<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 8, 2000
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
------------------------
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 25, 1999
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
------------------------------------
COMMISSION FILE NUMBER 0-27677
------------------------------------
CHARLOTTE RUSSE HOLDING, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 33-0724325
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
4645 MORENA BOULEVARD, SAN DIEGO, CA 92117
(Address, including Zip Code, of Registrant's Principal Executive Offices)
(858) 587-1500
(Registrant's Telephone Number, Including Area Code)
------------------------------------
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
COMMON STOCK, par value $0.01 per share, number of shares outstanding as of
February 8, 2000: 20,136,980 shares
================================================================================
<PAGE>
CHARLOTTE RUSSE HOLDING, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as of December 25, 1999 (unaudited)
and September 25, 1999......................................................................2
Consolidated Statements of Income (unaudited) for the three
months ended December 25, 1999 and December 26, 1998........................................3
Consolidated Statements of Cash Flows (unaudited) for the three
months ended December 25, 1999 and December 26, 1998........................................4
Notes to Consolidated Financial Statements..................................................5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS..................................................................7
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..................................9
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS..........................................................................10
ITEM 2. CHANGES IN SECURITIES......................................................................10
ITEM 3. DEFAULTS UPON SENIOR SECURITIES............................................................10
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........................................10
ITEM 5. OTHER INFORMATION..........................................................................10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K...........................................................10
</TABLE>
-1-
<PAGE>
CHARLOTTE RUSSE HOLDING, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 25, SEPTEMBER 25,
1999 1999
----------------- -------------
(unaudited) (audited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................................... $ 3,928,705 $ 2,982,025
Inventories......................................................... 9,354,963 11,193,914
Other current assets................................................ 3,002,286 2,454,230
Deferred tax assets................................................. 2,450,000 2,450,000
----------- -----------
Total current assets................................................ 18,735,954 19,080,169
Fixed assets, net...................................................... 41,558,550 37,028,566
Goodwill, net.......................................................... 30,239,227 30,446,323
Other assets........................................................... 1,416,373 2,013,962
----------- -----------
Total assets........................................................ $91,950,104 $88,569,020
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable trade.............................................. $ 9,814,264 $11,893,255
Accounts payable other.............................................. 1,523,448 5,222,136
Accrued payroll and related expense................................. 1,635,788 2,508,793
Income and sales taxes payable...................................... 6,061,447 1,890,342
Other current liabilities........................................... 8,930,927 4,783,301
----------- -----------
Total current liabilities........................................... 27,965,874 26,297,827
Notes payable to bank.................................................. -- 18,000,000
Deferred rent.......................................................... 2,339,243 1,991,252
Deferred tax liabilities............................................... 1,800,000 1,800,000
Other liabilities...................................................... 338,925 442,632
----------- -----------
Total liabilities................................................... 32,444,042 48,531,711
Commitments
Stockholders' equity:
Preferred Stock $0.01 par value, 3,000,000 shares authorized,
none issued and outstanding...................................... -- --
Common Stock $0.01 par value, 100,000,000 shares authorized,
issued and outstanding shares - 20,136,980 at December 25,
1999 and 18,310,800 at September 25, 1999........................ 201,370 183,108
Additional paid-in capital.......................................... 32,963,311 19,448,073
Deferred compensation............................................... (624,000) (660,000)
Notes receivable from officers...................................... -- (1,000,000)
Retained earnings................................................... 26,965,381 22,066,128
----------- -----------
Total stockholders' equity.......................................... 59,506,062 40,037,309
----------- -----------
Total liabilities and stockholders' equity............................. $91,950,104 $88,569,020
=========== ===========
</TABLE>
See accompanying notes.
-2-
<PAGE>
CHARLOTTE RUSSE HOLDING, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
FOR THE
THREE MONTHS ENDED
-------------------------------------------
DECEMBER 25, DECEMBER 26,
1999 1998
-------------------- ---------------------
<S> <C> <C>
Net sales......................................... $62,931,088 $46,007,351
Cost of goods sold, including buying,
distribution and occupancy costs............... 41,623,082 30,857,503
------------ ------------
Gross profit...................................... 21,308,006 15,149,848
Selling, general and administrative expenses...... 11,915,826 8,540,466
Amortization of goodwill and other
intangibles.................................. 223,842 223,842
------------ ------------
Operating income.................................. 9,168,338 6,385,540
Other expenses:
Interest expense............................... 196,124 764,535
Other charges, net............................. 65,262 64,370
------------ ------------
Total other expenses........................ 261,386 828,905
------------ ------------
Income before income taxes and extraordinary item. 8,906,952 5,556,635
Income taxes...................................... 3,696,385 2,333,367
------------ ------------
Income before extraordinary item.................. 5,210,567 3,223,268
Extraordinary loss from early debt retirement..... 311,314 --
------------ ------------
Net income........................................ $ 4,899,253 $ 3,223,268
============ ============
Basic earnings per share:
Income before extraordinary item............... $ 0.26 $ 0.18
============ ============
Net Income..................................... $ 0.25 $ 0.18
============ ============
Diluted earnings per share:
Income before extraordinary item............... $ 0.23 $ 0.15
============ ============
Net Income..................................... $ 0.22 $ 0.15
============ ============
Weighted average shares outstanding:
Basic.......................................... 19,675,418 18,300,000
============ ============
Diluted........................................ 22,561,611 21,152,000
============ ============
</TABLE>
See accompanying notes.
-3-
<PAGE>
CHARLOTTE RUSSE HOLDING, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
FOR THE
THREE MONTHS ENDED
-------------------------------------
DECEMBER 25, DECEMBER 26,
1999 1998
----------------- ------------------
<S> <C> <C>
OPERATING ACTIVITIES
Reconciliation of net income to net cash
provided by (used in) operating activities:
Net income................................................ $4,899,253 $3,223,268
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Amortization of deferred compensation.................. 36,000 --
Depreciation and amortization.......................... 1,747,630 1,298,364
Deferred rent.......................................... 347,991 228,721
Extraordinary loss from early debt retirement.......... 532,160 --
Changes in operating assets and liabilities:
Inventories.......................................... 1,838,951 2,365,528
Other current assets................................. (548,056) 47,704
Accounts payable trade............................... (2,078,991) (550,233)
Accounts payable other............................... (3,698,688) (133,917)
Accrued payroll and related expense.................. (873,005) (153,692)
Income and sales taxes payable....................... 4,171,105 2,774,884
Other current liabilities............................ 4,255,008 1,627,136
Other liabilities.................................... (103,707) (129,462)
----------- -----------
Net cash provided by operating activities.................... 10,525,651 10,598,301
INVESTING ACTIVITIES
Other assets................................................. 48,683 (14,710)
Purchases of fixed assets.................................... (6,053,772) (4,065,526)
----------- -----------
Net cash used in investing activities........................ (6,005,089) (4,080,236)
FINANCING ACTIVITIES
Payments on capital leases................................... (107,382) (118,272)
Payments on notes payable to bank............................ (19,000,000) (1,100,000)
Proceeds from notes payable to bank.......................... 1,000,000 500,000
Repayments of notes receivable from officers................. 1,000,000 --
Proceeds from issuance of common stock....................... 13,533,500 --
----------- -----------
Net cash used in financing activities........................ (3,573,882) (718,272)
----------- -----------
Net increase in cash and cash equivalents.................... 946,680 5,799,793
Cash and cash equivalents at beginning of the period......... 2,982,025 1,003,906
----------- -----------
Cash and cash equivalents at end of the period............... $3,928,705 $6,803,699
=========== ===========
</TABLE>
See accompanying notes.
-4-
<PAGE>
CHARLOTTE RUSSE HOLDING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. INTERIM FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements of
Charlotte Russe Holding, Inc. (the "Company") have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain
information and footnote disclosures required by generally accepted accounting
principles for complete financial statements have been condensed or omitted
pursuant to the rules and regulations of the Securities and Exchange Commission.
In the opinion of management, the accompanying unaudited financial statements
contain all material adjustments, consisting of normal recurring accruals,
necessary to present fairly the Company's financial position, results of
operations and cash flows for the periods indicated, and have been prepared in a
manner consistent with the audited financial statements as of September 25,
1999.
Due to the seasonal nature of the Company's business, the results of
operations for the three months ended December 25, 1999 are not necessarily
indicative of operation results for a full fiscal year.
These financial statements should be read in conjunction with the
audited financial statements and the footnotes for the fiscal year ended
September 25, 1999 included in the Company's Annual Report on Form 10-K filed
with the Securities and Exchange Commission.
2. RECLASSIFICATIONS
Certain amounts in the prior year financial statements have been
reclassified to conform with the fiscal 2000 presentation.
3. NET INCOME PER COMMON SHARE
In accordance with Statement of Financial Accounting Standards No. 128,
"Earnings Per Share", the following table reconciles income and share amounts
utilized to calculate basic and diluted net income per common share.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------
DECEMBER 25, DECEMBER 26,
1999 1998
------------- -------------
<S> <C> <C>
Net income......................................... $4,899,253 $3,222,268
---------- ----------
Income before extraordinary item................... $5,210,567 $3,222,268
========== ==========
Income before extraordinary item per share:
Basic........................................... $ 0.26 $ 0.18
Effect of dilutive securities stock options..... (0.01) (0.01)
Effect of dilutive securities warrants.......... (0.02) (0.02)
----------- ----------
Diluted......................................... $ 0.23 $ 0.15
=========== ==========
Earnings per share:
Basic........................................... $ 0.25 $ 0.18
Effect of dilutive securities stock options..... (0.01) (0.01)
Effect of dilutive securities warrants.......... (0.02) (0.02)
----------- ----------
Diluted......................................... $ 0.22 $ 0.15
=========== ==========
Weighted average number of shares:
Basic........................................... 19,675,418 18,300,000
Effect of dilutive securities stock options..... 959,953 814,000
Effect of dilutive securities warrants.......... 1,926,240 2,038,000
----------- ----------
Diluted......................................... 22,561,611 21,152,000
=========== ==========
</TABLE>
-5-
<PAGE>
4. INITIAL PUBLIC OFFERING
On October 19, 1999, the Company's issued 1,450,000 shares of common
stock for net proceeds of $13.5 million in connection with its initial public
offering.
5. REVOLVING CREDIT FACILITY
The Company repaid the outstanding balance of its secured revolving
credit facility primarily through proceeds from the Company's initial public
offering in October 1999 and from operational cash flows. In connection with the
repayment of this borrowing and termination of the related agreement,
unamortized deferred financing costs were written off in December 1999 resulting
in an extraordinary item charge of $0.3 million.
On December 23, 1999, the Company entered into an unsecured $15.0
million revolving credit agreement. Interest on the revolving credit facility is
payable quarterly at either (i) the bank's Base Rate, as defined, or (ii) the
bank's Eurodollar rate plus 1.00%, at the Company's option, subject to certain
adjustments. The revolving credit facility requires that the Company maintain
certain financial ratios that limits the level of indebtedness, limits the
amount of fixed charges relative to operational cash flows, and establishes a
minimum level of net worth. The agreement further limits the amount of dividends
that may be distributed.
-6-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS
We have made statements in this Quarterly Report that are
forward-looking statements. You can identify these statements by forward-looking
words such as "may," "will," "expect," "intend," "anticipate," "believe,"
"estimate" and "continue" or similar words. These forward-looking statements may
also use different phrases. We have based these forward-looking statements on
our current expectations and projections about future events. These
forward-looking statements, which are subject to certain risks, uncertainties,
and assumptions about us, may include, among other things, projections of our
future results of operations or of our financial condition, our anticipated
growth strategies, general and regional economic conditions, industry trends,
consumer demands and preferences, competition from other retailers and
uncertainties generally associated with women's apparel and accessory retailing.
There may be events in the future that we are not able to accurately
predict, or which we do not fully control, that could cause actual results to
differ materially from those expressed or implied in our forward-looking
statements. Because these forward-looking statements involve risks and
uncertainties, there are important factors that could cause results to differ
materially from those expressed or implied by these forward-looking statements,
including shopping mall traffic and shopping patterns, timing of openings for
new shopping malls or our stores, fashion trends, national or regional economic
influences, and weather. A description of these factors, as well as others that
could affect the Company's business, is set forth in the Company's Form 10-K for
the fiscal year ended September 25, 1999 which should be read in conjunction
with this Quarterly Report.
We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. In light of these risks, uncertainties and assumptions, the
forward-looking events discussed in the Quarterly Report might not occur.
RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results
of Operations should be read in conjunction with the Financial Statements and
Notes thereto of the company included elsewhere in this Form 10-Q. The following
table sets forth our operating results, expressed as a percentage of sales, and
store information for the periods indicated. These operating results are not
necessarily indicative of the results that may be expected for any future
period.
<TABLE>
<CAPTION>
FOR THE
THREE MONTHS ENDED
----------------------------
DEMEMBER 26, DECEMBER 25,
1998 1999
------------ ------------
<S> <C> <C>
Net sales..................................................... 100.0% 100.0%
Cost of goods sold............................................ 67.1 66.1
------------ ------------
Gross profit.................................................. 32.9 33.9
Selling, general and administrative expenses.................. 18.6 18.9
Amortization of goodwill and other intangibles................ 0.4 0.4
------------ ------------
Operating income.............................................. 13.9 14.6
Interest expense.............................................. (1.7) (0.3)
Other charges, net............................................ (0.1) (0.1)
------------ ------------
Income before income taxes and extraordinary item............. 12.1 14.2
Income taxes.................................................. 5.1 5.9
------------ ------------
Income before extraordinary item.............................. 7.0 8.3
Extraordinary loss from early debt retirement................. 0.0 0.5
------------ ------------
Net income.................................................... 7.0% 7.8%
============ ============
Number of stores open at end of period........................ 80 109
============ ============
</TABLE>
-7-
<PAGE>
THREE MONTHS ENDED DECEMBER 25, 1999 COMPARED TO THREE MONTHS ENDED DECEMBER 26,
1998
NET SALES. Net sales increased to $62.9 million from $46.0 million, an increase
of $16.9 million or 36.8% over the same period last year. This increase is
attributable primarily to $14.1 million of net sales for the 13 new stores
opened during the three months ended December 25, 1999, as well as other stores
opened in prior fiscal periods that did not qualify as comparable stores. Our
comparable store sales increased 6.4% and contributed $2.8 million to the net
sales increase during the three months ended December 25, 1999.
GROSS PROFIT. Gross profit represents net sales less cost of goods sold, which
includes buying, distribution and occupancy costs. Gross profit increased to
$21.3 million from $15.1 million, an increase of $6.2 million or 40.6% over the
same period last year. This increase is the result of higher net sales and
improved gross profit margins. As a percentage of net sales, gross profit rose
to 33.9% from 32.9%. The increase in gross profit as a percentage of net sales
was principally due to lower markdown expense and higher initial markups,
partially offset by higher occupancy expense.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased to $11.9 million from $8.5 million, an
increase of $3.4 million or 39.5% over the same period last year. This increase
is attributable to new store expansion and increased corporate expenses. As a
percentage of sales, these expenses increased to 18.9% from 18.6%. This increase
is attributable to increased marketing expenses and increased expenses related
to the opening of new stores, offset by the impact of leveraging corporate
expenses over a higher sales base.
AMORTIZATION OF GOODWILL AND OTHER INTANGIBLES. Amortization of goodwill and
other intangibles expense of $0.2 million is consistent with the same period
last year.
INCOME TAXES. The effective tax rate of 41.5% for the three months ended
December 25, 1999 compares to an effective tax rate of 42.0% for the same period
of the prior year. Our effective tax rate exceeds statutory tax rates due to
non-deductible amortization of goodwill associated with the acquisition of the
business in September 1996. Since amortization is a fixed amount, increases in
pre-tax earnings reduce the effect of this tax difference as a percentage of
pre-tax earnings.
NET INCOME. Net income for the three months ended December 25, 1999 increased to
$4.9 million from $3.2 million, an increase of $1.7 million or 52.0% over the
same period last year. This increase was primarily due to an increase in gross
profit, and was partially offset by an increase in selling, general and
administrative expenses, an increase in income taxes, and a $0.3 million charge
related to the early retirement of debt associated with the bank credit
facility.
LIQUIDITY AND CAPITAL RESOURCES
Our capital requirements result primarily from capital expenditures
related to new store openings. We have historically satisfied our cash
requirements principally through cash flow from operations. At December 25,
1999, we had approximately $3.9 million of cash and cash equivalents on hand.
Due to the rapid turnover of our inventory, we generate trade payables and other
accrued liabilities sufficient to offset our working capital requirements. As of
December 25, 1999, we had negative working capital of $9.2 million.
Net cash provided by operations was $10.5 million for the three months
ended December 25, 1999 compared with $10.6 million during the three months
ended December 26, 1998. Cash flows from operating activities for the period was
primarily generated by income from operations and changes in working capital
account balances.
Net cash used in investing activities were $6.0 million for the three
months ended December 25, 1999 compared with $4.1 million in the three months
ended December 26, 1998. Cash used in investing activities primarily represents
capital expenditures for store openings, store remodeling, and fixtures.
-8-
<PAGE>
In the three months ended December 25, 1999 and December 26, 1998, we
opened 13 and 6 stores, respectively. During fiscal 2000, we plan to open
between 30 to 33 stores. We anticipate that total capital expenditures during
fiscal 2000 will approximate $20.0 million. We plan to fund these expenditures
with cash flows from operations and from borrowings under the $15.0 million
revolving credit facility, as may be required.
Net cash used by financing activities was $3.6 million for the three
months ended December 25, 1999 compared with $0.7 million for the three months
ended December 26, 1998. Financing activities for the three months ended
December 25, 1999 primarily represents the repayment of $18.0 million of debt
under our revolving credit facility offset by proceeds of $13.5 million from our
initial public offering.
On December 23, 1999, we entered into a new unsecured revolving credit
agreement with BankBoston, N.A. The new facility provides us with a $15.0
million revolving line of credit under which borrowed funds bear interest at
either the bank's Eurodollar rate plus 1.00% or the bank's Base Rate, at our
option, subject to certain adjustments. The revolving credit facility requires
that we maintain certain financial ratios such as:
- total liabilities to earnings before interest, taxes,
depreciation and amortization;
- fixed charges coverage; and
- minimum net worth
We believe that anticipated cash flow from operations and funds
anticipated to be available under our revolving credit facility, will be
sufficient to fund our store expansion program and working capital requirements
through fiscal 2000.
YEAR 2000 UPDATE
As described in our Form 10-K for the fiscal year ended September 25,
1999, we had developed plans to address the possible exposures related to the
impact on our computer systems of the Year 2000. Since entering the year 2000,
we have not experienced any major disruptions to our business nor are we aware
of any significant Year 2000-related disruptions impacting our vendors. We will
continue to monitor our critical systems over the next several months but we do
not anticipate any significant impacts due to Year 2000 exposures from our
internal systems or from the activities of our suppliers and customers. If we,
or any third parties with whom we have a material relationship, were to suffer
adverse effects of the change from 1999 to 2000, now or in the coming months, we
may be temporarily prevented from operating any or all aspects of our business
in the ordinary course.
INFLATION
We do not believe that inflation has had a material adverse impact on
our business or operating results during the periods presented. There can be no
assurance, however, that our business will not be affected by inflation in the
future.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our market risks relate primarily to changes in interest rates. We
borrow money, when necessary, on a revolving basis under our $15.0 million
revolving credit facility to fund capital expenditures and other working capital
needs. Our revolving credit facility carries a variable interest rate pegged to
market indices and, therefore, our statement of income and our cash flows may be
impacted by changes in interest rates. As of December 25, 1999, there was no
outstanding balance under the revolving credit facility.
Another component of interest rate risk involves the short-term
investment of excess cash in short-term, investment-grade interest-bearing
securities. These are considered to be cash equivalents and are shown that way
on our balance sheet. Changes in interest rates affect the investment income we
earn on our investments and, therefore, impact our cash flows and results of
operations.
-9-
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company may be involved in litigation relating
to claims arising out of its operations. As of the date of this filing, the
Company is not engaged in any legal proceedings that are expected, individually
or in the aggregate, to have a material adverse effect on the Company's
business, financial condition or results of operations.
ITEM 2. CHANGES IN SECURITIES
UNREGISTERED SALES OF SECURITIES
Not applicable.
DIVIDENDS
We have never declared nor paid dividends on our common stock and we do
not intend to pay any dividends on our common stock in the foreseeable future.
We currently intend to retain earnings to finance future operations and
expansions. Moreover, under the terms of our revolving credit facility,
dividends, distributions and capital stock redemptions are restricted to $5.0
million or less in any fiscal year, of which up to $2.5 million may be cash
dividends paid on a non-cumulative basis.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On September 27, 1999 pursuant to the provisions of Section 228 of
the General Corporation Law of the State of Delaware, our 1999 Employee Stock
Purchase Plan was unanimously adopted by resolutions, in lieu of a meeting of
stockholders, by three stockholders constituting a beneficial ownership
interest of 99.95% of the outstanding shares of our common stock. No
stockholder voted against the adoption of the plan.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
(10.1) Revolving Credit Agreement, dated as of December 23, 1999, by
and among Charlotte Russe, Inc. as Borrower, Charlotte Russe Holding,
Inc., as Guarantor, and BankBoston, N.A., as Agent
(10.2) Guaranty, dated as of December 23, 1999, by Charlotte Russe
Holding, Inc., Charlotte Russe Merchandising, Inc., and certain other
Subsidiaries of the Borrower (as therein defined) which may become
parties thereto, each as a Guarantor, in favor of BankBoston, N.A., as
Agent
(27.1) Financial Data Schedule
(b) Reports on Form 8-K
No reports were filed on Form 8-K during the quarter for which this
report is filed.
-10-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this Quarterly Report on Form 10-Q to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of San Diego, State of California, on the 8th day of February, 2000.
CHARLOTTE RUSSE HOLDING, INC.
By: /s/ DANIEL T. CARTER
----------------------------------------------------
Daniel T. Carter
Executive Vice President and Chief Financial Officer
-11-
<PAGE>
CHARLOTTE RUSSE, INC.
REVOLVING CREDIT AGREEMENT
DATED as of December 23, 1999
among
CHARLOTTE RUSSE, INC., as Borrower,
CHARLOTTE RUSSE HOLDING, INC., as Guarantor
BANKBOSTON, N.A., as Agent,
and
THE BANKS
listed on SCHEDULE 1 hereto
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. DEFINITIONS AND RULES OF INTERPRETATION.. . . . . . . . . . . . . . .1
1.1. DEFINITIONS.. . . . . . . . . . . . . . . . . . . . . . . . ..1
1.2. RULES OF INTERPRETATION. . . . . . . . . . . . . . . . . . . 13
2. THE REVOLVING CREDIT FACILITY.. . . . . . . . . . . . . . . . . . . 15
2.1. COMMITMENT TO LEND.. . . . . . . . . . . . . . . . . . . . . 15
2.2. FACILITY FEE AND UTILIZATION FEE.. . . . . . . . . . . . . . 15
2.2.1. FACILITY FEE.
2.2.2 UTILIZATION FEE.
2.3. REDUCTION OF TOTAL COMMITMENT. . . . . . . . . . . . . . . . 16
2.4. THE NOTES. . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.5. INTEREST ON LOANS. . . . . . . . . . . . . . . . . . . . . . 16
2.6. REQUESTS FOR LOANS.. . . . . . . . . . . . . . . . . . . . . 17
2.6.1. GENERAL.. . . . . . . . . . . . . . . . . . . . . . 17
2.6.2. LOANS TO REPAY UNPAID REIMBURSEMENT OBLIGATIONS.. . 17
2.7. CONVERSION OPTIONS.. . . . . . . . . . . . . . . . . . . . . 17
2.7.1. CONVERSION TO DIFFERENT TYPE OF LOAN. . . . . . . . 17
2.7.2. CONTINUATION OF TYPE OF LOAN. . . . . . . . . . . . 18
2.7.3. EURODOLLAR RATE LOANS.. . . . . . . . . . . . . . . 18
2.8. FUNDS FOR LOANS. . . . . . . . . . . . . . . . . . . . . . . 18
2.8.1. FUNDING PROCEDURES. . . . . . . . . . . . . . . . . 18
2.8.2. ADVANCES BY AGENT.. . . . . . . . . . . . . . . . . 19
3. REPAYMENT OF THE LOANS. . . . . . . . . . . . . . . . . . . . . . . 19
3.1. MATURITY.. . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.2. MANDATORY REPAYMENTS OF LOANS. . . . . . . . . . . . . . . . 19
3.3. OPTIONAL REPAYMENTS OF LOANS.. . . . . . . . . . . . . . . . 20
4. LETTERS OF CREDIT.. . . . . . . . . . . . . . . . . . . . . . . . . 20
4.1. LETTER OF CREDIT COMMITMENTS.. . . . . . . . . . . . . . . . 20
4.1.1. COMMITMENT TO ISSUE LETTERS OF CREDIT.. . . . . . . 20
4.1.2. LETTER OF CREDIT APPLICATIONS.. . . . . . . . . . . 21
4.1.3. TERMS OF LETTERS OF CREDIT. . . . . . . . . . . . . 21
4.1.4. REIMBURSEMENT OBLIGATIONS OF BANKS. . . . . . . . . 21
4.1.5. PARTICIPATIONS OF BANKS.. . . . . . . . . . . . . . 22
4.2. REIMBURSEMENT OBLIGATION OF THE BORROWER.. . . . . . . . . . 22
4.3. LETTER OF CREDIT PAYMENTS. . . . . . . . . . . . . . . . . . 22
4.4. OBLIGATIONS ABSOLUTE.. . . . . . . . . . . . . . . . . . . . 23
4.5. RELIANCE BY ISSUER.. . . . . . . . . . . . . . . . . . . . . 24
4.6. LETTER OF CREDIT FEE.. . . . . . . . . . . . . . . . . . . . 24
5. CERTAIN GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . 25
5.1. FEES.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.1.1. AGENT'S FEE.. . . . . . . . . . . . . . . . . . . . 25
5.1.2. CLOSING FEE.. . . . . . . . . . . . . . . . . . . . 25
<PAGE>
-ii-
5.2. FUNDS FOR PAYMENTS.. . . . . . . . . . . . . . . . . . . . . 25
5.2.1. PAYMENTS TO AGENT.. . . . . . . . . . . . . . . . . 25
5.2.2. NO OFFSET, ETC. . . . . . . . . . . . . . . . . . . 25
5.3. COMPUTATIONS.. . . . . . . . . . . . . . . . . . . . . . . . 26
5.4. INABILITY TO DETERMINE EURODOLLAR RATE.. . . . . . . . . . . 26
5.5. ILLEGALITY.. . . . . . . . . . . . . . . . . . . . . . . . . 26
5.6. CHANGE IN CIRCUMSTANCES. . . . . . . . . . . . . . . . . . . 27
5.7. CAPITAL ADEQUACY.. . . . . . . . . . . . . . . . . . . . . . 27
5.8. CERTIFICATE. . . . . . . . . . . . . . . . . . . . . . . . . 28
5.9. INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.10. INTEREST AFTER DEFAULT. . . . . . . . . . . . . . . . . . . .28
5.10.1. OVERDUE AMOUNTS. . . . . . . . . . . . . . . . . . 28
5.10.2. AMOUNTS NOT OVERDUE. . . . . . . . . . . . . . . . 28
6. GUARANTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . 29
7.1. INCORPORATION; GOOD STANDING; AUTHORIZATION. . . . . . . . . 29
7.2. ENFORCEABILITY.. . . . . . . . . . . . . . . . . . . . . . . 29
7.3. TITLE TO PROPERTIES; FRANCHISES, INTELLECTUAL PROPERTY;
CONSENT; NO CONFLICT; INSURANCE.. . . . . . . . . . . . . . . . . . 29
7.4. FISCAL YEAR; FINANCIAL STATEMENTS AND FORECAST.. . . . . . . 29
7.5. NO MATERIAL CHANGES, ETC.. . . . . . . . . . . . . . . . . . 30
7.6. LITIGATION.. . . . . . . . . . . . . . . . . . . . . . . . . 30
7.7. CONSENTS; NO CONFLICT. . . . . . . . . . . . . . . . . . . . 30
7.8. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC.. . . . . . . . 30
7.9. SUBSIDIARIES, ETC. . . . . . . . . . . . . . . . . . . . . . 31
7.10. STATUS OF GUARANTOR.. . . . . . . . . . . . . . . . . . . . .31
7.11. NO DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . .31
7.12. USE OF PROCEEDS.. . . . . . . . . . . . . . . . . . . . . . .31
7.12.1. GENERAL. . . . . . . . . . . . . . . . . . . . . . 31
7.12.2. REGULATIONS U AND X. . . . . . . . . . . . . . . . 31
8. AFFIRMATIVE COVENANTS OF THE BORROWER AND THE GUARANTOR.. . . . . . 31
8.1. PUNCTUAL PAYMENT.. . . . . . . . . . . . . . . . . . . . . . 31
8.2. FINANCIAL STATEMENTS; COMPLIANCE CERTIFICATE; BUDGET.. . . . 32
8.3. BOOKS AND RECORDS; FISCAL YEAR; INSPECTIONS. . . . . . . . . 32
8.4. MAINTENANCE OF EXISTENCE, RIGHTS, FRANCHISES, ETC.;
MAINTENANCE OF PROPERTIES, ETC . . . . . . . . . . . . . . . . . . .32
8.5. INSURANCE; CHIEF EXECUTIVE OFFICE; COMPLIANCE WITH LAW;
PAYMENT OF TAXES.. . . . . . . . . . . . . . . . . . . . . . . . . .33
8.6. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.7. USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . 34
8.8. FURTHER ASSURANCES.. . . . . . . . . . . . . . . . . . . . . 34
9. CERTAIN NEGATIVE COVENANTS OF THE BORROWER AND THE GUARANTOR. . . . 34
<PAGE>
-iii-
9.1. RESTRICTIONS ON INDEBTEDNESS.. . . . . . . . . . . . . . . . 34
9.2. RESTRICTIONS ON LIENS. . . . . . . . . . . . . . . . . . . . 35
9.3. RESTRICTIONS ON SUBSIDIARIES AND INVESTMENTS.. . . . . . . . 37
9.4. DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . . 37
9.5. MERGER, CONSOLIDATION AND DISPOSITION OF ASSETS. . . . . . . 38
9.5.1. MERGERS AND ACQUISITIONS. . . . . . . . . . . . . . 38
9.5.2. DISPOSITION OF ASSETS.. . . . . . . . . . . . . . . 38
9.6. SALE AND LEASEBACK.. . . . . . . . . . . . . . . . . . . . . 38
9.7. GUARANTIES.. . . . . . . . . . . . . . . . . . . . . . . . . 39
9.8. BUSINESS ACTIVITIES. . . . . . . . . . . . . . . . . . . . . 39
9.9. FISCAL YEAR. . . . . . . . . . . . . . . . . . . . . . . . . 39
9.10. TRANSACTIONS WITH AFFILIATES. . . . . . . . . . . . . . . . 39
9.11. RESTRUCTURING AGREEMENTS. . . . . . . . . . . . . . . . . . 40
9.12. CREATION OF SUBSIDIARIESS.. . . . . . . . . . . . . . . . . 40
10. FINANCIAL COVENANTS OF THE BORROWER. . . . . . . . . . . . . . . . .40
10.1. CONSOLIDATED TOTAL LIABILITIES TO EBITDA. . . . . . . . . . 40
10.2. FIXED CHARGE RATIO. . . . . . . . . . . . . . . . . . . . . 40
10.3. CONSOLIDATED NET WORTH. . . . . . . . . . . . . . . . . . . 40
11. CLOSING CONDITIONS.. . . . . . . . . . . . . . . . . . . . . . . . .41
11.1. LOAN DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . . 41
11.2. CERTIFIED COPIES OF CHARTER DOCUMENTS.. . . . . . . . . . . 41
11.3. CORPORATE ACTION. . . . . . . . . . . . . . . . . . . . . . 41
11.4. INCUMBENCY CERTIFICATE. . . . . . . . . . . . . . . . . . . 41
11.5. CERTIFICATES OF INSURANCE.. . . . . . . . . . . . . . . . . 41
11.6. SOLVENCY CERTIFICATE. . . . . . . . . . . . . . . . . . . . 41
11.7. OPINION OF COUNSEL. . . . . . . . . . . . . . . . . . . . . 42
11.8. PAYMENT OF FEES.. . . . . . . . . . . . . . . . . . . . . . 42
12. CONDITIONS TO ALL BORROWINGS.. . . . . . . . . . . . . . . . . . . .42
12.1. REPRESENTATIONS TRUE; NO EVENT OF DEFAULT.. . . . . . . . . 42
12.2. NO LEGAL IMPEDIMENT.. . . . . . . . . . . . . . . . . . . . 42
13. EVENTS OF DEFAULT; ACCELERATION; ETC.. . . . . . . . . . . . . . . .42
13.1. EVENTS OF DEFAULT AND ACCELERATION. . . . . . . . . . . . . 42
13.2. TERMINATION OF COMMITMENTS. . . . . . . . . . . . . . . . . 45
13.3. REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . 45
13.4. DISTRIBUTION OF PROCEEDS. . . . . ERROR! BOOKMARK NOT DEFINED.
14. SETOFF. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
15. THE AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
15.1. AUTHORIZATION.. . . . . . . . . . . . . . . . . . . . . . . 46
15.2. EMPLOYEES AND AGENTS. . . . . . . . . . . . . . . . . . . . 47
15.3. NO LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . 47
15.4. NO REPRESENTATIONS. . . . . . . . . . . . . . . . . . . . . 47
15.4.1. GENERAL. . . . . . . . . . . . . . . . . . . . . .47
<PAGE>
-iv-
15.4.2. CLOSING DOCUMENTATION, ETC.. . . . . . . . . . . .48
15.5. PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . 48
15.5.1. PAYMENTS TO AGENT. . . . . . . . . . . . . . . . .48
15.5.2. DISTRIBUTION BY AGENT. . . . . . . . . . . . . . .48
15.5.3. DELINQUENT BANKS.. . . . . . . . . . . . . . . . .48
15.6. HOLDERS OF NOTES. . . . . . . . . . . . . . . . . . . . . . 49
15.7. INDEMNITY.. . . . . . . . . . . . . . . . . . . . . . . . . 49
15.8. AGENT AS BANK.. . . . . . . . . . . . . . . . . . . . . . . 49
15.9. RESIGNATION.. . . . . . . . . . . . . . . . . . . . . . . . 50
15.10. NOTIFICATION OF DEFAULTS AND EVENTS OF DEFAULT.. . . . . . 50
15.11. DUTIES IN THE CASE OF ENFORCEMENT. . . . . . . . . . . . . 50
16. EXPENSES AND INDEMNIFICATION.. . . . . . . . . . . . . . . . . . . .50
16.1. EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . 50
16.2. INDEMNIFICATION.. . . . . . . . . . . . . . . . . . . . . . 51
16.3. SURVIVAL. . . . . . . . . . . . . . . . . . . . . . . . . . 52
17. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION. . . . . . . . . . . .52
17.1. SHARING OF INFORMATION WITH SECTION 20 SUBSIDIARY.. . . . . 52
17.2. CONFIDENTIALITY.. . . . . . . . . . . . . . . . . . . . . . 52
17.3. PRIOR NOTIFICATION. . . . . . . . . . . . . . . . . . . . . 53
17.4. OTHER.. . . . . . . . . . . . . . . . . . . . . . . . . . . 53
18. SURVIVAL OF COVENANTS, ETC.. . . . . . . . . . . . . . . . . . . . .53
19. ASSIGNMENT AND PARTICIPATION.. . . . . . . . . . . . . . . . . . . .54
19.1. CONDITIONS TO ASSIGNMENT BY BANKS.. . . . . . . . . . . . . 54
19.2. CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS;
COVENANTS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
19.3. REGISTER. . . . . . . . . . . . . . . . . . . . . . . . . . 55
19.4. NEW NOTES.. . . . . . . . . . . . . . . . . . . . . . . . . 56
19.5. PARTICIPATIONS. . . . . . . . . . . . . . . . . . . . . . . 56
19.6. DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . . 56
19.7. ASSIGNEE OR PARTICIPANT AFFILIATED WITH THE BORROWER OR THE
GUARANTOR.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
19.8. MISCELLANEOUS ASSIGNMENT PROVISIONS.. . . . . . . . . . . . 57
19.9. ASSIGNMENT BY BORROWER OR GUARANTOR.. . . . . . . . . . . . 57
20. NOTICES, ETC.. . . . . . . . . . . . . . . . . . . . . . . . . . . .57
21. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . .58
22. HEADINGS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59
23. COUNTERPARTS.. . . . . . . . . . . . . . . . . . . . . . . . . . . .59
24. ENTIRE AGREEMENT, ETC. . . . . . . . . . . . . . . . . . . . . . . .59
25. WAIVER OF JURY TRIAL.. . . . . . . . . . . . . . . . . . . . . . . .59
26. CONSENTS, AMENDMENTS, WAIVERS, ETC.. . . . . . . . . . . . . . . . .60
27. SEVERABILITY.. . . . . . . . . . . . . . . . . . . . . . . . . . . .60
</TABLE>
<PAGE>
-v-
LIST OF SCHEDULES
<TABLE>
<S> <C>
SCHEDULE 1 - Banks
SCHEDULE 1.1(a) - Restructuring Transactions
SCHEDULE 4.1.1 - Existing Letters of Credit
SCHEDULE 7.4 - Fiscal Periods
SCHEDULE 7.7 - Consents
SCHEDULE 9.1 - Existing Indebtedness
SCHEDULE 9.2 - Existing Liens
</TABLE>
<PAGE>
-vi-
LIST OF EXHIBITS
<TABLE>
<S> <C>
EXHIBIT A - Form of Amended and Restated Revolving Credit Note
EXHIBIT B - Form of Loan Request
EXHIBIT C - Form of Compliance Certificate
EXHIBIT D - Form of Assignment and Acceptance
</TABLE>
<PAGE>
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT is made as of December 23, 1999, by and
among CHARLOTTE RUSSE, INC. (the "Borrower"), a California corporation having
its principal place of business at 4645 Morena Boulevard, San Diego, California
92117, CHARLOTTE RUSSE HOLDING, INC., (the "Guarantor"), a Delaware corporation,
BANKBOSTON, N.A., a national banking association, and the other lending
institutions listed on SCHEDULE 1, and BANKBOSTON, N.A., as agent for itself and
such other lending institutions.
1. DEFINITIONS AND RULES OF INTERPRETATION.
1.1. DEFINITIONS. The following terms shall have the meanings set
forth in this Section 1 or elsewhere in the provisions of this Credit
Agreement referred to below:
ADMINISTRATION CONTRIBUTION AGREEMENT. The Capital Contribution/
Incorporation Agreement dated as of September 25, 1998 between the Borrower
and Charlotte Russe Administration, as in effect on the Closing Date.
AFFILIATE. Any Person that would be considered to be an affiliate of
the Borrower or the Guarantor under Rule 144(a) of the Rules and Regulations
of the Securities and Exchange Commission, as in effect on the date hereof,
if the Borrower or the Guarantor were issuing securities.
AGENT'S HEAD OFFICE. The Agent's head office located at 100 Federal
Street, Boston, Massachusetts 02110, or at such other location as the Agent
or its successor in such capacity may designate from time to time as its head
office.
AGENT. BankBoston, N.A. (or its successor, in such capacity), acting
as agent for the Banks.
AGENT'S FEE LETTER. The side letter dated as of the date hereof
between the Borrower and the Agent regarding the Borrower's payment of an
annual Agent's fee.
AGENT'S SPECIAL COUNSEL. Bingham Dana LLP or such other counsel as
may be approved by the Agent.
APPLICABLE EURODOLLAR RATE MARGIN. For any fiscal quarter or portion
thereof within any Interest Period with respect to a Eurodollar Rate Loan,
one percent (1.00%) per annum; PROVIDED, HOWEVER, that from and after the
Agent's receipt of the financial statements required by Section 8.2 for the
fiscal quarter of the Borrower and the Guarantor ending March 25, 2000 and in
the event that the Debt Service Ratio as of the last day of any fiscal
quarter referred to above meets the requirements set forth in the chart
below, the Applicable Eurodollar Rate Margin shall be adjusted, on the dates
and for the periods set forth in the
<PAGE>
-2-
paragraph below, to the percentage set forth opposite the applicable Debt
Service Ratio in the table below:
<TABLE>
<CAPTION>
Debt Service Ratio Applicable Eurodollar Rate Margin
------------------ ---------------------------------
<S> <C>
Less than or equal to 1.75:1.00 1.25%
Greater than 1.75:1.00 and less than
or equal to 2.50:1.00 1.00%
Greater than 2.50:1.00 0.75%
</TABLE>
Changes in the Applicable Eurodollar Rate Margin resulting from changes in
the Debt Service Ratio shall become effective on the 10th day after the date
on which financial statements are received by the Agent pursuant to Section
8.2 (but with such receipt in no event to be later than the 45th day after
the end of each of the first three quarterly periods of each fiscal year or
the 100th day after the end of each fiscal year, as the case may be) and
shall remain in effect until the next change to be effected pursuant to this
paragraph. If any financial statements referred to above are not delivered
within the time periods specified above, then, until such financial
statements are delivered, the Applicable Eurodollar Rate Margin as at the end
of the fiscal period that would have been covered thereby shall, for the
purposes of this definition, be deemed to be 1.25%. In addition, at all
times while an Event of Default shall have occurred and be continuing, the
Applicable Eurodollar Rate Margin shall for the purposes of this definition
be deemed to be 1.25%. Each determination of the Debt Service Ratio pursuant
to this definition shall be made with respect to the period of four
consecutive fiscal quarters of the Borrower ending at the end of the period
covered by the relevant financial statements.
ASSIGNMENT AND ACCEPTANCE. See Section 19.1.
BALANCE SHEET DATE. September 25, 1999.
BANKS. BKB and the other lending institutions listed on SCHEDULE 1
hereto and any other Person who or which becomes an assignee of any rights
and obligations of a Bank pursuant to Section 19.
BASE RATE. The higher of (i) the annual rate of interest announced
from time to time by BKB at its head office in Boston, Massachusetts, as its
"base rate" and (ii) one-half of one percent (1/2%) above the Federal Funds
Effective Rate. For the purposes of this definition, "Federal Funds
Effective Rate" shall mean for any day, the rate per annum equal to the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of
the quotations for such day on such
<PAGE>
-3-
transactions received by the Agent from three funds brokers of recognized
standing selected by the Agent.
BASE RATE LOANS. Loans bearing interest calculated by reference to the
Base Rate.
BKB. BankBoston, N.A., a national banking association, in its individual
capacity.
BORROWER. As defined in the preamble hereto.
BUSINESS DAY. Any day on which banking institutions in Boston,
Massachusetts, are open for the transaction of banking business and, in the
case of Eurodollar Rate Loans, also a day which is a Eurodollar Business Day.
CAPITAL EXPENDITURES. Amounts paid or Indebtedness incurred by the
Guarantor or any of its Subsidiaries in connection with the purchase or lease
by the Guarantor or any of its Subsidiaries of fixed assets that would be
required to be capitalized and shown on the balance sheet of such Person in
accordance with generally accepted accounting principles (excluding amounts
paid or Indebtedness incurred in respect of Capitalized Leases); PROVIDED
that Capital Expenditures shall be calculated (i) net of any landlord
allowances for the purchase, lease or other acquisition or construction of
fixed assets, and (ii) in connection with the replacement or repair of any
fixed asset, net of any cash sale or insurance proceeds received by the
Guarantor or its Subsidiaries in respect of a sale of or casualty involving
the fixed asset which is replaced or repaired.
CAPITALIZED LEASES. Leases under which the Guarantor or any of its
Subsidiaries is the lessee or obligor, the discounted future rental payment
obligations under which are required to be capitalized on the balance sheet
of the lessee or obligor in accordance with generally accepted accounting
principles.
CHARLOTTE RUSSE ADMINISTRATION. Charlotte Russe Administration, Inc.,
a California corporation and wholly owned Subsidiary of the Borrower.
CHARLOTTE RUSSE MERCHANDISING. Charlotte Russe Merchandising, Inc., a
California corporation and wholly owned Subsidiary of the Borrower.
CHARTER DOCUMENTS. In respect of any entity, the certificate or
articles of incorporation or organization and the by-laws of such entity, or
other constitutive documents of such entity.
CLOSING DATE. The first date on which the conditions set forth in
Section 11 have been satisfied and any Loans are to be made or any Letter of
Credit is to be issued hereunder.
<PAGE>
-4-
CODE. The Internal Revenue Code of 1986.
COMMITMENT. With respect to each Bank, the amount set forth on
SCHEDULE 1 hereto as the amount of such Bank's commitment to make Loans to,
and to participate in the issuance, extension and renewal of Letters of
Credit for the account of, the Borrower, as the same may be reduced from time
to time pursuant to Section 2.3 or otherwise; or if such commitment is
terminated pursuant to the provisions hereof, zero.
COMMITMENT PERCENTAGE. With respect to each Bank, the percentage set
forth on SCHEDULE 1 hereto as such Bank's percentage of the aggregate
Commitments of all of the Banks.
CONSENT. In respect of any Person, any permit, license or exemption
from, approval, consent of, registration or filing with any local, state or
federal governmental or regulatory agency or authority, required under
applicable law.
CONSOLIDATED OR CONSOLIDATED. With reference to any term defined
herein, shall mean that term as applied to the accounts of the Guarantor and
its Subsidiaries, consolidated in accordance with generally accepted
accounting principles.
CONSOLIDATED CURRENT MATURITIES. For any period, the aggregate
liability of the Guarantor and its Subsidiaries on a consolidated basis on
Indebtedness For Borrowed Money (other than Indebtedness permitted under
Section 9.1(c) and (d) hereof and other Indebtedness consisting of
non-interest bearing ordinary course obligations) maturing on demand or
within one (1) year from the date as of which Consolidated Current Maturities
are to be determined, but excluding Consolidated Total Interest Expense with
respect thereto.
CONSOLIDATED EBITDA. For any fiscal period, an amount equal to
Consolidated Net Income of the Guarantor and its Subsidiaries for such
period, PLUS, to the extent deducted in the calculation of Consolidated Net
Income for such period and without duplication, the sum of (a) depreciation
and amortization for such period, PLUS (b) income tax expense for such
period, PLUS (c) Consolidated Total Interest Expense paid or accrued during
such period, PLUS (d) fees and expenses paid by the Guarantor and its
Subsidiaries during such period in connection, and associated, with the
closing of the Loans, not to exceed in aggregate amount $100,000 for all
fiscal periods, all as determined in accordance with GAAP.
CONSOLIDATED NET INCOME. For any period, the consolidated net income
(or net deficit) of the Guarantor and its Subsidiaries, after deduction of
all expenses, taxes and other proper charges, determined in accordance with
GAAP, after eliminating therefrom all extraordinary non-recurring non-cash
items of income and expense, in each case as determined in accordance with
GAAP.
<PAGE>
-5-
CONSOLIDATED NET WORTH. The excess of Consolidated Total Assets over
Consolidated Total Liabilities LESS, to the extent otherwise includable in
the computation of Consolidated Net Worth, any subscriptions receivable.
CONSOLIDATED TOTAL ASSETS. The sum of (i) all assets ("consolidated
balance sheet assets") of the Guarantor and its Subsidiaries determined on a
consolidated basis in accordance with generally accepted accounting
principles, PLUS (ii) without duplication, all assets leased by the Guarantor
or any Subsidiaries as lessee under any synthetic lease described in clause
(iv) of the definition of Indebtedness, to the extent that such assets would
have been consolidated balance sheet assets PLUS (iii) without duplication,
all sold receivables of the Guarantor or any Subsidiaries referred to in
clause (v) of the definition of Indebtedness, to the extent that such
receivables would have been consolidated balance sheet assets had they not
been sold.
CONSOLIDATED TOTAL INTEREST EXPENSE. For any period, the aggregate
liability of the Guarantor and its Subsidiaries for interest on Indebtedness
For Borrowed Money (other than Indebtedness permitted under Section 9.1(c)
hereof and other Indebtedness consisting of non-interest bearing ordinary
course obligations), whether expensed or capitalized, including payments
consisting of interest in respect of Capitalized Leases and including
commitment fees, agency fees, facility fees, utilization fees, balance
deficiency fees and similar fees and expenses in connection with the
borrowing of money or obtaining of credit and excluding, to the extent
applicable, premiums and other amounts payable.
CONSOLIDATED TOTAL LIABILITIES. All liabilities of the Guarantor and
its Subsidiaries that in accordance with GAAP are properly classified as
liabilities.
CONVERSION REQUEST. A notice given by the Borrower to the Agent of
the Borrower's election to convert or continue a Loan in accordance with
Section 2.7.
CREDIT AGREEMENT. This Revolving Credit Agreement, including the
Schedules and Exhibits hereto.
DEBT SERVICE RATIO. With respect to the last day of any fiscal
quarter, the ratio of (i) the sum of Consolidated EBITDA for the period of
four consecutive fiscal quarters ending on such day PLUS Rental Obligations
for such fiscal period to (ii) the sum of Consolidated Total Interest Expense
for such fiscal period PLUS Consolidated Current Maturities for such fiscal
period PLUS Rental Obligations for such fiscal period.
DEFAULT. An event or act which with the giving of notice and/or the
lapse of time would become an Event of Default.
DELINQUENT BANK. See Section 15.5.3.
DOCUMENTARY LETTER OF CREDIT. Any Letter of Credit that is issued for
the benefit of a supplier of inventory to the Borrower to effect payment for
such
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inventory, the conditions of drawing under which include the presentation to
the Agent of bills of lading, invoices or similar documents.
DOLLARS or $. Dollars in lawful currency of the United States of
America.
DOMESTIC LENDING OFFICE. Initially, the office of each Bank
designated as such in SCHEDULE 1 hereto; thereafter, such other office of
such Bank, if any, located within the United States that will be making or
maintaining Base Rate Loans.
DRAWDOWN DATE. The date on which any Loan is made or is to be made,
and the date on which any Loan is converted or continued in accordance with
Section 2.7.
ELIGIBLE ASSIGNEE. Any of (i) a commercial bank or finance company
organized under the laws of the United States, or any State thereof or the
District of Columbia, and having total assets in excess of $1,000,000,000;
(ii) a savings and loan association or savings bank organized under the laws
of the United States, or any State thereof or the District of Columbia, and
having a net worth of at least $100,000,000, calculated in accordance with
generally accepted accounting principles; (iii) a commercial bank organized
under the laws of any other country which is a member of the Organization for
Economic Cooperation and Development (the "OECD"), or a political subdivision
of any such country, and having total assets in excess of $1,000,000,000,
PROVIDED that such bank is acting through a branch or agency located in the
country in which it is organized or another country which is also a member of
the OECD; (iv) the central bank of any country which is a member of the OECD;
and (v) if, but only if, any Event of Default has occurred and is continuing,
any other bank, insurance company, commercial finance company or other
financial institution or other Person approved by the Agent, such approval
not to be unreasonably withheld.
ENVIRONMENTAL LAWS. All laws pertaining to environmental matters,
including without limitation, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response Compensation and Liability Act of 1980,
the Superfund Amendments and Reauthorization Act of 1986, the Federal Clean
Water Act, the Federal Clean Air Act, the Toxic Substances Control Act, in
each case as amended, and all rules, regulations, judgments, decrees, orders
and licenses arising under all such laws.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended, and all rules, regulations, judgments, decrees and orders arising
thereunder.
EUROCURRENCY RESERVE RATE. For any day with respect to a Eurodollar
Rate Loan, the maximum rate (expressed as a decimal) at which any lender
subject thereto would be required to maintain reserves under Regulation D of
the Board of Governors of the Federal Reserve System (or any successor or
similar regulations relating to such reserve requirements) against
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"Eurocurrency Liabilities" (as that term is used in Regulation D), if such
liabilities were Outstanding. The Eurocurrency Reserve Rate shall be
adjusted automatically on and as of the effective date of any change in the
Eurocurrency Reserve Rate.
EURODOLLAR BUSINESS DAY. Any day on which commercial banks are open
for international business (including dealings in Dollar deposits) in London
or such other eurodollar interbank market as may be selected by the Agent in
its sole discretion acting in good faith.
EURODOLLAR LENDING OFFICE. Initially, the office of each Bank
designated as such in SCHEDULE 1 hereto; thereafter, such other office of
such Bank, if any, that shall be making or maintaining Eurodollar Rate Loans.
EURODOLLAR RATE. For any Interest Period with respect to a Eurodollar
Rate Loan, the rate of interest equal to the rate per annum (rounded upward,
if necessary, to the nearest 1/32 of one percent) as determined on the basis
of the offered rates for deposits in U.S. dollars, for a period of time
comparable to such Eurodollar Rate Loan which appears on the Telerate page
3750 as of 11:00 a.m., London time, on the day that is two Eurodollar
Business Days preceding the Drawdown Date of such Eurodollar Rate Loan;
PROVIDED, HOWEVER, if the rate described above does not appear on the
Telerate System on any applicable interest determination date, the Eurodollar
Rate shall be the rate (rounded upwards as described above, if necessary) for
deposits in dollars for a period substantially equal to the interest period
on the Reuters Page "LIBO" (or such other page as may replace the LIBO Page
on that service for the purpose of displaying such rates), as of 11:00 a.m.,
London Time, on the day that is two (2) Eurodollar Business Days prior to the
beginning of such interest period.
If both the Telerate and Reuters system are unavailable, then the rate
for that date will be determined on the basis of the offered rates for
deposits in Dollars for a period of time comparable to such Eurodollar Rate
Loan which are offered by four major banks (as selected by the Agent) in the
London interbank market at approximately 11:00 a.m. London time, on the day
that is two (2) Eurodollar Business Days preceding the first day of such
Eurodollar Rate Loan. The principal London office of each of the four major
London banks will be requested to provide a quotation of its Dollar deposit
offered rate. If at least two such quotations are provided, the rate for
that date will be the arithmetic mean of the quotations. If fewer than two
quotations are provided as requested, the rate for that date will be
determined on the basis of the rates quoted for loans in Dollars to leading
European banks for a period of time comparable to such Eurodollar Rate Loan
offered by major banks in New York at approximately 11:00 a.m., New York City
time, on the day that is two Eurodollar Business Days preceding the first day
of such Eurodollar Rate Loan. In the event that the Agent is unable to
obtain any such quotation as provided above, it will be deemed that the
Eurodollar Rate pursuant to a Eurodollar Rate Loan cannot be determined. In
the event that the Board of Governors of the Federal Reserve System shall
impose a Eurocurrency Reserve Rate with respect
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to Eurodollar Rate Loans, then for any period during which such Eurocurrency
Reserve Rate shall apply, the Eurodollar Rate shall be equal to the amount
determined above divided by an amount equal to 1 minus the Eurocurrency
Reserve Rate.
EURODOLLAR RATE LOANS. Loans bearing interest calculated by reference
to the Eurodollar Rate.
EVENT OF DEFAULT. Any of the events listed in Section 13.1 hereof.
FINANCIAL STATEMENTS. In respect of any period, the balance sheet of
any Person as at the end of such period, and the related statement of income
and statement of cash flow for such period, each setting forth in comparative
form the figures for the previous comparable fiscal period, all in reasonable
detail as prepared in accordance with generally accepted accounting
principles except, with respect to monthly and quarterly financial
statements, the absence of footnotes.
FUNDS. Collectively, The SK Equity Fund, L.P. and the SK Investment
Fund, L.P.
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES or GAAP. Generally accepted
accounting principles consistent with those adopted by the Financial
Accounting Standards Board and its predecessor, (i) generally, as in effect
from time to time, and (ii) for purposes of determining compliance by the
Guarantor and its Subsidiaries with its financial covenants set forth herein,
as in effect for the fiscal year therein reported in the most recent
Financial Statements submitted to the Agent and the Banks prior to execution
of this Credit Agreement.
GUARANTY. The Guaranty, dated or to be dated on or prior to the
Closing Date, made by the Guarantor, Charlotte Russe Merchandising and each
other Subsidiary of the Borrower (other than Charlotte Russe Administration)
in favor of the Banks and the Agent pursuant to which each of the Guarantor,
Charlotte Russe Merchandising and such other Subsidiaries (other than
Charlotte Russe Administration) guaranties to the Banks and the Agent the
payment and performance of the Obligations, in form and substance
satisfactory to the Banks and the Agent.
GUARANTOR. See the preamble.
INDEBTEDNESS. All obligations, contingent and otherwise, that in
accordance with generally accepted accounting principles should be classified
upon the obligor's balance sheet as liabilities, or to which reference should
be made by footnotes thereto, including in any event and whether or not so
classified: (i) all debt and similar monetary obligations, whether direct or
indirect; (ii) all liabilities secured by any mortgage, pledge, security
interest, lien, charge, or other encumbrance existing on property owned or
acquired subject thereto, whether or not the liability secured thereby shall
have been
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assumed; (iii) all guarantees, endorsements and other contingent obligations
whether direct or indirect in respect of indebtedness of others, including
any obligation to supply funds to or in any manner to invest in, directly or
indirectly, the debtor, to purchase indebtedness, or to assure the owner of
indebtedness against loss, through an agreement to purchase goods, supplies,
or services for the purpose of enabling the debtor to make payment of the
indebtedness held by such owner or otherwise, and the obligations to
reimburse the issuer in respect of any letters of credit; (iv) every
obligation under any lease (a "synthetic lease") treated as an operating
lease under GAAP and as a loan or financing for U.S. income tax purposes; and
(v) all sales of (A) accounts or general intangibles for money due or to
become due, (B) chattel paper, instruments or documents creating or
evidencing a right to payment of money or (C) other receivables (collectively
"receivables"), whether pursuant to a purchase facility or otherwise, other
than in connection with the disposition of the business operations relating
thereto or a disposition of defaulted receivables for collection and not as a
financing arrangement, and together with any obligation to pay any discount,
interest, fees, indemnities, penalties, recourse, expenses or other amounts
in connection therewith.
INDEBTEDNESS FOR BORROWED MONEY. (a) All obligations for borrowed
money, whether secured or unsecured, absolute or contingent, including,
without limitation, unmatured reimbursement obligations with respect to
letters of credit or guarantees issued for the account of or on behalf of any
of the Transaction Parties, and all obligations representing the deferred
purchase price of property or services, other than accounts payable or
accrued expenses arising in the ordinary course of business, (b) all
obligations evidenced by bonds, notes, debentures or other similar
instruments, (c) all obligations secured by any mortgage, pledge, security
interest or other lien on property owned or acquired by any of the
Transaction Parties, whether or not the obligations secured thereby shall
have been assumed, (d) that portion of all obligations arising under
Capitalized Leases that is required to be capitalized on the Guarantor's
consolidated financial statements, (e) all guaranties, endorsements and other
contingent obligations of any of the Transaction Parties, whether direct or
indirect, in respect of indebtedness of others, including any obligation to
supply funds to or in any manner to invest in, directly or indirectly, the
debtor, to purchase indebtedness, or to assure the owner of indebtedness
against loss, through an agreement to purchase goods, supplies or services
for the purpose of enabling the debtor to make payment of the indebtedness
held by such owner or otherwise, (f) every obligation under any synthetic
lease described in clause (iv) of the definition of Indebtedness; and (g) all
sales of receivables described in clause (v) of the definition of
Indebtedness.
INELIGIBLE SECURITIES. Securities which may not be underwritten or
dealt in by member banks of the Federal Reserve System under Section 16 of
the Banking Act of 1993 (12 U.S.C. Section 24, Seventh), as amended.
INTEREST PAYMENT DATE. (i) As to any Base Rate Loan, the last day of
any fiscal quarter of the Borrower; and (ii) as to any Eurodollar Rate Loan
in respect
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of which the Interest Period is (A) 3 months or less, the last day of the
Interest Period relating to such Eurodollar Rate Loan and (B) more than 3
months, the date that is 3 months from the first day of such Interest Period
and, in addition, the last day of such Interest Period.
INTEREST PERIOD: With respect to each Loan, (i) initially, the period
commencing on the initial Drawdown Date of such Loan and ending on the last
day of one of the periods set forth below, as selected by the Borrower in a
Loan Request (A) for any Base Rate Loan, the last day of the fiscal quarter
of the Borrower; and (B) for any Eurodollar Rate Loan, 1, 2, 3 or 6 months;
and (ii) thereafter, each period commencing on the last day of the
immediately preceding Interest Period applicable to such Loan and ending on
the last day of one of the periods set forth above, as selected by the
Borrower in a Conversion Request; PROVIDED that all of the foregoing
provisions relating to Interest Periods are subject to the following:
(a) if any Interest Period with respect to a Eurodollar Rate Loan
would otherwise end on a day that is not a Eurodollar Business Day, that
Interest Period shall be extended to the next succeeding Eurodollar
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month, in which event such Interest
Period shall end on the immediately preceding Eurodollar Business Day;
(b) if any Interest Period with respect to a Base Rate Loan would
end on a day that is not a Business Day, that Interest Period shall end
on the next succeeding Business Day and interest shall accrue until such
next succeeding Business Day;
(c) if the Borrower shall fail to give notice as provided in
Section 2.7, the Borrower shall be deemed to have requested a conversion
of the affected Eurodollar Rate Loan to a Base Rate Loan and the
continuance of all Base Rate Loans as Base Rate Loans on the last day of
the then current Interest Period with respect thereto;
(d) any Interest Period that begins on the last Eurodollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Eurodollar Business Day of a
calendar month; and
(e) any Interest Period relating to any Eurodollar Rate Loan that
would otherwise extend beyond the Maturity Date shall end on the Maturity
Date.
INTEREST RATE AGREEMENT. Any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement, interest rate futures
contract, interest rate option agreement or other similar agreement or
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arrangement to which the Borrower is a party, designed to protect the
Borrower against fluctuations in interest rates.
LETTER OF CREDIT. See Section 4.1.1.
LETTER OF CREDIT APPLICATION. See Section 4.1.1.
LETTER OF CREDIT FEE. See Section 4.6.
LETTER OF CREDIT PARTICIPATION. See Section 4.1.4.
LIENS. Any encumbrance mortgage, pledge, hypothecation, charge,
restriction or other security interest of any kind securing any obligation of
any entity or person.
LOAN DOCUMENTS. This Credit Agreement, the Notes, the Letter of
Credit Applications, the Letters of Credit, the Agent's Fee Letter and the
Guaranty.
LOAN REQUEST. See Section 2.6.
LOANS. Revolving credit loans made or to be made by the Banks to the
Borrower pursuant to Section 2.
MAJORITY BANKS. As of any date, the Banks holding at least fifty-one
(51%) of the Outstanding principal amount of the Notes on such date; and if
no such principal is Outstanding, the Banks whose aggregate Commitments
constitute at least fifty-one percent (51%) of the Total Commitment.
MATERIALLY ADVERSE EFFECT. Any materially adverse effect on the
financial condition, business operations or assets of the Guarantor or any of
its Subsidiaries, as the case may be, or material impairment of the ability
of the Guarantor or any of its Subsidiaries, as the case may be, to perform
its obligations hereunder or under any of the other Loan Documents.
MAXIMUM DRAWING AMOUNT. The maximum aggregate amount that the
beneficiaries may at any time draw under outstanding Letters of Credit, as
such aggregate amount may be reduced from time to time pursuant to the terms
of the Letters of Credit.
NET CASH PROCEEDS. With respect to any sale of any assets of any of
the Transaction Parties, the gross consideration received by such Transaction
Party (in cash) from such sale, net of commissions, direct sales costs,
normal closing adjustments, income taxes attributable to such sale, amounts
paid in connection with the discharge of any liens on such assets and
professional fees and expenses incurred directly in connection therewith, to
the extent that the foregoing are actually paid in connection with such sale.
NOTES. See Section 2.4.
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OBLIGATIONS. All indebtedness, obligations and liabilities of any of
the Guarantor and its Subsidiaries to any of the Banks and the Agent,
individually or collectively, existing on the date of this Credit Agreement
or arising thereafter, direct or indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise, arising or
incurred under this Credit Agreement, any of the other Loan Documents or any
Interest Rate Agreement or in respect of any of the Loans made or
Reimbursement Obligations incurred or any of the Notes, Letter of Credit
Applications, Letters of Credit or other instruments at any time evidencing
any thereof.
OUTSTANDING or OUTSTANDING. With respect to the Loans, the aggregate
unpaid principal thereof as of any date of determination.
PERMITTED LIENS. Liens, security interests and other encumbrances
permitted by Section 9.2.
PERSON. Any individual, corporation, partnership, trust,
unincorporated association, business, or other legal entity, and any
government or any governmental agency or political subdivision thereof.
RECORD. The grid attached to a Note, or the continuation of such
grid, or any other similar record, including computer records, maintained by
any Bank with respect to any Loan referred to in such Note.
REGISTER. See Section 19.3.
REIMBURSEMENT OBLIGATION. The Borrower's obligation to reimburse the
Agent and the Banks on account of any drawing under any Letter of Credit as
provided in Section 4.2.
RENTAL OBLIGATIONS. For any period, all obligations in respect of
base and contingent rent and common area maintenance paid or due by the
Guarantor or any of its Subsidiaries during such period under any rental
agreements or leases of real or personal property (other than Capitalized
Leases).
REQUIREMENT OF LAW. In respect of any Person, any law, treaty, rule,
regulation or determination of an arbitrator, court, or other governmental
authority, in each case applicable to or binding upon such Person or
affecting any of its property.
RESTRUCTURING AGREEMENTS. Those agreements listed on SCHEDULE 1.1(A),
as in effect on the Closing Date.
REVOLVING CREDIT LOAN MATURITY DATE. December 23, 2004.
SECOND RESTATED CREDIT AGREEMENT. The Second Amended and Restated
Revolving Credit and Term Loan Agreement dated as of December 23, 1998
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among the Borrower, the Guarantor, the Agent, and the Banks listed on
SCHEDULE 1 thereto.
SECTION 20 SUBSIDIARY. A Subsidiary of the bank holding company
controlling any Bank, which Subsidiary has been granted authority by the
Federal Reserve Board to underwrite and deal in certain Ineligible Securities.
STANDBY LETTER OF CREDIT: Any Letter of Credit other than a
Documentary Letter of Credit.
SUBSIDIARY. Any corporation, association, trust, or other business
entity of which the designated parent shall at any time own directly or
indirectly through a Subsidiary or Subsidiaries at least a majority (by
number of votes) of the outstanding Voting Stock.
TOTAL COMMITMENT. The sum of the Commitments of the Banks, as in
effect from time to time.
TRANSACTION PARTIES. Collectively, the Borrower, the Guarantor and
each of their Subsidiaries.
TYPE. As to any Loan, its nature as a Base Rate Loan or a Eurodollar
Rate Loan.
UNIFORM CUSTOMS. With respect to any Letter of Credit, the Uniform
Customs and Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 500 or any successor version thereto
adopted by the Agent in the ordinary course of its business as a letter of
credit issuer and in effect at the time of issuance of such Letter of Credit.
UNPAID REIMBURSEMENT OBLIGATION. Any Reimbursement Obligation for
which the Borrower does not reimburse the Agent and the Banks on the date
specified in, and in accordance with, Section 4.2.
VOTING STOCK. Stock or similar interests, of any class or classes
(however designated), the holders of which are at the time entitled, as such
holders, to vote for the election of a majority of the directors (or persons
performing similar functions) of the corporation, association, trust or other
business entity involved, whether or not the right so to vote exists by
reason of the happening of a contingency.
1.2. RULES OF INTERPRETATION.
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to
time in accordance with its terms and the terms of this Credit Agreement.
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(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any law includes any amendment or modification
to such law.
(d) A reference to any Person includes its permitted successors
and permitted assigns.
(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by generally accepted accounting principles
applied on a consistent basis by the accounting entity to which they
refer.
(f) The words "include", "includes" and "including" are not
limiting.
(g) All terms not specifically defined herein or by generally
accepted accounting principles, which terms are defined in the Uniform
Commercial Code as in effect in the Commonwealth of Massachusetts, have
the meanings assigned to them therein, with the term "instrument" being
that defined under Article 9 of the Uniform Commercial Code.
(h) Reference to a particular "Section " refers to that section
of this Credit Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of like
import shall refer to this Credit Agreement as a whole and not to any
particular section or subdivision of this Credit Agreement.
(j) Unless otherwise expressly indicated, in the computation of
periods of time from a specified date to a later specified date, the word
"from" means "from and including," the words "to" and "until" each mean
"to but excluding," and the word "through" means "to and including."
(k) This Credit Agreement and the other Loan Documents may use
several different limitations, tests or measurements to regulate the same
or similar matters. All such limitations, tests and measurements are,
however, cumulative and are to be performed in accordance with the terms
thereof.
(l) This Credit Agreement and the other Loan Documents are the
result of negotiation among, and have been reviewed by counsel to, among
others, the Agent and the Borrower and the other Transaction Parties and
are the product of discussions and negotiations among all parties.
Accordingly, this Credit Agreement and the other Loan Documents are not
intended to be construed against the Agent or any of the Banks merely on
account of the Agent's or any Bank's involvement in the preparation of
such documents.
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2. THE REVOLVING CREDIT FACILITY.
2.1. COMMITMENT TO LEND. Subject to the terms and conditions set
forth in this Credit Agreement, each of the Banks severally agrees to lend to
the Borrower and the Borrower may borrow, repay, and reborrow from time to
time from the Closing Date up to but not including the Revolving Credit Loan
Maturity Date upon notice by the Borrower to the Agent given in accordance
with Section 2.6, such sums as are requested by the Borrower up to a maximum
aggregate amount Outstanding (after giving effect to all amounts requested)
at any one time equal to such Bank's Commitment MINUS such Bank's Commitment
Percentage of the sum of the Maximum Drawing Amount and all Unpaid
Reimbursement Obligations, PROVIDED that the sum of the Outstanding amount of
the Loans (after giving effect to all amounts requested) PLUS the Maximum
Drawing Amount and all Unpaid Reimbursement Obligations shall not at any time
exceed the Total Commitment. The Loans shall be made PRO RATA in accordance
with each Bank's Commitment Percentage. Each request for a Loan hereunder
shall constitute a representation and warranty by the Borrower that the
conditions set forth in Section 11 and Section 12, in the case of the initial
Loans to be made on the Closing Date, and Section 12, in the case of all
other Loans, have been satisfied on the date of such request.
2.2. FACILITY FEE AND UTILIZATION FEE.
2.2.1. FACILITY FEE. The Borrower agrees to pay to the Agent for
the accounts of the Banks in accordance with their respective Commitment
Percentages a facility fee calculated at the rate of one-quarter of one
percent (0.25%) per annum on the aggregate amount of the Total
Commitment. The facility fee shall be payable quarterly in arrears on
the first day of each fiscal quarter of the Borrower for the immediately
preceding fiscal quarter commencing on the first such date following the
date hereof, with a final payment on the Revolving Credit Loan Maturity
Date or any earlier date on which the Commitments shall terminate.
2.2.2. UTILIZATION FEE. The Borrower agrees to pay to the Agent
for the accounts of the Banks in accordance with their respective
Commitment Percentages a utilization fee calculated at the rate of
one-quarter of one percent (0.25%) per annum on the average daily amount
of the Loans outstanding during each fiscal quarter or portion thereof
from the date hereof to the Revolving Credit Loan Maturity Date;
PROVIDED, HOWEVER, that no such fee shall be payable during any fiscal
quarter or portion thereof during which the aggregate amount of the Loans
oustanding (after giving effect to all amounts requested) does not exceed
fifty percent (50%) of the Total Commitment for (a) more than three (3)
consecutive days during such quarter or (b) nine (9) days (whether or not
consecutive) during such quarter. The utilization fee shall be payable
quarterly in arrears on the first day of each fiscal quarter of the
Borower for the immediately preceding fiscal quarter commencing on the
first such
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date following the date hereof, with a final payment on the
Revolving Credit Loan Maturity Date or any earlier date on which the
Commitments shall terminate.
2.3. REDUCTION OF TOTAL COMMITMENT. The Borrower shall have the
right at any time and from time to time upon two (2) Business Days prior
written notice to the Agent to reduce by $100,000 or an integral multiple
thereof or terminate entirely the Total Commitment, whereupon the Commitments
of the Banks shall be reduced PRO RATA in accordance with their respective
Commitment Percentages of the amount specified in such notice or, as the case
may be, terminated. Promptly after receiving any notice of the Borrower
delivered pursuant to this Section 2.3, the Agent will notify the Banks of
the substance thereof. Upon the effective date of any such reduction or
termination, the Borrower shall pay to the Agent for the respective accounts
of the Banks the full amount of any facility fee and utilization fee then
accrued on the amount of the reduction. No reduction or termination of the
Commitments may be reinstated.
2.4. THE NOTES. The Loans shall be evidenced by separate promissory
notes of the Borrower in substantially the form of EXHIBIT A hereto (each a
"Note"), dated as of the Closing Date and completed with appropriate
insertions. One Note shall be payable to the order of each Bank in a
principal amount equal to such Bank's Commitment or, if less, the Outstanding
amount of all Loans made by such Bank, plus interest accrued thereon, as set
forth below. The Borrower irrevocably authorizes each Bank to make or cause
to be made, at or about the time of the making of any Loan or at the time of
receipt of any payment of principal on such Bank's Note, an appropriate
notation on such Bank's Note Record reflecting the making of such Loan or (as
the case may be) the receipt of such payment. The Outstanding amount of the
Loans set forth on such Bank's Note Record shall be PRIMA FACIE evidence of
the principal amount thereof owing and unpaid to such Bank, but the failure
to record, or any error in so recording, any such amount on such Bank's Note
Record shall not limit or otherwise affect the obligations of the Borrower
hereunder or under any Note to make payments of principal of or interest on
any Note when due.
2.5. INTEREST ON LOANS. Except as otherwise provided in
Section 5.10,
(a) Each Loan which is also a Base Rate Loan shall bear
interest for the period commencing with the Drawdown Date thereof
and ending on the last day of the Interest Period with respect
thereto at a rate per annum equal to the Base Rate.
(b) Each Loan which is also a Eurodollar Rate Loan shall
bear interest for the period commencing with the Drawdown Date
thereof and ending on the last day of the Interest Period with
respect thereto at a rate per annum equal to the Eurodollar Rate
determined for such Interest Period PLUS the Applicable Eurodollar
Rate Margin.
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(c) The Borrower promises to pay interest on each Loan in
arrears on each Interest Payment Date with respect thereto.
(d) There shall be no more than five (5) Outstanding Loans
which are Eurodollar Rate Loans at any time.
2.6. REQUESTS FOR LOANS.
2.6.1. GENERAL. The Borrower shall give to the Agent written
notice in the form of EXHIBIT B hereto (or telephonic notice confirmed in
a writing in the form of EXHIBIT B hereto) of each Loan requested
hereunder (a "Loan Request") no later than (i) 1:00 p.m., Boston time
(10:00 a.m., San Diego, California time), on the proposed Drawdown Date
of any Base Rate Loan and (ii) 1:00 p.m., Boston time (10:00 a.m., San
Diego, California time), three (3) Eurodollar Business Days prior to the
proposed Drawdown Date of any Eurodollar Rate Loan. Each such notice
shall specify (A) the principal amount of the Loan requested, (B) the
proposed Drawdown Date of such Loan, (C) the Interest Period for such
Loan and (D) the Type of such Loan. Promptly upon receipt of any such
notice, the Agent shall notify each of the Banks thereof. Each Loan
Request shall be irrevocable and binding on the Borrower and shall
obligate the Borrower to accept the Loan requested from the Banks on the
proposed Drawdown Date. Each Loan Request for Base Rate Loans shall be
in a minimum aggregate amount of $50,000 or an integral multiple thereof,
and each Loan Request for Eurodollar Rate Loan shall be in a minimum
aggregate amount of $100,000 or an integral multiple thereof.
2.6.2. LOANS TO REPAY UNPAID REIMBURSEMENT
OBLIGATIONS. Notwithstanding the notice and minimum borrowing
requirements set forth above in this Section 2.6, the Banks agree to make
Loans (which Loans shall be Base Rate Loans) to the Borrower sufficient
to pay to the Banks any Unpaid Reimbursement Obligations on the date on
which such Reimbursement Obligations become Unpaid Reimbursement
Obligations. The Borrower hereby requests and authorizes the Agent and
the Banks to make from time to time such Loans by means of paying Unpaid
Reimbursement Obligations. The Borrower acknowledges and agrees that,
except as otherwise provided in this Section 2.6.2, the making of such
Loans shall, in each case, be subject in all respects to the provisions
of this Agreement, including, without limitation, the limitations set
forth in Section 2.1 and the requirements of the applicable conditions in
Sections 11 and 12. All actions taken by the Agent and the Banks
pursuant to the provisions of this Section 2.6.2 shall be conclusive and
binding on the Borrower.
2.7. CONVERSION OPTIONS.
2.7.1. CONVERSION TO DIFFERENT TYPE OF LOAN. The Borrower may
elect from time to time to convert any Outstanding Loan to a Loan of
another Type, PROVIDED that (i) with respect to any such conversion of a
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Loan from a Eurodollar Loan to a Base Rate Loan, the Borrower shall give
the Agent at least three (3) Business Days prior written notice of such
election; (ii) with respect to any such conversion of a Base Rate Loan to
a Eurodollar Rate Loan, the Borrower shall give the Agent at least three
(3) Eurodollar Business Days prior written notice of such election; (iii)
with respect to any such conversion of a Eurodollar Rate Loan into a Base
Rate Loan, such conversion shall only be made on the last day of the
Interest Period with respect thereto and (iv) no Loan may be converted
into a Eurodollar Rate Loan when any Event of Default has occurred and is
continuing. On the date on which such conversion is being made, each
Bank shall take such action as is necessary to transfer its Commitment
Percentage of such Loans to its Domestic Lending Office or its Eurodollar
Lending Office, as the case may be. All or any part of Outstanding Loans
of any Type may be converted into a Loan of another Type as provided
herein, PROVIDED that any partial conversion shall be in an aggregate
principal amount of $100,000 or a whole multiple thereof. Each
Conversion Request relating to the conversion of a Loan to a Eurodollar
Rate Loan shall be irrevocable by the Borrower.
2.7.2. CONTINUATION OF TYPE OF LOAN. Any Loan of any Type may be
continued as a Loan of the same Type upon the expiration of an Interest
Period with respect thereto by compliance by the Borrower with the notice
provisions contained in Section 2.7.1; PROVIDED that no Eurodollar Rate
Loan may be continued as such when any Event of Default has occurred and
is continuing, but shall be automatically converted to a Base Rate Loan
on the last day of the first Interest Period relating thereto ending
during the continuance of any Event of Default of which officers of the
Agent active upon the Borrower's account have actual knowledge. In the
event that the Borrower fails to provide any such notice with respect to
the continuation of any Eurodollar Rate Loan as such, then such
Eurodollar Rate Loan shall be automatically converted to a Base Rate Loan
on the last day of the first Interest Period relating thereto. The Agent
shall notify the Banks promptly when any such automatic conversion
contemplated by this Section 2.7 is scheduled to occur.
2.7.3. EURODOLLAR RATE LOANS. Any conversion to or from
Eurodollar Rate Loans shall be in such amounts and be made pursuant to
such elections so that, after giving effect thereto, the aggregate
principal amount of all Eurodollar Rate Loans having the same Interest
Period shall not be less than $100,000 or an integral multiple thereof.
2.8. FUNDS FOR LOANS.
2.8.1. FUNDING PROCEDURES. Not later than 3:00 p.m. (Boston
time) on the proposed Drawdown Date of any Loan, each of the Banks will
make available to the Agent, at the Agent's Head Office, in immediately
available funds, the amount of such Bank's Commitment Percentage of the
amount of the requested Loan. Upon receipt from each
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Bank of such amount, and upon receipt of the documents required by
Sections 11 and 12 and the satisfaction of the other conditions set forth
therein, to the extent applicable, the Agent will make available to the
Borrower the aggregate amount of such Loans made available to the Agent
by the Banks. The failure or refusal of any Bank to make available to
the Agent at the aforesaid time and place on any Drawdown Date the amount
of its Commitment Percentage of the requested Loans shall not relieve any
other Bank from its several obligation hereunder to make available to the
Agent the amount of such other Bank's Commitment Percentage of any
requested Loan.
2.8.2. ADVANCES BY AGENT. The Agent may, unless notified to the
contrary by any Bank prior to a Drawdown Date, assume that such Bank has
made available to the Agent on such Drawdown Date the amount of such
Bank's Commitment Percentage of the Loans to be made on such Drawdown
Date, and the Agent may (but it shall not be required to), in reliance
upon such assumption, make available to the Borrower a corresponding
amount. If any Bank makes available to the Agent such amount on a date
after such Drawdown Date, such Bank shall pay to the Agent on demand an
amount equal to the product of (i) the average computed for the period
referred to in clause (iii) below, of the weighted average interest rate
paid by the Agent for federal funds acquired by the Agent during each day
included in such period, TIMES (ii) the amount of such Bank's Commitment
Percentage of such Loans, TIMES (iii) a fraction, the numerator of which
is the number of days that elapse from and including such Drawdown Date
to the date on which the amount of such Bank's Commitment Percentage of
such Loans shall become immediately available to the Agent, and the
denominator of which is 360. A statement of the Agent submitted to such
Bank with respect to any amounts owing under this paragraph shall be
PRIMA FACIE evidence of the amount due and owing to the Agent by such
Bank. If the amount of such Bank's Commitment Percentage of such Loans
is not made available to the Agent by such Bank within three (3) Business
Days following such Drawdown Date, the Agent shall be entitled to recover
such amount from the Borrower on demand, with interest thereon at the
rate per annum applicable to the Loans made on such Drawdown Date.
3. REPAYMENT OF THE LOANS.
3.1. MATURITY. The Borrower promises to pay on the Revolving Credit
Loan Maturity Date, and there shall become absolutely due and payable on the
Revolving Credit Loan Maturity Date, all of the Loans Outstanding on such date,
together with any and all accrued and unpaid interest thereon.
3.2. MANDATORY REPAYMENTS OF LOANS. If at any time the sum of the
Outstanding amount of the Loans, the Maximum Drawing Amount and all Unpaid
Reimbursement Obligations exceeds the Total Commitment (as the same may be
reduced from time to time pursuant to Section 2.3), then the Borrower
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shall immediately pay the amount of such excess to the Agent for the
respective accounts of the Banks for application: first, to any Unpaid
Reimbursement Obligations; second, to the Loans; and third, to provide to the
Agent cash collateral for Reimbursement Obligations as contemplated by
Section 4.2(b) and (c). In the event that any of the Transaction Parties
shall, after the Closing Date, effect any sale of assets (other than those
permitted by Section 9.5.2(a) and (b)), such Transaction Party shall, within
fifteen (15) days following receipt thereof (or if later, the first date on
which the aggregate amount of Net Cash Proceeds so received in any fiscal
year of the Borrower exceeds $250,000), prepay the Loans in the amount by
which the aggregate Net Cash Proceeds from all such sales in any fiscal year
of the Borrower exceed $250,000. Each payment of any Unpaid Reimbursement
Obligations or prepayment of Loans shall be allocated among the Banks, in
proportion, as nearly as practicable, to each Reimbursement Obligation or (as
the case may be) the respective unpaid principal amount of each Bank's Note,
with adjustments to the extent practicable to equalize any prior payments or
repayments not exactly in proportion.
3.3. OPTIONAL REPAYMENTS OF LOANS. The Borrower shall have the
right, at its election, to repay the Outstanding amount of the Loans, as a
whole or in part, at any time without penalty or premium, PROVIDED that any
full or partial prepayment of the Outstanding amount of any Eurodollar Rate
Loans pursuant to this Section 3.3 may be made only on the last day of the
Interest Period relating thereto unless the Borrower pays to the Agent, for
the PRO RATA accounts of the Banks, any breakage fees or other costs arising
from or associated with such prepayment in accordance with the requirements
of Section 5.9 hereof.. The Borrower shall give the Agent, no later than
1:00 p.m., Boston time (10:00 a.m. San Diego time), (i) on the date of any
proposed prepayment pursuant to this Section 3.3 of Base Rate Loans, and (ii)
at least three (3) Eurodollar Business Days notice of any proposed prepayment
pursuant to this Section 3.3 of Eurodollar Rate Loans, in each case
specifying the proposed date of prepayment of Loans and the principal amount
to be prepaid. Each such partial prepayment of the Loans shall be in an
integral multiple of $100,000, shall be accompanied by the payment of accrued
interest (except with respect to Base Rate Loans, accrued interest with
respect to which shall be payable on the next Interest Payment Date
applicable to Base Rate Loans) on the principal prepaid to the date of
prepayment and shall be applied, in the absence of instruction by the
Borrower, first to the principal of Base Rate Loans and then to the principal
of Eurodollar Rate Loans. Each partial prepayment shall be allocated among
the Banks, in proportion, as nearly as practicable, to the respective unpaid
principal amount of each Bank's Note, with adjustments to the extent
practicable to equalize any prior repayments not exactly in proportion.
4. LETTERS OF CREDIT.
4.1. LETTER OF CREDIT COMMITMENTS.
4.1.1. COMMITMENT TO ISSUE LETTERS OF CREDIT. Subject to the
terms and conditions hereof and the execution and delivery by the
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Borrower of a letter of credit application on the Agent's customary form
(a "Letter of Credit Application"), the Agent on behalf of the Banks and
in reliance upon the agreement of the Banks set forth in Section 4.1.4
and upon the representations and warranties of the Borrower contained
herein, agrees, in its individual capacity, to issue, extend and renew
for the account of the Borrower one or more standby or documentary
letters of credit (individually, a "Letter of Credit"), in such form as
may be requested from time to time by the Borrower and agreed to by the
Agent; PROVIDED, HOWEVER, that, after giving effect to such request, (a)
the sum of the aggregate Maximum Drawing Amount and all Unpaid
Reimbursement Obligations shall not exceed $5,000,000 at any one time and
(b) the sum of (i) the Maximum Drawing Amount on all Letters of Credit,
(ii) all Unpaid Reimbursement Obligations, and (iii) the amount of all
Loans Outstanding shall not exceed the Total Commitment. As of the
Closing Date, the letters of credit initially issued under the Second
Restated Credit Agreement and listed on SCHEDULE 4.1.1 hereto shall each
become a Letter of Credit under this Credit Agreement for all purposes,
shall continue to be issued for the account of the Borrower and shall
cease to be a Letter of Credit under and as defined in the Second
Restated Credit Agreement.
4.1.2. LETTER OF CREDIT APPLICATIONS. Each Letter of Credit
Application shall be completed to the reasonable satisfaction of the
Agent. In the event that any provision of any Letter of Credit
Application shall be inconsistent with any provision of this Credit
Agreement, then the provisions of this Credit Agreement shall, to the
extent of any such inconsistency, govern.
4.1.3. TERMS OF LETTERS OF CREDIT. Each Letter of Credit issued,
extended or renewed hereunder shall, among other things, (i) provide for
the payment of sight drafts for honor thereunder when presented in
accordance with the terms thereof and when accompanied by the documents
described therein, and (ii) have an expiry date no later than the date
which is thirty (30) days prior to the Revolving Credit Loan Maturity
Date. Each Letter of Credit so issued, extended or renewed shall be
subject to the Uniform Customs.
4.1.4. REIMBURSEMENT OBLIGATIONS OF BANKS. Each Bank severally
agrees that it shall be absolutely liable, without regard to the
occurrence of any Default or Event of Default or any other condition
precedent whatsoever, to the extent of such Bank's Commitment Percentage,
to reimburse the Agent on demand for the amount of each draft paid by the
Agent under each Letter of Credit to the extent that such amount is not
reimbursed by the Borrower pursuant to Section 4.2 (such agreement for a
Bank being called herein the "Letter of Credit Participation" of such
Bank).
<PAGE>
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4.1.5. PARTICIPATIONS OF BANKS. Each such payment made by a Bank
shall be treated as the purchase by such Bank of a participating interest
in the Borrower's Reimbursement Obligation under Section 4.2 in an amount
equal to such payment. Each Bank shall share in accordance with its
participating interest in any interest which accrues pursuant to Section
4.2.
4.2. REIMBURSEMENT OBLIGATION OF THE BORROWER. In order to induce
the Agent to issue, extend and renew each Letter of Credit and the Banks to
participate therein, the Borrower hereby agrees to reimburse or pay to the
Agent, for the account of the Agent or (as the case may be) the Banks, with
respect to each Letter of Credit issued, extended or renewed by the Agent
hereunder,
(a) except as otherwise expressly provided in Section 4.2(b) and
(c), on each date that any draft presented under such Letter of Credit is
honored by the Agent, or the Agent otherwise makes a payment with respect
thereto, (i) the amount paid by the Agent under or with respect to such
Letter of Credit, and (ii) the amount of any taxes, fees, charges or
other costs and expenses whatsoever incurred by the Agent or any Bank in
connection with any payment made by the Agent or any Bank under, or with
respect to, such Letter of Credit,
(b) upon the reduction (but not termination) of the Total
Commitment to an amount less than the Maximum Drawing Amount, an amount
equal to such difference, which amount shall be held by the Agent for the
benefit of the Banks and the Agent as cash collateral for all
Reimbursement Obligations, and
(c) upon the termination of the Total Commitment, or the
acceleration of the Reimbursement Obligations with respect to all Letters
of Credit in accordance with Section 13, an amount equal to the then
Maximum Drawing Amount on all Letters of Credit, which amount shall be
held by the Agent for the benefit of the Banks and the Agent as cash
collateral for all Reimbursement Obligations.
Unless funded by a Loan pursuant to Section 2.6.2, each such payment shall be
made to the Agent at the Agent's Head Office in immediately available funds.
Interest on any and all amounts remaining unpaid by the Borrower under this
Section 4.2 and not required to be funded by a Loan pursuant to Section 2.6.2
at any time from the date such amounts become due and payable (whether as
stated in this Section 4.2, by acceleration or otherwise) until payment in
full (whether before or after judgment) shall be payable to the Agent on
demand at the rate specified in Section 5.10 for overdue principal on the
Loans.
4.3. LETTER OF CREDIT PAYMENTS. If any draft shall be presented or
other demand for payment shall be made under any Letter of Credit, the Agent
shall notify the Borrower of the date and amount of the draft presented or
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demand for payment and of the date and time when it expects to pay such draft
or honor such demand for payment. If the Borrower fails to reimburse the
Agent as provided in Section 4.2 on or before the date that such draft is
paid or other payment is made by the Agent, the Agent may at any time
thereafter notify the Banks of the amount of any such Unpaid Reimbursement
Obligation. No later than 3:00 p.m., Boston time (12:00 p.m. San Diego,
California time) on the Business Day next following the receipt of such
notice, each Bank shall make available to the Agent, at the Agent's Head
Office, in immediately available funds, such Bank's Commitment Percentage of
such Unpaid Reimbursement Obligation, together with an amount equal to the
product of (i) the average, computed for the period referred to in clause
(iii) below, of the weighted average interest rate paid by the Agent for
federal funds acquired by the Agent during each day included in such period,
TIMES (ii) the amount equal to such Bank's Commitment Percentage of such
Unpaid Reimbursement Obligation, TIMES (iii) a fraction, the numerator of
which is the number of days that elapse from and including the date the Agent
paid the draft presented for honor or otherwise made payment to the date on
which such Bank's Commitment Percentage of such Unpaid Reimbursement
obligation shall become immediately available to the Agent, and the
denominator of which is 360. The responsibility of the Agent to the Borrower
and the Banks shall be only to determine that the documents (including each
draft) delivered under each Letter of Credit in connection with such
presentment shall be in conformity in all material respects with such Letter
of Credit.
4.4. OBLIGATIONS ABSOLUTE. The Borrower's obligations under this
Section 4 shall be absolute and unconditional under any and all circumstances
and irrespective of the occurrence of any Default or Event of Default or any
condition precedent whatsoever or any setoff, counterclaim or defense to
payment which the Borrower may have or have had against the Agent, any Bank
or any beneficiary of a Letter of Credit. The Borrower further agrees with
the Agent and the Banks that the Agent and the Banks shall not be
responsible for, and the Borrower's Reimbursement Obligations under Section
4.2 shall not be affected by, among other things, the validity or genuineness
of documents or of any endorsements thereon, even if such documents should in
fact prove to be in any or all respects invalid, fraudulent or forged, or any
dispute between or among the Borrower, the beneficiary of any Letter of
Credit or any financing institution or other party to which any Letter of
Credit may be transferred or any claims or defenses whatsoever of the
Borrower against the beneficiary of any Letter of Credit or any such
transferee. The Agent and the Banks shall not be liable for any error,
omission, interruption or delay in transmission, dispatch or delivery of any
message or advice, however transmitted, in connection with any Letter of
Credit. The Borrower agrees that any action taken or omitted by the Agent or
any Bank under or in connection with each Letter of Credit and the related
drafts and documents, if done in good faith, shall be binding upon the
Borrower and shall not result in any liability on the part of the Agent or
any Bank to the Borrower.
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4.5. RELIANCE BY ISSUER. To the extent not inconsistent with Section
4.4, the Agent shall be entitled to rely, and shall be fully protected in
relying upon, any Letter of Credit, draft, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex
or teletype message, statement, order or other document believed by it to be
genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel,
independent accountants and other experts selected by the Agent. The Agent
shall be fully justified in failing or refusing to take any action under this
Credit Agreement with respect to Letters of Credit issued hereunder unless it
shall first have received, following a request therefor, such advice or
concurrence of the Majority Banks as it reasonably deems appropriate or it
shall first be indemnified to its reasonable satisfaction by the Banks
against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Agent shall in
all cases be fully protected in acting, or in refraining from acting, under
this Credit Agreement in accordance with a request of the Majority Banks, and
such request and any action taken or failure to act pursuant thereto shall be
binding upon the Banks and all future holders of the Notes or of a Letter of
Credit Participation.
4.6. LETTER OF CREDIT FEE. The Borrower shall, as set forth below
(including with respect to any extensions or renewals of any Letter of
Credit) pay a fee (in each case, a "Letter of Credit Fee") to the Agent (i)
quarterly in arrears on the first day of each fiscal quarter of the Borrower
for the immediately preceding fiscal quarter of the Borrower, in respect of
each Standby Letter of Credit an amount equal to the Applicable Eurodollar
Rate Margin MULTIPLIED BY the result of (A) the average daily face amount of
such Standby Letter of Credit during such period, MULTIPLIED BY the number of
days such Standby Letter of Credit is outstanding and DIVIDED BY (B) three
hundred and sixty (360), of which an amount equal to one-eighth of one
percent (0.125%) of the result of (x) the average daily face amount of such
Standby Letter of Credit during such period, MULTIPLIED by the number of days
such Standby Letter of Credit is outstanding and DIVIDED BY (y) three hundred
and sixty (360) shall be for the account of the Agent, as a fronting fee, and
the balance of which Letter of Credit Fee shall be for the accounts of the
Banks in accordance with their respective Commitment Percentages and (ii)
quarterly in arrears on the first day of each fiscal quarter of the Borrower
for the immediately preceding fiscal quarter of the Borrower, in respect of
each Documentary Letter of Credit an amount equal to fifty percent (50%) of
the Applicable Eurodollar Rate Margin MULTIPLIED BY the result of (A) the
average daily face amount of such Documentary Letter of Credit during such
period, MULTIPLIED BY the number of days such Documentary Letter of Credit is
outstanding, DIVIDED BY (B) three hundred and sixty (360), of which an amount
equal to one-eighth of one percent (0.125%) of the result of (x) the average
daily face amount of such Documentary Letter of Credit during such period
MULTIPLIED BY the number of days such Documentary Letter of Credit is
outstanding and DIVIDED BY (y) three hundred sixty (360) shall be for the
account of the Agent, as a fronting fee, and the
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balance of which Letter of Credit Fee shall be for the accounts of the Banks
in accordance with their respective Commitment Percentages. In respect of
each Letter of Credit, the Borrower shall also pay to the Agent for the
Agent's own account, at such other time or times as such charges are
customarily made by the Agent, the Agent's customary issuance, amendment,
negotiation or document examination and other administrative fees as in
effect from time to time.
5. CERTAIN GENERAL PROVISIONS.
5.1. FEES.
5.1.1. AGENT'S FEE. At any time when more than one Bank is party
to this Credit Agreement, Borrower shall pay to the Agent annually in
advance, for the Agent's own account, an Agent's fee on such dates and in
such amounts as are set forth in the Agent's Fee Letter.
5.1.2. CLOSING FEE. On the Closing Date, the Borrower shall pay
to the Agent, for the PRO RATA accounts of the Banks, a closing fee in
the amount of $50,000.
5.2. FUNDS FOR PAYMENTS.
5.2.1. PAYMENTS TO AGENT. All payments of principal, interest
(including applicable margins), Reimbursement Obligations, facility fees,
utilization fees, Letter of Credit Fees and any other amounts due
hereunder or under any of the other Loan Documents shall be made to the
Agent, for the respective accounts of the Banks and the Agent, at the
Agent's Head Office or at such other location in the Boston,
Massachusetts, area that the Agent may from time to time designate, in
each case in immediately available funds.
5.2.2. NO OFFSET, ETC. All payments by the Borrower hereunder
and under any of the other Loan Documents shall be made without setoff or
counterclaim and free and clear of and without deduction for any taxes,
levies, imposts, duties, charges, fees, deductions, withholdings,
compulsory loans, restrictions or conditions of any nature now or
hereafter imposed or levied by any jurisdiction or any political
subdivision thereof or taxing or other authority therein unless the
Borrower is compelled by law to make such deduction or withholding. If
any such obligation is imposed upon the Borrower with respect to any
amount payable by it hereunder or under any of the other Loan Documents,
the Borrower will pay to the Agent, for the account of the Banks or (as
the case may be) the Agent, on the date on which such amount is due and
payable hereunder or under such other Loan Document, such additional
amount in Dollars as shall be necessary to enable the Banks or the Agent
to receive the same net amount which the Banks or the Agent would have
received on such due date had no such
<PAGE>
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obligation been imposed upon the Borrower. The Borrower will deliver
promptly to the Agent certificates or other valid vouchers for all taxes
or other charges deducted from or paid with respect to payments made by
the Borrower hereunder or under such other Loan Document.
5.3. COMPUTATIONS. All computations of interest on the Loans and of
facility fees, utilization fees, Letter of Credit Fees or other fees shall be
based on a 360-day year and paid for the actual number of days elapsed.
Except as otherwise provided in the definition of the term "Interest Period"
with respect to Eurodollar Rate Loans, whenever a payment hereunder or under
any of the other Loan Documents becomes due on a day that is not a Business
Day, the due date for such payment shall be extended to the next succeeding
Business Day, and interest shall accrue during such extension.
5.4. INABILITY TO DETERMINE EURODOLLAR RATE. In the event that,
prior to the commencement of any Interest Period relating to any Eurodollar
Rate Loan, the Agent shall determine (in accordance wth the definition of
Eurodollar Rate) that adequate and reasonable methods do not exist for
ascertaining the Eurodollar Rate that would otherwise determine the rate of
interest to be applicable to any Eurodollar Rate Loan during any Interest
Period, the Agent shall forthwith give notice of such determination (which
shall be conclusive and binding on the Borrower and the Banks) to the
Borrower and the Banks. In such event (i) any Loan Request or Conversion
Request with respect to Eurodollar Rate Loans shall be automatically
withdrawn and shall be deemed a request for Base Rate Loans, (ii) each
Eurodollar Rate Loan will automatically, on the last day of the then current
Interest Period relating thereto, become a Base Rate Loan, and (iii) the
obligations of the Banks to make Eurodollar Rate Loans shall be suspended
until the Agent determines that the circumstances giving rise to such
suspension no longer exist, whereupon the Agent shall so notify the Borrower
and the Banks.
5.5. ILLEGALITY. Notwithstanding any other provisions herein, if any
present or future law, regulation, treaty or directive or in the
interpretation or application thereof shall make it unlawful for any Bank to
make or maintain Eurodollar Rate Loans, such Bank shall forthwith give notice
of such circumstances to the Borrower and the other Banks and thereupon (i)
the commitment of such Bank to make Eurodollar Rate Loans or convert Loans of
another Type to Eurodollar Rate Loans shall forthwith be suspended and (ii)
such Bank's Loans then Outstanding as Eurodollar Rate Loans, if any, shall be
converted automatically to Base Rate Loans on the last day of each Interest
Period applicable to such Eurodollar Rate Loans or within such earlier period
as may be required by law; PROVIDED, HOWEVER, that nothing herein contained
shall be deemed to affect or limit the commitment of any other Bank not
affected by the circumstances set forth in this Section 5.5 to make
Eurodollar Rate Loans or to convert Loans of another type to Eurodollar Rate
Loans in accordance with the other terms and conditions of this Credit
Agreement. The Borrower hereby agrees promptly to pay the Agent for the
account of such Bank, upon demand by such Bank by delivery of a certificate
in accordance with Section 5.8, any additional
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amounts necessary to compensate such Bank for any costs incurred by such Bank
in making any conversion in accordance with this Section 5.5 other than on
the last day of any applicable Interest Period, including any interest or
fees payable by such Bank to lenders of funds obtained by it in order to make
or maintain its Eurodollar Rate Loans hereunder.
5.6. CHANGE IN CIRCUMSTANCES. If, on or after the date hereof the
Agent or any Bank determines that (i) the adoption of, or any change in, any
applicable law, rule, regulation or guideline or the interpretation or
administration thereof (whether or not having the force of law), or (ii)
compliance by the Agent or such Bank or its parent holding company with any
newly adopted or change in any applicable guideline, request or directive
(whether or not having the force of law), (A) shall subject the Agent or such
Bank to any tax, duty or other charge with respect to any Loan, any Letters
of Credit or any Note, or shall change the basis of taxation of payments to
the Agent or such Bank of the principal of or interest on, any Loans or in
respect of any other amounts due under this Credit Agreement (other than with
respect to taxes based upon the Agent or such Bank's net income), or (B)
shall impose, modify or deem applicable any reserve, special deposit or
similar requirement (including, without limitation, any imposed by the Board
of Governors of the Federal Reserve System, but excluding with respect to any
Eurodollar Rate Loan any such requirement included in an applicable
Eurocurrency Reserve Rate) against assets of, deposits with or for the
account of, or credit extended by, the Agent or such Bank, or shall impose on
the Agent or such Bank or the London interbank market any other condition
affecting the Loans, any Letters of Credit or the Notes, and the result of
any of the foregoing is to increase the cost to the Agent or such Bank of
making or maintaining any Loan or any Letter of Credit, to reduce the amount
of any sum received or receivable by the Agent or such Bank under this
Agreement, on account of any Letter of Credit or under the Notes with respect
to any Loan, or to require the Agent or such Bank to make any payment or to
forego any interest or Reimbursement Obligation or other sum payable
hereunder, by an amount reasonably deemed by the Agent or such Bank to be
material, then, upon demand by the Agent or such Bank by delivery of a
certificate in accordance with Section 5.8, the Borrower agrees to pay to the
Agent or such Bank such additional amount or amounts as will compensate the
Agent or such Bank for such increased cost or reduction.
5.7. CAPITAL ADEQUACY. If on or after the date hereof any Bank or
the Agent determines that (i) the adoption of or change in any law,
governmental rule, regulation, policy, guideline or directive (whether or not
having the force of law) regarding capital requirements for banks or bank
holding companies or any change in the interpretation or application thereof
by a court or governmental authority with appropriate jurisdiction, or (ii)
compliance by such Bank or the Agent or any corporation controlling such Bank
or the Agent with any law, governmental rule, regulation, policy, guideline
or directive (whether or not having the force of law) of any such entity
regarding capital adequacy, has the effect of reducing the return on such
Bank's or the Agent's commitment with respect to any Loans to a level below
that which such Bank or the Agent could
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have achieved but for such adoption, change or compliance by any amount
deemed by such Bank or (as the case may be) the Agent to be material, then
such Bank or the Agent may notify the Borrower of such fact. To the extent
that the amount of such reduction in the return on capital is not reflected
in the Base Rate, the Borrower agrees to pay such Bank or (as the case may
be) the Agent for the amount of such reduction in the return on capital as
and when such reduction is determined upon presentation by such Bank or (as
the case may be) the Agent of a certificate in accordance with Section 5.8
hereof. Each Bank or (as the case may be) the Agent shall allocate such cost
increases among the Borrower and its other customers similarly situated on a
fair and non-discriminatory basis.
5.8. CERTIFICATE. A certificate setting forth any additional amounts
payable pursuant to Sections 5.5, 5.7 or 5.8 and a brief explanation of such
amounts which are due, submitted by any Bank or the Agent to the Borrower,
shall be conclusive, absent manifest error, that such amounts are due and
owing. All additional amounts payable pursuant to Section 5.6 or Section 5.5
shall be due and payable fifteen (15) days after receipt by the Borrower of
such certificate.
5.9. INDEMNITY. The Borrower agrees to indemnify each Bank and to
hold each Bank harmless from and against any loss, cost or expense (excluding
loss of anticipated profits) that such Bank may sustain or incur as a
consequence of (i) default by the Borrower in payment of the principal amount
of or any interest on any Eurodollar Rate Loans, as and when due and payable,
including any such loss or expense arising from interest or fees payable by
such Bank to lenders of funds obtained by it in order to maintain its
Eurodollar Rate Loans, (ii) default by the Borrower in making a borrowing or
conversion after the Borrower has given (or is deemed to have given) a Loan
Request or a Conversion Request relating thereto in accordance with Section
2.6 or Section 2.7 or (iii) the making of any payment of a Eurodollar Rate
Loan or the making of any conversion of any such Loan to a Base Rate Loan on
a day that is not the last day of the applicable Interest Period with respect
thereto, including interest or fees payable by such Bank to lenders of funds
obtained by it in order to maintain any such Loans.
5.10. INTEREST AFTER DEFAULT.
5.10.1. OVERDUE AMOUNTS. Overdue principal and (to the extent
permitted by applicable law) interest on the Loans and all other overdue
amounts payable hereunder or under any of the other Loan Documents shall
bear interest compounded monthly and payable on demand at a rate per
annum equal to two percent (2%) above the rate of interest otherwise
applicable until such amount shall be paid in full (after as well as
before judgment).
5.10.2. AMOUNTS NOT OVERDUE. During the continuance of a Default
or an Event of Default, the principal of the Loans not overdue shall,
until such Default or Event of Default has been cured or remedied or such
Default or Event of Default has been waived by the Majority Banks
pursuant to
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Section 26, bear interest at a rate per annum equal to two percent (2%)
above the rate of interest otherwise applicable to such Loans pursuant to
Section 2.5.
6. GUARANTY.
The Obligations shall be guaranteed by the Guarantor and certain
Subsidiaries of the Borrower pursuant to the terms of the Guaranty.
7. REPRESENTATIONS AND WARRANTIES.
Each of the Borrower and the Guarantor represents and warrants to the
Banks and the Agent on the date hereof, on the date of any Loan Request, on
the date of each request for a Letter of Credit, on the initial Drawdown Date
of each Loan and on the date on which each Letter of Credit is issued,
extended or renewed that:
7.1. INCORPORATION; GOOD STANDING; AUTHORIZATION. Each of the
Transaction Parties is duly organized, validly existing, and in good standing
under the laws of its jurisdiction of incorporation and is duly qualified and
in good standing in every other jurisdiction where it is doing business
except those jurisdictions in which the failure to be so qualified would not
have a Materially Adverse Effect, and the execution, delivery and performance
by each of the Transaction Parties of the Loan Documents to which such
Transaction Party is a party (i) are within its corporate authority, (ii)
have been duly authorized, and (iii) do not conflict with or contravene its
Charter Documents.
7.2. ENFORCEABILITY. Upon execution and delivery thereof, each Loan
Document to which any of the Transaction Parties is a party shall constitute
the legal, valid and binding obligation of such Transaction Party, as
applicable, enforceable in accordance with its terms.
7.3. TITLE TO PROPERTIES; FRANCHISES, INTELLECTUAL PROPERTY; CONSENT;
NO CONFLICT; INSURANCE. Each of the Transaction Parties has good and
marketable title to all of its material properties, subject only to Liens
permitted hereunder, and possesses all assets, including intellectual
properties, franchises and Consents, adequate for the conduct of its business
as now conducted, without known conflict with any rights of others, other
than those the failure of which to possess would not have a Materially
Adverse Effect. Each of the Transaction Parties maintains insurance with
financially responsible insurers, copies of the policies for which have been
previously delivered to the Agent, covering such risks and in such amounts
and with such deductibles as are customary in such Transaction Party's
business and are adequate.
7.4. FISCAL YEAR; FINANCIAL STATEMENTS AND FORECAST. Each of the
Transaction Parties has a fiscal year which is the twelve (12) months ending
on the last Saturday in September of each year; the fiscal quarters of the
Guarantor and its Subsidiaries for the 1999-2004 fiscal years are as set
forth on
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SCHEDULE 7.4 hereto; the Guarantor and the Borrower have provided to the
Agent and the Banks the Guarantor's audited consolidated Financial Statements
as at the Balance Sheet Date and for the fiscal period then ended, and such
Financial Statements are complete and correct and fairly present the position
of the Guarantor and its Subsidiaries as at such date and for such period in
accordance with generally accepted accounting principles consistently
applied; none of the Transaction Parties has any Indebtedness, or any
financial obligations under any contracts, or agreements, except for
Indebtedness permitted under Section 9.1 hereof. The Guarantor has also
provided to the Agent and the Banks, as of September 25, 1999, its forecast
of the operations of the Guarantor and its Subsidiaries for the period from
September 25, 1999 through September 25, 2004, and such forecast was prepared
in good faith based upon reasonable assumptions at the time of preparation
thereof; such forecast shall not be construed as a representation or warranty
of future performance.
7.5. NO MATERIAL CHANGES, ETC. Since the Balance Sheet Date, there
has been no materially adverse change of any kind in the Borrower or the
Guarantor which would have a Materially Adverse Effect.
7.6. LITIGATION. There are no legal or other proceedings or
investigations pending or, to the best of the knowledge of each of the
Borrower and the Guarantor, threatened against any of the Transaction Parties
before any court, tribunal or regulatory authority in which there is a
reasonable possibility of an outcome that could have a Materially Adverse
Effect.
7.7. CONSENTS; NO CONFLICT. The execution, delivery and performance
of its obligations, and exercise of its rights under the Loan Documents to
which it is a party by each of the Borrower and any of the Transaction
Parties, including borrowing under this Credit Agreement and the obtaining of
Letters of Credit (i) except as set forth on SCHEDULE 7.7 hereto, do not
require any Consents other than those Consents that have been obtained or
that will be obtained prior to the Closing Date, including, without
limitation, all appropriate filings made pursuant to the provisions of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
rules and regulations promulgated thereunder, and other than those that the
failure of which to obtain would not have a Materially Adverse Effect; and
(ii) are not and will not be in conflict with or prohibited or prevented by
(A) any Requirement of Law, (B) any Charter Document, corporate minute or
resolution, in each case binding on it, or (C) any instrument, agreement or
provision thereof, in each case binding on it or affecting its property
except for such conflicts which would not have a Materially Adverse Effect.
7.8. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. None of the
Transaction Parties is in violation of (i) any Charter Document, corporate
minute or resolution, (ii) any instrument or agreement, in each case binding
on it or affecting its property, except for such violations which would not
have a Materially Adverse Effect or (iii) any Requirement of Law, in a manner
which
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could have a Materially Adverse Effect, including, without limitation, all
applicable federal and state tax laws, ERISA and Environmental Laws.
7.9. SUBSIDIARIES, ETC. As of the Closing Date, the Borrower is the
Guarantor's only Subsidiary. The Borrower has no direct or indirect
Subsidiaries other than Charlotte Russe Administration and the Subsidiaries
which are party to the Guaranty. Charlotte Russe Administration has no
Subsidiaries. None of the Transaction Parties is a party to any partnership
or joint venture.
7.10. STATUS OF GUARANTOR. As of the Closing Date, the Guarantor has
not carried on any business (other than holding the capital stock of the
Borrower) and has no liabilities (other than pursuant to the Loan Documents
and non-cash deferred tax assets and liabilities owed to governmental
authorities) except for matters relating to and liabilities incurred in
connection with its incorporation and status as a publicly traded company
under the Securities Act of 1933 and the Securities Exchange Act of 1934 and
the acquisition and ownership by the Guarantor of the capital stock of the
Borrower.
7.11. NO DEFAULT. No Default or Event of Default has occurred and is
continuing.
7.12. USE OF PROCEEDS.
7.12.1. GENERAL. The proceeds of the Loans shall be used to
refinance the Loans (as defined in the Second Restated Credit Agreement)
and for working capital and general corporate purposes. The Borrower
will obtain Letters of Credit solely for working capital and general
corporate purposes.
7.12.2. REGULATIONS U AND X. No portion of any Loan is to be
used, and no portion of any Letter of Credit is to be obtained, for the
purpose of purchasing or carrying any "margin security" or "margin stock"
as such terms are used in Regulations U and X of the Board of Governors
of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.
8. AFFIRMATIVE COVENANTS OF THE BORROWER AND THE GUARANTOR.
Each of the Borrower and the Guarantor covenants and agrees that, so
long as any Loan, Unpaid Reimbursement Obligation, Letter of Credit or Note
is outstanding or any Bank has any obligation to make any Loans or the Agent
has any obligation to issue, extend or renew any Letters of Credit, each of
the Borrower and the Guarantor will comply with its obligations set forth
throughout this Agreement and:
8.1. PUNCTUAL PAYMENT. The Borrower will duly and punctually pay or
cause to be paid the principal and interest (including applicable margins)
on
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the Loans, all Reimbursement Obligations, the Letter of Credit Fees, the
facility fees, the utilization fees, the Agent's fee and all other amounts
provided for in this Credit Agreement and the other Loan Documents to which
any of the Transaction Parties is a party, all in accordance with the terms
of this Credit Agreement and such other Loan Documents.
8.2. FINANCIAL STATEMENTS; COMPLIANCE CERTIFICATE; BUDGET. Each of
the Borrower and the Guarantor will furnish the Agent, with sufficient copies
for each of the Banks: (i) as soon as available but in any event within one
hundred (100) days after the close of each fiscal year, the audited
consolidated and consolidating Financial Statements of the Guarantor and its
Subsidiaries for such fiscal year, certified by the Guarantor's accountants;
(ii) as soon as available but in any event within forty-five (45) days after
the end of each fiscal quarter the unaudited consolidated and, if requested
by the Agent, consolidating Financial Statements of the Guarantor and its
Subsidiaries for such quarter, certified by the Guarantor's chief financial
officer; (iii) as soon as available, but in any event within forty-five (45)
days after the end of each fiscal month, the unaudited consolidated and, if
requested by the Agent, consolidating Financial Statements of the Guarantor
and its Subsidiaries for such month (excluding a statement of cash flow for
such period), monthly income statements for each of the Borrower's and its
Subsidiaries' stores and a report of sales at each store of the Borrower or
such Subsidiary for such month, compared to sales at such store for the same
month of the previous fiscal year; (iv) together with the quarterly and
annual audited Financial Statements, a certificate of the Borrower and the
Guarantor in the form attached hereto as EXHIBIT C setting forth computations
demonstrating compliance with the Guarantor's and its Subsidiaries' financial
covenants set forth herein, and certifying that no Default or Event of
Default has occurred, or if it has, the actions taken by the Guarantor and
its Subsidiaries with respect thereto; and (v) as soon as practicable, but in
any event not later than sixty (60) days after the beginning of each fiscal
year, commencing with the 2001 fiscal year, a management-prepared budget for
such fiscal year, together with income and cash flow statements and capital
expenditure projections for such fiscal year.
8.3. BOOKS AND RECORDS; FISCAL YEAR; INSPECTIONS. Each of the
Borrower and the Guarantor will, and will cause each of the other
Transaction Parties to, keep true and accurate books of account in accordance
with generally accepted accounting principles, maintain its current fiscal
year and permit the Agent, any Bank or its designated representatives to
inspect the Guarantor's and its Subsidiaries' premises during normal business
hours, to examine and be advised as to such or other business records upon
the request of the Agent or any Bank.
8.4. MAINTENANCE OF EXISTENCE, RIGHTS, FRANCHISES, ETC.; MAINTENANCE
OF PROPERTIES, ETC . Each of the Borrower and the Guarantor shall, and shall
cause each of the other Transaction Parties to: (i) do or cause to be done
all things necessary to preserve and keep in full force and effect its
corporate existence, rights and franchises and those of its Subsidiaries
(except
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as otherwise permitted in Section 9.5 hereof) and will not, and will not
cause or permit any of its Subsidiaries to, convert to a limited liability
company, (ii) cause all of its properties and those of its Subsidiaries to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment, (iii) cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of such Transaction Party, may be necessary so that the business
carried on in connection therewith may be properly and advantageously
conducted at all times, (iv) continue to engage primarily in the businesses
now conducted by it and in related businesses; PROVIDED that nothing in these
clauses (i)-(iv) shall prevent the Guarantor or the Borrower from
discontinuing the operation and maintenance of any of its properties or those
of its Subsidiaries if such discontinuance is, in the judgment of the
Guarantor or the Borrower, as the case may be, desirable in the conduct of
its or their business and that do not in the aggregate have a Materially
Adverse Effect.
8.5. INSURANCE; CHIEF EXECUTIVE OFFICE; COMPLIANCE WITH LAW; PAYMENT
OF TAXES. Each of the Borrower and the Guarantor shall, and shall cause each
of the other Transaction Parties to: (i) keep its business and assets insured
with financially responsible insurers, covering such risks and in such
amounts and with such deductibles as are customary in such Transaction
Party's business and are adequate; (ii) maintain its chief executive office
in the United States, (iii) comply with all Requirements of Law, including
ERISA and Environmental Laws, except for any noncompliance which would not
have a Materially Adverse Effect; and (iv) duly pay and discharge, or cause
to be paid and discharged, before the same shall become overdue, all taxes,
assessments and other governmental charges (other than taxes, assessments and
other governmental charges imposed by foreign jurisdictions that in the
aggregate would not have a Materially Adverse Effect) imposed upon it and its
real properties, sales and activities, or any part thereof, or upon the
income or profits therefrom, as well as all claims for labor, materials, or
supplies that if unpaid might by law become a lien or charge upon any of its
property; PROVIDED that any such tax, assessment, charge, levy or claim need
not be paid if the validity or amount thereof shall currently be contested in
good faith by appropriate proceedings and if such Transaction Party shall
have set aside on its books adequate reserves with respect thereto; and
PROVIDED FURTHER that the Guarantor and the Borrower will, and will cause the
other Transaction Parties to, pay all such taxes, assessments, charges,
levies or claims forthwith upon the commencement of proceedings to foreclose
any lien that may have attached as security therefor.
8.6. NOTICES. Each of the Borrower and the Guarantor shall notify
the Agent promptly in writing promptly upon any Transaction Party's chief
executive officer, president, chief financial officer, vice president,
treasurer or other responsible officer becoming aware thereof of (i) the
occurrence of any Default or Event of Default, (ii) any noncompliance with
ERISA or any Environmental Law or proceeding in respect thereof which could
have a Materially Adverse Effect, (iii) any change of address or additional
location, (iv)
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any threatened or pending litigation or similar proceeding affecting any of
the Transaction Parties involving an uninsured claim against such Transaction
Party in which there is a reasonable possibility of an outcome that could
have a Materially Adverse Effect or any material change in any such
litigation or proceeding previously reported and (v) claims against any
assets or properties of any of the Transaction Parties which could have a
Materially Adverse Effect.
8.7. USE OF PROCEEDS. The Borrower will use the proceeds of the
Loans solely to refinance the Loans (as defined in the Second Restated Credit
Agreement) and for working capital and general corporate purposes. The
Borrower will obtain Letters of Credit solely for working capital and general
corporate purposes.
8.8. FURTHER ASSURANCES. Each of the Borrower and the Guarantor
will, and will cause each of the Transaction Parties to, cooperate with the
Banks and the Agent and execute such further instruments and documents as the
Banks or the Agent shall reasonably request to carry out to their
satisfaction the transactions contemplated by and the purposes of this Credit
Agreement and the other Loan Documents.
9. CERTAIN NEGATIVE COVENANTS OF THE BORROWER AND THE GUARANTOR.
Each of the Borrower and the Guarantor covenants and agrees that, so
long as any Loan, Unpaid Reimbursement Obligation, Letter of Credit or Note
is outstanding or any Bank has any obligation to make any Loans or the Agent
has any obligations to issue, extend or renew any Letters of Credit:
9.1. RESTRICTIONS ON INDEBTEDNESS. Neither the Borrower nor the
Guarantor will, or will permit any of the other Transaction Parties to,
create, incur, assume, guarantee or be or remain liable, contingently or
otherwise, with respect to any Indebtedness other than:
(a) Indebtedness to the Agent or any of the Banks under the Loan
Documents or any Interest Rate Agreement;
(b) Indebtedness in respect of obligations of the Borrower or
Charlotte Russe Merchandising under Capitalized Leases which does not
exceed $2,500,000 in the aggregate outstanding at any time;
(c) liabilities (including all liabilities under leases other than
Capitalized Leases) of the Borrower or any of its Subsidiaries incurred
in the ordinary course of business not incurred through the borrowing of
money, Capitalized Leases or the obtaining of credit (except credit on an
open account customarily extended and in fact extended in connection with
normal purchases of goods and services);
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(d) Indebtedness owed by the Borrower or Charlotte Russe
Merchandising to trade vendors, in the amount of the cost to the Borrower
of inventory on consignment from such trade vendors not to exceed
$1,500,000 at any time outstanding;
(e) Indebtedness in respect of judgments or awards that have been
in force for less than the applicable period for taking an appeal so long
as execution is not levied thereunder or in respect of which the
applicable Transaction Party shall at the time in good faith be
prosecuting an appeal or proceedings for review and in respect of which a
stay of execution shall have been obtained pending such appeal or review;
(f) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the ordinary
course of business;
(g) Indebtedness in respect of taxes, assessments, governmental
charges or levies and claims for labor, materials and supplies to the
extent that payment therefor shall not at the time be required to be made
in accordance with the provisions of Section 8.5;
(h) Indebtedness of the Borrower to the Guarantor;
(i) (i) obligations in respect of the fees and related expenses
payable to Saunders Karp & Megrue, L.P. to the extent such fees and
expenses are permitted by Section 9.11, and (ii) other obligations in
respect of fees and expenses payable in connection with the Loan
Documents, not to exceed $500,000 in aggregate amount;
(j) Indebtedness owing to the Borrower by (i) the Guarantor in
respect of obligations evidencing advances made by the Borrower from time
to time equal to expenses incurred in the ordinary course of business by
the Guarantor and payable by the Guarantor within thirty (30) days of
receipt of such advance from the Borrower and (ii) of any Subsidiary of
the Borrower party to the Guaranty;
(k) Indebtedness consisting of liabilities resulting from the
marking up of the Borrower's existing leases to reflect market rents;
(l) existing Indebtedness not included above and listed on
SCHEDULE 9.1 hereto; and
(m) other Indebtedness not included in the foregoing provisions of
this Section 9.1 not to exceed $750,000 in the aggregate at any time
outstanding.
9.2. RESTRICTIONS ON LIENS. Neither the Borrower nor the Guarantor
will, nor will they permit any of the other Transaction Parties to, create,
incur,
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permit to exist or assume any Liens on any of the property or assets of the
Guarantor or the Borrower except:
(a) Liens in favor of the Agent and the Banks securing the
Obligations;
(b) Liens securing taxes, assessments and other governmental
charges or liens on properties to secure claims for labor, material or
supplies, in each case to the extent the Indebtedness in respect to which
is permitted under Section 9.1(g);
(c) deposits or pledges made in connection with worker's
compensation, unemployment insurance, old age pensions or other social
security obligations;
(d) Liens of carriers, warehousemen, mechanics and materialmen (i)
less than 120 days old in respect of obligations not overdue or (ii) with
respect to which the obligations related thereto (A) are contested by the
applicable Transaction Party in good faith by appropriate proceedings and
such Transaction Party shall have set aside on its book adequate reserves
with respect thereto or (B) do not exceed $100,000 for any individual
lien or $500,000 in the aggregate for all such liens, PROVIDED that the
Guarantor or the Borrower will pay, or will cause such other Transaction
Party to pay, all such carriers, warehousemen, mechanics and materialmen
forthwith upon the commencement of proceedings to foreclose any lien that
may have attached as security therefor;
(e) Liens on properties in respect of judgments or awards, the
Indebtedness with respect to which is permitted by Section 9.1(e);
(f) easements, rights-of-way, zoning restrictions, restrictions on
the use of real property and defects and irregularities in the title
thereto, landlord's or lessor's liens under leases to which any of the
Transaction Parties other than Charlotte Russe Administration is a party
and similar minor liens which individually and in the aggregate do not
have a Materially Adverse Effect;
(g) purchase money security interests in or purchase money
mortgages on, or Capitalized Leases in respect of, real or personal
property securing Indebtedness permitted by Section 9.1(b) or, as the
case may be (m), covering only the property so acquired or leased;
(h) Liens of consignors securing Indebtedness permitted under
Section 9.1(d); and
(i) other Liens existing on the date hereof and listed on
SCHEDULE 9.2 hereto.
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9.3. RESTRICTIONS ON SUBSIDIARIES AND INVESTMENTS. Neither the
Borrower nor the Guarantor will, or will permit any of the other Transaction
parties to, create, form or permit to exist any Subsidiary (other than the
Borrower and those Subsidiaries set forth in Section 7.9 and permitted to be
created by Section 9.12), or make or permit to exist or to remain outstanding
any Investment except Investments in:
(a) Investments in marketable direct or guaranteed obligations of
the United States maturing within one (1) year;
(b) Investments in certificates of deposit, bankers' acceptances
and time and demand deposits of United States banks having total assets
in excess of $1,000,000,000;
(c) Investments in securities commonly known as "commercial paper"
issued by a corporation that at the time of purchase have been rated and
the ratings for which are not less than "P1" if rated by Moody's
Investors Services, Inc., and not less than "A1" if rated by Standard and
Poor's;
(d) Investments in money market mutual funds utilized in the
ordinary course of business, the investment objectives and policies of
which require it to invest substantially all of its assets in investments
of the type permitted under clauses (a), (b) and (c) hereof;
(e) Investments consisting of the Guaranties or other investments
by the Guarantor in the Borrower;
(f) Investments by the Borrower (i) in the Guarantor; (ii) in
Charlotte Russe Administration consisting of up to $1,000,000 in the
aggregate in cash and the other assets described in Section 9.5.2(c); and
(iii) in any Subsidiary of the Borrower party to the Guaranty;
(g) Investments as contemplated by Section 9.5.1(b);
(h) Investments consisting of loans and advances to employees for
moving, entertainment, travel and other similar expenses in the ordinary
course of business not to exceed $100,000 in the aggregate at any time
outstanding; and
(i) such other investments as the Agent and the Majority Banks may
from time to time approve in writing.
9.4. DISTRIBUTIONS. Neither the Borrower nor the Guarantor will make
any dividends or distributions on or in respect of any class of its capital
stock of any nature whatsoever, other than (i) dividends payable solely in
shares of its common stock and (ii) dividends and distributions by the
Borrower to the Guarantor; and (iii) so long as no Default or Event of
Default has occurred and
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is continuing, dividends, distributions and capital stock redemptions of up
to $5,000,000 in any fiscal year of the Guarantor and the Borrower, up to
$2,500,000 of which may be cash dividends paid on a non-cumulative basis.
9.5. MERGER, CONSOLIDATION AND DISPOSITION OF ASSETS.
9.5.1. MERGERS AND ACQUISITIONS. Neither the Borrower nor the
Guarantor will, or will permit any of the other Transaction Parties to,
become a party to any merger or consolidation, or purchase, lease or
otherwise acquire assets other than (a) the acquisition of assets in the
ordinary course of business (which includes the opening of new stores)
consistent with past practices, (b) so long as no Event of Default has
occurred and is continuing or would result therefrom, the acquisition by
the Borrower of the stock or assets of Persons engaged primarily in the
same line of business as the Borrower for an aggregate amount not to
exceed $5,000,000 per fiscal year of the Borrower, PROVIDED that with
respect to any stock acquisitions, the acquired entity is, concurrently
with such acquisition, merged with and into the Borrower, with the
Borrower being the surviving entity, and (c) the merger of one or more
Subsidiaries of the Borrower with and into the Borrower, with the
Borrower as the surviving entity.
9.5.2. DISPOSITION OF ASSETS. Neither the Borrower nor the
Guarantor will, or will permit any of the other Transaction Parties to,
become a party to or agree to or effect any disposition of assets, other
than (a) asset sales or dispositions in the ordinary course, consistent
with past practices (not including the termination of store leases); (b)
so long as no Event of Default has occurred and is continuing, other
asset sales (including the termination of store leases of the Borrower
not to exceed eight (8) in any fiscal year) for cash, PROVIDED that the
aggregate amount of Net Cash Proceeds from all such sales in each fiscal
year of the Borrower in excess of $250,000 are applied by the Borrower,
concurrently with receipt of such proceeds by the Guarantor or the
Borrower to make prepayments on the Loans in accordance with Section 3.2;
(c) transfer to Charlotte Russe Administration of (i) cash not in excess
of $1,000,000 in the aggregate and (ii) rights to services of certain
employees pursuant to the Administration Contribution Agreement; or (d)
transfers to Charlotte Russe Merchandising.
9.6. SALE AND LEASEBACK. Neither the Borrower nor the Guarantor
will, or will permit any of the other Transaction Parties to, enter into any
arrangement, directly or indirectly, whereby any such Transaction Party shall
sell or transfer any property owned by it in order then or thereafter to
lease such property or lease other property that such Transaction Party
intends to use for substantially the same purpose as the property being sold
or transferred.
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9.7. GUARANTIES. Neither the Borrower nor the Guarantor will, or
will permit any of the other Transaction Parties to, guarantee payment on any
loan (other than pursuant to the Guaranty).
9.8. BUSINESS ACTIVITIES. The Borrower will not engage directly or
indirectly in any type of business other than the businesses conducted by it
on the Closing Date and in related businesses. The Guarantor will not
conduct any business or other activities other than the ownership of the
stock of the Borrower and the business and activities incidental thereto,
including, in connection therewith, the business and activities incidental to
being a publicly traded company under the Securities Act of 1933 and the
Securities Exchange Act of 1934. Neither the Borrower nor the Guarantor will
permit Charlotte Russe Administration to hold assets with a fair market value
in excess of $1,000,000 (excluding rights to services of certain employees)
or to engage in any business or activity other than conducting administrative
and management duties for the Borrower and the other Transaction Parties.
9.9. FISCAL YEAR. Neither the Borrower nor the Guarantor will change
the date of the end of its fiscal year from that set forth in Section 7.4.1.
9.10. TRANSACTIONS WITH AFFILIATES. Neither the Borrower nor the
Guarantor will, or will permit any of the other Transaction Parties to,
engage in any transaction with any Affiliate (other than for services as
employees, officers and directors), including any contract, agreement or
other arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any such Affiliate or, to the knowledge of the
Borrower, the Guarantor or any other Transaction Party, any corporation,
partnership, trust or other entity in which any such Affiliate has a
substantial interest or is an officer, director, trustee or partner, on terms
more favorable to such Person than would have been obtainable on an
arm's-length basis in the ordinary course of business, except:
(a) the agreement with Saunders Karp & Megrue requiring the
payment of (i) an annual monitoring fee in an amount up to $250,000 per
year and (ii) other amounts in reimbursement of Saunders, Karp & Megrue's
reasonable out-of-pocket expense;
(b) transactions or agreements among and between the Guarantor or
any Subsidiary of the Borrower Party to the Guaranty on the one hand and
the Borrower on the other hand;
(c) transactions contemplated by the Restructuring Agreements, as
in effect on the Closing Date; and
(d) transactions or agreements among and between Charlotte Russe
Merchandising and the Borrower.
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9.11. RESTRUCTURING AGREEMENTS. Neither the Borrower nor the
Guarantor will, or will permit any of the other Transaction Parties to,
amend, supplement or otherwise modify the terms of any of the Restructuring
Agreements.
9.12. CREATION OF SUBSIDIARIESS. Neither the Borrower nor the
Guarantor will, or will permit any of the other Transaction Parties to,
create any Subsidiary (other than Charlotte Russe Administration) unless (a)
one hundred percent (100%) of the capital stock or other equity interests of
such Subsidiary are owned by the Guarantor, the Borrower or a Subsidiary of
the Borrower party to the Guaranty, (b) prior to the formation of such
Subsidiary, the Borrower shall notify the Agent and the Banks thereof in
writing, and (c) contemporaneously with the formation of such Subsidiary, the
Borrower shall, or shall cause such other Transaction Party to, (i) take all
steps as may be necessary or advisable in the opinion of the Agent to cause
any such Subsidiary to guaranty all of the Obligations hereunder pursuant to
the Guaranty and (ii) deliver to the Agent all such evidence of corporate or
other authorization, legal opinions (including local counsel opinions where
applicable) and other documentation as the Agent may request.
10. FINANCIAL COVENANTS OF THE BORROWER.
Each of the Borrower and the Guarantor covenants and agrees that, so
long as any Loan, Unpaid Reimbursement Obligation, Letter of Credit or Note
is outstanding or any Bank has any obligation to make any Loans or the Agent
has any obligation to issue, extend or renew any Letters of Credit:
10.1. CONSOLIDATED TOTAL LIABILITIES TO EBITDA. The Borrower and the
Guarantor will not permit the ratio of Consolidated Total Liabilities
measured on the last day of each fiscal quarter to Consolidated EBITDA as
measured for the period of four consecutive fiscal quarters ending on such
last day to exceed 2.00:1.00.
10.2. FIXED CHARGE RATIO. The Borrower and the Guarantor will not
permit the ratio of the result of Consolidated EBITDA for any period of four
consecutive fiscal quarters PLUS Rental Obligations for such period MINUS
Capital Expenditures made during such fiscal period to Consolidated Total
Interest Expense for such period of four consecutive fiscal quarters PLUS
Rental Obligations for such period of four consecutive fiscal quarters to be
less than 1.25:1.0.
10.3. CONSOLIDATED NET WORTH. The Borrower and the Guarantor will
not permit Consolidated Net Worth at any time to be less than the sum of (i)
$41,000,000 PLUS (ii) on a cumulative basis, fifty percent (50%) of positive
Consolidated Net Income for each fiscal quarter beginning with the fiscal
quarter ended December 25, 1999.
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11. CLOSING CONDITIONS.
The obligations of the Banks to make the initial Loans and of the
Agent to issue any initial Letters of Credit shall be subject to the
satisfaction of the following conditions precedent:
11.1. LOAN DOCUMENTS. Each of the Loan Documents shall have been
duly executed and delivered by the respective parties thereto, shall be in
full force and effect and shall be in form and substance satisfactory to each
of the Banks. The Agent shall have received fully executed copies of each
such document in sufficient quantities for each Bank.
11.2. CERTIFIED COPIES OF CHARTER DOCUMENTS. The Agent shall have
received from each of the Transaction Parties copies, in sufficient
quantities for each Bank, certified by a duly authorized officer of such
Person to be true and complete on the Closing Date, of each of (i) its
charter or other incorporation documents as in effect on such date of
certification, and (ii) its by-laws as in effect on such date.
11.3. CORPORATE ACTION. All corporate action necessary for the valid
execution, delivery and performance by each of the Transaction Parties of
this Credit Agreement and the other Loan Documents to which it is or is to
become a party shall have been duly and effectively taken, and evidence
thereof satisfactory to the Agent shall have been provided to the Agent, in
sufficient quantities for each of the Banks.
11.4. INCUMBENCY CERTIFICATE. The Agent shall have received, in
sufficient quantities for each of the Banks, from each of the Transaction
Parties, an incumbency certificate, dated as of the Closing Date, signed by a
duly authorized officer of such Transaction Party, and giving the name and
bearing a specimen signature of each individual who shall be authorized: (i)
to sign, in the name and on behalf of each of such Transaction Party, each of
the Loan Documents to which such Transaction Party is or is to become a
party; (ii) in the case of the Borrower, to make Loan Requests and Conversion
Requests and to apply for Letters of Credit; and (iii) to give notices and to
take other action on its behalf under the Loan Documents.
11.5. CERTIFICATES OF INSURANCE. The Agent shall have received (i) a
certificate of insurance from an independent insurance broker dated as of the
Closing Date, identifying insurers, types of insurance, insurance limits, and
policy terms, and requiring the issuer to give the Agent at least thirty (30)
days prior written notice of cancellation of any insurance, and (ii)
certified copies of all policies evidencing such insurance (or certificates
therefore signed by the insurer or an agent authorized to bind the insurer).
11.6. SOLVENCY CERTIFICATE. Each of the Banks shall have received an
officer's certificate of the Borrower and the Guarantor dated as of the
Closing Date as to the solvency of the Borrower individually and of the
Transaction
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Parties considered as a whole following the consummation of the transactions
contemplated herein and in form and substance satisfactory to the Banks.
11.7. OPINION OF COUNSEL. Each of the Banks and the Agent shall have
received a favorable legal opinion addressed to the Banks and the Agent,
dated as of the Closing Date, in form and substance satisfactory to the Banks
and the Agent, from Latham & Watkins, counsel to the Borrower and the other
Transaction Parties.
11.8. PAYMENT OF FEES. The Borrower shall have paid to the Banks the
closing fee pursuant to Section 5.1.2, together with all reasonable
out-of-pocket expenses of the Agent, including but not limited to reasonable
attorneys' fees and disbursements.
12. CONDITIONS TO ALL BORROWINGS.
The obligations of the Banks to make any Loan and of the Agent to
issue, extend or renew any Letter of Credit, in each case whether on or after
the Closing Date, shall also be subject to the satisfaction of the following
conditions precedent:
12.1. REPRESENTATIONS TRUE; NO EVENT OF DEFAULT. Each of the
representations and warranties of the Borrower, the Guarantor and the other
Transaction Parties contained in this Credit Agreement, the other Loan
Documents or in any document or instrument delivered pursuant to or in
connection with this Credit Agreement shall be true as of the date as of
which they were made and shall also be true at and as of the time of the
making of such Loan or the issuance, extension or renewal of such Letter of
Credit, with the same effect as if made at and as of that time (except to the
extent of changes resulting from transactions contemplated or permitted by
this Credit Agreement and the other Loan Documents and changes occurring in
the ordinary course of business that singly or in the aggregate are not
materially adverse, and to the extent that such representations and
warranties relate expressly to an earlier date) and no Default or Event of
Default shall have occurred and be continuing.
12.2. NO LEGAL IMPEDIMENT. No change shall have occurred in any law
or regulations thereunder or interpretations thereof that in the reasonable
opinion of any Bank would make it illegal for such Bank to make such Loan or
to participate in the issuance, extension or renewal of such Letter of Credit
or in the reasonable opinion of the Agent would make it illegal for the Agent
to issue, extend or renew such Letter of Credit.
13. EVENTS OF DEFAULT; ACCELERATION; ETC.
13.1. EVENTS OF DEFAULT AND ACCELERATION. If any of the following
events ("Events of Default") shall occur:
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(a) the Borrower shall fail to pay any principal of the Loans or
any Reimbursement Obligation when the same shall become due and payable,
whether at the stated date of maturity or any accelerated date of
maturity or at any other date fixed for payment (it being understood that
Reimbursement Obligations shall not be deemed to be Unpaid Reimbursement
Obligations in the event that they become Loans pursuant to and in
accordance with the requirements of Section 2.6.2);
(b) the Borrower or any of the other Transaction Parties shall
fail to pay any interest (including applicable margins) on the Loans,
the facility fee, the utilization fee, any Letter of Credit Fee, or the
Agent's fee or other sums due hereunder or under any of the other Loan
Documents, when the same shall become due and payable, whether at the
stated date of maturity or any accelerated date of maturity or at any
other date fixed for payment;
(c) the Borrower or the Guarantor shall fail to comply with any
of its covenants contained in Section 8 (other than Sections 8.3, 8.4,
8.5 and 8.8), 9 (other than Section 9.10) or 10;
(d) the Borrower, the Guarantor or any of the other Transaction
Parties shall fail to perform any term, covenant or agreement contained
herein or in any of the other Loan Documents (other than those specified
elsewhere in this Section 13.1) for fifteen (15) days after written
notice of such failure has been given to the Borrower by the Agent or
shall fail to pay any sum due under any of the Loan Documents (other than
the sums referred to in paragraphs (a) and (b) of this Section 13.1)
within fifteen (15) days after written notice of such failure has been
given to the Borrower by the Agent;
(e) any representation or warranty of the Borrower or any of the
other Transaction Parties in this Credit Agreement or any of the other
Loan Documents, in any certificate or notice given in connection
therewith shall prove to have been false in any material respect upon the
date when made or deemed to have been made or repeated;
(f) the Borrower or any of the other Transaction Parties shall
fail to pay at maturity, or within any applicable period of grace, any
obligation in respect of any Indebtedness For Borrowed Money (the
aggregate amount of which Indebtedness For Borrowed Money exceeds
$500,000) or fail to observe or perform any material term, covenant or
agreement contained in any agreement by which it is bound, evidencing or
securing any Indebtedness For Borrowed Money (the aggregate amount of
which Indebtedness For Borrowed Money exceeds $500,000) for such period
of time as would permit (assuming the giving of appropriate notice if
required) the holder or holders thereof or of any obligations issued
thereunder to accelerate the maturity thereof;
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(g) the Borrower or any of the other Transaction Parties (i)
shall make an assignment for the benefit of creditors, (ii) shall be
adjudicated bankrupt or insolvent, (iii) shall seek the appointment of,
or be the subject of an order appointing, a trustee, liquidator or
receiver as to all or part of its assets, (iv) shall commence, approve or
consent to, any case or proceeding under any bankruptcy, reorganization
or similar law and, in the case of an involuntary case or proceeding,
such case or proceeding is not dismissed within forty-five (45) days
following the commencement thereof, or (v) shall be the subject of an
order for relief in an involuntary case under federal bankruptcy law;
(h) the Borrower or any of the other Transaction Parties shall be
unable to pay its debts as they mature;
(i) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty days, whether or not consecutive, any
final judgment against the Borrower or any of the other Transaction
Parties that, with other outstanding final judgments, undischarged,
unsatisfied and unstayed against the Borrower or any of the other
Transaction Parties exceeds in the aggregate $500,000;
(j) if any of the Loan Documents shall be cancelled, terminated,
revoked or rescinded, in each case otherwise than with the express prior
written agreement, consent or approval of the Banks, or any action at
law, suit or in equity or other legal proceeding to cancel, revoke or
rescind any of the Loan Documents shall be commenced by or on behalf of
the Borrower or any of the other Transaction Parties party thereto or any
of their respective stockholders, or any court or any other governmental
or regulatory authority or agency of competent jurisdiction shall make a
determination that, or issue a judgment, order, decree or ruling to the
effect that, any one or more of the Loan Documents is, in its or their
entirety or in any material respect, illegal, invalid or unenforceable in
accordance with the terms thereof;
(k) (i) the Guarantor shall at any time, legally or beneficially
cease to own 100% of the Voting Stock of the Borrower, (ii) any person or
group of persons (within the meaning of Section 13 or 14 of the
Securities Exchange Act of 1934, as amended) (but excluding the Funds and
their affiliates) shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 promulgated by the Securities and Exchange
Commission under said Act) of thirty-five percent (35%) or more of the
outstanding shares of common stock of the Guarantor; or (iii) during any
period of twelve consecutive calendar months, individuals who were
directors of the Guarantor on the first day of such period shall cease to
constitute a majority of the Board of Directors of the Guarantor;
then, and in any such event, so long as the same may be continuing, the Agent
may, and upon the request of the Majority Banks shall, by notice in writing to
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the Borrower declare all amounts owing with respect to this Credit Agreement,
the Notes and the other Loan Documents and all Reimbursement Obligations to
be, and they shall thereupon forthwith become, immediately due and payable
without presentment, demand, protest or other notice of any kind, all of
which are hereby expressly waived by the Borrower; PROVIDED that in the event
of any Event of Default specified in Sections 13.1(g) or 13.1(h), all such
amounts shall become immediately due and payable automatically and without
any requirement of notice from the Agent or any Bank.
13.2. TERMINATION OF COMMITMENTS. If any one or more of the Events
of Default specified in Section 13.1(g) or Section 13.1(h) shall occur, any
unused portion of the Commitments hereunder shall forthwith terminate and
each of the Banks shall be relieved of all further obligations to make Loans
to the Borrower and the Agent shall be relieved of all further obligations to
issue, extend or renew Letters of Credit. If any other Event of Default
shall have occurred and be continuing, the Agent may and, upon the request of
the Majority Banks, shall, by notice to the Borrower, terminate the unused
portion of the Commitments hereunder, and upon such notice being given such
unused portion of the Commitments hereunder shall terminate immediately and
each of the Banks shall be relieved of all further obligations to make Loans
and the Agent shall be relieved of all further obligations to issue, extend
or renew Letters of Credit. No termination of the Commitments hereunder shall
relieve the Borrower or any of the other Transaction Parties of any of the
Obligations.
13.3. REMEDIES. In case any one or more of the Events of Default
shall have occurred and be continuing, and whether or not the Banks shall
have accelerated the maturity of the Loans pursuant to Section 13.1, each
Bank, if owed any amount with respect to the Loans or the Reimbursement
Obligations, may, with the consent of the Majority Banks but not otherwise,
proceed to protect and enforce its rights by suit in equity, action at law or
other appropriate proceeding, whether for the specific performance of any
covenant or agreement contained in this Credit Agreement and the other Loan
Documents or any instrument pursuant to which the Obligations to such Bank
are evidenced, including as permitted by applicable law the obtaining of the
EX PARTE appointment of a receiver, and, if such amount shall have become
due, by declaration or otherwise, proceed to enforce the payment thereof or
any other legal or equitable right of such Bank. No remedy herein conferred
upon any Bank or the Agent or the holder of any Note or purchaser of any
Letter of Credit Participation is intended to be exclusive of any other
remedy and each and every remedy shall be cumulative and shall be in addition
to every other remedy given hereunder or now or hereafter existing at law or
in equity or by statute or any other provision of law.
14. SETOFF.
Regardless of the adequacy of any collateral for the Obligations,
during the continuance of any Event of Default, any deposits or other sums
credited by or due from any of the Banks to the Borrower or any of the other
Transaction
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Parties and any securities or other property of the Borrower and any of the
other Transaction Parties in the possession of such Bank may be applied to or
set off by such Bank against the payment of Obligations and any and all other
liabilities, direct, or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising, of the Borrower or such other
Transaction Party to such Bank. Each of the Banks agrees with each other
Bank that (i) if an amount to be set off is to be applied to Indebtedness of
the Borrower or such other Transaction Party to such Bank, other than
Indebtedness evidenced by the Notes held by such Bank or constituting
Reimbursement Obligations owed to such Bank, such amount shall be applied
ratably to such other Indebtedness and to the Indebtedness evidenced by all
such Notes held by such Bank or constituting Reimbursement Obligations owed
to such Bank, and (ii) if such Bank shall receive from the Borrower or such
other Transaction Party, whether by voluntary payment, exercise of the right
of setoff, counterclaim, cross action, enforcement of the claim evidenced by
the Notes held by, or constituting Reimbursement Obligations owed to, such
Bank by proceedings against the Borrower or such other Transaction Party at
law or in equity or by proof thereof in bankruptcy, reorganization,
liquidation, receivership or similar proceedings, or otherwise, and shall
retain and apply to the payment of the Note or Notes held by, or
Reimbursement Obligations owed to, such Bank any amount in excess of its
ratable portion of the payments received by all of the Banks with respect to
the Notes held by, and Reimbursement Obligations owed to, all of the Banks,
such Bank will make such disposition and arrangements with the other Banks
with respect to such excess, eitherby way of distribution, PRO TANTO
assignment of claims, subrogation or otherwise as shall result in each Bank
receiving in respect of the Notes held by it or Reimbursement obligations
owed it, its proportionate payment as contemplated by this Credit Agreement;
PROVIDED that if all or any part of such excess payment is thereafter
recovered from such Bank, such disposition and arrangements shall be
rescinded and the amount restored to the extent of such recovery, but without
interest.
15. THE AGENT.
15.1. AUTHORIZATION.
(a) The Agent is authorized to take such action on behalf of each
of the Banks and to exercise all such powers as are hereunder and under
any of the other Loan Documents and any related documents delegated to
the Agent, together with such powers as are reasonably incident thereto,
PROVIDED that no duties or responsibilities not expressly assumed herein
or therein shall be implied to have been assumed by the Agent.
(b) The relationship between the Agent and each of the Banks is
that of an independent contractor. The use of the term "Agent" is for
convenience only and is used to describe, as a form of convention, the
independent contractual relationship between the Agent and each of the
Banks. Nothing contained in this Credit Agreement nor the other Loan
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Documents shall be construed to create an agency, trust or other
fiduciary relationship between the Agent and any of the Banks.
(c) As an independent contractor empowered by the Banks to
exercise certain rights and perform certain duties and responsibilities
hereunder and under the other Loan Documents, the Agent is nevertheless a
"representative" of the Banks, as that term is defined in Article 1 of
the Uniform Commercial Code, for purposes of actions for the benefit of
the Banks and the Agent with respect to all guaranties contemplated by
the Loan Documents.
15.2. EMPLOYEES AND AGENTS. The Agent may exercise its powers and
execute its duties by or through employees or agents and shall be entitled to
take, and to rely on, advice of counsel concerning all matters pertaining to
its rights and duties under this Credit Agreement and the other Loan
Documents. The Agent may utilize the services of such Persons as the Agent
in its sole discretion may reasonably determine, and all reasonable fees and
expenses of any such Persons shall be paid by the Borrower.
15.3. NO LIABILITY. Neither the Agent nor any of its shareholders,
directors, officers or employees nor any other Person assisting them in their
duties nor any agent or employee thereof, shall be liable for any waiver,
consent or approval given or any action taken, or omitted to be taken, in
good faith by it or them hereunder or under any of the other Loan Documents,
or in connection herewith or therewith, or be responsible for the
consequences of any oversight or error of judgment whatsoever, except that
the Agent or such other Person, as the case may be, may be liable for losses
due to its willful misconduct or gross negligence.
15.4. NO REPRESENTATIONS.
15.4.1. GENERAL. The Agent shall not be responsible for the
execution or validity or enforceability of this Credit Agreement, the
Notes, the Letters of Credit, any of the other Loan Documents or any
instrument at any time constituting, or intended to constitute,
collateral security for the Notes, or for the value of any such
collateral security or for the validity, enforceability or collectability
of any such amounts owing with respect to the Notes, or for any recitals
or statements, warranties or representations made herein or in any of the
other Loan Documents or in any certificate or instrument hereafter
furnished to it by or on behalf of the Borrower or any of the other
Transaction Parties, or be bound to ascertain or inquire as to the
performance or observance of any of the terms, conditions, covenants or
agreements herein or in any instrument at any time constituting, or
intended to constitute, collateral security for the Notes or to inspect
any of the properties, books or records of the Borrower or any of the
other Transaction Parties. The Agent shall not be bound to ascertain
whether any notice, consent, waiver or request delivered to it by the
Borrower or any holder of any of the Notes shall
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have been duly authorized or is true, accurate and complete. The
Agent has not made nor does it now make any representations or
warranties, express or implied, nor does it assume any liability to
the Banks, with respect to the credit worthiness or financial
conditions of the Borrower or any of the other Transaction
Subsidiaries. Each Bank acknowledges that it has, independently and
without reliance upon the Agent or any other Bank, and based upon such
information and documents as it has deemed appropriate, made its own
credit analysis and decision to enter into this Credit Agreement.
15.4.2. CLOSING DOCUMENTATION, ETC. For purposes of determining
compliance with the conditions set forth in Section 11, each Bank that
has executed this Credit Agreement shall be deemed to have consented to,
approved or accepted, or to be satisfied with, each document and matter
either sent, or made available, by the Agent to such Bank for consent,
approval, acceptance or satisfaction, or required thereunder to be to be
consent to or approved by or acceptable or satisfactory to such Bank,
unless an officer of the Agent or the Arranger active upon the Borrower's
account shall have received notice from such Bank prior to the Closing
Date specifying such Bank's objection thereto and such objection shall
not have been withdrawn by notice to the Agent or the Arranger to such
effect on or prior to the Closing Date.
15.5. PAYMENTS.
15.5.1. PAYMENTS TO AGENT. A payment by the Borrower to the
Agent hereunder or any of the other Loan Documents for the account of any
Bank shall constitute a payment to such Bank. The Agent agrees promptly
to distribute to each Bank such Bank's PRO RATA share of payments
received by the Agent for the account of the Banks except as otherwise
expressly provided herein or in any of the other Loan Documents.
15.5.2. DISTRIBUTION BY AGENT. If in the opinion of the Agent
the distribution of any amount received by it in such capacity hereunder,
under the Notes or under any of the other Loan Documents might involve it
in liability, it may refrain from making distributions until its right to
make distributions shall have been adjudicated by a court of competent
jurisdiction. If a court of competent jurisdiction shall adjudge that
any amount received and distributed by the Agent is to be repaid, each
Person to whom any such distribution shall have been made shall either
repay to the Agent its proportionate share of the amount so adjudged to
be repaid or shall pay over the same in such manner and to such Persons
as shall be determined by such court.
15.5.3. DELINQUENT BANKS. Notwithstanding anything to the
contrary contained in this Credit Agreement or any of the other Loan
Documents, any Bank that fails (i) to make available to the Agent its PRO
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RATA share of any Loan or to purchase any Letter of Credit Participation
or (ii) to comply with the provisions of Section 14 with respect to
making dispositions and arrangements with the other Banks, where such
Bank's share of any payment received, whether by setoff or otherwise, is
in excess of its PRO RATA share of such payments due and payable to all
of the Banks, in each case as, when and to the full extent required by
the provisions of this Credit Agreement, shall be deemed delinquent (a
"Delinquent Bank") and shall be deemed a Delinquent Bank until such time
as such delinquency is satisfied. A Delinquent Bank shall be deemed to
have assigned any and all payments due to it from the Borrower, whether
on account of Outstanding Loans, Unpaid Reimbursement Obligations,
interest, fees or otherwise, to the remaining nondelinquent Banks for
application to, and reduction of, their respective PRO RATA shares of all
Outstanding Loans and Unpaid Reimbursement Obligations. The Delinquent
Bank hereby authorizes the Agent to distribute such payments to the
nondelinquent Banks in proportion to their respective PRO RATA shares of
all Outstanding Loans and Unpaid Reimbursement Obligations. A Delinquent
Bank shall be deemed to have satisfied in full a delinquency when and if,
as a result of application of the assigned payments to all Outstanding
Loans and Unpaid Reimbursement Obligations of the nondelinquent Banks,
the Banks' respective PRO RATA shares of all Outstanding Loans and Unpaid
Reimbursement Obligations have returned to those in effect immediately
prior to such delinquency and without giving effect to the nonpayment
causing such delinquency.
15.6. HOLDERS OF NOTES. The Agent may deem and treat the payee of any
Note or the purchaser of any Letter of Credit Participation as the absolute
owner or purchaser thereof for all purposes hereof until it shall have been
furnished in writing with a different name by such payee or by a subsequent
holder, assignee or transferee.
15.7. INDEMNITY. The Banks ratably agree hereby to indemnify and hold
harmless the Agent and its affiliates from and against any and all claims,
actions and suits (whether groundless or otherwise), losses, damages, costs,
expenses (including any expenses for which the Agent or such affiliate has not
been reimbursed by the Borrower or the Guarantor as required by Section 16), and
liabilities of every nature and character arising out of or related to this
Credit Agreement, the Notes, or any of the other Loan Documents or the
transactions contemplated or evidenced hereby or thereby, or the Agent's actions
taken hereunder or thereunder, except to the extent that any of the same shall
be directly caused by the Agent's willful misconduct or gross negligence.
15.8. AGENT AS BANK. In its individual capacity, Fleet shall have the
same obligations and the same rights, powers and privileges in respect to its
Commitment and the Loans made by it, and as the holder of any of the Notes and
as the purchaser of any Letter of Credit Participations, as it would have were
it not also the Agent.
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15.9. RESIGNATION. The Agent may resign at any time by giving sixty
(60) days prior written notice thereof to the Banks and the Borrower. Upon any
such resignation, the Majority Banks shall have the right to appoint a successor
Agent. Unless an Event of Default shall have occurred and be continuing, such
successor Agent shall be reasonably acceptable to the Borrower. If no successor
Agent shall have been so appointed by the Majority Banks and shall have accepted
such appointment within thirty (30) days after the retiring Agent's giving of
notice of resignation, then the retiring Agent may, on behalf of the Banks,
appoint a successor Agent, which shall be a financial institution having a
rating of not less than A or its equivalent by Standard & Poor's Corporation.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation, the provisions of this Credit Agreement and the
other Loan Documents shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as Agent.
15.10. NOTIFICATION OF DEFAULTS AND EVENTS OF DEFAULT. Each Bank hereby
agrees that, upon learning of the existence of a Default or an Event of Default,
it shall promptly notify the Agent thereof. The Agent hereby agrees that upon
receipt of any notice under this Section 15.10 it shall promptly notify the
other Banks of the existence of such Default or Event of Default.
15.11. DUTIES IN THE CASE OF ENFORCEMENT. In case one of more Events of
Default have occurred and shall be continuing, and whether or not acceleration
of the Obligations shall have occurred, the Agent shall, if (i) so requested by
the Majority Banks and (ii) the Banks have provided to the Agent such additional
indemnities and assurances against expenses and liabilities as the Agent may
reasonably request, proceed to exercise all or any such other legal and
equitable and other rights or remedies as it may have. The Majority Banks may
direct the Agent in writing as to the method and the extent of any such sale or
other disposition, the Banks hereby agreeing to indemnify and hold the Agent,
harmless from all liabilities incurred in respect of all actions taken or
omitted in accordance with such directions, PROVIDED that the Agent need not
comply with any such direction to the extent that the Agent reasonably believes
the Agent's compliance with such direction to be unlawful or commercially
unreasonable in any applicable jurisdiction.
16. EXPENSES AND INDEMNIFICATION.
16.1. EXPENSES. Each of the Borrower and the Guarantor agrees to pay
(i) the reasonable costs of producing and reproducing this Credit Agreement, the
other Loan Documents and the other agreements and instruments mentioned herein,
(ii) any taxes (including any interest and penalties in respect thereto) payable
by the Agent or any of the Banks (other than franchise or income taxes based
upon the Agent's or any Bank's net income or capital) on or with respect to the
transactions contemplated by this Credit Agreement (the Borrower and
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the Guarantor hereby agreeing to indemnify the Agent and each Bank with respect
thereto), (iii) the reasonable fees, expenses and disbursements of the Agent's
Special Counsel or any local counsel to the Agent incurred in connection with
the preparation, syndication, administration or interpretation of the Loan
Documents and other instruments mentioned herein, each closing hereunder, any
amendments, modifications, approvals, consents or waivers hereto or hereunder,
or the cancellation of any Loan Document upon payment in full in cash of all of
the Obligations or pursuant to any terms of such Loan Document for providing for
such cancellation, (iv) the fees, expenses and disbursements of the Agent or any
of its affiliates incurred by the Agent or such affiliate in connection with the
preparation, syndication, administration or interpretation of the Loan Documents
and other instruments mentioned herein; (v) all reasonable out-of-pocket
expenses (including without limitation reasonable attorneys' fees and costs,
which attorneys may be employees of any Bank or the Agent, and reasonable
consulting, accounting, investment banking and similar professional fees and
charges) incurred by any Bank or the Agent in connection with (A) the
enforcement of or preservation of rights under any of the Loan Documents against
the Borrower or any of the other Transaction Parties or the administration
thereof after the occurrence of a Default or Event of Default and (B) any
litigation, proceeding or dispute whether arising hereunder or otherwise, in any
way related to any Bank's or the Agent's relationship with the Borrower or any
of the other Transaction Parties and (vi) all reasonable fees, expenses and
disbursements of any Bank or the Agent incurred in connection with UCC searches.
16.2. INDEMNIFICATION. Each of the Borrower and the Guarantor agrees to
indemnify and hold harmless the Agent, its affiliates and the Banks from and
against any and all claims, actions and suits whether groundless or otherwise,
and from and against any and all liabilities, losses, damages and expenses of
every nature and character arising out of this Credit Agreement or any of the
other Loan Documents or the transactions contemplated hereby including, without
limitation, (i) any actual or proposed use by the Borrower or any of the other
Transaction Parties of the proceeds of any of the Loans or Letters of Credit,
(ii) the reversal or withdrawal of any provisional credits granted by the Agent
upon the transfer of funds from agency accounts or in connection with the
provisional honoring of checks or other items, (iii) the Borrower or any of the
other Transaction Parties entering into or performing this Credit Agreement or
any of the other Loan Documents or (iv) with respect to the Borrower and any of
the other Transaction Parties and their respective properties and assets, the
violation of any Environmental Law, the presence, disposal, escape, seepage,
leakage, spillage, discharge, emission, release or threatened release of any
Hazardous Substances or any action, suit, proceeding or investigation brought or
threatened with respect to any Hazardous Substances (including, but not limited
to, claims with respect to wrongful death, personal injury or damage to
property), in each case including, without limitation, the reasonable fees and
disbursements of counsel and allocated costs of internal counsel incurred in
connection with any such investigation, litigation or other proceeding;
PROVIDED,
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HOWEVER, that such indemnity shall not apply to the portion, if any,
of such losses, claims, damages, liabilities or related expenses of any Person
seeking indemnification that is determined by a court of competent jurisdiction
by final and nonappealable judgment to have resulted from the willful misconduct
or gross negligence of the Person seeking indemnification. In litigation, or
the preparation therefor, the Banks and the Agent and its affiliates shall be
entitled to select their own counsel and, in addition to the foregoing
indemnity, each of the Borrower and the Guarantor agrees to pay promptly the
reasonable fees and expenses of such counsel. If, and to the extent that the
obligations of the Borrower or the Guarantor under this Section 16.2 are
unenforceable for any reason, each of the Borrower and the Guarantor hereby
agrees to make the maximum contribution to the payment in satisfaction of such
obligations which is permissible under applicable law.
16.3. SURVIVAL. The covenants contained in this Section 16 shall
survive payment or satisfaction in full of all other Obligations.
17. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.
17.1. SHARING OF INFORMATION WITH SECTION 20 SUBSIDIARY. Each of the
Borrower and the Guarantor acknowledges that from time to time financial
advisory, investment banking and other services may be offered or provided to
the Borrower, the Guarantor or the other Transaction Parties in connection with
this Credit Agreement or otherwise, by a Section 20 Subsidiary. Each of the
Borrower and the Guarantor hereby authorizes (a) such Section 20 Subsidiary to
share with the Agent and each Bank any information delivered to such Section 20
Subsidiary by the Borrower or the Guarantor, and (b) the Agent and each Bank to
share with such Section 20 Subsidiary any information delivered to the Agent or
such Bank by the Borrower or any of the other Transaction Parties pursuant to
this Credit Agreement, or in connection with the decision of such Bank to enter
into this Credit Agreement; it being understood, in each case, that any such
Section 20 Subsidiary receiving such information shall be bound by the
confidentiality provisions of this Credit Agreement. Such authorization shall
survive the payment and satisfaction in full of all of the Obligations.
17.2. CONFIDENTIALITY. Each of the Banks and the Agent agrees, on
behalf of itself and each of its affiliates, directors, officers, employees and
representatives, to use reasonable precautions to keep confidential, in
accordance with their customary procedures for handling confidential information
of the same nature and in accordance with safe and sound banking practices, any
non-public information supplied to it by the Borrower or any of the other
Transaction Parties pursuant to this Credit Agreement that is identified by such
Person as being confidential at the time the same is delivered to the Banks or
the Agent, PROVIDED that nothing herein shall limit the disclosure of any such
information (a) after such information shall have become public other than
through a violation of this Section 17, (b) to the extent required by statute,
rule, regulation or judicial process, (c) to counsel for any of the Banks or the
Agent, (d) to bank examiners or any other regulatory authority having
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jurisdiction over any Bank or the Agent, or to auditors or accountants, (e) to
the Agent, any Bank or any Section 20 Subsidiary, (f) in connection with any
litigation to which any one or more of the Banks, the Agent or any Section 20
Subsidiary is a party, or in connection with the enforcement of rights or
remedies hereunder or under any other Loan Document, (g) to a Subsidiary or
affiliate of such Bank as provided in Section 17.1 or (h) to any assignee or
participant (or prospective assignee or participant) so long as such assignee or
participant agrees to be bound by the provisions of Section 19.6.
17.3. PRIOR NOTIFICATION. Unless specifically prohibited by
applicable law or court order, each of the Banks and the Agent shall, prior
to disclosure thereof, notify the Borrower of any request for disclosure of
any such non-public information by any governmental agency or representative
thereof (other than any such request in connection with an examination of the
financial condition of such Bank by such governmental agency) or pursuant to
legal process.
17.4. OTHER. In no event shall any Bank or the Agent be obligated or
required to return any materials furnished to it or any Section 20 Subsidiary by
the Borrower or any of the other Transaction Parties. The obligations of each
Bank under this Section 17 shall supersede and replace the obligations of such
Bank under any confidentiality letter in respect of this financing signed and
delivered by such Bank to the Borrower and/or the Guarantor prior to the date
hereof and shall be binding upon any assignee of, or purchaser of any
participation in, any interest in any of the Loans or Reimbursement Obligations
from any Bank.
18. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties made herein, in
the Notes, in any of the other Loan Documents or in any documents or other
papers delivered by or on behalf of the Borrower or any of the other Transaction
Parties pursuant hereto shall be deemed to have been relied upon by the Banks
and the Agent, notwithstanding any investigation heretofore or hereafter made by
any of them, and shall survive the making by the Banks of any of the Loans and
the issuance, extension or renewal of any Letters of Credit, as herein
contemplated, and shall continue in full force and effect so long as any Letter
of Credit or any amount due under this Credit Agreement or the Notes or any of
the other Loan Documents remains Outstanding or any Bank has any obligation to
make any Loans or the Agent has any obligation to issue, extend or renew any
Letter of Credit, and for such further time as may be otherwise expressly
specified in this Credit Agreement. All statements contained in any certificate
or other paper delivered to any Bank or the Agent at any time by or on behalf of
the Borrower or any of the other Transaction Parties pursuant hereto or in
connection with the transactions contemplated hereby shall constitute
representations and warranties by the Borrower or such Transaction Party
hereunder.
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19. ASSIGNMENT AND PARTICIPATION.
19.1. CONDITIONS TO ASSIGNMENT BY BANKS. Except as provided herein,
each Bank may assign to one or more Eligible Assignees all or a portion of its
interests, rights and obligations under this Credit Agreement (including all or
a portion of its Commitment Percentage and Commitment and the same portion of
the Loans at the time owing to it, the Notes held by it and its participating
interest in the risk relating to any Letters of Credit); PROVIDED that (i) each
of the Agent and, unless an Event of Default shall have occurred and be
continuing, the Borrower shall have given its prior written consent to such
assignment, which consent, in the case of the Borrower, will not be unreasonably
withheld, (ii) each such assignment shall be of a constant, and not a varying,
percentage of all the assigning Bank's rights and obligations under this Credit
Agreement, (iii) each assignment shall be in a minimum amount of $5,000,000 and
(iv) the parties to such assignment shall execute and deliver to the Agent, for
recording in the Register (as hereinafter defined), an Assignment and
Acceptance, substantially in the form of EXHIBIT D hereto (an "Assignment and
Acceptance"), together with any Notes subject to such assignment. Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, which effective date shall be at
least five (5) Business Days after the execution thereof, (i) the assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Bank hereunder,
and (ii) the assigning Bank shall, to the extent provided in such assignment and
upon payment to the Agent of the registration fee referred to in Section 19.3,
be released from its obligations under this Credit Agreement.
19.2. CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS;
COVENANTS. By executing and delivering an Assignment and Acceptance, the
parties to the assignment thereunder confirm to and agree with each other and
the other parties hereto as follows:
(a) other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned thereby free
and clear of any adverse claim, the assigning Bank makes no
representation or warranty, express or implied, and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement or
the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Credit Agreement, the other Loan Documents
or any other instrument or document furnished pursuant hereto;
(b) the assigning Bank makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower, any of the other Transaction Parties or any other Person
primarily or secondarily liable in respect of
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any of the Obligations, or the performance or observance by the
Borrower, any of the other Transaction Parties or any other Person
primarily or secondarily liable in respect of any of the Obligations
of any of their obligations under this Credit Agreement or any of the
other Loan Documents or any other instrument or document furnished
pursuant hereto or thereto;
(c) such assignee confirms that it has received a copy of this
Credit Agreement, together with copies of the most recent financial
statements referred to in Section 7.4 and Section 8.4 and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and
Acceptance;
(d) such assignee will, independently and without reliance upon
the assigning Bank, the Agent or any other Bank and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Credit Agreement;
(e) such assignee represents and warrants that it is an Eligible
Assignee;
(f) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this
Credit Agreement and the other Loan Documents as are delegated to the
Agent by the terms hereof or thereof, together with such powers as are
reasonably incidental thereto;
(g) such assignee agrees that it will perform in accordance with
their terms all of the obligations that by the terms of this Credit
Agreement are required to be performed by it as a Bank;
(h) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance; and
(i) such assignee acknowledges that it has made arrangements with
the assigning Bank satisfactory to such assignee with respect to its PRO
RATA share of Letter of Credit Fees in respect of Outstanding Letters of
Credit.
19.3. REGISTER. 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 Banks and the Commitment
Percentage of, and principal amount of the Loans owing to and Letter of Credit
Participations purchased by, the Banks from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the other Transaction Parties, the Agent and the Banks may treat each
Person whose name is recorded in the Register as a Bank hereunder for all
purposes of this Credit Agreement. The Register shall be available for
inspection by the Borrower and the Banks at any reasonable time and from time to
time upon
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reasonable prior notice. Upon each such recordation, the assigning Bank
agrees to pay to the Agent a registration fee in the sum of $3,500.
19.4. NEW NOTES. Upon its receipt of an Assignment and Acceptance
executed by the parties to such assignment, together with each Note subject
to such assignment, the Agent shall (i) record the information contained
therein in the Register, and (ii) give prompt notice thereof to the Borrower
and the Banks (other than the assigning Bank). Within five (5) Business Days
after receipt of such notice, the Borrower, at its own expense, shall execute
and deliver to the Agent, in exchange for each surrendered Note, a new Note
to the order of such Eligible Assignee in an amount equal to the amount
assumed by such Eligible Assignee pursuant to such Assignment and Acceptance
and, if the assigning Bank has retained some portion of its obligations
hereunder, a new Note to the order of the assigning Bank in an amount equal
to the amount retained by it hereunder. Such new Notes shall provide that
they are replacements for the surrendered Notes, shall be in an aggregate
principal amount equal to the aggregate principal amount of the surrendered
Notes, shall be dated the effective date of such an Assignment and Acceptance
and shall otherwise be substantially the form of the assigned Notes. The
surrendered Notes shall be canceled and returned to the Borrower.
19.5. PARTICIPATIONS. Each Bank may sell participations to one or more
banks or other entities in all or a portion of such Bank's rights and
obligations under this Credit Agreement and the other Loan Documents; PROVIDED
that (i) each such participation shall be in an amount of not less than
$5,000,000, (ii) any such sale or participation shall not affect the rights and
duties of the selling Bank hereunder to the Borrower and (iii) the only rights
granted to the participant pursuant to such participation arrangements with
respect to waivers, amendments or modifications of the Loan Documents shall be
the rights to approve waivers, amendments or modifications that would reduce the
principal of or the interest rate (including applicable margins) on any Loans,
extend the term or increase the amount of the Commitment of such Bank as it
relates to such participant, reduce the amount of any facility fees, utilization
fees or Letter of Credit Fees to which such participant is entitled or extend
any regularly scheduled payment date for principal or interest.
19.6. DISCLOSURE. Each of the Borrower and the Guarantor agrees that in
addition to disclosures made in accordance with standard and customary banking
practices any Bank may disclose information obtained by such Bank pursuant to
this Credit Agreement to assignees or participants and potential assignees or
participants hereunder; PROVIDED that such assignees or participants or
potential assignees or participants shall agree (i) to treat in confidence such
information unless such information otherwise becomes public knowledge, (ii) not
to disclose such information to a third party, except as required by law or
legal process and (iii) not to make use of such information for purposes of
transactions unrelated to such contemplated assignment or participation.
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19.7. ASSIGNEE OR PARTICIPANT AFFILIATED WITH THE BORROWER OR THE
GUARANTOR. If any assignee Bank is an Affiliate of the Borrower or the
Guarantor, then any such assignee Bank shall have no right to vote as a Bank
hereunder or under any of the other Loan Documents for purposes of granting
consents or waivers or for purposes of agreeing to amendments or other
modifications to any of the Loan Documents or for purposes of making requests to
the Agent pursuant to Section 13.1 or Section 13.2, and the determination of the
Majority Banks shall for all purposes of this Credit Agreement and the other
Loan Documents be made without regard to such assignee Bank's interest in any of
the Loans or Reimbursement Obligations. If any Bank sells a participating
interest in any of the Loans or Reimbursement Obligations to a participant, and
such participant is the Borrower or an Affiliate of the Borrower, then such
transferor Bank shall promptly notify the Agent of the sale of such
participation. A transferor Bank shall have no right to vote as a Bank
hereunder or under any of the other Loan Documents for purposes of granting
consents or waivers or for purposes of agreeing to amendments or modifications
to any of the Loan Documents or for purposes of making requests to the Agent
pursuant to Section 13.1 or Section 13.2 to the extent that such participation
is beneficially owned by the Borrower or any Affiliate of the Borrower, and the
determination of the Majority Banks shall for all purposes of this Credit
Agreement and the other Loan Documents be made without regard to the interest of
such transferor Bank in the Loans or Reimbursement Obligations to the extent of
such participation.
19.8. MISCELLANEOUS ASSIGNMENT PROVISIONS. Any assigning Bank shall
retain its rights to be indemnified pursuant to Section 16 with respect to any
claims or actions arising prior to the date of such assignment. If any assignee
Bank is not incorporated under the laws of the United States of America or any
state thereof, it shall, prior to the date on which any interest or fees are
payable hereunder or under any of the other Loan Documents for its account,
deliver to the Borrower and the Agent certification as to its exemption from
deduction or withholding of any United States federal income taxes. Anything
contained in this Section 19 to the contrary notwithstanding, any Bank may at
any time pledge all or any portion of its interest and rights under this Credit
Agreement (including all or any portion of its Notes) to any of the twelve
Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12
U.S.C. Section 341. No such pledge or the enforcement thereof shall release the
pledgor Bank from its obligations hereunder or under any of the other Loan
Documents.
19.9. ASSIGNMENT BY BORROWER OR GUARANTOR. Neither the Borrower nor the
Guarantor shall assign or transfer any of its rights or obligations under any of
the Loan Documents without the prior written consent of each of the Banks.
20. NOTICES, ETC.
Except as otherwise expressly provided in this Credit Agreement, all
notices and other communications made or required to be given pursuant to this
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Credit Agreement or the Notes or any Letter of Credit Applications shall be in
writing and shall be delivered in hand, mailed by United States registered or
certified first class mail, postage prepaid, sent by overnight courier, or sent
by telegraph, telecopy, facsimile or telex and confirmed by delivery via courier
or postal service, addressed as follows:
(a) if to the Borrower or the Guarantor, at 4645 Morena
Boulevard, San Diego, California 92117 Attention: Daniel T. Carter, Chief
Financial Officer, Fax: 858-587-0619 with a copy to Saunders Karp &
Megrue, L.P., 667 Madison Avenue, New York, New York 10021, Attn. Allan
Karp and David Oddi, Fax: 212-755-1624, or at such other address for
notice as the Borrower or the Guarantor shall last have furnished in
writing to the Person giving the notice;
(b) if to the Agent, at 100 Federal Street, Boston, Massachusetts
02110, USA, Attention: Stephen J. Garvin, Director, or such other
address for notice as the Agent shall last have furnished in writing to
the Person giving the notice; and
(c) if to any Bank, at such Bank's address set forth on
SCHEDULE 1 hereto, or such other address for notice as such Bank shall
have last furnished in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or made
and to have become effective (i) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile and
(ii) if sent by registered or certified first-class mail, postage prepaid, on
the third Business Day following the mailing thereof.
21. GOVERNING LAW.
THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF MASSACHUSETTS
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). EACH OF THE
BORROWER AND THE GUARANTOR AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
CREDIT AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS
OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND
CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS
IN ANY SUCH SUIT BEING MADE UPON THE BORROWER OR THE GUARANTOR BY MAIL AT THE
ADDRESS SPECIFIED IN SECTION 20. EACH OF THE BORROWER AND THE
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GUARANTOR HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN
AN INCONVENIENT COURT.
22. HEADINGS.
The captions in this Credit Agreement are for convenience of reference
only and shall not define or limit the provisions hereof.
23. COUNTERPARTS.
This Credit Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when
executed and delivered shall be an original, and all of which together shall
constitute one instrument. In proving this Credit Agreement it shall not be
necessary to produce or account for more than one such counterpart signed by the
party against whom enforcement is sought.
24. ENTIRE AGREEMENT, ETC.
The Loan Documents and any other documents executed in connection
herewith or therewith express the entire understanding of the parties with
respect to the transactions contemplated hereby. Neither this Credit Agreement
nor any term hereof may be changed, waived, discharged or terminated, except as
provided in Section 27.
25. WAIVER OF JURY TRIAL.
Each of the parties hereto hereby waives its right to a jury trial with
respect to any action or claim arising out of any dispute in connection with
this Credit Agreement, the Notes or any of the other Loan Documents, any rights
or obligations hereunder or thereunder or the performance of which rights and
obligations. Except as prohibited by law, each of the Borrower and the
Guarantor hereby waives any right it may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. Each of the Borrower and the Guarantor (i) certifies that no
representative, agent or attorney of any Bank or the Agent has represented,
expressly or otherwise, that such Bank or the Agent would not, in the event of
litigation, seek to enforce the foregoing waivers and (ii) acknowledges that the
Agent and the Banks have been induced to enter into this Credit Agreement, the
other Loan Documents to which it is a party by, among other things, the waivers
and certifications contained herein.
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26. CONSENTS, AMENDMENTS, WAIVERS, ETC.
Any consent or approval required or permitted by this Credit Agreement to
be given by the Banks may be given, and any term of this Credit Agreement, the
other Loan Documents or any other instrument related hereto or mentioned herein
may be amended, and the performance or observance by the Borrower or any of the
other Transaction Parties of any terms of this Credit Agreement, the other Loan
Documents or such other instrument or the continuance of any Default or Event of
Default may be waived (either generally or in a particular instance and either
retroactively or prospectively) with, but only with, the written consent of the
Borrower or, as applicable, such other Transaction Party, and the written
consent of the Majority Banks. Notwithstanding the foregoing, the rate of
interest (including applicable margins) on the Notes (other than interest
accruing pursuant to Section 5.10 following the effective date of any waiver by
the Majority Banks of the Default or Event of Default relating thereto), the
amount of the Commitments of the Banks, and the amount of facility fees,
utilization fees or Letter of Credit Fees hereunder may not be changed without
the written consent of the Borrower and the written consent of each Bank
affected thereby; the Revolving Credit Loan Maturity Date may not be postponed
without the written consent of each Bank affected thereby; this Section 26 and
the definition of Majority Banks may not be amended, without the written consent
of all of the Banks; and the amount of the Agent's Fee or any Letter of Credit
Fees payable for the Agent's account and Section 15 may not be amended without
the written consent of the Agent. No waiver shall extend to or affect any
obligation not expressly waived or impair any right consequent thereon. No
course of dealing or delay or omission on the part of the Agent or any Bank in
exercising any right shall operate as a waiver thereof or otherwise be
prejudicial thereto. No notice to or demand upon any of the Transaction Parties
shall entitle any of the Transaction Parties to other or further notice or
demand in similar or other circumstances.
27. SEVERABILITY.
The provisions of this Credit Agreement are severable and if any one
clause or provision hereof shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction, and shall
not in any manner affect such clause or provision in any other jurisdiction, or
any other clause or provision of this Credit Agreement in any jurisdiction.
<PAGE>
-61-
IN WITNESS WHEREOF, the undersigned have duly executed this Credit
Agreement as a sealed instrument as of the date first set forth above.
CHARLOTTE RUSSE, INC.
By: /s/ Daniel T. Carter
-----------------------------------
Name: Daniel T. Carter
Title: Executive Vice President and
Chief Financial Executive
CHARLOTTE RUSSE HOLDING, INC.
By: /s/ Daniel T. Carter
-----------------------------------
Name: Daniel T. Carter
Title: Executive Vice President and
Chief Financial Executive
BANKBOSTON, N.A., individually and as Agent
By: /s/ Stephen J. Garvin
-----------------------------------
Name: Stephen J. Garvin
Title: Director
<PAGE>
SCHEDULE 1
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
REVOLVING CREDIT REVOLVING CREDIT
BANKS COMMITMENT COMMITMENT PERCENTAGE
- --------------------------------------------------------------------------------
<S> <C> <C>
BANKBOSTON, N.A. $15,000,000 100%
- --------------------------------------------------------------------------------
TOTAL $15,000,000 100%
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 4.4
Letters of Credit
<TABLE>
<S> <C> <C>
1. B.B. Dakota, Inc. $33,048.00
2. B.B. Dakota, Inc. $65,083.60
3. Funika Ltd. $5,704.00
4. B.B. Dakota, Inc. $13,950.00
</TABLE>
<PAGE>
SCHEDULE 7.4
Fiscal Periods
<TABLE>
<CAPTION>
YEAR/QUARTER DATE ENDING
- ------------ -----------
<S> <C>
1998/99 (FY99)
First Quarter 12/26/98
Second Quarter 3/27/99
Third Quarter 6/26/99
Fourth Quarter 9/25/99
1999/00 (FY00)
First Quarter 12/25/00
Second Quarter 3/251/00
Third Quarter 6/24/00
Fourth Quarter 9/30/00
2000/01 (FY01)
First Quarter 12/30/00
Second Quarter 3/31/01
Third Quarter 6/30/01
Fourth Quarter 9/29/01
2001/02 (FY02)
First Quarter 12/29/01
Second Quarter 3/30/02
Third Quarter 6/29/02
Fourth Quarter 9/28/02
2002/03 (FY03)
First Quarter 12/28/02
Second Quarter 3/29/03
Third Quarter 6/28/03
Fourth Quarter 9/27/03
2003/04 (FY04)
First Quarter 12/27/03
Second Quarter 3/27/04
Third Quarter 6/26/04
Fourth Quarter 9/25/04
</TABLE>
<PAGE>
SCHEDULE 7.7
Consents
NONE
<PAGE>
SCHEDULE 9.1
Existing Indebtedness
<TABLE>
<CAPTION>
Institution Indebtedness
----------- ------------
<S> <C> <C>
NONE
</TABLE>
<PAGE>
SCHEDULE 9.2
Existing Liens
<TABLE>
<CAPTION>
Institution Lien
----------- ----
<S> <C>
COMDISCO Leased Equipment: HP K100
computer and related
equipment and software.
AMERICAN NATIONAL LEASING Leased Equipment: water
CORP. coolers in stores
BANCBOSTON LEASING, INC. Leased Equipment:
Materials Handling System in
distribution center
</TABLE>
<PAGE>
Exhibit A
FORM OF
REVOLVING CREDIT NOTE
$_____________ _____________, ____
FOR VALUE RECEIVED, the undersigned CHARLOTTE RUSSE, INC., a California
corporation, (the "Borrower"), hereby promises to pay to the order of
___________________________, [a national banking association] (the "Bank") at
the Agent's head office at 100 Federal Street, Boston, Massachusetts 02110:
(a) prior to or on the Revolving Credit Loan Maturity Date
the principal amount of __________________________ DOLLARS
($________________) or, if less, the aggregate unpaid principal
amount of Loans advanced by the Bank to the Borrower pursuant to
the Revolving Credit Agreement dated as of December ___, 1999 (as
amended and in effect from time to time, the "Credit Agreement"),
among the Borrower, the Guarantor (as defined therein), the Bank
and other lending institutions which are or may become parties
thereto from time to time, (the Bank and such other lending
institutions being collectively referred to as the "Banks") and
BankBoston, N.A., as agent for the Banks (the "Agent");
(b) the principal outstanding hereunder from time to time at
the times provided in the Credit Agreement; and
(c) interest on the principal balance hereof from time to time
outstanding from the Closing Date under the Credit Agreement through
and including the maturity date hereof at the times and at the rate
provided in the Credit Agreement.
This Note evidences borrowings under and has been issued by the
Borrower in accordance with the terms of the Credit Agreement. The Bank and
any holder hereof is entitled to the benefits of the Credit Agreement and the
other Loan Documents, and may enforce the agreements of the Borrower
contained therein, and any holder hereof may exercise the respective remedies
provided for thereby or otherwise available in respect thereof, all in
accordance with the respective terms thereof. All capitalized terms used in
this Note and not otherwise defined herein shall have the same meanings
herein as in the Credit Agreement.
The Borrower irrevocably authorizes the Bank to make or cause to be
made, at or about the time of the Drawdown Date of any Loan or at the time of
receipt of any payment of principal of this Note, an appropriate notation on
the grid attached to this Note, or the continuation of such grid, or any
other similar
<PAGE>
-2-
record, including computer records, reflecting the making of such Loan or (as
the case may be) the receipt of such payment. The outstanding amount of the
Loans set forth on the grid attached to this Note, or the continuation of
such grid, or any other similar record, including computer records,
maintained by the Bank with respect to any Loans shall be PRIMA FACIE
evidence of the principal amount thereof owing and unpaid to the Bank, but
the failure to record, or any error in so recording, any such amount on any
such grid, continuation or other record shall not limit or otherwise affect
the obligation of the Borrower hereunder or under the Credit Agreement to
make payments of principal of and interest on this Note when due.
The Borrower has the right in certain circumstances and the
obligation under certain other circumstances to prepay the whole or part of
the principal of this Note on the terms and conditions specified in the
Credit Agreement.
If any one or more of the Events of Default shall occur, the entire
unpaid principal amount of this Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of
any other rights of the Bank or such holder, nor shall any delay, omission or
waiver on any one occasion be deemed a bar or waiver of the same or any other
right on any further occasion.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any
extension or postponement of the time of payment or any other indulgence, to
any substitution, exchange or release of collateral and to the addition or
release of any other party or person primarily or secondarily liable.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR
ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY
FEDERAL COURT SITTING THEREIN AND THE CONSENT TO THE NONEXCLUSIVE
JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING
MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED BY REFERENCE IN
SECTION 20 OF THE CREDIT AGREEMENT. THE BORROWER HEREBY WAIVES ANY OBJECTION
THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY
<PAGE>
-3-
SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
This Note shall be deemed to take effect as a sealed instrument
under the laws of the Commonwealth of Massachusetts.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
<PAGE>
-4-
IN WITNESS WHEREOF, the undersigned have caused this Note to be
signed in its corporate name by its duly authorized officer as of the day and
year first above written.
CHARLOTTE RUSSE, INC.
By: ________________________________
Name:
Title:
<PAGE>
<TABLE>
<CAPTION>
- ------------------- -------------------- ------------------------ -------------------- --------------------
Amount Amount of Balance of
of Revolving Principal Paid Principal Notation
Date Credit Loan or Prepaid Unpaid Made By:
- ------------------- -------------------- ------------------------ -------------------- --------------------
<S> <C> <C> <C> <C>
- ------------------- -------------------- ------------------------ -------------------- --------------------
- ------------------- -------------------- ------------------------ -------------------- --------------------
- ------------------- -------------------- ------------------------ -------------------- --------------------
- ------------------- -------------------- ------------------------ -------------------- --------------------
- ------------------- -------------------- ------------------------ -------------------- --------------------
- ------------------- -------------------- ------------------------ -------------------- --------------------
- ------------------- -------------------- ------------------------ -------------------- --------------------
- ------------------- -------------------- ------------------------ -------------------- --------------------
- ------------------- -------------------- ------------------------ -------------------- --------------------
- ------------------- -------------------- ------------------------ -------------------- --------------------
- ------------------- -------------------- ------------------------ -------------------- --------------------
- ------------------- -------------------- ------------------------ -------------------- --------------------
- ------------------- -------------------- ------------------------ -------------------- --------------------
- ------------------- -------------------- ------------------------ -------------------- --------------------
- ------------------- -------------------- ------------------------ -------------------- --------------------
</TABLE>
<PAGE>
EXHIBIT B
CHARLOTTE RUSSE, INC.
4645 Morena Boulevard
San Diego, CA 92117
_____________, ____
BankBoston, N.A., as Agent
100 Federal Street
Boston, MA 02110
Attention: Stephen J. Garvin, Director
RE: REQUEST UNDER THE REVOLVING CREDIT AGREEMENT
Ladies and Gentlemen:
Reference is hereby made to that certain Revolving Credit Agreement,
dated as of December , 1999, by and among Charlotte Russe, Inc. (the
"Borrower"), Charlotte Russe Holding, Inc., BankBoston, N.A. and the other
lending institutions listed on SCHEDULE 1 thereto and BankBoston, N.A., as
agent (the "Agent") for itself and such other lending institutions (as
amended and in effect from time to time, the "Credit Agreement"). Capitalized
terms which are used herein without definition and which are defined in the
Credit Agreement shall have the same meanings herein as in the Credit
Agreement.
FOR BORROWINGS:
Pursuant to Section 2.6 of the Credit Agreement, we hereby request that
a Loan consisting of [**a Base Rate Loan in the principal amount of
$______________, or a Eurodollar Rate Loan in the principal amount of
$____________1/ with an Interest Period commencing on ____________ and maturing
on ___________**] be made on
____________________
____1/Note: Base Rate Loans shall not be less than $50,000 or a multiple of
$50,000 in excess thereof, and Eurodollar rate Loans shall not be less than
$100,000 or a multiple of $100,000 in excess thereof.
<PAGE>
BankBoston, N.A.
Page 2
____________ ___, _____. We understand that this request is irrevocable and
binding on us and obligates us to accept the requested Loan on such date.
We hereby certify (a) that the aggregate outstanding principal amount
of the Loans on today's date is $____________, (b) that we will use the proceeds
of the requested Loan in accordance with the provisions of the Credit Agreement,
(c) that each of the representations and warranties contained in the Credit
Agreement, any of the other Loan Documents or any documents, certificate or
other paper or notice delivered pursuant to or in connection with the Credit
Agreement was true and correct in all material respects as of the date as of
which they were made and each of the representations and warranties contained in
the Credit Agreement are true at and as of the date hereof (except, in each
case, to the extent of changes resulting from transactions contemplated or
permitted by the Credit Agreement and changes occurring in the ordinary course
of business that singly or in the aggregate are not materially adverse, and to
the extent that such representations and warranties relate expressly to an
earlier date) and (d) that no Default or Event of Default has occurred and is
continuing.
FOR REPAYMENTS:
Pursuant to the Credit Agreement, we hereby request that $_________ be
applied as payment of principal on our outstanding [**Loans **].
Very truly yours,
CHARLOTTE RUSSE, INC.
By:______________________________________
Title:
<PAGE>
EXHIBIT C
FORM OF
COMPLIANCE CERTIFICATE
[Date]
BankBoston, N.A., as Agent
and the Banks referred to below
100 Federal Street
Boston, Massachusetts 02110
Ladies and Gentlemen:
Reference is hereby made to that certain Revolving Credit Agreement,
dated as of December __, 1999, (as amended, modified, supplemented or restated
and in effect from time to time, the "Credit Agreement") among Charlotte Russe,
Inc. (the "Borrower"), Charlotte Russe Holding, Inc. (the "Guarantor), the
lending institutions referred to therein as Banks (collectively, the "Banks"),
and BankBoston, N.A., as agent for itself and the Banks (in such capacity, the
"Agent"). Capitalized terms used herein without definition shall have the same
meanings herein as in the Credit Agreement.
This is a certificate delivered pursuant to Section 8.2 of the Credit
Agreement for purposes of evidencing compliance with the financial covenants
provided for in Section 10 of the Credit Agreement. This certificate has been
duly executed by the principal financial or accounting officer of the Borrower.
To the best of the knowledge and belief of the undersigned: (a) each
of the representations and warranties contained in the Credit Agreement and the
other Loan Documents are true in all material respects as of the date hereof,
with the same effect as if made at and as of the date hereof (except to the
extent of any changes resulting from transactions contemplated or permitted by
the Credit Agreement and the other Loan Documents and changes occurring in the
ordinary course of business that singly or in the aggregate are not materially
adverse and to the extent that such representations and warranties relate
expressly to an earlier date); (b) attached hereto as APPENDIX I and set forth
in reasonable detail are computations evidencing compliance with the covenants
contained in Section 10 of the Credit Agreement as of the date and for the
applicable period to which the financial statements delivered herewith relate;
(c) the calculations present the financial information contained therein as of
the last day of such period and for such applicable period, as the case may be,
subject to normal year end adjustments; (d) as of the date hereof, no Default
or Event of Default has occurred or is continuing and (e) the [quarterly]
[annual]financial statements delivered to the Banks and the Agent herewith were
prepared in accordance with generally accepted accounting principles (except
for the absence of footnotes required by generally accepted accounting
principles) and presents
<PAGE>
-2-
fairly the financial position of the Borrower and its Subsidiaries as of the
date thereof [(subject, in the case of the quarterly financial statements, to
year-end adjustments)].
In addition, together with this certificate, the Borrower is delivering
to the Agent the financial statements [describe date and period of applicable
financial statements] required pursuant to Section 8.2 of the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has executed this certificate as
an instrument under seal as of the date first written above.
CHARLOTTE RUSSE, INC.
By:_______________________________
Name:
Title:
<PAGE>
APPENDIX I
COMPLIANCE CERTIFICATE WORKSHEET
CHARLOTTE RUSSE, INC.
CHARLOTTE RUSSE HOLDING, INC.
As of ______________
<TABLE>
<CAPTION>
Section Calculation
- ------- -----------
<S> <C> <C>
10.1. CONSOLIDATED TOTAL LIABILITIES TO EBITDA
A. CONSOLIDATED TOTAL LIABILITIES $___________
(measured on the last day
of each fiscal quarter)
B. CONSOLIDATED EBITDA:
(measured for the period of four consecutive
fiscal quarters ending on the last day of each
fiscal quarter)
(1) Consolidated net income (or net deficit), PLUS $___________
(after deduction of all expenses,
taxes, and other proper charges)
(2) depreciation and amortization, PLUS $___________
(3) income tax expense, PLUS $___________
(4) Consolidated Total Interest Expense, PLUS $___________
(5) fees and expenses paid during such period $___________
in connection with the closing of the Loans
(not to exceed $100,000 in the aggregate
for all fiscal periods)
$___________
C. RATIO OF A TO B: _____:_____
(not to exceed 2.00:1.00)
<PAGE>
-2-
10.2. FIXED CHARGE RATIO
A. CONSOLIDATED EBITDA
(measured for the period of four consecutive
fiscal quarters ending on the last day of each
fiscal quarter)
(1) Consolidated EBITDA, PLUS $___________
(3) Rental Obligations (for such period), MINUS $___________
(2) Capital Expenditures(for such period): $___________
$___________
B. CONSOLIDATED TOTAL INTEREST EXPENSE:
(measured for the period of four consecutive
fiscal quarters ending on the last day of such
fiscal quarter)
(1) Consolidated Total Interest Expense, PLUS $___________
(2) Rental Obligations (for such period): $___________
$___________
C. RATIO OF A TO B: _____:_____
(not to be less than 1.25:1.00)
10.3. CONSOLIDATED NET WORTH
A. Consolidated Total Assets $___________
MINUS
B. Consolidated Total Liabilities $___________
CONSOLIDATED NET WORTH $___________
Not to be less than:
a. $41,000,000, PLUS
b. 50% of positive Consolidated Net
Income (determined on a
cumulative basis beginning with
the fiscal quarter $___________
commencing on December 25, 1999)
Minimum Required: $___________
Sum of lines a and b
</TABLE>
<PAGE>
EXHIBIT D
FORM OF
ASSIGNMENT AND ACCEPTANCE
Dated as of ____________, ____
Reference is made to the Revolving Credit Agreement, dated as of
December __, 1999 (as from time to time amended and in effect, the "Credit
Agreement"), by and among CHARLOTTE RUSSE, INC., a California corporation
(the "Borrower"), CHARLOTTE RUSSE HOLDING, INC., a Delaware corporation (the
"Guarantor"), the banking institutions referred to therein as Banks
(collectively, the "Banks"), and BANKBOSTON, N.A., a national banking
association, as agent (in such capacity, the "Agent") for the Banks.
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the Credit Agreement.
____________________________________ (the "Assignor") and
__________________________ (the "Assignee") hereby agree as follows:
1. ASSIGNMENT. Subject to the terms and conditions of this Assignment
and Acceptance, the Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes without recourse to the Assignor, a
$____________ interest in and to the rights, benefits, indemnities and
obligations of the Assignor under the Credit Agreement equal to _______% in
respect of the Total Commitment immediately prior to the Effective Date (as
hereinafter defined).
2. ASSIGNOR'S REPRESENTATIONS. The Assignor (i) represents and warrants
that (A) it is legally authorized to enter into this Assignment and Acceptance,
(B) as of the date hereof, its Commitment is $____________, its Commitment
Percentage is _______%, the aggregate outstanding principal balance of its Loans
equals $____________, the aggregate amount of its Letter of Credit
Participations equals $____________ (in each case after giving effect to the
assignment contemplated hereby but without giving effect to any contemplated
assignments which have not yet become effective), and (C) immediately after
giving effect to all assignments which have not yet become effective, the
Assignor's Commitment Percentage will be sufficient to give effect to this
Assignment and Acceptance, (ii) makes no representation or warranty, express or
implied, and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
or any of the other Loan Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement, the
other Loan Documents or any other instrument or document
<PAGE>
-2-
furnished pursuant thereto or the attachment, perfection or priority of any
security interest or mortgage, other than that it is the legal and beneficial
owner of the interest being assigned by it hereunder free and clear of any
claim or encumbrance; (iii) makes no representation or warranty and assumes
no responsibility with respect to the financial condition of the Borrower or
the Guarantor or any other Person primarily or secondarily liable in respect
of any of the Obligations, or the performance or observance by the Borrower
or the Guarantor or any other Person primarily or secondarily liable in
respect of any of the Obligations of any of its obligations under the Credit
Agreement or any of the other Loan Documents or any other instrument or
document delivered or executed pursuant thereto; and (iv) attaches hereto the
Note delivered to it under the Credit Agreement.
The Assignor requests that the Borrower exchange the Assignor's Note
for new Notes payable to the Assignor and the Assignee as follows:
<TABLE>
<CAPTION>
Notes Payable to Amount of
the Order of: Note
- ---------------- ---------
<S> <C>
Assignor $______________
Assignee $______________
</TABLE>
3. ASSIGNEE'S REPRESENTATIONS. The Assignee (i) represents and
warrants that (A) it is duly and legally authorized to enter into this
Assignment and Acceptance, (B) the execution, delivery and performance of
this Assignment and Acceptance do not conflict with any provision of law or
of the charter or by-laws of the Assignee, or of any agreement binding on the
Assignee, (C) all acts, conditions and things required to be done and
performed and to have occurred prior to the execution, delivery and
performance of this Assignment and Acceptance, and to render the same the
legal, valid and binding obligation of the Assignee, enforceable against it
in accordance with its terms, have been done and performed and have occurred
in due and strict compliance with all applicable laws; (ii) confirms that it
has received a copy of the Credit Agreement, together with copies of the most
recent financial statements delivered pursuant to Section 8.2 thereof and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Acceptance;
(iii) agrees that it will, independently and without reliance upon the
Assignor, the Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Credit
Agreement; (iv) represents and warrants that it is an Eligible Assignee; (v)
appoints and authorizes the Agent to take such action as agent on its behalf
and to exercise such powers under the Credit Agreement and the other Loan
Documents as are delegated to the Agent by the terms thereof, together with
such powers as are reasonably incidental thereto; (vi) agrees that it will
perform in accordance with their terms all the obligations which by the terms
of the Credit Agreement are required to be performed by it as a Bank; and
(vii)
<PAGE>
-3-
acknowledges that it has made arrangements with the Assignor satisfactory to
the Assignee with respect to its pro rata share of Letter of Credit Fees in
respect of outstanding Letters of Credit.
4. EFFECTIVE DATE. The effective date for this Assignment and
Acceptance shall be _____________ __, ____ (the "Effective Date"). Following
the execution of this Assignment and Acceptance and, prior to the occurrence
of a Default or Event of Default, the consent of the Borrower hereto having
been obtained, each party hereto shall deliver its duly executed counterpart
hereof to the Agent for acceptance by the Agent and recording in the Register
by the Agent. Upon the recordation of this Assignment and Acceptance, the
Assignor shall pay to the Agent a registration fee in the sum of $3,500.
SCHEDULE 1 to the Credit Agreement shall thereupon be replaced as of the
Effective Date by the SCHEDULE 1 annexed hereto.
5. RIGHTS UNDER CREDIT AGREEMENT. Upon such acceptance and recording,
from and after the Effective Date, (i) the Assignee shall be a party to the
Credit Agreement and, to the extent provided in this Assignment and Acceptance,
have the rights and obligations of a Bank thereunder, and (ii) the Assignor
shall, with respect to that portion of its interest under the Credit Agreement
assigned hereunder, relinquish its rights and be released from its obligations
under the Credit Agreement; PROVIDED, HOWEVER, that the Assignor shall retain
its rights to be indemnified pursuant to Section 16 of the Credit Agreement
with respect to any claims or actions arising prior to the Effective Date.
6. PAYMENTS. Upon such acceptance of this Assignment and Acceptance
by the Agent and such recording, from and after the Effective Date, the Agent
shall make all payments in respect of the rights and interests assigned
hereby (including payments of principal, interest, fees and other amounts) to
the Assignee. The Assignor and the Assignee shall make any appropriate
adjustments in payments for periods prior to the Effective Date by the Agent
or with respect to the making of this assignment directly between themselves.
7. GOVERNING LAW. THIS ASSIGNMENT AND ACCEPTANCE IS INTENDED TO TAKE
EFFECT AS A SEALED INSTRUMENT TO BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (WITHOUT REFERENCE TO
CONFLICT OF LAWS).
8. COUNTERPARTS. This Assignment and Acceptance may be executed in
any number of counterparts which shall together constitute but one and the
same agreement.
<PAGE>
-4-
IN WITNESS WHEREOF, intending to be legally bound, each of the
undersigned has caused this Assignment and Acceptance to be executed on its
behalf by its officer thereunto duly authorized, as of the date first above
written.
ASSIGNOR:
By:__________________________________
Title:
ASSIGNEE:
By:___________________________________
Title:
CONSENTED TO:
CHARLOTTE RUSSE,
INC.
By:
___________________________
Title:
BANKBOSTON, N.A., as
Agent
By:________________________
Title:
<PAGE>
Exhibit 10.2
GUARANTY
GUARANTY, dated as of December 23, 1999, by CHARLOTTE RUSSE HOLDING,
INC., a Delaware corporation ("CRH"), CHARLOTTE RUSSE MERCHANDISING, INC., a
California corporation, and certain other Subsidiaries of the Borrower (as
hereinafter defined) which may become parties hereto (each a "Guarantor", and,
collectively, the "Guarantors") in favor of (a) BANKBOSTON, N.A., a national
banking association, as agent (hereinafter, in such capacity, the "Agent") for
itself and the other lending institutions (hereinafter, collectively, the
"Banks") which are or may become parties to that certain Revolving Credit
Agreement, dated as of December 23, 1999 (as may be amended and in effect from
time to time, the "Credit Agreement"), by and among Charlotte Russe, Inc. (the
"Borrower"), CRH, the Banks and the Agent and (b) each of the Banks.
WHEREAS, the Borrower and the Guarantors are members of a group of
related corporations, the success of any one of which is dependent in part on
the success of the other members of such group;
WHEREAS, each of the Guarantors expects to receive substantial direct
and indirect benefits from the extensions of credit to the Borrower by the Banks
pursuant to the Credit Agreement (which benefits are hereby acknowledged);
WHEREAS, it is a condition precedent to the Banks making any loans or
otherwise extending credit to the Borrower under the Credit Agreement that each
of the Guarantors execute and deliver to the Agent, for the benefit of the Banks
and the Agent, a guaranty substantially in the form hereof; and
WHEREAS, each of the Guarantors wishes to guaranty the Borrower's
obligations to the Banks under or in respect of the Credit Agreement as provided
herein;
NOW, THEREFORE, in consideration of these premises (the foregoing
recitals being part of this Guaranty), each of the Guarantors hereby jointly and
severally agrees with the Banks and the Agent as follows:
1. DEFINITIONS. The term "Obligations" and all other capitalized terms
used herein without definition shall have the respective meanings provided
therefor in the Credit Agreement.
2. GUARANTY OF PAYMENT AND PERFORMANCE. Each of the Guarantors hereby
jointly and severally guarantees to the Banks and the Agent the full and
punctual payment when due (whether at stated maturity, by required pre-payment,
by acceleration or otherwise), as well as the performance, of all of the
Obligations including all such which would become due but for the operation of
the automatic stay pursuant to Section 362(a) of the Federal Bankruptcy Code and
the operation of Section 502(b) and 506(b) of the Federal Bankruptcy Code. This
Guaranty is an absolute, unconditional and continuing guaranty of the full and
<PAGE>
-2-
punctual payment and performance of all of the Obligations and not of their
collectibility only and is in no way conditioned upon any requirement that the
Agent or any Bank first attempt to collect any of the Obligations from the
Borrower or resort to any collateral security or other means of obtaining
payment. Should the Borrower default in the payment or performance of any of the
Obligations, the joint and several obligations of the Guarantors hereunder with
respect to such Obligations in default shall become immediately due and payable
to the Agent, for the benefit of the Banks and the Agent, without demand or
notice of any nature, all of which are expressly waived by each of the
Guarantors. Payments by the Guarantors hereunder may be required by the Agent on
any number of occasions.
3. GUARANTORS' AGREEMENT TO PAY ENFORCEMENT COSTS, ETC. Each of the
Guarantors further agrees, as the principal obligor and not as a guarantor only,
to pay to the Agent, on demand, all costs and expenses (including court costs
and reasonable legal expenses) incurred or expended by the Agent in connection
with the Obligations, this Guaranty and the enforcement thereof, together with
interest on amounts recoverable under this Section 3 from the time when such
amounts become due until payment, whether before or after judgment, at the rate
of interest for overdue principal set forth in the Credit Agreement, PROVIDED
that if such interest exceeds the maximum amount permitted to be paid under
applicable law, then such interest shall be reduced to such maximum permitted
amount.
4. WAIVERS BY GUARANTORS; BANK'S FREEDOM TO ACT. Each of the Guarantors
agrees that the Obligations will be paid and performed strictly in accordance
with their respective terms, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or any Bank with respect thereto. To the fullest extent
permitted by law, each of the Guarantors waives promptness, diligences,
presentment, demand, protest, notice of acceptance, notice of any Obligations
incurred and all other notices of any kind, all defenses which may be available
by virtue of any valuation, stay, moratorium law or other similar law now or
hereafter in effect, any right to require the marshalling of assets of the
Borrower or any other entity or other person primarily or secondarily liable
with respect to any of the Obligations, and all suretyship defenses generally.
Without limiting the generality of the foregoing, each of the Guarantors agrees
to the provisions of any instrument evidencing, securing or otherwise executed
in connection with any Obligation and agrees that the obligations of each of the
Guarantors hereunder shall not be released or discharged, in whole or in part,
or otherwise affected by (i) the failure of the Agent or any Bank to assert any
claim or demand or to enforce any right or remedy against the Borrower or any
other entity or other person primarily or secondarily liable with respect to any
of the Obligations; (ii) any extensions, compromise, refinancing, consolidation
or renewals of any Obligation; (iii) any change in the time, place or manner of
payment of any of the Obligations or any rescissions, waivers, compromise,
refinancing, consolidation, or other amendments or modifications of any of the
terms or provisions of the Credit Agreement, the Notes, the other Loan Documents
or any other agreement evidencing, securing or otherwise executed
<PAGE>
-3-
in connection with any of the Obligations; (iv) the addition, substitution or
release of any entity or other person primarily or secondarily liable for any
Obligation, (v) the adequacy of any rights which the Agent or any Bank may have
against any collateral security or other means of obtaining repayment of any of
the Obligations; (vi) the impairment of any collateral securing any of the
Obligations, including without limitation the failure to perfect or preserve any
rights which the Agent or any Bank might have in such collateral security or the
substitution, exchange, surrender, release, loss or destruction of any such
collateral security; or (vii) to the fullest extent permitted by law, any other
act or omission which might in any manner or to any extent vary the risk of any
of the Guarantors or otherwise operate as a release or discharge of any of the
Guarantors, all of which may be done without notice to the Guarantors. To the
fullest extent permitted by law, each of the Guarantors hereby expressly waives
any and all rights or defenses arising by reason of (A) any "one action" or
"anti-deficiency" law which would otherwise prevent the Agent or any Bank from
bringing any action, including any claim for a deficiency, or exercising any
other right or remedy (including any right of set-off), against any of the
Guarantors before or after the Agent's or such Bank's commencement or completion
of any foreclosure action, whether judicially, by exercise of power of sale or
otherwise, or (B) any other law which in any other way would otherwise require
any election of remedies by the Agent or any Bank.
5. UNENFORCEABILITY OF OBLIGATIONS AGAINST BORROWER. If for any reason
the Borrower has no legal existence or is under no legal obligation to discharge
any of the Obligations, or if any of the Obligations have become irrecoverable
from the Borrower by reason of the Borrower's insolvency, bankruptcy or
reorganization or by other operation of law or for any other reason, this
Guaranty shall nevertheless be binding on each of the Guarantors to the same
extent as if each of the Guarantors at all times had been the principal obligor
on all such Obligations. In the event that acceleration of the time for payment
of any of the Obligations is stayed upon the insolvency, bankruptcy or
reorganization of the Borrower, or for any other reason, all such amounts
otherwise subject to acceleration under the terms of the Credit Agreement, the
Notes, the other Loan Documents or any other agreement evidencing, securing or
otherwise executed in connection with any Obligation shall be immediately due
and payable by each of the Guarantors.
6. SUBROGATION; SUBORDINATION.
6.1. WAIVER OF RIGHTS AGAINST BORROWER. Until the final
payment and performance in full of all of the Obligations and any and
all other obligations of the Borrower to the Agent or any Bank or any
affiliate of the Agent or such Bank, none of the Guarantors shall
exercise any rights against the Borrower arising as a result of payment
by such Guarantor hereunder, by way of subrogation, reimbursement,
restitution, contribution or otherwise, and will not prove any claim in
competition with the Agent or any Bank or such affiliate in respect of
any payment hereunder in any bankruptcy, insolvency or reorganization
case or proceedings of any nature; none of the Guarantors will claim
any
<PAGE>
-4-
setoff, recoupment or counterclaim against the Borrower in respect of
any liability of such Guarantor to the Borrower; and each of the
Guarantors waives any benefit of and any right to participate in any
collateral security which may be held by the Agent or any Bank or any
such affiliate.
6.2. SUBORDINATION. The payment of any amounts due with
respect to any indebtedness of the Borrower now or hereafter owed to
any of the Guarantors is hereby subordinated to the prior payment in
full of all of the Obligations and any and all other obligations of the
Borrower to the Agent or any Bank or any affiliate of the Agent or any
Bank. Each of the Guarantors agrees that, after the occurrence of any
default in the payment or performance of any of the Obligations, such
Guarantor will not demand, sue for or otherwise attempt to collect any
such indebtedness of the Borrower to such Guarantor until all of the
Obligations shall have been paid in full. If, notwithstanding the
foregoing sentence, any Guarantor shall collect, enforce or receive any
amounts in respect of such indebtedness, such amounts shall be
collected, enforced and received by such Guarantor as trustee for the
Banks and the Agent and be paid over to the Agent, for the benefit of
the Banks, on account of the Obligations without affecting in any
manner the liability of the Guarantor under the other provisions of
this Guaranty.
6.3. PROVISIONS SUPPLEMENTAL. The provisions of this Section 6
shall be supplemental to and not in derogation of any rights and
remedies of the Agent or any Bank or any affiliate of the Agent or any
Bank under any separate subordination agreement which the Agent or any
Bank or such affiliate may at any time and from time to time enter into
with any Guarantor.
7. SECURITY; SETOFF. Each of the Guarantors grants to the Agent, for
the benefit of the Banks, as security for the full and punctual payment and
performance of all of such Guarantor's obligations hereunder, a continuing lien
on and security interest in all securities or other property belonging to such
Guarantor now or hereafter held by the Banks and the Agent and in all deposits
(general or special, time or demand, provisional or final) and other sums
credited by or due from the Banks and the Agent to such Guarantor or subject to
withdrawal by such Guarantor. Regardless of the adequacy of any collateral
security or other means of obtaining payment of any of the Obligations, the
Agent is hereby authorized at any time and from time to time, when an Event of
Default has occurred and is continuing without notice to any of the Guarantors
(any such notice being expressly waived by each of the Guarantors) and to the
fullest extent permitted by law, to set off and apply such deposits and other
sums against the obligations of each of the Guarantors under this Guaranty,
whether or not the Agent shall have made any demand under this Guaranty and
although such obligations may be contingent or unmatured.
<PAGE>
-5-
8. FURTHER ASSURANCES. Each of the Guarantors also agrees to do all
such things and execute all such documents as the Agent may consider necessary
or desirable to give full effect to this Guaranty and to perfect and preserve
the rights and powers of the Banks and the Agent hereunder. Each of the
Guarantors acknowledges and confirms that such Guarantor itself has established
its own adequate means of obtaining from the Borrower on a continuing basis all
information desired by such Guarantor concerning the financial condition of the
Borrower and that such Guarantor will look to the Borrower and not to the Agent
or any Bank in order for such Guarantor to keep adequately informed of changes
in the Borrower's financial condition.
9. REINSTATEMENT. After the termination of this Guaranty, this Guaranty
shall continue to be effective or be reinstated if at any time any payment made
or value received with respect to any Obligation is rescinded or must otherwise
be returned by the Agent or any Bank upon the insolvency, bankruptcy or
reorganization of the Borrower, or otherwise, all as though such payment had not
been made or value received.
10. SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon each of
the Guarantors, their successors and assigns, and shall inure to the benefit of
and be enforceable by the Agent and the Banks and their successors, transferees
and assigns. Without limiting the generality of the foregoing sentence and
except as limited by the Credit Agreement, the Agent or any Bank may assign or
otherwise transfer the Credit Agreement, the Notes, the other Loan Documents or
any other agreement or note held by it evidencing, securing or otherwise
executed in connection with the Obligations, or sell participations in any
interest therein, to any other entity or other person, and such other entity or
other person shall thereupon become vested, to the extent set forth in the
agreement evidencing such assignment, transfer or participation, with all the
rights in respect thereof granted to the Agent or such Bank herein.
11. AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Guaranty nor consent to any departure by any of the Guarantors therefrom
shall be effective unless the same shall be in writing and signed by the Agent.
No failure on the part of the Agent or any Bank to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right.
12. NOTICES. All notices and other communications called for hereunder
shall be made in writing and, unless otherwise specifically provided herein,
shall be deemed to have been duly made or given when delivered by hand or mailed
by United States registered or certified first class, postage prepaid, or, sent
by overnight courier, or if sent by telecopy or telefax, when such telecopy or
telefax is transmitted to the appropriate telecopy or telefax number and
telephonic confirmation of receipt thereof is obtained, addressed as follows: if
to a Guarantor, at the address set forth beneath its signature hereto, and if to
the Banks, at the address for notices to the Agent set forth in Section 20 of
the Credit
<PAGE>
-6-
Agreement, or at such address as either party may designate in writing to the
other.
13. JOINT AND SEVERAL LIABILITIES. (a) Each of the Guarantors is
accepting unlimited joint and several liability hereunder and in consideration
of the financial accommodations to be provided by the Agent and the Banks under
the Loan Documents, for the mutual benefit, directly and indirectly, of each of
the Guarantors and in consideration of the undertakings of each other Guarantor
to accept joint and several liability for the Obligations.
(b) Each of the Guarantors, jointly and severally, hereby irrevocably
and unconditionally accepts, not merely as a surety but also as a co-debtor,
joint and several liability with the other Guarantors, with respect to the
payment and performance of all of the Obligations arising under this Guaranty
(including, without limitation, any Obligations arising under this Section 13),
it being the intention of the parties hereto that all such Obligations shall be
joint and several Obligations of each of the Guarantors without preferences or
distinction among them.
(c) If and to the extent that any of the Guarantors shall fail to make
any payment with respect to such Guarantor's Obligations as and when due or to
perform such Guarantor's Obligations in accordance with the terms thereof, then
in each such event the other Guarantors will make such payment with respect to,
or perform, such Obligation.
(d) The Obligations of each of the Guarantors under the provisions of
this Section 13 constitute full recourse Obligations of each of the Guarantors,
enforceable against each such Guarantor to the full extent of its properties and
assets, irrespective of the validity, regularity or enforceability of this
Guaranty or any other circumstance whatsoever.
(e) Except as otherwise expressly provided in this Guaranty, each of
the Guarantors hereby waives notice of acceptance of its joint and several
liability, notice of any Loans made under the Agreement, notice of the
occurrence of any default, notice of any action at any time taken or omitted by
the Agent or the Banks under or in respect of any of the Obligations, any
requirement of diligence or mitigation of damages and, generally, to the extent
permitted by applicable law, all demands, notices and other formalities of every
kind in connection with this Guaranty. Each of the Guarantors hereby assents to,
and waives notice of, any extension or postponement of the time for the payment
of any of the Obligations, the acceptance of any partial payment thereon, any
waiver, consent or other action or acquiescence by the Agent or any Bank at any
time or times in respect of any default by any of the Guarantors in the
performance or satisfaction of any term, covenant, condition or provision of
this Guaranty, any and all other indulgences whatsoever by the Agent or any Bank
in respect of any of the Obligations, and the taking, addition, substitution or
release, in whole or in part, at any time or times, of any security for any of
the Obligations or the addition, substitution or release, in whole or in part,
of any of the Guarantors. Without limiting the generality of the foregoing,
<PAGE>
-7-
each of the Guarantors assents to any other action or delay in acting or failing
to act on the part of the Agent or any Bank with respect to the failure by any
of the Guarantors to comply with any of its respective Obligations, including,
without limitation, any failure strictly or diligently to assert any right or to
pursue any remedy or to comply fully with applicable laws or regulations
thereunder, which might, but for the provisions of this Section 13, afford
grounds for terminating, discharging or relieving any of the Guarantors, in
whole or in part, from any of its Obligations under this Section 13, it being
the intention of each of the Guarantors that, so long as any of the Obligations
hereunder remain unsatisfied, the Obligations of the Guarantors under this
Section 13 shall not be discharged except by performance and then only to the
extent of such performance. The Obligations of each of the Guarantors under this
Section 13 shall not be diminished or rendered unenforceable by any winding up,
reorganization, arrangement, liquidation, reconstruction or similar proceeding
with respect to any of the Guarantors or the Agent or any Bank. The joint and
several liability of each Guarantor hereunder shall continue in full force and
effect notwithstanding any absorption, merger, amalgamation or any other change
whatsoever in the name, membership, constitution or place of formation of any
Guarantor or the Agent or any Bank. Each of the Guarantors hereby waives any and
all defenses based on suretyship and any and all defenses that might be
available under applicable law.
(f) The provisions of this Section 13 are made for the benefit of the
Agent, the Banks and their respective successors and assigns, and may be
enforced by any of them from time to time against any or all of the Guarantors
as often as occasion therefor may arise and without requirement on the part of
the Agent or any Bank first to marshall any of its claims or to exercise any of
its rights against any other Guarantor or to exhaust any remedies available to
it against any other Guarantor or to resort to any other source or means of
obtaining payment of any of the Obligations hereunder or to elect any other
remedy. The provisions of this Section 13 shall remain in effect until all of
the Company's obligations under the Loan Documents shall have been finally paid
in full or otherwise fully satisfied. If at any time, any payment, or any part
thereof, made in respect of any of the Obligations, is rescinded or must
otherwise be restored or returned by the Agent or any Bank upon the insolvency,
bankruptcy or reorganization of any of the Guarantors, or otherwise, the
provisions of this Section 13 will forthwith be reinstated and in effect, as
though such payment has not been made.
(g) Each Guarantor hereby agrees that it will not enforce any of its
rights of contribution or subrogation against any other Guarantor with respect
to any liability incurred by it hereunder or under any of the other Loan
Documents, any payments made by it to the Agent or any Bank with respect to any
of the Obligations or any collateral security therefor until such time as all
Obligations have been paid in full. If any payment shall be made to a Guarantor
on account of its rights under this Section 13 at any time when the Obligations
shall not have been paid in full, each and every amount so paid will forthwith
be paid over to the Agent for the ratable benefit of the Banks to be credited
and applied to the Obligations.
<PAGE>
-8-
14. GOVERNING LAW; CONSENT TO JURISDICTION. THIS GUARANTY IS INTENDED
TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. Each of the
Guarantors agrees that any suit for the enforcement of this Guaranty may be
brought in the courts of the Commonwealth of Massachusetts or any federal court
sitting therein and consents to the nonexclusive jurisdiction of such court and
to service of process in any such suit being made upon such Guarantor by mail at
the address specified by reference in Section 12. Each of the Guarantors hereby
waives any objection that it may now or hereafter have to the venue of any such
suit or any such court or that such suit was brought in an inconvenient court.
15. WAIVER OF JURY TRIAL. EACH OF THE GUARANTORS HEREBY WAIVES ITS
RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS GUARANTY, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR
THE PERFORMANCE OF ANY OF SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by
law, each of the Guarantors hereby waives any right which it may have to claim
or recover in any litigation referred to in the preceding sentence any special,
exemplary, punitive or consequential damages or any damages other than, or in
addition to, actual damages. Each of the Guarantors (i) certifies that neither
the Agent or any Bank nor any representative, agent or attorney of the Agent or
such Bank has represented, expressly or otherwise, that the Agent or such Bank
would not, in the event of litigation, seek to enforce the foregoing waivers and
(ii) acknowledges that, in entering into the Credit Agreement and the other Loan
Documents to which the Banks and the Agent are parties, the Banks and the Agent
are relying upon, among other things, the waivers and certifications contained
in this ss.15.
16. MISCELLANEOUS. This Guaranty constitutes the entire agreement of
each of the Guarantors with respect to the matters set forth herein. The rights
and remedies herein provided are cumulative and not exclusive of any remedies
provided by law or any other agreement, and this Guaranty shall be in addition
to any other guaranty of or collateral security for any of the Obligations. The
invalidity or unenforceability of any one or more sections of this Guaranty
shall not affect the validity or enforceability of its remaining provisions.
Captions are for the ease of reference only and shall not affect the meaning of
the relevant provisions. The meanings of all defined terms used in this Guaranty
shall be equally applicable to the singular and plural forms of the terms
defined.
<PAGE>
-9-
IN WITNESS WHEREOF, each of the Guarantors has caused this Guaranty to
be executed and delivered as of the date first above written.
CHARLOTTE RUSSE HOLDING, INC.
By: /s/ Daniel T. Carter
-----------------------------------------
Name: Daniel T. Carter
Title: Executive V.P. and Chief Financial Officer
Address: 4645 Morena Boulevard
San Diego, California 92117
Telecopy: 858-587-0619
CHARLOTTE RUSSE MERCHANDISING, INC.
By: /s/ Daniel T. Carter
-----------------------------------------
Name: Daniel T. Carter
Title: Chief Financial Officer
Address: 4645 Morena Boulevard
San Diego, California 92117
Telecopy: 858-587-0619
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-25-1999
<PERIOD-START> SEP-26-1999
<PERIOD-END> DEC-25-1999
<CASH> 3,928,705
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 9,354,963
<CURRENT-ASSETS> 18,735,954
<PP&E> 52,857,708
<DEPRECIATION> 11,299,158
<TOTAL-ASSETS> 91,950,104
<CURRENT-LIABILITIES> 27,765,874
<BONDS> 0
0
0
<COMMON> 201,370
<OTHER-SE> 59,304,692
<TOTAL-LIABILITY-AND-EQUITY> 91,950,104
<SALES> 62,931,088
<TOTAL-REVENUES> 0
<CGS> 41,623,082
<TOTAL-COSTS> 12,139,668
<OTHER-EXPENSES> 65,262
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 196,124
<INCOME-PRETAX> 8,906,952
<INCOME-TAX> 3,696,385
<INCOME-CONTINUING> 5,210,567
<DISCONTINUED> 0
<EXTRAORDINARY> 311,314
<CHANGES> 0
<NET-INCOME> 4,899,253
<EPS-BASIC> .25
<EPS-DILUTED> .22
</TABLE>
