UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended February 3, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 1-1394
EDISON BROTHERS STORES, INC.
(Exact name of registrant as specified in its charter)
Delaware 43-0254900
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
501 N. Broadway, St. Louis, Missouri 63102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 331-6000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, par value $1 per share New York Stock Exchange
Common Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of class)
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of
the registrant as of April 17, 1996:
Common Stock, $1 par value - $33,302,667
It is assumed for purposes of this calculation that the registrant has no
"affiliates". Information as to the shareholdings of directors of the
registrant is provided in the proxy statement for the 1996 annual meeting
of stockholders.
The number of shares outstanding of each of the registrant's classes of
common stock, as of April 17, 1996:
Common Stock, $1 par value - 22,201,778 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the annual report to stockholders for the fiscal year
ended February 3, 1996 ("1995 Annual Report"), are incorporated by
reference into Parts I and II.
Portions of the proxy statement for the 1996 annual stockholders
meeting are incorporated by reference into Part III.
PART I
Item 1. BUSINESS
General
Edison Brothers Stores, Inc. (the "company") owns and operates chains of
specialty stores in forty-nine of the United States, Puerto Rico, the
Virgin Islands, Mexico, and Canada. The company conducts its principal
operations through subsidiaries and divisions in two business segments:
apparel and footwear. Both the apparel and the footwear segments feature
primarily private label merchandise in the moderate price range. The
stores operated by the company are located primarily in shopping malls.
During 1995 the company opened 91 stores including 39 acquired by purchase,
sold 98 stores, and closed 656 stores.
Proceedings under Chapter 11
On November 3, 1995 (the "Petition Date"), the company and 65 of its
subsidiaries and affiliates (the "Debtors") filed petitions for
reorganization under Chapter 11 of the United States Bankruptcy Code in the
United States Bankruptcy Court in Wilmington, Delaware. The Debtors are
presently operating their respective businesses as debtors-in-possession.
A statutory creditors committee has been appointed in the Chapter 11
cases. The Chapter 11 cases of the Debtors are being jointly administered
for procedural purposes only.
Subsequent to the filing of the Chapter 11 petitions, the company sought
and obtained several orders from the Bankruptcy Court which were intended
to stabilize its business. The most significant of these: 1) authorized
the company to conduct store closing sales, 2) approved a $200 million
unsecured debtor-in-possession financing agreement with BankAmerica
Business Credit, 3) approved the sale of substantially all of the assets of
the company's mall entertainment division to Namco Cybertainment, and 4)
authorized a $21.6 million principal payment on prepetition liabilities,
payments of prepetition wages and vacation pay, and up to $6.0 million to
foreign vendors to aid the company in maintaining the normal flow of
merchandise to its stores.
The company and Edison Brothers Apparel Stores, Inc., as debtors-in-
possession, entered into a Loan Agreement dated effective November 9, 1995
(the "DIP facility"), with BankAmerica Business Credit, Inc., as Agent and
Lender ("BankAmerica"), under which the company may borrow up to $200
million to fund ongoing working capital needs. The DIP facility, subject
to collateral restrictions, has a sublimit of $150 million for the issuance
of letters of credit. The company expects that the DIP facility will
provide it with the cash and liquidity to conduct its operations and pay
for merchandise shipments at normal levels while it prepares a
reorganization plan.
At the company's option, the company may borrow under the DIP facility at
the Reference Rate (as defined) plus .25% or at the Eurodollar Rate (as
defined) plus 1.5%. The maximum borrowing, up to $200 million, is limited
to 50% of the value of eligible inventory (as defined) plus 95% of the
amount of cash deposited with the Agent. The company is required to pay a
commitment fee of .375% per annum of the unused portion of the DIP
facility. The DIP facility contains restrictive covenants including, among
other things, a limitation on store closings of 850, limitations on the
incurrence of additional liens and indebtedness, limitations on capital
expenditures and the sale of assets, the maintenance of minimum operating
earnings ("EBITDA") and inventory levels, and a prohibition on paying
dividends.
The lenders under the DIP facility have a "super-priority" administrative
expense claim against the estate of the company. The DIP facility expires
on the earlier of November 9, 1997, or the effective date of a
reorganization plan that is confirmed by the Bankruptcy Court.
Description of Business
Apparel Segment
Edison Brothers' men's apparel chains and other operations include
J. Riggings, JW/Jeans West, Oaktree, Zeidler & Zeidler, Coda, Repp Ltd.,
and Phoenix catalog operations. The womenswear chain is 5-7-9 Shops.
J. Riggings focuses on providing updated traditional apparel to a broad age
group of 16 to 40 year-old men. Its mainstream merchandise and classic
store design are targeted at a more conservative customer. J. Riggings
operated 419 and 498 stores at the end of fiscal 1995 and 1994,
respectively.
The JW/Jeans West (JW) chain had 360 and 425 stores at the end of fiscal
1995 and 1994 respectively. JW stores are generally smaller than stores in
the company's other menswear chains and are designed to maximize the amount
of apparel displayed on the sales floor. This chain targets young men in
the 14 to 25 year-old age group.
Oaktree offers a mix of sportswear for 18 to 29 year-old men. Its larger
store size accommodates Oaktree's presentation on custom fixtures in a
modern setting. Oaktree operated 84 and 279 stores at the end of fiscal
1995 and 1994, respectively.
The Zeidler & Zeidler store group markets upscale contemporary clothing for
men. Zeidler & Zeidler had 102 and 152 stores at the end of fiscal 1995
and 1994, respectively.
Coda presents branded and private label current fashion to 18 to 29 year-
old men. Coda's larger stores utilize a variety of merchandising
techniques, including visual displays and advanced sound systems. At the
end of fiscal 1995 and 1994 Coda operated 35 and 39 stores.
Repp Ltd. is a chain of 214 big and tall mens stores up from 185 in 1994.
Repp Ltd. markets sportswear and clothing to men who are 6 foot 3 inches or
taller or have a 44 inch or larger waist.
Phoenix Big & Tall is a catalog operation that markets sportswear and
clothing to big and tall men.
5-7-9 Shops primarily markets sportswear, dresses, and accessories to the
small size junior customer. 5-7-9 Shops operated 283 and 363 stores at the
end of fiscal 1995 and 1994, respectively.
Footwear Segment
The company's footwear chains include Bakers/Leeds, Precis, and Wild Pair.
The Bakers/Leeds stores, which are operated as a single chain, form the
company's third largest chain with 347 and 418 stores at the end of fiscal
1995 and 1994, respectively. Bakers/Leeds offers a wide selection of
popularly priced fashion shoes and accessories for the junior customer as
well as the contemporary woman.
Precis offers reasonably priced footwear and accessories in a boutique
setting, catering to contemporary women in their 20's, 30's and 40's.
Precis operated 39 and 29 stores at the end of fiscal 1995 and 1994,
respectively.
Wild Pair offers advanced shoe fashion for young women and men and a
selection of trend setting accessories. Wild Pair operated 194 and 234
stores at the end of fiscal 1995 and 1994, respectively.
Entertainment
Effective June 29, 1995, the company distributed all of the outstanding
shares of common stock of Dave & Buster's, Inc. owned by the company to
Edison Brothers' stockholders of record as of June 19, 1995. Prior to the
distribution, Dave & Buster's had been a majority-owned subsidiary engaged
in the ownership and operation of restaurant/entertainment complexes.
In January 1996 the company sold substantially all of the assets of its
mall entertainment division to Namco Cybertainment, a wholly owned
subsidiary of Namco Ltd., of Tokyo, Japan. The company will dispose of the
remaining operations in fiscal 1996. The company's mall entertainment
division included family entertainment centers and operations involved with
the marketing of new interactive entertainment technologies.
Additional information on the company's principal business segments is set
forth under "Note 16: Business Segments" of the Notes to Consolidated
Financial Statements in the 1995 Annual Report. Such information is
incorporated herein by reference.
Operations, Inventory and Distribution
The specialty retailing business is subject to fluctuations resulting from
changes in customer preferences dictated by fashion and season. This is
especially true for stores emphasizing fashion over classic basics. In
addition, merchandise usually must be ordered a significant time in advance
of the season and sometimes before fashion trends are evidenced by customer
purchases. It has been the general practice of the company and other
apparel retailers to build up inventory levels prior to peak selling
seasons, which further increases the vulnerability of the company to demand
and pricing shifts and to errors in selection and timing of the purchases
of merchandise.
Substantially all of the company's merchandise information, accounting, and
financial control systems are operated centrally from the company's
headquarters in St. Louis, Missouri. Daily polling of activity from the
point-of-sale registers in each store provides current data for updated
sales, merchandise, and bank activity reporting. Integration of this data
with the company's merchandise system enables each chain's team of
merchandise controllers and distributors to monitor performance and
replenish and control inventory.
The company must carry large amounts of inventory to meet the rapid
delivery requirements of its stores. The company operates three main
distribution centers located in Washington, Missouri; Rialto, California;
and Princeton, Indiana. The centers are receiving points for merchandise
from foreign and domestic suppliers and coordinate distribution of
individual shipments via common carrier to the stores serviced by the
center.
Purchasing
The company purchases approximately three quarters of its merchandise from
foreign suppliers and the balance from domestic suppliers. The company has
no long-term purchase commitments with any of its suppliers, and is not
dependent on any one supplier. The company's importing operations are
subject to the contingencies generally associated with foreign operations,
including fluctuations in currency values, customs duty increases, quota
limitations, and any other foreign development that could cause a
disruption of supply. The company has international buying offices in
Taiwan, Hong Kong, China, Indonesia, Korea, Honduras, and the Philippines.
The company does not manufacture any merchandise, but it markets most of
its merchandise under private labels. Each chain of stores maintains a
staff of buyers, and buying decisions are made at the chain level.
Competition
The apparel and footwear retailing industries are highly competitive. The
company's stores are in competition with numerous other independent
retailers, department stores, mail order companies and discount and
manufacturer's outlets, many of which have greater sales, assets and
financial resources than the company. Because the company's stores are
primarily in regional shopping malls, each faces several nearby
competitors. In competing for customers, the company emphasizes the
fashion orientation of its merchandise, customer service, store appearance,
and price.
Employees
During fiscal 1995, the company employed an average of 24,600 persons with
approximately 23,100 of them engaged in retail operations at the store
level (approximately 34% full-time and 66% part-time). In addition, a
substantial number of temporary employees are hired during peak selling
seasons. The company believes its employee benefits package is competitive
with those offered in the industry. The company's employees are virtually
all non-union with minor exceptions in certain foreign operations. The
company believes that its employee relations are good.
Seasonal Business
The company experiences a significant peak in sales during the Christmas
selling season. Sales during that season accounted for 16.5% of total
sales during 1995 compared with 16.8% in 1994. The company's inventory is
generally increased significantly prior to this peak selling period.
Trademarks
The company holds a number of trademarks covering its products. The
company believes that the loss of any of these trademarks would not have a
material effect on the company's business.
Item 2. PROPERTIES
Stores are located nationwide, and most are leased with initial terms
generally from five to ten years. The rentals under most leases are based
upon a minimum annual rental with a provision for additional rental based
upon a percentage of sales to the extent sales exceed a threshold amount.
Many of the leases provide for additional payments for real estate taxes
and other items. The stores generally range in size from 1,300 to 4,000
square feet.
The company-owned headquarters building in St. Louis, Missouri, was
completed in 1985 and is the home office for all divisions. The building
contains approximately 500,000 square feet, a portion of which the company
leases to others. The Rialto, California, and Princeton, Indiana,
distribution centers are owned by the company. The distribution center in
Washington, Missouri, is operated under a long term lease arrangement. The
Rialto and Washington centers service primarily the apparel segment while
Princeton services primarily the footwear segment. Another distribution
center in Rome, Georgia, was closed in January 1996.
Item 3. LEGAL PROCEEDINGS
The company and 65 of its subsidiaries and affiliates filed petitions for
reorganization under Chapter 11 of the United States Bankruptcy Code on
November 3, 1995. Additional information related to the filing is set
forth under Part 1, Item 1 of this Form 10-K and under the captions "To Our
Shareholders", "Note 1: Proceedings under Chapter 11" of the Notes to
Consolidated Financial Statements, and "Management's Discussion and
Analysis" in the 1995 Annual Report. Such information is incorporated
herein by reference.
Other Legal Matters
The company is not a party to any other material pending legal proceedings.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
fourth quarter.
<TABLE>
Item 4a. EXECUTIVE OFFICERS OF THE REGISTRANT
The following sets forth certain information regarding the executive
officers of the company:
<CAPTION>
Position in the Company (1)
Name Age Title Term
<S> <C> <C> <C>
Lester D. Cherry 61 President of Wild Pair Since 1986
David B. Cooper, Jr. 40 Director Since 1995
Executive Vice President and
Chief Financial Officer Since 1994
Peter A. Edison 40 Senior Executive Vice President Since 1995
and Director of Corporate
Development
President of Edison Big & Tall Since 1994
Executive Vice President
and Director of Corporate
Development 1992-1995
General Manager of Repp, Ltd.
Big & Tall 1991-1994
Director Since 1990
Vice President - Corporate
Development 1989-1992
President of Sacha London 1986-1990
Paul D. Eisen 41 President of JW/Jeans West Since 1995
President of Oaktree Since 1994
President and General Merchandise
Manager of Jeans West 1989-1994
Michael J. Fine 44 President of Edison Footwear and
Womenswear Group Since 1996
President of 5-7-9 Shops Since 1994
Eric A. Freesmeier 43 Executive Vice President-
Human Resources Since 1992
Vice President-Human Resources 1986-1992
Michael H. Freund 56 Executive Vice President-
Administration Since 1992
Director Since 1984
Vice President - Administration 1982-1992
Roger L. Koehnecke 51 Executive Vice President and
Chief Information Officer Since 1992
Vice President and Chief
Information Officer 1988-1992
Karl W. Michner 48 Senior Executive Vice President Since 1995
Director Since 1989
President of Edison Menswear Group Since 1987
Alan D. Miller 43 Chairman of the Board, President Since 1995
and Chief Executive Officer
President of Edison Footwear Group Since 1993
Director Since 1992
President of Bakers/Leeds/Precis 1991-1993
President of 5-7-9 Shops 1987-1991
Alan A. Sachs 49 Executive Vice President and
General Counsel Since 1992
Vice President and General Counsel 1990-1992
Director Since 1990
Secretary Since 1987
Vice President-Law 1985-1990
Les Wagner 55 President of Bakers/Leeds Since 1993
General Merchandise Manager of
Bakers/Leeds 1989-1994
<FN>
(1) Previous experience with other companies is as follows:
David B. Cooper, Jr. was Executive Vice President and Chief Financial
Officer of Del Monte Fresh Produce company from 1993 to 1994; and
Treasurer of Dole Food company, Inc. from 1986 to 1993.
Michael J. Fine was a Buyer for the Payless Shoe division of The May
Department Stores Company from 1992 to 1994 and President of John
Douglas from 1989 to 1992.
</FN>
</TABLE>
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
Information required by Item 5 is contained in "Note 9: Common Stock"
and "Note 6: Financing Arrangements" of the Notes to Consolidated
Financial Statements and under the caption "Quarterly Information" in
the 1995 Annual Report. Such information is incorporated herein by
reference.
Item 6. SELECTED FINANCIAL DATA
Information required by Item 6 is contained under the caption "Five-
Year Financial Summary" in the 1995 Annual Report. Such information
is incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Information required by Item 7 is presented under the captions "To Our
Shareholders" and "Management's Discussion and Analysis" in the 1995
Annual Report. Such information is incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by Item 8, as listed below, is included in the
1995 Annual Report. Such information is incorporated herein by
reference.
Consolidated Statements of Income - fiscal years 1995, 1994, and 1993
Consolidated Balance Sheets - 1995 and 1994 fiscal year-ends
Consolidated Statements of Cash Flows - fiscal years 1995, 1994, and
1993
Consolidated Statements of Common Stockholders' Equity - fiscal years
1995, 1994, and 1993
Notes to Consolidated Financial Statements
Quarterly Information
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding nominees for director as set forth under the
caption "Election of Directors" in the proxy statement for the 1996
annual stockholders' meeting is incorporated by reference.
Information regarding executive officers is included as Item 4a
hereof.
Information regarding the filing of reports required by Section 16(a)
of the Securities Exchange Act as set forth under the caption "Filings
under Section 16(a)" in the proxy statement for the 1996 annual
stockholders' meeting is incorporated by reference.
Item 11. EXECUTIVE COMPENSATION
Information regarding executive compensation, except for the sections
titled "Report of the Compensation Committee" and "Stock Price
Performance" as set forth under the caption "Executive Compensation",
and information regarding compensation of directors under the caption
"Additional Information Concerning the Board of Directors" in the
proxy statement for the 1996 annual stockholders meeting is
incorporated by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information regarding security ownership of certain beneficial owners
and management as set forth under the captions "Security Ownership of
Management" and "Security Ownership of Certain Beneficial Owners" in
the proxy statement for the 1996 annual stockholders meeting is
incorporated by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain relationships and related transactions
as set forth under the caption "Transactions Involving Directors and
Officers" in the proxy statement for the 1996 annual stockholders
meeting is incorporated by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) and (2) The response to this portion of Item 14 is submitted as
a separate section of this report.
(a) (3) Listing of exhibits:
<TABLE>
<CAPTION>
Exhibit No.
<S> <C>
3(a) Bylaws of the company, as amended April 23, 1996.
3(b) The company's Certificate of Incorporation, as amended
September 8, 1995, was filed as an Exhibit to the
company's quarterly report on Form 10-Q for the
quarter ended July 29, 1995, and is incorporated
herein by reference.
4(a) Rights Agreement, dated as of January 26, 1988, and
amendments thereto dated November 30, 1989 and
September 29, 1992, between Edison Brothers Stores,
Inc. and Mellon Securities Trust company, as Rights
Agent, were filed as Exhibits to the company's current
reports on Form 8-K dated February 17, 1988, December
11, 1989, and October 28, 1992, respectively, and are
incorporated herein by reference.
4(b) Note Agreements and Senior Notes, dated March 1, 1993,
between Edison Brothers Stores, Inc. and a number of
institutional lenders relating to $150 million of
unsecured debt were filed as an Exhibit to the
company's annual report on Form 10-K for the year
ended January 30, 1993, and are incorporated herein by
reference.
4(c) Amendment Agreements, dated as of January 15, 1994,
and February 1, 1994, amending the Note Agreements and
Senior Notes dated March 1, 1993, between Edison
Brothers Stores, Inc. and a number of institutional
lenders relating to $150 million of unsecured debt
were filed as Exhibits to the company's annual report
on Form 10-K for the year ended January 29, 1994, and
are incorporated herein by reference.
4(d) Amendment Agreement, dated as of April 1, 1995,
amending the Note Agreements and Senior Notes dated
March 1, 1993, as amended January 15, 1994, and
February 1, 1994, between Edison Brothers Stores, Inc.
and a number of institutional lenders relating to $150
million of unsecured debt was filed as an Exhibit to
the company's annual report on Form 10-K for the year
ended January 28, 1995, and incorporated herein by
reference.
4(e) Noteholder Forbearance Agreement, dated as of
September 22, 1995, between Edison Brothers Stores,
Inc. and a number of institutional lenders relating to
$150 million of unsecured debt.
4(f) Credit Agreement, dated as of June 4, 1993, between
Edison Brothers Stores, Inc. and a number of financial
institutions relating to a $150 million revolving
credit facility.
4(g) Amendment Agreements, dated as of January 24, 1994,
February 17, 1994, and March 29, 1995, amending the
Credit Agreement dated June 4, 1993, between Edison
Brothers Stores, Inc. and a number of financial
institutions relating to a $150 million revolving
credit facility.
4(h) Override Agreement, dated as of September 22, 1995,
between Edison Brothers Stores, Inc. and a number of
financial institutions relating to a $150 million
revolving credit facility.
4(i) Loan Agreement, dated as of November 9, 1995, between
Edison Brothers Stores, Inc. and Edison Brothers
Apparel Stores, Inc., Debtors in Possession, and
BankAmerica Business Credit, Inc., as Agent, and the
financial institutions named therein as Lenders, for a
revolving line of credit for loans and letters of
credit of up to $200 million in the aggregate, was
filed as an Exhibit to the company's quarterly report
on Form 10-Q for the quarter ended October 28, 1995,
and is incorporated herein by reference.
10(a) Form of Indemnification Agreement between the
company and each of its directors was filed as an
Exhibit to the company's annual report on Form 10-K
for the year ended January 3, 1987, and is incorporated
herein by reference.
10(b) The Edison Brothers Stores, Inc. 1992 Stock Option
Plan, as amended March 3, 1994, was filed as an
Exhibit to the company's annual report on Form 10-K
for the year ended January 29, 1994, and is
incorporated herein by reference.
10(c) The Edison Brothers Stores, Inc. 1986 Stock Option
Plan, as amended April 27, 1987 and March 3, 1994,
was filed as an Exhibit to the company's annual report
on Form 10-K for the year ended January 29, 1994, and
is incorporated herein by reference.
10(d) Non-Qualified Retirement Plan for Outside Directors is
described under the caption "Additional Information
Concerning the Board of Directors" in the proxy
statement for the company's 1996 annual stockholders
meeting, which description is incorporated herein by
reference.
10(e) Agency Agreement, dated November 24, 1995, between
Edison Brothers Stores, Inc. and Jubilee Limited
Partnership, Nassi Bernstein, Inc. and Alco Capital
Group, Inc. (collectively, JNA), naming JNA as
exclusive agent of the company for the purpose of
selling inventory contained in designated stores of
the company, was filed as an Exhibit to the company's
quarterly report on Form 10-Q for the quarter ended
October 28, 1995, and is incorporated herein by
reference.
10(f) Real Estate Retention Agreement dated November 17,
1995, between the company and Keen Realty Consultants,
Inc., was filed as an Exhibit to the company's
quarterly report on Form 10-Q for the quarter ended
October 28, 1995, and is incorporated herein by
reference.
10(g) Restricted stock grant by Edison Brothers Stores, Inc.
to Alan D. Miller, Chairman, President and Chief
Executive Officer of the company.
10(h) Form of Employment Agreement entered into by the
company with Alan D. Miller, Chairman of the Board,
President and Chief Executive Officer of the company,
corrected from the form of the agreement filed as an
Exhibit to the company's quarterly report on Form 10-Q
for the quarter ended October 28, 1995.
10(i) Form of Employment Agreement entered into by the
company with other executive officers of the company,
was filed as an Exhibit to the company's quarterly
report on Form 10-Q for the quarter ended October,
28, 1995, and is incorporated herein by reference.
11 Computation of per share earnings
13 1995 Annual Report to Stockholders
21 Subsidiaries
23 Consent of Independent Auditors
27 Financial Data Schedule
(b) The company filed a Form 8-K, dated November 17, 1995, with the
Commission to report the company's filing on November 3, 1995,
of a petition for reorganization under Chapter 11 of the U.S.
Bankruptcy Code.
(c) Exhibits:
The response to this portion of Item 14 is submitted as a
separate section of this report.
(d) Financial statement schedules:
The response to this portion of Item 14 is submitted as a
separate section of this report.
</TABLE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
EDISON BROTHERS STORES, INC.
(Registrant)
By /s/ Alan D. Miller 4/30/96 By /s/ David B. Cooper Jr. 4/30/96
Chairman of the Board, President Executive Vice President and
and Chief Executive Officer Chief Financial Officer
By /s/ James W. Shaffer 5/1/96
Vice President and Controller
Financial Reporting
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following directors on behalf of the
registrant on the dates indicated.
By /s/ David B. Cooper, Jr. 4/30/96 By /s/ Julian I. Edison 5/3/96
By /s/ Peter A. Edison 4/30/96 By /s/ Jane Evans 4/29/96
By /s/ Michael H. Freund 4/30/96 By /s/ Karl W. Michner 5/1/96
By /s/ Alan D. Miller 4/30/96 By /s/ Andrew E. Newman 5/1/96
By /s/ Eric P. Newman 5/3/96 By /s/ Alan A. Sachs 5/1/96
By /s/ Craig D. Schnuck 4/28/96 By /s/ Martin Sneider 4/30/96
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following director on behalf of the
registrant and on the date indicated.
By /s/ Jane Evans 4/29/96
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following director on behalf of the
registrant and on the date indicated.
By /s/ Craig D. Schnuck 4/28/96
ANNUAL REPORT ON FORM 10-K
ITEM 14(a) (1) and (2) and ITEM 14(d)
FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
YEAR ENDED FEBRUARY 3, 1996
EDISON BROTHERS STORES, INC.
ST. LOUIS, MISSOURI
FORM 10-K - ITEM 14(a) (1) and (2) and Item 14(d)
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
INDEX OF FINANCIAL STATEMENTS AND SCHEDULES
The following consolidated financial statements of Edison Brothers Stores,
Inc. and subsidiaries, included in the 1995 annual report of the registrant
to its stockholders, are incorporated by reference in Item 8:
Consolidated Statements of Income - fiscal years 1995, 1994, and 1993
Consolidated Balance Sheets - 1995 and 1994 fiscal year-ends
Consolidated Statements of Cash Flows - fiscal years 1995, 1994, and
1993
Consolidated Statements of Common Stockholders' Equity - fiscal years
1995, 1994, and 1993
Notes to consolidated financial statements
The following consolidated financial statement schedules of Edison Brothers
Stores, Inc. and subsidiaries is included in item 14(d):
Schedule II - Valuation and qualifying accounts
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not
required under the related instructions, or are inapplicable, and therefore
have been omitted.
Individual financial statements of the registrant have been omitted as the
registrant is primarily an operating company and all subsidiaries included
in the consolidated financial statements filed, in the aggregate, do not
have minority equity interests and/or indebtedness to any person other than
the registrant or its consolidated subsidiaries in amounts which together
(excepting indebtedness incurred in the ordinary course of business which
is not overdue and matures within one year from the date of its creation,
whether or not evidenced by securities, and indebtedness of subsidiaries
which is collateralized by the registrant by guarantee, pledge, assignment,
or otherwise) exceed five percent of the total assets as shown by the most
recent year-end consolidated balance sheet.
<TABLE>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
EDISON BROTHERS STORES, INC.
AND SUBSIDIARIES
<CAPTION>
Col. A Col. B Col. C Col. D Col. F
(In Millions)
<S> <C> <C> <C> <C>
Additions
Balance Charged Balance
at to at
January costs and Deductions February
Description 29,1995 expenses describe 3, 1996
Deferred tax
valuation $43.5 $43.5
allowance
<FN>
See "Note 8: Income Taxes" of the Notes to Consolidated Financial
Statements in the 1995 Annual Report. <PAGE>
</FN>
</TABLE>
EDISON BROTHERS STORES, INC.
____________________
BY-LAWS
____________________
ARTICLE I.
OFFICES
SECTION 1. Registered Office in Delaware. The registered office of
the Corporation in the State of Delaware shall be in the City of Dover,
County of Kent.
SECTION 2. Other Offices. The principal executive offices of the
Corporation shall be in St. Louis, Missouri. The Corporation may also have
offices in such other places as the Board of Directors may from time to
time determine or the business of the Corporation may require.
ARTICLE II.
MEETINGS OF STOCKHOLDERS
SECTION 1. Place of Meetings. All meetings of the stockholders shall
be held at the executive offices of the Corporation in St. Louis, Missouri,
or at such other place as may be designated by the Board of Directors or,
in the case of a special meeting called by the Chairman of the Board or the
President, by the person calling the meeting.
SECTION 2. Annual Meetings. An annual meeting of the stockholders,
for the election of directors and for the transaction of such other
business as may properly come before the meeting, shall be held on the
second Wednesday in June of each year at 11:00 A.M., Central Time, or on
such other date or at such other time as the Board of Directors may
designate.
Written notice of an annual meeting of stockholders, stating the
place, date and hour of the meeting, shall be mailed to each stockholder
entitled to vote thereat, at such address as appears on the records of the
Corporation, not less than ten nor more than sixty days prior to the date
of the meeting.
At an annual meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be (a) specified
in the notice of meeting (or any supplement thereto) given by or at the
direction of the Board of Directors, (b) otherwise properly brought before
the meeting by or at the direction of the Board of Directors, or
(c) otherwise properly brought before the meeting by a stockholder. For
business to be properly brought before an annual meeting by a stockholder,
the stockholder must have given timely notice thereof in writing to the
Secretary of the Corporation. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of
the Corporation not less than sixty days prior to the meeting; provided,<PAGE>
however, that in the event that less than seventy days' notice or prior
public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received
not later than the close of business on the tenth day following the date on
which such notice of the date of the annual meeting was mailed or such
public disclosure was made. A stockholder's notice to the Secretary shall
set forth as to each matter the stockholder proposes to bring before the
annual meeting (a) a brief description of the business desired to be
brought before the annual meeting, (b) the name and address, as they appear
on the Corporation's books, of the stockholder proposing such business,
(c) the class and number of shares of the Corporation which are
beneficially owned by the stockholder, and (d) any material interest of the
stockholder in such business. Notwithstanding anything in the By-laws to
the contrary, no business shall be conducted at an annual meeting except in
accordance with the procedures set forth in this Section 2. The presiding
officer of an annual meeting shall, if the facts warrant, determine that
business was not properly brought before the meeting in accordance with the
provisions of this Section 2, and if he should so determine, he shall so
declare to the meeting and any such business not properly brought before
the meeting shall not be transacted.
SECTION 3. Special Meetings. Except as otherwise required by law and
subject to the rights of the holders of any class or series of stock having
a preference over the Common Stock as to dividends or upon liquidation,
special meetings of the stockholders may be called only by the Chairman of
the Board, the President, or the Board of Directors pursuant to a
resolution approved by a majority of the entire Board of Directors.
Written notice of a special meeting of the stockholders, stating the
place, date and hour of the meeting, and the purpose or purposes for which
the meeting is called, shall be mailed to each stockholder entitled to vote
thereat, at such address as appears on the records of the Corporation, not
less than ten nor more than sixty days prior to the date of the meeting.
The business transacted at any special meeting of the stockholders
shall be confined to the purpose or purposes stated in the call.
SECTION 4. Organization. Each meeting of the stockholders shall be
presided over by the Chairman of the Board, or, in the absence of the
Chairman, by the President; if neither is present, the meeting shall be
presided over by a chairman to be chosen at the meeting. The Secretary of
the Corporation shall act as secretary of the meeting; if he is not
present, the secretary of the meeting shall be such person as the presiding
officer appoints.
SECTION 5. Voting. At each meeting of the stockholders, each
stockholder shall have one vote for each share of stock having voting power
registered in his name on the books of the Corporation. Each stockholder
having the right to vote may vote in person or by proxy appointed either by
an instrument in writing or by a transmission permitted by
Section 212(c)(2) of the Delaware General Corporation Law subscribed or
transmitted, as the case may be, by such stockholder or by his authorized
agent, except that no proxy shall be voted after three years from its date
unless such proxy provides for a longer period.
SECTION 6. Quorum. At all meetings of the stockholders, the
presence, in person or by proxy, of the holders of record of a majority of
the shares issued and outstanding and entitled to vote thereat shall
constitute a quorum for the transaction of business, except as otherwise
provided by law, by the Certificate of Incorporation or by these By-Laws.
In the absence of a quorum, the holders of record of a majority of the
shares present in person or by proxy and entitled to vote at the meeting
may adjourn the meeting from time to time until a quorum is present. No
notice need be given of the adjourned meeting if the time and place thereof
are announced at the meeting at which the adjournment is taken, unless the
adjournment is for more than thirty days or a new record date is fixed for
the adjourned meeting, in which event a notice of the adjourned meeting
shall be given to each stockholder of record entitled to vote thereat. At
any such adjourned meeting at which a quorum is present, any business may
betransacted that might have been transactedat the meeting as originally
called.
SECTION 7. Vote Required for Action. At each meeting of the
stockholders, if a quorum is present, the affirmative vote of the holders
of a majority of the shares represented in person or by proxy and entitled
to vote shall decide all matters brought before the meeting, except as
otherwise provided by law, by the Certificate of Incorporation or by these
By-Laws.
SECTION 8. List of Stockholders. A complete list of the stockholders
entitled to vote at any meeting of stockholders, arranged in alphabetical
order and showing the address of each stockholder and the number of shares
registered in his name, shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary
business hours for a period of at least ten days prior to the meeting at
the place where the meeting is to be held. The list shall also be kept at
the place of the meeting during the whole time thereof and shall be open to
inspection by any stockholder who is present.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. General Powers. The business and affairs of the
Corporation shall be managed by the Board of Directors. Except as
otherwise provided by law, by the Certificate of Incorporation or by these
By-Laws, the Board of Directors may exercise all powers and do all such
acts and things as may be exercised or done by the Corporation.
SECTION 2. Number, Election, Term of Office and Qualification.
Unless and until changed by amendment to this By-Law, the number of
directors constituting the Board of Directors shall be twelve [changed,
effective June 12, 1996, to "ten"]; provided, however, that if and whenever
by the terms and provisions of the Certificate of Incorporation the holders
of any class of stock other than the common stock shall be entitled to
elect additional directors, the number of directors shall be increased in
accordance with the terms and provisions of the Certificate of
Incorporation; and if and whenever the common stock shall become revested
with the exclusive voting right for the election of directors, the number
of directors shall be reduced by the number of additional directors chosen
by the holders of such other class of stock. Directors need not be
stockholders. All elections of directors by the holders of the common
stock shall be by a plurality of the votes cast. Except as otherwise
provided in this Article III, the directors to be chosen by the holders of
the common stock shall be elected at the annual meeting of the
stockholders. Each such director shall continue in office until the annual
meeting of the stockholders held next after his election and until his
successor shall have been elected and shall qualify, or until his earlier
resignation or removal. The directors, if any, to be chosen by the holders
of any class of stock other than the common stock shall be elected in the
manner, and their tenure of office shall be limited, as set forth in the
Certificate of Incorporation. No person shall be eligible for election as
a director if such person shall have attained the age of seventy, unless
such person is or was an employee of the Corporation and is eligible to
receive or is receiving pension benefits under the Edison Brothers Stores
Pension Plan or any successor or similar plan then in effect.
Subject to the rights of holders of any class or series of stock
having a preference over the common stock as to dividends or upon
liquidation, nominations for the election of directors may be made by the
Board of Directors or a committee appointed by the Board of Directors or by
any stockholder entitled to vote in the election of directors generally.
However, any stockholder entitled to vote in the election of directors
generally may nominate one or more persons for election as directors at a
meeting only if the stockholder has given timely notice in writing to the
Secretary of the Corporation of such stockholder's intent to make such
nomination or nominations. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of
the Corporation not later than (i) with respect to an election to be held
at an annual meeting of stockholders, ninety days prior to the anniversary
date of the immediately preceding annual meeting, and (ii) with respect to
an election to be held at a special meeting of stockholders for the
election of directors, the close of business on the tenth day following the
date on which notice of such meeting is first given to stockholders. Each
such notice shall set forth: (a) the name and address of the stockholder
who intends to make the nomination and of the person or persons to be
nominated; (b) a representation that the stockholder is a holder of record
of stock of the Corporation entitled to vote at such meeting and intends to
appear in person or by proxy at the meeting to nominate the person or
persons specified in the notice; (c) a description of all arrangements or
understandings between the stockholder and each nominee and any other
person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder; (d) such other
information regarding each nominee proposed by such stockholder as would be
required to be included in a proxy statement filed pursuant to the proxy
rules of the Securities and Exchange Commission had the nominee been
nominated by the Board of Directors; and (e) the consent of each nominee to
serve as a director of the Corporation, if so elected. The presiding
officer of the meeting shall refuse to acknowledge the nomination of any
person not made in compliance with the foregoing procedure.
SECTION 3. Resignation. Any director may resign at any time by
written notice to the Corporation, addressed to the attention of the
Chairman of the Board, the President or the Secretary. Unless otherwise
specified therein, such resignation shall take effect on receipt thereof.
SECTION 4. Vacancies. If the position of any director elected, or
entitled to be elected, by the holders of the common stock becomes vacant
by reason of death, resignation, removal, increase in the number of
directors or otherwise, such vacancy may be filled by the vote of a
majority of the remaining directors elected, or entitled to be elected, by
the holders of the common stock, though less than a quorum. If the
position of any director elected, or entitled to be elected, by the holders
of stock other than the common stock becomes vacant by reason of death,
resignation, removal from office (otherwise than by reason of the revesting
in the common stock of the exclusive voting right for the election of
directors), or otherwise, such vacancy may be filled by the vote of a
majority of the remaining directors elected, or entitled to be elected, by
the holders of such stock other than the common stock, though less than a
quorum.
SECTION 5. Annual and Regular Meetings. As soon as practicable after
the annual meeting of the stockholders in each year, an annual meeting of
the Board of Directors shall be held for the election of officers and for
the transaction of such other business as may properly come before the
meeting.
Annual and regular meetings of the Board of Directors may be held at
such times and places (within or without the State of Delaware) as the
Board may from time to time determine. No notice of any such meeting need
be given.
SECTION 6. Special Meetings. A special meeting of the Board of
Directors may be called at any time by the Chairman of the Board or by the
President, and shall be called by the Chairman, the President or the
Secretary upon the written request of two directors. The person calling
such meeting shall fix the time and place therefor. Notice of such meeting
shall be given (a) by written notice delivered personally, sent by telegram
or mailed to each director at his business or home address or (b) by verbal
notice communicated personally or by telephone to each director. Such
notice shall be given at least six hours prior to the meeting, except that
if given by mail such notice shall be given at least two days prior to the
meeting. If mailed, such notice shall be deemed delivered when deposited
in the United States mail. If given by telegram, such notice shall be
deemed delivered when the telegram is delivered to the telegraph company.
No such notice need be given to any director if waived by such director in
writing, whether before or after such meeting. Neither the business to be
transacted at, nor the purpose of, any special meeting of the Board need be
specified in the notice or waiver of notice of such meeting.
SECTION 7. Quorum and Vote Required for Action. At all meetings of
the Board of Directors, the presence in person of a majority of the total
number of directors shall constitute a quorum for the transaction of
business, and, except as otherwise provided by law, by the Certificate of
Incorporation or by these By-Laws, if a quorum is present, the act of a
majority of the directors present shall be the act of the Board of
Directors. In the absence of a quorum, a majority of the directors
present, without notice other than by announcement at the meeting, may
adjourn the meeting to another date, time or place.
SECTION 8. Participation in a Meeting by Conference Telephone. A
member of the Board of Directors, or of any committee thereof, may
participate in a meeting of such Board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other. Participation in a
meeting pursuant to this section shall constitute presence in person at
such meeting.
SECTION 9. Written Consent in Lieu of Meeting. Any action required
or permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if all members of the
Board or of such committee, as the case may be, consent thereto in writing,
and the writing or writings are filed with the minutes of proceedings of
the Board or committee.
SECTION 10. Compensation. Directors, as such, may receive such
compensation for their services, including their services as members of
committees of the Board of Directors, as the Board of Directors may fix
from time to time.
ARTICLE IV
COMMITTEES OF THE BOARD OF DIRECTORS
SECTION 1. Designation and Powers. The Board of Directors may, by
resolution or resolutions adopted by a majority of the whole Board,
designate one or more committees, each committee to consist of two or more
directors, which, to the extent specified in such resolution or
resolutions, and except as otherwise provided by law, shall have and may
exercise all of the powers of the Board of Directors in the management of
the business and affairs of the Corporation.
The members of each committee shall be appointed by the Board of
Directors. Any member of a committee may resign at any time by written
notice addressed to the Chairman of the Board, the President or the
Secretary. Unless otherwise specified therein, such resignation shall take
effect on receipt thereof. Any member of a committee may be removed at any
time, either with or without cause, by a majority vote of the directors
then in office. Any committee designated pursuant to this Article IV may
at any time thereafter be dissolved by resolution of the Board of
Directors.
SECTION 2. Meetings. Each committee may provide for the holding of
regular meetings at such times and places (within or without the State of
Delaware) as it may from time to time determine. No notice of any such
meeting need be given. A special meeting of a committee may be called at
any time by the chairman of such committee (if one has been appointed) or
by the Chairman of the Board or by the President. The person calling such
meeting shall fix the time and place therefor. Notice of such meeting
shall be given (a) by written notice delivered personally, sent by telegram
or mailed to each member of the committee at his business or home address
or (b) by verbal notice communicated personally or by telephone to each
member of the committee. Such notice shall be given at least six hours
prior to the meeting, except that if given by mail such notice shall be
given at least two days prior to the meeting. If mailed, such notice shall
be deemed delivered when deposited in the United States mail. If given by
telegram, such notice shall be deemed delivered when the telegram is
delivered to the telegraph company. Such notice need not state the purpose
of the meeting. Each committee shall keep minutes of its proceedings and
shall report the same to the Board of Directors when so requested by the
Board. At any meeting of a committee, the presence in person of a majority
of the members of the committee shall constitute a quorum for the
transaction of business, and, except as otherwise provided by law, by the
Certificate of Incorporation or by these By-Laws, if a quorum is present,
the act of a majority of the members present shall be the act of such
committee. In the absence of a quorum, a majority of the members present,
without notice other than by announcement at the meeting, may adjourn the
meeting to another date, time or place.
ARTICLE V
NOTICES
SECTION 1. Waiver of Notice. Whenever any notice is required to be
given by law, by the Certificate of Incorporation or by these By-Laws, a
written waiver thereof signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be deemed
equivalent to such notice. Neither the business to be transacted at, nor
the purpose of, any meeting need be specified in such waiver.
SECTION 2. Attendance at Meeting. Attendance of a person at any
meeting shall constitute a waiver of notice of such meeting, except when
the person attends such meeting for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
ARTICLE VI
OFFICERS
SECTION 1. Number. The officers of the Corporation shall be a
Chairman of the Board, a President, one or more Executive Vice Presidents,
one or more Vice Presidents, a Secretary, a Treasurer, and such other
officers as the Board of Directors may from time to time appoint. Any
number of offices may be held by the same person.
SECTION 2. Selection, Term of Office and Duties. All officers shall
be elected by the Board of Directors. Each officer shall hold office until
his successor is elected and qualified or until his earlier resignation or
removal. Each officer shall have such authority and perform such duties as
may be prescribed by these By-Laws or by the Board of Directors.
SECTION 3. Resignation. Any officer may resign at any time by
written notice to the Corporation, addressed to the attention of the
Chairman of the Board, the President or the Secretary. Unless otherwise
specified therein, such resignation shall take effect on receipt thereof.
SECTION 4. Removal. Any officer may be removed at any time, either
with or without cause, by the affirmative vote of a majority of the
directors then in office.
SECTION 5. Vacancies. If an office becomes vacant by reason of
death, resignation, removal or otherwise, such vacancy may be filled by the
Board of Directors.
SECTION 6. Compensation. The compensation of all officers of the
Corporation shall be fixed by the Board of Directors or such committee
thereof as the Board may designate.
SECTION 7. Chairman of the Board. The Chairman of the Board shall be
chosen from among the directors and shall, if present, preside at all
meetings of the stockholders and of the Board of Directors. Except where
by law the signature of the President is required, the Chairman of the
Board shall possess the same power as the President to sign all
certificates, contracts and other instruments of the Corporation. The
Chairman of the Board shall, subject to the direction and control of the
Board of Directors, have overall responsibility for the management and
supervision of the business and affairs of the Corporation. He shall, in
general, perform all duties incident to the office of the Chairman of the
Board and such other duties as from time to time may be assigned to him by
the Board of Directors.
SECTION 8. President. The President shall, subject to the direction
and control of the Board of Directors, share with the Chairman of the Board
responsibility for the management and supervision of the business and
affairs of the Corporation. He shall have the power to sign all
certificates, contracts and other instruments of the Corporation. In
general, the President shall perform all duties incident to the office of
President and shall have such other duties as the Board of Directors may
from time to time prescribe.
SECTION 9. Executive Vice Presidents and Vice Presidents. Each
Executive Vice President and Vice President shall have such duties as may
be assigned to him from time to time by the Board of Directors. In the
absence of both the Chairman of the Board and the President, or in the
event of their death or disability, the Executive Vice President having the
greatest seniority with the Corporation shall perform the duties and
exercise the powers of the Chairman of the Board and the President.
SECTION 10. Secretary and Assistant Secretaries. The Secretary shall
give, or cause to be given, notice of all meetings of the stockholders and
of the Board of Directors in accordance with these By-Laws, shall attend
all meetings of the stockholders and of the Board of Directors, and shall
record their proceedings in a book to be kept for that purpose. The
Secretary shall have custody of the corporate seal and affix the seal to
any instrument requiring it. He shall perform such other duties as the
Board of Directors may from time to time prescribe.
The Assistant Secretary or Assistant Secretaries, if any, shall, in
the absence or disability of the Secretary, or at his request, perform his
duties and exercise his powers and authority.
SECTION 11. Treasurer and Assistant Treasurers. The Treasurer shall
have custody of the funds and securities of the Corporation, shall keep
full and accurate accounts of receipts and disbursements in books belonging
to the Corporation, and shall deposit all money and other valuable effects
in the name and to the credit of the Corporation in such depositories as
may be designated by the Board of Directors. The Treasurer shall disburse
the funds of the Corporation as may be prescribed by the Board of
Directors, taking proper vouchers for such disbursements, and shall render
to the Board of Directors, at meetings of the Board of Directors or
whenever the Board may require it, an account of all his transactions as
Treasurer and of the financial condition of the Corporation. The Treasurer
shall perform such other duties as the Board of Directors may from time to
time prescribe.
The Assistant Treasurer or Assistant Treasurers, if any, shall, in the
absence or disability of the Treasurer, or at his request, perform his
duties and exercise his powers and authority.
SECTION 12. Delegation of Authority. Notwithstanding any provision
hereof, the Board of Directors may from time to time delegate the powers or
duties of any officer to any other officer.
SECTION 13. Surety Bonds. In the event that the Board of Directors
shall so require, any officer of the Corporation shall execute to the
Corporation a bond in such sum and with such surety or sureties as the
Board of Directors may direct, conditioned on the faithful performance of
his duties to the Corporation.
SECTION 14. Proxies. Subject to such limitations as the Board of
Directors may from time to time prescribe, the Chairman of the Board, the
President and any other officer of the Corporation so authorized by the
Chairman of the Board or the President shall have full power and authority
on behalf of the Corporation to attend, to vote at, and to waive notice of,
any meeting of stockholders of any other corporation, shares of stock of
which are owned by or stand in the name of the Corporation, to execute and
deliver proxies and actions in writing, and otherwise to exercise on behalf
of the Corporation any and all rights and powers incident to the ownership
of such shares.
ARTICLE VII
STOCK
SECTION 1. Certificates of Stock. The interest of each stockholder
shall be evidenced by a certificate or certificates representing shares of
stock of the Corporation which shall be in such form as the Board of
Directors may from time to time adopt. Each such certificate shall exhibit
the stockholder's name and the number of shares represented thereby, shall
be signed by the President or a Vice President and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary, shall be
sealed with the seal of the Corporation, and shall be countersigned and
registered in such manner, if any, as the Board of Directors may prescribe.
If such certificate is signed by a transfer agent of the Corporation, the
signature of any such officer and the seal of the Corporation on such
certificate may be facsimile. If any officer who has signed, or whose
facsimile signature has been used, on any such certificate shall cease to
be such officer of the Corporation before such certificate is issued and
delivered by the Corporation, such certificate may nevertheless be issued
and delivered with the same effect as if the person who signed such
certificate, or whose facsimile signature was used thereon, had not ceased
to be such officer. There shall be entered on the stock books of the
Corporation the number of each certificate issued, the number of shares
represented thereby, the name of the person to whom such certificate was
issued and the date of issuance thereof.
SECTION 2. Transfer of Stock. Transfers of shares of the stock of
the Corporation shall be made only on the books of the Corporation by the
holder of record thereof, or by his attorney thereunto duly authorized by a
power of attorney, upon the surrender of the certificate or certificates
for such shares properly endorsed, with such evidence of the authenticity
of such transfer, authorization and other matters as the Corporation or its
agents may reasonably require, and accompanied by all necessary federal and
state stock transfer stamps.
SECTION 3. Lost, Stolen or Destroyed Certificates. A certificate for
shares of stock of the Corporation may be issued in place of any
certificate alleged to have been lost, stolen or destroyed, but only upon
delivery to the Corporation of such evidence of loss, theft or destruction
as the Board of Directors may require, and, if the Board of Directors so
requires, of a bond of indemnity, in form and amount and with one or more
sureties satisfactory to the Board.
SECTION 4. Regulations, Transfer Agents and Registrars. The Board of
Directors may establish such other rules and regulations as it deems
appropriate concerning the issuance and transfer of certificates for shares
of the stock of the Corporation and may appoint one or more transfer agents
or registrars, or both.
SECTION 5. Record Date. (a) In order that the Corporation may
determine the stockholders entitled to notice of and to vote at any meeting
of stockholders, the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record
date is adopted, and which record date shall not be more than sixty days
nor less than ten days before the date of such meeting. If no record date
is fixed by the Board of Directors, the record date for determining
stockholders entitled to notice of and to vote at a meeting of stockholders
shall be the close of business on the day next preceding the day on which
notice of the meeting is given. A determination of the stockholders of
record entitled to notice of and to vote at a meeting of stockholders shall
apply to any adjournment of the meeting; provided, however, that the Board
of Directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or
allotment of any rights, or the stockholders entitled to exercise any
rights in respect of any change, conversion or exchange of stock, or for
the purpose of any other lawful action, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted, and which record date shall
be not more than sixty days prior to such action. If no record date is
fixed, the record date for determining stockholders for any such purpose
shall be the close of business on the date on which the Board of Directors
adopts the resolution relating thereto.
SECTION 6. Dividends and Reserves. Dividends shall be declared and
paid at such times as the Board of Directors may determine, provided that
no dividends shall be paid or declared contrary to applicable provisions of
law or of the Certificate of Incorporation. The Board of Directors may,
from time to time, set aside out of any funds of the Corporation available
for dividends such sum or sums as the Board, in its discretion, deems
proper as a reserve fund for working capital, or to meet contingencies, or
for repairing or maintaining the property of the Corporation, or for any
other purpose that the Board deems to be in the best interests of the
Corporation. The Board of Directors may modify or abolish any such reserve
at any time.
SECTION 7. Record Ownership. The Corporation shall be entitled to
treat the holder of record of any shares of stock of the Corporation as the
holder in fact thereof and shall not be bound to recognize any equitable or
other claim to or interest in such shares on the part of any other person,
whether or not the Corporation shall have express or other notice thereof,
except as otherwise provided by law.
ARTICLE VIII
CORPORATE SEAL
The corporate seal of the Corporation shall be circular and shall have
inscribed thereon the name of the Corporation, the year of its
organization, and the words "Corporate Seal, Delaware." In all cases in
which the corporate seal is authorized to be used, it may be used by
causing it or a facsimile of it to be impressed, affixed, reproduced,
engraved or printed.
ARTICLE IX
FISCAL YEAR
The fiscal year of the Corporation shall be either a 52 or 53 week
year which shall commence on the Sunday occurring on or nearest to
February 1 and shall end on the Saturday occurring on or nearest to the
following January 31.
ARTICLE X
AMENDMENTS
Subject to the provisions of the Certificate of Incorporation, these
By-Laws may be amended or repealed at any regular meeting of the
stockholders, or at any special meeting thereof duly called for that
purpose, at which a quorum is present, by a majority vote of the shares
represented and entitled to vote at such meeting. Subject to the laws of
the State of Delaware, the Certificate of Incorporation and these By-Laws,
the Board of Directors may, by majority vote of those directors present at
any meeting of the Board at which a quorum is present, amend these By-Laws
or adopt such other By-Laws as in their judgment may be advisable for the
regulation of the conduct of the affairs of the Corporation.
September 22, 1995
Edison Brothers Stores, Inc.
501 North Broadway
St. Louis, Missouri 63102
Attn:Chief Financial Officer
Gentlemen:
Reference is made to those certain separate Note Agreements, each
dated as of March 1, 1993, as amended by that certain Amendment Agreement
dated as of January 15, 1994, that certain Amendment Agreement dated as of
February 1, 1994 and that certain Amendment Agreement dated as of April 1,
1995 (collectively, the "Note Agreement"), between Edison Brothers Stores,
Inc., a Delaware corporation (the "Company"), and the Purchasers named in
Schedule 1 attached thereto, under which $45,000,000 aggregate principal
amount of 7.09% Series A Senior Notes due March 1, 2000, $60,000,000
aggregate principal amount of 7.52% Series B Senior Notes due March 1, 2003
and $45,000,000 aggregate principal amount of 8.04% Series C Senior Notes
due March 1, 2008 of the Company (collectively, the "Notes") were
originally issued. All capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the Note Agreement.
INTRODUCTION
The undersigned (the "Noteholders") are the holders of all of the
issued and outstanding Notes. The Company has informed the Noteholders
that the following Events of Default presently exist:
(a)an Event of Default as described on Schedule 2 attached hereto
and made a part hereof (the "Scheduled Events of Default"); and
(b)an Event of Default pursuant to Section 6.1(f) of the Note
Agreement, resulting from the failure of the Company to comply with
the provisions of Section 5.9 of the Note Agreement, as a result of
the Lien granted in favor of Mercantile, in its capacity as letter of
credit provider (the "Section 5.9 Event of Default").
The Company has also informed the Noteholders that it requires a new
working capital borrowing facility of up to $75,000,000, and that it has
received a commitment letter from the New Lender to provide the Company
with such a facility. The New Working Capital Facility is prohibited by
the present terms of the Note Agreement, and the Company is hereby
requesting a waiver of certain provisions of the Note Agreement to allow
the Company to enter into the New Working Capital Facility, the Mercantile
Letter of Credit Facility, the Bank Override Agreement and the New Lender
Intercreditor Agreement. To induce the New Lender to enter into the New
Working Capital Facility, the Company is also requesting that, during the
Forbearance Period, the Noteholders forbear from taking any action in
respect of the Scheduled Events of Default and the Section 5.9 Event of
Default and excuse compliance by the Company with Section 5.6 (Consolidated
Net Worth) and Section 5.8 (Fixed Charge Coverage Ratio) of the Note
Agreement.
The Noteholders are willing to forbear and excuse such financial
covenant compliance for the limited period provided for herein, but only
upon full and complete satisfaction and fulfillment by the Company of the
conditions and agreements set forth herein, and continued compliance by the
Company with the covenants set forth herein and in the Note Agreement, in
the manner hereinafter provided.
Accordingly, in consideration of the terms and conditions contained
herein, the Company and the Noteholders hereby agree as follows:
I. FORBEARANCE. The Noteholders, upon the express conditions set
forth in Section 3 hereof and subject to the continued compliance by the
Company with the covenants and agreements contained in Section 4 hereof and
in the Note Agreement (to the extent not otherwise waived or modified by
this Agreement), agree as follows:
1.to forbear from bringing any action, suit or other judicial
proceeding against any Person in respect of the Scheduled Events of
Default and the Section 5.9 Event of Default during the Forbearance
Period, but otherwise reserve all rights at law and in equity as set
forth in Section 8 of this Agreement;
2.to excuse compliance with Section 5.6 (Consolidated Net Worth)
and Section 5.8 (Fixed Charge Coverage Ratio) during the Forbearance
Period; and
3.to waive the provisions of Section 5.7 (Limitation on Funded
Debt and Current Debt) and Section 5.9 (Liens) and any other Sections
of the Note Agreement which would be violated by the Company's
entering into and performing under the New Working Capital Facility,
the Standby Letter of Credit Facility, the Bank Override Agreement and
the New Lender Intercreditor Agreement, in each case, as in effect on
the Effective Date, but only to the extent necessary to permit the
entering into, and borrowing and performance under, the New Working
Capital Facility, the Standby Letter of Credit Facility, the New
Lender Intercreditor Agreement and the Bank Override Agreement.
II. WARRANTIES AND REPRESENTATIONS. In order to induce the
Noteholders to enter into this Agreement, the Company warrants and
represents to each of the Noteholders that, as of the Effective Date:
1.Scope and Extent of Debt. The Company has no Current Debt,
Funded Debt or other Indebtedness, or any letter of credit
reimbursement obligation to any Person other than Mercantile and Banca
Nazionale del Lavoro S.p.A. ("BNL"), or any other contingent liability
(other than guaranties of operating leases) in excess of $5,000,000,
in each case other than as disclosed on Exhibit A hereto; no
Subsidiary has any outstanding Indebtedness or any letter of credit
reimbursement obligations to any person other than Mercantile; no
Subsidiary has any other contingent liability (other than guaranties
of operating leases) in excess of $5,000,000, in each case other than
as disclosed on Exhibit A hereto;
2.Certain Transfers. Neither the Company nor any Subsidiary has:
3.made any transfers of money or property on account of
antecedent liabilities during the 90 days prior to the Effective
Date other than (i) transfers in respect of Current Debt or
Funded Debt disclosed on Exhibit B hereto, (ii) transfers made
for goods and services received in the ordinary course of
business whether in connection with letters of credit or
otherwise, and (iii) transfers in the form of payments in respect
of claims and normal and customary business expenses, in each
case, made in the ordinary course of business; or
4.except as set forth on Exhibit B attached hereto, made any
"transfer" (as defined in the United States Bankruptcy Code, 11
U.S.C. section 101(54)) of property outside of the ordinary
course of business to an insider (as defined in the United States
Bankruptcy Code, 11 U.S.C. section 101(31)), within the
one-year period immediately preceding the Effective Date;
5.No Other Defaults. The Company is not aware of any Default or
Event of Default other than the Scheduled Events of Default and the
Section 5.9 Event of Default;
6.No Other Payments. Except for (i) the increased interest rates
and the forbearance fee provided for in this Agreement, (ii) the
interest rate increases and forbearance fee being granted to the Banks
and to BNL as specified in the agreements contemplated by Section 3(b)
and Section 3(c) hereof, (iii) the increased negotiation fee being
granted to the Commercial L/C Issuer as specified in the agreement
contemplated by Section 3(c) hereof, and (iv) the Company's agreements
with various Banks to pay the fees and expenses of legal counsel to
such Banks until the Effective Date, and except as otherwise provided
in this Agreement, the Company has made no payment, or given any other
consideration, to any Noteholder, to any Bank or to BNL to induce this
Agreement or the agreements contemplated by Sections 3(b) and 3(c)
hereof;
7.No Prohibited Action. The Company has not taken any action
which would have been prohibited by subsections (b), (d), (f), (g), or
(h) of Section 4 hereof had this Agreement been in effect at all
times since July 29, 1995; and
8.Minimum Availability. The Company and the Guarantors shall
have sufficient finished goods inventory to permit the Company to
borrow up to $75,000,000 under the New Working Capital Facility,
subject to verification of the filing of Uniform Commercial Code UCC-1
financing statements, which have been executed and delivered by the
Company to the New Lender for filing to perfect the grant of Liens to
the New Lender under the New Lender Agreement.
9.Additional Representations and Warranties. Each of the
representations and warranties made by the Company in the agreements
referred to in Section 3(b), Section 3(c) and Section 3(d) are true
and correct in all material respects.
III. CONDITIONS TO EFFECTIVENESS. The Noteholders' agreements set
forth herein shall be subject to and conditioned upon the satisfaction of
all of the conditions set forth below on or before September 22, 1995. The
first date upon which all such conditions shall have been satisfied is
herein referred to as the "Effective Date."
1.Execution and Delivery of this Agreement. The Company and the
holders of 100% in aggregate principal amount of the Notes shall have
executed and delivered a counterpart of this Agreement.
2.Execution and Delivery of Bank Agreements. The Committed
Banks, the Uncommitted Banks and BNL shall have entered into an
agreement substantially to the effect of this Agreement, such
agreement shall be in form and substance satisfactory to the
Noteholders in their discretion (such satisfaction shall be
conclusively evidenced by the execution and delivery of this Agreement
by each of the Noteholders), and such agreement shall be in full force
and effect.
3.Letters of Credit. Mercantile shall have entered into an
agreement with the Company whereby such bank shall be committed to
make available a $130,000,000 letter of credit facility during the
Forbearance Period, such agreement shall be in form and substance
satisfactory to the Noteholders in their discretion (such satisfaction
shall be conclusively evidenced by the execution and delivery of this
Agreement by each of the Noteholders and is subject to the reservation
of rights set forth in Section 8 hereof), and such agreement shall be
in full force and effect.
4.New Working Capital Facility. The Company and the New Lender
shall have entered into the New Working Capital Facility providing for
advances of up to $75,000,000 (subject to borrowing base availability
as determined in accordance with its provisions), such facility shall
be in form and substance satisfactory to the Noteholders in their
discretion (such satisfaction shall be conclusively evidenced by the
execution and delivery of this Agreement by each of the Noteholders),
and such facility shall be in full force and effect.
5.Subsidiary Guaranties. The Noteholders shall have received
from each Subsidiary of the Company listed on Exhibit C hereto a
guaranty to the effect and substantially in the form attached hereto
as Exhibit D. All guaranties issued by Subsidiaries of the Company to
the Banks, the Commercial L/C Issuer and the New Lender shall be
acceptable to the Noteholders in all respects, and, in the case of
guaranties of letter of credit obligations under the Mercantile Letter
of Credit Facility, Mercantile shall be obligated to exercise its
remedies against any available collateral before looking to the
guaranties. The Company shall have delivered to each Noteholder true
and correct copies of all guaranties issued by any Subsidiary to the
Banks, the Commercial L/C Issuer, the New Lender or any letter of
credit issuer.
6.Forbearance Fee. On the Effective Date, the Company shall have
paid to the Noteholders a forbearance fee equal to one percent (1%) of
the outstanding principal amount of the Notes. Payment of each
Noteholder's share of such forbearance fee shall be made by wire
transfer of immediately available funds to the account to which the
Company is obligated to make payments of interest in respect of the
Notes.
7.September 1, 1995 Interest Payment. On or before the Effective
Date, the Company shall have paid in full to the Noteholders the
interest payment due on September 1, 1995 pursuant to the Notes and
the Note Agreement, together with interest on such overdue installment
of interest at the rate of interest specified as the default rate in
the Note Agreement and the Notes applicable to each series of Notes,
such interest on such overdue installment to accrue from September 1,
1995 to (but not including) the Effective Date.
8.Advance Reserve Accounts for Counsel and Financial Advisor. On
or before the Effective Date, the Company shall have funded advance
reserves to be held by Price Waterhouse and Hebb & Gitlin as a reserve
for payment of fees and expenses due in accordance with Section 4(p)
and Section 4(q) hereof, respectively. The amount of such reserve for
Hebb & Gitlin shall be $75,000 and the amount of such reserve for
Price Waterhouse shall be $50,000.
9.Intercreditor Agreements. The Noteholders, the Committed
Banks, the Uncommitted Banks, the Commercial L/C Issuer and BNL shall
have entered into an agreement providing for, inter alia, the sharing
of principal payments and setoffs among such persons on a pro rata
basis, and such agreement shall be in full force and effect. The
Concentration Account Bank and the New Lender shall have entered into
an agreement relating to the relationship of such setoff rights to the
principal payment contemplated by Section 4(c) of this Agreement, and
such agreement shall be in full force and effect.
10.Legal Opinion. Each of the Noteholders shall have received
written opinions of Weil, Gotshal & Manges, special counsel to the
Company and the Subsidiaries, and Alan Sachs, General Counsel of the
Company, each addressed to the Noteholders and in form and substance
satisfactory to each such Noteholder and Hebb & Gitlin.
IV. COVENANTS OF THE COMPANY. In order to induce the Noteholders to
enter into this Agreement, the Company agrees that notwithstanding the
terms of the Note Agreement and the Notes:
1.Increased Rate and Frequency of Interest Payments. From and
after the Effective Date, interest shall accrue and be payable on the
outstanding principal amount of each of the Notes at a rate per annum
equal to 9.75%; provided that if an Event of Default occurs, interest
shall thereafter accrue on each of the Notes at a rate per annum equal
to 11.75%. All accrued and unpaid interest in respect of the Notes
shall be payable monthly in arrears on the first business day of each
calendar month beginning after the Effective Date. Interest on the
Notes shall be computed on the basis of a 360-day year of twelve 30-
day months.
2.Payments of Principal Prohibited.
3.The Company will not make, or cause or permit any of its
Subsidiaries to make, any principal payment (whether scheduled,
at maturity, by prepayment, by acceleration or otherwise) on or
in respect of any of the Indebtedness of the Company and/or its
Subsidiaries listed on Exhibit E attached hereto (the "Listed
Indebtedness") unless, simultaneously with such payment, the
Company shall make a principal payment to all holders of Listed
Indebtedness and the percentage of each holder's Listed
Indebtedness so paid shall be equal. The Company shall not
agree to or suffer any commitment reduction in the Mercantile
Letter of Credit Facility or the Standby Letter of Credit
Facility (other than letters of credit which are released by the
beneficiary thereof voluntarily) or grant any additional
collateral (other than such collateral as is granted in the
ordinary course of business each time a letter of credit is
issued under the Mercantile Letter of Credit Facility or the
Standby Letter of Credit Facility) for either of such facilities
unless, in each case, simultaneously with such reduction or
grant, the Company shall make a principal payment to each holder
of Listed Indebtedness of a percentage of the Listed Indebtedness
owed to such holder, which percentage shall be equal to the
percentage reduction in such letter of credit facility
commitment, or the percentage of the indebtedness outstanding
under said commitment which is being so collateralized, as the
case may be.
4.During the Forbearance Period, the Company will not make, or
cause or permit any of its Subsidiaries to make, any principal
payment (whether scheduled, at maturity, by prepayment, by
acceleration or otherwise) on or in respect of the City of
Washington, Franklin County, Missouri Industrial Revenue Bonds,
Series of 1977 and 1985.
5.The Company will not make, or cause or permit any of its
Subsidiaries to make, any payments to BNL in respect of any
reimbursement obligations arising under the Standby Letter of
Credit Facility unless, simultaneously with such payment, the
Company shall make a principal payment to all holders of Listed
Indebtedness and the percentage of each holder's Indebtedness so
paid shall be equal to the percentage which the payment to BNL
bears to $7,948,491.
6.Required Payments of Principal. No later than December 29,
1995 the Company shall pay to the Noteholders $10,305,906 in the
aggregate in respect of the principal amount of the Notes, as their
pro rata share of an aggregate payment of $25,000,000 in respect of
the obligations owing to the Noteholders, the Committed Banks, the
Uncommitted Banks and BNL.
7.Dividends. It will not declare, pay or make any dividends or
other distributions (whether in cash, other Property or stock) on or
in respect of any of its capital stock.
8.Debt; Loans. Neither the Company nor any Subsidiary shall
create, assume or incur any Indebtedness or any obligations
(contingent or otherwise) in respect of any letter of credit, except
for borrowings and other transactions under the New Working Capital
Facility, the Standby Letter of Credit Facility and the Mercantile
Letter of Credit Facility. The Company and the Subsidiaries may make
(i) loans to the Company or to a Wholly-owned Subsidiary that is a
Guarantor, provided that each such loan is made in the ordinary course
of the business of the Company and its Subsidiaries consistent with
their past practice, and (ii) loans (not exceeding $2,000,000 in the
aggregate at any time outstanding) to Subsidiaries which are not
Guarantors.
9.Liens. Except for Liens securing the New Working Capital
Facility, Liens of BNL in the Cash Collateral Account to the extent
provided for in the Bank Override Agreement and the set-off rights of
the Concentration Account Bank set forth in the Bank Override
Agreement and the New Lender Intercreditor Agreement, it will not
cause or permit any Lien to be placed upon any of its Property or the
Property of any Subsidiary, other than Liens permitted by subsections
(a) through (f) of Section 5.9 of the Note Agreement and renewals of
such Liens permitted by Section 5.9(i) of the Note Agreement.
Notwithstanding anything to the contrary contained in this Agreement,
restrictions on Liens set forth in this Section 4(f) do not apply to
the grant or perfecting of Liens securing the Mercantile Letter of
Credit Facility during the Forbearance Period.
10.Mergers, Etc. It will not, and will not permit any Subsidiary
to, be a party to any merger or consolidation or sell, lease or
otherwise transfer all or substantially all of its assets.
11.Sales of Assets. Except for sales of goods in the ordinary
course of business as previously conducted, the Company will not, and
will not permit any Subsidiary to, sell, lease, or otherwise transfer
any assets (by merger, consolidation, sale-leaseback or otherwise), or
permit any Subsidiary to issue or transfer any shares of its stock or
any other Securities exchangeable or convertible into its stock (such
stock and other Securities being called "Subsidiary Stock" below),
provided, however, that these restrictions do not apply to the sale of
(i) the stock or assets of Edison Brothers Mall Entertainment, Inc., a
Missouri corporation, (ii) the premises presently occupied by Bakers
Shoe Store located at 131-33 South State Street, Chicago, Illinois
60603, (iii) the warehouse owned by the Company, located at 400 South
14th Street, St. Louis, Missouri, and (iv) the trademark "Sacha
London" owned by the Company (collectively, the "Designated Assets").
Notwithstanding anything to the contrary in this Section 4(h), the
Company will not, and will not permit any Subsidiary to, sell, lease
or otherwise transfer any Designated Asset without the prior consent
(the "Noteholder Consent") of the holders of at least 51% in principal
amount of the Notes outstanding at such time if either the fair market
value, the proposed purchase price or the book value of such
Designated Asset exceeds $10,000,000 at the time of such proposed
sale. For purposes of this Section, the Noteholder Consent will be
deemed granted by the Noteholders, if the requisite amount of
Noteholders do not object in writing within 10 business days of their
receipt of a written Noteholder Consent request from the Company with
respect to such asset sale describing, with reasonable specificity and
supporting data, the value of such asset and the terms of the proposed
disposition.
12.Payments to Executives. During the Forbearance Period, the
Company will not, nor will it permit any Subsidiary to, exceed, change
or otherwise modify the Company's or any Subsidiary's policies with
respect to severance arrangements and executive compensation
arrangements with its officers and directors, as described in that
certain letter dated September 20, 1995 from the Company's chief
executive officer to certain representatives of the Banks and the
Noteholders, a copy of which has been delivered to the Noteholders.
13.Lease Termination Payments. From and after the Effective
Date, neither the Company nor any Subsidiary will make lease
termination payments which exceed $5,900,000 in the aggregate. Within
this aggregate limitation, lease termination payments of no more than
$4,000,000 in the aggregate for the Company and its Subsidiaries may
be made during the period commencing on the Effective Date and ending
on December 31, 1995. On or before October 31, 1995, the Company
shall deliver to the Noteholders a good faith estimate of the number
of store closings anticipated between the Effective Date and February
29, 1996, which estimate shall identify the stores proposed to be
closed and the anticipated closing costs of each such store.
14.Loans to Dave & Buster's. It will give the Noteholders prompt
written notice of all additional loans, advances or other investments
(whether in cash or property) made by the Company and its Subsidiaries
in or to Dave & Buster's, Inc., a Missouri corporation, and/or its
subsidiaries during the Forbearance Period; and the aggregate amount
of all such loans, advances and investments made by the Company and
its Subsidiaries during such period shall not exceed $2,200,000.
15.Capital Expenditures. Capital expenditures made by the
Company and its Subsidiaries during the Forbearance Period shall not
exceed $11,500,000 in the aggregate.
16.Business Plan. No later than October 31, 1995, the Company
shall deliver to the Noteholders the Company's proposed business plan
for fiscal year 1996, containing such minimum information as the
Noteholders, the Banks and Price Waterhouse shall request by
September 25, 1995.
17.Financial Reporting.
18.It shall (not later than the second business day of each week)
deliver to Price Waterhouse and the Noteholders a cash flow
statement and monitoring report for the previous week in form
acceptable to the Noteholders. No later than 25 days after the
end of each calendar month commencing with September 1995, the
Company shall deliver to Price Waterhouse and the Noteholders a
monthly and cumulative (beginning from September 1, 1995)
financial statement and monitoring report in form acceptable to
the Noteholders.
19.It will deliver to Price Waterhouse and the Noteholders as
soon as available and in any event within forty-five (45) days
after the end of each of the first three (3) quarters of each
fiscal year of the Company, a consolidated balance sheet of the
Company and its consolidated subsidiaries as at the end of such
fiscal quarter, the related consolidated statement of income for
such fiscal quarter and for the portion of the Company's fiscal
year ended at the end of such fiscal quarter and the related
consolidated statement of cash flows for such fiscal quarter and
for the portion of the Company's fiscal year ended at the end of
such fiscal quarter, setting forth in each case in comparative
form the figures as of the end of and for the corresponding
fiscal quarter and the corresponding portion of the Company's
previous fiscal year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, conformance with
GAAP and consistency by the chief financial officer of the
Company.
20.It will deliver to Price Waterhouse and the Noteholders as
soon as available and in any event within twenty-five (25) days
after the end of each fiscal month of the Company, a consolidated
balance sheet of the Company and its consolidated subsidiaries as
at the end of such fiscal month, the related consolidated
statement of income for such fiscal month and for the portion of
the Company's fiscal year ended at the end of such fiscal month
and the related consolidated statement of cash flows for such
fiscal month and for the portion of the Company's fiscal year
ended at the end of such fiscal month, together with comparable
store information by division for the corresponding portion of
the Company's previous fiscal year, all certified (subject to
normal year-end adjustments) as to fairness of presentation,
conformance with GAAP and consistency by the chief financial
officer of the Company.
21.It will deliver to Price Waterhouse and the Noteholders no
later than the second business day of each week a statement of
the consolidated cash flows of the Company and its consolidated
subsidiaries for the immediately preceding week.
22.It shall deliver to Price Waterhouse and the Noteholders
copies of each report, financial statement, proxy statement and
certificate required to be delivered by the Company or any
Subsidiary to the lender parties under the agreements referred to
in Section 3(b), Section 3(c) and Section 3(d) of this Agreement
within the time limits specified in such agreements other than
routine collateral reports required to be delivered to the New
Lender under the New Lender Agreement; provided, however, that
upon the request of the Noteholders, the Company will promptly
furnish such collateral reports to the Noteholders and Price
Waterhouse.
23.From time to time, with reasonable promptness, the Company
shall provide each Noteholder with such further information
regarding the business, affairs and financial position of the
Company and each Subsidiary as any Noteholder may reasonably
request.
It is understood that the Company's fiscal year ends on the
Saturday nearest in time to January 31, the first quarter of the
Company's fiscal year ends on the 13th Saturday following the end of
the fiscal year, the second quarter ends on the 13th Saturday
following the end of the first quarter, the third quarter ends on the
13th Saturday following the end of the second quarter and the fourth
quarter ends at the fiscal year end.
24.Amendment of Other Agreements. It shall not agree to any
amendment, modification or waiver of any provision of any agreement
referred to in subsections (b), (c) or (d) of Section 3 of this
Agreement, in each case as in effect as of the Effective Date, without
the written consent of the holders of at least 51% in aggregate
principal amount of the Notes. Without limiting the preceding
sentence, the Company shall not, and shall not permit any of its
Subsidiaries, to extend the term of the New Lender Agreement beyond
the Forbearance Period.
25.Financial Advisor. It will pay on a monthly basis within ten
(10) days after receipt of a bill for the same the reasonable fees and
actual expenses of Price Waterhouse as the financial advisor to the
Noteholders and the Banks in connection with the Note Agreement, and
it will give Price Waterhouse reasonable access to designated officers
(including, without limitation, the chief financial officers) of the
Company and its Subsidiaries and to the books and records of the
Company and its Subsidiaries.
26.Counsel Fees. It will pay on a monthly basis (within ten (10)
days after receipt of a bill for the same) the reasonable attorneys'
fees and actual expenses of Hebb & Gitlin as attorneys for the
Noteholders in connection with creditors rights matters concerning the
Noteholders in respect of the Company and its creditors, including,
without limitation, the evaluation of the Company's proposed business
plan, any proposed amendments, waivers or extensions of the Company's
obligations in respect of the Notes, the Note Agreement, the New
Lender Agreement and any documents or instruments evidencing the
Company's obligations to the Committed Banks, the Uncommitted Banks,
the Commercial L/C Issuer or BNL.
27.Consultations and Inspections. The Company acknowledges that
the Noteholders have retained Price Waterhouse as their joint
financial advisor with respect to the restructuring of the Company's
obligations (including, without limitation, the transactions
contemplated by this Agreement and any other document executed in
connection herewith). The Company will permit, and will cause each
Subsidiary to permit, at the Company's expense, any Noteholder or
Price Waterhouse and any person appointed by any Noteholder and Price
Waterhouse to discuss the affairs, finances and accounts of the
Company and its Subsidiaries with the officers of the Company and each
of its Subsidiaries, and to visit and inspect its properties and
examine its books and records all at such reasonable times and as
often as may from time to time be reasonably requested.
28.No Additional Stores. It will not permit to exist on any date
any net increase in the total number of stores operated by the Company
and its Subsidiaries from the number of such stores operated on the
Effective Date.
29.Letters of Credit Under New Lender Agreement. Neither the
Company nor any Subsidiary will at any time request or permit to be
issued any letter of credit under the New Working Capital Facility
unless the Company has fully utilized all of its existing availability
for issuances of commercial letters of credit under the Mercantile
Letter of Credit Facility; provided, however, that, notwithstanding
the forgoing, if the Company in good faith requires an issuance of a
commercial letter of credit of a type not issuable under the
Mercantile Letter of Credit Facility, the Company may request such
letter of credit to be issued under the New Working Capital Facility.
30.Weekly Compliance Certificate; Incumbency Certificates,
Resolutions, etc.
31.Through the Termination Date, on the first Business Day of
each week, the Company shall deliver to each of the Noteholders a
certificate executed by the Chief Executive Officer, the Chief
Financial Officer or the General Counsel of the Company in the
form attached hereto and made a part hereof as Exhibit F,
(A) stating whether there exists on the date of such certificate
any Default or any Event of Default (including any additional
Event of Default as specified in Section 5 of this Agreement) and
if any such Default or Event of Default then exists, setting
forth the details thereof and the action the Company is taking or
proposes to take with respect thereto, and (B) certifying that
all of the representations and warranties of the Company
contained in this Agreement are true and correct in all material
respects on or as of the date of such certificate as if made on
the date of such certificate.
32.No later than eight (8) Business Days after the Effective Date
the Company shall deliver to each of the Noteholders and their
special counsel, Hebb & Gitlin: (A) incumbency certificates,
executed by the Secretary or Assistant Secretary of each
Subsidiary that is party to the Guaranty, which shall identify by
name and title and bear the signature of the officers of such
entity authorized to sign the Guaranty to which it is a party,
upon which certificate the Noteholders will be entitled to rely;
(B) copies certified by the Secretary or Assistant Secretary of
each Subsidiary that is a party to the Guaranty of such
Subsidiary's certificate or articles of incorporation and by-
laws; and (C) certified copies of resolutions of each
Subsidiary's Board of Directors and, where necessary,
shareholders, authorizing or ratifying the execution, delivery
and performance of the Guaranty.
33.Restricted Subsidiaries; Prohibition on Redesignation. As of
the Effective Date, each and every Subsidiary shall be deemed to be
designated as a Restricted Subsidiary by the Company under the Note
Agreement irrespective of any prior designation as an Unrestricted
Subsidiary by the Company. The Company shall not designate any
Subsidiary as an Unrestricted Subsidiary.
V. ADDITIONAL EVENTS OF DEFAULT. In addition to the Events of
Default specified in the Note Agreement, the occurrence of any of the
following events shall constitute an immediate Event of Default under the
Note Agreement, giving to the Noteholders the same rights as if such event
had been expressly defined therein as an "Event of Default", including,
without limitation, the immediate right to declare the entire principal
amount of the Notes immediately due and payable:
(a)any warranty or representation made by the Company in this
Agreement or in any agreement referred to in Section 3(b) or Section
3(c) proves to have been false or misleading in any material respect;
(b)the Company shall fail to observe or perform any agreement
made by it in this Agreement, including, without limitation, payment
of interest on or before the date due; or
(c)the Company shall fail to observe or perform any agreement
binding on it contained in any agreement referred to in Section 3(b)
or Section 3(c) hereof whether or not performance thereof shall have
been waived or any of such agreements shall terminate; or the New
Lender shall accelerate payment of obligations due under, or terminate
or cease funding under, the New Working Capital Facility.
VI. DEFINED TERMS. As used in this Agreement the following terms
shall have the respective meanings set forth below or in the Section of
this Agreement set opposite such term below. All capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the
Note Agreement.
"BNL" -- Section 2(a).
"Bank" -- a Committed Bank and/or an Uncommitted Bank.
"Bank Override Agreement" -- means that certain Override Agreement,
dated as of the date hereof, by and among the Company, BNL and the Banks.
"Cash Collateral Account" -- means deposit account number 0510-
335401-00 maintained with BNL in the Company's name, but under the sole
dominion and control of BNL.
"Commercial L/C Issuer" -- means Mercantile, in its capacity as
provider of letters of credit pursuant to the Mercantile Letter of Credit
Facility.
"Committed Banks" -- means, collectively, Mercantile Bank of St.
Louis, National Association, The Boatmen's National Bank of St. Louis.,
Citibank, N.A., NBD Bank, N.A., The Bank of Nova Scotia, The First National
Bank of Chicago and Bank of America National Trust and Savings Association.
"Company" -- the introductory paragraph of this Agreement.
"Concentration Account Bank" -- means The Boatmen's National Bank of
St. Louis.
"Designated Assets" -- Section 4(h).
"Effective Date" -- the first sentence of Section 3 to this Agreement.
"Forbearance Period" -- the period beginning on the Effective Date and
ending on the Termination Date.
"Guarantor" -- means a Guarantor under the Guaranty.
"Guaranty" -- means that certain Guaranty dated the date hereof made
by certain Subsidiaries of the Company, jointly and severally, in favor of
the Noteholders.
"Listed Indebtedness" -- Section 4(b).
"Mercantile" -- Mercantile Bank of St. Louis National Association.
"Mercantile Letter of Credit Facility" -- the letter of credit
facility to be provided by Mercantile Bank of St. Louis, National
Association pursuant to Section 3(c) of this Agreement.
"New Lender" -- BankAmerica Business Credit, Inc., a Delaware
corporation.
"New Lender Agreement" -- means that certain Loan and Security
Agreement dated as of the date hereof, by and among the Company, Edison
Brothers Apparel Stores Inc. and Bankamerica Business Credit, Inc.
"New Lender Intercreditor Agreement" -- means that certain New Lender
Intercreditor Agreement, dated as of the date hereof, by and between the
New Lender and the Concentration Account Bank, and as acknowledged and
agreed to by the Company and certain of its Subsidiaries.
"New Working Capital Facility" -- the secured working capital facility
of up to $75,000,000 made available to the Company by the New Lender and
approved by the Noteholders pursuant to Section 3(d) of this Agreement.
"Note Agreement" -- the introductory paragraph of this Agreement.
"Noteholder Consent" -- Section 4(h).
"Noteholders" -- the introductory paragraph of this Agreement.
"Notes" -- the introductory paragraph of this Agreement.
"Price Waterhouse" -- Price Waterhouse, L.L.P.
"Property" -- means any interest in any kind of property or asset,
whether real, personal or mixed, and whether tangible or intangible.
"Scheduled Events of Default" -- the introductory paragraph of this
Agreement.
"Section 5.9 Event of Default" -- the introductory paragraph of this
Agreement.
"Standby Letter of Credit Facility" -- the standby letter of credit
facility provided by BNL pursuant to the Continuing Standby Letter of
Credit Agreement dated November 15, 1989, the Letter Agreement dated as of
June 30, 1994 and the Application for Standby Letter of Credit dated
December 19, 1994, each between BNL and the Company, pursuant to which four
standby letters of credit were issued by the BNL in the aggregate stated
amount of $7,948,491.
"Termination Date" -- the earliest to occur of (i) the date the
Company and the Noteholders execute and deliver a mutually agreeable
amendment to the Note Agreement, and such amendment shall become effective,
(ii) an Event of Default under the Note Agreement, as supplemented by this
Agreement, and (iii) February 29, 1996.
"Uncommitted Banks" -- Sumitomo Bank, The Bank of New York, Sanwa
Bank, Fifth Third Bank, The Boatmen's National Bank of St. Louis, Citibank,
N.A. and the Bank of Nova Scotia.
VII. AMENDMENTS/WAIVERS. Any provision of this Agreement may be
amended or waived with the written consent of the holders of at least 66 %
in aggregate principal amount of the Notes; provided, however, that no
amendment to the terms of Section 3(f), Section 3(g), Section 4(a), Section
4(b) or Section 4(c) hereof or this Section 7 shall be effective without
the written consent of all of the Noteholders.
VIII.NO OTHER WAIVERS OR AGREEMENTS; RESERVATION OF CERTAIN RIGHTS.
Except as specifically set forth herein, (i) the Noteholders have not
agreed to any waiver, modification or amendment of the Notes or the Note
Agreement, or their rights in respect thereof, (ii) the Note Agreement and
the Notes remain in full force and effect, (iii) upon the Termination Date,
the provisions of Section 1 of this Agreement shall be of no further force
or effect, without any requirement of further notice, or the running of
grace periods or cure periods, and (iv) the Noteholders reserve all of
their rights and remedies at law or in equity in respect of the Notes, the
Note Agreement, the Company and any other Person, with respect to the
continued existence of the Scheduled Events of Default, and the continued
existence of, and any future acts which would constitute, a Section 5.9
Event of Default.
IX. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and by the various parties in separate counterparts. Each
manually signed counterpart shall be deemed an original, but all
counterparts, together, shall constitute one and the same instrument.
X. APPLICABLE LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ALL
RESPECTS IN ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE
STATE OF ILLINOIS.
XI. GENERAL INDEMNITY. In addition to the payment of expenses
required by any other Section of this Agreement, whether or not the
transactions contemplated hereby shall be consummated, the Company hereby
agrees to indemnify, pay and hold each of the Noteholders and their
officers, directors, employees, agents and affiliates (collectively, the
"Indemnitees") harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever
(including, without limitation, the reasonable fees and disbursements of
counsel for such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or
not such Indemnitees shall be designated a party thereto), that may be
imposed on, incurred by or asserted against the Indemnitees, in any manner
relating to or arising out of this Agreement, the Note Agreement, the Notes
or any other agreement, document or instrument executed and delivered by
the Company or any Subsidiary in connection herewith or therewith
(collectively, the "Indemnified Liabilities"); provided that the Company
shall have no obligation to an Indemnitee hereunder with respect to
Indemnified Liabilities directly resulting from the gross negligence or
willful misconduct of that Indemnitee as determined by a court of competent
jurisdiction in a final nonappealable order. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in the preceding
sentence may be unenforceable because it is violative of any law or public
policy, the Company shall contribute the maximum portion that it is
permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by the Indemnitees or
any of them. The provisions of the undertakings and indemnification set
out in this Section 11 are continuing and shall survive the satisfaction
and payment of the Notes and the termination of this Agreement.
XII. RELEASE. In consideration of the agreements and understandings
set forth herein, the Company, for itself and its officers, directors,
shareholders, employees, agents, attorneys, successors and assigns, hereby
releases each of the Noteholders and their respective officers, directors,
shareholders, employees, agents, attorneys, successors and assigns, from
and against any and all liability, claim, right or cause of action which
now exists, or hereafter arises, whether known or unknown, arising from or
in any way related to the Note Agreement and the Notes. By way of example
and without limitation, the foregoing includes any claims in any way
related to actions taken or not taken by any Noteholder under or relating
to the Note Agreement and the Notes.
XIII.ACKNOWLEDGMENTS. The Company irrevocably ratifies, affirms and
acknowledges that (i) this Agreement, the Note Agreement and the Notes are
the valid and binding obligations of the Company, enforceable in accordance
with their respective terms and free from any offset, defense, recoupment
or counterclaim, at law or in equity, of any kind or nature, except as
limited by bankruptcy, insolvency or similar laws generally affecting the
enforcement of creditors' rights generally, (ii) each of the Noteholders
has fully performed all of its respective obligations and duties under
previously existing agreements between the Company and the Noteholders,
(iii) all actions taken by the Noteholders prior to the date of this
Agreement have been reasonable and appropriate under the circumstances, and
within the Noteholders' rights, and (iv) the outstanding aggregate
principal amount of the Notes is $150,000,000.
XIV. REVIVAL OF OBLIGATIONS. If all or any part of any payment on
account of the Note Agreement, the Guaranty, this Agreement or any of the
Notes shall be invalidated, set aside, declared or found to be void or
voidable or required to be repaid to the issuer or to any trustee,
custodian, receiver, conservator, master, liquidator or any other person
pursuant to any bankruptcy law or pursuant to any common law or equitable
cause then, to the extent of such invalidation, set aside, voidness,
voidability or required repayment, such payment shall not be deemed to not
have been paid, set aside, released or discharged and the obligations of
the Company or any Guarantor in respect thereof shall be immediately and
automatically revived without the necessity of any action by the issue or
any of the Noteholders.
XV. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL; BOND.
(a) THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF SUCH ILLINOIS STATE COURT OR SUCH FEDERAL COURT SITTING IN
THE STATE OF ILLINOIS AS ANY NOTEHOLDER MAY ELECT, IN ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTE
AGREEMENT, THE NOTES OR ANY OTHER AGREEMENT, DOCUMENT OR INSTRUMENT
EXECUTED AND DELIVERED BY THE COMPANY IN CONNECTION HEREWITH OR THEREWITH.
THE COMPANY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH
SUIT, ACTION OR PROCEEDING MAY BE HELD AND DETERMINED IN ANY OF SUCH
COURTS. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY OBJECTION WHICH THE COMPANY MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT, AND THE COMPANY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. THE COMPANY HEREBY EXPRESSLY WAIVES ALL RIGHTS WHICH
IT MAY NOW OR HEREAFTER HAVE, BY REASON OF ITS PRESENT OR SUBSEQUENT
DOMICILES, TO ALLEGE THAT SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE COMPANY
AUTHORIZES THE SERVICE OF PROCESS UPON THE COMPANY BY REGISTERED MAIL SENT
TO THE COMPANY AT ITS ADDRESS SET FORTH IN SECTION 9.6 OF THE NOTE
AGREEMENT. NOTHING CONTAINED IN THIS SECTION SHALL AFFECT THE RIGHT OF ANY
NOTEHOLDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
AFFECT THE RIGHT OF SUCH PERSON TO BRING ANY ACTION OR PROCEEDING AGAINST
THE COMPANY OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
(b) EACH OF THE NOTEHOLDERS AND THE COMPANY ACKNOWLEDGES THAT THE
TIME AND EXPENSE REQUIRED FOR TRIAL BY JURY EXCEED THE TIME AND EXPENSE
REQUIRED FOR A BENCH TRIAL AND HEREBY WAIVE, TO THE EXTENT PERMITTED BY
LAW, TRIAL BY JURY, AND WAIVE ANY BOND OR SURETY OR SECURITY UPON SUCH BOND
WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF ANY NOTEHOLDER.
XVI. CERTAIN RIGHTS OF SET-OFF. The parties hereto agree that any
right of set-off in favor of the Noteholders is subject to the limitations
contained in Section 6.2 of the Bank Override Agreement (such Section 6.2
being applied as if each Noteholder was a Bank as defined in the Bank
Override Agreement).
[Remainder of Page Intentionally Left Blank. Next Page is Signature Page.]
If the foregoing is acceptable to the Company, please execute a
counterpart hereof in the space indicated and return it to the undersigned.
Very truly yours,
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By: _____________________________________
Its:
By: _____________________________________
Its:
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By CIGNA Investments, Inc.
By: ________________________________
Its:
CONNECTICUT GENERAL LIFE INSURANCE COMPANY, on behalf of one or
more separate accounts
By CIGNA Investments, Inc.
By: ________________________________
Its:
LIFE INSURANCE COMPANY OF NORTH AMERICA
By CIGNA Investments, Inc.
By: ________________________________
Its:
ALLSTATE LIFE INSURANCE COMPANY
By: _____________________________________
Its:
By: _____________________________________
Its:
FARMLAND LIFE INSURANCE COMPANY
By: _____________________________________
Its:
FINANCIAL HORIZONS LIFE INSURANCE COMPANY
By: _____________________________________
Its:
NATIONWIDE LIFE INSURANCE COMPANY
By: _____________________________________
Its:
WEST COAST LIFE INSURANCE COMPANY
By: _____________________________________
Its:
WOODMEN OF THE WORLD LIFE INSURANCE SOCIETY
By: _____________________________________
Its:
By: _____________________________________
Its:
GENERAL AMERICAN LIFE INSURANCE COMPANY
By: _____________________________________
Its:
ATWELL & CO., nominee for U.S. Trust Company of New York and
custodian for Century Life of America
By: _____________________________________
Its:
ATWELL & CO., nominee for U.S. Trust Company of New York and
custodian for CUNA Mutual Insurance Society
By: _____________________________________
Its:
NATIONAL LIFE INSURANCE COMPANY
By: _____________________________________
Its:
PROVIDENT MUTUAL LIFE INSURANCE COMPANY OF PHILADELPHIA
By: _____________________________________
Its:
PROVIDENT MUTUAL LIFE AND ANNUITY COMPANY OF AMERICA
By: _____________________________________
Its:
PROVIDENT MUTUAL LIFE INSURANCE COMPANY - CALIC
By: _____________________________________
Its:
MODERN WOODMEN OF AMERICA
By: _____________________________________
Its:
GUARANTEE MUTUAL LIFE COMPANY
By: _____________________________________
Its:
WOODMEN ACCIDENT AND LIFE COMPANY
By: _____________________________________
Its:
AGREED AND ACCEPTED:
EDISON BROTHERS STORES, INC.
By: ______________________________________
Name:
Title:
<TABLE>
SCHEDULE 1
<CAPTION>
LIST OF PURCHASERS
<S> <C>
1. Principal Mutual Life Insurance Company
2. Cigna Property and Casualty Insurance Company and its nominee, CIG &
Co.
3. Connecticut General Life Insurance Company and its nominee, CIG & Co.
4. Connecticut General Life Insurance Company, on behalf of one or more
separate accounts, and its nominee, CIG & Co.
5. Life Insurance Company of North America and its nominee, ZANDE & Co.
6. Allstate Life Insurance Company
7. Farmland Life Insurance Company
8. Financial Horizons Life Insurance Company
9. Nationwide Life Insurance Company
10. West Coast Life Insurance Company
11. Woodmen of the World Life Insurance Society
12. General American Life Insurance Company and its nominee, GALICO
13. Century Life of America
14. CUNA Mutual Insurance Society and its nominee, Atwell & Company
15. National Life Insurance Company
16. Provident Mutual Life Insurance Company of Philadelphia
17. Provident Mutual Life and Annuity Company of America
18. Provident Mutual Life Insurance Company - CALIC
19. Modern Woodmen of America
20. Guarantee Mutual Life Company
21. Woodmen Accident and Life Company
</TABLE>
$150,000,000.00
CREDIT AGREEMENT
DATED EFFECTIVE AS OF
JUNE 4, 1993
BY AND AMONG
EDISON BROTHERS STORES, INC.,
THE BANKS LISTED HEREIN
AND
MERCANTILE BANK OF ST. LOUIS NATIONAL ASSOCIATION,
AS AGENT
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Accounting Terms and Determinations . . . . . . . . . . 20
ARTICLE II
LOANS
SECTION 2.01. Commitments To Lend . . . . . . . . . . . . . . . . . . 21
SECTION 2.02. Method of Borrowing . . . . . . . . . . . . . . . . . . 24
SECTION 2.03. Notes . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.04. Duration of Interest Periods and Selection of Interest
Rates . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.05. Interest Rates . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.06. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.07. Termination or Reduction of Commitments . . . . . . . . 30
SECTION 2.08. Early Payments . . . . . . . . . . . . . . . . . . . . . 31
SECTION 2.09. General Provisions as to Payments . . . . . . . . . . . 32
SECTION 2.10. Funding Losses . . . . . . . . . . . . . . . . . . . . . 32
SECTION 2.11. Computation of Interest . . . . . . . . . . . . . . . . 32
SECTION 2.12 Maturity . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE III
PRECONDITIONS TO LOANS
SECTION 3.01. Initial Loan . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.02. All Loans . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties . . . . . . . . . . . . . 34
(a) Corporate Existence and Power . . . . . . . . . . . 34
(b) Corporate Authorization . . . . . . . . . . . . . . 35
(c) Binding Effect . . . . . . . . . . . . . . . . . . 35
(d) Financial Information . . . . . . . . . . . . . . . 35
(e) Litigation . . . . . . . . . . . . . . . . . . . . 36
(f) Pension and Welfare Plans . . . . . . . . . . . . . 36
(g) Tax Returns and Payment . . . . . . . . . . . . . . 36
(h) Compliance With Other Instruments; None Burdensome 37
(i) Existing Indebtedness . . . . . . . . . . . . . . . 37
(j) Labor Matters . . . . . . . . . . . . . . . . . . . 37
(k) Title to Property . . . . . . . . . . . . . . . . . 37
(l) Regulation U . . . . . . . . . . . . . . . . . . . 38
(m) Multi-Employer Pension Plan Amendments Act of 1980 38
(n) Investment Company Act of 1940; Public Utility
Holding Company Act of 1935 . . . . . . . . . . . . 38
(o) Patents, Licenses, Trademarks, Etc. . . . . . . . . 38
(p) Environmental Safety and Health Matters . . . . . . 38
(q) Handyman Guarantees . . . . . . . . . . . . . . . . 39
(r) Subsidiaries . . . . . . . . . . . . . . . . . . . 39
(s) Disclosure . . . . . . . . . . . . . . . . . . . . 39
ARTICLE V
COVENANTS
SECTION 5.01. Covenants of the Company . . . . . . . . . . . . . . . . 39
(a) Information . . . . . . . . . . . . . . . . . . . . 40
(b) Consolidated Net Worth . . . . . . . . . . . . . . 42
(c) Limitations on Current Debt and Funded Debt . . . . 43
(d) Fixed Charges Coverage Ratio . . . . . . . . . . . 44
(e) Limitation on Liens . . . . . . . . . . . . . . . . 44
(f) Limitations on Sale and Leasebacks . . . . . . . . 46
(g) Merger or Consolidation . . . . . . . . . . . . . . 47
(h) Certain Restrictions Relating to Subsidiaries . . . 47
(i) Consolidated Current Ratio . . . . . . . . . . . . 50
(j) Transactions with Affiliates . . . . . . . . . . . 50
(k) Restricted Investments . . . . . . . . . . . . . . 51
(l) Payment of Indebtedness . . . . . . . . . . . . . . 51
(m) Payment of Liabilities . . . . . . . . . . . . . . 51
(n) Consultations and Inspections . . . . . . . . . . . 51
(o) Payment of Taxes and Claims; Corporate Existence;
Maintenance of Properties; Insurance . . . . . . . 52
(p) Maintenance of Books and Records . . . . . . . . . 53
(q) Changes in Nature of Business . . . . . . . . . . . 53
(r) Compliance with Law . . . . . . . . . . . . . . . . 53
(s) Accountant . . . . . . . . . . . . . . . . . . . . 54
(t) ERISA Compliance . . . . . . . . . . . . . . . . . 54
(u) Further Assurances . . . . . . . . . . . . . . . . 55
(v) Notices . . . . . . . . . . . . . . . . . . . . . . 55
(w) Pension Plans . . . . . . . . . . . . . . . . . . . 56
(x) Acquisitions . . . . . . . . . . . . . . . . . . . 56
(y) Guaranties . . . . . . . . . . . . . . . . . . . . 56
SECTION 5.02. Use of Proceeds . . . . . . . . . . . . . . . . . . . . 56
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . . . . 57
SECTION 6.02. Notice of Default . . . . . . . . . . . . . . . . . . . 60
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization . . . . . . . . . . . . . 60
SECTION 7.02. Agent and Affiliates . . . . . . . . . . . . . . . . . . 61
SECTION 7.03. Action by Agent . . . . . . . . . . . . . . . . . . . . 61
SECTION 7.04. Consultation with Experts . . . . . . . . . . . . . . . 61
SECTION 7.05. Liability of Agent . . . . . . . . . . . . . . . . . . . 61
SECTION 7.06. Indemnification . . . . . . . . . . . . . . . . . . . . 61
SECTION 7.07. Credit Decision . . . . . . . . . . . . . . . . . . . . 62
SECTION 7.08. Resignation of Agent . . . . . . . . . . . . . . . . . . 62
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
AFFECTING FIXED RATE LOANS
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair 63
SECTION 8.02. Illegality . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 8.03. Increased or Decreased Cost . . . . . . . . . . . . . . 64
SECTION 8.04. Prime Loans Substituted for Affected Fixed Rate Loans . 65
SECTION 8.05. Capital Adequacy . . . . . . . . . . . . . . . . . . . . 66
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 9.02. No Waivers . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 9.03. Expenses; Documentary Taxes . . . . . . . . . . . . . . 67
SECTION 9.04. General Indemnity . . . . . . . . . . . . . . . . . . . 67
SECTION 9.05. Environmental Indemnity . . . . . . . . . . . . . . . . 68
SECTION 9.06. Sharing of Setoffs . . . . . . . . . . . . . . . . . . . 69
SECTION 9.07. Amendments and Waivers . . . . . . . . . . . . . . . . . 69
SECTION 9.08. Successors and Assigns . . . . . . . . . . . . . . . . . 69
SECTION 9.09. Severability . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 9.10. Missouri Law . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 9.11. Counterparts; Effectiveness . . . . . . . . . . . . . . 71
SECTION 9.12. Authority to Act . . . . . . . . . . . . . . . . . . . . 71
SECTION 9.13. CONSENT TO JURISDICTION . . . . . . . . . . . . . . . . 71
SECTION 9.14. References; Headings for Convenience . . . . . . . . . . 71
SECTION 9.15. NO ORAL AGREEMENTS; ENTIRE AGREEMENT . . . . . . . . . . 72
SECTION 9.16. Resurrection of Loans . . . . . . . . . . . . . . . . . 72
Exhibit A - Line of Credit Note
Exhibit B - Revolving Credit Note
Exhibit C - Opinion of Counsel
Exhibit D - Certificate of Chief Financial Officer
Schedule 4.01(d) - Contingent Liabilities
Schedule 4.01(e) - Litigation
Schedule 4.01(f) - Pension Plan Matters
Schedule 4.01(i) - Existing Indebtedness
Schedule 4.01(j) - Labor Matters
Schedule 4.01(k) - Liens
Schedule 4.01(o) - Patents, Trademarks and other Intellectual
Property
Schedule 4.01(p) - Environmental and Safety and Health Matters
Schedule 4.01(r) - Subsidiaries
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Agreement") is made and
entered into effective as of the 4th day of June, 1993, by and
among EDISON BROTHERS STORES, INC., a Delaware corporation, and
the undersigned Banks, including MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION in its capacity as a lender hereunder and as
agent for the Banks under this Agreement.
The parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. In addition to the terms
defined elsewhere in this Agreement or in any Exhibit or Schedule
hereto, when used in this Agreement, the following terms shall
have the following meanings (such meanings shall be equally
applicable to the singular and plural forms of the terms used, as
the context requires):
"Acceptable Acquisition" shall mean any Acquisition
which has been (a) in the event a corporation is the subject of
such Acquisition, either (i) approved by the Board of Directors
of the corporation which is the subject of such Acquisition or
(ii) recommended by such Board of Directors to the shareholders
of such corporation, (b) in the event a partnership is the
subject of such Acquisition, approved by a majority (by
percentage of voting power) of the partners of the partnership
which is the subject of such Acquisition, (c) in the event an
organization or entity other than a corporation or partnership is
the subject of such Acquisition, approved by a majority (by
percentage of voting power) of the governing body, if any, or by
a majority (by percentage of ownership interest) of the owners of
the organization or entity which is the subject of such
Acquisition or (d) in the event the corporation, partnership or
other organization or entity which is the subject of such
Acquisition is in bankruptcy, approved by the bankruptcy court or
another court of competent jurisdiction.
"Acquisition" shall mean any transaction or series of
related transactions, consummated on or after the date of this
Agreement, by which the Company or any of its Subsidiaries
(a) acquires any going business or all or substantially all of
the assets of any corporation, partnership or other organization
or entity, whether through purchase of assets, merger or
otherwise or (b) directly or indirectly acquires (in one
transaction or as the most recent transaction in a series of
transactions) at least (i) a majority (in number of votes) of the
stock and/or other securities of a corporation having ordinary
voting power for the election of directors (other than stock
and/or other securities having such power only by reason
of the happening of a contingency), (ii) a majority (by
percentage of voting power) of the outstanding partnership
interests of a partnership or (iii) a majority of the ownership
interests in any organization or entity other than a corporation
or partnership.
"Affiliate" shall mean any Person (a) which directly or
indirectly through one or more intermediaries controls, is
controlled by or is under common control with the Company or any
Subsidiary, (b) which beneficially owns or holds or has the power
to direct the voting power of five percent (5%) or more of any
class of voting stock of the Company or any Subsidiary or
(c) which has five percent (5%) or more of its voting stock (or,
in the case of a Person which is not a corporation, five percent
(5%) or more of its equity interest) beneficially owned or held,
directly or indirectly, by the Company or any Subsidiary. For
purposes of this definition, "control" shall mean the power to
direct the management and policies of a Person, directly or
indirectly, whether through the ownership of voting securities,
by contract or otherwise.
"Agent" shall mean Mercantile Bank of St. Louis
National Association in its capacity as agent for the Banks
hereunder and its successors in such capacity.
"Assessment Rate" shall mean for any day the annual
assessment rate (rounded upwards, if necessary, to the next
higher 1/8 of 1% and determined without regard to rebates or
credits) charged to Mercantile by the Federal Deposit Insurance
Corporation (or any successor) for such Corporation's (or such
successor's) insuring time deposits at offices of Mercantile in
the United States on such day. The CD Rate shall be adjusted
automatically on and as of the effective date of any change in
the Assessment Rate.
"Attributable Indebtedness" shall mean in connection
with a Sale and Leaseback Transaction not satisfying the
requirements of Section 5.01(f)(i), as of the date of any
determination thereof, an amount equal to the aggregate amount of
the Minimum Rentals due and to become due (discounted from the
respective due dates thereof to such date at the interest rate
implicit in such lease per annum, with all such discounts to be
computed on the basis on a 360-day year of twelve 30-day months,
and otherwise in accordance with GAAP) under the lease relating
to such Sale and Leaseback Transaction.
"Bank(s)" shall mean each bank listed on the signature
pages hereof, and its successors and assigns.
"Business Day" shall mean any day except a Saturday,
Sunday or legal holiday observed by the Agent or by commercial
banks in New York, New York.
"Capitalized Lease" shall mean and include at any time
any lease of Property, real or personal, which in accordance with
GAAP would at such time be required to be capitalized on a
balance sheet of the lessee.
"Capitalized Rentals" of any Person shall mean, as of
the date of any determination thereof, the amount at which the
aggregate Minimum Rentals due and to become due under all
Capitalized Leases under which such Person is a lessee would be
reflected as a liability on a balance sheet of such Person.
"CD Base Rate" shall mean, with respect to the
applicable Interest Period, the rate per annum of interest
determined by Mercantile to be the average (rounded upwards, if
necessary, to the next higher 1/8 of 1%) of the rates per annum
quoted to Mercantile at such time as Mercantile in its sole
discretion elects on the first day of such Interest Period by two
certificate of deposit dealers of recognized standing, selected
by Mercantile in its sole discretion, for the purchase at face
value from Mercantile of its certificates of deposit on the first
day of the applicable Interest Period for a number of days
comparable to the number of days in such Interest Period and in
an amount approximately equal to the principal amount of the CD
Loan to which such Interest Period is to apply.
"CD Loan" shall mean any Loan bearing interest at the
CD Rate.
"CD Margin" shall mean: (a) with respect to each Line
of Credit Loan,
(i) .50% during such time as the Company's
commercial paper is rated P-1 by Moody's and A-1 by
S&P,
(ii) .50% during such time as the Company's
commercial paper is rated at least P-2 by Moody's and
at least A-2 by S&P,
(iii) .6875% during such time as the Company's
commercial paper is rated at least P-3 by Moody's and
at least A-3 by S&P, and
(iv) 1.0625% during such time as the Company's
commercial paper is (A) rated NP by Moody's or B, C or
D by S&P or (B) not rated by either or both of Moody's
and/or S&P,
and if clauses (i) and (ii) are both applicable or if clauses
(i), (ii) and (iii) are all applicable, the CD Margin set forth
in clause (i) shall be applicable, and if both clauses (ii) and
(iii) are applicable, the CD Margin set forth in clause (ii)
shall be applicable; and
(b) with respect to each Revolving Credit Loan,
(i) .50% during such time as the Company's
commercial paper is rated P-1 by Moody's and A-1 by
S&P,
(ii) .50% during such time as the Company's
commercial paper is rated at least P-2 by Moody's and
at least A-2 by S&P,
(iii) .6875% during such time as the Company's
commercial paper is rated at least P-3 by Moody's and
at least A-3 by S&P, and
(iv) 1.0625% during such time as the Company's
commercial paper is (A) rated NP by Moody's or B, C or
D by S&P or (B) not rated by either or both of Moody's
and/or S&P,
and if clauses (i) and (ii) are both applicable or if clauses
(i), (ii) and (iii) are all applicable, the CD Margin set forth
in clause (i) shall be applicable, and if both clauses (ii) and
(iii) are applicable, the CD Margin set forth in clause (ii)
shall be applicable.
The CD Rate shall be adjusted automatically on and as
of the effective date of any change in the CD Margin.
"CD Rate" shall mean (a) the quotient of (i) the CD
Base Rate divided by (ii) one minus the CD Reserve Percentage,
plus (b) the Assessment Rate, plus (c) the CD Margin.
"CD Reserve Percentage" shall mean for any day the
percentage (including any supplemental percentage applied on a
marginal basis or any other reserve requirement having a similar
effect), expressed as a decimal, which is in effect on such day,
as prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for determining the reserve
requirements for Mercantile as a member bank of the Federal
Reserve System in St. Louis, Missouri, in respect to new
non-personal time deposits in dollars in St. Louis, Missouri,
having a maturity comparable to the applicable Interest Period.
The CD Rate shall be adjusted automatically on and as of the
effective date of any change in the CD Reserve Percentage.
"Change of Control" shall mean any Acquisition
subsequent to the Effective Date of this Agreement by any Person,
or related Persons constituting a "group" for purposes of Section
13(d) of the Securities Exchange Act of 1934, of (a) the power to
elect, appoint or cause the election or appointment of at least a
majority of the members of the Board of Directors of the Company,
through beneficial ownership of the capital stock of the Company
or otherwise or (b) all or substantially all of the Properties
and assets of the Company; provided, however, that a Change of
Control shall not be deemed to have occurred if (i) the
Acquisition of such power or Properties and assets is pursuant to
a transaction in compliance with the provisions of
Section 5.01(g) and (ii) no Person, or related Persons
constituting a "group" for purposes of Section 13(d) of the
Securities Exchange Act of 1934, shall have the power to elect,
appoint or cause the election or appointment of at least a
majority of the members of the Board of Directors of such
successor or transferee. For purposes of this definition,
"Acquisition" of the power or Properties and assets stated in the
preceding sentence shall mean the earlier of (i) the actual
possession thereof or (ii) the consummation of any transaction or
series of related transactions which, with the passage of time,
will give such Person or Persons the actual possession thereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and any successor statute of similar import, together
with the regulations thereunder, in each case as in effect from
time to time. References to sections of the Code shall be
construed to also refer to any successor sections.
"Company" shall mean Edison Brothers Stores, Inc., a
Delaware corporation, and its successors.
"Consolidated", when used with respect to "Attributable
Indebtedness", "Funded Debt", "Secured Debt" or "Net Worth",
shall mean the Attributable Indebtedness, Funded Debt, Secured
Debt or Net Worth, as the case may be, of the Company and its
Restricted Subsidiaries determined on a consolidated basis in
accordance with GAAP.
"Consolidated Current Ratio" shall mean, as of any
particular time and after eliminating inter-company items, the
ratio of (a) the current assets of the Company and its
Subsidiaries to (b) the current liabilities of the Company and
its Subsidiaries, all as consolidated and determined in
accordance with GAAP. For purposes of this definition, if the
last day of the Revolving Credit Period (determined on a Bank by
Bank basis) is at least one (1) year after the applicable date of
determination, the current liabilities of the Company and its
Subsidiaries shall not include an amount equal to the unused
portion of the Revolving Credit Commitments of the applicable
Bank(s) as of the applicable date of determination thereof.
"Consolidated Net Income" shall mean, for the period in
question, the gross revenues of the Company and its Restricted
Subsidiaries for such period less all expenses and other proper
charges (including taxes on income), determined on a consolidated
basis after eliminating earnings or losses attributable to
outstanding Minority Interests, but excluding in any event:
(a) net earnings and losses of any corporation
(other than a Restricted Subsidiary), substantially all
of the assets of which have been acquired in any manner
by the Company or any Restricted Subsidiary, realized
by such corporation prior to the date of such
acquisition;
(b) net earnings and losses of any corporation
(other than a Restricted Subsidiary) with which the
Company or a Restricted Subsidiary shall have
consolidated or which shall have merged into or with
the Company or a Restricted Subsidiary prior to the
date of such consolidation or merger;
(c) net earnings of any business entity (other
than a Restricted Subsidiary) in which the Company or
any Restricted Subsidiary has an ownership interest
unless such net earnings shall have actually been
received by the Company or such Restricted Subsidiary
in the form of cash distributions;
(d) any portion of the net earnings of any
Restricted Subsidiary which for any reason is
unavailable for payment of dividends to the Company or
any other Restricted Subsidiary; and
(e) any other unusual or extraordinary gains or
losses.
"Consolidated Net Sales" shall mean, with respect to
any period and after eliminating inter-company items, the net
sales of the Company and its Subsidiaries, all as consolidated
and determined in accordance with GAAP.
"Consolidated Net Tangible Assets" shall mean, without
duplication, as of the date of any determination thereof, the
total amount of all assets of the Company and its Restricted
Subsidiaries less the sum of:
(a) the amount, if any, at which intangible assets
(including goodwill, trade names, trademarks, brand
names, patents, copyrights, patent applications,
licenses, franchises, permits, unamortized debt
discount and expense, organizational costs and expenses
and other similar intangibles (but excluding
unamortized leasehold rights) appear on a consolidated
balance sheet;
(b) any write-up of fixed assets after the date of
this Agreement; and
(c) all liabilities other than deferred taxes, the
SFAS 106 Liability and Consolidated Funded Debt.
"Consolidated Subsidiary" shall mean, at any date, any
Subsidiary or other entity the assets and liabilities of which
are or should be consolidated with those of the Company in its
consolidated financial statements as of such date in accordance
with GAAP.
"Current Debt" of any Person shall mean, as of the date
of determination thereof, (a) all Indebtedness of such Person for
borrowed money other than Funded Debt of such Person and (b)
Guaranties by such Person of Current Debt of others.
"Default" shall mean any condition or event which
constitutes an Event of Default or which with the giving of
notice or lapse of time or both would, unless cured or waived,
become an Event of Default.
"Effective Date" shall mean the date on which this
Agreement shall become effective in accordance with Section 9.11.
"Environmental Laws" shall mean the Comprehensive
Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act ("RCRA"), the Clean Water
Act, the Toxic Substances Control Act, the Hazardous Materials
Transportation Act, the Clean Air Act, superlien laws and any
other Federal, state or local statute, law, ordinance, code, rule
or regulation or judicial or administrative order or decree
regulating, relating to or imposing liability or standards of
conduct concerning any Hazardous Materials, and all amendments
thereto, now or at any time hereinafter in effect.
"Environmental Lien" shall mean any Lien in favor of
any governmental or regulatory entity or other Person for or with
respect to (a) any liability under any Environmental Law or
(b) damages or costs incurred by such governmental or regulatory
entity or other Person in connection with any actual, threatened
or suspected spillage, disposal or other release of any Hazardous
Materials, including, without limitation, investigative costs
related thereto.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended, and any successor statute of
similar import, together with the regulations thereunder, in each
case as in effect from time to time. References to sections of
ERISA shall be construed to also refer to any successor sections.
"ERISA Affiliate" shall mean any corporation, trade or
business that is, along with the Company, a member of a
controlled group of corporations or a controlled group of trades
or businesses, as described in Sections 414(b) and 414(c),
respectively, of the Code.
"Event of Default" shall have the meaning ascribed
thereto in Section 6.01.
"Fixed Charges" shall mean, for the period in question,
the sum of (i) all Gross Rentals under Operating Leases payable
during such period by the Company and its Restricted Subsidiaries
and (ii) all Interest Charges during such period on all
Indebtedness (including the interest component of Minimum Rentals
on Capitalized Leases) of the Company and its Restricted
Subsidiaries, all determined on a consolidated basis.
"Fixed Rate Loans" shall mean CD Loans or IBOR Loans or
both.
"Funded Debt" of any Person shall mean (i) all
Indebtedness of such Person for borrowed money or which has been
incurred in connection with the acquisition of assets in each
case having a final maturity of one (1) year or more from the
date of origin thereof (or which is renewable or extendible at
the option of the obligor for a period or periods more than one
(1) year from the date of origin thereof), excluding all payments
in respect thereof that are required to be made within one (1)
year from the date of any determination of Funded Debt, so long
as the obligation to make such payments shall constitute a
current liability of the obligor under GAAP, (ii) all Capitalized
Rentals of such Person other than that portion of Capitalized
Rentals which are due within one (1) year from the date of
determination of Funded Debt and (iii) all Guaranties by such
Person of Funded Debt of others.
"GAAP" shall mean, as to a particular Person, such
accounting principles as, in the opinion of the "Big 6"
accounting firm regularly retained by such Person, conform at the
time to generally accepted accounting principles; provided that
as to any Person who has not regularly retained such an
accounting firm, "GAAP" shall mean generally accepted accounting
principles at the time in the United States.
"Gross Rentals" for any period shall mean the aggregate
amounts payable by the lessee during such period pursuant to the
terms of Operating Leases (net of any amounts received by the
lessee for such period pursuant to the terms of a sublease of all
or part of the property demised by such Operating Lease) for
Minimum Rentals, common area maintenance charges and percentage
rentals, and any amounts actually paid pursuant to any guaranty
of a lessee's obligation under any Operating Lease (but only to
the extent that such amounts were for the payment of Minimum
Rentals, common area maintenance charges and/or percentage
rentals).
"Guaranties" by any Person shall mean all obligations
(other than endorsements in the ordinary course of business of
negotiable instruments for deposit or collection) of such Person
guaranteeing, or in effect guaranteeing, any Indebtedness,
dividend or other obligation of any other Person (the "primary
obligor") in any manner, whether directly or indirectly,
including, without limitation, all obligations incurred through
an agreement, contingent or otherwise, by such Person: (a) to
purchase such Indebtedness or obligation or any property or
assets constituting security therefor, (b) to advance or supply
funds (i) for the purchase or payment of such Indebtedness or
obligation, (ii) to maintain working capital or other balance
sheet condition or otherwise to advance or make available funds
for the purchase or payment of such Indebtedness or obligation,
(iii) to lease property or to purchase securities or other
property or services primarily for the purpose of assuring the
owner of such Indebtedness or obligation of the ability of the
primary obligor to make payment of the Indebtedness or obligation
or (iv) otherwise to assure the owner of the Indebtedness or
obligation of the primary obligor against loss in respect
thereof; provided, however, that "Guaranties" shall not include
(a) the Handyman Guaranties, (b) Guaranties of any lessee's
obligations under any Operating Lease and/or (c) Guaranties as to
which the primary obligation has been taken into account pursuant
to the definition of "Indebtedness." For the purposes of all
computations made under this Agreement, a Guaranty in respect of
any Indebtedness for borrowed money shall be deemed to be
Indebtedness equal to the then outstanding principal amount of
such Indebtedness for borrowed money which has been guaranteed,
and a Guaranty in respect of any other obligation or liability or
any dividend shall be deemed to be Indebtedness equal to the
maximum aggregate amount of such obligation, liability or
dividend.
"Handyman Guaranties" shall mean all guaranties by the
Company of payments under any Capitalized Lease or Operating
Lease of real property previously used by the Company's former
Subsidiary, the Handyman Corporation.
"Hazardous Materials" shall mean those materials,
wastes and substances defined as hazardous substances in 42
U.S.C. section 9601(14), and all other materials, wastes and
substances (including, without limitation, solids, liquids and
gases), now or hereafter designated or defined as hazardous, toxic,
dangerous or otherwise regulated under any Federal, state or local
law, rule or regulation pertaining to environmental pollution,
contamination, protection or waste management, treatment,
storage, handling or disposal and any other materials or
substances (including, without limitation, petroleum and other
substances specifically excluded from the definition of hazardous
substances under 42 U.S.C. section 9601(14)), the exposure to
which is prohibited, limited or regulated by any governmental or
regulatory authority or under any Environmental Law.
"Indebtedness" of any Person shall mean and include all
obligations of such Person which in accordance with GAAP shall be
classified upon a balance sheet of such Person as liabilities of
such Person, and in any event shall include all (a) obligations
of such Person for borrowed money or which have been incurred in
connection with the acquisition of Property or assets, (b)
obligations secured by any Lien upon Property or assets owned by
such Person, even though such Person has not assumed or become
liable for the payment of such obligations, (c) obligations
created or arising under any conditional sale or other title
retention agreement with respect to Property acquired by such
Person, notwithstanding the fact that the rights and remedies of
the seller, lender or lessor under such agreement in the event of
default are limited to repossession or sale of such Property, (d)
Capitalized Rentals and (e) Guaranties of obligations of others
of the character referred to in this definition.
"IBOR Base Rate" shall mean, with respect to the
applicable Interest Period, the rate per annum of interest
determined by Mercantile to be the average (rounded upwards, if
necessary, to the next higher 1/8 of 1%) at which dollar deposits
in immediately available funds are offered to Mercantile in the
Interbank Eurodollar market by two Interbank Eurodollar brokers
of recognized standing, selected by Mercantile in its sole
discretion, at such time as Mercantile in its sole discretion
elects on the first day of such Interest Period, for delivery on
the first day of the applicable Interest Period for a number of
days comparable to the number of days in such Interest Period and
in an amount approximately equal to the principal amount of the
IBOR Loan to which such Interest Period is to apply.
"IBOR Loan" shall mean any Loan bearing interest at the
IBOR Rate.
"IBOR Margin" shall mean: (a) with respect to each
Line of Credit Loan,
(i) .375% during such time as the Company's
commercial paper is rated P-1 by Moody's and A-1 by
S&P,
(ii) .50% during such time as the Company's
commercial paper is rated at least P-2 by Moody's and
at least A-2 by S&P,
(iii) .6875% during such time as the Company's
commercial paper is rated at least P-3 by Moody's and
at least A-3 by S&P, and
(iv) .9375% during such time as the Company's
commercial paper is (A) rated NP by Moody's or B, C or
D by S&P or (B) not rated by either or both of Moody's
and/or S&P,
and if clauses (i) and (ii) are both applicable or if clauses
(i), (ii) and (iii) are all applicable, the IBOR Margin set forth
in clause (i) shall be applicable, and if both clauses (ii) and
(iii) are applicable, the IBOR Margin set forth in clause (ii)
shall be applicable; and
(b) with respect to each Revolving Credit Loan,
(i) .375% during such time as the Company's
commercial paper is rated P-1 by Moody's and A-1 by
S&P,
(ii) .50% during such time as the Company's
commercial paper is rated at least P-2 by Moody's and
at least A-2 by S&P,
(iii) .6875% during such time as the Company's
commercial paper is rated at least P-3 by Moody's and
at least A-3 by S&P, and
(iv) .9375% during such time as the Company's
commercial paper is (A) rated NP by Moody's or B, C or
D by S&P or (B) not rated by either or both of Moody's
and/or S&P,
and if clauses (i) and (ii) are both applicable or if clauses
(i), (ii) and (iii) are all applicable, the IBOR Margin set forth
in clause (i) shall be applicable, and if both clauses (ii) and
(iii) are applicable, the IBOR Margin set forth in clause (ii)
shall be applicable.
The IBOR Rate shall be adjusted automatically on and as
of the effective date of any change in the IBOR Margin.
"IBOR Rate" shall mean (a) the quotient of (i) the IBOR
Base Rate divided by (ii) one minus the IBOR Reserve Percentage,
plus (b) the IBOR Margin.
"IBOR Reserve Percentage" shall mean for any day the
reserve percentage (including any supplemental percentage applied
on a marginal basis or any other reserve requirement having a
similar effect), expressed as a decimal, which is in effect on
the first day of the applicable Interest Period, as prescribed by
the Board of Governors of the Federal Reserve System (or any
successor) under Regulation D (or any other applicable regulation
of the Board of Governors (or any successor)) with respect to
"Eurocurrency Liabilities." The IBOR Rate shall be adjusted
automatically on and as of the effective date of any change in
the IBOR Reserve Percentage.
"Interest Charges" shall mean, for the period in
question, all interest paid or accrued (including imputed
interest in respect of Capitalized Rentals) and all amortization
of debt discount and expense on any particular Indebtedness for
which such calculations are being made.
"Interest Period" shall mean:
(a) with respect to each IBOR Loan:
(i) Initially, the period commencing on the date
of such Loan and ending 1 day, 1, 2 or 3 weeks or 1, 2,
3, 4, 5 or 6 months thereafter (or such other period
agreed upon in writing by the Company and all of the
Banks), as the Company may elect in the applicable
Notice of Borrowing; and
(ii) Thereafter, each period commencing on the
last day of the next preceding Interest Period
applicable to such Loan and ending 1 day, 1, 2 or 3
weeks or 1, 2, 3, 4, 5 or 6 months thereafter (or such
other period agreed upon in writing by the Company and
all of the Banks), as the Company may elect pursuant to
Section 2.04;
provided that:
(iii) Subject to clauses (iv), (v) and (vi) below,
if any Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall
end on the immediately preceding Business Day;
(iv) No Interest Period with respect to any IBOR
Loan which is a Line of Credit Loan shall extend beyond
the last day of the Line of Credit Period;
(v) No Interest Period with respect to any IBOR
Loan which is a Revolving Credit Loan shall extend
beyond the last day of the Revolving Credit Period; and
(vi) Any Interest Period which includes a date on
which a payment of principal is required to be made on
the applicable Loan(s) shall end on such date.
(b) with respect to each CD Loan:
(i) Initially, the period commencing on the date
of such Loan and ending 30, 60, 90, 120 or 180 days
thereafter (or such other period agreed upon in writing
by the Company and all of the Banks), as the Company
may elect in the applicable Notice of Borrowing; and
(ii) Thereafter, each period commencing on the
last day of the next preceding Interest Period
applicable to such Loan and ending 30, 60, 90, 120 or
180 days thereafter (or such other period agreed upon
in writing by the Company and all of the Banks), as the
Company may elect pursuant to Section 2.04;
provided that:
(iii) Subject to clauses (iv), (v) and (vi) below,
any Interest Period which would otherwise end on a day
which is not a Business Day shall end on the
immediately preceding Business Day;
(iv) No Interest Period with respect to any CD
Loan which is a Line of Credit Loan shall extend beyond
the last day of the Line of Credit Period;
(v) No Interest Period with respect to any CD
Loan which is a Revolving Credit Loan shall extend
beyond the last day of the Revolving Credit Period; and
(vi) Any Interest Period which includes a date on
which a payment of principal is required to be made on
the Loans shall end on such date.
"Lien" shall mean any mortgage, lien, pledge, security
interest, encumbrance or charge of any kind, any conditional sale
or other title retention agreement or any Capitalized Lease.
"Line of Credit Commitment" shall mean, subject to
termination or reduction as set forth in Section 2.01(c) and
Section 2.07: with respect to Mercantile, $10,000,000.00; with
respect to The Boatmen's National Bank of St. Louis,
$17,500,000.00; with respect to Citibank, N.A., $10,000,000.00;
with respect to NBD Bank, N.A., $12,500,000.00; with respect to
The Bank of Nova Scotia, $10,000,000.00; with respect to The
First National Bank of Chicago, $10,000,000.00; and with respect
to Bank of America National Trust and Savings Association,
$5,000,000.00.
"Line of Credit Extension Request" shall have the
meaning ascribed thereto in Section 2.01(c).
"Line of Credit Loan" and "Line of Credit Loans" shall
have the respective meanings ascribed thereto in Section 2.01(a).
"Line of Credit Notes" shall mean the Line of Credit
Notes of the Company to be executed and delivered to the Banks
pursuant to Section 2.03(a), as the same may from time to time be
amended, modified, extended or renewed.
"Line of Credit Period" shall have the meaning ascribed
thereto in Section 2.01(c).
"Loan" shall mean a Prime Loan, a CD Loan or an IBOR
Loan (whether a Line of Credit Loan or a Revolving Credit Loan)
and "Loans" shall mean Prime Loans, CD Loans and/or IBOR Loans
(whether Line of Credit Loans or Revolving Credit Loans).
"Loan Commitments" shall mean the total of the Line of
Credit Commitments and Revolving Credit Commitments of all of the
Banks.
"Material Adverse Effect" shall mean a material adverse
effect on (i) the Properties, business, profits or condition
(financial or otherwise) of the Company and its Subsidiaries
taken as a whole or (ii) the ability of the Company to perform
its obligations contained in this Agreement or in the Notes.
"Mercantile" shall mean Mercantile Bank of St. Louis
National Association, a national banking association, in its
individual corporate capacity and not as Agent hereunder.
"Minimum Rentals" shall mean and include as of the date
of any determination thereof all fixed payments (including as
such all payments which the lessee is obligated to make to the
lessor on termination of the lease or surrender of the leased
Property) payable by the Company or a Restricted Subsidiary, as
lessee or sublessee under a lease of real or personal property,
but shall be exclusive of any amounts required to be paid by the
Company or a Restricted Subsidiary (whether or not designated as
rents or additional rents) on account of maintenance, repairs,
insurance, taxes and similar charges. Fixed rents under any so-
called "percentage leases" shall be computed solely on the basis
of the minimum rents, if any, required to be paid by the lessee
regardless of sales volume or gross revenues.
"Minority Interests" shall mean any shares of stock of
any class of a Restricted Subsidiary (other than directors'
qualifying shares as required by law) that are not owned by the
Company and/or one or more of its Restricted Subsidiaries.
Minority Interests shall be valued by valuing Minority Interests
constituting preferred stock at the voluntary or involuntary
liquidation value of such preferred stock, whichever is greater,
and by valuing Minority Interests constituting common stock at
the book value of capital and surplus applicable thereto,
adjusted, if necessary, to reflect any changes from the book
value of such common stock required by the foregoing method of
valuing Minority Interests in preferred stock.
"Moody's" shall mean Moody's Investors Service, Inc.
"Multi-Employer Plan" shall mean a "multi-employer
plan" as defined in Section 4001(a)(3) of ERISA which is
maintained for employees of the Company, any ERISA Affiliate or
any Subsidiary.
"Net Income Available for Fixed Charges" shall mean,
for the period in question, the sum of Consolidated Net Income
during such period plus, to the extent deducted in determining
Consolidated Net Income, (a) all provisions for any Federal,
state or other income taxes made by the Company and its
Restricted Subsidiaries during such period and (b) Fixed Charges
of the Company and its Restricted Subsidiaries during such
period.
"Net Worth" shall mean, as of the date of any
determination thereof, the amount of the capital stock accounts
(net of treasury stock, at cost) less Minority Interests (to the
extent included therein) plus (or less in the case of a deficit)
cumulative currency translation adjustments plus (or minus in the
case of a deficit) the surplus and retained earnings of the
Company and its Restricted Subsidiaries determined on a
consolidated basis and in accordance with GAAP, plus the after-
tax effect of the SFAS 106 Adjustment.
"Note" shall mean a Line of Credit Note or a Revolving
Credit Note, and "Notes" shall mean the Line of Credit Notes and
the Revolving Credit Notes.
"Note Agreements" shall have the meaning ascribed
thereto in Section 6.01(n).
"Notice of Borrowing" shall have the meaning ascribed
thereto in Section 2.02.
"Occupational Safety and Health Laws" shall mean the
Occupational Safety and Health Act of 1970, as amended, and any
other Federal, state or local statute, law, ordinance, code, rule
or regulation or judicial or administrative order or decree
regulating, relating to or imposing liability or standards of
conduct concerning employee safety and/or health, as now or at
any time hereafter in effect.
"Operating Lease" shall mean any lease of real property
under which the Company or a Restricted Subsidiary is lessee,
other than (1) leases between the Company and its Restricted
Subsidiaries or between Restricted Subsidiaries of the Company
and (2) Capitalized Leases.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation and any entity succeeding to any or all of its
functions under ERISA.
"Pension Plan" shall mean a "pension plan," as such
term is defined in Section 3(2) of ERISA, which is established or
maintained by the Company, any ERISA Affiliate or any Subsidiary,
other than a Multi-Employer Plan.
"Person" shall mean any individual, sole
proprietorship, partnership, joint venture, trust, unincorporated
organization, association, corporation, institution, entity or
government (whether national, Federal, state, county, city,
municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Prime Loan" shall mean any Loan bearing interest at
the Prime Rate.
"Prime Rate" shall mean the interest rate announced
from time to time by Mercantile as its "prime rate" on commercial
loans (which rate shall fluctuate as and when said "prime rate"
shall change).
"Property" shall mean any interest in any kind of
property or asset, whether real, personal or mixed, or tangible
or intangible. Properties shall mean the plural of Property.
For purposes of this Agreement, the Company and each Subsidiary
shall be deemed to be the owner of any Property which it has
acquired or holds subject to a conditional sale agreement,
financing lease or other arrangement pursuant to which title to
the Property has been retained by or vested in some other Person
for security purposes.
"Pro Rata Share" shall mean, with respect to each Bank,
such Bank's percentage of the aggregate amount of Loans then
outstanding or, if no Loans are then outstanding, such Bank's
percentage of the total Loan Commitments of all of the Banks.
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System, as amended.
"Regulatory Change" shall have the meaning ascribed
thereto in Section 8.03(a).
"Reportable Event" shall have the meaning given to such
term in ERISA.
"Restricted Investment" shall mean any investment by
the Company or any Subsidiary in any Person, whether payment
therefor is made in cash or capital stock of the Company, and
whether such investment is by acquisition of stock or
Indebtedness, or by loan, advance, transfer of property out of
the ordinary course of business, capital contribution, extension
of credit on terms other than those normal in the ordinary course
of business, guarantee or otherwise becoming liable (contingently
or otherwise) in respect of the Indebtedness of any Person, or
otherwise; provided, however, that the term "Restricted
Investment" shall not include:
(a) investments in marketable obligations issued
or guaranteed by the United States of America, and
maturing not more than one (1) year from the date of
acquisition thereof;
(b) commercial paper rated A-1 or A-2 or better
by S&P or P-1 or P-2 or better by Moody's;
(c) certificates of deposit in, or banker's
acceptances issued by, United States commercial banks
or savings and loan associations that are members of
both the Federal Deposit Insurance Corporation and the
Federal Reserve System, that have combined capital and
surplus of at least $100,000,000.00 and that have a
senior debt rating of A- or better by S&P or A-3 or
better by Moody's, provided that such certificates of
deposit or banker's acceptances mature not more than
one (1) year from the date of acquisition thereof;
(d) bonds or notes issued by any corporation
organized and existing under the laws of the United
States of America or any state thereof that (i) are
rated at least BBB by S&P and Baa by Moody's and (ii)
have a maturity date of not more than one (1) year from
the date of acquisition thereof; provided, however,
that the aggregate outstanding principal amount of all
such notes and/or bonds of any single corporation owned
by the Company and/or any one or more of its
Subsidiaries shall not exceed $5,000,000.00 at any one
time;
(e) overnight repurchase agreements secured by
the government obligations described in clause (a)
above between the Company and a United States
commercial bank or saving and loan association that is
a member of both the Federal Deposit Insurance
Corporation and the Federal Reserve System, that has
combined capital and surplus of at least
$100,000,000.00 and that has a senior debt rating of A-
or better by S&P or A-3 or better by Moody's, and
pursuant to which the Company and such institution do
not have a commitment of more than $5,000,000.00;
(f) money market mutual funds that have total
assets in excess of $1,000,000,000.00 and that invest
substantially all of their assets in the items
described in clauses (a), (b) and (c) above;
(g) mutual funds that (i) have assets in excess
of $1,000,000,000.00, (ii) invest substantially all of
their assets in the items described in clauses (a),
(b), (c) and/or (d) above and (iii) are rated A or
better by S&P and A or better by Moody's;
(h) endorsements of negotiable instruments or
other receivables for collection in the ordinary course
of business, and demand deposits in the ordinary course
of business;
(i) investments in stock or other securities of,
or loans, advances, or capital contributions to, any
entity which by reason thereof will become a Subsidiary
in compliance with Section 5.01(g)(ii);
(j) loans or advances in the usual and ordinary
course of business to officers, directors and employees
for business expenses;
(k) guarantees of any lessee's or sublessee's
obligation under any Operating Lease, whether such
lessee or sublessee is the Company, any Subsidiary or
any other Person (provided that such lessee or
sublessee, if not the Company or a Subsidiary, is an
assignee or sublessee of the rights and obligations of
the Company or a Subsidiary under such Operating
Lease), and any inter-company guarantees;
(l) to the extent not already included in item
(k) above, the Handyman Guarantees;
(m) investments of up to $500,000.00 in suppliers
of goods sold by the Company or any of its Subsidiaries
in the ordinary course of business necessary or
desirable to develop or maintain sources of supply; and
(n) de minimis investments in any Person made in
the ordinary course of business for the purpose of
obtaining general information of such Person.
"Restricted Subsidiary" shall mean any Subsidiary which
is designated a Restricted Subsidiary in Schedule 4.01(r)
attached hereto or which may hereafter be so designated by the
Company by written notice to the Agent and each of the Banks,
accompanied by a resolution of the Board of Directors of the
Company or the Executive Committee of the Board of Directors of
the Company, to be included in the definition of Restricted
Subsidiary for all purposes of this Agreement; provided, however,
that:
(a) (i) no corporation shall be designated a
Restricted Subsidiary if such corporation shall
previously have been designated a Restricted Subsidiary
(including the initial designation contained in
Schedule 4.01(r) attached hereto), (ii) any corporation
designated a Restricted Subsidiary shall be deemed to
have created, assumed or incurred all Funded Debt of
such corporation existing immediately after it becomes
a Restricted Subsidiary, (iii) the designation of a
Restricted Subsidiary may only be made effective as at
the end of a fiscal quarter of the Company and (iv) at
the time of such designation and after giving effect
thereto, (A) no Default or Event of Default shall have
occurred and be continuing, (B) all of the
representations and warranties of the Company contained
in this Agreement shall be true and correct in all
material respects as if made on such date and (C) the
Company would be entitled, pursuant to the provisions
of Section 5.01(c)(i)(C) of this Agreement, to incur at
least $1.00 of additional Funded Debt; and
(b) any Restricted Subsidiary may be designated
by the Company, effective as at the end of a fiscal
quarter of the Company, by written notice to the Agent
and each of the Banks, accompanied by a resolution of
the Board of Directors of the Company or the Executive
Committee of the Board of Directors of the Company, to
be excluded from the definition of Restricted
Subsidiary for all purposes of this Agreement if at the
time of such designation and after giving effect
thereto, (i) no Default or Event of Default shall have
occurred and be continuing, (ii) all of the
representations and warranties of the Company contained
in this Agreement shall be true and correct in all
material respects as if made on such date, (iii) such
corporation shall neither own, directly or indirectly,
any Indebtedness for borrowed money or capital stock of
the Company or any Restricted Subsidiary and (iv) the
Company would be entitled pursuant to the provisions of
Section 5.01(c)(i)(C) of this Agreement, to incur at
least $1.00 of additional Funded Debt.
"Required Banks" shall mean at any time Banks having
67% of the aggregate amount of Loans then outstanding or, if no
Loans are then outstanding, 67% of the total Loan Commitments of
all of the Banks.
"Revolving Credit Commitment" shall mean, subject to
termination or reduction as set forth in Section 2.01(d) and
Section 2.07: with respect to Mercantile, $10,000,000.00; with
respect to The Boatmen's National Bank of St. Louis,
$17,500,000.00; with respect to Citibank, N.A., $10,000,000.00;
with respect to NBD Bank, N.A., $12,500,000.00; with respect to
The Bank of Nova Scotia, $10,000,000.00; with respect to The
First National Bank of Chicago, $10,000,000.00; and respect to
Bank of America National Trust and Savings Association,
$5,000,000.00.
"Revolving Credit Extension Request" shall have the
meaning ascribed thereto in Section 2.01(d).
"Revolving Credit Loan" and "Revolving Credit Loans"
shall have the respective meanings ascribed thereto in Section
2.01(b).
"Revolving Credit Notes" shall mean the Revolving
Credit Notes of the Company to be executed and delivered to the
Banks pursuant to Section 2.03(b), as the same may from time to
time be amended, modified, extended or renewed.
"Revolving Credit Period" shall have the meaning
ascribed thereto in Section 2.01(d).
"Sale and Leaseback Transaction" shall have the meaning
ascribed thereto in Section 5.01(f).
"Secured Debt" shall, without duplication, mean all
Current Debt and/or Funded Debt which is secured by a mortgage,
security interest, pledge, conditional sale or other title
retention agreement or other Lien upon any Property or assets of
the Company or a Restricted Subsidiary but shall not include
Capitalized Rentals or liabilities incurred in connection with
industrial revenue bond financings or pollution control bond
financings.
"SFAS 106" shall mean Statement of Financial Accounting
Standards No. 106, Employer's Accounting for Postretirement
Benefits Other Than Pensions, issued by the Financial Accounting
Standards Board.
"SFAS 106 Adjustment" shall mean (a) for any fiscal
period ending with or after the fiscal period in which the
Company has elected to immediately recognize the SFAS 106
Transition Obligation through a single charge against the
revenues of the Company and its Restricted Subsidiaries on a
consolidated basis, the amount charged against the revenues of
the Company and its Restricted Subsidiaries on a consolidated
basis in the fiscal period in which SFAS 106 is adopted by the
Company to reflect the effect of a change in accounting principle
(resulting from the adoption of SFAS 106) and (b) for any earlier
fiscal period, zero.
"SFAS 106 Liability" shall mean, as of the end of any
fiscal period, the amount set forth as such on the balance sheet
of the Company at the end of such period with respect to the SFAS
106 Adjustment.
"SFAS 106 Transition Obligation" shall mean as of the
date the Company adopts SFAS 106, the difference between (a) the
accumulated postretirement benefit obligation determined in
accordance with SFAS 106 and (b) the fair value of the assets
that the Company has segregated and restricted for the Company's
non-pension postretirement benefit plan, plus any accrued non-
pension postretirement benefit cost or less any prepaid non-
pension postretirement benefit cost as of such date.
"Significant Subsidiaries" shall mean EBSS-West, Inc.,
a California corporation, Edison Brothers Apparel Stores, Inc., a
Missouri corporation, Edison Brothers Entertainment, Inc., a
Missouri corporation, Edison Brothers Redevelopment Corporation,
a Missouri corporation, and Edison Brothers Stores International,
Inc., a Missouri corporation, and any other Subsidiary accounting
for more than (i) ten percent (10%) of the total Consolidated Net
Tangible Assets as of the last day of the fiscal year of the
Company immediately preceding the date of determination or (ii)
ten percent (10%) of the total Consolidated Net Sales for the
fiscal year of the Company immediately preceding the date of
determination.
"S&P" shall mean Standard and Poor's Corporation.
"Subsidiary" shall mean any corporation at least a
majority of whose outstanding stock having ordinary voting power
for the election of a majority of the members of the Board of
Directors (or other governing body) of such corporation (other
than stock having such power only by reason of the happening of a
contingency) shall at the time be owned by the Company and/or one
or more Subsidiaries of the Company.
"Transaction Documents" shall mean this Agreement, the
Notes and all other agreements, documents and instruments
heretofore, now or hereafter delivered to the Agent or any Bank
with respect to or in connection with or pursuant to this
Agreement or any Loans made hereunder, and executed by or on
behalf of the Company, all as the same may from time to time be
amended, modified, extended or renewed.
"Unrestricted Subsidiary" shall mean any Subsidiary
which is not a Restricted Subsidiary.
"Wholly-Owned" when used in connection with any
Subsidiary shall mean a Subsidiary of which all of the issued and
outstanding shares of stock (except shares required as directors'
qualifying shares) shall be owned by the Company and/or one or
more of its Wholly-Owned Subsidiaries.
SECTION 1.02. Accounting Terms and Determinations.
Except as otherwise specified herein, all accounting terms used
herein shall be interpreted, all accounting determinations
hereunder shall be made and all financial statements required to
be delivered hereunder shall be prepared in accordance with GAAP,
applied on a basis consistent (except for changes approved by the
Company's independent certified public accountants) with the most
recent audited consolidated financial statements of the Company
and its Consolidated Subsidiaries delivered to the Agent.
ARTICLE II
LOANS
SECTION 2.01. Commitments To Lend.
(a) During the Line of Credit Period, each Bank
severally agrees, on the terms and conditions set forth in this
Agreement, to lend to the Company from time to time
(individually, a "Line of Credit Loan" and collectively, the
"Line of Credit Loans") amounts not to exceed, in the aggregate
at any one time outstanding, the amount of such Bank's Line of
Credit Commitment. Each Line of Credit Loan under this Section
2.01(a) shall be made from the several Banks ratably in
proportion to their respective Line of Credit Commitments. Each
Line of Credit Loan under this Section 2.01(a) shall be for an
aggregate principal amount of $2,500,000.00 or any larger
multiple of $1,000,000.00. Within the foregoing limits, the
Company may borrow under this Section 2.01(a), prepay under
Section 2.08 and reborrow at any time during the Line of Credit
Period under this Section 2.01(a).
(b) During the Revolving Credit Period, each Bank
severally agrees, on the terms and conditions set forth in this
Agreement, to lend to the Company from time to time
(individually, a "Revolving Credit Loan" and collectively, the
"Revolving Credit Loans") amounts not to exceed, in the aggregate
at any one time outstanding, the amount of such Bank's Revolving
Credit Commitment. Each Revolving Credit Loan under this Section
2.01(b) shall be made from the several Banks ratably in
proportion to their respective Revolving Credit Loan Commitments.
Each Revolving Credit Loan under this Section 2.01(b) shall be
for an aggregate principal amount of $2,500,000.00 or any larger
multiple of $1,000,000.00. Within the foregoing limits, the
Company may borrow under this Section 2.01(b), prepay under
Section 2.08 and reborrow at any time during the Revolving Credit
Period under this Section 2.01(b).
(c) The Line of Credit Period shall mean the period
commencing on the Effective Date of this Agreement and ending
June 2, 1994; provided, however, that the Line of Credit Period
may be extended successively as provided in this Section 2.01(c).
The Company may successively request within each of the time
periods hereinafter set forth a one hundred eighty-two (182) day
extension of the Line of Credit Period. The Company shall
deliver any such request (a "Line of Credit Extension Request")
to the Agent between November 1 and November 15 of the applicable
year or between May 1 and May 15 of the applicable year,
whichever time period is more than six (6) months but less than
eight (8) months prior to the last day of the then current Line
of Credit Period, and the Agent shall promptly forward such
request to each of the Banks. Each Bank shall have the right, as
to its Line of Credit Commitment, in its sole and absolute
discretion, to approve or disapprove the requested extension of
the Line of Credit Period. Each Bank shall, no earlier than the
December 5 immediately following the date of the applicable Line
of Credit Extension Request (if the Line of Credit Extension
Request was dated in November) or the June 5 immediately
following the date of the applicable Line of Credit Extension
Request (if the Line of Credit Extension Request was dated in
May) and no later than the December 15 immediately following the
date of the applicable Line of Credit Extension Request (if the
Line of Credit Extension Request was dated in November) or the
June 15 immediately following the date of the applicable Line of
Credit Extension Request (if the Line of Credit Extension Request
was dated in May) (and any such notice which is sent or dated
more than one hundred eighty-two (182) days prior to the last day
of the then current Line of Credit Period shall not be effective
for any purpose and shall be null and void), notify the Agent in
writing whether such Bank will extend the Line of Credit Period
with respect to its Line of Credit Commitment and any Bank which
fails to notify the Agent of its decision within such time period
will be deemed to have elected not to approve the Line of Credit
Extension Request. In the event that Banks holding less than 67%
of the total Line of Credit Commitments approve the Line of
Credit Extension Request, the Line of Credit Period as to all of
the Banks (and the Line of Credit Commitments of each of the
Banks) shall terminate on the last day of the then current Line
of Credit Period. In the event Banks having at least 67% of the
total Line of Credit Commitments approve the Line of Credit
Extension Request (such Banks so approving the Line of Credit
Extension Request referred to herein as the "Approving Banks"),
the Line of Credit Period and the obligation to make Line of
Credit Loans, solely as to the Approving Banks, shall, subject to
all of the terms and conditions of this Agreement, be extended to
the date which is one hundred eighty-two (182) days after the
last day of the then current Line of Credit Period. From and
after the first day of any such extension of the Line of Credit
Period, any reference to "Line of Credit Commitments" shall refer
only to the Line of Credit Commitments of the Approving Banks.
The Line of Credit Commitment of any Bank which is not an
Approving Bank shall terminate on the last day of the then
current Line of Credit Period (without giving effect to any
extension thereof not approved by such Bank) and all Line of
Credit Loans made by such Bank, together with all accrued and
unpaid interest thereon and all fees and other amounts owing by
the Company to such Bank with respect thereto, shall be due and
payable on the last day of the current Line of Credit Period
(without giving effect to any extension thereof not approved by
such Bank). Any Bank which does not approve any such Line of
Credit Extension Request shall not be allowed to approve any
concurrent or subsequent Line of Credit Extension Request
(including any subsequent Line of Credit Extension Request made
before the expiration of such Bank's Line of Credit Period) or
Revolving Credit Extension Request.
(d) The Revolving Credit Period shall mean the period
commencing on the Effective Date of this Agreement and ending
June 4, 1996; provided, however, that the Revolving Credit Period
may be extended successively as provided in this Section. The
Company may successively request within each of the time periods
hereinafter set forth a one (1) year extension of the Revolving
Credit Period. The Company shall deliver any such request (a
"Revolving Credit Extension Request") to the Agent between May 1
and May 15 of the applicable year, and the Agent shall promptly
forward such request to each of the Banks. Each Bank shall have
the right, as to its Revolving Credit Commitment, in its sole and
absolute discretion, to approve or disapprove the requested
extension of the Revolving Credit Period. Each Bank shall, no
earlier than the June 5 immediately following the date of the
applicable Revolving Credit Extension Request and no later than
the June 15 immediately following the date of the applicable
Revolving Credit Extension Request, notify the Agent in writing
whether such Bank will extend the Revolving Credit Period with
respect to its Revolving Credit Commitment to the requested
extended Revolving Credit Period and any Bank which fails to
notify the Agent of its decision within such time period will be
deemed to have elected not to approve the Revolving Credit
Extension Request. In the event that Banks holding less than 67%
of the total Revolving Credit Commitments approve the Revolving
Credit Extension Request, the Revolving Credit Period as to all
of the Banks (and the Revolving Credit Commitments of each of the
Banks) shall terminate on the last day of the then current
Revolving Credit Period. In the event Banks having at least 67%
of the total Revolving Credit Commitments approve the Revolving
Credit Extension Request (such Banks so approving the Revolving
Credit Extension Request referred to herein as the "Approving
Banks"), the Revolving Credit Period and the obligation to make
Revolving Credit Loans, solely as to the Approving Banks, shall,
subject to all of the terms and conditions of this Agreement, be
extended to the date which is one (1) year after the last day of
the then current Revolving Credit Period. From and after the
first day of any such extension of the Revolving Credit Period,
any reference to "Revolving Credit Commitments" shall refer only
to the Revolving Credit Commitments of the Approving Banks. The
Revolving Credit Commitment of any Bank which is not an Approving
Bank shall terminate on the last day of the then current
Revolving Credit Period (without giving effect to any extension
thereof not approved by such Bank) and all Revolving Credit Loans
made by such Bank, together with all accrued and unpaid interest
thereon and all fees and other amounts owing by the Company to
such Bank with respect thereto, shall be due and payable on the
last day of the current Revolving Credit Period (without giving
effect to any extension thereof not approved by such Bank). Any
Bank which does not approve any such Revolving Credit Extension
Request shall not be allowed to approve any concurrent or
subsequent Revolving Credit Extension Request (including any
subsequent Revolving Credit Extension Request made before the
expiration of such Bank's Revolving Credit Period) or Line of
Credit Extension Request.
(e) The failure of any Bank to make any Loan required
under this Agreement shall not release any other Bank from its
obligation to make Loans as provided herein.
SECTION 2.02. Method of Borrowing. (a) The Company
shall give notice (a "Notice of Borrowing") to the Agent by 10:00
a.m. (St. Louis time) on the day of each Prime Loan or IBOR Loan,
and at least one (1) Business Day before each CD Loan,
specifying:
(i) the date of such Loan, which shall be a
Business Day,
(ii) the aggregate principal amount of such Loan,
(iii) whether such Loan is to be a Line of Credit
Loan or a Revolving Credit Loan,
(iv) whether such Loan is to be a Prime Loan, a CD
Loan or an IBOR Loan,
(v) in the case of a Fixed Rate Loan, the
duration of the initial Interest Period applicable
thereto, subject to the provisions of the definition of
Interest Period,
(vi) that on the date of, and after giving effect
to, such Loan, no Default or Event of Default under
this Agreement has occurred and is continuing, and
(vii) that on the date of, and after giving effect
to, such Loan, all of the representations and
warranties of the Company contained in this Agreement
are true and correct in all material respects as if
made on the date of such Loan.
A Notice of Borrowing shall not be required in connection with a
Prime Loan pursuant to Section 8.01.
(b) Upon receipt of a Notice of Borrowing given to it,
the Agent shall notify each Bank by 1:00 p.m. (St. Louis time) on
the date of receipt of such Notice of Borrowing by the Agent
(which must be a Business Day) of the contents thereof and of
such Bank's ratable share of such Loan. A Notice of Borrowing
shall not be revocable by the Company.
(c) Not later than 2:00 P.M. (St. Louis time) on the
date of each Loan, each Bank shall (except as provided in
subsection (d) of this Section) make available its ratable share
of such Loan, in Federal or other funds immediately available in
St. Louis, Missouri, to the Agent at its address specified in or
pursuant to Section 9.01. Unless the Agent determines that any
applicable condition specified in Article III has not been
satisfied, the Agent will make the funds so received from the
Banks available to the Company immediately thereafter at the
Agent's aforesaid address by crediting such funds to a demand
deposit account (or such other account mutually agreed upon in
writing between Agent and the Company) of the Company with the
Agent.
(d) If any Bank makes a new Loan hereunder on a day on
which the Company is required to or has elected to repay all or
any part of an outstanding Loan from such Bank, such Bank shall
apply the proceeds of its new Loan to make such repayment and
only an amount equal to the difference (if any) between the
amount being borrowed and the amount being repaid shall be made
available by such Bank to the Agent as provided in subsection (c)
of this Section, or remitted by the Company to the Agent as
provided in Section 2.09, as the case may be.
SECTION 2.03. Notes. (a) The Line of Credit Loans of
each Bank to the Company during the Line of Credit Period shall
be evidenced by a Line of Credit Note of the Company dated the
date hereof and payable to the order of such Bank in a principal
amount equal to its Line of Credit Commitment in substantially
the form of Exhibit A attached hereto (with appropriate
insertions) (as the same may from time to time be amended,
modified extended or renewed, the "Line of Credit Notes").
(b) The Revolving Credit Loans of each Bank to the
Company during the Revolving Credit Period shall be evidenced by
a Revolving Credit Note of the Company dated the date hereof and
payable to the order of such Bank in a principal amount equal to
its Revolving Credit Commitment in substantially the form of
Exhibit B attached hereto (with appropriate insertions) (as the
same may from time to time be amended, modified extended or
renewed, the "Revolving Credit Notes").
(c) Upon receipt of each Bank's Line of Credit Note
pursuant to Section 3.01(a), the Agent shall mail such Note by
certified mail, return receipt requested, to such Bank. Each
Bank shall record, and prior to any transfer of its Line of
Credit Note shall endorse on the schedules forming a part
thereof, appropriate notations to evidence the date and amount of
each Line of Credit Loan made by it during the Line of Credit
Period and the date and amount of each payment of principal made
by the Company with respect thereto. Each Bank is hereby
irrevocably authorized by the Company so to endorse its Line of
Credit Note and to attach to and make a part of any such Line of
Credit Note a continuation of any such schedule as and when
required; provided, however that the obligation of the Company to
repay each Line of Credit Loan made hereunder shall be absolute
and unconditional, notwithstanding any failure of any Bank to
endorse or any mistake by any Bank in connection with endorsement
on the schedules attached to their respective Line of Credit
Notes. The books and records of each Bank (including, without
limitation, the schedules attached to the Line of Credit Notes)
showing the account between such Bank and the Company shall be
admissible in evidence in any action or proceeding and shall
constitute prima facie proof of the items therein set forth.
(d) Upon receipt of each Bank's Revolving Credit Note
pursuant to Section 3.01(a), the Agent shall mail such Note by
certified mail, return receipt requested, to such Bank. Each
Bank shall record, and prior to any transfer of its Revolving
Credit Note shall endorse on the schedules forming a part
thereof, appropriate notations to evidence the date and amount of
each Revolving Credit Loan made by it during the Revolving Credit
Period and the date and amount of each payment of principal made
by the Company with respect thereto. Each Bank is hereby
irrevocably authorized by the Company so to endorse its Revolving
Credit Note and to attach to and make a part of any such
Revolving Credit Note a continuation of any such schedule as and
when required; provided, however that the obligation of the
Company to repay each Revolving Credit Loan made hereunder shall
be absolute and unconditional, notwithstanding any failure of any
Bank to endorse or any mistake by any Bank in connection with
endorsement on the schedules attached to their respective
Revolving Credit Notes. The books and records of each Bank
(including, without limitation, the schedules attached to the
Revolving Credit Notes) showing the account between such Bank and
the Company shall be admissible in evidence in any action or
proceeding and shall constitute prima facie proof of the items
therein set forth.
SECTION 2.04. Duration of Interest Periods and
Selection of Interest Rates. (a) The duration of the initial
Interest Period for each Fixed Rate Loan shall be as specified in
the applicable Notice of Borrowing. The Company shall elect the
duration of each subsequent Interest Period applicable to such
Loan and the interest rate to be applicable during such
subsequent Interest Period (and the Company shall have the option
(i) in the case of any Prime Loan, to elect that such Loan become
a Fixed Rate Loan and the Interest Period to be applicable
thereto, and (ii) in the case of any Fixed Rate Loan, to elect
that such Loan become a Prime Loan), by giving notice of such
election to the Agent by 10:00 a.m. (St. Louis time) on the day
of, in the case of the election of the Prime Rate or the IBOR
Rate, and by 10:00 a.m. (St. Louis time) at least one (1)
Business Day before, in the case of the election of the CD Rate,
the end of the immediately preceding Interest Period applicable
thereto, if any; provided, however, that notwithstanding the
foregoing, in addition to and without limiting the rights and
remedies of the Agent and the Banks under Article VI hereof, so
long as any Default or Event of Default under this Agreement has
occurred and is continuing, the Company shall not be permitted to
renew any Fixed Rate Loan as a Fixed Rate Loan or to convert any
Prime Loan into a Fixed Rate Loan.
(b) If the Agent does not receive a notice of election
for a Loan pursuant to subsection (a) above within the applicable
time limits specified therein, the Company shall be deemed to
have elected to pay such Loan in whole pursuant to Section 2.08
on the last day of the current Interest Period with respect
thereto and to reborrow the principal amount of such Loan on such
date as a Prime Loan of the same type (i.e. a Line of Credit Loan
or a Revolving Credit Loan).
(c) Notwithstanding the foregoing, the duration of
each Interest Period shall be subject to the provisions of the
definition of Interest Period.
SECTION 2.05. Interest Rates. (a) Each Prime Loan
shall bear interest on the outstanding principal amount thereof,
for each day from the date such Loan is made until it becomes
due, at a rate per annum equal to the Prime Rate. Such interest
shall be payable monthly in arrears on the fourth (4th) day of
each month, commencing on the first such date after such Prime
Loan is made, and at maturity. Any overdue principal of and, to
the extent permitted by law, overdue interest on, any Prime Loan
shall bear interest, payable on demand, for each day until paid
at a rate per annum equal to the sum of Two Percent (2%) plus the
otherwise applicable rate for such day.
(b) Each CD Loan shall bear interest on the
outstanding principal amount thereof, for each Interest Period
applicable thereto, at a rate per annum equal to the applicable
CD Rate; provided that if any CD Loan or any portion thereof
shall, as a result of clause (b)(iii), (b)(iv), (b)(v) or (b)(vi)
of the definition of Interest Period, have an Interest Period of
less than thirty (30) days, such portion shall bear interest
during such Interest Period at the rate applicable to Prime Loans
during such period. Such interest shall be payable for each
Interest Period on the last day thereof, unless the duration of
the applicable Interest Period exceeds ninety (90) days, in which
case such interest shall be payable on the ninetieth (90th) day
of such Interest Period and on the last day of such Interest
Period. Any overdue principal of and, to the extent permitted by
law, overdue interest on, any CD Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum
equal to the sum of Two Percent (2%) plus the higher of (i) the
CD Rate for the immediately preceding Interest Period applicable
to such CD Loan or (ii) the rate applicable to Prime Loans for
such day.
(c) Each IBOR Loan shall bear interest on the
outstanding principal amount thereof for each Interest Period
applicable thereto at a rate per annum equal to the applicable
IBOR Rate. Interest shall be payable for each Interest Period on
the last day thereof, unless the duration of the applicable
Interest Period exceeds three (3) months, in which case such
interest shall be payable at the end of the first three (3)
months of such Interest Period and on the last day of such
Interest Period. Any overdue principal of and, to the extent
permitted by law, overdue interest on, any IBOR Loan shall bear
interest, payable on demand, for each day until paid, at a rate
per annum equal to the sum of Two Percent (2%) plus the higher of
(i) the IBOR Rate for the immediately preceding Interest Period
applicable to such IBOR Loan or (ii) the rate applicable to Prime
Loans for such day.
(d) The Agent shall determine each interest rate
applicable to the Loans hereunder. The Agent shall give prompt
notice to the Company and the Banks by telecopy, telex or cable
of each rate of interest so determined, and its determination
thereof shall be conclusive in the absence of manifest error.
(e) The Agent hereby acknowledges that the procedure
for determining the IBOR Base Rate is substantially equivalent to
the procedure for determining the rate known in the Eurodollar
Market as the "LIBOR Base Rate" except for the time and place of
the rate quotation. In the case of the IBOR Base Rate the rate
quotation is made in the United States, whereas in the case of
said LIBOR Base Rate the rate quotation is made at 11:00 a.m. in
London. The Agent does not, however, represent, warrant or
guarantee that the IBOR Base Rate will be the same as said "LIBOR
Base Rate" on any given day.
SECTION 2.06. Fees. (a) From the Effective Date to but
excluding the last day of the Line of Credit Period of the
applicable Bank(s), the Company shall pay to the Agent for the
account of each Bank a nonrefundable commitment fee on the unused
portion of the Line of Credit Commitment of such Bank at the rate
of:
(i) .025% per annum during such time as the
Company's commercial paper is rated P-1 by Moody's and
A-1 by S&P,
(ii) .0625% per annum during such time as the
Company's commercial paper is rated at least P-2 by
Moody's and at least A-2 by S&P,
(iii) .0625% per annum during such time as the
Company's commercial paper is rated at least P-3 by
Moody's and at least A-3 by S&P, and
(iv) .0625% per annum during such time as the
Company's commercial paper is (A) rated NP by Moody's
or B, C or D by S&P or (B) not rated by either or both
of Moody's and/or S&P,
and if clauses (i) and (ii) are both applicable or if clauses
(i), (ii) and (iii) are all applicable, the rate set forth in
clause (i) shall be applicable, and if both clauses (ii) and
(iii) are applicable, the rate set forth in clause (ii) shall be
applicable. Such commitment fee shall be payable quarterly in
arrears on each January 1, April 1, July 1 and October 1 during
the Line of Credit Period of the applicable Bank(s) and on the
last day of the Line of Credit Period of the applicable Bank(s),
and shall be calculated on an actual day, 360-day year basis.
(b) From the Effective Date to but excluding the last
day of the Revolving Credit Period of the applicable Bank(s), the
Company shall pay to the Agent for the account of each Bank a
nonrefundable commitment fee on the unused portion of the
Revolving Credit Commitment of such Bank at the rate of:
(i) .0625% per annum during such time as the
Company's commercial paper is rated P-1 by Moody's and
A-1 by S&P,
(ii) .125% per annum during such time as the
Company's commercial paper is rated at least P-2 by
Moody's and at least A-2 by S&P,
(iii) .125% per annum during such time as the
Company's commercial paper is rated at least P-3 by
Moody's and at least A-3 by S&P, and
(iv) .125% per annum during such time as the
Company's commercial paper is (A) rated NP by Moody's
or B, C or D by S&P or (B) not rated by either or both
of Moody's and/or S&P,
and if clauses (i) and (ii) are both applicable or if clauses
(i), (ii) and (iii) are all applicable, the rate set forth in
clause (i) shall be applicable, and if both clauses (ii) and
(iii) are applicable, the rate set forth in clause (ii) shall be
applicable. Such commitment fee shall be payable quarterly in
arrears on each January 1, April 1, July 1 and October 1 during
the Revolving Credit Period of the applicable Bank(s) and on the
last day of the Revolving Credit Period of the applicable
Bank(s), and shall be calculated on an actual day, 360-day year
basis.
(c) From the Effective Date to but excluding the last
day of the Line of Credit Period of the applicable Bank(s), the
Company shall pay to the Agent for the account of each Bank a
nonrefundable facility fee on the entire Line of Credit
Commitment of such Bank at the rate of:
(i) .125% per annum during such time as the
Company's commercial paper is rated P-1 by Moody's and
A-1 by S&P,
(ii) .125% per annum during such time as the
Company's commercial paper is rated at least P-2 by
Moody's and at least A-2 by S&P,
(iii) .1875% per annum during such time as the
Company's commercial paper is rated at least P-3 by
Moody's and at least A-3 by S&P, and
(iv) .1875% per annum during such time as the
Company's commercial paper is (A) rated NP by Moody's
or B, C or D by S&P or (B) not rated by either or both
of Moody's and/or S&P,
and if clauses (i) and (ii) are both applicable or if clauses
(i), (ii) and (iii) are all applicable, the rate set forth in
clause (i) shall be applicable, and if both clauses (ii) and
(iii) are applicable, the rate set forth in clause (ii) shall be
applicable. Such facility fee shall be payable quarterly in
arrears on each January 1, April 1, July 1 and October 1 during
the Line of Credit Period of the applicable Bank(s) and on the
last day of the Line of Credit Period of the applicable Bank(s),
and shall be calculated on an actual day, 360-day year basis.
(d) From the Effective Date to but excluding the last
day of the Revolving Credit Period of the applicable Bank(s), the
Company shall pay to the Agent for the account of each Bank a
nonrefundable facility fee on the entire Revolving Credit
Commitment of such Bank at the rate of:
(i) .125% per annum during such time as the
Company's commercial paper is rated P-1 by Moody's and
A-1 by S&P,
(ii) .125% per annum during such time as the
Company's commercial paper is rated at least P-2 by
Moody's and at least A-2 by S&P,
(iii) .1875% per annum during such time as the
Company's commercial paper is rated at least P-3 by
Moody's and at least A-3 by S&P, and
(iv) .1875% per annum during such time as the
Company's commercial paper is (A) rated NP by Moody's
or B, C or D by S&P or (B) not rated by either or both
of Moody's and/or S&P,
and if clauses (i) and (ii) are both applicable or if clauses
(i), (ii) and (iii) are all applicable, the rate set forth in
clause (i) shall be applicable, and if both clauses (ii) and
(iii) are applicable, the rate set forth in clause (ii) shall be
applicable. Such facility fee shall be payable quarterly in
arrears on each January 1, April 1, July 1 and October 1 during
the Revolving Credit Period of the applicable Bank(s) and on the
last day of the Revolving Credit Period of the applicable
Bank(s), and shall be calculated on an actual day, 360-day year
basis.
(e) The Company shall also pay to the Agent for its
own account a nonrefundable agent's fee in the amounts set forth
in a letter agreement dated the date hereof by and between the
Company and the Agent.
SECTION 2.07. Termination or Reduction of Commitments.
(a) The Company may, upon one (1) Business Day's prior written
notice to the Agent, terminate entirely at any time, or
proportionately reduce from time to time on a pro rata basis
among the Banks based on their respective Line of Credit
Commitments by an aggregate amount of $5,000,000.00 or any larger
multiple of $5,000,000.00, the unused portions of the Line of
Credit Commitments; provided, however, that (i) at no time shall
the Line of Credit Commitments be reduced to a figure less than
the total of the outstanding principal amount of all Line of
Credit Loans, (ii) at no time shall the Line of Credit
Commitments be reduced to a figure greater than zero but less
than $25,000,000.00 and (iii) any such termination or reduction
shall be permanent and the Company shall have no right to
thereafter reinstate or increase, as the case may be, the Line of
Credit Commitment of any Bank.
(b) The Company may, upon one (1) Business Day's prior
written notice to the Agent, terminate entirely at any time, or
proportionately reduce from time to time on a pro rata basis
among the Banks based on their respective Revolving Credit
Commitments by an aggregate amount of $5,000,000.00 or any larger
multiple of $5,000,000.00, the unused portions of the Revolving
Credit Commitments; provided, however, that (i) at no time shall
the Revolving Credit Commitments be reduced to a figure less than
the total of the outstanding principal amount of all Revolving
Credit Loans, (ii) at no time shall the Revolving Credit
Commitments be reduced to a figure greater than zero but less
than $25,000,000.00 and (iii) any such termination or reduction
shall be permanent and the Company shall have no right to
thereafter reinstate or increase, as the case may be, the
Revolving Credit Commitment of any Bank.
SECTION 2.08. Early Payments. (a) The Company may,
upon notice to the Agent specifying that it is paying its Prime
Loans and specifying whether it is paying its Line of Credit
Loans and/or its Revolving Credit Loans, pay without penalty or
premium its Prime Loans in whole at any time, or from time to
time in part in amounts aggregating $2,500,000.00 or any larger
multiple of $1,000,000.00, by paying the principal amount to be
paid together with all accrued and unpaid interest thereon to and
including the date of payment; provided, however, that in no
event may the Company make a partial payment of Prime Loans which
results in the total outstanding Prime Loans which are Line of
Credit Loans or the total outstanding Prime Loans which are
Revolving Credit Loans being greater than zero but less than
$2,500,000.00. Each such optional payment shall be applied to
pay the Prime Loans of the several Banks in proportion to their
respective Line of Credit Commitments and/or Revolving Credit
Commitments, as the case may be depending upon which type of
Loans are being paid (i.e. Line of Credit Loans or Revolving
Credit Loans).
(b) The Company may, upon at least one (1) Business
Day's notice to the Agent specifying whether it is paying CD
Loans or IBOR Loans and specifying whether it is paying its Line
of Credit Loans and/or its Revolving Credit Loans, pay without
penalty or premium on the last day of any Interest Period its
Fixed Rate Loans to which such Interest Period applies, in whole,
or in part in amounts aggregating $2,500,000.00 or any larger
multiple of $1,000,000.00, by paying the principal amount to be
paid together with all accrued and unpaid interest thereon to and
including the date of payment; provided, however, that in no
event may the Company make a partial payment of CD Loans or IBOR
Loans which results in the total outstanding CD Loans which are
Line of Credit Loans with respect to which a given Interest
Period applies, the total outstanding CD Loans which are
Revolving Credit Loans with respect to which a given Interest
Period applies, the total outstanding IBOR Loans which are Line
of Credit Loans with respect to which a given Interest Period
applies or the total outstanding IBOR Loans which are Revolving
Credit Loans with respect to which a given Interest Period
applies being greater than zero but less than $2,500,000.00.
Each such optional payment shall, subject to Article VIII, be
applied to pay such Fixed Rate Loans of the several Banks in
proportion to their respective Line of Credit Commitments or
Revolving Credit Commitments, as the case may be depending upon
which type of Loans are being paid (i.e. Line of Credit Loans or
Revolving Credit Loans).
(c) Upon receipt of a notice of payment pursuant to
this Section, the Agent shall promptly notify each Bank of the
contents thereof and of such Bank's ratable share of such payment
and such notice shall not thereafter be revocable by the Company.
SECTION 2.09. General Provisions as to Payments. The
Company shall make each payment of principal of, and interest on,
the Loans and of fees and all other amounts payable hereunder,
not later than 12:00 P.M. (St. Louis time) on the date when due,
in Federal or other funds immediately available in St. Louis,
Missouri, to the Agent at its address referred to in Section
9.01. The Agent will promptly distribute to each Bank in
immediately available funds its ratable share of each such
payment received by the Agent for the account of the Banks.
Whenever any payment of principal of, or interest on, the Loans
or of fees shall be due on a day which is not a Business Day, the
date for payment thereof shall be extended to the next succeeding
Business Day. If the date for any payment of principal is
extended by operation of law or otherwise, interest thereon, at
the then applicable rate, shall be payable for such extended
time.
SECTION 2.10. Funding Losses. Notwithstanding any
provision contained herein to the contrary, if the Company makes
any payment of principal with respect to any Fixed Rate Loan
(pursuant to Article II, VI or VIII or otherwise, but excluding
any such payment required by Section 8.02) on any day other than
the last day of an Interest Period applicable thereto, or if the
Company fails to borrow or pay any Fixed Rate Loan after notice
has been given to the Agent in accordance with Section 2.02, 2.04
or 2.08(b), the Company shall reimburse each Bank on demand for
any resulting losses and expenses incurred by it, including,
without limitation, any losses incurred in obtaining, liquidating
or employing deposits from third parties, but excluding loss of
margin for the period after any such payment, provided that such
Bank shall have delivered to the Company a certificate as to the
amount of such losses and expenses, which certificate shall be
conclusive in the absence of manifest error.
SECTION 2.11. Computation of Interest. Interest on
Prime Loans hereunder shall be computed on the basis of a year of
360 days and paid for the actual number of days elapsed
(including the first day but excluding the last day). Interest
on CD Loans and interest on IBOR Loans shall be computed on the
basis of a year of 360 days and paid for the actual number of
days elapsed, calculated as to each Interest Period from and
including the first day thereof to but excluding the last day
thereof.
SECTION 2.12 Maturity. (a) All Line of Credit Loans
not paid prior to the last day of the Line of Credit Period of
the applicable Bank(s), together with all accrued and unpaid
interest thereon and all fees and other amounts owing by the
Company to such Bank(s) with respect thereto, shall be due and
payable on the last day of the Line of Credit Period of the
applicable Bank(s).
(b) All Revolving Credit Loans not paid prior to the
last day of the Revolving Credit Period of the applicable
Bank(s), together with all accrued and unpaid interest thereon
and all fees and other amounts owing by the Company to such
Bank(s) with respect thereto, shall be due and payable on the
last day of the Revolving Credit Period of the applicable
Bank(s).
ARTICLE III
PRECONDITIONS TO LOANS
SECTION 3.01. Initial Loan. Notwithstanding any
provision contained herein to the contrary, none of the Banks
shall have any obligation to make the initial Loan hereunder
unless the Agent shall have first received:
(a) this Agreement, the Line of Credit Notes and the
Revolving Credit Notes, each executed by duly authorized
officer(s) of the Company;
(b) a copy of resolutions of the Board of Directors of
the Company (or a duly authorized committee thereof), duly
adopted, which authorize the execution, delivery and performance
of this Agreement, the Line of Credit Notes, the Revolving Credit
Notes and the other Transaction Documents, certified by the
Secretary of the Company;
(c) a copy of the Certificate of Incorporation of the
Company, including any amendments thereto, certified by the
Secretary of State of the State of Delaware;
(d) a copy of the By-Laws of the Company, including
any amendments thereto, certified by the Secretary of the
Company;
(e) an incumbency certificate, executed by the
Secretary of the Company, which shall identify by name and title
and bear the signatures of all of the officers of the Company
executing any of the Transaction Documents;
(f) certificates of corporate good standing of the
Company issued by the Secretaries of States of the States of
Delaware and Missouri;
(g) an opinion of counsel of Alan Sachs, Executive
Vice President, General Counsel and Secretary of the Company, in
the form of Exhibit C attached hereto and incorporated herein by
reference;
(h) the Notice of Borrowing required by Section 2.02;
and
(i) such other agreements, documents, instruments and
certificates as the Agent or any Bank may reasonably request.
SECTION 3.02. All Loans. Notwithstanding any
provision contained herein to the contrary, none of the Banks
shall have any obligation to make any Loan hereunder unless:
(a) the Agent shall have received a Notice of
Borrowing for such Loan if required by Section 2.02;
(b) on the date of and immediately after such
Loan, no Default or Event of Default under this Agreement shall
have occurred and be continuing;
(c) on the date of and immediately after such
Loan, no material adverse change in the business, financial
condition or results of operations of the Company and its
Consolidated Subsidiaries, considered as a whole, shall have
occurred since the Effective Date of this Agreement and be
continuing; and
(d) all of the representations and warranties of
the Company contained in this Agreement shall be true and correct
in all material respects on and as of the date of such Loan as if
made on the date of such Loan.
Each request for a Loan by the Company hereunder shall
be deemed to be a representation and warranty by the Company on
the date of such Loan as to the facts specified in clauses (b),
(c) and (d) of this Section 3.02.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties. The
Company hereby represents and warrants to each of the Banks that:
(a) Corporate Existence and Power. The Company and
each of its Significant Subsidiaries: (i) is duly incorporated,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation; (ii) has all requisite
corporate powers and all material governmental and regulatory
licenses, authorizations, consents and approvals required to
carry on its business as now conducted; and (iii) is qualified to
do business in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary and
where failure to so qualify would have a Material Adverse Effect.
The Company further represents and warrants to each of the Banks
that the failure of any one or more of its Subsidiaries other
than the Significant Subsidiaries: (i) to be duly incorporated,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation; (ii) to have all requisite
corporate powers and material governmental and regulatory
licenses, authorizations, consents and approvals required to
carry on its business as now conducted; and/or (iii) to be
qualified to do business in all jurisdictions in which the nature
of the business conducted by it makes such qualification
necessary, does not and will not have a Material Adverse Effect.
(b) Corporate Authorization. The execution, delivery
and performance by the Company of this Agreement, the Notes and
the other Transaction Documents are within the corporate powers
of the Company and have been duly authorized by all necessary
corporate action.
(c) Binding Effect. This Agreement, the Line of
Credit Notes, the Revolving Credit Notes and the other
Transaction Documents have been duly executed and delivered by
the Company and constitute the legal, valid and binding
obligations of the Company enforceable in accordance with their
respective terms.
(d) Financial Information.
(i) The consolidated balance sheet of the Company
and its Consolidated Subsidiaries as of January 30, 1993, and the
related consolidated statements of income, common stockholders'
equity and cash flows for the fiscal year then ended, with the
report thereon of Ernst & Young, copies of which have been
provided to the Banks, fairly present, in conformity with GAAP,
the consolidated financial position of the Company and its
Consolidated Subsidiaries as of such date and their consolidated
results of operations and cash flows for such fiscal year;
(ii) Since January 30, 1993, there has been no
material adverse change in the business, operations, Properties
or condition, financial or otherwise, of the Company and its
Consolidated Subsidiaries considered as a whole; and
(iii) Except as disclosed in Schedule 4.01(d)
attached hereto, neither the Company nor any of its Consolidated
Subsidiaries has any contingent liability in excess of
$10,000,000.00 which is required to be disclosed in accordance
with GAAP and which is not disclosed on said financial statements
or the notes thereto.
(e) Litigation. Except as disclosed in Schedule
4.01(e) attached hereto, there is no action, suit or proceeding
pending or, to the knowledge of the Company, threatened against
or affecting, the Company or any of its Subsidiaries before any
court or arbitrator or any governmental, regulatory or
administrative body, agency or official in which the prayer or
claim for relief seeks recovery of an amount in excess of
$10,000,000.00 (or, if no dollar amount is specified in the
prayer or claim for relief, in which there is a reasonable
likelihood of recovery of an amount in excess of $10,000,000.00),
or any form of equitable relief which if granted would have a
Material Adverse Effect.
(f) Pension and Welfare Plans. Each Pension Plan
complies in all material respects with all applicable statutes
and governmental rules and regulations; no Reportable Event has
occurred and is continuing with respect to any Pension Plan;
neither the Company nor any ERISA Affiliate nor any Subsidiary
has withdrawn from any Multi-Employer Plan in a "complete
withdrawal" or a "partial withdrawal" as defined in Sections 4203
or 4205 of ERISA, respectively; no steps have been instituted by
the Company, any ERISA Affiliate or any Subsidiary to terminate
any Pension Plan; no condition exists or event or transaction has
occurred in connection with any Pension Plan or Multi-Employer
Plan which could result in the incurrence by the Company, any
ERISA Affiliate or any Subsidiary of any material liability, fine
or penalty; and neither the Company nor any ERISA Affiliate nor
any Subsidiary is a "contributing sponsor" as defined in Section
4001(a)(13) of ERISA of a "single-employer plan" as defined in
Section 4001(a)(15) of ERISA which has two or more contributing
sponsors at least two of whom are not under common control.
Except as disclosed on Schedule 4.01(f) attached hereto, neither
the Company nor any Subsidiary has any contingent liability with
respect to any "employee welfare benefit plan", as such term is
defined in Section 3(a) of ERISA, which covers retired employees
and their beneficiaries.
(g) Tax Returns and Payment. The Company and its
Subsidiaries have filed all tax returns which are required to be
filed and have paid all taxes which have become due pursuant to
such returns and all other taxes, assessments, fees and other
governmental charges upon the Company and its Subsidiaries and
upon their respective Properties, assets, income and franchises
which have become due and payable by the Company or any of its
Subsidiaries, except those (i) wherein the amount, applicability
or validity are being contested by the Company or any such
Subsidiary by appropriate proceedings being diligently conducted
in good faith and in respect of which adequate reserves have been
established or (ii) the nonpayment of which (a) by the Company or
any Subsidiary was not willful and (b) would not result in a
Material Adverse Effect. All material tax liabilities of the
Company and its Subsidiaries were adequately provided for as of
January 30, 1993, and are now so provided for on the books of the
Company and its Subsidiaries.
(h) Compliance With Other Instruments; None
Burdensome. Neither the Company nor any Subsidiary is a party to
any contract or agreement or subject to any charter or other
corporate restriction which could reasonably be expected to have
a Material Adverse Effect, and which is not disclosed on the
Company's financial statements heretofore submitted to the Banks;
none of the execution and delivery by the Company of the
Transaction Documents, the consummation of the transactions
therein contemplated or the compliance with the provisions
thereof will violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on the Company, or
any of the provisions of the Company's Certificate of
Incorporation or By-Laws or any of the provisions of any
indenture, agreement, document, instrument or undertaking to
which the Company is a party or subject or by which it or its
Property is bound, or conflict with or constitute a default
thereunder or result in the creation or imposition of any Lien
pursuant to the terms of any such indenture, agreement, document,
instrument or undertaking. No order, consent, approval, license,
authorization or validation of, or filing, recording or
registration with, or exemption by, any governmental, regulatory,
administrative or public body or authority, or any subdivision
thereof, or any other Person is required to authorize, or is
required as a pre-condition to, the execution, delivery or
performance of, or the legality, validity, binding effect or
enforceability of, any of the Transaction Documents.
(i) Existing Indebtedness. Schedule 4.01(i) attached
hereto is a true, correct and complete list of all Funded Debt
and Capitalized Leases of the Company with a principal balance of
$1,000,000.00 or more and all Current Debt, Funded Debt and
Capitalized Leases of the Restricted Subsidiaries with a
principal balance of $1,000,000.00 or more outstanding as of
April 30, 1993.
(j) Labor Matters. Except as disclosed on Schedule
4.01(j) attached hereto, (a) neither the Company nor any
Subsidiary is a party to any union labor contract and (b) neither
the Company nor any Subsidiary is a party to any labor dispute.
(k) Title to Property. The Company and each
Subsidiary is the sole and absolute owner of, or has the legal
right to use and occupy, all Property it claims to own or which
is necessary for the Company or such Subsidiary to conduct its
business. The Company and its Subsidiaries enjoy peaceful and
undisturbed possession in all material respects under all leases
under which they are operating as lessees (provided, however,
that any failure to enjoy such peaceful and undisturbed
possession under any such lease shall not constitute a breach of
this representation and warranty if the effect of such failure
would not have a Material Adverse Effect), and all such leases
are valid and subsisting and in full force and effect, except for
any default or defaults the effect of which, if taken
individually or in the aggregate, would not have a Material
Adverse Effect. Neither the Company nor any Subsidiary has
signed any financing statements, security agreements or chattel
mortgages with respect to any of its Property, has granted or
permitted any Liens securing Indebtedness or other claims in an
amount in excess of $500,000.00 with respect to any of its
Property or has any knowledge of any Liens securing Indebtedness
or other claims in an amount in excess of $500,000.00 with
respect to any of its Property, except as disclosed on Schedule
4.01(k) attached hereto.
(l) Regulation U. The Company is not engaged
principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U of The
Board of Governors of the Federal Reserve System, as amended) and
no part of the proceeds of any Loan will be used, whether
directly or indirectly, and whether immediately, incidentally or
ultimately (i) to purchase or carry margin stock or to extend
credit to others for the purpose of purchasing or carrying margin
stock, or to refund or repay indebtedness originally incurred for
such purpose or (ii) for any purpose which entails a violation
of, or which is inconsistent with, the provisions of any of the
Regulations of The Board of Governors of the Federal Reserve
System, including, without limitation, Regulations G, U, T or X
thereof, as amended. If requested by Agent, the Company shall
furnish to Agent a statement in conformity with the requirements
of Federal Reserve Form U-1 referred to in Regulation U.
(m) Multi-Employer Pension Plan Amendments Act of
1980. The Company and each Subsidiary is in compliance with the
Multi-Employer Pension Plan Amendments Act of 1980, as amended
("MEPPAA"), and has no liability for pension contributions
pursuant to MEPPAA.
(n) Investment Company Act of 1940; Public Utility
Holding Company Act of 1935. The Company is not an "investment
company" as that term is defined in, and is not otherwise subject
to regulation under, the Investment Company Act of 1940, as
amended. The Company is not a "holding company" as that term is
defined in, and is not otherwise subject to regulation under, the
Public Utility Holding Company Act of 1935, as amended.
(o) Patents, Licenses, Trademarks, Etc. Except as
disclosed on Schedule 4.01(o) attached hereto, the Company and
its Subsidiaries possess all necessary patents, licenses,
trademarks, trademark rights, trade names, trade name rights and
copyrights to conduct their respective businesses in all material
respects as now conducted without known conflict with any patent,
license, trademark, trade name or copyright of any other Person.
(p) Environmental Safety and Health Matters. Except
as disclosed on Schedule 4.01(p) attached hereto, (i) the Company
and its Subsidiaries are in compliance with all applicable
Environmental Laws and Occupational Safety and Health Laws such
that they will not incur or be subject to any liability, penalty
or Lien thereunder which could, individually or in the aggregate,
have a Material Adverse Effect, (ii) the Company and its
Subsidiaries do not create, manage, store, discharge, treat,
dispose of or release any Hazardous Materials in violation of any
applicable Environmental Laws, (iii) there are no known
conditions or circumstances associated with any of the currently
or previously owned or leased Properties or operations of the
Company or any of its Subsidiaries or any tenants, if any, of the
Company or any of its Subsidiaries which may give rise to any
liability, penalty or Lien under any applicable Environmental Law
or any applicable Occupational Safety and Health Law which could
have a Material Adverse Effect and (iv) neither the Company nor
any of its Subsidiaries has knowledge of any violation of, or has
received or filed any notice pertaining to any violation or
alleged violation of, any applicable Environmental Law or any
applicable Occupational Safety and Health Law.
(q) Handyman Guarantees. In the event the Company had
to assume payment under any or all of the Handyman Guarantees,
such payment or payments would not have a Material Adverse
Effect.
(r) Subsidiaries. Schedule 4.01(r) attached hereto
correctly sets forth (i) the name and jurisdiction of
incorporation of each Subsidiary as of the date hereof and (ii) a
statement of the ownership of each such Subsidiary's stock. The
shares of stock of the Subsidiaries listed on Schedule 4.01(r) as
being owned by the Company or any of its Subsidiaries are so
owned as of the date of this Agreement, free and clear of any and
all liens, claims and encumbrances of any kind or nature
whatsoever, and all such shares of stock have been duly issued
and are fully paid and non-assessable.
(s) Disclosure. Neither this Agreement nor any of the
Exhibits or Schedules hereto nor any certificate or other data
furnished to the Agent or any of the Banks in writing by or on
behalf of the Company in connection with the transactions
contemplated by this Agreement contains any untrue or incorrect
statement of a material fact or omits to state a material fact
necessary to make the statements contained herein or therein not
misleading. To the best knowledge of the Company, there is no
fact peculiar to the Company or any of its Subsidiaries which
presently has a Material Adverse Effect or in the future (so far
as the Company can now reasonably foresee) will have a Material
Adverse Effect, which has not heretofore been disclosed by the
Company to the Agent.
ARTICLE V
COVENANTS
SECTION 5.01. Covenants of the Company. The Company
agrees that, so long as any Bank has any Line of Credit
Commitment or Revolving Credit Commitment hereunder or any amount
payable under any Note remains unpaid, unless the prior written
consent of the Required Banks is obtained:
(a) Information. The Company will deliver to each
Bank:
(i) as soon as available and in any event within
ninety-five (95) days after the end of each fiscal year
of the Company, a consolidated balance sheet of the
Company and its Consolidated Subsidiaries as of the end
of such fiscal year and the related consolidated
statements of income, common stockholders' equity and
cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous
fiscal year, all prepared in accordance with GAAP and
reported on and accompanied by the unqualified opinion
(or, if the Required Banks, in their sole and absolute
discretion, determine that the reason or reasons for
the qualification of the accountant's opinion are not
disadvantageous in any material respect to the Company
or any of the Banks, the qualified opinion) of Ernst &
Young or other independent certified public accountants
of nationally recognized standing selected by the
Company, together with a certificate from such
accountants that, in conducting the examination
necessary for the signing of such annual audit report,
such accountants have not become aware of any Default
or Event of Default that has occurred and is
continuing, or, if such accountants have become aware
of any such event, describing it and the steps being
taken to cure it, but such accountants shall not be
liable, directly or indirectly, to anyone for failure
to obtain knowledge of any such Default or Event of
Default;
(ii) as soon as available and in any event within
fifty (50) days after the end of each of the first
three (3) quarters of each fiscal year of the Company,
a consolidated balance sheet of the Company and its
Consolidated Subsidiaries as of the end of such fiscal
quarter, the related consolidated statement of income
for such fiscal quarter and for the portion of the
Company's fiscal year ended at the end of such fiscal
quarter and the related consolidated statement of cash
flows for the portion of the Company's fiscal year
ended at the end of such fiscal quarter, setting forth
in each case in comparative form the figures for the
corresponding fiscal quarter and the corresponding
portion of the Company's previous fiscal year, all
certified (subject to normal year-end adjustments) as
to fairness of presentation, GAAP and consistency by
the chief financial officer of the Company;
(iii) simultaneously with the delivery of each set
of financial statements referred to in clauses (i) and
(ii) above, a certificate executed by the chief
financial officer of the Company on its behalf, in the
form attached hereto and made a part hereof as
Exhibit D, accompanied by supporting financial work
sheets where appropriate, (A) evidencing the Company's
compliance with the financial covenants contained in
Sections 5.01(b), 5.01(c), 5.01(d), 5.01(e)(vii),
5.01(e)(viii), 5.01(f), 5.01(h), 5.01(i) and 5.01(k) of
this Agreement, (B) stating whether there exists on the
date of such certificate any Default or Event of
Default and, if any Default or Event of Default then
exists, setting forth the details thereof and the
action which the Company is taking or proposes to take
with respect thereto, (C) certifying that all of the
representations and warranties of the Company contained
in this Agreement are true and correct in all material
respects on and as of the date of such certificate as
if made on the date of such certificate and (D) giving,
in the event of the formation or acquisition of a
Subsidiary during the preceding fiscal period, the name
of such Subsidiary, its jurisdiction of incorporation
and a brief description of its business, together with,
in the case of such an acquisition, evidence showing
the Company's compliance with Section 5.01(g)(ii);
(iv) promptly upon the mailing thereof to the
shareholders of the Company generally, and in any event
within ten (10) days after any such mailing, copies of
all financial statements, reports, proxy statements and
other material information so mailed;
(v) promptly upon any filing thereof, and in any
event within ten (10) days after the filing thereof,
copies of all registration statements (other than the
exhibits thereto and any registration statements on
Form S-8 or its equivalent) and annual, quarterly or
monthly reports which the Company shall file with the
Securities and Exchange Commission or any successor
agency;
(vi) if the Company submits a Revolving Credit
Extension Request to the Agent, simultaneously with the
delivery of each such Revolving Credit Extension
Request, consolidated balance sheet, income statement
and cash flow projections for the Company and its
Consolidated Subsidiaries for the fiscal year of the
Company during which such Revolving Credit Extension
Request is submitted and the succeeding two (2) year
period, all in form and detail reasonably acceptable to
the Banks;
(vii) within one hundred twenty (120) days after
the beginning of each fiscal year of the Company, a
general outline of the projected financial outlook for
the Company and its Consolidated Subsidiaries for such
fiscal year, which outline shall be delivered to each
of the Banks at a meeting to be held between the
Company and the Banks; and
(viii) from time to time, with reasonable
promptness, such further information regarding the
business, affairs and financial position of the Company
and each Subsidiary as the Agent or any Bank may
reasonably request.
It is understood that the Company's fiscal year ends on
the Saturday nearest in time to January 31, the first quarter of
the Company's fiscal year ends on the 13th Saturday following the
end of the fiscal year, the second quarter ends on the 13th
Saturday following the end of the first quarter, the third
quarter ends on the 13th Saturday following the end of the second
quarter and the fourth quarter ends at the fiscal year end.
The Company may from time to time change its accounting
methods, either at its option or in order to comply with GAAP,
provided that (a) any such change(s) are in accordance with GAAP
and are approved by the Company's independent certified public
accountants and (b) if the Required Banks or the Company, in
their or its sole and absolute discretion, determine that any
such accounting change(s), individually or in the aggregate, have
any significant effect on any of the financial covenants
contained in this Agreement (i) with respect to those financial
covenant(s) upon which the effect of such accounting change(s)
can be determined with mathematical certainty, such financial
covenant(s) shall be amended to reflect the effect of such
accounting change(s) (and the Company, the Agent and each of the
Banks shall be obligated to promptly execute an amendment to such
effect) and (ii) with respect to those financial covenant(s) upon
which the effect of such accounting change(s) cannot be
determined with mathematical certainty, the Company and the Banks
shall, in good faith, negotiate and use their best efforts to
agree upon new financial covenant(s) reasonably acceptable to the
Company and the Required Banks to replace the affected financial
covenant(s) (which new financial covenant(s) shall, to the extent
reasonably possible, approximate the effect of such accounting
change(s) on the existing financial covenant(s)), and if the
Company and the Required Banks cannot, in good faith, agree on
said new financial covenant(s), the existing financial
covenant(s) shall remain in full force and effect. Each such
amendment shall be evidenced by an instrument in writing signed
by the Company, the Agent and each of the Banks and until such
amendment has been fully executed the existing financial
covenant(s) shall remain in full force and effect.
(b) Consolidated Net Worth. The Company will keep and
maintain a Consolidated Net Worth in an amount not less than (i)
as of the last day of each fiscal quarter of the fiscal year of
the Company ending February 1, 1994, $320,000,000.00, and (ii) as
of the last day of each fiscal quarter of each fiscal year of the
Company thereafter, the sum of the Consolidated Net Worth
required to be maintained during the immediately preceding fiscal
year of the Company plus an amount equal to 33% of Consolidated
Net Income for such preceding fiscal year (but without deduction
in the case of a deficit in Consolidated Net Income).
(c) Limitations on Current Debt and Funded Debt. (i)
The Company will not create, assume or incur or in any manner be
or become liable in respect of any Funded Debt, and will not
cause or permit any Restricted Subsidiary to create, assume or
incur or in any manner be or become liable in respect of any
Current Debt or Funded Debt, except:
(A) Funded Debt evidenced by the Notes;
(B) Funded Debt of the Company and its
Restricted Subsidiaries outstanding as of the date
of this Agreement and reflected on Schedule
4.01(i) attached hereto;
(C) Additional Funded Debt of the Company
and additional Funded Debt and Current Debt of its
Restricted Subsidiaries provided that at the time
of issuance thereof and after giving effect
thereto and to the application of the proceeds
thereof: (1) in the case of the issuance of any
Funded Debt of the Company or any Restricted
Subsidiary, the sum of Consolidated Funded Debt
plus Consolidated Attributable Indebtedness does
not exceed 50% of Consolidated Net Tangible
Assets; and (2) in the case of the issuance of any
Funded Debt of the Company secured by Liens
permitted by Section 5.01(e)(viii) or the issuance
of any Funded Debt or Current Debt of a Restricted
Subsidiary, the sum, without duplication, of (x)
Consolidated Attributable Indebtedness, (y)
Consolidated Secured Debt secured by Liens
described in Section 5.01(e)(viii) and (z) the
aggregate amount of all Funded Debt and Current
Debt of Restricted Subsidiaries (other than Funded
Debt and Current Debt owing to the Company or to
another Wholly-Owned Restricted Subsidiary), would
not exceed 15% of Consolidated Net Tangible
Assets; and
(D) Current Debt or Funded Debt of a
Restricted Subsidiary to the Company or to a
Wholly-Owned Restricted Subsidiary.
(ii) Current Debt and Funded Debt issued or
incurred in accordance with the limitations of Sections
5.01(c)(i)(B) or 5.01(c)(i)(C) may be renewed, extended
or refunded (without any increase in principal amount
remaining unpaid at the time of such renewal, extension
or refunding) without regard to the limitations of this
Section 5.01(c).
(iii) Any corporation which becomes a Restricted
Subsidiary after the date hereof shall for all purposes
of this Section 5.01(c) be deemed to have created,
assumed or incurred at the time it becomes a Restricted
Subsidiary all Current Debt and Funded Debt of such
corporation existing immediately after it becomes a
Restricted Subsidiary.
(iv) Any Current Debt or Funded Debt of a
Restricted Subsidiary to a previously Wholly-Owned
Restricted Subsidiary shall be deemed to have been
created, assumed or incurred immediately after such
Wholly-Owned Restricted Subsidiary is no longer Wholly-
Owned.
(d) Fixed Charges Coverage Ratio. The Company will
keep and maintain the ratio of Net Income Available for Fixed
Charges to Fixed Charges for each period of four (4) consecutive
fiscal quarters at not less than 1.25 to 1.00.
(e) Limitation on Liens. The Company will not, and
will not cause or permit any Restricted Subsidiary to, create or
incur, or suffer to be incurred or to exist, any Lien on any of
its or their Property or assets, whether now owned or hereafter
acquired, or upon any income or profits therefrom, or transfer
any Property for the purpose of subjecting the same to the
payment of obligations in priority to the payment of its or their
general creditors, or acquire or agree to acquire, or permit any
Restricted Subsidiary to acquire or agree to acquire, any
Property or assets upon conditional sales agreements or other
title retention devices, except:
(i) Liens for property taxes and assessments or
governmental charges or levies and Liens securing
claims or demands of mechanics and materialmen,
provided payment thereof is not at the time required by
Section 5.01(o)(i);
(ii) Liens of or resulting from any judgment or
award, the time for the appeal or petition for
rehearing of which shall not have expired, or in
respect of which the Company or a Restricted Subsidiary
shall (A) at any time in good faith be prosecuting an
appeal or proceeding for a review and in respect of
which a stay of execution pending such appeal or
proceeding for review shall have been secured and (B)
have set aside on its books, reserves deemed by it to
be adequate with respect thereto;
(iii) Liens incidental to the conduct of business
or the ownership of Properties and assets (including
Liens in connection with worker's compensation,
unemployment insurance and other like laws,
warehousemen's and attorneys' liens and statutory
landlords' liens) and Liens to secure the performance
of bids, tenders or trade contracts, or to secure
statutory obligations, surety or appeal bonds or other
Liens of like general nature incurred in the ordinary
course of business and not in connection with the
borrowing of money or the acquisition of inventory;
provided in each case the obligation secured is not
overdue or, if overdue, is being contested in good
faith by appropriate actions or proceedings;
(iv) minor survey exceptions or minor
encumbrances, easements or reservations, or rights of
others for rights-of-way, utilities and other similar
purposes, or zoning or other restrictions as to the use
of real properties, which are necessary for the conduct
of the activities of the Company and its Restricted
Subsidiaries or which customarily exist on properties
of corporations engaged in similar activities and
similarly situated and which do not in any event
materially impair the use of such real properties in
the operation of the business of the Company and its
Restricted Subsidiaries;
(v) Liens securing Indebtedness of a Restricted
Subsidiary to the Company or to another Wholly-Owned
Restricted Subsidiary;
(vi) Liens existing as of April 30, 1993, and
reflected in Schedule 4.01(k) attached hereto;
(vii) Liens incurred after the Effective Date
given to secure the payment of the purchase price
incurred in connection with the acquisition of fixed
assets useful and intended to be used in carrying on
the business of the Company or a Restricted Subsidiary,
including Liens existing on such fixed assets at the
time of acquisition thereof or at the time of
acquisition by the Company or a Restricted Subsidiary
of any business entity then owning such fixed assets,
whether or not such existing Liens were given to secure
the payment of the purchase price of the fixed assets
to which they attach so long as they were not incurred,
extended or renewed in contemplation of such
acquisition, provided that (A) the Lien shall attach
solely to the fixed assets acquired or purchased, (B)
at the time of acquisition of such fixed assets, the
aggregate amount remaining unpaid on all Indebtedness
secured by Liens on such fixed assets whether or not
assumed by the Company or a Restricted Subsidiary shall
not exceed an amount equal to 100% of the lesser of the
total purchase price or fair market value at the time
of acquisition of such fixed assets (as determined in
good faith by the Board of Directors of the Company),
(C) all such Indebtedness shall have been incurred
within the applicable limitations provided in Section
5.01(c)(i)(C), and (D) such fixed assets shall not have
been acquired out of the proceeds of a Sale and
Leaseback Transaction permitted under Section 5.01(f).
(viii) Liens incurred after the Effective Date by
the Company or any Restricted Subsidiary on property,
plant or equipment given to secure Funded Debt of the
Company or any Restricted Subsidiary in addition to the
Liens permitted by the preceding clauses (i) through
(vii) hereof; provided that all Indebtedness secured by
Liens incurred pursuant to this Section 5.01(e)(viii)
shall have been incurred within the limitations
provided in Sections 5.01(c)(i)(C); and
(ix) any extension, renewal or replacement of any
Lien permitted by the preceding clauses (vi), (vii) and
(viii) hereof in respect of the same Property
theretofore subject to such Lien in connection with the
extension, renewal or refunding of the Indebtedness
secured thereby; provided that (1) such Lien shall
attach solely to the same such Property and (2) such
extension, renewal or refunding of such Indebtedness
shall be without increase in the principal remaining
unpaid as of the date of such extension, renewal or
refunding.
Any Lien securing Indebtedness of a Restricted
Subsidiary to a previously Wholly-Owned Restricted Subsidiary
shall be deemed to have been created immediately after such
Wholly-Owned Restricted Subsidiary is no longer Wholly-Owned.
(f) Limitations on Sale and Leasebacks. The Company
will not, and will not cause or permit any Restricted Subsidiary
to, enter into any arrangement, directly or indirectly, whereby
the Company or such Restricted Subsidiary shall in one or more
related transactions sell, transfer or otherwise dispose of any
Property owned by the Company or such Restricted Subsidiary more
than one hundred eighty (180) days after the later of the date of
initial acquisition of such Property or completion or occupancy
thereof, as the case may be, by the Company or such Restricted
Subsidiary, and then rent or lease, as lessee, such Property or
any part thereof for a period or periods which in the aggregate
would exceed thirty-six (36) months from the date of commencement
of the lease term (a "Sale and Leaseback Transaction"), provided
that the foregoing restriction shall not apply to any Sale and
Leaseback Transaction if immediately after the consummation of
such Sale and Leaseback Transaction and after giving effect
thereto, either of the following conditions is satisfied:
(i) the sale of such Property is for cash
consideration which equals or exceeds the fair market
value of the Property so sold (as determined in good
faith by the Board of Directors of the Company) and the
net proceeds from such sale are applied within ninety
(90) days after such sale to (A) the purchase or
acquisition (and/or, in the case of real property, the
construction) of tangible assets useful and intended to
be used by the Company or a Restricted Subsidiary in
the ordinary course of its business (provided that in
any such event the Company and its Restricted
Subsidiaries shall not then or thereafter cause or
permit or agree or consent to cause or permit such
tangible assets to be subject to any Lien) or (B) the
prepayment at the applicable prepayment premium, if
any, on a pro rata basis, of Funded Debt of the Company
and its Restricted Subsidiaries; or
(ii) after giving effect to the consummation of
such Sale and Leaseback Transaction and to the
application of the proceeds therefrom, the sum, without
duplication, of (1) Consolidated Attributable
Indebtedness (including the Consolidated Attributable
Indebtedness to be incurred in connection with such
Sale and Leaseback Transaction), (2) Consolidated
Secured Debt secured by Liens permitted and incurred
within the limitations of Section 5.01(e)(viii) and (3)
Current Debt and Funded Debt of Restricted Subsidiaries
shall not exceed 15% of Consolidated Net Tangible
Assets.
(g) Merger or Consolidation. The Company will not,
and, except as permitted in Section 5.01(h), it will not cause or
permit any Restricted Subsidiary to, merge or consolidate into or
with any other Person; provided, however, that:
(i) any Restricted Subsidiary may merge or
consolidate into or with the Company or any Wholly-
Owned Subsidiary so long as in any merger or
consolidation involving the Company, the Company shall
be the surviving or continuing corporation; and
(ii) the Company or any Restricted Subsidiary may
acquire by merger or other method all of the capital
stock or assets of any Person so long as (A) the
Company or such Restricted Subsidiary, as the case may
be, is the surviving or continuing corporation,
(B) both prior to and after giving effect to said
transaction, the Company is in compliance with all of
the terms, representations, warranties, covenants and
agreements contained in this Agreement and no Default
or Event of Default under this Agreement has occurred
and is continuing and (C) after giving effect to such
consolidation or merger the surviving or continuing
corporation would be permitted to incur at least $1.00
of additional Funded Debt under the provisions of
Section 5.01(c)(i)(C).
(h) Certain Restrictions Relating to Subsidiaries.
(i) Except as permitted by Section 5.01(g), the Company will not
cause or permit any Restricted Subsidiary to merge or consolidate
into or with any Person (other than the Company or a Wholly-Owned
Subsidiary) if such other Person will be the surviving or
continuing corporation unless, (A) immediately after giving
effect to such merger or consolidation, (1) the portion of
Consolidated Net Tangible Assets attributable to the Restricted
Subsidiary being merged or consolidated shall not exceed 12.5% of
the total Consolidated Net Tangible Assets as of the end of the
fiscal quarter of the Company immediately preceding the date of
such merger or consolidation and (2) the portion of Consolidated
Net Sales attributable to the Restricted Subsidiary being merged
or consolidated shall not exceed 12.5% of the total Consolidated
Net Sales as of the end of the fiscal year of the Company
immediately preceding the date of such merger or consolidation,
(B) the ratio of Net Income Available for Fixed Charges to Fixed
Charges for the period of four (4) consecutive fiscal quarters
ending immediately preceding the date of such merger or
consolidation (determined on a pro forma basis and excluding any
amounts attributable to the Restricted Subsidiary being merged or
consolidated) shall not be less than 1.25 to 1.00,
(C) immediately after giving effect to such merger or
consolidation, no Default or Event of Default shall have occurred
and be continuing and (D) immediately after giving effect to such
merger or consolidation, all of the representations and
warranties of the Company contained in this Agreement shall be
true and correct in all material respects as if made on the date
of such merger or consolidation.
(ii) The Company will not, and it will not cause or
permit any Restricted Subsidiary to, sell, assign, transfer or
otherwise dispose of any capital stock of any Restricted
Subsidiary to any Person (other than the Company or a Wholly-
Owned Subsidiary) unless, (A) immediately after giving effect to
such sale, assignment, transfer or other disposition, (1) the
portion of Consolidated Net Tangible Assets attributable to that
portion of the Restricted Subsidiary being sold, assigned,
transfered or otherwise disposed of (meaning the same proportion
as the fair market value (as determined by the Company in good
faith) of the capital stock being sold bears to the total fair
market value (as determined by the Company in good faith) of all
of the outstanding capital stock of such Restricted Subsidiary)
shall not exceed 12.5% of the total Consolidated Net Tangible
Assets as of the end of the fiscal quarter of the Company
immediately preceding the date of such sale, assignment, transfer
or other disposition and (2) the portion of Consolidated Net
Sales attributable to that portion of the Restricted Subsidiary
being sold, assigned, transfered or otherwise disposed of
(meaning the same proportion as the fair market value (as
determined by the Company in good faith) of the capital stock
being sold bears to the total fair market value (as determined by
the Company in good faith) of all of the outstanding capital
stock of such Restricted Subsidiary) shall not exceed 12.5% of
the total Consolidated Net Sales as of the end of the fiscal year
of the Company immediately preceding the date of such sale,
assignment, transfer or other disposition, (B) the ratio of Net
Income Available for Fixed Charges to Fixed Charges for the
period of four (4) consecutive fiscal quarters ending immediately
preceding the date of such sale, assignment, transfer or other
disposition (determined on a pro forma basis and excluding any
amounts attributable to that portion of the Restricted Subsidiary
being sold, assigned, transfered or otherwise disposed of
(meaning the same proportion as the fair market value (as
determined by the Company in good faith) of the capital stock
being sold bears to the total fair market value (as determined by
the Company in good faith) of all of the outstanding capital
stock the Restricted Subsidiary)) shall not be less than 1.25 to
1.00, (C) immediately after giving effect to such sale,
assignment, transfer or other disposition, no Default or Event of
Default shall have occurred and be continuing and (D) immediately
after giving effect to such sale, assignment, transfer or other
disposition, all of the representations and warranties of the
Company contained in this Agreement shall be true and correct in
all material respects as if made on the date of such transfer or
other disposition.
(iii) The Company will not cause or permit any
Restricted Subsidiary to issue any shares of its capital stock to
any Person (other than the Company or a Wholly-Owned Subsidiary)
unless, (A) immediately after giving effect to such issuance,
(1) the portion of Consolidated Net Tangible Assets attributable
to that portion of the Restricted Subsidiary being issued to
another Person (meaning the same proportion as the fair market
value (as determined by the Company in good faith) of the capital
stock being issued bears to the total fair market value (as
determined by the Company in good faith) of all of the
outstanding capital stock of such Restricted Subsidiary
(including the capital stock being issued)) shall not exceed
12.5% of the total Consolidated Net Tangible Assets as of the end
of the fiscal quarter of the Company immediately preceding the
date of such issuance and (2) the portion of Consolidated Net
Sales attributable to that portion of the Restricted Subsidiary
being issued to another Person (meaning the same proportion as
the fair market value (as determined by the Company in good
faith) of the capital stock being issued bears to the total fair
market value (as determined by the Company in good faith) of all
of the outstanding capital stock of such Restricted Subsidiary
(including the capital stock being issued)) shall not exceed
12.5% of the total Consolidated Net Sales as of the end of the
fiscal year of the Company immediately preceding the date of such
issuance, (B) the ratio of Net Income Available for Fixed Charges
to Fixed Charges for the period of four (4) consecutive fiscal
quarters ending immediately preceding the date of such issuance
(determined on a pro forma basis and excluding any amounts
attributable to that portion of the Restricted Subsidiary being
issued to another Person (meaning the same proportion as the fair
market value (as determined by the Company in good faith) of the
capital stock being issued bears to the total fair market value
(as determined by the Company in good faith) of all of the
outstanding capital stock of the Restricted Subsidiary (including
the capital stock being issued))) shall not be less than 1.25 to
1.00, (C) immediately after giving effect to such issuance, no
Default or Event of Default shall have occurred and be
continuing, and (D) immediately after giving effect to such
issuance, all of the representations and warranties of the
Company contained in this Agreement shall be true and correct in
all material respects as if made on the date of such issuance.
(iv) The Company will not cause or permit any
Restricted Subsidiary to, sell, assign, transfer or otherwise
dispose of (other than in the ordinary course of business) any of
such Restricted Subsidiary's Property or assets to any Person
(other than the Company or any Wholly-Owned Subsidiary) unless,
(A) immediately after giving effect to such sale, assignment,
transfer or other disposition, (1) the portion of Consolidated
Net Tangible Assets attributable to that portion of the
Restricted Subsidiary being sold, assigned, transfered or
otherwise disposed of (meaning the same proportion as the fair
market value (as determined by the Company in good faith) of the
Properties and assets being sold bears to the total fair market
value (as determined by the Company in good faith) of all of
Properties and assets of the Restricted Subsidiary) shall not
exceed 12.5% of the total Consolidated Net Tangible Assets as of
the end of the fiscal quarter of the Company immediately
preceding the date of such sale, assignment, transfer or other
disposition and (2) the portion of Consolidated Net Sales
attributable to that portion of the Restricted Subsidiary being
sold, assigned, transfered or otherwise disposed of (meaning the
same proportion as the fair market value (as determined by the
Company in good faith) of the Properties and assets being sold
bears to the total fair market value (as determined by the
Company in good faith) of all of Properties and assets of the
Restricted Subsidiary) shall not exceed 12.5% of the total
Consolidated Net Sales as of the end of the fiscal year of the
Company immediately preceding the date of such sale, assignment,
transfer or other disposition, (B) the ratio of Net Income
Available for Fixed Charges to Fixed Charges for the period of
four (4) consecutive fiscal quarters ending immediately preceding
the date of such sale, assignment, transfer or other disposition
(determined on a pro forma basis and excluding any amounts
attributable to that portion of the Restricted Subsidiary being
sold, assigned, transfered or otherwise disposed of (meaning the
same proportion as the fair market value (as determined by the
Company in good faith) of the Properties and assets being sold
bears to the total fair market value (as determined by the
Company in good faith) of all of Properties and assets of the
Restricted Subsidiary)) shall not be less than 1.25 to 1.00,
(C) immediately after giving effect to such sale, assignment,
transfer or other disposition, no Default or Event of Default
shall have occurred and be continuing and (D) immediately after
giving effect to such sale, assignment, transfer or other
disposition, all of the representations and warranties of the
Company contained in this Agreement shall be true and correct in
all material respects as if made on the date of such sale,
assignment, transfer or other disposition.
(i) Consolidated Current Ratio. The Company will at
all times maintain a Consolidated Current Ratio of at least 1.25
to 1.00.
(j) Transactions with Affiliates. The Company will
not, and will not cause or permit any Subsidiary to, enter into
or be a party to any transaction or arrangement with any
Affiliate (including, without limitation, the purchase from, sale
to or exchange of Property with, or the rendering of any service
by or for, any Affiliate), except in the ordinary course of
business and pursuant to the reasonable requirements of the
Company's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Company or such
Subsidiary than would be obtained in a comparable arm's-length
transaction with a Person not an Affiliate.
(k) Restricted Investments. The Company will not, and
will not cause or permit any Subsidiary to, directly or
indirectly, make any Restricted Investments, unless, immediately
after giving effect thereto, the aggregate amount of all
Restricted Investments owned by the Company and/or any one or
more of its Subsidiaries (valued in accordance with GAAP) does
not exceed the sum of $10,000,000.00.
(l) Payment of Indebtedness. The Company and each
Subsidiary will (i) pay any and all Indebtedness for borrowed
money with an outstanding principal balance of $1,000,000.00 or
more payable or guaranteed by the Company or such Subsidiary, as
the case may be, and any interest or premium thereon, when due
(whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) in accordance with the
agreement or instrument relating to such Indebtedness or such
guarantee and (ii) faithfully perform, observe and discharge all
covenants, conditions and obligations which are imposed upon the
Company or such Subsidiary, as the case may be, by any and all
agreements, documents, instruments and indentures evidencing,
securing or otherwise relating to such Indebtedness or guarantee.
(m) Payment of Liabilities. Except as otherwise
specifically provided in Section 5.01(o)(i), the Company and each
Subsidiary will pay each liability and/or obligation of an
outstanding amount of $1,000,000.00 or more which is payable or
guaranteed by the Company or such Subsidiary, as the case may be,
when due in accordance with the agreement or instrument relating
to such liability and/or obligation or such guarantee; provided,
however, that neither the Company nor any Subsidiary shall be
required to pay any such liability or obligation which is being
contested in good faith by appropriate proceedings being
diligently conducted and for which reserves in form and amount
deemed adequate by the Company in its reasonable judgment have
been provided (segregated to the extent required by GAAP), except
that the Company and its Subsidiaries shall pay or cause to be
paid all such liabilities and obligations forthwith upon the
commencement of proceedings to foreclose any Lien which is
attached as security therefor, unless such foreclosure is stayed
by the filing of an appropriate bond.
(n) Consultations and Inspections. Solely for the
purpose of permitting the Banks to determine compliance by the
Company with this Agreement, the Company will permit, and will
cause each Subsidiary to permit, any Bank (and any Person
appointed by any Bank to whom the Company does not reasonably
object) to discuss the affairs, finances and accounts of the
Company and its Subsidiaries with the officers of the Company and
each of its Subsidiaries, all at such reasonable times and as
often as may from time to time be reasonably requested. The
Company will also permit, and will cause each Subsidiary to
permit, inspection of its Properties, books and records by any
Bank during normal business hours and at other reasonable times.
If such consultation and/or inspection reveals that no Default or
Event of Default under this Agreement has occurred and is
continuing, the Bank causing such consultation and/or inspection
shall bear the expense of such consultation and/or inspection;
provided, however, that such expense shall not include
compensation of the Company or any Subsidiary or any of their
respective employees, agents or other representatives for their
involvement in such consultation and/or inspection. If such
consultation and/or inspection reveals that any Default or Event
of Default under this Agreement has occurred and is continuing,
the Company shall bear the expense of such consultation and/or
inspection.
(o) Payment of Taxes and Claims; Corporate Existence;
Maintenance of Properties; Insurance. The Company will, and will
cause each Subsidiary to:
(i) pay and discharge promptly all taxes,
assessments and other governmental charges or levies
imposed upon it or any of its income, profits or
Property before the same shall become past due or in
default, as well as all lawful claims and liabilities
of any kind (including claims and liabilities for
labor, materials and supplies) which, if unpaid, might
by law become a Lien upon any of its Property or
assets; provided, however, that (A) neither the Company
nor any Subsidiary shall be required to pay any such
tax, assessment, charge, levy or claim the payment of
which is being contested in good faith and by
appropriate proceedings being diligently conducted and
for which adequate reserves in form and amount deemed
adequate by the Company and its independent certified
public accountants have been provided (segregated to
the extent required by GAAP), except that the Company
and its Subsidiaries will pay or cause to be paid all
such taxes, assessments, charges, levies and claims
forthwith upon the commencement of proceedings to
foreclose any Lien which is attached as security
therefor, unless such foreclosure is stayed by the
filing of an appropriate bond and (B) any failure to
pay any such tax, assessment, charge, levy or claim
shall not constitute an Event of Default if such
failure (1) was not willful and (2) does not and will
not result in any Material Adverse Effect;
(ii) do all things necessary to preserve and keep
in full force and effect its corporate existence and
franchises; provided, however, that nothing in this
Section 5.01(o)(ii) shall prevent (1) the abandonment
or termination of the corporate existence and
franchises of any Subsidiary if, in the opinion of the
Company, such abandonment or termination is in the
interest of the Company and not disadvantageous in any
material respect to any of the Banks or (2) a
consolidation or merger permitted by Section 5.01(g);
(iii) on a basis consistent with the past practices
of the Company and its Subsidiaries, maintain and keep
its Properties used or useful in the conduct of its
business in good condition, repair and working order
and supplied with all necessary equipment and make all
necessary repairs, renewals, replacements, betterments
and improvements thereof, all as may be necessary so
that the business carried on in connection therewith
may be properly and advantageously conducted at all
times; and
(iv) cause its Properties of an insurable nature
to be self-insured or insured (subject to reasonable
deductible amounts) by reputable and solvent insurance
companies against loss or damages (including public
liability) in amounts and subject to terms deemed
adequate and prudent by the Company. For purposes of
this Section 5.01(o)(iv), a "reputable and solvent"
insurance company shall mean any insurance company
accorded a rating by A.M. Best Company, Inc. of A:XII
or higher at the time of issuance of any policy;
provided, however, that if during the term of any
insurance policy, the rating accorded the insurer shall
be less than A:XII, the Company or the Subsidiary, as
the case may be, on the date of renewal of any such
policy (or, if such change in rating shall occur within
ninety (90) days prior to such renewal date, within
ninety (90) days of the date of such change in rating),
will obtain such insurance policy from an insurer
accorded such a rating.
(p) Maintenance of Books and Records. The Company and
its Subsidiaries will, on a consolidated basis, maintain their
books and records in accordance with GAAP consistently applied
(except for changes disclosed in the financial statements
furnished to the Banks pursuant to Section 5.01(a) and concurred
in by the independent certified public accountants of the
Company).
(q) Changes in Nature of Business. The Company will
not, and will not cause or permit any Subsidiary to, engage in
any business if, as a result, the general nature of the business
which would then be engaged in by the Company and its
Subsidiaries, considered as a whole, would be substantially
changed from the general nature of the business engaged in by the
Company and its Subsidiaries as of the Effective Date of this
Agreement.
(r) Compliance with Law. The Company will, and will
cause each Subsidiary to, comply with any and all laws,
ordinances and governmental and regulatory rules and regulations
to which it is subject and obtain any and all licenses, permits,
franchises and other governmental and regulatory authorizations
necessary to the ownership of its Properties or to the conduct of
its business, which failure to comply or failure to obtain could
reasonably be expected to have a Material Adverse Effect.
(s) Accountant. The Company shall give the Banks
prompt notice of any change of the Company's independent
certified public accountants and a statement of the reasons for
such change. The Company shall at all times utilize independent
certified public accountants of nationally recognized standing.
(t) ERISA Compliance. If the Company or any
Subsidiary shall have any Pension Plan, the Company and such
Subsidiary or Subsidiaries shall comply in all material respects
with all requirements of ERISA relating to such plan. Without
limiting the generality of the foregoing, neither the Company nor
any Subsidiary shall:
(i) permit any Pension Plan maintained by it to
engage in any nonexempt "prohibited transaction," as
such term is defined in Section 4975 of the Code;
(ii) permit any Pension Plan maintained by it to
incur any "accumulated funding deficiency", as such
term is defined in Section 302 of ERISA, 29 U.S.C.
section 1082, whether or not waived;
(iii) terminate any such Pension Plan in a manner
which could result in the imposition of a Lien on any
Property of the Company or any Subsidiary pursuant to
Section 4068 of ERISA, 29 U.S.C. section 1368; or
(iv) take any action which would constitute a
complete or partial withdrawal from a Multi-Employer
Plan within the meaning of Sections 4203 and 4205 of
Title IV of ERISA.
Notwithstanding any provision contained in this Section
5.01(t) to the contrary, an act by the Company or any Subsidiary
shall not be deemed to constitute a violation of subparagraphs
(i) through (iv) hereof unless the Required Banks determine in
good faith that said action, individually or cumulatively with
other acts of the Company and its Subsidiaries, does have or is
likely to cause a Material Adverse Effect.
The Company shall have the affirmative obligation
hereunder to report to the Banks any of those acts identified in
subparagraphs (i) through (iv) hereof, regardless of whether said
act does have or is likely to cause a Material Adverse Effect,
and failure by the Company to report such act promptly upon the
Company's becoming aware of the existence thereof shall
constitute an Event of Default hereunder.
(u) Further Assurances. The Company will execute any
and all further agreements, documents and instruments, and take
any and all further actions which may be required under
applicable law, or which any Bank may from time to time
reasonably request, in order to effectuate the transactions
contemplated by this Agreement, the Notes and the other
Transaction Documents.
(v) Notices. The Company will notify the Agent in
writing of any of the following immediately upon learning of the
occurrence thereof, describing the same and, if applicable, the
steps being taken by the Company and/or its Subsidiaries with
respect thereto:
(i) Default. The occurrence of (A) any Default
or Event of Default under this Agreement or (B) any
default or event of default by the Company or any
Subsidiary under any note, indenture, loan agreement,
mortgage, deed of trust, security agreement, lease or
other similar agreement, document or instrument to
which the Company or any Subsidiary, as the case may
be, is a party or by which it is bound or to which it
is subject, a default under which could have a Material
Adverse Effect;
(ii) Litigation. The institution of any
litigation, arbitration proceeding or governmental,
regulatory or administrative proceeding affecting the
Company or any Subsidiary, whether or not considered to
be covered by insurance, in which the prayer or claim
for relief seeks recovery of an amount in excess of
$10,000,000.00 (or, if no dollar amount is specified in
the prayer or claim for relief, in which there is a
reasonable likelihood of recovery of an amount in
excess of $10,000,000.00) or any form of equitable
relief which if granted could have a Material Adverse
Effect;
(iii) Judgment. The entry of any judgment or
decree in an amount in excess of $1,000,000.00 against
the Company or any Subsidiary;
(iv) Pension Plans. The occurrence of a
Reportable Event with respect to any Pension Plan; the
filing of a notice of intent to terminate a Pension
Plan by the Company, any ERISA Affiliate or any
Subsidiary; the institution of proceedings to terminate
a Pension Plan by the PBGC or any other Person; the
withdrawal in a "complete withdrawal" or a "partial
withdrawal" as defined in Sections 4203 and 4205,
respectively, of ERISA by the Company, any ERISA
Affiliate or any Subsidiary from any Multi-Employer
Plan; or the incurrence of any material increase in the
contingent liability of the Company or any Subsidiary
with respect to any "employee welfare benefit plan" as
defined in Section 3(1) of ERISA which covers retired
employees and their beneficiaries;
(v) Environmental and Safety and Health Matters.
The receipt by the Company or any Subsidiary of any
notice or allegation by any governmental or regulatory
agency, entity, authority or official that: (i) the
operations of the Company or any Subsidiary are not in
full compliance with the requirements of any applicable
Environmental Law or Occupational Safety and Health
Law; (ii) the Company or any Subsidiary or any of their
respective Properties or facilities are subject to any
Federal, state or local investigation concerning
(A) any actual, threatened or suspected violation of
any Environmental Law or Occupational Safety and Health
Law and/or any spillage, disposal or other release into
the environment of any Hazardous Materials or (B) any
unsafe or unhealthful condition; or (iii) any
Properties, facilities or assets of the Company or any
Subsidiary are or may become subject to any
Environmental Lien;
(vi) Material Adverse Change. The occurrence of
any material adverse change in the business, operations
or condition, financial or otherwise, of the Company
and its Subsidiaries, considered as a whole; and
(vii) Change in Management. Any resignation,
removal or replacement of the Chairman of the Board,
President or Chief Financial Officer of the Company.
(w) Pension Plans. Neither the Company nor any
Subsidiary shall (a) permit any condition to exist in connection
with any Pension Plan which might constitute grounds for the PBGC
to institute proceedings to have such Pension Plan terminated or
a trustee appointed to administer such Pension Plan or (b) engage
in, or permit to exist or occur, any other condition, event or
transaction with respect to any Pension Plan which could result
in the incurrence by the Company or any Subsidiary of any
material liability, fine or penalty.
(x) Acquisitions. The Company will not, nor will it
cause or permit any Subsidiary to, make or suffer to exist any
Acquisition of any Person, except Acceptable Acquisitions.
(y) Guaranties. The Company will not, and will not
cause or permit any Restricted Subsidiary to, become liable in
respect of any Guaranty except Guaranties which are limited in
amount to a maximum stated dollar exposure or which constitute
Guaranties of obligations incurred by any Restricted Subsidiary
in compliance with Section 5.01(c) and the other provisions of
this Agreement.
SECTION 5.02. Use of Proceeds. The Company agrees
that (i) the proceeds of the Loans made under this Agreement will
be used solely for its general corporate purposes and (ii) none
of such proceeds will be used in violation of any applicable law
or regulation.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If any of the
following (each of the following herein sometimes called an
"Event of Default") shall occur and be continuing:
(a) the Company shall fail to pay any principal
of or interest on any of the Notes or any other amount
or amounts payable by the Company under this Agreement
as and when the same shall become due and payable;
(b) the Company shall violate or fail to perform
or observe any of the covenants or agreements contained
in Section 5.01 or Section 5.02 of this Agreement;
(c) the Company shall violate or fail to perform
or observe any other term, covenant or agreement
contained in this Agreement (other than those specified
in clauses (a) or (b) above) and any such violation or
failure shall remain unremedied for thirty (30) days
after the earlier of (i) written notice of default is
given to the Company by the Agent at the request of any
Bank or (ii) a responsible officer of the Company
obtaining knowledge of such default;
(d) any representation or warranty of the Company
made in this Agreement, in any other Transaction
Document or in any certificate, agreement, instrument
or statement furnished or made or delivered pursuant
hereto or thereto or in connection herewith or
therewith, shall prove to have been untrue, incorrect
or materially misleading when made or effected;
(e) this Agreement or any of the other
Transaction Documents shall at any time for any reason
cease to be in full force and effect or shall be
declared to be null and void by a court of competent
jurisdiction, or if the validity or enforceability
thereof shall be contested or denied by the Company, or
if the transactions completed hereunder or thereunder
shall be contested by the Company or if the Company
shall deny that it has any or further liability or
obligation hereunder or thereunder;
(f) the Company or any Subsidiary shall
(i) voluntarily commence any proceeding or file any
petition seeking relief under Title 11 of the United
States Code or any other Federal, state or foreign
bankruptcy, insolvency, receivership, liquidation or
similar law, (ii) consent to the institution of, or
fail to contravene in a timely and appropriate manner,
any such proceeding or the filing of any such petition,
(iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator or similar
official of itself or of a substantial part of its
Property or assets, (iv) file an answer admitting the
material allegations of a petition filed against itself
in any such proceeding, (v) make a general assignment
for the benefit of creditors, (vi) become unable, admit
in writing its inability or fail generally to pay its
debts as they become due or (vii) take any corporate or
other action for the purpose of effecting any of the
foregoing;
(g) An involuntary proceeding shall be commenced
or an involuntary petition shall be filed in a court of
competent jurisdiction seeking (i) relief in respect of
the Company or any Subsidiary, or of a substantial part
of the Property or assets of the Company or any
Subsidiary, under Title 11 of the United States Code or
any other Federal, state or foreign bankruptcy,
insolvency, receivership, liquidation or similar law,
(ii) the appointment of a receiver, trustee, custodian,
sequestrator or similar official of the Company or any
Subsidiary or of a substantial part of the Property or
assets of the Company or any Subsidiary or (iii) the
winding-up or liquidation of the Company or any
Subsidiary; and such proceeding or petition shall
continue undismissed for thirty (30) consecutive days
or an order or decree approving or ordering any of the
foregoing shall continue unstayed and in effect for
thirty (30) consecutive days;
(h) The Company or any Subsidiary shall be
declared by any of the Banks to be in default on, or
pursuant to the terms of, (1) any other present or
future obligation to any of such Bank(s), including,
without limitation, any other loan, line of credit,
revolving credit, guaranty or letter of credit
reimbursement obligation, or (2) any other present or
future agreement purporting to convey to any of such
Bank(s) a Lien upon any Property or assets of the
Company or such Subsidiary, as the case may be, and, if
such default relates to a commercial letter of credit
reimbursement obligation, such default shall remain
unremedied for two (2) Business Days after written
notice thereof shall have been given to the Company or
such Subsidiary, as the case may be, by such Bank(s);
(i) The Company or any Subsidiary shall fail (and
such failure shall not have been cured or waived) to
perform or observe any term, provision or condition of,
or any other default or event of default shall occur
under, any agreement, document or instrument
evidencing, securing or otherwise relating to any
outstanding Indebtedness of the Company or such
Subsidiary, as the case may be, for borrowed money
(other than the Notes), in a principal amount in excess
of Two Million Dollars ($2,000,000.00), if the effect
of such failure or default is to cause or permit such
Indebtedness to be declared to be due and payable or
otherwise accelerated, or to be required to be prepaid
(other than by a regularly scheduled required
prepayment) prior to the stated maturity thereof;
(j) The Company or any Subsidiary shall have a
judgment in excess of One Million Dollars
($1,000,000.00) entered against it by a court having
jurisdiction in the premises and such judgment shall
not be appealed in good faith or satisfied by the
Company or such Subsidiary (or an insurer on behalf of
the Company or such Subsidiary), as the case may be,
within the time permitted by applicable law for an
appeal of such judgment;
(k) The occurrence of a Reportable Event with
respect to any Pension Plan; the filing of a notice of
intent to terminate a Pension Plan by the Company, any
ERISA Affiliate or any Subsidiary; the institution of
proceedings to terminate a Pension Plan by the PBGC or
any other Person; the withdrawal in a "complete
withdrawal" or a "partial withdrawal" as defined in
Sections 4203 and 4205, respectively, of ERISA by the
Company, any ERISA Affiliate or any Subsidiary from any
Multi-Employer Plan; or the incurrence of any material
increase in the contingent liability of the Company or
any Subsidiary with respect to any "employee welfare
benefit plan" as defined in Section 3(1) of ERISA which
covers retired employees and their beneficiaries;
(l) The institution by the Company, any ERISA
Affiliate or any Subsidiary of steps to terminate any
Pension Plan if, in order to effectuate such
termination, the Company, such ERISA Affiliate or such
Subsidiary, as the case may be, would be required to
make a contribution to such Pension Plan, or would
incur a liability or obligation to such Pension Plan,
in excess of Ten Million Dollars ($10,000,000.00); or
the institution by the PBGC of steps to terminate any
Pension Plan;
(m) a Change of Control shall occur;
(n) any "Event of Default" (as defined therein)
shall occur under or within the meaning of any one or
more of those certain Note Agreements dated March 23,
1993, by and between the Company and each of Principal
Mutual Life Insurance Company, CIGNA Property and
Casualty Insurance Company, Connecticut General Life
Insurance Company, Connecticut General Life Insurance
Company on behalf of one or more separate accounts,
Life Insurance Company of North America, Allstate Life
Insurance Company, Farmland Life Insurance Company,
Financial Horizons Life Insurance Company, Nationwide
Life Insurance Company, West Coast Life Insurance
Company, Woodmen of the World Life Insurance Society,
General American Life Insurance Company, Century Life
of America, CUNA Mutual Insurance Society, National
Life Insurance Company, Provident Mutual Life Insurance
Company of Philadelphia, Provident Mutual Life and
Annuity Company of America, Provident Mutual Life
Insurance Company - CALIC, Modern Woodmen of America,
Guarantee Mutual Life Company and Woodmen Accident and
Life Company (collectively, as the same may from time
to time be amended, modified, extended or renewed, the
"Note Agreements");
THEN, and in each such event (other than an event
described in the foregoing clauses (f) or (g)), the Agent shall,
if requested in writing by the Required Banks, and may, in its
sole and absolute discretion, upon the oral request of the
Required Banks, by notice in writing to the Company declare that
the obligations of the Banks to make Loans under this Agreement
have terminated, whereupon such obligations of the Banks shall be
immediately and forthwith terminated, and the Agent shall, if
requested in writing by the Required Banks, and may, in its sole
and absolute discretion, upon the oral request of the Required
Banks, by notice in writing to the Company declare the entire
outstanding principal balance of and all accrued and unpaid
interest on the Notes issued under this Agreement and all other
amounts payable by the Company hereunder to be forthwith due and
payable, whereupon all of the unpaid principal balance, accrued
and unpaid interest and all such other amounts shall become and
be immediately due and payable, without presentment, demand,
protest or further notice of any kind, all of which are hereby
expressly waived by the Company; provided, however, that upon the
occurrence of any event described in the foregoing clauses (f) or
(g), the obligation of the Banks to make Loans under this
Agreement shall automatically terminate and the entire
outstanding principal balance of and all accrued and unpaid
interest on the Notes issued under this Agreement and all other
amounts payable by the Company hereunder shall automatically
become immediately due and payable, without presentment, demand,
protest or further notice of any kind, all of which are hereby
expressly waived by the Company.
SECTION 6.02. Notice of Default. The Agent shall give
notice of a Default to the Company promptly upon being requested
to do so by any Bank and shall thereupon notify all of the Banks
thereof.
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization. Each
Bank irrevocably appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under
this Agreement, the Notes and the other Transaction Documents as
are delegated to the Agent by the terms hereof or thereof,
togetherwith allsuch powersas maybe reasonablyincidental thereto.
SECTION 7.02. Agent and Affiliates. The Agent shall
have the same rights and powers under this Agreement as any other
Bank and may exercise or refrain from exercising the same as
though it were not the Agent, and the Agent and its affiliates
may accept deposits from, lend money to and generally engage in
any kind of business with the Company or any of its Subsidiaries
or Affiliates as if it were not the Agent hereunder.
SECTION 7.03. Action by Agent. The obligations of the
Agent hereunder are only those expressly set forth herein.
Without limiting the generality of the foregoing, the Agent shall
not be required to take any action with respect to any Default or
Event of Default, except as expressly provided in Article VI.
SECTION 7.04. Consultation with Experts. The Agent
may consult with legal counsel, independent certified public
accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants
or other experts.
SECTION 7.05. Liability of Agent. Neither the Agent
nor any of its directors, officers, employees, agents or advisors
shall be liable for any action taken or not taken by it in
connection herewith (i) with the consent or at the request of the
requisite percentage in interest of the Banks set forth herein or
(ii) in the absence of its own gross negligence or willful
misconduct as determined by a court of competent jurisdiction.
Neither the Agent nor any of its directors, officers, employees,
agents or advisors shall be responsible for or have any duty to
ascertain, inquire into or verify (i) any statement, warranty or
representation made in connection with this Agreement or any Loan
hereunder; (ii) the performance or observance of any of the
covenants or agreements of the Company; (iii) the satisfaction of
any condition specified in Article III, except receipt of items
required to be delivered to the Agent; or (iv) the validity,
effectiveness or genuineness of this Agreement, the Notes or any
of the other Transaction Documents. The Agent shall not incur
any liability by acting in reliance upon any notice, consent,
certificate, statement or other writing (which may be a bank
wire, telex, telecopy or similar writing) believed by it to be
genuine or to be signed by the proper party or parties.
SECTION 7.06. Indemnification. Notwithstanding any
other provision contained in this Agreement to the contrary, to
the extent the Company fails to reimburse the Agent pursuant to
Section 9.03 (excluding clause (i) thereof), Section 9.04 or
Section 9.05, or if any Default or Event of Default shall occur
under this Agreement, the Banks shall ratably in accordance with
their respective Pro Rata Shares of the aggregate amount of Loans
then outstanding, or if no Loans are then outstanding, their
respective Pro Rata Shares of the total Loan Commitments of all
of the Banks, indemnify the Agent and hold it harmless from and
against any and all liabilities, losses (except losses occasioned
solely by failure of the Company to make any payments or to
perform any obligations required by this Agreement (excepting
those described in Sections 9.03, 9.04 and 9.05), the Notes or
any of the other Transaction Documents), costs and/or expenses,
including, without limitation, any liabilities, losses, costs
and/or expenses arising from the failure of any Bank to perform
its obligations hereunder or in respect of this Agreement, and
also including, without limitation, reasonable attorneys' fees
and expenses, which the Agent may incur, directly or indirectly,
in connection with this Agreement, the Notes or any of the other
Transaction Documents, or any action or transaction related
hereto or thereto; provided only that the Agent shall not be
entitled to such indemnification for any losses, liabilities,
costs and/or expenses directly and solely resulting from its own
gross negligence or willful misconduct as determined by a court
of competent jurisdiction. This indemnity shall be a continuing
indemnity, contemplates all liabilities, losses, costs and
expenses related to the execution, delivery and performance of
this Agreement, the Notes and the other Transaction Documents,
and shall survive the satisfaction and payment of the Loans and
the termination of this Agreement.
SECTION 7.07. Credit Decision. Each Bank acknowledges
that it has, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it
has deemed appropriate, made its own credit analysis and decision
to enter into this Agreement. Each Bank also acknowledges that
it will, independently and without reliance upon 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 any action under this
Agreement.
SECTION 7.08. Resignation of Agent. The Agent may
resign at any time by giving written notice thereof to the Banks
and the Company. Upon any such resignation, the Company, with
the consent of the Required Banks, shall have the right to
appoint a successor Agent. If no successor Agent shall have been
so appointed by the Company, and shall have accepted such
appointment, within thirty (30) days after the retiring Agent's
giving of notice of resignation, then the Required Banks shall,
on behalf of all of the Banks, appoint a successor Agent, which
shall be a commercial bank organized under the laws of the United
States of America or of any State thereof and having a combined
capital and surplus of at least $100,000,000.00. 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 of the rights, powers, privileges and duties of
the retiring Agent, and the retiring Agent shall be discharged
from all of its duties and obligations under this Agreement.
After any retiring Agent's resignation as Agent, the provisions
of this Article VII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this
Agreement.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
AFFECTING FIXED RATE LOANS
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair. If with respect to any Interest Period:
(i) the Agent is advised by Mercantile that
deposits in dollars (in the applicable amounts) are not
being offered to Mercantile in the relevant market for
such Interest Period, or
(ii) Banks holding Notes evidencing 40% or more in
aggregate principal amount of the affected Fixed Rate
Loans (or having 40% or more of the aggregate amount of
the total Loan Commitments of all of the Banks, if no
such Fixed Rate Loans are then outstanding) advise the
Agent that the CD Rate or the IBOR Rate, as the case
may be, as determined by the Agent will not adequately
and fairly reflect the cost to such Banks of
maintaining or funding their IBOR Loans and/or CD Loans
for such Interest Period,
the Agent shall forthwith give notice thereof to the Company and
the Banks, whereupon until the Agent notifies the Company that
the circumstances giving rise to such suspension no longer exist,
(a) the obligations of the Banks to make CD Loans or IBOR Loans,
as the case may be, shall be suspended, and (b) the Company shall
repay in full the then outstanding principal amount of each of
its CD Loans or IBOR Loans, as the case may be, together with all
accrued and unpaid interest thereon, on the last day of the then
current Interest Period applicable to such Loan. Concurrently
with repaying each such Fixed Rate Loan of each Bank pursuant to
this Section, the Company may borrow a Prime Loan of the same
type (i.e., a Line of Credit Loan or a Revolving Credit Loan) in
an equal principal amount from such Bank, and, if the Company so
elects, such Bank shall make such a Prime Loan of the same type
(i.e., a Line of Credit Loan or a Revolving Credit Loan) to the
Company.
SECTION 8.02. Illegality. If, after the date of this
Agreement, the adoption of any applicable law, rule or
regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental or
regulatory authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance
by any Bank with any request or directive (whether or not having
the force of law) of any such governmental or regulatory
authority, central bank or comparable agency shall make it
unlawful or impossible for any Bank to make, maintain or fund its
IBOR Loans to the Company and such Bank shall so notify the
Agent, the Agent shall forthwith give notice thereof to the other
Banks and the Company. Upon receipt of such notice, the Company
shall repay in full the then outstanding principal amount of each
of its IBOR Loans from such Bank, together with all accrued and
unpaid interest thereon, on either (a) the last day of the then
current Interest Period applicable to such IBOR Loan if such Bank
may lawfully continue to maintain and fund such IBOR Loan to such
day or (b) immediately if such Bank may not lawfully continue to
fund and maintain such IBOR Loan to such day. Concurrently with
repaying each IBOR Loan of such Bank, the Company may borrow a
Prime Loan of the same type (i.e., a Line of Credit Loan or a
Revolving Credit Loan) in an equal principal amount from such
Bank, and, if the Company so elects, such Bank shall make such a
Prime Loan of the same type (i.e., a Line of Credit Loan or a
Revolving Credit Loan) to the Company.
SECTION 8.03. Increased or Decreased Cost. (a) If
(i) Regulation D or (ii) after the date hereof, the adoption of
any applicable law, rule or regulation, or any change therein, or
any change in the interpretation or administration thereof by any
governmental or regulatory authority, central bank or comparable
agency charged with the interpretation or administration thereof,
or compliance by any Bank with any request or directive (whether
or not having the force of law) of any such governmental or
regulatory authority, central bank or comparable agency (a
"Regulatory Change"):
(A) shall subject any Bank to any tax, duty or
other charge with respect to its Fixed Rate Loans, its
Notes or its obligation to make Fixed Rate Loans, or
shall change the basis of taxation of payments to any
Bank of the principal of or interest on its Fixed Rate
Loans or any other amounts due under this Agreement in
respect of its Fixed Rate Loans or its obligation to
make Fixed Rate Loans (except for taxes on or changes
in the rate of tax on the overall net income of such
Bank); or
(B) shall impose, modify or deem applicable or
inapplicable any reserve (including, without
limitation, any reserve imposed by the Board of
Governors of the Federal Reserve System), special
deposit, capital or similar requirement against assets
of, deposits with or for the account of, or credit
extended or committed to be extended by, any Bank or
shall, with respect to any Bank or the United States
market for certificates of deposit or the Interbank
Eurodollar market, impose, modify or deem applicable or
inapplicable any other condition affecting its Fixed
Rate Loans, its Notes or its obligation to make Fixed
Rate Loans;
and the result of any of the foregoing is to increase or decrease
the cost to (or in the case of Regulation D, to impose a cost on
or increase or decrease the cost to) such Bank of making or
maintaining any Fixed Rate Loan, or to reduce or increase the
amount of any sum received or receivable by such Bank under this
Agreement or under its Notes with respect thereto, by an amount
deemed by such Bank, in its reasonable good faith judgment, to be
material, and if such Bank or the Company, as the case may be, is
not otherwise fully compensated for such change in cost or
reduction or increase in amount received or receivable by virtue
of the inclusion of the reference to "CD Reserve Percentage" in
the calculation of the interest rate applicable to CD Loans or to
"IBOR Reserve Percentage" in the calculation of the interest rate
applicable to IBOR Loans, as the case may be, then, within
fifteen (15) days after notice by such Bank to the Company
together with a copy of the official notice of the applicable
change in law (if applicable) and a work sheet showing how the
change in cost or reduction or increase in amount received or
receivable was calculated (with a copy to the Agent and all of
the other Banks), (i) in the case of an increase in cost to such
Bank or a reduction in amounts received or receivable by such
Bank the Company shall pay for the account of such Bank as
additional interest, such additional amount or amounts as will
compensate such Bank for such increased cost or reduction and
(ii) in the case of a decrease in cost to such Bank or an
increase in amounts received or receivable by such Bank, the
Company's interest payments to such Bank under this Agreement
shall be reduced by such amount or amounts as will compensate the
Company for such decreased cost or increased amount received or
receivable by such Bank. Each Bank will promptly notify the
Company, the Agent and all of the other Banks of any event of
which it has knowledge, occurring after the date hereof, which
will entitle such Bank or the Company to compensation pursuant to
this Section. The determination by any Bank under this Section
of the additional amount or amounts to be paid to it or to the
Company hereunder shall be conclusive in the absence of manifest
error. In determining such amount or amounts, such Bank may use
any reasonable averaging and attribution methods.
(b) If any Bank demands compensation under this
Section, the Company may at any time, upon at least two (2)
Business Days' prior notice to such Bank and the Agent, repay in
full its then outstanding CD Loans or IBOR Loans, as the case may
be, of such Bank, together with all accrued and unpaid interest
thereon to the date of prepayment and any funding losses and
other amounts due under Section 2.10. Concurrently with repaying
such Fixed Rate Loans of such Bank, the Company may borrow from
such Bank a Prime Loan of the same type (i.e., a Line of Credit
Loan or a Revolving Credit Loan) in an amount equal to the
aggregate principal amount of such Fixed Rate Loans, and, if the
Company so elects, such Bank shall make such a Prime Loan of the
same type (i.e., a Line of Credit Loan or a Revolving Credit
Loan) to the Company.
SECTION 8.04. Prime Loans Substituted for Affected
Fixed Rate Loans. If notice has been given by a Bank pursuant to
Section 8.02 or by the Company pursuant to Section 8.03 requiring
Fixed Rate Loans of any Bank to be repaid, then, unless and until
such Bank notifies the Company that the circumstances giving rise
to such repayment no longer apply, all Loans which would
otherwise be made by such Bank to the Company as CD Loans or IBOR
Loans, as the case may be, shall be made instead as Prime Loans.
Such Bank shall notify the Company if and when the circumstances
giving rise to such repayment no longer apply.
SECTION 8.05. Capital Adequacy. If, after the date of
this Agreement, any Bank shall have determined that the adoption
of any applicable law, rule, regulation or guideline regarding
capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental or
regulatory authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance
by such Bank with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or will have
the effect of reducing the rate of return on such Bank's capital
in respect of its obligations hereunder to a level below that
which such Bank could have achieved but for such adoption, change
or compliance (taking into consideration such Bank's policies
with respect to capital adequacy), then from time to time the
Company shall pay to such Bank upon demand such additional amount
or amounts as will compensate such Bank for such reduction. All
determinations made by such Bank of the additional amount or
amounts required to compensate such Bank in respect of the
foregoing shall be conclusive in the absence of manifest error.
In determining such amount or amounts, such Bank may use any
reasonable averaging and attribution methods.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and
other communications to any party hereunder shall be in writing
(including bank wire, telex, telecopy or similar writing) and
shall be given to such party at its address or telex number set
forth on the signature pages hereof or such other address or
telex number as such party may hereafter specify for the purpose
by notice to the Agent and the Company. Each such notice,
request or other communication shall be effective (i) if given by
telex, when such telex is transmitted to the telex number
specified in this Section and the appropriate answer-back is
received upon completion of transmission, (ii) if given by mail,
on the third (3rd) Business Day after such communication is
deposited in the mails with appropriate first class, certified or
registered postage prepaid, addressed as aforesaid, or (iii) if
given by any other means, when delivered at the address specified
in this Section; provided that notices to the Agent under
Sections 2.02, 2.04, 2.07 or 2.08 or Article VIII shall not be
effective until actually received by the Agent.
SECTION 9.02. No Waivers. No failure or delay by the
Company, the Agent or any Bank in exercising any right, power or
privilege hereunder, under any Note or under any of the other
Transaction Documents shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right,
power or privilege. The rights and remedies provided in this
Agreement and in the other Transaction Documents shall be
cumulative and not exclusive of any rights or remedies provided
by law.
SECTION 9.03. Expenses; Documentary Taxes. The
Company agrees to pay (i) all reasonable out-of-pocket costs and
expenses of the Agent in connection with the preparation,
documentation, negotiation and execution of this Agreement and
the other Transaction Documents, including, without limitation,
reasonable fees and disbursements of Thompson and Mitchell,
counsel for the Agent, within thirty (30) days of receipt of a
statement therefor, (ii) all reasonable out-of-pocket costs and
expenses of the Agent in connection with the preparation of any
waiver or consent hereunder or any amendment, modification,
extension or renewal hereof or any default or alleged default by
the Company hereunder, including, without limitation, reasonable
fees and disbursements of counsel for Agent, within thirty (30)
days of receipt of a statement therefor and (iii) if a Default or
an Event of Default occurs hereunder, all reasonable
out-of-pocket costs and expenses incurred by the Agent or any
Bank, including, without limitation, reasonable fees and
disbursements of counsel (including attorneys who are employees
of the Agent or such Bank or of any affiliate of the Agent or
such Bank, as the case may be), in connection with such Default
or Event of Default and collection and other enforcement
proceedings resulting therefrom within thirty (30) days of
receipt of a statement therefor. The Company shall indemnify
each Bank against any transfer taxes, documentary taxes and/or
similar assessments or charges made by any governmental authority
by reason of the execution and delivery of this Agreement, the
Notes or any of the other Transaction Documents. The obligations
of the Company under this Section 9.03 are continuing and shall
survive the satisfaction and payment of the Loans and the
termination of this Agreement.
SECTION 9.04. General Indemnity. In addition to the
payment of expenses pursuant to Section 9.03, whether or not the
transactions contemplated hereby shall be consummated, the
Company hereby agrees to indemnify, pay and hold the Agent, each
of the Banks and any holder(s) of the Notes, and the officers,
directors, employees, agents and affiliates of the Agent, each of
the Banks and such holder(s) (collectively, the "Indemnitees")
harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, the reasonable
fees and disbursements of counsel for such Indemnitees in
connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not such
Indemnitees shall be designated a party thereto), that may be
imposed on, incurred by or asserted against the Indemnitees, in
any manner relating to or arising out of this Agreement, any of
the other Transaction Documents or any other agreement, document
or instrument executed and delivered by the Company in connection
herewith or therewith, the statements contained in any commitment
letters delivered by the Agent or any of the Banks, any Bank's
agreement to make the Loans hereunder or the use or intended use
of the proceeds of any Loan hereunder (collectively, the
"indemnified liabilities"); provided that the Company shall have
no obligation to an Indemnitee hereunder with respect to
indemnified liabilities directly resulting from (i) the gross
negligence or willful misconduct of that Indemnitee as determined
by a court of competent jurisdiction in a final nonappealable
order or (ii) any failure of the Agent to properly remit funds to
the Banks as required under Section 2.09 or any other provision
of this Agreement. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in the preceding
sentence may be unenforceable because it is violative of any law
or public policy, the Company shall contribute the maximum
portion that it is permitted to pay and satisfy under applicable
law to the payment and satisfaction of all indemnified
liabilities incurred by the Indemnitees or any of them. The
provisions of the undertakings and indemnification set out in
this Section 9.04 are continuing and shall survive the
satisfaction and payment of the Loans and the termination of this
Agreement.
SECTION 9.05. Environmental Indemnity. The Company
hereby agrees to indemnify and hold harmless the Agent and each
of the Banks and their respective shareholders, officers,
directors, employees, agents, successors and assigns, from and
against all claims and orders (including, without limitation, all
private and/or governmental claims or orders under common law
and/or any Environmental Law), causes of action, liabilities,
damages (including natural resource damages), costs and expenses
(including, without limitation, investigative and cleanup costs
and attorneys' fees and expenses), notwithstanding any negligence
on the part of the Agent or any Bank and/or any of their
respective officers, directors, employees, agents, successors and
assigns, arising out of or relating in any way to (i) the
release, threat of release or presence or threat of any Hazardous
Materials on, in, under or about any Property or facility owned
and/or operated by the Company or any Subsidiary or emanating or
disposed of therefrom (regardless of cause or source), (ii) any
act or omission or liability of the Company or any of its
Subsidiaries or any of their respective officers, partners,
employees, directors, agents, shareholders, successors or
assigns, concerning any Hazardous Materials; (iii) the
enforcement or exercise of any right in this Agreement pertaining
to environmental matters, including, without limitation, the
enforcement of this indemnity provision; and/or (iv) any unsafe
or unhealthful condition at any Property or facility owned or
operated by the Company or any Subsidiary or any violation of any
Occupation Safety and Health Law. The foregoing indemnity shall
be in addition to all other indemnity provisions contained in
this Agreement and any other agreements between the parties
hereto or executed in connection with the transactions
contemplated hereby, and all such indemnities shall be given
effect, notwithstanding any overlap in coverage. This indemnity
shall survive the repayment of the Loans and the termination of
this Agreement. Should it be finally determined by a court of
competent jurisdiction that the scope or reach of this indemnity
exceeds that allowed by applicable law, this indemnity shall be
construed to extend and shall be given effect to, but not in
excess of, the maximum scope and reach allowed by applicable law.
SECTION 9.06. Sharing of Setoffs. Each Bank agrees
that if it shall, by exercising any right of set-off or
counterclaim or otherwise, receive payment of a proportion of the
aggregate amount of principal and interest due with respect to
any Note held by it which is greater than the proportion received
by any other Bank (based on the Pro Rata Shares of the Banks) in
respect of the aggregate amount of principal and interest due
with respect to any Note held by such other Bank, the Bank
receiving such proportionately greater payment shall purchase
such participations in the Notes held by the other Banks (to
which purchase the Company hereby consents), and such other
adjustments shall be made, as may be required so that all such
payments of principal and interest with respect to the Notes held
by the Banks shall be shared by the Banks on the basis of their
Pro Rata Shares; provided, however, that nothing in this Section
shall impair the right of any Bank to exercise any right of
set-off or counterclaim it may have and to apply the amount
subject to such exercise to the payment of indebtedness of the
Company other than its indebtedness under the Notes. The Company
agrees, to the fullest extent it may effectively do so under
applicable law, that any holder of a participation in a Note,
whether or not acquired pursuant to the foregoing arrangements,
may exercise rights of set-off or counterclaim and other rights
with respect to such participation as fully as if such holder of
a participation were a direct creditor of the Company in the
amount of such participation.
SECTION 9.07. Amendments and Waivers. Any provision
of this Agreement, the Notes or any of the other Transaction
Documents may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Company
and the Required Banks (and, if the rights or duties of the Agent
in its capacity as Agent are affected thereby, by the Agent);
provided that no such amendment or waiver shall, unless signed by
all of the Banks, (i) increase the Line of Credit Commitment or
Revolving Credit Commitment of any Bank, (ii) reduce the
principal amount of or rate of interest on any Loan or any fees
hereunder, (iii) postpone the date fixed for any payment of
principal of or interest on any Loan or any fees hereunder,
(iv) change the percentage of the Line of Credit Commitments or
Revolving Credit Commitments or of the aggregate unpaid principal
amount of the Notes or the number of Banks which shall be
required for the Banks or any of them to take any action or
obligations under this Section or any other provision of this
Agreement.
SECTION 9.08. Successors and Assigns. (a) The
provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors
and assigns, except that (i) the Company may not assign or
otherwise transfer any of its rights or delegate any of its
obligations under this Agreement and (ii) without the prior
written consent of the Company, no Bank may sell, assign or
otherwise transfer its Notes or its rights under this Agreement
(other than by way of participation to the extent permitted
below) in whole or in part to any Person other than another
existing Bank; provided, however, that, notwithstanding the
foregoing, (i) any Bank may assign, as collateral or otherwise,
any of its rights (but not any of its obligations) under this
Agreement or its Notes (including, without limitation, rights to
payment of principal and/or interest on its Notes) to any Federal
Reserve Bank without notice to or consent of the Company or the
Agent, (ii) any Bank may sell participations in its Notes or its
rights under this Agreement in whole or in part to any commercial
bank organized under the laws of the United States or any state
thereof that is a member of both the Federal Deposit Insurance
Corporation and the Federal Reserve System without the consent of
the Company so long as each agreement pursuant to which any such
participation is granted provides that such selling Bank shall
retain the sole right to approve or disapprove (A) any amendment,
modification or waiver of any provision of this Agreement or any
of the other Transaction Documents, (B) any Line of Credit
Extension Request and (C) any Revolving Credit Extension Request
and (iii) from and after (A) the occurrence of any Event of
Default under this Agreement, (B) the termination of the
obligations of the Banks to make Loans under this Agreement and
(C) the acceleration of the entire outstanding principal balance
of and all accrued and unpaid interest on the Notes issued under
this Agreement, each Bank may sell, assign, grant a participation
in or otherwise transfer its Notes and its rights under this
Agreement in whole or in part to any Person without the consent
of the Company.
(b) Any Bank which, in accordance with Section
9.08(a), grants a participation in, or sells, assigns or
otherwise transfers any interest in, any of its rights under this
Agreement or its Notes shall give prompt notice thereof to the
Agent and the Company.
(c) Unless otherwise agreed to by the Company in
writing, no Bank shall, as between the Company and that Bank, be
relieved of any of its obligations under this Agreement as a
result of such Bank's granting of a participation in all or any
part of such Bank's Notes or all or any part of such Bank's
rights under this Agreement.
SECTION 9.09. Severability. In the event any one or
more of the provisions contained in this Agreement should be
invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
SECTION 9.10. Missouri Law. This Agreement, the Notes
and all of the other Transaction Documents shall be governed by
and construed in accordance with the internal laws of the State
of Missouri.
SECTION 9.11. Counterparts; Effectiveness. This
Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective on the later of (i) June 4,
1993, or (ii) the date when the Agent shall have received
counterparts hereof signed by all of the parties hereto, or
telexes confirming signatures to such counterparts.
SECTION 9.12. Authority to Act. The Agent shall be
entitled to act on any notices and instructions (telephonic or
written) reasonably believed by the Agent to have been delivered
by any person authorized to act on behalf of the Company pursuant
hereto, regardless of whether such notice or instruction was in
fact delivered by a person authorized to act on behalf of the
Company, and the Company hereby agrees to indemnify the Agent and
hold the Agent harmless from and against any and all losses and
expenses, if any, ensuing from any such action.
SECTION 9.13. CONSENT TO JURISDICTION. THE COMPANY
HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF
ANY MISSOURI STATE COURT OR ANY UNITED STATES OF AMERICA COURT
SITTING IN THE EASTERN DISTRICT OF MISSOURI, AS THE AGENT OR ANY
BANK MAY ELECT, IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT.
THE COMPANY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT
TO SUCH SUIT, ACTION OR PROCEEDING MAY BE HELD AND DETERMINED IN
ANY OF SUCH COURTS. THE COMPANY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH THE COMPANY
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT, AND THE
COMPANY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. THE COMPANY HEREBY EXPRESSLY WAIVES
ALL RIGHTS OF ANY OTHER JURISDICTION WHICH THE COMPANY MAY NOW OR
HEREAFTER HAVE BY REASON OF ITS PRESENT OR SUBSEQUENT DOMICILES.
THE COMPANY AUTHORIZES THE SERVICE OF PROCESS UPON THE COMPANY BY
REGISTERED MAIL SENT TO THE COMPANY AT ITS ADDRESS SET FORTH IN
SECTION 9.01.
SECTION 9.14. References; Headings for Convenience.
Unless otherwise specified herein, all references herein to
Section numbers refer to Section numbers of this Agreement, all
references herein to Exhibits "A", "B", "C" and "D" refer to
annexed Exhibits "A", "B", "C" and "D" which are hereby
incorporated herein by reference and all references herein to
Schedules 4.01(d), 4.01(e), 4.01(f), 4.01(i), 4.01(j), 4.01(k),
4.01(o), 4.01(p) and 4.01(r) refer to annexed Schedules 4.01(d),
4.01(e), 4.01(f), 4.01(i), 4.01(j), 4.01(k), 4.01(o), 4.01(p) and
4.01(r) which are hereby incorporated herein by reference. The
Section headings are furnished for the convenience of the parties
and are not to be considered in the construction or
interpretation of this Agreement.
SECTION 9.15. NO ORAL AGREEMENTS; ENTIRE AGREEMENT.
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT, INCLUDING PROMISES TO
EXTEND OR RENEW SUCH DEBT, ARE NOT ENFORCEABLE. TO PROTECT THE
COMPANY, THE AGENT AND THE BANKS FROM MISUNDERSTANDING OR
DISAPPOINTMENT, ANY AGREEMENTS REACHED BY THE COMPANY, THE AGENT
AND THE BANKS COVERING SUCH MATTERS ARE CONTAINED IN THIS
AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, WHICH AGREEMENT
AND OTHER TRANSACTION DOCUMENTS ARE A COMPLETE AND EXCLUSIVE
STATEMENT OF THE AGREEMENTS BETWEEN THE COMPANY, THE AGENT AND
THE BANKS, EXCEPT AS THE COMPANY, THE AGENT AND THE BANKS MAY
LATER AGREE IN WRITING TO MODIFY THEM. THIS AGREEMENT EMBODIES
THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES HERETO
AND SUPERSEDES ALL PRIOR AGREEMENTS AND UNDERSTANDINGS (ORAL OR
WRITTEN) RELATING TO THE SUBJECT MATTER HEREOF.
SECTION 9.16. Resurrection of Loans. To the extent
that any Bank receives any payment on account of any of the
Loans, and any such payment(s) or any part thereof are
subsequently invalidated, declared to be fraudulent or
preferential, set aside, subordinated and/or required to be
repaid to a trustee, receiver or any other Person under any
bankruptcy act, state or Federal law, common law or equitable
cause, then, to the extent of such payment(s) received, the Loans
or part thereof intended to be satisfied shall be revived and
continue in full force and effect, as if such payment(s) had not
been received by such Bank and applied on account of such
Loan(s).
IN WITNESS WHEREOF, the parties hereto have caused this
Credit Agreement to be duly executed by their respective
authorized officers effective as of the day and year first above
written.
EDISON BROTHERS STORES, INC.
By /s/Lee G. Weeks
Title: Executive Vice President and
Chief Financial Officer
501 North Broadway
St. Louis, Missouri 63102
Telex number: 797979
Telecopy number (314) 331-6554
MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION
By /s/Sally H. Roth
Title: Vice President
721 Locust Street
St. Louis, Missouri 63101
Telex number: 442300
Telecopy number: (314) 425-2162 <PAGE>
THE BOATMEN'S NATIONAL BANK OF
ST. LOUIS
By /s/Allan D. Ivie, IV
Title: Vice President
One Boatmen's Plaza
St. Louis, Missouri 63101
Telex number: 447389
Telecopy number: (314) 466-7783
CITIBANK, N.A.
By /s/
Title:
399 Park Avenue
12th Floor, Zone 21
New York, New York 10043
Telex number:
Telecopy number:
NBD BANK, N.A.
By /s/Thomas A. Levasseur
Title: Second Vice President
611 Woodward Avenue
Detroit, Michigan 48226
Telex number: None
Telecopy number: (313) 225-2649 <PAGE>
THE BANK OF NOVA SCOTIA
By /s/F. C. H. Ashby
Title: Senior Assistant Agent
Suite 650
55 Park Place
Atlanta, Georgia 30303
Telex number: 00542319
Telecopy number: (404) 581-0807
THE FIRST NATIONAL BANK OF CHICAGO
By /s/Jeanette Ganovsis
Title: Vice President
One First National Plaza
Mail Suite 0088; 1-14
Chicago, Illinois 60670
Telex number: 4430253
Telecopy number: (312) 732-6222
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By /s/
Title:
200 West Adams, Suite 2800
Chicago, Illinois 60606
Telex number: 6972650
Telecopy number: (312) 641-2350<PAGE>
MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION, as Agent
By /s/Sally H. Roth
Title: Vice President
721 Locust Street
St. Louis, Missouri 63101
Telex number: 442300
Telecopy number: (314) 425-2162
EXHIBIT A
LINE OF CREDIT NOTE
$ St. Louis, Missouri
June 4, 1993
FOR VALUE RECEIVED, on the last day of the Line of
Credit Period, the undersigned, EDISON BROTHERS STORES, INC., a
Delaware corporation (the "Company"), hereby promises to pay to
the order of
("Bank"), the principal sum of Dollars
($ ), or such lesser sum as may then constitute the
aggregate unpaid principal amount of all Line of Credit Loans
made by Bank to the Company pursuant to the Credit Agreement
referred to below. The aggregate principal amount which Bank
shall be committed to have outstanding hereunder at any time
shall not exceed Dollars
($ ), which amount may be borrowed, paid, reborrowed and
repaid, in whole or in part, subject to the terms and conditions
hereof and of the Credit Agreement referred to below. The
Company further promises to pay to the order of Bank interest on
the aggregate unpaid principal amount of such Line of Credit
Loans on the dates and at the rate or rates provided for in the
Credit Agreement. All such payments of principal and interest
shall be made in lawful currency of the United States in Federal
or other immediately available funds at the office of Mercantile
Bank of St. Louis National Association, 721 Locust Street,
St. Louis, Missouri 63101.
All Line of Credit Loans made by Bank and all
repayments of the principal thereof shall be recorded by Bank
and, prior to any transfer hereof, endorsed by Bank on the
schedule attached hereto, or on a continuation of such schedule
attached to and made a part hereof; provided, however, that the
obligation of the Company to repay each Line of Credit Loan made
hereunder shall be absolute and unconditional, notwithstanding
any failure of Bank to record or endorse or any mistake by Bank
in connection with recordation or endorsement on the schedules
attached to this Note. Bank's books and records (including,
without limitation, the schedules attached to this Note) showing
the account between Bank and the Company shall be admissible in
evidence in any action or proceeding and shall constitute prima
facie proof of the items therein set forth.
This Note is one of the Line of Credit Notes referred
to in the Credit Agreement dated the date hereof by and among the
Company, the banks listed on the signature pages thereof and
Mercantile Bank of St. Louis National Association, as agent (as
the same may from time to time be amended, modified, extended or
renewed, the "Credit Agreement"). The Credit Agreement, among
other things, contains provisions for acceleration of the
maturity hereof upon the occurrence of certain stated events and
also for prepayments on account of principal hereof and interest
hereon prior to the maturity hereof upon the terms and conditions
specified therein. Upon the occurrence of any Event of Default
under the Credit Agreement, the entire outstanding principal
balance of this Note and all accrued and unpaid interest thereon
may be declared to be immediately due and payable in the manner
and with the effect as provided in the Credit Agreement. All
capitalized terms used and not otherwise defined in this Note
shall have the respective meanings ascribed to them in the Credit
Agreement.
In the event that any payment due hereunder shall not
be paid when due, whether by reason of acceleration or otherwise,
and this Note shall be placed in the hands of an attorney or
attorneys for collection, or if this Note shall be placed in the
hands of an attorney or attorneys for representation of Bank in
connection with bankruptcy or insolvency proceedings relating
hereto, the Company hereby agrees to pay to the order of Bank, in
addition to all other amounts otherwise due hereon, the
reasonable costs and expenses of such collection and
representation, including, without limitation, reasonable
attorneys' fees and expenses (whether or not litigation shall be
commenced in aid thereof). The Company hereby waives presentment
for payment, demand, protest, notice of protest and notice of
dishonor.
This Note shall be governed by and construed in
accordance with the internal laws of the State of Missouri.
EDISON BROTHERS STORES, INC.
By /s/
Title:
Revolving Credit Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
Amount Amount of Unpaid
Prime, CD of Principal Principal
Notation
Date or IBOR Loan Loan Repaid Balance Made By
EXHIBIT B
REVOLVING CREDIT NOTE
$ St. Louis, Missouri
June 4, 1993
FOR VALUE RECEIVED, on the last day of the Revolving
Credit Period, the undersigned, EDISON BROTHERS STORES, INC., a
Delaware corporation (the "Company"), hereby promises to pay to
the order of
("Bank"), the principal sum of Dollars
($ ), or such lesser sum as may then constitute the
aggregate unpaid principal amount of all Revolving Credit Loans
made by Bank to the Company pursuant to the Credit Agreement
referred to below. The aggregate principal amount which Bank
shall be committed to have outstanding hereunder at any time
shall not exceed Dollars
($ ), which amount may be borrowed, paid, reborrowed and
repaid, in whole or in part, subject to the terms and conditions
hereof and of the Credit Agreement referred to below. The
Company further promises to pay to the order of Bank interest on
the aggregate unpaid principal amount of such Revolving Credit
Loans on the dates and at the rate or rates provided for in the
Credit Agreement. All such payments of principal and interest
shall be made in lawful currency of the United States in Federal
or other immediately available funds at the office of Mercantile
Bank of St. Louis National Association, 721 Locust Street,
St. Louis, Missouri 63101.
All Revolving Credit Loans made by Bank and all
repayments of the principal thereof shall be recorded by Bank
and, prior to any transfer hereof, endorsed by Bank on the
schedule attached hereto, or on a continuation of such schedule
attached to and made a part hereof; provided, however, that the
obligation of the Company to repay each Revolving Credit Loan
made hereunder shall be absolute and unconditional,
notwithstanding any failure of Bank to record or endorse or any
mistake by Bank in connection with recordation or endorsement on
the schedules attached to this Note. Bank's books and records
(including, without limitation, the schedules attached to this
Note) showing the account between Bank and the Company shall be
admissible in evidence in any action or proceeding and shall
constitute prima facie proof of the items therein set forth.
This Note is one of the Revolving Credit Notes referred
to in the Credit Agreement dated the date hereof by and among the
Company, the banks listed on the signature pages thereof and
Mercantile Bank of St. Louis National Association, as agent (as
the same may from time to time be amended, modified, extended or
renewed, the "Credit Agreement"). The Credit Agreement, among
other things, contains provisions for acceleration of the
maturity hereof upon the occurrence of certain stated events and
also for prepayments on account of principal hereof and interest
hereon prior to the maturity hereof upon the terms and conditions
specified therein. Upon the occurrence of any Event of Default
under the Credit Agreement, the entire outstanding principal
balance of this Note and all accrued and unpaid interest thereon
may be declared to be immediately due and payable in the manner
and with the effect as provided in the Credit Agreement. All
capitalized terms used and not otherwise defined in this Note
shall have the respective meanings ascribed to them in the Credit
Agreement.
In the event that any payment due hereunder shall not
be paid when due, whether by reason of acceleration or otherwise,
and this Note shall be placed in the hands of an attorney or
attorneys for collection, or if this Note shall be placed in the
hands of an attorney or attorneys for representation of Bank in
connection with bankruptcy or insolvency proceedings relating
hereto, the Company hereby agrees to pay to the order of Bank, in
addition to all other amounts otherwise due hereon, the
reasonable costs and expenses of such collection and
representation, including, without limitation, reasonable
attorneys' fees and expenses (whether or not litigation shall be
commenced in aid thereof). The Company hereby waives presentment
for payment, demand, protest, notice of protest and notice of
dishonor.
This Note shall be governed by and construed in
accordance with the internal laws of the State of Missouri.
EDISON BROTHERS STORES, INC.
By /s/
Title:
Revolving Credit Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
Amount Amount of Unpaid
Prime, CD of Principal Principal
Notation
Date or IBOR Loan Loan Repaid Balance Made By
EXHIBIT C
[Opinion of General Counsel of Edison Brothers Stores, Inc.]
June 4, 1993
To the Banks and the
Agent Referred to Below
c/o Mercantile Bank of St. Louis
National Association
721 Locust Street
St. Louis, Missouri 63101
Credit Agreement dated effective as of June 4,
1993, by and among Edison Brothers Stores, Inc.,
the Banks listed therein and Mercantile Bank of
St. Louis National Association, as Agent
Gentlemen:
I am Executive Vice President, General Counsel and
Secretary of Edison Brothers Stores, Inc., a Delaware corporation
(the "Company") and have acted as counsel to the Company in
connection with its execution and delivery of the Credit
Agreement referred to above (the "Agreement"). This opinion is
given pursuant to Section 3.01(g) of the Agreement. All
capitalized terms used and not otherwise defined herein shall
have the respective meanings ascribed to them in the Agreement.
In rendering this opinion, I have examined originals or
copies (certified or otherwise identified to my satisfaction) of
the Certificate of Incorporation and By-Laws of the Company, the
Agreement, the Line of Credit Notes, the Revolving Credit Notes,
records of proceedings of the Board of Directors and of the
Executive Committee of the Board of Directors of the Company and
such other documents, corporate records and certificates of
public officials as I have considered appropriate. I have
assumed the genuineness of all signatures on all documents
examined by me, the authenticity of all such documents delivered
to me as originals and the conformity to the originals of all
such documents delivered to me as copies.
In rendering the opinion expressed in the first
sentence of paragraph number 1 below, as to any of the
Subsidiaries of the Company listed on Exhibit A to this opinion
(the "Significant Subsidiaries") which are incorporated in a
State other than Missouri or Delaware, I have, with your
concurrence, relied without investigation solely on the
certificates rendered by the Secretaries of State of such States.
Based on the foregoing, I am of the opinion that:
1. The Company and each of its Significant
Subsidiaries is (a) a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its incorporation and (b) duly qualified to do business in all
jurisdictions in which the nature of the business conducted by it
makes such qualification necessary and where failure so to
qualify could reasonably be expected to have a material adverse
effect on the business, operations, Properties or condition,
financial or otherwise, of the Company and its Subsidiaries
considered as a whole.
2. The Company has the corporate power and authority
to enter into and perform the Agreement and to execute and
deliver the Line of Credit Notes and the Revolving Credit Notes
to you. The execution, delivery and performance of the
Agreement, including the execution and delivery of the Line of
Credit Notes and the Revolving Credit Notes, have been duly
authorized by all requisite corporate action on the part of the
Company, and the Agreement, the Line of Credit Notes and the
Revolving Credit Notes have been duly executed and delivered by
the Company.
3. The Agreement, Line of Credit Notes and the
Revolving Credit Notes are legal, valid and binding obligations
of the Company, enforceable against the Company in accordance
with their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency or other similar laws affecting
the enforcement of creditors' rights generally and by general
principles of equity.
4. The execution and delivery of the Agreement, the
Line of Credit Notes and the Revolving Credit Notes, and the
performance by the Company of their respective terms, do not
conflict with or result in a violation of or default under the
Certificate of Incorporation or By-Laws of the Company, any of
the Note Agreements or, to the best knowledge of the undersigned,
any other agreement, instrument, order, writ, judgment or decree
to which the Company is a party or is subject.
6. To the best knowledge of the undersigned, there
are no legal or arbitral proceedings by or before any
governmental or regulatory authority or agency, now pending or
threatened against the Company or any of its Subsidiaries, which
could reasonably be expected to have a material adverse effect on
the business, operations, Properties or condition, financial or
otherwise, of the Company and its Subsidiaries considered as a
whole. To the best knowledge of the undersigned, neither the
Company nor any of its Subsidiaries is in default under or in
violation of any order, writ or decree of any governmental or
regulatory authority, which default or violation could reasonably
be expected to have a material adverse effect on the business,
operations, Properties or condition, financial or otherwise, of
the Company and its Subsidiaries considered as a whole.
7. No approval, authorization or other action by, or
prior filing with, any governmental or regulatory authority is
required by current law in connection with the execution and
delivery by the Company of the Agreement, the Line of Credit
Notes or the Revolving Credit Notes.
This opinion is furnished solely for your benefit and
may not be distributed to or relied upon by any other person.
Very truly yours,
Alan A. Sachs
Executive Vice President, General
Counsel and Secretary<PAGE>
Exhibit D
C E R T I F I C A T E
This Certificate is issued pursuant to Section
5.01(a)(iii) of that certain Credit Agreement dated effective as
of June 4, 1993, by and among Edison Brothers Stores, Inc.,
Mercantile Bank of St. Louis National Association, as Agent, and
the Banks listed therein (as the same may from time to time be
amended, modified, extended or renewed, the "Credit Agreement").
All capitalized terms used and not otherwise defined herein shall
have the respective meanings ascribed to them in the Credit
Agreement.
Pursuant to Section 5.01(a)(iii) of the Credit
Agreement, the Company hereby certifies, represents and warrants
to the Agent and the Banks as follows:
(i) As of the date hereof, no Default or Event of
Default has occurred under the Credit Agreement and is
continuing;
(ii) All of the representations and warranties of the
Company contained in the Agreement are true and correct in all
material respects on and as of the date hereof as if made on the
date hereof;
(iii) As of , 19 , the calculations
contained in Schedule 1 attached hereto are true, accurate and
complete; and
(iv) [Description of New Subsidiaries].
Executed this day of , 19 .
EDISON BROTHERS STORES, INC.
By:/s/
Title:
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is
made and entered into this 24th day of January, 1994, by and
among EDISON BROTHERS STORES, INC., a Delaware corporation (the
"Company"), the banks listed on the signature pages hereof
(collectively, the "Banks") and MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION, a national banking association, as agent
for the Banks (in such capacity, the "Agent").
W I T N E S S E T H
WHEREAS, the Company, the Banks and the Agent have
heretofore entered into that certain Credit Agreement dated
effective as of June 4, 1993 (the "Credit Agreement"; all
capitalized terms used and not otherwise defined herein shall
have the respective meanings ascribed to them in the Credit
Agreement); and
WHEREAS, the Company desires to amend the Credit Agreement
in the manner hereinafter set forth and the Banks and the Agent
are willing to agree thereto on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, the
Banks and the Agent hereby agree as follows:
1. Notwithstanding any provision contained in Section
2.06(a) of the Credit Agreement to the contrary, during the
period commencing January 24th, 1994, and ending on the earlier
of (i) the last day of the Line of Credit Period of the
applicable Bank(s) and (ii) February 3, 1996, the nonrefundable
commitment fee payable by the Company under Section 2.06(a) of
the Credit Agreement shall be computed on the entire Line of
Credit Commitment of each Bank as opposed to the unused portion
of the Line of Credit Commitment of each Bank.
2. Notwithstanding any provision contained in Section
2.06(b) of the Credit Agreement to the contrary, during the
period commencing January 24th, 1994, and ending on the earlier
of (i) the last day of the Revolving Credit Period of the
applicable Bank(s) and (ii) February 3, 1996, the nonrefundable
commitment fee payable by the Company under Section 2.06(b) of
the Credit Agreement shall be computed on the entire Revolving
Credit Commitment of each Bank as opposed to the unused portion
of the Revolving Credit Commitment of each Bank.
3. Section 5.01(d) of the Credit Agreement is hereby
deleted in its entirety and the following substituted in lieu
thereof:
"(d) Fixed Charges Coverage Ratio. The Company will keep
and maintain the ratio of Net Income Available for Fixed
Charges to Fixed Charges for:
(i) each period of four (4) consecutive fiscal
quarters up to and including the quarter ending
October 30, 1993, at not less than 1.25 to 1.00;
(ii) the fiscal quarter ending January 29, 1994, at
not less than 1.25 to 1.00;
(iii) each of the first three (3) quarters during the
fiscal years of 1994 and 1995, at not less than 1.00
to 1.00, except that:
(A) if Consolidated Net Income
during any one of the first three quarters of
fiscal years 1994 and 1995 is a net loss, the
Company will keep and maintain a ratio of Net
Income Available for Fixed Charges to Fixed Charges
for the period of four (4) consecutive fiscal
quarters ending with the quarter in which the loss
occurs at not less than 1.10 to 1.00, if the loss
occurs during any of the first three fiscal
quarters of 1994, or at not less than 1.175 to
1.00, if the loss occurs during any of the first
three fiscal quarters of 1995; provided, however,
that the exception set forth in this clause (A)
shall not be applicable if Consolidated Net Income
for each of any two consecutive quarters during the
first three quarters of fiscal years 1994 or 1995
is a net loss; and
(B) if Consolidated Net Income
for each of any two consecutive quarters during the
first three quarters of fiscal years 1994 or 1995
is a net loss and the net loss reported for the
second such consecutive quarter is smaller than the
net loss reported for the first such quarter, the
Company will keep and maintain a ratio of Net
Income Available for Fixed Charges to Fixed Charges
for the period of four (4) consecutive fiscal
quarters ending with the second such consecutive
quarter at not less than 1.10 to 1.00, if the
consecutive quarterly losses occur during the first
three fiscal quarters of 1994, or at not less than
1.175 to 1.00, if the consecutive quarterly losses
occur during the first three fiscal quarters of
1995;
(iv) the fourth quarter of fiscal years 1994 and
1995, at not less than 1.25 to 1.00; and
(v) each period of four (4) consecutive fiscal
quarters beginning with the period ending with the
first quarter of fiscal year 1996, and thereafter, at
not less than 1.25 to 1.00.
If consolidated Net Income for each of any two
consecutive quarters during the first three quarters of
fiscal years 1994 or 1995 is a net loss and the loss
reported for the second such consecutive quarter is
greater than the loss reported for the first such quarter,
such event shall constitute an Event of Default under this
Agreement."
4. This Amendment shall not be effective unless and until
the Agent shall have received:
(a) evidence satisfactory to the Agent that the
minimum fixed charge coverage covenant contained in
Section 5.8 of each of the "Note Agreements" (as defined
in Section 6.01(n) of the Credit Agreement) has been
amended to read the same in all material respects as
Section 5.01(d) of the Credit Agreement as amended by this
Amendment (with the exception of the proviso added at the
end of clause (A) of paragraph (iii) of Section 5.01(d) of
the Credit Agreement as amended by this Amendment; and
(b) payment by the Company of a nonrefundable
amendment fee for the ratable benefit of the Banks in the
amount of Sixty-Two Thousand Five Hundred Dollars
($62,500.00).
5. The Company hereby agrees to reimburse the Agent upon
demand for all out-of-pocket costs and expenses, including,
without limitation, reasonable attorneys' fees and expenses,
incurred by the Agent in the preparation, negotiation and
execution of this Amendment. All of the obligations of the
Company under this Paragraph 5 shall survive termination of the
Credit Agreement.
6. All references in the Credit Agreement to this
"Agreement" and any other references of similar import shall
henceforth mean the Credit Agreement as amended by this
Amendment.
7. Except to the extent specifically amended by this
Amendment, all of the terms, provisions, conditions, covenants,
representations and warranties contained in the Credit Agreement
shall be and remain in full force and effect and the same are
hereby ratified and confirmed.
8. This Amendment shall be binding upon and inure to the
benefit of the Company, the Banks, the Agent and their respective
successors and assigns, except that Company may not assign,
transfer or delegate any of its rights or obligations hereunder.
9. The Company hereby represents and warrants to the
Banks and the Agent that:
(a) the execution, delivery and performance by the
Company of this Amendment are within the corporate powers of the
Company, have been duly authorized by all necessary corporate
action and require no action by or in respect of, or filing with,
any governmental or regulatory body, agency or official or any
other third party. The execution, delivery and performance by
the Company of this Amendment do not conflict with, or result in
a breach of the terms, conditions or provisions of, or constitute
a default under or result in any violation of, the terms of the
Certificate of Incorporation or By-Laws of the Company, any
applicable law, rule, regulation, order, writ, judgment or decree
of any court or governmental or regulatory agency or
instrumentality or any agreement, document or instrument to which
the Company is a party or by which it is bound or to which it is
subject;
(b) this Amendment has been duly executed and
delivered by the Company and constitutes the legal, valid and
binding obligation of the Company enforceable in accordance with
its terms; and
(c) as of the date hereof, all of the
representations, warranties and covenants of the Company set
forth in the Credit Agreement are true and correct and no Default
or Event of Default under or within the meaning of the Credit
Agreement has occurred and is continuing.
10. In the event of any inconsistency or conflict
between this Amendment and the Credit Agreement, the terms,
provisions and conditions of this Amendment shall govern and
control.
11. This Amendment shall be governed by and construed
in accordance with the substantive laws of the State of Missouri
(without reference to conflict of law principles).
12. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY,
EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT,
INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT, ARE NOT
ENFORCEABLE. TO PROTECT THE COMPANY, THE BANKS AND THE AGENT
FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS REACHED
BY THE COMPANY, THE BANKS AND THE AGENT COVERING SUCH MATTERS ARE
CONTAINED IN THE CREDIT AGREEMENT AS AMENDED BY THIS AMENDMENT,
WHICH CREDIT AGREEMENT AS AMENDED BY THIS AMENDMENT IS A COMPLETE
AND EXCLUSIVE STATEMENT OF THE AGREEMENTS BETWEEN THE COMPANY,
THE BANKS AND THE AGENT, EXCEPT AS THE COMPANY, THE BANKS AND THE
AGENT MAY LATER AGREE IN WRITING TO MODIFY THEM.
13. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same
instrument. Subject to the provisions of Paragraph 4 of this
Amendment, this Amendment shall become effective on the date when
the Agent shall have received counterparts hereof signed by the
Company and each of the Banks, or telexes confirming signatures
to such counterparts.
IN WITNESS WHEREOF, the Company, the Banks and the Agent
have executed this First Amendment to Credit Agreement this 24th
day of January, 1994.
EDISON BROTHERS STORES, INC.
By /s/ Ken Vaught
Title: Assistant Vice President and Cash
Management Officer
MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION
By /s/ Sally Dion
Title: Vice President
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
By /s/ C. Susan Taylor
Title: Vice President
CITIBANK, N.A.
By /s/ Theodore J. Beck
Title: Vice President
NBD BANK, N.A.
By /s/ Thomas G. Susser
Title: Second Vice President
THE BANK OF NOVA SCOTIA
By /s/ F.C.H. Ashby
Title: Senior Manager
Loan Operations
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Sharon A. Huebner
Title: Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/
Title:
MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION, as Agent
By /S/ Sally Dion
Title: Vice President
EXHIBIT 10.10
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this
"Amendment") is made and entered into this 17th day of February,
1994, by and among EDISON BROTHERS STORES, INC., a Delaware
corporation (the "Company"), the banks listed on the signature
pages hereof (collectively, the "Banks") and MERCANTILE BANK OF
ST. LOUIS NATIONAL ASSOCIATION, a national banking association,
as agent for the Banks (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, the Company, the Banks and the Agent have
heretofore entered into that certain Credit Agreement dated
effective as of June 4, 1993, as amended by that certain First
Amendment to Credit Agreement dated January 24th, 1994 (as so
amended, the "Credit Agreement"; all capitalized terms used and
not otherwise defined herein shall have the respective meanings
ascribed to them in the Credit Agreement); and
WHEREAS, the Company desires to amend the Credit Agreement
in the manner hereinafter set forth and the Banks and the Agent
are willing to agree thereto on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, the
Banks and the Agent hereby agree as follows:
1. Section 5.01(d) of the Credit Agreement is hereby
deleted in its entirety and the following substituted in lieu
thereof:
"(d) Fixed Charges Coverage Ratio. The Company will
keep and maintain the ratio of Net Income Available for
Fixed Charges to Fixed Charges for:
(i) each period of four (4) consecutive fiscal
quarters up to and including the quarter ending
October 30, 1993, at not less than 1.25 to 1.00;
(ii) the fiscal quarter ending January 29, 1994,
at not less than 1.25 to 1.00;
(iii) each period of four (4) consecutive fiscal
quarters beginning with the period that ends with the
first fiscal quarter of fiscal year 1994 to and
including the period that ends with the fourth fiscal
quarter of fiscal year 1994, at not less than 1.10 to
1.00;
(iv) each period of four (4) consecutive fiscal
quarters beginning with the period that ends with the
first fiscal quarter of fiscal year 1995 to and
including the period that ends with the fourth fiscal
quarter of fiscal year 1995, at not less than 1.175 to
1.00;
(v) the fourth fiscal quarters of fiscal years 1994
and 1995, at not less than 1.25 to 1.00; and
(vi) each period of four (4) consecutive fiscal
quarters beginning with the period that ends with the
first fiscal quarter of fiscal year 1996, and
thereafter, at not less than 1.25 to 1.00."
2. The word "or" is hereby added immediately following
clause (n) of Section 6.01 of the Credit Agreement and the
following new clause (o) is hereby added to Section 6.01 of the
Credit Agreement as an additional Event of Default under the
Credit Agreement:
"(o) If Consolidated Net Income for each of any two
consecutive fiscal quarters during fiscal years 1994 or
1995 is a net loss and the loss reported for the second
such consecutive quarter is greater than the loss reported
for the first such fiscal quarter;"
3. This Amendment shall not be effective unless and until
the Agent shall have received evidence satisfactory to the Agent
that the minimum fixed charge coverage covenant contained in
Section 5.8 of each of the "Note Agreements" (as defined in
Section 6.01(n) of the Credit Agreement) has been amended to read
the same in all material respects as Section 5.01(d) of the
Credit Agreement as amended by this Amendment.
4. The Company hereby agrees to reimburse the Agent upon
demand for all out-of-pocket costs and expenses, including,
without limitation, reasonable attorneys' fees and expenses,
incurred by the Agent in the preparation, negotiation and
execution of this Amendment. All of the obligations of the
Company under this Paragraph 4 shall survive termination of the
Credit Agreement.
5. All references in the Credit Agreement to this
"Agreement" and any, other references of similar import shall
henceforth mean the Credit Agreement as amended by this
Amendment.
6. Except to the extent specifically amended by this
Amendment, all of the terms, provisions, conditions, covenants,
representations and warranties contained in the Credit Agreement
shall be and remain in full force and effect and the same are
hereby ratified and confirmed.
7. This Amendment shall be binding upon and inure to the
benefit of the Company, the Banks, the Agent and their respective
successors and assigns, except that Company may not assign,
transfer or delegate any of its rights or obligations hereunder.
8. The Company hereby represents and warrants to the
Banks and the Agent that:
(a) the execution, delivery and performance by the
Company of this Amendment are within the corporate powers of the
Company, have been duly authorized by all necessary corporate
action and require no action by or in respect of, or filing with,
any governmental or regulatory body, agency or official or any
other third party. The execution, delivery and performance by
the Company of this Amendment do not conflict with, or result in
a breach of the terms, conditions or provisions of, or constitute
a default under or result in any violation of, the terms of the
Certificate of Incorporation or By-Laws of the Company, any
applicable law, rule, regulation, order, writ, judgment or decree
of any court or governmental or regulatory agency or
instrumentality, or any agreement, document or instrument to
which the Company is a party or by which it is bound or to which
it is subject;
(b) this Amendment has been duly executed and
delivered by the Company and constitutes the legal, valid and
binding obligation of the Company enforceable in accordance with
its terms; and
(c) as of the date hereof, all of the
representations, warranties and covenants of the Company set
forth in the Credit Agreement are true and correct and no Default
or Event of Default under or within the meaning of the Credit
Agreement has occurred and is continuing.
9. In the event of any inconsistency or conflict between
this Amendment and the Credit Agreement, the terms, provisions
and conditions of this Amendment shall govern and control.
10. This Amendment shall be governed by and construed
in accordance with the substantive laws of the State of Missouri
(without reference to conflict of law principles).
11. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY,
EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBIT
INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT, ARE NOT
ENFORCEABLE. TO PROTECT THE COMPANY, THE BANKS AND THE AGENT
FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS REACHED
BY THE COMPANY, THE BANKS AND THE AGENT COVERING SUCH MATTERS ARE
CONTAINED IN THE CREDIT AGREEMENT AS AMENDED BY THIS AMENDMENT,
WHICH CREDIT AGREEMENT AS AMENDED BY THIS AMENDMENT IS A COMPLETE
AND EXCLUSIVE STATEMENT OF THE AGREEMENTS BETWEEN THE COMPANY,
THE BANKS AND THE AGENT, EXCEPT AS THE COMPANY, THE BANKS AND THE
AGENT MAY LATER AGREE IN WRITING TO MODIFY THEM.
12. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same
instrument. Subject to the provisions of Paragraph 3 of this
Amendment, this Amendment shall become effective on the date when
the Agent shall have received counterparts hereof signed by the
Company and each of the Banks.
IN WITNESS WHEREOF, the Company, the Banks and the Agent
have executed this Second Amendment to Credit Agreement this 17th
day of February, 1994.
EDISON BROTHERS STORES, INC.
By /s/Lee G. Weeks
Title:
MERCANTILE BANK OF ST. LOUIS NATIONAL
ASSOCIATION
By /S/ Sally Dion
Title: Vice President
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
By /S/ C. Susan Taylor
Title: Vice President
CITIBANK, N.A.
By /S/ Theodore J. Beck
Title: Vice President
NBD BANK, N.A.
By /S/ J. J. Csernits
Title: First Vice President
THE BANK OF NOVA SCOTIA
By /S/ A. S. Norsworthy
Title: Assistant Agent
THE FIRST NATIONAL BANK OF CHICAGO
By /S/ Sharon A. Huebner
Title: Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /S/ Lymen Sanger
Title: Vice President
MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION, as Agent
By /S/ Sally Dion
Title: Vice President
EXHIBIT 10.11
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this
"Amendment") is made and entered into effective as of the 29th
day of March, 1995, by and among EDISON BROTHERS STORES, INC., a
Delaware corporation (the "Company"), the banks listed on the
signature pages hereof (collectively, the "Banks") and MERCANTILE
BANK OF ST. LOUIS NATIONAL ASSOCIATION, a national banking
association, as agent for the Banks (in such capacity, the
"Agent").
W I T N E S S E T H:
WHEREAS, the Company, the Banks and the Agent have
heretofore entered into that certain Credit Agreement dated
effective as of June 4, 1993, as amended by that certain First
Amendment to Credit Agreement dated January 24, 1994, and that
certain Second Amendment to Credit Agreement dated February 17,
1994 (as so amended, the "Credit Agreement"; all capitalized
terms used and not otherwise defined herein shall have the
respective meanings ascribed to them in the Credit Agreement);
and
WHEREAS, the Company desires to amend the Credit
Agreement in the manner hereinafter set forth and the Banks and
the Agent are willing to agree thereto on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and
for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, the
Banks and the Agent hereby agree as follows:
1. The definition of "IBOR Margin" set forth in
Section 1.01 of the Credit Agreement is hereby deleted in its
entirety and the following substituted in lieu thereof:
""IBOR Margin" shall mean: (a) with respect to
each Line of Credit Loan,
(i) during the period commencing June 4, 1993,
and ending March 28, 1995,
(A) .375% per annum during such time as the
Company's commercial paper is rated P-1 by Moody's
and A-1 by S&P,
(B) .50% per annum during such time as the
Company's commercial paper is rated at least P-2
by Moody's and at least A-2 by S&P,
(C) .6875% per annum during such time as the
Company's commercial paper is rated at least P-3
by Moody's and at least A-3 by S&P, and
(D) .9375% per annum during such time as the
Company's commercial paper is (1) rated NP by
Moody's or B, C or D by S&P or (2) not rated by
either or both of Moody's and/or S&P,
and if clauses (A) and (B) are both applicable or if
clauses (A), (B) and (C) are all applicable, the IBOR
Margin set forth in clause (A) shall be applicable, and
if both clauses (B) and (C) are applicable, the IBOR
Margin set forth in clause (B) shall be applicable; and
(ii) .625% per annum during the period commencing
March 29, 1995, and ending on the earlier of (1) the
first date when the Company has issued at least
$100,000,000.00 in aggregate principal amount of Long-
Term Indebtedness on or after March 29, 1995, or (2)
May 31, 1995; provided, however, that if (A) the
Company issues Long-Term Indebtedness on or after March
29, 1995, and before June 1, 1995, and (B) such Long-
Term Indebtedness is rated less than Baa-3 by Moody's
or less than BBB- by S&P, then such IBOR Margin shall
be adjusted retroactively to March 29, 1995, to the
IBOR Margin which would be applicable under clause
(iii) below given the applicable Long-Term Indebtedness
ratings, and
(iii) from and after the earlier of (1) the date
one day after the first date when the Company has
issued at least $100,000,000.00 in aggregate principal
amount of Long-Term Indebtedness on or after March 29,
1995, or (2) June 1, 1995,
(A) .50% per annum during such time as the
Company's Long-Term Indebtedness (if any) is rated
at least Baa-2 by Moody's and at least BBB by S&P,
(B) .625% per annum during such time as the
Company's Long-Term Indebtedness (if any) is rated
at least Baa-3 by Moody's and at least BBB- by
S&P,
(C) .825% per annum during such time as the
Company's Long-Term Indebtedness (if any) is rated
at least Ba-1 by Moody's and at least BB+ by S&P,
and
(D) 1.125% per annum during such time as (1)
the Company's Long-Term Indebtedness (if any) is
(a) rated Ba-2 or lower by Moody's or BB or lower
by S&P or (b) not rated by either or both of
Moody's and/or S&P or (2) the Company has no Long-
Term Indebtedness outstanding,
and if clauses (A) and (B) are both applicable or if
clauses (A), (B) and (C) are all applicable, the IBOR
Margin set forth in clause (A) shall be applicable, and
if both clauses (B) and (C) are applicable, the IBOR
Margin set forth in clause (B) shall be applicable; and
(b) with respect to each Revolving Credit Loan,
(i) during the period commencing June 4, 1993,
and ending March 28, 1995,
(A) .375% per annum during such time as the
Company's commercial paper is rated P-1 by Moody's
and A-1 by S&P,
(B) .50% per annum during such time as the
Company's commercial paper is rated at least P-2
by Moody's and at least A-2 by S&P,
(C) .6875% per annum during such time as the
Company's commercial paper is rated at least P-3
by Moody's and at least A-3 by S&P, and
(D) .9375% per annum during such time as the
Company's commercial paper is (1) rated NP by
Moody's or B, C or D by S&P or (2) not rated by
either or both of Moody's and/or S&P,
and if clauses (A) and (B) are both applicable or if
clauses (A), (B) and (C) are all applicable, the IBOR
Margin set forth in clause (A) shall be applicable, and
if both clauses (B) and (C) are applicable, the IBOR
Margin set forth in clause (B) shall be applicable; and
(ii) .625% per annum during the period commencing
March 29, 1995, and ending on the earlier of (1) the
first date when the Company has issued at least
$100,000,000.00 in aggregate principal amount of Long-
Term Indebtedness on or after March 29, 1995, or (2)
May 31, 1995; provided, however, that if (A) the
Company issues Long-Term Indebtedness on or after March
29, 1995, and before June 1, 1995, and (B) such Long-
Term Indebtedness is rated less than Baa-3 by Moody's
or less than BBB- by S&P, then such IBOR Margin shall
be adjusted retroactively to March 29, 1995, to the
IBOR Margin which would be applicable under clause
(iii) below given the applicable Long-Term Indebtedness
ratings, and
(iii) from and after the earlier of (1) the date
one day after the first date when the Company has
issued at least $100,000,000.00 in aggregate principal
amount of Long-Term Indebtedness on or after March 29,
1995, or (2) June 1, 1995,
(A) .50% per annum during such time as the
Company's Long-Term Indebtedness (if any) is rated
at least Baa-2 by Moody's and at least BBB by S&P,
(B) .625% per annum during such time as the
Company's Long-Term Indebtedness (if any) is rated
at least Baa-3 by Moody's and at least BBB- by
S&P,
(C) .825% per annum during such time as the
Company's Long-Term Indebtedness (if any) is rated
at least Ba-1 by Moody's and at least BB+ by S&P,
and
(D) 1.125% per annum during such time as (1)
the Company's Long-Term Indebtedness (if any) is
(a) rated Ba-2 or lower by Moody's or BB or lower
by S&P or (b) not rated by either or both of
Moody's and/or S&P or (2) the Company has no Long-
Term Indebtedness outstanding,
and if clauses (A) and (B) are both applicable or if
clauses (A), (B) and (C) are all applicable, the IBOR
Margin set forth in clause (A) shall be applicable, and
if both clauses (B) and (C) are applicable, the IBOR
Margin set forth in clause (B) shall be applicable.
The IBOR Rate shall be adjusted automatically on
and as of the effective date of any change in the IBOR
Margin."
2. The following new definition of "Long-Term
Indebtedness" is hereby added to Section 1.01 of the Credit
Agreement:
""Long-Term Indebtedness" shall mean senior
unsecured long-term debt of the Company which has a
maturity date of three (3) years or more from the date
of original issuance thereof."
3. Section 2.06 of the Credit Agreement is hereby
deleted in its entirety and the following substituted in lieu
thereof:
"SECTION 2.06. Fees. (a) From the Effective Date
to but excluding March 29, 1995, the Company shall pay
to the Agent for the account of each Bank a
nonrefundable commitment fee on (i) from the Effective
Date to but excluding January 23, 1994, the unused
portion of the Line of Credit Commitment of such Bank
and (ii) from January 24, 1994, to but excluding March
29, 1995, the entire Line of Credit Commitment of such
Bank, at the rate of:
(i) .025% per annum during such time as the
Company's commercial paper is rated P-1 by Moody's
and A-1 by S&P,
(ii) .0625% per annum during such time as the
Company's commercial paper is rated at least P-2
by Moody's and at least A-2 by S&P,
(iii) .0625% per annum during such time as
the Company's commercial paper is rated at least
P-3 by Moody's and at least A-3 by S&P, and
(iv) .0625% per annum during such time as the
Company's commercial paper is (A) rated NP by
Moody's or B, C or D by S&P or (B) not rated by
either or both of Moody's and/or S&P,
and if clauses (i) and (ii) are both applicable or if
clauses (i), (ii) and (iii) are all applicable, the
rate set forth in clause (i) shall be applicable, and
if both clauses (ii) and (iii) are applicable, the rate
set forth in clause (ii) shall be applicable. Such
commitment fee shall be payable quarterly in arrears on
each January 1, April 1, July 1 and October 1 during
the Line of Credit Period of the applicable Bank(s) and
on the last day of the Line of Credit Period of the
applicable Bank(s), and shall be calculated on an
actual day, 360-day year basis.
(b) From the Effective Date to but excluding March
29, 1995, the Company shall pay to the Agent for the
account of each Bank a nonrefundable commitment fee on
(i) from the Effective Date to but excluding January
23, 1994, the unused portion of the Revolving Credit
Commitment of such Bank and (ii) from January 24, 1994,
to but excluding March 29, 1995, the entire Revolving
Credit Commitment of such Bank, at the rate of:
(i) .0625% per annum during such time as the
Company's commercial paper is rated P-1 by Moody's
and A-1 by S&P,
(ii) .125% per annum during such time as the
Company's commercial paper is rated at least P-2
by Moody's and at least A-2 by S&P,
(iii) .125% per annum during such time as the
Company's commercial paper is rated at least P-3
by Moody's and at least A-3 by S&P, and
(iv) .125% per annum during such time as the
Company's commercial paper is (A) rated NP by
Moody's or B, C or D by S&P or (B) not rated by
either or both of Moody's and/or S&P,
and if clauses (i) and (ii) are both applicable or if
clauses (i), (ii) and (iii) are all applicable, the
rate set forth in clause (i) shall be applicable, and
if both clauses (ii) and (iii) are applicable, the rate
set forth in clause (ii) shall be applicable. Such
commitment fee shall be payable quarterly in arrears on
each January 1, April 1, July 1 and October 1 during
the Revolving Credit Period of the applicable Bank(s)
and on the last day of the Revolving Credit Period of
the applicable Bank(s), and shall be calculated on an
actual day, 360-day year basis.
(c) From the Effective Date to but excluding March
29, 1995, the Company shall pay to the Agent for the
account of each Bank a nonrefundable facility fee on
the entire Line of Credit Commitment of such Bank at
the rate of:
(i) .125% per annum during such time as the
Company's commercial paper is rated P-1 by Moody's
and A-1 by S&P,
(ii) .125% per annum during such time as the
Company's commercial paper is rated at least P-2
by Moody's and at least A-2 by S&P,
(iii) .1875% per annum during such time as
the Company's commercial paper is rated at least
P-3 by Moody's and at least A-3 by S&P, and
(iv) .1875% per annum during such time as the
Company's commercial paper is (A) rated NP by
Moody's or B, C or D by S&P or (B) not rated by
either or both of Moody's and/or S&P,
and if clauses (i) and (ii) are both applicable or if
clauses (i), (ii) and (iii) are all applicable, the
rate set forth in clause (i) shall be applicable, and
if both clauses (ii) and (iii) are applicable, the rate
set forth in clause (ii) shall be applicable. Such
facility fee shall be payable quarterly in arrears on
each January 1, April 1, July 1 and October 1 during
the Line of Credit Period of the applicable Bank(s) and
on the last day of the Line of Credit Period of the
applicable Bank(s), and shall be calculated on an
actual day, 360-day year basis.
(d) From the Effective Date to but excluding March
29, 1995, the Company shall pay to the Agent for the
account of each Bank a nonrefundable facility fee on
the entire Revolving Credit Commitment of such Bank at
the rate of:
(i) .125% per annum during such time as the
Company's commercial paper is rated P-1 by Moody's
and A-1 by S&P,
(ii) .125% per annum during such time as the
Company's commercial paper is rated at least P-2
by Moody's and at least A-2 by S&P,
(iii) .1875% per annum during such time as
the Company's commercial paper is rated at least
P-3 by Moody's and at least A-3 by S&P, and
(iv) .1875% per annum during such time as the
Company's commercial paper is (A) rated NP by
Moody's or B, C or D by S&P or (B) not rated by
either or both of Moody's and/or S&P,
and if clauses (i) and (ii) are both applicable or if
clauses (i), (ii) and (iii) are all applicable, the
rate set forth in clause (i) shall be applicable, and
if both clauses (ii) and (iii) are applicable, the rate
set forth in clause (ii) shall be applicable. Such
facility fee shall be payable quarterly in arrears on
each January 1, April 1, July 1 and October 1 during
the Revolving Credit Period of the applicable Bank(s)
and on the last day of the Revolving Credit Period of
the applicable Bank(s), and shall be calculated on an
actual day, 360-day year basis.
(e) From March 29, 1995, to and including the
earlier of (1) the first date when the Company has
issued at least $100,000,000.00 in aggregate principal
amount of Long-Term Indebtedness on or after March 29,
1995, or (2) May 31, 1995, the Company shall pay to the
Agent for the account of each Bank a nonrefundable
facility fee on the entire Line of Credit Commitment of
such Bank at the rate of .20% per annum; provided,
however, that if (A) the Company issues Long-Term
Indebtedness on or after March 29, 1995, and before
June 1, 1995, and (B) such Long-Term Indebtedness is
rated less than Baa-3 by Moody's or less than BBB- by
S&P, then the amount of such facility fee shall be
adjusted retroactively to March 29, 1995, to the
facility fee which would be applicable under clause (g)
below given the applicable Long-Term Indebtedness
ratings. Such facility fee shall be payable in arrears
on July 1, 1995, and shall be calculated on an actual
day, 360-day year basis.
(f) From March 29, 1995, to and including the
earlier of (1) the first date when the Company has
issued at least $100,000,000.00 in aggregate principal
amount of Long-Term Indebtedness on or after March 29,
1995, or (2) May 31, 1995, the Company shall pay to the
Agent for the account of each Bank a nonrefundable
facility fee on the entire Revolving Credit Commitment
of such Bank at the rate of .20% per annum; provided,
however, that if (A) the Company issues Long-Term
Indebtedness on or after March 29, 1995, and before
June 1, 1995, and (B) such Long-Term Indebtedness is
rated less than Baa-3 by Moody's or less than BBB- by
S&P, then the amount of such facility fee shall be
adjusted retroactively to March 29, 1995, to the
facility fee which would be applicable under clause (h)
below given the applicable Long-Term Indebtedness
ratings. Such facility fee shall be payable in arrears
on July 1, 1995, and shall be calculated on an actual
day, 360-day year basis.
(g) From the earlier of (1) the date one day
after the first date when the Company has issued at
least $100,000,000.00 in aggregate principal amount of
Long-Term Indebtedness on or after March 29, 1995, or
(2) June 1, 1995, to but excluding the last day of the
Line of Credit Period of the applicable Bank(s), the
Company shall pay to the Agent for the account of each
Bank a nonrefundable facility fee on the entire Line of
Credit Commitment of such Bank at the rate of:
(i) .15% per annum during such time as the
Company's Long-Term Indebtedness (if any) is rated
at least Baa-2 by Moody's and at least BBB by S&P,
(ii) .20% per annum during such time as the
Company's Long-Term Indebtedness (if any) is rated
at least Baa-3 by Moody's and at least BBB- by
S&P,
(iii) .325% per annum during such time as the
Company's Long-Term Indebtedness (if any) is rated
at least Ba-1 by Moody's and at least BB+ by S&P,
and
(iv) .375% per annum during such time as (A)
the Company's Long-Term Indebtedness (if any) is
(1) rated Ba-2 or lower by Moody's or BB or lower
by S&P or (2) not rated by either or both of
Moody's and/or S&P or (B) the Company has no Long-
Term Indebtedness outstanding,
and if clauses (i) and (ii) are both applicable or if
clauses (i), (ii) and (iii) are all applicable, the
rate set forth in clause (i) shall be applicable, and
if both clauses (ii) and (iii) are applicable, the rate
set forth in clause (ii) shall be applicable. Such
facility fee shall be payable quarterly in arrears on
each January 1, April 1, July 1 and October 1 during
the Line of Credit Period of the applicable Bank(s) and
on the last day of the Line of Credit Period of the
applicable Bank(s), and shall be calculated on an
actual day, 360-day year basis.
(h) From the earlier of (1) the date one day
after the first date when the Company has issued at
least $100,000,000.00 in aggregate principal amount of
Long-Term Indebtedness on or after March 29, 1995, or
(2) June 1, 1995, to but excluding the last day of the
Revolving Credit Period of the applicable Bank(s), the
Company shall pay to the Agent for the account of each
Bank a nonrefundable facility fee on the entire
Revolving Credit Commitment of such Bank at the rate
of:
(i) .15% per annum during such time as the
Company's Long-Term Indebtedness (if any) is rated
at least Baa-2 by Moody's and at least BBB by S&P,
(ii) .20% per annum during such time as the
Company's Long-Term Indebtedness (if any) is rated
at least Baa-3 by Moody's and at least BBB- by
S&P,
(iii) .325% per annum during such time as the
Company's Long-Term Indebtedness (if any) is rated
at least Ba-1 by Moody's and at least BB+ by S&P,
and
(iv) .375% per annum during such time as (A)
the Company's Long-Term Indebtedness (if any) is
(1) rated Ba-2 or lower by Moody's or BB or lower
by S&P or (2) not rated by either or both of
Moody's and/or S&P or (B) the Company has no Long-
Term Indebtedness outstanding,
and if clauses (i) and (ii) are both applicable or if
clauses (i), (ii) and (iii) are all applicable, the
rate set forth in clause (i) shall be applicable, and
if both clauses (ii) and (iii) are applicable, the rate
set forth in clause (ii) shall be applicable. Such
facility fee shall be payable quarterly in arrears on
each January 1, April 1, July 1 and October 1 during
the Revolving Credit Period of the applicable Bank(s)
and on the last day of the Revolving Credit Period of
the applicable Bank(s), and shall be calculated on an
actual day, 360-day year basis.
(i) For each day during the period commencing
March 29, 1995, and ending on the earlier of (1) the
first date when the Company has issued at least
$100,000,000.00 in aggregate principal amount of Long-
Term Indebtedness on or after March 29, 1995, or (2)
May 31, 1995, on which the unused portion of the Line
of Credit Commitment of a Bank is less than Fifty
Percent (50%) of the entire Line of Credit Commitment
of such Bank, the Company shall pay to the Agent for
the account of such Bank a nonrefundable utilization
fee on the entire Line of Credit Commitment of such
Bank at the rate of .20% per annum; provided, however,
that if (A) the Company issues Long-Term Indebtedness
on or after March 29, 1995, and before June 1, 1995,
and (B) such Long-Term Indebtedness is rated less than
Baa-3 by Moody's or less than BBB- by S&P, then the
amount of such utilization fee shall be adjusted
retroactively to March 29, 1995, to the utilization fee
which would be applicable under clause (k) below given
the applicable Long-Term Indebtedness ratings. Such
utilization fee shall be payable in arrears on July 1,
1995, and shall be calculated on an actual day, 360-day
year basis.
(j) For each day during the period commencing
March 29, 1995, and ending on the earlier of (1) the
first date when the Company has issued at least
$100,000,000.00 in aggregate principal amount of Long-
Term Indebtedness on or after March 29, 1995, or (2)
May 31, 1995, on which the unused portion of the
Revolving Credit Commitment of a Bank is less than
Fifty Percent (50%) of the entire Revolving Credit
Commitment of such Bank, the Company shall pay to the
Agent for the account of such Bank a nonrefundable
utilization fee on the entire Revolving Credit
Commitment of such Bank at the rate of .20% per annum;
provided, however, that if (A) the Company issues Long-
Term Indebtedness on or after March 29, 1995, and
before June 1, 1995, and (B) such Long-Term
Indebtedness is rated less than Baa-3 by Moody's or
less than BBB- by S&P, then the amount of such
utilization fee shall be adjusted retroactively to
March 29, 1995, to the utilization fee which would be
applicable under clause (l) below given the applicable
Long-Term Indebtedness ratings. Such utilization fee
shall be payable in arrears on July 1, 1995, and shall
be calculated on an actual day, 360-day year basis.
(k) For each day during the period commencing on
the earlier of (1) the date one day after the first
date when the Company has issued at least
$100,000,000.00 in aggregate principal amount of Long-
Term Indebtedness on or after March 29, 1995, or (2)
June 1, 1995, and ending on the last day of the Line of
Credit Period of the applicable Bank on which the
unused portion of the Line of Credit Commitment of a
Bank is less than Fifty Percent (50%) of the entire
Line of Credit Commitment of such Bank, the Company
shall pay to the Agent for the account of such Bank a
nonrefundable utilization fee on the entire Line of
Credit Commitment of such Bank at the rate of:
(i) .10% per annum during such time as the
Company's Long-Term Indebtedness (if any) is rated
at least Baa-2 by Moody's and at least BBB by S&P,
(ii) .20% per annum during such time as the
Company's Long-Term Indebtedness (if any) is rated
at least Baa-3 by Moody's and at least BBB- by
S&P,
(iii) .20% per annum during such time as the
Company's Long-Term Indebtedness (if any) is rated
at least Ba-1 by Moody's and at least BB+ by S&P,
and
(iv) .25% per annum during such time as (A)
the Company's Long-Term Indebtedness (if any) is
(1) rated Ba-2 or lower by Moody's or BB or lower
by S&P or (2) not rated by either or both of
Moody's and/or S&P or (B) the Company has no Long-
Term Indebtedness outstanding,
and if clauses (i) and (ii) are both applicable or if
clauses (i), (ii) and (iii) are all applicable, the
rate set forth in clause (i) shall be applicable, and
if both clauses (ii) and (iii) are applicable, the rate
set forth in clause (ii) shall be applicable. Such
utilization fee shall be payable quarterly in arrears
on each January 1, April 1, July 1 and October 1 during
the Line of Credit Period of the applicable Bank(s) and
on the last day of the Line of Credit Period of the
applicable Bank(s), and shall be calculated on an
actual day, 360-day year basis.
(l) For each day during the period commencing on
the earlier of (1) the date one day after the first
date when the Company has issued at least
$100,000,000.00 in aggregate principal amount of Long-
Term Indebtedness on or after March 29, 1995, or (2)
June 1, 1995, and ending on the last day of the
Revolving Credit Period of the applicable Bank on which
the unused portion of the Revolving Credit Commitment
of a Bank is less than Fifty Percent (50%) of the
entire Revolving Credit Commitment of such Bank, the
Company shall pay to the Agent for the account of such
Bank a nonrefundable utilization fee on the entire
Revolving Credit Commitment of such Bank at the rate
of:
(i) .10% per annum during such time as the
Company's Long-Term Indebtedness (if any) is rated
at least Baa-2 by Moody's and at least BBB by S&P,
(ii) .20% per annum during such time as the
Company's Long-Term Indebtedness (if any) is rated
at least Baa-3 by Moody's and at least BBB- by
S&P,
(iii) .20% per annum during such time as the
Company's Long-Term Indebtedness (if any) is rated
at least Ba-1 by Moody's and at least BB+ by S&P,
and
(iv) .25% per annum during such time as (A)
the Company's Long-Term Indebtedness (if any) is
(1) rated Ba-2 or lower by Moody's or BB or lower
by S&P or (2) not rated by either or both of
Moody's and/or S&P or (B) the Company has no Long-
Term Indebtedness outstanding,
and if clauses (i) and (ii) are both applicable or if
clauses (i), (ii) and (iii) are all applicable, the
rate set forth in clause (i) shall be applicable, and
if both clauses (ii) and (iii) are applicable, the rate
set forth in clause (ii) shall be applicable. Such
facility fee shall be payable quarterly in arrears on
each January 1, April 1, July 1 and October 1 during
the Revolving Credit Period of the applicable Bank(s)
and on the last day of the Revolving Credit Period of
the applicable Bank(s), and shall be calculated on an
actual day, 360-day year basis.
(m) The Company shall also pay to the Agent for
its own account a nonrefundable agent's fee in the
amounts set forth in a letter agreement dated June 4,
1993, by and between the Company and the Agent."
4. Section 5.01(d) of the Credit Agreement is hereby
deleted in its entirety and the following substituted in lieu
thereof:
"(d) Fixed Charges Coverage Ratio. The Company
will keep and maintain the ratio of Net Income
Available for Fixed Charges to Fixed Charges for:
(i) each period of four (4) consecutive
fiscal quarters up to and including the fiscal
quarter ending October 30, 1993, at not less than
1.25 to 1.00;
(ii) the fiscal quarter ending January 29,
1994, at not less than 1.25 to 1.00;
(iii) each period of four (4) consecutive
fiscal quarters beginning with the period that
ends with the first fiscal quarter of fiscal year
1994 to and including the period that ends with
the fourth fiscal quarter of fiscal year 1994, at
not less than 1.10 to 1.00;
(iv) the fourth fiscal quarter of fiscal year
1994, at not less than 1.25 to 1.00;
(v) each period of four (4) consecutive
fiscal quarters beginning with the period that
ends with the fiscal quarter ending April 29,
1995, to and including the period that ends with
the fiscal quarter ending October 28, 1995, at not
less than 1.05 to 1.00;
(vi) each period of four (4) consecutive
fiscal quarters beginning with the period that
ends with the fiscal quarter ending February 3,
1996, to and including the period that ends with
the fiscal quarter ending November 2, 1996, at not
less than 1.10 to 1.00;
(vii) the fourth fiscal quarter of each
fiscal year commencing with fiscal year 1995, at
not less than 1.25 to 1.00; and
(viii) each period of four (4) consecutive
fiscal quarters beginning with the period that
ends with the fiscal quarter ending February 1,
1997, and thereafter, at not less than 1.175 to
1.00."
5. Section 5.01(h) of the Credit Agreement is hereby
deleted in its entirety and the following substituted in lieu
thereof:
"(h) Certain Restrictions Relating to
Subsidiaries. (i) Except as permitted by Section
5.01(g), the Company will not cause or permit any
Restricted Subsidiary to merge or consolidate into or
with any Person (other than the Company or a Wholly-
Owned Subsidiary) if such other Person will be the
surviving or continuing corporation unless, (A)
immediately after giving effect to such merger or
consolidation, (1) the portion of Consolidated Net
Tangible Assets attributable to the Restricted
Subsidiary being merged or consolidated shall not
exceed 12.5% of the total Consolidated Net Tangible
Assets as of the end of the fiscal quarter of the
Company immediately preceding the date of such merger
or consolidation and (2) the portion of Consolidated
Net Sales attributable to the Restricted Subsidiary
being merged or consolidated shall not exceed 12.5% of
the total Consolidated Net Sales as of the end of the
fiscal year of the Company immediately preceding the
date of such merger or consolidation, (B) the ratio of
Net Income Available for Fixed Charges to Fixed Charges
for the period of four (4) consecutive fiscal quarters
ended immediately preceding the date of such merger or
consolidation and for the most recent fourth fiscal
quarter of the Company ended immediately preceding the
date of such merger or consolidation (each determined
on a pro forma basis and excluding any amounts
attributable to the Restricted Subsidiary being merged
or consolidated) shall not be less than the respective
minimum amounts required by Section 5.01(d),
(C) immediately after giving effect to such merger or
consolidation, no Default or Event of Default shall
have occurred and be continuing and (D) immediately
after giving effect to such merger or consolidation,
all of the representations and warranties of the
Company contained in this Agreement shall be true and
correct in all material respects as if made on and as
of the date of such merger or consolidation.
(ii) The Company will not, and it will not cause
or permit any Restricted Subsidiary to, sell, assign,
transfer or otherwise dispose of any capital stock of
any Restricted Subsidiary to any Person (other than the
Company or a Wholly-Owned Subsidiary) unless, (A)
immediately after giving effect to such sale,
assignment, transfer or other disposition, (1) the
portion of Consolidated Net Tangible Assets
attributable to that portion of the Restricted
Subsidiary being sold, assigned, transferred or
otherwise disposed of (meaning the same proportion as
the fair market value (as determined by the Company in
good faith) of the capital stock being sold bears to
the total fair market value (as determined by the
Company in good faith) of all of the outstanding
capital stock of such Restricted Subsidiary) shall not
exceed 12.5% of the total Consolidated Net Tangible
Assets as of the end of the fiscal quarter of the
Company immediately preceding the date of such sale,
assignment, transfer or other disposition and (2) the
portion of Consolidated Net Sales attributable to that
portion of the Restricted Subsidiary being sold,
assigned, transferred or otherwise disposed of (meaning
the same proportion as the fair market value (as
determined by the Company in good faith) of the capital
stock being sold bears to the total fair market value
(as determined by the Company in good faith) of all of
the outstanding capital stock of such Restricted
Subsidiary) shall not exceed 12.5% of the total
Consolidated Net Sales as of the end of the fiscal year
of the Company immediately preceding the date of such
sale, assignment, transfer or other disposition, (B)
the ratio of Net Income Available for Fixed Charges to
Fixed Charges for the period of four (4) consecutive
fiscal quarters ended immediately preceding the date of
such sale, assignment, transfer or other disposition
and for the most recent fourth fiscal quarter of the
Company ended immediately preceding the date of such
sale, assignment, transfer or other disposition (each
determined on a pro forma basis and excluding any
amounts attributable to that portion of the Restricted
Subsidiary being sold, assigned, transferred or
otherwise disposed of (meaning the same proportion as
the fair market value (as determined by the Company in
good faith) of the capital stock being sold bears to
the total fair market value (as determined by the
Company in good faith) of all of the outstanding
capital stock the Restricted Subsidiary)) shall not be
less than the respective minimum amounts required by
Section 5.01(d), (C) immediately after giving effect to
such sale, assignment, transfer or other disposition,
no Default or Event of Default shall have occurred and
be continuing and (D) immediately after giving effect
to such sale, assignment, transfer or other
disposition, all of the representations and warranties
of the Company contained in this Agreement shall be
true and correct in all material respects as if made on
and as of the date of such transfer or other
disposition.
(iii) The Company will not cause or permit any
Restricted Subsidiary to issue any shares of its
capital stock to any Person (other than the Company or
a Wholly-Owned Subsidiary) unless, (A) immediately
after giving effect to such issuance, (1) the portion
of Consolidated Net Tangible Assets attributable to
that portion of the Restricted Subsidiary being issued
to another Person (meaning the same proportion as the
fair market value (as determined by the Company in good
faith) of the capital stock being issued bears to the
total fair market value (as determined by the Company
in good faith) of all of the outstanding capital stock
of such Restricted Subsidiary (including the capital
stock being issued)) shall not exceed 12.5% of the
total Consolidated Net Tangible Assets as of the end of
the fiscal quarter of the Company immediately preceding
the date of such issuance and (2) the portion of
Consolidated Net Sales attributable to that portion of
the Restricted Subsidiary being issued to another
Person (meaning the same proportion as the fair market
value (as determined by the Company in good faith) of
the capital stock being issued bears to the total fair
market value (as determined by the Company in good
faith) of all of the outstanding capital stock of such
Restricted Subsidiary (including the capital stock
being issued)) shall not exceed 12.5% of the total
Consolidated Net Sales as of the end of the fiscal year
of the Company immediately preceding the date of such
issuance, (B) the ratio of Net Income Available for
Fixed Charges to Fixed Charges for the period of four
(4) consecutive fiscal quarters ended immediately
preceding the date of such issuance and for the most
recent fourth fiscal quarter of the Company ended
immediately preceding the date of such issuance (each
determined on a pro forma basis and excluding any
amounts attributable to that portion of the Restricted
Subsidiary being issued to another Person (meaning the
same proportion as the fair market value (as determined
by the Company in good faith) of the capital stock
being issued bears to the total fair market value (as
determined by the Company in good faith) of all of the
outstanding capital stock of the Restricted Subsidiary
(including the capital stock being issued))) shall not
be less than the respective minimum amounts required by
Section 5.01(d), (C) immediately after giving effect to
such issuance, no Default or Event of Default shall
have occurred and be continuing, and (D) immediately
after giving effect to such issuance, all of the
representations and warranties of the Company contained
in this Agreement shall be true and correct in all
material respects as if made on and as of the date of
such issuance.
(iv) The Company will not cause or permit any
Restricted Subsidiary to, sell, assign, transfer or
otherwise dispose of (other than in the ordinary course
of business) any of such Restricted Subsidiary's
Property or assets to any Person (other than the
Company or any Wholly-Owned Subsidiary) unless, (A)
immediately after giving effect to such sale,
assignment, transfer or other disposition, (1) the
portion of Consolidated Net Tangible Assets
attributable to that portion of the Restricted
Subsidiary being sold, assigned, transferred or
otherwise disposed of (meaning the same proportion as
the fair market value (as determined by the Company in
good faith) of the Properties and assets being sold
bears to the total fair market value (as determined by
the Company in good faith) of all of Properties and
assets of the Restricted Subsidiary) shall not exceed
12.5% of the total Consolidated Net Tangible Assets as
of the end of the fiscal quarter of the Company
immediately preceding the date of such sale,
assignment, transfer or other disposition and (2) the
portion of Consolidated Net Sales attributable to that
portion of the Restricted Subsidiary being sold,
assigned, transferred or otherwise disposed of (meaning
the same proportion as the fair market value (as
determined by the Company in good faith) of the
Properties and assets being sold bears to the total
fair market value (as determined by the Company in good
faith) of all of Properties and assets of the
Restricted Subsidiary) shall not exceed 12.5% of the
total Consolidated Net Sales as of the end of the
fiscal year of the Company immediately preceding the
date of such sale, assignment, transfer or other
disposition, (B) the ratio of Net Income Available for
Fixed Charges to Fixed Charges for the period of four
(4) consecutive fiscal quarters ended immediately
preceding the date of such sale, assignment, transfer
or other disposition and for the most recent fourth
fiscal quarter of the Company ended immediately
preceding the date of such sale, assignment, transfer
or other disposition (each determined on a pro forma
basis and excluding any amounts attributable to that
portion of the Restricted Subsidiary being sold,
assigned, transferred or otherwise disposed of (meaning
the same proportion as the fair market value (as
determined by the Company in good faith) of the
Properties and assets being sold bears to the total
fair market value (as determined by the Company in good
faith) of all of Properties and assets of the
Restricted Subsidiary)) shall not be less than the
respective minimum amounts required by Section 5.01(d),
(C) immediately after giving effect to such sale,
assignment, transfer or other disposition, no Default
or Event of Default shall have occurred and be
continuing and (D) immediately after giving effect to
such sale, assignment, transfer or other disposition,
all of the representations and warranties of the
Company contained in this Agreement shall be true and
correct in all material respects as if made on and as
of the date of such sale, assignment, transfer or other
disposition."
6. The following new Sections 5.01(z) and 5.01(aa)
are hereby added to the Credit Agreement:
"(z) Use of Proceeds of Long-Term Indebtedness.
The Company will use all of the net proceeds of each
issuance of Long-Term Indebtedness issued by the
Company on or after March 29, 1995, first to pay or
prepay (i) any Current Debt of the Company under any
uncommitted lines of credit of the Company and (ii) any
Loans of the Company under this Agreement on a pro-rata
basis among the Banks. Any remaining proceeds may then
be used by the Company for its general corporate
purposes to the extent not inconsistent with any of the
other terms or provisions of this Agreement.
(aa) No Prepayment of Funded Debt. The Company
will not make any optional prepayment on any Funded
Debt of the Company (other than the Loans under this
Agreement) except with the proceeds of Long-Term
Indebtedness issued by the Company on or after January
1, 1996."
7. Clause (o) of Section 6.01 of the Credit
Agreement is hereby deleted in its entirety and the following
substituted in lieu thereof:
"(o) If Consolidated Net Income for each of any
two consecutive fiscal quarters is a net loss and the
loss reported for the second such consecutive quarter
is greater than the loss reported for the first such
fiscal quarter;"
8. Notwithstanding any provision contained in the
Credit Agreement to the contrary, from and after March 29, 1995,
the Company shall have no right to request or obtain a CD Loan
under the Credit Agreement and all references in the Credit
Agreement to CD Loans (and any related terms) shall henceforth be
disregarded in their entirety.
9. This Amendment shall not be effective unless and
until the Agent shall have received:
(a) evidence satisfactory to the Agent that the
minimum fixed charge coverage covenant contained in
Section 5.8 of each of the "Note Agreements" (as
defined in Section 6.01(n) of the Credit Agreement) has
been amended to read the same in all material respects
as Section 5.01(d) of the Credit Agreement as amended
by this Amendment;
(b) a copy of resolutions of the Board of
Directors of the Company (or a duly authorized
committee thereof), duly adopted, which authorize the
execution, delivery and performance of this Amendment,
certified by the Secretary of the Company; and
(c) payment by the Company of a nonrefundable
amendment fee for the ratable benefit of the Banks in
the amount of One Hundred Fifty-Six Thousand Two
Hundred Fifty Dollars ($156,250.00).
10. The Company hereby agrees to reimburse the Agent
upon demand for all out-of-pocket costs and expenses, including,
without limitation, reasonable attorneys' fees and expenses,
incurred by the Agent in the preparation, negotiation and
execution of this Amendment. All of the obligations of the
Company under this Paragraph 10 shall survive the termination of
the Credit Agreement.
11. All references in the Credit Agreement and in the
Notes to the Credit Agreement and any other references of similar
import shall henceforth mean the Credit Agreement as amended by
this Amendment.
12. Except to the extent specifically amended by this
Amendment, all of the terms, provisions, conditions, covenants,
representations and warranties contained in the Credit Agreement
shall be and remain in full force and effect and the same are
hereby ratified and confirmed.
13. This Amendment shall be binding upon and inure to
the benefit of the Company, the Banks, the Agent and their
respective successors and assigns, except that Company may not
assign, transfer or delegate any of its rights or obligations
hereunder.
14. The Company hereby represents and warrants to the
Banks and the Agent that:
(a) the execution, delivery and performance by
the Company of this Amendment are within the corporate powers of
the Company, have been duly authorized by all necessary corporate
action and require no action by or in respect of, or filing with,
any governmental or regulatory body, agency or official or any
other third party. The execution, delivery and performance by
the Company of this Amendment do not conflict with, or result in
a breach of the terms, conditions or provisions of, or constitute
a default under or result in any violation of, the terms of the
Certificate of Incorporation or By-Laws of the Company, any
applicable law, rule, regulation, order, writ, judgment or decree
of any court or governmental or regulatory agency or
instrumentality or any agreement, document or instrument to which
the Company is a party or by which it is bound or to which it is
subject;
(b) this Amendment has been duly executed and
delivered by the Company and constitutes the legal, valid and
binding obligation of the Company enforceable in accordance with
its terms; and
(c) as of the date hereof, all of the
representations, warranties and covenants of the Company set
forth in the Credit Agreement are true and correct and no Default
or Event of Default under or within the meaning of the Credit
Agreement has occurred and is continuing.
15. In the event of any inconsistency or conflict
between this Amendment and the Credit Agreement, the terms,
provisions and conditions of this Amendment shall govern and
control.
16. This Amendment shall be governed by and construed
in accordance with the substantive laws of the State of Missouri
(without reference to conflict of law principles).
17. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY,
EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT,
INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT, ARE NOT
ENFORCEABLE. TO PROTECT THE COMPANY, THE BANKS AND THE AGENT
FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS REACHED
BY THE COMPANY, THE BANKS AND THE AGENT COVERING SUCH MATTERS ARE
CONTAINED IN THE CREDIT AGREEMENT AS AMENDED BY THIS AMENDMENT,
WHICH CREDIT AGREEMENT AS AMENDED BY THIS AMENDMENT IS A COMPLETE
AND EXCLUSIVE STATEMENT OF THE AGREEMENTS BETWEEN THE COMPANY,
THE BANKS AND THE AGENT, EXCEPT AS THE COMPANY, THE BANKS AND THE
AGENT MAY LATER AGREE IN WRITING TO MODIFY THEM.
18. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same
instrument. Subject to the provisions of Paragraph 9 of this
Amendment, this Amendment shall become effective on the date when
the Agent shall have received original or telecopied counterparts
hereof signed by the Company and each of the Banks.
IN WITNESS WHEREOF, the Company, the Banks and the
Agent have executed this Third Amendment to Credit Agreement this
11th day of April, 1995, effective as of March 29, 1995.
EDISON BROTHERS STORES, INC.
By /s/ David B. Cooper, Jr.
Title: Executive Vice President and
Chief Financial Officer
MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION
By /s/ Carl Dunajcik
Title:
THE BOATMEN'S NATIONAL BANK OF
ST. LOUIS
By /s/ John Rouse
Title:
CITIBANK, N.A.
By /s/ Theodore J. Beck
Title:
NBD BANK (formerly known as NBD
Bank, N.A.)
By Thomas A. LeVasseur
Title:
THE BANK OF NOVA SCOTIA
By /s/ S.C. B. Ashby
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Jeneatte Ganousis
Title:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By /s/ Adam N. Bolbach
Title:
MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION, as Agent
By /s/ Carl Dunajcik
Title:
OVERRIDE AGREEMENT
Dated as of September 22, 1995
By and Among
EDISON BROTHERS STORES, INC.,
as Borrower
and
THE FINANCIAL INSTITUTIONS LISTED ON THE
SIGNATURE PAGES HEREOF
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Article Page
<S> <C>
I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 3
1.1 Definitions Generally . . . . . . . . . . . . . . 3
1.2 Accounting Terms and Determinations . . . . . . . 13
II. OVERRIDE GENERALLY AND AMENDMENT AND RESTATEMENT
ELECTION;
STIPULATION OF CLAIMS; LETTER OF CREDIT PROVISIONS . . 13
2.1 Override Generally; Amendment and Restatement
Election . . . . . . . . . . . . . . . . . . . . . . 13
2.2 Stipulation as to Exposure . . . . . . . . . . . 15
2.3 Stipulation as to Existing Original Credit
Documents . . . . . . . . . . . . . . . . . . . . . . 15
2.4 Restatement of Other Original Credit Documents . 15
2.5 Treatment of Drawings of Standby Letters of
Credit . . . . . . . . . . . . . . . . . . . . . . . 16
III. MATURITY . . . . . . . . . . . . . . . . . . . . . . . 16
3.1 Maturity of the Loans . . . . . . . . . . . . . . 16
3.2 Cash Collateral for Standby Letter of Credit
Obligations . . . . . . . . . . . . . . . . . . . . . 16
3.3 Repayment of Other Obligations . . . . . . . . . 16
IV. TERMINATION OF REVOLVING CREDIT FACILITY
AND PRINCIPAL REDUCTION . . . . . . . . . . . . . . . . 17
4.1 Termination of Revolving Credit Commitments . . . 17
4.2 Mandatory Principal Reduction . . . . . . . . . . 17
4.3 Optional Principal Reduction . . . . . . . . . . 17
4.4 [Intentionally Omitted] . . . . . . . . . . . . . 17
4.5 Application of Payments by the Standby LC Bank . 17
4.6 General Provisions as to Payments . . . . . . . . 17
V. INTEREST AND FEES . . . . . . . . . . . . . . . . . . . 18
5.1 Interest Rates; Letter of Credit Fees . . . . . . 18
5.2 Postdefault Interest . . . . . . . . . . . . . . 18
5.3 Accrued and Unpaid Interest and Fees as of the
Effective Date . . . . . . . . . . . . . . . . . . . 18
5.4 Override Fees . . . . . . . . . . . . . . . . . . 19
5.5 Agency Fee . . . . . . . . . . . . . . . . . . . 19
5.6 Capital Adequacy . . . . . . . . . . . . . . . . 19
VI. PLEDGE OF PRINCIPAL CONCENTRATION ACCOUNT; SETOFF . . . 19
6.1 Pledge of Principal Concentration Account . . . . 19
6.2 Setoff . . . . . . . . . . . . . . . . . . . . . 19
6.3 Ratable Payments . . . . . . . . . . . . . . . . 20
6.4 Use of Setoff Funds . . . . . . . . . . . . . . . 20
VII. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . 21
7.1 Representations and Warranties . . . . . . . . . 21
(a) Corporate Existence and Power . . . . . . . 21
(b) Corporate Authorization . . . . . . . . . . 21
(c) Binding Effect . . . . . . . . . . . . . . . 21
(d) Financial Information . . . . . . . . . . . 21
(e) Litigation . . . . . . . . . . . . . . . . . 22
(f) Pension and Welfare Plans . . . . . . . . . 22
(g) Tax Returns and Payment . . . . . . . . . . 22
(h) Compliance With Other Instruments; None
Burdensome . . . . . . . . . . . . . . . . . 23
(i) Existing Indebtedness . . . . . . . . . . . 23
(j) Labor Matters . . . . . . . . . . . . . . . 23
(k) Title to Property . . . . . . . . . . . . . 23
(l) Multi-Employer Pension Plan Amendments Act
of 1980 . . . . . . . . . . . . . . . . . . 24
(m) Investment Company Act of 1940; Public
Utility Holding Company Act of 1935 . . . . 24
(n) Patents, Licenses, Trademarks, Etc. . . . . 24
(o) Environmental Safety and Health Matters . . 24
(p) Subsidiaries . . . . . . . . . . . . . . . . 25
(q) Disclosure . . . . . . . . . . . . . . . . . 25
(r) Transfers of Property . . . . . . . . . . . 25
(s) Handyman Guarantees . . . . . . . . . . . . 25
(t) Noteholder Forbearance Agreement
Representation . . . . . . . . . . . . . . . 25
VIII. COVENANTS . . . . . . . . . . . . . . . . . . . . . . 26
8.1 Covenants of the Borrower . . . . . . . . . . . . 26
(a) Information . . . . . . . . . . . . . . . . 26
(b) Limitations on Debt . . . . . . . . . . . . 27
(c) Limitations on Liens . . . . . . . . . . . . 28
(d) Limitations on Sale and Leasebacks . . . . . 30
(e) Merger, Consolidation, Sale of Stock and
Issuance of Stock . . . . . . . . . . . . . 30
(f) Transactions with Affiliates . . . . . . . . 31
(g) Restricted Investments . . . . . . . . . . . 31
(h) Restricted Payments -- Capital Stock . . . . 31
(i) Consultations and Inspections . . . . . . . 31
(j) Payment of Taxes and Claims; Corporate
Existence; Maintenance of Properties;
Insurance . . . . . . . . . . . . . . . . . 32
(k) Maintenance of Books and Records . . . . . . 33
(l) Changes in Nature of Business . . . . . . . 33
(m) Compliance with Law . . . . . . . . . . . . 33
(n) Accountant . . . . . . . . . . . . . . . . . 33
(o) ERISA Compliance . . . . . . . . . . . . . . 33
(p) Further Assurances . . . . . . . . . . . . . 34
(q) Notices . . . . . . . . . . . . . . . . . . 34
(i) Default . . . . . . . . . . . . . . . . 34
(ii) Litigation . . . . . . . . . . . . . 34
(iii) Judgment . . . . . . . . . . . . . . 35
(iv) Pension Plans . . . . . . . . . . . 35
(v) Environmental and Safety and Health
Matters . . . . . . . . . . . . . . . . 35
(vi) Material Adverse Change . . . . . . 35
(vii) Change in Management . . . . . . . . 35
(r) Pension Plans . . . . . . . . . . . . . . . 35
(s) Acquisitions . . . . . . . . . . . . . . . . 36
(t) Guaranties . . . . . . . . . . . . . . . . . 36
(u) Capital Expenditures . . . . . . . . . . . . 36
(v) Lease Termination Payments . . . . . . . . . 36
(w) Condemnation . . . . . . . . . . . . . . . . 36
(x) Accounts; Maintenance of Cash Management
System . . . . . . . . . . . . . . . . . . . 36
(y) Severance Payments . . . . . . . . . . . . . 37
(z) Amendment of New Commercial LC Facility
Agreement, Noteholder Forbearance
Agreement and New Financing Facility . . . . 37
(aa) No Additional Stores . . . . . . . . . . 37
(ab) Letters of Credit Under New Financing
Facility . . . . . . . . . . . . . . . . . . 37
(ac) Modification of Standby Letters of
Credit . . . . . . . . . . . . . . . . . . . 37
(ad) Noteholder Forbearance Agreement
Covenants . . . . . . . . . . . . . . . . . 37
8.2 Weekly Representation Covenant . . . . . . . . . 37
IX. DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . 38
9.1 Events of Default . . . . . . . . . . . . . . . . 38
9.2 Notice of Default . . . . . . . . . . . . . . . . 41
X. CONDITIONS PRECEDENT TO EFFECTIVENESS . . . . . . . . . 41
10.1 Closing Deliveries and Conditions . . . . . . . . 41
XI. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 43
11.1 Notices . . . . . . . . . . . . . . . . . . . . . 43
11.2 No Waivers . . . . . . . . . . . . . . . . . . . 43
11.3 Expenses; Documentary Taxes . . . . . . . . . . . 43
11.4 General Indemnity . . . . . . . . . . . . . . . . 44
11.5 Environmental Indemnity . . . . . . . . . . . . . 44
11.6 Amendments and Waivers . . . . . . . . . . . . . 45
11.7 Severability . . . . . . . . . . . . . . . . . . 45
11.8 Governing Law . . . . . . . . . . . . . . . . . . 45
11.9 Counterparts; Effectiveness . . . . . . . . . . . 45
11.10 Authority to Act . . . . . . . . . . . . . . 46
11.11 CONSENT TO JURISDICTION . . . . . . . . . . 46
11.12 References; Headings for Convenience . . . . 46
11.13 NO ORAL AGREEMENTS; ENTIRE AGREEMENT . . . . 46
11.14 Resurrection of Loans . . . . . . . . . . . 47
11.15 WAIVER OF JURY TRIAL . . . . . . . . . . . . 47
11.16 Release of Lender Parties . . . . . . . . . 47
11.17 Appointment of Agent . . . . . . . . . . . . 47
XII. BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS . . . 48
12.1 Successors and Assigns . . . . . . . . . . . . . 48
12.2 Participations . . . . . . . . . . . . . . . . . 48
(a) Permitted Participants; Effect . . . . . . . 48
(b) Voting Rights . . . . . . . . . . . . . . . 48
(c) Benefit of Set-off . . . . . . . . . . . . . 49
12.3 Assignments . . . . . . . . . . . . . . . . . . . 49
(a) Permitted Assignments . . . . . . . . . . . 49
(b) Effect; Effective Date . . . . . . . . . . . 49
XIII. FORBEARANCE AND RESERVATION OF CERTAIN RIGHTS . . . . 50
</TABLE>
<TABLE>
EXHIBITS
<S> <C>
Exhibit A Form of Amended and Restated Notes
Exhibit B Form of Weekly Representation
Certificate
Exhibit C-1 Form of Opinion of Weil, Gotshal &
Manges
Exhibit C-2 Form of Opinion of Alan Sachs, Esq.
Exhibit D-1 Form of Bank Guaranty
Exhibit D-2 Form of Commercial LC Facility
Guaranty
Exhibit E Specified Defaults
Exhibit F Form of Existing Lender Intercreditor
Agreement
Exhibit G Form of Last-Out Participation Agreement
Exhibit H Form of New Lender Intercreditor
Agreement
</TABLE>
<TABLE>
SCHEDULES
<S> <C>
Schedule 2.2 Exposures of the Banks
Schedule 2.3 Existing Original Credit Documents
Schedule 7.1(a) Borrower's Subsidiaries not in Good
Standing
Schedule 7.1(d) Contingent Liabilities
Schedule 7.1(e) Pending Litigation
Schedule 7.1(f) Pension and Welfare Plans
Schedule 7.1(i) Existing Indebtedness
Schedule 7.1(j) Labor Matters
Schedule 7.1(k) Permitted Liens
Schedule 7.1(n) Patents, Licenses, Trademarks, etc.
Schedule 7.1(o) Environmental Compliance
Schedule 7.1(p) Subsidiaries
Schedule 7.1(r) Transfers of Property
Schedule 8.1(b) Existing Indebtedness
Schedule 8.1(x) Cash Management System
Schedule 11.1 Addresses for Notice
</TABLE>
OVERRIDE AGREEMENT
This OVERRIDE AGREEMENT, dated as of September 22, 1995 (as
amended, modified, restated or supplemented from time to time,
this "Agreement"), is among Edison Brothers Stores, Inc., a
Delaware corporation (the "Borrower") and the financial
institutions listed on the signature pages hereof and their
respective successors and assigns (each individually, a "Bank"
and collectively, the "Banks").
PRELIMINARY STATEMENTS:
1. The Borrower and the Banks are parties to one or more
of the following agreements, documents and instruments (such
agreements, documents and instruments, together with all other
agreements, documents and instruments executed and delivered in
connection therewith that give rise to any claims against the
Borrower (contingent or otherwise) in favor of one or more Banks
being collectively referred to herein as the "Original Credit
Documents"):
(a) the Credit Agreement dated as of June 4, 1993 (as
heretofore amended, waived or otherwise modified, the
"Revolving Credit Facility") among the Borrower, the Banks
listed therein (collectively in such capacities, the
"Committed Banks") and Mercantile Bank of St. Louis National
Association, as agent (in such capacity, including its
successors, the "Agent"); and
(b) the various agreements or instrument (such
agreements or instrument, as heretofore amended, waived or
otherwise modified, collectively, the "Uncommitted Loan
Documents") between the Borrower and, or made by the
Borrower to the order of, each of The Boatmen's National
Bank of St. Louis, Citibank, N.A., The Bank of Nova Scotia,
Sanwa Bank, Fifth Third Bank, The Bank of New York and The
Sumitomo Bank, Limited (collectively in such capacities, the
"Uncommitted Banks"); and
(c) the Continuing Standby Letter of Credit Agreement
dated November 15, 1989, the Letter Agreement dated as of
June 30, 1994, and the Application for Standby Letter of
Credit dated December 19, 1994, each between Banca Nazionale
del Lavoro S.p.A., New York Branch (the "Standby LC Bank")
and the Borrower (collectively the "Original Standby LC
Documents").
2. The Borrower and Mercantile Bank of St. Louis National
Association (in such capacity, the "Commercial LC Bank") are
parties to the On-Line and International Banking System Agreement
dated May 27, 1992 (as heretofore amended, waived or otherwise
modified, the "Commercial LC Facility").
3. The Borrower is also indebted to various parties
(collectively, the "Private Placement Noteholders" and, together
with the Banks and the Commercial LC Bank, collectively called
the "Existing Lenders") pursuant to the Note Agreements dated as
of March 1, 1993 (as heretofore amended, waived or otherwise
modified, the "Note Agreements" and, together with the Original
Credit Documents and the Commercial LC Facility, collectively
called the "Existing Lender Agreements") relating to the 7.09%
Series A Senior Notes Due March 1, 2000, the 7.52% Series B
Senior Notes Due March 1, 2003 and the 8.04% Series C Senior
NotesDue March 1,2008(collectively, the"Private PlacementNotes").
4. Certain events of default under the Original Credit
Documents have occurred and are presently continuing (such events
of default, which are listed on Exhibit E, collectively called
the "Specified Defaults"). In addition, certain events of
default under the Note Agreements have occurred and are presently
continuing (such events of default, together with the Specified
Defaults, collectively called the "Existing Lender Defaults").
5. The Borrower has requested the Existing Lenders to
forbear from taking any enforcement or other action on account of
the Existing Lender Defaults. The Borrower has further requested
the Existing Lenders to modify the Existing Lender Agreements in
certain respects to permit, among other things, the Borrower to
obtain from BankAmerica Business Credit, Inc. (the "New Lender")
a new secured credit facility providing for extensions of credit
to the Borrower in a maximum aggregate amount of $75,000,000,
subject to borrowing base availability as determined in
accordance with its provisions (such facility, together with all
agreements, instruments and other documents relating thereto,
collectively called the "New Financing Facility").
6. Pursuant to the Borrower's request, and subject in all
respects to the terms and conditions of this Agreement, (a) each
of the Banks and the Borrower have agreed to enter into this
Agreement to provide the requested forbearance and to override or
to amend and restate to the extent provided herein, as
applicable, the terms and provisions of the Original Credit
Documents, (b) the Commercial LC Bank has agreed to commit to
continuing to issue commercial letters of credit for the account
of the Borrower pursuant to the Commercial LC Facility up to an
aggregate outstanding stated amount of $130,000,000, and (c) the
Borrower is causing certain of its Subsidiaries (hereinafter
defined) to guaranty (i) pursuant to the Bank Guaranty
(hereinafter defined) all of the indebtedness of the Borrower to
the Banks under the Original Credit Documents, as amended and
restated pursuant to this Agreement and (ii) pursuant to the
Commercial LC Facility Guaranty (hereinafter defined) the
obligations of the Borrower to the Commercial LC Bank under the
Commercial LC Facility.
7. In addition, the Borrower and the Private Placement
Noteholders are concurrently entering into an agreement modifying
the Note Agreements and the Private Placement Notes (the
"Noteholder Forbearance Agreement") in substantially the same
manner as the terms and conditions of the Original Credit
Documents are being modified by this Agreement, and the Borrower
is causing certain of its Subsidiaries to guaranty pursuant to
the Noteholder Guaranty (hereinafter defined) all of the
indebtedness of the Borrower to the Private Placement Noteholders
under the Note Agreements and the Private Placement Notes.
8. Finally, to establish and set forth their respective
rights with respect to the Borrower and its Subsidiaries from and
after the date hereof, the Existing Lenders are concurrently
entering into an Intercreditor Agreement (the "Existing Lender
Intercreditor Agreement") among themselves, the Borrower and the
Guarantors in the form of Exhibit F.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements contained herein, the parties hereto agree as
follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions Generally. For purposes of this Agreement,
the following capitalized terms have the meanings indicated in
this Section 1.1. The following definitions apply equally to
both the singular and plural forms of the defined terms.
"Acquisition" means any transaction or series of related
transactions, consummated on or after the date of this Agreement,
by which the Borrower or any of its Subsidiaries (a) acquires any
going business or all or substantially all of the assets of any
corporation, partnership or other organization or entity, whether
through purchase of assets, merger or otherwise or (b) directly
or indirectly acquires (in one transaction or as the most recent
transaction in a series of transactions) at least (i) a majority
(in number of votes) of the stock and/or other securities of a
corporation having ordinary voting power for the election of
directors (other than stock and/or other securities having such
power only by reason of the happening of a contingency), (ii) a
majority (by percentage of voting power) of the outstanding
partnership interests of a partnership or (iii) a majority of the
ownership interests in any organization or entity other than a
corporation or partnership.
"Administrative Representative" means The Boatmen's National
Bank of St. Louis, a national banking association, in its
capacity as administrative representative hereunder.
"Affiliate" means any Person (a) that directly or indirectly
through one or more intermediaries controls, is controlled by or
is under common control with the Borrower or any Subsidiary,
(b) that beneficially owns or holds or has the power to direct
the voting power of five percent (5%) or more of any class of
voting stock of the Borrower or any Subsidiary or (c) that has
five percent (5%) or more of its voting stock (or, in the case of
a Person that is not a corporation, five percent (5%) or more of
its equity interest) beneficially owned or held, directly or
indirectly, by the Borrower or any Subsidiary. For purposes of
this definition, "control" means the power to direct the
management and policies of a Person, directly or indirectly,
whether through the ownership of voting securities, by contract
or otherwise.
"Agent" has the meaning specified in the first Preliminary
Statement.
"Aggregate Exposure" means, as of any given time, the
aggregate Exposures of the Banks.
"Agreement" has the meaning specified in the Preamble.
"Amendment and Restatement Election" has the meaning
specified in Section 2.1(b).
"Bank(s)" has the meaning specified in the Preamble.
"Bank Guaranty" means the Guaranty of even date herewith
from the Guarantors to the Banks in the form of Exhibit D-1.
"Borrower" has the meaning specified in the Preamble.
"Business Day" means any day except a Saturday, Sunday or
legal holiday observed by commercial banks in New York, New York.
"Capital Expenditures" means, in respect of any Person, all
expenditures for the purchase or construction of fixed assets,
plant and equipment that are or should be capitalized in
accordance with GAAP, including, without limitation, Capitalized
Lease Obligations.
"Capitalized Lease" of a Person means any lease of Property
by such Person as lessee that are or should be capitalized on a
balance sheet of such Person prepared in accordance with GAAP.
"Capitalized Lease Obligations" of a Person means the amount
of the obligations of the Person under Capitalized Leases that
are or should be shown as a liability on a balance sheet of such
Person prepared in accordance with GAAP.
"Capitalized Rentals" of any Person means, as of the date of
any determination thereof, the amount at which the aggregate
minimum rentals due and to become due under all Capitalized
Leases under which such Person is a lessee would be reflected as
a liability on a balance sheet of such Person prepared in
accordance with GAAP.
"Change of Control" means any acquisition subsequent to the
Effective Date by any Person, or related Persons constituting a
"group" for purposes of Section 13(d) of the Securities Exchange
Act of 1934, as amended, of (a) the power to elect, appoint or
cause the election or appointment of at least a majority of the
members of the Board of Directors of the Borrower, through
beneficial ownership of the capital stock of the Borrower or
otherwise or (b) all or substantially all of the Properties and
assets of the Borrower. For purposes of this definition,
"acquisition" of the power or Properties and assets stated in the
preceding sentence means the earlier of (i) the actual possession
thereof and (ii) the consummation of any transaction or series of
related transactions that, with the passage of time, will give
such Person or Persons the actual possession thereof.
"Claim" of any Bank means at any time the sum of (a) the
amount of such Bank's Exposure plus (b) (i) in the case of the
Standby LC Bank, the amount of any accrued and unpaid Standby LC
Bank Fees plus any accrued and unpaid interest on any Note issued
to the Standby LC Bank pursuant to Section 2.5, and (ii) in the
case of each Bank other than the Standby LC Bank, the amount of
any accrued and unpaid interest on any Note held by such Bank.
"Code" means the Internal Revenue Code of 1986, as amended,
and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to
time. References to sections of the Code will be construed to
also refer to any successor sections.
"Commercial LC Bank" has the meaning specified in the second
Preliminary Statement.
"Commercial LC Facility" has the meaning specified in the
second Preliminary Statement.
"Commercial LC Facility Guaranty" means the Guaranty of even
date herewith from the Guarantors to the Commercial LC Bank in
the form of Exhibit D-2.
"Committed Banks" has the meaning specified in the first
Preliminary Statement.
"Concentration Account Bank" means The Boatmen's National
Bank of St. Louis or any successor to such bank in such capacity
approved in writing by the Required Banks and holders of a
majority in principal of the Private Placement Notes.
"Consolidated", when used with respect to "Indebtedness,"
means the Indebtedness of the Borrower and its Subsidiaries
determined on a consolidated basis in accordance with GAAP.
"Consolidated Subsidiary" means, at any date, any Subsidiary
or other entity the assets and liabilities of which are or should
be consolidated with those of the Borrower in its consolidated
financial statements as of such date in accordance with GAAP.
"Default" means any condition or event that constitutes an
Event of Default or that with the giving of notice or lapse of
time or both would become an Event of Default.
"Effective Date" means the first date on which all of the
conditions precedent set forth in Section 10.1 of this Agreement
are satisfied.
"Electing Bank" has the meaning specified in Section 2.1(b).
"Environmental Laws" means the Comprehensive Environmental
Response, Compensation and Liability Act, the Resource
Conservation and Recovery Act, the Clean Water Act, the Toxic
Substances Control Act, the Hazardous Materials Transportation
Act, the Clean Air Act, superlien laws and any other Federal,
state or local statute, law, ordinance, code, rule or regulation
or judicial or administrative order or decree regulating,
relating to or imposing liability or standards of conduct
concerning any Hazardous Materials, and all amendments thereto,
now or at any time hereafter in effect.
"Environmental Lien" means any Lien in favor of any
governmental or regulatory entity or other Person for or with
respect to (a) any liability under any Environmental Law or
(b) damages or costs incurred by such governmental or regulatory
entity or other Person in connection with any actual, threatened
or suspected spillage, disposal or other releases of any
Hazardous Materials, including, without limitation, investigative
costs related thereto.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import,
together with the regulations thereunder, in each case as in
effect from time to time. References to sections of ERISA will
be construed to also refer to any successor sections.
"ERISA Affiliate" means any corporation, trade or business
that is, along with the Borrower, a member of a controlled group
of corporations or a controlled group of trades or businesses, as
described in Section 414(b) and 414(c), respectively, of the
Code.
"Event of Default" has the meaning specified in Section 9.1.
"Existing Lender Agreements" has the meaning specified in
the third Preliminary Statement.
"Existing Lender Defaults" has the meaning specified in the
fourth Preliminary Statement.
"Existing Lender Intercreditor Agreement" has the meaning
specified in the eighth Preliminary Statement.
"Existing Lenders" has the meaning specified in the third
Preliminary Statement.
"Exposure" means, at any given time:
(a) with respect to each Committed Bank, the aggregate
outstanding principal balance of all Indebtedness owed by
the Borrower to such Committed Bank pursuant to the Original
Credit Documents to which such Committed Bank is a party,
this Agreement or the Notes;
(b) with respect to each Uncommitted Bank, the
aggregate outstanding principal balance of all Indebtedness
owing by the Borrower to such Uncommitted Bank pursuant to
the Original Credit Documents to which such Uncommitted Bank
is a party, this Agreement or the Notes; and
(c) with respect to the Standby LC Bank, the aggregate
amount of the Standby LC Bank's Letter of Credit Exposure.
"GAAP" means, as to a particular Person, such accounting
principles as, in the opinion of the "Big 6" accounting firm
regularly retained by such Person, conform at the time to
generally accepted accounting principles; provided that as to any
Person who has not regularly retained such an accounting firm,
"GAAP" means generally accepted accounting principles at the time
in the United States.
"Guaranties" by any Person means all obligations (other than
endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) of such Person
guaranteeing, or in effect guaranteeing, any Indebtedness,
dividend or other obligation of any other Person (the "primary
obligor") in any manner, whether directly or indirectly,
including, without limitation, all obligations incurred through
an agreement, contingent or otherwise, by such Person: (a) to
purchase such Indebtedness or obligation or any property or
assets constituting security therefor, (b) to advance or supply
funds (i) for the purchase or payment of such Indebtedness or
obligation, (ii) to maintain working capital or other balance
sheet condition or otherwise to advance or make available funds
for the purchase or payment of such Indebtedness or obligation,
(iii) to lease property or to purchase securities or other
property or services primarily for the purpose of assuring the
owner of such Indebtedness or obligation of the ability of the
primary obligor to make payment of such Indebtedness or
obligation or (iv) otherwise to assure the owner of such
Indebtedness or obligation of the primary obligor against loss in
respect thereof. For the purposes of all computations made under
this Agreement, a Guaranty in respect of any Indebtedness for
borrowed money will be deemed to be Indebtedness in an amount
equal to the then outstanding principal amount of such
Indebtedness for borrowed money that has been guaranteed, and a
Guaranty in respect of any other obligation or liability or any
dividend will be deemed to be Indebtedness in an amount equal to
the maximum aggregate amount of such obligation, liability or
dividend.
"Guarantor" means any Person that has guaranteed any or all
of the Obligations.
"Handyman Guaranties" means all guaranties by the Borrower
of payments under any Capitalized Lease or Operating Lease of
real property previously used by the Borrower's former
Subsidiary, The Handyman Corporation.
"Hazardous Materials" means those materials, wastes and
substances defined as hazardous substances in 42 U.S.C.
Section 9601(14), and all other materials, wastes and substances
(including, without limitation, solids, liquids and gases), now
or hereafter designated or defined as hazardous, toxic, dangerous
or otherwise regulated under any Federal, state or local law,
rule or regulation pertaining to environmental pollution,
contamination, protection or waste management, treatment,
storage, handling or disposal and any other materials or
substances (including, without limitation, petroleum and other
substances specifically excluded from the definition of hazardous
substances under 42 U.S.C. Section 9601(14)), the exposure to
which is prohibited, limited or regulated by any governmental or
regulatory authority or under any Environmental Law.
"Indebtedness" of any Person means and includes, without
duplication, all obligations of such Person that in accordance
with GAAP should be classified upon a balance sheet of such
Person as liabilities of such Person, and in any event includes
all (a) obligations of such Person for borrowed money or that
have been incurred in connection with the acquisition of Property
or assets, (b) obligations secured by any Lien upon Property or
assets owned by such Person, even though such Person has not
assumed or become liable for the payment of such obligations,
(c) obligations created or arising under any conditional sale or
other title retention agreement with respect to Property acquired
by such Person, notwithstanding that the rights and remedies of
the seller, lender or lessor under such agreement in the event of
default are limited to repossession or sale of such Property,
(d) Capitalized Rentals and (e) Guaranties of obligations of
others of the character referred to in this definition.
"LC Cash Collateral Account" means deposit account number
0510-335401-00 maintained with the Standby LC Bank in the
Borrower's name, but under the sole dominion and control of the
Standby LC Bank.
"Lease Termination Payments" means all payments or other
consideration of any nature made or otherwise provided by the
Borrower or any Subsidiary to landlords with respect to the
termination of leases of any retail or warehouse property under
which the Borrower or such Subsidiary is lessee.
"Letter of Credit Exposure" means, at any given time,
(i) the aggregate undrawn face amount of all outstanding Standby
Letters of Credit, plus (ii) the aggregate amount of any drawings
on any Standby Letters of Credit honored by the Standby LC Bank
and not reimbursed in cash, minus (iii) the amount on deposit in
the LC Cash Collateral Account.
"Lien" means any mortgage, lien, pledge, security interest,
encumbrance or charge of any kind, any conditional sale or other
title retention agreement or any Capitalized Lease.
"Material Adverse Effect" means a material adverse effect
(i) upon the financial condition, operations, business,
properties or prospects of the Borrower and the Subsidiaries
taken as a whole, or (ii) upon the ability of the Borrower or any
Guarantor to perform any of its material obligations under any of
the Override Documents.
"Maturity Date" means the earliest of (i) February 29, 1996,
(ii) the date the Obligations become due and payable pursuant to
Section 9.1, and (iii) the termination date of the New Financing
Facility.
"Multi-Employer Plan" means a "multi-employer plan" as
defined in Section 4001(a)(3) of ERISA that is maintained for
employees of the Borrower, any ERISA Affiliate or any Subsidiary.
"New Commercial LC Facility Agreement" means the Commercial
LC Facility as amended and modified by the Modification to On-
Line International Banking System Agreement and to Letter
Agreement of even date herewith providing for the Commercial LC
Bank's commitment to issue letters of credit for the account of
the Borrower and its Subsidiaries in an aggregate face amount not
to exceed $130,000,000.
"New Financing Facility" has the meaning specified in the
fifth Preliminary Statement.
"New Financing Facility Last-Out Participation" means a
last-out participation in the New Financing Facility that may be
purchased by the Concentration Account Bank for the pro rata
account and benefit of the Banks and the Private Placement
Noteholders from the New Lender in the amount and to the extent
of any Setoff Funds pursuant to the New Lender Intercreditor
Agreement, which last-out participation will be governed by the
Last-Out Participation Agreement in the form of Exhibit G.
"New Lender" has the meaning specified in the fifth
Preliminary Statement.
"New Lender Intercreditor Agreement" means an intercreditor
agreement of even date herewith among the Concentration Account
Bank and the New Lender in the form of Exhibit H.
"New Note" means, collectively, each of the Amended and
Restated Promissory Notes issued by the Borrower to a Committed
Bank or an Electing Bank pursuant to Section 2.4 in substitution
for such Bank's Original Promissory Notes.
"Nonelecting Bank" means any Uncommitted Bank or the Standby
LC Bank that is not an Electing Bank.
"Note" means, collectively, each New Note, each Nonelecting
Bank's Original Promissory Note and any promissory note issued
by the Borrower to the Standby LC Bank pursuant to Section 2.5.
"Note Agreements" has the meaning specified in the third
Preliminary Statement.
"Noteholder Forbearance Agreement" has the meaning specified
in the seventh Preliminary Statement.
"Noteholder Guaranty" means the Guaranty of even date
herewith from the Guarantors to the Private Placement Noteholders
in form and substance substantially identical to the Bank
Guaranty.
"Obligations" means all loans, advances, debts, liabilities,
obligations, covenants and duties owing by the Borrower to the
Banks, or to any Person entitled to indemnification pursuant to
Section 11.4 and/or 11.5 of this Agreement, of any kind or
nature, present or future, regardless whether evidenced by any
note, guaranty or other instrument, arising under this Agreement,
the Original Credit Documents, the Notes or any other Override
Document, regardless whether for the payment of money, whether
arising by reason of an extension of credit, opening or amendment
of a letter of credit or payment of any draft drawn thereunder,
prefunding obligations under letter of credit facilities, loan,
guaranty, indemnification, or reimbursement provision, or
otherwise, whether direct or indirect (including those acquired
by assignment), absolute or contingent, due or to become due, now
existing or hereafter arising and however acquired. The
Obligations include, without limitation, all interest, charges,
expenses, fees, attorneys' fees and disbursements and any other
sum chargeable to the Borrower under the Original Credit
Documents, this Agreement or any other Override Document.
"Occupational Safety and Health Laws" means the Occupational
Safety and Health Act of 1970, as amended, and any other Federal,
state or local statute, law, ordinance, code, rule or regulation
or judicial or administrative order or decree regulating,
relating to or imposing liability or standards of conduct
concerning employee safety and/or health, as now or at any time
hereafter in effect.
"Operating Lease" means any lease of real property under
which the Borrower or a Subsidiary is lessee, other than
(1) leases between the Borrower and its Subsidiaries or between
Subsidiaries of the Borrower and (2) Capitalized Leases.
"Original Credit Documents" has the meaning specified in the
first Preliminary Statement.
"Original Promissory Notes" means the promissory notes
issued by the Borrower to certain of the Banks pursuant to, or
constituting, the Original Credit Documents.
"Override Documents" means, collectively, this Agreement,
the New Notes, the Bank Guaranty, the Commercial LC Facility
Guaranty, the Existing Lender Intercreditor Agreement, the New
Lender Intercreditor Agreement and all exhibits and schedules
hereto and thereto and all other instruments, documents and
agreements executed and delivered in connection herewith and
therewith, each as amended or otherwise modified after the date
hereof in accordance with the terms of this Agreement.
"Original Standby LC Documents" has the meaning specified in
the first Preliminary Statement.
"PBGC" means the Pension Benefit Guaranty Corporation and
any entity succeeding to any or all of its functions under ERISA.
"Participants" has the meaning specified in Section 12.2(a).
"Pension Plan" means a "pension plan," as such term is
defined in Section 3(2) of ERISA, which is established or
maintained by the Borrower, any ERISA Affiliate or any
Subsidiary, other than a Multi-Employer Plan.
"Percentage" has the meaning specified in the Existing
Lender Intercreditor Agreement.
"Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization,
association, corporation, limited liability company, institution,
entity or government (whether national, Federal, state, county,
city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Prime Rate" means the interest rate announced from time to
time by Citibank, N.A., in New York, New York as its "base rate"
on commercial loans (which rate will change as and when such
"base rate" changes).
"Principal Concentration Account" means, collectively, each
of the deposit accounts of the Borrower maintained at the
Concentration Account Bank where substantially all cash, checks
and credit card collections and receipts of the Borrower and of
its Subsidiaries are or may be collected and concentrated under
the Borrower's cash management system described on
Schedule 8.1(x).
"Private Placement Noteholders" has the meaning specified in
the third Preliminary Statement.
"Private Placement Notes" has the meaning specified in the
third Preliminary Statement.
"Property" means any interest of any kind in any property or
asset, whether real, personal or mixed, or tangible or
intangible. For purposes of this Agreement, the Borrower and
each Subsidiary will be deemed to be the owner of any Property
that the Borrower or such Subsidiary has acquired or holds
subject to a conditional sale agreement, financing lease or other
arrangement pursuant to which title to such Property has been
retained by or vested in some other Person for security purposes.
"Pro Rata Share" means, at any given time, with respect to
any Bank, the ratio (stated as a percentage) of such Bank's
Exposure to the Aggregate Exposure.
"Reportable Event" has the meaning given to such term in
ERISA.
"Required Banks" means at any time Banks (i) having
Exposures aggregating at least 67% of the Aggregate Exposure and
(ii) constituting at least 51% of the Banks, it being understood
that, for purposes of this definition, (x) Banks that are both
Committed Banks and Uncommitted Banks will constitute one Bank
and (y) after the Maturity Date, a Nonelecting Bank will cease to
be a "Bank" if it is not a Committed Bank.
"Requirements of Law" means, as to any Person, the articles
or certificate of incorporation, charter and by-laws or other
organizational or governing documents of such Person (including,
without limitation, certificates of designation of any capital
stock of such Person), and any law, rule or regulation, or order,
award, judgment, decree, writ or determination of an arbitrator
or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its Property
or to which such Person or any of its Property is subject
including, without limitation, the Securities Act of 1933 as
amended, the Securities Exchange Act of 1934, as amended,
Regulations G, U and X of the Board of Governors of the Federal
Reserve System, ERISA, the Fair Labor Standards Act and any
certificate of occupancy, zoning ordinance, building,
environmental or land use requirement or permit or environmental,
labor, employment, occupational safety or health law, rule or
regulation.
"Restricted Investment" means any acquisition of Property by
the Borrower or any of its Subsidiaries in exchange for cash or
other Property, whether in the form of an acquisition of stock,
Indebtedness or other obligation, or by loan, advance, capital
contribution, or otherwise, except the following:
(a) Property used in the business of the Borrower and
its Subsidiaries and other investments existing on the
Effective Date as reflected in the financial statements of
the Borrower and its Subsidiaries referred to in Section
7.1(d);
(b) current assets arising from the sale or lease of
goods or rendition of services in the ordinary course of
business of the Borrower and its Subsidiaries; and
(c) loans made by the Borrower or any Subsidiary to
the Borrower or another Subsidiary permitted under
Section 8.1(b)(G) or (H).
"Revolving Credit Facility" has the meaning specified in the
first Preliminary Statement.
"Sale and Leaseback Transaction" means any arrangement,
directly or indirectly, with any Person whereby a seller or
transferor shall sell or otherwise transfer any Property after
the date of acquisition or occupancy of such Property, and
thereafter lease (whether or not a Capitalized Lease) the same or
similar Property from the purchaser or the transferee of such
Property.
"Setoff Funds" means those funds obtained by the
Concentration Account Bank or any other Bank pursuant to the
provisions of Section 6.2 or any Private Placement Noteholder or
the Commercial LC Bank.
"Setoff Limit" means an aggregate amount of $25,000,000,
whether such amount is obtained or realized from Setoff Funds or
the mandatory principal reduction payment required to be made
under Section 4.2, for the Banks and the Private Placement
Noteholders from the Effective Date until the later of (i) the
Maturity Date and (ii) the date on which the Borrower's
"Obligations" (as defined in the New Financing Facility) under
the New Financing Facility as in effect on the Effective Date
(and without giving effect to any extension, replacement or
refinancing thereof) are paid in full and the New Financing
Facility has been terminated.
"Specified Defaults" has the meaning specified in the fourth
Preliminary Statement.
"Standby LC Bank" has the meaning specified in the first
Preliminary Statement.
"Standby LC Bank Fee" has the meaning specified in
Section 5.1(b).
"Standby Letters of Credit" means, collectively, the four
Standby Letters of Credit issued pursuant to the Original Standby
LC Documents for the account of the Borrower in the aggregate
stated amount of $7,948,491.
"Subsidiary" means any corporation at least a majority of
whose outstanding stock having ordinary voting power for the
election of a majority of the members of the Board of Directors
(or other governing body) of such corporation (other than stock
having such power only by reason of the happening of a
contingency) are at the time owned by the Borrower and/or one or
more Subsidiaries of the Borrower.
"Uncommitted Banks" has the meaning specified in the first
Preliminary Statement.
"Uncommitted Loan Documents" has the meaning specified in
the first Preliminary Statement.
"Wholly Owned" when used in connection with any Subsidiary
means a Subsidiary of which all of the issued and outstanding
shares of stock (except shares required as directors' qualifying
shares) shall be owned by the Borrower and/or one or more of its
Wholly Owned Subsidiaries.
1.2 Accounting Terms and Determinations. Except as
otherwise specified herein, all accounting terms used herein
shall be interpreted, all accounting determinations hereunder
shall be made and all financial statements required to be
delivered hereunder shall be prepared in accordance with GAAP,
applied on a basis consistent (except for changes approved by the
Borrower's independent certified public accountants) with the
most recent audited consolidated financial statements of the
Borrower and its Consolidated Subsidiaries delivered to the
Banks.
ARTICLE II.
OVERRIDE GENERALLY AND AMENDMENT AND RESTATEMENT ELECTION;
STIPULATION OF CLAIMS; LETTER OF CREDIT PROVISIONS
2.1 Override Generally; Amendment and Restatement Election.
(a) On and after the Effective Date, and continuing through the
Maturity Date, the terms and conditions of the Revolving Credit
Facility and each of the other Original Credit Documents to which
a Committed Bank is a party will be governed by the terms and
conditions of this Agreement and the other Override Documents to
the extent that the terms and conditions of such Original Credit
Documents differ from or are inconsistent with the terms and
conditions of this Agreement and the other Override Documents.
Subject to the preceding sentence, each of the Original Credit
Documents to which a Committed Bank is a party will remain in
full force and effect. In furtherance of the foregoing and
notwithstanding any other provision of this Agreement, the
Borrower, the Agent and each of the Committed Banks agree that
Article VII of the Revolving Credit Facility and, subject to
Article XIII of this Agreement, Section 5.01(e) of the Revolving
Credit Facility are not affected in any way by this Agreement or
any other Override Document and remain in full force and effect;
provided, however, that Section 5.01(e) of the Revolving Credit
Facility shall not apply to or prohibit the Liens granted to the
New Lender under the New Financing Facility, the rights of setoff
provided to the Concentration Account Bank under this Agreement
and the New Lender Intercreditor Agreement.
(b) Each Uncommitted Bank and the Standby LC Bank may elect
on or within fifteen (15) Business Days following the Effective
Date by written notice to the Borrower to have this Agreement and
the other Override Documents amend, restate and supersede in
their entirety each of the Original Credit Documents to which
such Bank is a party, and from and after the date any such Bank
makes such election (each such election called an "Amendment and
Restatement Election" and any such Bank making such election
called an "Electing Bank"), this Agreement and the other Override
Documents will amend, restate and supersede in their entirety
each of the Original Credit Documents to which such Electing Bank
is a party.
(c) On the Effective Date and continuing through the
earlier of (i) the date on which the Nonelecting Bank party
thereto becomes an Electing Bank (whereupon all of such Original
Credit Documents will be amended and restated in accordance with
Section 2.1(b)) and (ii) the Maturity Date, the terms and
conditions of each of the Original Credit Documents to which a
Nonelecting Bank is a party will be governed by the terms and
conditions of this Agreement and the other Override Documents.
Subject to the preceding sentence, each of the Original Credit
Documents to which a Nonelecting Bank is a party will remain in
full force and effect throughout the term of this Agreement, and
on and after the Maturity Date, all of the Obligations of the
Borrower to each Nonelecting Bank will be governed exclusively by
the terms of the Original Credit Documents to which such
Nonelecting Bank is a party; provided, however, that,
notwithstanding the foregoing, each Nonelecting Bank will be
entitled to receive its Percentage of any Setoff Funds and/or the
mandatory principal reduction required to be paid pursuant to
Section 4.2.
(d) If the Standby LC Bank becomes an Electing Bank, all of
the provisions of the Original Standby LC Documents that do not
conflict or are not otherwise inconsistent with the terms of this
Agreement will be deemed to be incorporated by reference into
this Agreement upon the Standby LC Bank's becoming an Electing
Bank, and such provisions will apply and be binding upon the
Borrower and the Standby LC Bank under this Agreement as if set
forth in full herein. Regardless whether the Standby LC Bank
becomes an Electing Bank, the Standby LC Bank agrees that it will
not exercise any right of nonrenewal with respect to any Standby
Letters of Credit during the period from the Effective Date until
the Maturity Date.
(e) Nothing in this Agreement will be construed to
constitute a novation of any indebtedness arising pursuant to any
of the Original Credit Documents.
2.2 Stipulation as to Exposure. The Borrower and each Bank
hereby agree and acknowledge that, immediately prior to the
effectiveness of this Agreement on the Effective Date,
Schedule 2.2 accurately sets forth the aggregate amount, and each
category, of the Exposure of each Bank.
2.3 Stipulation as to Existing Original Credit Documents.
The Borrower and each Bank each hereby represents and warrants to
each other that, immediately prior to the effectiveness of this
Agreement on the Effective Date, (a) Schedule 2.3 accurately
identifies each Original Credit Document to which such Person, or
such Person's Affiliates, is a party and (b) without in any way
limiting the generality of the provisions of Section 11.13,
neither the Borrower nor any Subsidiary has paid or agreed to pay
any fees or other amounts to, or has made any covenants or other
promises for the benefit of, any Bank in connection with the
transactions contemplated by Override Documents, except the
Borrower's agreement pursuant to Section 11.3 to pay the fees and
expenses of legal counsel to such Banks until the Effective Date,
and except as otherwise provided in this Agreement and the other
Override Documents.
2.4 Restatement of Other Original Credit Documents. The
Original Promissory Notes held by each Committed Bank and each
Electing Bank, subject to the effectiveness of this Agreement,
will be amended and replaced by the New Notes executed and
delivered by the Borrower substantially in the form attached
hereto as Exhibit A (i) with respect to the Committed Banks, on
the Effective Date and (ii) with respect to each Electing Bank on
the later of (x) the Effective Date and (y) the date such
Electing Bank makes its Amendment and Restatement Election. As
soon as practicable following its receipt of its New Note and the
effectiveness of this Agreement, each Bank holding an Original
Promissory Note amended and replaced by this Section 2.4 will
exert reasonable efforts to deliver such Original Promissory Note
to the Borrower, after first affixing the following legend to the
face thereof:
"This promissory note has been amended and restated in
its entirety and substituted by the Amended and
Restated Promissory Note dated as of September __,
1995, executed and delivered by the undersigned maker
and made payable to the payee named herein. Such
amendment, restatement and substitution did not
constitute a repayment or novation of the indebtedness
evidenced by this promissory note, but merely a
modification of the terms and conditions of repayment
hereof."
Each Bank holding an Original Promissory Note to be amended and
replaced by a New Note hereby represents and warrants to the
Borrower that, as of the date of such amendment and replacement,
(a) it has not heretofore sold, given, conveyed, granted,
assigned, pledged, transferred, encumbered or otherwise
hypothecated or agreed to hypothecate under any agreement that
remains in effect as of the date hereof the Original Promissory
Note issued to it or any interest therein, (b) it is not
presently a party to any agreement pursuant to which it is
prohibited from amending and substituting such Original
Promissory Note in the manner contemplated by this Section 2.4(a)
and (c) to the best of such Bank's knowledge, no Person other
than such Bank has asserted any right, title, claim or other
interest in such Original Promissory Note or its proceeds.
2.5 Treatment of Drawings of Standby Letters of Credit.
Upon the Standby LC Bank's honoring any drawing under a Standby
Letter of Credit, the Standby LC Bank will be deemed to have
funded a loan to the Borrower in the principal amount of such
drawing to the extent that the Borrower's obligations to the
Standby LC Bank resulting from such drawing are not reimbursed
from amounts on deposit in the LC Cash Collateral Account. If
the Standby LC Bank is an Electing Bank, such loan will be
governed in all respects by the terms and conditions of this
Agreement, will be evidenced by a promissory note having
identical economic terms as a New Note (which will be in an
original principal amount equal to the Standby LC Bank's Letter
of Credit Exposure on the Effective Date and will be executed and
delivered to the Standby LC Bank by the Borrower on the Effective
Date), and will bear interest as provided in Article V. If the
Standby LC Bank is a Nonelecting Bank, such loan will be governed
by the terms and conditions of the Original Standby LC Documents,
as amended and superseded until the Maturity Date by this
Agreement.
ARTICLE III.
MATURITY
3.1 Maturity of the Loans. The aggregate outstanding
principal balance of all Obligations of the Borrower to the
Committed Banks and the Electing Banks will become due and
payable in full, in cash, on the Maturity Date. Subject to the
following sentence, the aggregate outstanding principal balance
of all Obligations of the Borrower to any Nonelecting Bank will
be due and payable in accordance with the terms of the Original
Credit Documents to which such Nonelecting Bank is a party. All
payments of principal amounts of all Obligations that are
otherwise required by the Original Credit Documents to be paid on
an earlier date are hereby deferred and extended until the
Maturity Date.
3.2 Cash Collateral for Standby Letter of Credit
Obligations. If the Standby LC Bank is an Electing Bank, on the
Maturity Date the Borrower shall pay to the Standby LC Bank, in
cash, an amount equal to the aggregate Letter of Credit Exposure
with respect to which the Borrower is obligated to the Standby LC
Bank as of such date. Such amount shall be deposited in the LC
Cash Collateral Account and held as cash collateral for such
Letter of Credit Exposure. If the Standby LC Bank is a
Nonelecting Bank, on and after the Maturity Date all of the
Obligations of the Borrower to the Standby LC Bank will be
governed by the Original Standby LC Documents.
3.3 Repayment of Other Obligations. All Obligations (other
than those described elsewhere in this Article III) that are
outstanding as of the Maturity Date shall become due and payable
in full on such date.
ARTICLE IV.
TERMINATION OF REVOLVING CREDIT FACILITY
AND PRINCIPAL REDUCTION
4.1 Termination of Revolving Credit Commitments. The
Committed Banks' obligations to make Revolving Credit Loans
pursuant to the Revolving Credit Facility are hereby terminated.
4.2 Mandatory Principal Reduction. On or before
11:00 a.m., St. Louis time, on December 29, 1995, the Borrower
will pay an amount equal to the Banks' collective Percentage
(calculated in accordance with Section 2 of the Existing Lender
Intercreditor Agreement) of $25,000,000, which is stipulated to
be $14,694,094 (it being understood that such amount will be
reduced by the amount of any Setoff Funds previously obtained) to
the Agent for the ratable account of the Committed Banks and to
each Uncommitted Bank and the Standby LC Bank. The Borrower will
allocate such amount among the Agent, the Uncommitted Banks and
the Standby LC Bank in accordance with the collective Percentage
of the Committed Banks and the respective Percentage of each
Uncommitted Bank and the Standby LC Bank, as applicable. The
Agent will distribute among the Committed Banks, the Committed
Banks' collective Percentage of such mandatory prepayment, in
accordance with their respective Percentages of such mandatory
prepayment.
4.3 Optional Principal Reduction. Subject to the
provisions of the Existing Lender Intercreditor Agreement, the
Borrower may prepay all or part of the outstanding principal
balance of the Obligations due to the Banks at any time.
4.4 [Intentionally Omitted]
4.5 Application of Payments by the Standby LC Bank. The
Standby LC Bank agrees that it will apply any payment it receives
pursuant to this Agreement or any other Override Document first
to the repayment of any outstanding loans made or deemed made by
the Standby LC Bank to the Borrower pursuant to Section 2.5 and
second to the LC Cash Collateral Account to secure the Standby LC
Bank's Letter of Credit Exposure with respect to outstanding
Standby Letters of Credit. The Standby LC Bank will have a Lien
upon and security interest in the LC Cash Collateral Account.
4.6 General Provisions as to Payments. The Borrower will
make each payment hereunder and under the Notes, irrespective of
any right of counterclaim or setoff, not later than 12:00 P.M.
(St. Louis time) on the date when due, in Federal or other
immediately available funds to (i) the Agent at its address
referred to in Section 11.1 with respect to any payments due to a
Committed Bank and (ii) each Uncommitted Bank or the Standby LC
Bank at its address referred to in Section 11.1 with respect to
any payment due to such Uncommitted Bank or the Standby LC Bank,
as the case may be. The Agent will promptly distribute to each
Committed Bank in immediately available funds such Committed
Bank's ratable portion under the Revolving Credit Facility of any
payment received by the Agent for the account of the Committed
Banks. Whenever any payment of any amount hereunder or under the
Notes shall be due on a day that is not a Business Day, the date
for payment thereof shall be extended to the next succeeding
Business Day. If the date for any payment of principal is
extended by operation of law or otherwise, interest thereon at
the then applicable rate shall be payable for such extended time.
ARTICLE V.
INTEREST AND FEES
5.1 Interest Rates; Letter of Credit Fees. (a) Subject to
the provisions of Section 5.2, the Borrower shall pay interest on
the unpaid principal balance of the Obligations to each Bank and
other Obligations outstanding from time to time, from and
including the later of the date such Obligations were incurred
and the Effective Date and until the principal amount thereof
will have been paid in full, at a rate per annum equal to either
(i) the Prime Rate plus 1% or (ii) 9.75%, as each such Bank may
elect by oral notice to the Borrower (confirmed in writing within
five (5) Business Days after such oral notice is given) on or
before the Effective Date. All such accrued and unpaid interest
shall be paid in arrears on the first Business Day of each
calendar month commencing after the Effective Date and will be
calculated based upon a year of 360 days and actual days elapsed.
(b) The Borrower will pay to the Standby LC Bank a fee
equal to two and three-quarters percent (2.75%) per annum of
difference of (i) the average daily undrawn face amount of all
Standby Letters of Credit outstanding from time to time minus
(ii) the average daily balance in the LC Cash Collateral Account
(the "Standby LC Bank Fee"). The Standby LC Bank Fee will be
payable monthly in arrears on the first Business Day of each
calendar month commencing after the Effective Date and will be
calculated based upon a year of 360 days and actual days elapsed.
In addition, the Borrower will pay to the Standby LC Bank all
customary charges and out-of-pocket and additional expenses in
connection with the administration of the Standby Letters of
Credit.
5.2 Postdefault Interest. During the continuation of a
Default, the outstanding principal Obligations of the Borrower to
the Banks shall bear interest, and the Standby LC Fee shall
accrue, at a rate per annum equal to the rate otherwise
applicable to the Obligations of the Borrower to the Banks and
other Obligations under Section 5.1(a) or Section 5.1(b), as the
case may be, plus two percent (2%); provided, however, that the
principal Obligations of the Borrower to any Nonelecting Bank
outstanding after the Maturity Date will bear interest as
provided in the Original Credit Documents to which such
Nonelecting Bank is a party.
5.3 Accrued and Unpaid Interest and Fees as of the
Effective Date. All accrued and unpaid interest and fees arising
under the Original Credit Documents (calculated at the
contractual rate applicable under the respective Original Credit
Documents and including, without limitation, interest on any
overdue interest calculated at the contractual rate applicable
under the respective Original Credit Documents) as of the
Effective Date will be due and payable by the Borrower on the
Effective Date.
5.4 Override Fees. On the Effective Date, the Borrower
shall pay to each of the Banks an override fee in the amount of
one percent (1%) of the principal amount of the Obligations owed
to each such Bank on the Effective Date pursuant to the Original
Credit Documents.
5.5 Agency Fee. On the Effective Date, the Borrower will
pay to the Agent for the Agent's own account an agency fee of
$25,000.
5.6 Capital Adequacy. If, after the date of this
Agreement, any Bank determines that the adoption of or any change
in, any applicable law, rule, regulation or guideline regarding
capital adequacy, or any change in the interpretation or
administration thereof by any governmental or regulatory
authority, central bank or comparable agency charged with the
interpretation of administration thereof, or compliance by such
Bank with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority,
central bank or comparable agency, has or will have the effect of
reducing the rate of return on such Bank's capital in respect of
its obligations hereunder to a level below that which such Bank
could have achieved but for such adoption, change or compliance
(taking into consideration such Bank's policies with respect to
capital adequacy), then from time to time the Borrower shall pay
to such Bank upon demand such additional amount or amounts as
will compensate such Bank for such reduction. All determinations
made by such Bank of the additional amount or amounts required to
compensate such Bank in respect of the foregoing shall be
conclusive in the absence of manifest error. In determining such
amount or amounts, such Bank may use any reasonable averaging and
attribution methods.
ARTICLE VI.
PLEDGE OF PRINCIPAL CONCENTRATION ACCOUNT; SETOFF
6.1 Pledge of Principal Concentration Account. The
Principal Concentration Account, pursuant to the provisions of
the New Financing Facility and the New Lender Intercreditor
Agreement, will be subject to a Lien and security interest in
favor of the New Lender, which security interest will be
(i) subject to the set-off rights of the Concentration Account
Bank set forth in the New Lender Intercreditor Agreement and
(ii) subject to the provisions of Section 6.2, 6.3 and 6.4 below.
6.2 Setoff. If any Event of Default occurs, any and all
deposits (including all account balances, whether provisional or
final and regardless whether collected or available) and any
other Indebtedness at any time held or owing by the Concentration
Account Bank to or for the credit or account of the Borrower, up
to the Setoff Limit, may be offset and applied toward the payment
of the Obligations owing to the Concentration Account Bank,
regardless whether the Obligations, or any part hereof, shall
then be due and applied in accordance with Section 6.4. The
Concentration Account Bank agrees not to exercise any rights of
setoff with respect to deposits except as provided in this
Agreement and the New Lender Intercreditor Agreement, and,
subject to the following sentence, so long as the Borrower and
its Subsidiaries comply with the cash management system set forth
on Schedule 8.1(x) to the extent they are required to do so under
Section 8.1(x), each Bank other than the Concentration Account
Bank agrees that it will not exercise any setoff rights it may
have against the Borrower or any of its Subsidiaries and the
Banks and the Concentration Account Bank agree that, individually
or collectively, they will not be entitled to receive funds
through the exercise of any right or rights of setoff in excess
of the Setoff Limit. Upon the later to occur of (x) the Maturity
Date and (y) the date on which the Borrower's "Obligations" (as
defined in the New Financing Facility) under the New Financing
Facility as in effect on the Effective Date (and without giving
effect to any extension, replacement or refinancing thereof) are
paid in full and the New Financing Facility has been terminated,
each Bank will have and be permitted to exercise any and all
rights of setoff provided under applicable law. Each of the
Banks acknowledges and agrees that the limitations on rights of
setoff contained in this Agreement are provided for the benefit
of the New Lender and the Borrower, and that neither this
Section 6.2 nor any of the defined terms used in this Section 6.2
may be amended or modified without the prior written consent of
the New Lender.
6.3 Ratable Payments. Subject to the terms of the Existing
Lender Intercreditor Agreement, each Bank agrees that if it, by
exercising any right of set-off or counterclaim or otherwise,
receives payment of a proportion of its Claim that is greater
than the proportion received by any other Bank (based on the Pro
Rata Shares of the Banks) in respect of its Claim, the Bank
receiving such proportionately greater payment shall purchase
such participations in the Claims of the other Banks (to which
purchase the Borrower hereby consents), and such other
adjustments will be made, as may be required so that all such
payments with respect to the Claims of the Banks shall be shared
by the Banks on the basis of their Pro Rata Shares. The Borrower
agrees, to the fullest extent it may effectively do so under
applicable law, that any holder of a participation in any of the
Obligations, regardless whether acquired pursuant to the
foregoing arrangements or as set forth in Article XII, may
exercise rights of set-off or counterclaim and other rights with
respect to such participation as fully as if such holder of a
participation were a direct creditor of the Borrower in the
amount of such participation; provided, however, that,
notwithstanding any of the foregoing provisions of this
Section 6.3, any and all amounts recovered from the Borrower or
any Subsidiary by any Bank as a result of such Bank's exercising
a right of set-off against any account of the Borrower or any
Subsidiary will constitute Setoff Funds subject to the Setoff
Limit, and any Bank recovering any such amounts will immediately
remit such amount to the Concentration Account Bank, which will
apply such funds in accordance with Section 6.4. Notwithstanding
the foregoing, each Bank other than the Concentration Account
Bank agrees to forbear from exercising any right of setoff
against the Borrower or any Subsidiary until the date specified
in the penultimate sentence of Section 6.2.
6.4 Use of Setoff Funds. To the extent the Concentration
Account Bank is required to do so under the terms of the New
Lender Intercreditor Agreement, the Concentration Account Bank
will utilize any Setoff Funds to purchase the New Financing
Facility Last-Out Participation in an amount equal to the lesser
of (i) the amount of such Setoff Funds and (ii) the sum of
(x) the aggregate amount of the principal of and accrued and
unpaid interest on any outstanding "Loans" (as defined in the New
Financing Facility) plus (y) the aggregate stated amount of any
outstanding Letters of Credit (as defined in the New Financing
Facility), plus (z) any accrued and unpaid fees, under the New
Financing Facility on the date the Concentration Account Bank
receives such Setoff Funds. To the extent the Concentration
Account Bank is not required by the New Lender Intercreditor
Agreement to use Setoff Funds to purchase the New Financing
Facility Last-Out Participation, any such Setoff Funds will be
shared among the Existing Lenders (other than the Commercial LC
Bank) in accordance with the terms of the Existing Lender
Intercreditor Agreement.
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES
7.1 Representations and Warranties. The Borrower hereby
represents and warrants to each of the Banks that:
(a) Corporate Existence and Power. Except as set
forth on Schedule 7.1(a), each of the Borrower and each
Subsidiary: (i) is duly incorporated, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation; (ii) has all requisite corporate powers and
all material governmental and regulatory licenses,
authorizations, consents and approvals required to carry on
its business as now conducted; and (iii) is qualified to do
business in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary
and where failure to so qualify would have a Material
Adverse Effect.
(b) Corporate Authorization. The execution, delivery
and performance by the Borrower and each Subsidiary of this
Agreement, the Notes and the other Override Documents to
which the Borrower or such Subsidiary is a party are within
the corporate powers of the Borrower or such Subsidiary and
have been duly authorized by all necessary corporate action.
(c) Binding Effect. This Agreement, the Notes and the
other Override Documents to which the Borrower or any
Subsidiary is a party have been duly executed and delivered
by the Borrower and each such Subsidiary and constitute the
legal, valid and binding obligations of the Borrower and
each such Subsidiary enforceable against the Borrower and
each such Subsidiary in accordance with their respective
terms.
(d) Financial Information.
(i) (A) The consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as at
January 28, 1995, and the related consolidated
statements of income, common stockholders' equity and
cash flows for the fiscal year then ended, with the
report thereon of Ernst & Young, copies of which have
been provided to the Banks, fairly present, in
conformity with GAAP, the consolidated financial
position of the Borrower and its Consolidated
Subsidiaries as of such date and their consolidated
results of operations and cash flows for such fiscal
year and (B) the consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as at
July 29, 1995 and the related consolidated statements
of income, common stockholders' equity and cash flows
for the fiscal quarter then ended, copies which have
been furnished to the Banks, fairly present, in
accordance with GAAP subject to normal year-end
adjustments, the consolidated financial position of the
Borrower and its Consolidated Subsidiaries as of such
date and their consolidated results of operations and
cash flows for such fiscal quarter; and
(ii) Except as disclosed in Schedule 7.1(d)
neither the Borrower nor any of its Consolidated
Subsidiaries has any contingent liability in excess of
$5,000,000 which is required to be disclosed in
accordance with GAAP and which is not disclosed on said
financial statements or the notes thereto.
(e) Litigation. Except as disclosed in
Schedule 7.1(e), there is no action, suit or proceeding
pending or, to the knowledge of the Borrower, threatened
against or affecting, the Borrower or any of its
Subsidiaries before any court or arbitrator or any
governmental, regulatory or administrative body, agency or
official in which the prayer or claim for relief seeks
recovery of an amount in excess of $5,000,000 (or, if no
dollar amount is specified in the prayer or claim for
relief, in which there is a reasonable likelihood of
recovery of an amount in excess of $5,000,000), or any form
of equitable relief which if granted would have a Material
Adverse Effect.
(f) Pension and Welfare Plans. Each Pension Plan
complies in all material respects with all applicable
statutes and governmental rules and regulations; no
Reportable Event has occurred and is continuing with respect
to any Pension Plan; neither the Borrower nor any ERISA
Affiliate nor any Subsidiary has withdrawn from any Multi-
Employer Plan in a "complete withdrawal" or a "partial
withdrawal" as defined in Sections 4203 or 4205 of ERISA,
respectively; no steps have been instituted by the Borrower,
any ERISA Affiliate or any Subsidiary to terminate any
Pension Plan; no condition exists or event or transaction
has occurred in connection with any Pension Plan or Multi-
Employer Plan which could result in the incurrence by the
Borrower, any ERISA Affiliate or any Subsidiary of any
material liability, fine or penalty; and neither the
Borrower nor any ERISA Affiliate nor any Subsidiary is a
"contributing sponsor" as defined in Section 4001(a)(13) of
ERISA of a "single-employer plan" as defined in
Section 4001(a)(15) of ERISA which has two or more
contributing sponsors at least two of whom are not under
common control. Except as disclosed on Schedule 7.1(f),
neither the Borrower nor any Subsidiary has any contingent
liability with respect to any "employee welfare benefit
plan," as such term is defined in Section 3(a) of ERISA,
which covers retired employees and their beneficiaries.
(g) Tax Returns and Payment. The Borrower and its
Subsidiaries have filed all tax returns which are required
to be filed and have paid all taxes which have become due
pursuant to such returns and all other taxes, assessments,
fees and other governmental charges upon the Borrower and
its Subsidiaries and upon their respective Properties,
assets, income and franchises which have become due and
payable by the Borrower or any of its Subsidiaries, except
those (i) wherein the amount, applicability of validity are
being contested by the Borrower or any such Subsidiary by
appropriate proceedings conducted diligently in good faith
and in respect of which adequate reserves have been
established in accordance with GAAP or (ii) the nonpayment
of which (A) by the Borrower or any Subsidiary was not
willful and (B) would not result in a Material Adverse
Effect. All material tax liabilities of the Borrower and
its Subsidiaries were adequately provided for as of July 29,
1995, and are now so provided for on the books of the
Borrower and its Subsidiaries.
(h) Compliance With Other Instruments; None
Burdensome. Neither the Borrower nor any Subsidiary is a
party to any contract or agreement or subject to any charter
or other corporate restriction which could reasonably be
expected to have a Material Adverse Effect, and which is not
disclosed on the Borrower's financial statements heretofore
submitted to the Banks; none of the execution and delivery
by the Borrower of the Override Documents, the consummation
of the transactions therein contemplated or the compliance
with the provisions thereof will violate any law, rule,
regulation, order, writ, judgment, injunction, decree or
award binding on the Borrower, or any of the provisions of
the Borrower's Certificate of Incorporation or By-laws or
any of the provisions of any indenture, agreement, document,
instrument or undertaking to which the Borrower is a party
or subject or by which it or its Property is bound, or
conflict with or constitute a default thereunder or result
in the creation or imposition of any Lien pursuant to the
terms of any such indenture, agreement, document, instrument
or undertaking. No order, consent, approval, license,
authorization or validation of, or filing, recording or
registration with, or exemption by, any governmental,
regulatory, administrative or public body or authority, or
any subdivision thereof, or any other Person is required to
authorize, or is required as a precondition to, the
execution, delivery or performance of, or the legality,
validity, binding effect or enforceability of, any of the
Override Documents.
(i) Existing Indebtedness. Schedule 7.1(i) is a true,
correct and complete list of all Indebtedness and
Capitalized Leases of the Borrower with a principal balance
of $1,000,000 or more and all Indebtedness and Capitalized
Leases of the Subsidiaries with a principal balance of
$1,000,000 or more outstanding as of July 29, 1995.
(j) Labor Matters. Except as disclosed on
Schedule 7.1(j), (i) neither the Borrower nor any Subsidiary
is a party to any union labor contract and (ii) neither the
Borrower nor any Subsidiary is a party to any labor dispute.
(k) Title to Property. The Borrower and each
Subsidiary is the sole and absolute owner of, or has the
legal right to use and occupy, all Property it claims to own
or which is necessary for the Borrower or such Subsidiary to
conduct its business. The Borrower and its Subsidiaries
enjoy peaceful and undisturbed possession in all material
respects under all leases under which they are operating as
lessees (provided, however, that any failure to enjoy such
peaceful and undisturbed possession under any such lease
shall not constitute a breach of this representation and
warranty if the effect of such failure would not have a
Material Adverse Effect), and all such leases are valid and
subsisting in full force and effect, except for any default
or defaults the effect of which, if taken individually or in
the aggregate, would not have a Material Adverse Effect.
Neither the Borrower nor any Subsidiary has signed any
financing statements, security agreements or chattel
mortgages with respect to any of its Property, has granted
or permitted any Liens securing Indebtedness or other claims
in an amount in excess of $500,000 with respect to any of
its Property or has any knowledge of any Liens securing
Indebtedness or other claims in an amount in excess of
$500,000 with respect to any of its Property, except as
disclosed on Schedule 7.1(k).
(l) Multi-Employer Pension Plan Amendments Act of
1980. The Borrower and each Subsidiary is in compliance
with the Multi-Employer Pension Plan Amendments Act of 1980,
as amended ("MEPPAA"), and has no liability for pension
contributions pursuant to MEPPAA.
(m) Investment Company Act of 1940; Public Utility
Holding Company Act of 1935. The Borrower is not an
"investment company" as that term is defined in, and is not
otherwise subject to regulation under, the Investment
Company Act of 1940, as amended. The Borrower is not a
"holding company" as that term is defined in, and is not
otherwise subject to regulation under, the Public Utility
Holding Company Act of 1935, as amended.
(n) Patents, Licenses, Trademarks, Etc. Except as
disclosed on Schedule 7.1(n), the Borrower and its
Subsidiaries possess all necessary patents, licenses,
trademarks, trademark rights, trade names, trade name rights
and copyrights to conduct their respective businesses in all
material respects as now conducted without known conflict
with any patent, license, trademark, trade name or copyright
of any other Person.
(o) Environmental Safety and Health Matters. Except
as disclosed on Schedule 7.1(o), the Borrower and its
Subsidiaries are in compliance with all applicable
Environmental Laws and Occupational Safety and Health Laws
such that they will not incur or be subject to any
liability, penalty or Lien thereunder which could,
individually or in the aggregate, have a Material Adverse
Effect, (ii) the Borrower and its Subsidiaries do not
create, manage, store, discharge, treat, dispose of or
release any Hazardous Materials in violation of any
applicable Environmental Laws, (iii) there are no known
conditions or circumstances associated with any of the
currently or previously owned or leased properties or
operations of the Borrower or any of its Subsidiaries or any
tenants, if any, of the Borrower or any of its Subsidiaries
which may give rise to any liability, penalty or Lien under
any applicable Environmental Law or any applicable
Occupational Safety and Health Law which could have a
Material Adverse Effect and (iv) neither the Borrower nor
any of its Subsidiaries has knowledge of any violation of,
or has received or filed any notice pertaining to any
violation or alleged violation of, any applicable
Environmental Law or any applicable Occupational Safety and
Health Law.
(p) Subsidiaries. Schedule 7.1(p) correctly sets
forth (i) the name and jurisdiction of incorporation of each
Subsidiary as of the date hereof and (ii) a statement of the
ownership of each such Subsidiary's stock. The shares of
stock of the Subsidiaries listed on Schedule 7.1(p) as being
owned by the Borrower or any of its Subsidiaries are so
owned as of the date of this Agreement, free and clear of
any and all liens, claims and encumbrances of any kind or
nature whatsoever, and all such shares of stock have been
duly issued and are fully paid and nonassessable.
(q) Disclosure. Neither this Agreement nor any of the
Exhibits or Schedules hereto nor any certificate or other
data furnished in writing to any of the Banks, nor any oral
statement made by or on behalf of the Borrower by a
director, officer, employee, or representative authorized to
speak on behalf of the Borrower in connection with the
transactions contemplated by this Agreement contains any
untrue or incorrect statement of a material fact or omits to
state a material fact necessary to make the statements
contained herein or therein not misleading. To the best
knowledge of the Borrower, there is no fact peculiar to the
Borrower or any of its Subsidiaries which presently has a
Material Adverse Effect or in the future (so far as the
Borrower can now reasonably foresee) will have a Material
Adverse Effect that has not heretofore been disclosed by the
Borrower to the Banks.
(r) Transfers of Property. Neither the Borrower nor
any domestic Subsidiary has made any "transfer" (as defined
in section 101(54) of the United States Bankruptcy Code, 11
U.S.C. section 101(54)) of Property outside of the ordinary
course of business to (a) an "insider" (as defined in
section 101(31) of the United States Bankruptcy Code, 11
U.S.C. section 101(31)), within the one-year period immediately
preceding the Effective Date or (b) any other Person within the
90-day period immediately preceding the Effective Date, except
as set forth on Schedule 7.1(r).
(s) Handyman Guarantees. If the Borrower is required
to assume payment under any or all of the Handyman
Guarantees, such payment or payments would not have a
Material Adverse Effect.
(t) Noteholder Forbearance Agreement Representations.
Each of the representations and warranties of the Borrower
contained in Section 2 of the Noteholder Forbearance
Agreement is true and correct.
ARTICLE VIII.
COVENANTS
8.1 Covenants of the Borrower. The Borrower agrees that,
so long as any Obligations remain outstanding to any Committed
Bank or Electing Bank hereunder or any amount payable under any
New Note remains unpaid, unless the prior written consent of the
Required Banks is obtained:
(a) Information. The Borrower will deliver to each
Bank:
(i) as soon as available and in any event within
forty-five (45) days after the end of each of the first
three (3) quarters of each fiscal year of the Borrower,
a consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as at the end of such fiscal
quarter, the related consolidated statement of income
for such fiscal quarter and for the portion of the
Borrower's fiscal year ended at the end of such fiscal
quarter and the related consolidated statement of cash
flows for such fiscal quarter and for the portion of
the Borrower's fiscal year ended at the end of such
fiscal quarter, setting forth in each case in
comparative form the figures as of the end of and for
the corresponding fiscal quarter and the corresponding
portion of the Borrower's previous fiscal year, all
certified (subject to normal year-end adjustments) as
to fairness of presentation, conformance with GAAP and
consistency by the chief financial officer of the
Borrower;
(ii) as soon as available and in any event within
twenty-five (25) days after the end of each fiscal
month of the Borrower, a consolidated balance sheet of
the Borrower and its Consolidated Subsidiaries as at
the end of such fiscal month, the related consolidated
statement of income for such fiscal month and for the
portion of the Borrower's fiscal year ended at the end
of such fiscal month and the related consolidated
statement of cash flows for such fiscal month and for
the portion of the Borrower's fiscal year ended at the
end of such fiscal month, together with comparable
store information by division for the corresponding
portion of the Borrower's previous fiscal year, all
certified (subject to normal year-end adjustments) as
to fairness of presentation, conformance with GAAP and
consistency by the chief financial officer of the
Borrower;
(iii) no later than the second Business Day of
each week (A) a statement of the consolidated cash
flows of the Borrower and its Consolidated Subsidiaries
for the immediately preceding week;
(iv) promptly upon the mailing thereof to the
shareholders of the Borrower generally, and in any
event within ten (10) days after any such mailing,
copies of all financial statements, reports, proxy
statements and other material information so mailed;
(v) promptly upon any filing thereof, and in any
event within ten (10) days after the filing thereof,
copies of all registration statements (other than the
exhibits thereto and any registration statements on
Form S-8 or its equivalent) and annual, quarterly or
monthly reports which the Borrower shall file with the
Securities and Exchange Commission or any successor
agency;
(vi) no later than October 31, 1995, the
Borrower's business plan for fiscal year 1996
containing such minimum information as the Existing
Lenders and Price Waterhouse, L.L.P. shall request by
September 25, 1995;
(vii) no later than eight (8) Business Days
after the Effective Date: (A) incumbency certificates,
executed by the Secretary or Assistant Secretary of
each Subsidiary, which shall identify by name and title
and bear the signature of the officers of such entity
authorized to sign the Override Documents to which it
is a party, upon which certificate the Banks will be
entitled to rely until informed in writing of any
change by such entity; (B) copies certified by the
Secretary or Assistant Secretary of each Subsidiary of
such Subsidiary's certificate or articles of
incorporation and by-laws; and (C) certified copies of
resolutions of each Subsidiary's Board of Directors
and, where necessary, shareholders, authorizing or
ratifying the execution, delivery and performance of
the Override Documents, the Noteholder Guaranty, the
New Financing Facility and all other documents provided
for herein or therein to be executed by such
Subsidiary; and
(viii) from time to time, with reasonable
promptness, such further information regarding the
business, affairs and financial position of the
Borrower and each Subsidiary as any Bank may reasonably
request.
It is understood that the Borrower's fiscal year ends on the
Saturday nearest in time to January 31, the first quarter of the
Borrower's fiscal year ends on the 13th Saturday following the
end of the fiscal year, the second quarter ends on the 13th
Saturday following the end of the first quarter, the third
quarter ends on the 13th Saturday following the end of the second
quarter and the fourth quarter ends at the fiscal year end.
(b) Limitations on Debt. (i) The Borrower will not
create, assume or incur or in any manner be or become liable
in respect of any Indebtedness, and will not cause or permit
any Subsidiary to create, assume or incur or in any manner
be or become liable in respect of any Indebtedness, except:
(A) the Obligations;
(B) Indebtedness of the Borrower under the
New Commercial LC Facility Agreement;
(C) Indebtedness of the Borrower and its
Subsidiaries on the Effective Date and reflected
on Schedule 8.1(b);
(D) trade payables and other contractual
obligations to suppliers and customers incurred in
the ordinary course of business (subject, in the
case of any such trade payables and other
contractual obligations owing by the Borrower to
Affiliates of the Borrower, to Section 8.1(f));
(E) Indebtedness incurred to finance the
purchase of equipment constituting Capital
Expenditures permitted by Section 8.1(u), so long
as the principal amount of Indebtedness incurred
for any such purchase of equipment does not exceed
100% of the cost of such equipment;
(F) Indebtedness incurred in the ordinary
course of business under Operating Leases;
(G) (x) in the case of any Subsidiary that
is a Guarantor, Indebtedness to the Borrower or a
Wholly Owned Subsidiary that is a Guarantor
incurred in the ordinary course of business of
such Subsidiary consistent with the past practices
of the Borrower and its Subsidiaries, provided
that any such Indebtedness is subordinated in
right of payment to the "Guaranteed Obligations"
under and as defined in each of the Bank Guaranty,
the Noteholder Guaranty and the Commercial LC
Facility Guaranty and (y) in the case of all
Subsidiaries that are not Guarantors, Indebtedness
to the Borrower or a Wholly Owned Subsidiary
incurred in the ordinary course of business of any
such Subsidiary consistent with the past practices
of the Borrower and its Subsidiaries in a net
aggregate outstanding principal amount not
exceeding $2,000,000 at any time;
(H) Indebtedness of the Borrower to any
Wholly Owned Subsidiary that is a Guarantor
incurred in the ordinary course of the business of
the Borrower and its Subsidiaries consistent with
their past practice, provided that any such
Indebtedness is subordinated in right of payment
to the Obligations; and
(I) Indebtedness of the Borrower and its
Subsidiaries under the New Financing Facility.
(ii) Any Indebtedness of a Subsidiary to a
previously Wholly Owned Subsidiary shall be deemed to
have been created, assumed or incurred immediately
after such Wholly Owned Subsidiary is no longer Wholly
Owned.
(c) Limitations on Liens. The Borrower will not, and
will not cause or permit any Subsidiary to, create or incur,
or suffer to be incurred or to exist, any Lien on any of its
or their Property or assets, whether now owned or hereafter
acquired, or upon any income or profits therefrom, or
transfer any Property for the purpose of subjecting the same
to the payment of obligations in priority to the payment of
its or their general creditors, or acquire or agree to
acquire, or permit any Subsidiary to acquire or agree to
acquire, any Property or assets upon conditional sales
agreements or other title retention devices, except:
(i) Liens on Property of the Borrower and its
Subsidiaries granted to secure their respective
"Obligations" under and as defined in the New Financing
Facility;
(ii) Liens for property taxes and assessments or
governmental charges or levies and Liens securing
claims or demands of mechanics and materialmen,
provided payment thereof is not at the time required by
Section 8.1(j)(i);
(iii) Liens of or resulting from any judgment
or award, the time for the appeal or petition for
rehearing of which shall not have expired, or in
respect of which the Borrower or a Subsidiary shall
(A) at any time in good faith be prosecuting an appeal
or proceeding for a review and in respect of which a
stay of execution pending such appeal or proceeding for
review shall have been secured and (B) have set aside
on its books adequate reserves in accordance with GAAP
with respect thereto;
(iv) Liens incidental to the conduct of business
or the ownership of Properties and assets (including
Liens in connection with worker's compensation,
unemployment insurance and other like laws,
warehousemen's and attorneys' liens and statutory
landlords' liens) and Liens to secure the performance
of bids, tenders or trade contracts, or to secure
statutory obligations, surety or appeal bonds or other
Liens of like general nature incurred in the ordinary
course of business and not in connection with the
borrowing of money or the acquisition of inventory;
provided in each case the obligation secured is not
overdue or, if overdue, is being contested in good
faith by appropriate actions or proceedings;
(v) minor survey exceptions or minor
encumbrances, easements or reservations, or rights of
others for rights-of-way, utilities and other similar
purposes, or zoning or other restrictions as to the use
of real properties, which are necessary for the conduct
of the activities of the Borrower and its Subsidiaries
or which customarily exist on properties of
corporations engaged in similar activities and
similarly situated and which do not in any event
materially impair the use of such real properties in
the operation of the business of the Borrower and its
Subsidiaries;
(vi) Liens, on computer equipment (principally
point of sale terminals) securing the leases of such
equipment, as described in Schedule 7.1(k);
(vii) Liens incurred after the Effective Date
given to secure the payment of the purchase price
incurred in connection with the acquisition of fixed
assets useful and intended to be used in carrying on
the business of the Borrower or a Subsidiary, including
Liens existing on such fixed assets at the time of
acquisition thereof or at the time of acquisition by
the Borrower or a Subsidiary of any business entity
then owning such fixed assets, whether or not such
existing Liens were given to secure the payment of the
purchase price of the fixed assets to which they attach
so long as they were not incurred, extended or renewed
in contemplation of such acquisition, provided that
(A) any such acquisition shall constitute a Capital
Expenditure permitted by Section 8.1(u), (B) the Lien
shall attach solely to the fixed assets acquired or
purchased and (C) at the time of acquisition of such
fixed assets, the aggregate amount remaining unpaid on
all Indebtedness secured by Liens on such fixed assets
whether or not assumed by the Borrower or a Subsidiary
shall not exceed an amount equal to 100% of the lesser
of the total purchase price or fair market value at the
time of acquisition of such fixed assets (as determined
in good faith by the Board of Directors of the
Borrower);
(viii) any extension or renewal of any Lien
permitted by the preceding clauses (vi) and (vii) above
in respect of the same Property theretofore subject to
such Lien in connection with the extension or renewal
of the Indebtedness secured thereby; provided that
(1) such Lien shall attach solely to the same such
Property and (2) such extension or renewal of such
Indebtedness shall be without increase in the principal
remaining unpaid as of the date of such extension or
renewal;
(ix) the Lien of the Standby LC Bank in the Cash
Collateral Account to the extent provided for in
Section 4.5(a); and
(x) the right of setoff provided to the
Concentration Account Bank under Section 6.2 and the
New Lender Intercreditor Agreement.
Notwithstanding anything above to the contrary, this
Section 8.1(c) does not apply to the Liens on the Borrower's
or its Subsidiaries' Property granted to secure the
Borrower's obligations under the New Commercial LC Facility
Agreement.
(d) Limitations on Sale and Leasebacks. The Borrower
will not, and will not permit any Subsidiary to, effect any
Sale and Leaseback Transaction.
(e) Merger, Consolidation, Sale of Stock and Issuance
of Stock. The Borrower will not, and it will not cause or
permit any Subsidiary to, (i) merge or consolidate into or
with, or liquidate into, or enter into any analogous
reorganization or transaction with, any other Person,
(ii) issue or sell, assign, transfer or otherwise dispose of
any of its capital stock other than pursuant to the exercise
of stock options that exist on the Effective Date by
directors, officers or employees of the Borrower or
(iii) sell, transfer, or otherwise dispose of its Property
or assets to any Person other than (A) sales of inventory in
the ordinary course of business and (B) sales of (I) the
stock or assets of Edison Brothers Mall Entertainment, Inc.,
a Missouri corporation, (II) the premises occupied by
Baker's Shoe Store located at 131-33 South State Street,
Chicago, Illinois, (III) the warehouse owned by the Borrower
at 400 South 14th Street, St. Louis, Missouri and (IV) the
trademark "Sacha London" owned by the Borrower, all of such
sales to be for cash (unless otherwise approved by the
Required Banks and holders of a majority in principal amount
of the Private Placement Notes) and otherwise on
commercially reasonable terms.
(f) Transactions with Affiliates. The Borrower will
not, and will not cause or permit any Subsidiary to, enter
into or be a party to any transaction or arrangement with
any Affiliate (including, without limitation, the purchase
from, sale to or exchange of Property with, or the rendering
of any service by or for, any Affiliate), except in the
ordinary course of business and pursuant to the reasonable
requirements of the Borrower's or such Subsidiary's business
and upon fair and reasonable terms no less favorable to the
Borrower or such Subsidiary than would be obtained in a
comparable arm's-length transaction with a Person not an
Affiliate.
(g) Restricted Investments. The Borrower will not,
and will not cause or permit any Subsidiary to, directly or
indirectly, make any Restricted Investments.
(h) Restricted Payments -- Capital Stock. The
Borrower will not, and will not permit any of its
Subsidiaries to, directly or indirectly:
(i) Declare or pay dividends, either in cash or
property, on the capital stock of the Borrower; or
(ii) Purchase, redeem or retire, directly or
indirectly, any of the capital stock of the Borrower or
any Subsidiary or any warrants, rights or options to
purchase or acquire any shares of such common stock,
except for purchases, redemptions or retirements of the
common stock of the Wholly Owned Subsidiaries or
retirements of options with respect to the Borrower's
capital stock in exchange for newly issued options with
respect to such common stock pursuant to plans of the
Borrower and the Subsidiaries in existence as of the
Effective Date; or
(iii) Make any other distribution of assets or
Property in respect of the capital stock of the
Borrower or any Subsidiary; provided that Subsidiaries
that are not Guarantors may pay cash dividends on their
stock to the Borrower or any Wholly Owned Subsidiary.
(i) Consultations and Inspections. The Borrower
acknowledges that the Banks and the Private Placement
Noteholders have retained Price Waterhouse, L.L.P. as their
joint financial advisor with respect to the restructuring of
the Borrower's Obligations (including without limitation the
transactions contemplated by this Agreement and the other
Override Documents). The Borrower will permit, and will
cause each Subsidiary to permit, at the Borrower's expense,
any Bank and/or Price Waterhouse, L.L.P. and any Person
appointed by any Bank and Price Waterhouse, L.L.P. to
discuss the affairs, finances and accounts of the Borrower
and its Subsidiaries with the officers of the Borrower and
each of its Subsidiaries, and to visit and inspect its
Properties and examine its books and records all at such
reasonable times and as often as may from time to time be
reasonably requested.
(j) Payment of Taxes and Claims; Corporate Existence;
Maintenance of Properties; Insurance. The Borrower will,
and will cause each Subsidiary to:
(i) pay and discharge promptly all taxes,
assessments and other governmental charges or levies
imposed upon it or any of its income, profits or
Property before the same shall become past due or in
default, as well as all lawful claims and liabilities
of any kind (including claims and liabilities for
labor, materials and supplies) which, if unpaid, might
by law become a Lien upon any of its Property or
assets; provided, however, that (A) neither the
Borrower nor any Subsidiary shall be required to pay
any such tax, assessment, charge, levy or claim the
payment of which is being contested in good faith and
by appropriate proceedings being diligently conducted
and for which adequate reserves in form and amount
deemed adequate by the Borrower and its independent
certified public accountants have been provided
(segregated to the extent required by GAAP), except
that the Borrower and its Subsidiaries will pay or
cause to be paid all such taxes, assessments, charges,
levies and claims forthwith upon the commencement of
proceedings to foreclose any Lien which is attached as
security therefor, unless such foreclosure is stayed by
the filing of an appropriate bond and (B) any failure
to pay any such tax, assessment, charge, levy or claim
shall not constitute an Event of Default if such
failure (1) was not willful and (2) does not and will
not result in any Material Adverse Effect;
(ii) do all things necessary to preserve and keep
in full force and effect its corporate existence and
franchises; provided, however, that nothing in this
Section 8.1(j)(ii) shall prevent the abandonment or
termination of the corporate existence and franchises
of any Subsidiary if, in the opinion of the Borrower,
such abandonment or termination is in the interest of
the Borrower and not disadvantageous in any material
respect to any of the Banks;
(iii) on a basis consistent with the past
practices of the Borrower and its Subsidiaries and the
requirements of this Agreement maintain and keep its
Properties used or useful in the conduct of its
business in good condition, repair and working order
and supplied with all necessary equipment and make all
necessary repairs, renewals, replacements, betterments
and improvements thereof, all as may be necessary so
that the business carried on in connection therewith
may be promptly and advantageously conducted at all
times; and
(iv) cause its Properties of an insurable nature
to be self-insured (in such manner as is in effect on
the Effective Date) or insured (subject to reasonable
deductible amounts) by reputable and solvent insurance
companies against loss or damage (including public
liability) in amounts and subject to terms deemed
adequate and prudent by the Borrower. For purposes of
this Section 8.1(j)(iv), a "reputable and solvent"
insurance company shall mean any insurance company
accorded a rating by A.M. Best Company, Inc. of A:XII
or higher at the time of issuance of any policy;
provided, however, that if during the term of any
insurance policy, the rating accorded the insurer shall
be less than A:XII, the Borrower or its applicable
Subsidiary, as the case may be, on the date of renewal
of any such policy (or, if such change in rating shall
occur within ninety (90) days prior to such renewal
date, within ninety (90) days of the date of such
change in rating), will obtain such insurance policy
from an insurer accorded such a rating.
(k) Maintenance of Books and Records. The Borrower
and its Subsidiaries will, on a consolidated basis, maintain
their books and records in accordance with GAAP consistently
applied (except for changes disclosed in the financial
statements furnished to the Banks pursuant to Section 8.1(a)
and concurred in by the independent certified public
accountants of the Borrower).
(l) Changes in Nature of Business. The Borrower will
not, and will not cause or permit any Subsidiary to, engage
in any business if, as a result, the general nature of the
business which would then be engaged in by the Borrower and
its Subsidiaries, considered as a whole, would be
substantially changed from the general nature of the
business engaged in by the Borrower and its Subsidiaries as
of the Effective Date.
(m) Compliance with Law. The Borrower will, and will
cause each Subsidiary to, comply with any and all laws,
ordinances and governmental and regulatory rules and
regulations to which it is subject and obtain any and all
licenses, permits, franchises and other governmental and
regulatory authorizations necessary to the ownership of its
Properties or to the conduct of its businesses, which
failure to comply or failure to obtain could reasonably be
expected to have a Material Adverse Effect.
(n) Accountant. The Borrower shall give the Banks
prompt notice of any change of the Borrower's independent
certified public accountants and a statement of the reasons
for such change. The Borrower shall at all times utilize
independent certified public accountants of nationally
recognized standing.
(o) ERISA Compliance. If the Borrower or any
Subsidiary shall have any Pension Plan, the Borrower and
such Subsidiary or Subsidiaries shall comply in all material
respects with all requirements of ERISA relating to such
plan. Without limiting the generality of the foregoing,
neither the Borrower nor any Subsidiary shall:
(i) permit any Pension Plan maintained by it to
engage in any nonexempt "prohibited transaction," as
such term is defined in Section 4975 of the Code;
(ii) permit any Pension Plan maintained by it to
incur any "accumulated funding deficiency," as such
term is defined in Section 302 of ERISA, 29 U.S.C.
Section 1082, whether or not waived.
(iii) terminate any such Pension Plan in a
manner which could result in the imposition of a Lien
on any Property of the Borrower or any Subsidiary
pursuant to Section 4068 of ERISA, 29 U.S.C.
Section 1368; or
(iv) take any action which would constitute a
complete or partial withdrawal from a Multi-Employer
Plan within the meaning of Sections 4203 and 4205 of
Title IV of ERISA.
(p) Further Assurances. The Borrower will execute,
and will cause the Subsidiaries to execute (if applicable),
any and all further agreements, documents and instruments,
and take any and all further actions that may be required
under applicable law, or which any Bank may from time to
time reasonably request, in order to effectuate the
transactions contemplated by this Agreement, the Notes and
the other Override Documents.
(q) Notices. The Borrower will notify each Bank in
writing of any of the following immediately upon learning of
the occurrence thereof, describing the same and, if
applicable, the steps being taken by the Borrower and/or its
Subsidiaries with respect thereto:
(i) Default. The occurrence of (A) any Default,
(B) any default or event of default under the New
Financing Facility, the Noteholder Forbearance
Agreement or the New Commercial LC Facility Agreement,
or (C) any default or event of default by the Borrower
or any Subsidiary under any note, indenture, loan
agreement, mortgage, deed of trust, security agreement,
lease or other similar agreement, document or
instrument to which the Borrower or any Subsidiary, as
the case may be, is a party or by which it is bound or
to which it is subject, a default under which could
have a Material Adverse Effect; the notice required by
this Section 8.1(q)(i) shall occur regardless whether
Borrower or any Subsidiary receives a waiver of such
default from the applicable creditor;
(ii) Litigation. The institution of any
litigation, arbitration proceeding or governmental,
regulatory or administrative proceeding affecting the
Borrower or any Subsidiary, whether or not considered
to be covered by insurance, in which the prayer or
claim for relief seeks recovery of an amount in excess
of $5,000,000 (or, if no dollar amount is specified in
the prayer or claim for relief, in which there is a
reasonable likelihood of recovery of an amount in
excess of $5,000,000) or any form of equitable relief
that if granted could reasonably be expected to have a
Material Adverse Effect;
(iii) Judgment. The entry of any judgment or
decree in an amount in excess of $1,000,000 against the
Borrower or any Subsidiary;
(iv) Pension Plans. The occurrence of a
Reportable Event with respect to any Pension Plan, the
filing of a notice of intent to terminate a Pension
Plan by the Borrower, any ERISA Affiliate or any
Subsidiary; the institution of proceedings to terminate
a Pension Plan by the PBGC or any other Person; the
withdrawal in a "complete withdrawal" or a "partial
withdrawal" as defined in Sections 4203 and 4205,
respectively, of ERISA by the Borrower, any ERISA
Affiliate or any Subsidiary from any Multi-Employer
Plan; or the incurrence of any material increase in the
contingent liability of the Borrower or any Subsidiary
with respect to any "employee welfare benefit plan" as
defined in Section 3(1) of ERISA which covers retired
employees and their beneficiaries;
(v) Environmental and Safety and Health Matters.
The receipt by the Borrower or any Subsidiary of any
notice or allegation by any governmental or regulatory
agency, entity, authority or official that: (A) the
operations of the Borrower or any Subsidiary are not in
full compliance with the requirements of any applicable
Environmental Law or Occupational Safety and Health
Law; (B) the Borrower or any Subsidiary or any of their
respective Properties or facilities are subject to any
Federal, state or local investigation concerning
(1) any actual, threatened or suspected violation of
any Environmental Law or Occupational Safety and Health
Law and/or any spillage, disposal or other release into
the environment of any Hazardous Materials or (2) any
unsafe or unhealthful condition; or (C) any Properties,
facilities or assets of the Borrower or any Subsidiary
are or may become subject to any Environmental Lien;
(vi) Material Adverse Change. The occurrence of
any event that could have a Material Adverse Effect;
and
(vii) Change in Management. Any resignation,
removal or replacement of any member of the Board of
Directors, the Chairman of the Board, President or
Chief Financial Officer of the Borrower.
(r) Pension Plans. Neither the Borrower nor any
Subsidiary will (i) permit any condition to exist in
connection with any Pension Plan that might constitute
grounds for the PBGC to institute proceedings to have such
Pension Plan terminated or a trustee appointed to administer
such Pension Plan or (ii) engage in, or permit to exist or
occur, any other condition, event or transaction with
respect to any Pension Plan which could result in the
incurrence by the Borrower or any Subsidiary of any material
liability, fine or penalty.
(s) Acquisitions. The Borrower will not, nor will it
cause or permit any Subsidiary to, make or suffer to exist
any Acquisition.
(t) Guaranties. The Borrower will not, and will not
cause or permit any Subsidiary to, become liable in respect
of any Guaranty except for (i) the Bank Guaranty, (ii) the
Commercial LC Facility Guaranty, (iii) the Noteholder
Guaranty, (iv) Guaranties under the New Financing Facility,
(v) the Handyman Guaranties, (vi) Guaranties of any lessee's
obligations under any Operating Lease (including Guaranties
in an amount not exceeding $9,500,000 of such Operating
Lease obligations that were assigned to and assumed by a
successor lessee), (vii) Guaranties as to which the primary
obligation has been taken into account pursuant to the
definition of "Indebtedness," (viii) Guaranties of the lease
obligations of Dave & Buster's, Inc. in an amount not
exceeding $66,000,000, and (ix) Guaranties of the lease
obligations of the Borrower's Wholly Owned Subsidiary Edbro
Missouri Realty Company, Inc. and of the principal of and
interest on the $5,500,000 Industrial Revenue Refunding
Bonds Series 1985 issued by the City of Washington,
Missouri.
(u) Capital Expenditures. The Borrower will not, and
will not permit any of its Subsidiaries to, make Capital
Expenditures in excess of $11,500,000 from and after the
Effective Date for the Borrower and its Subsidiaries in the
aggregate.
(v) Lease Termination Payments. From and after the
Effective Date, the Borrower will not, nor will it cause or
permit any Subsidiary to, make any Lease Termination
Payments exceeding an aggregate amount of $5,900,000.
Within this aggregate limitation, Lease Termination Payments
of no more than $4,000,000 in the aggregate for the Borrower
and all Subsidiaries may be made during the period
commencing on the Effective Date and ending on December 31,
1995. On or before October 31, 1995, the Borrower shall
deliver to each Bank a good faith estimate of the number of
store closings anticipated between the Effective Date and
February 29, 1996, which estimate shall identify the stores
proposed to be closed and the anticipated closing costs of
each such store.
(w) Condemnation. Immediately upon learning of the
institution of any proceeding for the condemnation or other
taking of any of the owned or leased real property of the
Borrower or any Subsidiary that could have a Material
Adverse Effect, the Borrower shall notify each Bank of the
pendency of such proceeding.
(x) Accounts; Maintenance of Cash Management System.
Until the earlier to occur of (i) the Borrower's payment in
full of the mandatory principal reduction required by
Section 4.2 and (ii) the exercise by the Concentration
Account Bank of any rights of setoff it has and its receipt
by virtue of such exercise of funds in an aggregate amount
equal to the Setoff Limit, neither the Borrower nor any
Subsidiary will establish, maintain, or permit to exist any
deposit account, investment account or other account of any
nature with any financial institution or any other Person
except such accounts specified on or contemplated by the
description of the Borrower and its Subsidiaries'
consolidated cash management system set forth in
Schedule 8.1(x) and except for the LC Cash Collateral
Account. The Borrower and its Subsidiaries will maintain
their consolidated cash management system in the manner
specified in Schedule 8.1(x) and will maintain the Principal
Concentration Account at the Concentration Account Bank;
provided, however, that the Borrower may maintain aggregate
collected balances up to $1,000,000 at Mercantile Bank of
St. Louis National Association.
(y) Severance Payments. The Borrower will not, nor
will it permit any Subsidiary to, enter into any new, or
amend any existing, severance agreement (or agreement that
directly or indirectly has the same effect as a severance
agreement) with any officer or director except in conformity
with the letter dated September 20, 1995 from Alan Miller
addressed to Karen Myers and Mark Denkinger, a copy of which
has been furnished to each Bank.
(z) Amendment of New Commercial LC Facility Agreement,
Noteholder Forbearance Agreement and New Financing Facility.
The Borrower will not, nor will it permit any Subsidiary to,
agree to any amendment, modification or waiver of any
provision of the New Commercial LC Facility Agreement, the
Noteholder Forbearance Agreement or the New Financing
Facility, without the written consent of the Required Banks.
(aa) No Additional Stores. The Borrower will not
permit to exist on any date any net increase in the total
number of stores operated by the Borrower and its
Subsidiaries from the number of such stores operated on the
Effective Date.
(ab) Letters of Credit Under New Financing Facility.
Neither the Borrower nor any Subsidiary will at any time
request or permit to be issued any letter of credit under
the New Financing Facility unless the Borrower has fully
utilized all of its existing availability for issuances
under the New Commercial LC Facility Agreement; provided,
however, that, notwithstanding the foregoing, if the
Borrower in good faith requires an issuance of a commercial
letter of credit under the New Commercial LC Facility
Agreement of a type not issuable under such facility, the
Borrower may request such letter of credit to be issued
under the New Financing Facility.
(ac) Modification of Standby Letters of Credit. The
Borrower will cooperate with the Standby LC Bank and the
beneficiaries under the Standby Letters of Credit to have
the terms and provisions of the Standby Letters of Credit
modified to conform as applicable with the terms and
provisions of this Agreement.
(ad) Noteholder Forbearance Agreement Covenants. The
Borrower and its Subsidiaries will comply with each of the
covenants contained in Section 4 of the Noteholder
Forbearance Agreement.
8.2 Weekly Representation Covenant. Through the Maturity
Date, on the first Business Day of each week, the Borrower shall
deliver to each Bank a certificate executed by the Chief
Executive Officer, the Chief Financial Officer or the General
Counsel of the Borrower in the form attached hereto and made a
part hereof as Exhibit B, (a) stating whether there exists on the
date of such certificate any Default and if any Default then
exists, setting forth the details thereof and the action the
Borrower is taking or proposes to take with respect thereto and
(b) certifying that all of the representations and warranties of
the Borrower contained in this Agreement and the other Override
Documents are true and correct in all material respects on or as
of the date of such certificate as if made on the date of such
certificate.
ARTICLE IX.
DEFAULTS
9.1 Events of Default. If any of the following (each of
the following herein sometimes called an "Event of Default")
shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of or
interest on any of the Obligations or any other amount or
amounts payable by the Borrower under this Agreement or the
New Commercial LC Facility Agreement as and when the same
shall become due and payable;
(b) the Borrower shall violate or fail to perform or
observe any of the covenants or agreements contained in
Section 8.1(b), (c), (d), (e), (f), (g), (h), (i), (q)(i),
(s), (t), (u), (v), (x), (y), (z), (aa), (ab), or (ad) of
this Agreement;
(c) the Borrower shall violate or fail to perform or
observe any of the covenants or agreements contained in
Section 8.1(a), (q)(ii) through (vii), or (w) and any such
violation or failure shall remain unremedied for two (2)
Business Days;
(d) the Borrower shall violate or fail to perform or
observe any other term, covenant or agreement contained in
this Agreement (other than those specified in clause (a),
(b) or (c) above) and any such violation or failure shall
remain unremedied for five (5) Business Days after the
earlier of (i) written notice of default is given to the
Borrower by any Bank and (ii) a responsible officer of the
Borrower obtaining knowledge of such default;
(e) any representation or warranty of the Borrower
made in this Agreement, in any other Override Document or in
any certificate, agreement, instrument or statement
furnished or made or delivered pursuant hereto or thereto or
in connection herewith or therewith, shall prove to have
been untrue, incorrect or materially misleading when made or
effected;
(f) this Agreement or any of the other Override
Documents shall at any time for any reason cease to be in
full force and effect or shall be declared to be null and
void by a court of competent jurisdiction, or the validity
or enforceability thereof shall be contested or denied by
the Borrower or any Subsidiary, or the transactions
contemplated hereunder or thereunder shall be contested by
the Borrower or any Subsidiary, or the Borrower or any
Subsidiary denies that it has any or further liability or
obligation hereunder or thereunder;
(g) the Borrower or any Subsidiary shall
(i) voluntarily commence any proceeding or file any petition
seeking relief under Title 11 of the United States Code or
any other Federal, state or foreign bankruptcy, insolvency,
receivership, liquidation or similar law, (ii) consent to
the institution of, or fail to contravene in a timely and
appropriate manner, any such proceeding or the filing of any
such petition, (iii) apply for or consent to the appointment
of a receiver, trustee, custodian, sequestrator or similar
official of itself or of a substantial part of its Property
or assets, (iv) file an answer admitting the material
allegations of a petition filed against itself in any such
proceeding, (v) make a general assignment for the benefit of
creditors, (vi) become unable, admit in writing its
inability or fail generally to pay its debts as they become
due or (vii) take any corporate or other action for the
purpose of effecting any of the foregoing;
(h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of the Borrower
or any Subsidiary, or of a substantial part of the Property
or assets of the Borrower or any Subsidiary, under Title 11
of the United States Code or any other Federal, state or
foreign bankruptcy, insolvency, receivership, liquidation or
similar law, (ii) the appointment of a receiver, trustee,
custodian, sequestrator or similar official of the Borrower
or any Subsidiary or of a substantial part of the Property
or assets of the Borrower or any Subsidiary or (iii) the
winding-up or liquidation of the Borrower or any Subsidiary;
and such proceeding or petition shall continue undismissed
for thirty (30) consecutive days or an order or decree
approving or ordering any of the foregoing shall continue
unstayed and in effect for thirty (30) consecutive days;
(i) the Borrower or any Subsidiary shall be declared
by any of the Banks to be in default on, or pursuant to the
terms of, (i) any other present or future obligation to any
of such Bank(s), including, without limitation, any other
loan, line of credit, revolving credit, guaranty or letter
of credit reimbursement obligation, or (ii) any other
present or future agreement purporting to convey to any of
such Bank(s) a Lien upon any Property or assets of the
Borrower or such Subsidiary, as the case may be;
(j) the Borrower or any Subsidiary shall fail (and
such failure shall not have been cured or waived) to perform
or observe any term, provision or condition of, or any other
default or event of default shall occur under, any
agreement, document or instrument evidencing, securing or
otherwise relating to any outstanding Indebtedness of the
Borrower or such Subsidiary, as the case may be, for
borrowed money (other than the Notes), in a principal amount
in excess of $1,000,000, if the effect of such failure or
default is to cause or permit such Indebtedness to be
declared to be due and payable or otherwise accelerated, or
to be required to be prepaid (other than by a regularly
scheduled required prepayment) prior the stated maturity
thereof;
(k) the Borrower or any Subsidiary shall have a
judgment in excess of $1,000,000 entered against it by a
court having jurisdiction in the premises and such judgment
shall not be appealed in good faith or satisfied by the
Borrower or such Subsidiary (or an insurer on behalf of the
Borrower or such Subsidiary), as the case may be, within the
time permitted by applicable law for an appeal of such
judgment;
(l) the occurrence of a Reportable Event with respect
to any Pension Plan; the filing of a notice of intent to
terminate a Pension Plan by the Borrower, any ERISA
Affiliate or any Subsidiary; the institution of proceedings
to terminate a Pension Plan by the PBGC or any other Person;
the withdrawal in a "complete withdrawal" or a "partial
withdrawal" as defined in Sections 4203 and 4205,
respectively, of ERISA by the Borrower, any ERISA Affiliate
or any Subsidiary from any Multi-Employer Plan; or the
incurrence of any material increase in the contingent
liability of the Borrower or any Subsidiary with respect to
any "employee welfare benefit plan" as defined in
Section 3(1) of ERISA which covers retired employees and
their beneficiaries;
(m) the institution by the Borrower, any ERISA
Affiliate or any Subsidiary of steps to terminate any
Pension Plan if, in order to effectuate such termination,
the Borrower, such ERISA Affiliate or such Subsidiary, as
the case may be, would be required to make a contribution to
such Pension Plan, or would incur a liability or obligation
to such Pension Plan, in excess of $10,000,000; or the
institution by the PBGC of steps to terminate any Pension
Plan;
(n) a Change of Control shall occur;
(o) any "Event of Default" (as defined therein) shall
occur under or within the meaning of the Noteholder
Forbearance Agreement;
(p) any event of default or default shall occur under
or within the meaning of the New Financing Facility that
results in the Borrower's or any co-borrower's ability to
request or obtain loans or other extensions of credit
thereunder being suspended in a manner that impairs the
liquidity of the Borrower or terminated; or
(q) the Borrower or any Subsidiary, directly or
indirectly, shall have made any loans or advances of any
kind to Dave & Buster's, Inc. in excess of $2,200,000 in the
aggregate after the Effective Date.
THEN, and in each such event (other than an event described
in Sections 9.1(g) or (h)), the Required Banks may, by notice in
writing to the Borrower, declare all of the Obligations owed to
the Committed Banks and the Electing Banks to be immediately due
and payable, whereupon (i) such Obligations shall become and be
immediately due and payable, without presentment, demand, protest
or further notice of any kind, all of which are hereby expressly
waived by the Borrower, and (ii) all of the Obligations owed to
each Nonelecting Bank will immediately become governed by the
Original Credit Documents to which each such Nonelecting Bank is
a party, and each Nonelecting Bank will have and be entitled to
exercise any and all rights and remedies provided in the Original
Credit Documents to which such Nonelecting Bank is a party;
provided, however, that upon the occurrence of any event
described in Sections 9.1(g) or (h), all of the Obligations shall
automatically become immediately due and payable, without
presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrower.
9.2 Notice of Default. Each Bank that becomes aware of the
existence of a Default will give notice of such Default to the
Borrower as promptly as practicable and will thereupon notify all
of the Banks thereof; provided, however, that the failure of any
Bank so to notify the Borrower shall not affect in any way the
existence of a Default or be deemed to be a waiver thereof.
ARTICLE X.
CONDITIONS PRECEDENT TO EFFECTIVENESS
10.1 Closing Deliveries and Conditions. This Agreement
shall not become effective unless:
(a) there have been received (in sufficient number to
provide originals or copies, as the case may be, for each of
the Banks):
(i) Counterpart signature pages of this
Agreement, executed by the Borrower and each Bank;
(ii) The New Notes executed by the Borrower and
made payable to the appropriate Bank;
(iii) Incumbency certificate, executed by the
Secretary or Assistant Secretary of the Borrower, which
shall identify by name and title and bear the signature
of the officers of such entity authorized to sign the
Override Documents to which it is a party, upon which
certificate the Banks shall be entitled to rely until
informed in writing of any change by such entity;
(iv) Copies certified by the Secretary or
Assistant Secretary of the Borrower of the Borrower's
certificate or articles of incorporation and by-laws;
(v) Certified copies of resolutions of the
Executive Committee of the Borrower's Board of
Directors and, where necessary, shareholders,
authorizing or ratifying the execution, delivery and
performance of the Override Documents, the Noteholder
Forbearance Agreement, New Commercial LC Facility
Agreement, the New Financing Facility and all other
documents provided for herein or therein to be executed
by the Borrower;
(vi) A certificate, signed by the Chief Financial
Officer of the Borrower, stating that on the Effective
Date no Default has occurred and is continuing and all
of the representations and warranties contained in this
Agreement and in the other Override Documents are true
and correct in all material respects;
(vii) Written opinions of Weil, Gotshal &
Manges, special counsel to the Borrower and the
Subsidiaries, and Alan Sachs, General Counsel of the
Borrower, each addressed to the Banks and in
substantially the form of Exhibit C-1 and C-2,
respectively; and
(viii) The Bank Guaranty substantially in the
form of Exhibit D-1 hereto and the Commercial LC
Facility Guaranty substantially in the form of
Exhibit D-2; and
(b) each of the following conditions shall be
satisfied in a manner, subject to such documentation and
evidence and in form and substance as is acceptable to the
Banks (as evidenced by their execution and delivery of a
counterpart to this Agreement):
(i) No Requirements of Law shall, and no Bank
shall have received any notice that litigation is
pending or threatened which is likely to, (A) enjoin,
prohibit or restrain any of the transactions
contemplated by this Agreement or the other Override
Documents or (B) impose or result in the imposition of
a Material Adverse Effect;
(ii) Each of the representations and warranties
contained in this Agreement and in the other Override
Documents shall be true and correct in all material
respects on and as of the Effective Date;
(iii) There shall have been paid to each
Uncommitted Bank, to the Standby LC Bank and to the
Agent for the account of each Committed Bank all
accrued and unpaid interest on or relating to the
Borrower's obligations under the Original Credit
Documents, all other fees due and payable on or before
the Effective Date, and all expenses and other amounts
incurred on or before the Effective Date and required
to be paid pursuant to Section 11.3;
(iv) Each of the New Commercial LC Facility
Agreement, the Noteholder Forbearance Agreement, the
Existing Lender Intercreditor Agreement, the New
Financing Facility and the New Lender Intercreditor
Agreement, shall have been duly executed and delivered
by each of the parties thereto and each such agreement
shall have become effective in accordance with the
terms thereof; and
(v) The Borrower shall have paid retainers to
(a) Price Waterhouse, L.L.P. in the amount of $50,000,
(b) Thompson & Mitchell in the amount of $50,000 and
(c) Jones, Day, Reavis & Pogue in the amount of
$100,000.
ARTICLE XI.
MISCELLANEOUS
11.1 Notices. All notices, requests and other
communications to any party hereunder shall be in writing
(including bank wire, telegram, telex, telecopy or similar
writing) and shall be given to such party at its addresses or
telex number set forth on Schedule 11.1 or such other address or
telex number as such party may hereafter specify for the purpose
by notice to each Bank and the Borrower. Each such notice,
request or other communication shall be effective (a) if given by
telegram, telex or telecopy, when delivered to the telegraph
company, transmitted by telecopier or confirmed by telex
answerback, respectively, (b) if given by mail, on the third
(3rd) Business Day after such communication is deposited in the
mails with appropriate first class, certified or registered
postage prepaid addressed as aforesaid, or (c) if given by any
other means, when delivered at the address specified in this
Section.
11.2 No Waivers. No failure or delay by the Borrower or any
Bank in exercising any right, power or privilege hereunder, under
any Note or under any of the other Override Documents shall
operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The
rights and remedies provided in this Agreement and in the other
Override Documents shall be cumulative and not exclusive of any
rights or remedies provided by law.
11.3 Expenses; Documentary Taxes. The Borrower agrees to
pay (a) all reasonable out-of-pocket costs and expenses of the
Agent and the Banks arising under the Original Credit Documents
and incurred in connection with the preparation, documentation,
negotiation and execution of this Agreement and the other
Override Documents, including, without limitation, reasonable
fees and disbursements of counsel for the Agent and each of the
Banks on the Effective Date, (b) all reasonable and out-of-pocket
costs and expenses of the Agent, the Administrative
Representative and the Banks (excluding, however, except as
otherwise specified in this clause (b), the fees and expenses of
counsel for any of the Banks) in connection with the
administration of this Agreement and the other Override Documents
and the preparation of any waiver or consent hereunder or
thereunder or any amendment, modification, extension or renewal
hereof or thereof, including, without limitation, reasonable fees
and disbursements of Thompson and Mitchell, counsel for the
Agent, and Jones, Day, Reavis & Pogue, counsel for the Banks,
within 30 days of receipt of a statement therefor, (c) if a
Default occurs, all reasonable out-of-pocket costs and expenses
incurred by the Agent or any Bank, including, without limitation,
reasonable fees and disbursements of counsel (including attorneys
who are employees of the Agent or such Bank or of any affiliate
of the Agent or such Bank, as the case may be), in connection
with such Default and collection and other enforcement
proceedings resulting therefrom within 30 days of receipt of a
statement therefor and (d) all fees and reasonable out-of-pocket
costs and expenses of Price Waterhouse, L.L.P. incurred in
performance of its duties under this Agreement and the other
Override Documents. The Borrower shall indemnify each Bank
against any transfer taxes, documentary taxes and/or similar
assessments or charges made by any governmental authority by
reason of the execution and delivery of this Agreement or any of
the other Override Documents. The obligations of the Borrower
under this Section 11.3 are continuing and shall survive the
satisfaction and payment of the Obligations and the termination
of this Agreement.
11.4 General Indemnity. In addition to the payment of
expenses pursuant to Section 11.3, whether or not the
transactions contemplated hereby shall be consummated, the
Borrower hereby agrees to pay, and indemnify and hold harmless
the Agent, the Administrative Representative and each of the
Banks and any holder(s) of the Notes, and the officers,
directors, employees, agents and affiliates of the Agent, the
Administrative Representative and each of the Banks and such
holder(s) (collectively, the "Indemnitees") from and against, any
and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever (including,
without limitation, the reasonable fees and disbursements of
counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or
threatened, whether or not such Indemnitees shall be designated a
party thereto), that may be imposed on, incurred by or asserted
against the Indemnitees, in any manner relating to or arising out
of this Agreement, any of the other Override Documents or any
other agreement, document or instrument executed and delivered by
the Borrower in connection herewith or therewith or the
statements contained in any commitment letters delivered by any
of the Banks (collectively, the "indemnified liabilities");
provided that the Borrower shall have no obligation to an
Indemnitee hereunder with respect to indemnified liabilities
directly resulting from (a) the gross negligence or willful
misconduct of that Indemnitee as determined by a court of
competent jurisdiction in a final nonappealable order or (b) any
failure of the Administrative Representative or the Agent to
properly remit funds to the Banks as required under Sections 4.2
or 4.6 or any other provision of this Agreement. To the extent
that the undertaking to indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable because it
is violative of any law or public policy, the Borrower shall
contribute the maximum portion that it is permitted to pay and
satisfy under applicable law to the payment and satisfaction of
all indemnified liabilities incurred by the Indemnitees or any of
them. The provisions of the undertakings and indemnification set
out in this Section 11.4 are continuing and shall survive the
satisfaction and payment of the Obligations and the termination
of this Agreement.
11.5 Environmental Indemnity. The Borrower hereby agrees to
indemnify and hold harmless the Agent, the Administrative
Representative and each of the Banks and their respective
shareholders, officers, directors, employees, agents, successors
and assigns, from and against all claims and orders (including,
without limitation, all private and/or governmental claims or
orders under common law and/or any Environmental Law), causes of
action, liabilities, damages (including natural resource
damages), costs and expenses (including, without limitation,
investigative and cleanup costs and attorneys' fees and
expenses), notwithstanding any negligence on the part of the
Agent, the Administrative Representative or any Bank and/or any
of their respective officers, directors, employees, agents,
successors and assigns, arising out of or relating in any way to
(a) the release, threat of release or presence or threat of any
Hazardous Materials on, in, under or about any Property or
facility owned and/or operated by the Borrower or any Subsidiary
or emanating or disposed of therefrom (regardless of cause or
source); (b) any act or omission or liability of the Borrower or
any Subsidiaries or any of their respective officers, partners,
employees, directors, agents, shareholders, successors or assigns
concerning any Hazardous Materials; (c) the enforcement or
exercise of any right in this Agreement pertaining to
environmental matters, including, without limitation, the
enforcement of this indemnity provision; and/or (d) any unsafe or
unhealthful condition at any Property or facility owned or
operated by the Borrower or any Subsidiary or any violation of
any Occupational Safety and Health Law. The foregoing indemnity
shall be in addition to all other indemnity provisions contained
in this Agreement and any other agreements between the parties
hereto or executed in connection with the transactions
contemplated hereby, and all such indemnities shall be given
effect, notwithstanding any overlap in coverage. This indemnity
shall survive the repayment of the Obligations and the
termination of this Agreement, and should it be finally
determined by a court of competent jurisdiction that the scope or
reach of this indemnity exceeds that allowed by applicable law,
this indemnity shall be construed to extend and shall be given
effect to, but not in excess of, the maximum scope and reach
allowed by applicable law.
11.6 Amendments and Waivers. Any provision of this
Agreement, the Notes or any of the other Override Documents may
be amended or waived if, but only if, such amendment or waiver is
in writing and is signed by the Borrower and the Required Banks
(and, if the right or duties of the Agent or the Administrative
Representative are affected thereby, by the Agent or the
Administrative Representative, as the case may be); provided that
no such amendment or waiver shall, unless signed by all of the
Banks, (a) reduce the principal amount of or rate of interest on
any Obligations or any fees hereunder, (b) postpone the date
fixed for any payment of principal of or interest on any
Obligations or any fees hereunder, (c) change the percentage of
the aggregate unpaid principal amount of the Notes or the number
of Banks which shall be required for the Banks or any of them to
take any action or obligations under this Section or any other
provision of this Agreement, (d) release any Guarantor from its
Obligations under the Bank Guaranty, the Commercial LC Facility
Guaranty, or the Noteholder Guaranty, or (e) waive the
satisfaction of any condition precedent to the effectiveness of
this Agreement specified in Article X.
11.7 Severability. In the event one or more of the
provisions contained in this Agreement should be invalid, illegal
or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
11.8 Governing Law. This Agreement, the New Notes and all
of the other Override Documents shall be governed and construed
in accordance with the laws of the State of New York.
11.9 Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
11.10 Authority to Act. Each Bank shall be entitled to
act on any notices and instructions (telephonic or written)
reasonably believed by such Bank to have been delivered by any
person authorized to act on behalf of the Borrower pursuant
hereto, regardless of whether such notice or instruction was in
fact delivered by a person authorized to act on behalf of the
Borrower, and the Borrower hereby agrees to indemnify such Bank
from and against any and all losses and expenses, if any, ensuing
from any such action.
11.11 CONSENT TO JURISDICTION. THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW
YORK STATE COURT OR ANY UNITED STATES OF AMERICA COURT SITTING IN
THE SOUTHERN DISTRICT OF NEW YORK, AS ANY BANK MAY ELECT, IN ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER OVERRIDE DOCUMENT. THE BORROWER HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH SUIT,
ACTION OR PROCEEDING MAY BE HELD AND DETERMINED IN ANY OF SUCH
COURTS. THE BORROWER IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH THE BORROWER MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT, AND THE BORROWER FURTHER
IRREVOCABLY WAIVES ANY CLAIM THAT SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. THE BORROWER AUTHORIZES THE SERVICE OF PROCESS UPON THE
BORROWER BY REGISTERED MAIL SENT TO THE BORROWER AT ITS NOTICE
ADDRESS SPECIFIED IN SECTION 11.1.
11.12 References; Headings for Convenience. Unless
otherwise specified herein, all references to Section numbers
refer to Section numbers of this Agreement, all references herein
to Exhibits A, B, C-1, C-2, D-1, D-2, E, F, G and H refer to
annexed Exhibits A, B, C-1, C-2, D-1, D-2, E, F, G and H which
are hereby incorporated herein by reference and all references
herein to Schedules 2.2, 2.3, 7.1(a), 7.1(d), 7.1(e), 7.1(f),
7.1(i), 7.1(j), 7.1(k), 7.1(n), 7.1(o), 7.1(p), 7.1(r), 8.1(b),
8.1(x) and 11.1 refer to annexed Schedules 2.2, 2.3, 7.1(a),
7.1(d), 7.1(e), 7.1(f), 7.1(i), 7.1(j), 7.1(k), 7.1(n), 7.1(o),
7.1(p), 7.1(r), 8.1(b), 8.1(x) and 11.1 which are hereby
incorporated herein by reference. The Section headings and table
of contents hereof are furnished for the convenience of the
parties and are not to be considered in the construction or
interpretation of this Agreement.
11.13 NO ORAL AGREEMENTS; ENTIRE AGREEMENT. THIS
AGREEMENT AND THE OTHER OVERRIDE DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER
HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES RELATING TO THE SUBJECT MATTER HEREOF OR THEREOF. THERE
ARE NO ORAL AGREEMENTS AMONG THE PARTIES RELATING TO THE SUBJECT
MATTER OF THIS AGREEMENT AND THE OTHER OVERRIDE DOCUMENTS.
11.14 Resurrection of Loans. To the extent that any
Bank receives any payment on account of any of the Obligations of
the Borrower to the Banks, and any such payment(s) or any part
thereof are substantially invalidated, declared to be fraudulent
or preferential, set aside, subordinated and/or required to be
repaid to a trustee, receiver or any other Person under any
bankruptcy act, state or federal law, common law or equitable
cause, then, to the extent of such payment(s) received, the
Obligations or part thereof intended to be satisfied shall be
revived and continue in full force and effect, as if such
payment(s) had not been received by such Bank and applied on
account of such Obligations.
11.15 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING (I) TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR
IN CONNECTION WITH THIS AGREEMENT, THE OTHER OVERRIDE DOCUMENTS
OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR
THAT MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR
THEREWITH, OR (II) ARISING FROM ANY DISPUTE OR CONTROVERSY IN
CONNECTION WITH OR RELATED TO THIS AGREEMENT, THE OTHER OVERRIDE
DOCUMENTS OR ANY SUCH AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR COUNTERCLAIM SHALL
BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
11.16 Release of Lender Parties. The Borrower, for
itself and on behalf of each of its Subsidiaries and Affiliates
and each of its employees, officers and directors, and each of
their respective predecessors, successors and assigns
(collectively, the "Releasors"), does hereby forever and
unconditionally (i) release, discharge and acquit the Agent, the
Banks and each of their respective parent corporations,
subsidiaries and affiliates, and each of their respective
officers, directors, shareholders, employees, attorneys, agents,
accountants, consultants, servants and representatives, and each
of their respective predecessors, successors, heirs and assigns
(collectively, the "Lender Parties"), of and from any and all
claims of every type, kind, nature, description or character,
known and unknown, whensoever arising out of any actions or
omissions of the Lender Parties, or any of them, occurring at any
time up to and through the date hereof, which in any way arise
out of, are connected with or relate to the Existing Lender
Agreements, this Agreement or the other Override Documents
(collectively, "Releasor Claims"), and (ii) agree not to bring
any action in any judicial, administrative or other proceeding
against the Lender Parties, or any of them, alleging any such
Releasor Claims or any other claim otherwise arising in
connection with any such Releasor Claims, or support any
shareholder of the Borrower or any of the respective Releasors in
any such action brought by such shareholder.
11.17 Appointment of Agent. The Required Banks hereby
reserve the right to appoint an agent for purposes of enforcing
or administering their rights under this Agreement.
ARTICLE XII.
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1 Successors and Assigns. The terms and provisions of
the Override Documents shall be binding upon and inure to the
benefit of the Borrower and the Banks and their respective
successors and assigns, except that (i) the Borrower shall not
have the right to assign its rights or obligations under the
Override Documents without the consent of all of the Banks and
(ii) any assignment by any Bank of its rights, interests and
duties under the Override Documents must be made in compliance
with Section 12.3. Notwithstanding clause (ii) of this Section,
any Bank may at any time, without the consent of the Borrower,
assign all or any portion of its rights under this Agreement or
the other Override Documents to a Federal Reserve Bank; provided,
however, that no such assignment shall release the transferor
Bank from its obligations hereunder or thereunder. The Agent may
treat the Committed Banks that are signatories hereto as the
owners of such Banks' Obligations for all purposes hereof unless
and until any such Bank complies with Section 12.3 in the case of
an assignment thereof or, in the case of any other transfer, a
written notice of the transfer is filed with the Agent. Any
assignee or transferee of a portion of the Obligations agrees by
acceptance thereof to be bound by all the terms and provisions of
the Override Documents. Any request, authority or consent of any
Person, who at the time of making such request or giving such
authority or consent is the holder of any Obligations, as
determined by this Section 12.1, shall be conclusive and binding
on any subsequent holder, transferee or assignee of such
Obligation.
12.2 Participations.
(a) Permitted Participants; Effect. Any Bank may at any
time sell to one or more banks or other entities ("Participants")
participating interests in any of the Obligations owing to such
Bank, any letter of credit issued by such Bank or any other
interest of such Bank under the Override Documents; provided,
however, that in no event shall any Bank be permitted to sell
participation interests in any such rights or obligations to the
Borrower or any Affiliate of the Borrower without the prior
written consent of all of the Banks. In the event of any such
sale by a Bank of participating interests to a Participant, such
Bank's obligations under the Override Documents shall remain
unchanged, such Bank shall remain solely responsible to the other
parties hereto for the performance of such obligations, such Bank
shall remain the holder of any such Obligations for all purposes
under the Override Documents, all amounts payable by the Borrower
and Subsidiaries under this Agreement and the other Override
Documents shall be determined as if such Bank had not sold such
participating interests, and the Borrower and Subsidiaries and
the Agent and the other Banks shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and
obligations under the Override Documents.
(b) Voting Rights. The Banks shall retain the right to
approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Override Documents
in accordance with Section 11.6 other than any amendment,
modification or waiver with respect to any Obligations in which
such Participant has an interest that forgives principal,
interest or fees or reduces the stated interest rate or the
stated rates at which fees are payable with respect to any such
Obligations, postpones the Maturity Date or other regularly
scheduled date of payment of interest or fees on any such
Obligations, or releases or subordinates any portion of the Bank
Guaranty.
(c) Benefit of Set-off. The Borrower agrees that each
Participant shall be deemed to have the right of set-off to the
extent provided in Section 6.2 in respect of its participating
interest in amounts owing under the Override Documents to the
same extent as if the amount of its participating interest were
owing directly to it as a Bank under the Override Documents,
provided that each Bank shall retain the right of set-off
provided in Section 6.2 with respect to the amount of
participating interests sold to each Participant. The Banks
agree to share with each Participant, and each Participant, by
exercising the right of set-off provided in Section 6.2, agrees
to share with each Bank to the extent required by such Section,
any amount received pursuant to the exercise of its right of set-
off, such amounts to be shared in accordance with Section 6.3 as
if each Participant were a Bank.
12.3 Assignments.
(a) Permitted Assignments. Any Bank may at any time assign
to one or more banks or other entities ("Purchasers") all or any
part of its rights and obligations under the Override Documents.
In no event shall any Bank be permitted to assign any such rights
or obligations to the Borrower or any Affiliate of the Borrower
without the prior written consent of all of the Banks.
(b) Effect; Effective Date. Upon delivery to each Bank
(and, in the case of a Committed Bank, the Agent) of a notice of
assignment (a "Notice of Assignment"), together with any consents
required by Section 12.3(a), such assignment shall become
effective on the effective date specified in such Notice of
Assignment. On and after the effective date of such assignment,
such Purchaser shall for all purposes be a Bank party to this
Agreement and any other Override Documents to which the
transferor Bank was a party or beneficiary immediately prior to
the effectiveness of such assignment and shall have all the
rights and obligations of the transferor Bank under the Override
Documents, to the same extent as if it were an original party
hereto and thereto, and no further consent or action by the
Borrower, the Banks or the Agent, as the case may be, shall be
required to release the transferor Bank with respect to its
Obligations assigned to such Purchaser. Upon the consummation of
any assignment to a Purchaser pursuant to this Section 12.3(b),
the transferor Bank, the Agent, the Banks and the Borrower, as
the case may be, shall make appropriate arrangements so that
replacement Notes are issued to such transferor Bank and new
Notes or, as appropriate, replacement Notes, are issued to such
Purchaser, in each case in the appropriate principal amounts, as
adjusted pursuant to such assignment.
ARTICLE XIII.
FORBEARANCE AND RESERVATION OF CERTAIN RIGHTS
Each of the Banks agrees to forbear from bringing any
action, suit or other judicial proceeding against the Borrower
with respect to the Specified Defaults and any other default or
event of default under any Original Credit Document during the
period from the Effective Date until the Maturity Date. Nothing
in this Agreement or in any other Override Document will waive or
be deemed to waive any default or event of default under any
Original Credit Document.
[The remainder of this page is intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers effective as of the day and year first above written.
Borrower
EDISON BROTHERS STORES, INC.
By /s/Alan Sachs
Title: Executive Vice President
General Counsil & Secretary
Committed Banks
MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION, in its
capacity as a Committed Bank
and not in its capacity as
the Commercial LC Bank
By /s/Karen D. Meyers
Title: Vice President
THE BOATMEN'S NATIONAL BANK
OF ST. LOUIS
By /s/Gary K. Peterson
Title: Vice President
CITIBANK, N.A.
By /s/Victoria Lasseter
Title: Vice President
Institutional Recovery
Management
NBD BANK
(formerly known a NBD Bank,N.A.)
By /s/Bruce E. Thompson
Title: Vice President
THE BANK OF NOVA SCOTIA
By /s/D. N. Gillespie
Title: Assistant General Manager
THE FIRST NATIONAL BANK
OF CHICAGO
By /s/Richard A. Peterson
Title: Vice President
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By /s/ Lynn D. Simmons
Title: Vice President
Uncommitted Banks
THE SANWA BANK, LIMITED,
CHICAGO BRANCH
By /s/ Kenneth C. Eichwald
Title: Vice President and Manager
THE BOATMEN'S NATIONAL BANK
OF ST. LOUIS
By /s/ Gary K. Peterson
Title: Vice President
FIFTH THIRD BANK
By /s/ Matthew J. Zeck
Title: National Accounts Officer
THE BANK OF NOVA SCOTIA
By /s/ D.N. Gillespie
Title: Assistant General Manager
THE BANK OF NEW YORK
By /s/ Richard Maybaum
Title: Assistant Vice President
CITIBANK, N.A.
By /s/ Victoria Lasseter
Title: Vice President
Institutional Recovery
Management
THE SUMITOMO BANK, LIMITED,
CHICAGO BRANCH
By /s/ Katsuyasu Iwasawa
Title: Joint General Manager
The Standby LC Bank
BANCA NAZIONALE DEL
LAVORO, S.P.A., New York
Branch
By /s/ Giulio Giovine
Title: Vice President
By /s/ Giuliano Violetta
Title: First Vice President
Mercantile Bank of St. Louis National Association, in its
capacity as Agent under the Revolving Credit Facility, hereby
accepts and acknowledges receipt of a copy of the foregoing
Override Agreement as of this 22nd day of September, 1995, and
agrees to the terms hereof.
MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION, as
Agent under the Revolving
Credit Facility
By /s/
Title:
EDISON BROTHERS STORES INC.
EXECUTIVE OFFICES
501 NORTH BROADWAY . POST OFFICE BOX 14020 . ST. LOUIS, MO 63178
PHONE (314) 331-6000 FAX (314) 331-7200
May 11, 1995
Mr. Alan D. Miller
Chairman, President and
Chief Executive Officer
Edison Brothers Stores, Inc.
501 North Broadway
St. Louis, Missouri 63102
Dear Alan:
The Special Compensation Subcommittee of the Compensation
Committee of the Board of Directors of Edison Brothers Stores,
Inc. ("EBS") has authorized EBS to grant to you, subject to
certain conditions hereinafter set forth, 50,000 shares of the
Common Stock of EBS. This letter agreement shall evidence such
grant and the conditions which must be satisfied in order for you
to receive the stock free of restrictions.
1. Date of Grant: May 11, 1995
2. Number of Shares of Restricted Stock: 50,000 shares of
Common Stock, par value $1.00 per share, of EBS (the "Restricted
Stock").
3. Cost of Shares of Restricted Stock: This grant of
Restricted Stock is considered additional compensation, and shall
be at no cost to you.
4. Delivery of Restricted Stock: The Restricted Stock
shall be transferred to you as of the Date of Grant but shall not
be delivered to you until certain specified conditions,
hereinafter set forth, are met. None of the 50,000 shares which
are the subject of this letter agreement will be newly issued.
All of such shares will be treasury stock of EBS.
5. Dividend Rights: You shall have full dividend rights
with respect to each share of Restricted Stock, beginning with
the Date of Grant, and shall retain such rights so long as such
share of Restricted Stock is not forfeited by you prior to
vesting or disposed of by you after vesting.
6. Voting Rights: You shall have full voting rights with
respect to each share of Restricted Stock, beginning with the
Date of Grant, and shall retain such rights so
long as such share of Restricted Stock is not forfeited by you
prior to vesting or disposed of by you after vesting.
7. Vesting: The shares of Restricted Stock shall vest and
be delivered to you free of any restriction imposed hereunder, as
follows:
<TABLE>
<CAPTION>
Number of Shares
----------------
<S> <C>
May 13, 1996 10,000
May 20, 1997 10,000
May 27, 1998 10,000
June 3, 1999 10,000
June 12, 2000 10,000
</TABLE>
provided, however, that except as provided in paragraph 9 below,
such shares shall vest and be delivered only if at the time set
forth above for vesting and delivery you are then in the employ
of EBS or one of its subsidiaries, as such term is defined in
Section 425(f) of the Internal Revenue Code of 1986, as amended
("Subsidiaries"), and shall have been continuously so employed
since the Date of Grant. If there should come a time when you are
no longer employed by either EBS or a Subsidiary of EBS, then at
such time all shares of Restricted Stock not yet vested shall be
forfeited (except as provided in paragraph 9 below).
Notwithstanding the foregoing, the Board of Directors of EBS, in
its sole discretion, may accelerate the vesting schedule as set
out above in whole or in part at any time and from time to time.
8. Non-Transferability: No share of Restricted Stock shall
be transferable by you prior to vesting.
9. Death or Disability: In the event of your death or
Disability while in the employ of EBS or one of its Subsidiaries,
all shares of Restricted Stock not yet vested due to the
restrictions set forth above shall become immediately vested and,
if not already delivered, shall be delivered to you or your
estate. As used herein, "Disability" means your inability to
engage in any substantial gainful activity by reason of any
medically-determined physical or mental impairment which, in the
judgment of a physician selected by EBS who certifies to such
judgment, is expected to be of indefinite duration or result in
imminent death. The Disability must have continued for at least
52 weeks and you must have received a federal Social Security
disability insurance award (unless you lack the quarters of
coverage
required for Social Security entitlement). The cause of such
Disability must be other than an injury of disease sustained by
you:
(a) while serving in any armed services or on
voluntary leave for other health reasons;
(b) as a result of an act of war;
(c) while wilfully and illegally participating in a
fight, riot, or civil insurrection or while
committing a crime.
10. Adjustment Upon Changes in Capitalization: In the event
that each of the outstanding shares of Common Stock of EBS shall
be changed into or exchanged for a different number or kind of
shares of stock or other securities of EBS or of another
corporation, whether by reason of stock dividend,
recapitalization, merger, consolidation, split-up, spinoff,
combination, exchange of shares and the like, then there shall be
substituted for each share of Restricted Stock the number and
kind of shares of stock or other securities into which each
outstanding share of Common Stock of EBS shall be so changed or
for which each such share shall be exchanged.
11. Withholding: When shares of Restricted Stock are vested
or upon your earlier election pursuant to Section 83(b) of the
Internal Revenue Bode of 1986, as amended, to be taxed at the
time of the transfer of shares of Restricted Stock, you shall
simultaneously deliver to EBS sufficient cash to satisfy federal
and state income tax withholding requirements. If you do not
deliver such cash at such time, EBS may withhold from any
delivery of shares that number of shares necessary to satisfy
federal and state income tax withholding requirements, and/or EBS
may withhold cash compensation to satisfy such requirements.
12. Right to Continued Employment: Nothing in this
agreement shall confer upon you any right to continue in the
employ of EBS or any of its Subsidiaries or interfere with the
right of EBS or any of its Subsidiaries to terminate your
employment at any time.
13. Investment Representation: You represent to EBS that
the shares of Restricted Stock to be received by you will be
acquired for investment for your own account, not as a nominee or
agent, and not with a view to the sale or distribution of any
part thereof, and that at the time of receipt of such shares of
Restricted Stock you will have no present intention of selling,
granting, participation in or otherwise distributing the same.
You will reconfirm such investment representation at the time of
the future delivery of shares of Restricted Stock. You further
represent that you do not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or
grant participation to such person or to any third person with
respect to any of the shares of Restricted Stock.
You understand that the Restricted Stock to be delivered to
you will not be registered under the Securities Act of 1933, as
amended (the "1933 Act"), on the ground that the issuance of such
Restricted Stock is exempt from registration under the 1933 Act
pursuant to Section 4(2) thereof, and that EBS' reliance on such
exemption is predicated on your representations set forth herein.
You understand that the shares of Restricted Stock to be
delivered to you under this Agreement may not be sold,
transferred or otherwise disposed of without registration under
the 1933 Act or an exemption therefrom.
14. Effect of Certain Changes: In the event of a Potential
Change in Control of EBS, as defined below, which occurs while
you are still in the employ of EBS or one of its Subsidiaries,
all shares of Restricted Stock which have not yet vested shall
become immediately vested and, if not already delivered to you,
shall be delivered to you. As used herein, a Potential Change in
Control shall be deemed to occur if, at any time during any 24-
month period, the membership of the Board of Directors of EBS is
not at least two-thirds constituted by (a) individuals who were
directors at the beginning of such period, or (b) individuals
whose election, or nomination for election by the stockholders of
EBS, to the Board of Directors during such period was approved by
the vote of two-thirds of those directors still in office who
were directors at the beginning of such period, unless such
approval by such directors was incident to a Third Party
Transaction as described below. Notwithstanding the foregoing, no
Potential Change in Control shall be deemed to have occurred with
respect to any change in the members of the Board of Directors
that occurs as a result of a consolidation, merger, liquidation
or sale of substantially all the assets of EBS or any similar
transaction ("Transaction") which has been approved by two-thirds
of the Board of Directors, unless the Transaction is with a third
party ("Third Party Transaction") that commenced an offer for
more than 30% of the outstanding shares of voting stock of EBS
without the prior approval of two-thirds of the Board of
Directors.
Very truly yours,
EDISON BROTHERS STORES, INC.
By /s/ JULIAN I. EDISON
------------------------------------------
Julian I. Edison
Chairman of the Compensation Committee
of the Board of Directors
Agreed to and accepted
May 11, 1995
/s/ ALAN D. MILLER
----------------------------------
Alan D. Miller
EMPLOYMENT AGREEMENT
AGREEMENT (the "Agreement") dated September 18, 1995 between
_____________, currently residing at ___________________,
_______, Missouri _____ ("Employee"), and Edison Brothers
Stores, Inc., a Delaware corporation (the "Company").
In consideration of the mutual covenants contained herein,
the parties hereto agree as follows:
1. Employment. Subject to the terms and conditions
hereinafter set forth, the Company hereby agrees to employ
Employee, and Employee hereby agrees to be employed by the
Company, during the two-year period beginning on the date hereof
and ending on September 17, 1997 (the "Employment Term"). The
Employment Term may be extended by mutual written agreement of
the parties or terminated pursuant to the provisions of Section 4
or Section 5 hereof. In the event a Change in Control (as
hereinafter defined) occurs at a time when Employee is still
employed hereunder, the Employment Term shall be extended for a
period ending three years after the date of occurrence of the
Change in Control.
2. Duties. Employee shall be employed in the capacity of
_______________________________________________________.
Employee shall have such duties as may reasonably be assigned to
him by or at the direction of the Board of Directors of the
Company. Employee shall perform such duties diligently and to
the best of his ability, and shall comply with the Company's
Business Conduct Policy and other policies as in effect from time
to time. Employee's duties shall be performed primarily at the
Company's home office in St. Louis, Missouri, with such foreign
and domestic travel as the performance of his duties may require.
During the Employment Term, Employee shall devote his entire
working time, attention and energy to the business of the
Company, and shall not be engaged in any other business activity
that conflicts with or interferes with Employee's performance of
his duties hereunder except as authorized by the Board of
Directors of the Company.
3. Compensation and Benefits.
A. Salary. During the Employment Term, the Company shall
pay Employee for his services hereunder a base salary at the rate
of $_______, subject to upward adjustment in accordance with the
Company's salary review practices and procedures in effect from
time to time. Such salary shall be payable semi-monthly on the
15th and last day of each month.
B. Benefits and Perquisites. During the Employment Term,
Employee shall be entitled to participate in, to the extent
Employee is eligible under the terms thereof, the Company's
Medical, Dental, Life Insurance, Disability, Pension and 401(k)
Savings Plans, its Officer Perquisite Program, and all such other
benefit programs as are generally provided from time to time by
the Company to its executive personnel. Subject to the rights of
Employee set forth in Sections 5 and 6 hereof, nothing herein
shall preclude the Company from terminating or amending any
employee benefit plan or program.
C. Vacation. During the Employment Term, Employee shall be
entitled to a vacation of ____ weeks per calendar year to be
taken in accordance with the Company's normal policies.
D. Bonuses and Stock Options. Subject to the provisions of
the next sentence, Employee shall be entitled to receive a lump
sum cash bonus equal to four times Employee's monthly base salary
at the highest rate in effect at any time between the date hereof
and the payment date. Such bonus shall be payable on
September 17, 1997 or such earlier date as there occurs a Change
in Control, provided that Employee is still in the employ of the
Company as of that date. Notwithstanding the foregoing, if
(i) in the absence of or prior to the occurrence of a Change in
Control and (ii) after eighteen months from the date hereof but
prior to September 17, 1997, Employee's employment is terminated
by the Company Without Cause (as hereinafter defined) or is
terminated by Employee for Good Reason (as hereinafter defined),
then the Company shall pay to Employee on the Termination Date
(as hereinafter defined) a lump sum cash amount equal to four
times Employee's monthly base salary at the highest rate in
effect at any time between the date hereof and the Termination
Date multiplied by a fraction, the numerator of which shall be
the number of months from the date hereof to the Termination
Date, including partial months, and the denominator of which
shall be twenty-four. Employee shall also be eligible for such
other bonus payments and shall be granted such options to
purchase common stock of the Company as the Board of Directors of
the Company, or a duly constituted committee thereof, shall
determine in its discretion.
E. Travel and Business Expenses. Upon submission of
itemized expense statements in the manner specified by the
Company, Employee shall be entitled to reimbursement for
reasonable travel and other business expenses incurred by
Employee in the performance of his duties hereunder.
F. Payment. Payment of all compensation and benefits to
Employee hereunder shall be made in accordance with the relevant
policies of the Company in effect from time to time and shall be
subject to all applicable employment and withholding taxes.
G. Cessation of Employment. If Employee shall cease to be
employed by the Company for any reason, then Employee's
compensation and benefits shall cease as of the Termination Date,
except as otherwise provided herein or in any applicable employee
benefit plan or program.
4. Termination of Employment of Employee by the Company.
(a) Employee's employment may be terminated by the
Company for Cause (as hereinafter defined) at any time,
effective upon the giving to Employee of a written notice of
termination specifying in detail the particulars of the
conduct of Employee deemed by the Company to justify such
termination for Cause.
(b) Employee's employment may be terminated by the
Company Without Cause at any time, effective upon the giving
to Employee of a written notice of termination specifying
that such termination is Without Cause.
(c) Upon a termination by the Company of Employee's
employment for Cause, Employee shall be entitled to the
payments specified in subparagraph (a) of Section 6 of this
Agreement. Upon a termination by the Company of Employee's
employment Without Cause, Employee shall be entitled to all
of the payments and benefits provided for in Section 6
hereof.
(d) If, as a result of Employee's incapacity due to
physical or mental illness, Employee shall have been absent
from Employee's duties hereunder for 180 days within any 365
day period, the Company may, by notice to Employee,
terminate Employee's employment hereunder for "Disability".
Upon a termination of Employee's employment for Disability,
Employee shall be entitled to the payments specified in
subparagraph (a) of Section 6 of this Agreement. During any
period that Employee fails to perform Employee's duties
hereunder as a result of incapacity due to physical or
mental illness (a "Disability Period"), Employee shall
continue to receive the compensation and benefits provided
for in Section 3 hereof unless and until Employee's
employment hereunder is terminated; provided, however, that
the amount of compensation and benefits received by Employee
during the Disability Period shall be reduced by the
aggregate amounts, if any, payable to Employee under
disability benefit plans and programs of the Company or
under the Social Security disability insurance program.
5. Termination of Employment by Employee. Employee shall
be entitled to terminate his employment with the Company at any
time. If such termination is for Good Reason, Employee shall be
entitled to all of the payments and benefits specified in
Section 6 hereof. If such termination is for other than Good
Reason, Employee shall be entitled to the payments specified in
subparagraph (a) of Section 6. Employee shall give the Company
written notice of any such voluntary termination of employment,
which notice need specify only Employee's desire to terminate his
employment and, if such termination is for Good Reason, set forth
in reasonable detail the facts and circumstances claimed by
Employee to constitute Good Reason.
6. Payments and Benefits Upon Termination. To the extent
provided in Sections 4 and 5 hereof, upon termination of his
employment, Employee shall be entitled to receive the following
payments and benefits:
(a) The Company shall pay to Employee on the
Termination Date (i) the full base salary earned by Employee
through the Termination Date and unpaid at the Termination
Date, plus (ii) credit for any vacation earned by Employee
but not taken at the Termination Date, plus (iii) all other
amounts earned by Employee and unpaid as of the Termination
Date.
(b) The Company shall pay to Employee on the
Termination Date a lump sum cash amount equal to Employee's
monthly salary at the highest rate in effect at any time
between the date hereof and the Termination Date multiplied
by the greater of (i) twelve or (ii) the number of months
remaining until the Completion Date (as hereinafter
defined), including partial months.
(c) The Company shall maintain in full force and effect
for Employee's continued benefit until the earlier of
(i) the Completion Date or twelve months from the
Termination Date, whichever is later, or (ii) Employee's
similar coverage by a new employer, all life insurance,
medical, dental, and disability plans, programs or
arrangements in which Employee was entitled to participate
immediately prior to the Termination Date, provided that
Employee's continued participation is possible under the
terms and provisions of such plans, programs or
arrangements. In the event that Employee's participation in
any such plan, program or arrangement is barred by the terms
thereof, the Company shall arrange to provide Employee with
benefits substantially similar to those which Employee would
otherwise be entitled to receive under such plans, programs
or arrangements. Any continuation of benefits under this
Section 6(c) shall not be counted towards the benefits
extension period mandated by the Consolidated Omnibus Budget
Reconciliation Act of 1985.
(d) The Company shall pay to Employee (or his
beneficiary upon his death) the excess, if any, of (i) the
benefit Employee (or his beneficiary, as the case may be)
would have been entitled to receive under the Edison
Brothers Stores Pension Plan and any supplemental pension
plan or any successor or similar plans then in effect
(collectively the "Plan") had he remained an employee of the
Company until the earlier of the Completion Date or his
death at a salary at the highest rate of Employee's
compensation in effect during the twelve months immediately
preceding the Termination Date, over (ii) the benefit
actually payable to Employee (or his beneficiary, as the
case may be) under the Plan. Such excess benefit shall be
determined in accordance with the provisions, rules and
assumptions of the Plan but shall be actually paid from the
general assets of the Company.
Employee shall not be required to mitigate the amount of any
payment provided for in this Section 6 by seeking other
employment or otherwise, nor shall the amount of any payment
provided for in this Section 6 be reduced by any compensation or
other amounts paid to or earned by Employee as the result of
employment by another employer after the Termination Date or
otherwise.
7. Tax Indemnity. If any amounts, reimbursements or
benefits payable by the Company to Employee pursuant to this
Agreement or any other plan, agreement or arrangement of the
Company are determined to be subject to an excise or similar tax
pursuant to Section 4999 of the Internal Revenue Code of 1986, as
amended, or any successor or other comparable federal, state or
local tax laws, the Company shall pay to Employee such additional
sum as is necessary (after taking into account all federal, state
and local income taxes payable by the Employee as a result of the
receipt of such additional sum) to place Employee in the same
after-tax position he would have been in had no such excise or
similar purpose tax been paid or incurred.
8. Employee's Expenses. All costs and expenses (including
reasonable legal and accounting fees) incurred by Employee to
(a) defend the validity of this Agreement, (b) contest the
termination of his employment by the Company or any
determinations by the Company concerning the amounts payable by
the Company under this Agreement or (c) otherwise obtain or
enforce any right or benefit provided to Employee by this
Agreement (including, without limitation, any right or benefit
under this Section 8), shall be paid by the Company if Employee
is the prevailing party.
9. Confidential Information. Employee, during the period
of his employment by the Company and thereafter, irrespective of
whether the termination of his employment is voluntary or
involuntary, will not, directly or indirectly (without the
Company's prior written consent), use for himself, or use for or
disclose to any other party, any confidential information
regarding the Company. For purposes of this Agreement, such
confidential information shall include any data or information
regarding the business of the Company or any subsidiary or
affiliate of the Company that is not generally known to the
public, including without limitation any confidential information
or data regarding the cost of products sold by, or the plans of,
the Company or its affiliates or the business methods of the
Company or its affiliates not in general use by others or the
identity of any customers or suppliers of the Company or its
affiliates or information respecting transactions or prospective
transactions therewith.
10. Notice. All notices hereunder shall be in writing and
shall be deemed to have been duly given (a) when delivered
personally or by courier, or (b) on the third business day
following the mailing thereof by registered or certified mail,
postage prepaid, in each case addressed as set forth below:
(a) If to the Company
Edison Brothers Stores, Inc.
501 North Broadway
St. Louis, Missouri 63102
Attention: Alan D. Miller
(b) If to Employee:
_____________________
_____________________
_____________________
Any party may change the address to which notices are to be
addressed by giving the other party written notice in the manner
herein set forth.
11. Definitions.
(a) "Cause," when used in connection with the
termination of Employee's employment by the Company, shall
mean (i) the willful or repeated failure by Employee
substantially to perform his duties or otherwise comply with
any of his obligations hereunder, which failure is not or
cannot be cured within five business days after the Company
has given written notice thereof to Employee specifying in
detail the particulars of the acts or omissions deemed to
constitute such failure; (ii) the engaging by Employee in
any act of dishonesty or willful misconduct of more than
trifling significance; (iii) the engaging by Employee in any
act of moral turpitude that is reasonably likely to
materially and adversely affect the Company or its business;
or (iv) Employee's conviction of, or entry of a plea of nolo
contendere with respect to, any felony.
(b) "Change in Control" shall mean the occurrence of
any of the following events:
(i) at any time during any 24-month period, the
membership of the Board of Directors of the Company is
not at least two-thirds constituted by (1) individuals
who were directors at the beginning of such period or
(2) individuals whose election, or nomination for
election by the Company's stockholders, to the Board
during such period was approved by the vote of two-
thirds of those directors then still in office who were
directors at the beginning of such period; or
(ii) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or
substantially all of the Company's assets; or
(iii) the Board determines in its sole and absolute
discretion that there has been a change in control of
the Company.
(c) "Company" shall have the definition set forth in
Section 12 hereof.
(d) "Completion Date" shall mean the date the
Employment Term would have ended under the provisions of
Section 1 hereof had it not been terminated pursuant to
Section 4 or Section 5.
(e) "Good Reason," when used with reference to a
voluntary termination by Employee of his employment with the
Company in the absence of or prior to the occurrence of a
Change in Control, shall mean a reduction in Employee's base
salary as in effect on the date hereof or as the same may be
increased from time to time. "Good Reason," when used with
reference to a voluntary termination by Employee of his
employment with the Company after the occurrence of a Change
in Control, shall mean:
(i) the assignment to Employee of any duties materially
inconsistent with, or the reduction of powers or
functions associated with, his positions,
responsibilities or status with the Company immediately
prior to the Change in Control, or any removal of
Employee from or any failure to re-elect Employee to
any positions or offices held by Employee immediately
prior to the Change in Control, except in connection
with the termination of Employee's employment by the
Company for Cause or for Disability;
(ii) a reduction in Employee's base salary as in effect
on the date hereof or as the same may be increased from
time to time;
(iii) the mandatory transfer of Employee to another
geographic location, except for required travel on
Company business to an extent substantially consistent
with Employee's business travel obligations immediately
prior to the Change in Control;
(iv) the failure by the Company to continue in effect
any employee benefit plan, program or arrangement in
which Employee was participating immediately prior to
the Change in Control (or plans, programs or
arrangements providing Employee with substantially
similar benefits), or the taking of any action by the
Company which would adversely affect Employee's
participation in, or materially reduce Employee's
benefits under, any of such plans, programs or
arrangements, or the failure by the Company to provide
Employee with the number of paid vacation days to which
Employee was entitled immediately prior to the Change
in Control;
(v) the failure by the Company to obtain an express
written assumption of the obligations of the Company to
perform this Agreement by any successor (whether by
purchase, merger or otherwise) to all or substantially
all of the business and/or assets of the Company upon
or prior to the effective date of any such succession;
or
(vi) any purported termination of Employee's employment
by the Company which is not effected pursuant to the
requirements of this Agreement.
(e) "Termination Date" shall mean the effective date as
provided hereunder of the termination of Employee's
employment.
(f) "Without Cause," when used in connection with the
termination of Employee's employment by the Company, shall
mean any termination of the employment of Employee by the
Company which is not a termination of employment for Cause.
12. Successors; Binding Agreement.
(a) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company, upon or prior to such
succession, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the
Company would have been required to perform it if no such
succession had taken place. A copy of such assumption and
agreement shall be delivered to Employee promptly after its
execution by the successor. Failure of the Company to
obtain such agreement upon or prior to the effectiveness of
any such succession shall be a breach of this Agreement and
shall entitle Employee to benefits from the Company in the
same amounts and on the same terms as Employee would be
entitled hereunder if Employee terminated his employment for
Good Reason after a Change in Control. For purposes of the
preceding sentence, the date on which any such succession
becomes effective shall be deemed the Termination Date. As
used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business
and/or assets as aforesaid which executes and delivers the
agreement provided for in this Section 12(a) or which
otherwise becomes bound by the terms and provisions of this
Agreement by operation of law.
(b) This Agreement is personal to Employee and Employee
may not assign or delegate any part of his rights or duties
hereunder to any other person, except that this Agreement
shall inure to the benefit of and be enforceable by
Employee's legal representatives, executors, administrators,
heirs and beneficiaries.
13. Severability. If any provision of this Agreement or
the application thereof to any person or circumstance shall to
any extent be held to be invalid or unenforceable, the remainder
of this Agreement and the application of such provision to
persons or circumstances other than those as to which it is held
invalid or unenforceable shall not be affected thereby, and each
provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
14. Headings. The headings in this Agreement are inserted
for convenience of reference only and shall not in any way affect
the meaning or interpretation of this Agreement.
15. Counterparts. This Agreement may be executed in one or
more identical counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the
same instrument.
16. Waiver. Neither any course of dealing nor any failure
or neglect of either party hereto in any instance to exercise any
right, power or privilege hereunder or under law shall constitute
a waiver of such right, power or privilege or of any other right,
power or privilege or of the same right, power or privilege in
any other instance. Without limiting the generality of the
foregoing, Employee's continued employment without objection
shall not constitute Employee's consent to, or a waiver of
Employee's rights with respect to, any circumstances constituting
Good Reason. All waivers by either party hereto must be
contained in a written instrument signed by the party to be
charged therewith, and, in the case of the Company, by its duly
authorized officer.
17. Entire Agreement. This instrument constitutes the
entire agreement of the parties in this matter and supersedes any
other agreement between the parties, oral or written, concerning
the same subject matter, including that certain agreement dated
February 21, 1990, between the Company and Employee.
18. Amendment. This Agreement may be amended only by a
writing which makes express reference to this Agreement as the
subject of such amendment and which is signed by Employee and by
a duly authorized officer of the Company.
19. Governing Law. This Agreement shall be governed by,
and construed and enforced in accordance with, the laws of the
State of Missouri, without reference to the conflict of laws
rules of such State.
20. Post Employment Term Change in Control. In the event a
Change in Control occurs after the end of the Employment Term but
at a time when Employee is still employed by the Company, and if,
within three years after the occurrence of such Change in
Control, Employee's employment is terminated by the Company
Without Cause or is terminated by Employee for Good Reason, then
Employee shall be entitled to all of the payments and benefits
provided for in Section 6 of this Agreement. For purposes
hereof, the term "Completion Date" as used in Section 6 shall be
deemed to be the last day of such three-year period.
21. Survival. This Agreement, and the respective rights
and obligations of the Company and Employee hereunder, shall
survive and remain in full force and effect following the
expiration of the Employment Term and the termination of
Employee's employment hereunder.
IN WITNESS WHEREOF, Employee and the Company have executed
this Agreement as of the day and year first above written.
EDISON BROTHERS STORES, INC.
By /s/
Name: Julian I. Edison
Title: Chairman, Compensation
Committee of the
Board of Directors
By /s/
Name: Peter A. Edison
Title: Senior Executive
Vice President
/s/ Alan D. Miller
[name of employee]
<TABLE>
EXHIBIT 11 - COMPUTATION OF PER SHARE EARNINGS
EDISON BROTHERS STORES, INC.
AND SUBSIDIARIES
<CAPTION>
1995 1994 1993
(restated)
<S> <C> <C> <C>
Income (Loss) from continuing
operations $(222,042) $ 20,470 $ 20,880
Preferred stock dividends (2) (10) (26)
Net income (Loss) applicable to
common stock $(222,044) $ 20,460 $ 20,854
SIMPLE AND PRIMARY
Weighted average shares
outstanding 22,070 22,007 21,998
Net effect of dilutive stock
options - based on the
treasury method 0 90 206
TOTAL 22,070 22,097 22,204
Per common share amounts:
Simple Net Income (Loss)
applicable to common stock $ (10.06) $ .93 $ .95
Per common share amounts:
Primary Net Income (Loss)
applicable to common stock $ (10.06) $ .93 $ .94
FULLY DILUTED
Weighted average shares
outstanding 22,070 22,007 21,998
Net effect of dilutive stock
options - based on the
treasury method 10 120 225
TOTAL 22,080 22,127 22,223
Per common share amounts:
Fully diluted Net Income
(Loss) applicable to
common stock $ (10.06) $ .92 $ .94
</TABLE>
TO OUR SHAREHOLDERS
Edison Brothers experienced the greatest challenges in its
history in 1995. For several decades young customers pursued
ever-changing fashion trends and were willing to spend their
considerable disposable income at stores like ours. Over the
years we focused on diverse niches within the categories of
moderate-priced apparel and footwear, which allowed us to develop
a portfolio of synergistic retail concepts. We also benefited
from explosive shopping center growth in the sixties, seventies,
and eighties.
In the past few years, however, many customers have shifted their
interest to more basic styles and have come to demand the lowest
possible prices on those styles. In addition, the earlier
rampant retail expansion led to a situation in which the U.S.
simply had too many stores competing for business in an
atmosphere of conservative consumer spending.
Continuing deterioration of the specialty retail climate and
increasing emphasis on price cutting led us to conclude we could
not operate profitably under existing conditions. By fall, we
faced a combination of circumstances:
Because of concerns about our company and the retail industry in
general, we were unable to obtain new long-term financing.
Despite a short-term standstill agreement with our lenders and
arrangements for interim financing, our domestic merchandise
vendors and their commercial factors constricted credit terms and
limits, reducing our access to necessary product lines.
We had a large number of underperforming stores that we needed to
close in order to begin restoring our profitability.
The business trend in our retail segment deteriorated rapidly in
fall 1995, and retail experts were forecasting a difficult
Christmas season.
We concluded that significant restructuring was necessary. In
order to obtain the time and resources necessary to complete such
restructuring, relief under Chapter 11 of the U.S. Bankruptcy
Code became mandatory.
Our challenge now is to use this period of reorganization to
restructure Edison Brothers so we can produce reliable profits
once we emerge from Chapter 11. That restructuring will include
both short-term and mid-range initiatives:
RESTRUCTURING: SHORT-TERM INITIATIVES
We took several steps to stabilize our organization and
operations and improve cash flow during the three months between
our filing for Chapter 11 reorganization and the end of fiscal
1995:
The court approved our $200 million debtor-in-possession credit
facility, providing reassurance to our vendors and factors. Our
inventory flow was restored, giving us confidence that our future
orders will be shipped on time.
In addition to the 155 stores we had closed earlier in 1995, we
closed nearly 500 unprofitable apparel and footwear stores in
December and January. The closing of these stores is permitting
us to focus our attention and resources on those stores that are
profitable or have solid potential for profitability in the near
future. Average annual sales volume of our remaining stores is
about 75 percent higher than the average volume of the stores we
closed.
During 1995 we opened 52 new stores in carefully selected
locations with strong potential. We also acquired 39 stores in
the Repp Ltd. men s big-and-tall chain. At the end of fiscal
1995 we operated 2,077 apparel and footwear stores, compared with
2,622 apparel and footwear stores at the end of 1994.
At the end of January 1996 we completed the sale of our mall
entertainment division to Namco Cybertainment. With this sale we
have completed our exit from the entertainment field and will be
able to concentrate fully on our core apparel and footwear
businesses.
We closed our apparel distribution center in Rome, Georgia, and
will sell that building. The distribution responsibilities of
that center were shifted to our apparel distribution centers in
Washington, Missouri, and Rialto, California. Our footwear
distribution center in Princeton, Indiana, took on additional
responsibilities for shipment consolidation.
We considerably reduced the number of our menswear stores in
Mexico. When we began opening stores in Mexico in 1992,
consumers there were eager for U.S. fashions and we were able to
offer very appealing styles and prices. Both sales and margins
were above average, and these stores produced substantial profits
in 1993 and 1994. Because of the currency devaluation in
December 1994 and the declining economic climate in Mexico, the
performance of these stores fell off dramatically in 1995. As a
result, we have now closed 26 of the 36 stores.
While we have held our corporate overhead costs flat for several
years, we are finding ways to further reduce our overhead.
Through an early retirement program, attrition, and restructuring
of certain functions, we expect our home office personnel
expenses to be significantly lower in 1996 than in 1995. We also
have reduced our space usage in our 12-story home office
building, which we own, and we expect to be leasing out several
floors.
RESTRUCTURING: MID-RANGE INITIATIVES
Now that we have accomplished the necessary immediate stabilizing
steps, we can focus on identifying our basic strengths and
weaknesses, setting new goals, and developing strategies to meet
those goals. In accomplishing our turnaround and preparing for
our emergence from Chapter 11, we will be pursuing several
initiatives:
We will continue to enhance consumer appeal by capitalizing on
our greatest strengths, which include seasoned buying staffs,
merchandise procurement expertise, established franchises in
menswear and footwear, powerful positions in the small-size
junior and men s big-and-tall size niches, and strong real estate
locations resulting from long-standing relationships with
developers.
It is essential for each of our chains to establish strong brand
and store equity. We must clearly define the niches in which we
can best operate, then reposition, eliminate, or consolidate any
concept that does not serve a definable and profitable niche.
Each surviving concept must consistently execute its mission,
offering a combination of merchandise, pricing, convenience, and
service that qualifies it as the best choice for consumers in its
niche.
Upgrading our merchandise planning systems and organizations is a
key priority. Several of our apparel divisions are implementing
planning systems that enforce more disciplined buying, help to
pinpoint regional merchandising opportunities, and reduce
markdowns by improving inventory flow. We expect to quickly
expand those benefits to all divisions. In connection with that
merchandise planning system, we also are refining the role of our
buyers to allow them to focus more of their attention on creative
product development.
Our chains will seek to buy merchandise that can be priced at
more realizable original retails, without compromising quality.
They will narrow their assortments and emphasize key items aimed
directly at their consumer niches. These steps will help to
establish the identity of each chain and its brands and will
contribute to improved regular-price sales and promotional yield.
In order to improve store personnel recruitment and training and
make sure store personnel are effectively executing the chain
mission, divisional sales managers in most of our chains are
being relocated from our home office to the field. We ve changed
the job responsibilities of these seasoned executives to make
them more responsible for sales and customer service and less
involved with administrative detail.
We will further trim our expense base to protect against the
prospect that the retail climate will continue to depress gross
margins. We will improve efficiency throughout our organization
as we identify opportunities to reduce store occupancy costs, re-
engineer processes, and better use technology to reduce overhead
costs.
Our turnaround will be based on improved performance in our
existing stores, and we must make those stores as appealing as
possible. We intend to significantly reduce expenditures on new
stores and major remodelings, and will focus on routine
maintenance, such as paint and carpeting, in our existing stores.
We believe these short-term and mid-range initiatives will
sharpen our execution, raise our level of productivity, improve
service to our customers, and establish a long-term competitive
advantage for our stores.
FINANCIAL RESULTS
Total sales for the 53 weeks of fiscal 1995 were $1.39 billion,
down 5.9 percent from sales of $1.48 billion in the 52 weeks of
fiscal 1994. Same-store sales were down 4.9 percent. (The same-
store sales comparison is based upon 53 weeks in both years and
excludes fourth-quarter liquidation sales and sales of the
entertainment division.)
The net loss for 1995 included several special after-tax charges
amounting to $158.1 million. Of those charges, $109.1 million
represented the write-off of fixed assets and intangibles and
other noncash charges, $39.3 million were in connection with
future lease payments that are subject to settlement under
reorganization proceedings, and $9.7 million were primarily
associated with reorganization. Without the special charges, the
net loss for 1995 was $63.9 million. The total net loss of
$222.0 million, or $10.06 per share, compares with 1994 net
income of $20.5 million, or 93 cents per share.
OUTLOOK FOR 1996
Fashion specialty retailing is adjusting to the realities of the
marketplace, which had far more stores than it could support.
Many competitors are closing excess stores and tightening their
operations, as we are. Strong promotional activity has become a
way of life, and merchandising plans must take that into account.
Consumers are no longer willing to respond to one fashion fad
after another, so the retailers who succeed will be those who
offer the key items at compelling prices.
We're acting on those signals and are pursuing an aggressive
restructuring program that should result in our emergence from
Chapter 11. As we reshape our retail portfolio and our
organization, we are capitalizing on the strength of our most
successful retail franchises and the specialized expertise of our
loyal, dedicated employees. We are committed to making all the
changes necessary to succeed in the competitive environment in
which we do business today.
/s/ Alan Miller,
Chairman, President and CEO
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in millions, except per share data)
<CAPTION>
1995 1994 1993
(53 Weeks)(52 Weeks)(52 Weeks)
(restated)
<S> <C> <C> <C>
Net Sales $1,389.4 $1,476.4 $1,462.9
Cost of goods sold, occupancy and buying
expenses 1,033.3 1,017.4 990.8
Store operating and administrative expenses 352.1 360.3 352.6
Depreciation and amortization 62.8 69.6 67.1
Interest expense, net 25.2 19.0 19.7
Restructuring and reorganization expenses 167.1
Other operating (22.3)
1,640.5 1,444.0 1,430.2
Income (Loss) before Income Taxes (251.1) 32.4 32.7
Income tax provision (benefit) (29.1) 11.9 11.8
Net Income (Loss) $ (222.0) $ 20.5 $ 20.9
Net Income (Loss) per Common Share: $ (10.06)$ .93 $ .95
<FN>
See accompanying notes
</FN>
</TABLE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
<CAPTION>
ASSETS
1995 1994
year-end year-end
<S> <C> <C>
Current Assets:
Cash and short-term investments $139.6 $ 27.0
Merchandise inventories 250.5 318.4
Income tax receivable 42.8 7.3
Deferred income taxes 9.6
Prepaid expenses 10.2 8.2
Other current assets 9.4 26.6
Total Current Assets 452.5 397.1
Property and Equipment, net 209.0 347.0
Intangible Assets, net 50.3 96.2
Prepaid Pension Expense 38.4 38.7
Other Assets 11.3 14.8
Total Assets $761.5 $893.8
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable, trade $ 64.8 $ 75.4
Notes payable .2 115.9
Payroll and vacations 13.4 16.4
Other taxes 6.9 10.1
Other current liabilities 25.8 38.4
Total Current Liabilities 111.1 256.2
Liabilities Subject to Settlement under
Reorganization Proceedings 489.8
Long-Term Debt 173.5
Postretirement Benefits 40.0
Other Liabilities 20.2 33.2
Deferred Income Taxes 3.7
Common Stockholders' Equity:
Common stock, par value $1 22.1 22.0
Capital in excess of par value 76.7 76.5
Retained Earnings 41.6 303.8
Foreign currency translation adjustment
and other (15.1)
Total Common Stockholders' Equity 140.4 387.2
Total Liabilities and Equity $761.5 $893.8
<FN>
See accompanying notes.
</FN>
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
<CAPTION>
1995 1994 1993
(53 Weeks) (52 Weeks) (52 Weeks)
(Restated)
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income (Loss) $ (222.0) $ 20.5 $ 20.9
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 62.8 69.6 67.1
Provision for deferred income
taxes, net of valuation
allowance 4.5 8.8 2.5
Restructuring and reorganization
expenses 163.4
Changes in assets and liabilities,
net of effects from acquisitions
and dispositions:
Merchandise inventories 71.0 (26.7) 55.5
Other assets (16.8) (24.9) (18.6)
Accounts payable, accrued
expenses, and other
liabilities 19.3 (5.0)
Other 3.2 7.6 3.6
Total Operating Activities 85.4 49.9 131.0
Cash Flows from Investing Activities:
Payment for companies and assets
purchased, net of cash acquired (14.1) (11.8) (39.2)
Capital expenditures (37.2) (61.7) (78.4)
Net proceeds from disposal of
subsidiaries 17.1
Other 2.7 (.9) (2.5)
Total Investing Activities (31.5) (74.4) (120.1)
Cash Flows from Financing Activities:
Proceeds from prepetition debt
issuance 60.0 15.0 150.0
Prepetition long-term debt payments (.1) (35.7) (75.2)
Net prepetition short-term debt
borrowings (payments) 11.4 71.1 (48.0)
Net postpetition borrowings under
short-term credit facility .2
Dividends on common stock (9.3) (27.3) (27.3)
Common stock purchased (5.5)
Other 6.1 1.0 4.3
Total Financing Activities 68.3 24.1 (1.7)
Effect of exchange rate changes on cash (9.6) (5.2)
Cash Provided (Used) 112.6 (5.6) 9.2
Beginning cash and short-term investments 27.0 32.6 23.4
Ending Cash and Short-Term Investments $139.6 $27.0 $32.6
Cash Payments (Receipts) for:
Interest expense $ 23.9 $ 20.4 $ 19.0
Income taxes $ (.7) $ 4.5 $ 21.7
<FN>
See accompanying notes.
</FN>
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY
(Dollars in millions, except per share data)
<CAPTION>
Foreign
currency
Capital in Retained translation
Common excess of earnings adjustment
stock par value (restated) and other
<S> <C> <C> <C> <C>
Balance at Beginning of 1993 $22.0 $76.6 $317.0 $ 0
Net income 20.9
Stock options exercised and
employee benefit plans .2 4.3 (.2)
Common stock purchased -
195,600 shares (.2) (5.3)
Foreign currency translation
adjustment (.1)
Dividends on common stock -
$1.24 per share (27.3)
Balance at End of 1993 22.0 75.6 310.6 (.3)
Net income 20.5
Stock options exercised and
employee benefit plans 1.0 .1
Common stock purchased -
9,000 shares (.1)
Foreign currency translation
adjustment (14.9)
Dividends on common stock -
$1.24 per share (27.3)
Balance at End of 1994 22.0 76.5 303.8 (15.1)
Net loss (222.0)
Stock options exercised and
employee benefit plans .1 .2
Spin-off of subsidiary (30.9)
Foreign currency translation
adjustment 15.1
Dividends on common stock -
$.42 per share (9.3)
Balance at End of 1995 $22.1 $76.7 $ 41.6 $ 0
<FN>
See accompanying notes.
</FN>
</TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share data)
Note 1: Proceedings under Chapter 11
On November 3, 1995 (the Petition Date), Edison Brothers Stores, Inc. and
65 of its subsidiaries and affiliates (the Debtors) filed petitions for
relief under Chapter 11 of the United States Bankruptcy Code (Chapter 11)
in the United States Bankruptcy Court in Wilmington, Delaware. The Debtors
are presently operating their respective businesses as debtors-in-
possession. A statutory Creditors' Committee has been appointed in the
Chapter 11 cases. The Chapter 11 cases of the Debtors are being jointly
administered for procedural purposes only.
Certain foreign subsidiaries were not included in the Chapter 11 filing.
The results of their operations and financial position are not material to
the consolidated financial statements.
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles applicable to a
going concern, which principles, except as otherwise disclosed, assume that
assets will be realized and liabilities will be discharged in the normal
course of business. As a result of the Chapter 11 cases and circumstances
relating to this event, including the company's debt structure, its
recurring losses, and current economic conditions, such realization of
assets and liquidation of liabilities are subject to significant
uncertainty. Additionally, the amounts reported on the consolidated
balance sheet could materially change because of a plan of reorganization,
since such reported amounts do not give effect to adjustments to the
carrying value of the underlying assets or amounts of liabilities that may
ultimately result.
In the Chapter 11 cases, substantially all liabilities as of the Petition
Date are subject to compromise or other treatment under a plan of
reorganization. For financial reporting purposes, those liabilities and
obligations whose disposition is dependent on the outcome of the Chapter 11
cases have been segregated and classified as liabilties subject to
settlement under reorganization proceedings in the consolidated balance
sheet. Generally, actions to enforce or otherwise effect repayment of all
pre-Chapter 11 liabilities as well as all pending litigation against the
Debtors are stayed while the Debtors continue their business operations as
debtors-in-possession. Schedules have been filed by the Debtors with the
Bankruptcy Court setting forth the assets and liabilities of the Debtors as
of the Petition Date as reflected in the Debtors' accounting records.
Differences between amounts reflected in such schedules and claims filed by
creditors will be investigated and either amicably resolved or adjudicated
before the Bankruptcy Court. The ultimate amount of and settlement terms
for such liabilities are subject to a plan of reorganization and
accordingly are not presently determinable.
Under the Bankruptcy Code, the company may elect to assume or reject real
estate leases, employment contracts, personal property leases, service
contracts and other prepetition executory contracts, subject to Bankruptcy
Court approval. The liabilities subject to settlement under reorganization
proceedings include a provision for the estimated amount that may be
claimed by lessors and allowed in connection with the unexpired real estate
leases. The company will continue to analyze its executory contracts and
may assume or reject additional contracts.
Note 2 : Description of Business and Summary of Significant Accounting
Policies
Business - The company owns and operates chains of specialty retailing
stores located in forty-nine states, Puerto Rico, the Virgin Islands,
Mexico, and Canada. The company conducts its principal operations through
subsidiaries in two segments: apparel and footwear.
Consolidation - The financial statements include the accounts of all
subsidiaries; intercompany accounts and transactions have been eliminated.
Short-term investments are stated at cost that approximates market, consist
of highly liquid debt instruments, and are considered to be cash
equivalents for consolidated statements of cash flows.
Inventories - A portion of the inventories (72%) is determined using the
retail method and is based on the lower of cost or market. The other
portion (28%) is stated at the lower of cost, principally average cost, or
market, based principally on anticipated realizable values.
Depreciation and amortization of property and equipment and intangible
assets are computed principally on the straight-line basis. Lease rights
acquired are amortized on a straight-line basis over remaining lease terms
and anticipated renewals.
Income Taxes - The liability method is used to compute deferred income
taxes resulting from temporary differences in the recognition of income and
expense items for tax and financial reporting purposes.
Interest Expense - Interest expense for 1995, 1994, and 1993 has been
reduced by interest income of $1.8 (earned prior to the Petition Date),
$1.6, and $.7, respectively. Interest earned subsequent to the Petition
Date of $.9 is included in restructuring and reorganization expenses.
Store Opening and Closing Costs - Store preopening costs are charged
against income as incurred. Closing costs are accrued when the decision is
made to close a store.
Intangible Assets - The company evaluates the recoverability of its
significant intangible assets as follows:
Lease Rights - The value of lease rights is determined based
on the excess of a lease's market value over the discounted
scheduled rent payments at the time the lease is entered into
or assumed by the company. The carrying value is amortized
over the life of the lease and is charged to expense if the
lease is terminated prior to its normal expiration.
Goodwill - Goodwill is determined based on the excess of the
purchase price over the fair value of the net tangible assets
of the business acquired. The carrying value of this asset is
evaluated periodically in relation to the operating
performance of the underlying business. This evaluation is
based on a discounted cash flow analysis and takes into
account such factors as the occurrence of a significant event,
a significant change in the environment in which the business
operates, and the continuing viability of the business as a
whole.
Earnings Per Share - Earnings per common share is based on the weighted
average number of shares outstanding (22,070,000 in 1995; 22,007,000 in
1994; and 21,998,000 in 1993). Shares issuable under the stock option and
stock bonus plans did not have a significant dilutive effect on earnings
per share.
Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and revenues and expenses during the reporting period. Actual
amounts could differ from those estimates.
Reclassifications - Certain prior-year items have been reclassified to
conform to the current year presentation.
Fiscal Year - The company's fiscal year ends on the Saturday closest to
January 31. References to 1995, 1994, and 1993 are to the 53 weeks ended
February 3, 1996, and 52 weeks ended January 28, 1995, and January 29,
1994.
Note 3: Acquisitions
During 1995 the company made acquisitions for an aggregate cash
consideration of $14.1. Assets of $19.9 and liabilities of $5.8 were
recorded in connection with the acquisitions. The acquisitions were
accounted for by the purchase method, and operating results of the acquired
entities have been included in the consolidated financial statements since
their respective acquisition dates.
Note 4: Dispositions
Effective June 29, 1995, the company distributed all of the outstanding
shares of common stock of Dave & Buster's, Inc. owned by the company to
Edison Brothers' stockholders of record as of June 19, 1995. Prior to the
distribution, Dave & Buster's had been a majority-owned subsidiary engaged
in the ownership and operation of restaurant/entertainment complexes. No
gain or loss was recorded as a result of the distribution. The
distribution was recorded as a dividend and, accordingly, the company
reduced retained earnings by the net book value distributed. Through the
distribution date, Dave & Buster's reported 1995 net income of $1.0. As of
June 29, 1995, it had total assets of $49.2 and a net book value of $30.9.
For fiscal years 1994 and 1993, Dave & Buster's reported net income of $2.4
and $1.2, respectively. At the end of 1994 Dave & Buster's had total
assets of $49.0 and a net book value of $27.7. The company has guaranteed
certain Dave & Buster's lease obligations with a present value of $8.2.
Dave & Buster's has agreed, among other things, to indemnify the company
from loss under the lease guarantees and has granted the company a
subordinated security interest in Dave & Buster's leasehold interests in
the guaranteed leases and all real and personal property owned by Dave &
Buster's on the date of the agreement. The company believes it has
adequate security against loss under the guarantees.
In January 1996 the company entered into an agreement to sell substantially
all of the assets of its mall entertainment division to Namco
Cybertainment. The company received approval for the sale from the
Bankruptcy Court and completed the sale in January 1996. The company
recorded a loss of $24.7 in connection with the sale. The company intends
to dispose of the remaining entertainment operations and recorded a
provision of $8.3 in the 1995 Consolidated Statement of Income related to
their disposal. For fiscal years 1995, 1994, and 1993, the mall
entertainment division reported a net loss of $1.8, $1.8, and $.1,
respectively. At the date of sale, the entertainment division had total
assets of $51.8 and a net book value of $44.9. At the end of 1994, total
assets were $57.9, and net book value was $51.1.
Note 5: Liabilities Subject to Settlement under Reorganization Proceedings
The principal categories of claims classified as liabilities subject to
settlement under reorganization proceedings are identified below. All
amounts below may be subject to future adjustment depending on Bankruptcy
Court action, further developments with respect to disputed claims,
determination as to the value of any collateral securing claims, or other
events. Additional claims may arise resulting from rejection of additional
executory contracts by the company.
<TABLE>
<CAPTION>
1995
year-end
<S> <C>
Notes payable - banks $205.9
Long-term senior notes payable 150.0
Captial leases 8.4
Accrued interest payable 3.5
Cash set-off applied to debt (3.6)
Deferred debt costs (6.7)
Postretirement benefit accrual 41.1
Accounts payable 38.5
Lease termination claims 38.6
Taxes 4.3
Other 9.8
Total liabilities subject to settlement under
reorganization proceedings $489.8
</TABLE>
As a result of the bankruptcy filing, no principal or interest payments
will be made on any prepetition debt without Bankruptcy Court approval or
until a reorganization plan defining the repayment terms has been approved.
Interest on prepetition obligations has not been accrued after the Petition
Date. Contractual interest expense not recorded on certain prepetition
debt totaled $9.1 for the fiscal year 1995.
Prior to the bankruptcy filing and certain agreements discussed below, the
company's debt consisted of senior notes held by various institutional
lenders amounting to $150.0. The unsecured senior notes, having maturities
from 7 to 15 years, were to bear interest at rates of 7.09% to 8.04%. The
company also had outstanding borrowings under a $125.0 revolving credit
facility as well as short-term and demand notes under uncommitted bank
lines with varying interest rates and maturity dates. In addition, the
company had $8.4 in capital lease obligations relating to its Washington,
Missouri, distribution center.
As a result of its operating loss for second quarter 1995, the company was
in violation of certain financial covenants under its bank and senior note
agreements. During the third quarter 1995, the company and its subsidiary,
Edison Brothers Apparel Stores, Inc., entered into an agreement for a $75.0
secured revolving line of credit facility with BankAmerica Business Credit,
Inc. extending through February 29, 1996. In addition, the company entered
into override agreements with its existing lenders through February 29,
1996. The override agreements covered existing 1995 financial covenants
and deferred principal repayments otherwise due December 1, 1995.
Furthermore, the company's primary existing letter of credit bank agreed to
continue to provide international letters of credit through the override
period. In exchange for these concessions, the company paid a one-time
forbearance fee of $3.6 and agreed to increase the interest rate on the
outstanding debt to 9.75%.
As of the bankruptcy filing, the company had outstanding $150.0 of senior
notes, $125.0 under its $125.0 revolving credit facility, $80.9 of short-
term and demand notes under its uncommitted bank lines, $8.4 of capital
lease obligations, and $21.6 under its $75.0 secured revolving line of
credit facility. The company received authorization from the Bankruptcy
Court to make a $21.6 payment on the secured revolving line of credit
facility. In addition, $3.6 of cash was set-off by the banks against
outstanding principal and accrued interest balances. No further principal
or interest payments will be made on any prepetition debt without
Bankruptcy Court approval or until a reorganization plan defining the
repayment terms has been approved.
Note 6: Financing Arrangements
The company and Edison Brothers Apparel Stores, Inc., as debtors-in-
possession, are parties to a Loan Agreement dated effective November 9,
1995, (the DIP facility) with BankAmerica Business Credit, Inc., as Agent
and Lender, under which the company may borrow up to $200.0 to fund ongoing
working capital needs. The DIP facility, which has been approved by the
Bankruptcy Court, has a sublimit of $150.0, subject to collateral
restrictions, for the issuance of letters of credit. The DIP facility is
intended to provide the company with the cash and liquidity to conduct its
operations and pay for merchandise shipments at normal levels while it
prepares a reorganization plan.
At the company's option, the company may borrow under the DIP facility at
the Reference Rate (as defined) plus .25% or at the Eurodollar Rate (as
defined) plus 1.5%. The current borrowing rate is 8.5%. The maximum
borrowing, up to $200.0, is limited to 50% of the value of eligible
inventory (as defined) plus 95% of the amount of cash deposited with the
Agent. The company is required to pay a commitment fee of .375% per annum
on the unused portion of the DIP facility. The DIP facility contains
restrictive covenants including, among other things, a limitation on store
closings of 850, limitations on the incurrence of additional liens and
indebtedness, limitations on capital expenditures and the sale of assets,
the maintenance of minimum operating earnings (EBITDA) and inventory
levels, and a prohibition on paying dividends. At February 3, 1996, the
company was in compliance with the DIP facility covenants.
The lenders under the DIP facility have a "super-priority" administrative
expense claim against the estate of the company. The DIP facility expires
on the earlier of November 9, 1997, or the effective date of a
reorganization plan that is confirmed by the Bankruptcy Court.
As of February 3, 1996, the company had outstanding $.2 under the DIP
facility. Outstanding letters of credit were $112.6 and available
borrowings under the DIP facility were $56.9.
Note 7: Restructuring and Reorganization Expenses
Restructuring and reorganization expenses for the fiscal year ended
February 3, 1996, were as follows:
<TABLE>
<CAPTION>
1995
<S> <C>
Estimated costs for store
closings $101.6
Loss on sale of subsidiaries 33.0
Accelerated goodwill amortization 15.1
Other 17.4
Total restructuring and
reorganization expenses $167.1
</TABLE>
During the second and fourth quarters of fiscal 1995, the company
recognized store closing provisions relating to a restructuring plan
designed to close unprofitable stores. Sales and store contribution for
1995 for the stores closed during 1995 and the remaining stores to be
closed in 1996 were $177.2 and $(26.1) and $63.3 and $(5.6), respectively.
The company is continuing to evaluate store operating performance to
determine the need for additional store closings.
Store closing costs of $101.6 during 1995 represent a provision to cover
early lease termination claims and the write-off of fixtures and equipment,
leasehold improvements, and related intangible assets. Total charges of
$59.2, representing the net book value of fixed and intangible assets, have
been made to the reserve since inception. Of the reserve, $38.6, related
to lease termination claims, has been reclassified to liabilities subject
to settlement under reorganization proceedings.
The company recorded a $24.7 loss related to the sale of substantially all
the assets of its mall entertainment division in January 1996. In
addition, the company recorded $8.3 to cover the costs associated with the
disposal of the remaining operations.
The company recorded a $15.1 charge for the accelerated amortization of
Zeidler & Zeidler goodwill based on an analysis of estimated future cash
flow, discounted to present value. An evaluation of the carrying value of
the goodwill in relation to the operating performance of the underlying
business indicated that such goodwill had declined in value.
Other reorganization expenses of $17.4 represent expenses related to an
early retirement program, costs related to the closing of the distribution
center in Rome, Georgia, and professional fees incurred as a result of the
Chapter 11 filing. These professional fees relate primarily to accounting,
legal, and consulting services provided to the company and the Creditors'
Committee (which are required to be paid by the company while in Chapter
11).
Of the total restructuring and reorganization charges, $38.7 were cash,
which related primarily to future lease termination payments that are
subject to settlement under reorganization proceedings. Non-cash expenses
were $128.4. Cash payments of $3.7, primarily for professional fees, were
made during 1995.
<TABLE>
Note 8: Income Taxes
The provision (benefit) for income taxes consists of:
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Current expense (benefit)
Federal $(35.6) $ .4 $ 7.1
Foreign .3 2.6 1.4
State and local 1.7 .1 .8
Deferred expense (benefit) (39.0) 8.8 2.5
Deferred tax valuation allowance 43.5
Total provision (benefit) $(29.1) $11.9 $11.8
</TABLE>
Significant components of the deferred tax liabilities and assets in the
consolidated balance sheets are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
year-end year-end year-end
<S> <C> <C> <C>
Accelerated depreciation $ 9.3 $11.1 $16.5
Pension income 14.9 12.2 14.3
Other 9.8 21.2 14.4
Total deferred tax liabilities 34.0 44.5 45.2
Inventory capitalization 4.8 4.6 3.0
Rent expense accruals 7.7 8.0 9.0
Postretirement benefits 16.1 13.0 15.2
Acquisition-related reserves 1.3 2.6 6.7
Restructuring reserves 20.6
Net operating loss carryforward 13.9
Other 13.1 22.2 21.4
Total deferred tax assets 77.5 50.4 55.3
Less: Deferred tax valuation
allowance 43.5
Net deferred tax asset $ 0 $ 5.9 $10.1
</TABLE>
During 1995 the company concluded that it is likely it will not be able to
realize its deferred tax assets. Accordingly, an allowance against the net
deferred tax asset balance of $43.5 and a charge to income tax expense are
reflected in the consolidated financial statements.
<TABLE>
Reconciliation of federal statutory rates to effective income tax rates:
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Federal corporate statutory rate(35.0)% 35.0% 35.0%
State and local income taxes,
net of federal income tax
benefit (.4) 3.5 2.7
Goodwill amortization 3.3
Deferred tax valuation allowance 17.3
Miscellaneous items, net 3.2 (1.6) (1.6)
Actual tax expense (benefit) (11.6)% 36.9% 36.1%
</TABLE>
Pretax earnings from foreign subsidiaries were $0 in 1995, $8.4 in 1994,
and $4.8 in 1993.
As of year-end 1995 the company has a net operating loss carryforward for
federal income tax purposes of approximately $35.2, which is available to
offset future taxable income through 2010. In addition, the company has an
alternative minimum tax credit carryforward of approximately $2.7, which is
available to reduce future regular income taxes over an indefinite period.
A plan of reorganization or significant change in ownership of the company
could limit the use of the net operating loss carryforward.
<TABLE>
Note 9: Common Stock
<CAPTION>
1995 year-end 1994 year-end
<S> <C> <C>
Shares:
Issued (100,000,000
authorized) 27,554,232 27,554,232
Less held in treasury 5,466,742 5,531,429
Outstanding 22,087,490 22,022,803
Stockholders of record 4,000 4,000
</TABLE>
The 1986 and 1992 stock option plans authorize the sale of 1.5 and 1.0
million common shares, respectively, to executives and store managers. No
options were granted under the 1986 plan subsequent to adoption of the 1992
plan. Options are exercisable over various option terms not exceeding 10
years following the date of grant.
Activity under these plans was as follows:
<TABLE>
<CAPTION>
1995 1994 1993
Option Option Option
price price price
Number of per Number of per Number of per
Options share options share options share
<S> <C> <C> <C> <C> <C> <C>
Outstanding at
beginning of
year 1,068,231 $16.13- 570,521 $11.38- 801,500 $ 9.56-
37.25 37.25 37.25
Granted 902,080 4.31- 711,700 23.75-
27.98 29.81
Exercised 0 (44,078) 11.38- (185,771) 9.56-
27.15 27.15
Canceled (862,215) 11.13- (169,912) 11.38- (45,208) 9.56-
37.25 37.25 37.25
Outstanding
at end of 1,108,096 4.31- 1,068,231 16.13- 570,521 11.38-
year 27.98 37.25 37.25
Shares
exercisable
at end of
year 321,153 260,091 214,151
Shares issued
for options
exercised 0 44,078 185,771
</TABLE>
Outstanding stock options under all plans were adjusted on June 29, 1995,
as a result of the Dave & Buster's, Inc. spin-off. The number of shares
subject to each option was increased by 33.1% and the excercise price was
reduced by 24.9%.
During 1995, 175,050 options with exercise prices ranging from $25.38 to
$37.25 were canceled and reissued at an exercise price of $14.81.
At February 3, 1996, 1,449,044 shares of common stock were reserved for
issuance under the stock option plans.
Each share of outstanding common stock includes a right that entitles the
holder to purchase one share of common stock for $93. Rights attach to all
new shares of common stock issued and become exercisable only under certain
conditions involving actual or potential acquisitions of the company's
common stock. Depending on the circumstances, all holders except the
acquiring person may be entitled to purchase at the exercise price
additional shares of common stock of the company and/or of the acquiring
person having a market value equal to two times the exercise price. The
rights remain in existence until January 26, 1998, unless they are redeemed
(at five cents per right) or terminated.
<TABLE>
Note 10: Property and Equipment
Property and equipment are stated at cost as follows:
<CAPTION>
1995 1994
year-end year-end
<S> <C> <C>
Land $ 5.8 $ 11.5
Buildings 69.7 77.3
Leasehold improvements 189.7 304.0
Fixtures and equipment 147.5 230.7
Property held under capital leases, principally
buildings 9.6 9.6
Total cost 422.3 633.1
Accumulated depreciation and amortization (213.3) (286.1)
Property and equipment, net $209.0 $347.0
</TABLE>
Depreciation and amortization expense for 1995, 1994, and 1993 was $52.1,
$56.9, and $54.6, respectively.
<TABLE>
Note 11: Intangible Assets
<CAPTION>
1995 1994
year-end year-end
<S> <C> <C>
Leasehold rights $ 10.1 $ 46.6
Goodwill 34.0 70.1
Covenant not to compete 12.0 15.6
Other 15.3 10.2
Total cost 71.4 142.5
Accumulated amortization (21.1) (46.3)
Intangible assets, net $ 50.3 $ 96.2
</TABLE>
Intangibles are amortized over useful lives ranging from 2 to 30 years.
Amortization expense for 1995, 1994, and 1993 was $10.7, $12.7, and $12.5,
respectively. In 1995 an additional charge of $15.1 was recorded for the
accelerated amortization of Zeidler & Zeidler goodwill.
Note 12: Pension Plan
The pension plan covers employees who have met age and service eligibility
requirements. Benefits are based on each employee's highest average
compensation for any 5 consecutive full calendar years out of the last 15
years of credited service preceding separation. The company funds at least
the minimum amount required by funding standards. Currently, the pension
plan on an actuarial basis is overfunded and there is no current funding by
the company.
In determining the actuarial present value of projected future benefits for
1995 and 1994, the weighted-average discount rate was 7.0% and 8.75%
respectively, and the rate of increase in future compensation levels was
5.65% and 5.2%, respectively. For 1995, 1994, and 1993, the assumed rate
of return on assets is 9.5%. Plan assets consist primarily of fixed income
and equity securities.
The plan's funded status is as follows:
<TABLE>
<CAPTION>
1995 1994
year-end year-end
<S> <C> <C>
Actuarial present value:
Vested benefit obligation $ 48.1 $ 33.2
Nonvested benefit obligation 4.3 5.3
Accumulated benefit obligation $ 52.4 $ 38.5
Projected benefit obligation $(65.8) $(44.1)
Plan assets at market value 118.1 89.2
Plan assets in excess of projected
benefit obligation 52.3 45.1
Unrecognized net asset existing
at year-end (16.5) (11.7)
Unrecognized prior service cost 4.2 6.4
Additional minimum liability (3.9) (2.7)
Pension prepayment recognized in
the company's balance sheet $ 36.1 $ 37.1
</TABLE>
Net pension income includes the following components:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Service cost $(1.5) $(2.4) $(2.1)
Interest cost (3.7) (3.8) (3.8)
Actual return on assets 30.7 2.5 11.0
Partial recognition of prior
period net gain (loss) .1 (.3) (.1)
Net losses (gains) deferred
to future periods (22.2) 5.4 (3.9)
Net pension income $ 3.4 $ 1.4 $ 1.1
</TABLE>
Note 13: Employee Benefits
The company at its discretion provides medical, dental, and life insurance
coverage for its employees and retirees. Medical and life insurance
expenses were $12.6 in 1995, $11.8 in 1994, and $12.1 in 1993. Dental
expenses were $.8 in 1995, $.9 in 1994, and $.8 in 1993.
The company provides an employee savings plan that permits employees to
make contributions in accordance with Internal Revenue Code Section 401(k).
Employees who meet age and service requirements are eligible to participate
by contributing up to 15% of their pretax compensation. The company
matches a portion of the employee's contribution under a predetermined
formula based on the company's return on equity. Company contributions to
the plan may be remitted to the Trustee in the form of company common stock
or cash, which is then used to acquire company common stock on the open
market. The company's expense related to the plan was $.2 for 1995, $.3
for 1994, and $.2 for 1993.
Note 14: Postretirement Benefits
The company at its discretion provides a defined dollar benefit health and
life plan to its retirees and their eligible spouses. To qualify, an
employee must retire at age 55 or later with at least 15 years of credited
service under the pension plan. The health care portion of the plan is
contributory, with retiree contributions subject to adjustment annually.
The life insurance portion of the plan is noncontributory. The company
funds, as needed, plan costs in excess of retiree contributions. The
company reserves the right to modify or terminate these benefits.
The plan's funded status is as follows:
<TABLE>
<CAPTION>
1995 1994
year-end year-end
<S> <C> <C>
Accumulated postretirement
benefit obligation:
Retirees $ 37.1 $ 31.4
Fully eligible active plan
participants 3.7 3.2
Other active plan participants 4.1 3.2
Unrecognized net gain (loss) (3.7) 2.3
Prior service cost (.1) (.1)
Accrued postretirement benefit
cost $ 41.1 $ 40.0
</TABLE>
The accrued benefit cost has been classified as liabilities
subject to settlement under reorganization proceedings for year-
end 1995.
Net periodic postretirement benefit cost consists of:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Service cost $ .2 $ .2
Interest cost 3.2 3.1
Net periodic postretirement benefit
cost $ 3.4 $ 3.3
</TABLE>
An increase in the cost of covered health care benefits of 11% for pre-age-
65 participants and 10% for post-age-65 participants was assumed for fiscal
year 1996. This rate is assumed to decrease gradually to 6% by the year <PAGE>
2000 and remain at that level thereafter. A 1% increase in the health care
cost trend rate would increase the accumulated postretirement benefit
obligation by $2.3 at year-end 1995 and the aggregate of the service and
interest cost components of net periodic postretirement benefit cost for
1995 by $.2. The weighted average discount rate used in determining the
accumulated postretirement benefit obligation was 7.0% and 8.75% at
year-end 1995 and 1994, respectively.
Note 15: Leases
Most operations are conducted in leased premises. Some of the leases
include options for renewal or extension on various terms. For 1995, 1994,
and 1993, respectively, minimum rentals for operating leases were $137.6,
$140.6, and $129.9; additional percentage rentals based on sales were $3.5,
$4.8, and $5.3. Most leases also require the payment of common area
expenses and real estate taxes.
At year-end 1995 future minimum lease payments required under operating
leases are $98.7, 1996; $91.8, 1997; $82.6, 1998; $73.5, 1999; $61.5, 2000,
and $527.1, total.
<TABLE>
Note 16: Business Segments
<CAPTION>
Net sales Operating profit (loss)
1995 1994 1993 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
Apparel $ 952.3 $ 975.8 $ 981.6 $ (129.5) $ 7.7 $ 37.2
Footwear 367.9 400.2 394.3 (8.9) 28.7 22.5
1,320.2 1,376.0 1,375.9 (138.4) 36.4 59.7
Corporate
and other 69.2 100.4 87.0 (87.5) 16.6 (6.6)
Interest
expense (25.2) (20.6) (20.4)
$1,389.4 $1,476.4 $1,462.9 $ (251.1) $ 32.4 $ 32.7
</TABLE>
<TABLE>
<CAPTION>
Depreciation Capital
Identifiable assets and amortization expenditures
1995 1994 1993 1995 1994 1993 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Apparel $362.2 $492.1 $492.3 $36.9 $39.9 $39.1 $11.2 $28.1 $34.5
Footwear 131.2 155.5 145.5 10.1 9.6 9.8 10.4 14.8 14.2
493.4 647.6 637.8 47.0 49.5 48.9 21.6 42.9 48.7
Corporate
and other 268.1 246.2 235.3 15.8 20.1 18.2 15.6 18.8 29.7
$761.5 $893.8 $873.1 $62.8 $69.6 $67.1 $37.2 $61.7 $78.4
</TABLE>
See Note 18 for amounts affecting 1993 operating loss of Corporate and
other.
Note 17: Other Operating
The $22.3 reported as other operating in the 1994 Consolidated Statement
of Income represents the benefit resulting from recovery of countervailing
duties.
Note 18: Restatement
Income for 1993 has been restated and reduced by $2.3 ($1.2 after-tax or 6
cents per share) to reflect as annual compensation expense certain amounts
payable under a contingent earn-out related to a 1989 business
acquisition; such amounts were previously considered as additional
purchase price to be reflected upon payment in 1995. In addition, 1993
beginning retained earnings have been reduced by $2.7 to reflect the
effect of restatement for years prior to 1993.
Report of Ernst & Young LLP, Independent Auditors
Stockholders and Board of Directors
Edison Brothers Stores, Inc.
We have audited the consolidated balance sheets of Edison
Brothers Stores, Inc. (the Company and its principal operating
subsidiaries in reorganization under Chapter 11 title 11 of the
United States Bankruptcy Code since November 3, 1995, see Note 1
to the consolidated financial statements) as of February 3, 1996,
and January 28, 1995, and the related consolidated statements of
income, common stockholders' equity, and cash flows for each of
the three years in the period ended February 3, 1996. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Edison Brothers Stores, Inc. at February 3,
1996, and January 28, 1995, and the consolidated results of its
operations and its cash flows for each of the three years in the
period ended February 3, 1996, in conformity with generally
accepted accounting principles.
The accompanying consolidated financial statements have been
prepared on a going concern basis which contemplates continuity
of the Company's operations and realization of its assets and
payment of its liabilities in the ordinary course of business.
As described more fully in Note 1, on November 3, 1995, Edison
Brothers Stores, Inc. filed a voluntary petition for relief under
Chapter 11 of the United States Bankruptcy Code and is currently
operating its business as a debtor-in-possession under the
supervision of the Bankruptcy Court. The Chapter 11 filing was
the result of violation of certain debt covenants, recurring
operating losses, deterioration of vendor support, and cash flow
problems. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. Management's
plans to finance operating activities and further reorganize
operations are also described in Notes 6 and 7.
The appropriateness of using the going concern basis is dependent
upon, among other things, approval of a plan of reorganization by
the Bankruptcy Court, attainment by the Company of profitable
future operations, and its ability to generate sufficient cash
from operations and other financing sources to support its
business activities. As a result of the reorganization
proceedings, the Company may sell or otherwise dispose of assets
and liquidate or settle liabilities for amounts other than those
reflected in the financial statements referred to above.
Further, a plan of reorganization, as finally approved by the
Bankruptcy Court, could materially change the amounts currently
recorded. The accompanying consolidated financial statements do
not reflect further adjustments that might be necessary to the
carrying value of assets and the amounts and classification of
liabilities or stockholders' equity as a consequence of these
bankruptcy proceedings.
/s/ Ernst & Young LLP
St. Louis, MO
March 14, 1996
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL INFORMATION
Management is responsible for the integrity and objectivity of
the financial statements and other information included in this
annual report. The financial statements have been prepared in
conformity with generally accepted accounting principles.
Information that is not subject to objective determination has
been developed based upon management's best judgment.
The company maintains accounting systems that management believes
are sufficient to provide reasonable assurance of reliable
financial statements and to maintain accountability for assets.
These systems are supported by careful selection and training of
qualified personnel. The extent of internal accounting controls
implemented must be related to the benefits derived, and the
balancing of the cost of controls to the benefits derived
requires management's estimates and judgments. In addition, as
part of its audit of the company's financial statements, Ernst &
Young LLP completed a study and evaluation of selected internal
accounting controls to establish a basis for reliance thereon in
determining the nature, timing, and extent of audit tests to be
applied.
The Board of Directors has an Audit Committee, which is comprised
totally of members of the board who are not employees of the
company. The committee meets with the independent auditors,
internal auditors, and representatives of management to discuss
auditing and financial reporting matters. Both independent
auditors and the company's internal auditors meet with the Audit
Committee, with and without management representatives present,
to discuss the scope and results of their examinations, the
quality of financial reporting, and the propriety of management's
conduct of the business.<PAGE>
Management is committed to conducting its business affairs in
accordance with the highest ethical standards and in conformity
with the law.
Management's Discussion and Analysis
(Dollars in Millions, except per share data)
On November 3, 1995, Edison Brothers Stores, Inc. (the company)
and 65 of its subsidiaries and affiliates filed petitions for
reorganization under Chapter 11 of the U.S. Bankruptcy Code. The
company will continue to conduct business in the ordinary course
under the protection of the Bankruptcy Court while a
reorganization plan is developed.
Business The company owns and operates chains of specialty
retailing stores located in forty-nine states, Puerto Rico, the
Virgin Islands, Mexico, and Canada. The company conducts its
principal operations through subsidiaries in two segments:
apparel and footwear. Stores within the apparel and footwear
segments, with the exception of the Repp Ltd. chain of big-and-
tall mens stores, are almost exclusively mall-based and generally
range in size from 1,300 to 3,000 square feet. Merchandise is
acquired from many vendors and the company is not dependent on
any one supplier. Three main distribution centers serve as
receiving points for merchandise and coordinate the distribution
of shipments to the stores via common or contract carrier. A
fourth distribution center in Rome, Georgia, was closed in
January 1996. The company also had entertainment operations
comprised of predominantly mall-based entertainment centers and
free-standing Dave & Buster's restaurant/entertainment complexes.
In June 1995 the company spun-off to its shareholders as a
separate publicly-held corporation its interest in the
subsidiaries that owned and operated the Dave & Buster's
complexes. In January 1996 the company sold substantially all of
the assets of its mall entertainment division to Namco
Cybertainment for approximately $15.0.
During 1995 the company closed 656 stores. The company has
identified another group of stores that will be closed during
1996, and has recorded a charge associated with the closings in
the 1995 consolidated financial statements. Store performance
will continue to be monitored during 1996 to evaluate the need
for further store closings.
At year-end 1995 the apparel segment operated 1,497 stores in
eight chains. Seven chains focus on menswear: J. Riggings,
JW/Jeans West, Oaktree, Zeidler & Zeidler, Coda, Repp Ltd., and
Phoenix, the company's catalog operation. Each menswear chain
targets a specific age group of men, with a different product
mix. The womenswear chain, 5-7-9 Shops, primarily market casual
wear and accessories to teens and pre-teens. The footwear
segment operated 580 stores in three chains at the end of fiscal
1995. The footwear chains are Bakers/Leeds and Precis, which
offer popular-priced women's fashion shoes, and Wild Pair, which
focuses on advanced shoe fashion for young men and women.
The company's fiscal year ends on Saturday closest to January 31.
References to 1995, 1994 and 1993 are to the 53 weeks ended
February 3, 1996, and 52 weeks ended January 28, 1995, and
January 29, 1994.
Financial Condition Cash and short-term investments at year-end
1995 increased $112.6 over year-end 1994 primarily as a result of
the deferral of payment of liabilities due to the Chapter 11
filing. Requirements for the payment of debt, accounts payable,
and other liabilities that arose prior to the Chapter 11 filing
are in most cases stayed while the company is under the
protection of the Bankruptcy Court. The company received
authorization from the Bankruptcy Court to make a $21.6 principal
payment in 1995 on prepetition liabilities. The Bankruptcy Court
also has authorized payments of prepetition wages, vacation pay,
and up to $6.0 to foreign vendors to aid the company in
maintaining the normal flow of merchandise to its stores. The
remaining prepetition liabilities of $489.8 have been classified
as liabilities subject to settlement under reorganization
proceedings in the consolidated balance sheet as of February 3,
1996 (see Note 5 to the consolidated financial statements).
Merchandise inventories decreased by 21.3% between 1994 and 1995
primarily due to the numerous store closings. The decreases in
property and equipment, net, and intangible assets also were
related to actual 1995 and identified 1996 store closings as well
as the spin-off of Dave & Buster's, the sale of the company's
mall entertainment division, and the accelerated amortization of
goodwill related to the company's Zeidler & Zeidler operations.
These decreases were partially offset by additions to intangibles
related to 1995 acquisitions. Capital expenditures for 1995 also
decreased 39.7% from 1994. The income tax receivable at the end
of 1995 resulted from the significant loss in fiscal 1995 and
utilization of net operating loss carrybacks. The company
received a $37.6 tax refund in February 1996. The remaining
change in other current assets between 1995 and 1994 was due to
the establishment of a valuation allowance for deferred taxes.
During 1995 the company concluded that it is likely it will not
be able to realize its deferred tax assets.
Capital Resources and Liquidity Subsequent to the Chapter 11
filing the company entered into a loan agreement (the DIP
facility) with BankAmerica Business Credit, Inc. under which the
company may borrow up to $200.0 to fund ongoing working capital
needs. The DIP facility has a sublimit of $150.0, subject to
collateral restrictions, for the issuance of letters of credit.
The DIP facility contains restrictive covenants including
limitations on capital expenditures and restrictions on the
payment of dividends. As of February 3, 1996, the company had
$56.9 available for borrowing under the DIP facility and $139.6
of cash and investments. The company expects that its cash and
investments and the DIP facility will provide it with sufficient
liquidity to conduct its operations and pay for merchandise
shipments through the course of the Chapter 11 process. At
February 3, 1996, the company had utilized $112.6 of the DIP
facility to issue letters of credit, but had no significant
borrowings outstanding under the DIP facility.
Cash flow from operations in 1995 increased $35.5 or 71.1% over
1994. The increase was primarily attributable to a $71.0
decrease in inventory in 1995 and $26.7 increase in inventory in
1994, offset by the deterioration in 1995 net income. In 1994
cash flow from operations decreased by $81.1 or 61.9% compared to
1993. The decrease was primarily attributable to a $26.7
increase in inventory in 1994 and a $55.5 decrease in inventory
in 1993. The 1993 decrease in inventory resulted primarily from
the sale of existing inventories and reductions in merchandise
purchases. All of the company's chains reduced inventories
during 1993, except J. Riggings and Repp Ltd., which were the
only chains with increases in number of stores. In 1994 the
company increased inventories in those chains experiencing
greater customer demand, such as JW/Jeans West and Bakers/Leeds.
At the end of 1995 and 1994, working capital was $341.4 and
$140.9, respectively. This increase was due to the increase in
cash and investments subsequent to the Chapter 11 filing and the
reclassification of prepetition liabilities as liabilities
subject to settlement under reorganization proceedings.
The company expects that cash flow from operations should improve
in 1996 as the company continues to close unprofitable stores and
closely monitors expenses. During 1996 capital expenditures are
expected to be reduced more than 25% versus 1995 levels. The
company's focus will be on routine maintenance within existing
stores rather than the opening of new stores. Other expected
demands on company funds will be for normal seasonal inventory
requirements. Cash for capital expenditures and merchandise
inventory is expected to come from funds generated from
operations, reduced cash requirements while operating under
Chapter 11, and existing available cash. The company generally
does not expect to borrow under the DIP facility to finance
operations during 1996.
Operating Results Net sales for the fifty-three weeks of fiscal
1995 decreased $87.0 or 5.9% from net sales for the fifty-two
weeks of fiscal 1994. Same-store sales (sales reported by stores
open throughout both years), excluding the fourth quarter
liquidation sales of approximately 500 stores closed by the
company and excluding sales of the mall entertainment division
which was sold in January 1996, decreased 4.9% during fiscal
1995. Same-store sales were calculated based upon fifty-three
weeks for both years. The decline in same-store sales was
experienced in both the apparel and footwear segments. The
climate in the specialty retail industry deteriorated throughout
1995, resulting in lower sales and the need for higher
promotional markdowns. Disruptions in the receipt of merchandise
prior to the Chapter 11 filing and during the stabilization
period after the filing also contributed to the sales decline.
Net sales for 1994 increased by $13.5 or.9% from 1993 levels.
Same-store sales had improved in the footwear segment but
declined in apparel and entertainment. A lackluster fashion
environment prompted reliance on off-price promotions to
stimulate sales. Because of favorable interest rates and demand
for higher-ticket items, consumers seemed to shift their
purchases to electronics and hardgoods.
Sales for 1996 will be impacted by the closing of numerous stores
in 1995 and the projected closings in 1996. Sales in 1995
related to the closed stores were $240.5.
Cost of goods sold, including occupancy and buying expenses, were
74.4% of sales in 1995 compared to 68.9% and 67.7% of sales in
1994 and 1993, respectively. The increase in 1995 over 1994 was
due primarily to higher promotional markdowns needed during the
year to stimulate sales. Markdowns as a percentage of sales were
23.6% in 1995 compared to 19.0% in 1994. The level of shrinkage
between years remained relatively constant. Cost of goods sold
as a percentage of sales in 1994 increased compared to 1993
because of increases in merchandise, occupancy, and buying
expenses. The direct cost of merchandise increased and the level
of shrinkage was somewhat higher in 1994 compared to 1993.
Markdowns in 1994 were consistent with those in 1993. Minimum
rent and related common area maintenance charges and the shutdown
costs associated with closing the company's St. Louis
distribution center also contributed to the increase in 1994
compared to 1993.
Store operating and administrative expenses were 25.3% of sales
in 1995 compared to 24.4% in 1994. The increase occurred in
administrative expenses and was due to the benefit in 1994 of
nonrecurring items. Store expenses for the total company
remained constant between years. Both the apparel and footwear
segments had slight increases in store expenses. Store expenses
within the entertainment operations decreased as a result of
there being only a partial year of results for Dave & Buster's
(due to the spin-off) which had significantly higher store
expenses as a percentage of sales compared to the company's other
operations. Store operating and administrative expenses as a
percentage of sales increased from 24.1% in 1993 to 24.4% in
1994. Nearly all of the modest percentage increase in 1994 was
in the area of store operating expenses. In 1994 the footwear
segment was able to decrease store expenses as a percentage of
sales from 1993 levels by tightly controlling costs and
increasing sales. However, the improvement in the footwear
segment was offset by an increase in store expenses as a
percentage of sales in the apparel segment, largely due to
declining sales, and by the opening of a new Dave & Buster's
unit during first quarter 1994. Administrative costs as a
percentage of sales were held constant between 1993 and 1994,
with 1994 benefiting somewhat from some nonrecurring items.
Depreciation and amortization expense in 1995 decreased from 1994
due to the numerous store closings and the write-off of the
related fixed assets and intangibles. The increase in 1994 over
1993 was due to increased levels of property and equipment.
Higher interest expense in 1995 was attributable to higher
interest rates on a larger borrowing base. Interest expense
would have been $9.1 higher in 1995, but interest on prepetition
obligations after the petition dates was not accrued. Interest
income of $0.9 earned on the increased cash balance subsequent to
the Chapter 11 filing was offset against reorganization expenses
in the 1995 Consolidated Statement of Income. The reduction in
interest expense in 1994 from 1993 was attributable to the
discontinuance and partial reversal of an accrual for
countervailing duties along with greater interest earnings, all
partially offset by higher expense on borrowings.
Restructuring and reorganization expenses in 1995 totaled $167.1
and consisted of $101.6 for early lease termination costs and
write-offs of fixtures and equipment, leasehold improvements, and
related intangible assets; a $24.7 loss on the sale of the mall
entertainment division and an $8.3 reserve to cover the costs
associated with the disposal of the remaining operations; $15.1
for the accelerated amortization of Zeidler & Zeidler goodwill;
and $17.4 for expenses related to an early retirement program,
costs related to the closing of the Rome, Georgia, distribution
center, and professional fees incurred as a result of the Chapter
11 filing. Of the total restructuring and reorganization
charges, $38.7 were cash, which related primarily to future lease
termination payments that are subject to settlement under
reorganization proceedings. Non-cash expenses were $128.4. Cash
payments of $3.7, primarily for professional fees, were made
during 1995.
During the fourth quarter of 1994 a dispute involving certain
countervailing duties on imported footwear, and accrued interest
thereon, was resolved in the company's favor. All previous
accruals of duties and interest expense were reversed, resulting
in a credit to income of $22.3.
Pretax income of 1995, excluding the restructuring and
reorganization expenses, decreased dramatically from 1994 pretax
income excluding the benefit resulting from the recovery of
countervailing duties. The decrease resulted from lower sales,
lower gross margins due to higher markdowns, and higher interest
expense. Pretax income for 1994 excluding the special income
item decreased 69.1% compared to 1993, primarily due to lower
margins and higher store operating expenses. The apparel segment
reported significant declines in operating profit. The footwear
segment was able to achieve gross margins somewhat above 1993
levels and to improve store expense performance, which
contributed to a 28% increase in operating profit from 1993.
Reorganization expenses will be incurred by the company
throughout the Chapter 11 process. In addition, as the company
continues to monitor store performance in 1996 and identifies
further store closings, additional charges to income may occur.
As discussed in Note 1 to the consolidated financial statements,
the financial condition of the company raises substantial doubt
about its ability to continue as a going concern. However, with
the closing of underperforming stores and focused attention on
improving merchandising and sales strategies, the company expects
that 1996 should yield higher margin percentages and reduced
pretax losses.
On a seasonal average basis the company employed approximately
24,600 people during 1995. Salaries and wages in 1995, 1994, and
1993, were $241.9, $252.6, and $254.4, respectively.
<TABLE>
FIVE YEAR FINANCIAL SUMMARY
(Dollars in millions, except per share data)
<CAPTION>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Stores at the end of the
year 2,077 2,761 2,866 2,787 2,781
Net sales $1,389.4 $1,476.4 $1,462.9 $1,508.8$1,385.3
Income (loss) from
continuing
operations (222.0) 20.5 20.9 70.4 58.9
Net income (loss) (222.0) 20.5 20.9 47.3 58.9
Total assets 761.5 893.8 873.1 850.2 759.6
Long-term debt 173.5 159.2 194.4 119.5
Common stockholders'
equity 140.4 387.2 407.9 415.6 383.4
Return on common
stockholders' equity (84.2)% 5.2% 5.1% 11.8% 16.2%
Per common share:
Income (loss) from
continuing
operations $ (10.06) $ .93 $ .95 $ 3.24$ 2.74
Net income (loss) (10.06) .93 .95 2.18 2.74
Dividends on common
stock .42 1.24 1.24 1.15 1.06
Common stockholders'
equity 6.36 17.58 18.56 18.91 17.76
</TABLE>
See Management s Discussion and Analysis for significant items affecting
data comparability among 1993, 1994, and 1995. See Note 18 to the
consolidated financial statements for discussion of the restatement of
income in 1993. The effect of restatement in 1992 and 1991 was a $.7 (3
cents per share) and a $2.0 (9 cents per share) reduction of income,
respectively. Long-term debt has been reclassified to liabilities subject
to settlement under reorganization proceedings (see Note 5 to the
consolidated financial statments).
<TABLE>
QUARTERLY INFORMATION
(Dollars in millions, except per share data)
<CAPTION>
Quarter
1st 2nd 3rd 4th
Fiscal Year
13 weeks 13 weeks 13 weeks 14 wks 13 wks
53 wks 52 wks
1995 1994 1995 1994 1995 1994 1995 1994
1995 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<C> <C>
Net Sales $318.1 $326.7 $334.7 $351.0 $319.8 $353.6 $416.8 $445.1
$1,389.4 $1,476.4
Cost of
goods,sold,
occupancy and
buying expenses 218.9 212.9 244.2 241.6 246.4 242.1 323.8 320.7
1,033.3 1,017.3
Net income (loss) (6.4) 1.9 (25.7) .8 (83.3) .6 (106.6) 17.2
(222.0) 20.5
Per common share:
Net
income(loss) (.29) .09 (1.17) .03 (3.77) .03 (4.83) .78
(10.06) .93
Dividends .31 .31 .11 .31 .31 .31
.42 1.24
Common stock
market price:
High 15.75 32.13 16.75 29.75 10.25 26.00 4.00 24.63
16.75 32.13
Low 12.38 28.38 10.25 23.13 2.88 21.50 1.38 12.00
1.38 12.00
Decrease in net
income
resulting from
restatements:
Net income .3 .2 .2
Per common
share .01 .02 .01
</TABLE>
Amounts presented for the first three quarters of 1994 differ from amounts
originally reported on Form 10-Q because of the restatement discussed in
Note 18 to the consolidated financial statements.
Edison Brothers Stores, Inc. common stock is listed on the New York Stock
Exchange.
Transfer Agent and Registrar: Boatmen's Trust Company, St. Louis, MO 63101
EXHIBIT 21 - SUBSIDIARIES
EDISON BROTHERS STORES, INC.
AND SUBSIDIARIES
FEBRUARY 3, 1996
The following is a grouping of subsidiary corporations by segment. All of
the outstanding capital stock of the subsidiaries is owned, directly or
indirectly, by the company. All of the subsidiaries are included in the
consolidated financial statements filed herein.
<TABLE>
<CAPTION>
No. Of
Principal State of subsidiary
Segment business names incorporation corporation
<S> <C> <C> <C>
Apparel JW/Jeans West, Oaktree,
J. Riggings, Coda, Maryland 1
Zeidler & Zeidler, Missouri 3
Repp Ltd. Big & Tall, California 1
5-7-9 Shops, Phoenix Delaware 1
Footwear Bakers/Leeds, Precis,
Wild Pair Various 46
Other Time-Out, Space Port, Party
Zone,
Exhilarama, Horizon
Entertainment, Inc.,
Other: Corporate-Related
Functions Various 13
Foreign subsidiaries
involved in Canada 2
retail operations or Mexico 3
acquisitions of Taiwan 1
merchandise for Apparel and Hong Kong 1
Footwear segments Philippines 1
73
</TABLE>
EXHIBIT 23 - CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form
10-K) of Edison Brothers Stores, Inc. of our report dated March 14, 1996,
included in the 1995 Annual Report to Stockholders of Edison Brothers
Stores, Inc.
Our audits also included the financial statement schedules of Edison
Brothers Stores, Inc. listed in Item 14(a). These schedules are the
responsibility of the company's management. Our responsibility is to
express an opinion based on our audits. In our opinion, the financial
statement schedules referred to above, when considered in relation to the
basic financial statements taken as a whole, present fairly in all material
respects the information set forth therein.
We also consent to the incorporation by reference in Registration
Statements (Form S-8 Number 33-13297) pertaining to the Edison Brothers
Stores, Inc. 1986 Stock Option Plan and (Form S-8 Number 33-54754)
pertaining to the Edison Brothers Stores, Inc. 1992 Stock Option Plan and
in the related Prospectuses of our report dated March 14, 1996, with
respect to the consolidated financial statements incorporated herein, by
reference, and our report included in the preceding paragraph with respect
to its financial statements and schedules included in the Annual Report
(Form 10-K) of Edison Brothers Stores, Inc. for the year ended February 3,
1996.
/s/ERNST & YOUNG LLP
St. Louis, Missouri
May 2, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet as of February 3, 1996, and the consolidated
statement of income for the 53 weeks ended February 3, 1996, and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-03-1996
<PERIOD-END> FEB-03-1996
<CASH> 139,600
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 250,500
<CURRENT-ASSETS> 452,500
<PP&E> 422,300
<DEPRECIATION> (213,300)
<TOTAL-ASSETS> 761,500
<CURRENT-LIABILITIES> 111,100
<BONDS> 0
0
0
<COMMON> 22,100
<OTHER-SE> 118,300
<TOTAL-LIABILITY-AND-EQUITY> 761,500
<SALES> 1,389,400
<TOTAL-REVENUES> 1,389,400
<CGS> 1,033,300
<TOTAL-COSTS> 414,900
<OTHER-EXPENSES> 167,100
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,200
<INCOME-PRETAX> (251,100)
<INCOME-TAX> (29,100)
<INCOME-CONTINUING> (222,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (222,000)
<EPS-PRIMARY> (10.06)
<EPS-DILUTED> (10.06)
</TABLE>
