UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended November 1, 1997
//TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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
Not applicable
Former name, former address and former fiscal year,
if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No ___
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the close of the period covered by this report:
Common Stock, $.01 par value - 9,291,900
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
INDEX
Page No.
Part I. Financial Information
Condensed Consolidated Balance Sheets as of
November 1, 1997 and February 1, 1997 1
Condensed Consolidated Statements of Operations for
the 4 weeks ended November 1, 1997, the 9 weeks
ended October 4, 1997 and the 13 weeks ended
November 2, 1996 2
Condensed Consolidated Statements of Operations for
the 4 weeks ended November 1, 1997, the 35 weeks
ended October 4, 1997 and the 39 weeks ended
November 2, 1996 3
Condensed Consolidated Statements of Cash Flows
the 4 weeks ended November 1, 1997, the 35 weeks
ended October 4, 1997 and the 39 weeks ended
November 2, 1996 4
Notes to Condensed Consolidated Financial Statements 5
Management's Discussion and Analysis of Operating
Results and Financial Condition 15
Part II. Other Information 18
Signatures 20
<TABLE>
PART I FINANCIAL INFORMATION
EDISON BROTHERS STORES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Millions)
<CAPTION>
As Reorganized Pre Confirmation
November 1, February 1
1997 1997
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $13.3 $125.6
Investments --- 78.5
Merchandise inventories 211.2 210.7
Pension assets held pending distribution 63.3 ---
Prepaid expenses 12.9 14.6
Senior note interest escrow 17.6 ---
Other current assets 4.0 5.6
Total Current Assets 322.3 435.0
Assets Held for Sale --- 10.9
Assets Held for Senior Note Interest
Escrow 10.4 ---
Property and Equipment, net 123.4 146.0
Intangible Assets, net 1.6 ---
Reorganization Value in Excess of
Identifiable Assets 46.7 ---
Prepaid Pension Expense 19.6 41.3
Other Assets 6.0 10.2
Total Assets $530.0 $643.4
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Distribution to creditors pending
pension termination $42.0 ---
Merchandise accounts payable 37.2 $50.7
Expense accounts payable 29.9 28.1
Short term borrowings 11.6 ---
Assumed prepetition reclamation costs 4.8 ---
Payroll and vacations 9.7 10.7
Reorganization liabilities 19.8 ---
Workers' compensation and general liability 5.4 ---
Other taxes 26.2 5.7
Other current liabilities 23.4 23.1
Total Current Liabilities 210.0 118.3
Liabilities Subject to Settlement under
Reorganization Proceedings --- 508.3
Long Term Debt 128.0 ---
Postretirement Employee Benefits 46.6 ---
Other Liabilities 14.7 18.9
Common Stockholders' Equity (Deficit):
Common stock 0.1 22.2
Capital in excess of par value 130.5 76.9
Warrants 7.0 ---
Retained deficit (6.8) (101.6)
Foreign currency translation adjustment
and other (0.1) (0.4)
Total Common Stockholders' Equity
(Deficit) 130.7 (2.1)
Total Liabilities and Equity
(Deficit) $530.0 $643.4
<fnl>
See notes to condensed consolidated financial statements.
</fnl>
</TABLE>
<TABLE>
EDISON BROTHERS STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THIRD QUARTER
(Dollars in Millions, except per share data)
<CAPTION>
As Reorganized Pre-Confirmation
4 Weeks Ended 9 Weeks Ended 13 Weeks Ended
November 1, 1997 Oct. 4, 1997 Nov. 2, 1996
<S> <C> <C> <C>
Net Sales $62.7 $153.2 $255.2
Cost of goods sold, occupancy,
and buying expenses 48.7 111.7 182.1
Store operating and administrative
expenses 17.3 45.7 64.8
Depreciation and amortization 2.7 5.2 10.6
Interest expense, net 1.0 2.8 0.4
Restructuring and reorganization
expenses --- 26.5 7.3
Impairment of long lived assets --- 2.5 ---
Other (0.3) (0.1) 1.5
Total Expenses 69.4 194.3 266.7
Loss before income taxes, extraordinary
item and the effects of fresh start
adjustments (6.7) (41.1) (11.5)
Income tax provision 0.1 0.1 ---
Loss before extraordinary item and
the effects of fresh start
adjustments (6.8) (41.2) (11.5)
Extraordinary item: Gain on debt
discharge --- 8.3 ---
Fresh start adjustments --- 2.9 ---
Net Loss ($6.8) ($30.0) ($11.5)
Net Loss per Common Share ($0.67)
Weighted Average Common Shares
Outstanding (in thousands) 10,225
<fn2>
See notes to condensed consolidated financial statements. Per share and
share data are not presented for periods prior to October 4, 1997, the
effective date of the Company's plan of reorganization, due to the general
lack of comparability as a result of the revised capital structure of the
Company.
</fn2>
</TABLE>
<TABLE>
EDISON BROTHERS STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR TO DATE AS OF THE THIRD QUARTER
(Dollars in Millions, except per share data)
<CAPTION>
As Reorganized Pre-Confirmation
4 Weeks Ended 35 Weeks Ended 39 Weeks Ended
November 1, 1997 Oct. 4, 1997 Nov. 2, 1996
<S> <C> <C> <C>
Net Sales $62.7 $613.8 $782.1
Cost of goods sold, occupancy
and buying expenses 48.7 435.2 572.5
Store operating and administrative
expenses 17.3 174.2 202.2
Depreciation and amortization 2.7 20.5 31.1
Interest expense, net 1.0 4.3 1.3
Restructuring and reorganization
expense --- 44.7 25.9
Pension settlement gain --- (15.8) ---
Impairment of long-lived assets --- 2.5 ---
Other (0.3) 6.0 3.1
Total Expenses 69.4 671.6 836.1
Loss before income taxes, extraordinary
item and the effects of fresh start
adjustments (6.7) (57.8) (54.0)
Income tax provision 0.1 0.3 0.4
Loss before extraordinary item and
the effects of fresh start
adjustments (6.8) (58.1) (54.4)
Extraordinary item: Gain on debt
discharge --- 8.3 ---
Fresh start adjustments --- (2.9) ---
Net Loss ($6.8) ($46.9) ($54.4)
Net Loss per Common Share ($0.67)
Weighted Average Common Shares
Outstanding (in thousands) 10,225
<fn3>
See notes to condensed consolidated financial statements. Per share and
share data are not presented for periods prior to October 4, 1997, the
effective date of the Company's plan of reorganization, due to the general
lack of comparability as a result of the revised capital structure of the
Company.
</fn3>
</TABLE>
<TABLE>
EDISON BROTHERS STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
<CAPTION>
As Reorganized Pre-Confirmation
4 Weeks Ended 35 Weeks Ended 39 Weeks Ended
November 1, 1997 Oct. 4, 1997 Nov. 2, 1996
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net Loss ($6.8) ($46.9) ($54.4)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Extraordinary gain on debt
discharge --- (8.3) ---
Fresh start accounting
adjustment --- (2.9) ---
Asset impairment --- 2.5 ---
Depreciation & amortization 2.7 20.5 31.1
Loss on disposal of property
& equipment 0.2 3.1 ---
Restructuring & reorganization
expenses, noncash portion --- 3.3 11.3
Pension settlement gain --- (15.8) ---
Working capital changes, net of
effects from acquisitions and
divestitures (12.5) 9.3 37.8
Other 0.2 (2.5) 5.4
Total Operating Activities (16.2) (37.7) 31.2
Cash Flows from Investing Activities:
Capital expenditures (5.2) (27.2) (13.1)
(Increase)decrease in
investments --- 78.5 (82.8)
Proceeds from property and equipment
disposals 0.2 1.7 ---
Other --- 0.9 0.7
Total Investing Activities (5.0) 53.9 (95.2)
Cash Flows from Financing Activities:
Payments on capital lease
obligation --- (2.6) ---
Net proceeds from short term
borrowings 11.6 --- ---
Payments on liabilities subject
to compromise (2.0) (96.9) ---
Increase in senior note
interest escrow --- (17.6) ---
Other (0.1) 0.3 1.8
Total Financing Activities 9.5 (116.8) 1.8
Effect of exchange rate changes
on cash --- --- (1.8)
Cash Used (11.7) (100.6) (64.0)
Beginning cash & cash equivalents 25.0 125.6 139.6
Ending Cash and Cash Equivalents $13.3 $25.0 $75.6
<fn4>
See notes to condensed consolidated financial statements.
</fn4>
</TABLE>
EDISON BROTHERS STORES, INC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions)
NOTE 1. GENERAL
The information set forth in these interim financial statements as of and
for the four weeks ended November 1, 1997, the nine and thirty-five weeks
ended October 4, 1997, and the thirteen and thirty-nine weeks ended
November 2, 1996, respectively, is unaudited. In the opinion of
management, the unaudited financial statements reflect all adjustments
necessary to present fairly the consolidated financial results of Edison
Brothers Stores, Inc. (the Company ) for the periods indicated. Results
of operations for the interim periods presented are not necessarily
indicative of the results of operations for the full fiscal year.
Due to the Restructuring and implementation of Fresh Start Reporting, the
condensed consolidated financial statements for the new Reorganized Company
(period starting October 5, 1997) are not comparable to those of the
Predecessor Company (periods prior to October 5, 1997). For financial
reporting purposes, the effective date of the Company's emergence from
bankruptcy is considered to be the close of business on October 4, 1997.
A black line has been drawn on the accompanying condensed consolidated
financial statements to distinguish between the Reorganized Company and the
Predecessor Company.
NOTE 2. REORGANIZATION
On November 3, 1995 (the Petition Date ), the Company and 65 of its
subsidiaries and affiliates (the Debtors ) filed petitions for relief
under Chapter 11 of the United States Bankruptcy Code in the United States
Bankruptcy Court (the Court ) in Wilmington, Delaware. The Debtor's
Amended Joint Plan of Reorganization (the Plan ) was confirmed by the
Court on September 9, 1997. The Company emerged from Chapter 11 on
September 26, 1997 (the Emergence Date ). During the period from November
3, 1995 through September 26, 1997 the Company operated as debtor-in-
possession.
The Plan provides for general unsecured creditors to receive: (i) $99
($96.9 distributed to creditors and $2.1 distributed to the Limited
Liability Companies established pursuant to the Plan); (ii) ten year, 11%
unsecured notes in the principal amount of $120 (with approximately the
first three years of interest pre-funded and no scheduled principal
payments until maturity in 2007) ( Senior Notes ); (iii) 10,000,000 of new
common stock of the Company ( New Common Stock )(minus approximately 92,500
shares to be issued to holders of equity interests who exercised certain
Rights granted to them pursuant to the Plan, with the proceeds of such
Rights Offering being added to the cash to be distributed to creditors);
(iv) title to the Company's headquarters building in downtown St. Louis (
Corporate Headquarters Building ), which the Company continues to occupy
under the terms of a three year lease, plus options to extend; and (v) $48,
from the Company's over-funded pension plan less any taxes ( Pension Plan
Proceeds ).
All of the Company's existing shares of common stock were cancelled as of
the Emergence Date. The Plan provides for holders of existing equity
interests in the Company to receive eight-year warrants to purchase a total
of approximately nine percent of the New Common Stock.
The Company also terminated the Company's pension plan as of May 31, 1997
and has established a replacement plan effective January 1, 1998.
Pursuant to an order of the Bankruptcy Court dated May 13, 1997, the assets
and liabilities of the Debtors were deemed to be substantively consolidated
solely for purposes relating to the Plan including with respect to voting
and distributions. As a result, among other things, for purposes of the
Plan, all duplicative claims against the Debtors were consolidated and all
guarantee and similar claims have been eliminated. Substantive
consolidation, however, will not affect, among other things, the separate
legal and corporate structure of the individual Debtors.
NOTE 3. FRESH START ACCOUNTING AND REPORTING
In accounting for the effects of the Plan, the Company has implemented
Statement of Position 90-7, Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code, issued by the American Institute
of Certified Public Accountants in November 1990 (SOP 90-7).
Under fresh start accounting a new reporting entity is created and all
assets and liabilities are recorded at their respective fair market values.
The appraised reorganization value of the ongoing business is now reflected
as the equity and long term debt value of the new company in accordance
with the Plan. The appraised reorganization value of $275 million (the
approximate fair value) was based on the consideration of many factors and
various valuation methods, namely, (i) the going concern value of the
business, (ii) the excess working capital calculated by subtracting the
projected average financing facility revolver balance for the 12 months
subsequent to the Emergence Date from projected excess cash over the same
period, (iii) $99 to be distributed under the Plan ($96.9 distributed to
creditors and $2.1 distributed to the Limited Liability Companies
established pursuant to the Plan), and (iv) the value of certain other
assets to be distributed under the Plan- the Pension Plan Proceeds and
Corporate Headquarters Building. It excludes, however, the unresolved
avoidance claims and the proceeds, if any, generated by the Rights offering
(as defined in the Plan) and the D&B Spinoff Settlement Offer (as defined
in the Plan), all of which were distributed to creditors under the Plan.
The excess of the appraised reorganization value over the fair value of
identifiable assets and liabilities is reported as Reorganization Value in
Excess of Identifiable Assets in the accompanying condensed consolidated
balance sheets and is being amortized over a ten year period.
The going concern value of the business as used in the calculation of the
appraised reorganization value above was determined by a three year period
modified discounted cash flow analysis, the result of which was then
capitalized using comparable company multiplies.
As a result of the implementation of fresh start accounting, the financial
statements of the Company after consummation of the Plan are not comparable
to the Company's financial statements for prior periods.
The Reorganization and the adoption of fresh start accounting resulted in
the following adjustments to the Company's Condensed Consolidated Balance
Sheet as of October 4, 1997:
<TABLE>
<CAPTION>
Reorganization, As
PreConfirmation Debt Discharge &Reorganized
Fresh Start Adjustments
October 4, October 4,
1997 Debit Credit 1997
<s <C> <C> <C> <C>
ASSETS
Total Current Assets $368.6 $63.3(d) $5.8(a) $327.1
99.0(f)
Assets Held for Sale 10.8 .4(a) ---
10.4(b)
Escrowed Assets 10.4(b) 10.4
Property and Equipment, net 140.8 19.8(c) 121.0
Intangible Assets, net 1.6(c) 1.6
Reorganization Value in Excess
of Identifiable Assets 47.1(h) 47.1
Prepaid Pension Expense 58.6 24.3(a) 63.3(d) 19.6
Other Assets 9.6 3.3(a) 6.3
Total Assets $588.4 $146.7 $202.0 $533.1
LIABILITIES AND COMMON
STOCKHOLDERS' EQUITY (DEFICIT)
Total Current Liabilities $133.9 $12.7(a) $206.1
50.6(d)
8.9(f)
Liabilities Subject to Settlement under
Reorganization Proceedings 450.9 19.8(c)
50.6(d)
264.3(e)
107.9(f)
8.3(g) ------
Long Term Debt 1.3 126.7(e) 128.0
Postretirement Employee Benefits 48.0 1.4(a) 46.6
Other Liabilities 14.2 0.6(a) 14.8
Common Stockholders' Equity (Deficit):
Common stock 22.2 22.2(h) .1(e) .1
Capital in excess of par value77.0 77.0(h) 130.5(e) 130.5
Warrants 7.0(e) 7.0
Retained deficit (159.5) 2.9(a) ---
1.6(c)
8.3(g)
146.7(h)
Foreign currency translation adjustment
and other 0.4 0.4(h) - -.-
Total Liabilities and Equity
(Deficit) $588.4 $551.9 $496.6 $533.1
</TABLE>
Explanation of the adjustment columns of the balance sheet are as follows:
(a) To adjust assets held for sale, pension assets, pension excise
taxes, postretirement benefit liabilities and other assets and
liabilities to fair market value.
(b) To reflect the transfer of $10.4 of assets held for sale as escrowed
assets pursuant to the Plan.
(c) To reflect the transfer of title of the Corporate Headquarters
Building to the creditors and execution of a lease agreement pursuant to
the Plan.
(d) To reflect the termination of the Company's qualified pension plan
pursuant to the Plan.
(e) To establish the long term debt and stockholders' equity to settle
liabilities subject to compromise pursuant to the Plan.
(f) To record the payment of cash to the creditors and record the
assumption of prepetition reclamation and cure payments pursuant to the
Plan.
(g) To reflect $8.3 of extraordinary gain resulting from discharge of
indebtedness.
(h) To reflect the elimination of stockholders' equity of the pre-
confirmation Company and establish the reorganization value in excess of
identifiable assets. The reorganization value in excess of identifiable
assets is calculated as follows:
New debt $137.4
New equity 137.6
Reorganization value 275.0
Plus: Fair value of identifiable liabilities 258.1
Less: Fair value of identifiable assets 486.0
Reorganization Value in Excess of Identifiable Assets $ 47.1
The Reorganization and the adoption of fresh start accounting resulted in
the following adjustments to the Company's Condensed Consolidated Income
Statement for the 35 week period ended October 4, 1997:
<TABLE>
<CAPTION>
Reorganization, As
Pre-ConfirmationDebt Discharge &Reorganized
October 4, Fresh Start Adjustments
October 4,
1997 Debit Credit 1997
<S> <C> <C> <C> <C>
Net Sales 613.8 613.8
Cost of goods sold, occupancy,
and buying expenses 435.2 435.2
Store operating and administrative
expenses 174.2 174.2
Depreciation and amortization 20.5 20.5
Interest expense, net 4.3 4.3
Restructuring and reorganization
expenses 44.7 44.7
Pension settlement gain (15.8) (15.8)
Other 8.5 8.5
671.6 671.6
Loss before income taxes, extraordinary
items and the effects of fresh
start adjustments (57.8) (57.8)
Income tax provision 0.3 0.3
Loss before extraordinary items and
the effects on fresh start
adjustments (58.1) (58.1)
Extraordinary item: Gain on
debt discharge --- $8.3 8.3
Fresh start adjustments --- 2.9 2.9
Income tax provision 7.0 -.- 7.0
Net income (loss) (58.1) 11.2 (46.9)
</TABLE>
NOTE 4. CASH AND INVESTMENTS
Investments are stated at cost that approximates market and consist of U.
S. government debt securities having maturities greater than ninety days
from the Company's original purchase date.
The Company considers those investments with maturities of three months or
less to be cash equivalents for condensed consolidated statements of cash
flows.
NOTE 5. PROPERTY, EQUIPMENT & INTANGIBLE ASSETS 7 REORGANIZATION VALUE IN
EXCESS OF IDENTIFIABLE ASSEETS
<TABLE>
<CAPTION>
As
Reorganized Pre-Confirmation
November 1, February 1,
1997 1997
Property and equipment, net is composed of the following:
<S> <C> <C>
Cost $125.7 $346.1
Accumulated depreciation and
amortization (2.3) (200.1)
Net book value $123.4 $146.0
Intangible assets, net is composed of the following:
Cost $1.6 $ ---
Accumulated amortization --- ---
Net book value $1.6 $ ---
Reorganization Value in Excess of Identifiable Assets is composed of the
following:
Cost $47.1 $ ---
Accumulated amortization (0.4) ---
Net book value $46.7 $ ---
</TABLE>
The Reorganization Value in Excess of Identifiable Assets will be amortized
over ten years.
During fourth quarter 1996, the remaining net book value of intangibles of
$42.4 was written off in accordance with Statement of Financial Accounting
Standards 121, Accounting for Long-Lived Assets and for Long-Lived Assets
to be Disposed Of.
NOTE 6. NOTES PAYABLE - POST EMERGENCE
SENIOR NOTES
Pursuant to the Plan, the Company issued senior notes in the aggregate
principal amount of $120 due on the tenth anniversary of the Emergence
Date, September 26, 2007 ( Senior Notes ). The Senior Notes bear interest
at a fixed rate of 11% per annum from July 31,1997, payable semi-annually
on January 31 and July 31 of each year, commencing January 31, 1998. To
secure the payment of approximately the first three years of interest on
the Senior Notes, the Company and Edison Brothers Apparel Stores, Inc., a
wholly owned subsidiary of the Company ( EBAS ), have entered into a
Funding Escrow Agreement (the Escrow Agreement ) with Mercantile Trust
Company N.A., as escrow agent. Pursuant to the Escrow Agreement , the
Company has deposited $17.6 with the escrow agent. Additionally, the
Company and EBAS have granted the escrow agent mortgages on certain of
their real properties totaling $10.4, previously classified as Assets Held
for Sale.
The Senior Notes may be redeemed, at the option of the Company, in
increments of not less than $5 at the following Redemption Prices
(expressed as percentages of the principal amount):
Emergence Date through June 30, 1998 100% of par
July 1, 1998 through June 30, 1999 104% of par
July 1, 1999 through June 30, 2000 103% of par
July 1, 2000 through June 30, 2001 102% of par
July 1, 2001 through June 30, 2002 101% of par
July 1, 2002 through September 26, 2007 100% of par
In the event there occurs a change in control (as defined in the Trust
Indenture and First Supplemental Trust Indenture (together, the Indenture)
pursuant to which the Senior Notes were issued), each holder of Senior
Notes may, at the option of the holder, require the Company to repurchase
all or any of such holder's Senior Notes at a price equal to 101% of par
plus accrued interest. In the event the Company makes extraordinary asset
sales (as defined in the Indenture) and if the net proceeds thereof not
otherwise required to be paid to other lenders exceeds $5, 50% of such net
sale proceeds must be used to pay principal under the Senior Notes.
The Indenture also contains customary covenants including compliance with
laws, payment of taxes and maintenance of corporate existence, properties
and insurance, and negative covenants, including limitations on: (i) the
incurrence of new indebtedness and liens, subject to permitted exceptions,
(ii) disposition of assets, (iii) transactions with affiliates, and (iv)
restricted payments.
CREDIT FACILITY
At the Emergence Date, the Company entered into a $200 revolving credit
facility (the Credit Facility') with Congress Financial Corporation, as
Agent ( Agent ), and CIT Group/Business Credit, Inc., as Co-Agent, secured
by inventory and other related assets, to fund ongoing working capital
needs and to provide letter of credit financing. The Credit Facility has a
sublimit of $150 for the issuance of letters of credit. The Credit Facility
is intended to provide the Company with the cash and liquidity to conduct
its operations. The Credit Facility expires on September 26, 2002.
At the Company's option, the Company may borrow under the Credit Facility
at the Prime Rate (as defined in the Credit Facility), or at the Eurodollar
Rate (as defined in the Credit Facility) plus 2.25%. The current borrowing
rate is 8.5%.
The maximum borrowing, up to $200, is limited to 60% of the value of
eligible inventory (as defined in the Credit Facility) or 85% of the Net
Recovery Cost Percentage of the inventory (as defined in the Credit
Facility) multiplied by the cost of eligible inventory, plus 95% of the
aggregate amount of cash held by the Agent as collateral, less any
availability reserves established by the Agent. During the period
commencing August 1 through and including December 15 of each year, the
borrowing limit calculation uses 70% of eligible inventory and 100% of the
Net Recovery Cost Percentage.
The Company is required to pay an unused line fee of .375% per annum.
The Credit Facility contains numerous covenants including, among other
things, a limitation on store closings (10% of the number of stores as of
the end of the immediately preceding fiscal year), limitations on the
incurrence of additional liens and indebtedness, limitations on capital
expenditures and sales of assets, required minimum net worth and inventory
levels and a prohibition on paying dividends. At November 1, 1997, the
Company was in compliance with the Credit Facility.
As of November 1, 1997, $11.6 was outstanding under the Credit Facility.
Outstanding letters of credit were $80.0 and available borrowings, before
availability reserves established by the Agent, if any, under the Credit
Facility, were $83.4.
OTHER
Edbro Missouri Realty Company, Inc. ( Edbro ), a Missouri corporation and
wholly-owned subsidiary of the Company, is party to a Loan Agreement (the
Agreement ) dated as of August 1, 1997 with the City of Washington,
Franklin County, MO (the City ). Pursuant to the Agreement, Edbro issued a
Promissory Note (the Note ) in favor of the City in the principal amount
of $6.7. To secure its obligations under the Agreement and Note, Edbro
executed a Deed of Trust and Security Agreement encumbering the
distribution center owned and operated by it in Washington, Missouri.
Pursuant to the Agreement, the City issued two series of industrial revenue
bonds (the Bonds ), Series 1997A in the original principal amount of $2.5
and Series 1997B in the original principal amount of $4.2. Under the
Agreement and Note, Edbro is obligated to pay on behalf of the City all
principal and interest due under the Bonds.
The Series 1997A bonds accrue interest at 6.25% per annum, payable semi-
annually in arrears on June 1 and December 1. The principal of the Series
1997A bonds is to be redeemed in increments of $.1 on June 1 of 1998, 1999
and 2000, an increment of $.5 on June 1, 2001, and an increment of $3.5 at
maturity on June 1, 2002.
The Series 1997B bonds accrue interest at a floating rate equal to 75.83%
of the prime rate (as defined in the bond) with interest payable quarterly
in arrears on February 1, May 1, August 1 and November 1. The principal of
the Series 1997B bonds is to be redeemed in equal increments of $.5 on
November 1 of 2006 through 2010. The prime rate at November 1, 1997 was
8.5%.
The Series 1997B bonds incorporate a put option, exercisable on January 1,
2000 and on each January 1 thereafter, whereby, at the option of the Series
1997B bondholders, the Company and Edbro would be required to redeem in
full the then-outstanding principal.
NOTE 7. LIABILITIES SUBJECT TO COMPROMISE
The principal categories of claims classified as liabilities subject to
settlement under reorganization proceedings are identified below.
Substantially all of the amounts listed below will be, or have been,
settled in fiscal 1997 in accordance with the Plan.
<TABLE>
<CAPTION>
October 4, February 1,
1997 1997
<S> <C> <C>
Long-term senior notes payable $ 150.0 $150.0
Notes payable banks 205.9 205.9
Cash set-off applied to debt (3.6) (3.6)
Capital lease obligations 8.4 12.4
Accrued interest payable 4.6 4.3
Deferred debt costs (4.3) (4.3)
Postretirement employee benefit --- 47.7
Accounts payable 37.3 36.1
Lease termination claims 44.6 42.8
Taxes 3.8 6.0
Other 4.2 11.0
Distributions and debt forgiveness(450.9) ---
Liabilities subject to settlement
under reorganization proceedings $ --- $508.3
</TABLE>
During the first quarter of 1997, postretirement medical benefit accruals
of $42.2 and pension accruals of $5.5 were reclassified from liabilities
subject to settlement under reorganization proceedings to other noncurrent
liabilities. Under the Plan, the Company has assumed the postretirement
medical benefit and pension liabilities, subject to the Company's ability
to amend or otherwise modify these plans.
NOTE 8. RESTRUCTURING AND REORGANIZATION EXPENSES
In accordance with SOP 90-7, expenses resulting from the Chapter 11
reorganization are reported separately as restructuring and reorganization
expenses in the condensed consolidated statements of operations. These
amounts are summarized below.
<TABLE>
<CAPTION>
9 Weeks 13 Weeks 35 Weeks 39 Weeks
Ended Ended Ended Ended
Oct. 4, Nov. 2, Oct. 4, Nov. 2,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Legal and consulting fees $ 6.1 $6.0 $19.2
$12.9
Estimated costs of store
Closings 2.3 1.5 5.6 10.5
Estimated loss on sale of
subsidiaries --- --- --- 0.9
Payroll and related expenses 11.2 0.6 15.8 2.2
Early retirement program --- --- --- 2.3
Interest income (1.4) (2.1) (5.9) (5.9)
Relocation and other facility
related expenses 3.6 --- 4.2 0.2
Other 4.7 1.2 5.8 2.7
Restructuring and reorganization
expenses $26.5 $7.2 $44.7 $25.8
</TABLE>
The increase in payroll and related expenses from 1996 is primarily due to
costs related to the anticipated replacement of the Company's chief
executive officer and other severance programs related to the
reorganization of the Company.
NOTE 9. INCOME TAXES
The effective tax rate of (.6)% of the pre-tax loss for the 39 weeks ended
November 1, 1997, differs from the Company's customary relationship between
the income tax provision and pre-tax accounting loss. The difference is due
to the uncertainty of the Company producing future taxable income, which
will be available to absorb net operating loss carry-forwards. Accordingly,
no tax benefit relative to current operating results has been recorded,
since the Company has concluded that it likely will not be able to realize
its deferred tax assets. The provision for the 4 weeks ended November 1,
1997 of $.1 and the 9 weeks ended October 4, 1997 of $.3 on the 1997
condensed consolidated statements of operations generally relates to state
taxes and foreign operations of the Company.
The Company has significant net operating loss carryforwards available
(with certain annual limits) to offset future taxable income of the
reorganized company. These carryforwards will expire over various periods
through the year 2011.
The Internal Revenue Service filed a Proof of Claim in the Company's
Chapter 11 proceedings for U.S. Income Taxes against the Company of $15.2.
This claim relates to ongoing examinations of the Company's U.S. income tax
returns, and a pending action in the U.S. Tax Court against the Company.
The Company believes that final settlement of this claim will not have a
material adverse effect on the financial position of the Company.
NOTE 10. EARNINGS (LOSS) PER SHARE
Net income (loss) per common share is based on the weighted average common
shares outstanding during each period. Shares issuable under the Company's
stock option plans would have no material dilutive effect on earnings per
common share.
NOTE 11. COMMON SHARES AND WARRANTS OUTSTANDING
The reorganized Company is authorized to issue 100,000,000 shares of common
stock, par value $.01 per share. Currently, 9,291,900 shares have been
issued. Approximately 933,100 additional shares will be issued upon
completion of distributions under the Plan. All per share data in the
financial statements has been computed on the basis of the 10,225,000 total
shares expected to be issued under the terms of the Plan.
Pursuant to the Plan, the 1997 Stock Option Plan (1997 Stock Option Plan),
the 1997 Directors Stock Option Plan ( Directors Stock Option Plan ) and
certain Restricted Stock Agreements were approved.
The 1997 Stock Option Plan makes available for the granting of options to
key employees an aggregate of 800,000 shares of New Common Stock. To date,
options with respect to 478,500 shares have been issued under the 1997
Stock Option Plan. The purchase price per share of the New Common Stock
under these options will be the average of the closing prices of the New
Common Stock on the Nasdaq National Market over the first twenty days of
trading in the New Common Stock following the initial distribution date of
the New Common Stock (December 12, 1997).
The Director Stock Option Plan makes available for the granting of options
to members of the Board of Directors who are not employees of the Company
an aggregate of 200,000 shares of New Common Stock. To date, options with
respect to 24,500 shares have been issued under the Directors Stock Option
Plan. The exercise price under these options is the same as the exercise
price under the options that have been granted pursuant to the 1997 Stock
Option Plan.
The Company has elected to follow Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employees (APB 25) and Related
Interpretations. Under APB 25, because the exercise price of the Company's
employee stock options equals the fair value of the underlying stock, no
compensation expense is recognized.
A total of 225,000 shares of restricted New Common Stock were issued as of
the Emergence Date to certain executive officers of the Company. Such
stock vests over periods up to two years from such date and compensation
will be recognized over the vesting period based on the fair value of the
New Common Stock on the issuance date.
Pursuant to the Warrant Agreement entered into in accordance with the Plan,
the Company has issued or will be issuing a total of approximately
1,008,791 warrants to purchase shares of New Common Stock ( Warrants ).
Each Warrant will entitle the holder thereof to purchase one share of New
Common Stock at an exercise price of $16.40 per share, subject to
adjustment in certain circumstances, as described below. The Warrants will
be exercisable until 5:00 p.m., New York City time, on September 26, 2005.
Under Statement of Financial Accounting Standards No. 123, Accounting for
Stock-Based Compensation, the warrants are valued at fair value, using a
standard warrants pricing model resulting in a value of $6.93 per warrant.
Holders of the Warrants will have no voting rights, will not be entitled to
receive dividends or other distributions declared on the capital stock of
the Company, and will not be entitled to share in any of the assets of the
Company upon liquidation, dissolution or winding up of the Company. The
number of shares of Common Stock for which a Warrant is exercisable and the
exercise price of the Warrants are subject to adjustment in certain events,
including (1) stock dividends, subdivisions and combinations affecting the
New Common Stock, (2) certain extraordinary distributions to holders of the
New Common Stock, and (3) certain reorganizations, reclassifications,
consolidations, mergers and dispositions involving the Company. If at any
time the daily market price of the New Common Stock, as calculated pursuant
to the terms of the Warrant Agreement, exceeds 200% of the then current
exercise price of the Warrants on any ten Trading Days (as defined in the
Warrant Agreement) during any period of 15 consecutive Trading Days, the
Company will have the right upon written notice to repurchase the Warrants
for a purchase price of $1.00 per Warrant.
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
(Dollars in Millions)
OPERATING RESULTS
The following discussion covers the 13 week period ended November 1, 1997.
It does not distinguish between the 4 week period ended November 1, 1997
and the 9 week period ended October 4, 1997, as separate discussions of
these periods are not meaningful in terms of their operating results or
comparisons to the prior year.
Net sales for the 13 weeks and 39 weeks ended November 1, 1997 decreased by
15.4% and 13.5%, respectively, from the comparable periods of 1996. The
decrease reflected a 14.8% decrease in the average number of stores in
operation between the first 39 weeks of 1996 and the first 39 weeks of
1997. Same-store sales decreased 3.9% and 1.8% for the 13 week and 39 week
periods, respectively. Shifty's, REPP Ltd and Phoenix posted same-store
sales increases for the 13 week and 39 week periods and Wild Pair reported
a 2.2% increase in the 39 week period. The increases were due to better
merchandising, including branded merchandise in Wild Pair and new fashion
sportswear in REPP Ltd. All other chains reported same-store decreases from
the prior year in both periods. These decreases were due to unseasonably
warm weather in September and October, cancellations of key items due to
quality problems, and some fashion assortments missing their targeted
customers.
Cost of goods sold, including occupancy and buying expenses, was 74.3% and
71.5% of sales for the 13 weeks and 39 weeks ended November 1, 1997,
respectively, compared with 71.4% and 73.2% for the comparable periods in
1996. Merchandise costs decreased 11.9% and 16.2% in 1997 from 1996 for
the 13 weeks and 39 weeks, respectively, reflective of the decrease in
sales volume and a decrease in markdowns taken by 5-7-9 and Bakers.
Occupancy and buying costs decreased 12.5% and 13.4% in 1997 from 1996 for
the 13 weeks and 39 weeks, respectively, with costs as a percentage of
sales remaining consistent for both the 13 week and the 39 week period.
Merchandise markdowns decreased to 16.0% and 17.2% of sales for the 13 week
and 39 week periods in 1997, compared to 19.1% and 19.8% in 1996. The
decrease was attributable to several factors. In 1996, a special markdown
of $6.1 was recorded for REPP Ltd tailored clothing in an effort to move
away from the suit and sport coat categories and increase focus on casual
components. Additionally, a special markdown was taken to liquidate the
remaining inventory of the discontinued Zeidler & Zeidler division. In
1997, Bakers sold the majority of its spring merchandise quickly, requiring
fewer markdowns to be taken, and 5-7-9 continued with its promotional
strategy of taking markdowns more frequently throughout the season, moving
merchandise more quickly and reducing the total amount of markdowns needed
to turn the inventory.
The decrease in occupancy and buying costs was due to the closing of
numerous under-performing stores during 1996, coupled with reduced store
occupancy costs as a result of negotiations with landlords. The 13 week
period decrease in occupancy and buying expenses was smaller due to the
expiration of many negotiated rent reductions.
Store operating and administrative expenses decreased 5.3% for the 39 week
period in 1997 compared to the same period in 1996. As a percentage of
sales, these expenses were 28.3% and 25.9% for the 39 week period in 1997
and 1996, respectively. The same trend occurred in the 13 week period with
expenses down 4.8%, but as a percentage of sales was 29.2% compared to
25.9% in 1996.
Store operating expenses decreased $3.1 and $13.1 for the 13 week and 39
week periods of 1997, remaining consistent as a percentage of sales
compared to 1996. The decrease related primarily to the closing of under-
performing stores.
Administrative expenses increased $1.3 for the 13 week period and increased
$2.4 for the 39 week period ended November 1, 1997, or 8% and 4.8% from the
comparable periods in 1996. The increase in expense for the 39 week period
was primarily due to the decrease in interest income earned on the old
pension plan assets in excess of the pension liability. With the
termination of the pension plan, the excess assets were reduced in 1997,
reducing interest income and in comparison to 1996 contributing to an
unfavorable change of $1.6. Also contributing to the increase in
administrative expense was $.8 in non-bankruptcy consulting fees for
current information systems and real estate projects.
Depreciation and amortization expense decreased $2.7 and $7.9 between 1997
and 1996, for the 13 week and 39 week periods, respectively. The decrease
resulted from the closing of approximately 233 stores during 1997, coupled
with a lower cost basis caused by the recognition of asset impairment in
fourth quarter 1996 in accordance with Statement of Financial Accounting
Standard 121, Accounting for Long Lived Assets and for Long Lived Assets
to be Disposed of (SFAS 121).
Restructuring and reorganization expenses of $44.7 for the 39 week period
of 1997 consisted of $5.6 million for early lease termination costs, write-
offs of fixtures and equipment and discontinued operations, $19.2 for legal
and consulting fees, $15.8 for severance and related benefits, and $10 of
other bankruptcy related expenses, reduced by $5.9 of interest income.
FINANCIAL CONDITION
Cash and investments were $145.1 lower at the end of third quarter 1997
compared with third quarter 1996 and down $190.8 since the end of fiscal
1996. This reduction was due primarily to the cash payments pursuant to the
Plan.
Merchandise inventories decreased by $40.2 from third quarter 1996 to third
quarter 1997 due to the numerous store closings and the liquidation of
seasonal merchandise in the same season by various chains. Fixed assets,
net decreased $66.7 or 35.1% and intangible assets, net decreased $42.3 or
96.4% between third quarter 1996 and third quarter 1997 due to the asset
impairment loss recognized in accordance with SFAS 121, coupled with a
reduction of approximately 233 stores. The Company recorded $47.1 in
Reorganization in Excess of Identifiable Assets based on fresh start
accounting upon emergence. Postretirement benefits were previously included
in liabilities subject to settlement under reorganization proceedings for
the 39 week period of 1996 and at the end of fiscal year 1996.
To facilitate comparison of cash flow activity for fiscal year 1997 to
fiscal year 1996, cash flow for the thirty-five weeks ended October 4, 1997
and the four weeks ended November 1, 1997, as disclosed in the accompanying
Condensed Consolidated Statements of Cash Flows, have been combined for the
following discussion.
Net cash flow used in operations for the 39 week period ended November 1,
1997 was $53.9 ($37.7 for the 35 weeks ended October 4, 1997 and $16.2 for
the 4 weeks ended November 1, 1997) compared to $31.2 provided from
operations for the 39 weeks ended November 2, 1996. This difference is
principally attributable to three factors: (1) tax refund of $37.6 in the
39 weeks ended November 2, 1996, (2) reorganization and bankruptcy
emergence payments of $25 in the 39 weeks ended November 1, 1997, and (3)
financing inventory balances through short-term borrowings instead of
merchandise accounts payable.
Total cash flow from investing activities increased $144.1 in 1997
primarily due to the Company's decision to move excess funds out of
investments and into cash equivalents in anticipation of cash disbursements
under the Plan, an increase of $161.3. This source of cash was slightly
offset by a $19.3 increase in capital expenditures from 1996 to 1997 due to
increased remodeling projects and store moves. The Company also used cash
to fund financing needs of $107.3, primarily for the $96.9 paid to the
creditors pursuant the Plan and the $17.6 deposited in the senior note
interest escrow.
KNOWN TRENDS AND UNCERTAINTIES
The efficient operation of the Company's business is dependent in part on
its computer software programs and operating systems (collectively,
Programs and Systems ). These Programs and Systems are used in several key
areas of the Company's business, including merchandise purchasing,
inventory management, pricing, sales, shipping and financial reporting, as
well as in various administrative functions. The Company has been
evaluating its Programs and Systems to identify potential Year 2000
compliance problems. These actions are necessary to ensure that the
Programs and Systems will recognize and process the year 2000 and beyond.
It is anticipated that modification or replacement of most of the Company's
Programs and Systems will be necessary to make such Programs and Systems
Year 2000 compliant. The Company is also communicating with suppliers,
financial institutions and others to coordinate year 2000 conversion.
Based on present information, the Company believes that it will be able to
achieve such Year 2000 compliance through a combination of modification
of some existing Programs and Systems, and the replacement of other
Programs and Systems with new Programs and Systems that are already Year
2000 compliant. However, no assurance can be given that these efforts will
be successful. The Company expects that the expenses and capital
expenditures associated with achieving Year 2000 compliance will have a
material effect on its financial results in 1998 and 1999.
The Company is currently undergoing a restructuring process, involving
changes such as the consolidation of business functions, elimination of
work and personnel reductions. This restructuring process is designed to
allow the Company to focus its resources in ways that will best enhance its
prospects for profitability and growth. The majority of these changes
will be in effect by fiscal year 1998.
The Company experiences peak selling periods, such as Easter (early
spring), back-to-school (July to August), and Christmas (Thanksgiving to
Christmas), with the Christmas selling season accounting for a significant
amount of the full year sales (13.8% for fiscal year 1996). Current sales
from the back-to-school and early Christmas period have fallen far below
management expectations. If the lackluster trend of specialty retail sales
continues through fourth quarter 1997 and into 1998, it will have a
material adverse effect on operating results.
This Report contains forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended. The words
anticipate, believe, expect, will, could and similar expressions
are intended to identify certain forward-looking statements. Such
statements reflect the Company's current views with respect to future
events and financial performance and involve risks and uncertainties,
including, without limitation, the risks described above under the caption
Known Trends and Uncertainties and such other risks as are described in
the Company's other filings with the Securities and Exchange Commission.
Should one or more of these risks or uncertainties occur, or should
underlying assumptions prove incorrect, actual results may vary materially
and adversely from those anticipated, believed or otherwise indicated.
Consequently, all of the forward-looking statements made in this Report are
qualified by these cautionary statements.
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
PART II OTHER INFORMATION
Item 1. Legal Proceedings
See Note 1 of the Notes to Condensed Consolidated Financial
Statements.
Item 2. Changes in Securities
On September 26, 1997, the Company emerged from bankruptcy proceedings
pursuant to its Amended Joint Plan of Reorganization (the Plan ). On such
date, the Company cancelled all existing debt and all equity securities,
including common stock and common stock options. Under the Plan, the
Company has issued or will issue $120 million of 11% Senior Notes due in
2007, 10.2 million shares of $.01 par value new common stock, and 1 million
eight-year warrants to purchase shares of new common stock at an exercise
price of $16.40 per share.
Items 3, 4 and 5 of Part II are not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit No.
2 Debtors' Amended Joint Plan of Reorganization under Chapter 11 of the
Bankruptcy Code, dated June 30, 1997, as modified.
3.1 Amended and Restated Certificate of Incorporation of the Company.
3.2 Amended and Restated Bylaws of the Company.
4.1 Loan and Security Agreement, dated as of
September 26, 1997, by and
among the Company, Edison Brothers Apparel Stores, Inc. and Edison
Puerto Rico Stores, Inc., as Borrowers, the Guarantors named therein,
the financial institutions named therein as Lenders, Congress
Financial Corporation, as Agent, and The CITGroup/Business Credit,
Inc., as Co-Agent.
4.2 Indenture, dated as of September 26, 1997, between the Company and
the Bank of New York, as Trustee.
4.3 First Supplemental Trust Indenture, dated as of September 26, 1997,
between the Company and The Bank of New York, as Trustee.
4.4 Funding Escrow Agreement, dated as of September 26, 1997, among the
Company, Edison Brothers Apparel Stores, Inc. and Mercantile Trust
Company, N.A., as Escrow Agent.
4.5 Registration Rights Agreement, dated as of September 26, 1997,
between the Company and Swiss Bank Corporation.
4.6 Warrant Agreement, dated as of September 26, 1997 between the Company
and ChaseMellon Shareholder Services, L.L.C., as Warrant Agent.
10.1 Form of Indemnification Agreement between the Company and each
of its Directors.
10.2 Edison Brothers Stores, Inc. 1997 Stock Option Plan.
10.3 Edison Brothers Stores, Inc. 1997 Directors Stock Option Plan
10.4 Form of Restricted Stock Agreement, entered into by the Company on
June 4, 1997 with certain executive officers of the Company.
10.5 Employment Termination Agreement, dated September 4, 1997, between
the Company and Alan D. Miller, Chairman of the Board, President and
Chief Executive Officer of the Company.
10.6 Form of Employment Agreement entered into by the Company on September
4, 1997 with certain executive officers of the Company, and schedule
of material differences.
10.7 Form of Employment Agreement entered into by the Company on September
4, 1997 with certain other executive officers of the Company, and
schedule of material differences.
.
10.8 Lease Agreement between the Company, as tenant, and EBS Building,
L.L.C., as landlord.
11 Computations of Per Share Earnings
27 Financial Data Schedule
(b)The Company filed a Form 8-K, dated September 26, 1997, with the
Commission to report a press release issued by the Company announcing that
the Company emerged on such date from reorganization under Chapter 11 of
the United States Bankruptcy Code.
SIGNATURES
Pursuant to the requirements 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.
DATE: December 16, 1997
____________________________
By/s/David B. Cooper, Jr.
Executive Vice President and
Chief Financial Officer
<TABLE>
EXHIBIT 11 - COMPUTATION OF PER SHARE EARNINGS
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
<CAPTION>
4 Weeks 13 Weeks 39 Weeks
Ended Ended Ended
Nov 1, Nov 2, Nov 1,
1997 1996 1996
(In thousands, except per share data)
<S> <C> <C> <C>
Income/(Loss) from continuing operations $(6,794) $(11,460)
$(54,350)
Preferred stock dividends ---- ---- ----
Net Income/(Loss) applicable to common
stock $(6,794) $(11,460) $(54,350)
SIMPLE AND PRIMARY
Weighted average shares outstanding 10,225 22,202 22,180
Net effect of dilutive stock options
based on the treasury method
TOTAL 10,225 22,202 22,180
Per common share amounts: Simple
Net Income/(Loss) applicable to common
stock $ (.67) $ (.52) $(2.45)
Per common share amounts: Primary
Net Income/(Loss) applicable to common
stock $ (.67) $ (.52) $ (2.45)
FULLY DILUTED
Weighted average shared outstanding 10,225 22,202 22,180
Net effect of dilutive stock options -
based on the treasury method
TOTAL 10,225 22,202 22,180
Per common share amounts: Fully Diluted
Net Income/(Loss) applicable to common
stock $ (.67) $ (.52) $ (2.45)
</TABLE>
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
- --------------------------------------------------------------------X
:
In re : CHAPTER 11
:
EDISON BROTHERS STORES, INC., et al., : Case No. 95-1354
(PJW)
:
Debtors. : JOINTLY ADMINISTERED
:
- --------------------------------------------------------------------X
DEBTORS' AMENDED JOINT PLAN OF REORGANIZATION
UNDER CHAPTER 11 OF THE BANKRUPTCY CODE, AS MODIFIED
Edison Brothers Stores, Inc. and its 65 affiliate Debtors propose
the following joint plan of reorganization under section 1121(a) of title
11 of the United States Code:
ARTICLE I.
DEFINITIONS AND CONSTRUCTION OF TERMS
Definitions. As used herein, the following terms have the respective
meanings specified below, unless the context otherwise requires:
1.1. Administrative Expense Claim means any right to payment
constituting a cost or expense of administration of any of the Chapter 11
Cases under sections 503(b) and 507(a)(1) of the Bankruptcy Code,
including, without limitation, any actual and necessary costs and expenses
of preserving the estates of the Debtors, any actual and necessary costs
and expenses of operating the business of the Debtors, any indebtedness or
obligations incurred or assumed by the Debtors in Possession in connection
with the conduct of their business, including, without limitation, for the
acquisition or lease of property or an interest in property or the
rendition of services, all compensation and reimbursement of expenses to
the extent Allowed by the Bankruptcy Court under section 330 or 503 of the
Bankruptcy Code, any Administrative Reclamation Claim, and any fees or
charges assessed against the estates of the Debtors under section 1930 of
chapter 123 of title 28 of the United States Code.
1.2. Administrative Reclamation Claim means any Claim under section
546(c) of the Bankruptcy Code, which, at the election of the holder thereof
pursuant to an order of the Bankruptcy Court dated June 4, 1996, is deemed
an Administrative Expense Claim under the Plan.
1.3. Allowed means, with reference to any Claim or Equity Interest, (a)
any Claim against or Equity Interest in the Debtors which has been listed
by the Debtors in their Schedules, as such Schedules may be amended by the
Debtors from time to time in accordance with Bankruptcy Rule 1009, as
liquidated in amount and not disputed or contingent and for which no
contrary proof of claim or interest has been filed, (b) any Claim or Equity
Interest allowed hereunder, (c) any Claim or Equity Interest which is not
Disputed, or (d) any Claim or Equity Interest which, if Disputed, (i) as to
which, pursuant to the Plan or a Final Order of the Bankruptcy Court, the
liability of the Debtors and the amount thereof are determined by a final
order of a court of competent jurisdiction other than the Bankruptcy Court,
or (ii) has been Allowed by Final Order; provided, however, that any Claims
or Equity Interests allowed solely for the purpose of voting to accept or
reject the Plan pursuant to an order of the Bankruptcy Court shall not be
considered Allowed Claims or Allowed Equity Interests hereunder.
Unless otherwise specified herein or by order of the Bankruptcy Court,
Allowed Administrative Expense Claim, Allowed Claim, or Allowed Equity
Interest shall not, for purposes of computation of distributions under the
Plan, include interest on such Administrative Expense Claim, Claim or
Equity Interest from and after the Commencement Date.
1.4. Amended Edison Bylaws means the amended and restated Bylaws of
Reorganized Edison, which shall be in substantially the form contained in
the Plan Supplement.
1.5. Amended Edison Certificate of Incorporation means the amended and
restated Certificate of Incorporation of Reorganized Edison, which shall be
in substantially the form contained in the Plan Supplement.
1.6. Authorized Denominations means $4,000 or any integral multiple of
$250 in excess thereof.
1.7. Avoidance Claims means all fraudulent transfer Causes of Action
under sections 544, 548 and 550 of the Bankruptcy Code or otherwise
applicable state law that one or more of the Debtors or Debtors in
Possession may have in connection with or arising out of the D&B Spinoff.
1.8. Ballot means the form distributed to each holder of an impaired
Claim or Equity Interest on which is to be indicated acceptance or
rejection of the Plan.
1.9. Bankruptcy Code means title 11 of the United States Code, as
amended from time to time, as applicable to the Chapter 11 Cases.
1.10. Bankruptcy Court means the United States District Court for
the District of Delaware having jurisdiction over the Chapter 11 Cases and,
to the extent of any reference under section 157 of title 28 of the United
States Code, the unit of such District Court under section 151 of title 28
of the United States Code.
1.11. Bankruptcy Rules means the Federal Rules of Bankruptcy
Procedure as promulgated by the United States Supreme Court under section
2075 of title 28 of the United States Code, and any Local Rules of the
Bankruptcy Court.
1.12. Bond Counsel means an attorney or firm of attorneys of
nationally recognized standing in matters pertaining to the validity and
enforceability of, and the tax-exempt nature of interest on, obligations
issued by states and/or cities and their political subdivisions or
authorities.
1.13. Business Day means any day other than a Saturday, Sunday or
any other day on which commercial banks in New York, New York are required
or authorized to close by law or executive order.
1.14. Cash means legal tender of the United States of America and
equivalents thereof.
1.15. Cash Distribution Pool means $119,000,000 (a) plus the sum of
(i) the Pension Plan Proceeds to the extent received by the Debtors prior
to the Effective Date, (ii) the Corporate Headquarters Building Proceeds to
the extent received by the Debtors prior to the Effective Date, (iii) the
Resolved Avoidance Claims Proceeds and (iv) the Rights Exercise Proceeds,
if any, and (b) minus the LLC Funding Amount; provided, however, that the
Debtors shall have the right, at or prior to the Confirmation Hearing, (i)
in their sole discretion, upon notice to the Creditors' Committee, to
reduce the amount of the Cash Distribution Pool by up to $15,000,000, in
$5,000,000 increments, and (ii) with the consent of the Creditors'
Committee, to reduce the Cash Distribution Pool by an additional
$5,000,000, provided that, as a consequence of any such reduction and
contemporaneously therewith, the New Notes Distribution Amount shall be
increased by the amount of such reduction.
1.16. Causes of Action means, without limitation, any and all
actions, causes of action, liabilities, obligations, rights, suits, debts,
sums of money, damages, judgments, claims and demands whatsoever, whether
known or unknown, in law, equity or otherwise.
1.17. Chapter 11 Cases means the cases under chapter 11 of the
Bankruptcy Code commenced by the Debtors, styled In re Edison Brothers
Stores, Inc. et al., Chapter 11 Case No. 95-1354 (PJW), Jointly
Administered, currently pending in the Bankruptcy Court.
1.18. Claim has the meaning set forth in section 101 of the
Bankruptcy Code.
1.19. Claims Resolution Committee means the committee to be
established pursuant to Section 13.7 of the Plan.
1.20. Class means a category of holders of Claims or Equity
Interests as set forth in Article III of the Plan.
1.21. Class A Membership Units means 10,000,000 Class A Membership
Units in the EBS Litigation, L.L.C., 10,000,000 Class A Membership Units in
the EBS Pension, L.L.C. and 10,000,000 Class A Membership Units in the EBS
Building, L.L.C.
1.22. Class B Membership Units means 10,000,000 Class B Membership
Units in the EBS Litigation, L.L.C., 10,000,000 Class B Membership Units in
the EBS Pension, L.L.C. and 10,000,000 Class B Membership Units in the EBS
Building, L.L.C.
1.23. Collateral means any property or interest in property of the
estates of the Debtors subject to a Lien to secure the payment or
performance of a Claim, which Lien is not subject to avoidance under the
Bankruptcy Code or otherwise invalid under the Bankruptcy Code or
applicable state law.
1.24. Commencement Date means November 3, 1995, the date on which
the Debtors commenced the Chapter 11 Cases.
1.25. Confirmation Date means the date on which the Clerk of the
Bankruptcy Court enters the Confirmation Order on the docket.
1.26. Confirmation Hearing means the hearing held by the Bankruptcy
Court to consider confirmation of the Plan pursuant to section 1129 of the
Bankruptcy Code, as such hearing may be adjourned or continued from time to
time.
1.27. Confirmation Order means the order of the Bankruptcy Court
confirming the Plan pursuant to section 1129 of the Bankruptcy Code.
1.28. Convenience Claim means any Unsecured Claim in the amount of
$1,000 or less and any Unsecured Claim that is reduced to $1,000 by the
election of the holder thereof on such holder's Ballot.
1.29. Corporate Headquarters Building means the Debtors' corporate
headquarters building located at 501 North Broadway in St. Louis, Missouri.
1.30. Corporate Headquarters Building Lease means the lease for the
Corporate Headquarters Building between the EBS Building, L.L.C., as
lessor, and Reorganized Edison, as lessee, on the terms and subject to the
conditions described in Exhibit A annexed hereto, which shall be in
substantially the form contained in the Plan Supplement.
1.31. Corporate Headquarters Building Proceeds means the Cash
proceeds received by the Debtors or Reorganized Debtors as a consequence of
the sale, sale/leaseback or other disposition of the Corporate Headquarters
Building, net of all costs and expenses incurred by the Debtors or
Reorganized Debtors in connection with such sale, sale/leaseback or other
similar disposition, including, without limitation, all applicable taxes,
brokers' fees, advertising fees, legal fees and filing fees.
1.32. Creditors' Committee means the statutory committee of
unsecured creditors appointed in the Chapter 11 Cases pursuant to section
1102 of the Bankruptcy Code.
1.33. D&B Common Stock means, collectively, the 4,417,498 shares of
common stock in Dave & Buster's, Inc. (a Missouri corporation) which D&B
Spinoff Stockholders were entitled to receive in connection with the D&B
Spinoff.
1.34. D&B Spinoff means the June 29, 1995 distribution by Edison of
its 85% equity interest in Dave & Buster's, Inc. (a Missouri corporation),
as a stock dividend, to holders of Edison common stock as of June 19, 1995
and all related transactions.
1.35. D&B Spinoff Release Minimum Rights means, when used with
reference to a particular D&B Spinoff Stockholder, a number of Rights equal
to the product of (a) the D&B Spinoff Release Rights Multiplier and (b) the
number of shares of D&B Common Stock that such D&B Spinoff Stockholder was
entitled to receive in connection with the D&B Spinoff.
1.36. D&B Spinoff Release Minimum Purchase Price means, when used
with reference to a particular D&B Spinoff Stockholder, an amount equal to
the product of (a) $5.6593 and (b) the number of shares of D&B Common Stock
that such D&B Spinoff Stockholder was entitled to receive in connection
with the D&B Spinoff.
1.37. D&B Spinoff Release Rights Multiplier means 2.2637, determined
by dividing the aggregate number of Rights (10,000,000) by the aggregate
number of shares of D&B Common Stock (4,417,498).
1.38. D&B Spinoff Release Shortfall Amount means, when used with
reference to a particular D&B Spinoff Stockholder, an amount determined in
accordance with the following formula:
(5.6593) x ((D&B Spinoff Release Minimum Rights Number of Rights Exercised
by D&B Spinoff Stockholder) ? (D&B Spinoff Release Rights Multiplier))
1.39. D&B Spinoff Settlement means the settlement, the terms of
which are set forth in Section 10.2 of the Plan, between (a) the EBS
Litigation, L.L.C. and (b) each Released D&B Spinoff Stockholder, pursuant
to which each Released D&B Spinoff Stockholder will be released from any
and all Avoidance Claims against such Released D&B Spinoff Stockholder.
1.40. D&B Spinoff Settlement Period means the period commencing on
or about the Effective Date and concluding on the D&B Spinoff Settlement
Expiration Date.
1.41. D&B Spinoff Settlement Expiration Date means 5:00 p.m.,
Eastern Time on the day that is 30 days after the Effective Date or, if
such day is not a Business Day, the next following Business Day.
1.42. D&B Spinoff Settlement Notice means the form of notice that
will provide for the participation in the D&B Spinoff Settlement by certain
D&B Spinoff Stockholders in accordance with Section 10.2 of the Plan, which
notice shall contain instructions for the proper completion and due
execution of such notice and timely delivery thereof, together with other
requirements relating to the valid and effective exercise of the right to
participate in the D&B Spinoff Settlement.
1.43. D&B Spinoff Settlement Offer means the offer by the EBS
Litigation, L.L.C. to all D&B Spinoff Stockholders, pursuant to
Section 10.2 of the Plan, to participate in the D&B Spinoff Settlement.
1.44. D&B Spinoff Settlement Proceeds means the aggregate Cash
proceeds generated by the D&B Spinoff Settlement Offer, excluding any
Rights Exercise Proceeds.
1.45. D&B Spinoff Stockholders means, collectively, the record
holders of Edison common stock, determined in accordance with Edison's
books and records, as of the June 19, 1995 record date used to determine
the holders of Edison common stock entitled to participate in the D&B
Spinoff.
1.46. Debtors means, collectively, Edison, Edison Brothers Apparel
Stores, Inc., Edison Brothers Shoe Stores, Inc., Edison Paymaster, Inc.,
Edison Brothers Redevelopment Corporation, Edbro Missouri, Edison Alabama
Stores, Inc., Edison Arkansas Stores, Inc., Edison Colorado Stores, Inc.,
Edison Brothers Company, Edison Hawaii Stores, Inc., Edison Illinois
Stores, Inc., Edison Kansas Stores, Inc., Edison Kentucky Stores, Inc.,
Edison Louisiana Stores, Inc., Edison Maryland Stores, Inc., Edison
Massachusetts Stores, Inc., Edison Michigan Stores, Inc., Edison Minnesota
Stores, Inc., Edison Mississippi Stores, Inc., Edison Nebraska Stores,
Inc., Edison New Jersey Stores, Inc., Edison New Mexico Stores, Inc.,
Edison New York Stores, Inc., Edison Ohio Stores, Inc., Edison Oklahoma
Stores, Inc., Edison Oregon Stores, Inc., Edison Pennsylvania Stores, Inc.,
Edison Tennessee Stores, Inc., Edison Texas Stores, Inc., Edison Utah
Stores, Inc., Edbro Ohio Realty, Inc., EBSS-Montana, Inc., EBSS-North
Central, Inc., EBSS-Indiana, Inc., EBSS-Iowa, Inc., EBSS-Kansas, Inc., EBSS-
Wisconsin, Inc., EBSS-Northeast, Inc., EBSS-South, Inc., EBSS-Mideast,
Inc., EBSS-Michigan, Inc., EBSS-East, Inc., EBSS-Ohio, Inc., EBSS-
Pennsylvania, Inc., EBSS-Texas, Inc., EBSS-West, Inc., Edison Puerto Rico
Stores, Inc., Ebscat, Inc., Edison Brothers Mall Entertainment, Inc.,
Horizon Entertainment, Inc., Edison Brothers Stores International, Inc.,
Edisur, Inc., EBS Holdings Corp., Edison Whittier Warehouse, Inc., Edbro
California USG -- 2, Inc., Edbro Missouri USG -- 2, Inc., Edbro California
USG -- 1, Inc., Industrial Design, Inc., Webster Clothes, Inc., Z&Z
Fashions, Ltd., Webster-Rossville, Inc., Time-Out Family Amusement Centers,
Inc., Tofac of Puerto Rico, Inc., Sacha Shoes Ltd. and Mandel's of
California.
1.47. Debtors in Possession means the Debtors in their capacity as
debtors in possession in the Chapter 11 Cases pursuant to sections 1101,
1107(a) and 1108 of the Bankruptcy Code.
1.48. Director Options shall have the meaning set forth in Section
9.7 of the Plan.
1.49. Director Stock Option Plan means the Edison Brothers Stores,
Inc. 1997 Director Stock Option Plan, which shall be in substantially the
form annexed to the Disclosure Statement as Exhibit F.
1.50. Disbursing Agent shall have the meaning set forth in Section
6.4(g) of the Plan.
1.51. Disclosure Statement means the disclosure statement relating
to the Plan, including, without limitation, all exhibits and schedules
thereto, as approved by the Bankruptcy Court pursuant to section 1125 of
the Bankruptcy Code.
1.52. Disputed means, with reference to any Claim or Equity
Interest, any Claim or Equity Interest proof of which was timely and
properly filed and which has been or hereafter is listed on the Schedules
as unliquidated, disputed or contingent, and in either case or in the case
of an Administrative Expense Claim, any Administrative Expense Claim, Claim
or Equity Interest which is disputed under the Plan or as to which the
Debtors or, if not prohibited by the Plan, any other party in interest has
interposed a timely objection and/or request for estimation in accordance
with section 502(c) of the Bankruptcy Code and Bankruptcy Rule 3018, which
objection and/or request for estimation has not been withdrawn or
determined by a Final Order, and any Claim or Equity Interest proof of
which was required to be filed by order of the Bankruptcy Court but as to
which a proof of claim or interest was not timely or properly filed.
1.53. Disputed Claim Amount means the amount set forth in the proof
of claim relating to a Disputed Claim or, if an amount is estimated in
respect of a Disputed Claim in accordance with section 502(c) of the
Bankruptcy Code and Bankruptcy Rule 3018 for purposes of, among other
things, Section 6.4(c)(i) of the Plan, the amount so estimated pursuant to
an order of the Bankruptcy Court.
1.54. EBS Building, L.L.C. means the Delaware limited liability
company formed pursuant to the EBS Building LLC Members Agreement.
1.55. EBS Building LLC Members Agreement means that certain Members
Agreement to govern the EBS Building, L.L.C., which shall be in
substantially the form contained in the Plan Supplement.
1.56. EBS Litigation, L.L.C. means the Delaware limited liability
company formed pursuant to the EBS Litigation LLC Members Agreement.
1.57. EBS Litigation LLC Members Agreement means that certain
Members Agreement to govern the EBS Litigation, L.L.C., which shall be in
substantially the form contained in the Plan Supplement.
1.58. EBS Pension, L.L.C. means the Delaware limited liability
company formed pursuant to the EBS Pension LLC Members Agreement.
1.59. EBS Pension LLC Members Agreement means that certain Members
Agreement to govern the EBS Pension, L.L.C., which shall be in
substantially the form contained in the Plan Supplement.
1.60. Edbro Missouri means Edbro Missouri Realty Company, Inc., a
Missouri corporation.
1.61. Edbro Missouri Facility means all land and improvements
presently leased to Edbro Missouri pursuant to the Series 1977 Lease
Agreement or the Series 1985 Lease Agreement, together with any fixtures
appurtenant thereto and any personalty located thereon and related to the
foregoing which is owned by Edbro Missouri or leased by Edbro Missouri
under the terms of the Series 1977 Lease Agreement and/or the Series 1985
Lease Agreement.
1.62. Edison means Edison Brothers Stores, Inc., a Delaware
corporation.
1.63. Edison Equity Interest means any share of common stock or
other instrument evidencing a present ownership interest in Edison, whether
or not transferable, and any option, warrant or right, contractual or
otherwise, to acquire any such interest.
1.64. Effective Date means the first Business Day on which the
conditions specified in Section 11.1 of the Plan have been satisfied or
waived.
1.65. Employment Contracts means the employment contracts or amended
employment contracts entered into between the Reorganized Debtors and
certain of their key executives, which shall be in substantially the form
annexed to the Disclosure Statement as Exhibit F.
1.66. Equity Committee means the committee of equity security
holders appointed in the Chapter 11 Cases pursuant to section 1102 of the
Bankruptcy Code.
1.67. Equity Interest means any share of common stock or other
instrument evidencing an ownership interest in any of the Debtors, whether
or not transferable, and any option, warrant or right, contractual or
otherwise, to acquire any such interest.
1.68. Final Order means an order of the Bankruptcy Court as to which
the time to appeal, petition for certiorari, or move for reargument or
rehearing has expired and as to which no appeal, petition for certiorari,
or other proceedings for reargument or rehearing shall then be pending or
as to which any right to appeal, petition for certiorari, reargue, or
rehear shall have been waived in writing in form and substance satisfactory
to the Debtors or the Reorganized Debtors or, in the event that an appeal,
writ of certiorari, or reargument or rehearing thereof has been sought,
such order of the Bankruptcy Court shall have been determined by the
highest court to which such order was appealed, or certiorari, reargument
or rehearing shall have been denied and the time to take any further
appeal, petition for certiorari or move for reargument or rehearing shall
have expired; provided, however, that the possibility that a motion under
Rule 59 or Rule 60 of the Federal Rules of Civil Procedure, or any
analogous rule under the Bankruptcy Rules, may be filed with respect to
such order shall not cause such order not to be a Final Order.
1.69. Funding Escrow means the escrow established pursuant to
Section 5.2 of the Plan and governed by the Funding Escrow Agreement.
1.70. Funding Escrow Assets means (a) $16,000,000, (b) the documents
of title to the Funding Escrow Properties and (c) anything deposited in or
transferred to or earned by the Funding Escrow on or after the Effective
Date; provided, however, that if the Debtors have, prior to the Effective
Date, entered into a contract to sell, sell and lease back or otherwise
dispose of one or more of the Funding Escrow Properties, the Cash proceeds
of such transaction or, if such Cash proceeds have not been received prior
to the Effective Date, the right to receive such Cash proceeds, shall be
transferred into the Funding Escrow in lieu of the Funding Escrow Property
or Funding Escrow Properties disposed of.
1.71. Funding Escrow Agent means the escrow agent appointed pursuant
to Section 5.2 of the Plan and the Funding Escrow Agreement.
1.72. Funding Escrow Agreement means the escrow agreement governing
the Funding Escrow, which shall be in substantially the form contained in
the Plan Supplement.
1.73. Funding Escrow Mortgages means the mortgages on the Funding
Escrow Properties, which shall be in substantially the form contained in
the Plan Supplement.
1.74. Funding Escrow Properties means the following properties owned
by the Debtors: (a) a parcel of land containing a 13-story building with
accompanying driveways and parking facility located at 400 South 14th
Street, St. Louis, Missouri; (b) a parcel of land containing a five-story
building plus basement comprising the whole of Block 282 of the City of St.
Louis located at 1230 North Second Street, St. Louis, Missouri; (c) a
parcel of land containing a four-story building plus basement located in
Cook County, Illinois at 131-133 South State Street, Chicago, Illinois; (d)
a parcel of land containing approximately 15.02 acres together with a
building thereon containing approximately 309,444 square feet of ground
floor space with accompanying parking facility and truck areas located at
1351 Redmond Road, Rome, Georgia; and (e) a parcel of land in Princeton,
Potaka County, Illinois, containing approximately 41.19 acres together with
a building thereon containing approximately 369,000 square feet of ground
floor space with accompanying parking facility and truck areas located at
U.S. 41 and Highway 100, Princeton, Indiana.
1.75. General Unsecured Claim means any Unsecured Claim other than a
Convenience Claim.
1.76. Initial Distribution Date means the date that is 60 days
subsequent to the Effective Date, or as soon thereafter as is practicable.
1.77. Insured Claim means any Claim arising from an incident or
occurrence that is covered under the Debtors' insurance policies.
1.78. Issuer means the City of Washington, Franklin County,
Missouri, as the issuer of the Original Bonds or the Series 1997 Bonds, as
applicable.
1.79. Lien has the meaning set forth in section 101 of the
Bankruptcy Code.
1.80. LLC Funding Amount means an amount determined in the sole
discretion of the Creditors' Committee and specified in a writing provided
to the Debtors by no later than 10 days prior to the date of the
Confirmation Hearing; provided, however, that such amount shall in no event
be greater than the Cash Distribution Pool.
1.81. Management Options shall have the meaning set forth in Section
9.6 of the Plan.
1.82. Membership Certificates means, collectively, the certificates
which will be delivered to each person who is to receive a distribution
under the Plan (including distributions to be made following an exercise of
Rights) of Class A Membership Units.
1.83. Mercantile means Mercantile Bank National Association (f/k/a
Mercantile Bank of St. Louis, National Association, f/k/a Mercantile Trust
Company National Association).
1.84. New Common Stock means the common stock of Reorganized Edison
authorized and to be issued pursuant to the Plan. The New Common Stock
shall have a par value of $.01 per share and such rights with respect to
dividends, liquidation, voting and other matters as are provided for by
applicable nonbankruptcy law or in the Amended Edison Certificate of
Incorporation and the Amended Edison Bylaws.
1.85. New Common Stock Distribution Pool means 10,000,000 shares of
New Common Stock minus the number of shares of New Common Stock issuable as
a consequence of valid exercises of Rights pursuant to Section 10.1 of the
Plan.
1.86. New Notes means the promissory notes authorized and to be
issued pursuant to the Plan on the terms and subject to the conditions
described in Exhibit B annexed hereto.
1.87. New Notes Distribution Amount means $100,000,000 in principal
amount of New Notes; provided, however, that the principal amount of the
New Notes may be increased as described in Section 1.15 of the Plan.
1.88. New Notes Indentures means the trust indenture and first
supplemental trust indenture between Reorganized Edison, as issuer, and the
indenture trustee, which shall be in substantially the form contained in
the Plan Supplement.
1.89. Original Bondholder means any of the Series 1977 Bondholders
or any of the Series 1985 Bondholders.
1.90. Original Bonds means, collectively, the Series 1977 Bonds and
Series 1985 Bonds.
1.91. Other Priority Claim means any Claim, other than an
Administrative Expense Claim or a Priority Tax Claim, entitled to priority
in right of payment under section 507(a) of the Bankruptcy Code.
1.92. Other Secured Claim means any Secured Claim, other than a
Secured Series 1977 Bondholder Claim, a Secured Series 1985 Bondholder
Claim or a Secured Tax Claim.
1.93. Pension Plan means the Edison Brothers Stores Pension Plan, as
the same may have been or may be amended, modified, revised or restated.
1.94. Pension Plan Payment Date means the date upon which there is a
final distribution of assets from the Pension Plan.
1.95. Pension Plan Proceeds means the Cash proceeds received by the
Debtors or Reorganized Debtors as a consequence of the termination of the
Pension Plan, net of (a) the Pension Plan assets transferred to a qualified
replacement plan within the meaning of section 4980(d)(2) of the Internal
Revenue Code (which assets in excess of accrued benefits are not to exceed
the statutory minimum required to limit excise taxes relating to the
termination of the Pension Plan to 20%), (b) all costs, fees and expenses
incurred or for which a reserve is established in connection with, arising
from or related to such termination and the establishment of a replacement
pension plan, (c) all excise taxes arising from or related to the
termination of the Pension Plan and (d) all applicable income taxes, if
any, incurred in connection with, or arising from or related to the
termination of the Pension Plan for which a reserve in the amount of
$7,000,000 is established.
1.96. Plan means this chapter 11 plan of reorganization, including,
without limitation, the Plan Supplement and all exhibits, supplements,
appendices and schedules hereto, either in its present form or as the same
may be altered, amended or modified from time to time.
1.97. Plan Supplement means the forms of documents specified in
Section 13.17 of the Plan.
1.98. Priority Tax Claim means any Claim of a governmental unit of
the kind specified in sections 502(i) and 507(a)(8) of the Bankruptcy Code.
1.99. Pro Rata Share means a proportionate share, so that the ratio
of the consideration distributed on account of an Allowed Claim or Allowed
Equity Interest in a Class to the amount of such Allowed Claim or Allowed
Equity Interest is the same as the ratio of the amount of the consideration
distributed on account of all Allowed Claims or Allowed Equity Interests in
such Class to the amount of all Allowed Claims or Allowed Equity Interests
in such Class.
1.100. Quarter means the period beginning on the Effective Date and
ending on the next of October 31, January 31, April 30 and July 31, and
each three month period thereafter.
1.101. Record Date means the day that is five days from and after the
Confirmation Date.
1.102. Registration Rights Agreement means a registration rights
agreement to be entered into pursuant to Section 6.8 of the Plan between
Reorganized Edison and any person or entity entitled to become a party to
such registration rights agreement under Section 6.8 of the Plan, which
shall be in substantially the form contained in the Plan Supplement.
1.103. Released D&B Spinoff Stockholder means a D&B Spinoff
Stockholder (a) who exercises, in accordance with Section 10.1 of the Plan,
a number of Rights greater than or equal to the D&B Spinoff Release Minimum
Rights (and elects to participate in the D&B Spinoff Settlement in respect
of each Right exercised), (b) who pays, in accordance with Section 10.2 of
the Plan, an amount greater than or equal to the D&B Spinoff Release
Minimum Purchase Price or (c) who (i) exercises a number of Rights less
than the D&B Spinoff Release Minimum Rights (and elects to participate in
the D&B Spinoff Settlement in respect of each Right exercised) and (ii)
pays, in accordance with Section 10.2 of the Plan, an amount equal to the
D&B Spinoff Release Shortfall Amount.
1.104. Remarketing Agent shall have the meaning ascribed to such term
in Schedule 4 to the Plan.
1.105. Reorganized Debtors means Reorganized Edison and each of the
Reorganized Subsidiaries.
1.106. Reorganized Edbro Missouri means Edbro Missouri, or any
successor thereto by merger, consolidation or otherwise, on and after the
Effective Date.
1.107. Reorganized Edison means Edison, or any successor thereto by
merger, consolidation or otherwise, on and after the Effective Date.
1.108. Reorganized Subsidiaries means each of the Subsidiaries, or
any successors thereto by merger, consolidation or otherwise, on and after
the Effective Date.
1.109. Reserve shall have the meaning set forth in Section 6.4(c)(i)
of the Plan.
1.110. Restricted Stock shall have the meaning set forth in Section
9.8 of the Plan.
1.111. Restricted Stock Agreements means the agreements entered into
between Edison and certain of its key executives with respect to the award
by Edison of Restricted Stock to such key executives, which shall be in
substantially the form annexed to the Disclosure Statement as Exhibit F.
1.112. Resolved Avoidance Claims means all Avoidance Claims that are,
prior to the Effective Date, the subject of a compromise and settlement
approved pursuant to Bankruptcy Rule 9019 by Final Order or otherwise
resolved, discontinued, abandoned or dismissed.
1.113. Resolved Avoidance Claims Proceeds means the Cash proceeds
received by the Debtors or Reorganized Debtors prior to the Effective Date
as a consequence of the Resolved Avoidance Claims.
1.114. Rights means 10,000,000 uncertificated, transferable rights,
exercisable in the aggregate to purchase the Rights Aggregate
Consideration, which rights shall be issued to holders of Allowed Edison
Equity Interests pursuant to Section 4.8 of the Plan and be exercisable in
accordance with the provisions of Section 10.1 of the Plan.
1.115. Rights Agent means the person designated by the Debtors as the
Rights agent by no later than 10 days prior to the date of the Confirmation
Hearing.
1.116. Rights Aggregate Consideration means the New Common Stock
Distribution Pool and the Class A Membership Units in EBS Litigation,
L.L.C.
1.117. Rights Exercise Instructions means the instructions which will
accompany the Rights Exercise Notice and which will include instructions
for the proper completion and due execution of the Rights Exercise Notice
and timely delivery thereof, together with other requirements relating to
the valid and effective exercise of the Rights.
1.118. Rights Exercise Notice means the form of exercise notice which
will provide for the exercise of the Rights by each holder thereof.
1.119. Rights Exercise Period means the period commencing on or about
the Effective Date and concluding on the Rights Expiration Date.
1.120. Rights Exercise Price means $16.40 per Right.
1.121. Rights Exercise Proceeds means the aggregate Cash proceeds
generated by the exercise of the Rights pursuant to Section 10.1 of the
Plan.
1.122. Rights Expiration Date means 5:00 p.m., Eastern Time on the
day that is 30 days after the Effective Date or, if such day is not a
Business Day, the next following Business Day.
1.123. Schedules means the schedules of assets and liabilities, the
list of holders of Equity Interests and the statements of financial affairs
filed by the Debtors under section 521 of the Bankruptcy Code and
Bankruptcy Rule 1007, and all amendments and modifications thereto through
the Confirmation Date.
1.124. Secured Claim means any Claim, to the extent reflected in the
Schedules or a proof of claim as a Secured Claim, which is secured by a
Lien on Collateral to the extent of the value of such Collateral, as
determined in accordance with section 506(a) of the Bankruptcy Code, or, in
the event that such Claim is subject to setoff under section 553 of the
Bankruptcy Code, to the extent of such setoff.
1.125. Secured Series 1977 Bondholder Claim means any Series 1977
Bondholder Claim to the extent such Claim is a Secured Claim.
1.126. Secured Series 1985 Bondholder Claim means any Series 1985
Bondholder Claim to the extent such Claim is a Secured Claim.
1.127. Secured Tax Claim means any Secured Claim which, absent its
secured status, would be entitled to priority in right of payment under
section 507(a)(8) of the Bankruptcy Code.
1.128. Series 1977 Bond Documents means, collectively, the Series
1977 Bonds, the Series 1977 Bond Ordinance, the Series 1977 Lease
Agreement, the Series 1977 Guaranty and each of the other documents,
instruments, certificates or agreements executed and delivered in
connection with any of the foregoing documents or otherwise with respect to
the issuance of the Series 1977 Bonds, as heretofore amended, supplemented,
restated and/or modified.
1.129. Series 1977 Bond Ordinance means that certain Ordinance No.
4930 adopted by the Issuer on June 9, 1977, pursuant to which the Series
1977 Bonds were issued.
1.130. Series 1977 Bondholder Claim means any Claim filed by the City
on behalf of all Series 1977 Bondholders, against Edbro Missouri or Edison
arising under or relating to the Series 1977 Bond Documents.
1.131. Series 1977 Bondholders means the person or persons in whose
name or names any Series 1977 Bond shall be registered on the books of the
Issuer or paying agent therefor, kept for that purpose in accordance with
the terms of the Series 1977 Bond Ordinance.
1.132. Series 1977 Bonds means the City of Washington, County of
Franklin, State of Missouri Industrial Revenue Bonds, Series of 1977,
issued in the original aggregate principal amount of $3,950,0000.
1.133. Series 1977 Guaranty means, collectively, that certain
Guaranty, dated December 15, 1976, executed by Edison, and that certain
Guaranty, dated June 6, 1977, executed by Edison, each securing the
obligations of Edbro Missouri under the Series 1977 Lease Agreement.
1.134. Series 1977 Lease Agreement means that certain Agreement of
Lease and Option to Purchase, dated December 15, 1976, between the Issuer
and Edbro Missouri, as amended by that certain First Amendment of Lease and
Option to Purchase, dated June 6, 1977, between the Issuer and Edbro
Missouri.
1.135. Series 1985 Bank Agreement means that certain Bank Agreement,
dated as of November 15, 1985, between Edison and Mercantile, in its
capacity as the holder of all Series 1985 Bonds.
1.136. Series 1985 Bond Documents means, collectively, the Series
1985 Bonds, the Series 1985 Bond Indenture, the Series 1985 Lease
Agreement, the Series 1985 Bank Agreement, the Series 1985 Guaranty and
each of the other documents, instruments, certificates or agreements
executed and delivered in connection with any of the foregoing documents or
otherwise with respect to the issuance of the Series 1985 Bonds, as
heretofore amended, supplemented, restated and/or modified.
1.137. Series 1985 Bond Indenture means that certain Indenture of
Trust dated as of November 15, 1985, between the Issuer and the Trustee,
pursuant to which the Series 1985 Bonds were issued, together with any
supplements thereto.
1.138. Series 1985 Bondholder Claim means any Claim by the City or
the Trustee, on behalf of all Series 1985 Bondholders, against Edbro
Missouri or Edison arising under or relating to the Series 1985 Bond
Documents.
1.139. Series 1985 Bondholders means the person or persons in whose
name or names any Series 1985 Bond shall be registered on the books of the
Trustee kept for that purpose in accordance with the terms of the Series
1985 Bond Indenture.
1.140. Series 1985 Bonds means the City of Washington, Franklin
County, Missouri Industrial Revenue Refunding Bonds (Edbro Missouri Realty
Company, Inc. Project) Series of 1985, issued in the original aggregate
principal amount of $5,500,000.
1.141. Series 1985 Guaranty means that certain Guaranty Agreement,
dated as of November 15, 1985, among the Issuer, Trustee and Edison,
securing the obligations of Edbro Missouri under the Series 1985 Lease
Agreement.
1.142. Series 1985 Lease Agreement means that certain Amended Lease
Agreement, dated November 15, 1985, between the Issuer and Edbro Missouri,
as amended by that certain Amendment to Amended Lease Agreement, dated
November 28, 1994, between the Issuer and Edbro Missouri.
1.143. Series 1997 A Bondholders means the registered holders of the
Series 1997 A Bonds.
1.144. Series 1997 B Bondholders means the registered holders of the
Series 1997 B Bonds.
1.145. Series 1997 A Bonds means those certain tax-exempt industrial
development revenue refunding bonds in the aggregate principal amount of
$2,482,000 issued by the Issuer for the purpose of refunding a portion of
the outstanding Series 1977 Bonds in an aggregate principal amount equal to
the Allowed Secured Series 1977 Bondholder Claim, which Series 1997 A Bonds
shall have the interest rate, maturity and other terms as more specifically
described on Schedule 3 to the Plan.
1.146. Series 1997 B Bonds means those certain tax-exempt industrial
development revenue refunding bonds in the aggregate principal amount of
$4,235,000 issued by the Issuer for the purpose of refunding a portion of
the outstanding Series 1985 Bonds in an aggregate principal amount equal to
the Allowed Secured Series 1985 Bondholder Claim, which Series 1997 B Bonds
shall have the interest rate, maturity and other terms as more specifically
described on Schedule 4 to the Plan.
1.147. Series 1997 Bond Indenture shall have the meaning ascribed to
such term in Schedule 1 to the Plan.
1.148. Series 1997 Bondholders means, collectively, the Series 1997 A
Bondholders and the Series 1997 B Bondholders.
1.149. Series 1997 Bonds means, collectively, the Series 1997 A Bonds
and Series 1997 B Bonds.
1.150. Series 1997 Collateral Documents shall have the meaning
ascribed to such term in Schedule 2 to the Plan.
1.151. Series 1997 Guaranty shall have the meaning ascribed to such
term in Schedule 2 to the Plan.
1.152. Series 1997 Loan shall have the meaning ascribed to such term
in Schedule 1 to the Plan.
1.153. Series 1997 Loan Agreement shall have the meaning ascribed to
such term in Schedule 1 to the Plan.
1.154. Series 1997 Loan Documents means, collectively, the Series
1997 Loan Agreement, the Series 1997 Note, the Series 1997 Collateral
Documents, and any other agreements, instruments, certificates, statements,
or other documents executed by Reorganized Edbro Missouri, Reorganized
Edison, or any of the other Reorganized Debtors in connection with any of
the foregoing documents and/or the making of the Series 1997 Loan and the
issuance of the Series 1997 Bonds.
1.155. Series 1997 Note shall have the meaning ascribed to such term
in Schedule 1 to the Plan.
1.156. Series 1997 Refunding Conditions means the conditions
described on Schedule 2 to the Plan.
1.157. Stock Option Plan means the Edison Brothers Stores, Inc. 1997
Stock Option Plan, which shall be in substantially the form annexed to the
Disclosure Statement as Exhibit F.
1.158. Subsequent Distribution Date means the twentieth day after the
end of the Quarter following the Quarter in which the Initial Distribution
Date occurs and the twentieth day after the end of each subsequent Quarter;
provided, however, that solely for purposes of Sections 4.7(b)(ii) and
6.4(e) of the Plan, the first and second Subsequent Distribution Date shall
occur on the twentieth day after the end of the second and fourth Quarters,
respectively, following the Quarter in which the Initial Distribution Date
occurs.
1.159. Subsidiary means any Debtor of which Edison owns directly or
indirectly all of the outstanding capital stock.
1.160. Subsidiary Equity Interest means any share of common stock or
other instrument evidencing a present ownership interest in any of the
Subsidiaries, whether or not transferable, and any option, warrant or
right, contractual or otherwise, to acquire any such interest.
1.161. Surplus Distributions shall have the meaning set forth in
Section 6.4(e) of the Plan.
1.162. Tort Claim means any Claim relating to personal injury,
property damage or products liability or other similar Claim asserted
against any of the Debtors that has not been compromised and settled or
otherwise resolved.
1.163. Trustee means, (i) with respect to the Series 1985 Bonds,
Mercantile in its capacity as trustee under the Series 1985 Bond Indenture
and (ii) with respect to the Series 1997 Bonds, the trust company or bank
(which shall be acceptable to Edbro Missouri) which is initially appointed
by the Issuer as Trustee under the Series 1997 Bond Indenture.
1.164. Unresolved Avoidance Claims means all Avoidance Claims that
are not, prior to the Effective Date, the subject of a compromise and
settlement approved pursuant to Bankruptcy Rule 9019 by Final Order or
otherwise resolved, discontinued, abandoned or dismissed.
1.165. Unsecured Claim means any Claim that is not a Secured Claim,
Administrative Expense Claim, Priority Tax Claim or Other Priority Claim.
1.166. Warrants means warrants to purchase New Common Stock, on the
terms and subject to the conditions described in Exhibit C annexed hereto,
to be distributed to the holders of Allowed Edison Equity Interests
pursuant to Section 4.8 of the Plan.
1.167. Warrant Distribution Pool means approximately 1,008,791
Warrants.
Interpretation; Application of Definitions and Rules of Construction.
Wherever from the context it appears appropriate, each term stated in
either the singular or the plural shall include both the singular and the
plural and pronouns stated in the masculine, feminine or neuter gender
shall include the masculine, feminine and neuter. Unless otherwise
specified, all section, article, schedule or exhibit references in the Plan
are to the respective Section in, Article of, Schedule to, or Exhibit to,
the Plan. The words herein, hereof, hereto, hereunder and other
words of similar import refer to the Plan as a whole and not to any
particular section, subsection or clause contained in the Plan. The rules
of construction contained in section 102 of the Bankruptcy Code shall apply
to the construction of the Plan. A term used herein that is not defined
herein, but that is used in the Bankruptcy Code, shall have the meaning
ascribed to that term in the Bankruptcy Code. The headings in the Plan are
for convenience of reference only and shall not limit or otherwise affect
the provisions of the Plan.
ARTICLE II.
TREATMENT OF ADMINISTRATIVE
EXPENSE CLAIMS AND PRIORITY TAX CLAIMS
2.1. Administrative Expense Claims. Except to the extent that any
entity entitled to payment of any Allowed Administrative Expense Claim
agrees to a different treatment, each holder of an Allowed Administrative
Expense Claim shall receive Cash in an amount equal to such Allowed
Administrative Expense Claim on the later of the Effective Date and the
date such Administrative Expense Claim becomes an Allowed Administrative
Expense Claim, or as soon thereafter as is practicable; provided, however,
that Allowed Administrative Expense Claims representing liabilities
incurred in the ordinary course of business by the Debtors in Possession or
liabilities arising under loans or advances to or other obligations
incurred by the Debtors in Possession, to the extent authorized and
approved by the Bankruptcy Court if such authorization and approval was
required under the Bankruptcy Code, shall be paid in full and performed by
the Reorganized Debtors in the ordinary course of business in accordance
with the terms and subject to the conditions of any agreements governing,
instruments evidencing or other documents relating to, such transactions.
2.2. Professional Compensation and Reimbursement Claims. All entities
seeking an award by the Bankruptcy Court of compensation for services
rendered or reimbursement of expenses incurred through and including the
Confirmation Date under sections 503(b)(2), 503(b)(3), 503(b)(4) or
503(b)(5) of the Bankruptcy Code (a) shall file their respective final
applications for allowances of compensation for services rendered and
reimbursement of expenses incurred through the Confirmation Date by the
date that is 60 days after the Effective Date or such other date as may be
fixed by the Bankruptcy Court and, (b) if granted such an award by the
Bankruptcy Court, shall be paid in full in such amounts as are Allowed by
the Bankruptcy Court (i) on the date such Administrative Expense Claim
becomes an Allowed Administrative Expense Claim, or as soon thereafter as
is practicable or (ii) upon such other terms as may be mutually agreed upon
between such holder of an Administrative Expense Claim and the Debtors in
Possession or, on and after the Effective Date, the Reorganized Debtors.
2.3. Priority Tax Claims. Except to the extent that a holder of an
Allowed Priority Tax Claim has been paid by the Debtors prior to the
Effective Date or agrees to a different treatment, each holder of an
Allowed Priority Tax Claim shall receive, at the sole option of Reorganized
Edison, (a) Cash in an amount equal to such Allowed Priority Tax Claim on
the later of the Effective Date and the date such Priority Tax Claim
becomes an Allowed Priority Tax Claim, or as soon thereafter as is
practicable, or (b) equal annual Cash payments in an aggregate amount equal
to such Allowed Priority Tax Claim, together with interest at a fixed
annual rate equal to 8%, over a period through the sixth anniversary of the
date of assessment of such Allowed Priority Tax Claim, or upon such other
terms determined by the Bankruptcy Court to provide the holder of such
Allowed Priority Tax Claim deferred Cash payments having a value, as of the
Effective Date, equal to such Allowed Priority Tax Claim.
ARTICLE III.
CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS
Claims, other than Administrative Expense Claims and Priority Tax
Claims, and Equity Interests are classified for all purposes, including
voting, confirmation and distribution pursuant to the Plan, as follows:
Class Status
Class 1 -- Other Priority Claims Unimpaired
Class 2 -- Secured Series 1977 Bondholder Claims Impaired
Class 3 -- Secured Series 1985 Bondholder Claims Impaired
Class 4 -- Secured Tax Claims Impaired
Class 5 -- Other Secured Claims Unimpaired
Class 6 -- Convenience Claims Impaired
Class 7 -- General Unsecured Claims Impaired
Class 8 -- Edison Equity Interests Impaired
ARTICLE IV.
TREATMENT OF CLAIMS AND EQUITY INTERESTS
4.1. CLASS 1 -- OTHER PRIORITY CLAIMS.
(a) Impairment and Voting. Class 1 is unimpaired by the Plan. Each
holder of an Allowed Other Priority Claim is conclusively presumed to have
accepted the Plan and is not entitled to vote to accept or reject the Plan.
(b) Distributions. Each holder of an Allowed Other Priority Claim
shall receive Cash in an amount equal to such Allowed Other Priority Claim
on the later of the Effective Date and the date such Allowed Other Priority
Claim becomes an Allowed Other Priority Claim, or as soon thereafter as is
practicable.
4.2. CLASS 2 -- SECURED SERIES 1977 BONDHOLDER CLAIMS.
(a) Impairment and Voting. Class 2 is impaired by the Plan. The
beneficial holders of the Secured Series 1977 Bondholder Claims are the
Series 1977 Bondholders. Consequently, each Series 1977 Bondholder shall
be entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date and upon satisfaction of
each of the Series 1997 Refunding Conditions, Reorganized Edbro Missouri
shall cause the Series 1997 A Bonds to be issued by the Issuer in the
original aggregate principal amount of $2,482,000 and shall cause the
distribution of the Series 1997 A Bonds to or on behalf of the Series 1977
Bondholders as of the Record Date in satisfaction of all Allowed Secured
Series 1977 Bondholder Claims. The Series 1997 A Bonds shall be issued for
the purpose of refunding a portion of the Series 1977 Bonds in an aggregate
principal amount equal to the Allowed Secured Series 1977 Bondholder
Claims. Each Series 1977 Bondholder shall receive Series 1997 A Bonds in
Authorized Denominations, in an aggregate principal amount equal to 85% of
the principal amount of the Series 1977 Bonds held by such Series 1977
Bondholder as of the Record Date. The Series 1997 A Bonds will contain
such terms and shall be issued pursuant to such documents as more
particularly described on Schedules 1, 2 and 3 attached hereto and made a
part hereof.
(c) Lien Priority. The Trustee, on behalf of and for the benefit of all
Series 1997 Bondholders, shall have a first lien on the Edbro Missouri
Facility to secure the Series 1997 Loan and the other obligations of
Reorganized Edbro Missouri under the Series 1997 Loan Documents. There
shall be no priority in payment or lien rights of the Series 1997 A
Bondholders over the payment or lien rights of the Series 1997 B
Bondholders but such payment and lien rights shall be pari passu with
respect to each series of Series 1997 Bonds.
4.3. CLASS 3 -- SECURED SERIES 1985 BONDHOLDER CLAIMS.
(a) Impairment and Voting. Class 3 is impaired by the Plan. The
beneficial holders of the Secured Series 1985 Bondholder Claims are the
Series 1985 Bondholders. Consequently, each Series 1985 Bondholder shall
be entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date and upon satisfaction of
each of the Series 1997 Refunding Conditions, Reorganized Edbro Missouri
shall cause the Series 1997 B Bonds to be issued by the Issuer in the
original aggregate principal amount of $4,235,000 and shall cause the
distribution of the Series 1997 B Bonds to or on behalf of the Series 1985
Bondholders as of the Record Date in satisfaction of all Allowed Secured
Series 1985 Bondholder Claims. The Series 1997 B Bonds shall be issued for
the purpose of refunding a portion of the Series 1985 Bonds in an aggregate
principal amount equal to the Allowed Secured Series 1985 Bondholder
Claims. Each Series 1985 Bondholder shall receive Series 1997 B Bonds in
Authorized Denominations, in an aggregate principal amount equal to 77% of
the principal amount of the Series 1985 Bonds held by such Series 1985
Bondholder as of the Record Date. The Series 1997 B Bonds will contain
such terms and shall be issued pursuant to such documents as more
particularly described on Schedules 1, 2 and 3 attached hereto and made a
part hereof.
(c) Lien Priority. The Trustee, on behalf of and for the benefit of
all Series 1997 Bondholders, shall have a first lien on the Edbro Missouri
Facility to secure the Series 1997 Loan and the other obligations of
Reorganized Edbro Missouri under the Series 1997 Loan Documents. There
shall be no priority in payment or lien rights of the Series 1997 A
Bondholders over the payment or lien rights of the Series 1997 B
Bondholders but such payment and lien rights shall be pari passu with
respect to each series of Series 1997 Bonds.
4.4. CLASS 4 -- SECURED TAX CLAIMS.
(a) Impairment and Voting. Class 4 is impaired by the Plan. Each
holder of an Allowed Secured Tax Claim is entitled to vote to accept or
reject the Plan.
(b) Distributions. Except to the extent that a holder of an Allowed
Secured Tax Claim has been paid by the Debtors prior to the Effective Date
or agrees to a different treatment, each holder of an Allowed Secured Tax
Claim shall receive, at the sole option of Reorganized Edison, (i) Cash in
an amount equal to such Allowed Secured Tax Claim, including any interest
on such Allowed Secured Tax Claim required to be paid pursuant to section
506(b) of the Bankruptcy Code, on the later of the Effective Date and the
date such Allowed Secured Tax Claim becomes an Allowed Secured Tax Claim,
or as soon thereafter as is practicable, or (ii) equal annual Cash payments
in an aggregate amount equal to such Allowed Secured Tax Claim, together
with interest at a fixed annual rate equal to 8.25%, over a period through
the sixth anniversary of the date of assessment of such Allowed Secured Tax
Claim, or upon such other terms determined by the Bankruptcy Court to
provide the holder of such Allowed Secured Tax Claim deferred Cash payments
having a value, as of the Effective Date, equal to such Allowed Secured Tax
Claim.
(c) Retention of Liens. Each holder of an Allowed Secured Tax Claim
shall retain the Liens (or replacement Liens as may be contemplated under
nonbankruptcy law) securing its Allowed Secured Tax Claim as of the
Effective Date until full and final payment of such Allowed Secured Tax
Claim is made as provided herein, and upon such full and final payment,
such Liens shall be deemed null and void and shall be unenforceable for all
purposes.
4.5. CLASS 5 -- OTHER SECURED CLAIMS.
(a) Impairment and Voting. Class 5 is unimpaired by the Plan. Each
holder of an Allowed Other Secured Claim is conclusively presumed to have
accepted the Plan and is not entitled to vote to accept or reject the Plan.
(b) Distributions/Reinstatement of Claims. Except to the extent that
a holder of an Allowed Other Secured Claim agrees to a different treatment,
at the sole option of Reorganized Edison, (i) each Allowed Other Secured
Claim shall be reinstated and rendered unimpaired in accordance with
section 1124(2) of the Bankruptcy Code, notwithstanding any contractual
provision or applicable nonbankruptcy law that entitles the holder of an
Allowed Other Secured Claim to demand or receive payment of such Allowed
Other Secured Claim prior to the stated maturity of such Allowed Other
Secured Claim from and after the occurrence of a default, (ii) each holder
of an Allowed Other Secured Claim shall receive Cash in an amount equal to
such Allowed Other Secured Claim, including any interest on such Allowed
Other Secured Claim required to be paid pursuant to section 506(b) of the
Bankruptcy Code, on the later of the Effective Date and the date such
Allowed Other Secured Claim becomes an Allowed Other Secured Claim, or as
soon thereafter as is practicable, or (iii) each holder of an Allowed Other
Secured Claim shall receive the Collateral securing its Allowed Other
Secured Claim and any interest on such Allowed Other Secured Claim required
to be paid pursuant to section 506(b) of the Bankruptcy Code, in full and
complete satisfaction of such Allowed Other Secured Claim on the later of
the Effective Date and the date such Allowed Other Secured Claim becomes an
Allowed Other Secured Claim, or as soon thereafter as is practicable.
4.6. CLASS 6 -- CONVENIENCE CLAIMS.
(a) Impairment and Voting. Class 6 is impaired by the Plan. Each
holder of an Allowed Convenience Claim is entitled to vote to accept or
reject the Plan.
(b) Distributions. Each holder of an Allowed Convenience Claim as of
the Record Date shall receive Cash in an amount equal to 100% of such
Allowed Convenience Claim on the later of the Effective Date and the date
such Allowed Convenience Claim becomes an Allowed Convenience Claim, or as
soon thereafter as is practicable.
4.7. CLASS 7 -- GENERAL UNSECURED CLAIMS.
(a) Impairment and Voting. Class 7 is impaired by the Plan. Each
holder of an Allowed General Unsecured Claim is entitled to vote to accept
or reject the Plan.
(b) Distributions.
(i) On the Initial Distribution Date or as soon thereafter as is
practicable, each holder of an Allowed General Unsecured Claim as of
the Record Date shall receive a Pro Rata Share of (a) the Cash
Distribution Pool less the amount of Cash in the Reserve, (b) the New
Notes Distribution Amount less the aggregate principal amount of New
Notes in the Reserve, (c) the New Common Stock Distribution Pool less
the number of shares of New Common Stock in the Reserve and (d) subject
to Sections 5.1(c) and 10.1 of the Plan and in accordance with Section
6.4(b) of the Plan, the Class A Membership Units, plus any interest
required to be paid pursuant to Section 6.4(a) of the Plan.
(ii) On each Subsequent Distribution Date, each holder of an Allowed
General Unsecured Claim as of the Record Date shall receive a Pro Rata
Share of the amount of Cash, New Notes, New Common Stock and Class A
Membership Units in the Surplus Distributions.
4.8. CLASS 8 -- EDISON EQUITY INTERESTS.
(a) Impairment and Voting. Class 8 is impaired by the Plan. Each
holder of an Allowed Edison Equity Interest is entitled to vote to accept
or reject the Plan.
(b) Distributions. Each holder of an Allowed Edison Equity Interest
as of the Record Date shall receive a Pro Rata Share of (i) the Warrants in
the Warrant Distribution Pool, on the later of the Initial Distribution
Date and the date such Allowed Edison Equity Interest becomes an Allowed
Edison Equity Interest or as soon thereafter as is practicable and (ii) the
Rights, pursuant to section 10.1 of the Plan, on the Effective Date.
ARTICLE V.
ESTABLISHMENT OF LIMITED LIABILITY
COMPANIES AND FUNDING ESCROW; PENSION PLAN
5.1. EBS Litigation, L.L.C., EBS Pension, L.L.C. and EBS Building,
L.L.C.
(a) Creation. Subject to Section 5.1(c) of the Plan, prior to the
Effective Date, (i) the EBS Litigation, L.L.C. shall be established
pursuant to the EBS Litigation LLC Members Agreement and the Plan, (ii) the
EBS Pension, L.L.C. shall be established pursuant to the EBS Pension LLC
Members Agreement and the Plan and (iii) the EBS Building, L.L.C. shall be
established pursuant to the EBS Building LLC Members Agreement and the
Plan.
(b) Transfer of Certain Assets to the LLCs.
(i) Subject to Section 5.1(c) of the Plan, on the Effective Date, the
Debtors and the Reorganized Debtors shall transfer to the EBS
Litigation, L.L.C. all of their right, title and interest in and to the
Unresolved Avoidance Claims. Subject to Section 5.1(c) of the Plan and
pursuant to Section 10.2 of the Plan, as promptly as is practicable
after the D&B Spinoff Settlement Expiration Date, the Disbursing Agent
shall transfer the D&B Spinoff Settlement Proceeds, if any, to the EBS
Litigation, L.L.C. The EBS Litigation, L.L.C. shall be appointed the
representative of the Debtors' estates for the purpose of retaining and
enforcing the Unresolved Avoidance Claims in accordance with section
1123(b)(3)(B) of the Bankruptcy Code and the EBS Litigation LLC Members
Agreement.
(ii) Subject to Section 5.1(c) of the Plan, on the Effective Date,
the Debtors and the Reorganized Debtors shall transfer to the EBS
Pension, L.L.C. the right to receive the Pension Plan Proceeds from the
Reorganized Debtors within five days after the Pension Plan Payment
Date.
(iii) Subject to Section 5.1(c) of the Plan, on the Effective Date,
the Debtors and the Reorganized Debtors will transfer to the EBS
Building, L.L.C.: (a) the right to receive the Corporate Headquarters
Building Proceeds if the Debtors or Reorganized Debtors have, as of the
Effective Date, entered into a contract to sell, sell and lease back or
otherwise dispose of the Corporate Headquarters Building and all of the
Corporate Headquarters Building Proceeds have not been received by the
Debtors prior to the Effective Date; provided, however, that if such
contract does not thereafter result in the sale or other disposition
contemplated thereby within 60 days after the Effective Date, the
Debtors shall promptly transfer the Corporate Headquarters Building to
the EBS Building, L.L.C., or (b) if no such contract to sell, sell and
lease back or otherwise dispose of the Corporate Headquarters Building
has been entered into as of the Effective Date, the Corporate
Headquarters Building.
(c) Exceptions to Transfers. If, prior to the Effective Date, the
Debtors have received the Pension Plan Proceeds, the Pension Plan Proceeds
shall be added to the Cash Distribution Pool pursuant to Section 1.15
hereof and the EBS Pension, L.L.C. shall be terminated. If, prior to the
Effective Date, the Debtors have received the Corporate Headquarters
Building Proceeds, the Corporate Headquarters Building Proceeds shall be
added to the Cash Distribution Pool pursuant to Section 1.15 hereof and the
EBS Building, L.L.C. shall be terminated. If, as of the Effective Date,
there are no Unresolved Avoidance Claims and the Resolved Avoidance Claims
Proceeds have been added to the Cash Distribution Pool pursuant to Section
1.15 hereof, the EBS Litigation, L.L.C. shall be terminated.
(d) Funding of the LLCs. On the Effective Date, the Debtors or
Reorganized Debtors shall transfer to the EBS Litigation, L.L.C., the EBS
Pension, L.L.C. and the EBS Building, L.L.C. the LLC Funding Amount in the
respective amounts designated to the Debtors by the Creditors' Committee,
in writing, within 10 days prior to the Confirmation Date.
(e) Corporate Headquarters Building Lease. Subject to Section 5.1(c)
of the Plan, on the Effective Date, the EBS Building, L.L.C., as lessor,
and Reorganized Edison, as lessee, shall enter into the Corporate
Headquarters Building Lease.
(f) Indemnification. Except with respect to any Unresolved Avoidance
Claims that the EBS Litigation, L.L.C. may have against present or former
officers, directors or employees of the Debtors in their capacities other
than as present or former officers, directors or employees, the EBS
Litigation, L.L.C. and the EBS Pension, L.L.C. shall indemnify, defend and
hold harmless the Reorganized Debtors and their present or former officers,
directors and employees (the Indemnified Parties ) from and against any
direct losses, claims, damages, expenses, liabilities and actions arising
from or relating to the EBS Litigation, L.L.C and any actions taken or
proceedings commenced by the EBS Litigation, L.L.C. (the LLC Related
Claims ); provided, however, that the foregoing indemnification (except
with respect to costs and expenses as provided in the penultimate sentence
of this Section 5.1(f)) shall be satisfied solely from the funds, if any,
received by the EBS Litigation, L.L.C. from the compromise and settlement
or successful prosecution of the Unresolved Avoidance Claims. As more
particularly set forth in the EBS Pension LLC Members Agreement, the EBS
Pension, L.L.C. shall establish a reserve from the Pension Plan Proceeds
for the benefit of the Indemnified Parties in the amount of $1,500,000 to
pay the costs and expenses incurred by the Indemnified Parties in defending
against the LLC Related Claims; provided, however, that the Indemnified
Parties shall, in the first instance, seek payment of the costs and
expenses of defending against the LLC Related Claims from any applicable
officers' and directors' insurance policy, as such costs and expenses are
incurred. Any amounts remaining in the reserve upon the final
adjudication, including any appeals, of the LLC Related Claims or the
compromise and settlement of such claims, shall be released and distributed
pursuant to the terms of the EBS Pension LLC Members Agreement.
5.2. Funding Escrow.
(a) Creation of the Funding Escrow. On the Effective Date, pursuant
to section 1123(b)(3)(B) of the Bankruptcy Code, the Funding Escrow shall
be created and governed by the Funding Escrow Agreement for the benefit of
the Reorganized Debtors and holders of New Notes.
(b) Funding Escrow Assets. On the Effective Date, Reorganized Edison
shall enter into the Funding Escrow Agreement and deposit the Funding
Escrow Assets in the Funding Escrow for the purpose of prefunding the
interest payments required to be made by Reorganized Edison under the New
Notes through and including July 31, 2000. Pursuant to the Funding Escrow
Agreement, Reorganized Edison shall (i) have the right in its sole
discretion to direct the Funding Escrow Agent to transfer to Reorganized
Edison Cash from the Funding Escrow in amounts necessary to pay the
interest payments required under the New Notes through and including July
31, 2000, (ii) have the right in its sole discretion to cause the Funding
Escrow Agent to deliver to Reorganized Edison any documents of title to
enable Reorganized Edison to sell, sell and lease back or otherwise dispose
of one or more of the Funding Escrow Properties and retain the proceeds
therefrom in the Funding Escrow, (iii) have the right to use of the Funding
Escrow Properties for no cost at all times during the existence of the
Funding Escrow, unless and until the Funding Escrow Properties are sold,
sold and leased back or otherwise disposed of pursuant to this Section
5.2(b) and the Funding Escrow Agreement, (iv) be required to pay the taxes
relating to and operating costs of the Funding Escrow Properties, unless
and until the Funding Escrow Properties are sold, sold and leased back or
otherwise disposed of pursuant to this Section 5.2(b) and the Funding
Escrow Agreement and (v) have the right in its sole discretion to
substitute $14,000,000 in Cash for the Funding Escrow Properties at any
time during the existence of the Funding Escrow, unless and until the
Funding Escrow Properties are sold, sold and leased back or otherwise
disposed of pursuant to this Section 5.2(b) and the Funding Escrow
Agreement; provided, however, that if the Debtors have, prior to the
Effective Date, entered into a contract to sell, sell and lease back or
otherwise dispose of one or more of the Funding Escrow Properties, the Cash
proceeds of such transaction or, if such Cash proceeds have not been
received prior to the Effective Date, the right to receive such Cash
proceeds, shall be transferred into the Funding Escrow pursuant to Section
1.70 of the Plan and the amount of Cash that Reorganized Edison may
substitute for the Funding Escrow Properties ($14,000,000) shall be reduced
by the Cash proceeds of such transaction or transactions. Provided that
all interest payments required under the New Notes have been paid by
Reorganized Edison through and including July 31, 2000, any funds in the
Funding Escrow that have not been distributed and the Funding Escrow
Properties that have not been sold or otherwise disposed of by the Funding
Escrow Agent on or before August 1, 2000, shall be returned to Reorganized
Edison by the Funding Escrow Agent free and clear of all claims, liens,
encumbrances and contractually imposed restrictions arising under or
related to the Funding Escrow Agreement and the Plan and any documents or
instruments relating thereto.
(c) Funding Escrow Mortgages. The Funding Escrow Agent shall be
granted the Funding Escrow Mortgages to secure the payment of interest by
Reorganized Edison on the New Notes for the first three years; provided,
however, that if the Debtors have, prior to the Effective Date, entered
into a contract to sell, sell and lease back or otherwise dispose of one or
more of the Funding Escrow Properties, there shall be no Funding Escrow
Mortgage on such Funding Escrow Property or Funding Escrow Properties;
provided, further, that if such contract does not thereafter result in the
sale or other disposition contemplated thereby within 60 days after the
Effective Date, there shall be a Funding Escrow Mortgage on such Funding
Escrow Property or Funding Escrow Properties. Upon Reorganized Edison's
payment of all interest payments required to be made under the New Notes
through and including July 31, 2000 or upon the consummation by Reorganized
Edison of its right to substitute Cash for the Funding Escrow Properties,
as described in Section 5.2(b) of the Plan, all of the Funding Escrow
Mortgages shall be released. Upon the consummation by Reorganized Edison
of a sale, sale and lease back or other disposition of one of the Funding
Escrow Properties, as described in and subject to Section 5.2(b) of the
Plan, the corresponding Funding Escrow Mortgage shall be released.
(d) Funding Escrow Agent. The Funding Escrow Agent shall be appointed
by the Debtors by no later than 10 days prior to the date of the
Confirmation Hearing. The name of the person appointed in that capacity
shall be disclosed at or prior to the Confirmation Hearing. The Funding
Escrow Agent shall serve for the duration of the Funding Escrow subject to
his or her earlier death, resignation, incapacity or removal as provided in
the Funding Escrow Agreement.
(e) Powers of Funding Escrow Agent. From and after the Effective
Date, the Funding Escrow Agent's powers shall be as provided for in the
Funding Escrow Agreement.
(f) Distribution of Funding Escrow Assets. The Funding Escrow Assets
shall be distributed in accordance with the provisions of the Plan and the
Funding Escrow Agreement.
(g) Term of Funding Escrow. The Funding Escrow and the Funding Escrow
Agreement shall terminate on the thirtieth day after the distribution of
all of the Funding Escrow Assets in accordance with the provisions of the
Plan and the Funding Escrow Agreement.
(h) Indemnification. The Funding Escrow shall indemnify, defend and
hold harmless the Reorganized Debtors and their officers, directors and
employees from and against any losses, claims, damages, expenses,
liabilities and actions arising from or relating to the Funding Escrow.
5.3. Pension Plan. The Debtors and Reorganized Debtors shall take all
actions necessary and appropriate to generate the Pension Plan Proceeds.
Except as provided in Section 5.1(c) of the Plan, the Pension Plan Proceeds
shall be transferred to the EBS Pension, L.L.C. in accordance with Section
5.1(b) of the Plan.
ARTICLE VI.
PROVISIONS REGARDING VOTING AND DISTRIBUTIONS
UNDER THE PLAN AND TREATMENT OF DISPUTED,
CONTINGENT AND UNLIQUIDATED ADMINISTRATIVE
EXPENSE CLAIMS, CLAIMS AND EQUITY INTERESTS
6.1. Voting of Claims and Equity Interests. Each holder of an Allowed
Claim or an Allowed Equity Interest in an impaired Class of Claims or
Equity Interests shall be entitled to vote separately to accept or reject
the Plan as provided in such order as is entered by the Bankruptcy Court
establishing certain procedures with respect to the solicitation and
tabulation of votes to accept or reject the Plan, or any other order or
orders of the Bankruptcy Court.
6.2. Nonconsensual Confirmation. If any impaired Class of Claims or
Equity Interests entitled to vote shall not accept the Plan by the
requisite statutory majorities provided in sections 1126(c) or 1126(d) of
the Bankruptcy Code, as applicable, the Debtors reserve the right to amend
the Plan in accordance with Section 13.10 hereof or undertake to have the
Bankruptcy Court confirm the Plan under section 1129(b) of the Bankruptcy
Code or both.
6.3. Method of Distributions Under the Plan.
(a) In General. Subject to Bankruptcy Rule 9010, all distributions
under the Plan shall be made by Reorganized Edison to the holder of each
Allowed Claim at the address of such holder as listed on the Schedules as
of the Record Date, and to the holder of each Allowed Edison Equity
Interest at the address of such holder as listed in the transfer ledger for
Edison Equity Interests as of the Record Date, unless the Debtors or
Reorganized Debtors have been notified in writing of a change of address,
including, without limitation, by the filing of a proof of Claim or Equity
Interest by such holder that provides an address for such holder different
from the address reflected on the Schedules (for holders of Allowed Claims)
or on the transfer ledger as of the Record Date (for holders of Allowed
Edison Equity Interests).
(b) Distributions of Cash. Any payment of Cash made by Reorganized
Edison pursuant to the Plan shall be made by check drawn on a domestic
bank.
(c) Timing of Distributions. Any payment or distribution required to
be made under the Plan on a day other than a Business Day shall be made on
the next succeeding Business Day.
(d) Hart-Scott-Rodino Compliance. Any shares of New Common Stock to
be distributed under the Plan to any entity required to file a Premerger
Notification and Report Form under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, shall not be distributed until the
notification and waiting periods applicable under such Act to such entity
shall have expired or been terminated.
(e) Minimum Distributions. No payment of Cash less than one-hundred
dollars shall be made by Reorganized Edison to any holder of a Claim unless
a request therefor is made in writing to Reorganized Edison.
(f) Fractional Shares, Rights, Warrants or Class A Membership Units;
Multiples of New Notes. No fractional shares of New Common Stock,
fractional Rights, fractional Warrants or fractional Class A Membership
Units or Cash in lieu thereof shall be distributed under the Plan. When
any distribution on account of an Allowed Claim or Allowed Edison Equity
Interest pursuant to the Plan would otherwise result in the issuance of a
number of shares of New Common Stock, Rights, Warrants or Class A
Membership Units that is not a whole number, the actual distribution of
shares of New Common Stock, Rights, Warrants or Class A Membership Units
shall be rounded as follows: (i) fractions of 1/2 or greater shall be
rounded to the next higher whole number and (ii) fractions of less than 1/2
shall be rounded to the next lower whole number. The total number of
shares of New Common Stock, Rights, Warrants or Class A Membership Units to
be distributed to a Class of Claims or Edison Equity Interests, as the case
may be, shall be adjusted as necessary to account for the rounding provided
in this Section 6.3(f). New Notes shall only be issued in multiples of
$1,000. Any New Notes that would otherwise have been distributed in
multiples of other than $1,000 shall be aggregated by the indenture trustee
under the New Notes Indentures or the Disbursing Agent and sold. The Cash
proceeds from such sale shall be distributed on a pro rata basis to those
holders of Allowed General Unsecured Claims that would have been entitled
to New Notes in multiples of other than $1,000.
(g) Unclaimed Distributions. Except with respect to distributions
under the Plan to holders of Allowed General Unsecured Claims, any
distributions under the Plan that are unclaimed for a period of one year
after distribution thereof shall be revested in Reorganized Edison and any
entitlement of any holder of any Claim or Equity Interest to such
distributions shall be extinguished and forever barred. Distributions
under the Plan to holders of Allowed General Unsecured Claims that are
unclaimed for a period of one year after distribution thereof shall be
added to the Reserve and any entitlement of such holders of Allowed General
Unsecured Claims to such distributions shall be extinguished and forever
barred.
(h) Distributions to Holders as of the Record Date. As at the close
of business on the Record Date, the claims register (for Claims) and the
transfer ledgers (for Edison Equity Interests) shall be closed, and there
shall be no further changes in the record holders of any Claims or Edison
Equity Interests. Edison and Reorganized Edison shall have no obligation
to recognize any transfer of any Claims or Edison Equity Interests
occurring after the Record Date. Edison and Reorganized Edison shall
instead be entitled to recognize and deal for all purposes under the Plan
(except as to voting to accept or reject the Plan pursuant to Section 6.1
of the Plan) with only those record holders stated on the claims register
(for Claims) and transfer ledgers (for Edison Equity Interests) as of the
close of business on the Record Date.
6.4. General Unsecured Claims.
(a) Cash Held Prior to the Initial Distribution Date. On the
Effective Date, Reorganized Edison shall deposit the Cash in the Cash
Distribution Pool in a segregated bank account or accounts. Reorganized
Edison shall invest the Cash held in such account or accounts in a manner
consistent with investment guidelines to be agreed upon by the Debtors and
the Creditors' Committee, which investment guidelines shall be included in
the Plan Supplement. Reorganized Edison shall pay, or cause to be paid,
out of the funds held in such account or accounts, any tax imposed on such
account by any governmental unit with respect to income generated by the
property held in such account or accounts. The yield earned on such
invested Cash for the period commencing on the Effective Date and
continuing through and including the Initial Distribution Date (net of
applicable taxes), shall be distributed to each holder of an Allowed
General Unsecured Claim on the Initial Distribution Date, based upon each
holders' Pro Rata Share.
(b) Membership Units. On the Effective Date, Reorganized Edison shall
hold 100% of the Class B Membership Units. In connection with each
distribution of Class A Membership Units under the Plan, Reorganized Edison
will surrender for cancellation a number of Class B Membership Units in
each of the EBS Litigation, L.L.C., the EBS Pension, L.L.C. and the EBS
Building, L.L.C. equal to the number of Class A Membership Units in each
such LLC that are to be distributed under the Plan, and will receive in
exchange therefor, for distribution under the Plan, a like number of Class
A Membership Units in such LLC.
(c) Distributions Withheld for Disputed General Unsecured Claims.
(i) Establishment and Maintenance of Reserve. On the Initial
Distribution Date and each Subsequent Distribution Date, Reorganized
Edison shall reserve from the distributions to be made on such dates to
the holders of Allowed General Unsecured Claims, an amount of Cash, New
Notes and New Common Stock equal to 100% of the distributions to which
holders of Disputed General Unsecured Claims would be entitled under
the Plan as of such dates if such Disputed General Unsecured Claims
were Allowed Claims in their Disputed Claim Amounts (the Reserve ).
Subject to Section 6.4(b) of the Plan, Reorganized Edison shall also
hold in the Reserve the Class B Membership Units.
(ii) Property Held in Reserve. Cash held in the Reserve (including
interest paid on New Notes held in the Reserve and dividends paid on
New Common Stock held in the Reserve, if any) shall be deposited in a
segregated bank account or accounts in the name of Reorganized Edison
and designated as held in trust for the benefit of holders of Allowed
General Unsecured Claims. Cash held in the Reserve shall not
constitute property of the Reorganized Debtors. Reorganized Edison
shall invest the Cash held in the Reserve in a manner consistent with
investment guidelines to be agreed upon by the Debtors and the
Creditors' Committee, which investment guidelines shall be included in
the Plan Supplement. Reorganized Edison shall pay, or cause to be
paid, out of the funds held in the Reserve, any tax imposed on the
Reserve by any governmental unit with respect to income generated by
the property held in the Reserve. The yield earned on such invested
Cash (net of applicable taxes) shall be distributed to each holder of
an Allowed General Unsecured Claim on the last Subsequent Distribution
Date under the Plan, based upon each holders' Pro Rata Share. New
Notes, New Common Stock and Class B Membership Interests held in the
Reserve shall be held in trust by the Reorganized Debtors for the
benefit of the potential claimants of such securities and shall not
constitute property of the Reorganized Debtors.
(d) Distributions Upon Allowance of Disputed General Unsecured Claims.
The holder of a Disputed General Unsecured Claim that becomes an Allowed
Claim subsequent to the Initial Distribution Date shall receive
distributions of Cash, New Notes and New Common Stock from the Reserve and,
in accordance with Section 6.4(b) of the Plan, Class A Membership Units, on
the next Subsequent Distribution Date that follows the Quarter during which
such Disputed General Unsecured Claim becomes an Allowed Claim pursuant to
a Final Order. Such distributions shall be made in accordance with the
Plan based upon the distributions that would have been made to such holder
under the Plan if the Disputed General Unsecured Claim had been an Allowed
Claim on or prior to the Effective Date, without any post-Effective Date
interest thereon (without regard to interest earned on property held in the
Reserve pursuant to Section 6.4 of the Plan).
(e) Surplus Distributions to Holders of Allowed General Unsecured
Claims. The following consideration shall constitute surplus distributions
(the Surplus Distributions ) pursuant to the Plan: (i) pursuant to
Section 6.3(g) of the Plan, distributions under the Plan to holders of
Allowed General Unsecured Claims that are unclaimed for a period of one
year after distribution thereof; (ii) to the extent that a Disputed General
Unsecured Claim is not Allowed or becomes an Allowed Claim in an amount
less than the Disputed Claim Amount, the excess of the amount of Cash, New
Notes and New Common Stock in the Reserve over the amount of Cash, New
Notes and New Common Stock actually distributed on account of such Disputed
General Unsecured Claim; and (iii) to the extent that a Disputed General
Unsecured Claim is not Allowed or becomes an Allowed Claim in an amount
less than the Disputed Claim Amount, a number of Class A Membership Units
equal to the number of Class B Membership Units held in the Reserve on
account of such excess. The Surplus Distributions shall be distributed to
the holders of Allowed General Unsecured Claims pursuant to Section
4.7(b)(ii) of the Plan; provided, however, that Reorganized Edison shall
not be under any obligation to make any Surplus Distributions on a
Subsequent Distribution Date unless the Cash portion of the Surplus
Distributions to be distributed on a Subsequent Distribution Date
aggregates $1,000,000 or more, unless the distribution is the last
distribution under the Plan.
(f) Personal Injury Tort Claims. All personal injury Tort Claims are
Disputed Claims. Any personal injury Tort Claim as to which a proof of
claim was timely filed in the Chapter 11 Cases shall be determined and
liquidated in the administrative or judicial tribunal(s) in which it is
pending on the Effective Date or, if no action was pending on the Effective
Date, in any administrative or judicial tribunal of appropriate
jurisdiction, or in accordance with any alternative dispute resolution or
similar proceeding as same may be approved by order of the Bankruptcy
Court. Any personal injury Tort Claim determined and liquidated (i)
pursuant to a judgment obtained in accordance with this Section 6.4(f) and
applicable nonbankruptcy law which is no longer appealable or subject to
review, or (ii) in any alternative dispute resolution or similar proceeding
as same may be approved by order of the Bankruptcy Court, shall be deemed
an Allowed Claim in such liquidated amount and satisfied in accordance with
the Plan. Nothing contained in this Section 6.4(f) shall impair the
Debtors' right to seek estimation of any and all personal injury Tort
Claims in a court or courts of competent jurisdiction or constitute or be
deemed a waiver of any Cause of Action that the Debtors may hold against
any entity, including, without limitation, in connection with or arising
out of any personal injury Tort Claim.
(g) Disbursing Agent. The Debtors or the Reorganized Debtors will
appoint a disbursing agent (the Disbursing Agent ) to (i) fulfill the
obligations that the Reorganized Debtors have under the Plan with respect
to distributions to holders of Allowed General Unsecured Claims, including,
without limitation, holding all reserves and accounts pursuant to the Plan,
including the Reserve, and (ii) effectuate the D&B Spinoff Settlement on
behalf of the EBS Litigation, L.L.C., pursuant to Section 10.2 of the Plan.
6.5. Objections to and Resolution of Administrative Expense Claims,
Claims and Equity Interests.
(a) Except as to applications for allowances of compensation and
reimbursement of expenses under sections 330 and 503 of the Bankruptcy
Code, the Debtors or Reorganized Debtors shall have the exclusive right to
make and file objections to Administrative Expense Claims, Claims and
Equity Interests subsequent to the Confirmation Date. All objections shall
be litigated to Final Order; provided, however, that, subject to Section
6.5(b) of the Plan, the Reorganized Debtors shall have the authority to
compromise, settle, otherwise resolve or withdraw any objections, without
approval of the Bankruptcy Court. Unless otherwise ordered by the
Bankruptcy Court, the Debtors or Reorganized Debtors shall file all
objections to Administrative Expense Claims that are the subject of proofs
of claim or requests for payment filed with the Bankruptcy Court (other
than applications for allowances of compensation and reimbursement of
expenses), Claims and Equity Interests and serve such objections upon the
holder of the Administrative Expense Claim, Claim or Equity Interest as to
which the objection is made as soon as is practicable, but in no event
later than 60 days after the Effective Date or such later date as may be
approved by the Bankruptcy Court.
(b) On the last day of each month or as otherwise agreed to in writing
by the Debtors and the Creditors' Committee, the Reorganized Debtors shall
provide counsel to the Claims Resolution Committee with written notice by
overnight delivery service or facsimile transmission of each Disputed Claim
that they intend to compromise, settle or resolve, other than such
compromises, settlements or resolutions that fall within the parameters of
(i) prior orders of the Bankruptcy Court authorizing the Debtors to
compromise or settle certain Claims without approval of the Bankruptcy
Court, (ii) settlement guidelines to be agreed upon by the Debtors and the
Creditors' Committee prior to the Confirmation Date, or (iii) settlement
guidelines to be agreed upon by the Debtors and the Claims Resolution
Committee subsequent to the Effective Date. Within 15 days after the
receipt of such notice, the Claims Resolution Committee shall provide the
Reorganized Debtors with written notice of any such compromises,
settlements or resolutions with which it does not concur. If the
Reorganized Debtors and the Claims Resolution Committee cannot reach
agreement with respect to any such compromise, settlement or resolution,
the Claims Resolution Committee will be permitted to file with the
Bankruptcy Court and serve on the Reorganized Debtors an objection to the
reasonableness of any such compromise, settlement or resolution within 15
days after the date that the Claims Resolution Committee provides the
Reorganized Debtors with written notice of such compromise, settlement or
resolution with which it does not concur, or within such other time period
as may be agreed upon by the Reorganized Debtors and the Creditors'
Committee, and the reasonableness of such compromise, settlement or
resolution shall be determined by the Bankruptcy Court. If the Claims
Resolution Committee fails to timely file and serve an objection to a
compromise, settlement or resolution, such compromise, settlement or
resolution shall be deemed resolved on the terms and subject to the
conditions agreed to by the Reorganized Debtors. Notwithstanding the
foregoing, the Claims Resolution Committee shall have the authority to
compromise, settle or resolve any Disputed Claim without the consent of the
Reorganized Debtors.
6.6. Distributions Relating to Allowed Insured Claims. Distributions
under the Plan to each holder of an Allowed Insured Claim shall be in
accordance with the treatment provided under the Plan for the Class in
which such Allowed Insured Claim is classified, but solely to the extent
that such Allowed Insured Claim is not satisfied from proceeds payable to
the holder thereof under any pertinent insurance policies and applicable
law. Nothing contained in this Section 6.6 shall constitute or be deemed a
waiver of any Cause of Action that the Debtors or any entity may hold
against any other entity, including, without limitation, insurers under any
policies of insurance.
6.7. Cancellation and Surrender of Existing Securities and Agreements.
(a) On the Effective Date, the promissory notes, share certificates,
bonds and other instruments evidencing any Claim or Edison Equity Interest
shall be deemed cancelled without further act or action under any
applicable agreement, law, regulation, order or rule and the obligations of
the Debtors under the agreements, indentures and certificates of
designations governing such Claims and Edison Equity Interests, as the case
may be, shall be discharged.
(b) Each holder of a promissory note, share certificate, bond or other
instrument evidencing a Claim or Edison Equity Interest shall surrender
such promissory note, share certificate, bond or instrument to the
Reorganized Debtors, unless such requirement is waived by the Reorganized
Debtors. No distribution of property hereunder shall be made to or on
behalf of any such holders unless and until such promissory note, share
certificate, bond or instrument is received by the Reorganized Debtors or
the unavailability of such promissory note, share certificate, bond or
instrument is established to the reasonable satisfaction of the Reorganized
Debtors or such requirement is waived by the Reorganized Debtors. The
Reorganized Debtors may require any holder that is unable to surrender or
cause to be surrendered any such promissory notes, share certificates,
bonds or instruments to deliver an affidavit of loss and indemnity and/or
furnish a bond in form and substance (including, without limitation, with
respect to amount) reasonably satisfactory to the Reorganized Debtors. Any
holder that fails within the later of one year after the Confirmation Date
and the date of Allowance of its Claim or Edison Equity Interest (i) if
possible, to surrender or cause to be surrendered such promissory note,
share certificate, bond or instrument, (ii) if requested, to execute and
deliver an affidavit of loss and indemnity reasonably satisfactory to the
Reorganized Debtors and (iii) if requested, to furnish a bond reasonably
satisfactory to the Reorganized Debtors, shall be deemed to have forfeited
all rights, claims and Causes of Action against the Debtors and Reorganized
Debtors and shall not participate in any distribution hereunder.
6.8. Registration of New Common Stock. Each person or entity receiving
a distribution of New Common Stock pursuant to the Plan representing at
least 10% of the aggregate New Common Stock issuable pursuant to the Plan
shall be entitled to become a party to the Registration Rights Agreement.
6.9. Listing of New Common Stock, New Notes and Warrants. Reorganized
Edison shall use reasonable commercial efforts to cause the shares of New
Common Stock, the New Notes and the Warrants to be listed on a national
securities exchange or the Nasdaq National Market.
6.10. Full Recovery for Holders of Allowed General Unsecured Claims.
Holders of Allowed General Unsecured Claims will not be deemed to have
received 100% of the value of their Allowed General Unsecured Claims unless
and until the aggregate value of all distributions to such holders under
the Plan equals the amount of their Allowed General Unsecured Claims, plus
interest from the Commencement Date through and including the Effective
Date at a rate of 8.89%.
ARTICLE VII.
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
7.1. Assumption or Rejection of Executory Contracts and Unexpired
Leases.
(a) Executory Contracts and Unexpired Leases. Pursuant to sections
365(a) and 1123(b)(2) of the Bankruptcy Code, all executory contracts and
unexpired leases that exist between the Debtors and any person shall be
deemed assumed by the Reorganized Debtors as of the Effective Date, except
for any executory contract or unexpired lease (i) which has been assumed
pursuant to an order of the Bankruptcy Court entered prior to the
Confirmation Date, (ii) which has been rejected pursuant to an order of the
Bankruptcy Court entered prior to the Confirmation Date, (iii) as to which
a motion for approval of the rejection of such executory contract or
unexpired lease has been filed and served prior to the Confirmation Date or
(iv) which is set forth in Schedule 7.1(a)(x) (executory contracts) or
Schedule 7.1(a)(y) (unexpired leases), which Schedules shall be included in
the Plan Supplement; provided, however, that the Debtors or Reorganized
Debtors reserve the right, on or prior to the Confirmation Date, to amend
Schedules 7.1(a)(x) or 7.1(a)(y) to delete any executory contract or
unexpired lease therefrom or add any executory contract or unexpired lease
thereto, in which event such executory contract(s) or unexpired lease(s)
shall be deemed to be, respectively, assumed or rejected. The Debtors or
Reorganized Debtors shall provide notice of any amendments to Schedules
7.1(a)(x) or 7.1(a)(y) to the parties to the executory contracts and
unexpired leases affected thereby. The listing of a document on Schedules
7.1(a)(x) and 7.1(a)(y) shall not constitute an admission by the Debtors or
Reorganized Debtors that such document is an executory contract or an
unexpired lease or that the Debtors or Reorganized Debtors have any
liability thereunder.
(b) Schedules of Rejected Executory Contracts and Unexpired Leases;
Inclusiveness. Each executory contract and unexpired lease listed or to be
listed on Schedules 7.1(a)(x) or 7.1(a)(y) that relates to the use or
occupancy of real property shall include (i) modifications, amendments,
supplements, restatements, or other agreements made directly or indirectly
by any agreement, instrument, or other document that in any manner affects
such executory contract or unexpired lease, without regard to whether such
agreement, instrument or other document is listed on Schedules 7.1(a)(x) or
7.1(a)(y) and (ii) executory contracts or unexpired leases appurtenant to
the premises listed on Schedules 7.1(a)(x) or 7.1(a)(y), including, without
limitation, all easements, licenses, permits, rights, privileges, immuni
ties, options, rights of first refusal, powers, uses, usufructs, reciprocal
easement agreements, vault, tunnel or bridge agreements or franchises, and
any other interests in real estate or rights in rem relating to such
premises to the extent any of the foregoing are executory contracts or
unexpired leases, unless any of the foregoing agreements previously have
been assumed.
(c) Insurance Policies. Each of the Debtors' insurance policies and
any agreements, documents or instruments relating thereto, including,
without limitation, any retrospective premium rating plans relating to such
policies, are treated as executory contracts under the Plan.
Notwithstanding the foregoing, distributions under the Plan to any holder
of a Claim covered by any of such insurance policies and related
agreements, documents or instruments that are assumed hereunder, shall be
in accordance with the treatment provided under Article IV and Section 6.6
of the Plan. Nothing contained in this Section 7.1(c) shall constitute or
be deemed a waiver of any Cause of Action that the Debtors may hold against
any entity, including, without limitation, the insurer under any of the
Debtors' policies of insurance.
(d) Approval of Assumption or Rejection of Executory Contracts and
Unexpired Leases. Entry of the Confirmation Order shall constitute (i) the
approval, pursuant to sections 365(a) and 1123(b)(2) of the Bankruptcy
Code, of the assumption of the executory contracts and unexpired leases
assumed pursuant to Section 7.1(a) hereof, (ii) the extension of time,
pursuant to section 365(d)(4) of the Bankruptcy Code, within which the
Debtors may assume or reject the unexpired leases specified in Section
7.1(a) hereof through the date of entry of an order approving the
assumption or rejection of such unexpired leases and (iii) the approval,
pursuant to sections 365(a) and 1123(b)(2) of the Bankruptcy Code, of the
rejection of the executory contracts and unexpired leases rejected pursuant
to Sections 7.1(a) hereof.
(e) Cure of Defaults. Except as may otherwise be agreed to by the
parties, within 60 days after the Effective Date, the Reorganized Debtors
shall cure any and all undisputed defaults under any executory contract or
unexpired lease assumed pursuant to the Plan in accordance with section
365(b)(1) of the Bankruptcy Code. All disputed defaults that are required
to be cured shall be cured either within 30 days of the entry of a Final
Order determining the amount, if any, of the Debtors' or Reorganized
Debtors' liability with respect thereto, or as may otherwise be agreed to
by the parties.
(f) Bar Date for Filing Proofs of Claim Relating to Executory
Contracts and Unexpired Leases Rejected Pursuant to the Plan. Claims
arising out of the rejection of an executory contract or unexpired lease
pursuant to Section 7.1 of the Plan must be filed with the Bankruptcy Court
and/or served upon the Debtors or Reorganized Debtors or as otherwise may
be provided in the Confirmation Order, by no later than 30 days after the
later of (i) notice of entry of an order approving the rejection of such
executory contract or unexpired lease, (ii) notice of entry of the
Confirmation Order and (iii) notice of an amendment to Schedule 7.1(a)(x)
or 7.1(a)(y). Any Claims not filed within such time will be forever barred
from assertion against the Debtors, their estates, the Reorganized Debtors
and their property. Unless otherwise ordered by the Bankruptcy Court, all
Claims arising from the rejection of executory contracts and unexpired
leases shall be treated as General Unsecured Claims under the Plan.
7.2. Releases. The Debtors hereby release and are permanently enjoined
from any prosecution or attempted prosecution of any and all Causes of
Action which they have, may have or claim to have against any present or
former director, officer or employee of the Debtors; provided, however,
that the foregoing shall not operate as a waiver of or release from (i) any
Causes of Action arising out of any express contractual obligation owing by
any such director, officer or employee to the Debtors or any reimbursement
obligation of any such director, officer or employee with respect to a loan
or advance made by the Debtors to such director, officer or employee and
(ii) any Avoidance Claims that any such director, officer or employee may
be subject to in their capacities other than as present or former director,
officer or employee.
7.3. Indemnification Obligations. For purposes of the Plan, the
obligations of the Debtors to defend, indemnify, reimburse or limit the
liability of their present and any former directors, officers or employees
who were directors, officers or employees, respectively, on or after the
Commencement Date against any claims or obligations pursuant to the
Debtors' certificates of incorporation or bylaws, applicable state law or
specific agreement, or any combination of the foregoing, shall survive
confirmation of the Plan, remain unaffected thereby, and not be discharged
irrespective of whether indemnification, defense, reimbursement or
limitation is owed in connection with an event occurring before, on or
after the Commencement Date.
7.4. Compensation and Benefit Programs. Except as provided in Section
7.1(a) of the Plan, all employment and severance practices and policies,
and all compensation and benefit plans, policies, and programs of the
Debtors applicable to their directors, officers or employees, including,
without limitation, all savings plans, retirement plans, health care plans,
severance benefit plans, incentive plans, workers' compensation programs
and life, disability and other insurance plans are treated as executory
contracts under the Plan and are hereby assumed pursuant to sections 365(a)
and 1123(b)(2) of the Bankruptcy Code.
7.5. Retiree Benefits. Payments, if any, due to any person for the
purpose of providing or reimbursing payments for retired employees and
their spouses and dependents for medical, surgical, or hospital care
benefits, or benefits in the event of sickness, accident, disability, or
death under any plan, fund, or program (through the purchase of insurance
or otherwise) maintained or established in whole or in part by the Debtors
prior to the Commencement Date shall be continued for the duration of the
period the Debtors have obligated themselves to provide such benefits.
ARTICLE VIII.
CONSOLIDATION OF EDISON AND THE SUBSIDIARIES
8.1. Substantive Consolidation. By order dated May 13, 1997, the
Bankruptcy Court approved the substantive consolidation of the Chapter 11
Cases for all purposes related to the Plan, including, without limitation,
for purposes of voting, confirmation and distribution. Pursuant to such
order, (i) all assets and liabilities of the Subsidiaries shall be deemed
merged or treated as though they were merged into and with the assets and
liabilities of Edison, (ii) no distributions shall be made under the Plan
on account of intercompany claims among the Debtors, (iii) no distributions
shall be made under the Plan on account of Subsidiary Equity Interests,
(iv) all guarantees of the Debtors of the obligations of any other Debtor
shall be deemed eliminated so that any claim against any Debtor and any
guarantee thereof executed by any other Debtor and any joint or several
liability of any of the Debtors shall be deemed to be one obligation of the
consolidated Debtors and (v) each and every Claim filed or to be filed in
the Chapter 11 Case of any of the Debtors shall be deemed filed against the
consolidated Debtors, and shall be deemed one Claim against and obligation
of the consolidated Debtors. Such substantive consolidation shall not
(other than for purposes related to the Plan) affect (i) the legal and
corporate structures of the Reorganized Debtors, subject to the right of
the Debtors or Reorganized Debtors to effect restructurings as provided in
Section 8.2 of the Plan, (ii) intercompany claims by and among the Debtors
or Reorganized Debtors, (iii) Subsidiary Equity Interests and (iv) pre and
post Commencement Date guarantees that are required to be maintained (a) in
connection with executory contracts or unexpired leases that were entered
into during the Chapter 11 Cases or that have been or will be assumed, or
(b) pursuant to the Plan.
8.2. Merger of Corporate Entities. On or as of the Effective Date,
within the sole and exclusive discretion of the Debtors, any or all of the
Subsidiaries may be merged into one or more of the Debtors or dissolved.
Upon the occurrence of any such merger, all assets of the merged entities
shall be transferred to and become the assets of the surviving corporation,
and all liabilities of the merged entities, except to the extent
discharged, released or extinguished pursuant to the Plan and the
Confirmation Order, shall be assumed by and shall become the liabilities of
the surviving corporation. All mergers and dissolutions shall be effective
as of the Effective Date pursuant to the Confirmation Order without any
further action by the stockholders or directors of any of the Debtors, the
Debtors in Possession or the Reorganized Debtors.
ARTICLE IX.
PROVISIONS REGARDING CORPORATE GOVERNANCE
AND MANAGEMENT OF THE REORGANIZED DEBTORS
9.1. General. On the Effective Date, the management, control and
operation of the Reorganized Debtors shall become the general
responsibility of the respective Boards of Directors of the Reorganized
Debtors, who shall, thereafter, have the responsibility for the management,
control and operation of the Reorganized Debtors.
9.2. Meetings of Reorganized Edison Stockholders. In accordance with
the Amended Edison Certificate of Incorporation and the Amended Edison
Bylaws, as the same may be amended from time to time, the first annual
meeting of the stockholders of Reorganized Edison shall be held on a date
in 1998 selected by the Board of Directors of Reorganized Edison, and
subsequent meetings of the stockholders of Reorganized Edison shall be held
at least once annually each year thereafter.
9.3. Directors and Officers of Reorganized Debtors.
(a) Boards of Directors.
(i) Reorganized Edison. The initial Board of Directors of Reorganized
Edison shall consist of up to nine individuals whose names shall be
disclosed prior to the date of the Confirmation Hearing. Each of the
members of such initial Board of Directors shall serve until the first
annual meeting of stockholders of Reorganized Edison or their earlier
resignation or removal in accordance with the Amended Edison
Certificate of Incorporation or Amended Edison Bylaws, as the same may
be amended from time to time.
(ii) Reorganized Subsidiaries. The initial Board of Directors of each
of the Reorganized Subsidiaries shall consist of officers or employees
of Reorganized Edison whose names shall be disclosed prior to the date
of the Confirmation Hearing. Each of the members of each such initial
Board of Directors shall serve until the first meeting of stockholders
of the respective Reorganized Subsidiary or their earlier resignation
or removal in accordance with the certificate of incorporation or
bylaws of such Reorganized Subsidiary.
(b) Officers. The officers of the respective Debtors immediately
prior to the Effective Date shall serve as the initial officers of the
respective Reorganized Debtors on and after the Effective Date. Such
officers shall serve in accordance with any employment agreement with the
Reorganized Debtors and applicable nonbankruptcy law.
9.4. Amended Bylaws and Amended Certificates of Incorporation. The
Amended Edison Bylaws, the Amended Edison Certificate of Incorporation and
the certificates of incorporation of each of the Reorganized Subsidiaries
shall be amended and restated as of the Effective Date to the extent
necessary (a) to prohibit the issuance of nonvoting equity securities as
required by section 1123(a)(6) of the Bankruptcy Code, subject to further
amendment of such certificates of incorporation and bylaws as permitted by
applicable law and (b) to effectuate the provisions of the Plan, in each
case without any further action by the stockholders or directors of the
Debtors, the Debtors in Possession or the Reorganized Debtors.
9.5. Issuance of New Securities. The issuance of the following
securities and notes by Reorganized Edison, or, as applicable, by the EBS
Litigation, L.L.C., the EBS Pension, L.L.C. and the EBS Building, L.L.C. as
successors in interest to the Debtors with respect to certain Edison
assets, is hereby authorized without further act or action under applicable
law, regulation, order or rule:
(a) 100,000,000 shares of New Common Stock;
(b) the Warrants;
(c) the Rights;
(d) the Series 1997 Bonds;
(e) the New Notes;
(f) the Class A Membership Units and Class B Membership Units;
(g) the Restricted Stock;
(h) the Management Options;
(i) the Director Options; and
(j) 10,000,000 shares of preferred stock.
9.6. Stock Option Plan. If not theretofore adopted by Edison, on the
Effective Date, Reorganized Edison shall adopt the Stock Option Plan.
Pursuant and subject to the Stock Option Plan, Reorganized Edison will
issue to certain of its key employees options to purchase in the aggregate
approximately 800,000 shares of New Common Stock (the Management Options
). Management Options to purchase approximately 500,000 shares of New
Common Stock will be issued as of the Effective Date. The balance of the
Management Options to purchase approximately 300,000 shares of New Common
Stock shall be reserved for issuance by Reorganized Edison within six
months following the Effective Date pursuant and subject to the Stock
Option Plan.
9.7. Director Stock Option Plan. If not theretofore adopted by Edison,
on the Effective Date, Reorganized Edison shall adopt the Director Stock
Option Plan. Pursuant and subject to the Director Stock Option Plan,
Reorganized Edison will make available for issuance to its outside
directors options to purchase in the aggregate approximately 200,000 shares
of New Common Stock (the Director Options ). A Director Option will be
granted to all outside Directors of Reorganized Edison as of the Effective
Date entitling each such person to purchase 3,500 shares of New Common
Stock. Each outside Director who is thereafter elected or appointed also
will receive a Director Option to purchase 3,500 shares of New Common
Stock. In addition, each such Director who remains a Director as of the
completion of the Annual Meeting of Stockholders of Reorganized Edison in
each calendar year following the calendar year in which such Director
received such Director Option granted initially will receive an additional
Director Option to purchase that number of shares of New Common Stock
(rounded to the nearest whole number) equal to $20,000 divided by the Fair
Market Value (as defined in the Director Stock Option Plan) of a share of
New Common Stock as of such date.
9.8. Restricted Stock Agreements. If not theretofore executed by
Edison and its key executives designated to receive Restricted Stock, on
the Effective Date, Reorganized Edison and such key executives shall
execute the Restricted Stock Agreements. Pursuant and subject to the
Restricted Stock Agreements, Reorganized Edison will issue to certain of
its senior executives an aggregate of 225,000 shares of restricted New
Common Stock (the Restricted Stock ). All of the Restricted Stock will be
issued as of the Effective Date.
9.9. Employment Contracts. As of the Effective Date, the Debtors or
Reorganized Debtors will have entered into the Employment Contracts.
9.10. Retention/Performance Bonuses. As of the Effective Date,
Edison or Reorganized Edison will have adopted a retention bonus program
that will result in payments aggregating approximately $750,000 to certain
key executives in 1998, provided that such executives remain employed with
Reorganized Edison through the date of such payments. In addition, as of
the Effective Date, in recognition of the successful restructuring of the
Debtors, Edison or Reorganized Edison will have adopted a bonus program
that will result in payments aggregating approximately $2,200,000 to
certain key executives instrumental to such restructuring.
ARTICLE X.
IMPLEMENTATION AND EFFECT OF CONFIRMATION OF PLAN
10.1. Procedures for Exercise of Rights.
(a) Each Right may be exercised by the holder thereof at any time
during the Rights Exercise Period to purchase, at the Rights Exercise
Price, (i) one share of New Common Stock and (ii) at the election of the
holder thereof, (A) one Class A Membership Unit in the EBS Litigation,
L.L.C. or (B) if such holder is a D&B Spinoff Stockholder, and subject to
the terms and conditions of Sections 10.1(f) and 10.2 of the Plan, the
right to participate in the D&B Spinoff Settlement. All Rights to be
exercised by such holder shall be exercised concurrently. Any exercise of
Rights shall be irrevocable.
(b) The Rights shall be registered on the books of Reorganized Edison
maintained at the principal office of the Rights Agent (the Rights
Register ) as they are issued. Reorganized Edison and the Rights Agent
shall be entitled to treat the registered owner of any Right as the owner
in fact thereof for all purposes and shall not be bound to recognize any
equitable or other claim to or interest in such Right on the part of any
other person. The Rights Agent shall initially register ownership of
Rights in the Rights Register in accordance with the written instructions
of Reorganized Edison. Subject to the terms of this Section 10.1, and the
receipt of such documentation as the Rights Agent may reasonably require,
the Rights Agent shall, on each Business Day during the Rights Exercise
Period, register the transfer of any outstanding Rights upon the Rights
Register upon tender of a written instrument or instruments of transfer in
form reasonably satisfactory to Reorganized Edison and the Rights Agent,
duly executed by the registered holder(s) thereof or by the duly appointed
legal representative thereof or by a duly authorized attorney.
(c) On the date upon which the Rights Exercise Period commences, the
Rights Agent shall mail to each holder of an Allowed Edison Equity Interest
a Rights Exercise Notice together with the Rights Exercise Instructions.
In order for an exercise of Rights to be valid and effective, the holder of
the Rights seeking to effect such an exercise must deliver to the Rights
Agent prior to the Rights Expiration Date a properly completed and duly
executed Rights Exercise Notice which (i) indicates (A) the number of
Rights sought to be exercised and (B) the holder's election of either Class
A Membership Units in EBS Litigation, L.L.C. or the right to participate in
the D&B Spinoff Settlement and (ii) is accompanied by a certified check or
bank draft drawn upon a United States bank or a wire transfer, in an amount
equal to the product of the Rights Exercise Price and the number of Rights
sought to be exercised. The foregoing items will not be deemed to have
been timely delivered to the Rights Agent (and thus the attempted exercise
of Rights will not be valid or effective) unless they are completed and
executed in conformity with the Rights Exercise Instructions and are
actually received by the Rights Agent, at the address specified therefor in
the Rights Exercise Instructions, on or prior to the Rights Expiration
Date.
(d) All determinations as to proper completion, due execution,
timeliness, eligibility and other matters affecting the validity or
effectiveness of any attempted exercise of any Rights shall be made by
Reorganized Edison and the Rights Agent, whose determination shall be final
and binding. The Rights Agent in its sole discretion may waive or reject
the attempted exercise of any Right subject to any such defect or
irregularity. Deliveries required to be received by the Rights Agent in
connection with an attempted exercise of Rights will not be deemed to have
been so received or accepted until actual receipt thereof by the Rights
Agent shall have occurred and any defects or irregularities shall have been
waived or cured within such time as the Rights Agent may determine in its
sole discretion. Neither the Debtors, the Reorganized Debtors or the
Rights Agent will have any obligation to give notice to any holder of a
Right of any defect or irregularity in connection with any attempted
exercise thereof or incur any liability as a result of any failure to give
any such notice.
(e) On or as promptly as practicable following the Initial
Distribution Date, the Rights Agent will mail (or cause to be mailed) to
each holder of Rights who has sought to exercise Rights, a written
statement specifying the number of Rights that were validly and effectively
exercised by such holder and the consideration purchased upon such exercise
of such Rights, together with (i) a stock certificate representing the
shares of New Common Stock so purchased and (ii) if elected by the holder,
a Membership Certificate representing the Class A Membership Units in the
EBS Litigation, L.L.C. so purchased.
(f) Section 10.2 of the Plan shall govern the release (or retention,
as the case may be) of Unresolved Avoidance Claims against D&B Spinoff
Stockholders who attempt to participate in the D&B Spinoff Settlement
through an exercise of Rights pursuant to this Section 10.1.
10.2. The D&B Spinoff Settlement Offer.
(a) Subject to the terms and conditions of this Section 10.2, each D&B
Spinoff Stockholder shall have the right, at any time during the D&B
Spinoff Settlement Period, to participate in the D&B Spinoff Settlement by
qualifying as a Released D&B Spinoff Stockholder.
(b) On the date upon which the D&B Spinoff Settlement Period
commences, the Disbursing Agent, on behalf of the EBS Litigation, L.L.C.,
shall mail to each D&B Spinoff Stockholder a D&B Spinoff Settlement Notice.
In order to participate in the D&B Spinoff Settlement, a D&B Spinoff
Stockholder seeking to qualify as a Released D&B Spinoff Stockholder must
deliver to the Disbursing Agent, on behalf of the EBS Litigation, L.L.C.,
prior to the D&B Spinoff Settlement Expiration Date a properly completed
and duly executed D&B Spinoff Settlement Notice, which (i) if the D&B
Spinoff Stockholder has exercised Rights in accordance with Section 10.1 of
the Plan, indicates the number of Rights so exercised in a manner effecting
an election to participate in the D&B Spinoff Settlement, and if such
number is less than the D&B Spinoff Release Minimum Rights, is accompanied
by a certified check or bank draft drawn on a United States bank or a wire
transfer, in an amount equal to the D&B Spinoff Release Shortfall Amount or
(ii) if the D&B Spinoff Stockholder has not exercised any Rights, is
accompanied by a certified check or bank draft drawn upon a United States
bank or a wire transfer, in an amount equal to the D&B Spinoff Release
Minimum Purchase Price. The foregoing items will not be deemed to have
been timely delivered to the Disbursing Agent (and thus the attempted
participation in the D&B Spinoff Settlement will not be valid or effective)
unless they are completed and executed in conformity with the instructions
contained in the D&B Spinoff Settlement Notice and are actually received by
the Disbursing Agent, at the address specified therefor in the D&B Spinoff
Settlement Notice, on or prior to the D&B Spinoff Settlement Expiration
Date.
(c) All determinations as to proper completion, due execution,
timeliness, eligibility and other matters affecting the validity or
effectiveness of any attempted participation in the D&B Spinoff Settlement
shall be made by the Disbursing Agent, on behalf of the EBS Litigation,
L.L.C., whose determination shall be final and binding. Deliveries
required to be received by the Disbursing Agent in connection with an
attempted participation in the D&B Spinoff Settlement will not be deemed to
have been so received or accepted until actual receipt thereof by the
Disbursing Agent shall have occurred and any defects or irregularities
shall have been waived or cured within such time as the Disbursing Agent
may determine in its sole discretion. Neither the Debtors, the Reorganized
Debtors, the EBS Litigation, L.L.C. or the Disbursing Agent will have any
obligation to give notice to any D&B Spinoff Stockholder of any defect or
irregularity in connection with any attempted participation in the D&B
Spinoff Settlement or incur any liability as a result of any failure to
give any such notice.
(d) On or as promptly as practicable following the Initial
Distribution Date, the Disbursing Agent, on behalf of the EBS Litigation,
L.L.C., will mail (or cause to be mailed) to each D&B Spinoff Stockholder
who sought to participate in the D&B Spinoff Settlement a written statement
specifying whether such D&B Spinoff Stockholder qualifies as a Released D&B
Spinoff Stockholder. The Debtors, the Reorganized Debtors and the EBS
Litigation, L.L.C. shall be deemed, as of the Effective Date, for good and
valuable consideration, to have forever released, waived and discharged
each Released D&B Spinoff Stockholder from any and all Unresolved Avoidance
Claims that the Debtors, the Reorganized Debtors or the EBS Litigation,
L.L.C. ever had, now has, hereafter can, shall or may have against any
Released D&B Spinoff Stockholder. Any and all Unresolved Avoidance Claims
against any and all D&B Spinoff Stockholders that do not constitute
Released D&B Spinoff Stockholders are hereby expressly reserved by the
Debtors and the EBS Litigation, L.L.C. Nothing contained herein shall
constitute a release, waiver or discharge of any Unresolved Avoidance
Claims against any person other than a Released D&B Spinoff Stockholder and
Unresolved Avoidance Claims against such other persons are expressly
reserved and shall be transferred to the EBS Litigation, L.L.C. in
accordance with section 1123(b)(3)(B) of the Bankruptcy Code, the EBS
Litigation LLC Members Agreement and Section 5.1 of the Plan.
(e) Pursuant to Bankruptcy Rule 9019 and in consideration for the
releases and other benefits provided under this Section 10.2, the
provisions of this Section 10.2 shall constitute a good faith compromise
and settlement of all Unresolved Avoidance Claims against Released D&B
Spinoff Stockholders. The entry of the Confirmation Order shall constitute
the Bankruptcy Court's approval of the compromise or settlement of all
Unresolved Avoidance Claims against the Released D&B Spinoff Stockholders
and the Bankruptcy Court's finding that such compromise or settlement is in
the best interests of the Debtors and the Reorganized Debtors and their
estates, the EBS Litigation, L.L.C. and holders of Claims and Equity
Interests, and is fair, equitable and reasonable.
(f) As promptly as is practicable after the D&B Spinoff Settlement
Expiration Date, the Disbursing Agent shall transfer the D&B Spinoff
Settlement Proceeds, if any, to the EBS Litigation, L.L.C.
10.3. Term of Bankruptcy Injunction or Stays. All injunctions or
stays provided for in the Chapter 11 Cases under sections 105 or 362 of the
Bankruptcy Code, or otherwise, and in existence on the Confirmation Date,
shall remain in full force and effect until the Effective Date.
10.4. Revesting of Assets.
(a) The property of the estates of the Debtors shall revest in the
Reorganized Debtors on the Effective Date, except as provided in Sections
5.1, 5.2 and 10.3 of the Plan.
(b) From and after the Effective Date, the Reorganized Debtors may
operate their businesses, and may use, acquire and dispose of property free
of any restrictions imposed under the Bankruptcy Code.
(c) As of the Effective Date, all property of the Debtors and
Reorganized Debtors shall be free and clear of all liens, claims and
interests of holders of Claims and Equity Interests, except as provided in
the Plan.
10.5. Causes of Action. Except as provided in Section 5.1 of the
Plan, as of the Effective Date, pursuant to section 1123(b)(3)(B) of the
Bankruptcy Code, any and all Causes of Action accruing to the Debtors and
Debtors in Possession, including, without limitation, actions under
sections 545, 549, 550 and 551 of the Bankruptcy Code, but excluding
avoidance or recovery actions under sections 544, 547, 548 and 553 of the
Bankruptcy Code, shall become assets of the Reorganized Debtors, and the
Reorganized Debtors shall have the authority to prosecute such Causes of
Action for the benefit of the estates of the Debtors. The Reorganized
Debtors shall have the authority to compromise and settle, otherwise
resolve, discontinue, abandon or dismiss all such Causes of Action without
approval of the Bankruptcy Court.
10.6. Discharge of Debtors. The rights afforded herein and the
treatment of all Claims and Equity Interests herein shall be in exchange
for and in complete satisfaction, discharge and release of Claims and
Equity Interests of any nature whatsoever, including any interest accrued
on such Claims from and after the Commencement Date, against the Debtors
and the Debtors in Possession, or any of their assets or properties.
Except as otherwise provided herein, (a) on the Effective Date, all such
Claims against and Equity Interests in the Debtors shall be satisfied,
discharged and released in full, and (b) all persons shall be precluded
from asserting against the Reorganized Debtors, their successors, or their
assets or properties any other or further Claims or Equity Interests based
upon any act or omission, transaction or other activity of any kind or
nature that occurred prior to the Confirmation Date.
10.7. Injunction. Except as otherwise expressly provided in the
Plan, the Confirmation Order or a separate order of the Bankruptcy Court,
all entities who have held, hold or may hold Claims against or Equity
Interests in any or all of the Debtors, are permanently enjoined, on and
after the Effective Date, from (a) commencing or continuing in any manner
any action or other proceeding of any kind with respect to any such Claim
or Equity Interest, (b) the enforcement, attachment, collection or recovery
by any manner or means of any judgment, award, decree or order against the
Debtors on account of any such Claim or Equity Interest, (c) creating,
perfecting or enforcing any encumbrance of any kind against the Debtors or
against the property or interests in property of the Debtors on account of
any such Claim or Equity Interest and (d) asserting any right of setoff,
subrogation or recoupment of any kind against any obligation due from the
Debtors or against the property or interests in property of the Debtors on
account of any such Claim or Equity Interest. Such injunction shall extend
to successors of the Debtors (including, without limitation, the
Reorganized Debtors) and their respective properties and interests in
property.
ARTICLE XI.
EFFECTIVENESS OF THE PLAN
11.1. Conditions Precedent to Effectiveness. The Plan shall not
become effective unless and until the following conditions shall have been
satisfied or waived pursuant to Section 11.3 of the Plan:
(a) the Confirmation Order, in form and substance reasonably
acceptable to the Debtors and the Creditors' Committee, shall have been
signed by the judge presiding over the Chapter 11 Cases, and there shall
not be a stay or injunction in effect with respect thereto;
(b) the Debtors shall have at least $10,000,000 in Cash as of August
7, 1997, after giving effect to the distributions of Cash projected to be
made under the Plan;
(c) the Reorganized Debtors shall have credit availability under a
working capital credit facility, in form and substance acceptable to the
Debtors and reasonably acceptable to the Creditors' Committee, to provide
the Reorganized Debtors with working capital sufficient to meet their
ordinary and peak requirements;
(d) the New Notes Indentures shall have been qualified under the Trust
Indenture Act of 1939, as amended;
(e) (i) the Funding Escrow shall have been established and the Funding
Escrow Agent under the Funding Escrow Agreement shall have been appointed
in accordance with Section 5.2 of the Plan; and (ii) subject to Section 5.1
of the Plan, the EBS Litigation, L.L.C., the EBS Pension, L.L.C. and the
EBS Building, L.L.C. shall have been established in accordance with the EBS
Litigation LLC Members Agreement, the EBS Pension LLC Members Agreement and
the EBS Building LLC Members Agreement.
(f) subject to Section 5.1(c) of the Plan, the EBS Building, L.L.C.
shall have entered into the Corporate Headquarters Building Lease with
Reorganized Edison;
(g) all actions, documents and agreements necessary to implement the
Plan shall have been effected or executed;
(h) the Debtors shall have received all authorizations, consents,
regulatory approvals, rulings, letters, no-action letters, opinions or
documents that are determined by the Debtors to be necessary to implement
the Plan, including, without limitation, no-action letters from the
Securities and Exchange Commission and letter or other rulings from the
Internal Revenue Service; and
(i) each of the Amended Edison Certificate of Incorporation, the
Amended Edison Bylaws, the amended certificates of incorporation of the
Reorganized Subsidiaries, the EBS Litigation LLC Members Agreement, the EBS
Pension LLC Members Agreement, the EBS Building LLC Members Agreement, the
Funding Escrow Agreement, the Funding Escrow Mortgages, the Rights
documents, the D&B Spinoff Settlement documents, the New Notes, the New
Notes Indentures, the Corporate Headquarters Building Lease, the
Registration Rights Agreement, the Stock Option Plan, the Director Stock
Option Plan, the Employment Contracts and the Restricted Stock Agreements,
in form and substance reasonably acceptable to the Debtors and the
Creditors' Committee, shall have been effected or executed.
11.2. Effect of Failure of Conditions. In the event that one or
more of the conditions specified in Section 11.1 of the Plan have not
occurred on or before 60 days after the Confirmation Date, upon
notification submitted by the Debtors to the Bankruptcy Court and counsel
for the Creditors' Committee and the Equity Committee, (a) the Confirmation
Order shall be vacated, (b) no distributions under the Plan shall be made,
(c) the Debtors and all holders of Claims and Equity Interests shall be
restored to the status quo ante as of the day immediately preceding the
Confirmation Date as though the Confirmation Date never occurred and (d)
the Debtors' obligations with respect to the Claims and Equity Interests
shall remain unchanged and nothing contained herein shall constitute or be
deemed a waiver or release of any Claims or Equity Interests by or against
the Debtors or any other person or to prejudice in any manner the rights of
the Debtors or any person in any further proceedings involving the Debtors.
11.3. Waiver of Conditions. The Debtors may waive, by a writing
signed by an authorized representative of the Debtors and subsequently
filed with the Bankruptcy Court, one or more of the conditions precedent to
effectiveness of the Plan set forth in Sections 11.1 (b), (f) and (g)
(exclusive of those documents and agreements set forth in (i)) of the Plan.
The Debtors, with the written consent of the Creditors' Committee (which
consent shall not be unreasonably withheld), may waive, by a writing signed
by an authorized representative of the Debtors and subsequently filed with
the Bankruptcy Court, the conditions precedent to effectiveness of the Plan
set forth in Sections 11.1(a), (c), (d), (e), (h) and (i) of the Plan.
ARTICLE XII.
RETENTION OF JURISDICTION
The Bankruptcy Court shall have exclusive jurisdiction of all
matters arising out of, and related to, the Chapter 11 Cases and the Plan
pursuant to, and for the purposes of, sections 105(a) and 1142 of the
Bankruptcy Code and for, among other things, the following purposes:
(a) To hear and determine pending applications for the assumption or
rejection of executory contracts or unexpired leases, if any are
pending, and the allowance of Claims resulting therefrom;
(b) To determine any and all adversary proceedings, applications and
contested matters, including, without limitation, adversary proceedings
and contested matters arising in connection with the prosecution by the
EBS Litigation, L.L.C. of the Unresolved Avoidance Claims.
(c) To resolve all matters arising under or relating to the EBS
Litigation, L.L.C., the EBS Pension, L.L.C. and the EBS Building,
L.L.C., including, without limitation, all disputes between the
Reorganized Debtors and such entities and with respect to the
interpretation of the EBS Litigation LLC Members Agreement, the EBS
Pension LLC Members Agreement and the EBS Building LLC Members
Agreement;
(d) To resolve all matters and issues relating to the Rights and
the D&B Spinoff Settlement;
(e) To resolve all matters arising under or relating to the Funding
Escrow, including, without limitation, all disputes between the
Reorganized Debtors and the Funding Escrow Agent and with respect to
the interpretation of the Funding Escrow Agreement;
(f) To hear and determine any objection to Administrative Expense
Claims, Claims or Equity Interests;
(g) To enter and implement such orders as may be appropriate in the
event the Confirmation Order is for any reason stayed, revoked,
modified or vacated;
(h) To issue such orders in aid of execution and consummation of the
Plan, to the extent authorized by section 1142 of the Bankruptcy Code;
(i) To consider any amendments to or modifications of the Plan, to
cure any defect or omission, or reconcile any inconsistency in any
order of the Bankruptcy Court, including, without limitation, the
Confirmation Order;
(j) To hear and determine all applications for compensation and
reimbursement of expenses of professionals under sections 330, 331 and
503(b) of the Bankruptcy Code;
(k) To hear and determine disputes arising in connection with the
interpretation, implementation or enforcement of the Plan;
(l) To recover all assets of the Debtors and property of the Debtors'
estates, wherever located;
(m) To hear and determine matters concerning state, local and federal
taxes in accordance with sections 346, 505 and 1146 of the Bankruptcy
Code;
(n) To hear any other matter not inconsistent with the Bankruptcy
Code; and
(o) To enter a final decree closing the Chapter 11 Cases.
ARTICLE XIII.
MISCELLANEOUS PROVISIONS
13.1. Effectuating Documents and Further Transactions. Each of the
Debtors or Reorganized Debtors is authorized to execute, deliver, file or
record such contracts, instruments, releases, indentures and other
agreements or documents and take such actions as may be necessary or
appropriate to effectuate and further evidence the terms and conditions of
the Plan and any notes or securities issued pursuant to the Plan.
13.2. Corporate Action. On the Effective Date, all matters provided
for under the Plan that would otherwise require approval of the
stockholders, directors or members of one or more of the Debtors or
Reorganized Debtors or their successors in interest under the Plan,
including, without limitation, the authorization to issue or cause to be
issued preferred stock, the issuance of New Common Stock, Rights,
Restricted Stock, New Notes, Series 1997 Bonds, Warrants, Management
Options, Director Options, Class A Membership Units and Class B Membership
Units, the effectiveness of the Amended Edison Certificate of
Incorporation, the Amended Edison Bylaws and the amended certificates of
incorporation of the Reorganized Subsidiaries, corporate mergers or
dissolutions effectuated pursuant to the Plan, the election or appointment,
as the case may be, of directors and officers of the Debtors pursuant to
the Plan, the authorization and approval of the D&B Spinoff Settlement
Offer, the Employment Contracts, the Stock Option Plan, the Director Stock
Option Plan and the Restricted Stock Agreements and the creation of the EBS
Litigation, L.L.C., the EBS Pension, L.L.C., the EBS Building, L.L.C., the
Funding Escrow and the Funding Escrow Mortgages shall be deemed to have
occurred and shall be in effect from and after the Effective Date pursuant
to the applicable general corporation law of the states in which the
Debtors or Reorganized Debtors are incorporated, without any requirement of
further action by the stockholders or directors of the Debtors or
Reorganized Debtors. On the Effective Date or as soon thereafter as is
practicable, the Reorganized Debtors shall, if required, file their amended
certificates of incorporation with the Secretary of State of the state in
which each Reorganized Debtor is incorporated, in accordance with the
applicable general corporation law of such states.
13.3. Exemption from Transfer Taxes. Pursuant to section 1146(c) of
the Bankruptcy Code, the issuance, transfer or exchange of notes or equity
securities under the Plan, the creation of any mortgage, deed of trust or
other security interest, the making or assignment of any lease or sublease,
or the making or delivery of any deed or other instrument of transfer
under, in furtherance of, or in connection with the Plan, including,
without limitation, any merger agreements or agreements of consolidation,
deeds, bills of sale or assignments executed in connection with any of the
transactions contemplated under the Plan shall not be subject to any stamp,
real estate transfer, mortgage recording or other similar tax.
13.4. Injunction Regarding Worthless Stock Deduction. At the
Confirmation Hearing, Edison may request that the Bankruptcy Court include
in the Confirmation Order a provision enjoining any 50-percent shareholder
of Edison within the meaning of section 382(g)(4)(D) of the Internal
Revenue Code of 1986, as amended, from claiming a worthless stock deduction
with respect to its Edison Equity Interest for any taxable year of such
shareholder ending prior to the Effective Date.
13.5. Exculpation. Neither the Debtors, the Reorganized Debtors,
the Creditors' Committee or the Equity Committee or any of their respective
members, officers, directors, employees, advisors or agents shall have or
incur any liability to any holder of a Claim or Equity Interest for any act
or omission in connection with, related to, or arising out of, the Chapter
11 Cases, the pursuit of confirmation of the Plan, the consummation of the
Plan or the administration of the Plan or the property to be distributed
under the Plan, except for willful misconduct or gross negligence, and, in
all respects, the Debtors, the Reorganized Debtors, the Creditors'
Committee, the Equity Committee and each of their respective members,
officers, directors, employees, advisors and agents shall be entitled to
rely upon the advice of counsel with respect to their duties and
responsibilities under the Plan; provided, however, that nothing contained
herein shall exculpate, satisfy, discharge or release any Avoidance Claims
against present or former officers, directors or employees of the Debtors
in their capacities other than as present or former officers, directors or
employees.
13.6. Termination of Committees. The appointments of the Creditors'
Committee and the Equity Committee shall terminate on the later of the
Effective Date and the date of the hearing to consider applications for
final allowances of compensation and reimbursement of expenses.
13.7. Claims Resolution Committee.
(a) Function and Composition. Prior to the Effective Date, the
Creditors' Committee will have established the Claims Resolution Committee.
The functions of the Claims Resolution Committee will be (i) to monitor the
Reorganized Debtors' progress in (a) reconciling and resolving Disputed
Claims and (b) making distributions on account of such Claims once such
Claims become Allowed Claims, (ii) to compel the Debtors to compromise,
settle or otherwise resolve Disputed Claims and (iii) to review and assert
objections to the reasonableness of compromises, settlements or other
resolutions of Disputed Claims, as provided in Section 6.5(b) of the Plan.
The Claims Resolution Committee will consist of three holders of Claims
each of whom previously has served as a member of the Creditors' Committee.
(b) Procedures. The Claims Resolution Committee will adopt by-laws
that will control its functions. These by-laws, unless modified by the
Claims Resolution Committee, will provide the following: (i) a majority of
the Claims Resolution Committee will constitute a quorum; (ii) one member
of the Claims Resolution Committee will be designated by the majority of
its members as its chairperson; (iii) meetings of the Claims Resolution
Committee will be called by its chairperson on such notice and in such
manner as its chairperson may deem advisable; and (iv) the Claims
Resolution Committee will function by decisions made by a majority of its
members in attendance at any meeting.
(c) Employment of Attorneys and Reimbursement of Expenses. The Claims
Resolution Committee will be authorized to retain one law firm. The role
of the Claims Resolution Committee's attorneys will be strictly limited to
assisting the Claims Resolution Committee in its functions as set forth
herein. The Reorganized Debtors will pay the actual, necessary, reasonable
and documented fees and expenses of the attorneys retained by the Claims
Resolution Committee, as well as the actual, necessary, reasonable and
documented expenses incurred by each member of the Claims Resolution
Committee in the performance of its duties, in accordance with the
Reorganized Debtors' normal business practice for compensating and
reimbursing professionals. Other than as specified in the preceding
sentence, the members of the Claims Resolution Committee will serve without
compensation. If there is any unresolved dispute between the Reorganized
Debtors and the Claims Resolution Committee, its attorneys or its members
as to any fees or expenses, such dispute will be submitted to the
Bankruptcy Court for resolution.
(d) Dissolution. Subject to further order of the Bankruptcy Court,
the Claims Resolution Committee will dissolve upon the earlier to occur of
(i) the date that an officer of Reorganized Edison files with the
Bankruptcy Court and serves upon counsel to the Claims Resolution Committee
by overnight delivery service or facsimile transmission a certification
that the aggregate Disputed Claim Amount for all remaining Disputed Claims
is equal to or less than $5,000,000 (the Certification ) and (ii) the
third anniversary of the Effective Date. The Claims Resolution Committee
may file with the Bankruptcy Court and serve upon the Reorganized Debtors
an objection to such Certification within 10 days of the receipt thereof,
in which event the aggregate Disputed Claim Amount for all remaining
Disputed Claims will be determined by the Bankruptcy Court. If the
Bankruptcy Court determines that the aggregate Disputed Claim Amount for
all remaining Disputed Claims is greater than $5,000,000, the Claims
Resolution Committee will continue in existence, subject to the conditions
set forth in the first sentence of this subsection. If the Bankruptcy
Court determines that the aggregate Disputed Claim Amount for all remaining
Disputed Claims is equal to or less than $5,000,000, the Claims Resolution
Committee will dissolve effective as of the date that the Certification is
served and filed. The attorneys retained by, and members of, the Claims
Resolution Committee, will not be entitled to compensation or reimbursement
of expenses for services rendered after the date of dissolution of the
Claims Resolution Committee.
13.8. Post-Confirmation Date Fees and Expenses. From and after the
Confirmation Date, the Debtors and Reorganized Debtors shall, in the
ordinary course of business and without the necessity for any approval by
the Bankruptcy Court, pay the reasonable fees and expenses of professional
persons thereafter incurred by the Debtors and Reorganized Debtors,
including, without limitation, those fees and expenses incurred in
connection with the implementation and consummation of the Plan.
13.9. Payment of Statutory Fees. All fees payable pursuant to
section 1930 of the title 28 of the United States Code, as determined by
the Bankruptcy Court at the Confirmation Hearing, shall be paid on the
Effective Date.
13.10. Amendment or Modification of the Plan. Alterations,
amendments or modifications of the Plan may be proposed in writing by the
Debtors at any time prior to the Confirmation Date, provided that the Plan,
as altered, amended or modified, satisfies the conditions of sections 1122
and 1123 of the Bankruptcy Code, and the Debtors shall have complied with
section 1125 of the Bankruptcy Code; provided, however, that, prior to the
date of the commencement of solicitation of votes to accept or reject the
Plan, no alteration, amendment or modification of the Plan that would
materially and adversely change the treatment of General Unsecured Claims
may be made without prior approval of the Creditors' Committee, which
approval shall not be unreasonably withheld. The Plan may be altered,
amended or modified at any time after the Confirmation Date and before
substantial consummation, provided that the Plan, as altered, amended or
modified, satisfies the requirements of sections 1122 and 1123 of the
Bankruptcy Code and the Bankruptcy Court, after notice and a hearing,
confirms the Plan, as altered, amended or modified, under section 1129 of
the Bankruptcy Code and the circumstances warrant such alterations,
amendments or modifications. A holder of a Claim or Equity Interest that
has accepted the Plan shall be deemed to have accepted the Plan, as
altered, amended or modified, if the proposed alteration, amendment or
modification does not materially and adversely change the treatment of the
Claim or Equity Interest of such holder.
13.11. Severability. In the event that the Bankruptcy Court
determines, prior to the Confirmation Date, that any provision in the Plan
is invalid, void or unenforceable, such provision shall be invalid, void or
unenforceable with respect to the holder or holders of such Claims or
Equity Interests as to which the provision is determined to be invalid,
void or unenforceable. The invalidity, voidness or unenforceability of any
such provision shall in no way limit or affect the enforceability and
operative effect of any other provision of the Plan.
13.12. Revocation or Withdrawal of the Plan. The Debtors reserve the
right to revoke or withdraw the Plan prior to the Confirmation Date. If
the Debtors revoke or withdraw the Plan prior to the Confirmation Date,
then the Plan shall be deemed null and void. In such event, nothing
contained herein shall constitute or be deemed a waiver or release of any
claims by or against the Debtors or any other person or to prejudice in any
manner the rights of the Debtors or any person in any further proceedings
involving the Debtors.
13.13. Binding Effect. The Plan shall be binding upon and inure to
the benefit of the Debtors, the holders of Claims and Equity Interests, and
their respective successors and assigns, including, without limitation, the
Reorganized Debtors.
13.14. Notices. All notices, requests and demands to or upon the
Debtors or the Reorganized Debtors to be effective shall be in writing and,
unless otherwise expressly provided herein, shall be deemed to have been
duly given or made when actually delivered or, in the case of notice by
facsimile transmission, when received and telephonically confirmed,
addressed as follows:
If to the Debtors:
Edison Brothers Stores, Inc.
501 North Broadway
St. Louis, Missouri 63102
Attn: Alan A. Sachs, Esq.
Telephone: (314) 331-6565
Facsimile: (314) 331-6554
with a copy to:
Weil, Gotshal & Manges LLP Young, Conaway, Stargatt & Taylor
767 Fifth Avenue 1110 N. Market Street
New York, New York 10153 P.O. Box 391
Attn: Richard P. Krasnow, Esq. Rodney Square North, 11th Floor
Telephone: (212) 310-8000 Wilmington, Delaware 19801
Facsimile: (212) 310-8007 Attn: Laura Davis Jones, Esq.
Telephone: (302) 571-6600
Facsimile: (302) 571-1253
If to the Creditors' Committee:
Jones, Day, Reavis & Pogue Richards, Layton & Finger, P.A.
77 West Wacker One Rodney Square
Chicago, Illinois 60601 Wilmington, Delaware 19899
Attn: David Kurtz, Esq. Attn: Thomas L. Ambro, Esq .
Telephone: (312) 782-3939 Telephone: (302) 651-7612
Facsimile: (312) 782-8585 Facsimile: (302) 658-6458
If to the Equity Committee:
Paul, Weiss, Rifkind, Wharton & Garrison Duane Morris & Heckscher
1285 Avenue of the Americas 1201 Market Street
New York, New York 10019 Wilmington, Delaware 19801
Attn: Alan W. Kornberg, Esq. Attn: Teresa K.D. Currier, Esq.
Telephone: (212) 373-3209 Telephone: (302) 657-4957
Facsimile: (212) 373-2053 Facsimile: (302) 571-5560
13.15. Governing Law. Except to the extent the Bankruptcy Code,
Bankruptcy Rules or other federal law is applicable, or to the extent an
Exhibit to the Plan provides otherwise, the rights and obligations arising
under this Plan shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York, without giving effect
to the principles of conflicts of law of such jurisdiction.
13.16. Withholding and Reporting Requirements. In connection with
the consummation of the Plan, the Debtors or the Reorganized Debtors, as
the case may be, shall comply with all withholding and reporting
requirements imposed by any federal, state, local or foreign taxing
authority and all distributions hereunder shall be subject to any such
withholding and reporting requirements.
13.17. Plan Supplement. Forms of the documents relating to the
Amended Edison Certificate of Incorporation, the Amended Edison Bylaws, the
EBS Litigation LLC Members Agreement, the EBS Pension LLC Members
Agreement, the EBS Building LLC Members Agreement, the Funding Escrow
Agreement, the Funding Escrow Mortgages, the New Notes, the New Notes
Indentures, the Series 1977 Bonds, the Rights, the D&B Spinoff Settlement,
the investment guidelines referred to in Sections 6.4(a) and 6.4(c)(ii) of
the Plan, Schedules 7.1(a)(x) and 7.1(a)(y) referred to in Section 7.1 of
the Plan, the Warrants (including a Warrant agreement), the Corporate
Headquarters Building Lease and the Registration Rights Agreement shall be
contained in the Plan Supplement and filed with the Clerk of the Bankruptcy
Court at least 10 days prior to the last day upon which holders of Claims
and Equity Interests may vote to accept or reject the Plan. Upon its
filing with the Bankruptcy Court, the Plan Supplement may be inspected in
the office of the Clerk of the Bankruptcy Court during normal court hours.
Holders of Claims or Equity Interests may obtain a copy of the Plan Sup
plement upon written request to Edison in accordance with Section 13.14 of
the Plan.
13.18. Allocation of Plan Distributions Between Principal and
Interest. To the extent that any Allowed Claim entitled to a distribution
under the Plan is comprised of indebtedness and accrued but unpaid interest
thereon, such distribution shall, for federal income tax purposes, be
allocated to the principal amount of the Claim first and then, to the
extent the consideration exceeds the principal amount of the Claim, to
accrued but unpaid interest.
13.19. Headings. Headings are used in the Plan for convenience and
reference only, and shall not constitute a part of the Plan for any other
purpose.
13.20. Exhibits/Schedules. All Exhibits and Schedules to the Plan,
including the Plan Supplement, are incorporated into and are a part of the
Plan as if set forth in full herein.
13.21. Filing of Additional Documents. On or before substantial
consummation of the Plan, the Debtors shall file with the Bankruptcy Court
such agreements and other documents as may be necessary or appropriate to
effectuate and further evidence the terms and conditions of the Plan.
Dated: Wilmington, Delaware
June 30, 1997, September 8, 1997 (Modified)
EDISON BROTHERS STORES, INC.,
a Delaware corporation(for itself and on
behalf of each of the Subsidiaries)
By: /s/ Alan D. Miller
Name: Alan D. Miller
Title: Chairman and Chief Executive Officer
EXHIBIT A TO PLAN
SUMMARY OF TERMS OF CORPORATE HEADQUARTERS LEASE
LESSOR: EBS Building, L.L.C.
LESSEE: Reorganized Edison
TERM: Three years,
commencing on the Effective Date, followed
by, at Reorganized Edison's sole option,
either (a) a one year option at $12.00 per
square foot or (b) a seven year option at
Prevailing Market rent
RENT: Years one through
three: $9.00 per square foot
Year four (if one year
option is selected): $12.00 per square foot
Years four through 10 (if
seven year option is selected): at
Prevailing Market rent as such term is
defined in the Corporate Headquarters Lease
DISPOSITION: Any sale or other
disposition of the Corporate Headquarters
Building by the EBS Building, L.L.C. shall be
subject to the Corporate Headquarters
Building Lease and such other terms as are
acceptable to Reorganized Edison
The Corporate
Headquarters Lease shall be junior to any
mortgage on the Corporate Headquarters
Building, provided that non-disturbance under
the Corporate Headquarters Lease is assured
under any such mortgage
OTHER TERMS: Such other terms as may
be mutually agreeable to the Debtors and the
Creditors' Committee
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EXHIBIT B TO PLAN
SUMMARY OF TERMS OF NEW NOTES
ISSUER: Reorganized Edison
AMOUNT: $100,000,000, subject to adjustment as provided
in Section 1.15 of the Plan
TERM: The later of the tenth anniversary of the
Effective Date and July 31, 2007
INTEREST: 11.0% per annum, payable semi-annually on January 31
and July 31. Interest shall begin accruing on the earlier of the
Effective Date and July 31, 1997. The first interest payment
shall be made on January 31, 1998
MATURITY: 100% of outstanding principal amount payable on the
later of the tenth anniversary of the Effective Date and July 31,
2007
SECURITY: Funding Escrow Mortgages (coverage of portion of
interest)
PREFUNDING: Through the Funding Escrow, approximately the first
three years of interest payable shall be prefunded by the Debtors
with $16 million in Cash and the Funding Escrow Properties
COVENANTS: Mandatory Principal Prepayment -- 50% of the net
proceeds of extraordinary asset sales (excluding individual sales
of assets for which the consideration received is less that
$250,000) not otherwise required to be paid to working capital
facility lenders; provided, however, that such amount shall not
be distributed unless in excess of $5,000,000
Optional Redemption -- In whole or in part at the option of
Reorganized Edison in increments of not less than $5 million in accordance
with the following schedule:
Effective Date - June 30, 1998:100% of par
July 1, 1998 - June 30, 1999:104% of par
July 1, 1999 - June 30, 2000:103% of par
July 1, 2000 - June 30, 2001:102% of par
July 1, 2001 - June 30, 2002:101% of par
July 1, 2002 - Maturity: 100% of par
Mandatory Redemption Upon Change of Control -- Upon a Change in Control,
at 101% of par. The definition of Change of Control is described in the
Disclosure Statement
Other Covenants -- Such other covenants as may be mutually agreeable to the
Debtors and the Creditors' Committee
OTHER TERMS: Such other terms as may be mutually agreeable to
the Debtors and the Creditors' Committee
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EXHIBIT C TO PLAN
SUMMARY OF TERMS OF WARRANTS
WARRANTS: Warrants to purchase 9.0% of the issued New
Common Stock, on a fully diluted basis
EXERCISE PRICE: $16.40
TERM: The Warrants shall
expire on the eighth
anniversary of the Effective Date
OTHER TERMS: Such other terms as described in the Disclosure
Statement
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SCHEDULE 1 TO PLAN
ISSUANCE OF SERIES 1997 BONDS
(1) The Series 1977 Bonds are currently outstanding in an
aggregate principal amount of $2,920,000. The Issuer will issue the
Series 1997 A Bonds in an aggregate principal amount of $2,482,000 in
exchange for a portion of the Series 1977 Bonds in an aggregate
principal amount equal to the Allowed Secured Series 1977 Bondholder
Claims. The Series 1985 Bonds are currently outstanding in an
aggregate principal amount of $5,500,000. The Issuer will issue the
Series 1997 B Bonds in an aggregate principal amount of $4,235,000 in
exchange for a portion of the Series 1985 Bonds in an aggregate
principal amount equal to the Allowed Secured Series 1985 Bondholder
Claims.
(2) The Series 1997 Bonds will be issued pursuant to the terms
of a trust indenture between the Issuer and the Trustee in
substantially the form attached to the Plan Supplement with only such
changes, additions, or modifications as shall be approved by the
Issuer, the Trustee, on behalf of all Series 1997 Bondholders, and
Edbro Missouri (the Series 1997 Bond Indenture ). In connection with
the issuance of the Series 1997 Bonds, all property currently leased
to Edbro Missouri pursuant to the terms of the Series 1977 Lease
Agreement and/or the Series 1985 Lease Agreement, shall be conveyed by
the Issuer to Reorganized Edbro Missouri by special warranty deed,
bill of sale and other such conveyance documents as provided under the
Series 1977 Lease Agreement and Series 1985 Lease Agreement, subject
only to the Permitted Encumbrances (as such term is defined in the
Series 1985 Lease Agreement) or as shall otherwise be approved by
Edbro Missouri, and pursuant to such other documents as may reasonably
be required by Edbro Missouri to vest title in all such property in
Reorganized Edbro Missouri. The Series 1977 Lease Agreement and the
Series 1985 Lease Agreement shall each be terminated of record. Upon
issuance of the Series 1997 Bonds, the Issuer shall be deemed to have
made a loan (the Series 1997 Loan ) to Reorganized Edbro Missouri in
an amount equal to the aggregate principal amount of the Series 1997
Bonds ($6,717,000). In connection with the issuance of the Series
1997 Bonds, Reorganized Edbro Missouri shall enter into a Loan
Agreement with the Issuer substantially in the form attached to the
Plan Supplement with only such changes, additions, or modifications as
shall be approved by the Issuer, the Trustee, on behalf of all Series
1997 Bondholders, and Edbro Missouri (the Series 1997 Loan Agreement
) and shall execute and deliver a promissory note in the aggregate
principal amount of $6,717,000 in favor of the Issuer evidencing the
Series 1997 Loan, in substantially the form attached to the Plan
Supplement with only such changes, additions, or modifications as
shall be approved by the Issuer, the Trustee, on behalf of all Series
1997 Bondholders, and Edbro Missouri (the Series 1997 Note ).
Pursuant to the terms of the Series 1997 Loan Agreement and the Series
1997 Note, Reorganized Edbro Missouri shall be obligated to pay to the
Issuer payments on the Series 1997 Loan in the amounts and at the
times necessary to permit the Issuer to make the payments when due of
the principal of, premium, if any, and interest on the Series 1997
Bonds and to timely pay the purchase price of the Series 1997 B Bonds
tendered for purchase in accordance with the terms of the Series 1997
Bond Indenture. The Issuer shall assign all of its rights under the
Series 1997 Loan Agreement (except for certain rights of
indemnification of the Issuer and the Issuer's rights to the payment
of its reasonable costs, fees, and expenses), the Series 1997 Note and
each of the other Series 1997 Loan Documents to the Trustee in
accordance with the terms of the Series 1997 Bond Indenture. On or
prior to the Effective Date, Reorganized Edbro Missouri shall also
execute and deliver or cause to be executed and delivered each of the
Series 1997 Collateral Documents, and shall satisfy or cause to be
satisfied each of the Series 1997 Refunding Conditions.
(3) The Series 1997 Bonds will be limited obligations of the
Issuer and will be payable solely from and equally and ratably
secured, to the extent provided in the Series 1997 Bond Indenture, by
a pledge of (i) all income, accounts, revenues, proceeds, and other
amounts to which the Issuer is entitled, derived from or in connection
with the Series 1997 Loan Documents, including, without limitation,
all payments of the principal of and interest on the Series 1997 Note
and all amounts obtained through the exercise of the remedies provided
in the Series 1997 Loan Documents upon the occurrence of any event of
default thereunder and all receipts of the Trustee credited under the
provisions of the Series 1997 Bond Indenture against said amounts
payable, and (ii) moneys held in the funds and accounts under the
Series 1997 Bond Indenture, together with investment earnings thereon
(excluding any amounts held in any rebate fund established under and
as provided in the Series 1997 Bond Indenture).
(4) In connection with the issuance of the Series 1997 Bonds,
the Issuer, the Trustee and Reorganized Edbro Missouri shall cause
each of the Series 1997 Refunding Conditions to be satisfied.
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SCHEDULE 2 TO PLAN
SERIES 1997 REFUNDING CONDITIONS
On or prior to the date of issuance of the Series 1997 Bonds and
subject to the provisions of Sections 4.2 and 4.3 of the Plan, each of the
following conditions shall be fully satisfied and each of the following
documents, instruments and agreements shall be delivered in form and
content satisfactory to the Issuer, the Trustee, Edbro Missouri and Edison:
(a) The Issuer shall have adopted an ordinance authorizing the
issuance of the Series 1997 Bonds and a certified copy of such ordinance
shall have been delivered to the Trustee.
(b) The Issuer and the Trustee shall have executed and delivered the
Series 1997 Bond Indenture.
(c) Reorganized Edbro Missouri and the Issuer shall have executed and
delivered the Series 1997 Loan Agreement and an original of same shall have
been delivered to the Trustee.
(d) Reorganized Edbro Missouri shall have executed and delivered the
Series 1997 Notes and the originals shall have been delivered to the
Trustee.
(e) Reorganized Edbro Missouri shall have executed, and or caused the
applicable party to have executed, as applicable, and delivered each of the
following collateral documents (collectively, the Series 1997 Collateral
Documents ):
(1) a Deed of Trust and Security Agreement made by Reorganized
Edbro Missouri in favor of the Issuer, in substantially in the
form attached to the Plan Supplement, encumbering the Edbro
Missouri Facility and subject only to such encumbrances as shall
be approved by the Issuer and Trustee, (the Series 1997 Mortgage
); the Series 1997 Mortgage shall have been assigned by the
Issuer to the Trustee pursuant to the Series 1997 Bond Indenture
and/or an assignment in form and substance acceptable to the
Trustee (the Series 1997 Assignment Agreement );
(2) one or more UCC-1 Financing Statements made by Reorganized
Edbro Missouri, as Debtor, in favor of the Issuer, as secured
party, as necessary to perfect the Issuer's security interest in
the collateral encumbered by the Series 1997 Mortgage
(collectively, the Series 1997 Financing Statements ); the
Series 1997 Financing Statements shall have been assigned by the
Issuer to the Trustee pursuant to the Series 1997 Bond Indenture
and/or the Series 1997 Assignment Agreement;
(3) a guaranty agreement executed by Reorganized Edison in favor
of the Issuer, in substantially the form attached to the Plan
Supplement with only such changes, additions, or modifications as
shall be approved by the Issuer, the Trustee, on behalf of all
Series 1997 Bondholders, and Reorganized Edison (the Series 1997
Guaranty ); the Series 1997 Guaranty shall have been assigned by
the Issuer to the Trustee pursuant to the Series 1997 Bond
Indenture and/or the Series 1997 Assignment Agreement; and
(4) any other pledge agreements, security agreements, documents,
instruments, or other agreements necessary to pledge, mortgage,
lien or encumber, or to perfect any security interest in the
Edbro Missouri Facility, all payments to be made by Reorganized
Edbro Missouri under the Series 1997 Loan Agreement and Series
1997 Notes and all other revenues, contract rights, tangible and
intangible property and property rights, all real and personal
property, and all other assets of Reorganized Edbro Missouri to
be pledged as security for the obligations of Reorganized Edbro
Missouri as provided in the Series 1997 Loan Agreements, the
Series 1997 Bond Indenture and the Series 1997 Loan Documents,
subject only to such encumbrances as shall be approved by the
Issuer and Trustee, for the benefit of the Series 1997
Bondholders, and which shall have been assigned by the Issuer to
the Trustee pursuant to the Series 1997 Bond Indenture and/or the
Series 1997 Assignment Agreement.
(f) There shall have been delivered to the Trustee, the Issuer and
Reorganized Edbro Missouri, an unqualified favorable opinion of Bond
Counsel with respect to the validity of the Series 1997 Bonds and to the
effect that the interest on the Series 1997 Bonds will not be included in
the gross income of the holders thereof for Federal income tax purposes,
dated as of the date of issuance of the Series 1997 Bonds and addressed to
the Issuer, the Trustee and Reorganized Edbro Missouri; such opinion may
contain those qualifications and exceptions which are customarily
incorporated in approving opinions of Bond Counsel and which are acceptable
to the Issuer, the Trustee and Reorganized Edbro Missouri.
(g) There shall have been delivered to the Trustee and the Issuer, a
favorable opinion of counsel for Reorganized Edbro Missouri and Reorganized
Edison with respect to due authorization, execution and delivery and
enforceability of the Series 1997 Loan Agreement and each of the other
Series 1997 Loan Documents executed and delivered by Reorganized Edbro
Missouri or Reorganized Edison and with respect to such other matters as
the Trustee or Issuer may reasonably request, dated as of the date of
issuance of the Series 1997 Bonds and addressed to the Trustee and the
Issuer.
(h) There shall have been delivered to the Trustee and the Issuer,
governmental certificates, dated the most recent practicable date prior to
the date of issuance of the Series 1997 Bonds, showing that each of
Reorganized Edbro Missouri and Reorganized Edison is organized and in good
standing in the jurisdiction of its organization and is qualified to do
business and in good standing in all other jurisdictions in which the
failure to so qualify would have a material adverse effect on the ability
of such entity to perform its obligations under the Series 1997 Loan
Documents.
(i) There shall have been delivered to the Trustee and the Issuer,
(i) copies of the Articles of Incorporation of Reorganized Edbro Missouri
and Reorganized Edison, each certified as of a recent date by the Secretary
of State of the state of organization of Reorganized Edbro Missouri or
Reorganized Edison, as applicable, (ii) a copy of the Bylaws of each of
Reorganized Edbro Missouri and Reorganized Edison, certified as of a recent
date by an officer of each such entity, (iii) a corporate resolution of
each of Reorganized Edbro Missouri and Reorganized Edison authorizing the
execution and delivery by such entity of each of the Series 1997 Loan
Documents executed and delivered by such entity, (iv) certificates of the
Secretary of each of Reorganized Edbro Missouri and Reorganized Edison,
dated as of the date of issuance of the Series 1997 Bonds, as to the
incumbency and signatures of the officers of each such entity executing the
Series 1997 Loan Documents to be executed and delivered by such entity,
together with evidence of the incumbency of such Secretary.
(j) There shall have been delivered to the Trustee, as-built surveys
of the Edbro Missouri Facility, dated no earlier than 90 days prior to the
date of issuance of the Series 1997 Bonds, in a form and content acceptable
to the Trustee and the title company issuing a mortgagee policy in favor of
the Issuer and Trustee, as their interests may appear.
(k) There shall have been delivered to the Trustee, a title insurance
policy naming the Issuer and Trustee, as their interests may appear, as the
insureds thereunder, issued by a title company acceptable to the Trustee in
an aggregate amount equal to $6,717,000, insuring the validity and priority
of the lien of the Series 1997 Mortgage, subject only to such exceptions as
are approved by the Trustee and containing such endorsements and
affirmative insurance as the Trustee may reasonably require.
(l) There shall have been delivered to the Trustee, evidence that the
insurance policies provided in the Series 1997 Loan Agreement and the
Series 1997 Mortgage are in full force and effect and that such policies
include the Trustee as an additional named insured party and loss payee
thereunder.
(m) There shall have been delivered to the Trustee and the Issuer
such other documents, instruments and agreements consistent with the terms
of the Plan as shall be reasonably requested by the Trustee or the Issuer.
SCHEDULE 3 TO PLAN
TERMS OF SERIES 1997 A BONDS
Authorized $4,000 or any integral multiple of $1.00 in excess
Denominations: thereof
Interest Rate: Six and twenty-five one-hundredths percent (6.25%) per
annum
Maturity: June 1, 2002
Interest Payment
Dates: June 1 and December 1 of each year
Principal
Redemption: Principal redemption payments in the amount of $60,000 will
be due and payable on each June 1 commencing on June 1, 1998
through maturity with a final principal payment of
$2,242,000 due on June 1, 2002
Collateral: Issuer shall assign to the Trustee, for the benefit of all
Series 1997 Bondholders, all of its rights (except for
certain rights of indemnification of the Issuer and the
Issuer's rights to the payment of its reasonable costs,
fees, and expenses) under the Series 1997 Loan Documents,
including, without limitation, its right to receipt of
payments made by Reorganized Edbro Missouri on account of
the Series 1997 Loans and its interest as mortgagee under
the Series 1997 Mortgage. As a result of such assignment to
the Trustee, Series 1997 A Bonds and Series 1997 B Bonds
shall be equally and ratably secured, pari passu, by the
Series 1997 Loan Documents.
Other Terms: Such other terms as may be mutually agreeable to Edbro
Missouri, the Issuer and the Trustee.
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SCHEDULE 4 TO PLAN
TERMS OF SERIES 1997 B BONDS
Authorized
Denominations: $4,000 or any integral multiple of $250 in excess
thereof
Interest Rate: Variable rate equal to seventy-five and eighty-
three one hundredths percent (75.83%) of the interest
rate announced from time to time by Mercantile Bank
National Association as its prime rate on commercial
loans (which interest rate shall fluctuate as and when
said prime rate shall change); subject to conversion to
a Subsequent Variable Rate or Fixed Rate , as
provided below
Maximum Permitted
Rate: 14% per annum or such higher rate as shall be
permitted
by law
Maturity: November 1, 2010
Interest Payment
Dates: Prior to conversion of the interest rate on the
Series
1997 B Bonds to a Subsequent Variable Rate
or Fixed Rate (as such terms are defined in the
Series 1997 Bond Indenture), February 1, May 1, August
1 and November 1 of each year; after such conversion,
May 1 and November 1 of each year
Principal
Redemption: Principal redemption payments in the amount of $847,000
will be due and payable on November 1, 2006
and on each
November 1 thereafter through maturity
Conversion: The interest rate mode on the Series 1997 B Bonds may
be converted, at the option of Reorganized
Edbro
Missouri, to a Subsequent Variable Rate
and/or to a
Fixed Rate as more particularly provided in
the
Series 1997 Bond Indenture. All Series 1997
B Bonds
shall be subject to mandatory tender for
purchase by or
on behalf of Reorganized Edbro Missouri on
the date of
any such conversion. All Series 1997 B Bonds
so
tendered shall be remarketed by a remarketing
agent
selected by Reorganized Edbro Missouri and
appointed by
the Issuer, upon written instructions from
Reorganized
Edbro Missouri (the Remarketing Agent ), as
provided for and in accordance with the terms of the Series
1997
Bond Indenture.
Tender Option
for Mandatory
Purchase of Series
1997 B Bonds: Prior to any conversion of the interest rate mode on the
Series 1997 B Bonds to a Subsequent Variable Rate or a Fixed
Rate as set forth above and so long as Mercantile is the
sole beneficial owner of the Series 1997 B Bonds, Mercantile
will have the option to tender all of the outstanding Series
1997 B Bonds for mandatory purchase by or on behalf of
Reorganized Edbro Missouri on January 1, 2000 and, if such
option has not been previously exercised, on any succeeding
January 1 until the principal amount of the Series 1997 B
Bonds has been repaid in full, such option to be exercisable
upon 90 days' prior written notice to Reorganized Edbro
Missouri as more particularly provided in the Series 1997
Bond Indenture. All Series 1997 B Bonds so tendered by
Mercantile shall be remarketed by the Remarketing Agent as
provided for and in accordance with the terms of the Series
1997 Bond Indenture; provided, however, that the right to
exercise such tender option shall not be subject to or
conditioned upon the successful remarketing of the Series
1997 B Bonds. The tender option described above shall be
for the exclusive benefit of Mercantile, as the sole
beneficial owner of all of the outstanding Series 1997 B
Bonds, for as long as Mercantile is the sole beneficial
owner of all of the outstanding Series 1997 B Bonds and
prior to any conversion of the interest rate mode on the
Series 1997 B Bonds to a Subsequent Variable Rate or Fixed
Rate, and shall not be exercisable by Mercantile or any
other Series 1997 B Bondholder (a) if any of the Series 1997
B Bonds are held by any Person other than Mercantile, or (b)
following any conversion of the interest rate mode on the
Series 1997 B Bonds to a Subsequent Variable Rate or Fixed
Rate.
Collateral: Issuer shall assign to the Trustee, for the benefit of
all Series 1997 Bondholders, all of its rights (except for
certain rights of indemnification of the Issuer and the
Issuer's rights to the payment of its reasonable costs,
fees, and expenses) under the Series 1997 Loan Documents,
including, without limitation, (i) its right to receipt of
payments made by Reorganized Edbro Missouri on account of
the Series 1997 Loan, (ii) its rights under the Series 1997
Guaranty and (iii) its interest as mortgagee under the
Series 1997 Mortgage. As a result of such assignment to the
Trustee, Series 1997 A Bonds and Series 1997 B Bonds shall
be equally and ratably secured, pari passu, by the Series
1997 Loan Documents.
Other Terms: Such other terms as may be mutually agreeable to Edbro
Missouri, the Issuer and the Trustee.
TABLE OF CONTENTS
Page
ARTICLE I.
DEFINITIONS AND CONSTRUCTION OF TERMS A-1
1.1. Administrative Expense Claim A-1
1.2. Administrative Reclamation Claim A-1
1.3. Allowed A-1
1.4. Amended Edison Bylaws A-2
1.5. Amended Edison Certificate of Incorporation A-2
1.6. Authorized Denominations A-2
1.7. Avoidance Claims A-2
1.8. Ballot A-2
1.9. Bankruptcy Code A-2
1.10. Bankruptcy Court A-2
1.11. Bankruptcy Rules A-2
1.12. Bond Counsel A-2
1.13. Business Day A-2
1.14. Cash A-2
1.15. Cash Distribution Pool A-2
1.16. Causes of Action A-2
1.17. Chapter 11 Cases A-2
1.18. Claim A-2
1.19. Claims Resolution Committee A-2
1.20. Class A-3
1.21. Class A Membership Units A-3
1.22. Class B Membership Units A-3
1.23. Collateral A-3
1.24. Commencement Date A-3
1.25. Confirmation Date A-3
1.26. Confirmation Hearing A-3
1.27. Confirmation Order A-3
1.28. Convenience Claim A-3
1.29. Corporate Headquarters Building A-3
1.30. Corporate Headquarters Building Lease A-3
1.31. Corporate Headquarters Building Proceeds A-3
1.32. Creditors' Committee A-3
1.33. D&B Common Stock A-3
1.34. D&B Spinoff A-3
1.35. D&B Spinoff Release Minimum Rights A-3
1.36. D&B Spinoff Release Minimum Purchase Price A-4
1.37. D&B Spinoff Release Rights Multiplier A-4
1.38. D&B Spinoff Release Shortfall Amount A-4
1.39. D&B Spinoff Settlement A-4
1.40. D&B Spinoff Settlement Period A-4
1.41. D&B Spinoff Settlement Expiration Date A-4
1.42. D&B Spinoff Settlement Notice A-4
1.43. D&B Spinoff Settlement Offer A-4
1.44. D&B Spinoff Settlement Proceeds A-4
1.45. D&B Spinoff Stockholders A-4
1.46. Debtors A-4
1.47. Debtors in Possession A-4
1.48. Director Options A-5
1.49. Director Stock Option Plan A-5
1.50. Disbursing Agent A-5
1.51. Disclosure Statement A-5
1.52. Disputed A-5
1.53. Disputed Claim Amount A-5
1.54. EBS Building, L.L.C. A-5
1.55. EBS Building LLC Members Agreement A-5
1.56. EBS Litigation, L.L.C. A-5
1.57. EBS Litigation LLC Members Agreement A-5
1.58. EBS Pension, L.L.C A-5
1.59. EBS Pension LLC Members Agreement A-5
1.60. Edbro Missouri A-5
1.61. Edbro Missouri Facility A-5
1.62. Edison A-5
1.63. Edison Equity Interest A-5
1.64. Effective Date A-6
1.65. Employment Contracts A-6
1.66. Equity Committee A-6
1.67. Equity Interest A-6
1.68. Final Order A-6
1.69. Funding Escrow A-6
1.70. Funding Escrow Assets A-6
1.71. Funding Escrow Agent A-6
1.72. Funding Escrow Agreement A-6
1.73. Funding Escrow Mortgages A-6
1.74. Funding Escrow Properties A-6
1.75. General Unsecured Claim A-6
1.76. Initial Distribution Date A-7
1.77. Insured Claim A-7
1.78. Issuer A-7
1.79. Lien A-7
1.80. LLC Funding Amount A-7
1.81. Management Options A-7
1.82. Membership Certificates A-7
1.83. Mercantile A-7
1.84. New Common Stock A-7
1.85. New Common Stock Distribution Pool A-7
1.86. New Notes A-7
1.87. New Notes Distribution Amount A-7
1.88. New Notes Indentures A-7
1.89. Original Bondholder A-7
1.90. Original Bonds A-7
1.91. Other Priority Claim A-7
1.92. Other Secured Claim A-7
1.93. Pension Plan A-7
1.94. Pension Plan Payment Date A-7
1.95. Pension Plan Proceeds A-8
1.96. Plan A-8
1.97. Plan Supplement A-8
1.98. Priority Tax Claim A-8
1.99. Pro Rata Share A-8
1.100. Quarter A-8
1.101. Record Date A-8
1.102. Registration Rights Agreement A-8
1.103. Released D&B Spinoff Stockholder A-8
1.104. Remarketing Agent A-8
1.105. Reorganized Debtors A-8
1.106. Reorganized Edbro Missouri A-8
1.107. Reorganized Edison A-8
1.108. Reorganized Subsidiaries A-8
1.109. Reserve A-8
1.110. Restricted Stock A-8
1.111. Restricted Stock Agreements A-9
1.112. Resolved Avoidance Claims A-9
1.113. Resolved Avoidance Claims Proceeds A-9
1.114. Rights A-9
1.115. Rights Agent A-9
1.116. Rights Aggregate Consideration A-9
1.117. Rights Exercise Instructions A-9
1.118. Rights Exercise Notice A-9
1.119. Rights Exercise Period A-9
1.120. Rights Exercise Price A-9
1.121. Rights Exercise Proceeds A-9
1.122. Rights Expiration Date A-9
1.123. Schedules A-9
1.124. Secured Claim A-9
1.125. Secured Series 1977 Bondholder Claim A-9
1.126. Secured Series 1985 Bondholder Claim A-9
1.127. Secured Tax Claim A-9
1.128. Series 1977 Bond Documents A-10
1.129. Series 1977 Bond Ordinance A-10
1.130. Series 1977 Bondholder Claim A-10
1.131. Series 1977 Bondholders A-10
1.132. Series 1977 Bonds A-10
1.133. Series 1977 Guaranty A-10
1.134. Series 1977 Lease Agreement A-10
1.135. Series 1985 Bank Agreement A-10
1.136. Series 1985 Bond Documents A-10
1.137. Series 1985 Bond Indenture A-10
1.138. Series 1985 Bondholder Claim A-10
1.139. Series 1985 Bondholders A-10
1.140. Series 1985 Bonds A-10
1.141. Series 1985 Guaranty A-10
1.142. Series 1985 Lease Agreement A-10
1.143. Series 1997 A Bondholders A-10
1.144. Series 1997 B Bondholders A-11
1.145. Series 1997 A Bonds A-11
1.146. Series 1997 B Bonds A-11
1.147. Series 1997 Bond Indenture A-11
1.148. Series 1997 Bondholders A-11
1.149. Series 1997 Bonds A-11
1.150. Series 1997 Collateral Documents A-11
1.151. Series 1997 Guaranty A-11
1.152. Series 1997 Loan A-11
1.153. Series 1997 Loan Agreement A-11
1.154. Series 1997 Loan Documents A-11
1.155. Series 1997 Note
A-11
1.156. Series 1997 Refunding Conditions A-11
1.157. Stock Option Plan A-11
1.158. Subsequent Distribution Date A-11
1.159. Subsidiary A-11
1.160. Subsidiary Equity Interest A-11
1.161. Surplus Distributions A-11
1.162. Tort Claim A-11
1.163. Trustee A-12
1.164. Unresolved Avoidance Claims A-12
1.165. Unsecured Claim A-12
1.166. Warrants A-12
1.167. Warrant Distribution Pool A-12
ARTICLE II.
TREATMENT OF ADMINISTRATIVE
EXPENSE CLAIMS AND PRIORITY TAX CLAIMS A-12
2.1. Administrative Expense Claims A-12
2.2. Professional Compensation and Reimbursement Claims A-12
2.3. Priority Tax Claims A-12
ARTICLE III.
CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS A-13
ARTICLE IV.
TREATMENT OF CLAIMS AND EQUITY INTERESTS A-13
4.1. CLASS 1 -- OTHER PRIORITY CLAIMS A-13
4.2. CLASS 2 -- SECURED SERIES 1977 BONDHOLDER CLAIMS A-13
4.3. CLASS 3 -- SECURED SERIES 1985 BONDHOLDER CLAIMS A-14
4.4. CLASS 4 -- SECURED TAX CLAIMS A-14
4.5. CLASS 5 -- OTHER SECURED CLAIMS A-15
4.6. CLASS 6 -- CONVENIENCE CLAIMS A-15
4.7. CLASS 7 -- GENERAL UNSECURED CLAIMS A-15
4.8. CLASS 8 -- EDISON EQUITY INTERESTS A-15
ARTICLE V.
ESTABLISHMENT OF LIMITED LIABILITY
COMPANIES AND FUNDING ESCROW; PENSION PLAN A-16
5.1.EBS Litigation, L.L.C., EBS Pension, L.L.C. and EBS Building, L.L.C. A-16
5.2. Funding Escrow A-17
5.3. Pension Plan A-18
ARTICLE VI.
PROVISIONS REGARDING VOTING AND DISTRIBUTIONS
UNDER THE PLAN AND TREATMENT OF DISPUTED,
CONTINGENT AND UNLIQUIDATED ADMINISTRATIVE
EXPENSE CLAIMS, CLAIMS AND EQUITY INTERESTS A-18
6.1. Voting of Claims and Equity Interests A-18
6.2. Nonconsensual Confirmation A-18
6.3. Method of Distributions Under the Plan A-18
6.4. General Unsecured Claims A-19
6.5.Objections to and Resolution of Administrative Expense Claims,
Claims and Equity Interests A-21
6.6.Distributions Relating to Allowed Insured Claims A-21
6.7.Cancellation and Surrender of Existing Securities and Agreements A-22
6.8.Registration of New Common Stock A-22
6.9.Listing of New Common Stock, New Notes and Warrants A-22
6.10.Full Recovery for Holders of Allowed General Unsecured Claims A-22
ARTICLE VII.
EXECUTORY CONTRACTS AND UNEXPIRED LEASES A-22
7.1.Assumption or Rejection of Executory Contracts and Unexpired Leases A-22
7.2. Releases A-23
7.3. Indemnification Obligations A-24
7.4. Compensation and Benefit Programs A-24
7.5. Retiree Benefits A-24
ARTICLE VIII.
CONSOLIDATION OF EDISON AND THE SUBSIDIARIES A-24
8.1. Substantive Consolidation A-24
8.2. Merger of Corporate Entities A-24
ARTICLE IX.
PROVISIONS REGARDING CORPORATE GOVERNANCE
AND MANAGEMENT OF THE REORGANIZED DEBTORS A-25
9.1. General A-25
9.2. Meetings of Reorganized Edison Stockholders A-25
9.3. Directors and Officers of Reorganized Debtors A-25
9.4. Amended Bylaws and Amended Certificates of Incorporation A-25
9.5. Issuance of New Securities A-25
9.6. Stock Option Plan A-26
9.7. Director Stock Option Plan A-26
9.8. Restricted Stock Agreements A-26
9.9. Employment Contracts A-26
9.10. Retention/Performance Bonuses A-26
ARTICLE X.
IMPLEMENTATION AND EFFECT OF CONFIRMATION OF PLAN A-27
10.1. Procedures for Exercise of Rights A-27
10.2. The D&B Spinoff Settlement Offer A-28
10.3. Term of Bankruptcy Injunction or Stays A-29
10.4. Revesting of Assets A-29
10.5. Causes of Action A-29
10.6. Discharge of Debtors A-29
10.7. Injunction A-29
ARTICLE XI.
EFFECTIVENESS OF THE PLAN A-30
11.1. Conditions Precedent to Effectiveness A-30
11.2. Effect of Failure of Conditions A-30
11.3. Waiver of Conditions A-30
ARTICLE XII.
RETENTION OF JURISDICTION A-31
ARTICLE XIII.
MISCELLANEOUS PROVISIONS A-32
13.1. Effectuating Documents and Further Transactions A-32
13.2. Corporate Action A-32
13.3. Exemption from Transfer Taxes A-32
13.4. Injunction Regarding Worthless Stock Deduction A-32
13.5. Exculpation A-32
13.6. Termination of Committees A-32
13.7. Claims Resolution Committee A-33
13.8. Post-Confirmation Date Fees and Expenses A-33
13.9. Payment of Statutory Fees A-33
13.10. Amendment or Modification of the Plan A-33
13.11. Severability A-34
13.12. Revocation or Withdrawal of the Plan A-34
13.13. Binding Effect A-34
13.14. Notices A-34
13.15. Governing Law A-35
13.16. Withholding and Reporting Requirements A-35
13.17. Plan Supplement A-35
13.18.Allocation of Plan Distributions Between Principal and
Interest A-35
13.19. Headings A-35
13.20. Exhibits/Schedules A-35
13.21. Filing of Additional Documents A-36
INDEX OF SCHEDULES AND EXHIBITS
Exhibit A Summary of Terms of Corporate Headquarters Building Lease
Exhibit B Summary of Terms of New Notes
Exhibit C Summary of Terms of Warrants
Schedule 1 Issuance of Series 1997 Bonds
Schedule 2 Series 1997 Refunding Conditions
Schedule 3 Terms of Series 1997 A Bonds
Schedule 4 Terms of Series 1997 B Bonds
[THIS PAGE INTENTIONALLY LEFT BLANK]
COMPOSITE
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
- --------------------------------------------------------------------X
:
In re : CHAPTER 11
:
EDISON BROTHERS STORES, INC., et al., : Case No. 95-1354
(PJW)
:
Debtors. : JOINTLY ADMINISTERED
:
DEBTORS' AMENDED JOINT PLAN OF REORGANIZATION
UNDER CHAPTER 11 OF THE BANKRUPTCY CODE, AS MODIFIED
WEIL, GOTSHAL & MANGES LLP
Attorneys for the Debtors
767 Fifth Avenue
New York, New York 10153
(212) 310-8000
and
YOUNG, CONAWAY, STARGATT & TAYLOR
Attorneys for the Debtors
1110 N. Market St.
P. O. Box 391
Rodney Square North, 11th Floor
Wilmington, Delaware 19801
(302) 571-6600
Dated: Wilmington, Delaware
June 30, 1997, September 8, 1997 (Modification)
[THIS PAGE INTENTIONALLY LEFT BLANK]
EDISON BROTHERS STORES, INC.
AMENDED AND RESTATED 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 (60) 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 later than ninety (90) days prior
to the anniversary date of the immediately preceding annual meeting of
stockholders; provided, however, that in the event that the date of the
annual meeting is advanced by more than thirty (30) days from such
anniversary date, then, to be considered timely, notice by the stockholder
must be received not later than the close of business on the tenth day
following the date on which notice of such meeting was mailed to
stockholders. 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, and
shall be called by the President or Secretary upon the written request of
the holders of at least 51% of the outstanding shares of Common Stock.
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 (60) 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 Restated 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 (30) 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
be transacted that might have been transacted at 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 Restated 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 (10) 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 or under the direction of the Board of
Directors. Except as otherwise provided by law, by the Restated
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 not less
than five (5) nor more than nine (9), the exact number of which shall be
fixed by resolution of the Board of Directors from time to time; provided,
however, that if and whenever by the terms and provisions of the Restated
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 Restated 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 Restated Certificate of
Incorporation.
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 (90) days prior to the
anniversary date of the immediately preceding annual meeting of
stockholders; provided, however, that in the event that the date of the
annual meeting is advanced by more than thirty (30) days from such
anniversary date, then, to be considered timely, notice by the stockholder
must be received not later than the close of business on the tenth day
following the date on which notice of such meeting was mailed to
stockholders, 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 was mailed 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 (2) 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 Restated
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 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 (2) 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 Restated 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 Restated 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 (60) days nor less than ten (10) 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 (60) 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 Restated 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 Restated 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 Restated 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.
9/26/97 - execution
LOAN AND SECURITY AGREEMENT
by and among
EDISON BROTHERS STORES, INC.
EDISON BROTHERS APPAREL STORES, INC.
EDISON PUERTO RICO STORES, INC.
as Borrowers
and
THE GUARANTORS NAMED HEREIN
THE FINANCIAL INSTITUTIONS NAMED HEREIN
as Lenders
CONGRESS FINANCIAL CORPORATION
as Agent
THE CIT GROUP/BUSINESS CREDIT, INC.
as Co-Agent
Dated: As of September 26, 1997
TABLE OF CONTENTS
SECTION 1. DEFINITIONS 2
SECTION 2. CREDIT FACILITIES 18
2.1 Loans 18
2.2 Letter of Credit Accommodations 19
2.3 Commitments 22
2.4 Joint and Several Liability 22
SECTION 3. INTEREST AND FEES 23
3.1 Interest 23
3.2 Closing Fee 24
3.3 Servicing Fee 25
3.4 Co-Agent's Fee 25
3.5 Unused Line Fee 25
3.6 Syndication Fee 25
3.7 Changes in Laws and Increased Costs of Loans 25
SECTION 4. CONDITIONS PRECEDENT 26
4.1 Conditions Precedent to Initial Loans and Letter of
Credit Accommodations 26
4.2 Conditions Precedent to All Loans and Letter of Credit
Accommodations 29
SECTION 5. SECURITY INTEREST 30
SECTION 6. COLLECTION AND ADMINISTRATION 30
6.1 Borrowers' Loan Account 30
6.2 Statements 31
6.3 Collection of Proceeds 31
6.4 Payments and Prepayments 33
6.5 Sharing of Payments, Etc. 34
6.6 Authorization to Make Loans 36
6.7 Settlement Procedures 36
6.8 Use of Proceeds 38
SECTION 7. COLLATERAL REPORTING AND COVENANTS 38
7.1 Collateral Reporting 38
7.2 Receivables Covenants 40
7.3 Inventory Covenants 41
7.4 Power of Attorney 42
7.5 Right to Cure 43
7.6 Access to Premises 43
SECTION 8. REPRESENTATIONS AND WARRANTIES 44
8.1 Corporate Existence, Power and Authority; Subsidiaries
44
8.2 Financial Statements; No Material Adverse Change. 44
8.3 Chief Executive Office; Collateral Locations. 45
8.4 Priority of Liens; Title to Properties 45
8.5 Tax Returns 45
8.6 Litigation 45
8.7 Intellectual Property 46
8.8 Compliance with Other Agreements and Applicable Laws
46
8.9 Environmental Compliance 47
8.10 Governmental Authority 47
8.11 Credit Card Agreements 48
8.12 Employee Benefits 48
8.13 Bank Accounts 49
8.14 Customs Brokers 49
8.15 Interrelated Businesses 49
8.16 Capitalization 49
8.17 Plan 50
8.18 Accuracy and Completeness of Information. 50
8.19 Survival of Warranties; Cumulative 51
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS 51
9.1 Maintenance of Existence 51
9.2 New Collateral Locations 51
9.3 Compliance with Laws, Regulations, Etc 52
9.4 Payment of Taxes and Claims 52
9.5 Insurance 52
9.6 Financial Statements and Other Information 53
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc
56
9.8 Encumbrances 61
9.9 Indebtedness 62
9.10 Loans, Investments, Guarantees, Etc 70
9.11 Dividends; Redemptions; Issuance of Capital Stock 73
9.12 Transactions with Affiliates 74
9.13 Credit Card Agreements 74
9.14 Net Worth 75
9.15 Compliance with ERISA 75
9.16 Additional Bank Accounts 76
9.18 Costs and Expenses 76
9.19 Further Assurances 77
SECTION 10. EVENTS OF DEFAULT AND REMEDIES 77
10.1 Events of Default 77
10.2 Remedies 80
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW 81
11.1 Governing Law; Choice of Forum; Service of Process;
Jury Trial Waiver 81
11.2 Waiver of Notices 82
11.3 Amendments and Waivers 83
11.4 Waiver of Counterclaims 84
11.5 Indemnification 84
SECTION 12. THE AGENT 85
12.1 Appointment, Powers and Immunities 85
12.2 Reliance by Agent 86
12.3 Events of Default 86
12.4 Rights as a Lender 86
12.5 Indemnification 87
12.6 Non-Reliance on Agent and Other Lenders 87
12.7 Failure to Act 88
12.8 Successor Agent. 88
12.9 Withholding Tax 88
12.10 Additional Loans 90
12.11 Concerning the Collateral and the Related Financing
Agreements 90
12.12 Field Audit and Examination Reports; Disclaimer by
Lenders 90
12.13 Collateral Matters 91
12.14 Agency for Perfection 92
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS 93
13.1 Term 93
13.2 Notices 95
13.3 Partial Invalidity 95
13.4 Successors 95
13.5 Assignments; Participations. 96
13.6 Confidentiality 98
13.7 Entire Agreement 99
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated as of September 26, 1997 is
entered into by and among Edison Brothers Stores, Inc., a Delaware
corporation ( Edison ), Edison Brothers Apparel Stores, Inc., a Missouri
corporation ( Edison Apparel ), Edison Puerto Rico Stores, Inc., a Puerto
Rico corporation ( Edison Puerto Rico , and together with Edison and Edison
Apparel, individually, a Borrower and collectively, Borrowers , as
hereinafter further defined), the other persons signatories hereto as
guarantors (individually, a Guarantor and collectively, Guarantors , as
hereinafter further defined), the financial institutions from time to time
parties hereto as lenders, whether by execution of this Agreement or an
Assignment and Acceptance (individually, a Lender and collectively, the
Lenders , as hereinafter further defined), Congress Financial Corporation,
a California corporation, in its capacity as administrative agent and
collateral agent for the Lenders (in such capacity, the Agent ) and The
CIT Group/Business Credit, Inc., a New York corporation, in its capacity as
co-agent for the Lenders (in such capacity, the Co-Agent ).
W I T N E S S E T H:
WHEREAS, on or about November 3, 1995, Borrowers and Guarantors each
filed a voluntary petition for relief under Chapter 11 of the Bankruptcy
Code (as hereinafter defined) in the United States Bankruptcy Court for the
District of Delaware (the Chapter 11 Cases , as hereinafter further
defined); and
WHEREAS, pursuant to the order of the United States Bankruptcy Court
for the District of Delaware entered on November 29, 1995 in the Chapter 11
Cases, Borrowers, as debtors and debtors-in-possession under Chapter 11 of
the Bankruptcy Code, entered into post-petition financing arrangements with
a syndicate of financial institutions for which BankAmerica Business
Credit, Inc. acted as agent (the BABC DIP Facility ; as hereinafter
further defined); and
WHEREAS, pursuant to the order of the United States Bankruptcy Court
for the District of Delaware, the Plan (as defined herein) has been
confirmed, and concurrently with the making of the initial loans or
issuance of letters of credit hereunder, the Effective Date (as defined
therein) with respect to the Plan has occurred; and
WHEREAS, each of Lenders is willing to agree severally and not jointly
to make loans and provide other financial accommodations to Borrowers on a
pro rata basis according to its Commitment (as defined below), on the terms
and conditions set forth herein and Agent is willing to act as agent for
Lenders, on the terms and conditions set forth herein and the other
Financing Agreements (as defined below);
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
SECTION 1. DEFINITIONS
All terms used herein which are defined in Article 1 or Article 9 of
the Uniform Commercial Code shall have the meanings given therein unless
otherwise defined in this Agreement. All references to the plural herein
shall also mean the singular and to the singular shall also mean the plural
unless the context otherwise requires. The words hereof , herein ,
hereunder , this Agreement and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not any particular
provision of this Agreement and as this Agreement now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced. The word including when used in this Agreement shall mean
including, without limitation . The words ratable or ratably or words
of similar import when used in this Agreement shall refer to a sharing or
allocation based on the respective Pro Rata Shares of Lenders. An Event of
Default shall exist or continue or be continuing until such Event of
Default is waived in accordance with Section 11.3 or if capable of being
cured as reasonably determined by Agent, is cured. Any accounting term
used herein unless otherwise defined in this Agreement shall have the
meaning customarily given to such term in accordance with GAAP. For
purposes of this Agreement, the following terms shall have the respective
meanings given to them below:
1.1 Accounts shall mean each Borrower's right to payment for a sale
or lease and delivery of goods or rendition of services, whether or not
evidenced by instruments or chattel paper, and whether or not earned by
performance and including, without limitation, Credit Card Receivables.
1.2 Adjusted Eurodollar Rate shall mean, with respect to each
Interest Period for any Eurodollar Rate Loan, the rate per annum (rounded
upwards, if necessary, to the next one-sixteenth (1/16) of one percent
(1%)) determined by dividing (a) the Eurodollar Rate for such Interest
Period by (b) a percentage equal to: (i) one (1) minus (ii) the Reserve
Percentage. For purposes hereof, Reserve Percentage shall mean the
reserve percentage, expressed as a decimal, prescribed by any United States
or foreign banking authority for determining the reserve requirement which
is or would be applicable to deposits of United States dollars in a non-
United States or an international banking office of Reference Bank used to
fund a Eurodollar Rate Loan or any Eurodollar Rate Loan made with the
proceeds of such deposit, whether or not the Reference Bank actually holds
or has made any such deposits or loans. The Adjusted Eurodollar Rate shall
be adjusted on and as of the effective day of any change in the Reserve
Percentage.
1.3 Affiliate shall mean, as to any specified Person, any other
Person which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, such
specified Person. For purposes of this definition, control (including
with correlative meanings, the terms controlling , controlled by and
under common control with ), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to effectively direct
or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or
otherwise.
1.4 Agent Advances shall have the meaning set forth in Section 12.13
hereof.
1.5 Assignment and Acceptance shall mean an Assignment and
Acceptance substantially in the form of Exhibit A attached hereto (with
blanks appropriately completed) delivered to the Agent in connection with
an assignment of a Lender's interest hereunder in accordance with the
provisions of Section 13.5 below.
1.6 Availability shall mean, at any time, the lesser of (a) the
amount of the Loans which would be available to Borrowers as of such time
based on the applicable lending formulas set forth in Section 2.1(a)
hereof, as determined by Agent, and subject to Availability Reserves
established at such time hereunder (without regard to the then outstanding
Loans and Letter of Credit Accommodations) and (b) the Maximum Credit. The
term Availability is used herein to mean the amount of Loans available
without reduction for the amount of Loans and Letter of Credit
Accommodations then outstanding.
1.7 Availability Reserves shall mean, as established and revised by
Agent in good faith from time to time, (i) reserves, in Agent's reasonable
discretion, for accrued interest on Loans and accrued fees in respect of
the Letter of Credit Accommodations; (ii) reserves for rebates due
Borrowers and Guarantors on Inventory purchases made by Borrowers and
Guarantors and reserves for shrinkage of inventory to the extent (if any)
such shrinkage is not otherwise provided for in the calculation of
Availability in the Borrowing Base Certificate in a manner satisfactory to
Agent; (iii) other reserves which Agent in its reasonable discretion deems
necessary or desirable to maintain with respect to the loan account of
Borrowers as disclosed to Edison as of the date hereof and all other
reserves hereafter established or revised by Agent in good faith, after
prior notice to Edison (which reserves shall be in amounts having a
reasonable relationship to the event, condition or other matter which is
the basis for it as determined by Agent in good faith), (A) to reflect
events, conditions or circumstances that, as determined by Agent in good
faith, adversely affect or have a reasonable likelihood of adversely
affecting either: (1) the Collateral or any other property which is
security for the Obligations or its value, (2) the security interests and
other rights of Agent or any Lender in the Collateral (including the
enforceability, perfection and priority thereof) or (3) the assets,
financial condition or business of Borrowers and Guarantors taken as a
whole (but not any economic events related to the general state of the
world economy or U.S. economy or the retail apparel industry); (iv) other
reserves hereafter established or revised by Agent, after prior notice to
Edison, which Agent in its reasonable discretion deems necessary or
desirable to maintain in respect of any state of facts which Agent
determines in good faith constitutes an Event of Default or would, with
notice or passage of time or both, constitute an Event of Default, or to
reflect the Agent's good faith belief that any collateral report or
financial information furnished by or on behalf of any Borrower or
Guarantor to Agent or any Lender is incomplete, inaccurate or misleading;
and (v) reserves to reflect outstanding Letter of Credit Accommodations as
provided in Section 2.2 hereof. To the extent Agent may revise the lending
formula set forth in Section 2.1 hereof so as to address any event,
condition or circumstance in a manner satisfactory to Agent, Agent shall
not establish an Availability Reserve for the same purpose.
1.8 BABC shall mean BankAmerica Business Credit, Inc., a Delaware
corporation, and its successors and assigns.
1.9 BABC DIP Facility shall mean the credit facility provided to
Edison and Edison Apparel, each as a debtor-in-possession during the
pendency of the Chapter 11 Cases, by certain financial institutions for
whom BABC acts as agent pursuant to the Loan and Security Agreement, dated
November 9, 1995, by and among the financial institutions parties thereto
as lenders, BABC as agent for such lenders, Borrowers and Guarantors.
1.10 Bankruptcy Code shall mean the United States Bankruptcy Code,
being Title 11 of the United States Code, as the same now exists or may
from time to time hereafter be amended, modified, recodified or
supplemented, together with all official rules thereunder or related
thereto.
1.11 Bankruptcy Court shall mean the United States District Court
for the District of Delaware having jurisdiction over the Chapter 11 Cases
and, to the extent of any reference under Section 157 of Title 28 of the
United States Code, the unit of such District Court under Section 151 of
Title 28 of the United States Code.
1.12 Borrowers shall mean individually and collectively, jointly and
severally, Edison Brothers Stores, Inc., a Delaware corporation, Edison
Brothers Apparel Stores, Inc., a Missouri corporation, Edison Puerto Rico
Stores, Inc., a Puerto Rico corporation, and their respective successors
and assigns, in each case as successors to Edison Brothers Stores, Inc., as
debtor and debtor-in-possession, Edison Brothers Apparel Stores, Inc., as
debtor and debtor-in-possession, and Edison Puerto Rico Stores, Inc., as
debtor and debtor-in-possession, respectively under the Chapter 11 Cases,
being sometimes individually referred to herein as a Borrower .
1.13 Borrowing Base Certificate shall mean a certificate
substantially in the form of Exhibit B hereto, as such form may from time
to time be modified by Edison, with the prior consent of Agent, or by
Agent, with the prior consent of Edison, which is duly completed (including
all schedules thereto) and executed by the chief financial officer or other
appropriate financial officer of Edison acceptable to Agent and delivered
to Agent.
1.14 Business Day shall mean any day other than a Saturday, Sunday,
or other day on which commercial banks are authorized or required to close
under the laws of the State of New York or the Commonwealth of
Pennsylvania, and a day on which the Reference Bank and Agent are open for
the transaction of business, except that if a determination of a Business
Day shall relate to any Eurodollar Rate Loans, the term Business Day shall
also exclude any day on which banks are closed for dealings in dollar
deposits in the London interbank market or other applicable Eurodollar Rate
market.
1.15 Capital Leases shall mean, as applied to any Person, any leases
of (or any agreement conveying the right to use) any property (whether
real, personal or mixed) by such Person as lessee which, in accordance with
GAAP, is required to be capitalized and accounted for as a capital lease.
1.16 Capital Stock shall mean any and all shares, interests,
participations, or other equivalents (however designated) of corporate
stock, partnership interests or limited liability company interests and any
options or warrants with respect to any of the foregoing.
1.17 Cash Distribution Pool shall have the meaning set forth in the
Plan as in effect on the date hereof.
1.18 Cash Equivalents shall mean investments of the type described
on Schedule 1.18 hereto.
1.19 Change of Control shall have the meaning set forth on Schedule
1.19 hereto.
1.20 Chapter 11 Cases shall mean the cases under Chapter 11 of the
Bankruptcy Code commenced by Borrowers and Guarantors, styled In re Edison
Brothers Stores, Inc., et al., Chapter 11 Case No. 95-1354 (PJW) Jointly
Administered, filed in the Bankruptcy Court on or about November 3, 1995.
1.21 CIT shall mean The CIT Group/Business Credit, Inc., a New York
corporation, in its individual capacity, and its successors and assigns.
1.22 Code shall mean the Internal Revenue Code of 1986, as the same
now exists or may from time to time hereafter be amended, modified,
recodified or supplemented, together with all rules, regulations and
interpretations of the Internal Revenue Service thereunder or related
thereto.
1.23 Collateral shall have the meaning set forth in Section 5
hereof.
1.24 Commitment shall have the meaning set forth in Section 2.3
hereof.
1.25 Commitment Percentage shall mean, as to each Lender, the
percentage of the Maximum Credit provided for hereunder represented by such
Lender's Commitment. The Commitment Percentage of each Lender signing this
Agreement is set forth on the signature pages hereto below each Lender's
signature.
1.26 Concentration Accounts shall mean, collectively, the Store
Concentration Account and the Credit Card Concentration Account.
1.27 Confirmation Order shall mean the Order Confirming the Plan
entered by the Bankruptcy Court on September 9, 1997, in the Chapter 11
Cases.
1.28 Congress shall mean Congress Financial Corporation, a
California corporation, in its individual capacity, and its successors and
assigns.
1.29 Cost shall mean, as to the Inventory as of any date, the cost
of such Inventory as of such date, determined principally using the first-
in-first-out method and the retail inventory method or average cost
(consistent with current practice of Borrowers and Guarantors as of the
date hereof) in accordance with GAAP.
1.30 Credit Card Acknowledgments shall mean, individually and
collectively, the agreements by Credit Card Issuers or Credit Card
Processors who are parties to Credit Card Agreements in favor of Agent
acknowledging Agent's first priority security interest in the monies due
and to become due to any Borrower or Guarantor (including, without
limitation, credits and reserves) under the Credit Card Agreements, and
agreeing to transfer such amounts to the Credit Card Concentration Account
established for such purposes, as the same now exist or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
1.31 Credit Card Agreements shall mean all agreements now or
hereafter entered into by any Borrower or Guarantor with any Credit Card
Issuer or any Credit Card Processor, as the same now exist or may hereafter
be amended, modified, supplemented, extended, renewed, restated or
replaced, including, but not limited to, the agreements set forth on
Schedule 8.11 hereto.
1.32 Credit Card Concentration Account shall mean account no.
10022188164 maintained by and in the name of Edison at Mercantile Bank of
St. Louis National Association or such other deposit account as Edison may
hereafter establish and maintain at the same or any other depository bank
in accordance with Section 9.16 hereof to which amounts payable to any
Borrower or Guarantor constituting Proceeds of Credit Card Receivables are
sent.
1.33 Credit Card Issuer shall mean any person (other than any
Borrower or Guarantor) who issues or whose members issue credit cards,
including, without limitation, MasterCard or VISA bank credit or debit
cards or other bank credit or debit cards issued through MasterCard
International, Inc., Visa, U.S.A., Inc. or Visa International and American
Express, Discover, Diners Club, Carte Blanche and other non-bank credit or
debit cards, including, without limitation, credit or debit cards issued by
or through American Express Travel Related Services Company, Inc. and Novus
Services, Inc.
1.34 Credit Card Processor shall mean any servicing or processing
agent or any factor or financial intermediary who facilitates, services,
processes or manages the credit authorization, billing transfer and/or
payment procedures with respect to sales transactions of any Borrower or
Guarantor involving credit card or debit card purchases by customers using
credit cards or debit cards issued by any Credit Card Issuer (including,
but not limited to National Processing Company and National City Bank of
Kentucky).
1.35 Credit Card Receivables shall mean collectively, (a) all
present and future rights of each Borrower to payment from any Credit Card
Issuer, Credit Card Processor or other third party arising from sales of
goods or rendition of services to customers who have purchased such goods
or services using a credit or debit card and (b) all present and future
rights of each Borrower to payment from any Credit Card Issuer, Credit Card
Processor or other third party in connection with the sale or transfer of
Accounts arising pursuant to the sale of goods or rendition of services to
customers who have purchased such goods or services using a credit card or
a debit card, including, but not limited to, all amounts at any time due or
to become due from any Credit Card Issuer or Credit Card Processor under
the Credit Card Agreements or otherwise.
1.36 Customs Broker shall mean any customs broker or similar persons
used by any Borrower or Guarantor for the purpose of assisting,
facilitating and arranging for Inventory to be shipped or delivered to
Borrowers and Guarantors who may at any time have custody, control or
possession of any bills of lading or other documents of title with respect
to goods purchased by Borrowers or Guarantors, provided, that, the term
Customs Broker shall not be construed to include common carriers used by
any Borrower or Guarantor in the United States for transporting goods
within the United States.
1.37 Edbro Missouri shall mean Edbro Missouri Realty Company, Inc.,
a Missouri corporation and its successors and assigns.
1.38 Edbro Missouri Facility shall mean the warehouse and
distribution facility owned by Edbro Missouri located at 200 West Link
Industrial Drive, Washington, Missouri 63084.
1.39 Effective Date shall have the meaning given to such term in the
Plan as in effect on the date hereof.
1.40 Eligible Inventory shall mean Inventory consisting of finished
goods held for resale in the ordinary course of the businesses of Borrowers
that:
(a) is not, in Agent's reasonable judgment, obsolete or
unmerchantable;
(b) upon which Agent, for itself and the ratable benefit of
Lenders, has a first priority perfected security interest as to which Agent
has received such proof as Agent may require as to such perfection and
priority;
(c) is either (i) located at premises owned by or leased to a
Borrower or Guarantor or (ii) on premises otherwise reasonably acceptable
to Agent or (iii) is in transit in the United States to a location of
Borrowers in the United States if Agent has a first priority security
interest therein or (iv) is outside of the United States and in transit to
a location of Borrowers in the United States if Agent has a first priority
security interest in and control of the documents of title covering such
goods (whether through a Customs Broker or otherwise) and so long as no
Letter of Credit Accommodation is outstanding with respect thereto;
(d) Agent otherwise deems eligible as the basis for Loans and
Letter of Credit Accommodations based on such other credit and collateral
considerations as Agent may from time to time establish in its sole
discretion; and
(e) is not subject to a lien, security interest or other
encumbrance in favor of any issuer or provider of Letter of Credit
Accommodations (other than Agent).
Without intending to limit Agent's discretion to establish other criteria
of eligibility, Inventory located outside of the United States (other than
the in-transit Inventory to the extent provided above), piece-work,
packaway inventory, packaging and shipping material, supplies, bill and
hold Inventory, non-first quality returned Inventory, defective Inventory,
raw materials, work-in-process, excess or slow moving Inventory or
Inventory delivered to any Borrower on consignment shall not constitute
Eligible Inventory.
1.41 Environmental Laws shall mean all foreign, Federal, State,
Provincial and local laws (including common law), legislation, rules,
codes, licenses, permits (including any conditions imposed therein),
authorizations, judicial or administrative decisions, injunctions or
agreements between any Borrower or Guarantor and any Governmental
Authority, (a) relating to pollution and the protection, preservation or
restoration of the environment (including air, water vapor, surface water,
ground water, drinking water, drinking water supply, surface land,
subsurface land, plant and animal life or any other natural resource), or
to human health or safety, (b) relating to the exposure to, or the use,
storage, recycling, treatment, generation, manufacture, processing,
distribution, transportation, handling, labeling, production, release or
disposal, or threatened release, of Hazardous Materials, or (c) relating to
all laws with regard to recordkeeping, notification, disclosure and
reporting requirements respecting Hazardous Materials. The term
Environmental Laws includes (i) the Federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Federal Superfund
Amendments and Reauthorization Act, the Federal Water Pollution Control Act
of 1972, the Federal Clean Water Act, the Federal Clean Air Act, the
Federal Resource Conservation and Recovery Act of 1976 (including the
Hazardous and Solid Waste Amendments thereto), the Federal Solid Waste
Disposal and the Federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking
Water Act of 1974, (ii) applicable state counterparts to such laws, and
(iii) any common law or equitable doctrine that may impose liability or
obligations for injuries or damages due to, or threatened as a result of,
the presence of or exposure to any Hazardous Materials.
1.42 ERISA shall mean the Employee Retirement Income Security Act of
1974, as the same now exists or may hereafter from time to time be amended,
modified, recodified or supplemented, together with all rules, regulations
and interpretations of the Internal Revenue Service thereunder or related
thereto.
1.43 ERISA Affiliate shall mean any person required to be aggregated
with Edison or any of its Subsidiaries under Sections 414(b), 414(c),
414(m) or 414(o) of the Code.
1.44 Eurodollar Rate shall mean with respect to the Interest Period
for a Eurodollar Rate Loan, the interest rate per annum equal to the
arithmetic average of the rates of interest per annum (rounded upwards, if
necessary, to the next one-sixteenth (1/16) of one percent (1%)) at which
Reference Bank is offered deposits of United States dollars in the London
interbank market (or other Eurodollar Rate market selected by a Borrower
and approved by Agent) on or about 9:00 a.m. (New York time) two (2)
Business Days prior to the commencement of such Interest Period in amounts
substantially equal to the principal amount of the Eurodollar Rate Loans
requested by and available to such Borrower in accordance with this
Agreement, with a maturity of comparable duration to the Interest Period
selected by such Borrower.
1.45 Eurodollar Rate Loans shall mean any Loans or portion thereof
on which interest is payable based on the Adjusted Eurodollar Rate in
accordance with the terms hereof.
1.46 Excess Availability shall mean the amount, as determined by
Agent, calculated at any time, equal to: (a) the Availability at such time,
minus (b) the sum of: (i) the amount of all then outstanding and unpaid
Obligations, plus (ii) the aggregate amount of all trade payables of
Borrowers which are more than thirty (30) days past due as of such time,
plus (iii) the amount of checks issued by Borrowers to pay trade payables,
but not yet sent and the book overdraft of Borrowers.
1.47 Existing Letters of Credit shall mean the letters of credit
outstanding on the date hereof issued by Bank of America, N.T. & S.A. for
the account of any Borrower pursuant to the BABC DIP Facility.
1.48 Event of Default shall have the meaning set forth in Section
10.1 hereof.
1.49 Financing Agreements shall mean, collectively, this Agreement
and all notes, guarantees, security agreements and other agreements,
documents and instruments now or at any time hereafter executed and/or
delivered by any Borrower or Guarantor in connection with this Agreement,
as the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
1.50 Funding Escrow Agent shall mean Mercantile Trust Company, N.A.
and its successors and assigns, as escrow agent appointed pursuant to
Section 5.2 of the Plan.
1.51 Funding Escrow Properties shall mean the real property owned by
certain of Borrowers and Guarantors described on Schedule 1.51 hereto.
1.52 GAAP shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Boards which are
applicable to the circumstances as of the date of determination
consistently applied, provided that if any change in generally accepted
accounting principles after the date hereof, in itself materially affects
the calculation of compliance with the financial covenant in
Section 9.14 hereof, Borrowers may by notice to Agent, or Agent may, or at
the request of Majority Lenders shall, by notice to Edison require that
such covenant thereafter be calculated in accordance with generally
accepted accounting principles as in effect, and applied by Borrowers,
immediately before such change in generally accepted accounting principles
occurred. If such notice is given, the compliance certificates delivered
pursuant to Section 9.6(a) hereof after such change occurs shall be
accompanied by reconciliations of the difference between the calculation
set forth therein and a calculation made in accordance with generally
accepted accounting principles as in effect from time to time after such
change occurs.
1.53 Governmental Authority shall mean the United States of America,
any State of the United States of America, any foreign government, or a
local municipality or other political subdivision or any body, department,
authority, agency, public corporation or instrumentality of any of the
foregoing.
1.54 Guarantors shall mean each of the Subsidiaries of Edison set
forth on Schedule 1.54 hereto and any other Person at any time hereafter
liable on or in respect of the Obligations, and their respective successors
and assigns, sometimes being individually referred to herein as a
Guarantor .
1.55 Hazardous Materials shall mean any hazardous, toxic or
dangerous substances, materials and wastes, including, without limitation,
hydrocarbons (including naturally occurring or man-made petroleum and
hydrocarbons), flammable explosives, asbestos, urea formaldehyde
insulation, radioactive materials, biological substances, polychlorinated
biphenyls, pesticides, herbicides and any other kind and/or type of
pollutants or contaminants (including, without limitation, materials which
include hazardous constituents), sewage, sludge, industrial slag, solvents
and/or any other similar substances, materials, or wastes and including any
other substances, materials or wastes that are or become regulated under
any Environmental Law (including, without limitation, any that are or
become classified as hazardous or toxic under any Environmental Law).
1.56 Indebtedness shall mean, with respect to any Person, any
liability, whether or not contingent, (a) in respect of borrowed money
(whether or not the recourse of the lender is to the whole of the assets of
such Person or only to a portion thereof) or evidenced by bonds, notes,
debentures or similar instruments; (b) representing the balance deferred
and unpaid of the purchase price of any property or services (except any
such balance that constitutes an account payable to a trade creditor
(whether or not an Affiliate) created, incurred, assumed or guaranteed by
such Person in the ordinary course of business of such Person in connection
with obtaining goods, materials or services that is not overdue by more
than ninety (90) days, unless the trade payable is being diligently
contested in good faith); (c) all obligations as lessee under leases which
have been, or should be, in accordance with GAAP recorded as Capital
Leases; (d) any contractual obligation, contingent or otherwise, of such
Person to pay or be liable for the payment of any indebtedness described in
this definition of another Person, including, without limitation, any such
indebtedness, directly or indirectly guaranteed, endorsed (other than for
collection or deposit in the ordinary course of business), co-made or
discounted or sold with recourse by such Person, or in respect of which
such Person is otherwise directly or indirectly liable, including,
contractual obligations (contingent or otherwise) arising through any
agreement to purchase, repurchase, or otherwise acquire such indebtedness,
obligation or liability or any security therefor, or to provide funds for
the payment or discharge thereof (whether in the form of loans, advances,
stock purchases, capital contributions or otherwise), or to maintain
solvency, assets, level of income, or other financial condition, or to make
payment other than for value received; (e) all obligations with respect to
redeemable stock and redemption or repurchase obligations under any Capital
Stock or other equity securities issued by such Person; (f) all
reimbursement obligations and other similar liabilities of such Person with
respect to surety bonds (whether bid, performance or otherwise), letters of
credit, banker's acceptances or similar documents or instruments issued for
such Person's account (including, without limitation steamship or airway
guarantees, indemnities or releases); (g) all indebtedness of such Person
in respect of indebtedness of another Person for borrowed money or
indebtedness of another Person otherwise described in this definition which
is secured by any consensual lien, security interest, collateral
assignment, conditional sale, mortgage, deed of trust, or other encumbrance
on any asset of such Person, whether or not such obligations, liabilities
or indebtedness are assumed by or are a personal liability of such Person,
all as of such time; and (h) all obligations, liabilities and indebtedness
of such Person (marked to market) consisting of hedging obligations (on a
net basis).
1.57 Interest Period shall mean, as to a Borrower, for any
Eurodollar Rate Loan, a period of approximately one (1), two (2), or three
(3) months duration as such Borrower may elect, the exact duration to be
determined in accordance with the customary practice in the applicable
Eurodollar Rate market; provided, that, no Borrower may elect an Interest
Period which will end after the last day of the then-current term of this
Agreement.
1.58 Interest Rate shall mean, as to Prime Rate Loans, the Prime
Rate per annum and, as to Eurodollar Rate Loans, a rate of two and one-
quarter percent (2 1/4%) per annum in excess of the Adjusted Eurodollar
Rate (based on the Eurodollar Rate applicable for the Interest Period
selected by a Borrower as in effect three (3) Business Days after the date
of receipt by Agent of the request of such Borrower for such Eurodollar
Rate Loans in accordance with the terms hereof, whether such rate is higher
or lower than any rate previously quoted to such Borrower); provided, that;
the Interest Rate shall be increased to the rate of two percent (2%) per
annum in excess of the Prime Rate as to Prime Rate Loans and the rate of
four and one-quarter percent (4 1/4%) per annum in excess of the Adjusted
Eurodollar Rate as to Eurodollar Rate Loans, at Agent's option, without
notice, for the period on and after (a) the date of termination hereof and
until such time as all Obligations are indefeasibly paid in full
(notwithstanding entry of any judgment against such Borrower), or (b) the
date of the occurrence of any Event of Default, or act, condition or event
which with notice or passage of time or both would constitute an Event of
Default, and for so long as such Event of Default or other act, condition
or event is continuing.
1.59 Inventory shall mean all of each Borrower's now owned and
hereafter acquired inventory, goods, merchandise, and other personal
property, wherever located, to be furnished by such Borrower under any
contract of service or held for sale or lease, all raw materials, work-in-
process, finished goods, returned and repossessed goods, and materials and
supplies of any kind, nature or description which are or might be used or
consumed in such Borrower's business or used in connection with the
manufacture, packing, shipping, advertising, selling or finishing of such
inventory, goods, merchandise and such other personal property, and all
documents of title or other documents representing them.
1.60 Issuing Banks shall mean CoreStates Bank, N.A. or any of its
branches or Affiliates and their respective successors and assigns.
1.61 Lenders shall mean the financial institutions who are
signatories hereto as lenders and other persons made a party to this
Agreement as Lenders in accordance with Section 13.5 hereof, and their
respective successors and assigns.
1.62 Letter of Credit Accommodations shall mean the letters of
credit, merchandise purchase guaranties or other guaranties which are from
time to time either (a) issued or opened by Agent or any Lender for the
account of a Borrower or any Guarantor or (b) with respect to which Agent
on behalf of Lenders has agreed to indemnify the issuer or guaranteed to
the issuer the performance by a Borrower or any Guarantor of its
obligations to such issuer (including, without limitation, the Existing
Letters of Credit).
1.63 Loans shall mean the loans now or hereafter made to or for the
benefit of Borrowers by Lenders or, at Agent's option, by Agent for the
ratable account of Lenders, on a revolving basis (involving advances,
repayments and readvances) as set forth in Section 2.1 hereof.
1.64 Majority Lenders shall mean as of any date of determination
thereof, Lenders holding more than fifty percent (50%) of the aggregate
outstanding principal amount of Loans and outstanding Letter of Credit
Accommodations, or, if there are no Loans or Letter of Credit
Accommodations outstanding, then such term shall mean Lenders having
aggregate Commitment Percentages of more than fifty percent (50%).
1.65 Material Adverse Effect shall mean (a) a material adverse
change in, or a material adverse effect upon (i) the Collateral or (ii) the
operations, business, properties, condition (financial or otherwise) or
prospects of Edison and its Subsidiaries taken as a whole; (b) a material
impairment of the ability of Borrowers and Guarantors (taken as a whole) to
perform under any of the Financing Agreements and to avoid any Event of
Default; (c) a material adverse effect upon the legality, validity, binding
effect or enforceability against Edison or any of its Subsidiaries of any
of the Financing Agreements; or (d) a material adverse effect upon the
perfection or priority of the security interests and liens of Agent upon
the Collateral or any other property which is security for the Obligations.
1.66 Maturity Date shall have the meaning set forth in Section 13.1
hereof.
1.67 Maximum Credit shall mean $200,000,000.
1.68 Net Recovery Cost Percentage shall mean the fraction, expressed
as a percentage, (a) the numerator of which is the amount equal to the
recovery on the aggregate amount of the Inventory at such time on a going
out of business sale basis as set forth in the most recent acceptable
appraisal of Inventory received by Agent in accordance with Section 7.3,
net of operating expenses, liquidation expenses and commissions with
respect to such sale, and (b) the denominator of which is the Cost of the
aggregate amount of the Inventory subject to such appraisal.
1.69 Net Recovery Retail Percentage shall mean the fraction,
expressed as a percentage, (a) the numerator of which is the amount equal
to the recovery on the aggregate amount of the Inventory at such time on a
going out of business sale basis as set forth in the most recent
acceptable appraisal of Inventory received by Agent in accordance with
Section 7.3, net of operating expenses, liquidation expenses and
commissions with respect to such sale, and (b) the denominator of which is
the Retail Value of the aggregate amount of the Inventory subject to such
appraisal.
1.70 Net Worth shall mean as to any Person, at any time, in
accordance with GAAP (except as otherwise specifically set forth below), on
a consolidated basis for such Person and its subsidiaries (if any), the
amount equal to the difference between: (a) the aggregate net book value of
all assets of such Person and its subsidiaries, calculating the book value
of inventory for this purpose principally on a first-in-first-out basis, at
(i) the lower of cost or market using the first-in-first-out method and the
retail inventory method or (ii) stating the inventory at the lower of cost,
mainly average cost, or market based principally on anticipated realizable
values, consistent with current practice as of the date hereof, after
deducting from such book values all appropriate reserves in accordance with
GAAP (including all reserves for doubtful receivables, obsolescence,
depreciation and amortization) and (b) the aggregate amount of the
indebtedness and other liabilities of such Person and its subsidiaries
(including tax and other proper accruals).
1.71 New Note Indenture shall mean the Indenture, dated as of
September 26, 1997, by and between Edison, as issuer, and The Bank of New
York, as trustee, with respect to the New Notes, as the same now exists or
may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.72 New Notes shall mean, collectively, the 11% Notes due 2007
issued by Edison in the aggregate principal amount of $120,000,000 (since
Edison has elected on or before the Effective Date to reduce certain cash
to be paid into the Cash Distribution Pool pursuant to Section 1.15 of the
Plan (as in effect on the date hereof), so that the principal amount of the
New Notes has been increased from $100,000,000 to $120,000,000), pursuant
to the terms of the New Note Indenture, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced.
1.73 Non-Guarantor Subsidiary shall mean any Subsidiary of Edison
which is not a Guarantor.
1.74 Obligations shall mean any and all Loans, Letter of Credit
Accommodations and all other obligations, liabilities and indebtedness of
every kind, nature and description owing by any or all of Borrowers to
Agent or any Lender, and including principal, interest, charges, fees,
costs and expenses, however evidenced, whether as principal, surety,
endorser, guarantor or otherwise, arising under or in connection with this
Agreement or any of the other Financing Agreements, whether now existing or
hereafter arising, whether arising before, during or after the initial or
any renewal term of this Agreement, or before, during and after the
Effective Date or the confirmation of the Plan in the Chapter 11 Cases or
the reopening of the Chapter 11 Cases (including, without limitation, the
payment of interest and other amounts owed by any or all of Borrowers to
Agent and Lenders which would accrue and become due if such Chapter 11
Cases were reopened or after the commencement of any future case with
respect to any or all of Borrowers under the Bankruptcy Code or any similar
statute, whether or not such amounts are allowed or allowable in whole or
in part in such case), whether direct or indirect, absolute or contingent,
joint or several, due or not due, primary or secondary, liquidated or
unliquidated, or secured or unsecured.
1.75 Participant shall mean any financial institution that acquires
and holds a participation in the interest of any Lender in any of the Loans
and Letter of Credit Accommodations in conformity with the provisions of
Section 13.5 of this Agreement governing participations.
1.76 Payment Account shall have the meaning set forth in Section 6.3
hereof.
1.77 Permits shall have the meaning set forth in Section 8.8 hereof.
1.78 Person or person shall mean any individual, sole
proprietorship, partnership, corporation (including, without limitation,
any corporation which elects subchapter S status under the Code), limited
liability company, limited liability partnership, business trust,
unincorporated association, joint stock corporation, trust, joint venture
or other entity or any government or any agency or instrumentality or
political subdivision thereof.
1.79 Plan shall mean the Amended Joint Plan of Reorganization under
Chapter 11 of the Bankruptcy Code, dated June 30, 1997, of Borrower and
Guarantors, in the form filed with the Bankruptcy Court on June 30, 1997,
and any amendments, supplements or modifications thereto.
1.80 Prime Rate shall mean the rate from time to time publicly
announced by CoreStates Bank, N.A., or its successors, at its office in
Philadelphia, Pennsylvania, as its prime rate, whether or not such
announced rate is the best rate available at such bank.
1.81 Prime Rate Loans shall mean any Loans or portion thereof on
which interest is payable based on the Prime Rate in accordance with the
terms hereof.
1.82 Proceeds shall mean all products and proceeds of any
Collateral, and all proceeds of such proceeds and products, including,
without limitation, all cash and credit balances, all payments under any
indemnity, warranty, or guaranty payable with respect to any Collateral,
all awards for taking by eminent domain, all proceeds of fire or other
insurance, and all money and other property obtained as a result of any
claims against third parties or any legal action or proceeding with respect
to Collateral.
1.83 Proprietary Rights shall mean all of each Borrower's now owned
and hereafter arising or acquired United States: licenses, franchises,
permits, patents, patent rights, copyrights, works which are the subject
matter of copyrights, trademarks, trade names, tradestyles, patent and
trademark applications and licenses and rights thereunder, and all other
rights under any of the foregoing, all extensions, renewals, reissues,
divisions, continuations, and continuations-in-part of any of the
foregoing, and all rights to sue for past, present, and future infringement
of any of the foregoing; inventions, trade secrets, formulae, processes,
compounds, drawings, designs, blueprints, surveys, reports, manuals, and
operating standards; goodwill; customer and other lists in whatever form
maintained; and trade secret rights, copyright rights, rights in works of
authorship, and contract rights relating to computer software programs, in
whatever form created or maintained.
1.84 Pro Rata Share shall mean, with respect to any Lender, a
fraction (expressed as a percentage), the numerator of which shall be the
amount of such Lender's Commitment as adjusted from time to time in
accordance with the provisions of Section 13.5 hereof, and the denominator
of which shall be the aggregate amount of all of the Lenders' Commitments,
provided, that, if the Commitments have been terminated, the numerator
shall be the unpaid amount of such Lender's Loans and its interest in the
Letter of Credit Accommodations and the denominator shall be the aggregate
amount of all unpaid Loans and Letter of Credit Accommodations.
1.85 Receivables shall mean all of each Borrower's now owned and
hereafter arising or acquired: Accounts (whether or not earned by
performance), including Accounts owed to a Borrower by any of its
Subsidiaries or Affiliates, together with all interest, late charges,
penalties, collection fees, and other sums which shall be due and payable
in connection with any Account; proceeds of any letters of credit naming a
Borrower as beneficiary; contract rights, chattel paper, instruments,
documents, credit card or debit card sales slips or charge slips or
receipts, notes, general intangibles (including without limitation, choses
in action, causes of action, tax refunds, tax refund claims, and other
amounts payable to a Borrower from pension and employee benefit plans,
rights and claims against shippers and carriers, rights to indemnification
and business interruption insurance) and all forms of obligations owing to
a Borrower (including, without limitation, obligations owing to a Borrower
by its Subsidiaries and Affiliates); guarantees and other security for any
of the foregoing; and rights of stoppage in transit, replevin and
reclamation; and other rights or remedies of an unpaid vendor, lienor, or
secured party.
1.86 Reference Bank shall mean CoreStates Bank, N.A. or such other
bank as Agent may designate from time to time.
1.87 Refinancing Indebtedness shall have the meaning set forth in
Section 9.9 hereto.
1.88 Register shall have the meaning set forth in Section 13.5
hereof.
1.89 Retail Value shall mean, as to the Inventory as of any date,
the then current retail sales price of such Inventory as of such date,
after reduction by the amount of markdowns from the original retail sales
price or ticketed sales price with respect thereto (other than temporary
point-of-sale promotional markdowns consistent with current practices as of
the date hereof).
1.90 Series 1997 Note shall mean the Promissory Note, dated as of
September 26, 1997, issued by Edbro Missouri and made payable to the City
of Washington, Franklin County, Missouri, as the issuer of certain bonds,
in the original aggregate principal amount of $6,717,000, as the same now
exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.91 Series 1997 Loan Agreement shall mean the Loan Agreement, dated
as of August 1, 1997, by and between Edbro Missouri and the City of
Washington, Missouri, as the issuer of certain bonds, as the same now
exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.92 Store Concentration Account shall mean account no. 001010057985
maintained by and in the name of Edison at NationsBank Texas, N.A. (which
account number may be changed on or about October 6, 1997 to account no.
3750917165) or such other deposit account as Edison may hereafter establish
and maintain at the same or any other depository bank in accordance with
Section 9.16 hereof into which Proceeds of sales of Inventory are sent from
the local depository banks used by each of the retail store locations of
Borrower and Guarantors.
1.93 Subsidiary shall mean any corporation of which fifty percent
(50%) or more of the outstanding securities of any class or classes
thereof, as to which the holders thereof are ordinarily in the absence of
contingencies, entitled to elect a majority of the directors (or Persons
performing similar functions) of such corporation, is now or hereafter
directly or indirectly (through one or more intermediaries) owned by any
Borrower or Guarantor and/or any one or more of its Subsidiaries.
1.94 United States shall mean the United States of America, and its
possessions, including Puerto Rico and the Virgin Islands.
1.95 Value shall mean, with respect to Inventory, the lower of (a)
Cost or (b) market value.
1.96 Weighted Average Life to Maturity shall mean, when applied to
any Indebtedness at any date, the number of years obtained by dividing
(a) the then outstanding principal amount of such Indebtedness into (b) the
total of the product obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required
payments of principal, including payment at final maturity, in respect
thereof, by (ii) the number of years (calculated to the nearest one-
twelfth) that will elapse between such date and the making of such payment.
SECTION 2. CREDIT FACILITIES
2.1 Loans.
(a) Subject to, and upon the terms and conditions contained
herein, each of the Lenders severally (and not jointly) agrees to fund its
Pro Rata Share of Loans to Borrowers from time to time in amounts requested
by a Borrower up to the amount equal to:
(i) the lesser of the Maximum Credit or: (A) during the period
commencing on December 16 in each calendar year through and including July
31 in the following calendar year, the lesser of: (1) sixty percent (60%)
multiplied by the Value of Eligible Inventory or (2) eighty-five percent
(85%) of the Net Recovery Cost Percentage multiplied by the Cost of
Eligible Inventory, or (B) during the period commencing on August 1 through
and including December 15 in each calendar year, the lesser of:
(1) seventy percent (70%) multiplied by the Value of Eligible Inventory or
(2) one hundred percent (100%) of the Net Recovery Cost Percentage
multiplied by the Cost of Eligible Inventory; plus
(ii) ninety-five percent (95%) multiplied by the aggregate amount
of cash and Cash Equivalents of Borrowers and Guarantors which are (A) held
by Agent as Collateral for the ratable benefit of itself and Lenders on
terms and conditions acceptable to Agent and pursuant to such agreements
and instruments satisfactory in form and substance to Agent and (B) free
and clear of any and all liens, security interests, claims and other
encumbrances except for the lien and security interest in favor of Agent
for the ratable benefit of itself and Lenders; minus
(iii) any Availability Reserves.
(b) In the event that any appraisal of the Inventory after the
date hereof by a third party appraiser shall reflect a Net Recovery Cost
Percentage or Net Recovery Retail Percentage less than such percentages
reflected in the appraisal of the Inventory by Gordon Brothers delivered to
Agent prior to the date hereof, Agent may, in its discretion, upon not less
than five (5) days prior notice to Edison, reduce the percentage lending
formula set forth in Section 2.1(a)(i)(A)(2) and 2.1(a)(i)(B)(2) above with
respect to Eligible Inventory to the extent of the decrease in the Net
Recovery Retail Percentage or the Net Recovery Cost Percentage after the
date hereof.
(c) Except in Agent's discretion, with the consent of the
Majority Lenders, (i) the aggregate amount of the Loans and the Letter of
Credit Accommodations outstanding at any time shall not exceed the Maximum
Credit, (ii) the aggregate amount of the Letter of Credit Accommodations
shall not exceed the sublimit for Letter of Credit Accommodations set forth
in Section 2.2(d) and (iii) the aggregate amount of the Loans outstanding
at any time shall not exceed the Availability.
2.2 Letter of Credit Accommodations.
(a) Subject to, and upon the terms and conditions contained
herein, at the request of a Borrower, Agent agrees, for the ratable risk of
Lenders, according to their Pro Rata Shares, to provide or arrange for
Letter of Credit Accommodations issued by the Issuing Bank or Bank of
America, N.T. & S.A. for the account of such Borrower containing terms and
conditions acceptable to Agent and Issuing Bank or Bank of America, N.T. &
S.A. (as the case may be). Any payments made by Agent or Lenders to the
Issuing Bank or Bank of America, N.T. & S.A. and/or related parties in
connection with the Letter of Credit Accommodations shall constitute
additional Loans to Borrowers pursuant to this Section 2.
(b) Borrowers shall pay to Agent for the ratable benefit of
Lenders a letter of credit fee at a rate equal to one and one-quarter
percent (1-1/4%) per annum on the daily outstanding balance of the Letter
of Credit Accommodations for the immediately preceding month (or part
thereof), payable in arrears as of the first day of each succeeding month,
except that Agent may, and upon the written direction of the Majority
Lenders shall, require Borrowers to pay to Agent, for the ratable benefit
of Lenders, such letter of credit fee, without notice, at a rate equal to
three and one-quarter percent (3-1/4%) per annum on such daily outstanding
balance for the period from and after the date of the occurrence of an
Event of Default for so long as such Event of Default is continuing. Such
letter of credit fee shall be calculated on the basis of a three hundred
sixty (360) day year and actual days elapsed and the obligation of
Borrowers to pay such fee shall survive the termination or non-renewal of
this Agreement. The foregoing letter of credit fee shall be in addition to
any charges, fees or expenses charged by any bank or issuer in connection
with the Letter of Credit Accommodations, provided, that, with respect to
Letter of Credit Accommodations which are not standby Letter of Credit
Accommodations and are used solely for the purpose of purchasing goods
expected to become Eligible Inventory or goods being shipped to Canada or
goods constituting fabric being shipped from one jurisdiction outside the
United States to another jurisdiction outside the United States, no bank
fees, opening charges or amendment or similar fees shall be charged by the
Issuing Bank for purposes of this Section 2.2(b), except as otherwise
provided in the fee agreement by and among the Issuing Bank and Borrowers.
Any Letter of Credit Accommodations issued payable to BABC in connection
with the Existing Letters of Credit constitutes a standby Letter of Credit
Accommodations for the purpose of satisfying the reimbursement obligations
of Borrowers and Guarantors to BABC arising upon a draw under the Existing
Letters of Credit, not for the purpose of purchasing goods.
(c) No Letter of Credit Accommodations shall be available unless
on the date of the proposed issuance of any Letter of Credit
Accommodations, the Loans available to Borrowers (subject to the Maximum
Credit and any Availability Reserves) are equal to or greater than (i) if
the proposed Letter of Credit Accommodation is for the purpose of
purchasing goods expected to become Eligible Inventory, the amount equal to
(A) the percentage equal to one hundred percent (100%) minus the then
applicable percentage set forth in Section 2.1(a)(i) above multiplied by
(B) the Cost of such Eligible Inventory, and (ii) if the proposed Letter of
Credit Accommodation is for any other purpose, an amount equal to one
hundred percent (100%) of the face amount thereof and all other commitments
and obligations made or incurred by Agent and Lenders with respect thereto.
Effective on the issuance of each Letter of Credit Accommodations, an
Availability Reserve shall be established in the applicable amount set
forth in Section 2.2(c)(i) or Section 2.2(c)(ii). To the extent that the
Existing Letters of Credit are for the purpose of purchasing goods expected
to become Eligible Inventory, the Availability Reserve for any Letter of
Credit Accommodations issued payable to BABC to reimburse BABC in the event
of a draw under such Existing Letters of Credit, subject to the other terms
and conditions contained herein, shall be in the amount set forth in
Section 2.2(c)(i).
(d) Except in Agent's discretion, with the consent of the
Majority Lenders, the amount of all outstanding Letter of Credit
Accommodations and all other commitments and obligations made or incurred
by Agent or any Lender in connection therewith, shall not at any time
exceed $150,000,000. At any time an Event of Default exists or has
occurred and is continuing, upon Agent's request, Borrowers will either
furnish cash collateral to secure the reimbursement obligations to the
issuer in connection with any Letter of Credit Accommodations or furnish
cash collateral to Agent, for itself and the ratable benefit of Lenders,
for the Letter of Credit Accommodations, and in either case, the Loans
otherwise available to Borrowers shall not be reduced as provided in
Section 2.2(c) to the extent of such cash collateral.
(e) Each Borrower shall indemnify and hold Agent and Lenders
harmless from and against any and all losses, claims, damages, liabilities,
costs and expenses which Agent or any Lender may suffer or incur in
connection with any Letter of Credit Accommodations and any documents,
drafts or acceptances relating thereto (and including, without limitation,
any steamship or airway guaranties or releases, indemnities or delivery
orders) including, but not limited to, any losses, claims, damages,
liabilities, costs and expenses due to any action taken by any issuer or
correspondent with respect to any Letter of Credit Accommodation, except
for any losses, claims, damages, liabilities, costs and expenses as a
result of the gross negligence or wilful misconduct of Agent and Lenders as
determined pursuant to a final non-appealable order of a court of competent
jurisdiction. Each Borrower assumes all risks with respect to the acts or
omissions of the drawer under or beneficiary of any Letter of Credit
Accommodation and for such purposes the drawer or beneficiary shall be
deemed Borrowers' agent. Each Borrower assumes all risks for, and agrees
to pay, all foreign, Federal, State and local taxes, duties and levies
relating to any goods subject to any Letter of Credit Accommodations or any
documents, drafts or acceptances thereunder. Borrowers hereby release and
hold Agent and Lenders harmless from and against any acts, waivers, errors,
delays or omissions, whether caused by Borrowers, by any issuer or
correspondent or otherwise with respect to or relating to any Letter of
Credit Accommodation, except for any losses, claims, damages, liabilities,
costs and expenses as a result of the gross negligence or wilful misconduct
of Agent and Lenders as determined pursuant to final non-appealable order
of a court of competent jurisdiction. The provisions of this Section
2.2(e) shall survive the payment of Obligations and the termination of this
Agreement.
(f) Nothing contained herein shall be deemed or construed to
grant Borrowers any right or authority to pledge the credit of Agent or any
Lender in any manner. Agent and Lenders shall have no liability of any
kind with respect to any Letter of Credit Accommodation provided by an
issuer other than Agent unless Agent has duly executed and delivered to
such issuer the application or a guarantee or indemnification in writing
with respect to such Letter of Credit Accommodation or has otherwise
evidenced in writing or electronically its approval of the issuance of such
Letter of Credit Accommodation. Borrowers shall be bound by any
interpretation made in good faith by Agent, or any other issuer or
correspondent under or in connection with any Letter of Credit
Accommodation or any documents, drafts or acceptances thereunder,
notwithstanding that such interpretation may be inconsistent with any
instructions of Borrowers. Agent shall have the sole and exclusive right
and authority to, and Borrowers shall not: (i) at any time an Event of
Default exists or has occurred and is continuing, (A) approve or resolve
any questions of non-compliance of documents, (B) give any instructions as
to acceptance or rejection of any documents or goods or (C) execute any and
all applications for steamship or airway guaranties, releases, indemnities
or delivery orders, and (ii) at all times, (A) grant any extensions of the
maturity of, time of payment for, or time of presentation of, any drafts,
acceptances, or documents, and (B) agree to any amendments, renewals,
extensions, modifications, changes or cancellations of any of the terms or
conditions of any of the applications, Letter of Credit Accommodations, or
documents, drafts or acceptances thereunder or any letters of credit
included in the Collateral. Agent may take such actions either in its own
name or the name of any Borrower or Guarantor.
(g) Any rights, remedies, duties or obligations granted or
undertaken by Borrowers or Guarantors to any issuer or correspondent in any
application for any Letter of Credit Accommodation, or any other agreement
in favor of any issuer or correspondent relating to any Letter of Credit
Accommodation, shall be deemed to have been granted or undertaken by
Borrowers and Guarantors to Agent and Lenders. Any duties or obligations
undertaken by Agent to any issuer or correspondent in any application for
any Letter of Credit Accommodation, or any other agreement by Agent in
favor of any issuer or correspondent relating to any Letter of Credit
Accommodation, shall be deemed to have been undertaken by Borrowers and
Guarantors to Agent and to apply in all respects to Borrowers and
Guarantors. Borrowers and Guarantors shall take such actions as Agent or
Issuing Bank may reasonably request with respect to documents of title or
other documents required for drawing in connection with any of the Existing
Letters of Credit. All originals of documents of title covering goods
being purchased with Letter of Credit Accommodations shall either be sent
to (i) the appropriate Customs Broker in the United States who has entered
into an agreement (in form and substance satisfactory to Agent) in favor of
Agent, (ii) the Issuing Bank or (iii) Mercantile Bank of St. Louis National
Association, as the case may be.
2.3 Commitments. The Commitments of Lenders shall be the respective
maximum amounts set forth below each Lender's signature on the signature
pages hereto, as the same may from time to time be amended with the written
acknowledgment of the Agent and Edison (to the extent the consent of Edison
is required under Section 13.5 hereof) in connection with any executed
Assignment and Acceptance executed and delivered to evidence permitted
assignments by any Lender as provided in Section 13.5 hereof.
2.4 Joint and Several Liability. Borrowers shall be liable for all
amounts due to Agent and Lenders under this Agreement, regardless of which
Borrower actually receives the Loans or other extensions of credit
hereunder or the amount of such Loans received or the manner in which Agent
or any Lender accounts for such Loans, Letter of Credit Accommodations or
other extensions of credit on its books and records. The Obligations with
respect to Loans made to a Borrower, and the Obligations arising as a
result of the joint and several liability of a Borrower hereunder, with
respect to Loans made to the other Borrowers hereunder, shall be separate
and distinct obligations, but all such other Obligations shall be primary
obligations of all Borrowers. The Obligations arising as a result of the
joint and several liability of a Borrower hereunder with respect to Loans,
Letter of Credit Accommodations or other extensions of credit made to the
other Borrowers hereunder shall, to the fullest extent permitted by law, be
unconditional irrespective of (a) the validity or enforceability, avoidance
or subordination of the Obligations of the other Borrowers or of any
promissory note or other document evidencing all or any part of the
Obligations of the other Borrowers, (b) the absence of any attempt to
collect the Obligations from the other Borrowers, any Guarantors or any
other security therefor, or the absence of any other action to enforce the
same, (c) the waiver, consent, extension, forbearance or granting of any
indulgence by Agent or any Lender with respect to any provisions of any
instrument evidencing the Obligations of the other Borrowers, or any part
thereof, or any other agreement now or hereafter executed by the other
Borrowers and delivered to Agent or any Lender, (d) the failure by Agent or
any Lender to take any steps to perfect and maintain its security interest
in, or to preserve its rights and maintain its security or collateral for
the Obligations of the other Borrowers, (e) the election of Agent or any
Lender in any proceeding instituted under the Bankruptcy Code, of the
application of Section 1111(b)(2) of the Bankruptcy Code, (f) any
borrowings or grant or a security interest by the other Borrowers, as
debtor-in-possession under Section 364 of the Bankruptcy Code, (g) the
disallowance of all or any portion of the claim(s) of Agent or any Lender
for the repayment of the Obligations of the other Borrowers under Section
502 of the Bankruptcy Code, or (h) any other circumstances which might
constitute a legal or equitable discharge or defense of a guarantor or of
the other Borrowers. With respect to the Obligations arising as a result
of the joint and several liability of a Borrower hereunder with respect to
Loans, Letter of Credit Accommodations or other extensions of credit made
to the other Borrowers hereunder, each Borrower waives, until the
Obligations shall have been paid in full and this Agreement shall have been
terminated, any right to enforce any right of subrogation or any remedy
which Agent or any Lender now has or may hereafter have against Borrowers,
any endorser or any guarantor of all or any part of the Obligations, and
any benefit of, and any right to participate in, any security or collateral
given to Agent for itself and the ratable benefit of Lender. Upon any
Event of Default, Agent may proceed directly and at once, without notice,
against any Borrower to collect and recover the full amount, or any portion
of the Obligations, without first proceeding against the other Borrowers or
any other Person, or against any security or collateral for the
Obligations. Each Borrower consents and agrees that Agent shall be under
no obligation to marshall any assets in favor of Borrower(s) or against or
in payment of any or all of the Obligations.
SECTION 3. INTEREST AND FEES
3.1 Interest.
(a) Borrowers shall pay to Agent, for the ratable benefit of
Lenders, interest on the outstanding principal amount of the Loans at the
Interest Rate. All interest accruing hereunder on and after the date of
any Event of Default or termination hereof shall be payable on demand.
(b) Borrowers may from time to time request that (i) Prime Rate
Loans be converted to Eurodollar Rate Loans, or (ii) any existing
Eurodollar Rate Loans continue for an additional Interest Period or (iii)
any existing Eurodollar Rate Loans be converted to Prime Rate Loans
(provided, that, in the event a Borrower elects to convert any Eurodollar
Rate Loans to Prime Rate Loans prior to the end of the applicable Interest
Period, Borrowers shall be liable for any amounts required to compensate
Agent, any Lender, the Reference Bank or any Participant as a result of
such conversion as provided below). Any such request from a Borrower shall
specify the amount of the Prime Rate Loans to be converted to Eurodollar
Rate Loans (subject to the limits set forth below) or Eurodollar Rate Loans
to be converted to Prime Rate Loans, as the case may be, and as to Prime
Rate Loans to be converted to Eurodollar Rate Loans, the Interest Period to
be applicable to such Eurodollar Rate Loans.
(c) Subject to the terms and conditions contained herein, three
(3) Business Days after receipt by Agent of such a request from a Borrower
to convert Prime Rate Loans to Eurodollar Rate Loans, or to continue any
existing Eurodollar Rate Loan, such Prime Rate Loans shall be converted to
Eurodollar Rate Loans or such Eurodollar Rate Loans shall continue, as the
case may be, provided, that, as of such date each of the following
conditions is satisfied as determined by Agent: (i) no Event of Default,
or act, condition or event which with notice or passage of time or both
would constitute an Event of Default, shall exist or have occurred and be
continuing, (ii) Borrowers shall have complied with such customary
procedures as are established by Agent and specified by Agent to a Borrower
from time to time for requests by Borrowers for Eurodollar Rate Loans,
(iii) no more than five (5) Interest Periods may be in effect at any one
time, (iv) the aggregate amount of the Eurodollar Rate Loans must be in an
amount not less than $2,500,000 or an integral multiple of $500,000 in
excess thereof, and (v) Agent shall have determined that the Interest
Period or Adjusted Eurodollar Rate is available to Agent and Lenders
through the Reference Bank and can be readily determined as of the date of
the request for such Eurodollar Rate Loan by a Borrower. Any request by a
Borrower to convert Prime Rate Loans to Eurodollar Rate Loans or to
continue any existing Eurodollar Rate Loans or to convert Eurodollar Rate
Loans to Prime Rate Loans shall be irrevocable. Notwithstanding anything
to the contrary contained herein, Agent, Lenders and Reference Bank shall
not be required to purchase United States Dollar deposits in the London
interbank market or other applicable Eurodollar Rate market to fund any
Eurodollar Rate Loans, but the provisions hereof shall be deemed to apply
as if Agent, Lenders and Reference Bank had purchased such deposits to fund
the Eurodollar Rate Loans.
(d) Any Eurodollar Rate Loans shall automatically convert to
Prime Rate Loans upon the last day of the applicable Interest Period,
unless Agent has received a request to continue such Eurodollar Rate Loan
at least three (3) Business Days prior to such last day in accordance with
the terms hereof and the conditions set forth herein shall have been
satisfied. Any Eurodollar Rate Loans shall, at Agent's option, upon notice
by Agent to a Borrower, convert to Prime Rate Loans in the event that (i)
an Event of Default, or act, condition or event which with the notice or
passage of time or both would constitute an Event of Default, shall exist
or have occurred, (ii) the aggregate principal amount of the Prime Rate
Loans which have previously been converted to Eurodollar Rate Loans or
existing Eurodollar Rate Loans continued, as the case may be, at the
beginning of an Interest Period shall at any time during such Interest
Period exceed either (A) the aggregate principal amount of the Loans then
outstanding or (B) the Availability. Borrower shall pay to Agent, for the
ratable benefit of Lenders, upon demand by Agent (or Agent may, at its
option, charge any loan account of Borrower) any amounts required to
compensate Agent, any Lender or the Reference Bank for any loss (including
loss of anticipated profits), cost or expense incurred by such person, as a
result of the conversion of Eurodollar Rate Loans to Prime Rate Loans
pursuant to this clause (d) or as a result of the conversion of Eurodollar
Rate Loans to Prime Rate Loans pursuant to clause (b)(iii) above.
(e) Interest shall be payable by Borrowers to Agent, for the
ratable benefit of Lenders, monthly in arrears not later than the first day
of each calendar month and shall be calculated on the basis of a three
hundred sixty (360) day year and actual days elapsed. The interest rate on
non-contingent Obligations (other than Eurodollar Rate Loans) shall
increase or decrease by an amount equal to each increase or decrease in the
Prime Rate effective on the first day of the month after any change in such
Prime Rate is announced based on the Prime Rate in effect on the last day
of the month in which any such change occurs. In no event shall charges
constituting interest payable by Borrowers to Agent or Lenders exceed the
maximum amount or the rate permitted under any applicable law or
regulation, and if any such part or provision of this Agreement is in
contravention of any such law or regulation, such part or provision shall
be deemed amended to conform thereto.
3.2 Closing Fee. Borrowers shall pay to Agent, for the ratable
benefit of Lenders, based on their Pro Rata Shares, as a closing fee the
amount of $1,250,000 which shall be fully earned as of and payable on the
date of the initial Loans or Letter of Credit Accommodations hereunder.
3.3 Servicing Fee. Borrowers shall pay to Agent, for its own
account, a monthly servicing fee in an amount equal to $12,500 for each
month (or part thereof) while this Agreement is in effect and for so long
thereafter as any of the Obligations are outstanding, which fee shall be
fully earned as of and payable in advance on the date hereof and on the
first day of each month hereafter.
3.4 Co-Agent's Fee. Borrowers shall pay to Agent, for the account of
Co-Agent, a monthly fee in an amount equal to $10,416.66 for each of the
first twelve months (or part thereof) that this Agreement is in effect, and
$8,3333.33 for each month (or part thereof) thereafter while this Agreement
is in effect and for so long thereafter as any of the Obligations are
outstanding, which fee shall be fully earned as of and payable in advance
on the date hereof and on the first day of each month hereafter.
3.5 Unused Line Fee. Borrowers shall pay to Agent, for the ratable
benefit of Lenders, based on their Pro Rata Shares, monthly an unused line
fee at a rate equal to three-eighths of one percent (3/8 of 1%) per annum
calculated upon the amount by which the Maximum Credit exceeds the average
daily principal balance of the outstanding Loans and Letter of Credit
Accommodations during the immediately preceding month (or part thereof)
while this Agreement is in effect, which fee shall be payable on the first
day of each month in arrears.
3.6 Syndication Fee. Borrowers shall pay to Agent, for the ratable
benefit of Congress and CIT, a syndication fee the amount of $250,000,
which shall be fully earned as of the date hereof, and which shall be
payable on the third anniversary of the date hereof, provided, that, such
amount shall not be payable if (a) on or before the date ninety (90) days
prior to such third anniversary date, Agent shall have received written
notice from Borrowers of their election to terminate this Agreement (which
notice shall be irrevocable), and (b) Agent and Lenders shall have received
full and final repayment of all of the Obligations and cash collateral as
required under Section 13.1(d) hereof on or before the third anniversary of
the date hereof.
3.7 Changes in Laws and Increased Costs of Loans.
(a) Notwithstanding anything to the contrary contained herein,
all Eurodollar Rate Loans shall, upon notice by Agent to Borrowers, convert
to Prime Rate Loans in the event that (i) any change in applicable law or
regulation (or the interpretation or administration thereof by the
Governmental Authority having jurisdiction over such matters) shall either
(A) make it unlawful for Agent, any Lender or Reference Bank to make or
maintain Eurodollar Rate Loans or to comply with the terms hereof in
connection with the Eurodollar Rate Loans, or (B) shall result in the
increase in the costs to Agent, any Lender or Reference Bank of making or
maintaining any Eurodollar Rate Loans by an amount deemed by Agent to be
material, or (C) reduce the amounts received or receivable by Agent or any
Lender in respect thereof, by an amount deemed by Agent to be material or
(ii) the cost to Agent, any Lender or Reference Bank of making or
maintaining any Eurodollar Rate Loans shall otherwise increase by an amount
deemed by Agent to be material. Borrowers shall pay to Agent, for the
ratable benefit of Lenders, upon demand by Agent (or Agent may, at its
option, charge any loan account of Borrowers) any amounts required to
compensate Agent, any Lender or the Reference Bank for any loss (including
loss of anticipated profits), cost or expense incurred by such person as a
result of the foregoing, including, without limitation, any such loss, cost
or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such person to make or maintain the
Eurodollar Rate Loans or any portion thereof. A certificate of Agent or
any Lender setting forth the basis for the determination of such amount
necessary to compensate Agent or such Lender as aforesaid shall be
delivered to Borrowers and shall be conclusive, absent manifest error.
(b) If any payments or prepayments in respect of the Eurodollar
Rate Loans are received by Agent other than on the last day of the
applicable Interest Period (whether pursuant to acceleration, upon maturity
or otherwise), including any payments pursuant to the application of
collections under Section 6.3 or any other payments made with the proceeds
of Collateral, Borrowers shall pay to Agent, for the ratable benefit of
Lenders, upon demand by Agent (or Agent may, at its option, charge any loan
account of Borrowers) any amounts required to compensate Agent, any Lender
or the Reference Bank for any additional loss (including loss of
anticipated profits), cost or expense incurred by such person as a result
of such prepayment or payment, including, without limitation, any loss,
cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such person to make or maintain such
Eurodollar Rate Loans or any portion thereof.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations. Each of the following is a condition precedent to Agent and
Lenders making the initial Loans and providing the initial Letter of Credit
Accommodations hereunder:
(a) Agent shall have received, in form and substance reasonably
satisfactory to Agent, all releases, terminations and such other documents
as Agent may reasonably request to evidence and effectuate the termination
by BABC and the other financial institutions who are lenders under the BABC
DIP Facility of such financing arrangements with Borrowers and Guarantors
(and any financing arrangements in effect prior to the commencement of the
Chapter 11 Cases) and the termination and release by them and BABC of any
interest in and to any assets and properties of Borrowers and Guarantors,
duly authorized, executed and delivered by it or them or on its or their
behalf, including, but not limited to, UCC termination statements for all
UCC financing statements previously filed by BABC, as secured party and any
Borrower or Guarantor, as debtors;
(b) Agent shall have received evidence, in form and substance
reasonably satisfactory to Agent, that Agent, for itself and the ratable
benefit of Lenders, has valid perfected and first priority security
interests in and liens upon the Collateral and any other property which is
intended to be security for the Obligations or the liability of any
Guarantor in respect thereof, subject only to the security interests and
liens permitted herein or in the other Financing Agreements;
(c) Agent shall have received, in form and substance reasonably
satisfactory to Agent, unlimited guarantees of payment of the Obligations
by each Guarantor in favor of Agent and Lenders, and with respect to each
Guarantor, (i) a security agreement by each such Guarantor in favor of
Agent and the ratable benefit of Lenders, granting Agent, for itself and
the ratable benefit of Lenders, a first priority security interest in each
such Guarantor's assets, and (ii) UCC-1 financing statements with respect
thereto, in each case duly authorized, executed and delivered by the
parties thereto;
(d) all requisite corporate action and proceedings in connection
with this Agreement and the other Financing Agreements shall be
satisfactory in form and substance to Agent, and Agent shall have received
all information and copies of all documents, including, without limitation,
records of requisite corporate action and proceedings which Agent may have
requested in connection therewith, such documents where requested by Agent
or its counsel to be certified by appropriate corporate officers or
governmental authorities;
(e) no act, condition or event shall exist or have occurred
which would have a Material Adverse Effect since the date of Agent's latest
field examination of the businesses of Borrowers and Guarantors;
(f) Agent shall have completed a field review of the books and
records of Borrowers and Guarantors and such other information with respect
to the Collateral as Agent may require to determine the amount of Loans
available to Borrowers including, without limitation, current perpetual
inventory records and/or roll-forwards of Inventory through the date of
closing, together with such supporting documentation as may be necessary or
appropriate, and other documents and information that will enable Agent to
accurately identify and verify the Collateral, the results of which shall
be satisfactory to Agent, not more than seven (7) days prior to the date
hereof (or such greater number of days as is satisfactory to Agent);
(g) Agent shall have received, in form and substance
satisfactory to Agent, all consents, waivers, acknowledgments and other
agreements from third persons which Agent may deem necessary or desirable
in order to permit, protect and perfect its security interests in and liens
upon the Collateral or to effectuate the provisions or purposes of this
Agreement and the other Financing Agreements, including, without
limitation, agreements with Customs Brokers acknowledging Agent's security
interests in the Collateral, waiving any security interests, liens or other
claims by such persons to the Collateral and permitting Agent access to,
and the right to remain on, the premises to exercise its rights and
remedies and otherwise deal with the Collateral;
(h) Borrowers shall have established the Concentration Accounts
and Agent shall have received, in form and substance satisfactory to Agent,
all agreements with the depository banks and Borrowers with respect to such
Concentration Accounts as Agent may require pursuant to Section 6.3 hereof,
duly authorized, executed and delivered by such depository banks and
Borrowers;
(i) Agent shall have received Credit Card Acknowledgements in
each case, duly authorized, executed and delivered by the Credit Card
Issuers and Credit Card Processors;
(j) the Excess Availability as determined by Agent, as of the
date hereof, shall not be less than $20,000,000 after giving effect to the
initial Loans made or to be made and Letter of Credit Accommodations issued
or to be issued in connection with the initial transactions hereunder, and
after giving effect to the payment of all fees and costs of the
transactions provided for herein;
(k) Agent shall have received a Borrowing Base Certificate
setting forth the Loans available to Borrowers as of the date hereof as
completed in a manner satisfactory to Agent and duly authorized, executed
and delivered on behalf of Borrowers;
(l) Agent shall have received evidence of insurance and loss
payee endorsements required hereunder (which will not include Agent as loss
payee with respect to insurance on the Funding Escrow Properties) and under
the other Financing Agreements, in form and substance satisfactory to
Agent, and certificates of insurance policies and/or endorsements naming
Agent as loss payee;
(m) no court of competent jurisdiction shall have issued any
injunction, restraining order or other order which prohibits the
consummation of the transactions described in the Financing Agreements, and
no governmental or other action or proceeding shall have been threatened or
commenced, seeking any injunction, restraining order or other order which
seeks to void or otherwise modify the transactions described in the
Financing Agreements or which would otherwise have a Material Adverse
Effect;
(n) Agent shall have received a certified copy of the
Confirmation Order, which shall be in form and substance reasonably
satisfactory to Agent;
(o) the Confirmation Order shall have been entered, following
due notice to such creditors and other parties-in-interest as required by
the Bankruptcy Court and the Confirmation Order shall not be subject to any
pending motion for reconsideration or any stay pending appeal and all steps
to be taken on the Effective Date under the Plan shall have been taken and,
concurrently with the satisfaction of the other conditions precedent set
forth in this Section 4.1, the Effective Date shall have occurred;
(p) any amendments, modifications or supplements to the
provisions of the Plan relating to Agent and Lenders, the rights of Agent
and Lenders or the financing arrangements provided for herein (if any)
shall be in form and substance satisfactory to Agent and Lenders;
(q) no motion, action or proceeding shall be pending against
Borrowers or Guarantors (or their predecessors) by any creditor or other
party-in-interest in the Bankruptcy Court or in any other court of
competent jurisdiction which would if successful have a Material Adverse
Effect;
(r) Agent shall have received evidence, in form and substance
satisfactory to Agent, that, concurrently with the satisfaction of the
other conditions precedent set forth in this Section 4.1, the Effective
Date shall have occurred;
(s) Agent shall have received, in form and substance reasonably
satisfactory to Agent, the opinion letter of counsel(s) to Borrower and
Guarantors with respect to the Financing Agreements and the security
interests and liens of Agent with respect to the Collateral, the
confirmation of the Plan, the occurrence of the Effective Date, the entry
of the Confirmation Order and such other matters as Agent may request; and
(t) the other Financing Agreements and all instruments and
documents hereunder and thereunder shall have been duly executed and
delivered to Agent, in form and substance satisfactory to Agent.
4.2 Conditions Precedent to All Loans and Letter of Credit
Accommodations. Each of the following is an additional condition precedent
to Agent and Lenders making Loans and/or providing Letter of Credit
Accommodations to Borrowers, including the initial Loans and Letter of
Credit Accommodations and any future Loans and Letter of Credit
Accommodations:
(a) all representations and warranties contained herein and in
the other Financing Agreements shall be true and correct in all material
respects with the same effect as though such representations and warranties
had been made on and as of the date of the making of each such Loan or
providing each such Letter of Credit Accommodation and after giving effect
thereto; and
(b) no Event of Default and no act, condition or event which,
with notice or passage of time or both, would constitute an Event of
Default, shall exist or have occurred and be continuing on and as of the
date of the making of such Loan or providing each such Letter of Credit
Accommodation and after giving effect thereto.
SECTION 5. SECURITY INTEREST
To secure payment and performance of all Obligations, each Borrower
hereby grants to Agent, for itself and the ratable benefit of Lenders, a
continuing security interest in, a lien upon, and a right of set off
against, and hereby assigns to Agent, for itself and the ratable benefit of
Lenders, as security, the following property and interests in property of
such Borrower, whether now owned or hereafter acquired or existing, and
wherever located (collectively, the Collateral ):
5.1 all Receivables, Inventory, Proprietary Rights, and Proceeds,
wherever located and whether now existing or hereafter arising or acquired;
5.2 all moneys, securities and other property and the Proceeds
thereof, now or hereafter held or received by, or in transit to Agent or
any Lender from or for such Borrower, whether for safekeeping, pledge,
custody, transmission, collection or otherwise, including, without
limitation, all of such Borrower's deposit accounts, credits, and balances
with Agent or any Lender and all claims of such Borrower against Agent or
any Lender at any time existing;
5.3 all of such Borrower's deposit accounts with any financial
institutions with which such Borrower maintains deposits, excluding
deposits of cash or Cash Equivalents held by the Funding Escrow Agent
pursuant to or as contemplated by the Plan to the extent such deposits do
not constitute other property described in this Section 5; and
5.4 all books, records and other property relating to or referring to
any of the foregoing, including, without limitation, all books, records,
ledger cards, data processing records, computer software and other property
and general intangibles at any time evidencing or relating to the
Receivables, Inventory, Proprietary Rights, Proceeds, and other property
referred to above.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrowers' Loan Account. Agent shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all
payments in respect thereof and (c) all other appropriate debits and
credits as provided in this Agreement, including, without limitation, fees,
charges, costs, expenses and interest. All entries in the loan account(s)
shall be made in accordance with Agent's customary practices as in effect
from time to time.
6.2 Statements. Agent shall render to Borrowers each month, within
ten (10) days after the first day of such month, a statement setting forth
the balance in the Borrowers' loan account(s) maintained by Agent for
Borrowers pursuant to the provisions of this Agreement, including
principal, interest, fees, costs and expenses. Each such statement shall
be subject to subsequent adjustment by Agent but shall, absent manifest
errors or omissions, be considered correct and deemed accepted by Borrowers
and conclusively binding upon Borrowers as an account stated except to the
extent that Agent receives a written notice from Borrowers of any specific
exceptions of Borrowers thereto within thirty (30) days after the date such
statement has been mailed by Agent. Until such time as Agent shall have
rendered to Borrowers a written statement as provided above, the balance in
Borrowers' loan account(s) shall be presumptive evidence of the amounts due
and owing to Agent and Lenders by Borrowers.
6.3 Collection of Proceeds.
(a) Schedule 6.3 sets forth all of the banks or other financial
institutions with whom Borrowers and Guarantors have investment accounts,
securities accounts, deposit account arrangements and merchant payment
arrangements as of the date hereof and identifies each of the deposit
accounts at such banks to a retail store location of Borrowers and
Guarantors or otherwise describes the nature of the use of such investment
account, securities account or deposit account by Borrowers and Guarantors.
(i) Borrowers and Guarantors shall deposit all Proceeds
from sales of Inventory in every form, including, without limitation, cash,
checks, credit card sales drafts, credit card sales or charge slips or
receipts and other forms of daily store receipts, from each retail store
location of Borrowers and Guarantors on each Business Day into the deposit
accounts of Borrowers and Guarantors used solely for such purpose and
identified to such retail store location as set forth on Schedule 6.3 or
such other deposit accounts as are established by Borrowers to be used for
a retail store location after the date hereof as provided in Section 9.16
hereof. All such funds deposited into the separate deposit accounts shall
be sent by wire transfer each Business Day to the Store Concentration
Account as provided in Section 6.3(a)(ii) below. Borrowers and Guarantors
shall irrevocably authorize and direct each of the banks into which
Proceeds from sales of Inventory from each retail store location of
Borrowers and Guarantors are at any time deposited as provided above to
send all funds deposited in such account by wire transfer each Business Day
to the Store Concentration Account. Such authorization and direction shall
not be rescinded, revoked or modified without the prior written consent of
Agent. Notwithstanding the foregoing, Borrowers and Guarantors shall be
permitted to retain cash at each retail store location of Borrowers and
Guarantors (or at the respective deposit accounts used for such retail
store locations as set forth on Schedule 6.3 or established after the date
hereof as provided in Section 9.16 hereof) in such amounts as are necessary
for the day-to-day operation of such retail stores consistent with prior
practices in respect of each such store.
(ii) Borrowers shall establish and maintain, at their
expense, the Concentration Accounts. Borrowers shall cause (A) all amounts
payable to Borrowers and Guarantors from Credit Card Issuers and Credit
Card Processors to be deposited in the Credit Card Concentration Account on
each Business Day and (B) all amounts on deposit in its deposit accounts
used by each retail store location to be sent as provided in Section
6.3(a)(i) above on each Business Day to the Store Concentration Account.
The banks at which each of the Concentration Accounts are at any time
established shall enter into an agreement, in form and substance
satisfactory to Agent, providing that all items received or deposited in
such of the Concentration Accounts are subject to the security interest and
lien of Agent for itself and the ratable benefit of Lenders, that the
depository bank has no lien upon, or right of setoff against, such of the
Concentration Accounts, the items received for deposit therein, or the
funds from time to time on deposit therein and that upon the request of
Agent, the depository bank will wire, or otherwise transfer, in immediately
available funds, on each Business Day all funds received or deposited into
such of the Concentration Accounts to such bank account of Agent as Agent
may from time to time designate for such purpose ( Payment Account ).
Agent shall instruct the depository banks at which the Concentration
Accounts are maintained to transfer the funds on deposit in the
Concentration Accounts to such operating bank accounts of Borrowers as
Borrowers may specify in writing to Agent until such time as Agent shall
notify the depository banks otherwise. Agent may instruct the depository
banks at which the Concentration Accounts are maintained to transfer all
funds received or deposited into the Concentration Accounts to the Payment
Account at any time that either: (A) an Event of Default, or act,
condition or event which with notice or passage of time or both would
constitute an Event of Default, shall exist or have occurred and be
continuing, or (B) Excess Availability shall be less than $10,000,000.
Borrowers agree that all amounts deposited in such Concentration Accounts
or other funds received and collected by Agent and Lenders, whether as
Proceeds or otherwise shall be subject to the security interest and lien of
Agent for itself and the ratable benefit of Lenders.
(b) For purposes of calculating the amount of the Loans
available to Borrowers and except as otherwise provided below, for purposes
of calculating interest on the Obligations, all payments in respect of the
Obligations will be applied (conditional upon final collection) to the
Obligations on the Business Day of receipt by Agent of immediately
available funds in the Payment Account provided such payments and notice
thereof are received in accordance with Agent's usual and customary
practices as in effect from time to time and within sufficient time to
credit Borrowers' loan account(s) on such day, and if not, then on the next
Business Day. In the event that Agent shall have the right to instruct the
depository banks at which the Concentration Accounts are maintained to
transfer funds to the Payment Account pursuant to Section 6.3(a) above or
otherwise thereafter, for purposes of calculating interest on the
Obligations, such payments or other funds received will be applied
(conditional upon final collection) to the Obligations one (1) Business Day
following the date of receipt of immediately available funds by Agent in
the Payment Account provided such payments or other funds and notice
thereof are received in accordance with Agent's usual and customary
practices as in effect from time to time and within sufficient time to
credit Borrowers' loan accounts on such day, and if not, then on the next
Business Day (the Collection Period ). The economic benefit of the
Collection Period shall be for Agent's sole account. If the closing daily
balance in the loan account(s) of Borrowers as of any day is a credit
balance, Agent shall, on the first day of the next month, credit the loan
account(s) of Borrowers with an amount calculated upon such credit balance
at the rate of three and one-half percent (3 1/2%) per annum less than the
Prime Rate so long as no Event of Default, or act, condition or event which
with notice or passage of time or both would constitute an Event of
Default, shall exist or have occurred and be continuing. Such amount to be
credited shall be calculated on the basis of a three hundred sixty (360)
day year and actual days elapsed. The Prime Rate used to calculate such
credit to the loan account(s) of Borrowers shall increase or decrease by an
amount equal to such increase or decrease in such Prime Rate effective on
the first day of the month after any change in such rate. In the event
that no Loans are outstanding, and so long as no Event of Default, or act,
condition or event which with notice or passage of time or both would
constitute an Event of Default, shall exist or have occurred and be
continuing, upon Borrowers' request made to Agent on a Business Day, Agent
shall remit to Borrowers not later than the next succeeding Business Day,
an amount equal to such credit balance in the loan account of Borrowers.
(c) Borrowers and Guarantors shall, acting as trustee for Agent,
receive, as the property of Agent, any cash, checks, credit card sales
drafts, credit card sales or charge slips or receipts, notes, drafts, all
forms of store receipts or any other payment relating to and/or Proceeds of
Receivables or other Collateral which come into their possession or under
their control and immediately upon receipt thereof, shall deposit or cause
the same to be deposited in the Concentration Accounts, or remit the same
or cause the same to be remitted, in kind, to Agent. Each Borrower agrees
to reimburse Agent and Lenders on demand for any amounts owed or paid to
any bank at which a Concentration Account is established or any other bank
or person involved in the transfer of funds to or from the Concentration
Accounts arising out of Agent's or any Lender's payments to or
indemnification of such bank or person. The obligation of Borrowers to
reimburse Agent and Lenders for such amounts pursuant to this Section 6.3
shall survive the termination of this Agreement.
6.4 Payments and Prepayments.
(a) Each Borrower may, in accordance with the terms of this
Agreement, from time to time borrow, prepay and reborrow Loans.
(b) On each date when any reduction to the lending formula set
forth in Section 2.1(a)(i) becomes effective, regardless of the amounts of
Eligible Inventory, Borrowers shall absolutely and unconditionally,
automatically and without demand, pay to Agent for the ratable benefit of
Lenders in respect of the Loans an amount equal to the excess, if any, of
the aggregate unpaid principal amount of the Loans with respect to Eligible
Inventory over the amount of the Availability calculated using the
applicable percentage with respect to Eligible Inventory as so reduced.
(c) In the event that the outstanding amount of the Loans exceed
the Availability, or the aggregate amount of the outstanding Letter of
Credit Accommodations exceed the sublimit for Letter of Credit
Accommodations set forth in Section 2.3(d), or the aggregate amount of the
Loans and the Letter of Credit Accommodations outstanding at any time shall
exceed the Maximum Credit, such event shall not limit, waive or otherwise
affect any rights of Agent and Lenders in that circumstance or on any
future occasions and Borrowers shall, upon demand by Agent, which may be
made at any time or from time to time, immediately repay to Agent, for the
ratable benefit of Lenders, the entire amount of any such excess(es) for
which payment is demanded.
(d) All Obligations shall be payable to the Payment Account as
provided in Section 6.3 or such other place in the United States as Agent
may designate from time to time. Agent may apply payments received or
collected from Borrowers or for the account of Borrowers (including,
without limitation, the monetary proceeds of collections or of realization
upon any Collateral) to such of the Obligations, whether or not then due,
in such order and manner as Agent determines provided, that, (i) all such
payments shall be applied to Obligations which are then due and payable
before being applied to prepay any Obligations which are not then due and
payable and (ii) all such payments shall be applied to Prime Rate Loans
before being applied to Eurodollar Rate Loans. At Agent's option, all
principal, interest, fees, costs, expenses and other charges provided for
in this Agreement or the other Financing Agreements may be charged directly
to the loan account(s) of Borrowers. Borrowers shall make all payments to
Agent and Lenders on the Obligations free and clear of, and without
deduction or withholding for or on account of, any setoff, counterclaim,
defense, duties, taxes, levies, imposts, fees, deductions, withholding,
restrictions or conditions of any kind. If after receipt of any payment
of, or proceeds of Collateral applied to the payment of, any of the
Obligations, Agent or any Lender is required to surrender or return such
payment or proceeds to any Person for any reason, then the Obligations
intended to be satisfied by such payment or proceeds shall be reinstated
and continue and this Agreement shall continue in full force and effect as
if such payment or proceeds had not been received by Agent or such Lender.
Borrowers shall be liable to pay to Agent and Lenders, and does hereby
indemnify and hold Agent and Lenders harmless for the amount of any
payments or proceeds surrendered or returned. This Section 6.4 shall
remain effective notwithstanding any contrary action which may be taken by
Agent or any Lender in reliance upon such payment or proceeds. This
Section 6.4 shall survive the payment of the Obligations and the
termination of this Agreement.
6.5 Sharing of Payments, Etc.
(a) Borrowers agree that, in addition to (and without limitation
of) any right of setoff, banker's lien or counterclaim Agent or a Lender
may otherwise have, each Lender shall be entitled, at its option (but
subject, as among Agent and Lenders, to the provisions of Section 12.3(b)
hereof), to offset balances held by it for the account of Borrowers and
Guarantors at any of its offices, in dollars or in any other currency,
against any principal of or interest on any Loans owed to such Lender or
any other amount payable to such Lender hereunder, that is not paid when
due (regardless of whether such balances are then due to Borrowers and
Guarantors), in which case it shall promptly notify a Borrower and Agent
thereof; provided, that, such Lender's failure to give such notice shall
not affect the validity thereof.
(b) If any Lender shall obtain from any Borrower or Guarantor
payment of any principal of or interest on any Loan owing to it or payment
of any other amount under this Agreement or any other Financing Agreement
through the exercise of any right of setoff, banker's lien or counterclaim
or similar right or otherwise (other than from Agent as provided herein),
and, as a result of such payment, such Lender shall have received more than
its Pro Rata Share of the principal of or interest on the Loans or such
other amounts then due hereunder or thereunder by Borrowers to such Lender
than the percentage thereof received by any other Lender, it shall promptly
pay to Agent, for the benefit of Lenders, the amount of such excess and
simultaneously purchase from such other Lenders a participation in the
Loans or such other amounts, respectively, owing to such other Lenders (or
such interest due thereon, as the case may be) in such amounts, and make
such other adjustments from time to time as shall be equitable, to the end
that all Lenders shall share the benefit of such excess payment (net of any
expenses that may be incurred by such Lender in obtaining or preserving
such excess payment) in accordance with their respective Pro Rata Shares.
Amounts received by Agent under this Section 6.5 hereof shall be treated as
a payment received from Borrowers under Section 6.5 hereof. To such end
all Lenders shall make appropriate adjustments among themselves (by the
resale of participation sold or otherwise) if such payment is rescinded or
must otherwise be restored.
(c) Borrowers agree that any Lender so purchasing such a
participation (or direct interest) may exercise, in a manner consistent
with this Section 6.5, all rights of setoff, banker's lien, counterclaim or
similar rights with respect to such participation as fully as if such
Lender were a direct holder of Loans or other amounts (as the case may be)
owing to such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to
exercise any such right or shall affect the right of any Lender to
exercise, and retain the benefits of exercising, any such right with
respect to any other indebtedness or obligation of Borrowers. If, under
any applicable bankruptcy, insolvency or other similar law, any Lender
receives a secured claim in lieu of a setoff to which this Section 6.5
applies, such Lender shall, to the extent practicable, assign such rights
to Agent for the benefit of Lenders and, in any event, exercise its rights
in respect of such secured claim in a manner consistent with the rights of
Lenders entitled under this Section 6.5 to share in the benefits of any
recovery on such secured claim.
6.6 Authorization to Make Loans. Agent is authorized to make the
Loans and provide the Letter of Credit Accommodations based upon telephonic
or other instructions received from anyone purporting to be an authorized
officer of a Borrower or other authorized person set forth on the list of
such authorized officers and other authorized persons furnished by
Borrowers to Agent as supplemented by Borrowers from time to time, or, at
the discretion of Agent, if such Loans are necessary to satisfy any
Obligations. All requests for Loans or Letter of Credit Accommodations
hereunder shall specify the date on which the requested advance is to be
made or Letter of Credit Accommodations established (which day shall be a
Business Day) and the amount of the requested Loan. Requests received
after 12:00 noon New York City time on any day shall be deemed to have been
made as of the opening of business on the immediately following Business
Day. All Loans and Letter of Credit Accommodations under this Agreement
shall be conclusively presumed to have been made to, and at the request of
and for the benefit of, Borrowers when deposited to the credit of Borrowers
or otherwise disbursed or established in accordance with the instructions
of a Borrower or in accordance with the terms and conditions of this
Agreement.
6.7 Settlement Procedures.
(a) Notwithstanding any other provision of this Agreement, and
in order to administer the Loans and the Letter of Credit Accommodations in
an efficient manner and to reduce the number of fund transfers between
Lenders and Agent, Borrowers, Lenders and Agent agree that Agent may (but
shall not be obligated to), and Borrowers and Lenders hereby irrevocably
authorize the Agent to, fund, on behalf of the Lenders, Loans pursuant to
Section 2.1, subject to the procedures for settlement set forth in this
Section 6.7; provided, that, (i) other than to fund Loans to make payments
to the issuer of any of the Letter of Credit Accommodations or for costs
and expenses as provided for herein, Agent shall in no event fund such
Loans if the Agent shall have received written notice from the Majority
Lenders on the Business Day prior to the day of the proposed Loan that one
or more of the conditions precedent contained in Section 4 will not be
satisfied on the day of the proposed Loan, and (ii) Agent shall not
otherwise be required to determine that, or take notice whether, the
conditions precedent in Section 4 have been satisfied.
(b) With respect to all periods for which the Agent has funded
Loans pursuant to Section 6.7(a) above, the amount of each Lender's Pro
Rata Share in the outstanding Loans and Letter of Credit Accommodations
shall be computed weekly, and shall be adjusted upward or downward on the
basis of the amount of the outstanding Loans as of the close of business on
the Business Day immediately preceding the date of each settlement
computation; provided, that, Agent retains the absolute right at any time
or from time to time to make the above described adjustments at intervals
more frequent than weekly. Agent shall deliver to each of Lenders after
the end of each week, or such lesser period or periods as Agent shall
determine, a summary statement of the amount of outstanding Loans for such
period (such week or lesser period or periods being hereinafter referred to
as a Settlement Period ). If the summary statement is sent by Agent and
received by a Lender prior to 12:00 noon (New York City time) then such
Lender shall make the settlement transfer described in this Section by no
later than 2:00 p.m. (New York City time) on the day such summary statement
was sent, and if such summary statement is sent by Agent and received by a
Lender after 12:00 noon (New York City time), such Lender shall make such
settlement transfer by no later than 2:00 p.m. (New York City time) on the
next Business Day following the date of the receipt of such summary
statement. If, as of the end of any Settlement Period, the amount of a
Lender's Pro Rata Share of the outstanding Loans is more than such Lender's
Pro Rata Share of the outstanding Loans as of the end of the previous
Settlement Period, then such Lender shall forthwith (but in no event later
than the time set forth in the preceding sentence) transfer to Agent by
wire transfer in immediately available funds the amount of the increase.
If the amount of a Lender's Pro Rata Share of the outstanding Loans in any
Settlement Period is less than the amount of such Lender's Pro Rata Share
of the outstanding Loans for the previous Settlement Period, Agent shall
forthwith transfer to such Lender by wire transfer in immediately available
funds the amount of the decrease. The obligation of each of the Lenders to
transfer such funds and effect such settlement shall be irrevocable and
unconditional and without recourse to or warranty by Agent. Each of Agent
and Lenders agrees to mark its books and records at the end of each
Settlement Period to show at all times the dollar amount of its Pro Rata
Share of the outstanding Loans and Letter of Credit Accommodations. Each
Lender shall only be entitled to receive interest on its Pro Rata Share of
the Loans which have been funded by such Lender.
(c) To the extent that Agent has made any such amounts available
and the settlement described above shall not yet have occurred, upon
repayment of any Loans by Borrowers, Agent may apply such amounts repaid
directly to any amounts made available by Agent pursuant to this Section
6.7. In lieu of weekly or more frequent settlements, Agent may at any time
require each Lender to provide Agent with immediately available funds
representing its Pro Rata Share of each Loan, prior to Agent's disbursement
of such Loan to Borrowers. In such event, all Loans under this Agreement
shall be made by the Lenders simultaneously and proportionately to their
Pro Rata Shares. No Lender shall be responsible for any default by any
other Lender in the other Lender's obligation to make a Loan requested
hereunder nor shall the Commitment of any Lender be increased or decreased
as a result of the default by any other Lender in the other Lender's
obligation to make a Loan requested hereunder.
(d) If Agent is not funding a particular Loan pursuant to
Section 6.7(a) above on any day, Agent may assume that each Lender will
make available to Agent such Lender's Pro Rata Share of the Loan requested
or otherwise made on such day and Agent may, in its discretion, but shall
not be obligated to, cause a corresponding amount to be made available to
Borrowers on such day. If Agent makes such corresponding amount available
to a Borrower and such corresponding amount is not in fact made available
to Agent by such Lender, Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest
thereon for each day from the date such payment was due until the date such
amount is paid to Agent at the Interest Rate. During the period in which
such Lender has not paid such corresponding amount to Agent,
notwithstanding anything to the contrary contained in this Agreement or any
of the other Financing Agreements, the amount so advanced by Agent to a
Borrower shall, for all purposes hereof, be a Loan made by Agent for its
own account. Upon any such failure by a Lender to pay Agent, Agent shall
promptly thereafter notify Borrowers of such failure and the Borrowers
shall immediately pay such corresponding amount to Agent for its own
account.
(e) Nothing in this Section 6.7 or otherwise in this Agreement
or the other Financing Agreements shall be deemed to require Agent to
advance funds on behalf of any Lender or to relieve any Lender from its
obligation to fulfill its Commitment hereunder or to prejudice any rights
that Agent or Borrower may have against any Lender as a result of any
default by such Lender hereunder.
6.8 Use of Proceeds. Borrowers shall use the initial proceeds of the
Loans and Letter of Credit Accommodations provided by Lenders to Borrowers
hereunder only for: (a) the Letter of Credit Accommodation to be issued
payable to BABC in respect of the Existing Letters of Credit; (b) payments
to each of the persons listed in the disbursement direction letter
furnished by Borrowers to Agent on or about the date hereof and (c) costs,
expenses and fees in connection with the preparation, negotiation,
execution and delivery of this Agreement and the other Financing
Agreements. All other Loans made or Letter of Credit Accommodations
provided by Agent and Lenders to Borrowers pursuant to the provisions
hereof shall be used by Borrowers only for general operating, working
capital and other proper corporate purposes of Borrowers not otherwise
prohibited by the terms hereof. None of the proceeds will be used,
directly or indirectly, for the purpose of purchasing or carrying any
margin security or for the purposes of reducing or retiring any
indebtedness which was originally incurred to purchase or carry any margin
security or for any other purpose which might cause any of the Loans to be
considered a purpose credit within the meaning of Regulation G of the
Board of Governors of the Federal Reserve System, as amended.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 Collateral Reporting.
(a) Borrowers shall provide Agent with the following documents
in a form satisfactory to Agent:
(i) on a weekly basis, or more frequently as reasonably
practicable upon request of Agent at any time on or after an Event of
Default, or act, condition or event which with notice or passage of time or
both would constitute an Event of Default, a Borrowing Base Certificate
setting forth Borrowers' calculation of the Loans and Letter of Credit
Accommodations available to Borrowers pursuant to the terms and conditions
contained herein as of the Saturday of the immediately preceding week, duly
completed and executed by the chief financial officer or other appropriate
financial officer acceptable to Agent, together with all schedules required
pursuant to the terms of the Borrowing Base Certificate duly completed (and
including, without limitation, (A) a summary of the perpetual inventory
reports, (B) reports of amounts of consigned Inventory held by Borrowers by
category and consignor and (C) reports of the Cost and Retail Value of the
Inventory (net of markdowns));
(ii) on a monthly basis or more frequently as Agent may
reasonably request, (A) inventory reports by category to reflect the mix of
Inventory by chain of Borrowers' stores, (B) agings of accounts payable,
(C) reports of sales for each category of Inventory and gross profit margin
for each category of Inventory by chain and (D) reports on sales and use
tax collections, deposits and payments, including monthly sales and use tax
accruals;
(iii) upon Agent's reasonable request, (A) copies of
deposit slips and bank statements, (B) copies of shipping and delivery
documents, (C) copies of purchase orders, invoices and delivery documents
for Inventory, (D) reports by retail store location of sales and operating
profits for each such retail store location, and (E) perpetual inventory
reports, (F) agings of accounts receivable, and (G) the monthly statements
received by any Borrower or Guarantor from any Credit Card Issuers or
Credit Card Processors, together with such additional information with
respect thereto as shall be sufficient to enable Agent to monitor the
transactions pursuant to the Credit Card Agreements;
(iv) such other reports as to the Collateral as Agent shall
reasonably request from time to time.
(b) Nothing contained in any Borrowing Base Certificate shall be
deemed to limit, impair or otherwise affect the rights of Agent contained
herein and in the event of any conflict or inconsistency between the
calculation of the Loans and Letter of Credit Accommodations available to
Borrowers as set forth in any Borrowing Base Certificate and as determined
by Agent, the determination of Agent shall govern and be conclusive and
binding upon Borrowers absent manifest error. Agent shall, upon Borrowers'
request, provide to Borrowers the basis for the calculation by Agent of the
Loans and Letter of Credit Accommodations available to Borrowers. Without
limiting the foregoing, Borrowers shall furnish to Agent any information
which Agent may reasonably request regarding the determination and
calculation of any of the amounts set forth in the Borrowing Base
Certificate. If any records or reports of the Collateral are prepared or
maintained by an accounting service, contractor, shipper or other agent,
Borrowers hereby irrevocably authorize such service, contractor, shipper or
agent to deliver such records, reports and related documents to Agent and
to follow Agent's instructions with respect to further services at any time
that an Event of Default exists or has occurred and is continuing.
7.2 Receivables Covenants.
(a) Borrowers shall notify Agent promptly of (i) the assertion
of any claims, offsets, defenses or counterclaims by any account debtor,
Credit Card Issuer or Credit Card Processor or any disputes with any of
such persons or any settlement, adjustment or compromise thereof in excess
of $500,000 and (ii) all material adverse information relating to the
financial condition of any account debtor, Credit Card Issuer or Credit
Card Processor. No credit, discount, allowance or extension or agreement
for any of the foregoing shall be granted to any account debtor, Credit
Card Issuer or Credit Card Processor except in the ordinary course of the
business of Borrowers in accordance with the current practices of Borrowers
as in effect on the date hereof. So long as no Event of Default exists or
has occurred and is continuing, Borrowers may settle, adjust or compromise
any claim, offset, counterclaim or dispute with any account debtor, Credit
Card Issuer or Credit Card Processor. At any time that an Event of Default
exists or has occurred and is continuing, Agent shall, at its option, have
the exclusive right to settle, adjust or compromise any claim, offset,
counterclaim or dispute with account debtors, Credit Card Issuers or Credit
Card Processors or grant any credits, discounts or allowances.
(b) Borrowers shall notify Agent promptly of: (i) any notice of
a material default by Borrowers under any of the Credit Card Agreements or
of any default which might result in the Credit Card Issuer or Credit Card
Processor ceasing to make payments or suspending payments to Borrowers,
(ii) any notice from any Credit Card Issuer or Credit Card Processor that
such person is ceasing or suspending, or will cease or suspend, any present
or future payments due or to become due to Borrowers from such person, or
that such person is terminating or will terminate any of the Credit Card
Agreements, and (iii) the failure of Borrowers to comply with any material
terms of the Credit Card Agreements or any terms thereof which might result
in the Credit Card Issuer or Credit Card Processor ceasing or suspending
payments to Borrowers.
(c) Agent may, at any time or times that an Event of Default
exists or has occurred, (i) notify any or all account debtors, Credit Card
Issuers and Credit Card Processors that the Receivables have been assigned
to Agent and that Agent has a security interest therein for itself and the
ratable benefit of Lenders and Agent may direct any or all account debtors,
Credit Card Issuers and Credit Card Processors to make payments of
Receivables directly to Agent, (ii) extend the time of payment of,
compromise, settle or adjust for cash, credit, return of merchandise or
otherwise, and upon any terms or conditions, any and all Receivables or
other obligations included in the Collateral and thereby discharge or
release the account debtor or any other party or parties in any way liable
for payment thereof without affecting any of the Obligations, (iii) demand,
collect or enforce payment of any Receivables or such other obligations,
but without any duty to do so, and Agent shall not be liable for its
failure to collect or enforce the payment thereof nor for the negligence of
its agents or attorneys with respect thereto so long as Agent has selected
such agents or attorneys, with reasonable care, and (iv) take whatever
other action Agent may deem necessary or desirable for the protection of
its interests. At any time that an Event of Default exists or has occurred
and is continuing, at Agent's request, all invoices and statements sent to
any account debtor, Credit Card Issuer or Credit Card Processor shall state
that the Receivables due from such account debtor, Credit Card Issuer or
Credit Card Processor and such other obligations have been assigned to
Agent and are payable directly and only to Agent, for itself and the
ratable benefit of Lenders, and Borrowers shall deliver to Agent such
originals of documents evidencing the sale and delivery of goods or the
performance of services giving rise to any Receivables as Agent may
require.
(d) Agent shall have the right at any time or times, in Agent's
name or in the name of a nominee of Agent, to verify the validity, amount
or any other matter relating to any Account or other Collateral, by mail,
telephone, facsimile transmission or otherwise.
(e) Borrowers shall deliver or cause to be delivered to Agent,
with appropriate endorsement and assignment, with full recourse to
Borrowers, all chattel paper and instruments which a Borrower now owns or
may at any time acquire immediately upon such Borrower's receipt thereof,
except as Agent may otherwise agree.
7.3 Inventory Covenants. With respect to the Inventory: (a) Borrowers
shall at all times maintain inventory records consistent with the current
practices of Borrowers as of the date hereof or as modified in any material
respect after the date hereof in a manner reasonably acceptable to Agent,
keeping correct and accurate records itemizing and describing the kind,
type, quality and quantity of Inventory, Borrowers' cost therefor and daily
withdrawals therefrom and additions thereto; (b) Borrowers shall conduct a
physical count of the Inventory at least once each fiscal year, but at any
time or times as Agent may request on or after an Event of Default exists
or has occurred and so long as the same is continuing, and promptly
following such physical inventory shall supply Agent with a report in the
form and with such specificity as may be reasonably satisfactory to Agent
concerning such physical count; (c) Borrowers shall not remove any
Inventory from the locations set forth or permitted herein, without the
prior written consent of Agent, except for sales of Inventory in the
ordinary course of such Borrower's business and except to move Inventory
directly from one location set forth or permitted herein to another such
location or Inventory in transit to such location; (d) upon Agent's
request, such Borrower shall, at its expense, no more than once in any six
(6) month period, but at any time or times as Agent may request at Agent's
expense, or at any time or times as Agent may request at such Borrower's
expense on or after an Event of Default exists or has occurred and so long
as the same is continuing, deliver or cause to be delivered to Agent
written reports or appraisals as to the Inventory in form, scope and
methodology acceptable to Agent and by an appraiser acceptable to Agent,
addressed to Agent or upon which Agent is expressly permitted to rely; (e)
upon Agent's request, each Borrower shall, at its expense, conduct through
RGIS Inventory Specialists, Inc. or another inventory counting service
acceptable to Agent, a physical count of the Inventory in form, scope and
methodology acceptable to Agent no more than once in any twelve (12) month
period, but at any time or times as Agent may request on or after an Event
of Default exists or has occurred and so long as the same is continuing,
the results of which shall be reported directly by such inventory counting
service to Agent and such Borrower shall promptly deliver confirmation in a
form satisfactory to Agent that appropriate adjustments have been made to
the inventory records of such Borrower to reconcile the inventory count to
such Borrower's inventory records; (f) each Borrower shall produce, use,
store and maintain the Inventory, with all reasonable care and caution and
in accordance with applicable standards of any insurance and in conformity
with applicable laws (including, but not limited to, the requirements of
the Federal Fair Labor Standards Act of 1938, as amended and all rules,
regulations and orders related thereto); (g) as between Agent, Lenders and
Borrowers, each Borrower assumes all responsibility and liability arising
from or relating to the production, use, sale or other disposition of the
Inventory; (h) each Borrower shall not sell Inventory to any customer on
approval, or any other basis which entitles the customer to return or may
obligate such Borrower to repurchase such Inventory except for the right of
return given to retail customers of such Borrower in the ordinary course of
the business of such Borrower in accordance with the then current return
policy of such Borrower; (i) each Borrower shall keep the Inventory in good
and marketable condition in all material respects; (j) no Borrower shall
acquire or accept any Inventory on consignment or approval, except to the
extent such Inventory is reported to Agent in accordance with the terms
hereof; and (k) each Borrower shall give Agent not less than ten (10) days'
prior written notice of any change in the inventory counting service used
by such Borrower.
7.4 Power of Attorney. Each Borrower hereby irrevocably designates
and appoints Agent (and all persons designated by Agent) as such Borrower's
true and lawful attorney-in-fact, and authorizes Agent, in such Borrower's
or Agent's name, to: (a) at any time an Event of Default or act, condition
or event which with notice or passage of time or both would constitute an
Event of Default exists or has occurred and is continuing (i) demand
payment on Receivables or other proceeds of Inventory or other Collateral,
(ii) enforce payment of Receivables by legal proceedings or otherwise,
(iii) exercise all of such Borrower's rights and remedies to collect any
Receivables or other Collateral, (iv) sell or assign any Receivables upon
such terms, for such amount and at such time or times as the Agent deems
advisable, (v) settle, adjust, compromise, extend or renew a Receivable,
(vi) discharge and release any Receivable, (vii) prepare, file and sign
such Borrower's name on any proof of claim in bankruptcy or other similar
document against an account debtor, and (viii) do all acts and things which
are necessary, in Agent's determination, to fulfill such Borrower's
obligations under this Agreement and the other Financing Agreements, (b) at
any time that Agent may receive any item of payment or proceeds thereof,
endorse such Borrower's name upon such item of payment or proceeds thereof
and deposit the same in the Agent's account for application to the
Obligations, (c) at any time Agent may receive any chattel paper, document,
instrument, invoice, or similar document or agreement relating to any
Receivable or any goods pertaining thereto or any other Collateral, endorse
such Borrower's name thereon, (d) at any time sign such Borrower's name on
any verification of Receivables and notices thereof to account debtors and
(e) execute in such Borrower's name and file any UCC financing statements
or amendments thereto. Each Borrower hereby releases Agent, Lenders and
its and their officers, employees and designees from any liabilities
arising from any act or acts under this power of attorney and in
furtherance thereof, whether of omission or commission, except as a result
of Agent's or such Lender's own gross negligence or wilful misconduct as
determined pursuant to a final non-appealable order of a court of competent
jurisdiction.
7.5 Right to Cure. Agent may, at its option, (a) upon notice to
Borrowers, cure any default by Borrowers, Guarantors or their Subsidiaries,
under any material agreement with a third party which affects the
Collateral, its value or the ability of Agent to collect, sell or otherwise
dispose of the Collateral or the rights and remedies of Agent or any Lender
therein or the ability of Borrowers or Guarantors to perform their
obligations hereunder or under the other Financing Agreements, provided,
that, so long as no Event of Default, or act, condition or event which with
notice or passage of time or both would constitute an Event of Default,
shall exist or have occurred and be continuing, then (i) if such material
agreement provides for or relates to liabilities and obligations which do
not exceed $5,000,000, either singly or in the aggregate, then such notice
from Agent to Borrowers shall be not less than thirty (30) days, and (ii)
if such material agreement provides for or relates to liabilities and
obligations which equal or exceed $5,000,000, either singly or in the
aggregate, then such notice from Agent to Borrowers shall be not less than
ten (10) days, (b) upon notice to Borrowers, pay or bond on appeal any
judgment entered against any Borrower, (c) discharge taxes, liens, security
interests or other encumbrances at any time levied on or existing with
respect to the Collateral (other than those permitted hereunder) and (d)
pay any amount, incur any expense or perform any act which, in Agent's
judgment, is necessary or appropriate to preserve, protect, insure or
maintain the Collateral and the rights of Agent and Lenders with respect
thereto. Agent may add any amounts so expended to the Obligations and
charge any loan account of Borrowers therefor, such amounts to be repayable
by Borrowers on demand. Agent and Lenders shall be under no obligation to
effect such cure, payment or bonding and shall not, by doing so, be deemed
to have assumed any obligation or liability of Borrowers or Guarantors.
Any payment made or other action taken by Agent or any Lender under this
Section shall be without prejudice to any right to assert an Event of
Default hereunder and to proceed accordingly.
7.6 Access to Premises. From time to time as requested by Agent, at
the cost and expense of Borrowers, (a) Agent and any Lender or its designee
shall have complete access to all of each Borrower's premises during normal
business hours and after notice to a Borrower, or at any time and without
notice to Borrowers if an Event of Default exists or has occurred and is
continuing, for the purposes of inspecting, verifying and auditing the
Collateral and all of Borrowers' books and records, and (b) Borrowers shall
allow and assist Agent to make such copies of such books and records or
extracts therefrom as Agent may reasonably request, and (c) Agent may use
during normal business hours such of Borrowers' personnel, equipment,
supplies and premises as may be reasonably necessary for the foregoing and
if an Event of Default exists or has occurred and is continuing for the
collection of Accounts and realization of other Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Borrowers and Guarantors hereby jointly and severally represent and
warrant to Agent and Lenders the following (which shall survive the
execution and delivery of this Agreement), the truth and accuracy of which
are a continuing condition of the making of Loans and providing Letter of
Credit Accommodations by Agent and Lenders to Borrowers:
8.1 Corporate Existence, Power and Authority; Subsidiaries. Each
Borrower and Guarantor is a corporation or limited liability company duly
organized and in good standing under the laws of its jurisdiction of
organization and is duly qualified as a foreign corporation and in good
standing in all states or other jurisdictions where the nature and extent
of the business transacted by it or the ownership of assets makes such
qualification necessary, except for those jurisdictions in which the
failure to so qualify would not have a Material Adverse Effect. The
execution, delivery and performance of this Agreement, the other Financing
Agreements and the transactions contemplated hereunder and thereunder are
all within the corporate powers or powers as a limited liability company of
each Borrower and Guarantor, have been duly authorized and are not in
contravention of law or the terms of each Borrower's and Guarantor's
certificate of incorporation, by-laws, or other organizational
documentation, or any indenture, agreement or undertaking to which such
Borrower or Guarantor is a party or by which such Borrower or Guarantor or
its property are bound. This Agreement and the other Financing Agreements
constitute legal, valid and binding obligations of Borrowers and Guarantors
enforceable in accordance with their respective terms. Borrowers and
Guarantors do not have any Subsidiaries except as set forth in Schedule 8.1
hereto, and such other Subsidiaries as may be formed after the date hereof
in accordance with Section 9.7 below. The only Non-Guarantor Subsidiaries
of Borrowers and Guarantors in existence on the date hereof are identified
on Schedule 8.1.
8.2 Financial Statements; No Material Adverse Change. All financial
statements relating to Borrowers and Guarantors at any time delivered by
Borrowers or Guarantors to Agent or any Lender have been prepared in
accordance with GAAP and fairly present the financial condition and the
results of operations of Edison and its Subsidiaries on a consolidated
basis as at the dates and for the periods set forth therein. Except as
disclosed in any interim financial statements furnished by or on behalf of
Borrowers or Guarantors to Agent or any Lender prior to the date of this
Agreement, there has been no material adverse change in the assets, liabi
lities, properties and condition, financial or otherwise, of Edison and its
Subsidiaries on a consolidated basis, since the date of the audited
financial statements included with the disclosure statement for the Plan
filed with the Bankruptcy Court as of June 30, 1997.
8.3 Chief Executive Office; Collateral Locations. The chief
executive office of each Borrower and Borrower's books and records
concerning Receivables and Inventory are located only at the address set
forth below and its other places of business and the other locations of
Collateral, if any, are the addresses set forth in Schedule 8.3 hereto and
the other locations established by Borrowers after the date hereof in
accordance with Section 9.2 hereof. Schedule 8.3 correctly identifies any
of such locations which are not owned by Borrowers or Guarantors and sets
forth the owners and/or operators thereof as of the date hereof.
8.4 Priority of Liens; Title to Properties. The security interests
and liens granted to Agent for itself and the ratable benefit of Lenders
under this Agreement and the other Financing Agreements constitute valid
and perfected first priority liens and security interests in and upon the
Collateral subject only to the liens indicated on Schedule 8.4 hereto and
the other liens permitted under Section 9.8 hereof. Each Borrower owns and
has good title to the Collateral owned by such Borrower and such title to
all of its other properties and assets as is necessary to operate its
business, subject to no liens, mortgages, pledges, security interests,
encumbrances or charges of any kind, except those granted to Agent for
itself and the ratable benefit of Lenders and such others as are
specifically listed on Schedule 8.4 hereto or permitted under Section 9.8
hereof.
8.5 Tax Returns. Each Borrower and Guarantor has filed or caused to
be filed all tax returns and other reports which it was required by law to
file on or prior to the date hereof and has paid all taxes, assessments,
fees, and other governmental charges, and penalties and interest, if any,
against it or its properties, assets, income, or franchise, that are due
and payable (except to the extent that (a) any such taxes, assessments,
fees, and other governmental charges, and penalties and interest are
diligently contested in good faith by appropriate proceedings and proper
reserves are established on the books of the applicable Borrower or
Guarantor as provided by GAAP and (b) a stay of enforcement of any liens
arising from the nonpayment thereof when due is in effect). Adequate
provision has been made for the payment of all accrued and unpaid Federal,
State, Provincial, county, local, foreign and other taxes whether or not
yet due and payable and whether or not disputed. Each Borrower and
Guarantor has remitted to the appropriate tax authority all sales and/or
use taxes applicable to its business required to be collected and remitted
under the laws of the United States and each possession or territory
thereof, and each State or political subdivision thereof, including any
State in which such Borrower or Guarantor owns any Inventory or owns or
leases any other property.
8.6 Litigation. Except as set forth in Schedule 8.6, there is no
present investigation by any Governmental Authority to the best of the
knowledge of Borrowers and Guarantors pending or threatened, against or
affecting any Borrower or Guarantor, its assets or business and there is no
action, suit, proceeding or claim by any Person pending or to the best of
the knowledge of Borrowers and Guarantors, threatened, against any Borrower
or Guarantor or its assets or goodwill, or against or affecting any
transactions contemplated by this Agreement, which if adversely determined
against any Borrower or Guarantor would have a Material Adverse Effect.
8.7 Intellectual Property. Each Borrower and Guarantor owns or
licenses all material patents, trademarks, service-marks, logos, trade
names, trade secrets, know-how, copyrights, or licenses and other rights
with respect to any of the foregoing, which are necessary for the operation
of its business as presently conducted or proposed to be conducted. To the
best of the knowledge of Borrowers and Guarantors, no product, process,
method, substance, part or other material presently contemplated to be sold
by or employed by any Borrower or Guarantor infringes any patent,
trademark, service-mark, trade name, copyright, license or other right
owned by any other Person and no claim or litigation is pending or to the
best of the knowledge of Borrowers and Guarantors, threatened against or
affecting any Borrower or Guarantor contesting its right to sell or use any
such product, process, method, substance, part or other material which
would have a Material Adverse Effect.
8.8 Compliance with Other Agreements and Applicable Laws.
(a) No Borrower or Guarantor is in default in any respect under,
or in violation in any respect of any of the terms of, any agreement,
contract, instrument, lease or other commitment to which it is a party or
by which it or any of its assets are bound where any such default or
violation would have a Material Adverse Effect. Each Borrower and
Guarantor is in compliance in all respects with the requirements of all
applicable laws, rules, regulations and orders of any Governmental
Authority relating to its business, including, without limitation, those
set forth in or promulgated pursuant to the Occupational Safety and Health
Act of 1970, as amended, the Fair Labor Standards Act of 1938, as amended,
ERISA, the Code, as amended, and the rules and regulations thereunder, all
Federal, State, Provincial and local statutes, regulations, rules and
orders relating to consumer credit (including, without limitation, as each
has been amended, the Truth-in-Lending Act, the Fair Credit Billing Act,
the Equal Credit Opportunity Act and the Fair Credit Reporting Act, and
regulations, rules and orders promulgated thereunder), all Federal, State,
Provincial and local states, regulations, rules and orders pertaining to
sales of consumer goods (including, without limitation, the Consumer
Products Safety Act of 1972, as amended, and the Federal Trade Commission
Act of 1914, as amended, and all regulations, rules and orders promulgated
thereunder) where the failure to comply would have a Material Adverse
Effect.
(b) Each Borrower and Guarantor has obtained all material
permits, licenses, approvals, consents, certificates, orders or
authorizations of any Governmental Authority required for the lawful
conduct of its business (collectively, the Permits ). All of the Permits
are valid and subsisting and in full force and effect except where the
failure to have such Permits would not have a Material Adverse Effect.
There are no actions, claims or proceedings pending or threatened that seek
the revocation, cancellation, suspension or modification of any of the
Permits except where the failure to have such Permits would not have a
Material Adverse Effect.
8.9 Environmental Compliance.
(a) Except as set forth on Schedule 8.9 hereto, (i) each
Borrower, Guarantor and its Subsidiaries has not generated, used, stored,
treated, transported, manufactured, handled, produced or disposed of any
Hazardous Materials, on or off its premises (whether or not owned by it) in
any manner which at any time violates any applicable Environmental Law or
any license, permit, certificate, approval or similar authorization
thereunder in any manner which would have a Material Adverse Effect and
(ii) the operations of such Borrower, Guarantor and its Subsidiaries comply
in all respects with all Environmental Laws and all licenses, permits,
certificates, approvals and similar authorizations thereunder, where the
failure to so comply would have a Material Adverse Effect.
(b) Except as set forth on Schedule 8.9 hereto, there has been
no investigation, proceeding, complaint, order, directive, claim, citation
or notice of violation by any Governmental Authority or any other person
nor is any pending or to the best knowledge of Borrowers and Guarantors
threatened, with respect to any non-compliance with or violation of the
requirements of any Environmental Law by any Borrower, Guarantor or its
Subsidiaries or the release, spill or discharge, threatened or actual, of
any Hazardous Material or the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any
Hazardous Materials or any other environmental, health or safety matter,
which affects any Borrower, Guarantor or its Subsidiaries or its or their
businesses, operations or assets or any properties at which any Borrower,
Guarantor or its Subsidiaries has transported, stored or disposed of any
Hazardous Materials, which would have a Material Adverse Effect.
(c) Except as set forth on Schedule 8.9 hereto, each Borrower,
Guarantor and its Subsidiaries has no liability (contingent or otherwise)
in connection with a release, spill or discharge, threatened or actual, of
any Hazardous Materials or the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any
Hazardous Materials, which would have a Material Adverse Effect.
(d) Except as set forth on Schedule 8.9 hereto, each Borrower,
Guarantor and its Subsidiaries has all licenses, certificates, approvals,
authorizations or other permits required to be obtained or filed in
connection with the operations of such Borrower, Guarantor and Subsidiary
under any Environmental Law, except where the failure to obtain, file or
maintain as valid and effective any such licenses, certificates, approvals,
authorizations or other Permits would not have a Material Adverse Effect.
All of such licenses, certificates, approvals, authorizations or other
permits are valid and in full force and effect.
8.10 Governmental Authority. No consent, approval or other action of,
or filing with, or notice to any Governmental Authority is required in
connection with the execution, delivery and performance of this Agreement,
the other Financing Agreements or any of the instruments or documents to be
delivered pursuant hereto or thereto, except for those consents or
approvals already obtained by Borrowers and Guarantors and the filing of
UCC financing statements.
8.11 Credit Card Agreements. Set forth in Schedule 8.11 hereto is a
correct and complete list as of the date hereof of all of the Credit Card
Agreements and all other agreements, documents and instruments existing as
of the date hereof between or among Borrowers, Guarantors, the Credit Card
Issuers, the Credit Card Processors and any of their Affiliates. The
Credit Card Agreements constitute all of such agreements necessary for each
Borrower and Guarantor to operate its business as presently conducted with
respect to credit cards and debit cards and no Accounts of Borrowers or
Guarantors arise from purchases by customers of Inventory with credit cards
or debit cards, other than those which are issued by Credit Card Issuers
with whom such Borrower or Guarantor has entered into one of the Credit
Card Agreements set forth on Schedule 8.11 hereto or with whom such
Borrower or Guarantor has entered into a Credit Card Agreement in
accordance with Section 9.13 hereof. Each of the Credit Card Agreements
constitutes the legal, valid and binding obligations of Borrowers and
Guarantors and to the best of the knowledge of Borrowers and Guarantors,
the other parties thereto, enforceable in accordance with their respective
terms and are in full force and effect. No default or event of default, or
act, condition or event which after notice or passage of time or both,
would constitute a default or an event of default under any of the Credit
Card Agreements exists or has occurred. Borrowers and the other parties
thereto have complied with all of the terms and conditions of the Credit
Card Agreements to the extent necessary for Borrowers to be entitled to
receive all payments thereunder. Borrowers have delivered, or caused to be
delivered to Agent, true, correct and complete copies of all of the Credit
Card Agreements.
8.12 Employee Benefits.
(a) No Borrower or Guarantor has engaged in any transaction in
connection with which such Borrower or Guarantor or any of its ERISA
Affiliates could be subject to either a civil penalty assessed pursuant to
ERISA or a tax imposed by the Code, including any accumulated funding
deficiency described in Section 8.12(c) hereof and any deficiency with
respect to vested accrued benefits described in Section 8.12(d) hereof.
(b) No liability to the Pension Benefit Guaranty Corporation has
been or is expected to be incurred by any Borrower or Guarantor with
respect to any employee benefit plan of any Borrower or Guarantor or any of
its ERISA Affiliates. There has been no reportable event (within the
meaning of ERISA) or any other event or condition with respect to any
employee benefit plan of any Borrower or Guarantor or any of its ERISA
Affiliates which presents a risk of termination of any such plan by the
Pension Benefit Guaranty Corporation.
(c) Full payment has been made of all amounts which any
Borrower, Guarantor or any of its ERISA Affiliates is required under ERISA
and the Code to have paid under the terms of each employee benefit plan as
contributions to such plan as of the last day of the most recent fiscal
year of such plan ended prior to the date hereof, and no accumulated
funding deficiency (as defined in ERISA and the Code), whether or not
waived, exists with respect to any employee pension benefit plan, including
any penalty or tax described in Section 8.12(a) hereof and any deficiency
with respect to vested accrued benefits described in Section 8.12(d)
hereof.
(d) The current value of all vested accrued benefits under all
employee pension benefit plans maintained by each Borrower and Guarantor
that are subject to Title IV of ERISA does not exceed the current value of
the assets of such plans allocable to such vested accrued benefits,
including any penalty or tax described in Section 8.12(a) hereof and any
accumulated funding deficiency described in Section 8.12(d) hereof. The
terms current value and accrued benefit have the meanings specified in
ERISA.
(e) No Borrower, Guarantor or any of their ERISA Affiliates is
or has ever been obligated to contribute to any multiemployer plan (as
such term is defined in ERISA) that is subject to Title IV of ERISA.
8.13 Bank Accounts. All of the deposit accounts, securities accounts,
investment accounts or other accounts in the name of or used by each
Borrower and Guarantor maintained at any bank or other financial
institution as of the date hereof are set forth on Schedule 6.3 hereto.
8.14 Customs Brokers. All of the Customs Brokers used by Borrowers
and Guarantors as of the date hereof are set forth on Schedule 8.14 hereto.
8.15 Interrelated Businesses. Borrowers and Guarantors make up an
interrelated organization of various entities constituting a single
economic and business enterprise in which each Borrower and Guarantor
shares an identity of interests such that any benefit received by any
Borrower or Guarantor benefits the other such Persons. Each Borrower and
Guarantor purchases or sells and supplies goods and renders or receives
services to or from, or for the benefit of, the other such Persons and
provides or receives other financial accommodations to or for the benefit
of the other such Persons and administrative, marketing, payroll and
management services to or from or for the benefit of, the other such
Persons. Each Borrower and Guarantor has consolidated accounting,
administrative, financial, computer, credit, legal and other services.
8.16 Capitalization.
(a) All of the issued and outstanding shares of Capital Stock of
Guarantors are directly and beneficially owned and held as of the date
hereof by the persons identified on Schedule 8.16 and all of such shares
have been duly authorized and are fully paid and non-assessable, free and
clear of all claims, liens, pledges and encumbrances of any kind, except in
favor of Agent and as permitted hereunder. All of the issued and
outstanding shares of Capital Stock of Edison Apparel are directly and
beneficially owned and held by Edison and all of such shares have been duly
authorized and are fully paid and non-assessable, free and clear of all
claims, liens, pledges and encumbrances of any kind, except in favor of
Agent and as permitted hereunder.
(b) Each Borrower is solvent and will continue to be solvent
after the creation of the Obligations, the security interests of Agent and
the other transactions contemplated hereunder, is able to pay its debts as
they mature and has (and has reason to believe it will continue to have)
sufficient capital (and not unreasonably small capital) to carry on its
business and all businesses in which it is about to engage. The assets and
properties of each Borrower at a fair valuation and at their present fair
salable value are, and will be, greater than the Indebtedness and other
liabilities of such Borrower, and including subordinated and contingent
liabilities computed at the amount which, to the best of the knowledge of
Borrowers, represents an amount which can reasonably be expected to become
an actual or matured liability.
8.17 Plan. The Plan has been confirmed pursuant to the Confirmation
Order, and concurrently with the making of the initial Loans or issuance of
the initial Letter of Credit Accommodations, the Effective Date has
occurred. The Plan is valid and binding upon all parties in interest and
is in full force and effect. The Confirmation Order (a) has been duly
entered; (b) is valid, subsisting and continuing; (c) has not been revoked,
remanded, vacated, modified, reversed on appeal or revoked, remanded,
vacated, reversed or modified by any Bankruptcy or District Court Judge;
(d) has not been appealed as of the date hereof, except as set forth on
Schedule 8.17 hereto and (e) is not subject to any pending motion for
reconsideration or any stay pending appeal. All steps to be taken on or
before the Effective Date under the terms of the Plan have been taken and
upon the making of the initial Loans or issuing of the initial Letter of
Credit Accommodations hereunder, all conditions precedent to the
effectiveness of the Plan have been fulfilled, in each case as of the date
hereof. Borrowers have delivered, or caused to be delivered, to Agent and
Lenders a true copy of the Plan (including all amendments, modifications
and supplements thereto) and the Confirmation Order in the form duly
entered by the Bankruptcy Court on or before the date hereof.
8.18 Accuracy and Completeness of Information. All information
furnished by or on behalf of Borrowers or Guarantors in writing to Agent or
any Lender in connection with this Agreement or any of the other Financing
Agreements or any transaction contemplated hereby or thereby, including,
without limitation, all information on the schedules is true and correct in
all material respects on the date as of which such information is dated or
certified and does not omit any material fact necessary in order to make
such information not misleading. No event or circumstance with respect to
the business of Edison and its Subsidiaries has occurred which has had or
could reasonably be expected to have a Material Adverse Effect, which has
not been fully and accurately disclosed to Agent in writing.
8.19 Survival of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Financing
Agreements shall survive the execution and delivery of this Agreement and
shall be deemed to have been made again to Agent and Lenders on the date of
each additional borrowing or other credit accommodation hereunder and shall
be conclusively presumed to have been relied on by Agent and Lenders
regardless of any investigation made or information possessed by Agent and
Lenders. The representations and warranties set forth herein shall be
cumulative and in addition to any other representations or warranties which
Borrowers shall now or hereafter give, or cause to be given, to Agent and
Lenders.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence. Each Borrower and Guarantor shall, and
shall cause its Subsidiaries to, at all times preserve, renew and keep in
full, force and effect its corporate existence and rights and franchises
with respect thereto and maintain in full force and effect all licenses,
trademarks, tradenames, approvals, authorizations, leases, contracts and
Permits necessary to carry on its business as presently or proposed to be
conducted, except to the extent otherwise permitted under Section 9.7
hereof. Each Borrower and Guarantor shall, and shall cause its
Subsidiaries to, give Agent thirty (30) days prior written notice of any
proposed change in its corporate name, which notice shall set forth the new
name and, if requested by Agent, such Borrower or Guarantor shall deliver
to Agent a copy of the amendment to the Certificate of Incorporation of
such Borrower, Guarantor or Subsidiary providing for the name change
certified by the Secretary of State of the jurisdiction of incorporation of
such Borrower, Guarantor or Subsidiary as soon as it is available.
9.2 New Collateral Locations. Each Borrower and Guarantor may open
any new location within the United States so long as such Borrower or
Guarantor (a) gives Agent thirty (30) days prior written notice of the
intended opening of any such new location; except, that, Borrowers and
Guarantors shall not be required to give such prior written notice of a new
retail store location of Borrowers or Guarantors, provided, that, (i) no
Event of Default, or act, condition or event which with notice or passage
of time or both would constitute an Event of Default, shall exist or have
occurred and be continuing, (ii) the total amount of Inventory located at
all such new retail store locations shall not exceed $2,500,000 (provided,
that, if Borrowers have provided evidence to Agent that such new retail
store location is in a jurisdiction in which the security interest or lien
of Agent for itself and the ratable benefit of Lenders is perfected, the
amount of Inventory at such location shall not be considered for purposes
of such limit), and (iii) Borrowers and Guarantors shall include such new
retail store locations in the monthly reports provided by Borrowers and
Guarantors to Agent in accordance with Section 9.6 hereof, and (b) executes
and delivers, or causes to be executed and delivered, to Agent such
agreements, documents, and instruments as Agent may deem reasonably
necessary or desirable to protect its interests in the Collateral at such
location, including UCC financing statements.
9.3 Compliance with Laws, Regulations, Etc. Each Borrower and
Guarantor shall, and shall cause its Subsidiaries to, at all times comply
with all applicable provisions of laws, rules, regulations, licenses,
approvals, orders and Permits and duly observe all requirements, of any
foreign, Federal, State, Provincial or local Governmental Authority,
including, without limitation, the Occupational Safety and Health Act of
1970, as amended, the Code, the Fair Labor Standards Act of 1938, as
amended, and the rules and regulations thereunder, all Federal, State,
Provincial and local statutes, regulations, rules and orders relating to
consumer credit (including, without limitation, as each has been amended,
the Truth-in-Lending Act, the Fair Credit Billing Act, the Equal Credit
Opportunity Act and the Fair Credit Reporting Act, and regulations, rules
and orders promulgated thereunder), all Federal, State, Provincial and
local statutes, regulations, rules and orders pertaining to sales of
consumer goods (including, without limitation, the Consumer Products Safety
Act of 1972, as amended, and the Federal Trade Commission Act of 1914, as
amended, and all regulations, rules and orders promulgated thereunder) and
all statutes, rules, regulations, orders, permits and stipulations relating
to environmental pollution and employee health and safety, including,
without limitation, all Environmental Laws, where the failure to so comply
would have a Material Adverse Effect.
9.4 Payment of Taxes and Claims. Each Borrower and Guarantor shall,
and shall cause its Subsidiaries to, duly pay and discharge all taxes,
assessments, contributions and governmental charges upon or against it or
its properties or assets, except for taxes the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to Borrowers and Guarantors and with respect to which adequate
reserves have been set aside on its books and as to which no lien has been
filed.
9.5 Insurance.
(a) Each Borrower and Guarantor shall, and shall cause its
Subsidiaries to, at all times insure all tangible property of such
Borrower, Guarantor or Subsidiary (other than tangible property located in
retail stores) against loss or damage by fire with extended coverage,
theft, burglary, pilferage, loss in transit, and such other hazards as
Agent shall specify and shall also maintain, and cause each of its
Subsidiaries to maintain, such other insurance as Agent may reasonably
require, including, without limitation, liability insurance, in each case
in amounts, under policies and by insurers acceptable to Agent.
(b) Each Borrower and Guarantor shall, and shall cause its
Subsidiaries to, cause Agent (for the ratable benefit of the Lenders) to be
named in each such policy as loss payee or additional insured, as
appropriate, in a manner acceptable to Agent. Each policy of insurance
shall contain a clause or endorsement requiring the insurer to give not
less than thirty (30) days (or in the case of nonpayment of premiums, ten
(10) days) prior written notice to Agent in the event of cancellation of
the policy for any reason whatsoever and with respect to property
insurance, a clause or endorsement stating that the interest of Agent shall
not be impaired or invalidated by any act or neglect of any Borrower,
Guarantor or Subsidiary or the owner of any premises where assets and/or
properties are located nor by the use of such premises for purposes more
hazardous than are permitted by such policy.
(c) All premiums for such insurance shall be paid by the
applicable Borrower, Guarantor or Subsidiary when due, and certificates of
insurance and, if requested, photocopies of the policies shall be delivered
to Agent (with copies for each of Lenders). If any Borrower or Guarantor
fails to procure such insurance or to pay the premiums therefor when due,
Agent may (but shall not be required to) do so and charge the costs thereof
to the loan account of Borrower maintained by Agent.
(d) Each Borrower and Guarantor shall promptly notify Agent of
any loss, damage, or destruction to any of the tangible property of such
Borrower or Guarantor or any of its Subsidiaries or arising from its use,
whether or not covered by insurance, to the extent that the amount of the
loss with respect to such property exceeds $1,000,000.
(e) Subject to Section 9.5(f) hereof, Agent is hereby authorized
to collect directly all insurance proceeds with respect to liability
insurance for which Agent is named as beneficiary or additional insured and
property insurance for which Agent is named as loss payee or additional
insured.
(f) In addition to the insurance required pursuant to the
foregoing, each Borrower or Guarantor shall, and shall cause its
Subsidiaries to, maintain such other insurance (which may be self-
insurance) with respect to its property and business against casualties and
contingencies of such types (including, without limitation, business
interruption, environmental liability, public liability, product liability,
and larceny, embezzlement or other criminal misappropriation) and in such
amounts as is customary for persons of established reputation engaged in
the same or a similar business and similarly situated. All of the
insurance of Borrowers and Guarantors and their Subsidiaries shall require
at least thirty (30) days (or, in the case of nonpayment of premiums, ten
(10) days) prior written notice to Agent of any cancellation, non-renewal
or material change. At its option, Agent may apply any insurance proceeds
with respect to Collateral received by Agent at any time to payment of the
Obligations, whether or not then due, in any order and in such manner as
Agent may determine or hold such proceeds as cash collateral for the
Obligations, except as Agent may otherwise agree, provided, however, that
if at the time Agent receives any such insurance proceeds no Event of
Default, and no act, condition or event which with notice or passage of
time or both would constitute an Event of Default, shall exist or have
occurred and be continuing, and the aggregate amount of such proceeds from
any one occurrence, loss or destruction does not exceed $1,000,000, then
Agent shall remit such proceeds to Borrowers.
9.6 Financial Statements and Other Information.
(a) Borrowers shall promptly furnish to Agent and Lenders all
such financial information as Agent shall reasonably request. Borrowers
hereby authorize Agent to meet with and/or contact Borrowers' auditors and
accountants regarding the financial condition of Edison and its
Subsidiaries. Edison will authorize its accountants and auditors to
cooperate with Agent. Without limiting the foregoing, Borrowers will
furnish to Agent and Lenders, in such detail as Agent shall request, the
following:
(i) As soon as available, but in any event not later than
ninety (90) days after the close of each fiscal year of Edison and its
Subsidiaries, (A) consolidated audited balance sheets of Edison and its
Subsidiaries as of the end of such fiscal year and (B) consolidated audited
statements of income and expense, retained earnings and cash flow for
Edison and its Subsidiaries for such fiscal year, all in reasonable detail,
fairly presenting the financial position and the results of operations of
Edison and its Subsidiaries as at the date thereof and for the fiscal year
then ended, and prepared in accordance with GAAP. Such statements shall be
examined in accordance with generally accepted auditing standards by and
accompanied by a report thereon unqualified as to scope of Ernst & Young
L.L.P. or such other independent certified public accountants selected by
Edison and reasonably satisfactory to Agent.
(ii) As soon as available, but in any event not later than
forty-five (45) days after the close of each fiscal quarter of Edison and
its Subsidiaries (other than any fiscal quarter which is also the end of
any fiscal year of Edison and its Subsidiaries) and not later than ninety
(90) days after the end of any fiscal quarter of Edison and its
Subsidiaries which is also the end of any fiscal year of Edison and its
Subsidiaries, (A) consolidated unaudited balance sheets of Edison and its
Subsidiaries as at the end of such quarter and (B) consolidated unaudited
statements of income and expense and cash flow for Edison and its
Subsidiaries for such quarter and for the period from the beginning of the
fiscal year to the end of such quarter, in each instance setting forth next
to such quarterly figures and year to end of quarter figures, the budgeted
figures for such periods, respectively, together with the accompanying
notes thereto, all in reasonable detail, fairly presenting the financial
position and results of operation of Edison and its Subsidiaries as at the
date thereof and for such periods, and prepared in accordance with GAAP
consistent with the audited financial statements required pursuant to
Section 9.6(a)(i) above. Edison shall certify, by a certificate signed by
its chief financial officer, that all such statements have been prepared in
accordance with GAAP and present fairly, subject to normal year-end
adjustments, Edison's consolidated financial position as at the dates
thereof and its results of operations for the periods then ended.
(iii) As soon as available, but in any event not later than
thirty (30) days after the close of each fiscal month of Edison and its
Subsidiaries (other than any fiscal month which is also the end of any
fiscal quarter of Edison and its Subsidiaries) and not later than forty-
five (45) days after the close of each fiscal month of Edison and its
Subsidiaries which is also the end of any fiscal quarter of Edison and its
Subsidiaries (other than any fiscal quarter which is also the end of any
fiscal year of Edison and its Subsidiaries) and not later than ninety (90)
days after the close of each fiscal month of Edison and its Subsidiaries
which is also the end of any fiscal year of Edison and its Subsidiaries,
(A) consolidated unaudited balance sheets of Edison and its Subsidiaries as
at the end of such fiscal month and (B) consolidated unaudited statements
of income and expense and cash flow for Edison and its Subsidiaries for
such fiscal month and for the period from the beginning of the fiscal year
to the end of such fiscal month, together with comparable store information
by division for the corresponding portion of Edison's previous fiscal year,
all in reasonable detail. Edison shall certify, by a certificate signed by
its chief financial officer, that all such statements have been prepared in
accordance with GAAP and present fairly, subject to normal year-end
adjustments, Edison's consolidated financial position as at the dates
thereof and its results of operations for the periods then ended.
(iv) With each of the audited financial statements
delivered pursuant to Section 9.6(a)(i), a certificate of the independent
certified public accountants that examined such statements to the effect
that they have reviewed and are familiar with the Financing Agreements and
that, in the course of examining such financial statements, they did not
become aware of any fact or condition which then constituted an Event of
Default, except for those, if any, described in reasonable detail in such
certificate.
(b) Borrowers shall promptly notify Agent and Lenders in writing
of the details of (i) any loss, damage, investigation, action, suit,
proceeding or claim relating to the Collateral or any other property which
is security for the Obligations which has or would have a Material Adverse
Effect and (ii) the occurrence of any Event of Default, or act, condition
or event which, with the passage of time or giving of notice or both, would
constitute an Event of Default.
(c) Borrowers shall promptly after the sending or filing thereof
furnish or cause to be furnished to Agent and Lenders copies of all reports
which Edison sends to its stockholders generally and copies of all reports
and registration statements which any Borrower or Guarantor files with the
Securities and Exchange Commission, any national securities exchange or the
National Association of Securities Dealers, Inc.
(d) Without limiting the rights of Agent under any other
provision of this Agreement, as soon as available, but in any event not
later than thirty (30) days after the end of each calendar month, Borrowers
and Guarantors shall deliver to Agent, in form and reasonably substance
satisfactory to Agent, in each case certified by the chief financial
officer of Edison as true and correct: (i) a statement confirming the
payment of rent and other amounts due to owners and lessors of real
property used by Borrowers and Guarantors in the immediately preceding
month, subject to year-end or periodic adjustments, (ii) the addresses of
all new retail store locations of Borrowers and Guarantors opened and
existing retail store locations closed or sold, in each case since the date
of the most recent certificate delivered to Agent containing the
information required under this subsection (ii), or if no such certificate
has been delivered, then since the date hereof, and (iii) a report of any
new deposit account, investment accounts, securities accounts or other
accounts established or used by Borrowers and Guarantors with any bank or
other financial institution, including the Borrower or Guarantor in whose
name the account is maintained, the account number, the name and address of
the financial institution at which such account is maintained, the purpose
of such account and, if any, the amount held in such account on or about
the date of such report.
(e) Without limiting the rights of Agent under any other
provisions of this Agreement, Borrowers and Guarantors shall deliver to
Agent, upon the reasonable request of Agent from time to time, in each case
certified by the chief financial officer or other senior financial officer
of Edison as true and correct, a list and description of guarantees by a
Borrower after the date hereof of the obligations of any Guarantor under
real property leases with respect to retail store locations leased by such
Guarantor, which list shall set forth in reasonable detail satisfactory to
Agent, the person or persons to whom such guaranteed obligations will be
owed, the premises to be leased and the amount of the monthly rent or other
amounts payable to the lessor.
(f) Borrowers shall furnish or cause to be furnished to Agent
and Lenders such budgets, forecasts, projections and other information
respecting the Collateral and the businesses of Borrowers and Guarantors,
as Agent may, from time to time, reasonably request. Agent and Lenders are
hereby authorized to deliver a copy of any financial statement or any other
information relating to the businesses of Borrowers and Guarantors to any
court or other Governmental Authority or to any Participant or assignee or
prospective Participant or assignee (subject to Section 13.6 hereof with
respect to the confidentiality of such information). Any documents,
schedules, invoices or other papers delivered to Agent or any Lender may be
destroyed or otherwise disposed of by Agent or such Lender one (1) year
after the same are delivered to Agent or such Lender, except as otherwise
designated by Borrowers to Agent or such Lender in writing.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. Each
Borrower and Guarantor shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly:
(a) merge into or with or consolidate with any other Person or
permit any other Person to merge into or with or consolidate with any other
Person, except, that, (i) a Borrower or Guarantor may merge with and into
or consolidate with any other Borrower or Guarantor, and any Non-Guarantor
Subsidiary may merge with and into or consolidate with any Borrower,
Guarantor or any other Non-Guarantor Subsidiary; provided, that, each of
the following conditions is satisfied as determined by Agent: (A) Agent
shall have received not less than ten (10) Business Days prior written
notice of the intention of such Borrower, Guarantor or Non-Guarantor
Subsidiary to so merge or consolidate and such information with respect
thereto as Agent may request, (B) as of the effective date of the merger or
consolidation and after giving effect thereto, no Event of Default, or act,
condition or event which with notice or passage of time or both would
constitute an Event of Default, shall exist or have occurred and be
continuing, (C) promptly upon Agent's request, Borrowers and Guarantors
shall furnish, or cause to be furnished to Agent, true, correct and
complete copies of all agreements, documents and instruments relating to
such merger or consolidation, including, but not limited to, the
certificate or certificates of merger or consolidation as filed with each
appropriate Secretary of State, (D) in the case of a merger or
consolidation involving any Borrower or Guarantor, promptly upon Agent's
request, the surviving entity shall immediately upon the effectiveness of
the merger or consolidation expressly confirm in writing pursuant to an
agreement, in form and substance satisfactory to Agent, its continuing
liability in respect of the Obligations and Financing Agreements and
execute and deliver such other agreements, documents and instruments as
Agent may request in connection therewith, (E) in the case of a merger or
consolidation involving any Borrower or Guarantor, promptly upon Agent's
request, each Borrower and Guarantor shall ratify and confirm that their
respective guarantees of the Obligations shall apply to the Obligations as
assumed by such surviving entity, (F) in the case of a merger or
consolidation involving any Borrower or Guarantor, the surviving entity
shall, immediately before and immediately after giving effect to such
transaction or series of transactions have a net worth (including, without
limitation, any Indebtedness incurred or anticipated to be incurred in
connection with or in respect of such transaction or series of
transactions) equal to or greater than the net worth it had immediately
prior to such transaction or series of transactions, and (G) no Borrower or
Guarantor shall become obligated with respect to any Indebtedness, nor any
of its property become subject to any security interest, lien, claim or
other encumbrance, pursuant to such merger or consolidation unless such
Borrower or Guarantor could incur such Indebtedness or create such security
interest, lien, claim or other encumbrance hereunder or under the other
Financing Agreements and (ii) a Guarantor may merge with and into any other
Guarantor or Non-Guarantor Subsidiary as set forth on Schedule 9.7 hereto,
provided, that, such mergers shall occur by no later than December 31,
1997, except as Agent may otherwise agree; or
(b) sell, assign, lease, transfer, abandon or otherwise dispose
of any of its assets to any other Person, except for:
(i) sales of Inventory in the ordinary course of business,
(ii) sales or other dispositions by Borrowers and Guarantors
of assets in connection with the closing or sale of a retail store location
of a Borrower or Guarantor in the ordinary course of business which consist
of leasehold interests in the premises of such store, the equipment and
fixtures located at such premises and the books and records relating
exclusively and directly to the operations of such store; provided, that,
as to each and all such sales, (A) on the date of, and after giving effect
to, any such sale, in any fiscal year, the number of retail store locations
closed or sold by Borrowers and Guarantors minus the number of retail
stores opened by Borrowers and Guarantors in such fiscal year, whether as
relocations of closed stores or new retail store locations, shall not
exceed the amount equal to ten percent (10%) of the number of retail store
locations of Borrowers and Guarantors as of the end of the immediately
preceding fiscal year, but in no event shall the retail store locations
closed or sold by Borrowers and Guarantors in any fiscal year have
accounted for more than $150,000,000 of all sales of Borrowers and
Guarantors in the immediately preceding fiscal year, (B) at any time after
Agent's request, thereafter Agent must have received not less than ten (10)
Business Days prior written notice of such sale, which notice shall set
forth in reasonable detail satisfactory to Agent, the parties to such sale
or other disposition, the assets to be sold or otherwise disposed of, the
purchase price and the manner of payment thereof and such other information
with respect thereto as Agent may request, (C) as of the date of such sale
or other disposition and after giving effect thereto, no Event of Default,
or act, condition or event which with notice or passage of time would
constitute an Event of Default, shall exist or have occurred and be
continuing, (D) such sale or other disposition shall be on commercially
reasonable prices and terms in a bona fide arm's length transaction, and
(E) in the event Agent shall have the right to instruct the depository
banks at which the Concentration Accounts are maintained to transfer the
funds received or deposited into any of the Concentration Accounts to the
Payment Account, any and all net proceeds in respect of such sale or other
disposition of Collateral or reasonably attributable to Collateral shall be
paid or delivered, or caused to be paid or delivered, to Agent in
accordance with the terms of this Agreement either, at Agent's option, for
application to the Obligations in accordance with the terms hereof (except
to the extent such proceeds reflect payment in respect of Indebtedness
secured by a properly perfected first priority security interest in the
assets sold, in which case, such proceeds shall be applied to such
indebtedness secured thereby) or to be held by Agent for itself and the
ratable benefit of Lenders as cash collateral for the Obligations on terms
and conditions acceptable to Agent,
(iii) sales or other dispositions by Borrowers and
Guarantors of assets (other than the Collateral) in addition to sales or
other dispositions permitted under Section 9.7(b)(ii) above or Sections
9.7(b)(iv), (v), (vi) and (vii) below; provided, that, as to each and all
such sales or other dispositions, each of the following conditions is
satisfied, as determined by Agent: (A) the consideration received in
connection with any such sale or other disposition shall be at least equal
to the fair market value of such assets, (B) the fair market value of all
such assets so sold by Borrowers, Guarantors and their Subsidiaries in a
single transaction or series of related transactions shall not exceed
$5,000,000 in the aggregate in any fiscal year, or $20,000,000 in the
aggregate during the term of this Agreement, for all such assets so sold by
Borrowers and Guarantors, (C) any and all net cash proceeds payable or
delivered to any Borrower or Guarantor from such sales or other
dispositions shall be used to repay any Indebtedness which is secured by a
purchase money security interest on the asset so sold or otherwise disposed
of, and any remaining proceeds shall be either (1) retained by Borrowers
and Guarantors if at the time of receipt of such proceeds no Event of
Default, or act, condition or event which with notice or passage of time or
both would constitute an Event of Default, shall exist or have occurred and
be continuing, or (2) if an Event of Default, or such other act, condition
or event, shall then exist or have occurred and be continuing, paid or
delivered, or caused to be paid or delivered, to Agent either, at Agent's
option, for application to the Obligations or to be held by Agent for
itself and the ratable benefit of Lenders as cash collateral for the
Obligations on terms and conditions acceptable to Agent, (D) Agent shall
have received not less than ten (10) Business Days prior written notice of
any such sale or other disposition of assets having a fair market value in
excess of $500,000, which notice shall set forth in reasonable detail
satisfactory to Agent, the parties to such sale or other disposition, the
assets to be sold or otherwise disposed of, the purchase price and the
manner of payment thereof and such other information with respect thereto
as Agent may request, (E) to the extent that the assets sold or otherwise
disposed of consist of any portion of real property or equipment related
thereto, the sale thereof shall not, in the good faith determination of
Agent, have an adverse affect on the value, or the ability to use the
remaining portion of the real property in a manner consistent with current
uses thereof or the ability of Agent to realize on any of the Collateral,
and (F) as of the date of such sale and after giving effect thereto, no
Event of Default, or act, condition or event which with notice or passage
of time would constitute an Event of Default, shall exist or have occurred
and be continuing,
(iv) the grant by Borrowers, Guarantors and their
Subsidiaries of a non-exclusive license to any person for the use of any
trademarks or other Proprietary Rights, provided, that, as to each and all
of such licenses, each of the following conditions is satisfied, (A) at the
time of the grant of the license and after giving effect thereto, no Event
of Default, or act, condition or event which with notice or passage of time
or both would constitute an Event of Default, shall exist or have occurred
and be continuing, (B) the rights of such licensee in the trademarks or
other Proprietary Rights subject to such license shall be subject and
subordinate in all respects to the rights of Agent therein, and (C) Agent
shall have received true, correct and complete copies of the executed
license agreement, promptly after the execution thereof, which shall be
acceptable to Agent and shall expressly provide for the subordination
required under clause (B) above,
(v) the disposition through the abandonment, cancellation or
other failure to maintain any trademark or other Proprietary Rights which
are no longer used or useful in the business of Borrowers, Guarantors or
their Subsidiaries and are not otherwise material to the businesses of
Borrowers, Guarantors or their Subsidiaries;
(vi) the sale, assignment or transfer by Borrowers or
Guarantors of any of the Capital Stock of Borrowers, Guarantors or their
Subsidiaries to one of the other Borrowers, Guarantors or Subsidiaries,
provided, that, as to each and all of such transfers, each of the following
conditions is satisfied, as determined by Agent: (A) Agent shall have
received not less than ten (10) Business Days prior written notice of such
transfer, which notice shall set forth in reasonable detail satisfactory to
Agent, the parties to such transfer, the Capital Stock which is being
transferred and such other information with respect thereto as Agent may
reasonably request, (B) as of the date of such transfer and after giving
effect thereto, no Event of Default, or act, condition or event which with
notice or passage of time or both would constitute an Event of Default,
shall exist or have occurred and be continuing;
(vii) the distribution of assets of Edison and its
Subsidiaries to the extent required by the Plan (as in effect on the date
hereof) and the sale of assets from the Funding Escrow Account as
contemplated by the Plan (as in effect on the date hereof);
(c) form or acquire any Subsidiaries, except, that, (i)
Borrowers and Guarantors may acquire Subsidiaries to the extent permitted
under Section 9.7(b)(vi) above, (ii) Borrowers and Guarantors may form or
acquire Subsidiaries (including any limited liability company) after the
date hereof; provided, that, each of the following conditions is satisfied,
as determined by Agent: (A) promptly upon such formation or acquisition,
such Borrower or Guarantor shall cause any such Subsidiary to execute and
deliver to Agent, in form and substance satisfactory to Agent: (1) an
absolute and unconditional guarantee of payment of all of the Obligations,
(2) a general security agreement granting to Agent, for itself and ratable
benefit of Lenders, a first and only security interest in and lien upon all
of the assets and properties of such Subsidiary, (3) related Uniform
Commercial Code financing statements, and (4) such other agreements,
documents and instruments as Agent may reasonably require, (B) the amount
of the investment by such Borrower or Guarantor in the Capital Stock of
such Subsidiary and any other amounts paid by such Borrower or Guarantor to
or for the formation or acquisition of such Subsidiary shall not exceed the
amount permitted under Section 9.10 hereof and (C) no Event of Default, or
act, condition or event which with notice or passage of time or both would
constitute an Event of Default, shall exist or have occurred and be
continuing, and (iii) Borrowers, Guarantors and Non-Guarantor Subsidiaries
may form or acquire other Non-Guarantor Subsidiaries after the date hereof;
provided, that, each of the following conditions is satisfied, as
determined by Agent: (A) Borrowers shall have given Agent notice of such
formation or acquisition not later than the effective date thereof and (B)
no payment of any amount, transfer of any property (other than de minimis
amounts required under applicable state corporate law for the commencement
of corporate existence not to exceed $75,000 in the aggregate for all such
Non-Guarantor Subsidiaries) or incurrence of any Indebtedness shall have
been required from or by any of Borrowers or Guarantors in connection with
such formation or acquisition or otherwise at any time be made to or on
behalf of such Non-Guarantor Subsidiaries (except for loans by Borrowers or
Guarantors to Non-Guarantor Subsidiaries to the extent permitted under
Section 9.10(h) hereof); or
(d) wind up, liquidate or dissolve, except, (i) in connection
with any merger or consolidation permitted under Section 9.7(a) hereof and
(ii) any Guarantor or Non-Guarantor Subsidiary may wind up, liquidate or
dissolve; provided, that, each of the following conditions is satisfied:
(A) Agent shall have received not less than ten (10) Business Days prior
written notice of the intention to wind up, liquidate or dissolve such
Guarantor or Non-Guarantor Subsidiary, (B) such winding up, liquidation or
dissolution shall be done in accordance with the requirements of all
applicable laws and regulations, (C) effective upon such winding up,
liquidation or dissolution all of the assets and properties of such
Guarantor or Non-Guarantor Subsidiary shall be duly and validly transferred
and assigned to any Borrower or other Guarantor (or in the case of a Non-
Guarantor Subsidiary, also to another Non-Guarantor Subsidiary), free and
clear of any liens, restrictions or encumbrances, (D) after giving effect
to such winding up, liquidation or dissolution, none of Borrowers or
Guarantors shall have any liabilities or obligations as a result thereof,
and (E) as of the date of such winding up, liquidation or dissolution, and
after giving effect thereto, no Event of Default, or act, condition or
event which with notice or passage of time or both would constitute an
Event of Default, shall exist or have occurred and be continuing, or
(e) agree to do any of the foregoing.
9.8 Encumbrances. Each Borrower and Guarantor shall not, and shall
not permit any of its Subsidiaries to, create, incur, assume or suffer to
exist any security interest, mortgage, pledge, lien, charge or other
encumbrance of any nature whatsoever on any of its assets or properties,
including, without limitation, the Collateral, except:
(a) liens and security interests of Agent for itself and the
ratable benefit of Lenders;
(b) liens for taxes or other governmental charges not yet
payable or liens for taxes or other governmental charges being contested in
good faith and by proper proceedings diligently pursued, provided, that, a
reserve or other appropriate provision, if any, as shall be required by
GAAP shall have been made therefor on the applicable financial statements
of the applicable Borrower or Guarantor and that a stay of enforcement of
any such lien is in effect;
(c) liens upon equipment granted in connection with the
acquisition of such equipment after the date hereof (including, without
limitation, pursuant to Capital Leases), provided, that: (i) the aggregate
amount of the Indebtedness secured by such liens does not exceed
$30,000,000, (ii) each such lien attaches only to the equipment acquired
with the Indebtedness secured thereby, and (iii) the principal amount of
the Indebtedness secured by any item of equipment shall not exceed one
hundred percent (100%) of the cost thereof;
(d) reservations, exceptions, encroachments, easements, rights
of way, covenants, conditions, restrictions, leases and other similar title
exceptions or encumbrances affecting any real property of Edison or any of
its Subsidiaries, provided, that, they do not in the aggregate materially
detract from the value of said properties or materially interfere with
their use in the ordinary conduct of the businesses of any Borrower or
Guarantor;
(e) deposits under workmen's compensation, unemployment
insurance, social security and other similar laws;
(f) liens relating to statutory obligations with respect to
surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business;
(g) carriers', warehousemen's, mechanics, materialmen's or other
similar liens arising in the ordinary course of business securing sums
which are not overdue or are being diligently contested in good faith by
Borrowers or Guarantors and if such lien is being contested, so long as the
holder of such lien has not obtained any judgment or taken any action
adversely affecting the assets of Borrowers or Guarantors;
(h) judgment liens on assets of any Borrower or Guarantor being
contested in good faith and by proper proceedings diligently pursued,
provided, that, (i) a reserve or other appropriate provision, if any, as
shall be required by GAAP shall have been made therefor on the applicable
financial statements of such Borrower or Guarantor, (ii) a stay of
enforcement of any such lien is in effect and (iii) if any such judgment
lien is on any of the Collateral, such lien or liens, either singly or in
the aggregate, are not in excess of $1,000,000;
(i) the liens and security interests upon the Edbro Missouri
Facility in favor of the City of Washington, Franklin County, Missouri to
secure the Indebtedness of Edbro Missouri permitted under Section 9.9(d)
hereof;
(j) the mortgages, liens and security interests of the Funding
Escrow Agent on the Funding Escrow Properties to secure the payment of
interest by Edison on the New Notes from the date of the issuance thereof
through and including July 1, 2000, to the extent required by the Plan (as
in effect on the date hereof); or
(k) the liens and security interests set forth on Schedule 8.4
hereto.
9.9 Indebtedness. Each Borrower and Guarantor shall not, and shall
not permit any of its Subsidiaries to, incur, create, assume, become or be
liable in any manner with respect to, or permit to exist, any Indebtedness,
except:
(a) the Obligations;
(b) purchase money Indebtedness (including Capital Leases) to
the extent not incurred or secured by liens (including Capital Leases) in
violation of any other provision of this Agreement;
(c) Indebtedness of Edison evidenced by the New Notes, provided,
that:
(i) the principal amount of such Indebtedness shall not in
the aggregate exceed $120,000,000 (since Edison has elected on or before
the Effective Date to reduce certain cash to be paid into the Cash
Distribution Pool pursuant to Section 1.15 of the Plan as in effect on the
date hereof so that the principal amount of the New Notes has been
increased from $100,000,000 to $120,000,000), less the aggregate amount of
all repayments or repurchases, optional or mandatory, of principal in
respect thereof, plus interest thereon at the rate provided for in the New
Notes as in effect on the date hereof,
(ii) Edison shall only make regularly scheduled payments of
principal and interest on an unaccelerated basis, in respect of such
Indebtedness in accordance with the terms of the New Notes as in effect on
the date hereof (except as otherwise permitted below);
(iii) such Indebtedness consisting of interest at the rate
provided for in the New Notes (as in effect on the date hereof) for the
period from the issuance thereof through and including July 1, 2000 only
shall be secured by security interests in and liens upon the Funding Escrow
Properties to the extent permitted under Section 9.8(j) hereof; and
(iv) Borrowers and Guarantors shall not, directly or
indirectly, (A) amend, modify, alter or change any terms of such
Indebtedness or any agreement, document or instrument related thereto,
except, that, Edison may, after prior written notice to Agent, amend,
modify, alter or change the terms thereof other than to (1) increase the
amount of such Indebtedness, or the interest rate, or any fees or other
charges or amounts payable in respect thereof or in connection therewith,
(2) require that any of such Indebtedness be paid sooner than is required
under the New Notes as in effect on the date hereof, (3) grant any security
interests, liens or other encumbrances to secure directly or indirectly any
or all of such Indebtedness, (4) add any provision which in any way,
directly or indirectly, limits, impairs or otherwise affects the ability or
right of Borrowers to request or receive Loans or Letter of Credit
Accommodations or amend, modify, supplement, extend, renew, restate or
replace any of the Financing Agreements or in any way relates to or affects
the arrangements of Borrowers and Guarantors with Agent and Lenders, or (5)
make any covenants contained therein more restrictive or burdensome as to
Borrowers and Guarantors or otherwise less favorable to Borrowers or
Guarantors, or (B) redeem, retire, defease, purchase or otherwise acquire
such Indebtedness, or set aside or otherwise deposit or invest any sums for
such purpose, except, that, (1) Edison may prepay or redeem any of such
Indebtedness with the proceeds of Refinancing Indebtedness to the extent
permitted under Section 9.9(n) below and (2) Edison may prepay or redeem
any or all of such Indebtedness, provided, that, each of the following
conditions is satisfied as determined by Agent: (aa) Agent shall have
received not less than ten (10) Business Days and not more than twenty (20)
Business Days prior written notice of the intention of Edison to prepay or
redeem such Indebtedness, (bb) as of the date of such payment and after
giving effect thereto, no Event of Default, or act, condition or event
which with notice or passage of time or both would constitute an Event of
Default, shall exist or have occurred and be continuing, and (cc) as of the
date of any such payment, the daily average of the Excess Availability for
the immediately preceding thirty (30) consecutive day period shall be not
less than $20,000,000, and as of the date of any such payment and after
giving effect thereto, the Excess Availability shall be not less than
$20,000,000, and
(v) Borrowers and Guarantors shall furnish to Agent all
notices, demands or other materials concerning such Indebtedness either
received by any Borrower or Guarantor or on its or their behalf, promptly
after receipt thereof, or sent by any Borrower or Guarantor or on its or
their behalf, concurrently with the sending thereof, as the case may be;
(d) Indebtedness of Edbro Missouri evidenced by the Series 1997
Note and Series 1997 Loan Agreement, provided, that,
(i) the principal amount of such Indebtedness shall not in
the aggregate exceed $6,717,000, less the aggregate amount of all
repayments or repurchases, optional or mandatory, of principal in respect
thereof, plus interest thereon at the rate(s) provided for in the Series
1997 Note and Series 1997 Loan Agreement, as in effect on the date hereof;
(ii) Edbro Missouri shall only make regularly scheduled
payments of principal, interest, purchase price and other mandatory
payments on an unaccelerated basis, in respect of such Indebtedness in
accordance with the terms of the Series 1997 Note, as in effect on the date
hereof (except as otherwise permitted below);
(iii) such Indebtedness shall only be secured by security
interests in and liens upon the Edbro Missouri Facility to the extent
permitted under Section 9.8(i) hereof;
(iv) such Indebtedness shall be guaranteed by Edison but
only to the extent as permitted under Section 9.10(e) hereof;
(v) Borrowers and Guarantors shall not, directly or
indirectly, (A) amend, modify, alter or change any terms of such
Indebtedness or any agreement, document or instrument related thereto,
except, that, Edbro Missouri may, after prior written notice to Agent,
amend, modify, alter or change the terms thereof other than to (1) increase
the amount of such Indebtedness, the interest rate, or any fees or other
charges or amounts payable in respect thereof or in connection therewith,
(2) require that any of such Indebtedness be paid sooner than is required
under the Series 1997 Note and Series 1997 Loan Agreement, as in effect on
the date hereof, (3) grant any further security interests, liens or other
encumbrances to secure directly or indirectly any or all of such
Indebtedness, (4) add any provision which in any way, directly or
indirectly, limits, impairs or otherwise affects the ability or right of
Borrowers to request or receive Loans or Letter of Credit Accommodations or
amend, modify, supplement, extend, renew, restate or replace any of the
Financing Agreements or in any way relates to or affects the arrangements
of Borrowers and Guarantors with Agent and Lenders, or (5) make any
covenants contained therein more restrictive or burdensome as to Borrowers
and Guarantors or otherwise less favorable to Borrowers and Guarantors, or
(B) redeem, retire, defease, purchase or otherwise acquire such
Indebtedness, or set aside or otherwise deposit or invest any sums for such
purpose except, that, (1) Edbro Missouri may prepay any of such
Indebtedness with the proceeds of Refinancing Indebtedness to the extent
permitted under Section 9.9(n) below, (2) Edbro Missouri may purchase the
Series 1997 Note to the extent such purchase or prepayment is mandatory
under the terms of the Series 1997 Note as in effect on the date hereof,
and (3) Edbro Missouri may prepay any or all of such Indebtedness,
provided, that, each of the following conditions is satisfied as determined
by Agent: (aa) Agent shall have received not less than ten (10) Business
Days and not more than twenty (20) Business Days prior written notice of
the intention of Edbro Missouri to prepay or redeem such Indebtedness, (bb)
as of the date of such prepayment and after giving effect thereto, no Event
of Default, or act, condition or event which with notice or passage of time
or both would constitute an Event of Default, shall exist or have occurred
and be continuing, and (cc) as of the date of any such payment, the daily
average of the Excess Availability for the immediately preceding thirty
(30) consecutive day period shall be not less than $20,000,000, and as of
the date of any such payment and after giving effect thereto, the Excess
Availability shall be not less than $20,000,000, and
(vi) Borrowers and Guarantors shall furnish to Agent all
notices, demands or other materials concerning such Indebtedness either
received by any Borrower or Guarantor or on its or their behalf, promptly
after receipt thereof, or sent by any Borrower or Guarantor or on its or
their behalf, concurrently with the sending thereof, as the case may be;
(e) Indebtedness of Borrowers and Guarantors to Bank of America,
N.T. & S.A., as assignee of BABC, in respect of the Existing Letters of
Credit issued by Bank of America, N.T.& S.A. under the BABC DIP Facility
and fees and expenses relating thereto arising pursuant to the
reimbursement agreement by Borrowers in favor of Bank of America, N.T. &
S.A., as assignee of BABC (as in effect on the date hereof), provided,
that, (i) Borrowers and Guarantors shall not, directly or indirectly,
amend, modify, alter or change (A) the terms of such Indebtedness or the
reimbursement agreement related thereto, or (B) any of such Existing
Letters of Credit or any agreement, document or instrument related thereto
so as to increase the amount thereof (except that Borrowers may increase
the amount of any such existing Letters of Credit so long as (1) in the
aggregate the total amount of the liability of Borrowers and Guarantors to
Bank of America, N.T. & S.A., as assignee of BABC, in respect of such
Existing Letters of Credit shall not exceed the amount thereof as of the
date hereof by more than ten (10%) percent, (2) Borrowers shall give Agent
prompt written notice of a request for any such increase, and (3) after
giving effect to any Availability Reserve required as a result of such
increase, there shall be Excess Availability) or (C) any of such Existing
Letters of Credit or any agreement, document or instrument related thereto
which are standby letters of credit so as to extend the expiration date
thereof or (D) any of such Existing Letters of Credit or any agreement,
document or instrument related thereto which are for the purposes of
purchasing Inventory so as to extend the expiration date thereof by more
than ninety (90) days (provided that Borrowers shall give Agent prompt
written notice of any request for such extension), (ii) Borrowers and
Guarantors shall furnish to Agent all notices or demands in connection with
such Indebtedness, either received by any Borrower or Guarantor or on its
or their behalf, promptly after the receipt thereof, or sent by any
Borrower or Guarantor or on its or their behalf, concurrently with the
sending thereof, as the case may be and (iii) Borrowers and Guarantors
shall cause the documents of title related to goods purchased pursuant to
such Existing Letters of Credit to be promptly delivered to a Customs
Broker;
(f) Indebtedness of Borrowers and Guarantors to Bank of America,
N.T. & S.A. arising after the date hereof in respect of Letter of Credit
Accommodations issued by Bank of America, N.T. & S.A. for the account of
Borrowers and fees and expenses relating thereto arising pursuant to the
reimbursement agreement by Borrowers in favor of Bank of America, N.T. &
S.A. (as in effect on the date hereof), provided, that, (i) Borrowers shall
not request any such Letter of Credit Accommodations without the prior
written consent of Agent, (ii) Borrowers shall not request such Letter of
Credit Accomodations after the earlier of November 15, 1997 or the date of
written notice from Agent to Borrowers that Agent has received notice from
Issuing Bank that the Issuing Bank will be issuing or arranging for the
issuance of Letter of Credit Accomodations, (iii) Borrower and Guarantors
shall not, directly or indirectly, amend, modify, alter or change (A) the
terms of such Indebtedness or the reimbursement agreement related thereto,
or (B) any of such Letter of Credit Accomodations or any agreement,
document or instrument related thereto so as to increase the amount thereof
or extend the terms thereof, (iv) Borrowers and Guarantors shall furnish to
Agent all notices or demands in connection with such Indebtedness, either
received by any Borrower or Guarantor or on its or their behalf, promptly
after the receipt thereof, or sent by any Borrower or Guarantor or on its
or their behalf, concurrently with the sending thereof, as the case may be
and (v) Borrowers and Guarantors shall cause the documents of title related
to goods purchased pursuant to such Letter of Credit Accomodations to be
promptly delivered to a Customs Broker;
(g) Indebtedness of Edison to the Internal Revenue Service as
permitted under the Plan, provided, that:
(i) the principal amount of such Indebtedness shall not in
the aggregate exceed $16,000,000, less the aggregate amount of all
repayments or repurchases, optional or mandatory, of principal in respect
thereof, plus interest thereon at the rate provided for in the Plan (as in
effect on the date hereof),
(ii) Edison shall only make regularly scheduled payments of
principal and interest on an unaccelerated basis, in respect of such
Indebtedness in accordance with the terms of such Indebtedness as in effect
on the date hereof (except as otherwise permitted below),
(iii) such Indebtedness shall be unsecured,
(iv) Borrowers and Guarantors shall not, directly or
indirectly, (A) amend, modify, alter or change any terms of such
Indebtedness or any agreement, document or instrument related thereto,
except, that, Edison may, after prior written notice to Agent, amend,
modify, alter or change the terms thereof other than to (1) increase the
amount of such Indebtedness, or the interest rate, or any fees or other
charges or amounts payable in respect thereof or in connection therewith,
(2) require that any of such Indebtedness be paid sooner than is required
under the terms thereof as in effect on the date hereof, (3) grant any
security interests, liens or other encumbrances to secure directly or
indirectly any or all of such Indebtedness, (4) add any provision which in
any way, directly or indirectly, limits, impairs or otherwise affects the
ability or right of Borrowers to request or receive Loans or Letter of
Credit Accommodations or amend, modify, supplement, extend, renew, restate
or replace any of the Financing Agreements or in any way relates to or
affects the arrangements of Borrowers and Guarantors with Agent and
Lenders, or (5) make any covenants contained therein more restrictive or
burdensome as to Borrowers and Guarantors or otherwise less favorable to
Borrowers or Guarantors, or (B) redeem, retire, defease, purchase or
otherwise acquire such Indebtedness, or set aside or otherwise deposit or
invest any sums for such purpose, except, that, (1) Edison may prepay or
redeem any of such Indebtedness with the proceeds of Refinancing
Indebtedness to the extent permitted under Section 9.9(n) below and (2)
Edison may prepay or redeem any or all of such Indebtedness, provided,
that, each of the following conditions is satisfied as determined by Agent:
(aa) Agent shall have received not less than ten (10) Business Days and not
more than twenty (20) Business Days prior written notice of the intention
of Edison to prepay or redeem such Indebtedness, (bb) as of the date of
such payment and after giving effect thereto, no Event of Default, or act,
condition or event which with notice or passage of time or both would
constitute an Event of Default, shall exist or have occurred and be
continuing, and (cc) as of the date of any such payment, the daily average
of the Excess Availability for the immediately preceding thirty (30)
consecutive day period shall be not less than $20,000,000, and as of the
date of any such payment and after giving effect thereto, the Excess
Availability shall be not less than $20,000,000, and
(v) Borrowers and Guarantors shall furnish to Agent all
notices, demands or other materials concerning such Indebtedness either
received by any Borrower or Guarantor or on its or their behalf, promptly
after receipt thereof, or sent by any Borrower or Guarantor or on its or
their behalf to the holders of such Indebtedness or their representatives
or agents, concurrently with the sending thereof, as the case may be;
(h) Indebtedness arising in the ordinary course of the business
of any Borrower or Guarantor in connection with worker's compensation,
unemployment insurance or other types of social security benefits in each
case consistent with the current practices of such Borrower or Guarantor as
of the date hereof; provided, that, such Indebtedness is secured only by
liens on assets and property of such Borrower or Guarantor permitted under
Section 9.8(e) hereof;
(i) unsecured Indebtedness of any Borrower or Guarantor to any
of the other Borrowers or Guarantors or to any Non-Guarantor Subsidiary
arising pursuant to intercompany loans permitted under Section 9.10 hereof;
(j) unsecured Indebtedness of any Non-Guarantor Subsidiary to
any Borrower, Guarantor or other Non-Guarantor Subsidiary arising pursuant
to intercompany loans permitted under Section 9.10 hereof;
(k) unsecured Indebtedness of any Borrower or Guarantor to any
Non-Guarantor Subsidiary arising pursuant to intercompany loans permitted
under Section 9.10 hereof;
(l) other Indebtedness constituting guarantees permitted under
Section 9.10 hereof;
(m) Indebtedness of Borrowers, Guarantors and their Subsidiaries
existing as of the date hereof set forth on Schedule 9.9 hereto, provided,
that, (i) such Borrower, Guarantor or Subsidiary may only make regularly
scheduled payments of principal and interest in respect of such
Indebtedness in accordance with the terms of the agreement or instrument
evidencing or giving rise to such Indebtedness as in effect on the date
hereof (except as otherwise permitted below), (ii) such Borrower, Guarantor
or Subsidiary shall not, directly or indirectly, (A) amend, modify, alter
or change the terms of such Indebtedness or any agreement, document or
instrument related thereto as in effect on the date hereof, except, that,
such Borrower and Guarantor or Subsidiary may, after prior written notice
to Agent, amend, modify, alter or change the terms thereof other than to
(1) increase the amount of such Indebtedness, the interest rate, or any
fees or other charges or amounts payable in respect thereof or in
connection therewith, (2) require that any of such Indebtedness be paid
sooner than is required under the terms of the agreement or instrument
evidencing or giving rise to such Indebtedness as in effect on the date
hereof, (3) grant any security interests, liens or other encumbrances to
secure directly or indirectly any or all of such Indebtedness, (4) add any
provision which in any way, directly or indirectly, limits, impairs or
otherwise affects the ability of Borrowers to request or receive Loans or
Letter of Credit Accommodations or amend, modify, supplement, extend,
renew, restate or replace any of the Financing Agreements or in any way
relates to or affects the arrangements of Borrowers and Guarantors with
Agent and Lenders, or (5) make covenants contained therein more restrictive
or burdensome as to the Borrowers and Guarantors or otherwise less
favorable to Borrowers and Guarantors taken as a whole, or (B) redeem,
retire, defease, purchase or otherwise acquire such Indebtedness, or set
aside or otherwise deposit or invest any sums for such purpose, except,
that, (1) such Borrower, Guarantor or Subsidiary may prepay or redeem any
of such Indebtedness with the proceeds of Refinancing Indebtedness to the
extent permitted under Section 9.9(n) below and (2) such Borrower,
Guarantor or Subsidiary may prepay or redeem any or all of such
Indebtedness, provided, that, each of the following conditions is satisfied
as determined by Agent: (aa) Agent shall have received not less than ten
(10) Business Days and not more than twenty (20) Business Days prior
written notice of the intention of such Borrower, Guarantor or Subsidiary
to prepay or redeem such Indebtedness, (bb) as of the date of such payment
and after giving effect thereto, no Event of Default, or act, condition or
event which with notice or passage of time or both would constitute an
Event of Default, shall exist or have occurred and be continuing, and (cc)
as of the date of any such payment, the daily average of the Excess
Availability for the immediately preceding thirty (30) consecutive day
period shall be not less than $20,000,000, and as of the date of any such
payment and after giving effect thereto, the Excess Availability shall be
not less than $20,000,000, and (iii) Borrowers and Guarantors shall, and
shall cause their Subsidiaries to, furnish to Agent all notices, demands or
other materials concerning such Indebtedness either received by any
Borrower, Guarantor or Subsidiary or on its or their behalf, promptly after
the receipt thereof, or sent by any Borrower, Guarantor or Subsidiary or on
its or their behalf, concurrently with the sending thereof, as the case may
be;
(n) Indebtedness issued in exchange for, or the proceeds of
which are used to extend, refinance, replace, substitute or refund
Indebtedness referred to in Section 9.9(b), 9.9(c), 9.9(d), 9.9(g) and
9.9(m) hereof (the Refinancing Indebtedness ); provided, that, (i) the
principal amount of such Refinancing Indebtedness shall not exceed the
principal amount of the Indebtedness so extended, refinanced, replaced,
substituted or refunded (plus the amount of reasonable refinancing fees and
expenses incurred in connection therewith), (ii) the Refinancing
Indebtedness shall have a Weighted Average Life to Maturity and a final
maturity equal to or greater than the Weighted Average Life to Maturity and
the final maturity, respectively, of the Indebtedness being extended,
refinanced, replaced, substituted or refunded, (iii) the Refinancing
Indebtedness shall rank in right of payment no more senior than, and be at
least as subordinated (if subordinated) to, the Obligations as the
Indebtedness being extended, refinanced, replaced, substituted or refunded,
(iv) the Refinancing Indebtedness shall not include terms and conditions
with respect to any Borrower or Guarantor which are more burdensome or
restrictive than those included in the Indebtedness so extended,
refinanced, replaced, substituted or refunded, (v) Agent shall have
received not less than ten (10) Business Days prior written notice of the
intention to incur such Indebtedness, which notice shall set forth in
reasonable detail satisfactory to Agent, the amount of such Indebtedness,
the person to whom such Indebtedness will be owed, the interest rate, the
schedule of repayments and maturity date with respect thereto and such
other information with respect thereto as Agent may request, (vi) promptly
upon Agent's request, Agent shall have received true, correct and complete
copies of all agreements, documents and instruments evidencing or otherwise
related to such Indebtedness, as duly authorized executed and delivered by
the parties thereto, (vii) such Indebtedness incurred by any Borrower or
Guarantor shall be at rates and with fees or other charges no higher or
greater than the Indebtedness so extended, refinanced, replaced,
substituted or refunded, (viii) such Indebtedness shall not be owed to any
officer, director, agent, employee or other Affiliate (other than a
shareholder) of any Borrower or Guarantor, (ix) as of the date of incurring
such Indebtedness and after giving effect thereto, no Event of Default, or
act, condition or event which with notice or passage of time or both would
constitute an Event of Default, shall exist or have occurred and be
continuing, (x) Borrowers and Guarantors may only make regularly scheduled
payments of principal and interest in respect of such Indebtedness (except
as otherwise permitted below), (xi) Borrowers and Guarantors shall not,
directly or indirectly, (A) amend, modify, alter or change the terms of the
agreements with respect to such Indebtedness except, that, Borrowers and
Guarantors may, after prior written notice to Agent, amend, modify, alter
or change the terms thereof other than to (1) increase the amount of such
Indebtedness, the interest rate, or any fees or other charges or amounts
payable in respect thereof or in connection therewith, (2) require that any
of such Indebtedness be paid sooner than is required under the terms of the
agreement or instrument evidencing or giving rise to such Indebtedness as
in effect upon the execution thereof, (3) grant any security interests,
liens or other encumbrances to secure directly or indirectly any or all of
such Indebtedness, (4) add any provision which in any way, directly or
indirectly, limits, impairs or otherwise affects the ability or right of
Borrowers to request or receive Loans or Letter of Credit Accommodations or
amend, modify, supplement, extend, renew, restate or replace any of the
Financing Agreements or in any way relates to or affects the arrangements
of Borrowers and Guarantors with Agent and Lenders, or (5) make any
covenants contained therein more restrictive or burdensome as to the
Borrowers and Guarantors or otherwise less favorable to Borrowers and
Guarantors taken as a whole, and (B) redeem, retire, defease, purchase or
otherwise acquire such Indebtedness, or set aside or otherwise deposit or
invest any sums for such purpose, except, that, (1) Borrowers and
Guarantors may prepay or redeem any of such Indebtedness with the proceeds
of Refinancing Indebtedness to the extent permitted under this Section
9.9(n) and (2) Borrowers and Guarantors may prepay or redeem any or all of
such Indebtedness, provided, that, each of the following conditions is
satisfied as determined by Agent: (aa) Agent shall have received not less
than ten (10) Business Days and not more than twenty (20) Business Days
prior written notice of the intention of Borrowers and Guarantors to prepay
or redeem such Indebtedness, (bb) as of the date of such payment and after
giving effect thereto, no Event of Default, or act, condition or event
which with notice or passage of time or both would constitute an Event of
Default, shall exist or have occurred and be continuing, and (cc) as of the
date of any such payment, the daily average of the Excess Availability for
the immediately preceding thirty (30) consecutive day period shall be not
less than $20,000,000, and as of the date of any such payment and after
giving effect thereto, the Excess Availability shall be not less than
$20,000,000, and (xii) Borrowers and Guarantors shall furnish to Agent all
notices, demands or other materials concerning such Indebtedness either
received by any Borrower or Guarantor or on its or their behalf, promptly
after the receipt thereof, or sent by any Borrower or Guarantor on its or
their behalf, concurrently with the sending thereof, as the case may be.
9.10 Loans, Investments, Guarantees, Etc. Each Borrower and
Guarantor shall not, and shall not permit its Subsidiaries to, directly or
indirectly, make any loans or advance money or property to any person, or
invest in (by capital contribution, dividend or otherwise) or purchase or
repurchase the Capital Stock or Indebtedness or all or a substantial part
of the assets or property of any person, or guarantee, assume, endorse, or
otherwise become responsible for (directly or indirectly) the Indebtedness,
performance, obligations or dividends of any Person or agree to do any of
the foregoing, except:
(a) the endorsement of instruments for collection or deposit in
the ordinary course of business;
(b) investments in cash or Cash Equivalents, provided, that, to
the extent such investments are Collateral, as to any of the foregoing,
promptly upon the request of Agent, Borrowers and Guarantors shall take
such actions as are deemed necessary by Agent to perfect the security
interest of Agent in such investments;
(c) the existing investments of Edison, either directly or
indirectly, in the Capital Stock of the other Borrowers, Guarantors and the
Non-Guarantor Subsidiaries as of the date hereof;
(d) the guarantees by Borrowers and Guarantors in favor of Agent
and Lenders,
(e) the guarantee by Edison of the Indebtedness of Edbro
Missouri to the City of Washington, Franklin County, Missouri evidenced by
the Series 1997 Note (as in effect on the date hereof) to the extent such
Indebtedness is permitted under Section 9.9(d) hereof; provided, that,
(i) Borrowers and Guarantors shall not, directly or indirectly, (A) amend,
modify, alter or change the terms of such guarantee or any agreement,
document or instrument related thereto, except, that, Edison may, after
prior written notice to Agent, amend, modify, alter or change the terms
thereof other than to (1) increase the amount of such Indebtedness, the
interest rate, or any fees or other charges or amounts payable in respect
thereof or in connection therewith, (2) require that any of such
Indebtedness be paid sooner than is required under the Series 1997 Note or
such guarantee (as each is in effect on the date hereof), (3) grant any
security interests, liens or other encumbrances to secure directly or
indirectly any or all of such Indebtedness, (4) add any provision which in
any way, directly or indirectly, limits, impairs or otherwise affects the
ability or right of Borrowers to request or receive Loans or Letter of
Credit Accommodations or amend, modify, supplement, extend, renew, restate
or replace any of the Financing Agreements or in any way relates to or
affects the arrangements of Borrowers and Guarantors with Agent and
Lenders, or (5) make any covenants contained therein more restrictive or
burdensome as to the Borrowers and Guarantors or otherwise less favorable
to Borrowers and Guarantors, or (B) redeem, retire, defease, purchase or
otherwise acquire such guarantee or set aside or otherwise deposit or
invest any sums for such purpose (except to the extent the Indebtedness of
Edbro Missouri subject to such guarantee may be prepaid or redeemed under
Section 9.9(d) hereof) and (ii) Borrowers and Guarantors shall furnish to
Agent all notices, demands or other materials in connection with such
loans, advances or guarantees either received by any of them or on its or
their behalf, promptly after the receipt thereof, or sent by any of them or
on its or their behalf, concurrently with the sending thereof, as the case
may be;
(f) loans by any Borrower or Guarantor to any other Borrower or
Guarantor in the ordinary course of the business of Borrowers and
Guarantors consistent with the current practices as of the date hereof;
provided, that, (i) such Indebtedness is not, and shall not be, evidenced
by any promissory note or other instrument, unless the original of such
note is promptly delivered to Agent upon the issuance thereof, duly
indorsed and assigned by such Borrower or Guarantor to Agent and (ii) such
Indebtedness is subordinated in right of payment to the Obligations on
terms and conditions and in a manner acceptable to Agent;
(g) loans by any Non-Guarantor Subsidiary to any other Non-
Guarantor Subsidiary in the ordinary course of business of such Non-
Guarantor Subsidiaries consistent with current practices as of the date
hereof;
(h) loans by any Borrower or Guarantor to any Non-Guarantor
Subsidiary in the ordinary course of the business of Borrowers and
Guarantors consistent with current practices as of the date hereof,
provided, that, the net aggregate outstanding principal amount of such
loans shall not exceed $2,000,000 at any time, except, that, the principal
amount of such loans may exceed $2,000,000 so long as each of the following
conditions is satisfied, as determined by Agent, (i) Agent shall have
received not less than ten (10) Business Days prior written notice of the
intention of Borrowers or Guarantors to make such loans in excess of the
principal amount of $2,000,000, (ii) as of the date of such loan, and after
giving effect thereto, no Event of Default, or act, condition or event
which with notice of passage of time or both would constitute an Event of
Default, shall exist or have occurred and be continuing, (iii) as of the
date of any such loan and after giving effect thereto, the daily average of
the Excess Availability for the immediately preceding thirty (30)
consecutive day period shall be not less than $20,000,000, and as of the
date of such loan and after giving effect thereto, Excess Availability
shall be not less than $20,000,000, (iv) there shall be no restriction,
limitation or subordination with respect to the obligation of such Non-
Guarantor Subsidiary to repay or prepay the Indebtedness owing to such
Borrower or Guarantor arising pursuant to such loan, and (v) such
Indebtedness is not, and shall not be, evidenced by any promissory note or
other instrument, unless the original of such note is promptly delivered to
Agent upon the issuance thereof, duly indorsed and assigned by such
Borrower or Guarantor to Agent;
(i) loans by any Non-Guarantor Subsidiary to any Borrower or
Guarantor in the ordinary course of the business of Borrowers and
Guarantors consistent with current practices as of the date hereof;
provided, that, the Indebtedness of any Borrower or Guarantor to such Non-
Guarantor Subsidiary arising pursuant to such loan shall be subordinated in
right of payment to the Obligations on terms and conditions and in a manner
acceptable to Agent;
(j) capital contributions of Borrowers and Guarantors to any
Subsidiaries formed or acquired after the date hereof to the extent
permitted under and in accordance with Section 9.7 hereof, provided, that,
(i) as of the date of such investment and after giving effect thereto, no
Event of Default, or act, condition or event which with notice or passage
of time or both would constitute an Event of Default, shall exist or have
occurred and be continuing and (ii) in no event shall the total amount of
any capital contributions or other amounts paid by any Borrower or
Guarantor to or for the formation or acquisition of any such Subsidiaries
exceed $500,000 in the aggregate;
(k) loans and advances by any Borrower, Guarantor or their
Subsidiaries to employees of such Borrower, Guarantor or Subsidiary after
the date hereof not to exceed the principal amount of $1,000,000 in the
aggregate at any time outstanding for reasonable and necessary work-related
travel or other ordinary business expenses to be incurred by employees in
connection with their work for Borrowers, Guarantors or their Subsidiaries
or for the relocation of such employees in connection with their work for
Borrowers, Guarantors or their Subsidiaries;
(l) guarantees by a Borrower of the obligations of any Guarantor
or any other Borrower under real property leases with respect to retail
store locations leased by such Guarantor or Borrower in the ordinary course
of business consistent with current practices;
(m) the other existing loans, advances and guarantees by any
Borrower, Guarantor or Subsidiary outstanding as of the date hereof as set
forth on Schedule 9.10 hereto not otherwise permitted above; provided,
that, as to such loans, advances and guarantees, (i) such Borrower,
Guarantor or Subsidiary shall not, directly or indirectly, (A) amend,
modify, alter or change the terms of such loans, advances or guarantees or
any agreement, document or instrument related thereto, or (B) as to such
guarantees, redeem, retire, defease, purchase or otherwise acquire such
guarantee or set aside or otherwise deposit or invest any sums for such
purpose and (ii) Borrowers and Guarantors shall furnish to Agent all
notices, demands or other materials in connection with such loans, advances
or guarantees either received by any Borrower, Guarantor or Subsidiary or
on its or their behalf, promptly after the receipt thereof, or sent by any
Borrower, Guarantor or Subsidiary or on its or their behalf, concurrently
with the sending thereof, as the case may be.
9.11 Dividends; Redemptions; Issuance of Capital Stock.
(a) Each Borrower and Guarantor shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, declare or pay any
dividends on account of any shares of class of its Capital Stock now or
hereafter outstanding, or set aside or otherwise deposit or invest any sums
for such purpose, or redeem, retire, defease, purchase or otherwise acquire
any shares of any class of Capital Stock (or set aside or otherwise deposit
or invest any sums for such purpose) for any consideration other than
common stock or apply or set apart any sum, or make any other distribution
(by reduction of capital or otherwise) in respect of any such shares or
agree to do any of the foregoing, except, that, (i) any Borrower, Guarantor
or its Subsidiary may declare and pay dividends to any other Borrower or
Guarantor out of legally available funds therefor and (ii) any Non-
Guarantor Subsidiary may declare and pay dividends to any Borrower,
Guarantor or other Non-Guarantor Subsidiary.
(b) Each Borrower and Guarantor shall not, and shall not permit
any of its Subsidiaries to, authorize, issue, sell or otherwise dispose of
any of its Capital Stock, except (i) Edison may authorize and issue shares
of its own Capital Stock pursuant to stock option plans of Edison in effect
on the date hereof or hereafter, (ii) any Borrower or Guarantor may
authorize, issue and sell its Capital Stock after the date hereof,
provided, that, (A) Agent shall have received not less than ten (10)
Business Days prior written notice of such issuance and sale, which notice
shall specify the parties to whom such shares are to be sold, the terms of
such sale, the total amount which it is anticipated will be realized from
the issuance and sale of such Capital Stock and the net cash proceeds which
it is anticipated will be received by such Borrower or Guarantor from such
sale, (B) no Borrower or Guarantor shall be required to pay any dividends
or repurchase or redeem such Capital Stock or make any other payments in
respect thereof, (C) the terms of such Capital Stock, and the terms and
conditions of the purchase and sale thereof, shall not include any
provision which in any way, directly or indirectly, limits, impairs or
otherwise affects the ability or right of Borrower to request or receive
Loans or Letter of Credit Accommodations or to amend, modify, supplement,
extend, renew, restate or replace any of the Financing Agreements or
otherwise in any way relates to or affects the arrangements of Borrowers
and Guarantors with Agent and Lenders or are more restrictive or burdensome
to Borrowers and Guarantors than the terms of any Capital Stock in effect
on the date hereof, and (D) as of the date of such issuance and sale and
after giving effect thereto, no Event of Default, or act, condition or
event which with notice or passage of time or both would constitute an
Event of Default, shall exist or have occurred and be continuing and (iii)
Edison may issue shares of its own Capital Stock pursuant to warrants
outstanding on the date hereof as set forth in Schedule 9.11 hereto.
9.12 Transactions with Affiliates. Each Borrower and Guarantor shall
not, and shall not permit any of its Subsidiaries to, directly or
indirectly, (a) purchase, acquire or lease any property from, or sell,
transfer or lease any property to, any officer, employee, shareholder Bank
National Association , director, agent or any other Affiliate, except in
the ordinary course of and pursuant to the reasonable requirements of such
Borrower's, Guarantor's or Subsidiary's business and upon fair and
reasonable terms no less favorable to the such Borrower, Guarantor or
Subsidiary than such Borrower, Guarantor or Subsidiary would obtain in a
comparable arm's length transaction with an unaffiliated person or (b) make
any payments of management, consulting or other fees for management or
similar services, or of any Indebtedness owing to any officer, employee,
director or other Affiliate except (i) reasonable compensation, severance,
advances and reimbursement for business-related expenses to officers,
employees and directors for services rendered to Borrowers, Guarantors and
their Subsidiaries in the ordinary course of business or (ii) as otherwise
permitted hereunder.
9.13 Credit Card Agreements. Each Borrower shall (a) observe and
perform all material terms, covenants, conditions and provisions of the
Credit Card Agreements to be observed and performed by it at the times set
forth therein; (b) not do, permit, suffer or refrain from doing anything,
as a result of which there could be a default under or breach of any of the
terms of any of the Credit Card Agreements and (c) at all times maintain in
full force and effect the Credit Card Agreements and not terminate, cancel,
surrender, modify, amend, waive or release any of the Credit Card
Agreements, or consent to or permit to occur any of the foregoing; except,
that, (i) a Borrower may terminate or cancel any of the Credit Card
Agreements in the ordinary course of the business of such Borrower; (d) not
enter into any new Credit Card Agreements with any new Credit Card Issuer
unless (i) Agent shall have received not less than thirty (30) days prior
written notice of the intention of such Borrower to enter into such
agreement (together with such other information with respect thereto as
Agent may request) and (ii) such Borrower delivers, or causes to be
delivered to Agent, a Credit Card Acknowledgment in favor of Agent; (e)
give Agent immediate written notice of any Credit Card Agreement entered
into by such Borrower after the date hereof, together with a true, correct
and complete copy thereof and such other information with respect thereto
as Agent may request; and (f) furnish to Agent, promptly upon the request
of Agent, such information and evidence as Agent may require from time to
time concerning the observance, performance and compliance by such Borrower
or the other party or parties thereto with the terms, covenants or
provisions of the Credit Card Agreements.
9.14 Net Worth. The consolidated Net Worth of Edison and its
Subsidiaries shall, on the last day of each fiscal quarter of Borrowers and
Guarantors, equal or exceed $100,000,000.
9.15 Compliance with ERISA.
(a) Each Borrower and Guarantor shall not with respect to any
employee benefit plans maintained by such Borrower or Guarantor or any of
its ERISA Affiliates: (i) terminate any of such employee pension plans so
as to incur any liability to the Pension Benefit Guaranty Corporation
established pursuant to ERISA, (ii) allow or suffer to exist any prohibited
transaction involving any of such employee benefit plans or any trust
created thereunder which would subject Borrower or such ERISA Affiliate to
a tax or penalty or other liability on prohibited transactions imposed
under the Code or ERISA, (iii) fail to pay to any such employee benefit
plan any contribution which it is obligated to pay under ERISA, the Code or
the terms of such plan, (iv) allow or suffer to exist any accumulated
funding deficiency, whether or not waived, with respect to any such
employee benefit plan, (v) allow or suffer to exist any occurrence of a
reportable event or any other event or condition which presents a material
risk of termination by the Pension Benefit Guaranty Corporation of any such
employee benefit plan that is a single employer plan, which termination
could result in any liability to the Pension Benefit Guaranty Corporation
or (vi) incur any withdrawal liability with respect to any multiemployer
pension plan.
(b) Nothing contained in this Section 9.15 shall be construed to
prohibit the termination of the Existing Pension Plan (as such term is
defined in the Plan as in effect on the date hereof) and its replacement
with a new plan in each case in accordance with the Plan (as in effect on
the date hereof).
(c) As used in this Section 9.15, the term employee pension
benefit plans, employee benefit plans , accumulated funding deficiency
and reportable event shall have the respective meanings assigned to them
in ERISA, and the term prohibited transaction shall have the meaning
assigned to it in the Code and ERISA.
9.16 Additional Bank Accounts. Each Borrower and Guarantor shall not,
and shall not permit any of its Subsidiaries to, directly or indirectly,
open, establish or maintain any deposit account, investment account,
securities account or any other account with any bank or other financial
institution, other than the Concentration Accounts and the accounts set
forth in Schedule 6.3 hereto, except: (a) as to any new or additional
Concentration Accounts, with the prior written consent of Agent and subject
to such conditions thereto as Agent may establish and (b) as to any
accounts used by Borrowers or Guarantors to make payments of payroll, taxes
or other obligations to third parties, so long as prior to an Event of
Default, such accounts are reported to Agent in accordance with Section 9.6
hereof and after an Event of Default, only after prior written notice to
Agent.
9.17 Customs Brokers. Borrowers and Guarantors shall not, and shall
not permit any of its Subsidiaries to, use any Customs Brokers other than
those listed on Schedule 8.14 hereof, except if (a) Agent shall have
received not less than ten (10) days' prior written notice of the intention
of such Borrower or Guarantor to use any other Customs Broker; (b) Agent
shall have received an agreement in writing from such other Customs Broker,
in form and substance satisfactory to Agent, acknowledging the security
interests of Agent in the Collateral, waiving any security interest, lien
or other claim of such Customs Broker in any Collateral at any time in the
custody, control or possession of such person and agreeing to follow the
instructions of Agent with respect thereto upon Agent's request, duly
authorized, executed and delivered by such other Customs Broker; (c) such
Customs Broker shall be reasonably acceptable to Agent; and (d) no Event of
Default shall exist or have occurred and be continuing.
9.18 Costs and Expenses. Borrowers and Guarantors shall pay to Agent
on demand all costs, expenses, filing fees and taxes paid or payable in
connection with the preparation, negotiation, execution, delivery,
recording, administration, collection, liquidation, enforcement and defense
of the Obligations, the rights of Agent and Lenders in the Collateral, this
Agreement, the other Financing Agreements and all other documents related
hereto or thereto, including any amendments, supplements or consents which
may hereafter be contemplated (whether or not executed) or entered into in
respect hereof and thereof, including: (a) all costs and expenses of filing
or recording (including Uniform Commercial Code financing statement filing
taxes and fees, documentary taxes, intangibles taxes and mortgage recording
taxes and fees, if applicable); (b) all insurance premiums, appraisal fees
and search fees; (c) costs and expenses of remitting loan proceeds,
collecting checks and other items of payment, and establishing and
maintaining the Concentration Accounts, together with Agent's customary
charges and fees with respect thereto; (d) charges, fees or expenses
charged by any bank or issuer in connection with the Letter of Credit
Accommodations (except that with respect to Letter of Credit Accommodation
which are not standby Letter of Credit Accommodations and are used solely
for the purpose of purchasing goods expected to become Eligible Inventory,
no bank fees, opening charges or amendment or similar fees shall be charged
by the Issuing Bank as provided in Section 2.2(b), except as otherwise
provided in the fee agreement between Borrowers and the Issuing Bank); (e)
costs and expenses of preserving and protecting the Collateral; (f) costs
and expenses paid or incurred in connection with obtaining payment of the
Obligations, enforcing the security interests and liens of Agent and
Lenders, selling or otherwise realizing upon the Collateral, and otherwise
enforcing the provisions of this Agreement and the other Financing
Agreements or defending any claims made or threatened against Agent and
Lenders arising out of the transactions contemplated hereby and thereby
(including preparations for and consultations concerning any such matters);
(g) all reasonable out-of-pocket expenses and costs heretofore and from
time to time hereafter incurred by Agent and Lenders during the course of
periodic field examinations of the Collateral and Borrower's operations,
plus a per diem charge at the rate of $600 per person per day for Agent's
examiners in the field and office; and (h) the reasonable fees and
disbursements of counsel (including legal assistants) to Agent and Lenders
in connection with any of the foregoing.
9.19 Further Assurances. At the request of Agent at any time and from
time to time, each Borrower and Guarantor shall, at its expense, duly
execute and deliver, or cause to be duly executed and delivered, such
further agreements, documents and instruments, and do or cause to be done
such further acts as may be necessary or proper to evidence, perfect,
maintain and enforce the security interests and the priority thereof in the
Collateral and to otherwise effectuate the provisions or purposes of this
Agreement or any of the other Financing Agreements. Agent may at any time
and from time to time request a certificate from an officer of a Borrower
representing that all conditions precedent to the making of Loans and
providing Letter of Credit Accommodations contained herein are satisfied.
In the event of such request by Agent, Agent and Lenders may, at Agent's
option, cease to make any further Loans or provide any further Letter of
Credit Accommodations until Agent has received such certificate and, in
addition, Agent has determined that such conditions are satisfied. Where
permitted by law, each Borrower and Guarantor hereby authorizes Agent to
execute and file one or more UCC financing statements signed only by Agent.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. The occurrence or existence of any one or
more of the following events are referred to herein individually as an
Event of Default , and collectively as Events of Default :
(a) (i) any Borrower fails to pay any of the Obligations within
three (3) days after the same becomes due and payable, (ii) any Borrower or
Guarantor fails to perform any of the covenants contained in Sections 6.3,
6.4, 7.6, 8.6, 9.6(b), 9.7, 9.8, 9.9, 9.10, 9.11 and 9.12 of this
Agreement, (iii) any Borrower or Guarantor fails to perform any of the
covenants contained in Sections 9.1, 9.2, 9.3, 9.4, 9.5, 9.6 (other than
Section 9.6(b)), 9.16, 9.17, 9.19 or 9.20 of this Agreement and such
failure shall continue for ten (10) days or (iv) any Borrower or Guarantor
fails to perform any of the other covenants contained in the Agreement or
the other Financing Agreements and such failure shall continue for twenty
(20) days; provided, that, (A) the ten (10) day period and the twenty (20)
day period provided for in clauses (iii) and (iv) above shall not apply in
the case of: (1) any failure to observe any such covenant which is not
capable of being cured at all or within such ten (10) day period or twenty
(20) day period, as applicable, or which has been the subject of a prior
failure within a six (6) month period or (2) an intentional breach by any
Borrower or Guarantor of any such covenant or (3) any failure to observe
any such covenant if as a result of such failure, any of the Financing
Agreements shall terminate (other than in accordance with its terms or the
terms hereof or with the written consent of Agent) or become void or
unenforceable; and (B) the twenty (20) day period provided for in clause
(iv) above shall commence on the earlier of (1) written notice of default
being given to Edison by Agent or any Lender and (2) a responsible officer
of either Edison or Edison Apparel obtaining knowledge of such default;
(b) any representation, warranty or statement of fact in writing
made by any Borrower or Guarantor to Agent or any Lender in this Agreement,
the other Financing Agreements or any other agreement, schedule,
confirmatory assignment or certificate shall when made or deemed made be
false or misleading in any material respect;
(c) any Guarantor revokes, terminates or fails to perform any of
the terms, covenants, conditions or provisions of any guarantee,
endorsement or other agreement of such party in favor of Agent or any
Lender;
(d) one or more final judgments for the payment of money
aggregating in excess of $1,000,000 (whether or not covered by insurance)
shall be rendered against any Borrower or Guarantor and such Borrower or
Guarantor shall fail to discharge the same within twenty (20) days from the
date of notice of entry thereof or to appeal therefrom and a stay of
execution shall not then be in effect pending determination of such appeal;
(e) any Borrower or Guarantor shall file a certificate of
dissolution under applicable state or foreign law or shall be liquidated,
dissolved or wound-up or shall commence or have commenced against it any
action or proceeding for dissolution, winding-up or liquidation, or shall
take any corporate action in furtherance thereof or shall suspend or
discontinue doing business except as permitted hereunder;
(f) Borrowers and Guarantors become insolvent (however defined
or evidenced) on a consolidated basis, or any Borrower or Guarantor makes
an assignment for the benefit of creditors, or makes or sends notice of a
bulk transfer (except in connection with a disposition of assets to the
extent permitted hereunder);
(g) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect (other than to the extent of
the retention of jurisdiction by the Bankruptcy Court with respect to the
Chapter 11 Cases) or under any insolvency, reorganization, receivership,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction now or hereafter in effect (whether at law or in equity) is
filed against any Borrower or Guarantor or all or any part of its
properties and such petition or application is not dismissed within thirty
(30) days after the date of its filing or such Borrower or Guarantor shall
file any answer admitting or not contesting such petition or application or
indicates its consent to, acquiescence in or approval of, any such action
or proceeding or the relief requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect (other than to the extent of
the retention of jurisdiction by the Bankruptcy Court with respect to the
Chapter 11 Cases) or under any insolvency, reorganization, receivership,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction now or hereafter in effect (whether at a law or equity) is
filed by any Borrower or Guarantor or for all or any part of its property;
(i) any default by any Borrower or Guarantor under any
agreement, document or instrument relating to any Indebtedness owing to any
person other than Agent and Lenders in any case in an amount in excess of
$2,500,000, which default continues for more than the applicable cure
period, if any, with respect thereto, or any default by Borrower or any
Guarantor under the Plan, the Confirmation Order, or any material contract,
lease, license or other obligation to any person other than Agent and
Lenders, which default continues for more than the applicable cure period,
if any, with respect thereto and which would have a Material Adverse
Effect;
(j) a Change of Control;
(k) the indictment or threatened indictment of any Borrower or
Guarantor under any criminal statute, or commencement or threatened
commencement of criminal or civil proceedings brought by any Governmental
Authority against any Borrower or Guarantor, pursuant to which statute or
proceedings the penalties or remedies sought or available include
forfeiture of any material portion of the Collateral;
(l) there occurs any material adverse change in the property,
business, operations, prospects or condition (financial or otherwise) of
Edison and its Subsidiaries, taken as a whole; or
(m) the distribution under Section 4.7(b)(i) of the Plan in
respect of Class 7 Allowed General Unsecured Claims shall not have been
fully and completely made within seventy (70) days after the Effective
Date; or
(n) there shall be an Event of Default as such term is defined
in any of the other Financing Agreements.
10.2 Remedies.
(a) At any time an Event of Default exists or has occurred and
is continuing, Agent and Lenders shall have all rights and remedies
provided in this Agreement, the other Financing Agreements, the Uniform
Commercial Code and other applicable law, all of which rights and remedies
may be exercised without notice to or consent by Borrowers or Guarantors,
except as such notice or consent is expressly provided for hereunder or
required by applicable law. All rights, remedies and powers granted to
Agent and Lenders hereunder, under any of the other Financing Agreements,
the Uniform Commercial Code or other applicable law, are cumulative, not
exclusive and enforceable, in Agent's discretion, alternatively,
successively, or concurrently on any one or more occasions, and shall
include, without limitation, the right to apply to a court of equity for an
injunction to restrain a breach or threatened breach by any Borrower or
Guarantor of this Agreement or any of the other Financing Agreements.
Agent may, at any time or times, proceed directly against any Borrower or
Guarantor to collect the Obligations without prior recourse to the
Collateral.
(b) Without limiting the foregoing, at any time an Event of
Default exists or has occurred and is continuing, Agent may, in its
discretion and without limitation, and upon specific direction by the
Majority Lenders shall, (i) accelerate the payment of all Obligations and
demand immediate payment thereof to Agent for itself and the ratable
benefit of Lenders (provided, that, upon the occurrence of any Event of
Default described in Sections 10.1(g) and 10.1(h), all Obligations shall
automatically become immediately due and payable), (ii) with or without
judicial process or the aid or assistance of others, enter upon any
premises on or in which any of the Collateral may be located and take
possession of the Collateral or complete processing, manufacturing and
repair of all or any portion of the Collateral, (iii) require Borrowers, at
Borrowers' expense, to assemble and make available to Agent any part or all
of the Collateral at any place and time designated by Agent, (iv) collect,
foreclose, receive, appropriate, setoff and realize upon any and all
Collateral, (v) remove any or all of the Collateral from any premises on or
in which the same may be located for the purpose of effecting the sale,
foreclosure or other disposition thereof or for any other purpose, (vi)
sell, lease, transfer, assign, deliver or otherwise dispose of any and all
Collateral (including, without limitation, entering into contracts with
respect thereto, public or private sales at any exchange, broker's board,
at any office of Agent or elsewhere) at such prices or terms as Agent may
deem reasonable, for cash, upon credit or for future delivery, with the
Agent having the right to purchase the whole or any part of the Collateral
at any such public sale, all of the foregoing being free from any right or
equity of redemption of Borrowers, which right or equity of redemption is
hereby expressly waived and released by Borrowers and/or (vii) terminate
this Agreement. If any of the Collateral is sold or leased by Agent upon
credit terms or for future delivery, the Obligations shall not be reduced
as a result thereof until payment therefor is finally collected by Agent.
If notice of disposition of Collateral is required by law, five (5) days
prior notice by Agent to Borrowers designating the time and place of any
public sale or the time after which any private sale or other intended
disposition of Collateral is to be made, shall be deemed to be reasonable
notice thereof and Borrowers waive any other notice. In the event Agent or
any Lender institutes an action to recover any Collateral or seeks recovery
of any Collateral by way of prejudgment remedy, Borrowers waive the posting
of any bond which might otherwise be required.
(c) Agent may apply the cash proceeds of Collateral actually
received by Agent from any sale, lease, foreclosure or other disposition of
the Collateral to payment of the Obligations, in whole or in part and in
such order as Agent may elect, whether or not then due. Borrowers shall
remain liable to Agent and Lenders for the payment of any deficiency with
interest at the highest rate provided for herein and all costs and expenses
of collection or enforcement, including attorneys' fees and legal expenses.
(d) Without limiting the foregoing, upon the occurrence of an
Event of Default or an act, condition or event which with notice or passage
of time or both would constitute an Event of Default, Agent may, at its
option, and upon direction by the Majority Lenders shall, without notice,
(i) cease making Loans or arranging for Letter of Credit Accommodations or
reduce the lending formulas or amounts of Loans and Letter of Credit
Accommodations available to Borrowers and/or (ii) terminate any provision
of this Agreement providing for any future Loans or Letter of Credit
Accommodations to be made by Agent or any Lender to Borrowers.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements and any dispute arising out of
the relationship between the parties hereto, whether in contract, tort,
equity or otherwise, shall be governed by the internal laws of the State of
New York (without giving effect to principles of conflicts of law).
(b) Borrowers, Guarantors, Agent and Lenders irrevocably consent
and submit to the non-exclusive jurisdiction of the Supreme Court of the
State of New York in New York County and the United States District Court
for the Southern District of New York and waive any objection based on
venue or forum non conveniens with respect to any action instituted therein
arising under this Agreement or any of the other Financing Agreements or in
any way connected with or related or incidental to the dealings of the
parties hereto in respect of this Agreement or any of the other Financing
Agreements or the transactions related hereto or thereto, in each case
whether now existing or hereafter arising, and whether in contract, tort,
equity or otherwise, and agree that any dispute with respect to any such
matters shall be heard only in the courts described above (except that
Agent shall have the right to bring any action or proceeding against any
Borrower or Guarantor or its property in the courts of any other
jurisdiction which Agent deems necessary or appropriate in order to realize
on the Collateral or to otherwise enforce its rights against any Borrower
or Guarantor or its property).
(c) Each Borrower and Guarantor hereby waives personal service
of any and all process upon it and consents that all such service of
process may be made by certified mail (return receipt requested) directed
to its address set forth on the signature pages hereof and service so made
shall be deemed to be completed five (5) days after the same shall have
been so deposited in the U.S. mails, or, at Agent's option, by service upon
any Borrower or Guarantor in any other manner provided under the rules of
any such courts. Within thirty (30) days after receipt by such Borrower or
Guarantor of such service, such Borrower or Guarantor shall appear in
answer to such process, failing which such Borrower or Guarantor shall be
deemed in default and judgment may be entered by Agent against such
Borrower or Guarantor for the amount of the claim and other relief
requested.
(d) BORROWERS, GUARANTORS, AGENT AND LENDERS EACH HEREBY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
(i) ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS
OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS
OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER
FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT,
TORT, EQUITY OR OTHERWISE. BORROWERS, GUARANTORS, AGENT AND LENDERS EACH
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT BORROWERS,
GUARANTORS, AGENT OR LENDERS MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF
THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Neither Agent nor any Lender shall have any liability to
Borrowers or Guarantors (whether in tort, contract, equity or otherwise)
for losses suffered by Borrowers or Guarantors in connection with, arising
out of, or in any way related to the transactions or relationships
contemplated by this Agreement, or any act, omission or event occurring in
connection herewith, unless it is determined by a final and non-appealable
judgment or court order binding on such party, that the losses were the
result of acts or omissions constituting gross negligence or willful
misconduct. In any such litigation, Agent and Lenders shall be entitled to
the benefit of the rebuttable presumption that it and they acted in good
faith and with the exercise of ordinary care in the performance by it and
them of the terms of this Agreement.
11.2 Waiver of Notices. Each Borrower and Guarantor hereby expressly
waives demand, presentment, protest and notice of protest and notice of
dishonor with respect to any and all instruments and commercial paper,
included in or evidencing any of the Obligations or the Collateral, and any
and all other demands and notices of any kind or nature whatsoever with
respect to the Obligations, the Collateral and this Agreement, except such
as are expressly provided for herein. No notice to or demand on any
Borrower or Guarantor which Agent or any Lender may elect to give shall
entitle Borrowers or Guarantors to any other or further notice or demand in
the same, similar or other circumstances.
11.3 Amendments and Waivers.
(a) Neither this Agreement nor any provision hereof shall be
amended, modified, waived or discharged orally or by course of conduct, but
only by a written agreement signed as provided in Section 11.3(b) below.
Agent and Lenders shall not, by any act, delay, omission or otherwise be
deemed to have expressly or impliedly waived any of its or their rights,
powers and/or remedies unless such waiver shall be in writing and signed as
provided in Section 11.3(b) below. Any such waiver shall be enforceable
only to the extent specifically set forth therein. A waiver by Agent or
any Lender of any right, power and/or remedy on any one occasion shall not
be construed as a bar to or waiver of any such right, power and/or remedy
which Agent or any Lender would otherwise have on any future occasion,
whether similar in kind or otherwise.
(b) Neither this Agreement nor any other Financing Agreement nor
any terms hereof or thereof may be changed, waived, discharged or
terminated unless such change, waiver, discharge or termination is in
writing signed by Agent and the Majority Lenders and as to amendments to
any Financing Agreement, by Borrowers; except, that, any change, waiver,
discharge or termination with respect to the following shall require the
consent of Agent and all Lenders: (i) the extension of the scheduled final
maturity of any Loan, or any portion thereof, or reduction in the rate or
extension of the time of payment of interest thereon or fees (other than as
a result of waiving or not requiring the applicability of any post-default
increase in fees for outstanding Letter of Credit Accommodations or
increased interest rates on Loans in excess of the amounts then available
to Borrowers), or reduction in the principal amount thereof, or increase in
the Commitment of any Lender over the amount thereof then in effect or
provided hereunder (it being understood that a waiver of any Event of
Default shall not constitute a change in the terms of any Commitment of any
Lender), (ii) the release of a material amount of the Collateral (except as
expressly required by the Financing Agreements and except as permitted
under Section 12.13 hereof), (iii) the amendment, modification or waiver of
any provision of this Section 11.3, (iv) the reduction of any percentage
specified in the definition of Majority Lenders, (v) the consent to the
assignment or transfer by any Borrower of any of its rights and obligations
under this Agreement or (vi) the increase in the stated advance percentage
under the lending formulas contained in Section 2.1 hereof. No provision
of this Section 11.3 may be amended without the prior written consent of
Agent.
(c) Notwithstanding anything to the contrary contained in
Section 11.3(b) above, in the event that Borrowers request that this
Agreement or any other Financing Agreements be amended or otherwise
modified in a manner which would require the unanimous consent of all of
the Lenders and such amendment or other modification is agreed to by the
Majority Lenders, then, with the consent of Borrowers and the Majority
Lenders, Borrowers and the Majority Lenders may amend this Agreement
without the consent of the Lender or Lenders which did not agree to such
amendment or other modification (collectively, the Minority Lenders ) to
provide for (i) the termination of the Commitment of each of the Minority
Lenders, (ii) the addition to this Agreement of one or more other Lenders,
or an increase in the Commitment of one or more of the Majority Lenders, so
that the Commitments, after giving effect to such amendment, shall be in
the same aggregate amount as the Commitments immediately before giving
effect to such amendment, (iii) if any Loans are outstanding at the time of
such amendment, the making of such additional Loans by such new Lenders or
Majority Lenders, as the case may be, as may be necessary to repay in full
the outstanding Loans of the Minority Lenders immediately before giving
effect to such amendment and (iv) the payment of all interest, fees and
other Obligations payable or accrued in favor of the Minority Lenders and
such other modifications to this Agreement as Borrowers and the Majority
Lenders may determine to be appropriate.
11.4 Waiver of Counterclaims. Each Borrower and Guarantor waives all
rights to interpose any claims, deductions, setoffs or counterclaims of any
nature (other then compulsory counterclaims) in any action or proceeding
with respect to this Agreement, the Obligations, the Collateral or any
matter arising therefrom or relating hereto or thereto to the extent
permitted by applicable law.
11.5 Indemnification.
(a) Borrowers and Guarantors shall indemnify and hold Agent,
Lenders, and their respective directors, agents, employees and counsel,
harmless from and against any and all losses, claims, damages, liabilities,
costs or expenses imposed on, incurred by or asserted against any of them
in connection with any litigation, investigation, claim or proceeding
commenced or threatened related to the negotiation, preparation, execution,
delivery, enforcement, performance or administration of this Agreement, any
other Financing Agreements, or any undertaking or proceeding related to any
of the transactions contemplated hereby or any act, omission, event or
transaction related or attendant thereto, including, without limitation,
amounts paid in settlement, court costs, and the reasonable fees and
expenses of counsel, except to the extent such losses, claims, damages,
liabilities, costs or expenses are the result of the gross negligence or
willful misconduct of Agent or Lenders as determined pursuant to a final
non-appealable order of a court of competent jurisdiction. To the extent
that the undertaking to indemnify, pay and hold harmless set forth in this
Section may be unenforceable because it violates any law or public policy,
Borrowers and Guarantors shall pay the maximum portion which it is
permitted to pay under applicable law to Agent and Lenders in satisfaction
of indemnified matters under this Section. The foregoing indemnity shall
survive the payment of the Obligations and the termination of this
Agreement.
(b) Borrowers and Guarantors shall be liable for any tax or
penalties imposed on Agent or any Lender as a result of the financing
arrangements provided for herein and each Borrower and Guarantor agrees to
indemnify and hold Agent and Lenders harmless with respect to the
foregoing, and to repay to Agent and Lenders on demand the amount thereof,
and until paid by Borrowers or Guarantors such amount shall be added and
deemed part of the Loans, provided, that, nothing contained herein shall be
construed to require Borrowers or Guarantors to pay any income or franchise
taxes attributable to the income of Agent or any Lender from any amounts
charged or paid hereunder to Agent or such Lender. The foregoing indemnity
shall survive the payment of the Obligations and the termination of this
Agreement.
SECTION 12. THE AGENT
12.1 Appointment, Powers and Immunities. Each Lender hereby
irrevocably appoints and authorizes Agent to act as its agent hereunder and
under the other Financing Agreements with such powers as are specifically
delegated to Agent by the terms of this Agreement and of the other
Financing Agreements, together with such other powers as are reasonably
incidental thereto. Agent (a) shall have no duties or responsibilities
except those expressly set forth in this Agreement and in the other
Financing Agreements, and shall not by reason of this Agreement or any
other Financing Agreement be a trustee or fiduciary for any Lender; (b)
shall not be responsible to Lenders for any recitals, statements,
representations or warranties contained in this Agreement or in any other
Financing Agreement, or in any certificate or other document referred to or
provided for in, or received by any of them under, this Agreement or any
other Financing Agreement, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other
Financing Agreement or any other document referred to or provided for
herein or therein or for any failure by any Borrower or Guarantor or any
other Person to perform any of its obligations hereunder or thereunder; and
(c) shall not be responsible to Lenders for any action taken or omitted to
be taken by it hereunder or under any other Financing Agreement or under
any other document or instrument referred to or provided for herein or
therein or in connection herewith or therewith, except for its own gross
negligence or willful misconduct as determined by a final non-appealable
judgment of a court of competent jurisdiction. Agent may employ agents and
attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it in good
faith. Agent may deem and treat the payee of any note as the holder
thereof for all purposes hereof unless and until the assignment thereof
pursuant to an agreement (if and to the extent permitted herein) in form
and substance satisfactory to Agent shall have been delivered to and
acknowledged by Agent. The identification of CIT as a co-agent hereunder
shall not create any rights in favor of it in such capacity or subject it
to any duties or obligations, except as expressly set forth herein.
12.2 Reliance by Agent. Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telecopy, telex, telegram or cable) reasonably believed by it to
be genuine and correct and to have been signed or sent by or on behalf of
the proper Person or Persons, and upon advice and statements of legal
counsel, independent accountants and other experts selected by Agent. As
to any matters not expressly provided for by this Agreement or any other
Financing Agreement, Agent shall in all cases be fully protected in acting,
or in refraining from acting, hereunder or thereunder in accordance with
instructions given by Majority Lenders or all of Lenders as is required in
such circumstance, and such instructions of such Lenders and any action
taken or failure to act pursuant thereto shall be binding on all Lenders.
12.3 Events of Default.
(a) Agent shall not be deemed to have knowledge or notice of the
occurrence of an Event of Default or other failure of a condition precedent
to the Loans and Letter of Credit Accommodations hereunder, unless and
until Agent has received written notice from a Lender or a Borrower
specifying such Event of Default or any unfulfilled condition precedent,
and stating that such notice is a Notice of Default or Failure of
Condition . In the event that Agent receives such a Notice of Default or
Failure of Condition, Agent shall give prompt notice thereof to Lenders.
Agent shall (subject to Section 12.7) take such action with respect to any
such Event of Default or failure of condition precedent as shall be
directed by the Majority Lenders; provided, that, unless and until Agent
shall have received such directions, Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to
or by reason of such Event of Default or failure of condition precedent, as
it shall deem advisable in the best interest of Lenders. Without limiting
the foregoing, and notwithstanding the existence or occurrence and
continuance of an Event of Default or any other failure to satisfy any of
the conditions precedent set forth in Section 4 of this Agreement to the
contrary, Agent may, but shall have no obligation to, continue to make
Loans and issue or cause to be issued Letter of Credit Accommodations for
the ratable account and risk of Lenders from time to time if Agent believes
making such Loans or issuing or causing to be issued such Letter of Credit
Accommodations is in the best interests of Lenders.
(b) Except with the prior written consent of Agent, no Lender
may assert or exercise any enforcement right or remedy in respect of the
Loans, Letter of Credit Accommodations or other Obligations, as against any
Borrower or Guarantor or any of the Collateral or other property of any
Borrower or Guarantor.
12.4 Rights as a Lender. With respect to its Commitment and the Loans
made and Letter of Credit Accommodations issued or caused to be issued by
it (and any successor acting as Agent), so long as Congress shall be a
Lender hereunder, it shall have the same rights and powers hereunder as any
other Lender and may exercise the same as though it were not acting as
Agent, and the term Lender or Lenders shall, unless the context
otherwise indicates, include Congress in its individual capacity as Lender
hereunder. Congress (and any successor acting as Agent) and its
Affiliates may (without having to account therefor to any Lender) lend
money to, make investments in and generally engage in any kind of business
with Borrowers and Guarantors (and any of their subsidiaries or Affiliates)
as if it were not acting as Agent, and Congress and its Affiliates may
accept fees and other consideration from Borrowers and Guarantors for
services in connection with this Agreement or otherwise without having to
account for the same to Lenders.
12.5 Indemnification. Lenders agree to indemnify Agent (to the extent
not reimbursed by Borrowers hereunder and without limiting the Obligations
of Borrowers hereunder) ratably, in accordance with their Pro Rata Shares,
for any and all claims of any kind and nature whatsoever that may be
imposed on, incurred by or asserted against Agent (including by any Lender)
arising out of or by reason of any investigation in or in any way relating
to or arising out of this Agreement or any other Financing Agreement or any
other documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby (including the costs and
expenses that Agent is obligated to pay hereunder) or the enforcement of
any of the terms hereof or thereof or of any such other documents,
provided, that, no Lender shall be liable for any of the foregoing to the
extent it arises from the gross negligence or willful misconduct of the
party to be indemnified as determined by a final non-appealable judgment of
a court of competent jurisdiction.
12.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees that
it has, independently and without reliance on Agent or any other Lender,
and based on such documents and information as it has deemed appropriate,
made its own credit analysis of Borrowers and Guarantors and has made its
own decision to enter into this Agreement and that it will, independently
and without reliance upon Agent or any other Lender, and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not taking
action under this Agreement or any of the other Financing Agreements.
Agent shall not be required to keep itself informed as to the performance
or observance by Borrowers or Guarantors of any term or provision of this
Agreement or any of the other Financing Agreements or any other document
referred to or provided for herein or therein or to inspect the properties
or books of Borrowers or Guarantors. Agent will use reasonable efforts to
provide Lenders with any information received by Agent from Borrowers which
is required to be provided to Lenders hereunder and with a copy of any
Notice of Default or Failure of Condition received by Agent from a Borrower
or any Lender; provided, that, Agent shall not be liable to any Lender for
any failure to do so, except to the extent that such failure is
attributable to Agent's own gross negligence or willful misconduct as
determined by a final non-appealable judgment of a court of competent
jurisdiction. Except for notices, reports and other documents expressly
required to be furnished to Lenders by Agent hereunder, Agent shall not
have any duty or responsibility to provide any Lender with any other credit
or other information concerning the affairs, financial condition or
business of Borrowers that may come into the possession of Agent or any of
its affiliates.
12.7 Failure to Act. Except for action expressly required of Agent
hereunder and under the other Financing Agreements, Agent shall in all
cases be fully justified in failing or refusing to act hereunder and
thereunder unless it shall receive further assurances to its satisfaction
from Lenders of their indemnification obligations under Section 12.5 hereof
against any and all liability and expense that may be incurred by it by
reason of taking or continuing to take any such action.
12.8 Successor Agent.
(a) Agent may resign from the performance of all its functions
and duties hereunder and under the other Financing Agreements at any time
by giving at least thirty (30) days' prior written notice to Borrowers and
each Lender. Such resignation shall take effect upon the acceptance by a
successor Agent of appointment pursuant to Sections 12.8(b) and 12.8(c)
below or as otherwise provided below.
(b) Upon any such notice of resignation, the Majority Lenders
shall appoint a successor Agent. If the successor Agent is not selected
from one of the Lenders, the successor Agent must be reasonably
satisfactory to Borrowers. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under this Agreement and the other
Financing Agreements. After any Agent's resignation hereunder as the
Agent, the provisions of this Section 12 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Agent under
this Agreement and the other Financing Agreements.
(c) If a successor Agent shall not have been so appointed within
such thirty (30) Business Day period, the retiring Agent, with the consent
of Borrowers, shall then appoint a successor Agent who shall serve as Agent
until such time, if any, as the Majority Lenders, with the consent of
Borrowers, appoint a successor Agent as provided above.
12.9 Withholding Tax.
(a) If any Lender is a foreign corporation, partnership or
trust within the meaning of the Code and such Lender claims exemption
from, or a reduction of, U.S. withholding tax under Sections 1441 or 1442
of the Code, such Lender agrees with and in favor of Agent, to deliver to
Agent:
(i) if such Lender claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, properly completed
IRS Forms 1001 and W-8 before the payment of any interest in the first
calendar year and before the payment of any interest in each third
succeeding calendar year during which interest may be paid under this
Agreement;
(ii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Lender, two properly completed and executed copies of IRS Form 4224 before
the payment of any interest is due in the first taxable year of such Lender
and in each succeeding taxable year of such Lender during which interest
may be paid under this Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required under the
Code or other laws of the United States as a condition to exemption from,
or reduction of, United States withholding tax.
Such Lender agrees to promptly notify Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001
properly completed and such Lender sells, assigns, grants a participation
in, or otherwise transfers all or part of the Obligations of Borrowers to
such Lender, such Lender agrees to notify Agent of the percentage amount in
which it is no longer the beneficial owner of Obligations of Borrowers to
such Lender. To the extent of such percentage amount, Agent will treat
such Lender's IRS Form 1001 as no longer valid.
(c) If any Lender claiming exemption from United States
withholding tax by filing IRS Form 4224 with Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of
Borrowers to such Lender, such Lender agrees to undertake sole
responsibility for complying with the withholding tax requirements imposed
by Section 1441 and 1442 of the Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such
Lender an amount equivalent to the applicable withholding tax after taking
into account such reduction. If the forms or other documentation required
by subsection (a) of this Section are not delivered to Agent, then Agent
may withhold from any interest payment to such Lender not providing such
forms or other documentation an amount equivalent to the applicable
withholding tax.
(e) If the Internal Revenue Service or any other Governmental
Authority of the United States of America or other jurisdiction asserts a
claim that Agent did not properly withhold tax from amounts paid to or for
the account of any Lender (because the appropriate form was not delivered,
was not properly executed, or because such Lender failed to notify Agent of
a change in circumstances which rendered the exemption from, or reduction
of, withholding tax ineffective, or for any other reason) such Lender shall
indemnify Agent fully for all amounts paid, directly or indirectly, by
Agent as tax or otherwise, including penalties and interest, and including
any taxes imposed by any jurisdiction on the amounts payable to Agent under
this Section, together with all costs and expenses (including attorneys'
fees and expenses). The obligations of the Lenders under this subsection
shall survive the payment of all Obligations and the resignation or
replacement of Agent.
12.10 Additional Loans. Agent shall not make any Loans or provide any
Letter of Credit Accommodations on behalf of Lenders intentionally and with
actual knowledge that such Loans or Letter of Credit Accommodations would
cause the aggregate amount of the total outstanding Loans and Letter of
Credit Accommodations to exceed the Availability, without the prior consent
of all Lenders, except, that, Agent may make such additional Loans or
provide such additional Letter of Credit Accommodations on behalf of
Lenders intentionally and with actual knowledge that such Loans or Letter
of Credit Accommodations will cause the total outstanding Loans and Letter
of Credit Accommodations to exceed the Availability as Agent may deem
necessary or advisable in its discretion, provided, that: (a) the total
principal amount of the additional Loans or additional Letter of Credit
Accommodations which Agent may make or provide after obtaining such actual
knowledge that the aggregate principal amount of the Loans equal or exceed
the Availability shall not exceed the amount equal to ten percent (10%) of
the Availability at the time and shall not cause the total principal amount
of the Loans and Letter of Credit Accommodations to exceed the Maximum
Credit and (b) without the consent of all Lenders, Agent shall not make any
such additional Loans or Letter of Credit Accommodations more than ninety
(90) days from the date of the first such additional Loans or Letter of
Credit Accommodations each time Agent shall make or provide the same. Each
Lender shall be obligated to pay Agent the amount of its Pro Rata Share of
any such additional Loans or Letter of Credit Accommodations provided that
Agent is acting in accordance with the terms of this Section 12.10.
12.11 Concerning the Collateral and the Related Financing Agreements.
Each Lender authorizes and directs Agent to enter into this Agreement and
the other Financing Agreements relating to the Collateral, for the ratable
benefit of Lenders and Agent. Each Lender agrees that any action taken by
Agent or Majority Lenders in accordance with the terms of this Agreement or
the other Financing Agreements relating to the Collateral, and the exercise
by the Agent or Majority Lenders of their respective powers set forth
therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.
12.12 Field Audit and Examination Reports; Disclaimer by Lenders. By
signing this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish Lender,
promptly after it becomes available, a copy of each field audit or
examination report (each a Report and collectively, Reports ) prepared
by Agent;
(b) expressly agrees and acknowledges that Agent (i) does not
make any representation or warranty as to the accuracy of any Report, or
(ii) shall not be liable for any information contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing
any audit or examination will inspect only specific information regarding
Borrowers and Guarantors and will rely significantly upon Borrowers' books
and records, as well as on representations of Borrowers' personnel; and
(d) agrees to keep all Reports confidential and strictly for its
internal use in accordance with the terms of Section 13.6 hereof, and not
to distribute or use any Report in any other manner.
12.13 Collateral Matters.
(a) Agent may from time to time, at any time on or after an
Event of Default and for so long as the same is continuing, make such
disbursements and advances ( Agent Advances ) which Agent, in its sole
discretion, deems necessary or desirable either (i) to preserve or protect
the Collateral or any portion thereof, (ii) to enhance the likelihood or
maximize the amount of repayment by Borrowers of the Loans and other
Obligations or (iii) to pay any other amount chargeable to Borrowers
pursuant to the terms of this Agreement, including, without limitation,
costs, fees and expenses as described in Section 9.19 and payments to any
issuer of Letter of Credit Accommodations. Agent Advances shall be
repayable on demand and be secured by the Collateral. Agent Advances shall
not constitute Loans but shall otherwise constitute Obligations hereunder.
Agent shall notify each Lender and Borrower in writing of each such Agent
Advance, which notice shall include a description of the purpose of such
Agent Advance. Without limitation of its obligations pursuant to Section
6.7, each Lender agrees that it shall make available to Agent, upon Agent's
demand, in immediately available funds, the amount equal to such Lender's
Pro Rata Share of each such Agent Advance. If such funds are not made
available to Agent by such Lender, Agent shall be entitled to recover such
funds, on demand from such Lender together with interest thereon, for each
day from the date such payment was due until the date such amount is paid
to Agent, at the Interest Rate.
(b) Lenders hereby irrevocably authorize Agent, at its option
and in its discretion to release any security interest in, mortgage or lien
upon, any of the Collateral (i) upon termination of the Commitments and
payment and satisfaction of all of the Obligations and delivery of cash
collateral to the extent required under Section 13.1 below, or
(ii) constituting property being sold or disposed of if a Borrower
certifies to Agent that the sale or disposition is made in compliance with
Section 9.7 hereof (and Agent may rely conclusively on any such
certificate, without further inquiry), or (iii) constituting property in
which no Borrower owned an interest at the time the security interest,
mortgage or lien was granted or at any time thereafter, or (iv) having a
value of less than $5,000,000 or (v) if approved, authorized or ratified in
writing by the Majority Lenders. Except as provided above, Agent will not
release any security interest in, mortgage or lien upon, any of the
Collateral without the prior written authorization of the Majority Lenders.
Upon request by Agent at any time, Lenders will promptly confirm in writing
Agent's authority to release particular types or items of Collateral
pursuant to this Section 12.13.
(c) Without any manner limiting Agent's authority to act without
any specific or further authorization or consent by the Majority Lenders,
each Lender agrees to confirm in writing, upon request by Agent, the
authority to release Collateral conferred upon Agent under this Section
12.13. Agent shall (and is hereby irrevocably authorized by Lenders to)
execute such documents as may be necessary to evidence the release of the
security interest, mortgage or liens granted to Agent for the benefit of
the Lenders upon any Collateral to the extent set forth above; provided,
that, (i) Agent shall not be required to execute any such document on terms
which, in Agent's opinion, would expose Agent to liability or create any
obligations or entail any consequence other than the release of such
security interest, mortgage or liens without recourse or warranty and
(ii) such release shall not in any manner discharge, affect or impair the
Obligations or any security interest, mortgage or lien upon (or obligations
of any Borrower in respect of) the Collateral retained by such Borrower.
(d) Agent shall have no obligation whatsoever to any Lender or
any other Person to investigate, confirm or assure that the Collateral
exists or is owned by any Borrower or Guarantor or is cared for, protected
or insured or has been encumbered, or that any particular items of
Collateral meet the eligibility criteria applicable in respect of the Loans
or Letter of Credit Accommodations hereunder, or whether any particular
Availability Reserves are appropriate, or that the liens and security
interests granted to Agent herein or pursuant hereto or otherwise have been
properly or sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to exercise at all
or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and
powers granted or available to Agent in this Agreement or in any of the
other Financing Agreements, it being understood and agreed that in respect
of the Collateral, or any act, omission or event related thereto, Agent may
act in any manner it may deem appropriate, in its discretion, given Agent's
own interest in the Collateral as a Lender and that Agent shall have no
duty or liability whatsoever to any other Lender.
12.14 Agency for Perfection. Agent and each Lender hereby appoints
each other Lender as agent for the purpose of perfecting the security
interests in and liens upon the Collateral of Agent for itself and the
ratable benefit of Lenders in assets which, in accordance with Article 9 of
the UCC can be perfected only by possession. Should any Lender obtain
possession of any such Collateral, such Lender shall notify Agent thereof,
and, promptly upon Agent's request therefor shall deliver such Collateral
to Agent or in accordance with Agent's instructions.
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS
13.1 Term.
(a) This Agreement and the other Financing Agreements shall
become effective as of the date of the initial Loans or Letter of Credit
Accommodations hereunder (including such Loans or Letter of Credit
Accommodations arising pursuant to Section 2.5 hereof) and shall continue
in full force and effect for a term ending on the date five (5) years from
the date hereof (the Maturity Date ), unless sooner terminated pursuant to
the terms hereof.
(b) Borrowers may terminate this Agreement and the other
Financing Agreements at any time by giving to Agent and Lenders not less
than ten (10) Business Days prior written notice; provided, that, (i) this
Agreement and all other Financing Agreements must be terminated
simultaneously, (ii) Borrowers shall pay and perform all of the Obligations
as provided in Section 13.1(d) below, and including, without limitation,
the early termination fee provided for in Section 13.1 hereof (to the
extent such termination is effective prior to September 26, 1999), and
(iii) any such notice by Borrowers is irrevocable.
(c) Agent may, at its option, or shall upon the direction or the
Majority Lenders terminate this Agreement and the other Financing
Agreements at any time an Event of Default shall exist or have occurred and
be continuing.
(d) Upon the effective date of termination of the Financing
Agreements, Borrowers shall pay to Agent, for itself and the ratable
benefit of Lenders, in full in cash or other immediately available funds,
all outstanding and unpaid Obligations and shall furnish cash collateral to
Agent, for itself and the ratable benefit of Lenders, in such amounts as
Agent determines are reasonably necessary to secure Agent, for itself and
the ratable benefit of Lenders, from loss, cost, damage or expense,
including attorneys' fees and legal expenses, in connection with any
contingent Obligations, including issued and outstanding Letter of Credit
Accommodations and checks or other payments provisionally credited to the
Obligations and/or as to which Agent or any Lender has not yet received
final and indefeasible payment. Such payments in respect of the
Obligations and cash collateral shall be remitted by wire transfer in
Federal funds to such bank account of Agent, as Lender may, in its
discretion, designate in writing to Borrowers for such purpose. Interest
shall be due until and including the next business day, if the amounts so
paid by Borrowers to the bank account designated by Agent are received in
such bank account later than 12:00 noon, New York City time.
(e) No termination of this Agreement or the other Financing
Agreements shall relieve or discharge any Borrower or Guarantor of its
respective duties, obligations and covenants under this Agreement or the
other Financing Agreements until (i) all Obligations other than the
contingent obligations referred to in subsection (ii) of this Section
13.1(e) have been fully and finally discharged and paid, and Agent's
continuing security interest in the Collateral and the rights and remedies
of Agent and Lenders hereunder, under the other Financing Agreements and
applicable law, shall remain in effect until all such Obligations have been
fully and finally discharged and paid, and (ii) with respect to any
contingent Obligations (including issued and outstanding Letter of Credit
Accommodations and checks or other documents provisionally credited to the
Obligations and/or as to which Agent or any Lender has not yet received
final and indefeasible payment), cash collateral shall have been furnished
to Agent, for itself and ratable benefit of Lenders, in the amounts and in
the manner required under Section 13.1(d) hereof.
(f) If for any reason this Agreement is terminated prior to the
end of the then current term or renewal term of this Agreement, in view of
the impracticality and extreme difficulty of ascertaining actual damages
and by mutual agreement of the parties as to a reasonable calculation of
lost profits of Agent and Lenders as a result thereof, Borrowers agree to
pay to Agent, for itself and the ratable benefit of Lenders, upon the
effective date of such termination, an early termination fee in the amount
set forth below if such termination is effective in the period indicated:
Amount Period
(i) 2% of Maximum Credit From
the date hereof to and including
September 26, 1998.
(ii) 1/2% of Maximum Credit From
September 27, 1998 to and includ
ing September 25, 1999.
Such early termination fee shall be presumed to be the amount of damages
sustained by Agent and Lenders as a result of such early termination and
Borrowers agree that it is reasonable under the circumstances currently
existing. In addition, Agent, for itself and the ratable benefit of
Lenders, shall be entitled to such early termination fee upon the
occurrence of any Event of Default described in Sections 10.1(g) and
10.1(h) hereof, even if Agent and Lenders do not exercise its or their
right to terminate this Agreement, but elects, at its or their option, to
provide financing to Borrowers or permit the use of cash collateral under
the Bankruptcy Code. The early termination fee provided for in this
Section 13.1 shall be deemed included in the Obligations.
(g) In the event that after the Test Period (as defined below)
the Issuing Bank, Lender or Mercantile Bank, National Association (
Mercantile ) do not in any material respect fulfill their respective
obligations in connection with the issuance of Letter of Credit
Accommodations within the applicable time periods for such obligations set
forth in Schedule 13.1 hereto on a consistent basis for a period of more
than ten (10) consecutive days (other than as a result of acts or omissions
of Borrowers or Guarantors), Borrowers may notify Agent and Issuing Bank.
If for a period of thirty (30) consecutive days after the receipt of such
notice by Agent and Issuing Bank, Issuing Bank continues to fail in any
material respect on a consistent basis to fulfill such obligations within
the applicable time periods set forth in Schedule 13.1 hereto Borrowers may
within five (5) Business Days after the end of such period upon thirty (30)
days written notice to Agent terminate this Agreement and the other
Financing Agreements. If Borrowers elect to terminate this Agreement and
the other Financing Agreements pursuant to their rights under this Section
13.1(g), Borrowers shall not be required to pay to Agent the early
termination fee otherwise payable under Section 13.1(f) if each of the
following conditions is satisfied: (i) no Event of Default, or act,
condition or event which with notice or passage of time or both would
constitute an Event of Default, shall exist or have occurred and be
continuing, and (ii) Lender shall have received the full and final
repayment of all of the Obligations and the cash collateral all as provided
in Section 13.1(d) above, within ten (10) days of the written notice from
Borrowers of their election to so terminate this Agreement. As used
herein, the term Test Period shall mean the period of one hundred eighty
(180) days after the Commencement Date as such term is defined in the
Letter of Credit Processing Agreement by and among Agent, the Issuing Bank,
Mercantile and Borrowers.
13.2 Notices. All notices, requests and demands hereunder shall be
in writing and (a) made to Agent and Lenders at their respective addresses
set forth below and to Borrowers at their chief executive office set forth
below, or to such other address as either party may designate by written
notice to the other in accordance with this provision, and (b) deemed to
have been given or made: if delivered in person, immediately upon delivery;
if by telex, telegram or facsimile transmission, immediately upon sending
and upon confirmation of receipt; if by nationally recognized overnight
courier service with instructions to deliver the next Business Day, one (1)
Business Day after sending; and if by certified mail, return receipt
requested, five (5) days after mailing.
13.3 Partial Invalidity. If any provision of this Agreement is held
to be invalid or unenforceable, such invalidity or unenforceability shall
not invalidate this Agreement as a whole, but this Agreement shall be
construed as though it did not contain the particular provision held to be
invalid or unenforceable and the rights and obligations of the parties
shall be construed and enforced only to such extent as shall be permitted
by applicable law.
13.4 Successors. This Agreement, the other Financing Agreements and
any other document referred to herein or therein shall be binding upon and
inure to the benefit of and be enforceable by Borrowers, Guarantors, Agent,
Lenders and their respective permitted successors and assigns, except that
Borrowers may not assign their rights under this Agreement, the other
Financing Agreements and any other document referred to herein or therein
without the prior written consent of Agent and all Lenders. Any such
purported assignment without such express prior written consent shall be
void. No Lender may assign its rights and obligations under this Agreement
without the prior written consent of all Lenders, Agent and Edison (to the
extent provided in Section 13.5 below), except as provided in Section 13.5
below. The terms and provisions of this Agreement and the other Financing
Agreements are for the purpose of defining the relative rights and
obligations of Borrowers, Guarantors, Agent and Lenders with respect to the
transactions contemplated hereby and there shall be no third party
beneficiaries of any of the terms and provisions of this Agreement or any
of the other Financing Agreements.
13.5 Assignments; Participations.
(a) Each Lender may with the written consent of Agent and Edison
(which consent of Edison shall not be unreasonably withheld, conditioned or
delayed), assign to one or more commercial banks or other financial
institutions a portion of its rights and obligations under this Agreement
(including, without limitation, a portion of its Commitment, the Loans
owing to it and its rights and obligations as a Lender with respect to
Letters of Credit Accommodations) and the other Financing Agreements;
provided, that, (i) each such assignment shall be in a principal amount of
not less than $10,000,000 and in multiples of $1,000,000 in excess thereof
(or the remainder of such Lender's Commitment) and (ii) the parties to each
such assignment shall execute and deliver to Agent, for its acceptance and
recording in the Register an Assignment and Acceptance.
(b) Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in each Assignment and
Acceptance, (i) the assignee thereunder shall be a party hereto and to the
other Financing Agreements and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations (including, without limitation,
the obligation to participate in Letter of Credit Accommodations) of a
Lender hereunder and thereunder and (ii) the assigning Lender shall, to the
extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement.
(c) By executing and delivering an Assignment and Acceptance,
the assignor and assignee thereunder confirm to and agree with each other
and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, the assigning Lender makes no
representation or warranty and assumes no responsibility with respect to
any statements, warranties or representations made in or in connection with
this Agreement or any of the other Financing Agreements or the execution,
legality, enforceability, genuineness, sufficiency or value of this
Agreement or any of the other Financing Agreements furnished pursuant
hereto, (ii) the assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of
Borrowers or Guarantors or the performance or observance by Borrowers or
Guarantors of any of the Obligations, (iii) such assignee confirms that it
has received a copy of this Agreement and the other Financing Agreements,
together with such other documents and information it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (iv) such assignee will, independently and
without reliance upon the assigning Lender, the Agent or any other Lender
and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not taking
action under this Agreement and the other Financing Agreements, (v) such
assignee appoints and authorizes Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement and the other
Financing Agreements as are delegated to Agent by the terms hereof and
thereof, together with such powers as are reasonably incidental thereto,
and (vi) such assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement and the
other Financing Agreements are required to be performed by it as a Lender.
Agent and Lenders may furnish any information concerning Borrowers or
Guarantors in the possession of Agent or any Lender from time to time to
assignees and Participants (subject to Section 13.16 hereof).
(d) Agent shall maintain at its address referred to on the
signature page hereto, a copy of each Assignment and Acceptance delivered
to and accepted by it and a register for the recordation of the names and
addresses of Lenders and the Commitment of each Lender from time to time
(the Register ). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and Borrowers, Agent and
Lenders may treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by Borrower and any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by
an assigning Lender and an assignee Lender, Agent shall, if such Assignment
and Acceptance has been completed and is in substantially the form of
Exhibit A hereto, (i) accept such Assignment and Acceptance, (ii) give
prompt notice thereof to Edison and (iii) record the information contained
therein in the Register.
(f) Each Lender may sell participations to one or more banks or
other entities in or to all or a portion of its rights and obligations
under this Agreement and the other Financing Agreements (including, without
limitation, all or a portion of its Commitments and the Loans owing to it
and its participation in the Letter of Credit Accommodations); provided,
that, (i) such Lender's obligations under this Agreement (including,
without limitation, its Commitment hereunder) and the other Financing
Agreements shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, and Borrowers, Agent and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and the other Financing
Agreements, (iii) such sale shall be to a Lender, or an Affiliate of a
Lender or a commercial bank or other financial institution which has,
together with its Affiliates, combined capital surplus and undivided
profits of not less than $100,000,000, (iv) each of Congress and CIT shall
at all times hold an interest for its own respective account of not less
than $25,000,000 in the rights and obligations under this Agreement and the
other Financing Agreements, and (v) at any one time there shall not be more
than ten (10) Participants hereunder. Each Participant shall have the
rights of a Lender (including any right to receive payment) under Section
3.7 hereof to the extent of such Participant's interest; provided, that all
requests for any such payments shall be made by Participant through the
Lender granting such participation. The right of each Participant to
receive payment under Section 3.7 hereof shall be limited to the lesser of
(i) the amounts actually incurred by such Participant for which payment is
provided under such Section and (ii) the amounts that would have been
payable under such Section by Borrowers to the Lender granting the
participation to such Participant had such participation not been granted
(to the extent of such Participant's interest). Each Lender shall inform
Agent of the Persons who have purchased such participations and upon
Borrowers' request, Agent shall inform Borrowers of the names of the
Persons who as of the date of such request have purchased participations in
the Loans.
13.6 Confidentiality. Each Lender agrees to take normal and
reasonable precautions and exercise due care to maintain the
confidentiality of all information identified as confidential by
Borrowers to such Lender and provided to it by any Borrower or Guarantor,
or by Agent on such Borrower's or Guarantor's behalf, in connection with
this Agreement or any of the other Financing Agreements, and neither it nor
any of its Affiliates shall use any such information for any purpose or in
any manner other than for purposes of this Agreement; except to the extent
that any Borrower or Guarantor consents in writing to such disclosure or
that such information (a) was or becomes generally available to the public
other than as a result of a disclosure by Agent or any Lender, or (b) was
or becomes available on a non-confidential basis from a source other than
any Borrower or Guarantor, provided that such source is not bound by a
written confidentiality agreement with such Borrower or Guarantor actually
known to Agent or such Lender, or (c) was available to Agent or such Lender
on a non-confidential basis prior to its disclosure to Agent or such Lender
by any Borrower or Guarantor; provided, that, Agent and any Lender may
disclose such information (i) at the request or pursuant to any requirement
of any Governmental Authority to which Agent or such Lender is subject,
(ii) pursuant to subpoena or other similar legal process (provided, that,
Lenders shall make reasonable efforts (if permitted under applicable law)
to give Edison prompt written notice of such subpoena or requirement and
shall make such disclosure only to the extent it is advised by counsel that
such disclosure is necessary under applicable law or to avoid any
liability), (iii) when required to do so in accordance with the provisions
of any applicable requirement of law (provided, that, Lenders shall make
reasonable efforts (if permitted under applicable law) to give Edison
prompt written notice of such requirement and shall make such disclosure
only to the extent it is advised by counsel that such disclosure is
necessary under applicable law or to avoid any liability); (iv) to the
extent reasonably required in connection with any litigation or proceeding
to which Agent, any Lender or their respective Affiliates may be party
(provided, that, Lenders shall make reasonable efforts (if permitted under
applicable law) to give Edison prompt written notice of any subpoena or
requirement and shall make such disclosure only to the extent it is advised
by counsel that such disclosure is necessary under applicable law or to
avoid any liability); (v) to the extent reasonably required in connection
with the exercise of any remedy hereunder or under any of the other
Financing Agreements; and (vi) to such Person's outside auditors, counsel,
consultants, appraisers and other professional advisors, subject to the
provisions of this Section 13.6, (vii) to any assignee or Participant (or
prospective assignee or Participant) so long as such assignee or
Participant (or prospective assignee or Participant) shall have first
agreed to treat such information as confidential in accordance with this
Section 13.6, (viii) to counsel for Agent or such Lender, or (ix) to
counsel for any Participant or assignee (or prospective Participant or
assignee), so long as such counsel shall have first agreed to treat such
information as confidential in accordance with this Section 13.6. In no
event shall this Section 13.6 or any other provision of this Agreement or
applicable law be deemed to require Agent or any Lender to return any
materials furnished by any Borrower or Guarantor to Agent or such Lender or
to prevent Agent or such Lender from responding to routine informational
requests in accordance with its customary practices as then in effect. The
obligations of Agent and Lenders under this Section 13.6 shall supersede
and replace the obligations of Agent and Lenders under any confidentiality
letter signed prior to the date hereof.
13.7 Entire Agreement. This Agreement, the other Financing
Agreements, any supplements hereto or thereto, and any instruments or
documents delivered or to be delivered in connection herewith or therewith
represents the entire agreement and understanding concerning the subject
matter hereof and thereof between the parties hereto, and supersede all
other prior agreements, understandings, negotiations and discussions,
representations, warranties, commitments, proposals, offers and contracts
concerning the subject matter hereof, whether oral or written.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, Agent, Co-Agent, Lenders, Borrowers and Guarantors
have caused these presents to be duly executed as of the day and year first
above written.
AGENT
CONGRESS FINANCIAL CORPORATION,
as Agent
By: /S/
Title:
Address:
1133 Avenue of the Americas
New York, New York 10036
CO-AGENT
THE CIT GROUP/BUSINESS CREDIT, INC.
By: /S/
Title:
Address:
1211 Avenue of the Americas
New York, New York 10036
BORROWERS
EDISON BROTHERS STORES, INC.
By: /S/
Title:
Chief Executive Office:
501 North Broadway
St. Louis, Missouri 63178
EDISON BROTHERS APPAREL
STORES, INC.
By: /S/
Title:
Chief Executive Office:
501 North Broadway
St. Louis, Missouri 63178
EDISON PUERTO RICO STORES, INC.
By: /S/
Title:
Chief Executive Office:
501 North Broadway
St. Louis, Missouri 63178
LENDERS
CONGRESS FINANCIAL CORPORATION
By: /S/
Title:
Address:
1133 Avenue of the Americas
New York, New York 10036
Commitment:
$100,000,000 THE CIT GROUP/BUSINESS CREDIT, INC.
By: /S/
Title:
Address:
1211 Avenue of the Americas
New York, New York 10036
Commitment:
$100,000,000
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
GUARANTORS
EDISON PAYMASTER, INC.
EDBRO MISSOURI REALTY, INC.
EDISON KANSAS STORES, INC.
EDISON KENTUCKY STORES, INC.
EDISON NEW YORK STORES, INC.
EDISON OHIO STORES, INC.
EDISON PENNSYLVANIA STORES, INC.
EDISON TEXAS STORES, INC.
EDISON UTAH STORES, INC.
EDBRO OHIO REALTY, INC.
EBSS-KANSAS, INC.
EBSS-EAST, INC.
EBSS-OHIO, INC.
EBSS-PENNSYLVANIA, INC.
EBSS-TEXAS, INC.
EBSS-WEST, INC.
EDISON BROTHERS STORES INTERNATIONAL, INC.
EDISON WHITTIER WAREHOUSE, INC.
EDBRO CALIFORNIA USG - 2, INC.
EDBRO CALIFORNIA USG - 1, INC.
WEBSTER CLOTHES, INC.
Z & Z FASHIONS, LTD.
TIME-OUT FAMILY AMUSEMENT CENTERS, INC.
TOFAC OF PUERTO RICO, INC.
SACHA SHOES LTD.
MANDEL'S OF CALIFORNIA
By:
Title:
EDISON INDIANA, LLC
By: EDISON BROTHERS APPAREL STORES, INC., its Manager
By:
Title:
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
EDISON BROTHERS STORES, INC.
EDISON BROTHERS STORES, INC., a corporation duly incorporated by
the filing of its original Certificate of Incorporation (the Original
Certificate of Incorporation ) with the Secretary of State of the State of
Delaware on March 13, 1929 (the Company ), desiring to amend and restate
said Original Certificate of Incorporation, as amended, and such amended
and restated Certificate of Incorporation having been duly adopted in
accordance with Sections 242, 245 and 303 of the General Corporation Law of
the State of Delaware, hereby certifies as follows:
1. This Amended and Restated Certificate of Incorporation
amends and restates the Original Certificate of Incorporation of the
Company, as heretofore amended, and has been duly adopted in accordance
with Sections 242, 245 and 303 of the General Corporation Law of the State
of Delaware, as amended (the DGCL ), pursuant to the authority granted to
the Company under Section 303 of the DGCL to put into effect and carry out
the Debtors' Amended Joint Plan of Reorganization under Chapter 11 of title
11 of the United States Code (the Bankruptcy Code ) for the Company, et
al. (the Plan ), as confirmed on September 9, 1997 by order of the United
States Bankruptcy Court for the District of Delaware (the Bankruptcy Court
). The Company's Chapter 11 case was commenced by a bankruptcy filing on
November 3, 1995. Provision for the making of this Amended and Restated
Certificate of Incorporation is contained in the order of the Bankruptcy
Court having jurisdiction under the Bankruptcy Code for the reorganization
of the Company.
2. The Original Certificate of Incorporation, as heretofore
amended, is hereby further amended and restated to read in its entirety as
follows:
FIRST: The name of the corporation is EDISON BROTHERS STORES,
INC. (the Company ).
SECOND: The address of the registered office of the Company in
the State of Delaware is 1013 Centre Road, in the City of Wilmington,
County of New Castle, Delaware 19805. The registered agent for the Company
at such address is Corporation Service Company.
THIRD: The nature of business and purpose of the Company is to
engage in any lawful act or activity for which corporations may be
organized under the Delaware General Corporation Law, as amended (the DGCL
).
FOURTH: The total number of shares of all classes of capital
stock which the Company shall have authority to issue is 110,000,000
shares, consisting of:
(i) 100,000,000 shares of Common Stock, par
value $0.01 per share (the Common Stock ); and
(ii) 10,000,000 shares of Preferred Stock,
par value $0.01 per share (the Preferred Stock ).
Except as otherwise provided by law, the shares of capital stock
of the Company, regardless of class, may be issued by the Company from time
to time in such amounts, for such lawful consideration and for such
corporate purpose(s) as the Board of Directors may from time to time
determine.
Subject to the laws of the State of Delaware and to the
limitations set forth below, authority is hereby vested in the Board of
Directors of the Company to issue said ten million (10,000,000) shares of
Preferred Stock from time to time in one or more series, with such
designations, voting powers, preferences and relative, participating,
optional and other rights, and such qualifications, limitations or
restrictions thereof, as shall be stated in the resolution or resolutions
providing for the issuance of such stock adopted by the Board of Directors.
Without limiting the generality of the foregoing, in the resolution or
resolutions providing for the issuance of each particular series of
Preferred Stock, the Board of Directors is expressly authorized:
(a) to fix the distinctive serial designation of the shares of any
such series;
(b) to fix the consideration for which the shares of any such series
are to be issued;
(c) to fix the rate per annum, if any, at which the holders of the
shares of any such series shall be entitled to receive dividends, the dates
on which such dividends shall be payable, whether the dividends shall be
cumulative or noncumulative, and if cumulative, the date or dates from
which such dividends shall be cumulative;
(d) to fix the price or prices at which, the times during which, and
the other terms, if any, upon which the shares of any such series may be
redeemed;
(e) to fix the rights, if any, which the holders of shares of any
such series shall have in the event of a dissolution or upon distribution
of the assets of the Company;
(f) to determine whether the shares of any such series shall be made
convertible into or exchangeable for other securities of the Company,
including shares of the Common Stock of the Company or shares of any other
series of the Preferred Stock of the Company, now or hereafter authorized,
or any new class of stock of the Company hereafter authorized, the price or
prices or the rate or rates at which such conversion or exchange may be
made, and the terms and conditions upon which any such conversion right or
exchange right may be exercised;
(g) to determine whether a sinking fund shall be provided for the
purchase or redemption of shares of such series and, if so, to fix the
terms and amount of such sinking fund;
(h) to determine (subject to Article EIGHTH hereof) whether the
shares of any such series shall have voting rights, and, if so, to fix the
voting rights of the shares of such series, provided, however, that the
holders of shares of Preferred Stock shall not be entitled to more than one
vote per share when voting as a class with the holders of shares of Common
Stock; and
(i) to fix such other preferences, rights, privileges and
restrictions applicable to any such series as may be permitted by law.
Subject to the prior rights of the holders of any shares of
Preferred Stock, the holders of the Common Stock shall be entitled to
receive, to the extent permitted by law, such dividends as may be declared
from time to time by the Board of Directors.
Subject to the provisions of applicable law and the Company's
Bylaws with respect to the closing of the transfer books or the fixing of a
record date for the determination of stockholders entitled to vote, the
holders of outstanding shares of capital stock of the Company shall
exclusively possess the voting power for the election of directors of the
Company and for all other purposes as prescribed by applicable law, with
each holder of record of shares of Common Stock having voting power being
entitled to one vote for each share of Common Stock registered in his or
its name on the books, registers and/or accounts of the Company.
FIFTH: A director of the Company shall not be personally
liable either to the Company or to any stockholder for monetary damages for
breach of fiduciary duty as a director, except (i) for any breach of the
director's duty of loyalty to the Company or its stockholders, or (ii) for
acts or omissions which are not taken or omitted to be taken in good faith
or which involve intentional misconduct or knowing violation of the law, or
(iii) for any matter in respect of which such director would be liable
under Section 174 of the DGCL or any amendment or successor provision
thereto, or (iv) for any transaction from which the director shall have
derived an improper personal benefit. Neither the amendment nor the repeal
of this Article FIFTH nor the adoption of any provision of this Amended and
Restated Certificate of Incorporation inconsistent with this Article FIFTH
shall eliminate or reduce the effect of this Article FIFTH in respect of
any matter occurring, or any cause of action, suit or claim that, but for
this Article FIFTH, would accrue or arise prior to such amendment, repeal
or adoption of an inconsistent provision.
The Company shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director or an
officer of the Company at any time after the Effective Time against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding to the fullest extent and in the manner set
forth in and permitted by the DGCL, and any other applicable law, as from
time to time in effect. Such right of indemnification shall not be deemed
exclusive of any other rights to which such director or officer may be
entitled apart from the foregoing provisions. The foregoing provisions
shall be deemed to be a contract between the Company and each director and
officer who serves in such capacity at any time while this Article FIFTH
and the relevant provisions of the DGCL and other applicable law, if any,
are in effect, and any repeal or modification thereof shall not affect any
rights or obligations then existing with respect to any state of facts then
or theretofore existing or any action then or theretofore brought or
threatened based in whole or in part upon any such state of facts.
The Company may indemnify any person who was or is threatened to
be made a party to any threatened pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he is or was an employee or agent of the Company
after the Effective Time, or is or was serving at the request of the
Company, as a director, officer, employee or agent after the Effective Time
of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding to the extent and in the
manner set forth in and permitted by the DGCL, and any other applicable
law, as from time to time in effect. Such right of indemnification shall
not be deemed exclusive of any other rights to which any such person may be
entitled apart from the foregoing provisions.
SIXTH: Notwithstanding Section 228(a) of the DGCL, any action
required or permitted to be taken by the stockholders of the Company must
be effected at a duly called annual or special meeting of such stockholders
and may not be effected by any consent in writing by such stockholders.
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 stockholders
of the Company 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, and shall be called by the
President or Secretary upon the written request of the holders of at least
51% of the outstanding shares of Common Stock.
SEVENTH: At the Effective Time, the number of directors
constituting the entire Board of Directors shall be not more than nine (9).
After the Effective Time, the number of directors constituting the entire
Board of Directors shall be fixed by, or in the manner provided in, the
Company's Bylaws. Election of directors need not be by written ballot.
EIGHTH: Notwithstanding any other provision contained herein,
the Company, as a Debtor (as defined in the Plan referred to below) under
the Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy
Code for the Company et al., as confirmed on September 9, 1997 (the Plan
), shall not issue nonvoting equity securities in connection with the Plan
and shall comply, to the extent applicable, with Section 1123(a)(6) of the
Bankruptcy Code of 1978, as amended. This Article EIGHTH shall not be
amended or repealed prior to 180 days after the Effective Time; provided
that after the expiration of such 180-day period, this Article EIGHTH may
be amended or repealed by the affirmative vote of a majority of the
outstanding stock entitled to vote thereon in accordance with Section 242
of the DGCL.
* * * *
3. At the Effective Time, as contemplated by the Plan, each
share of the Company's old common stock, par value $1.00 per share,
outstanding immediately prior to the Effective Time, shall, without any
further action on the part of the Company or of any holder of stock of the
Company, be cancelled and cease to represent any ownership interest in the
Company, and new fully paid and nonassessable shares of the Common Stock
will be issued pursuant to the Plan.
4. This Amended and Restated Certificate of Incorporation shall
become effective at 10:00 a.m., Delaware time, on September 26, 1997 (the
Effective Time ), and shall not become effective until such time.
IN WITNESS WHEREOF, Edison Brothers Stores, Inc. has caused its
corporate seal to be hereunto affixed and this certificate to be signed by
Alan D. Miller, its Chairman of the Board, President and Chief Executive
Officer, and attested to by Alan A. Sachs, its Executive Vice President,
General Counsel and Secretary, as of September 25, 1997.
EDISON BROTHERS STORES, INC.
By: __/S/_________________________
Alan D. Miller
Chairman of the
Board, President and Chief Executive Officer
Attest:
Alan A. Sachs
Executive Vice President, General
Counsel and Secretary
Edison Brothers Stores, Inc.
and
The Bank of New York,
Trustee
First Supplemental Trust Indenture
Dated as of September 26, 1997
Supplementing that certain
INDENTURE
Dated as of September 26, 1997
Authorizing the Issuance and Delivery of
Debt Securities
consisting of $120,000,000 aggregate principal amount
of 11% Senior Notes due 2007
TABLE OF CONTENTS
There are TWO table of contents in this document. When you generate the
ToC, it places the contents of the entire document in both of the table of
contents. You have the delete the portion not wanted from each ToC.
Page
RECITALS 1
[Form of Face of Security] 2
[Form of Reverse of Security] 4
ARTICLE I. ISSUANCE OF SENIOR NOTES 8
Section 1.1. Issuance of Senior Notes; Principal
Amount; Maturity 8
Section 1.2.Interest on the Senior Notes; Payment
of Interest 8
ARTICLE II. CERTAIN DEFINITIONS 9
Section 2.1 Certain Definitions 9
ARTICLE III. CERTAIN COVENANTS 16
Section 3.1. Indebtedness 16
Section 3.2. Liens 16
Section 3.3. Restricted Payments 17
Section 3.4. Change of Control 18
Section 3.5. Payment Restrictions Affecting
Subsidiaries 20
Section 3.6. Issuance of Subsidiary Preferred
Stock 20
Section 3.7. Asset Sales 20
Section 3.8. Transactions with Affiliates 21
Section 3.9. Sale and Leaseback Transactions 22
ARTICLE IV. ADDITIONAL EVENTS OF DEFAULT. 22
Section 4.1. Additional Events of Default 22
ARTICLE V. REDEMPTION OF SECURITIES 22
Section 5.1. Right of Redemption 22
Section 5.2. Repurchase 22
ARTICLE VI. DEFEASANCE. 23
Section 6.1. Applicability of Article V of the
Indenture. 23
ARTICLE VII. MISCELLANEOUS 23
Section 7.1. Reference to and Effect on the
Indenture 23
Section 7.2. Waiver of Certain Covenants. 23
Section 7.3. Supplemental Indenture May be
Executed in Counterparts. 23
FIRST SUPPLEMENTAL INDENTURE, dated as of September 26, 1997 (this
First Supplemental Indenture ), between Edison Brothers Stores, Inc., a
corporation duly organized and existing under the laws of the State of
Delaware (the Company ), and The Bank of New York, a New York banking
corporation, as Trustee (the Trustee ), supplementing that certain
Indenture, dated as of September 26, 1997, between the Company and the
Trustee (the Indenture ).FooterA
RECITALS
A. The Company has duly authorized the execution and delivery of the
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes and/or other unsecured evidences of indebtedness (the
Securities ) to be issued in one or more series as provided for in the
Indenture.
B. The Indenture provides that the Securities of each series shall
be in such form as may be established by or pursuant to a Board Resolution
or in one or more indentures supplemental thereto, and may have such
letters, numbers, or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of
any securities exchange or as may, consistently herewith, be determined by
the officers executing such Securities, as evidenced by their execution
thereof.
C. The Company and the Trustee have agreed that the Company shall
issue and deliver, and the Trustee shall authenticate, Securities
denominated 11% Senior Notes due 2007 (the Senior Notes ) pursuant to
the terms of this First Supplemental Indenture and substantially in the
form set forth below, in each case with such appropriate insertions,
omissions, substitutions, and other variations as are required or permitted
by the Indenture and this First Supplemental Indenture, and with such
letters, numbers, or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of
any securities exchange or as may, consistently herewith, be determined by
the officers executing such Senior Notes, as evidenced by their execution
thereof.
[Form of Face of Security]
EDISON BROTHERS STORES, INC.
11% SENIOR NOTE DUE 2007
No. R-__________ $__________________
CUSIP No.
EDISON BROTHERS STORES, INC., a corporation duly organized and
existing under the laws of the State of Delaware (hereinafter called the
Company, which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
_______________, or registered assigns, the principal sum of $__________ on
September 26, 2007, subject to earlier redemption or repurchase as
described below, and to pay interest thereon from July 31, 1997, or from
the most recent Interest Payment Date to which interest has been paid or
duly provided for, at the rate of 11% per annum, payable semiannually on
January 31 and July 31 of each year, commencing on January 31, 1998, until
the principal hereof is paid or made available for payment. The interest
so payable, and punctually paid or duly provided for, on any Interest
Payment Date shall, as provided in said Indenture, be computed on the basis
of a 360-day year consisting of twelve 30-day months and paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the January 15 or July 15 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment
Date. Any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such Regular Record Date and
may either be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed
by the Trustee, notice whereof shall be given to Holders of Securities of
this series not less than 10 calendar days prior to such Special Record
Date, or be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Securities of
this series may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in said Indenture.
Payment of the principal of and any such interest on this Security
shall be made at the office or agency of the Company maintained for such
purpose in New York, New York, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts; provided, however, that at the option of the
Company payment of interest may be made by check mailed to the address of
the Person entitled thereto as such address appears in the Security
Register.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS SET FORTH ON THE
REVERSE HEREOF. SUCH PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME
EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Security shall not be valid or become obligatory for any purpose
until the certificate of authentication herein has been signed manually by
the Trustee under said Indenture.
IN WITNESS WHEREOF, this instrument has been duly executed in
accordance with the Indenture.
EDISON BROTHERS STORES, INC.
By:
Name:
Attest: Title:
By:
[Form of Reverse of Security]
EDISON BROTHERS STORES, INC.
This Security is one of a duly authorized issue of securities of the
Company (herein called the Securities ) issued and to be issued in one or
more series under an Indenture, dated as of September 26, 1997 (herein
called the Indenture ), between the Company and The Bank of New York, as
Trustee (herein called the Trustee, which term includes any successor
trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties, and immunities thereunder
of the Company, the Trustee, and the Holders of the Securities and of the
terms upon which the Securities are, and are to be, authenticated and
delivered. This Security is one of the series designated on the face
hereof, limited in aggregate principal amount to $120,000,000.
No sinking fund is provided for the Securities. The Securities are
subject to redemption at the option of the Company, at any time and from
time to time, in whole or in part, in increments of not less than $5.0
million, upon not more than 60 nor less than 30 days' notice to the Holders
prior to the Redemption Date, at the following Redemption Prices (expressed
as percentages of the principal amount): If redeemed on or before June 30,
1998, 100%, and if redeemed during the 12-month period beginning on July 1
of the years indicated:
Year Redemption Price
1998 104%
1999 103%
2000 102%
2001 101%
2002 and thereafter 100%,
together, in the case of any such redemption, with accrued and unpaid
interest to the date of redemption.
If less than all of the Securities are to be redeemed, the particular
Securities or portions thereof to be redeemed will be selected by such
method as the Trustee may deem fair and appropriate. In the event of the
redemption of this Security in part only, a new Security or Securities of
this series and of like tenor for the portion hereof not so redeemed shall
be issued in the name of the Holder hereof upon the cancellation hereof.
Upon the occurrence of a Change of Control, the Company is required to
repurchase the Securities, at the option of the Holders thereof, at a
purchase price equal to 101% of the outstanding principal amount thereof,
together in the case of any such purchase with accrued and unpaid interest
to the Repurchase Date, but interest installments with a Stated Maturity on
or prior to such Repurchase Date shall be payable to the Holders of such
Securities of record at the close of business on the relevant Regular
Record Dates referred to on the face hereof all as provided in the
Indenture. In the event of the repurchase of this Security in part only, a
new Security or Securities of this series of like tenor for the portion
hereof not so repurchased shall be issued in the name of the Holder hereof
upon the cancellation hereof.
The Indenture contains provisions for defeasance at any time of (a)
the entire indebtedness evidenced by this Security or (b) certain
restrictive covenants and Events of Default with respect to this Security,
in each case upon compliance with certain conditions set forth in the
Indenture.
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may
be declared due and payable in the manner and with the effect provided in
the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of
the Company and the rights of the Holders of the Securities of each series
to be affected under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of a majority in principal amount
of the Securities at the time Outstanding of each series to be affected.
The Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities of each series at the
time Outstanding, on behalf of the Holders of all Securities of such
series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Security
shall be conclusive and binding upon such Holder and upon all future
Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any
proceeding with respect to the Indenture or for the appointment of a
receiver or trustee or for any other remedy thereunder unless such Holder
shall have previously given the Trustee written notice of a continuing
Event of Default with respect to the Securities of this series, the Holders
of not less than 25% in principal amount of the Securities of this series
at the time Outstanding shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default as Trustee and
offered the Trustee reasonable indemnity, the Trustee shall not have
received from the Holders of a majority in principal amount of Securities
of this series at the time Outstanding a direction inconsistent with such
request and the Trustee shall have failed to institute such proceeding for
60 calendar days after receipt of such notice, request, and offer of
indemnity. However, the foregoing shall not apply to any suit instituted
by the Holder of this Security for the enforcement of any payment of
principal hereof or interest hereon on or after the respective due dates
therefor expressed herein.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and any
premium or interest on this Security at the times, place, and rate, and in
the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registerable in the
Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in any place where the
principal of and interest on this Security are payable, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to
the Company and the Security Registrar duly executed by, the Holder hereof
or his attorney duly authorized in writing, and thereupon one or more new
Securities of this series and of like tenor, of authorized denominations
and for the same aggregate principal amount, shall be issued to the
designated transferee or transferees.
The Securities of this series are issuable only in registered form
without coupons in denominations of $1,000 and integral multiples thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate
principal amount of Securities of this series and of like tenor of a
different authorized denomination, as requested by the Holder surrendering
the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee, and any agent of the Company or the
Trustee may treat the Person in whose name this Security is registered as
the owner hereof for all purposes, whether or not this Security shall be
overdue, and neither the Company, the Trustee, nor any such agent shall be
affected by notice to the contrary.
All terms used in this Security that are defined in the Indenture
shall have the respective meanings assigned to them in the Indenture. This
Security and the Indenture shall be construed in accordance with the laws
of the State of New York without giving effect to principles of conflict of
laws of such State.
D. The Trustee's certificate of authentication shall be in
substantially the following form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
Dated: The Bank of New York, as Trustee
By:
Authorized Signatory
E. All acts and things necessary to make the Senior Notes, when the
Senior Notes have been executed by the Company and authenticated by the
Trustee and delivered as provided in the Indenture and this First
Supplemental Indenture, the valid, binding, and legal obligations of the
Company and to constitute these presents a valid indenture and agreement
according to its terms, have been done and performed, and the execution and
delivery by the Company of the Indenture and this First Supplemental
Indenture and the issue hereunder of the Senior Notes have in all respects
been duly authorized; and the Company, in the exercise of legal right and
power in it vested, has executed and delivered the Indenture and is
executing and delivering this First Supplemental Indenture and proposes to
make, execute, issue, and deliver the Senior Notes.
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
In order to declare the terms and conditions upon which the Senior
Notes are authenticated, issued, and delivered, and in consideration of the
premises and of the purchase and acceptance of the Senior Notes by the
Holders thereof, it is mutually agreed, for the equal and proportionate
benefit of the respective Holders from time to time of the Senior Notes, as
follows:
ARTICLE I. ISSUANCE OF SENIOR NOTES.
Section I.1. Issuance of Senior Notes; Principal Amount; Maturity.
(a) On the Initial Distribution Date (as defined in the Plan), the
Company shall issue and deliver to the Trustee, and the Trustee shall
authenticate, Senior Notes substantially in the form set forth above, in
each case with such appropriate insertions, omissions, substitutions, and
other variations as are required or permitted by the Indenture and this
First Supplemental Indenture, and with such letters, numbers, or other
marks of identification and such legends or endorsements placed thereon as
may be required to comply with the rules of any securities exchange or as
may, consistently herewith, be determined by the officers executing such
Senior Notes, as evidenced by their execution thereof.
(b) The Senior Notes shall be issued in the aggregate principal
amount of $120,000,000 and shall mature on September 26, 2007.
Section I.2. Interest on the Senior Notes; Payment of Interest.
(a) The Senior Notes shall bear interest at the rate of 11% per annum
from July 31, 1997, or, if later, from the most recent Interest Payment
Date to which interest has been paid or duly provided for.
(b) The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date shall, as provided in the Indenture, be
paid to the Person in whose name a Senior Note (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record
Date for such interest, which shall be the January 15 or July 15 (whether
or not a Business Day), as the case may be, next preceding such Interest
Payment Date. Any such interest not so punctually paid or duly provided
for shall forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name the Senior
Note (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof shall be given to
Holders of Securities of this series not less than 10 calendar days prior
to such Special Record Date, or be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Securities of this series may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in the
Indenture.
(c) Payment of the principal of and any such interest on the Senior
Notes shall be made at the office or agency of the Company maintained for
such purpose in New York, New York, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts; provided, however, that at the option of the
Company payment of interest may be made by check mailed to the address of
the Person entitled thereto as such address appears in the Security
Register.
ARTICLE II. CERTAIN DEFINITIONS.
Section II.1. Certain Definitions.
The terms defined in this Section 2.1 (except as herein otherwise
expressly provided or unless the context of this First Supplemental
Indenture otherwise requires) for all purposes of this First Supplemental
Indenture and of any indenture supplemental hereto have the respective
meanings specified in this Section 2.1. All accounting terms not otherwise
defined herein have the meanings assigned to them in accordance with GAAP.
All other terms used in this First Supplemental Indenture that are defined
in the Indenture or the Trust Indenture Act, either directly or by
reference therein (except as herein otherwise expressly provided or unless
the context of this First Supplemental Indenture otherwise requires), have
the respective meanings assigned to such terms in the Indenture or the
Trust Indenture Act, as the case may be, as in force at the date of this
First Supplemental Indenture as originally executed.
Affiliate has the meaning ascribed thereto in Section 3.8.
Bank Facilities means the $200 million credit facility of the
Company and certain of its subsidiaries, and the agreements, instruments
and other documents governing such facility, including the Loan and
Security Agreement dated as of September 26, 1997 ( Loan and Security
Agreement ) among the Company, Edison Brothers Apparel Stores, Inc., a
Missouri corporation, Edison Puerto Rico Stores, Inc., a Puerto Rico
corporation, the other persons signatories thereto as guarantors, the
financial institutions from time to time parties thereto as lenders,
Congress Financial Corporation, a California corporation, in its capacity
as administrative agent and collateral agent for such lenders, and The CIT
Group/Business Credit, Inc., a New York corporation, in its capacity as co-
agent for such lenders, as the same may be amended, supplemented, or
otherwise modified from time to time.
Cash Equivalent means: (a) obligations issued or unconditionally
guaranteed as to principal and interest by the United States of America or
by any agency or authority controlled or supervised by and acting as an
instrumentality of the United States of America; (b) obligations
(including, but not limited to, demand or time deposits, bankers'
acceptances, and certificates of deposit) issued by a depository
institution or trust company or a wholly owned Subsidiary of the Company or
branch office of any depository institution or trust company, provided that
(i) such depository institution or trust company has, at the time of the
Company's or any of its Subsidiaries' investment therein or contractual
commitment providing for such investment, capital, surplus, or undivided
profits (as of the date of such institution's most recently published
financial statements) in excess of $100.0 million and (ii) the commercial
paper of such depository institution or trust company, at the time of the
Company's or any of its Subsidiaries' investment therein or contractual
commitment providing for such investment, is rated at least A1 by S&P or
P-1 by Moody's; (c) debt obligations (including, but not limited to,
commercial paper and medium term notes) issued or unconditionally
guaranteed as to principal and interest by any corporation, state or
municipal government or agency or instrumentality thereof, or foreign
sovereignty, if the commercial paper of such corporation, state or
municipal government or foreign sovereignty, at the time of the Company's
or any of its Subsidiaries' investment therein or contractual commitment
providing for such investment, is rated at least A1 by S&P or P-1 by
Moody's; (d) repurchase obligations with a term of not more than seven
calendar days for underlying securities of the type described above entered
into with a depository institution or trust company meeting the
qualifications described in clause (b) above; and (e) Investments in money
market or mutual funds that invest predominantly in Cash Equivalents of the
type described in clauses (a), (b), (c), and (d) above; provided, however,
that, in the case of clause (a) above, each such investment has a maturity
of 762 days or less from the date of acquisition thereof, and, in the case
of clauses (b) and (c) above, each such investment has a maturity of 397
days or less from the date of acquisition thereof.
Change of Control means the occurrence of any of the following
events: (a) any person (other than an Exempt Person) or group (other
than a group that includes at least one Exempt Person to whom or which more
than 300,000 shares of Common Stock of the Company shall be distributable
and/or shall have been distributed pursuant to the Plan or at least one
Person who or which directly or indirectly controls, is directly or
indirectly controlled by, or is under direct or indirect common control
with, such an Exempt Person) (as the terms person and group are used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the beneficial
owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, of more than 50% of the total voting power of all
classes of stock entitled to vote generally in the election of directors of
the Company ( Voting Stock ); (b) the Company consolidates with, or merges
with or into, another Person or sells, assigns, conveys, transfers, leases,
or otherwise disposes of all or substantially all of its assets to any
Person, in any such event pursuant to a transaction in which the
outstanding Voting Stock is converted into or exchanged for cash,
securities, or other property, and immediately after such transaction, any
person (other than an Exempt Person) or group (other than a group that
includes at least one Exempt Person to whom or which more than 300,000
shares of Common Stock of the Company shall be distributable and/or shall
have been distributed pursuant to the Plan or at least one Person who or
which directly or indirectly controls, is directly or indirectly controlled
by, or is under direct or indirect common control with, such an Exempt
Person) (as the terms person and group are used in Sections 13(d) and
14(d) of the Exchange Act) is or becomes the beneficial owner (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly,
of more than 50% of the total voting power of all classes of Voting Stock
(or, if the Person surviving or resulting from such transaction or
acquiring such assets is not the Company, of more than 50% of the total
voting power of the equity interests in such Person that are most analogous
to Voting Stock); (c) during any consecutive two-year period, individuals
who at the beginning of such period constituted the Board of Directors
(together with any new directors whose election by such Board of Directors
or whose nomination for election by the stockholders of the Company was
approved by a vote of a majority of the directors then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors then in office; or (d) the
dissolution or liquidation of the Company (to the extent that such
dissolution or liquidation does not constitute an Event of Default with
respect to the Senior Notes).
EBS Building, L.L.C. has the meaning ascribed thereto in the Plan.
EBS Litigation, L.L.C. has the meaning ascribed thereto in the Plan.
EBS Pension, L.L.C. has the meaning ascribed thereto in the Plan.
Effective Date means September 26, 1997.
Excess Sale Proceeds has the meaning ascribed thereto in Section
3.7(a).
Exempt Person means (a) any Person to whom or which shares of Common
Stock of the Company are distributed pursuant to the Plan and (b) any
Person who or which directly or indirectly controls, is directly or
indirectly controlled by, or is under direct or indirect common control
with, any Person to whom or which shares of Common Stock of the Company are
distributed pursuant to the Plan.
Interest Coverage Ratio means the ratio of (a) the sum of (i) net
income (other than net income of any Subsidiary of the Company during a
period in which such Subsidiary is prohibited from paying dividends
pursuant to any provision referred to in clause (ii), (iii), or (iv) of
Section 3.5 hereof), (ii) net interest expense, (iii) cash dividends with
respect to redeemable preferred stock (to the extent deducted from net
income and not included in net interest expense in accordance with GAAP),
(iv) income tax expense, (v) depreciation expense, (vi) amortization
expense, and (vii) the net amount, which may be less than zero, of
extraordinary or unusual losses, minus extraordinary or unusual gains, of
the Company and its Subsidiaries on a consolidated basis, to (b) net
interest expense, plus cash dividends with respect to redeemable preferred
stock (to the extent deducted from net income and not included in net
interest expense in accordance with GAAP), of the Company and its
Subsidiaries on a consolidated basis, all as determined in accordance with
GAAP (or, in respect of the net income of any Subsidiary of the Company for
purposes of the parenthetical in clause (a)(i) above, the normal accounting
practices of such Subsidiary as in effect from time to time), for the four
most recently completed fiscal quarters of the Company.
Investment means, with respect to any Person, any direct or indirect
loan or other extension of credit or capital contribution to (by means of
any transfer of cash or other property to others or any payment for
property or services for the account or use of others), or any purchase or
acquisition by such Person of any capital stock, bonds, notes, debentures,
or other securities or evidences of Indebtedness issued by any other
Person. The amount of any Investment shall be the original cost thereof,
plus the cost of all additions thereto and minus the amount of all
reductions therein in the nature of repayment of principal or return of
capital, without any adjustments for increases or decreases in value, write-
ups, write-downs, or write-offs with respect to such Investment.
Lien means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
security interest, or preference, priority, or other security agreement or
preferential arrangement of any kind or nature whatsoever intended to
assure payment of any Indebtedness or other obligation, including without
limitation any conditional sale, deferred purchase price, or other title
retention agreement, the interest of a lessor under a Capital Lease
Obligation, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing, under the Uniform
Commercial Code or comparable law of any jurisdiction, of any financing
statement naming the owner of the asset to which such financing statement
relates as debtor.
Loan and Security Agreement has the meaning ascribed thereto in the
definition of Bank Facilities.
Moody's means Moody's Investors Service, Inc., or any successor to
the rating agency business thereof.
Net Sale Proceeds has the meaning ascribed thereto in Section
3.7(a).
Permitted Indebtedness means, without duplication: (a) the Senior
Notes; (b) the Series 1997 Loan Agreement, the Series 1997 Note and all
other Series 1997 Loan Documents; (c) the outstanding principal amount of
uncertificated obligations of the Company owed to the Internal Revenue
Service and other taxing authorities pursuant to the Plan; (d) Indebtedness
under the Bank Facilities in an aggregate principal amount at any one time
outstanding not to exceed $250.0 million; (e) Indebtedness incurred for the
purpose of financing store construction and remodeling or other capital
expenditures; (f) unsecured Indebtedness between or among the Company and
its Subsidiaries; (g) Indebtedness in respect of the deferred purchase
price of property or arising under any conditional sale or other title
retention agreement; (h) Indebtedness of a Person acquired by the Company
or a Subsidiary of the Company at the time of such acquisition (provided
that such Indebtedness was not incurred by such Person in contemplation of
such acquisition); (i) to the extent deemed to be Indebtedness,
obligations under swap agreements, cap agreements, collar agreements,
insurance arrangements, or any similar agreement or arrangement, in each
case designed to provide a bona fide hedge against fluctuations in interest
rates, the cost of currency, or the cost of goods (other than inventory);
(j) other Indebtedness of the Company or its Subsidiaries in outstanding
amounts not to exceed $10.0 million in the aggregate at any particular
time; (k) Indebtedness evidenced by letters of credit that are issued in
the ordinary course of the business of the Company and its Subsidiaries to
secure workers' compensation and other insurance coverages; (l)
Indebtedness of the Company or a Subsidiary of the Company, as applicable,
existing as of the Effective Date (after giving effect to the consummation
of the Plan) and identified on Schedule I hereto; (m) deferred taxes and
other deferred obligations incurred in the ordinary course of business and
not evidenced by notes, bonds, debentures or other evidences of
indebtedness; and (n) Indebtedness incurred in connection with any
extension, renewal, refinancing, replacement, or refunding (including
successive extensions, renewals, refinancings, replacements, or
refundings), in whole or in part, of any Indebtedness of the Company or its
Subsidiaries; provided, however, that the principal amount of the
Indebtedness so incurred does not exceed the sum of the principal amount of
the Indebtedness so extended, renewed, refinanced, replaced, or refunded,
plus all interest accrued thereon and all related fees and expenses.
Permitted Investments means, without duplication: (a) Cash
Equivalents; (b) Investments in another Person, if as a result of such
Investment (i) such other Person becomes a Subsidiary of the Company or
(ii) such other Person is merged or consolidated with or into, or transfers
or conveys all or substantially all of its assets to, the Company or a
Subsidiary of the Company; (c) Investments in any Subsidiary of the Company
or Investments in the Company by a Subsidiary of the Company; (d)
Investments represented by accounts receivable created or acquired in the
ordinary course of business or extensions of trade credit on commercially
reasonable terms in accordance with normal trade practices; (e) commissions
and advances to employees of the Company and its Subsidiaries in the
ordinary course of business; (f) Investments representing notes,
securities, or other instruments or obligations acquired in connection with
the sale of assets; (g) Investments represented by that portion of the
proceeds from asset sales permitted under Section 3.7 to the extent such
Investments are non-cash proceeds; (h) Investments representing capital
stock or obligations issued to the Company or any Subsidiary of the Company
in settlement of claims against any other Person by reason of a composition
or readjustment of debt or a reorganization of any debtor of the Company or
such Subsidiary; (i) loans or advances to vendors in connection with in-
store (or catalog) merchandising to be repaid either on a lump-sum basis or
over a period of time by the delivery of merchandise; (j) loans or advances
to sublessees in an aggregate amount not to exceed $1.0 million at any time
outstanding; (k) construction advances to developers or contractors; (l)
Investments in swap agreements, cap agreements, collar agreements,
insurance arrangements or any similar agreement or arrangement, in each
case designed to provide a bona fide hedge against fluctuations in interest
rates, the cost of currency, or the cost of goods (other than inventory);
and (m) other Investments, the aggregate amount of which at any one time
does not exceed $10.0 million; provided that any Investment referred to in
this clause (m) that is made at a time at which, after giving effect
thereto, the aggregate amount of Investments referred to in this clause (m)
would exceed $2.5 million shall be a Permitted Investment only to the
extent, if any, of the amount thereof that could then have been paid as a
dividend on the Company's capital stock in accordance with Section 3.3.
Permitted Liens means, without duplication: (a) Liens (other than
Liens on inventory) securing any Permitted Indebtedness (other than
Permitted Indebtedness referred to in clause (f) of the definition of
Permitted Indebtedness ) or other Indebtedness incurred in accordance with
Section 3.1; (b) Liens on inventory securing any Indebtedness referred to
in clause (d) of the definition of Permitted Indebtedness; (c) Liens
incurred and pledges and deposits made in the ordinary course of business
in connection with liability insurance, workers' compensation, unemployment
insurance, old-age pensions, and other social security benefits other than
in respect of employee benefit plans subject to the Employee Retirement
Income Security Act of 1974, as amended; (d) Liens on goods and documents
securing trade letters of credit; (e) Liens imposed by law, such as
carriers', warehousemen's, mechanics', materialmen's, and vendor's Liens,
incurred in the ordinary course of business and securing obligations which
are not yet due or which are being contested in good faith by appropriate
proceedings; (f) Liens securing the payment of taxes, assessments, and
governmental charges or levies, either (i) not delinquent or (ii) being
contested in good faith by appropriate legal or administrative proceedings
and as to which adequate reserves shall have been established on the books
of the relevant Person in conformity with GAAP; (g) zoning restrictions,
easements, rights of way, reciprocal easement agreements, operating
agreements, covenants, conditions, or restrictions on the use of any parcel
of property that are routinely granted in real estate transactions or do
not interfere in any material respect with the ordinary conduct of the
business of the Company and its Subsidiaries or the value of such property
for the purpose of such business; (h) Liens on property existing at the
time such property is acquired; (i) purchase money Liens upon or in any
property acquired or held in the ordinary course of business to secure
Indebtedness incurred solely for the purpose of financing the acquisition
of such property; (j) Liens on the assets of any Subsidiary of the Company
at the time such Subsidiary is acquired; (k) Liens with respect to
obligations in outstanding amounts not to exceed $5.0 million at any
particular time and that (i) are not incurred in connection with the
borrowing of money or obtaining advances or credit (other than trade credit
in the ordinary course of business) and (ii) do not in the aggregate
interfere in any material respect with the ordinary conduct of the business
of the Company and its Subsidiaries; (l) deposits to secure the performance
of bids, trade contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of the
business of the Company and its Subsidiaries; (m) Liens 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 (i) the Company or a
Subsidiary of the Company shall in good faith be prosecuting an appeal or
proceeding for a review, (ii) a stay of execution pending such appeal or
proceeding for review shall be in effect, and (iii) the Company shall have
established on its books adequate reserves in accordance with GAAP;
(n) rights of banks to set off deposits against Indebtedness owed to such
banks; (o) Liens on assets or properties of the Company or a Subsidiary of
the Company, as applicable, existing as of the Effective Date (after giving
effect to the consummation of the Plan) and identified on Schedule II
hereto; and (p) any extension, renewal, or replacement, in whole or in
part, of any Lien described in the foregoing clauses; provided, however,
that any such extension, renewal, or replacement Lien is limited to the
property or assets covered by the Lien extended, renewed, or replaced or
substitute property or assets, the value of which is not materially greater
than the value of the property or assets for which the substitute property
or assets are substituted.
Plan means the Amended Joint Plan of Reorganization of the Company
and certain of its Subsidiaries, as confirmed on September 9, 1997 by the
United States Bankruptcy Court for the District of Delaware in Case No. 95-
1354 (PJW).
Repurchase Date has the meaning ascribed thereto in Section 3.4(a).
Restricted Payments has the meaning ascribed thereto in Section 3.3.
Repurchase Price has the meaning described thereto in Section
3.4(a).
Restricted Payments has the meaning ascribed thereto in Section 3.3.
S&P means Standard & Poor's Ratings Services, a Division of the
McGraw-Hill Companies, Inc., or any successor to the rating agency business
thereof.
Sale and Leaseback Transaction means, with respect to any Person, an
arrangement with any bank, insurance company, or other lender or investor
or to which such lender or investor is a party providing for the leasing
pursuant to a Capital Lease by such Person or any Subsidiary of such Person
of any property or asset of such Person or such Subsidiary which has been
or is being sold or transferred by such Person or such Subsidiary to such
lender or investor or to any Person to whom funds have been or are to be
advanced by such lender or investor on the security of such property or
asset.
Series 1997 Loan Agreement has the meaning ascribed thereto in the
Plan.
Series 1997 Loan Documents has the meaning ascribed thereto in the
Plan.
Series 1997 Note has the meaning ascribed thereto in the Plan.
Significant Subsidiary means any Subsidiary of the Company that
would be a significant subsidiary of the Company within the meaning of
Rule 1-02(w) of Regulation S-X promulgated by the Commission (as in effect
on the date hereof) if the Company were viewed as the registrant for
purposes of such Rule.
Subordinated Indebtedness means any Indebtedness of the Company
which is expressly subordinated in right of payment to the Senior Notes.
Uniform Commercial Code means the New York Uniform Commercial Code
as amended or modified from time to time.
Voting Stock has the meaning ascribed thereto in the definition of
Change of Control.
Warrant Agreement means the Eight-Year Warrant Agreement under which
the Warrants are to be issued pursuant to the Plan, as such Eight-Year
Warrant Agreement is in effect on the Effective Date.
Warrants has the meaning ascribed thereto in the Plan.
ARTICLE III. CERTAIN COVENANTS.
Section III.1. Indebtedness.
The Company shall not, directly or indirectly, create, incur, issue,
assume, guarantee, or otherwise become liable with respect to any
Indebtedness other than Permitted Indebtedness referred to in clauses (a)
through (d), clauses (f) and (g), and clauses (i) through (n) of the
definition thereof, unless immediately thereafter the Interest Coverage
Ratio is 2.0 to 1.0 or greater, after giving effect thereto on a pro forma
basis as if incurred at the beginning of the applicable period.
The Company shall not permit any Subsidiary of the Company, directly
or indirectly, to create, incur, issue, assume, guarantee, or otherwise
become liable with respect to, any Indebtedness other than Permitted
Indebtedness; provided, in the case of Permitted Indebtedness incurred
pursuant to clauses (e) and (h) of the definition thereof, immediately
thereafter the Interest Coverage Ratio is 2.0 to 1.0 or greater, after
giving effect thereto on a pro forma basis as if incurred at the beginning
of the applicable period.
Section III.2. Liens.
The Company shall not, and shall not permit any Subsidiary of the
Company to, create, incur, assume, or suffer to exist any Liens upon any of
their respective assets, other than Permitted Liens, unless the Senior
Notes are secured by an equal and ratable Lien on the same assets.
Section III.3. Restricted Payments. The Company shall not, and shall
not permit any Subsidiary of the Company to, (a) declare or pay any
dividend on, or make any other distribution on account of, the Company's
capital stock; (b) purchase, redeem, or otherwise acquire or retire for
value any capital stock (including any option, warrant, or right to
purchase capital stock) of the Company owned beneficially by a Person other
than a wholly owned Subsidiary of the Company; (c) purchase, redeem, or
otherwise acquire or retire for value the principal of any Subordinated
Indebtedness prior to the scheduled maturity thereof other than pursuant to
mandatory scheduled redemptions or repayments; or (d) make any Investment
other than Permitted Investments (all such dividends, distributions,
purchases, redemptions, or Investments being collectively referred to as
Restricted Payments ) if, at the time of such action, or after giving
effect thereto: (i) an Event of Default shall have occurred and is
continuing; (ii) the Company could not incur at least $1.00 of additional
Indebtedness under the Interest Coverage Ratio test in Section 3.1; or
(iii) the cumulative amount of Restricted Payments made subsequent to the
Effective Date (together with the amount, if any, of any Permitted
Investment referred to in clause (m) of the definition thereof that exceeds
$2.5 million) shall be greater than the sum of: (A) 50% of the Company's
cumulative consolidated net income (or a negative amount equal to 100% of
the Company's cumulative consolidated net loss, if applicable) from the
Effective Date through the end of the Company's fiscal quarter immediately
preceding the taking of such action; and (B) 100% of the aggregate net cash
proceeds received by the Company from the issue or sale of capital stock of
the Company (other than redeemable capital stock), including capital stock
issued upon the conversion of convertible Indebtedness issued on or after
the Effective Date, in exchange for outstanding Indebtedness, or from the
exercise of options, warrants, or rights to purchase capital stock of the
Company to any Person other than to a Subsidiary of the Company subsequent
to the Effective Date (with the Company being deemed, in the case of
capital stock issued upon conversion or in exchange for Indebtedness, to
have received net cash proceeds equal to the principal amount of the
Indebtedness so converted or exchanged); provided, however, that (1) the
payment of any dividend within 60 calendar days after the date of
declaration thereof, if such declaration complied with the foregoing
redemption or other acquisition provisions on the date of such declaration,
(2) the purchase, redemption, or other acquisition or retirement for value
of any shares of capital stock of the Company in exchange for, or out of
the proceeds of, a substantially concurrent issue and sale (other than to a
Subsidiary of the Company) of other shares of capital stock (other than
redeemable capital stock) of the Company, (3) the redemption or other
acquisition or retirement for value prior to any scheduled maturity of any
Subordinated Indebtedness in exchange for, or out of the proceeds of, a
substantially concurrent issue and sale of (a) capital stock (other than
redeemable capital stock) of the Company or (b) Subordinated Indebtedness
of the Company, (4) any purchase, redemption, or other acquisition or
retirement for value of any capital stock (including any option, warrant,
or right to purchase capital stock) of the Company issued to any employee
or director of the Company pursuant to any employee benefit or similar
plan, and (5) the exercise by the Company of its option to repurchase
Warrants at any time and from time to time in accordance with the
provisions of Section 14.1 of the Warrant Agreement shall not be deemed to
constitute Restricted Payments and shall not be prohibited under this
Section.
Section III.4. Change of Control.
(a) Right to Require Repurchase. In the event that there shall occur
a Change of Control, then each Holder shall have the right, at such
Holder's option, to require the Company to repurchase all or any designated
part of such Holder's Senior Notes on the date (the Repurchase Date )
selected by the Company that is not more than 75 days after the date the
Company gives notice of the Change of Control as contemplated in paragraph
(b) below at a price (the Repurchase Price ) equal to 101% of the
outstanding principal amount thereof, together with accrued and unpaid
interest to the Repurchase Date. Such right to require the repurchase of
Senior Notes shall continue notwithstanding a discharge of the Company from
its obligations with respect to the Senior Notes in accordance with the
provisions of Article V or Article XII of the Indenture.
(b) Notice; Method of Exercising Repurchase Right. On or before the
15th day after the Company knows that a Change of Control has occurred, the
Company or, at the request of the Company, the Trustee (in the name of and
at the expense of the Company), shall give notice of the occurrence of the
Change of Control and of the repurchase right set forth herein arising as a
result thereof by first-class mail, postage prepaid, to each Holder of the
Senior Notes at such Holder's address appearing in the Security Register
for the Senior Notes. The Company shall also deliver a copy of such notice
to the Trustee.
Each notice of a repurchase right shall state:
(1) the Repurchase Date,
(2) the date by which the repurchase right
must be exercised,
(3) the Repurchase Price, and
(4) the instructions a Holder must follow to
exercise its repurchase right.
No failure of the Company to give the foregoing notice shall
limit any Holder's right to exercise its repurchase right. The Trustee
shall have no affirmative obligation to determine if there shall have
occurred a Change of Control. To exercise a repurchase right, a Holder
shall deliver to the Company (or to an agent designated by the Company for
such purpose in the notice referred to above) on or before the fifth
Business Day prior to the Repurchase Date (i) written notice of the
Holder's exercise of such right, which notice shall set forth the name of
the Holder, the principal amount of the Senior Note (or portion of the
Senior Note) to be repurchased, and a statement that an election to
exercise the repurchase right is being made thereby, and (ii) the Senior
Note with respect to which the repurchase right is being exercised, duly
endorsed for transfer to the Company. Such written notice shall be
irrevocable. If the Repurchase Date falls between any Regular Record Date
and the corresponding succeeding Interest Payment Date, Senior Notes to be
repurchased must be accompanied by payment from the Holder of an amount
equal to the interest thereon which the registered Holder thereof is to
receive on such Interest Payment Date. In the event a repurchase right
shall be exercised in accordance with the terms hereof and the instructions
referred to herein, (x) the Company shall on the Repurchase Date pay or
cause to be paid in cash to the Holder thereof the Repurchase Price for
each Senior Note (or any portion thereof) as to which the repurchase right
has been exercised, and (y) the Company shall execute, and the Trustee
shall authenticate and make available for delivery to the Holder of such
Senior Note without service charge, a new Senior Note or Notes, as
applicable, of any authorized denomination as requested by such Holder in
aggregate principal amount equal to and in exchange for any portion of the
principal of such Senior Note as to which the repurchase right has not been
exercised. Any questions as to the compliance by a Holder of Senior Notes
with the requirements for a valid exercise of a repurchase right (including
the timely delivery of an exercise notice in proper form) shall be
determined by the Company in its sole discretion, which in all events shall
be exercised in good faith.
(c) Deposit of Repurchase Price. On or prior to the Repurchase Date,
the Company shall deposit with the Trustee or with a Paying Agent (or, if
the Company is acting as its own Paying Agent, segregate and hold in trust
as provided in Section 6.03 of the Indenture) an amount of money sufficient
to pay the Repurchase Price of the Senior Notes which are to be repurchased
on the Repurchase Date.
(d) Senior Notes Not Repurchased on Repurchase Date. If any Senior
Note (or any portion thereof) surrendered for repurchase shall not be so
paid on the Repurchase Date, the principal of such Senior Note (or such
portion thereof) shall, until paid, bear interest from the Repurchase Date
at the rate borne by such Senior Note.
(e) Compliance. The Company shall comply with all tender offer
rules, including but not limited to Section 14(e) of the Exchange Act and
Rule 14e-1 thereunder, to the extent applicable to any repurchase of the
Senior Notes under this Section 3.4.
Section III.5. Payment Restrictions Affecting Subsidiaries.
The Company shall not, and shall not permit any Subsidiary to,
directly or indirectly, create or otherwise cause or suffer to exist any
contractual restriction on the ability of any Subsidiary of the Company to
(a) pay any dividend on, or make any other distribution on account of, its
capital stock or pay any Indebtedness owed to the Company or a Subsidiary
of the Company or (b) make loans or advances to the Company or a Subsidiary
of the Company, except for (i) restrictions existing as of the Effective
Date, (ii) restrictions in the documentation setting forth the terms of or
entered into in connection with any Permitted Indebtedness, (iii)
restrictions in the documentation setting forth the terms of or entered
into in connection with the sale of such Subsidiary to a third party, (iv)
restrictions applicable to a Person acquired by the Company or a Subsidiary
of the Company, which exist at the time of such acquisition, or (v) other
restrictions arising in the ordinary course of business otherwise than in
connection with financing transactions.
Section III.6. Issuance of Subsidiary Preferred Stock.
The Company shall not permit any Subsidiary of the Company to issue
any shares of preferred stock other than (a) preferred stock issued to the
Company or a wholly owned Subsidiary of the Company or (b) preferred stock
issued to any other Person if, after giving effect thereto on a pro forma
basis as if such preferred stock were issued at the beginning of the
applicable period, such Subsidiary could have incurred additional
Indebtedness in an amount equal to the aggregate liquidation value of such
preferred stock (assuming such Indebtedness were incurred to the Person(s)
and for the purposes to which and for which such preferred stock was
issued).
Section III.7. Asset Sales.
(a) The Company shall not, and shall not permit any Subsidiary of the
Company to, consummate any sale of assets (other than sales of inventories,
goods, fixtures, and accounts receivable in the ordinary course of
business, and sales of assets to the Company or a wholly owned Subsidiary
of the Company) unless such sale is for fair market value and, in the case
of individual sales of assets for which the consideration received
(including liabilities assumed) is more than $1.0 million, at least 75% of
the consideration therefor (other than liabilities assumed) consists of any
combination of cash and Cash Equivalents. The aggregate amount of cash and
Cash Equivalent proceeds (net of all legal, title, and recording tax
expenses, commissions, and other fees and expenses incurred, and all
federal, state, provincial, foreign, and local taxes and reserves required
to be accrued as a liability, as a consequence of such sales of assets, and
net of all payments made on any Indebtedness which is secured by such
assets in accordance with the terms of any Liens upon such assets or which
must by the terms of such Liens or the Bank Facilities be repaid out of the
proceeds from such sales of assets, and net of all distributions and other
payments made to minority interest holders in Subsidiaries of the Company
or joint ventures as a result of such sales of assets) from such sales of
assets (excluding individual sales of assets for which the consideration
received is less than $250,000) shall constitute Net Sale Proceeds for
purposes of this Section 3.7, and 50% of the cumulative Net Sale Proceeds
in excess of $5.0 million shall constitute Excess Sale Proceeds for
purposes of this Section 3.7.
(b) If, at any time, the cumulative amount of Excess Sale Proceeds
that shall not have been previously applied to the repurchase or redemption
of Senior Notes as provided in this Section 3.7(b) shall exceed $1,000,000,
the Company shall apply such Excess Sale Proceeds to the repurchase, in the
open market, or, at the Company's option, the optional redemption, of
Senior Notes. The Company shall effect such application of such Excess
Sale Proceeds as promptly as practicable, and in any event within 30 (or,
in the case of an optional redemption, 75) calendar days after the date on
which the obligation to so apply such Excess Sale Proceeds arises;
provided, however, that the Company shall not be in breach of its
obligations under this sentence for so long as it is using commercially
reasonable efforts in good faith to apply all Excess Sale Proceeds then
required to be applied to the repurchase or redemption of Senior Notes to
the repurchase of Senior Notes in the open market. The Company shall
deliver all Senior Notes repurchased or redeemed pursuant to this Section
3.7(b) to the Trustee for cancellation as promptly as practicable, and in
any event within 30 calendar days after such Senior Notes are so
repurchased or redeemed.
Section III.8. Transactions with Affiliates.
The Company shall not, and shall not permit any of its Subsidiaries
to, engage in any transaction with an Affiliate (other than the Company or
a wholly owned Subsidiary thereof) on terms more favorable to the Affiliate
than would have been obtainable in arm's-length dealing. Solely for
purposes of this Section 3.8, an Affiliate of any specified Person means
any other Person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified Person, or any
other Person that has a relationship with such specified Person whereby
either of such Persons holds or beneficially owns 10% or more of the
equity interest in the other or 10% or more of any class of voting
securities of the other; provided that, under no circumstances shall EBS
Building, L.L.C., EBS Litigation, L.L.C. or EBS Pension, L.L.C. be deemed
to be an Affiliate of the Company or any of its Subsidiaries. For the
purposes of this definition, control when used with respect to any
specified Person, means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms controlling
and controlled have meanings correlative to the foregoing.
Section III.9. Sale and Leaseback Transactions.
The Company shall not, and shall not permit any Subsidiary of the
Company to, enter into any Sale and Leaseback Transaction unless: (a) the
Capital Lease Obligation incurred in connection therewith complies with
Section 3.1 and (b) the Net Sale Proceeds therefrom are applied in
compliance with Section 3.7 and to the extent required by Section 3.7.
ARTICLE IV. ADDITIONAL EVENTS OF DEFAULT.
Section IV.1. Additional Events of Default.
In addition to the Events of Default set forth in the Indenture, the
term Event of Default, whenever used in the Indenture or this First
Supplemental Indenture with respect to the Senior Notes, means the
occurrence (whatever the reason for such occurrence and whether it may be
voluntary or involuntary or be effected by operation of law or pursuant to
any judgment, decree, or order of any court or any order, rule, or
regulation of any administrative or governmental body) in respect of any
Significant Subsidiary or, in related events, any group of Subsidiaries of
the Company which, if considered in the aggregate, would be a Significant
Subsidiary, of any of the events referred to in clauses (vii) and (viii) of
Section 8.01(a) of the Indenture that, if the same were to occur in respect
of the Company, would constitute an Event of Default under either of such
clauses of Section 8.01(a) of the Indenture.
ARTICLE V. REDEMPTION OF SECURITIES.
Section V.1. Right of Redemption.
The Senior Notes may be redeemed in accordance with the provisions of
the form thereof set forth herein.
Section V.2. Repurchase.
The Company may at any time and from time to time purchase Senior
Notes in the open market or otherwise at any price, and any Senior Notes so
purchased shall be promptly surrendered to the Trustee for cancellation and
shall not be reissued.
ARTICLE VI. DEFEASANCE.
Section VI.1. Applicability of Article V of the Indenture.
(a) The Senior Notes shall be subject to Defeasance and Covenant
Defeasance as provided in Article V of the Indenture.
(b) Upon the exercise of the option provided in Section 5.01 of the
Indenture to have Section 5.03 of the Indenture applied to the Outstanding
Senior Notes, in addition to the obligations from which the Company shall
be released specified in the Indenture, the Company shall be released from
its obligations under Article III hereof.
ARTICLE VII. MISCELLANEOUS.
Section VII.1. Reference to and Effect on the Indenture.
This First Supplemental Indenture shall be construed as supplemental
to the Indenture and all the terms and conditions of this First
Supplemental Indenture shall be deemed to be part of the terms and
conditions of the Indenture. Except as set forth herein, the Indenture
heretofore executed and delivered is hereby (i) incorporated by reference
in this First Supplemental Indenture and (ii) ratified, approved and
confirmed.
Section VII.2. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any
term, provision, or condition set forth in Article III hereof if the
Holders of a majority in principal amount of the Outstanding Senior Notes
shall, by Act of such Holders, either waive such compliance in such
instance or generally waive compliance with such term, provision or
condition, but no such waiver shall extend to or affect such term,
provision, or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Company
and the duties of the Trustee in respect of any such term, provision, or
condition shall remain in full force and effect.
Section VII.3. Supplemental Indenture May be Executed in Counterparts.
This instrument may be executed in any number of counterparts, each of
which shall be an original; but such counterparts shall together constitute
but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, all as of the day and year first
above written.
[Seal] EDISON BROTHERS STORES, INC.
By:
Name: David B. Cooper, Jr.
Title: Executive Vice President
and Chief Financial Officer
Attest:
Name:
Title:
THE BANK OF NEW YORK, as Trustee
By:
Name:
Title:
Attest:
Name:
Title:
STATE OF )
) ss.:
COUNTY OF )
On this _____ day of September, 1997, before me personally came David
B. Cooper, Jr., to me known, who, being by me duly sworn, did depose and
say that he is an Executive Vice President and the Chief Financial Officer
of EDISON BROTHERS STORES, INC., one of the entities described in and which
executed the above instrument; that he/she knows the seal of said entity;
that the seal or a facsimile thereof affixed to said instrument is such
seal; that it was so affixed by authority of the Board of Directors of said
entity, and that he/she signed his/her name thereto by like authority.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
Notary Public
STATE OF )
) ss.:
COUNTY OF )
On this _____ day of September, 1997, before me personally came
_____________________________________, to me known, who, being by me duly
sworn, did depose and say that he/she is a
________________________________________________________________________of
THE BANK OF NEW YORK, one of the entities described in and which executed
the above instrument; that he/she knows the seal of said entity; that the
seal or a facsimile thereof affixed to said instrument is such seal; that
it was so affixed by authority of the Board of Directors of said entity,
and that he/she signed his/her name thereto by like authority.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
Notary Public
Schedule I
Additional Permitted Indebtedness
(1) Indebtedness of Borrowers (as defined below) and the other Persons
signatory to the Loan and Security Agreement as guarantors (the Guarantors
) to Bank of America, N.T. & S.A., as assignee of BankAmerica Business
Credit, Inc., a Delaware corporation ( BABC ), in respect of the letters of
credit outstanding on the date hereof issued by Bank of America, N.T. &
S.A. (the Existing Letters of Credit ) for the account of the Company,
Edison Brothers Apparel Stores, Inc., a Missouri corporation ( Edison
Apparel ), or Edison Puerto Rico Stores, Inc., a Puerto Rico corporation (
Edison Puerto Rico, and, collectively with the Company and Edison Apparel,
the Borrowers ) under the credit facility provided to the Company and
Edison Apparel, each as a debtor-in-possession during the pendency of their
Chapter 11 cases pertaining to the Plan, by certain financial institutions
for whom BABC acts as agent pursuant to the Loan and Security Agreement
dated November 9, 1995 by and among the financial institutions parties
thereto, as lenders, BABC, as agent for such lenders, the Borrowers and the
Guarantors, and fees and expenses relating thereto arising pursuant to the
reimbursement agreement by the Borrowers in favor of Bank of America, N.T.
& S.A., as assignee of BABC (as in effect on the date hereof). The terms
of such Indebtedness may be amended to increase the amount thereof so long
as in the aggregate the total amount of the liability to Bank of America,
N.T. & S.A., as assignee of BABC, shall not exceed the amount thereof as of
the date hereof by more than 10 percent (10%). The expiration date of the
Existing Letters of Credit and the documents related thereto may be
extended by up to ninety (90) days.
(2) Indebtedness of Borrowers and Guarantors to Bank of America, N.T. &
S.A. arising after the date hereof in respect of the letters of credit,
merchandise purchase guaranties or other guaranties which are from time to
time, until November 15, 1997, either (a) issued or opened by the Agent or
any Lender under the Bank Facilities for the account of a Borrower or any
Guarantor or (b) with respect to which such Agent on behalf of any such
Lenders has agreed to indemnify the issuer or guaranteed to the issuer the
performance by a Borrower or any Guarantor of its obligations to such
issuer (including without limitation the Existing Letters of Credit) issued
by Bank of America, N.T. & S.A. for the account of Borrowers or Guarantors
and fees and expenses relating thereto arising pursuant to the
reimbursement agreement by Borrowers in favor of Bank of America, N.T. &
S.A. as in effect on the date hereof.
(3) Indebtedness arising or relating to letters of credit issued prior to
November 3, 1995 by Banca Nazionale del Lavoro in an aggregate amount not
exceeding $2.9 million to secure certain workers' compensation obligations,
and to a lesser extent, automobile liabilities, and any replacements
thereof or substitutions thereto issued at any time on or after November 3,
1995.
Schedule II
Additional Permitted Liens
(1) Liens granted under the Funding Escrow Mortgages (as defined in the
Plan).
(2) Liens and security interests set forth on Annex A to this Schedule II.
FUNDING ESCROW AGREEMENT
between
EDISON BROTHERS STORES, INC.,
EDISON BROTHERS APPAREL STORES, INC.
and
MERCANTILE TRUST COMPANY, N.A.,
as Escrow Agent
dated as of
September 26, 1997
TABLE OF CONTENTS
Page
1. DEFINITIONS 1
2. APPOINTMENT OF ESCROW AGENT. 5
2.1. Appointment and Acceptance
5
3. FUNDING ESCROW ASSETS DEPOSITED WITH AND DELIVERED TO THE ESCROW
AGENT 5
3.1.Deposit into Funding Escrow of Funding Escrow Initial
Cash 5
3.2. Deposit into Funding Escrow of Funding Escrow
Properties Conveyance Documents 5
3.3. No Other Deposits
6
3.4. Other Items
6
4. PURPOSE AND OPERATION OF FUNDING ESCROW 6
4.1. Purpose
6
4.2. Operation
6
4.3. Funding Escrow Mortgages
7
4.4.Return of Funding Escrow Assets and Release of Funding
Escrow Mortgages 8
5. OTHER PROVISIONS AFFECTING THE ESCROW AGENT 8
5.1. Fees
8
5.2. Indemnification
8
5.3. Authorized Representative of the Company and EBAS
9
5.4. Instructions
9
5.5. Other Protections
9
5.6. Distribution Records
10
6. TERM AND TERMINATION 10
6.1. Term
10
6.2. Effect of Termination
10
7. MISCELLANEOUS 10
7.1. Notices
10
7.2. No Third Party Beneficiaries
12
7.3. Entire Agreement; Modifications
12
7.4. Governing Law
13
7.5. Severability
13
7.6. Headings
13
7.7. Plurals
13
7.8. Counterparts
13
7.9. Assignability
14
Annexes
Annex A - Fees and expenses of the Escrow Agent
Annex B - Names, positions and specimen signatures of persons
authorized to act for Edison Brothers Stores, Inc. and
Edison Brothers Apparel Stores, Inc.
Exhibit
Exhibit A - Funding Escrow Mortgages
FUNDING ESCROW AGREEMENT
FUNDING ESCROW AGREEMENT (this Agreement ) dated as of September
26, 1997 (the Effective Date ) between Edison Brothers Stores, Inc., a
Delaware corporation (the Company ), Edison Brothers Apparel Stores, Inc.,
a Missouri corporation ( EBAS ), and Mercantile Trust Company, N.A., as
escrow agent (the Escrow Agent ).
R E C I T A L S
WHEREAS, the Debtors' Amended Joint Plan of Reorganization Under
Chapter 11 of the Bankruptcy Code dated June 30, 1997 has been confirmed by
order (the Confirmation Order ), entered September 9, 1997, of the United
States Bankruptcy Court for the District of Delaware (as so confirmed, the
Plan ); and
WHEREAS, the Company and EBAS desire to establish, pursuant to
Section 1123(b)(3)(B) of the Bankruptcy Code, the Funding Escrow for the
benefit of the Reorganized Debtors and holders of New Notes, as provided in
Section 5.2 of the Plan;
NOW THEREFORE, in consideration of the premises and mutual
covenants and agreements herein contained, the Company, EBAS and the Escrow
Agent hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms have the
respective meanings set forth below:
Agreement shall have the meaning assigned to such term in the
introductory paragraph hereto.
Bankruptcy Code shall mean title 11 of the United States Code, as
amended from time to time.
Business Day shall mean any day that is not a Saturday or Sunday or
a day on which banks are required or permitted to be closed in the State of
New York or the State of Missouri.
Cash shall have the meaning assigned to such term in the Plan.
Cash Equivalents shall mean:
(i) direct obligations of, and obligations fully guaranteed as to the
full and timely payment of principal and interest, if any, by, the United
States of America;
(ii) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company incorporated under the laws of the
United States of America or any State thereof (or any domestic branch of a
foreign bank) and subject to supervision and examination by Federal or
State banking or depository institution authorities; provided, however,
that, at the time of the investment therein, the commercial paper or other
short-term unsecured debt obligations (other than such obligations the
rating of which is based on the credit of a person other than such
depository institution or trust company) thereof shall be rated A-1 by
Standard & Poor's or P-1 by Moody's;
(iii) commercial paper that, at the time of the investment
therein, is rated A-1 by Standard & Poor's or P-1 by Moody's;
(iv) bankers' acceptances issued by any depository institution or
trust company referred to in clause (ii) above;
(v) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed as to the full and timely payment
of principal and interest, if any, by, the United States of America or any
agency or instrumentality thereof the obligations of which are backed by
the full faith and credit of the United States of America, in either case
entered into with (A) a depository institution or trust company (acting as
principal) described in clause (ii) above or (B) a depository institution
or trust company whose commercial paper or other short term unsecured debt
obligations are rated A-1 by Standard & Poor's or P-1 by Moody's and
long term unsecured debt obligations are rated AAA by Standard & Poor's
or Aaa by Moody's; and
(vi) money market mutual funds registered under the Investment Company
Act of 1940, as amended, which invest solely in securities referred to in
clauses (i) through (v) above, have a rating, at the time of such
investment, from either Standard & Poor's or Moody's in the highest
investment category granted thereby and seek to maintain a net asset value
of $1.00 per unit (including funds for which the Indenture Trustee, the
Escrow Agent or any of their respective affiliates is investment manager or
advisor).
Company shall have the meaning assigned to such term in the
introductory paragraph hereto.
Confirmation Order shall have the meaning assigned to such term in
the recitals hereto.
Debtors shall mean, collectively, the Company, Edison Brothers
Apparel Stores, Inc., Edison Brothers Shoe Stores, Inc., Edison Paymaster,
Inc., Edison Brothers Redevelopment Corporation, Edbro Missouri Realty
Company, Inc., Edison Alabama Stores, Inc., Edison Arkansas Stores, Inc.,
Edison Colorado Stores, Inc., Edison Brothers Company, Edison Hawaii
Stores, Inc., Edison Illinois Stores, Inc., Edison Kansas Stores, Inc.,
Edison Kentucky Stores, Inc., Edison Louisiana Stores, Inc., Edison
Maryland Stores, Inc., Edison Massachusetts Stores, Inc., Edison Michigan
Stores, Inc., Edison Minnesota Stores, Inc., Edison Mississippi Stores,
Inc., Edison Nebraska Stores, Inc., Edison New Jersey Stores, Inc., Edison
New Mexico Stores, Inc., Edison New York Stores, Inc., Edison Ohio Stores,
Inc., Edison Oklahoma Stores, Inc., Edison Oregon Stores, Inc., Edison
Pennsylvania Stores, Inc., Edison Tennessee Stores, Inc., Edison Texas
Stores, Inc., Edison Utah Stores, Inc., Edbro Ohio Realty, Inc., EBSS-
Montana, Inc., EBSS-North Central, Inc., EBSS-Indiana, Inc., EBSS-Iowa,
Inc., EBSS-Kansas, Inc., EBSS-Wisconsin, Inc., EBSS-Northeast, Inc., EBSS-
South, Inc., EBSS-Mideast, Inc., EBSS-Michigan, Inc., EBSS-East, Inc., EBSS-
Ohio, Inc., EBSS-Pennsylvania, Inc., EBSS-Texas, Inc., EBSS-West, Inc.,
Edison Puerto Rico Stores, Inc., Ebscat, Inc., Edison Brothers Mall
Entertainment, Inc., Horizon Entertainment, Inc., Edison Brothers Stores
International, Inc., Edisur, Inc., EBS Holdings Corp., Edison Whittier
Warehouse, Inc., Edbro California USG -- 2, Inc., Edbro Missouri USG -- 2,
Inc., Edbro California USG -- 1, Inc., Industrial Design, Inc., Webster
Clothes, Inc., Z&Z Fashions, Ltd., Webster-Rossville, Inc., Time-Out Family
Amusement Centers, Inc., Tofac of Puerto Rico, Inc., Sacha Shoes Ltd. and
Mandel's of California.
EBAS shall have the meaning assigned to such term in the
introductory paragraph hereto.
Effective Date shall have the meaning assigned to such term in the
introductory paragraph hereto.
Escrow Agent shall have the meaning assigned to such term in the
introductory paragraph hereto.
Funding Escrow shall mean the escrow of the Funding Escrow Assets by
the Company and EBAS with the Escrow Agent created, established and
governed by this Agreement.
Funding Escrow Assets shall mean, collectively, (1) the Funding
Escrow Initial Cash deposited by the Company with the Escrow Agent
hereunder on the Effective Date, (2) the Funding Escrow Properties
Conveyance Documents deposited by the Company and EBAS with the Escrow
Agent hereunder on the Effective Date, and (3) anything deposited in or
transferred to or earned by the Funding Escrow on or after the Effective
Date (including Funding Escrow Cash).
Funding Escrow Cash shall have the meaning assigned to such term in
Section 3.1 hereof.
Funding Escrow Initial Cash shall have the meaning assigned to such
term in Section 3.1 hereof.
Funding Escrow Mortgages shall mean the mortgages on the Funding
Escrow Properties in substantially the form attached hereto as Exhibit A,
as such form may be required to be modified to comply with applicable state
law.
Funding Escrow Properties shall mean the following properties owned
by the Debtors: (1) that certain parcel of land containing a five-story
building plus basement comprising the whole of Block 282 of the City of St.
Louis located at 1230 North Second Street, St. Louis, Missouri; (2) that
certain parcel of land containing a four-story building plus basement
located in Cook County, Illinois at 131-133 South State Street, Chicago,
Illinois; (3) that certain parcel of land containing approximately 15.02
acres together with a building thereon containing approximately 309,444
square feet of ground floor space with accompanying parking facility and
truck areas located at 1351 Redmond Road, Rome, Georgia; and (4) that
certain parcel of land in Princeton, Potaka County, Indiana, containing
approximately 41.19 acres together with a building thereon containing
approximately 369,000 square feet of ground floor space with accompanying
parking facility and truck areas located at U.S. 41 and Highway 100,
Princeton, Indiana.
Funding Escrow Properties Conveyance Documents shall mean the
original deed (or a certified copy thereof) to each of the Funding Escrow
Properties.
Funding Escrow Trust Account shall have the meaning assigned to such
term in Section 3.1 hereof.
Indenture Trustee shall mean the Trustee under the New Notes
Indentures.
New Notes shall have the meaning assigned to such term in the Plan.
New Notes Indentures shall have the meaning assigned to such term in
the Plan.
Officer's Certificate shall mean a certificate of the Company and
EBAS signed by one of the authorized Company and EBAS officers listed on
Annex B attached hereto, as the same may be supplemented or modified
pursuant to Section 5.3 hereof.
Plan shall have the meaning assigned to such term in the recitals
hereto.
Reorganized Debtors shall have the meaning assigned to such term in
the Plan.
Termination Date shall have the meaning assigned to such term in
Section 6.1 hereof.
2. APPOINTMENT OF ESCROW AGENT.
2.1. Appointment and Acceptance. The Company and EBAS hereby appoint
the Escrow Agent to act as agent for the Company and EBAS in accordance
with the instructions set forth in this Agreement, and the Escrow Agent
hereby accepts such appointment.
3. FUNDING ESCROW ASSETS DEPOSITED WITH AND DELIVERED TO THE ESCROW
AGENT.
3.1. Deposit into Funding Escrow of Funding Escrow Initial Cash.
Pursuant to the Plan, on the Effective Date, the Company shall deposit (or
cause to be deposited) with the Escrow Agent, as part of the Funding
Escrow, by wire transfer of immediately available funds (to Mercantile Bank
of St. Louis, N.A.; ABA No. 081000210; Credit Account No. 476740-0172;
Attn: Mary L. Parker; For further credit to Account No. 41322440), Cash in
the amount of $17,624,076 (the Funding Escrow Initial Cash ). The Escrow
Agent shall hold the Funding Escrow Initial Cash and all other Cash or
other funds contained from time to time in the Funding Escrow, whether
derived from new deposits therein pursuant to the terms of this Agreement,
investment earnings on the amounts therein or otherwise (the Funding Escrow
Initial Cash and all such other Cash and funds, collectively, the Funding
Escrow Cash ) in a separate trust account (the Funding Escrow Trust
Account ) in its name for the benefit of the Reorganized Debtors and
holders of New Notes hereunder, previously established by it for such
purpose, until withdrawn for distribution in accordance with the terms of
this Agreement. The Escrow Agent shall invest the Funding Escrow Cash in
such Cash Equivalents as the Escrow Agent shall be directed from time to
time by the Company. All risk of loss on the Funding Escrow Cash so
invested shall be at the risk of the Company. The Company shall be
responsible for the payment of all taxes and the filing of all returns in
respect of any earnings on such Funding Escrow Cash.
3.2. Deposit into Funding Escrow of Funding Escrow Properties
Conveyance Documents. Pursuant to the Plan, on the Effective Date, the
Company and EBAS shall deposit (or cause to be deposited) with the Escrow
Agent, as part of the Funding Escrow, the Funding Escrow Properties
Conveyance Documents (except with respect to those Funding Escrow
Properties as to which the Debtors have, prior to the Effective Date,
entered into a contract to sell, sell and lease back or otherwise dispose
of). The Escrow Agent shall hold the Funding Escrow Properties Conveyance
Documents in the Funding Escrow, until returned to the Company or EBAS,
including for execution and delivery in connection with a sale, sale and
lease back or other disposition of the Funding Escrow Properties, in each
case in accordance with the terms of this Agreement.
3.3. No Other Deposits. Neither the Company nor EBAS has any
obligation to deposit with or transfer to the Escrow Agent any assets or
properties other than as set forth in Sections 3.1 and 3.2 hereof.
3.4. Other Items. The Company has delivered (or will shortly
hereafter deliver) to the Escrow Agent photocopies of the following
documents:
(1) the Debtors' Joint Disclosure Statement Pursuant
to Section 1125 of the Bankruptcy Code dated June 30, 1997
pertaining to the Plan;
(2) the Plan; and
(3) the Confirmation Order.
4. PURPOSE AND OPERATION OF FUNDING ESCROW.
4.1. Purpose. The purpose of the Funding Escrow shall be to prefund
the interest payments required to be paid by the Company under the terms of
the New Notes through and including July 31, 2000.
4.2. Operation. The Company shall have the right in its sole
discretion to, at any time and from time to time, pursuant to an Officer's
Certificate (which the Escrow Agent shall comply with):
(1) Transfer Funding Escrow Cash. Direct the Escrow Agent to
transfer to the Company or the Indenture Trustee for the benefit of the
holders of the New Notes in immediately available funds those amounts of
Funding Escrow Cash necessary to timely pay the interest payments required
to be paid by the Company under the terms of the New Notes through and
including July 31, 2000; provided, however, that after the occurrence and
during the continuation of an Event of Default under the New Notes
Indentures caused by the failure of the Company to pay interest on the New
Notes under the terms thereof through and including July 31, 2000, the
Escrow Agent shall, upon the written direction of the Indenture Trustee,
promptly distribute to the Indenture Trustee, for the benefit of the
holders of the New Notes, that amount of Funding Escrow Cash equal to the
lesser of (1) the interest payments required to be paid by the Company
under the terms of the New Notes through and including July 31, 2000 that
are then due and payable and (2) such Funding Escrow Cash;
(2) Dispose of Funding Escrow Properties. Direct the Escrow
Agent to deliver to the Company or EBAS any or all of the Funding Escrow
Properties Conveyance Documents and to release the related Funding Escrow
Mortgages to enable the Company or EBAS to sell, sell and lease back or
otherwise dispose of, on the terms established by the Company, any or all
of the Funding Escrow Properties; provided that the proceeds therefrom (net
of taxes, expenses and other costs) shall be transferred to the Escrow
Agent and the Escrow Agent shall deposit such proceeds in the Funding
Escrow (the Company and EBAS shall pay the taxes relating to and operating
costs of the Funding Escrow Properties, unless and until the Funding Escrow
Properties are sold, sold and leased back or otherwise disposed of);
(3) Use Funding Escrow Properties. Use the Funding Escrow
Properties for any purpose whatsoever for no cost or charge whatsoever at
all times during the existence of the Funding Escrow, unless and until such
Funding Escrow Properties so used are sold, sold and leased back or
otherwise disposed of pursuant to this Agreement; and
(4) Substitution. Substitute for all of the Funding Escrow
Properties Conveyance Documents and the Funding Escrow Mortgages applicable
to the Funding Escrow Properties in the Funding Escrow an amount of Cash
equal to $12,375,924 (in which case all Funding Escrow Mortgages shall be
released by the Escrow Agent); provided however, that if the Debtors have,
prior to the Effective Date, entered into a contract to sell, sell and
lease back or otherwise dispose of one or more of the Funding Escrow
Properties, the Cash proceeds thereof (or, if such Cash proceeds have not
been received prior to the Effective Date, the right to receive such Cash
proceeds) shall be transferred into the Funding Escrow and the $12,375,924
otherwise required for such substitution shall be reduced by an amount
equal to such proceeds.
4.3. Funding Escrow Mortgages. To secure the Company's interest
payment obligations under the terms of the New Notes through and including
July 31, 2000, the Company and EBAS shall grant to the Escrow Agent a
security interest in the Funding Escrow Properties pursuant to the Funding
Escrow Mortgages; provided, however, that if the Debtors have, prior to the
Effective Date, entered into a contract to sell, sell and lease back or
otherwise dispose of, one or more of the Funding Escrow Properties, no
Funding Escrow Mortgage shall be granted on any such Funding Escrow
Property; and provided further that, if such a sale, sale and lease back or
other disposition is not consummated within 60 days after the Effective
Date, such a Funding Escrow Mortgage shall be granted. Upon the
consummation by the Company or EBAS of a sale, sale and lease back or other
disposition of one or more of the Funding Escrow Properties, the related
Funding Escrow Mortgage shall be released. If the Escrow Agent forecloses
upon any of the Funding Escrow Properties under the terms of the Funding
Escrow Mortgages, the Escrow Agent shall promptly thereafter distribute to
the Indenture Trustee, for the benefit of the holders of the New Notes
under the New Notes Indentures, that amount of any Cash proceeds resulting
therefrom (net of all reasonable costs of and expenses incurred by the
Escrow Agent in connection therewith) equal to the lesser of (1) the
interest payments required to be paid by the Company under the terms of the
New Notes through and including July 31, 2000 that are then due and payable
and (2) such Cash proceeds. The maximum amount to be secured by the
Funding Escrow Mortgages shall not exceed in the aggregate $21,975,924.
4.4. Return of Funding Escrow Assets and Release of Funding Escrow
Mortgages. If all interest payments required to be paid by the Company
under the terms of the New Notes through and including July 31, 2000 have
been so paid by the Company, then (1) all Funding Escrow Assets remaining
after such payment shall be returned to the Company by the Escrow Agent,
free and clear of all claims, liens, encumbrances and contractually imposed
restrictions arising under or related to this Agreement and the Plan and
any documents or instruments relating thereto (including the release of the
related Funding Escrow Mortgages), as instructed by the Company, and (2)
the Escrow Agent shall release all Funding Escrow Mortgages.
5. OTHER PROVISIONS AFFECTING THE ESCROW AGENT.
5.1. Fees. For the Escrow Agent's services hereunder, the Company
shall pay the Escrow Agent the fees and shall reimburse the Escrow Agent
the expenses set forth on Annex A attached hereto.
5.2. Indemnification. The Company covenants and agrees to indemnify
the Escrow Agent and to hold the Escrow Agent harmless against any and all
losses, liabilities, costs, claims, damages or expenses, including
judgments, costs and reasonable attorney's fees, for anything done or
omitted by the Escrow Agent in the execution of the Escrow Agent's duties
and powers hereunder, except losses, liabilities, costs, claims, damages or
expenses incurred as a result of negligence, willful misconduct or bad
faith on the part of the Escrow Agent. With respect to any and all losses,
liabilities, costs, claims, damages or expenses, including judgments, costs
and reasonable attorney's fees, that may be incurred by the Company or any
of its subsidiaries or, to the extent not one of such subsidiaries, any of
the Reorganized Debtors, or any of their respective officers, directors or
employees, related to, arising out of or in connection with this Agreement
and the transactions contemplated hereby, the Funding Escrow Assets shall
be used, if so directed by the Company, to indemnify the Company and such
subsidiaries, Reorganized Debtors, officers, directors or employees
therefrom, except with respect to losses, liabilities, costs, claims,
damages or expenses incurred as a result of negligence, willful misconduct
or bad faith on the part of the Company or such subsidiaries, Reorganized
Debtors, officers, directors or employees, as the case may be.
5.3. Authorized Representative of the Company and EBAS. Set forth on
Annex B hereto is a list of the names, positions and specimen signatures of
the persons authorized to act for the Company and EBAS under this
Agreement. The Secretary or any Assistant Secretary of the Company and
EBAS shall, from time to time, if requested by the Escrow Agent, certify to
the Escrow Agent the names and signatures of any other persons authorized
to act for the Company and EBAS under this Agreement.
5.4. Instructions. Any instructions given to the Escrow Agent orally,
as permitted by any provision of this Agreement, shall be confirmed in
writing by the Company as soon as practicable.
5.5. Other Protections. As Escrow Agent for the Company hereunder,
the Escrow Agent:
(1) shall have no duties or obligations other than those specifically
set forth herein or in a written supplement hereto or amendment hereof
executed and delivered by the Company, EBAS and the Escrow Agent;
(2) shall not be obligated to take any legal action hereunder which
might, in the Escrow Agent's reasonable judgment and after consultation
with the Company, involve any expense or liability unless the Escrow Agent
has been furnished with reasonable indemnity;
(3) may rely on and be fully protected in acting upon any
certificate, instrument, opinion, notice, letter, telegram or other
document or security delivered to the Escrow Agent and reasonably believed
by the Escrow Agent to be genuine and correct and to have been signed by
the proper party or parties, and may take the statements made therein as
correct without any affirmative duty of investigation;
(4) shall not be liable for any recital or statement contained in any
documents other than those prepared by or on behalf of the Escrow Agent or
the Escrow Agent's counsel;
(5) shall not be responsible for any failure on the part of the
Company or EBAS to comply with any of its covenants and obligations
contained in the Plan;
(6) may rely on, and shall be protected in acting upon, the written
or oral (unless expressly required to be in writing hereunder) instructions
of the Company (and telephone instructions reasonably believed by the
Escrow Agent to be instructions of the Company) with respect to the Escrow
Agent's duties hereunder, and shall not be liable for any action taken,
suffered or omitted by the Escrow Agent hereunder, in accordance with any
such instructions; and
(7) may consult with counsel satisfactory to the Escrow Agent, and
the opinion of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by the
Escrow Agent hereunder in good faith and in accordance with such opinion of
counsel.
5.6. Distribution Records. The Escrow Agent shall maintain a written
record of all distributions made by it hereunder and shall deliver to the
Company, as soon as practicable but in no event later than two Business
Days after request therefor by the Company, a complete copy of such
records.
6. TERM AND TERMINATION.
6.1. Term. This Agreement shall commence on the Effective Date and
shall remain in full force and effect until the Termination Date. As used
in this Agreement, the term Termination Date shall mean 30 days after the
date on which there are no longer any Funding Escrow Assets in the Funding
Escrow.
6.2. Effect of Termination. From and after the Termination Date, the
respective rights and duties of the Company, EBAS and the Escrow Agent
under this Agreement shall cease, provided that, notwithstanding anything
to the contrary set forth in this Agreement, Sections 5.1 and 5.2 hereof
shall survive any termination of this Agreement.
7. MISCELLANEOUS.
7.1. Notices. Any request, notice, direction, authorization, consent,
waiver, demand or other communication permitted or authorized by this
Agreement to be made upon, given or furnished to or filed with the Company,
EBAS or the Escrow Agent by the other party hereto shall be sufficient for
every purpose hereunder if in writing (including telecopy communication)
and telecopied or delivered by hand (including by courier service) or sent
by registered or certified mail, return receipt requested and postage
prepaid, as follows:
(1) If to the Company, to it at:
Edison Brothers Stores, Inc.
501 North Broadway
St. Louis, Missouri 63102
Attention: Alan A. Sachs, Esq.
Telephone No.: (314) 331-6565
Telecopy No.: (314) 331-6554
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Richard P. Krasnow, Esq.
Telephone No.: (212) 310-8000
Telecopy No.: (212) 310-8007
or
(2) If to EBAS, to it at:
Edison Brothers Apparel Stores, Inc.
501 North Broadway
St. Louis, Missouri 63102
Attention: Alan A. Sachs, Esq.
Telephone No.: (314) 331-6565
Telecopy No.: (314) 331-6554
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Richard P. Krasnow, Esq.
Telephone No.: (212) 310-8000
Telecopy No.: (212) 310-8007
or
(3) If to the Escrow Agent, to it at:
Mercantile Trust Company, N.A.
P. O. Box 387
Tram 16-6
St. Louis, Missouri 63166-0387
Attention: Mary Parker, Vice President
Telephone No.: (314) 425-1716
Telecopy No.: (314) 425-2922
with a copy to:
William A. Johnson, Esq.
Senior Attorney-Trust
Mercantile Bancorporation Inc.
One Mercantile Center
7th and Washington
Tram 10-7
St. Louis, Missouri 63101
Telephone No.: (314) 425-8168
Telecopy No.: (314) 425-1386
or, in either case, such other address as shall have been set forth in a
notice delivered in accordance with this Section 7.1. All such
communications shall, when so telecopied or delivered by hand or sent by
registered or certified mail, be effective when telecopied with
confirmation of receipt or received by the addressee or three Business Days
after deposit in the United States mail, respectively. Any person that
telecopies any communication hereunder to any person shall, on the same
date as such telecopy is transmitted, also send, by first class mail,
postage prepaid and addressed to such person as specified above, an
original copy of the communication so transmitted. A copy of any notice
provided by one party to the other party hereunder shall also be provided
by the party providing such notice to the Indenture Trustee at the address
thereof set forth in the New Notes Indenture.
7.2. No Third Party Beneficiaries. This Agreement is for the benefit
of the parties hereto and nothing contained herein shall be construed to
give any third party any benefits or right hereunder, except that the
Indenture Trustee shall be a third-party beneficiary of this Agreement.
7.3. Entire Agreement; Modifications. This Agreement sets forth the
entire agreement of the parties hereto as to the subject matter hereof and
supersedes all previous agreements of the parties hereto with respect
thereto, whether written, oral or otherwise. This Agreement may not be
changed, modified or altered except by an agreement in writing executed and
delivered on behalf of the Company, EBAS and the Escrow Agent.
7.4. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without regard to the
provisions thereof relating to conflict of laws.
7.5. Severability. If any provision of this Agreement is prohibited
by law or otherwise determined to be invalid or unenforceable by a court of
competent jurisdiction, such prohibition shall not affect the validity of
the remaining provisions of this Agreement.
7.6. Headings. The descriptive headings of the several Articles and
Sections of this Agreement are inserted for convenience and shall not
control or affect the meaning or construction of any of the provisions
hereof.
7.7. Plurals. Whenever the context herein may require, the singular
form of nouns, pronouns and verbs shall include the plural and vice versa.
7.8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute but one and
the same instrument.
7.9. Assignability. This Agreement may not be assigned by the Escrow
Agent without the prior written consent of the Company.
IN WITNESS WHEREOF, the Company, EBAS and the Escrow Agent have
caused this Agreement to be duly executed and delivered as of the day and
year first above written.
EDISON BROTHERS STORES, INC.
By:
Name: David B. Cooper, Jr.
Title: Executive Vice President and
Chief Financial Officer
EDISON BROTHERS APPAREL STORES, INC.
By:
Name: David B. Cooper, Jr.
Title: Vice President and Treasurer
MERCANTILE TRUST COMPANY, N.A.,
as Escrow Agent
By:
Name:
Title:
Annex A
Company/Escrow Agent Fee Agreement
Annex B
Names, positions and specimen signatures
of persons authorized to act for
Edison Brothers Stores, Inc.
Name and Position Specimen Signature
David B. Cooper, Jr.
Executive Vice President
and Chief Financial Officer
Alan A. Sachs,
Executive Vice President
General Counsel and Secretary
Names, positions and specimen signatures
of persons authorized to act for
Edison Brothers Apparel Stores, Inc.
Name and Position Specimen Signature
David B. Cooper, Jr.
Vice President and Treasurer
Alan A. Sachs,
Vice President and Secretary
Exhibit A
Funding Escrow Mortgages
Edison Brothers Stores, Inc.
and
The Bank of New York,
Trustee
_______________________
INDENTURE
Dated as of September 26, 1997
_______________________
DEBT SECURITIES
Debt Securities (Cross Reference Sheet*)
This Cross Reference Sheet shows the location in the Indenture of the
provisions inserted pursuant to Sections 310 - 318(a), inclusive, of the
Trust Indenture Act of 1939, as amended.
Trust Indenture Act Sections of Indenture
310(a)(1) 9.08
(a)(2) 9.08
(a)(3) Inapplicable
(a)(4) Inapplicable
(a)(5) 9.08
(b) 9.07 and 9.09
(c) Inapplicable
311(a) 9.12
(b) 9.12
(c) Inapplicable
312(a) 7.01 and 7.02
(b) 7.02
(c) 7.02
313(a) 7.03
(b) 7.03
(c) 7.03
(d) 7.03
314(a) 7.04
(a)(4) 1.01 and 6.07
(b) Inapplicable
(c)(1) 13.05
(c)(2) 13.05
(c)(3) Inapplicable
(d) Inapplicable
(e) 13.05
(f) Inapplicable
315(a) 9.01
(b) 8.08
(c) 9.01
(d) 9.01
(e) 8.07
316(a) 1.01
(a)(1)(A) 8.01 and 8.06
(a)(1)(B) 8.01
(a)(2) Inapplicable
(b) 8.09
(c) 13.11
317(a)(1) 8.02
(a)(2) 8.02
(b) 6.03
318(a) 13.08
* The Cross Reference Sheet is not part of the Indenture.
Table of Contents*
There are TWO table of contents in this document. When you generate the
ToC, it places the contents of the entire document in both of the table of
contents. You have the delete the portion not wanted from each ToC.To
clean this ToC:
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Recitals 1
Article I. Definitions 1
Section 1.01.Certain Terms Defined 1
Act 2
Affiliate 2
Authenticating Agent 2
Board of Directors 2
Board Resolution 2
Business Day 2
Capital Lease 2
Capital Lease Obligation 3
Commission 3
Common Stock 3
Company 3
Company Request or Company Order 3
Corporate Trust Office 3
Covenant Defeasance 4
Default 4
Defaulted Interest 4
Defeasance 4
Defeasible Series 4
Depositary 4
Event of Default 4
Exchange Act 4
GAAP 5
Global Security 5
Holder 5
Indebtedness 5
Indenture 5
Interest 6
Interest Payment Date 6
Material Adverse Effect 6
Maturity 6
Notice of Default 6
Officer's Certificate 6
Opinion of Counsel 7
Original Issue Discount Security 7
Outstanding 7
Paying Agent 8
Person 8
Place of Payment 8
Predecessor Security 8
Redemption Date 8
Redemption Price 8
Regular Record Date 9
Responsible Officer 9
Securities 9
Security Register and Security Registrar 9
Special Record Date 9
Stated Maturity 9
Subsidiary 10
Trust Indenture Act 10
Trustee 10
U.S. Government Obligation 10
Vice President 11
Article II. The Securities 11
Section 2.01.Designation and Amount of Securities 11
Section 2.02.Form of Securities and Trustee's
Certificate of Authentication 13
Section 2.03.Date and Denominations 14
Section 2.04.Execution, Authentication, and Delivery of
Securities 14
Section 2.05.Registration of Transfer and Exchange
16
Section 2.06.Temporary Securities 17
Section 2.07 Mutilated, Destroyed, Lost, and Stolen
Securities 18
Section 2.08.Cancellation of Surrendered Securities
19
Section 2.09.Payment of Interest; Interest Rights
Preserved 19
Section 2.10.Persons Deemed Owners 20
Section 2.11.Computation of Interest 21
Section 2.12.CUSIP Numbers 21
Article III. Redemption of Securities 21
Section 3.01.Applicability of Article 21
Section 3.02.Election to Redeem; Notice to Trustee
21
Section 3.03.Deposit of Redemption Price 22
Section 3.04.Securities Payable on Redemption Date
23
Section 3.05.Securities Redeemed in Part 23
Article IV. Sinking Funds 23
Section 4.01.Applicability of Article 23
Section 4.02.Satisfaction of Sinking Fund Payments With
Securities 24
Section 4.03.Redemption of Securities for Sinking Fund
24
Article V. Defeasance and Covenant Defeasance 24
Section 5.01.Company's Option to Effect Defeasance or
Covenant Defeasance 24
Section 5.02. Defeasance and Discharge 25
Section 5.03. Covenant Defeasance 25
Section 5.04. Conditions to Defeasance or Covenant
Defeasance 26
Section 5.05. Deposited Money and U.S. Government
Obligations to be Held in Trust; Other Miscellaneous
Provisions 28
Section 5.06. Reinstatement 28
Article VI. Particular Covenants of the Company 29
Section 6.01.Payment of Principal, Premium, and
Interest
on Securities 29
Section 6.02.Maintenance of Office or Agency 29
Section 6.03.Money for Securities Payments to be Held
in Trust 30
Section 6.04. Payment of Taxes and Other Claims 31
Section 6.05. Maintenance of Properties 31
Section 6.06. Existence 31
Section 6.07. Compliance with Laws 32
Section 6.08. Statement by Officers as to Default 32
Section 6.09. Waiver of Certain Covenants 32
Section 6.10. Calculation of Original Issue Discount
32
Article VII. Securities Holders' Lists And Reports By The
Company And The Trustee 33
Section 7.01.Company to Furnish Trustee Names and
Addresses of Holders 33
Section 7.02.Preservation of Information; Communication
to Holders 33
Section 7.03.Reports by Trustee 33
Section 7.04.Reports by Company 34
Article VIII. Default 34
Section 8.01.Event of Default 34
Section 8.02.Covenant of Company to Pay to Trustee
Whole Amount Due on Securities on Default
in Payment of Interest or Principal; Suits
for Enforcement by Trustee 37
Section 8.03 Application of Money Collected by Trustee
38
Section 8.04.Limitation on Suits by Holders of
Securities 39
Section 8.05.Rights and Remedies Cumulative; Delay or
Omission in Exercise of Rights not a Waiver
of Event of Default 39
Section 8.06.Rights of Holders of Majority in Principal
Amount of Outstanding Securities to Direct
Trustee 40
Section 8.07.Requirement of an Undertaking to Pay
Costs in Certain Suits Under the Indenture or
Against the Trustee 40
Section 8.08 Notice of Defaults 40
Section 8.09. Unconditional Right of Holders to Receive
Principal, Premium, and Interest 41
Section 8.10. Restoration of Rights and Remedies 41
Section 8.11. Trustee May File Proofs of Claims 41
Article IX. Concerning the Trustee 42
Section 9.01.Certain Duties and Responsibilities 42
Section 9.02.Certain Rights of Trustee 42
Section 9.03.Not Responsible for Recitals or Issuance
of Securities 43
Section 9.04.May Hold Securities 43
Section 9.05.Money Held in Trust 43
Section 9.06.Compensation and Reimbursement 43
Section 9.07.Disqualification; Conflicting Interests
44
Section 9.08.Corporate Trustee Required Eligibility
44
Section 9.09.Resignation and Removal; Appointment of
Successor 45
Section 9.10.Acceptance of Appointment by Successor
46
Section 9.11.Merger, Conversion, Consolidation, or
Succession to Business 47
Section 9.12.Preferential Collection of Claims Against
Company 48
Section 9.13.Appointment of Authenticating Agent 48
Article X. Supplemental Indentures And Certain Actions 50
Section 10.01.Purposes for Which Supplemental
Indentures May Be Entered Into Without Consent of
Holders 50
Section 10.02.Modification of Indenture With
Consent of Holders of at Least a Majority in
Principal Amount of Outstanding Securities 51
Section 10.03.Execution of Supplemental Indentures
52
Section 10.04.Effect of Supplemental Indentures
52
Section 10.05.Conformity with Trust Indenture Act
52
Section 10.06.Reference in Securities to
Supplemental
Indentures 53
Article XI. Consolidation, Merger, Sale, or Transfer 53
Section 11.01.Consolidations and Mergers of
Company
and Sales Permitted Only on Certain Terms 53
Article XII. Satisfaction and Discharge of Indenture 54
Section 12.01.Satisfaction and Discharge of
Indenture 54
Section 12.02.Application of Trust Money 54
Article XIII. Miscellaneous Provisions 55
Section 13.01.Successors and Assigns of Company
Bound by Indenture 55
Section 13.02.Service of Required Notice to
Trustee and
Company 55
Section 13.03.Service of Required Notice to
Holders;
Waiver 55
Section 13.04.Indenture and Securities to be
Construed in Accordance with the Laws of the State
of New York 56
Section 13.05.Compliance Certificates and Opinions
56
Section 13.06.Form of Documents Delivered to
Trustee 56
Section 13.07.Payments Due on Non-Business Days
56
Section 13.08.Provisions Required by Trust
Indenture Act to Control 57
Section 13.09.Invalidity of Particular Provisions
57
Section 13.10.Indenture May be Executed In
Counterparts 57
Section 13.11.Acts of Holders; Record Dates 57
Section 13.12.Effect of Headings and Table of
Contents 60
Section 13.13. Benefits of Indenture 60
Indenture, dated as of September 26, 1997, between
Edison Brothers Stores, Inc., a corporation duly
organized and existing under the laws of the State
of Delaware (the Company), and The Bank of New
York, a New York banking corporation, as Trustee
(the Trustee).
Recitals
A. The Company has duly authorized the execution and delivery
of this Indenture to provide for the issuance from time to time of its
unsecured debentures, notes, and other evidences of indebtedness (the
Securities), to be issued in one or more series as in this Indenture
provided.
B. All acts and things necessary to make the Securities, when
the Securities have been executed by the Company and authenticated by the
Trustee and delivered as provided in this Indenture, the valid, binding,
and legal obligations of the Company and to constitute these presents a
valid indenture and agreement according to its terms, have been done and
performed, and the execution and delivery by the Company of this Indenture
and the issue hereunder of the Securities have in all respects been duly
authorized; and the Company, in the exercise of legal right and power in it
vested, is executing and delivering this Indenture and proposes to make,
execute, issue, and deliver the Securities.
Now, Therefore, this Indenture Witnesseth:
In order to declare the terms and conditions upon which the
Securities are authenticated, issued, and delivered, and in consideration
of the premises and of the purchase and acceptance of the Securities by the
Holders thereof, it is mutually agreed, for the equal and proportionate
benefit of the respective Holders from time to time of the Securities or of
a series thereof, as follows:Paragraph Numbering Definition: X. 01. (a)
(1) (a) (i) (i) (a)
Article I. Definitions.
Section I.01. Certain Terms Defined.
(a) The terms defined in this Section 1.01 (except as herein
otherwise expressly provided or unless the context of this Indenture
otherwise requires) for all purposes of this Indenture and of any indenture
supplemental hereto have the respective meanings specified in this Section
1.01. All other terms used in this Indenture that are defined in the Trust
Indenture Act, either directly or by reference therein (except as herein
otherwise expressly provided or unless the context of this Indenture
otherwise requires), have the respective meanings assigned to such terms in
the Trust Indenture Act as in force at the date of this Indenture as
originally executed.
Act:
The term Act, when used with respect to any Holder, has the
meaning set forth in Section 13.11.
Affiliate:
The term Affiliate means, with respect to a particular Person,
any Person that, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person. For purposes of this
definition, control of a Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
controlling and controlled have meanings correlative of the foregoing.
Authenticating Agent:
The term Authenticating Agent means any Person authorized by the
Trustee pursuant to Section 9.13 to act on behalf of the Trustee to
authenticate Securities of one or more series.
Board of Directors:
The term Board of Directors means the Board of Directors of the
Company or a duly authorized committee of such Board.
Board Resolution:
The term Board Resolution means a copy of a resolution certified
by the Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on the
date of such certification, and delivered to the Trustee.
Business Day:
The term Business Day, when used with respect to any Place of
Payment, means each Monday, Tuesday, Wednesday, Thursday, and Friday which
is not a day on which banking institutions in that Place of Payment are
authorized or required by law or executive order to close.
Capital Lease:
The term Capital Lease means, with respect to any Person, any
lease of property (whether real, personal, or mixed) by such Person or its
Subsidiaries as lessee that would be capitalized on a balance sheet of such
Person or its Subsidiaries prepared in conformity with GAAP, other than, in
the case of such Person or its Subsidiaries, any such lease under which
such Person or any of its Subsidiaries is the lessor.
Capital Lease Obligation:
The term Capital Lease Obligations means, with respect to any
Person, the capitalized amount of all obligations of such Person and its
Subsidiaries under Capital Leases, as determined on a consolidated basis in
conformity with GAAP.
Commission:
The term Commission means the Securities and Exchange Commission,
as from time to time constituted, created under the Exchange Act or, if at
any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.
Common Stock:
The term Common Stock means the common stock of the Company.
Company:
The term Company means Edison Brothers Stores, Inc., a Delaware
corporation, until a successor Person shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter Company will
mean such successor Person.
Company Request or Company Order:
The term Company Request or Company Order means a written request
or order signed in the name of the Company by the Chief Executive Officer,
the President, the Chief Financial Officer or the Secretary of the Company,
and delivered to the Trustee.
Corporate Trust Office:
The term Corporate Trust Office means the office of the Trustee
at which at any particular time its corporate trust business is principally
administered, which on the date hereof is 101 Barclay Street, Floor 21
West, New York, New York 10286.
Covenant Defeasance:
The term Covenant Defeasance has the meaning set forth in Section
5.03.
Default:
The term Default means any event which, with notice or passage of
time or both, would constitute an Event of Default.
Defaulted Interest:
The term Defaulted Interest has the meaning set forth in Section
2.09.
Defeasance:
The term Defeasance has the meaning set forth in Section 5.02.
Defeasible Series:
The term Defeasible Series has the meaning set forth in Section
5.01.
Depositary:
The term Depositary means, with respect to Securities of any
series issuable in whole or in part in the form of one or more Global
Securities, a clearing agency registered under the Exchange Act that is
designated to act as Depositary for such Securities in accordance with
Section 2.01.
Event of Default:
The term Event of Default has the meaning set forth in Section
8.01(a).
Exchange Act:
The term Exchange Act means the Securities Exchange Act of 1934,
as amended, or any similar federal statute, and the rules and regulations
of the Commission thereunder, as the same may be in effect from time to
time.
GAAP:
The term GAAP means generally accepted accounting principles in
the United States of America as in effect from time to time set forth in
the opinions and pronouncements of the Accounting Principles Board and The
American Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board, or in such
other statements by any successor entity as may be in general use by
significant segments of the accounting profession, which are applicable to
the circumstances as of the date of determination.
Global Security:
The term Global Security means a Security that evidences all or
part of the Securities of any series and is authenticated and delivered to,
and registered in the name of, the Depositary for such Securities or a
nominee thereof.
Holder:
The term Holder means a person in whose name a particular
Security is registered in the Security Register.
Indebtedness:
The term Indebtedness means, as applied to any Person, without
duplication, (a) indebtedness for borrowed money, all indebtedness
evidenced by notes, bonds, debentures or other evidences of indebtedness,
and all indebtedness under purchase money mortgages or other purchase money
liens or conditional sales or similar title retention agreements, in each
case where such indebtedness has been created, incurred, assumed or
guaranteed by such Person or where such Person is otherwise liable
therefor, and (b) indebtedness for borrowed money secured by any mortgage,
pledge or other lien or encumbrance upon property owned by such Person even
though such Person has not assumed or become liable for the payment of such
indebtedness; provided, however, that indebtedness of the type referred
to in clause (b) above shall be included within the definition of
Indebtedness only to the extent of the lesser of: (i) the amount of the
underlying indebtedness referred to in the clause (b) above and (ii) the
aggregate value of the security for such indebtedness.
Indenture:
The term Indenture means this Indenture, as this Indenture may be
amended, supplemented, or otherwise modified from time to time, including,
for all purposes of this Indenture and any such supplemental indenture, the
provisions of the Trust Indenture Act that are deemed to be a part of and
govern this instrument and any such supplemental indenture, respectively.
The term Indenture will also include the terms of particular series of
Securities established in accordance with Section 2.01.
Interest:
The term interest, (i) when used with respect to an Original
Issue Discount Security which by its terms bears interest only after
Maturity, means interest which accrues from and after and is payable after
Maturity and (ii) when used with respect to any Security, means the amount
of all interest accruing on such Security, including any default interest
and any interest that would have accrued after any Event of Default but for
the occurrence of such Event of Default, whether or not a claim for such
interest would be otherwise allowable under applicable law.
Interest Payment Date:
The term Interest Payment Date, when used with respect to any
Security, means the Stated Maturity of an installment of interest on such
Security.
Material Adverse Effect:
The term Material Adverse Effect means a material adverse effect
on the business, assets, financial condition or results of operations of
the Company (taken together with its Subsidiaries as a whole).
Maturity:
The term Maturity, when used with respect to any Security, means
the date on which the principal of that Security or an installment of
principal becomes due and payable as therein or herein provided, whether at
the Stated Maturity or by declaration of acceleration, call for redemption,
or otherwise.
Notice of Default:
The term Notice of Default means a written notice of the kind set
forth in Section 8.01(a)(iv).
Officer's Certificate:
The term Officer's Certificate means a certificate executed on
behalf of the Company by a Responsible Officer, and delivered to the
Trustee.
Opinion of Counsel:
The term Opinion of Counsel means an opinion in writing signed by
legal counsel, who, subject to any express provisions hereof, may be an
employee of or counsel for the Company or any Subsidiary, reasonably
acceptable to the Trustee.
Original Issue Discount Security:
The term Original Issue Discount Security means any Security
which provides for an amount less than the principal amount thereof to be
due and payable upon a declaration of acceleration of the Maturity thereof
pursuant to Section 8.01(b).
Outstanding:
The term Outstanding means, when used with reference to
Securities as of a particular time, all Securities theretofore issued by
the Company and authenticated and delivered by the Trustee under this
Indenture, except (a) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation, (b) Securities in respect of
which (i) notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made,
and (ii) money in the amount required for the redemption thereof has been
deposited with the Trustee or any Paying Agent (other than the Company) in
trust for the Holders of such Securities, (c) Securities paid pursuant to
Section 2.07(c), and (d) Securities in exchange for or in lieu of which
other Securities have been authenticated and delivered pursuant to this
Indenture, other than any such Securities in respect of which there shall
have been presented to the Trustee proof satisfactory to it that such
Securities are held by a bona fide purchaser in whose hands such Securities
are valid obligations of the Company; provided, however, that in
determining whether the Holders of the requisite principal amount of the
Outstanding Securities have given any request, demand, authorization,
direction, notice, consent, or waiver hereunder, (x) the principal amount
of an Original Issue Discount Security that will be deemed to be
Outstanding will be the amount of the principal thereof that would be due
and payable as of the date of such determination upon acceleration of the
Maturity thereof to such date pursuant to Section 8.01(b), (y) the
principal amount of a Security denominated in one or more foreign
currencies or currency units will be the U.S. dollar equivalent, determined
in the manner contemplated by Section 2.01 on the date of original issuance
of such Security, of the principal amount (or, in the case of an Original
Issue Discount Security, the U.S. dollar equivalent on the date of original
issuance of such Security of the amount determined as provided in clause
(i) above) of such Security, and (z) Securities owned by the Company or any
other obligor upon the Securities or any Affiliate of the Company or of
such other obligor will be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee will be protected in
relying upon any such request, demand, authorization, direction, notice,
consent, or waiver, only Securities which a Responsible Officer of the
Trustee actually knows to be so owned will be so disregarded. Securities
so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee
the pledgee's right so to act with respect to such Securities and that the
pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor.
Paying Agent:
The term Paying Agent means any Person authorized by the Company
to pay the principal of or any premium or interest on any Securities on
behalf of the Company.
Person:
The term Person means any individual, partnership, corporation,
limited liability company, limited liability partnership, joint stock
company, business trust, trust, unincorporated association, joint venture,
or other entity, or government or political subdivision or agency thereof.
Place of Payment:
The term Place of Payment, when used with respect to the
Securities of any series, means the place or places for the payment of the
principal of and any premium and interest on the Securities of that series
established in accordance with Section 2.01.
Predecessor Security:
The term Predecessor Security, when used with respect to any
particular Security, means every previous Security evidencing all or a
portion of the same debt as that evidenced by such Security; and, for the
purposes of this definition, any Security authenticated and delivered under
Section 2.07 in exchange for or in lieu of a mutilated, destroyed, lost, or
stolen Security will be deemed to evidence the same debt as the mutilated,
destroyed, lost, or stolen Security.
Redemption Date:
The term Redemption Date, when used with respect to any Security
to be redeemed, means the date fixed for such redemption by or pursuant to
this Indenture.
Redemption Price:
The term Redemption Price, when used with respect to any Security
to be redeemed, means the price (including premium, if any) at which it is
to be redeemed pursuant to this Indenture.
Regular Record Date:
The term Regular Record Date for the interest payable on any
Interest Payment Date on the Securities of any series means the date
established for that purpose in accordance with Section 2.01.
Responsible Officer:
The term Responsible Officer, when used (a) with respect to the
Company, means the Chief Executive Officer, the President, the Chief
Financial Officer or the Secretary of the Company and (b) with respect to
the Trustee, means any Vice President, any Assistant Vice President, any
Assistant Secretary, any Assistant Treasurer, any trust officer or
assistant trust officer, or any other officer or assistant officer of the
Trustee customarily performing functions similar to those performed by the
persons who at the time are such officers, respectively, or to whom any
corporate trust matter is referred because of his knowledge of and
familiarity with the particular subject.
Securities:
The term Securities has the meaning set forth in the first
recital of this Indenture and more particularly means any Securities
authenticated and delivered under this Indenture.
Security Register and Security Registrar:
The terms Security Register and Security Registrar have the
respective meanings set forth in Section 2.05.
Special Record Date:
The term Special Record Date for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 2.09.
Stated Maturity:
The term Stated Maturity, when used with respect to any Security,
any installment of interest thereon, or any other amount payable under this
Indenture or the Securities, means the date specified in this Indenture or
such Security as the regularly scheduled date on which the principal of
such Security, such installment of interest, or such other amount, is due
and payable.
Subsidiary:
The term Subsidiary means, as applied with respect to any Person,
any corporation, partnership, or other business entity of which, in the
case of a corporation, more than 50% of the issued and outstanding capital
stock having ordinary voting power to elect a majority of the board of
directors of such corporation (irrespective of whether at the time capital
stock of any other class or classes of such corporation has or might have
voting power upon the occurrence of any contingency), or, in the case of
any partnership or other legal entity, more than 50% of the ordinary equity
capital interests, is at the time directly or indirectly owned or
controlled by such Person, by such Person and one or more of its other
Subsidiaries, or by one or more of such Person's other Subsidiaries.
Trust Indenture Act:
The term Trust Indenture Act means the Trust Indenture Act of
1939, as amended, as in force at the date as of which this instrument was
executed; provided, however, that in the event the Trust Indenture Act of
1939 is amended after such date, Trust Indenture Act means, to the extent
required by any such amendment, the Trust Indenture Act of 1939 as so
amended.
Trustee:
The term Trustee means the Person named as the Trustee in the
first paragraph of this Indenture until a successor Trustee shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter Trustee will mean or include each Person who is then a Trustee
hereunder, and if at any time there is more than one such Person, Trustee
as used with respect to the Securities of any series will mean each Trustee
with respect to Securities of that series.
U.S. Government Obligation:
The term U.S. Government Obligation means (a) any security that
is (i) a direct obligation of the United States of America for the payment
of which full faith and credit of the United States of America is pledged
or (ii) an obligation of a Person controlled or supervised by and acting as
an agency or instrumentality of the United States of America the payment of
which is unconditionally guaranteed as a full faith and credit obligation
by the United States of America, which, in either case (i) or (ii), is not
callable or redeemable at the option of the issuer thereof and (b) any
depositary receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act of 1933, as amended) as custodian with respect to any U.S.
Government Obligation specified in clause (a), which U.S. Government
Obligation is held by such custodian for the account of the holder of such
depositary receipt, or with respect to any specific payment of principal of
or interest on any such U.S. Government Obligation, provided that (except
as required by law) such custodian is not authorized to make any deduction
from the amount payable to the holder of such depositary receipt from any
amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment of principal or interest evidenced by
such depositary receipt.
Vice President:
The term Vice President, when used with respect to the Company or
the Trustee, means any vice president, whether or not designated by a
number or a word or words added before or after the title vice president.
(b) The words Article and Section refer to an Article and
Section, respectively, of this Indenture. The words herein, hereof,and
hereunder and other words of similar import refer to this Indenture as a
whole and not to any particular Article, Section, or other subdivision.
Certain terms used principally in Articles V, VI, and IX are defined in
those Articles. Terms in the singular include the plural and terms in the
plural include the singular.
Article II. The Securities.
Section II.01. Designation and Amount of Securities.
(a) The aggregate principal amount of Securities that may be
authenticated and delivered under this Indenture is unlimited.
(b) The Securities may be issued in one or more series. There
will be established in or pursuant to a Board Resolution and, subject to
Section 2.04, set forth or determined in the manner provided in an
Officer's Certificate, or established in one or more indentures
supplemental hereto, prior to the issuance of Securities of any series:
(i) the title of the Securities of the series (which will distinguish the
Securities of the series from Securities of any other series); (ii) any
limit upon the aggregate principal amount of the Securities of the series
which may be authenticated and delivered under this Indenture (except for
Securities authenticated and delivered upon registration of transfer of, or
in the exchange for, or in lieu of, other Securities of the series pursuant
to Section 2.05, 2.06, 2.07, 3.05, or 10.06 and except for any Securities
which, pursuant to Section 2.04, are deemed never to have been
authenticated and delivered hereunder); (iii) the Person to whom any
interest on a Security of the series will be payable, if other than the
Person in whose name that Security (or one or more Predecessor Securities)
is registered at the close of business on the Regular Record Date for such
interest; (iv) the date or dates on which the principal of the Securities
of the series is payable; (v) the rate or rates at which the Securities of
the series will bear interest, if any, the date or dates from which such
interest will accrue, the Interest Payment Dates on which any such interest
will be payable, and the Regular Record Date for any interest payable on
any Interest Payment Date; (vi) the place or places where the principal of
and any premium and interest on Securities of the series will be payable;
(vii) the period or periods within which, the price or prices at which, and
the terms and conditions upon which Securities of the series may be
redeemed, in whole or in part, at the option of the Company; (viii) the
obligation, if any, of the Company to redeem or purchase Securities of the
series pursuant to any sinking fund or analogous provisions or at the
option of a Holder thereof and the period or periods within which, the
price or prices at which, and the terms and conditions upon which
Securities of the series will be redeemed or purchased, in whole or in
part, pursuant to such obligation; (ix) if other than denominations of
$1,000 and integral multiples thereof, the denominations in which
Securities of the series will be issuable; (x) the currency, currencies, or
currency units in which payment of the principal of and any premium and
interest on any Securities of the series will be payable if other than the
currency of the United States of America and the manner of determining the
equivalent thereof in the currency of the United States of America for
purposes of the definition of Outstanding in Section 1.01; (xi) if the
amount of payments of principal of or any premium or interest on any
Securities of the series may be determined with reference to an index,
based upon a formula, or in some other manner, the manner in which such
amounts will be determined; (xii) if the principal of or any premium or
interest on any Securities of the series is to be payable, at the election
of the Company or a Holder thereof, in one or more currencies or currency
units other than that or those in which the Securities are stated to be
payable, the currency, currencies, or currency units in which payment of
the principal of and any premium and interest on Securities of such series
as to which such election is made will be payable, and the periods within
which and the terms and conditions upon which such election is to be made;
(xiii) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which will be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section
8.01(b); (xiv) if applicable, that the Securities of the series will be
subject to either or both of Defeasance or Covenant Defeasance as provided
in Article V, provided that no series of Securities that is convertible
into Common Stock pursuant to Section 2.01(b)(xvi) or convertible into or
exchangeable for any other securities pursuant to Section 2.01(b)(xvii)
will be subject to Defeasance pursuant to Section 5.02; (xv) if and as
applicable, that the Securities of the series will be issuable in whole or
in part in the form of one or more Global Securities and, in such case, the
Depositary or Depositaries for such Global Security or Global Securities
and any circumstances other than those set forth in Section 2.05 in which
any such Global Security may be transferred to, and registered and
exchanged for Securities registered in the name of, a Person other than the
Depositary for such Global Security or a nominee thereof and in which any
such transfer may be registered; (xvi) the terms and conditions, if any,
pursuant to which the Securities are convertible into Common Stock; (xvii)
the terms and conditions, if any, pursuant to which the Securities are
convertible into or exchangeable for any other securities, including
(without limitation) securities of Persons other than the Company; (xviii)
if and as applicable, that the Securities of the series will be subordinate
and subject in right of payment to the prior payment of other Indebtedness;
and (xix) any other terms of, or provisions, covenants, rights or other
matters applicable to, the series (which terms, provisions, covenants,
rights or other matters will not be inconsistent with the provisions of
this Indenture, except as permitted by Section 10.01(e)).
(c) All Securities of any one series will be substantially
identical except as to denomination and except as may otherwise be provided
in or pursuant to the Board Resolution referred to below and (subject to
Section 2.04) set forth or determined in the manner provided in the
Officer's Certificate referred to above or in any such indenture
supplemental hereto.
(d) If any of the terms of the series are established by action
taken pursuant to a Board Resolution, a copy of an appropriate record of
such action will be certified by the Secretary or an Assistant Secretary of
the Company and delivered to the Trustee concurrently with or prior to the
delivery of the Officer's Certificate setting forth the terms of the
series.
Section II.02. Form of Securities and Trustee's Certificate of
Authentication.
(a) The Securities of each series will be in such form as may be
established by or pursuant to a Board Resolution or in one or more
indentures supplemental hereto, and may have such letters, numbers, or
other marks of identification and such legends or endorsements placed
thereon as may be required to comply with the rules of any securities
exchange or as may, consistently herewith, be determined by the officers
executing such Securities, as evidenced by their execution of the
Securities. If the form of Securities of any series is established by
action taken pursuant to a Board Resolution, a copy of an appropriate
record of such action will be certified by the Secretary or an Assistant
Secretary of the Company and delivered to the Trustee concurrently with or
prior to the delivery of the Company Order contemplated by Section 2.04 for
the authentication and delivery of such Securities.
(b) The definitive Securities will be printed, lithographed, or
engraved on steel engraved borders or may be produced in any other manner
permitted by the rules of any securities exchange on which the Securities
may be listed, all as determined by the officers executing such Securities,
as evidenced by their execution of such Securities.
(c) The Trustee's certificate of authentication will be in
substantially the following form:
[Form of Trustee's Certificate of Authentication for Securities]
Trustee's Certificate of Authentication
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By:
Authorized Signatory
(d) Every Global Security authenticated and delivered hereunder
will bear a legend in substantially the following form:
[Form of Legend for Global Securities]
This Security is a Global Security within the meaning of the
Indenture hereinafter referred to and is registered in the name of a
Depositary or a nominee thereof. This Security may not be transferred to,
or registered or exchanged for Securities registered in the name of, any
Person other than the Depositary or a nominee thereof, and no such transfer
may be registered, except in the limited circumstances described in the
Indenture. Every Security authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, this Security will be a
Global Security subject to the foregoing, except in such limited
circumstances.
Section II.03. Date and Denominations.
Each Security will be dated the date of its authentication. The
Securities of each series will be issuable only in registered form without
coupons in such denominations as may be specified in accordance with
Section 2.01. In the absence of any such specified denomination with
respect to the Securities of any series, the Securities of such series will
be issuable in denominations of $1,000 and integral multiples thereof.
Section II.04. Execution, Authentication, and Delivery of Securities.
(a) The Securities will be executed on behalf of the Company by
the Chief Executive Officer or the President of the Company and attested by
the Treasurer or the Secretary of the Company under its corporate seal.
The signature of any of these officers on the Securities may be manual or
facsimile. The seal of the Company may be in the form of a facsimile
thereof and may be impressed, affixed, imprinted, or otherwise reproduced
on the Securities.
(b) Only such Securities bearing the Trustee's certificate of
authentication, signed manually by the Trustee, will be entitled to the
benefits of this Indenture or be valid or obligatory for any purpose. Such
execution of the certificate of authentication by the Trustee upon any
Securities executed by the Company will be conclusive evidence that the
Securities so authenticated have been duly authenticated and delivered
hereunder. Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 2.08, for all purposes of this
Indenture such Security will be deemed never to have been authenticated and
delivered hereunder and will never be entitled to the benefits of this
Indenture.
(c) Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company will
bind the Company, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of
such Securities or did not hold such offices at the date of such
Securities.
(d) At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities of any
series executed by the Company to the Trustee for authentication, together
with a Company Order for the authentication and delivery of such
Securities, and the Trustee in accordance with the Company Order will
authenticate and make such Securities available for delivery. If the form
or terms of the Securities of the series have been established in or
pursuant to one or more Board Resolutions as permitted by Sections 2.01 and
2.02, in authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee will be entitled to receive, and (subject to Section 9.01) will be
fully protected in relying upon, an Opinion of Counsel stating (i) if the
form of such Securities has been established by or pursuant to a Board
Resolution as permitted by Section 2.02, that such form has been
established in conformity with the provisions of this Indenture, (ii) if
the terms of such Securities have been established by or pursuant to a
Board Resolution as permitted by Section 2.01, that such terms have been
established in conformity with the provisions of this Indenture, and (iii)
that such Securities, when authenticated and delivered by the Trustee and
issued by the Company in the manner and subject to any conditions specified
in such Opinion of Counsel, will constitute valid and binding obligations
of the Company enforceable in accordance with their terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, or other laws of general applicability relating
to or affecting creditors' rights and by general principles of equity.
(e) Notwithstanding the provisions of Sections 2.01 and 2.04(d),
if all Securities of a series are not to be originally issued at one time,
it will not be necessary to deliver the Officer's Certificate otherwise
required pursuant to Section 2.01 or the Company Order and Opinion of
Counsel otherwise required pursuant to Section 2.04(d) at or prior to the
time of authentication of each Security of such series if such documents
are delivered at or prior to the authentication upon original issuance of
the first Security of such series to be issued.
Section II.05. Registration of Transfer and Exchange.
(a) The Company will cause to be kept at the Corporate Trust
Office a register (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein
sometimes collectively referred to as the Security Register) in which,
subject to such reasonable regulations as it may prescribe, the Company
will provide for the registration of Securities and of transfers of
Securities. The Trustee is hereby appointed Security Registrar for the
purpose of registering Securities and transfers of Securities as herein
provided.
(b) Upon surrender for registration of transfer of any Security
of any series at the office or agency in a Place of Payment for that
series, the Company will execute, and the Trustee will authenticate and
make available for delivery, in the name of the designated transferee or
transferees, one or more new Securities of the same series, of any
authorized denominations and of a like aggregate principal amount and
tenor.
(c) At the option of the Holder, Securities of any series may be
exchanged for other Securities of the same series, of any authorized
denominations and of a like aggregate principal amount and tenor, upon
surrender of the Securities to be exchanged at such office or agency.
Whenever any Securities are so surrendered for exchange, the Company will
execute, and the Trustee will authenticate and make available for delivery,
the Securities which the Holder making the exchange is entitled to receive.
(d) Every Security presented or surrendered for registration of
transfer or exchange will (if so required by the Company or the Trustee) be
duly endorsed, or be accompanied by a written instrument or instruments of
transfer, in form reasonably satisfactory to the Company and the Security
Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing. No service charge will be made for any registration
of transfer or exchange of Securities, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge that may
be imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Section 2.06, 3.05, or 10.06
not involving any transfer. The Company will not be required (i) to issue,
register the transfer of, or exchange Securities of any series during a
period beginning at the opening of business 15 calendar days before the
mailing of a notice of redemption of Securities of that series selected for
redemption under Section 3.02(c) and ending at the close of business on the
day of such mailing or (ii) to register the transfer of or exchange any
Security so selected for redemption in whole or in part, except, in the
case of any Securities to be redeemed in part, the portion thereof not
being redeemed.
(e) All Securities issued upon any registration of transfer or
exchange of Securities will be valid obligations of the Company, evidencing
the same debt, and entitled to the same benefits under this Indenture, as
the Securities surrendered upon such registration of transfer or exchange.
(f) Notwithstanding any other provision in this Indenture, no
Global Security may be transferred to, or registered or exchanged for
Securities registered in the name of, any Person other than the Depositary
for such Global Security or any nominee thereof, and no such transfer may
be registered, unless (i) such Depositary (A) notifies the Company that it
is unwilling or unable to continue as Depositary for such Global Security
or (B) ceases to be a clearing agency registered under the Exchange Act,
(ii) the Company executes and delivers to the Trustee a Company Order that
such Global Security shall be so transferable, registrable, and
exchangeable, and such transfers shall be registrable, (iii) there shall
have occurred and be continuing an Event of Default with respect to the
Securities evidenced by such Global Security, or (iv) there shall exist
such other circumstances, if any, as have been specified for this purpose
in accordance with Section 2.01. Notwithstanding any other provision in
this Indenture, a Global Security to which the restriction set forth in the
preceding sentence shall have ceased to apply may be transferred only to,
and may be registered and exchanged for Securities registered only in the
name or names of, such Person or Persons as the Depositary for such Global
Security shall have directed and no transfer thereof other than such a
transfer may be registered. Every Security authenticated and delivered
upon registration of transfer of, or in exchange for or in lieu of, a
Global Security to which the restriction set forth in the first sentence of
this Section 2.05(f) shall apply, whether pursuant to this Section 2.05,
Section 2.06, 2.07, 3.05, or 10.06 or otherwise, will be authenticated and
delivered in the form of, and will be, a Global Security.
Section II.06. Temporary Securities.
Pending the preparation of definitive Securities of any series,
the Company may execute and register and upon Company Order the Trustee
will authenticate and make available for delivery temporary Securities
(printed, lithographed, or typewritten), of any authorized denomination,
and substantially in the form of the definitive Securities but with such
omissions, insertions, and variations as may be appropriate for temporary
Securities, all as may be determined by the officers executing such
Securities as evidenced by their execution of such Securities; provided,
however, that the Company will use reasonable efforts to have definitive
Securities of that series available at the times of any issuance of
Securities under this Indenture. Every temporary Security will be executed
and registered by the Company and be authenticated by the Trustee upon the
same conditions and in substantially the same manner, and with like effect,
as the definitive Securities. The Company will execute and register and
furnish definitive Securities of such series as soon as practicable and
thereupon any or all temporary Securities of such series may be surrendered
in exchange therefor at the office or agency of the Company in the Place of
Payment for that series, and the Trustee will authenticate and make
available for delivery in exchange for such temporary Securities of such
series one or more definitive Securities of the same series, of any
authorized denominations, and of a like aggregate principal amount and
tenor. Such exchange will be made by the Company at its own expense and
without any charge to the Holder therefor. Until so exchanged, the
temporary Securities of any series will be entitled to the same benefits
under this Indenture as definitive Securities of the same series
authenticated and delivered hereunder.
Section II.07. Mutilated, Destroyed, Lost, and Stolen Securities.
(a) If any mutilated Security is surrendered to the Trustee, the
Company will execute and the Trustee will authenticate and make available
for delivery in exchange therefor a new Security of the same series and of
like tenor and principal amount and bearing a number not contemporaneously
outstanding.
(b) If there shall be delivered to the Company and the Trustee
(i) evidence to their satisfaction of the destruction, loss, or theft of
any Security and (ii) such security or indemnity as may be required by them
to save each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Trustee that such Security has been
acquired by a bona fide purchaser, the Company will execute and the Trustee
will authenticate and make available for delivery, in lieu of any such
destroyed, lost, or stolen Security, a new Security of the same series and
of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
(c) In case any such mutilated, destroyed, lost, or stolen
Security has become or is about to become due and payable, the Company in
its discretion may, instead of issuing a new Security, pay such Security.
(d) Upon the issuance of any new Security under this Section
2.07, the Company may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto
and any other expenses (including the fees and expenses of the Trustee)
connected therewith.
(e) Every new Security of any series issued pursuant to this
Section 2.07 in exchange for any mutilated Security or in lieu of any
destroyed, lost, or stolen Security will constitute an original additional
contractual obligation of the Company, whether or not the mutilated,
destroyed, lost, or stolen Security shall be at any time enforceable by
anyone, and will be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Securities of that series duly
issued hereunder.
(f) The provisions of this Section 2.07 are exclusive and will
preclude (to the extent lawful) all other rights and remedies with respect
to the replacement or payment of mutilated, destroyed, lost, or stolen
Securities.
Section II.08. Cancellation of Surrendered Securities.
All Securities surrendered for payment, redemption, registration
of transfer or exchange, or for credit against any sinking fund payment
will, if surrendered to any Person other than the Trustee, be delivered to
the Trustee and will be promptly cancelled by it. The Company may at any
time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have acquired
in any manner whatsoever, and may deliver to the Trustee (or to any other
Person for delivery to the Trustee) for cancellation any Securities
previously authenticated hereunder which the Company has not issued and
sold, and all Securities so delivered will be promptly cancelled by the
Trustee. No Securities will be authenticated in lieu of or in exchange for
any Securities cancelled as provided in this Section 2.08, except as
expressly permitted by this Indenture. All cancelled Securities held by
the Trustee will be disposed of as directed by a Company Order, provided,
however, that the Trustee will not be required to destroy cancelled
Securities except in accordance with its established policies.
Section II.09. Payment of Interest; Interest Rights Preserved.
(a) Except as otherwise provided in accordance with Section 2.01
with respect to any series of Securities, interest on any Security which is
payable, and is punctually paid or duly provided for, on any Interest
Payment Date will be paid to the Person in whose name that Security (or one
or more Predecessor Securities) is registered at the close of business on
the Regular Record Date for such interest.
(b) Any interest on any Security of any series which is payable,
but is not punctually paid or duly provided for, on any Interest Payment
Date (herein called Defaulted Interest) will forthwith cease to be payable
to the Holder on the relevant regular Record Date by virtue of having been
such Holder, and such Defaulted Interest may be paid by the Company
together with interest thereon (to the extent permitted by law) at the rate
of interest applicable to such Security, at its election in each case, as
provided in clause (i) or (ii) below:
(i) The Company may elect to make payment of any Defaulted
Interest (and interest thereon, if any) to the Persons in whose names
the Securities of such series (or their respective Predecessor
Securities) are registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest, which will be
fixed in the following manner. The Company will notify the Trustee in
writing of the amount of Defaulted Interest (and interest thereon, if
any) proposed to be paid on each Security of such series and the date
of the proposed payment, and at the same time the Company will deposit
with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest (and
interest thereon, if any) or will make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the benefit
of the persons entitled to such Defaulted Interest (and interest
thereon, if any) as in this clause (i) provided. Thereupon the
Trustee will fix a Special Record Date for the payment of such
Defaulted Interest (and interest thereon, if any) which will be not
more than 15 calendar days and not less than 10 calendar days prior to
the date of the proposed payment and not less than 10 calendar days
after the receipt by the Trustee of the notice of the proposed
payment. The Trustee will promptly notify the Company of such Special
Record Date and, in the name and at the expense of the Company, will
cause notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor to be mailed, first-class postage
prepaid, to each Holder of Securities of such series at his address as
it appears in the Security Register, not less than 10 calendar days
prior to such Special Record Date. Notice of the proposed payment of
such Defaulted Interest (and interest thereon, if any) and the Special
Record Date therefor having been so mailed, such Defaulted Interest
will be paid to the Persons in whose names the Securities of such
series (or their respective Predecessor Securities) are registered at
the close of business on such Special Record Date and will no longer
be payable pursuant to the following clause (ii).
(ii) The Company may make payment of any Defaulted Interest
(and interest thereon, if any) on the Securities of any series in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which such Securities may be listed, and upon
such notice as may be required by such exchange, if, after notice
given by the Company to the Trustee of the proposed payment pursuant
to this clause (ii), such manner of payment shall be deemed
practicable by the Trustee.
(c) Subject to the foregoing provisions of this Section 2.09,
each Security delivered under this Indenture upon registration of transfer
of or in exchange for or in lieu of any other Security will carry the
rights to interest accrued and unpaid, and to accrue, which were carried by
such other Security.
Paragraph Numbering Definition: X. 1. (a) (1) (a) (i) (i) (a)
Starting Paragraph Number: 2.10
Section II.10. Persons Deemed Owners.
Prior to due presentment of a Security for registration of
transfer, the Company, the Trustee, and any agent of the Company or the
Trustee may treat the Person in whose name such Security is registered as
the owner of such Security for the purpose of receiving payment of
principal of and any premium and (subject to Section 2.09) any interest on
such Security and for all other purposes whatsoever, whether or not such
Security shall be overdue, and neither the Company, the Trustee nor any
agent of the Company or the Trustee will be affected by notice to the
contrary.
Section II.11. Computation of Interest.
Except as otherwise specified in accordance with Section 2.01 for
Securities of any series, interest on the Securities of each series will be
computed on the basis of a 360-day year consisting of 12 30-day months.
Section II.12. CUSIP Numbers.
The Company, in issuing Securities of any series, may use CUSIP
numbers (if then generally in use) and, if so, the Trustee will use CUSIP
numbers in notices of redemption as a convenience to Holders; provided that
any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as
contained in any notice of a redemption and that reliance may be placed
only on the other identification numbers printed on the Securities, and any
such redemption will not be affected by any defect in or omission of such
numbers. To the extent applicable, the Company will promptly notify the
Trustee of any change in the CUSIP numbers.
Paragraph Numbering Definition: X. 01. (a) (1) (a) (i) (i) (a)
Starting Paragraph Number: 3.
Article III. Redemption of Securities.
Section III.01. Applicability of Article.
Securities of any series which are redeemable before their Stated
Maturity will be redeemable in accordance with their terms and (except as
otherwise specified in accordance with Section 2.01 for Securities of any
series) in accordance with this Article III.
Section III.02. Election to Redeem; Notice to Trustee.
(a) The election of the Company to redeem any Securities will be
evidenced by a Board Resolution. In case of any redemption at the election
of the Company, the Company will, at least 60 calendar days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date,
of the principal amount of Securities of such series to be redeemed. In
the case of any redemption of Securities prior to the expiration of any
restriction on such redemption provided in the terms of such Securities or
elsewhere in this Indenture, the Company will furnish the Trustee with an
Officer's Certificate evidencing compliance with such restriction.
(b) Notice of redemption of Securities to be redeemed at the
election of the Company will be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company and
will be irrevocable. Notice of redemption will be given by mail, first-
class postage prepaid, not less than 30 or more than 60 calendar days prior
to the Redemption Date, to each Holder of Securities to be redeemed, at his
address appearing in the Security Register. All notices of redemption will
identify the Securities to be redeemed (including the CUSIP numbers
thereof, if applicable) and will state (i) the Redemption Date, (ii) the
Redemption Price, (iii) if less than all the Outstanding Securities of any
series are to be redeemed, the identification (and, in the case of partial
redemption of any Securities, the principal amounts) of the particular
Securities to be redeemed, (iv) that on the Redemption Date the Redemption
Price will become due and payable upon each such Security to be redeemed
and, if applicable, that interest thereon will cease to accrue on and after
said date, (v) the place or places where such Securities are to be
surrendered for payment of the Redemption Price, (vi) that the redemption
is for a sinking fund, if such is the case, and (vii) the specific
provision of this Indenture pursuant to which such Securities are to be
redeemed.
(c) If less than all the Securities of any series are to be
redeemed, the particular Securities to be redeemed will be selected not
more than 60 calendar days prior to the Redemption Date by the Trustee,
from the Outstanding Securities of such series not previously called for
redemption, by such method as the Trustee may deem fair and appropriate and
which may provide for the selection for redemption of portions (equal to
the minimum authorized denomination for Securities of that series or any
integral multiple thereof) of the principal amount of Securities of such
series of a denomination larger than the minimum authorized denomination
for Securities of that series. The Trustee will promptly notify the
Company in writing of the Securities selected for redemption and, in the
case of any Securities selected for partial redemption, the principal
amount thereof to be redeemed.
(d) For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Securities
will relate, in the case of any Securities redeemed or to be redeemed only
in part, to the portion of the principal amount of such Securities which
has been or is to be redeemed.
Section III.03. Deposit of Redemption Price.
At or prior to 10:00 a.m., New York City time, any Redemption
Date, the Company will deposit with the Trustee or with a Paying Agent (or,
if the Company is acting as its own Paying Agent, segregate and hold in
trust as provided in Section 6.03) an amount of money sufficient to pay the
Redemption Price of, and (except if the Redemption Date shall be an
Interest Payment Date) any accrued interest on, all of the Securities that
are to be redeemed on that date.
Section III.04. Securities Payable on Redemption Date.
(a) Notice of redemption having been given as aforesaid, the
Securities so to be redeemed will, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from and after such
date (unless the Company defaults in the payment of the Redemption Price
and accrued interest) such Securities will cease to accrue interest. Upon
surrender of any such Security for redemption in accordance with said
notice, such Security will be paid by the Company at the Redemption Price,
together with accrued interest to the Redemption Date; provided, however,
that, unless otherwise specified in accordance with Section 2.01,
installments of interest whose Stated Maturity is on or prior to the
Redemption Date will be payable to the Holders of such Securities, or one
or more Predecessor Securities, registered as such at the close of business
on the relevant Record Dates in accordance with their terms and the
provisions of Section 2.09.
(b) If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal and any premium will,
until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Security.
Section III.05. Securities Redeemed in Part.
Any Security that is to be redeemed only in part will be
surrendered at a Place of Payment therefor (with, if the Company or the
Trustee so requires, due endorsement by, or a written instrument of
transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or his attorney duly authorized in writing), and the
Company will execute, and the Trustee will authenticate and make available
for delivery to the Holder of such Security without service charge, a new
Security or Securities of the same series and of like tenor, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal
of the Security so surrendered.
Article IV. Sinking Funds.
Section IV.01. Applicability of Article.
The provisions of this Article IV will be applicable to any
sinking fund for the retirement of Securities of a series except as
otherwise specified in accordance with Section 2.01 for Securities of such
series. The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a mandatory
sinking fund payment, and any payment in excess of such minimum amount
provided for by the terms of Securities of any series is herein referred to
as an optional sinking fund payment. If provided for by the terms of
Securities of any series, the amount of any sinking fund payment may be
subject to reduction as provided in Section 4.02. Each sinking fund
payment with respect to Securities of a particular series will be applied
to the redemption of Securities of such series as provided for by the terms
of Securities of such series.
Section IV.02. Satisfaction of Sinking Fund Payments With Securities.
The Company (a) may deliver Outstanding Securities of a series
(other than any previously called for redemption) and (b) may apply as a
credit Securities of a series which have been redeemed either at the
election of the Company pursuant to the terms of such Securities or through
the application of permitted optional sinking fund payments pursuant to the
terms of such Securities, in each case in satisfaction of all or any part
of any sinking fund payment with respect to the Securities of such series
required to be made pursuant to the terms of such Securities as provided
for by the terms of such series, provided that such Securities have not
been previously so credited. Such Securities will be received and credited
for such purpose by the Trustee at the Redemption Price specified in such
Securities for redemption through operation of the sinking fund and the
amount of such sinking fund payment will be reduced accordingly.
Section IV.03. Redemption of Securities for Sinking Fund.
Not less than 60 calendar days prior to each sinking fund payment
date for any series of Securities, the Company will deliver to the Trustee
an Officer's Certificate specifying the amount of the next ensuing sinking
fund payment for that series pursuant to the terms of that series, the
portion thereof, if any, that is to be satisfied by payment of cash and the
portion thereof, if any, that is to be satisfied by delivering and
crediting Securities of that series pursuant to Section 4.02 and will also
deliver to the Trustee any Securities to be so delivered. Not less than 30
calendar days before each such sinking fund payment date, the Trustee will
select the Securities to be redeemed upon such sinking fund payment date in
the manner specified in Section 3.02(c) and cause notice of the redemption
thereof to be given in the name of and at the expense of the Company in the
manner provided in Section 3.02(b). Such notice having been duly given,
the redemption of such Securities will be made upon the terms and in the
manner stated in Sections 3.04 and 3.05.
Article V. Defeasance and Covenant Defeasance.
Section V.01. Company's Option to Effect Defeasance or Covenant
Defeasance.
The Company may elect, at its option by Board Resolution at any
time, to have either Section 5.02 or Section 5.03 applied to the
Outstanding Securities of any series designated pursuant to Section 2.01 as
being defeasible pursuant to this Article V (hereinafter called Defeasible
Series), upon compliance with the conditions set forth below in this
Article V, provided that Section 5.02 will not apply to any series of
Securities that is convertible into Common Stock pursuant to Section
2.01(b)(xvi) or convertible into or exchangeable for any other securities
pursuant to Section 2.01(b)(xvii).
Section V.02. Defeasance and Discharge.
Upon the Company's exercise of the option provided in Section
5.01 to have this Section 5.02 applied to the Outstanding Securities of any
Defeasible Series and subject to the proviso to Section 5.01, the Company
will be deemed to have been discharged from its obligations with respect to
the Outstanding Securities of such series as provided in this Section 5.02
on and after the date the conditions set forth in Section 5.04 are
satisfied (hereinafter called Defeasance). For this purpose, such
Defeasance means that the Company will be deemed to have paid and
discharged the entire indebtedness represented by the Outstanding
Securities of such series and to have satisfied all its other obligations
under the Securities of such series and this Indenture insofar as the
Securities of such series are concerned (and the Trustee, at the expense of
the Company, will execute proper instruments acknowledging the same),
subject to the following which will survive until otherwise terminated or
discharged hereunder: (a) the rights of Holders of Securities of such
series to receive, solely from the trust fund described in Section 5.04 and
as more fully set forth in Section 5.04, payments in respect of the
principal of and any premium and interest on such Securities of such series
when payments are due, (b) the Company's obligations with respect to the
Securities of such series under Sections 2.05, 2.06, 2.07, 6.02, 6.03, and
10.06, (c) the rights, powers, trusts, duties, and immunities of the
Trustee hereunder, and (d) this Article V. Subject to compliance with this
Article V, the Company may exercise its option provided in Section 5.01 to
have this Section 5.02 applied to the Outstanding Securities of any
Defeasible Series notwithstanding the prior exercise of its option provided
in Section 5.01 to have Section 5.03 applied to the Outstanding Securities
of such series.
Section V.03. Covenant Defeasance.
Upon the Company's exercise of the option provided in Section
5.01 to have this Section 5.03 applied to the Outstanding Securities of any
Defeasible Series, (a) the Company will be released from its obligations
under Sections 6.04 through 6.07, inclusive, Section 11.01, and such
provisions of any Supplemental Indenture specified as may be in such
Supplemental Indenture, and (b) the occurrence of any event specified in
Sections 8.01(a)(iii), 8.01(a)(iv) (with respect to any of Sections 6.04
through 6.07, inclusive, Section 11.01, and such provisions of any
Supplemental Indenture as may be specified in such Supplemental Indenture),
8.01(a)(v), 8.01(a)(vi), and 8.01(a)(ix) will be deemed not to be or result
in an Event of Default, in each case with respect to the Outstanding
Securities of such series as provided in this Section on and after the date
the conditions set forth in Section 5.04 are satisfied (hereinafter called
Covenant Defeasance). For this purpose, such Covenant Defeasance means
that the Company may omit to comply with and will have no liability in
respect of any term, condition, or limitation set forth in any such
specified Section or provision (to the extent so specified in the case of
Section 8.01(a)(iv)), whether directly or indirectly by reason of any
reference elsewhere herein to any such Section or provision or by reason of
any reference in any such Section or provision to any other provision
herein or in any other document, but the remainder of this Indenture and
the Securities of such series will be unaffected thereby.
Section V.04. Conditions to Defeasance or Covenant Defeasance.
The following will be the conditions to application of either
Section 5.02 or Section 5.03 to the Outstanding Securities of any
Defeasible Series:
(a) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee that satisfies the
requirements contemplated by Section 9.08 and agrees to comply with
the provisions of this Article V applicable to it) as trust funds in
trust for the benefit of the Holders of Outstanding Securities of such
series (i) money in an amount, or (ii) U.S. Government Obligations
that through the scheduled payment of principal and interest in
respect thereof in accordance with their terms will provide, without
reinvestment, not later than one day before the due date of any
payment, money in an amount, or (iii) a combination thereof, in each
case sufficient to pay and discharge, and which will be applied by the
Trustee (or any such other qualifying trustee) to pay and discharge,
the principal of and any premium and interest on the Securities of
such series on the respective Stated Maturities or on any earlier date
or dates on which the Securities of such series shall be subject to
redemption and the Company shall have given the Trustee irrevocable
instructions satisfactory to the Trustee to give notice to the Holders
of the redemption of the Securities of such series, all in accordance
with the terms of this Indenture and the Securities of such series.
(b) In the case of an election under Section 5.02, the Company
shall have delivered to the Trustee an Opinion of Counsel (from a
counsel who shall not be an employee of the Company) to the effect
that (i) the Company has received from, or there has been published
by, the Internal Revenue Service a ruling, or (ii) since the date of
this Indenture there has been a change in the applicable federal
income tax law, in either case to the effect that, and based thereon
such opinion shall confirm that, the Holders of the Outstanding
Securities of such series will not recognize gain or loss for federal
income tax purposes as a result of the deposit, Defeasance, and
discharge to be effected with respect to the Securities of such series
and will be subject to federal income tax on the same amount, in the
same manner, and at the same times as would be the case if such
deposit, Defeasance, and discharge were not to occur.
(c) In the case of an election under Section 5.03, the Company
shall have delivered to the Trustee an Opinion of Counsel (from a
counsel who shall not be an employee of the Company) to the effect
that the Holders of the Outstanding Securities of such series will not
recognize gain or loss for federal income tax purposes as a result of
the deposit and Covenant Defeasance to be effected with respect to the
Securities of such series and will be subject to federal income tax on
the same amount, in the same manner, and at the same times as would be
the case if such deposit and Covenant Defeasance were not to occur.
(d) The Company shall have delivered to the Trustee an Opinion
of Counsel (from a counsel who shall not be an employee of the
Company) stating that the defeasance trust does not violate the
Investment Company Act of 1940.
(e) The Company shall have delivered to the Trustee the opinion
of a nationally recognized independent public accounting firm
certifying the sufficiency of the amount of the moneys, U.S.
Government Obligations, or a combination thereof, placed on deposit to
pay, without regard to any reinvestment, the principal of and any
premium and interest on the Securities on the Stated Maturity thereof
or on any earlier date on which the Securities shall be subject to
redemption.
(f) The Company shall have delivered to the Trustee an Officer's
Certificate (i) stating that the deposit was not made by the Company
with the intent of preferring the holders of the Securities over the
other creditors of the Company or with the intent of defeating,
hindering, delaying or defrauding creditors of the Company or others,
and (ii) to the effect that the Securities of such series, if then
listed on any securities exchange, will not be delisted solely as a
result of such deposit.
(g) No Event of Default or event that (after notice or lapse of
time or both) would become an Event of Default shall have occurred and
be continuing at the time of such deposit or, with regard to any Event
of Default or any such event specified in Sections 8.01(a)(vii) and
(viii), at any time on or prior to the 124th calendar day after the
date of such deposit (it being understood that this condition will not
be deemed satisfied until after such 124th calendar day).
(h) Such Defeasance or Covenant Defeasance will not cause the
Trustee to have a conflicting interest within the meaning of the Trust
Indenture Act (assuming all Securities are in default within the
meaning of such Act).
(i) Such Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under, any other
agreement or instrument to which the Company is a party or by which it
is bound.
(j) The Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all
conditions precedent with respect to such Defeasance or Covenant
Defeasance have been complied with.
Section V.05. Deposited Money and U.S. Government Obligations to be Held
in Trust; Other Miscellaneous Provisions.
(a) Subject to the provisions of Section 6.03(e), all money and
U.S. Government Obligations (including the proceeds thereof) deposited with
the Trustee or other qualifying trustee (solely for purposes of this
Section 5.05 and Section 5.06, the Trustee and any such other trustee are
referred to collectively as the Trustee) pursuant to Section 5.04 in
respect of the Securities of any Defeasible Series will be held in trust
and applied by the Trustee, in accordance with the provisions of the
Securities of such series and this Indenture, to the payment, either
directly or through any such Paying Agent (including the Company acting as
its own Paying Agent) as the Trustee may determine, to the Holders of
Securities of such series, of all sums due and to become due thereon in
respect of principal and any premium and interest, but money so held in
trust need not be segregated from other funds except to the extent required
by law.
(b) The Company will pay and indemnify the Trustee against any
tax, fee, or other charge imposed on or assessed against the U.S.
Government Obligations deposited pursuant to Section 5.04 or the principal
and interest received in respect thereof other than any such tax, fee, or
other charge that by law is for the account of the Holders of Outstanding
Securities.
(c) Notwithstanding anything in this Article V to the contrary,
the Trustee will deliver or pay to the Company from time to time upon a
Company Request any money or U.S. Government Obligations held by it as
provided in Section 5.04 with respect to Securities of any Defeasible
Series that are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Defeasance or Covenant Defeasance
with respect to the Securities of such series.
Section V.06. Reinstatement.
If the Trustee or the Paying Agent is unable to apply any money
in accordance with this Article V with respect to the Securities of any
series by reason of any order or judgment of any court or governmental
authority enjoining, restraining, or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the
Securities of such series will be revived and reinstated as though no
deposit had occurred pursuant to this Article V with respect to Securities
of such series until such time as the Trustee or Paying Agent is permitted
to apply all money held in trust pursuant to Section 5.05 with respect to
Securities of such series in accordance with this Article V; provided,
however, that if the Company makes any payment of principal of or any
premium or interest on any Security of such series following the
reinstatement of its obligations, the Company will be subrogated to the
rights of the Holders of Securities of such series to receive such payment
from the money so held in trust.
Article VI. Particular Covenants of the Company.
Section VI.01. Payment of Principal, Premium, and Interest on Securities.
The Company, for the benefit of each series of Securities, will
duly and punctually pay the principal of and any premium and interest on
the Securities of that series in accordance with the terms of the
Securities and this Indenture.
Section VI.02. Maintenance of Office or Agency.
(a) The Company will maintain in each Place of Payment for any
series of Securities an office or agency where Securities of that series
may be presented or surrendered for payment, where Securities of that
series may be surrendered for registration of transfer or exchange, and
where notices and demands to or upon the Company in respect of the
Securities of that series and this Indenture may be served. The Company
will give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the
Company shall fail to maintain any such required office or agency or shall
fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices, and demands may be made or served at the Corporate
Trust Office, and the Company hereby appoints the Trustee as its agent to
receive all such presentations, surrenders, notices, and demands.
(b) The Company may also from time to time designate one or more
other offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to
time rescind such designations; provided, however, that no such designation
or rescission will in any manner relieve the Company of its obligation to
maintain an office or agency in each Place of Payment for Securities of any
series for such purposes. The Company will give prompt written notice to
the Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.
Section VI.03. Money for Securities Payments to be Held in Trust.
(a) If the Company shall at any time act as its own Paying Agent
with respect to any series of Securities, it will, on or before each due
date of the principal of or any premium or interest on any of the
Securities of that series, segregate and hold in trust for the benefit of
the Persons entitled thereto a sum sufficient to pay the principal and any
premium and interest so becoming due until such sums shall be paid to such
Persons or otherwise disposed of as herein provided and will promptly
notify the Trustee of its action or failure so to act.
(b) Whenever the Company shall have one or more Paying Agents
for any series of Securities, it will, prior to each due date of the
principal of or any premium or interest on any Securities of that series,
deposit with a Paying Agent a sum sufficient to pay such amount, such sum
to be held as provided by the Trust Indenture Act, and (unless such Paying
Agent is the Trustee) the Company will promptly notify the Trustee of its
action or failure so to act.
(c) The Company will cause each Paying Agent for any series of
Securities other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent will agree with the Trustee, subject
to the provisions of this Section 6.03, that such Paying Agent will (i)
comply with the provisions of the Trust Indenture Act applicable to it as a
Paying Agent and (ii) during the continuance of any default by the Company
(or any other obligor upon the Securities of that series) in the making of
any payment in respect of the Securities of that series, and upon the
written request of the Trustee, forthwith pay to the Trustee all sums held
in trust by such Paying Agent for payment in respect of the Securities of
that series.
(d) The Company may at any time, for the purpose of obtaining
the satisfaction and discharge of this Indenture or for any other purpose,
pay, or by Company Order direct any Paying Agent to pay, to the Trustee all
sums held in trust by the Company or such Paying Agent, such sums to be
held by the Trustee upon the same trusts as those upon which such sums were
held by the Company or such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent will be released from all
further liability with respect to such money.
(e) Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of or
any premium or interest on any Security of any series and remaining
unclaimed for two years after such principal, premium, or interest has
become due and payable will be paid to the Company upon a Company Request
(or, if then held by the Company, will be discharged from such trust); and
the Holder of such Security will thereafter, as an unsecured general
creditor, look only to the Company for payment thereof, and all liability
of the Trustee or such Paying Agent with respect to such trust money, and
all liability of the Company as trustee thereof, will thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company
cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general
circulation in the Borough of Manhattan, The City of New York, notice that
such money remains unclaimed and that, after a date specified therein,
which will not be less than 30 calendar days from the date of such
publication, any unclaimed balance of such money then remaining will be
repaid to the Company.
Section VI.04. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (a) all taxes,
assessments, and governmental charges levied or imposed upon the Company or
any Subsidiary of the Company or upon the income, profits, or property of
the Company or any Subsidiary of the Company, and (b) all lawful claims for
labor, materials, and supplies, in each case which, if unpaid, might by law
become a lien upon the property of the Company or any Subsidiary of the
Company and would have a Material Adverse Effect; provided, however, that
(x) the Company will not be required to pay or discharge or cause to be
paid or discharged any such tax, assessment, charge, or claim the amount,
applicability, or validity of which is being contested in good faith by
appropriate proceedings, and (y) any failure to pay any such tax,
assessment, charge, or claim shall not constitute a breach of this Section
6.04 if such failure (i) was not willful and (ii) does not and will not
result in any Material Adverse Effect.
Section VI.05. Maintenance of Properties.
The Company will cause all properties used or useful in the
conduct of its business or the business of any Subsidiary of the Company to
be maintained and kept in good condition, repair, and working order and
supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments, and improvements
thereof; provided, however, that nothing in this Section 6.05 will (i)
require the Company to take any action that it determines in good faith to
be contrary to its best interests, so long as the failure to take such
action will not have a Material Adverse Effect, or (ii) prevent the Company
from taking any action that it determines in good faith to be in its best
interests, so long as the taking of such action will not have a Material
Adverse Effect.
Section VI.06. Existence.
Subject to Article XI, the Company will, and will cause each of
its Subsidiaries to, do or cause to be done all things necessary to
preserve and keep in full force and effect its existence, rights (charter
and statutory), and franchises; provided, however, that, except with
respect to the preservation of the Company's existence, nothing in this
Section 6.06 will (i) require the Company to take any action that it
determines in good faith to be contrary to its best interests, so long as
the failure to take such action will not have a Material Adverse Effect, or
(ii) prevent the Company from taking any action that it determines in good
faith to be in its best interests, so long as the taking of such action
will not have a Material Adverse Effect.
Section VI.07. Compliance with Laws.
The Company will, and will cause each of its Subsidiaries to,
comply with all applicable federal, state, local, or foreign laws, rules,
regulations, or ordinances, including without limitation such laws, rules,
regulations, or ordinances relating to pension, environmental, employee,
and tax matters, to the extent that, in the aggregate, the failure so to
comply would have a Material Adverse Effect.
Section VI.08. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 calendar days
after the end of each fiscal year of the Company ending after the date
hereof, an Officer's Certificate signed by the principal executive officer,
principal financial officer, or principal accounting officer of the Company
stating whether or not to the knowledge of such person after due inquiry
the Company is in default in the performance and observance of any of the
terms, provisions, and conditions of this Indenture (without regard to any
period of grace or requirement of notice provided hereunder) and, if the
Company is in default, specifying all such defaults and the nature and
status thereof of which such person may have such knowledge.
Section VI.09. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with
any term, provision, or condition set forth in Sections 6.04 through 6.07,
inclusive, and such provisions of any Supplemental Indenture as may be
specified in such Supplemental Indenture, with respect to the Securities of
any series if the Holders of a majority in principal amount of the
Outstanding Securities of such series shall, by Act of such Holders, either
waive such compliance in such instance or generally waive compliance with
such term, provision, or condition, but no such waiver will extend to or
affect such term, provision, or condition except to the extent so expressly
waived, and, until such waiver shall become effective, the obligations of
the Company and the duties of the Trustee in respect of any such term,
provision, or condition will remain in full force and effect.
Paragraph Numbering Definition: X. 1. (a) (1) (a) (i) (i) (a)
Starting Paragraph Number: 6.10
Section VI.10. Calculation of Original Issue Discount.
The Company will, to the extent applicable, file with the Trustee
promptly at the end of each calendar year (i) a written notice specifying
the amount of original issue discount (including daily rates and accrual
periods) accrued on Outstanding Securities as of the end of such year and
(ii) such other specific information relating to such original issue
discount as may then be required under the Internal Revenue Code of 1986,
as amended from time to time.
Paragraph Numbering Definition: X. 01. (a) (1) (a) (i) (i) (a)
Starting Paragraph Number: 7Article VII. Securities Holders' Lists And
Reports By The Company And The Trustee.
Section VII.01. Company to Furnish Trustee Names and Addresses of
Holders.
The Company will furnish or cause to be furnished to the Trustee
(a) semi-annually, not more than 15 calendar days after the applicable
Regular Record Date, a list for each series of Securities, in such form as
the Trustee may reasonably require, of the names and addresses of the
Holders of Securities of such series as of such Regular Record Date and (b)
at such other times as the Trustee may request in writing, within 30
calendar days after the receipt by the Company of any such request, a list
of similar form and content as of a date not more than 15 calendar days
prior to the time such list is furnished; excluding from any such list
names and addresses received by the Trustee in its capacity as Security
Registrar.
Section VII.02. Preservation of Information; Communication to Holders.
(a) The Trustee will preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the
most recent list furnished to the Trustee as provided in Section 7.01 and
the names and addresses of Holders received by the Trustee in its capacity
as Security Registrar. The Trustee may destroy any list furnished to it as
provided in Section 7.01 upon receipt of a new list so furnished.
(b) The rights of the Holders to communicate with other Holders
with respect to their rights under this Indenture or under the Securities,
and the corresponding rights and privileges of the Trustee, will be as
provided by the Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor
the Trustee nor any agent of either of them will be held accountable by
reason of any disclosure of information as to names and addresses of
Holders made pursuant to the Trust Indenture Act.
Section VII.03. Reports by Trustee.
The Trustee will transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to
the Trust Indenture Act or any rule or regulation of the Commission
promulgated pursuant thereto at the times and in the manner provided
therein. If required by Section 313(a) of the Trust Indenture Act, the
Trustee will, within sixty days after each May 15 following the date of
this Indenture, deliver to Holders a brief report, dated as of such May 15,
which complies with the provisions of such Section 313(a). A copy of each
such report will, at the time of such transmission to Holders, be filed by
the Trustee with each stock exchange upon which any Securities are listed,
with the Commission, and with the Company. The Company will promptly
notify the Trustee when any Securities are listed on any stock exchange.
Section VII.04. Reports by Company.
The Company will file with the Trustee and the Commission, and
transmit to Holders, such information, documents, and other reports, and
such summaries thereof, as may be required pursuant to the Trust Indenture
Act or any rule or regulation of the Commission promulgated pursuant
thereto at the times and in the manner provided therein; provided that any
such information, documents, or reports required to be filed with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act will be
filed with the Trustee within 15 calendar days after the same is so
required to be filed with the Commission. Delivery of such reports,
information, and documents to the Trustee is for informational purposes
only and the Trustee's receipt of such will not constitute constructive
notice of any information contained therein or determinable from
information contained therein, including the Company's compliance with any
of its covenants hereunder (as to which the Trustee is entitled to rely
exclusively on Officer's Certificates).
Article VIII. Default.
Section VIII.01. Event of Default.
(a) Event of Default, wherever used herein with respect to
Securities of any series, means any one of the following events (whatever
the reason for such Event of Default and whether it may be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree, or order of any court or any order, rule, or regulation of any
administrative or governmental body):
(i) default in the payment of any interest on any Security
of that series when it becomes due and payable, and continuance of
such default for a period of 30 calendar days;
(ii) default in the payment of principal of (or premium, if
any, on) any Security of that series when it becomes due and payable,
whether by redemption, repurchase, or otherwise;
(iii) default in the making of any sinking fund payment when
and as due by the terms of a Security of that series;
(iv) default in the performance, or breach, of any covenant
or warranty of the Company in this Indenture (other than a covenant or
warranty, a default in the performance or breach of which is elsewhere
in this Section 8.01 specifically dealt with or which has expressly
been included in this Indenture solely for the benefit of one or more
series of Securities other than that series), and continuance of such
default or breach for a period of 60 calendar days after there has
been given, by registered or certified mail, to the Company by the
Trustee or to the Company and the Trustee by the Holders of at least
25% in principal amount of the Outstanding Securities of that series a
written notice specifying such default or breach and requiring it to
be remedied and stating that such notice is a Notice of Default
hereunder;
(v) any default in the payment at maturity of principal of
any Indebtedness of the Company or any Subsidiary of the Company in an
aggregate principal amount of $10.0 million or more, which, in any
such case, (A) continues beyond any period of grace provided with
respect thereto and (B) results in such Indebtedness becoming due
prior to its stated maturity or occurs at the final maturity of such
Indebtedness; provided, however, that, subject to the provisions of
Section 9.01 and 8.08, the Trustee will not be deemed to have
knowledge of such nonpayment or other default unless either (1) a
Responsible Officer of the Trustee has actual knowledge of nonpayment
or other default or (2) the Trustee has received written notice
thereof from the Company, from any Holder, from the holder of any such
Indebtedness or from the trustee under the agreement or instrument
relating to such Indebtedness;
(vi) the entry of one or more judgments or orders for the
payment of money against the Company, which judgments and orders
create a liability of $25.0 million or more in excess of insured
amounts and have not been stayed (by appeal or otherwise), vacated,
discharged, or otherwise satisfied within 60 calendar days of the
entry of such judgments and orders;
(vii) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the Company
in an involuntary case or proceeding under any applicable federal or
state bankruptcy, insolvency, reorganization, or other similar law or
(B) a decree or order adjudging the Company a bankrupt or insolvent,
or approving as properly filed a petition seeking reorganization,
arrangement, adjustment, or composition of or in respect of the
Company under any applicable federal or state law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator, or
other similar official of the Company or of any substantial part of
its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order for relief or
any such other decree or order unstayed and in effect for a period of
60 consecutive calendar days;
(viii) the commencement by the Company of a voluntary case or
proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization, or other similar law or of any other case
or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by it to the entry of a decree or order for relief in respect
of the Company in an involuntary case or proceeding under any
applicable federal or state bankruptcy, insolvency, reorganization, or
other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief with
respect to the Company under any applicable federal or state
bankruptcy, insolvency, reorganization, or other similar law, or the
consent by it to the filing of such petition or to the appointment of
or taking possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator, or other similar official of the Company or of
any substantial part of its property pursuant to any such law, or the
making by it of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally
as they become due, or the taking of corporate action by the Company
in furtherance of any such action; or
(ix) any other Event of Default provided with respect to
Securities of that series.
(b) If an Event of Default (other than an Event of Default
arising under Section 8.01(a)(vii) or (viii)) with respect to Securities of
any series at the time Outstanding occurs and is continuing, then in every
case the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding Securities of that series may declare the principal amount
(or, if any of the Securities of that series are Original Issue Discount
Securities, such portion of the principal amount of such Securities as may
be specified in the terms thereof) of all of the Securities of that series
to be due and payable immediately, by a notice in writing to the Company
(and to the Trustee if given by Holders), and upon any such declaration
such principal amount (or specified amount) will become immediately due and
payable. If an Event of Default under Section 8.01(a)(vii) or (viii)
occurs, then the principal of, premium, if any, and accrued interest on the
Securities shall become immediately due and payable without any declaration
or other act on the part of the Trustee or any Holder.
(c) At any time after such a declaration of acceleration with
respect to Securities of any series has been made and before a judgment or
decree for payment of the money due has been obtained by the Trustee as
hereinafter in this Article VIII provided, the Holders of a majority in
principal amount of the outstanding Securities of that series, by written
notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if (i) the Company has paid or deposited
with the Trustee a sum sufficient to pay (A) all overdue interest on all
Securities of that series, (B) the principal of (and premium, if any, on)
any Securities of that series which have become due otherwise than by such
declaration of acceleration and any interest thereon at the rate or rates
prescribed therefor in such Securities, (C) to the extent that payment of
such interest is lawful, interest upon overdue interest at the rate or
rates prescribed therefor in such Securities, and (D) all sums paid or
advanced by the Trustee hereunder and the reasonable compensation,
expenses, disbursements, and advances of the Trustee and its agents and
counsel and (ii) all Events of Default with respect to Securities of that
series, other than the non-payment of the principal of Securities of that
series that has become due solely by such declaration of acceleration, have
been cured or waived as provided in Section 8.01(d). No such rescission
will affect any subsequent default or impair any right consequent thereon.
(d) The Holders of a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all
the Securities of such series waive any past default hereunder with respect
to such series and its consequences, except a default (i) in the payment of
the principal of or any premium or interest on any Security of such series
or (ii) in respect of a covenant or provision hereof which under Article X
cannot be modified or amended without the consent of the Holder of each
Outstanding Security of such series affected. Upon any such waiver, such
default will cease to exist, and any Event of Default arising therefrom
will be deemed to have been cured, for every purpose of this Indenture, but
no such waiver will extend to any subsequent or other default or impair any
right consequent thereon.
Section VIII.02. Covenant of Company to Pay to Trustee Whole Amount Due
on Securities on Default in Payment of Interest or Principal;
Suits for Enforcement by Trustee.
(a) The Company covenants that if (i) default is made in the
payment of any interest on any Security when such interest becomes due and
payable and such default continues for a period of 30 calendar days or (ii)
default is made in the payment of the principal of (or premium, if any, on)
any Security when it becomes due and payable, the Company will, upon demand
of the Trustee, pay to it, for the benefit of the Holders of such
Securities, the whole amount then due and payable on such Securities for
principal and any premium and interest and, to the extent that payment of
such interest will be legally enforceable, interest on any overdue
principal and premium and on any overdue interest, at the rate or rates
prescribed therefor in such Securities, and, in addition thereto, such
further amount as will be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements,
and advances of the Trustee and its agents and counsel.
(b) If an Event of Default with respect to Securities of
any series occurs and is continuing, the Trustee may in its discretion
proceed to protect and enforce its rights and the rights of the Holders of
Securities of such series by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy.
(c) In case of any judicial proceeding relative to the Company
(or any other obligor upon the Securities), its property or its creditors,
the Trustee will be entitled and empowered, by intervention in such
proceeding or otherwise, to take any and all actions authorized under the
Trust Indenture Act in order to have claims of the Holders and the Trustee
allowed in any such proceeding. In particular, the Trustee will be
authorized to collect and receive any money or other property payable or
deliverable on any such claims and to distribute the same, and any
custodian, receiver, assignee, trustee, liquidator, sequestrator, or other
similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee consents to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation,
expenses, disbursements, and advances of the Trustee and its agents and
counsel, and any other amounts due the Trustee under Section 9.06.
(d) No provision of this Indenture will be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment, or composition
affecting the Securities or the rights of any Holder thereof or to
authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding; provided, however, that the Trustee may, on behalf of the
Holders, vote for the election of a trustee in bankruptcy or similar
official and be a member of a creditors' or other similar committee.
(e) All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the
Trustee will be brought in its own name as trustee of an express trust, and
any recovery of judgment will, after provision for the payment of the
reasonable compensation, expenses, disbursements, and advances of the
Trustee and its agents and counsel, be for the ratable benefit of the
Holders of the Securities in respect of which such judgment has been
recovered.
Section VIII.03. Application of Money Collected by Trustee.
Any money collected by the Trustee pursuant to this Article VIII
will be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of
principal or any premium or interest, upon presentation of the Securities
and the notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
FIRST: To the payment of all amounts due the
Trustee under Section 9.06; and
SECOND: To the payment of the amounts then due
and unpaid for principal of and any premium and
interest on the Securities in respect of which or for
the benefit of which such money has been collected,
ratably, without preference or priority of any kind,
according to the amounts due and payable on such
Securities for principal and any premium and interest,
respectively.
Section VIII.04. Limitation on Suits by Holders of Securities.
No Holder of any Security of any series will have any right to
institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless (a) such Holder has previously given written
notice to the Trustee of a continuing Event of Default with respect to the
Securities of that series, (b) the Holders of not less than 25% in
principal amount of the Outstanding Securities of that series shall have
made written request to the Trustee to institute proceedings in respect of
such Event of Default in its own name as Trustee hereunder, (c) such Holder
or Holders have offered to the Trustee reasonable indemnity against the
costs, expenses, and liabilities to be incurred in compliance with such
request, (d) the Trustee for 60 calendar days after its receipt of such
notice, request, and offer of indemnity has failed to institute any such
proceeding, and (e) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Securities of that series,
it being understood and intended that no one or more of such Holders will
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb, or prejudice the rights of
any other of such Holders, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under
this Indenture, except in the manner herein provided and for the equal and
ratable benefit of all of such Holders.
Section VIII.05. Rights and Remedies Cumulative; Delay or Omission in
Exercise of Rights not a Waiver of Event of Default.
(a) Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost, or stolen Securities in the last
paragraph of Section 2.07, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders is intended to be exclusive of
any other right or remedy, and every right and remedy will, to the extent
permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder,
or otherwise, will not prevent the concurrent assertion or employment of
any other appropriate right or remedy.
(b) No delay or omission of the Trustee or of any Holder of any
Securities to exercise any right or remedy accruing upon any Event of
Default will impair any such right or remedy or constitute a waiver of any
such Event of Default or an acquiescence therein. Every right and remedy
given by this Article VIII or by law to the Trustee or to the Holders may
be exercised from time to time, and as often as may be deemed expedient, by
the Trustee or by the Holders, as the case may be.
Section VIII.06. Rights of Holders of Majority in Principal Amount of
Outstanding Securities to Direct Trustee.
The Holders of a majority in principal amount of the Outstanding
Securities of any series will have the right to direct the Trustee with
respect to the time, method, and place of conducting any proceeding for any
remedy available to the Trustee and the exercise of any trust or power
conferred on the Trustee, in each case with respect to the Securities of
such series, provided that (a) such direction will not be in conflict with
any rule of law or with this Indenture and (b) the Trustee may take any
other action deemed proper by the Trustee which is not inconsistent with
such direction.
Section VIII.07. Requirement of an Undertaking to Pay Costs in Certain
Suits Under the Indenture or Against the Trustee.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken,
suffered, or omitted by it as Trustee, a court may require any party
litigant in such suit to file an undertaking to pay the costs of such suit,
and may assess costs, including legal fees and expenses, against any such
party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided that neither this Section 8.07 nor the Trust
Indenture Act will be deemed to authorize any court to require such an
undertaking or to make such an assessment in any suit instituted by the
Trustee or by the Company.
Section VIII.08. Notice of Defaults.
If a Default occurs hereunder with respect to Securities of any
series, the Trustee will give the Holders of Securities of such series
notice of such Default actually known to it as and to the extent provided
by the Trust Indenture Act; provided, however, that in the case of any
Default of the character specified in Section 8.01(a)(iv) with respect to
Securities of such series no such notice to Holders will be given until at
least 30 calendar days after the occurrence thereof. The Company will give
the Trustee notice of any uncured Event of Default within 10 days after any
Responsible Officer of the Company becomes aware of or receives actual
notice of such Event of Default.
Section VIII.09. Unconditional Right of Holders to Receive Principal,
Premium, and Interest.
Notwithstanding any other provision in this Indenture, the Holder
of any Security will have the right, which is absolute and unconditional,
to receive payment of the principal of and any premium and (subject to
Section 2.09) interest on such Security on the respective Stated Maturities
expressed in such Security (or, in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any such
payment, and such rights may not be impaired without the consent of such
Holder.
Paragraph Numbering Definition: X. 1. (a) (1) (a) (i) (i) (a)
Starting Paragraph Number: 8.10
Section VIII.10. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has
been discontinued or abandoned for any reason, or has been determined
adversely to the Trustee or to such Holder, then and in every such case,
subject to any determination in such proceeding, the Company, the Trustee,
and the Holders will be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee
and the Holders will continue as though no such proceeding had been
instituted.
Section VIII.11. Trustee May File Proofs of Claims.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of
the Trustee (including any claim for the reasonable compensation, expenses,
disbursements, and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceeding relative to the Company or the
Subsidiaries (or any other obligor upon the Securities), their creditors or
their property and shall be entitled and empowered to collect and receive
any monies or other property payable or deliverable on any such claim and
to distribute the same, and any custodian in any such judicial proceedings
is hereby authorized by each Holder to make such payments to the Trustee
and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements, and advances
of the Trustee, its agents and counsel, and any other amounts due the
Trustee hereunder. Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.
Paragraph Numbering Definition: X. 01. (a) (1) (a) (i) (i) (a)
Starting Paragraph Number: 9
Article IX. Concerning the Trustee.
Section IX.01. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee will be as
provided by the Trust Indenture Act. Notwithstanding the foregoing, no
provision of this Indenture will require the Trustee to expend or risk its
own funds or otherwise incur any financial liability in the performance of
any of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it. Whether or not therein expressly so provided,
every provision of this Indenture relating to the conduct or affecting the
liability of or affording protection to the Trustee will be subject to the
provisions of this Section 9.01.
Section IX.02. Certain Rights of Trustee.
Subject to the provisions of Section 9.01: (a) the Trustee may
conclusively rely and will be protected in acting or refraining from acting
upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness, or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties; (b) any request or direction of the Company mentioned herein will
be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board will be sufficiently evidenced by a Board
Resolution; (c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering, or omitting any action hereunder, the Trustee
(unless other evidence be herein specifically prescribed) may, in the
absence of bad faith on its part, rely upon an Officer's Certificate; (d)
the Trustee may consult with counsel of its selection and the advice of
such counsel or any Opinion of Counsel will be full and complete
authorization and protection in respect of any action taken, suffered, or
omitted by it hereunder in good faith and in reliance thereon; (e) the
Trustee will be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of any of the
Holders pursuant to this Indenture, unless such Holders shall have offered
to the Trustee reasonable security or indemnity against the costs,
expenses, and liabilities which might be incurred by it in compliance with
such request or direction; (f) the Trustee will not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness, or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it will be entitled to examine the
books, records, and premises of the Company, personally or by agent or
attorney; (g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee will not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder; (h) the Trustee will not be liable for any action taken,
suffered, or omitted to be taken by it in good faith and reasonably
believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Indenture; and (i) the Trustee will not be
deemed to have notice of any Default or Event of Default unless a
Responsible Officer of the Trustee has actual knowledge thereof or unless
written notice of any event or circumstance which is in fact such a Default
or Event of Default is received by the Trustee at the Corporate Trust
Office of the Trustee, and such notice references the Securities (or the
applicable series thereof) and this Indenture.
Section IX.03. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, may be taken as the statements of
the Company, and neither the Trustee nor any Authenticating Agent assumes
any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of
the Securities. The Trustee or any Authenticating Agent will not be
accountable for the use or application by the Company of Securities or the
proceeds thereof.
Section IX.04. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar, or any other agent of the Company, in its individual or
any other capacity, may become the owner or pledgee of Securities and,
subject to Sections 9.07 and 9.12, may otherwise deal with the Company with
the same rights it would have if it were not Trustee, Authenticating Agent,
Paying Agent, Security Registrar, or such other agent.
Section IX.05. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required herein or by law.
The Trustee will be under no liability for interest on any money received
by it hereunder except as otherwise agreed in writing with the Company.
Section IX.06. Compensation and Reimbursement.
(a) The Company will (i) pay to the Trustee from time to time
such compensation as shall be agreed to in writing between the Company and
the Trustee for all services rendered by it hereunder (which compensation
will not be limited to any provision of law in regard to the compensation
of a trustee of an express trust); (ii) except as otherwise expressly
provided herein, reimburse the Trustee upon its request for all reasonable
expenses, disbursements, and advances incurred or made by the Trustee in
accordance with provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of agents and counsel),
except any such expense, disbursement, or advance as may be attributable to
its negligence or bad faith; and (iii) indemnify the Trustee and any
predecessor Trustee for, and hold them harmless against, any and all
losses, liabilities, damages, claims and expenses, including taxes (other
than taxes based on the income of the Trustee or predecessor Trustee and
other taxes relating to the Trustee's or predecessor Trustee's overall
business and operations) incurred without negligence or bad faith on its
part arising out of or in connection with the acceptance or administration
of the trust or trusts hereunder, including the costs and expenses of
defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
(b) The Trustee will have a lien prior to the Securities as to
all property and funds held by it hereunder for any amount owed to it or
any predecessor Trustee pursuant to this Section 9.06, except with respect
to funds held in trust for the benefit of the Holders of particular
Securities.
(c) When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 8.01(a)(vii) or
Section 8.01(a)(viii), such expenses (including the reasonable fees and
expenses of its counsel) and the Trustee's compensation for such services
are intended to constitute expenses of administration under any applicable
federal or state bankruptcy, insolvency, or other similar law.
(d) The provisions of this Section 9.06 will survive the
termination of this Indenture.
Section IX.07. Disqualification; Conflicting Interests.
If the Trustee has or acquires a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee will either eliminate such
interest or resign, to the extent and in the manner provided by, and
subject to the provisions of, the Trust Indenture Act and this Indenture.
Section IX.08. Corporate Trustee Required Eligibility.
There will at all times be one or more Trustees hereunder with
respect to the Securities of each series, at least one of which will be a
Person that is eligible pursuant to the Trust Indenture Act to act as such
and has a combined capital and surplus of at least $100,000,000 and its
Corporate Trust Office or principal office in New York City, or any other
major city in the United States that is acceptable to the Company. If such
Person publishes reports of condition at least annually, pursuant to law or
to the requirements of a supervising or examining state or federal
authority, then for the purposes of this Section 9.08, the combined capital
and surplus of such Person shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of this Section 9.08, it will resign immediately in the
manner and with the effect hereinafter specified in this Article IX.
Section IX.09. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment
of a successor Trustee pursuant to this Article IX will become effective
until the acceptance of appointment by the successor Trustee in accordance
with the applicable requirements of Section 9.10.
(b) The Trustee may resign at any time with respect to the
Securities of one or more series by giving written notice thereof to the
Company. If the instrument of acceptance by a successor Trustee required
by Section 9.10 shall not have been delivered to the Trustee within 30
calendar days after the giving of such notice of resignation, the resigning
Trustee may petition, at the expense of the Company, any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal
amount of the Outstanding Securities of such series, delivered to the
Trustee and to the Company. If the instrument of acceptance by a successor
Trustee required by Section 9.10 shall not have been delivered to the
Trustee within 30 calendar days after the giving of such notice of removal,
the Trustee being removed may petition, at the expense of the Company, any
court of competent jurisdiction for the appointment of a successor Trustee
with respect to the Securities of such series.
(d) If, at any time, (i) the Trustee fails to comply with
Section 9.07 after written request therefor by the Company or by any Holder
who has been a bona fide Holder of a Security for at least six months, (ii)
the Trustee ceases to be eligible under Section 9.08 and fails to resign
after written request therefor by the Company or by any such Holder, or
(iii) the Trustee becomes incapable of acting or is adjudged a bankrupt or
insolvent or a receiver of the Trustee or of its property is appointed or
any public officer takes charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation, or
liquidation, then, in any such case, (A) the Company by a Board Resolution
may remove the Trustee with respect to all Securities or (B) subject to
Section 8.07, any Holder who has been a bona fide Holder of a Security for
at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of
the Trustee with respect to all Securities and the appointment of a
successor Trustee or Trustees.
(e) If the Trustee resigns, is removed, or becomes incapable of
acting, or if a vacancy occurs in the office of Trustee for any cause, with
respect to the Securities of one or more series, the Company by a Board
Resolution will promptly appoint a successor Trustee or Trustees with
respect to the Securities of that or those series (it being understood that
any such successor Trustee may be appointed with respect to the Securities
of one or more or all of such series and that at any time there will be
only one Trustee with respect to the Securities of any particular series)
and will comply with the applicable requirements of Section 9.10. If,
within one year after such resignation, removal, or incapability or the
occurrence of such vacancy, a successor Trustee with respect to the
Securities of any series is appointed by Act of the Holders of a majority
in principal amount of the Outstanding Securities of such series delivered
to the Company and the retiring Trustee, the successor Trustee so appointed
will, forthwith upon its acceptance of such appointment in accordance with
the applicable requirements of Section 9.10, become the successor Trustee
with respect to the Securities of such series and to that extent supersede
the successor Trustee appointed by the Company. If no successor Trustee
with respect to the Securities of any series shall have been so appointed
by the Company or the Holders and accepted appointment in the manner
required by Section 9.10, any Holder who has been a bona fide Holder of a
Security of such series for at least six months may, on behalf of himself
and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.
(f) The Company will give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series and
each appointment of a successor Trustee with respect to the Securities of
any series to all holders of Securities of such series in the manner
provided in Section 13.03. Each notice will include the name of the
successor Trustee with respect to the Securities of such series and the
address of its Corporate Trust Office.
Paragraph Numbering Definition: X. 1. (a) (1) (a) (i) (i) (a)
Starting Paragraph Number: 9.10
Section IX.10. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee
with respect to all Securities, every such successor Trustee so appointed
will execute, acknowledge, and deliver to the Company and to the retiring
Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee will become effective and
such successor Trustee, without any further act, deed, or conveyance, will
become vested with all the rights, powers, trusts, and duties of the
retiring Trustee, but, on the request of the Company or the successor
Trustee, such retiring Trustee will, upon payment of its charges, execute
and deliver an instrument transferring to such successor Trustee all the
rights, powers, and duties of the retiring Trustee and will duly assign,
transfer, and deliver to such Trustee all property and money held by such
retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee
with respect to the Securities of one or more (but not all) series, the
Company, the retiring Trustee, and each successor Trustee with respect to
the Securities of one or more series will execute and deliver an indenture
supplemental hereto wherein such successor Trustee will accept such
appointment and which (i) will contain such provisions as may be necessary
or desirable to transfer and confirm to, and to vest in, each successor
Trustee all the rights, powers, trusts, and duties of the retiring Trustee
with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates, (ii) if the retiring Trustee
is not retiring with respect to all Securities, will contain such
provisions as may be deemed necessary or desirable to confirm that all the
rights, powers, trusts, and duties of the retiring Trustee with respect to
the Securities of that or those series as to which the retiring Trustee is
not retiring will continue to be vested in the retiring Trustee, and (iii)
will add to or change any of the provisions of this Indenture as may be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein
or in such supplemental indenture will constitute such Trustees co-trustees
of the same trust and that each such Trustee will be trustee of a trust or
trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustees and upon the execution and delivery
of such supplemental indenture the resignation or removal of the retiring
Trustee will become effective to the extent provided therein and each such
successor Trustee, without any further act, deed, or conveyance, will
become vested with all the rights, powers, trusts, and duties of the
retiring Trustee with respect to the Securities of that or those series to
which the appointment of such successor Trustee relates; but on request of
the Company or any successor Trustee, such retiring Trustee will duly
assign, transfer, and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder with respect to the
Securities of that or those series to which the appointment of such
successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company will
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all applicable rights, powers, and
trusts referred to in the preceding paragraphs of this Section 9.10.
(d) No successor Trustee will accept its appointment unless at
the time of such acceptance such successor Trustee is qualified and
eligible under this Article IX.
Section IX.11. Merger, Conversion, Consolidation, or Succession to
Business.
Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion, or consolidation to which the Trustee may be a party,
or any corporation succeeding to all or substantially all the corporate
trust business of the Trustee, will be the successor of the Trustee
hereunder, provided such corporation is otherwise qualified and eligible
under this Article IX, without the execution or filing of any paper or any
further act on the part of any of the parties hereto. In case any
Securities shall have been authenticated, but not delivered, by the Trustee
then in office, any successor by merger, conversion, or consolidation to
such authenticating Trustee may adopt such authentication and deliver the
Securities so authenticated with the same effect as if such successor
Trustee had itself authenticated such Securities.
Section IX.12. Preferential Collection of Claims Against Company.
If and when the Trustee is or becomes a creditor of the Company
(or any other obligor upon the Securities), the Trustee will be subject to
the provisions of the Trust Indenture Act regarding the collection of
claims against the Company (or any such other obligor).
Section IX.13. Appointment of Authenticating Agent.
(a) The Trustee may appoint an Authenticating Agent or Agents
with respect to one or more series of Securities which will be authorized
to act on behalf of the Trustee to authenticate Securities of such series
issued upon original issue and upon exchange, registration of transfer, or
partial redemption thereof or pursuant to Section 2.07, and Securities so
authenticated will be entitled to the benefits of this Indenture and will
be valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference will be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating
Agent and a certificate of authentication executed on behalf of the Trustee
by an Authenticating Agent. Each Authenticating Agent shall be acceptable
to the Company and shall at all times be a corporation organized and doing
business under the laws of the United States of America, any state thereof,
or the District of Columbia, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of not less
than $50,000,000 and subject to supervision or examination by federal or
state authority. If such Authenticating Agent publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section
9.13, the combined capital and surplus of such Authenticating Agent will be
deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time an Authenticating
Agent shall cease to be eligible in accordance with the provisions of this
Section 9.13, such Authenticating Agent will resign immediately in the
manner and with the effect specified in this Section 9.13.
(b) Any corporation into which an Authenticating Agent may be
merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion, or consolidation to
which such Authenticating Agent may be a party, or any corporation
succeeding to the corporate agency or corporate trust business of an
Authenticating Agent, will continue to be an Authenticating Agent, provided
such corporation is otherwise eligible under this Section 9.13, without the
execution or filing of any paper or any further act on the part of the
Trustee or the Authenticating Agent.
(c) An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and to the Company. The Trustee may
at any time terminate the agency of an Authenticating Agent by giving
written notice thereof to such Authenticating Agent and to the Company.
Upon receiving such a notice of resignation or upon such a termination, or
in case at any time such Authenticating Agent shall cease to be eligible in
accordance with the provisions this Section 9.13, the Trustee may appoint a
successor Authenticating Agent which shall be acceptable to the Company and
will mail written notice of such appointment by first-class mail, postage
prepaid, to all Holders of Securities of the series with respect to which
such Authenticating Agent will serve, as their names and addresses appear
in the Security Register. Any successor Authenticating Agent upon
acceptance of its appointment hereunder will become vested with all the
rights, powers, and duties of its predecessor hereunder, with like effect
as if originally named as an Authenticating Agent. No successor
Authenticating Agent will be appointed unless eligible under the provisions
of this Section 9.13.
(d) The Trustee agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this Section
9.13, and the Trustee will be entitled to be reimbursed for such payments,
subject to the provisions of Section 9.06.
(e) If an appointment with respect to one or more series of
Securities is made pursuant to this Section 9.13, the Securities of such
series may have endorsed thereon, in addition to the Trustee's certificate
of authentication, an alternative form of certificate of authentication in
the following form:
This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By:
As Authenticating Agent
By:
Authorized Signatory
Paragraph Numbering Definition: X. 01. (a) (1) (a) (i) (i) (a)
Starting Paragraph Number: 10
Article X. Supplemental Indentures And Certain Actions.
Section X.01. Purposes for Which Supplemental Indentures May Be Entered
Into Without Consent of Holders.
Without the consent of or notice to any Holders, the Company,
when authorized by a Board Resolution, and the Trustee, at any time and
from time to time, may enter into one or more indentures supplemental
hereto, in form satisfactory to the Trustee, for any of the following
purposes:
(a) to evidence the succession of another Person to the Company
and the assumption by any such successor of the covenants of the
Company herein and in the Securities, all to the extent otherwise
permitted hereunder;
(b) to add to the covenants of the Company for the benefit of
the Holders of all or any series of Securities (and if such covenants
are to be for the benefit of less than all series of Securities,
stating that such covenants are expressly being included solely for
The benefit of such series) or to surrender any right or power herein
conferred upon the Company;
(c) to add any additional Events of Default;
(d) to add to or change any of the provisions of this Indenture
to such extent as may be necessary to permit or facilitate the
issuance of Securities in bearer form, registrable or not registrable
as to principal, and with or without interest coupons, or to permit or
facilitate the issuance of Securities in uncertificated form;
(e) to add to, change, or eliminate any of the provisions of
this Indenture in respect of one or more series of Securities,
provided that any such addition, change, or elimination (i) will
neither (A) apply to any Security of any series created prior to the
execution of such supplemental indenture and entitled to the benefit
of such provision nor (B) modify the rights of the Holder of any such
Security with respect to such provision or (ii) will become effective
only when there is no such Security Outstanding;
(f) to establish the form or terms of Securities of any series
as permitted by Sections 2.01 and 2.02;
(g) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one
or more series and to add to or change any of the provisions of this
Indenture as may be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee,
pursuant to the requirements of Section 9.10; or
(h) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions with respect to
matters or questions arising under this Indenture, provided that such
action pursuant to this clause (h) will not adversely affect the
interests of the Holders of Securities of any series in any material
respect.
Section X.02. Modification of Indenture With Consent of Holders of at
Least a Majority in Principal Amount of Outstanding
Securities.
(a) With the consent of the Holders of a majority in principal
amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and
the Trustee, the Company, when authorized by a Board Resolution, and the
Trustee may enter into an indenture or indentures supplemental hereto for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of modifying in any
manner the rights of the Holders of Securities of such series under this
Indenture; provided, however, that no such supplemental indenture will,
without the consent of the Holder of each Outstanding Security affected
thereby:
(i) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Security, or reduce
the principal amount thereof or the rate of interest thereon or any
premium payable upon the redemption thereof, or reduce the amount of
the principal of an Original Issue Discount Security that would be due
and payable upon a declaration of acceleration of the Maturity thereof
pursuant to Sections 8.01(b), or change any Place of Payment where, or
the coin or currency in which, any Security or any premium or interest
thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption
Date);
(ii) reduce the percentage in principal amount of the
Outstanding Securities of any series, the consent of the Holders of
which is required for any such supplemental indenture, or the consent
of the Holders of which is required for any waiver (of compliance with
certain provisions of this Indenture or certain defaults hereunder and
their consequences) provided for in this Indenture; or
(iii) modify any of the provisions of this Section 10.02,
Section 8.01(d) or Section 6.09, except to increase the percentage in
principal amount of Holders required under any such Section or to
provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each
Outstanding Security affected thereby, provided, however, that this
clause (c) will not be deemed to require the consent of any Holder
with respect to changes in the references to ?the Trustee? and
concomitant changes in this Section 10.02 and Section 6.09, or the
deletion of this proviso, in accordance with the requirements of
Sections 9.10 and 10.01(g).
(b) A supplemental indenture which changes or eliminates any
covenant or other provision of this Indenture which has expressly been
included solely for the benefit of one or more particular series of
Securities, or which modifies the rights of the Holders of Securities of
such series with respect to such covenant or other provision, will be
deemed not to affect the rights under this Indenture of the Holders of
Securities of any other series.
(c) It will not be necessary for any Act of Holders under this
Section 10.02 to approve the particular form of any proposed supplemental
indenture, but it will be sufficient if such Act approves the substance
thereof.
Section X.03. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article X or the modifications
thereby of the trusts created by this Indenture, the Trustee will be
entitled to receive, and (subject to Section 9.01) will be fully protected
in relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The
Trustee may, but will not be obligated to, enter into any such supplemental
indenture which affects the Trustee's own rights, duties, or immunities
under this Indenture or otherwise.
Section X.04. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article X, this Indenture will be modified in accordance therewith, and
such supplemental indenture will form a part of this Indenture for all
purposes; and every Holder of Securities theretofore or thereafter
authenticated and delivered hereunder will be bound thereby.
Section X.05. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article X
will conform to the requirements of the Trust Indenture Act.
Section X.06. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article X may, and
will if required by the Trustee, bear a notation in form approved by the
Trustee as to any matter provided for in such supplemental indenture. If
the Company shall so determine, new Securities of any series so modified as
to conform, in the opinion of the Trustee and the Company, to any such
supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities of such series.
Article XI. Consolidation, Merger, Sale, or Transfer.
Section XI.01. Consolidations and Mergers of Company and Sales Permitted
Only on Certain Terms.
(a) The Company shall not consolidate with or merge with or into
any other Person, or transfer (by lease, assignment, sale, or otherwise)
its properties and assets substantially as an entirety to another Person
unless (i) either (A) the Company shall be the continuing or surviving
Person in such a consolidation or merger or (B) the Person (if other than
the Company) formed by such consolidation or into which the Company is
merged or to which the properties and assets of the Company are transferred
substantially as an entirety (the Company or such other Person being
referred to as the Surviving Person) shall be a corporation organized and
validly existing under the laws of the United States, any state thereof, or
the District of Columbia, and shall expressly assume, by an indenture
supplement, all the obligations of the Company under the Securities and the
Indenture, (ii) immediately after the transaction and the incurrence or
anticipated incurrence of any Indebtedness to be incurred in connection
therewith, no Default will exist, and (iii) an Officer's Certificate has
been delivered to the Trustee to the effect that the conditions set forth
in the preceding clauses (i) and (ii) have been satisfied and an Opinion of
Counsel (from a counsel who shall not be an employee of the Company) has
been delivered to the Trustee to the effect that the conditions set forth
in the preceding clause (i) have been satisfied.
(b) The Surviving Person will succeed to and be substituted for
the Company with the same effect as if it had been named herein as a party
hereto, and thereafter the predecessor corporation (if it is not the
Surviving Person) will be relieved of all obligations and covenants under
this Indenture and the Securities.
Article XII. Satisfaction and Discharge of Indenture.
Section XII.01. Satisfaction and Discharge of Indenture.
This Indenture will upon a Company Request cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange of Securities herein expressly provided for), and the Trustee, at
the expense the Company, will execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when: (a) either (i) all
Securities theretofore authenticated and delivered (other than (A)
Securities which have been destroyed, lost, or stolen and which have been
replaced or paid as provided in Section 2.07 and (B) Securities for the
payment of which money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust, as provided in Section 6.03) have
been delivered to the Trustee for cancellation or (ii) all such Securities
not theretofore delivered to the Trustee for cancellation (A) have become
due and payable, (B) will become due and payable at their Stated Maturity
within one year, or (C) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Company,
and the Company, in the case of clause (A), (B), or (C) above, has
deposited or caused to be deposited with the Trustee as trust funds in
trust for such purpose an amount sufficient to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to the Trustee
for cancellation, for principal and any premium and interest to the date of
such deposit (in the case of Securities which have become due and payable)
or to the Stated Maturity or Redemption Date, as the case may be; (b) the
Company has paid or caused to be paid all other sums payable hereunder by
the Company; and (c) the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of
this Indenture have been satisfied. Notwithstanding the satisfaction and
discharge of this Indenture, the obligations of the Company to the Trustee
under Section 9.06, the obligations of the Company to any Authenticating
Agent under Section 9.13, and, if money shall have been deposited with the
Trustee pursuant to subclause (ii) of clause (a) of this Section 12.01, the
obligations of the Trustee under Sections 6.03(e) and 12.02, will survive.
Section XII.02. Application of Trust Money.
Subject to provisions of Section 6.03(e), all money deposited with the
Trustee pursuant to Section 12.01 will be held in trust and applied by it,
in accordance with the provisions of the Securities and this Indenture, to
the payment, either directly or through any Paying Agent (including the
Company acting as its own Paying Agent) as the Trustee may determine, to
the Persons entitled thereto, of the principal and any premium and interest
for whose payment such money has been deposited with the Trustee.
Article XIII. Miscellaneous Provisions.
Section XIII.01. Successors and Assigns of Company Bound by Indenture.
All the covenants, stipulations, promises, and agreements in this
Indenture contained by or on behalf of the Company will bind its successors
and assigns, whether so expressed or not.
Section XIII.02. Service of Required Notice to Trustee and Company.
Any request, demand, authorization, direction, notice, consent,
waiver, Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with (a) the
Trustee by any Holder or by the Company will, upon receipt, be sufficient
for every purpose hereunder if made, given, furnished, or filed in a
writing received by the Trustee at its Corporate Trust Office (addressed to
the attention of: Corporate Trust Trustee Administration) or (b) the
Company by the Trustee or by any Holder will, upon receipt, be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
made, given, furnished, or filed in a writing received by the Company at
its principal executive offices (addressed to the attention of both its
Chief Financial Officer and its General Counsel).
Section XIII.03. Service of Required Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event,
such notice will be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each
Holder affected by such event, at his address as it appears in the Security
Register, not later than the latest date (if any), and not earlier than the
earliest date (if any), prescribed for the giving of such notice. In any
case where notice to Holders is given by mail, neither the failure to mail
such notice, nor any defect in any notice so mailed, to any particular
Holder will affect the sufficiency of such notice with respect to other
Holders. Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such
notice, either before or after the event, and such waiver will be the
equivalent of such notice. Waivers of notice by Holders will be filed with
the Trustee, but such filing will not be a condition precedent to the
validity of any action taken in reliance upon such waiver. In case by
reason of the suspension of regular mail service or by reason of any other
cause it will be impracticable to give such notice by mail, then such
notification as may be made with the approval of the Trustee will
constitute a sufficient notification for every purpose hereunder.
Section XIII.04. Indenture and Securities to be Construed in Accordance
with the Laws of the State of New York.
This Indenture and the Securities will be deemed to be a contract
made under the laws of the State of New York, and for all purposes will be
construed in accordance with the laws of said State without giving effect
to principles of conflict of laws of such State.
Section XIII.05. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to
take any action under any of the provisions of this Indenture, the Company
will furnish to the Trustee such certificates and opinions as may be
required under the Trust Indenture Act. Each such certificate or opinion
will be given in the form of an Officer's Certificate, if to be given by an
officer of the Company, or an Opinion of Counsel, if to be given by
counsel, and will comply with the requirements of the Trust Indenture Act
and any other requirements set forth in this Indenture.
Section XIII.06. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary
that all such matters be certified by, or covered by the opinion of, only
one such Person, or that they be so certified or covered by only one
document, but one such Person may certify or give an opinion with respect
to some matters and one or more other such Persons as to other matters, and
any such Person may certify or give an opinion as to such matters in one or
several documents. Where any Person is required to make, give, or execute
two or more applications, requests, consents, certificates, statements,
opinions, or other instruments under this Indenture, they may, but need
not, be consolidated and form one instrument.
Section XIII.07. Payments Due on Non-Business Days.
In any case where any Interest Payment Date, Redemption Date, or
Stated Maturity of any Security shall not be a Business Day at any Place of
Payment, then (notwithstanding any other provision of this Indenture or of
the Securities (other than a provision of the Securities of any series
which specifically states that such provision will apply in lieu of this
Section 13.07)) payment of interest or principal (and premium, if any) need
not be made at such Place of Payment on such date, but may be made on the
next succeeding Business Day at such Place of Payment with the same force
and effect as if made on the Interest Payment Date or Redemption Date, or
at the Stated Maturity, and no interest shall accrue for the intervening
period.
Section XIII.08. Provisions Required by Trust Indenture Act to Control.
If any provision of this Indenture limits, qualifies, or
conflicts with the duties imposed on any Person by Sections 310 through 317
of the Trust Indenture Act (including provisions automatically deemed
included in this Indenture pursuant to the Trust Indenture Act unless this
Indenture provides that such provisions are excluded), which are deemed to
be a part of and govern this Indenture, whether or not contained herein,
then such imposed duties will control.
Section XIII.09. Invalidity of Particular Provisions.
In case any one or more of the provisions contained in this
Indenture or in the Securities is for any reason held to be invalid,
illegal, or unenforceable in any respect, such the validity, illegality, or
enforceability will not affect any other provision of this Indenture or of
the Securities, but this Indenture and such Securities will be construed as
if such invalid or illegal or unenforceable provision had never been
contained herein or therein.
Paragraph Numbering Definition: X. 1. (a) (1) (a) (i) (i) (a)
Starting Paragraph Number: 13.10
Section XIII.10. Indenture May be Executed In Counterparts.
This instrument may be executed in any number of counterparts,
each of which will be an original, but such counterparts will together
constitute but one and the same instrument.
Section XIII.11. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice,
consent, waiver, or other action provided or permitted by this Indenture to
be given or taken by Holders may be embodied in and evidenced by one or
more instruments of substantially similar tenor signed by such Holders in
person or by agent duly appointed in writing; and, except as herein
otherwise expressly provided, such action will become effective when such
instrument or instruments are delivered to the Trustee and, where it is
hereby expressly required, to the Company. Such instrument or instruments
(and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the Act of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent will be sufficient for any purpose of this
Indenture and (subject to Section 9.01) conclusive in favor of the Trustee
and the Company, if made in the manner provided in this Section 13.11.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Where such execution is by a signer acting in a
capacity other than his individual capacity, such certificate or affidavit
will also constitute sufficient proof of his authority. The fact and date
of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other manner which the
Trustee deems sufficient.
(c) The ownership of Securities will be proved by the Security
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver, or other Act of the Holder of any Security will bind every
future Holder of the same Security and the Holder of every Security issued
upon the registration of transfer thereof or in exchange thereof or in lieu
thereof in respect of anything done, omitted, or suffered to be done by the
Trustee or the Company in reliance thereon, whether or not notation of such
action is made upon such Security.
(e) The Company may, in the circumstances permitted by the Trust
Indenture Act, set any day as the record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
give or take any request, demand, authorization, direction, notice,
consent, waiver, or other action provided or permitted by this Indenture to
be given or taken by Holders of Securities of such series. With regard to
any record date set pursuant to this paragraph, the Holders of Outstanding
Securities of the relevant series on such record date (or their duly
appointed agents), and only such Persons, will be entitled to give or take
the relevant action, whether or not such Holders remain Holders after such
record date. With regard to any action that may be given or taken
hereunder only by Holders of a requisite principal amount of Outstanding
Securities of any series (or their duly appointed agents) and for which a
record date is set pursuant to this paragraph, the Company may, at its
option, set an expiration date after which no such action purported to be
given or taken by any Holder will be effective hereunder unless given or
taken on or prior to such expiration date by Holders of the requisite
principal amount of Outstanding Securities of such series on such record
date (or their duly appointed agents). On or prior to any expiration date
set pursuant to this paragraph, the Company may, on one or more occasions
at its option, extend such date to any later date. Nothing in this
paragraph will prevent any Holder (or any duly appointed agent thereof)
from giving or taking, after any such expiration date, any action identical
to, or, at any time, contrary to or different from, the action or purported
action to which such expiration date relates, in which event the Company
may set a record date in respect thereof pursuant to this paragraph.
Nothing in this Section 13.11(e) will be construed to render ineffective
any action taken at any time by the Holders (or their duly appointed
agents) of the requisite principal amount of Outstanding Securities of the
relevant series on the date such action is so taken. Notwithstanding the
foregoing or the Trust Indenture Act, the Company will not set a record
date for, and the provisions of this Section 13.11(e) will not apply with
respect to, any notice, declaration, or direction referred to in the next
paragraph.
(f) Upon receipt by the Trustee from any Holder of Securities of
a particular series of (a) any notice of default or breach referred to in
Section 8.01(a)(iv) or 8.01(a)(v) with respect to Securities of such
series, if such default or breach has occurred and is continuing and the
Trustee shall not have given such notice to the Company, (b) any
declaration of acceleration referred to in Section 8.01(b), if an Event of
Default with respect to Securities of such series has occurred and is
continuing and the Trustee shall not have given such a declaration to the
Company, or (c) any direction referred to in Section 8.06 with respect to
Securities of such series, if the Trustee shall not have taken the action
specified in such direction, then a record date will automatically and
without any action by the Company or the Trustee be set for determining the
Holders of Outstanding Securities of such series entitled to join in such
notice, declaration, or direction, which record date will be the close of
business on the tenth calendar day following the day on which the Trustee
receives such notice, declaration, or direction. Promptly after such
receipt by the Trustee, and in any case not later than the fifth calendar
day thereafter, the Trustee will notify the Company and the Holders of
Outstanding Securities of such series of any such record date so fixed.
The Holders of Outstanding Securities of such series on such record date
(or their duly appointed agents), and only such Persons, will be entitled
to join in such notice, declaration, or direction, whether or not such
Holders remain Holders after such record date; provided that, unless such
notice, declaration, or direction shall have become effective by virtue of
Holders of the requisite principal amount of Outstanding Securities of such
series on such record date (or their duly appointed agents) having joined
therein on or prior to the 90th calendar day after such record date, such
notice, declaration, or direction will automatically and without any action
by any Person be cancelled and of no further effect. Nothing in this
Section 13.11(f) will be construed to prevent a Holder (or a duly appointed
agent thereof) from giving, before or after the expiration of such 90-day
period, a notice, declaration, or direction contrary to or different from,
or, after the expiration of such period, identical to, the notice,
declaration, or direction to which such record date relates, in which event
a new record date in respect thereof will be set pursuant to this Section
13.11(f). Nothing in this Section 13.11(f) will be construed to render
ineffective any notice, declaration, or direction of the type referred to
in this Section 13.11(f) given at any time to the Trustee and the Company
by Holders (or their duly appointed agents) of the requisite principal
amount of Outstanding Securities of the relevant series on the date such
notice, declaration, or direction is so given.
(g) Without limiting the foregoing, a Holder entitled hereunder
to give or take any action hereunder with regard to any particular Security
may do so with regard to all or any part of the principal amount of such
Security or by one or more duly appointed agents each of which may do so
pursuant to such appointment with regard to all or any different part of
such principal amount.
Section XIII.12. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents
are for convenience only and will not affect the construction hereof.
Section XIII.13. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or
implied, will give to any Person, other than the parties hereto and their
successors hereunder and the Holders, any benefit or any legal or equitable
right, remedy, or claim under this Indenture.
____________________
In Witness Whereof, the parties hereto have caused this Indenture
to be duly executed, and their respective corporate seals to be hereunto
affixed and attested, all as of the day and year first above written.
[Seal] EDISON BROTHERS STORES, INC.
By:
Name: David B. Cooper, Jr.
Title: Executive Vice President and
Chief Financial Officer
Attest:
Name:
Title:
THE BANK OF NEW YORK, as Trustee
By:
Name:
Title:
Attest:
Name:
Title:
STATE OF )
) ss.:
COUNTY OF )
On this ____ day of September, 1997, before me personally came
David B. Cooper, Jr., to me known, who, being by me duly sworn, did depose
and say that he is an Executive Vice President and the Chief Financial
Officer of EDISON BROTHERS STORES, INC., one of the entities described in
and which executed the above instrument; that he/she knows the seal of said
entity; that the seal or a facsimile thereof affixed to said instrument is
such seal; that it was so affixed by authority of the Board of Directors of
said entity, and that he/she signed his/her name thereto by like authority.
Notary Public
In Witness Whereof, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
Notary Public
STATE OF )
) ss.:
COUNTY OF )
On this ____ day of September, 1997, before me personally came
, to me known, who, being by me
duly sworn, did depose and say that he/she is
__________________________________________ of THE BANK OF NEW YORK, one of
the entities described in and which executed the above instrument; that
he/she knows the seal of said entity; that the seal or a facsimile thereof
affixed to said instrument is such seal; that it was so affixed by
authority of the Board of Directors of said entity, and that he/she signed
his/her name thereto by like authority.
Notary Public
In Witness Whereof, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
Notary Public
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this Agreement ), dated as
of September 26, 1997, is entered into between Edison Brothers Stores,
Inc., a Delaware corporation (the Company ), and each of the other persons
or entities signatory hereto (each of such other persons, a Stockholder ).
W I T N E S S E T H :
WHEREAS, the Debtors' Amended Joint Plan of Reorganization under
Chapter 11 of the Bankruptcy Code (the Plan ) was confirmed on September
9, 1997 by order of the United States Bankruptcy Court for the District of
Delaware in Case No. 95-1354 (PJW);
WHEREAS, pursuant to the Plan, each Stockholder will receive at
least 10% of the aggregate shares of Common Stock (as hereinafter defined),
and/or at least 10% in aggregate principal amount of the New Notes,
issuable under the Plan (such shares of Common Stock issued to the
Stockholders, collectively the Shares );
WHEREAS, the Shares and the New Notes will be issued to the
Stockholders pursuant to the Plan without registration under the Securities
Act (as hereinafter defined), in reliance on an applicable exemption from
such registration, and the Company and the Stockholders desire to provide
for the registration of the resale by the Stockholders of Registrable
Securities (as hereinafter defined) from time to time, upon the terms and
subject to conditions hereinafter set forth; and
WHEREAS, it is intended by the Company and the Stockholders that
this Agreement shall become effective immediately as of the Effective Date.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged and affirmed,
the parties hereto, intending to be legally bound, hereby agree as follows:
1. DEFINITIONS.
All capitalized terms used but not defined in this Agreement have
the respective meanings assigned to such terms in the Plan. As used in
this Agreement, the following capitalized terms (in their singular and
plural forms, as applicable) have the following meanings:
Agreement has the meaning assigned to such term in the
introductory paragraph to this Agreement.
Commission means the United States Securities and Exchange
Commission and any successor United States federal agency or governmental
authority having similar powers.
Common Stock means the common stock, par value $0.01 per share,
of the Company, issued as of the Effective Date pursuant to the Plan.
Company has the meaning assigned to such term in the
introductory paragraph to this Agreement.
Demand Common Stock Registration has the meaning assigned to
such term in Section 2(b).
Demand New Notes Registration has the meaning assigned to such
term in Section 2(b).
Demand Registration has the meaning assigned to such term in
Section 2(b).
Demand Request has the meaning assigned to such term in Section
2(b).
Effective Period has the meaning assigned to such term in
Section 2(a)(ii).
Exchange Act means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
Material Adverse Effect has the meaning assigned to such term
in Section 2(b)(iv).
Material Disclosure Event means, as of any date of
determination, any pending or imminent event relating to the Company,
which, in the good faith, reasonable opinion of the Board of Directors of
the Company (i) requires disclosure of material, non-public information
relating to such event in any registration statement so that such
registration statement would not be materially misleading, (ii) is
otherwise not required to be publicly disclosed at that time (e.g., on Form
8-K or Form 10-Q) under applicable federal or state securities laws, and
(iii) if publicly disclosed at the time of such event, would have a
material adverse effect on the business, financial condition or prospects
of the Company.
Permitted Assignee means any person or entity that (i) wholly
owns, is wholly owned by or is under common whole ownership with any
Stockholder and (ii) acquires, in a single transaction from any
Stockholder, at least ten percent of the Company's then-outstanding shares
of Common Stock, such percentage to be calculated as of immediately after
such acquisition.
Piggyback Registration has the meaning assigned to such term in
Section 2(c)(i).
The terms register, registered and registration means a
registration effected by preparing and filing with the Commission a
registration statement on an appropriate form in compliance with the
Securities Act, and the declaration or order of the Commission of the
effectiveness of such registration statement under the Securities Act.
Registrable Securities means the Shares (and any other
securities issued by the Company in respect thereof), the shares of Common
Stock issuable upon exercise of the Warrants issued pursuant to the Plan
and the New Notes; provided, however, that as to any Registrable
Securities, such securities shall cease to constitute Registrable
Securities for purposes of this Agreement if and when (i) a registration
statement with respect to the sale of such securities shall have been
declared effective by the Commission and such securities shall have been
sold pursuant thereto in accordance with the intended plan and method of
distribution therefor set forth in the final prospectus forming part of
such registration statement or (ii) such securities shall have been sold in
satisfaction of all applicable resale provisions of Rule 144 under the
Securities Act or (iii) such securities have been transferred to any person
or entity other than a Permitted Transferee or (iv) such securities may be
freely sold publicly without registration under the Securities Act or
compliance with Rule 144 under the Securities Act.
Registration Expenses means all reasonable expenses incurred by
the Company in complying with Section 2 hereof, including, without
limitation, all registration and filing fees (including fees and expenses
associated with filings required to be made with the National Association
of Securities Dealers, Inc. and any national securities exchange or U.S.
automated inter-dealer quotation system of a registered national securities
association on which the class of Registrable Securities is listed or
otherwise admitted to unlisted trading privileges), printing expenses, if
any (including expenses of printing certificates for the Registrable
Securities being registered in a form eligible for deposit with The
Depository Trust Company and of printing registration statements and
prospectuses), fees and disbursements of counsel for the Company, fees and
expenses of compliance with state securities or blue sky laws (including
reasonable fees and expenses of one firm of counsel for all underwriters
collectively, if any, in connection with blue sky qualifications of the
Registrable Securities being registered and the determination of eligi
bility for investment under the laws of such jurisdictions designated by
the underwriters, if any), accountants' fees and expenses (including the
expenses of any special audits or comfort letters incident to or required
by any such registration), transfer taxes, fees of transfer agents and
registrars, and reasonable fees and disbursements of underwriters
customarily paid by issuers or sellers of securities, but excluding
underwriting discounts and commissions and broker-dealer concessions,
commissions and allowances and marketing expenses.
Required Filing Date has the meaning assigned to such term in
Section 2(b).
Securities Act means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.
Shares has the meaning assigned to such term in the recitals to
this Agreement.
Shelf Registration Statement has the meaning assigned to such
term in Section 2(a)(i).
Stockholder has the meaning assigned to such term in the
introductory paragraph to this Agreement.
2. REGISTRATION UNDER THE SECURITIES ACT, ETC.
(a) Shelf Registration.
(i) General. The Company shall use reasonable commercial
efforts to prepare and file with the Commission, and to cause to become
effective under the Securities Act, not later than the 91st day after the
Effective Date, a registration statement on Form S-3 or other applicable
form relating to the resale, from time to time, of the Registrable
Securities by the Stockholders in accordance with the plan and method of
distribution set forth in the prospectus forming part of such registration
statement (a Shelf Registration Statement ). The Company shall provide
each Stockholder with a reasonable opportunity to review and comment on
such Shelf Registration Statement prior to the filing thereof with the
Commission, and shall not unreasonably decline to make such changes thereto
required by the Securities Act as any Stockholder may reasonably request in
writing.
(ii) Effective Period. The Company agrees to use reasonable
commercial efforts to keep the Shelf Registration Statement continuously
effective until the 24-month anniversary of the date on which the Shelf
Registration Statement shall have first been declared effective by the
Commission (subject to Suspension Periods (as hereinafter defined) and
extensions coincident with the length of such Suspension Periods), or the
date on which all Registrable Securities covered by the Shelf Registration
Statement have been sold thereunder in accordance with the plan and method
of distribution intended by the Stockholders and as disclosed in the
prospectus forming part of the Shelf Registration Statement (the Effective
Period ).
(iii) Suspension Period. For purposes hereof, Suspension
Period shall mean a period of time commencing on the date on which the
Company provides notice that the Shelf Registration Statement is no longer
effective, that the prospectus included in the Shelf Registration Statement
no longer complies with the requirements therefor prescribed by Section
10(a) of the Securities Act, or there is a Material Disclosure Event and
the Company has elected to require the suspension of the sale by the
Stockholders of Registrable Securities pursuant to the Shelf Registration
Statement, and shall end on the date when the Stockholders either receive
copies of the supplemented or amended prospectus contemplated by Section
2(d)(vi) plus an additional five Business Days or otherwise are advised in
writing by the Company that use of the prospectus may be resumed. Each of
the Stockholders agrees that it will not sell any Registrable Securities
pursuant to the Shelf Registration Statement during any Suspension Period.
The Company agrees to cause each Suspension Period to end as soon as
reasonably practicable. The Company further agrees that no other holder of
the Company's stock will be permitted to sell shares of the Company's stock
pursuant to a registration statement during a Suspension Period. If one or
more Suspension Periods occur, the Effective Period shall be extended by
such number of days equal to the aggregate number of days included in all
Suspension Periods.
(b) Demand Registration.
(i) Request for Registration. Commencing on the 91st day
after the Effective Date and ending on the second anniversary of the
Effective Date, any one or more of the Stockholders may request
(collectively, the Requesting Stockholders, which term shall include
parties deemed Requesting Stockholders pursuant to Section 2(b)(vi)
hereof) in writing (a Demand Request ), that the Company effect (1) the
registration under the Securities Act of that number of Shares (including
Shares issuable upon exercise of Warrants) requested and owned by the
Requesting Stockholders (a Demand Common Stock Registration ) or (2) the
registration under the Securities Act of that principal amount of New Notes
requested and owned by the Requesting Stockholders (a Demand New Notes
Registration and, together with the Demand Common Stock Registrations, the
Demand Registrations ). Notwithstanding anything to the contrary set forth
in this Agreement, the Company shall in no event be required to effect, in
the aggregate with respect to all of the Stockholders, more than two Demand
Common Stock Registrations or more than one Demand New Notes Registration;
provided that, if any Registrable Securities requested to be registered
pursuant to a Demand Request under this Section 2(b)(i) are excluded from a
registration pursuant to Section 2(b)(iv) below, the Requesting
Stockholders shall have the right, with respect to each such exclusion, to
one additional Demand Registration under this Section 2(b)(i) with respect
to such excluded Registrable Securities. Subject to Section 2(b)(v), the
Company shall file with the Commission, within 60 days after receiving a
Demand Request (the Required Filing Date ), a registration statement on an
appropriate form under the Securities Act providing for the sale or
distribution of those Registrable Securities subject to the Demand
Registration, and shall thereafter use reasonable commercial efforts to
cause the same to be declared effective by the Commission as promptly as
practicable after such filing. Notwithstanding anything to the contrary
set forth in this Agreement, (1) no Stockholder may make a Demand Request
or participate in a Demand Registration unless, at the time thereof, (a)
such Stockholder owns at least 10% of the then-outstanding shares of Common
Stock with respect to a Demand Common Stock Registration or at least 10% in
aggregate principal amount of the then-outstanding New Notes with respect
to a Demand New Notes Registration or (b) certifies in writing to the
Company that such Stockholder may be deemed to be an affiliate of the
Company under the Securities Act; (2) the Company shall not be required to
effect any Demand Registration pursuant to any registration statement other
than the Shelf Registration Statement at any time when the Shelf
Registration Statement is effective and may be used for such Demand
Registration; and (3) the Company shall not be required to effect any
Demand Registration of an offering and sale that can otherwise be effected
in compliance with Rule 144 under the Securities Act.
(ii) Effective Registration and Expenses. A registration
will not count as a Demand Registration until it has become effective
(unless the Requesting Stockholders withdraw from such registration all
their Registrable Securities and the Company has performed its obligations
hereunder in all material respects, in which case such demand will count as
a Demand Registration unless the Requesting Stockholders pay all
Registration Expenses in connection with such withdrawn registration);
provided that, if, after it has become effective, an offering of
Registrable Securities pursuant to such registration is terminated by any
stop order, injunction, or other order of the Commission or other
governmental agency or court, such registration will be deemed not to have
been effected and will not count as a Demand Registration.
(iii) Selection of Underwriters. Any offering of
Registrable Securities pursuant to a Demand Registration shall be in the
form of a firm commitment underwritten offering or such other lawful form
as the Requesting Stockholders may reasonably specify; provided however,
that no such offering may be in the form of a best efforts or similar
type offering. With respect to any offering of Registrable Securities
pursuant to a Demand Registration in the form of a firm commitment
underwritten offering, the holders of a majority of the Registrable
Securities to be included in such offering (measured by number of shares
with respect to the Shares and principal amount with respect to the New
Notes) and the Company shall jointly select the investment banking firm or
firms to manage the underwritten offering.
(iv) Priority on Demand Registrations. No securities to be
sold for the account of any person or entity (including the Company) other
than a Requesting Stockholder shall be included in a Demand Registration
unless the managing underwriter or underwriters shall advise the Company or
the Requesting Stockholders in writing that the inclusion of such
securities will not materially and adversely affect the price or success of
the offering (a Material Adverse Effect ). Furthermore, in the event that
the managing underwriter or underwriters shall advise the Company or the
Requesting Stockholders that even after exclusion of all securities of the
other persons or entities pursuant to the immediately preceding sentence,
the amount of Registrable Securities proposed to be included in such Demand
Registration by Requesting Stockholders is sufficiently large to cause a
Material Adverse Effect, the Registrable Securities of the Requesting
Stockholders to be included in such Demand Registration shall equal that
number of Shares or principal amount of New Notes, as the case may be,
which the Company is so advised can be sold in such offering without a
Material Adverse Effect and such Shares or New Notes shall be allocated pro
rata among the Requesting Stockholders on the basis of the number of Shares
or principal amount of New Notes, as the case may be, requested to be
included by each such Requesting Stockholder.
(v) Deferral of Filing. If a Material Disclosure Event
exists as of the time the filing of a registration statement is otherwise
required by Section 2(b), the Company may defer such filing (but not the
preparation) of such registration statement until a date not later than 120
days after the Required Filing Date. A deferral of the filing of a
registration statement pursuant to this Section 2(b)(v) shall be lifted,
and the requested registration statement shall be filed forthwith, if the
Material Disclosure Event ceases. In order to defer the filing of a
registration statement pursuant to this Section 2(b)(v), the Company shall
promptly (but in any event within 10 days), upon determining to seek such
deferral, deliver to each Requesting Stockholder a certificate signed by an
executive officer of the Company stating that the Company is deferring such
filing pursuant to this Section 2(b)(v) and a general statement of the
reason for such deferral and an approximation of the anticipated delay.
Within 20 days after receiving such certificate, the holders of a majority
of the Registrable Securities (measured by number of shares with respect to
the Shares and principal amount with respect to the New Notes) beneficially
owned by the Requesting Stockholders and for which registration was
previously requested may withdraw such Demand Request by giving notice to
the Company; if withdrawn, the Demand Request shall be deemed not to have
been made for all purposes of this Agreement.
(vi) Rights of Nonrequesting Stockholders. Upon receipt of
any Demand Request, the Company shall promptly, but in any event within 10
days, give notice of such proposed Demand Registration to all other
Stockholders, who shall have the right, exercisable by written notice to
the Company within 20 days of their receipt of the Company's notice, to
elect to include in such Demand Registration, all or any portion of their
Registrable Securities (such notice from any Stockholder shall state the
number of shares of Common Stock or the principal amount of New Notes
requested to be registered). All Stockholders requesting to have any of
their Registrable Securities included in a Demand Registration in
accordance with the preceding sentence shall be deemed to be Requesting
Stockholders for purposes of Section 2. The failure of any Stockholder to
elect to include any of such Stockholder's Registrable Securities in such
Demand Registration pursuant to this Section 2(b)(vi) shall not result in
such Demand Registration failing to count as one Demand Registration for
all purposes of this Agreement.
(c) Piggyback Registration.
(i) Right to Piggyback. Commencing on the 91st day after
the Effective Date and ending on the second anniversary of the Effective
Date, each time during such period that the Company proposes to register
any of its Common Stock under the Securities Act for sale pursuant to an
underwritten public offering for cash (whether for the account of the
Company or the account of any securityholder of the Company other than
under Section 2(b)) and the form of registration statement to be used
permits the registration of Registrable Securities (without limitation,
Forms S-4 and S-8 and successor forms thereto shall be deemed not to permit
such registration), the Company shall give prompt written notice to each
Stockholder (which notice shall be given not less than 30 days prior to the
effective date of the Company's registration statement), which notice shall
offer each Stockholder the opportunity to include any or all of such
Registrable Securities of such Stockholder in such registration statement,
subject to the limitations contained in Section 2(c)(ii) (a Piggyback
Registration ). Each Stockholder that desires to have its Registrable
Securities included in such registration statement shall so advise the
Company in writing (stating the number of shares of Common Stock or the
principal amount of New Notes desired to be registered) within 20 days
after the date of receipt of such notice from the Company. Any Stockholder
shall have the right to withdraw such Stockholder's request for inclusion
of such Stockholder's Registrable Securities in any registration statement
pursuant to this Section 2(c) by giving written notice to the Company of
such withdrawal not later than five days prior to the effective date of the
Company's registration statement. Subject to Section 2(c)(ii) below, the
Company shall include in such registration statement all such Registrable
Securities so requested to be included therein; provided, however, that the
Company may at any time withdraw or cease proceeding with any such
registration if it shall at the same time withdraw or cease proceeding with
the registration of all the Common Stock originally proposed to be
registered. Notwithstanding anything to the contrary set forth in this
Agreement, no Stockholder may participate in a registration under this
Section 2(c) unless, at the time thereof, (1) such Stockholder owns at
least 10% of the then-outstanding shares of Common Stock with respect to a
registration involving the Common Stock or at least 10% in aggregate
principal amount of the then-outstanding New Notes with respect to a
registration revolving the New Notes or (2) certifies in writing to the
Company that such Stockholder may be deemed to be an affiliate of the
Company under the Securities Act.
(ii) Priority on Registrations. If the Registrable
Securities requested to be included in the registration statement by any
Stockholder differ from the type of securities proposed to be registered by
the Company and the managing underwriter advises the Company that due to
such differences the inclusion of such Registrable Securities would cause a
Material Adverse Effect, then (1) the number of such Stockholder's or
Stockholders' Registrable Securities to be included in the Registration
Statement shall be reduced to an amount which, in the judgment of the
managing underwriter, would eliminate such Material Adverse Effect or (2)
if no such reduction would, in the judgment of the managing underwriter,
eliminate such Material Adverse Effect, then the Company shall have the
right to exclude all such Registrable Securities from such registration
statement provided no other securities of such type are included and
offered for the account of any other person or entity in such registration
statement. Any partial reduction in the number of Registrable Securities
to be included in the registration statement pursuant to clause (1) of the
immediately preceding sentence shall be effected pro rata based on the
ratio which such Stockholder's requested securities bears to the total
number of Shares or principal amount of New Notes, as the case may be,
requested to be included in such registration statement by all persons or
entities (including Requesting Stockholders) who have requested (pursuant
to contractual registration rights) that their securities be included in
such registration statement. If the Registrable Securities requested to be
included in the registration statement are of the same type as the
securities being registered by the Company and the managing underwriter
advises the Company that the inclusion of such Registrable Securities would
cause a Material Adverse Effect, the Company will be obligated to include
in such registration statement, as to each Stockholder, only a portion of
the Registerable Securities such Stockholder has requested be registered
equal to the ratio which such Stockholder's requested securities bears to
the total number of Shares or principal amount of New Notes, as the case
may be, requested to be included in such registration statement by all
persons or entities (including Requesting Stockholders) who have requested
(pursuant to contractual registration rights) that their securities be
included in such registration statement. If as a result of the provisions
of this Section 2(c)(ii) any Stockholder shall not be entitled to include
all Registrable Securities in a registration that such Stockholder has
requested to be so included, such Stockholder may withdraw such
Stockholder's request to include Registrable Securities in such
registration statement.
(d) Registration Procedures. The Company shall:
(i) provide the Stockholders with a reasonable
opportunity to review and comment on any registration statement to be filed
pursuant to Section 2 of this Agreement prior to the filing thereof with
the Commission, and shall not unreasonably decline to make such changes
thereto required by the Securities Act as any Stockholder may reasonably
request in writing;
(ii) cause any such registration statement and the
related prospectus and any amendment or supplement thereto, as of the
effective date of such registration statement, amendment or supplement,
(A) to comply in all material respects with the applicable requirements of
the Securities Act and the rules and regulations of the Commission
promulgated thereunder and (B) not to contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(iii) use reasonable commercial efforts to prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement, and take such other actions, as may be necessary to
keep such registration statement effective and to comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such registration statement until, with
respect to the Shelf Registration Statement, the earlier of (a) such time
as all such Registrable Securities have been disposed of in accordance with
the intended plan and method of disposition by the Stockholders or (b) the
24-month anniversary of the date on which such Shelf Registration Statement
was first declared effective (subject to Suspension Periods and extensions
coincident with the length of such suspensions), with respect to any
registration statement filed under Section 2(b) of this Agreement, such
time as all such Registrable Securities have been disposed of in accordance
with the intended plan and method of disposition by the Stockholders but in
no event more than 180 days after the second anniversary of the Effective
Date, and with respect to any registration statement filed under Section
2(c) of this Agreement, such time as the Company determines to withdraw or
cease proceeding with any such registration pursuant to the terms hereof,
and will furnish to the Stockholders a copy of any amendment or supplement
to such registration statement or prospectus prior to filing the same with
the Commission and shall not file any such amendment or supplement to which
the Stockholders shall reasonably have objected in writing on the grounds
that such amendment or supplement does not comply in all material respects
with the requirements of the Securities Act or otherwise inaccurately
describes information pertaining to the Stockholders or to the intended
plan and method of disposition of Registrable Securities by the
Stockholders;
(iv) furnish to the Stockholders such number of
conformed copies of such registration statement and of each such amendment
and supplement thereto (in each case including all exhibits thereto), such
number of copies of the prospectus included in such registration statement
(including each preliminary prospectus), and such number of the documents,
if any, incorporated by reference in such registration statement or
prospectus, as the Stockholders reasonably may request;
(v) use reasonable commercial efforts to register
or qualify the Registrable Securities covered by such registration
statement under such securities or blue sky laws of the states of the
United States as the Stockholders reasonably shall request, to keep such
registration or qualification in effect for so long as such registration
statement remains in effect, and to do any and all other acts and things
which may be necessary or advisable to enable the Stockholders to
consummate the disposition in such jurisdictions of the Registrable
Securities covered by such registration statement, except that the Company
shall not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction in which it is not
and would not, but for the requirements of this Section 2(d)(v), be
obligated to be so qualified, or to subject itself to taxation in any such
jurisdiction, or to consent to general service of process in any such
jurisdiction;
(vi) immediately notify the Stockholders, at any
time when a prospectus or prospectus supplement relating thereto is
required to be delivered under the Securities Act, upon discovery that, or
upon the occurrence of any event as a result of which, the prospectus
included in such registration statement, as then in effect, includes an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading,
which untrue statement or omission requires amendment of the registration
statement or supplementing of the prospectus, and, at the request of the
Stockholders, prepare and furnish to the Stockholders a reasonable number
of copies of a supplement to such prospectus as may be necessary so that,
as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that with respect to
Registrable Securities registered pursuant to such registration statement,
each Stockholder agrees that it will not sell any Registrable Securities
pursuant to such registration statement during the time after the
furnishing of the Company's notice that the Company is preparing and filing
with the Commission a supplement to or an amendment of such prospectus or
registration statement and, with respect to a Shelf Registration Statement,
such period shall be a Suspension Period for purposes of determining the
Effective Period hereunder;
(vii) use reasonable commercial efforts to comply
with all applicable rules and regulations of the Commission, and make
available to holders of its securities, as soon as reasonably practicable,
an earnings statement covering the period of at least 12 months, but not
more than 18 months, beginning with the first month of the first fiscal
quarter after the effective date of such registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act;
(viii) provide and cause to be maintained a transfer
agent and registrar for the Registrable Securities covered by such
registration statement from and after a date not later than the effective
date of such registration statement; it being hereby agreed that the
Stockholders shall furnish to the Company such information regarding the
Stockholders and the plan and method of distribution of Registrable
Securities intended by the Stockholders as the Company may from time to
time reasonably request in writing and as shall be required by law or by
the Commission in connection therewith;
(ix) notify the Stockholders and the managing
underwriters, if any, promptly, and (if requested by any such person)
confirm such notice in writing, (A) when a prospectus, prospectus
supplement or post-effective amendment related to such registration
statement has been filed, and, with respect to such registration statement
or any post-effective amendment thereto, when the same has become
effective, (B) of any request by the Commission or any other federal or
state governmental authority for amendments or supplements to such
registration statement or related prospectus, (C) of the issuance by the
Commission or any other federal or state governmental authority of any stop
order suspending the effectiveness of such registration statement or the
initiation of any proceedings for that purpose, and (D) of the receipt by
the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose;
(x) use reasonable commercial efforts to obtain
the withdrawal of any order suspending the effectiveness of such
registration statement, or the lifting of any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest possible moment;
(xi) cooperate with the Stockholders and the
managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold,
which certificates will not bear any restrictive legends; and enable such
Registrable Securities to be in such authorized denominations and
registered in such names as the managing underwriters, if any, shall
reasonably request at least two Business Days prior to any sale of
Registrable Securities to the underwriters; and
(xii) with respect to a firm commitment
underwritten offering, enter into an underwriting agreement in such form,
scope and substance as is customary in such underwritten offerings.
(e) Preparation; Reasonable Investigation. In connection with
the preparation and filing of each registration statement registering
Registrable Securities under the Securities Act as contemplated by this
Agreement, the Company shall give the Stockholders, their underwriters, if
any, and the Stockholders' counsel and accountants, the opportunity to
review the Company's preparation of such registration statement, each
prospectus included in such registration statement or filed with the
Commission and each amendment or supplement thereto, and the Company will
give such person or persons such reasonable access to the Company's books
and records and such opportunities to discuss the business of the Company
with its officers and the independent public accountants who have certified
its financial statements as shall be necessary for the Stockholders and
such other persons to conduct a reasonable investigation within the meaning
of Section 11 of the Securities Act. To minimize disruption and expense to
the Company during the course of the registration process, each Stockholder
shall use reasonable commercial efforts to coordinate its investigation and
due diligence efforts and, to the extent practicable, will act through a
single firm of counsel for all Stockholders and a single firm of
accountants for all Stockholders and, if requested by the Company, will
enter into a confidentiality agreement with the Company in a form
reasonably satisfactory to the Company.
(f) Indemnification. (i) Indemnification by the Company. The
Company shall indemnify and hold harmless (x) each Stockholder and its
affiliates, with respect to any registration statement filed pursuant to
this Agreement, (y) any underwriter or selling agent selected by the
Stockholders with respect to such Registrable Securities and (z) each
person who controls the Stockholder or affiliate, and any underwriter or
selling agent, within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act, against any losses, claims, damages,
liabilities or expenses (each a Loss and collectively Losses ), joint or
several, to which the Stockholder or any such persons may become subject
under the Securities Act or otherwise, to the extent that such Losses (or
related actions or proceedings) arise out of or are based upon (A) any
untrue statement or alleged untrue statement of any material fact contained
in an effective registration statement in which such Registrable Securities
were included for registration under the Securities Act, any preliminary
prospectus if used prior to the effective date of the registration
statement (unless such statement is corrected in the final prospectus and
the Company shall have furnished a sufficient number of copies thereof to
the Stockholder in a manner and at a time sufficient to permit delivery of
the same to prospective purchasers concurrently with or prior to the sale
of the related Registrable Securities), final prospectus (as supplemented,
if the Company shall have filed with the Commission any supplement thereto)
if used during the period in which the Company is required to keep the
registration statement to which such prospectus relates current and
otherwise in compliance with Section 10(a) of the Securities Act, or
(B) any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
provided, however, that the Company shall have no obligation to provide any
indemnification hereunder if any such Losses (or actions or proceedings in
respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, preliminary prospectus or final prospectus, as the
case may be, in reliance upon and in conformity with written information
furnished to the Company by the Stockholder or on the Stockholder's behalf
for inclusion in such registration statement; and provided, further, that
the Company shall have no obligation to provide any indemnification
hereunder if any such Losses arise out of or are based upon an untrue
statement or alleged untrue statement or omission or alleged omission in
the final prospectus, if such untrue statement or alleged untrue statement
or omission or alleged omission shall have been corrected in a supplement
to the final prospectus and the Stockholder or any such other person shall
have failed to deliver such final prospectus as so supplemented prior to or
concurrently with the sale of the Registrable Securities covered by a
registration statement to the individual or entity asserting such Losses
after the Company shall have furnished the Stockholder or any such other
persons with a sufficient number of copies thereof in a manner and at a
time sufficient to permit such delivery of the same. The indemnity
provided in this Section 2(f)(i) shall remain in full force and effect
regardless of any investigation made by or on behalf of the Stockholder or
any such other persons and shall survive the transfer of the Registrable
Securities by the Stockholder or any such other persons.
(ii) Indemnification by the Stockholders. Each Stockholder
shall indemnify and hold harmless (in the same manner and to the same
extent as set forth in Section 2(f)(i) hereof) the Company, each director
of the Company, each officer of the Company who shall sign such
registration statement and each other person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, with respect to any untrue statement in or omission
from any registration statement filed by the Company pursuant to this
Agreement, any preliminary prospectus or any final prospectus included in
such registration statement, or any amendment or supplement to such
registration statement or prospectus, as the case may be, of a material
fact if such statement or omission was made in reliance upon and in
conformity with written information furnished to the Company or any of its
representatives by the Stockholder or such other persons, if any, who
control the Stockholder within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, or on the Stockholder's behalf, for
inclusion in such registration statement, preliminary prospectus or final
prospectus, as the case may be.
(iii) Notice of Claims, etc. Promptly after
receipt by an indemnified party of notice of the commencement of any action
or proceeding (an Action ) involving a claim referred to in Sections
2(f)(i) and 2(f)(ii) hereof, such indemnified party shall, if
indemnification is sought against an indemnifying party, give written
notice to the indemnifying party of the commencement of such action;
provided, however, that the failure of any indemnified party to give said
notice shall not relieve the indemnifying party of its obligations under
Sections 2(f)(i) or 2(f)(ii) hereof, except to the extent that the
indemnifying party is actually and materially prejudiced by such failure.
In case an Action is brought against any indemnified party, and such
indemnified party notifies an indemnifying party of the commencement there
of, the indemnifying party shall be entitled to participate therein and, to
the extent it may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party shall have the right
to employ its own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of such indemnified party, unless
(A) the employment of such counsel shall have been authorized in writing by
the indemnifying party, (B) the indemnifying party shall not have employed
counsel (reasonably satisfactory to the indemnified party) to take charge
of the defense of such Action, within a reasonable time after notice of the
commencement thereof, or (C) such indemnified party reasonably shall have
concluded that there may be defenses available to it which are different
from or additional to those available to the indemnifying party which, if
the indemnifying party and the indemnified party were to be represented by
the same counsel, could result in a conflict of interest for such counsel
or materially prejudice the prosecution of the defenses available to such
indemnified party. If any of the events specified in clauses (A), (B) or
(C) of the preceding sentence shall have occurred or otherwise shall be
applicable, then the fees and expenses of one counsel (or firm of counsel)
for the indemnified party shall be borne by the indemnifying party. If, in
any case, the indemnified party employs separate counsel, the indemnifying
party shall not have the right to direct the defense of such action on
behalf of the indemnified party. Anything in this Section 2(f)(iii) to the
contrary notwithstanding, an indemnifying party shall not be liable for the
settlement of any action effected without its prior written consent (which
consent in the case of an action exclusively seeking monetary relief shall
not unreasonably be withheld or delayed), but if settled with the prior
written consent of the indemnifying party, or if there be a final judgment
adverse to the indemnified party, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment. No indemnifying party shall,
without the prior consent of the indemnified party, consent to entry of any
judgment or enter into any settlement which does not include as a term
thereof the unconditional release of the indemnified party from all
liability in respect of such claim or litigation.
(iv) Contribution. If the indemnification
provided for in this Section 2 is unavailable or insufficient to hold
harmless an indemnified party in respect of any Losses, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a
result of such Losses in such proportion as appropriate to reflect the
relative fault of the Company, on the one hand, and the Stockholder, on the
other hand, and the parties' relative intent, knowledge, access to
information and opportunity to correct or mitigate the damage in respect of
or prevent any untrue statement or omission giving rise to such
indemnification obligation. The Company and the Stockholders agree that it
would not be just and equitable if contributions pursuant to this Section
2(f)(iv) were determined by pro rata allocation or by any other method of
allocation which did not take account of the equitable considerations
referred to above. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation.
(v) Indemnification Payments. Periodic payments
of amounts required to be paid pursuant to this Section 2 shall be made
during the course of the investigation or defense, as and when reasonably
itemized bills therefor are delivered to the indemnifying party in respect
of any particular Loss, damage or liability that is incurred.
(g) Registration Expenses. The Company shall bear all
Registration Expenses incurred in connection with the performance of its
obligations under Section 2 of this Agreement.
(h) Holdback Agreements.
(i) Restrictions on Public Sale by Stockholders. Each
Stockholder agrees not to effect any public sale or distribution of
Registrable Securities or similar securities of the Company, or any
securities convertible into or exchangeable or exercisable for such
securities, including a sale pursuant to Rule 144 under the Securities Act,
during the 14 days prior to, and during the period (not to exceed 90 days)
beginning on, the commencement of an underwritten public distribution of
Registrable Securities under any registration statement pursuant to this
Agreement (except as part of such underwritten public distribution), if and
to the extent requested by the Company or by the managing underwriter or
underwriters.
(ii) Restrictions on Public Sale by the Company. The
Company agrees not to effect any public sale or distribution of any
securities similar to those being registered hereunder, or any securities
convertible into or exchangeable or exercisable for such securities, except
in any case for any such sale or distribution of such securities in
connection with any merger or consolidation involving the Company or any
subsidiary thereof, the acquisition by the Company or any subsidiary
thereof of the capital stock or substantially all of the assets of any
other person or entity, any shelf registration, or any employee or director
benefit or similar plan or any dividend reinvestment plan), during the 14
days prior to, and during the period (not to exceed 90 days) beginning on,
the commencement of an underwritten public distribution of Registrable
Securities, if and to the extent requested by the managing underwriter or
underwriters.
(i) Certain Obligations of Stockholders. The Company may
require each Stockholder of Registrable Securities as to which any
registration is being effected to furnish to the Company all such
information regarding the distribution of such Registrable Securities as
the Company may from time to time reasonably request in writing and such
other information as may be legally required in connection with such
registration. Each Stockholder agrees that, upon receipt of any notice
from the Company of the happening of any Material Disclosure Event, such
Stockholder will forthwith discontinue the offering and disposition of
Registrable Securities pursuant to any registration statement covering such
Registrable Securities until such Stockholder's receipt of the copies of
any supplemented or amended prospectus and until it is advised in writing
by the Company that the use of the prospectus may be resumed, and, if so
directed by the Company, such Stockholder will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies then in
such Stockholder's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the Company shall extend the period
during which such registration statement shall be maintained effective by
the number of days during the period from and including the date of the
giving of such notice to and including the date when each Stockholder of
Registrable Securities covered by such registration statement shall have
received the copies of any supplemented or amended prospectus and such
notification from the Company permitting the resumption of the use of the
prospectus. No Stockholder may participate in any registration under this
Agreement (whether pursuant to the Shelf Registration Statement, a Demand
Registration or a Piggyback Registration) unless such Stockholder (1)
agrees to sell its Registrable Securities on the basis provided in any
underwriting arrangements approved by the Company; (2) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements, and other documents reasonably required under the terms of such
underwriting arrangements; provided, however, that no Stockholder shall be
required to make any representations or warranties in connection with any
such registration other than representations and warranties as to (a) its
ownership of its Registrable Securities to be sold or transferred free and
clear of all liens, claims, and encumbrances, (b) its power and authority
to effect such transfer, and (c) such matters pertaining to compliance with
securities laws as may be reasonably requested; and (3) exercises, pursuant
to the terms of the warrant agreement governing the Warrants, Warrants to
purchase Common Stock to the extent such Common Stock is to be so
registered.
3. RULE 144.
The Company shall comply with the requirements of Rule 144(c)
under the Securities Act, as such Rule may be amended from time to time (or
any similar rule or regulation hereafter adopted by the Commission),
regarding the availability of current public information to the extent
required to enable any Stockholder to sell Registrable Securities without
registration under the Securities Act pursuant to the resale provisions of
Rule 144 (or any similar rule or regulation). Upon the request of any
Stockholder, the Company will deliver to such Stockholder a written
statement as to whether it has complied with such requirements and, upon
such Stockholder's compliance with the applicable provisions of Rule 144,
will take such action as may be required (including, without limitation,
causing legal counsel to issue an appropriate opinion) to cause its
transfer agent to effectuate any transfer of Registrable Securities
properly requested by such Stockholder, in accordance with the terms and
conditions of Rule 144.
4. MISCELLANEOUS.
(a) Notice Generally. Any notice, demand, request, consent,
approval, declaration, delivery or other communication hereunder to be made
pursuant to the provisions of this Agreement shall specify the Section of
this Agreement pursuant to which it is given or being made and shall be
sufficiently given or made if in writing and signed by the party making the
same, and either delivered in person with receipt acknowledged or sent by
registered or certified mail, return receipt requested, postage prepaid, or
by telecopy and confirmed by telecopy answerback, addressed as follows:
(i) If to any Stockholder, at the address of such
Stockholder as set forth on the signature pages hereto; and
(ii) If to Company, at
Edison Brothers Stores, Inc.
501 North Broadway
St. Louis, Missouri 63102
Attention: Alan A. Sachs, Esq.
Executive Vice President,
General Counsel and Secretary
Telecopy Number: (314) 331-6554
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Every notice,
demand, request, consent, approval, declaration, delivery or other
communication hereunder shall be deemed to have been duly given or served
on the date on which personally delivered, with receipt acknowledged,
telecopied and confirmed by telecopy answerback or three Business Days
after the same shall have been deposited in the United States mail (by
registered or certified mail, return receipt requested, postage prepaid),
whichever is earlier.
(b) Successors and Assigns. This Agreement (i) may not be
assigned by the Company or any Stockholder (except that this Agreement may
be assigned by any Stockholder to a Permitted Assignee in connection with
the transaction pursuant to which such Permitted Assignee becomes such,
whereupon such Permitted Assignee shall be deemed to be a Stockholder for
all purposes of this Agreement) and (ii) shall be binding on all successors
to the Company and the Stockholders.
(c) Amendments. This Agreement may be amended or modified only
by a written agreement signed by each party hereto.
(d) Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
(e) Headings. The headings used in this Agreement are for the
convenience of reference only and shall not, for any purpose, be deemed a
part of this Agreement.
(f) Governing Law. This Agreement shall be governed by the laws
of the State of New York, without regard to the provisions thereof relating
to conflict of laws.
(g) Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
(h) Entire Agreement. This Agreement embodies the entire
agreement and understanding between the Company and the Stockholders in
respect of the subject matter contained herein. This Agreement supersedes
all prior agreements and understandings between the parties with respect to
the subject matter of this Agreement.
(i) Specific Performance. The parties hereto acknowledge and
agree that they would not have adequate remedies at law and would be
irreparably harmed if any of the provisions of this Agreement were not
performed by the parties hereto in accordance with the specific terms
hereof or were otherwise breached, and that, in such case, it would be
impossible to measure in money the damages to such parties. It is
accordingly agreed that the parties hereto shall be entitled to injunctive
relief or the enforcement of other equitable remedies, without bond or
other security, to compel performance and to prevent breaches of this
Agreement and specifically to enforce the terms and provisions hereof, in
addition to any other remedy to which they may be entitled, at law or in
equity.
IN WITNESS WHEREOF, the parties hereto have caused this
Registration Rights Agreement to be duly executed and delivered as of the
date first above written.
EDISON BROTHERS STORES, INC.
By:
Name: David B. Cooper, Jr.
Title: Executive Vice President and
Chief Financial Officer
SWISS BANK CORPORATION
By:
Name:
Title:
Address: Swiss Bank Corporation,
New York Branch
45 Broadway
New York, New York 10006
Telecopy Number:
EDISON BROTHERS STORES, INC.
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
as Warrant Agent
Warrants to Purchase 1,008,791 Shares of Common Stock
__________________
WARRANT AGREEMENT
Dated as of September 26, 1997
TABLE OF CONTENTS
Page
1. DEFINITIONS 1
2. APPOINTMENT OF WARRANT AGENT 6
2.1. Appointment 6
3. REGISTRATION, FORM AND EXECUTION OF WARRANTS 6
3.1. Registration 6
3.2. Form of Warrant 6
3.3. Countersignature of Warrants 7
4. EXERCISE OF WARRANTS 7
4.1. Manner of Exercise 7
4.2. Payment of Taxes 8
4.3. Fractional Shares 9
5. TRANSFER, DIVISION AND COMBINATION 9
5.1. Transfer 9
5.2. Division and Combination 9
5.3. Maintenance of Books 10
6. ADJUSTMENTS 10
6.1. Stock Dividends, Subdivisions and Combinations 10
6.2. Certain Distributions 10
6.3. Issuance of Rights to Purchase Common Stock at
Below Daily Market Price 11
6.4.Issuance of Common Stock Below Daily Market Price 13
6.5. Reorganization, Reclassification, Merger,
Consolidation or Disposition 14
6.6. Other Provisions Applicable to Adjustments 15
6.7. Certain Limitations 17
7. NOTICES TO WARRANT HOLDERS 17
7.1. Notice of Adjustments 17
7.2. Notice of Corporate Action 18
8. NO IMPAIRMENT 18
9. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION
WITH OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY 19
10. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS 20
11. RESTRICTIONS ON TRANSFERABILITY 20
11.1. Restrictive Legend 20
12. LOSS OR MUTILATION 21
13. OFFICE OF COMPANY 21
14. REPURCHASE BY COMPANY OF WARRANTS 21
14.1. Option to Repurchase Warrants 21
14.2. Payment of Repurchase Price 22
15. WARRANT AGENT. 22
15.1.Merger or Consolidation or Change of Name of Warrant
Agent 22
15.2.Certain Terms and Conditions Concerning the Warrant
Agent 22
15.3. Change of Warrant Agent. 25
15.4.Disposition of Proceeds on Exercise of Warrants,
Inspection of Warrant Agreement 26
16. MISCELLANEOUS 26
16.1. Limitation of Liability 26
16.2. Notice Generally 26
16.3. Successors and Assigns 27
16.4. Amendment 27
16.5. Severability 28
16.6. Headings 28
16.7. Governing Law 28
16.8. Counterparts 28
EXHIBITS
Exhibit A - Form of Warrant Certificate
Exhibit B - Warrant Agent Fees
THIS WARRANT AGREEMENT (this Warrant Agreement ), dated as of
September 26, 1997, is made by and between Edison Brothers Stores, Inc., a
Delaware corporation (the Company ), and ChaseMellon Shareholder Services,
L.L.C., a New Jersey limited liability company, as warrant agent (the
Warrant Agent ).
W I T N E S S E T H:
WHEREAS, the Company proposes to issue, to holders of Allowed
Edison Equity Interests, warrants, as hereinafter described (the Warrants
), to purchase up to an aggregate of 1,008,791 shares of its Common Stock
pursuant to Section 4.8 of the Plan, as confirmed by the United States
Bankruptcy Court for the District of Delaware (the Court ), by order
entered September 9, 1997, under title 11 of the United States Code; and
WHEREAS, the Company has requested the Warrant Agent to act on
behalf of the Company, and the Warrant Agent is willing so to act, in
connection with the issuance, division, transfer, exchange and exercise of
Warrants;
NOW, THEREFORE, in consideration of the foregoing and for the
purpose of defining the terms and provisions of the Warrants and the
respective rights and obligations thereunder and hereunder of the Company,
the Warrant Agent, and the Holders, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged
and affirmed, the Company and the Warrant Agent hereby agree as follows:
1. DEFINITIONS.
As used in this Warrant Agreement, the following terms have the
respective meanings set forth below:
Additional Shares of Common Stock shall mean all shares of
Common Stock issued by the Company after the Effective Date, other than
Warrant Stock.
Allowed shall have the meaning assigned to such term in the
Plan.
Business Day shall mean any day that is not a Saturday or
Sunday or a day on which banks are required or permitted to be closed in
the State of New York.
Common Stock shall mean (except where the context otherwise
indicates) the Common Stock, $.01 par value per share, of the Company as
constituted on the Effective Date, and any capital stock into which such
Common Stock may thereafter be changed, and shall also include (1) capital
stock of the Company of any other class (regardless of how denominated)
issued to the holders of shares of Common Stock upon any reclassification
thereof which is also not preferred as to dividends or assets over any
other class of stock of the Company and which is not subject to redemption
and (2) shares of common stock of any successor or acquiring corporation
received by or distributed to the holders of Common Stock of the Company in
the circumstances contemplated by Section 6.5.
Company shall have the meaning assigned to such term in the
first paragraph of this Warrant Agreement.
Convertible Securities shall mean evidences of indebtedness,
shares of stock or other securities which are convertible into or
exchangeable for Additional Shares of Common Stock, either immediately or
upon the occurrence of a specified date or a specified event.
Court shall have the meaning assigned to such term in the
recitals to this Warrant Agreement.
Current Warrant Price shall mean, in respect of a share of
Common Stock at any date herein specified, the price at which a share of
Common Stock may be purchased pursuant to this Warrant Agreement on such
date.
Daily Market Price shall mean, in respect of any share of
Common Stock on any Trading Day, (1) the last sale price on such day on the
principal stock exchange on which such Common Stock is then listed or
admitted to trading or (2) if no sale takes place on such day on any such
exchange, the average of the last reported closing bid and asked prices on
such day as officially quoted on any such exchange. If the Common Stock is
not then listed or admitted to trading on any stock exchange, the Daily
Market Price shall be the average of the last reported closing bid and
asked prices on such day in the over-the-counter market, as furnished by
the National Association of Securities Dealers Automatic Quotation System
or the National Quotation Bureau, Inc.; provided, that if neither such
corporation at the time is engaged in the business of reporting such
prices, the Daily Market Price shall be as furnished by any similar firm
then engaged in such business, or if there is no such firm, as furnished by
any member of the NASD selected mutually by the Majority Holders and the
Company or, if they cannot agree upon such selection, as selected by two
such members of the NASD, one of which shall be selected by the Majority
Holders and one of which shall be selected by the Company. If the Common
Stock is not reported in the over-the-counter market and no member of the
NASD selected pursuant to the preceding sentence will furnish the Daily
Market Price, then the Daily Market Price shall be as determined in good
faith by the Board of Directors of the Company, whose determination shall
be conclusive.
Debtors shall mean, collectively, the Company, Edison Brothers
Apparel Stores, Inc., Edison Brothers Shoe Stores, Inc., Edison Paymaster,
Inc., Edison Brothers Redevelopment Corporation, Edbro Missouri Realty
Company, Inc., Edison Alabama Stores, Inc., Edison Arkansas Stores, Inc.,
Edison Colorado Stores, Inc., Edison Brothers Company, Edison Hawaii
Stores, Inc., Edison Illinois Stores, Inc., Edison Kansas Stores, Inc.,
Edison Kentucky Stores, Inc., Edison Louisiana Stores, Inc., Edison
Maryland Stores, Inc., Edison Massachusetts Stores, Inc., Edison Michigan
Stores, Inc., Edison Minnesota Stores, Inc., Edison Mississippi Stores,
Inc., Edison Nebraska Stores, Inc., Edison New Jersey Stores, Inc., Edison
New Mexico Stores, Inc., Edison New York Stores, Inc., Edison Ohio Stores,
Inc., Edison Oklahoma Stores, Inc., Edison Oregon Stores, Inc., Edison
Pennsylvania Stores, Inc., Edison Tennessee Stores, Inc., Edison Texas
Stores, Inc., Edison Utah Stores, Inc., Edbro Ohio Realty, Inc., EBSS-
Montana, Inc., EBSS-North Central, Inc., EBSS-Indiana, Inc., EBSS-Iowa,
Inc., EBSS-Kansas, Inc., EBSS-Wisconsin, Inc., EBSS-Northeast, Inc., EBSS-
South, Inc., EBSS-Mideast, Inc., EBSS-Michigan, Inc., EBSS-East, Inc., EBSS-
Ohio, Inc., EBSS-Pennsylvania, Inc., EBSS-Texas, Inc., EBSS-West, Inc.,
Edison Puerto Rico Stores, Inc., Ebscat, Inc., Edison Brothers Mall
Entertainment, Inc., Horizon Entertainment, Edison Brothers Stores
International, Inc., Edisur, Inc., EBS Holdings Corp., Edison Whittier
Warehouse, Inc., Edbro California USG-2, Inc., Edbro Missouri USG-2, Inc.,
Edbro California USG-1, Inc., Industrial Design, Inc., Webster Clothes,
Inc., Z&Z Fashions, Ltd., Webster-Rossville, Inc., Time-Out Family
Amusement Centers, Inc., Tofac of Puerto Rico, Inc., Sacha Shoes, Inc. and
Mandel's of California.
Edison Equity Interest shall have the meaning assigned to such
term in the Plan.
Effective Date shall have the meaning set forth in the Plan.
Expiration Date shall mean the date that is the eight-year
anniversary of the Effective Date or, if such date is not a Business Day,
the next succeeding Business Day.
Fully Diluted Outstanding shall mean, when used with reference
to Common Stock, at any date as of which the number of shares thereof is to
be determined, all shares of Common Stock Outstanding at such date and all
shares of Common Stock issuable in respect of any Warrants to purchase, or
securities convertible into or exchangeable for, shares of Common Stock
outstanding on such date which would be deemed outstanding in accordance
with GAAP for purposes of determining book value or net income per share.
GAAP shall mean generally accepted accounting principles in the
United States of America as from time to time in effect.
Holder shall mean the Person in whose name a Warrant is
registered in the warrant register of the Company maintained by or on
behalf of the Company for such purpose.
Insider shall mean any person, as such term is defined in
Section (a)(2) of Rule 144 under the Securities Act, that is the beneficial
owner, as such term is used in such Rule 144, of ten percent (10%) or more
of any class of equity securities (or other equity interest) of the
Company.
Majority Holders shall mean the Holders of Warrants exercisable
for in excess of 50% of the aggregate number of shares of Common Stock then
purchasable upon exercise of all Warrants.
NASD shall mean the National Association of Securities Dealers,
Inc., or any successor corporation thereto.
Other Property shall have the meaning set forth in Section 6.2.
Outstanding shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be
determined, all issued shares of Common Stock, except shares then owned or
held by or for the account of Company or any subsidiary thereof, and shall
include all shares issuable in respect of outstanding scrip or any
certificates representing fractional interests in shares of Common Stock.
Permitted Issuances shall mean (i) the issuance of the
Warrants, (ii) the issuance of warrants or stock options to the Company's
management and other employees for the purchase of up to 800,000 shares of
Common Stock pursuant and subject to the 1997 Stock Option Plan of the
Company, (iii) the issuance of warrants or stock options to the Company's
non-employee directors for the purchase of up to 200,000 shares of Common
Stock pursuant and subject to the 1997 Directors Stock Option Plan of the
Company, (iv) the issuance of warrants or stock options to the Company's
directors, management or other employees for the purchase of Common Stock
pursuant to any other stock option plan of the Company, (v) the issuance of
shares of Common Stock upon exercise of the warrants and options referred
to in clauses (i), (ii), (iii) and (iv), and (vi) all other issuances of
Common Stock and warrants or stock options by the Company expressly
authorized by the Plan.
Person shall mean any individual, sole proprietorship,
partnership, joint venture, trust, incorporated organization, association,
corporation, limited liability company, limited liability partnership,
institution, public benefit corporation, entity or government (whether
federal, state, county, city, municipal or otherwise, including, without
limitation, any instrumentality, division, agency, body or department
thereof).
Plan shall mean the Debtors' Amended Joint Plan of
Reorganization Under Chapter 11 of the United States Bankruptcy Code, as it
may be further amended or modified.
Pricing Period shall have the meaning set forth in Section
14.1.
Repurchase Price shall have the meaning set forth in Section
14.1.
Securities Act shall mean the Securities Act of 1933, as
amended, and the rules and regulations adopted by the Securities and
Exchange Commission thereunder.
Trading Day shall mean any day on which the principal stock
exchange on which the Common Stock is listed or admitted to trading is open
or, if the Common Stock is not then listed or admitted to trading on any
stock exchange, any day on which the National Association of Securities
Dealers Automatic Quotation System or the National Quotation Bureau Inc.
reports prices in respect of securities or, if neither such corporation is
then engaged in such business, any day on which the member of the NASD
selected as specified in the proviso set forth in the definition of Daily
Market Price furnishes prices for securities.
Warrant Agent shall have the meaning assigned to such term in
the first paragraph of this Warrant Agreement and shall include any
successor Warrant Agent hereunder.
Warrant Agent's Principal Office shall mean the principal
office of the Warrant Agent in New York City, New York (or such other
office of the Warrant Agent or any successor thereto hereunder acceptable
to the Company as set forth in a written notice provided to the Company and
the Holders).
Warrant Agreement shall have the meaning assigned to such term
in the first paragraph of this Warrant Agreement.
Warrant Price shall mean an amount equal to (1) the number of
shares of Common Stock being purchased upon exercise of a Warrant pursuant
to Section 4.1, multiplied by (2) the Current Warrant Price as of the date
of such exercise.
Warrant Stock shall mean the shares of Common Stock purchased
by the Holders of the Warrants upon the exercise thereof.
Warrants shall have the meaning assigned to such term in the
recitals to this Warrant Agreement, and shall include all warrants issued
upon transfer, division or combination of, or in substitution for, any
thereof. All Warrants shall at all times be identical as to terms and
conditions and date, except as to the number of shares of Common Stock for
which they may be exercised.
2. APPOINTMENT OF WARRANT AGENT.
2.1. Appointment. The Company hereby appoints the Warrant Agent to
act as agent for the Company in accordance with the instructions set forth
in this Warrant Agreement, and the Warrant Agent hereby accepts such
appointment.
3. REGISTRATION, FORM AND EXECUTION OF WARRANTS.
3.1. Registration. All Warrants shall be numbered and shall be
registered in a warrant register maintained at the Warrant Agent's
Principal Office by the Warrant Agent as they are issued. The Company and
the Warrant Agent shall be entitled to treat a Holder as the owner in fact
for all purposes whatsoever of each Warrant registered in such Holder's
name.
3.2. Form of Warrant. The text of each Warrant and of the Election to
Purchase Form and Assignment Form shall be substantially as set forth in
Exhibit A attached hereto. Each Warrant shall be executed on behalf of the
Company by its President or one of its Vice Presidents, under its corporate
seal reproduced thereon or facsimile thereof attested by its Secretary or
an Assistant Secretary. The signature of any of such officers on the
Warrants may be manual or facsimile.
Warrants bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall
bind the Company, notwithstanding that such individuals or any one of them
shall have ceased to hold such offices prior to the delivery of such
Warrants or did not hold such offices on the date of this Warrant
Agreement.
Warrants shall be dated as of the date of countersignature
thereof by the Warrant Agent either upon initial issuance or upon division,
exchange, substitution or transfer.
3.3. Countersignature of Warrants. Each Warrant shall be manually
countersigned by the Warrant Agent (or any successor to the Warrant Agent
then acting as warrant agent under this Warrant Agreement) and shall not be
valid for any purpose unless so countersigned. Warrants may be
countersigned, however, by the Warrant Agent (or by its successor as
warrant agent hereunder) and may be delivered by the Warrant Agent,
notwithstanding that the persons whose manual signatures appear thereon as
proper officers of the Company shall have ceased to be such officers at the
time of such countersignature, issuance or delivery. The Warrant Agent
shall, upon written instructions of the President, a Vice President, the
Secretary, or an Assistant Secretary of the Company, countersign, issue and
deliver Warrants entitling the Holders thereof to purchase not more than
1,008,791 shares of Common Stock (subject to adjustment as set forth
herein) and shall countersign and deliver Warrants as otherwise provided in
this Warrant Agreement.
4. EXERCISE OF WARRANTS
4.1. Manner of Exercise. From and after the Effective Date and until
5:00 p.m., New York City time, on the Expiration Date, a Holder may
exercise any of its Warrants, on any Business Day, for all or any part of
the number of shares of Common Stock purchasable hereunder.
In order to exercise a Warrant, in whole or in part, a Holder
shall deliver to the Company at the Warrant Agent's Principal Office, (1) a
written notice of such Holder's election to exercise such Warrant, which
notice shall include the number of shares of Common Stock to be purchased,
(2) payment of the Warrant Price for the account of the Company and
(3) such Warrant. Such notice shall be substantially in the form of the
Election to Purchase Form set forth on the reverse side of the form of
Warrant Certificate attached as Exhibit A hereto, duly executed by such
Holder or its agent or attorney. Upon receipt thereof, the Warrant Agent
shall, as promptly as practicable, and in any event within five Business
Days thereafter, deliver or cause to be delivered to such Holder an
executed certificate or certificates representing the aggregate number of
full shares of Common Stock issuable upon such exercise, together with cash
in lieu of any fraction of a share, as hereinafter provided. The stock
certificate or certificates so delivered shall be, to the extent possible,
in such denomination or denominations as such Holder shall request in the
notice and shall be registered in the name of such Holder or, subject to
Section 11, such other name as shall be designated in such notice. A
Warrant shall be deemed to have been exercised and such certificate or
certificates shall be deemed to have been issued, and such Holder or any
other Person so designated to be named therein shall be deemed to have
become a holder of record of such shares for all purposes, as of the date
such notice, together with the check or checks and such Warrant, is
received by the Warrant Agent as described above and all taxes required to
be paid by such Holder, if any, pursuant to Section 4.2 prior to the
issuance of such shares have been paid. If any Warrant shall have been
exercised in part, the Warrant Agent shall, at the time of delivery of the
certificate or certificates representing Warrant Stock, deliver to the
Holder a new Warrant evidencing the rights of such Holder to purchase the
unpurchased shares of Common Stock called for by such Warrant, which new
Warrant shall in all other respects be identical with the Warrant exercised
in part, or, at the request of such Holder, appropriate notation may be
made on such exercised Warrant and the same returned to such Holder.
Notwithstanding any provision herein to the contrary, the Warrant Agent
shall not be required to register shares in the name of any Person who
acquired a Warrant (or part thereof) or any Warrant Stock otherwise than in
accordance with such Warrant and this Warrant Agreement.
Payment of the Warrant Price shall be made at the option of the
Holder by certified or official bank check or any combination thereof, duly
executed by such Holder or by such Holder's attorney duly authorized in
writing.
4.2. Payment of Taxes. All shares of Common Stock issuable upon the
exercise of any Warrant pursuant to the terms hereof shall be validly
issued, fully paid and nonassessable and without any preemptive rights.
The Company shall pay any documentary stamp taxes attributable to the
initial issuance of shares of Common Stock issuable upon the exercise of
Warrants; provided, however, that the Company shall not be required to pay
any tax or taxes which may be payable in respect of any transfer involved
in the issue or delivery of any certificates for shares of Common Stock in
a name other than that of the Holder of Warrants in respect of which such
shares are issued and the Company shall not be required to issue and
deliver the certificates for such shares unless and until such Holder has
paid to the Company the amount of any tax which may be payable in respect
of any transfer involved in such issuance or delivery or shall establish to
the satisfaction of the Company that all such taxes have been paid. Other
than with respect to such documentary stamp taxes, the Holder shall pay all
expenses in connection with, and all taxes and other governmental charges
that may be imposed with respect to, the issue or delivery of shares of
Common Stock issuable upon the exercise of any Warrant.
4.3. Fractional Shares. The Company shall not be required to issue a
fractional share of Common Stock upon exercise of any Warrant. As to any
fraction of a share which the Holder of one or more Warrants, the rights
under which are exercised in the same transaction, would otherwise be
entitled to purchase upon such exercise, the Company shall pay a cash
adjustment in respect of such final fraction in an amount equal to the same
fraction of the average of the Daily Market Price per share of Common Stock
for the 5 consecutive Trading Days preceding the date of exercise.
5. TRANSFER, DIVISION AND COMBINATION.
5.1. Transfer. Subject to compliance with Section 11, transfer of any
Warrant and all rights hereunder, in whole or in part, shall be registered
in the warrant register of the Company to be maintained for such purpose at
the Warrant Agent's Principal Office, upon surrender of such Warrant at the
Warrant Agent's Principal Office, together with a written assignment of
such Warrant substantially in the form set forth on the reverse side of the
form of Warrant Certificate attached as Exhibit A hereto duly executed by
the Holder or its agent or attorney and payment of all funds sufficient to
pay any taxes payable upon the making of such transfer. Upon such
surrender and, if required, such payment, and subject to Section 9, the
Company shall execute and the Warrant Agent shall countersign and deliver a
new Warrant or Warrants in the name of the assignee or assignees and in the
denomination specified in such instrument of assignment, and shall issue to
the assignor a new Warrant evidencing the portion of such Warrant not so
assigned, and the surrendered Warrant shall promptly be canceled. A
Warrant, if properly assigned in compliance with Section 11, may be
exercised by a new Holder for the purchase of shares of Common Stock
without having a new Warrant issued.
5.2. Division and Combination. Subject to Section 11, any Warrant may
be divided or combined with other Warrants upon presentation thereof at the
Warrant Agent's Principal Office, together with a written notice specifying
the names and denominations in which new Warrants are to be issued, signed
by the Holder or its agent or attorney. Subject to compliance with Section
5.1 and Section 11, as to any transfer which may be involved in such
division or combination, the Company shall execute and the Warrant Agent
shall countersign and deliver a new Warrant or Warrants in exchange for the
Warrant or Warrants to be divided or combined in accordance with such
notice.
5.3. Maintenance of Books. The Warrant Agent agrees to maintain, at
the Warrant Agent's Principal Office, the warrant register for the
registration and the registration of transfer of the Warrants.
6. ADJUSTMENTS.
The number of shares of Common Stock for which a Warrant is
exercisable, and the price at which such shares may be purchased upon
exercise of a Warrant, shall be subject to adjustment from time to time as
set forth in this Section 6.
6.1. Stock Dividends, Subdivisions and Combinations. If at any time
the Company shall:
(a) pay a dividend or otherwise effect a distribution of
Additional Shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
then (i) the number of shares of Common Stock for which a Warrant is
exercisable immediately after the occurrence of any such event shall be
adjusted to equal the number of shares of Common Stock that a record holder
of the same number of shares of Common Stock for which a Warrant is
exercisable immediately prior to the occurrence of such event would own or
be entitled to receive immediately after the occurrence of such event; and
(ii) the Current Warrant Price shall be concurrently adjusted to equal
(A) the Current Warrant Price in effect immediately prior to such
adjustment multiplied by the number of shares of Common Stock for which a
Warrant is exercisable immediately prior to such adjustment divided by (B)
the number of shares for which a Warrant is exercisable immediately after
such adjustment.
6.2. Certain Distributions. If at any time the Company shall:
(a) distribute to all holders of record of Common Stock
evidences of indebtedness or any shares of capital stock, securities,
property or assets of any nature whatsoever (other than Permitted
Issuances or regularly scheduled cash dividends payable out of
earnings or earned surplus legally available for payment of dividends
or any transaction covered by Section 6.1, 6.3, 6.4 or 6.5), or
(b) distribute to all holders of record of Common Stock
options, warrants or other rights to acquire, subscribe for or
purchase any evidences of indebtedness or any shares of capital stock,
securities, property or assets of any nature whatsoever (other than
Permitted Issuances or options, warrants or other rights covered by
Section 6.3 hereof),
then (i) the number of shares of Common Stock for which a Warrant is
exercisable immediately after the occurrence of any such event shall be
adjusted to equal the product obtained by multiplying the number of shares
of Common Stock for which a Warrant is exercisable immediately prior to
such adjustment by a fraction (A) the numerator of which shall be the
average of the Daily Market Price per share of Common Stock for the 5
consecutive Trading Days preceding the record date for such distribution
and (B) the denominator of which shall be such average Daily Market Price
per share of Common Stock minus the amount allocable to one share of Common
Stock of the fair value (as determined in good faith by the Board of
Directors of the Company) of any and all such evidences of indebtedness,
shares of stock, other securities or property or warrants or other
subscription, acquisition or purchase rights so distributed; and (ii) the
Current Warrant Price shall be concurrently reduced to equal (A) the
Current Warrant Price in effect immediately prior to such adjustment
multiplied by the number of shares of Common Stock for which a Warrant is
exercisable immediately prior to such adjustment divided by (B) the number
of shares of Common Stock for which a Warrant is exercisable immediately
after such adjustment. A reclassification of the Common Stock (other than
a change in par value, or from par value to no par value or from no par
value to par value) into shares of Common Stock and shares of any other
class of capital stock of the Company shall be deemed a distribution by the
Company to the holders of its Common Stock of such shares of such other
class of stock within the meaning of this Section 6.2 and, if the
outstanding shares of Common Stock shall be changed into a larger or
smaller number of shares of Common Stock as a part of such
reclassification, such change shall be deemed a subdivision or combination,
as the case may be, of the outstanding shares of Common Stock within the
meaning of Section 6.1 (provided that, in any such case, the adjustment
provided for in Section 6.1 shall be effected after the adjustment provided
for in this Section 6.2).
6.3. Issuance of Rights to Purchase Common Stock at Below Daily Market
Price. If at any time the Company shall distribute to all holders of
record of Common Stock options, warrants or other rights to subscribe for
or purchase any Additional Shares of Common Stock or any Convertible
Securities (other than Permitted Issuances or any transaction covered by
Section 6.5), whether or not the rights to exchange, subscribe or convert
thereunder are immediately exercisable, and the consideration per share for
which Common Stock is issuable upon the exercise of such options, warrants
or other rights (or, in the case of options, warrants or other rights to
subscribe for or purchase Convertible Securities, the consideration per
share for which Common Stock is issuable upon the exercise of such options,
warrants or other rights and conversion of such Convertible Securities)
shall be less than the average of the Daily Market Price per share of
Common Stock for the 5 consecutive Trading Days immediately prior to the
date of such distribution, then (i) the number of shares of Common Stock
for which a Warrant is exercisable immediately after the occurrence of any
such distribution shall be adjusted to equal the product obtained by
multiplying the number of shares of Common Stock for which a Warrant is
exercisable immediately prior to such distribution by a fraction (A) the
numerator of which shall be the number of shares of Common Stock
Outstanding immediately prior to such distribution plus the total number of
Additional Shares of Common Stock issuable upon the exercise of such
options, warrants or other rights (or, in the case of options, warrants or
other rights to subscribe for or purchase Convertible Securities, issuable
upon the exercise of such options, warrants or other rights and conversion
of such Convertible Securities) and (B) the denominator of which shall be
the number of shares of Common Stock Outstanding immediately prior to such
distribution plus the number of shares of Common Stock which the aggregate
consideration to be paid for all such Additional Shares of Common Stock
issuable upon the exercise of such options, warrants or other rights (or,
in the case of options, warrants or other rights to subscribe for or
purchase Convertible Securities, issuable upon the exercise of such
options, warrants or other rights and conversion of such Convertible
Securities) would purchase at the average of the Daily Market Price per
share of Common Stock for the 5 consecutive Trading Days immediately prior
to the date of such distribution; and (ii) the Current Warrant Price shall
be concurrently reduced to equal (A) the Current Warrant Price in effect
immediately prior to such adjustment multiplied by the number of shares of
Common Stock for which a Warrant is exercisable immediately prior to such
adjustment divided by (B) the number of shares of Common Stock for which a
Warrant is exercisable immediately after such adjustment. No further
adjustments of the number of shares for which Warrants are exercisable or
of the Current Warrant Price shall be made upon the actual issuance of such
Common Stock upon exercise of such options, warrants or other rights (or
the conversion of such Convertible Securities); provided, however, that in
the event any such options, warrants or other rights to subscribe for or
purchase any Additional Shares of Common Stock or any Convertible
Securities are not exercised (or, in the case of Convertible Securities,
are not converted) prior to the respective expiration dates thereof, then,
on each such expiration date, the number of shares of Common Stock for
which a Warrant is exercisable and the Current Warrant Price shall be
readjusted to reverse the adjustment made pursuant to this Section 6.3 in
respect of such number(s) of options, warrants or other rights to subscribe
for or purchase any Additional Shares of Common Stock or any Convertible
Securities that were not exercised (or, in the case of Convertible
Securities, were not converted) prior to such expiration date.
Notwithstanding anything to the contrary set forth in this Section 6.3, in
the event the Company shall distribute any options, warrants or other
rights to purchase any Additional Shares of Common Stock or any Convertible
Securities (other than Permitted Issuances or any transaction covered by
Section 6.5) pursuant to any so-called poison pill or shareholders'
rights or similar plan or agreement, the distribution of separate
certificates representing such options, warrants or rights subsequent to
their initial distribution shall be deemed to be the distribution thereof
for purposes of this Section 6.3; provided that the Company may, in lieu of
making any adjustment pursuant to this Section 6.3 upon such a distribution
of separate certificates, make proper provision so that each Holder of
Warrants who exercises such Warrants (or any portion thereof) (A) after
such initial distribution but before such distribution of separate
certificates shall be entitled to receive upon such exercise shares of
Common Stock issued with such options, warrants or other rights and (B)
after such distribution of separate certificates and prior to the
expiration, redemption or termination of such options, warrants or other
rights shall be entitled to receive upon such exercise, in addition to the
shares of Common Stock issuable upon such exercise, the same number of such
options, warrants or other rights as would have accompanied such shares of
Common Stock had such Warrants been exercised immediately prior to such
distribution of separate certificates.
6.4. Issuance of Common Stock Below Daily Market Price. If the
Company shall at any time, directly or indirectly, sell or issue shares of
Common Stock (whether originally issued or from the Company's treasury), or
options, warrants or other rights to subscribe for or purchase any
Additional Shares of Common Stock or any Convertible Securities (other than
(x) Permitted Issuances and (y) securities issued in any of the
transactions described in Section 6.1, 6.2, 6.3 or 6.5 or issued upon the
exercise or conversion of any such securities) for consideration per share
of Common Stock that is less than the average of the Daily Market Price per
share of Common Stock for the 5 consecutive Trading Days immediately prior
to such sale or issuance, then (i) the number of shares of Common Stock for
which a Warrant is exercisable immediately after the occurrence of any such
sale or issuance shall be adjusted to equal the product obtained by
multiplying the number of shares of Common Stock for which a Warrant is
exercisable immediately prior to such sale or issuance by a fraction (A)
the numerator of which shall be the total number of shares of Common Stock
Outstanding immediately after such sale or issuance, and (B) the
denominator of which shall be the sum of the number of shares of Common
Stock Outstanding immediately prior to such sale or issuance plus the
number of shares of Common Stock which the aggregate consideration received
for such sale or issuance would purchase at the average of the Daily Market
Price per share of Common Stock for the 5 consecutive Trading Days
immediately prior to the date of such sale or issuance (for the purpose of
such adjustment, the shares of Common Stock that the holder of any such
options, warrants, rights or Convertible Securities shall be entitled to
receive upon the exercise or conversion thereof shall be deemed to be
Outstanding immediately after such sale or issuance, and the consideration
received by the Company therefor shall be deemed to be the consideration
received by the Company for such options, warrants, rights or Convertible
Securities plus the consideration that the holder of any such options,
warrants, rights or Convertible Securities would be required to pay or
surrender upon the exercise or conversion thereof); and (ii) the Current
Warrant Price shall be concurrently reduced to equal (A) the Current
Warrant Price in effect immediately prior to such adjustment multiplied by
the number of shares of Common Stock for which a Warrant is exercisable
immediately prior to such adjustment divided by (B) the number of shares of
Common Stock for which a Warrant is exercisable immediately after such
adjustment. Notwithstanding the foregoing, in the event any such options,
warrants or other rights to subscribe for or purchase any Additional Shares
of Common Stock or any Convertible Securities are not exercised (or, in the
case of Convertible Securities, are not converted) prior to the respective
expiration dates thereof, then, on each such expiration date, the number of
shares of Common Stock for which a Warrant is exercisable and the Current
Warrant Price shall be readjusted to reverse the adjustment made pursuant
to this Section 6.4 in respect of such number(s) of options, warrants or
other rights to subscribe for or purchase any Additional Shares of Common
Stock or any Convertible Securities that were not exercised (or, in the
case of Convertible Securities, were not converted) prior to such
expiration date.
6.5. Reorganization, Reclassification, Merger, Consolidation or
Disposition. In case the Company shall reorganize its capital, reclassify
its capital stock, consolidate or merge with or into another corporation
(where the Company is not the surviving corporation or where there is a
change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of all or substantially all its
property, assets or business to another Person, and, pursuant to the terms
of such reorganization, reclassification, merger, consolidation or
disposition, shares of common stock of the successor or acquiring
corporation, or any cash, shares of stock or other securities, property or
assets of any nature whatsoever (including warrants or other subscription
or purchase rights) in addition to or in lieu of common stock of the
successor or acquiring corporation ( Other Property ) are to be received by
or distributed to the holders of Common Stock of the Company, then each
Holder shall have the right thereafter to receive, upon exercise of a
Warrant, the number of shares of common stock of the successor or acquiring
corporation or of the Company, if it is the surviving corporation, and
Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition by a holder of the
number of shares of Common Stock for which a Warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition, the successor or
acquiring corporation (if other than the Company) shall expressly assume
the due and punctual observance and performance of each and every covenant
and condition of this Warrant Agreement and the Warrants to be performed
and observed by the Company and all the obligations and liabilities
hereunder, subject to such modifications as may be deemed appropriate (as
determined by resolution of the Board of Directors of the Company) in order
to provide for adjustments of shares of the Common Stock for which a
Warrant is exercisable which shall be as nearly equivalent as practicable
to the adjustments provided for in this Section 6. For purposes of this
Section 6.5, common stock of the successor or acquiring corporation shall
include stock of such corporation of any class which is not preferred as to
dividends or assets over any other class of stock of such corporation and
which is not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities which are convertible
into or exchangeable for any such stock, either immediately or upon the
arrival of a specified date or the happening of a specified event and any
warrants or other rights to subscribe for or purchase any such stock. The
foregoing provisions of this Section 6.5 shall similarly apply to
successive reorganizations, reclassifications, mergers, consolidations or
dispositions.
6.6. Other Provisions Applicable to Adjustments. The following
provisions shall be applicable to the making of adjustments of the number
of shares of Common Stock for which Warrants are exercisable and the
Current Warrant Price provided for in this Section 6:
(a) Computation of Consideration. To the extent that any
Additional Shares of Common Stock or any Convertible Securities or any
options, warrants or other rights to subscribe for or purchase any
Additional Shares of Common Stock or any Convertible Securities shall be
issued for cash consideration, the consideration received by the Company
therefor shall be the amount of the cash received by the Company therefor,
or, if such Additional Shares of Common Stock or Convertible Securities are
offered by the Company for subscription, the subscription price. To the
extent that such issuance shall be for consideration other than cash, then,
except as herein otherwise expressly provided, the amount of such
consideration shall be deemed to be the fair value of such consideration at
the time of such issuance as determined in good faith by the Board of
Directors of the Company. In case any Additional Shares of Common Stock or
any Convertible Securities or any options, warrants or other rights to
subscribe for or purchase such Additional Shares of Common Stock or
Convertible Securities shall be issued in connection with any merger in
which the Company issues any securities, the amount of consideration
therefor shall be deemed to be the fair value, as determined in good faith
by the Board of Directors of the Company, of such portion of the assets and
business of the nonsurviving corporation as such Board in good faith shall
determine to be attributable to such Additional Shares of Common Stock,
Convertible Securities, options, warrants or other rights, as the case may
be. The consideration for any Additional Shares of Common Stock issuable
pursuant to any options, warrants or other rights to subscribe for or
purchase the same shall be the consideration received by the Company for
issuing such options, warrants or other rights plus any additional
consideration payable to the Company upon exercise of such options,
warrants or other rights. The consideration for any Additional Shares of
Common Stock issuable pursuant to the terms of any Convertible Securities
shall be the consideration received by the Company for issuing options,
warrants or other rights to subscribe for or purchase such Convertible
Securities, plus the consideration paid or payable to the Company in
respect of the subscription for or purchase of such Convertible Securities,
plus the additional consideration, if any, payable to the Company upon
exercise of the right of conversion or exchange in such Convertible
Securities. In case of the issuance at any time of any Additional Shares
of Common Stock or Convertible Securities in payment or satisfaction of any
dividends upon any class of stock other than Common Stock, the Company
shall be deemed to have received for such Additional Shares of Common Stock
or Convertible Securities a consideration equal to the amount of such
dividend so paid or satisfied.
(b) When Adjustments Are to Be Made. The adjustments required
by this Section 6 shall be made whenever and as often as any specified
event requiring an adjustment shall occur, except that any adjustment of
the number of shares of Common Stock for which Warrants are exercisable
that would otherwise be required may be postponed (except in the case of a
subdivision or combination of shares of the Common Stock, as provided for
in Section 6.1) up to, but not beyond, the date of exercise if such
adjustment either by itself or with other adjustments not previously made
adds or subtracts less than 1% of the shares of Common Stock for which
Warrants are exercisable immediately prior to the making of such
adjustment. Any adjustment representing a change of less than such minimum
amount (except as aforesaid) which is postponed shall be carried forward
and made as soon as such adjustment, together with other adjustments
required by this Section 6 and not previously made, would result in a
minimum adjustment or on the date of exercise. For the purpose of any
adjustment, any specified event shall be deemed to have occurred at the
close of business on the date of its occurrence.
(c) Fractional Interests. In computing adjustments under this
Section 6, fractional interests in Common Stock shall be rounded up or down
to the nearest whole share.
6.7. Certain Limitations. Notwithstanding anything herein to the
contrary, the Company agrees not to enter into any transaction which, by
reason of any adjustment hereunder, would cause the Current Warrant Price
to be less than the par value per share of Common Stock.
7. NOTICES TO WARRANT HOLDERS.
7.1. Notice of Adjustments. Whenever the number of shares of Common
Stock for which a Warrant is exercisable, or whenever the price at which a
share of such Common Stock may be purchased upon exercise of the Warrants,
shall be adjusted pursuant to Section 6, the Company shall forthwith
prepare a certificate to be executed by the chief financial officer of the
Company setting forth, in reasonable detail, the event requiring the
adjustment and the method by which such adjustment was calculated,
specifying the number of shares of Common Stock for which a Warrant is
exercisable and describing the number and kind of any other shares of stock
or Other Property for which a Warrant is exercisable, and any change in the
purchase price or prices thereof, after giving effect to such adjustment or
change. The Company shall promptly cause a signed copy of such certificate
to be delivered to each Holder in accordance with Section 16.1. The
Company shall keep at its office or agency designated by the Company
pursuant to Section 13 copies of all such certificates and cause the same
to be available for inspection at said office during normal business hours
by any Holder or any prospective purchaser of a Warrant designated by a
Holder thereof.
7.2. Notice of Corporate Action. If at any time
(a) The Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend (other than a
regularly scheduled cash dividend payable out of earnings or earned surplus
legally available for the payment of dividends under the laws of the
jurisdiction of incorporation of the Company) or other distribution, or
(b) there shall be any capital reorganization of the Company,
any reclassification or recapitalization of the capital stock of the
Company or any consolidation or merger of the Company with, or any sale,
transfer or other disposition of all or substantially all the property,
assets or business of the Company to, another corporation, or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to each
Holder (i) prompt written notice of the date on which a record date shall
be selected for such dividend, distribution or right or for determining
rights to vote in respect of any such reorganization, reclassification,
merger, consolidation, sale, transfer, disposition, dissolution,
liquidation or winding up, and (ii) in the case of any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up, at least 10 days' prior written
notice of the date when the same shall take place. Such notice in
accordance with the foregoing clause also shall specify (i) the date on
which any such record is taken for the purpose of such dividend,
distribution or right, the date on which the holders of Common Stock shall
be entitled to any such dividend, distribution or right, and the amount and
character thereof, and (ii) the date and time on which any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up takes place. Each such
written notice shall be sufficiently given if addressed to such Holder at
the last address of such Holder appearing on the books of the Company and
delivered in accordance with Section 16.1.
8. NO IMPAIRMENT.
The Company shall not by any action, including, without
limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant
Agreement or any Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may
be necessary or appropriate to protect the rights of Holders against
impairment. Without limiting the generality of the foregoing, the Company
will (1) not increase the par value of any shares of Common Stock
receivable upon the exercise of a Warrant above the amount payable therefor
upon such exercise immediately prior to such increase in par value, (2)
take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares
of Common Stock upon the exercise of any Warrant and (3) use good faith
efforts to obtain all such authorizations, exemptions or consents from any
public regulatory body having jurisdiction thereof as may be necessary to
enable the Company to perform its obligations under this Warrant Agreement.
9. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY.
From and after the Effective Date, the Company shall at all times
reserve and keep available for issue upon the exercise of Warrants such
number of its authorized but unissued shares of Common Stock as will be
sufficient to permit the exercise in full of all outstanding Warrants. All
shares of Common Stock which shall be so issuable, when issued upon
exercise of any Warrant and payment therefor in accordance with the terms
of this Warrant Agreement and such Warrant, shall be duly and validly
issued and fully paid and nonassessable, and not subject to preemptive
rights.
Before taking any action which would cause an adjustment reducing
the Current Warrant Price below the then par value, if any, of the shares
of Common Stock issuable upon exercise of the Warrants, the Company shall
take any corporate action which may be necessary in order that the Company
may validly and legally issue fully paid and nonassessable shares of such
Common Stock at such adjusted Current Warrant Price.
The Company shall use reasonable good faith efforts to cooperate
with each Holder of a Warrant and each holder of Common Stock in supplying
such information as may be reasonably requested by such holder for such
holder to complete and file any information or reporting forms currently or
hereafter required by the Securities and Exchange Commission as a condition
to the availability of an exemption from the Securities Act for the sale of
any Warrant or Common Stock.
The Company shall file all reports required to be filed by it
under the Securities Act and the Securities Exchange Act of 1934, as
amended, and the rules and regulations adopted by the Securities and
Exchange Commission thereunder, and will use commercially reasonable
efforts to take such further action as any Holder may reasonably request to
enable such Holder to sell Warrant Stock pursuant to Rule 144 or Rule 144A
adopted by the Securities and Exchange Commission under the Securities Act.
The Company shall send or make available to each Holder copies of such
annual, quarterly or current reports, proxy statements and other reports
and documents sent or made available by the Company to its stockholders at
the same time these reports, statements or documents are sent or made
available to the stockholders.
10. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS.
In the case of all dividends or other distributions by the
Company to the holders of its Common Stock with respect to which any
provision of Section 6, if any, refers to the taking of a record of such
holders, the Company will in each such case take such a record and will
take such record as of the close of business on a Business Day. The
Company will not at any time, except upon dissolution, liquidation or
winding up of the Company, close its stock transfer books or Warrant
transfer books so as to result in preventing or delaying the exercise or
transfer of any Warrant.
11. RESTRICTIONS ON TRANSFERABILITY.
The Warrants and the Warrant Stock shall not be transferred,
hypothecated or assigned before satisfaction of the applicable conditions,
if any, specified by Section 11.1. All Holders, by their acceptance of a
Warrant, agree to be bound by the provisions of this Section 11.
11.1. Restrictive Legend. All certificates representing Warrants
shall be stamped or otherwise imprinted with a legend in substantially the
following form with respect to any Holder who cannot certify that it is not
an Insider (to the extent such certification is required by the Plan):
THIS WARRANT AND THE WARRANT STOCK (AS DEFINED HEREIN) HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY APPLICABLE STATE SECURITIES LAWS, AND ARE SUBJECT TO THE
PROVISIONS (INCLUDING THE RESTRICTIONS ON TRANSFER) SET FORTH IN
THE WARRANT AGREEMENT BETWEEN EDISON BROTHERS STORES, INC. AND
CHASEMELLON SHAREHOLDER SERVICES, L.L.C., AS WARRANT AGENT, DATED
SEPTEMBER 26, 1997. THIS WARRANT AND THE WARRANT STOCK MAY NOT
(AND THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS
CERTIFICATE, AGREES THAT THIS WARRANT AND THE WARRANT STOCK MAY
NOT AND WILL NOT) BE SOLD OR OTHERWISE TRANSFERRED, PLEDGED, OR
HYPOTHECATED UNLESS AND UNTIL SUCH RESTRICTIONS ARE COMPLIED WITH
AND SUCH WARRANTS AND THE WARRANT STOCK ARE REGISTERED UNDER SUCH
ACT, AND SUCH STATE LAW, OR AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY IS OBTAINED TO THE EFFECT THAT SUCH REGISTRATION IS
NOT REQUIRED.
12. LOSS OR MUTILATION.
Upon receipt by the Company and the Warrant Agent from any Holder
of evidence reasonably satisfactory to them of the ownership of and the
loss, theft, destruction or mutilation of such Holder's Warrant and
indemnity reasonably satisfactory to them, and in case of mutilation upon
surrender and cancellation thereof, the Company will execute and the
Warrant Agent will countersign and deliver in lieu hereof a new Warrant of
like tenor to such Holder; provided, in the case of mutilation, no
indemnity shall be required if such Warrant in identifiable form is
surrendered to the Company or the Warrant Agent for cancellation.
13. OFFICE OF COMPANY.
As long as any of the Warrants remain outstanding, the Company
shall maintain an office or agency (which may be the principal executive
offices of the Company) where the Warrants may be presented for exercise,
registration of transfer, division or combination as provided in this
Warrant Agreement. The Company shall initially maintain such an agency at
the Warrant Agent's Principal Offices. The Company shall promptly notify
each Holder of any change in such office or agency.
14. REPURCHASE BY COMPANY OF WARRANTS.
14.1. Option to Repurchase Warrants. If the Daily Market Price
for Common Stock exceeds 200% of the Current Warrant Price on any 10
Trading Days (whether or not consecutive) during any period of 15
consecutive Trading Days (the Pricing Period ), the Company shall have the
right, upon prior written notice to any Holder (which shall be delivered no
later than 20 days following the end of the applicable Pricing Period or,
if such day is not a Business Day, the next succeeding Business Day), to
repurchase from such Holder, from any source of funds legally available
therefor, on the 45th day following delivery of such notice (or, if such
day is not a Business Day, the next succeeding Business Day) and in the
manner set forth in Section 14.2 below, each Warrant then held by such
Holder for an amount equal to one dollar ($1.00) (the Repurchase Price );
provided, however, that nothing herein shall preclude the exercise by such
Holder of any portion of such Warrant exercisable at any time prior to such
repurchase.
14.2. Payment of Repurchase Price. On the date of any repurchase
of Warrants pursuant to this Section 14, each Holder shall assign to
Company such Holder's Warrant being repurchased, without any representation
or warranty, by the surrender of such Holder's Warrant to the Company at
the Warrant Agent's Principal Office against payment therefor of the
Repurchase Price by check issued by the Company.
15. WARRANT AGENT.
15.1. Merger or Consolidation or Change of Name of Warrant Agent.
Any corporation into which the Warrant Agent may be merged or with which it
may be consolidated, or any corporation resulting from any merger or
consolidation to which the Warrant Agent shall be a party, or any
corporation succeeding to the corporate trust business of the Warrant
Agent, shall be the successor to the Warrant Agent hereunder without the
execution or filing of any paper or any further act on the part of any of
the parties hereto; provided that such corporation must be eligible for
appointment as a successor Warrant Agent under the provisions of Section
15.3 hereof. If at the time such successor to the Warrant Agent shall
succeed to the agency created by this Warrant Agreement any of the Warrants
shall have been countersigned but not delivered, any such successor to the
Warrant Agent may adopt the countersignature of the predecessor Warrant
Agent and deliver such Warrants so countersigned; and if at that time any
of the Warrants shall not have been countersigned, any successor to the
Warrant Agent may countersign such Warrants either in the name of the
predecessor Warrant Agent or in the name of the successor Warrant Agent;
and in all such cases Warrants shall have the full force provided in the
Warrants and in this Warrant Agreement. If at any time the name of the
Warrant Agent shall be changed and at such time any of the Warrants shall
have been countersigned but not delivered, the Warrant Agent may adopt the
countersignatures under its prior name and deliver such Warrants so
countersigned; and if at that time any of the Warrants shall not have been
countersigned, the Warrant Agent may countersign such Warrants either in
its prior name or in its changed name; and in all such cases such Warrants
shall have the full force provided in the Warrants and in this Warrant
Agreement.
15.2. Certain Terms and Conditions Concerning the Warrant Agent.
The Warrant Agent undertakes the duties and obligations imposed by this
Warrant Agreement upon the following terms and conditions, by all of which
the Company and the Holders, by their acceptance of Warrants, shall be
bound:
(a) Correctness of Statements. The statements contained
herein and in the Warrants shall be taken as statements of the Company and
the Warrant Agent assumes no responsibility for the correctness of any of
the same except such as describe the Warrant Agent or action taken by it.
The Warrant Agent assumes no responsibility with respect to the
distribution of the Warrants except as herein otherwise provided.
(b) Breach of Covenants. The Warrant Agent shall not be
responsible for any failure of the Company to comply with any of the
covenants contained in this Warrant Agreement or in the Warrants to be
complied with specifically by the Company.
(c) Performance of Duties. The Warrant Agent may execute
and exercise any of the rights or powers hereby vested in it or perform any
duty hereunder either itself or by or through its attorneys or agents
(which shall not include its employees) and shall not be responsible for
the misconduct or negligence of any agent appointed with due care.
(d) Reliance on Counsel. The Warrant Agent may consult at
any time with legal counsel satisfactory to it (who may be counsel for the
Company) and the Warrant Agent shall incur no liability or responsibility
to the Company or to any Holder in respect of any action taken, suffered or
omitted by it hereunder in good faith and in accordance with the opinion or
the advice of such counsel provided that such counsel shall have been
selected with due care.
(e) Proof of Actions Taken. Whenever in the performance of
its duties under this Warrant Agreement the Warrant Agent shall deem it
necessary or desirable that any fact or matter be proved or established by
the Company prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed conclusively to be proved and established by a
certificate signed by the President, the Chief Financial Officer or the
Secretary of the Company and delivered to the Warrant Agent; and such
certificate shall be full authorization to the Warrant Agent for any action
taken or suffered in good faith by it under the provisions of this Warrant
Agreement in reliance upon such certificate.
(f) Compensation. The Company agrees to pay the Warrant
Agent reasonable compensation as set forth in the fee schedule attached
hereto as Exhibit B for all services rendered by the Warrant Agent in the
performance of its duties under this Warrant Agreement, to reimburse the
Warrant Agent for all expenses, taxes and governmental charges and other
charges of any kind and nature incurred by the Warrant Agent in the
performance of its duties under this Warrant Agreement, and to indemnify
the Warrant Agent and save it harmless against any and all liabilities,
including judgments, costs and counsel fees, for anything done or omitted
by the Warrant Agent in the performance of its duties under this Warrant
Agreement except as a result of the Warrant Agent's negligence or bad
faith.
(g) Legal Proceedings. The Warrant Agent shall be under no
obligation to institute any action, suit or legal proceeding or to take any
other action likely to involve expense unless the Company or one or more
Holders shall furnish the Warrant Agent with reasonable security and
indemnity for any costs and expenses that may be incurred, but this
provision shall not affect the power of the Warrant Agent to take such
action as the Warrant Agent may consider proper, whether with or without
any such security or indemnity. All rights of action under this Warrant
Agreement or under any of the Warrants may be enforced by the Warrant Agent
without the possession of any of the Warrants or the production thereof at
any trial or other proceeding relative thereto, and any such action, suit
or proceeding instituted by the Warrant Agent shall be brought in its name
as Warrant Agent, and any recovery of judgment shall be for the ratable
benefit of the Holders, as their respective rights or interests may appear.
(h) Other Transactions in Securities of the Company. The
Warrant Agent and any stockholder, director, officer or employee of the
Warrant Agent may buy, sell or deal in any of the Warrants or other
securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not Warrant Agent under this Warrant Agreement. Nothing herein shall
preclude the Warrant Agent from acting in any other capacity for the
Company or for any other legal entity.
(i) Liability of Warrant Agent. The Warrant Agent shall
act hereunder solely as agent, and its duties shall be determined solely by
the provisions hereof. The Warrant Agent shall not be liable for anything
that it may do or refrain from doing in connection with this Warrant
Agreement except for its own negligence or bad faith.
(j) Reliance on Documents. The Warrant Agent will not
incur any liability or responsibility to the Company or to any Holder for
any action taken in reliance on any notice, resolution, waiver, consent,
order, certificate, or other paper, document or instrument reasonably
believed by it to be genuine and to have been signed, sent or presented by
the proper party or parties.
(k) Validity of Agreements. The Warrant Agent shall not be
under any responsibility in respect of the validity of this Warrant
Agreement or the execution and delivery hereof (except the due execution
and delivery hereof by the Warrant Agent) or in respect of the validity or
execution of any Warrant (except its countersignature and delivery
thereof); nor shall the Warrant Agent by any act hereunder be deemed to
make any representation or warranty as to the authorization or reservation
of any Warrant Stock (or other stock) to be issued pursuant to this Warrant
Agreement or any Warrant, or as to whether any Warrant Stock (or other
stock) will, when issued, be validly issued, fully paid and nonassessable,
or as to the Warrant Price or the number or amount of Warrant Stock or
other securities or other property issued upon exercise of any Warrant.
(l) Instructions from Company. The Warrant Agent is hereby
authorized and directed to accept instructions with respect to the
performance of its duties hereunder from the President, the Chief Financial
Officer or the Secretary of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and shall not be
liable for any action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer or officers.
15.3. Change of Warrant Agent. The Warrant Agent may resign and
be discharged from its duties under this Warrant Agreement by giving to the
Company 30 days' advance notice in writing. The Warrant Agent may be
removed by like notice to the Warrant Agent from the Company. If the
Warrant Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Warrant
Agent. If the Company shall fail to make such appointment within a period
of 30 days after such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Warrant
Agent, then any Holder may apply to the Court for the appointment of a
successor to the Warrant Agent. Pending the appointment of the successor
warrant agent, the Company shall perform the duties of the Warrant Agent.
Any successor warrant agent, whether appointed by the Company or the Court,
shall be a bank or trust company, in good standing, incorporated under the
laws of the United States of America or any state thereof and having at the
time of its appointment as warrant agent a combined capital and surplus of
at least $50,000,000. After appointment, the successor warrant agent shall
be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Warrant Agent without further act or deed;
but the former Warrant Agent shall deliver and transfer to the successor
warrant agent any property at the time held by it hereunder, and execute
and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Failure to give any notice provided for in this Section 15.3,
however, or any defect therein, shall not affect the legality or validity
of the resignation or removal of the Warrant Agent or the appointment of
the successor warrant agent, as the case may be. In the event of such
resignation or removal, the successor warrant agent shall mail, first
class, to each Holder, written notice of such removal or resignation and
the name and address of such successor warrant agent.
15.4. Disposition of Proceeds on Exercise of Warrants, Inspection
of Warrant Agreement. The Warrant Agent shall account promptly to the
Company with respect to Warrants exercised and concurrently pay to the
Company all immediately available funds and any other consideration
received by the Warrant Agent for the purchase of the Warrant Stock through
the exercise of such Warrants. The Warrant Agent shall, upon request of
the Company from time to time, deliver to the Company such complete reports
of registered ownership of the Warrants and such complete records or
transactions with respect to the Warrants and the shares of Common Stock as
the Company may request. The Warrant Agent shall also make available to
the Company for inspection by the Company's agents or employees, from time
to time as the Company may request, such original books of accounts and
records maintained by the Warrant Agent in connection with the issuance and
exercise of Warrants hereunder, such inspections to occur at the Warrant
Agent's Principal Office. The Warrant Agent shall keep copies of this
Warrant Agreement and any notices given or received hereunder available for
inspection by the Company or the Holders at the Warrant Agent's Principal
Office. The Company shall supply the Warrant Agent from time to time with
such numbers of copies of this Warrant Agreement as the Warrant Agent may
request.
16. MISCELLANEOUS.
16.1. Limitation of Liability. No provision hereof, in the
absence of affirmative action by a Holder to purchase shares of Common
Stock, and no enumeration herein of the rights or privileges of a Holder,
shall impose on any such Holder an obligation to purchase any Common Stock
or any liability as a stockholder of the Company, whether such obligation
or liability is asserted by the Company or by creditors of the Company.
16.2. Notice Generally. Any notice, demand, request, consent,
approval, declaration, delivery or other communication hereunder to be made
pursuant to the provisions of this Warrant Agreement shall be sufficiently
given or made if in writing and either delivered in person with receipt
acknowledged or sent by registered or certified mail, return receipt
requested, postage prepaid, or by telecopy and confirmed by telecopy
answerback, addressed as follows:
(a) If to any Holder or holder of Warrant Stock, at
its last known address appearing on the warrant register of the
Company maintained for such purpose.
(b) If to Company at
Edison Brothers Stores, Inc.
501 North Broadway
St. Louis, Missouri 63102
Attention: Alan A. Sachs
Telecopy Number: (314) 331-6554
(c) If to Warrant Agent at
ChaseMellon Shareholder Services, L.L.C.
510 Locust Street
St. Louis, Missouri 63101
Attention: H. Eugene Bradford
Telecopy Number: (314) 466-2469
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Every notice,
demand, request, consent, approval, declaration, delivery or other
communication hereunder shall be deemed to have been duly given or served
on the date on which personally delivered, with receipt acknowledged,
telecopied and confirmed by telecopy answerback or three Business Days
after the same shall have been deposited in the United States mail (by
registered or certified mail, return receipt requested, postage prepaid),
whichever is earlier.
16.3. Successors and Assigns. All covenants and provisions of
this Warrant Agreement by or for the benefit of the Company or the Warrant
Agent shall bind and inure to the benefit of their respective successors
and assigns hereunder.
16.4. Amendment. This Warrant Agreement and the Warrants may be
modified or amended or the provisions hereof and thereof waived with the
written consent of the Company, the Warrant Agent and the Majority Holders,
provided that no Warrant may be modified or amended to reduce the number of
shares of Common Stock for which such Warrant is exercisable or to increase
the price at which such shares may be purchased upon exercise of such
Warrant (before giving effect to any adjustment as provided herein and
therein) without the prior written consent of the Holder thereof.
16.5. Severability. Wherever possible, each provision of this
Warrant Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Warrant
Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Warrant Agreement.
16.6. Headings. The headings used in this Warrant Agreement are
for the convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant Agreement.
16.7. Governing Law. THIS WARRANT AGREEMENT AND THE WARRANTS
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO
THE PROVISIONS THEREOF RELATING TO CONFLICT OF LAWS.
16.8. Counterparts. This Warrant Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
IN WITNESS WHEREOF, each of the Company and the Warrant Agent has
caused this Warrant Agreement to be duly executed by its duly authorized
officers as of the date first above written.
EDISON BROTHERS STORES, INC.
By:/S/
Name: David B. Cooper, Jr.
Title: Executive Vice President and
Chief Financial Officer
CHASEMELLON SHAREHOLDER SERVICES,
L.L.C., as Warrant Agent
By:/S/
Name:
Title:
EXHIBIT A
[FORM OF FACE OF WARRANT CERTIFICATE]
[NOTE: THE FOLLOWING LEGEND WILL BE ADDED ON WARRANTS OF ANY
HOLDER WHO CANNOT CERTIFY THAT IT IS NOT AN INSIDER:
THIS WARRANT AND THE WARRANT STOCK (AS DEFINED HEREIN) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAWS, AND ARE SUBJECT TO THE PROVISIONS
(INCLUDING THE RESTRICTIONS ON TRANSFER) SET FORTH IN THE WARRANT
AGREEMENT BETWEEN EDISON BROTHERS STORES, INC. AND CHASEMELLON
SHAREHOLDER SERVICES, L.L.C., AS WARRANT AGENT, DATED SEPTEMBER 26,
1997. THIS WARRANT AND THE WARRANT STOCK MAY NOT (AND THE HOLDER OF
THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES THAT THIS
WARRANT AND THE WARRANT STOCK MAY NOT AND WILL NOT) BE SOLD OR
OTHERWISE TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS AND UNTIL SUCH
RESTRICTIONS ARE COMPLIED WITH AND SUCH WARRANTS AND THE WARRANT STOCK
ARE REGISTERED UNDER SUCH ACT, AND SUCH STATE LAW, OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY IS OBTAINED TO THE EFFECT THAT
SUCH REGISTRATION IS NOT REQUIRED. ]
EDISON BROTHERS STORES, INC.
Warrant to purchase Common Stock, par value $0.01 per share, of Edison
Brothers Stores, Inc.
Warrant Certificate No.: Number of Warrants:
CUSIP No.
See Reverse for Certain Definitions
Exercisable from and after September 26, 1997 until 5:00 p.m., New
York City time, on September 26, 2005.
This Warrant Certificate certifies that ____________________, or
registered assigns, is the registered holder of the number of Warrants set
forth above, expiring at 5:00 p.m., New York City time, on September 26,
2005 or, if such date is not a Business Day, the next succeeding Business
Day (the Warrants ), to purchase Common Stock, par value $0.01 per share
(the Common Stock ), of Edison Brothers Stores, Inc., a Delaware
corporation (the Company ). The Common Stock issuable upon exercise of
Warrants is hereinafter referred to as the Warrant Stock. Subject to the
immediately succeeding paragraph, each Warrant entitles the holder upon
exercise to purchase from the Company on or before 5:00 p.m., New York City
time, on September 26, 2005, or, if such date is not a Business Day, the
next succeeding Business Day, one share of Common Stock, subject to
adjustment as set forth herein and in the Warrant Agreement dated as of
September 26, 1997 (the Warrant Agreement ) by and between the Company and
ChaseMellon Shareholder Services, L.L.C., as warrant agent (the Warrant
Agent ), in whole or in part, at the initial purchase price of $16.40 per
share, on and subject to the terms and conditions set forth herein and in
the Warrant Agreement. Such purchase shall be payable in lawful money of
the United States of America by certified or official bank check or any
combination thereof to the order of the Warrant Agent for the account of
the Company at the principal office of the Warrant Agent, subject to the
conditions set forth herein and in the Warrant Agreement. The number of
shares of Common Stock for which each Warrant is exercisable, and the price
at which such shares may be purchased upon exercise of each Warrant, are
subject to adjustment upon the occurrence of certain events as set forth in
the Warrant Agreement. Whenever the number of shares of Common Stock for
which a Warrant is exercisable, or the price at which a share of such
Common Stock may be purchased upon exercise of the Warrants, is adjusted
pursuant to the Warrant Agreement, the Company shall cause to be given to
each of the registered holders of the Warrants at such holders' addresses
appearing on the Warrant register written notice of such adjustment by
first class mail postage pre-paid.
No Warrant may be exercised before 1:00 p.m., New York City time, on
September 26, 1997, or after 5:00 p.m., New York City time, on September
26, 2005 or, if such date is not a Business Day, the next succeeding
Business Day, and to the extent not exercised by such time such Warrants
shall become void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse side hereof and such further
provisions shall for all purposes have the same effect as though fully set
forth at this place.
This Warrant Certificate shall not be valid unless countersigned by
the Warrant Agent.
THIS WARRANT CERTIFICATE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
DELAWARE, WITHOUT REGARD TO THE PROVISIONS THEREOF RELATING TO CONFLICT OF
LAWS.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be signed by its President and has caused its corporate seal to be affixed
hereunto or imprinted hereon.
Dated:
(Seal)
Attest: EDISON BROTHERS STORES, INC.
By: /S/
Name: Name:
Title: Secretary Title: President
COUNTERSIGNED:
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C, as Warrant Agent
By: /S/
Name:
Title:
[Authorized Signature]
[FORM OF REVERSE OF WARRANT CERTIFICATE]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of up to 1,008,791 Warrants expiring at 5:00 p.m., New
York City time, on September 26, 2005 or, if such date is not a Business
Day, the next succeeding Business Day, entitling the holder on exercise to
purchase shares of Common Stock, par value $0.01 per share, of the Company,
and are issued or to be issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of
this instrument and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Warrant Agent, the Company and the Holders (the words Holders or Holder
meaning the registered holders or registered holder of the Warrants). A
copy of the Warrant Agreement may be obtained by the Holder hereof upon
written request to the Company.
Warrants may be exercised at any time on and after 1:00 p.m., New York
City time, on September 26, 1997 and on or before 5:00 p.m., New York City
time, on September 26, 2005 or, if such date is not a Business Day, the
next succeeding Business Day. The Holder of Warrants evidenced by this
Warrant Certificate may exercise them by surrendering this Warrant
Certificate, with the form of election to purchase set forth hereon
properly completed and executed, together with payment of the purchase
price by certified or official bank check or any combination thereof to the
order of the Warrant Agent for the account of the Company and the other
required documentation. In the event that upon any exercise of Warrants
evidenced hereby the number of Warrants exercised shall be less than the
total number of Warrants evidenced hereby, there shall be issued to the
Holder hereof or his assignee a new Warrant Certificate evidencing the
number of Warrants not exercised.
The Warrant Agreement provides that the number of shares of Common
Stock for which each Warrant is exercisable, and the price at which such
shares may be purchased upon exercise of each Warrant, are subject to
adjustment upon the occurrence of certain events as set forth in the
Warrant Agreement. The Company shall not be required to issue any
fractional share of Common Stock upon the exercise of any Warrant, but the
Company shall pay the cash value thereof determined as provided in the
Warrant Agreement.
Warrant Certificates, when surrendered at the office of the Warrant
Agent by the registered Holder thereof in person or by legal representative
or attorney duly authorized in writing, may be exchanged, in the manner and
subject to the limitations provided in the Warrant Agreement, but without
payment of any service charge, for another Warrant Certificate or Warrant
Certificates of like tenor evidencing in the aggregate a like number of
Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like
number of Warrants shall be issued to the transferee in exchange for this
Warrant Certificate, subject to the limitations provided in the Warrant
Agreement without charge except for any tax imposed in connection
therewith.
[ELECTION TO PURCHASE FORM]
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for the purchase of ______ Shares of Common Stock of
EDISON BROTHERS STORES, INC. and herewith makes payment therefor, all at
the price and on the terms and conditions specified in this Warrant and the
Warrant Agreement and requests that certificates for the shares of Common
Stock hereby purchased (and any securities or other property issuable upon
such exercise) be issued in the name of and delivered to _____________
whose address is _________________ and, if such shares of Common Stock
shall not include all of the shares of Common Stock issuable as provided in
this Warrant, that a new Warrant of like tenor and date for the balance of
the shares of Common Stock issuable hereunder be delivered to the
undersigned.
_______________________________
(Name of Registered Owner)
_/S/______________________________
(Signature of Registered Owner)
_______________________________
(Street Address)
_______________________________
(City) (State) (Zip Code)
NOTICE: The signature on this election to purchase must correspond with
the name as written upon the face of the within Warrant in every
particular, without alteration or enlargement or any change
whatsoever.
[ASSIGNMENT FORM]
FOR VALUE RECEIVED the undersigned registered owner of this
Warrant hereby sells, assigns and transfers unto the Assignee named below
all of the rights of the undersigned under this Warrant, with respect to
the number of shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of Common Stock
and does hereby irrevocably constitute and appoint _______ ________________
attorney-in-fact to register such transfer on the books of EDISON BROTHERS
STORES, INC. maintained for the purpose, with full power of substitution in
the premises.
Dated:____________________ Print Name:
Signature:/S/
Witness:
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
EXHIBIT B
Schedule of Fees
INDEMNIFICATION AGREEMENT
AGREEMENT made this 12th day of June, 1996, between Edison Brothers
Stores, Inc., a Delaware corporation, with offices at 501 North Broadway,
St. Louis, Missouri 63102 (the Corporation ) and _________________,
presently residing at ______________________, ( Indemnitee ).
WHEREAS, Indemnitee is a member of the Board of Directors of the
Corporation and in such capacity is performing a valuable service for the
Corporation; and
WHEREAS, it appears that lawsuits against directors of publicly-held
corporations questioning their decisions and actions have increased in
number in recent years; and
WHEREAS, the judgments sought by plaintiffs in such cases are often
very large, exposing directors to financial risks far out of proportion to
the amount of compensation (if any) received by them for their services as
directors; and
WHEREAS, regardless of whether a case is meritorious, the costs of
defending it can be substantial; and
WHEREAS, as a result of the above factors, competent and experienced
persons are becoming more reluctant to serve as directors of a corporation
unless they are protected by indemnification; and
WHEREAS, Section 145 of the General Corporation Law of the State of
Delaware, under which the Corporation is organized, empowers a corporation,
with certain limitations, to indemnify a director against such claims and
to advance to such director the expenses of defending such actions brought
against him, and further provides that the indemnification and advancement
of expenses provided by or granted pursuant to said Section shall not be
deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any bylaw, agreement, vote
of stockholders or disinterested directors or otherwise; and
WHEREAS, the Corporation desires to have Indemnitee serve as a member
of its Board of Directors and as a director, officer, employee or agent of
this or any other corporation, partnership, joint venture, trust or other
enterprise of which he has been or is serving or may in the future serve at
the request of the Corporation, free from undue concern as to the possible
effect of claims for damages by reason of his decisions or actions in such
capacity; and to that end, and to thereby induce Indemnitee to serve as
aforesaid, the Corporation has determined that it is in its best interests
to enter into this Agreement;
NOW, THEREFORE, in consideration of Indemnitee's service to the
Corporation as a member of its Board of Directors and in any of the other
capacities aforementioned after the date hereof, the parties hereto agree
as follows:
Section 1. Statutory Indemnification. If Indemnitee was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was a
director of the Corporation, or, while a director of the Corporation, is or
was serving as an officer of the Corporation or at the request of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, the
Corporation shall indemnify and hold harmless Indemnitee against expenses
(including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by Indemnitee in connection
with such action, suit or proceeding to the fullest extent authorized or
permitted by the provisions of Section 145 of the General Corporation Law
of the State of Delaware, or by any amendment thereof or other statutory
provisions authorizing or permitting such indemnification adopted after the
date hereof.
Section 2. Additional Indemnification. Subject only to the
exclusions set forth in Section 3 hereof, the Corporation hereby further
agrees to hold harmless and indemnify Indemnitee against any and all
expenses (including attorneys' fees), judgments, penalties (including ERISA
excise taxes), fines and amounts paid in settlement actually and reasonably
incurred by Indemnitee in connection with any threatened, pending or
completed action, suit or proceeding (including without limitation expenses
incurred in the investigation, defense, settlement or appeal thereof),
whether civil, criminal, administrative or investigative (including an
action by or in the right of the Corporation) to which Indemnitee was or is
a party or is threatened to be made a party by reason of the fact that
Indemnitee is or was a director of the Corporation or, while a director of
the Corporation, is or was serving as an officer of the Corporation or at
the request of the Corporation as a director, officer, employee, agent or
trustee of another corporation, partnership, joint venture, trust or other
enterprise (hereinafter collectively referred to as an affiliated
enterprise ) (including without limitation the Edison Brothers Stock
Ownership Plan, the Edison Brothers Stores, Inc. 1975 Stock Bonus Plan, the
Edison Brothers Stores, Inc. 1982 Incentive Stock Option Plan, the Edison
Brothers Stores, Inc. 1986 Stock Option Plan, the Edison Brothers Stores
Pension Plan and any other employee benefit plan or similar plan of or
sponsored by the Corporation or any of its subsidiaries now or hereafter in
effect), or by reason of any action alleged to have been taken or omitted
by Indemnitee in any such capacity.
Section 3. Limitations on Additional Indemnification. Indemnitee
shall have no right to indemnification under Section 2 hereof:
(a) on account of any action, suit or proceeding in respect to
remuneration paid to Indemnitee if it is determined by final judgment
or other final adjudication that such remuneration was in violation of
law;
(b) on account of any action, suit or proceeding in which final
judgment is rendered against Indemnitee for an accounting of profits
made from the purchase or sale by Indemnitee of securities of the
Corporation pursuant to the provisions of Section 16(b) of the
Securities Exchange Act of 1934, as amended, or similar provisions of
any federal, state or local statute;
(c) on account of any action, suit or proceeding in which it is
determined by final judgment or other final adjudication that
Indemnitee defrauded the Corporation or an affiliated enterprise or
converted to his personal use or benefit business or properties of the
Corporation or an affiliated enterprise or improperly used for his
personal benefit confidential information regarding the business or
plans of the Corporation or an affiliated enterprise or was otherwise
knowingly dishonest;
(d) if a final decision by a court having jurisdiction in the matter
shall determine that such indemnification is not lawful.
Section 4. Notification and Defense of Claim. As promptly as
practicable after receipt by Indemnitee of notice of the commencement of
any action, suit or proceeding against him, Indemnitee will, if a claim in
respect thereof is to be made against the Corporation under this agreement,
notify the Corporation of the commencement thereof. Except as otherwise
provided below, following its receipt of such notice the Corporation may
(but shall not be obligated to) assume the defense of such action, suit or
proceeding, with counsel satisfactory to Indemnitee. After written notice
from the Corporation to Indemnitee of the Corporation's election so to
assume the defense of such action, suit or proceeding, the Corporation will
not be liable to Indemnitee under this agreement for any legal or other
expenses subsequently incurred by Indemnitee in connection with the defense
thereof except as provided below. Indemnitee shall have the right to
employ his own counsel in such action, suit or proceeding, but the fees and
expenses of such counsel incurred after notice from the Corporation of its
assumption of the defense thereof shall be at the expense of Indemnitee
unless (a) the employment of counsel by Indemnitee has been authorized by
the Corporation, (b) Indemnitee shall have reasonably concluded that there
may be a conflict of interest between the Corporation and Indemnitee in the
conduct of the defense of such action or (c) the Corporation shall not in
fact have employed counsel to assume the defense of such action, in each of
which cases the fees and expenses of Indemnitee's counsel shall be at the
expense of the Corporation. The Corporation shall not be entitled to
assume the defense of any action, suit or proceeding brought by or on
behalf of the Corporation or as to which Indemnitee shall have made the
conclusion provided for in (b) above. In the event the Corporation assumes
the defense of any such action, suit or proceeding pursuant to this
Section 4, the Corporation shall not settle such action, suit or proceeding
in any manner which would impose any penalty or limitation on Indemnitee
without Indemnitee's written consent, which consent shall not be
unreasonably withheld.
Section 5. Advancement of Expenses. The Corporation shall, upon
Indemnitee's request, pay the costs and expenses incurred by Indemnitee in
connection with any action, suit or proceeding described in Section 1
and/or Section 2 of this Agreement in advance of the final disposition of
such action, suit or proceeding, with the understanding and agreement
hereby made and entered into by Indemnitee and the Corporation that in the
event it shall ultimately be determined that Indemnitee was not entitled to
be indemnified for such expenses under the terms of this Agreement, that
Indemnitee shall repay to the Corporation all amounts so paid or advanced
in such manner and on such terms as the Board of Directors of the
Corporation shall direct. Indemnitee further agrees that if the
Corporation assumes the defense of any action, suit or proceeding against
Indemnitee pursuant to Section 4 hereof, Indemnitee will reimburse the
Corporation for all reasonable expenses paid by the Corporation in
defending such action, suit or proceeding in the event and to the extent
that it shall ultimately be determined that Indemnitee was not entitled to
be indemnified by the Corporation for such expenses under the terms of this
Agreement. Any determination required to be made under the provisions of
this Section 5 shall be made (a) by the Board of Directors of the
Corporation by a majority vote of a quorum consisting of directors who were
not parties to such action, suit or proceeding, or (b) if such a quorum is
not obtainable, or even if obtainable a quorum of disinterested directors
so directs, by independent legal counsel in a written opinion, or (c) by a
majority vote of the stockholders of the Corporation.
Section 6. Procedure for Indemnification; Enforcement. Any
indemnification under Sections 1 or 2 or advance of costs and expenses
under Section 5 of this Agreement shall be made promptly upon the written
request of Indemnitee. If the Corporation denies such request, in whole or
in part, or if no disposition thereof is made within sixty days following
the Corporation's receipt of the request, Indemnitee may bring suit against
the Corporation in any court of competent jurisdiction to enforce his
rights thereto, and, if such suit is successful in whole or in part, the
Corporation shall also pay to Indemnitee the fees and expenses incurred by
Indemnitee in prosecuting such claim. It shall be a defense to any action
seeking to enforce a right to indemnification under Section 1 of this
Agreement that the Indemnitee has not met the standards of conduct which
make it permissible under the Delaware General Corporation Law to indemnify
the Indemnitee for the amount claimed, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, its independent legal
counsel or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of Indemnitee is proper in
the circumstances because he has met the applicable standard of conduct set
forth in the Delaware General Corporation Law, nor the fact that there has
been an actual determination by the Corporation (including its Board of
Directors, its independent legal counsel, or its stockholders) that
Indemnitee has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that the Indemnitee has not
met the applicable standard of conduct.
Section 7. Other Rights and Remedies. The rights to indemnification
and advance payment of expenses conferred on Indemnitee by this Agreement
shall not be deemed exclusive of any other rights which Indemnitee may now
or hereafter have under any provision of law, the Certificate of
Incorporation or By-laws of the Corporation, any other agreement, vote of
stockholders or disinterested directors or otherwise.
Section 8. Severability. If any provision of this Agreement shall be
held to be invalid or unenforceable for any reason whatsoever, the validity
and enforceability of the remaining portions of this Agreement shall not in
any way be affected or impaired thereby, and the Corporation shall continue
to indemnify Indemnitee to the full extent permitted by any portion of this
Agreement that shall not have been invalidated and to the full extent
permitted by applicable law.
Section 9. Notices. All notices, requests, and other communications
hereunder shall be in writing and shall be deemed to have been duly given
when delivered personally or when mailed by certified or registered mail,
postage prepaid, addressed to the party to whom directed at the address
indicated above or to such other address as may have been furnished by such
party by notice to the other party.
Section 10. Continuation of Indemnity; Binding Effect. The parties'
respective rights and obligations contained herein shall continue after
Indemnitee has ceased to be a director of the Corporation or to occupy any
of the other positions referred to in Section 2 hereof. This Agreement
shall be binding upon and inure to the benefit of Indemnitee and the
Corporation and their respective heirs, executors, administrators,
successors and assigns.
Section 11. Governing Law. This agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
Delaware.
Section 12. Amendment and Termination. No amendment, modification,
termination or cancellation of this Agreement shall be effective unless in
writing signed by both of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
EDISON BROTHERS STORES, INC.
By_/S/_______________________________
Alan D. Miller
________________________________
[Name]
EDISON BROTHERS STORES, INC.
1997 STOCK OPTION PLAN
1. Purpose of the Plan
The purpose of the Edison Brothers Stores, Inc. 1997 Stock Option Plan
is to secure for EBS and its stockholders the benefits of the incentive
inherent in the ownership of EBS common stock by the officers and key
employees of the Company who will be largely responsible for the Company's
future growth and financial success.
2. Definitions
A. Board means the Board of Directors of EBS.
B. Cause, when used in connection with the termination of an
optionee's employment by the Company, means (i) the optionee's willful
or repeated failure substantially to perform the duties of his or her
position with the Company (other than any such failure resulting from
his or her Disability), which failure is not or cannot be cured within
five business days after the Company has given written notice thereof
to the optionee specifying in detail the particulars of the acts or
omissions deemed to constitute such failure; (ii) the engaging by the
optionee in willful misconduct which is materially injurious to the
Company; (iii) the engaging by the optionee in any act of moral
turpitude that is reasonably likely to materially and adversely affect
the Company or its business; or (iv) the optionee's conviction of, or
entry of a plea of nolo contendere with respect to, any felony. For
purposes of this definition, no act, or failure to act, on the
optionee's part shall be considered willful unless done, or omitted
to be done, by the optionee in bad faith and without reasonable belief
that the optionee's action or omission was in the best interests of
the Company. The optionee shall not be deemed to have been terminated
for Cause unless and until the Board finds that the optionee's
termination for Cause is justified and has given the optionee written
notice of termination, specifying in detail the particulars of the
optionee's conduct found by the Board to justify such termination for
Cause.
C. Change in Control means the occurrence of any of the
following events: (i) any person or group (as such terms are used
in Section 13(d) of the Securities Exchange Act of 1934, as amended
(the Exchange Act )) becomes the beneficial owner (as determined
pursuant to Rules 13d-3 and 13d-5 promulgated under the Exchange Act),
directly or indirectly, of securities of EBS having more than 33% of
the total voting power of all classes of capital stock of EBS entitled
to vote generally in the election of directors of EBS; (ii) at any
time during any 24-month period, individuals who at the beginning of
such period constituted the Board of Directors of EBS (together with
any new directors whose election, or nomination for election by the
stockholders of EBS, to the Board was approved by a majority of the
directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of EBS then in office; (iii) the
Board approves an agreement providing for the sale, lease, transfer or
other disposition of all or substantially all of the assets of EBS, in
one transaction or a series of related transactions, to any person
or group (as such terms are used in Section 13(d) of the Exchange
Act) other than a wholly-owned subsidiary of EBS; (iv) the Board
approves an agreement providing for the merger or consolidation of EBS
with another corporation, other than a merger in which EBS would be
the surviving corporation and which would result in (a) securities
having more than 50% of the total voting power of all classes of
capital stock entitled to vote generally in the election of directors
of the surviving corporation being beneficially owned (as determined
pursuant to Rules 13d-3 and 13d-5 under the Exchange Act) by the
holders of the capital stock of EBS immediately prior to such merger
and (b) no person or group (as such terms are used in
Section 13(d) of the Exchange Act) beneficially owning (as
determined pursuant to Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, securities having more than 33% of the total
voting power of all classes of capital stock entitled to vote
generally in the election of directors of the surviving corporation;
or (v) the Board approves a plan for the liquidation or dissolution of
EBS; provided, however, that no such event shall be deemed a Change in
Control if it occurs as part of the implementation of, and pursuant to
the express terms of, a plan of reorganization of EBS under Chapter 11
of Title 11 of the United States Code that has been confirmed by the
Bankruptcy Court in the Chapter 11 Case, and provided further that two
or more entities shall not be deemed to constitute a person or
group for purposes hereof in respect of any securities of EBS
received by them pursuant to such plan of reorganization merely by
virtue of the fact that such entities were each members of the
statutory Creditors' Committee appointed in the Chapter 11 Case.
D. Chapter 11 Case means the case commenced by EBS on
November 3, 1995 under Chapter 11 of Title 11 of the United States
Code in the United States Bankruptcy Court in Delaware (Case No. 95-
1354 (PJW)).
E. Committee has the meaning set forth in paragraph 4 hereof.
F. Common Stock means shares of the common stock of EBS, par
value $.01 per share, authorized and issued pursuant to the terms of a
plan of reorganization of EBS under Chapter 11 of Title 11 of the
United States Code as confirmed by the Bankruptcy Court in the
Chapter 11 Case.
G. Company means EBS and its Subsidiaries.
H. Disability means the inability of an optionee to perform
the duties of his or her position with the Company by reason of a
medically determined physical or mental impairment which has existed
for a continuous period of at least 26 weeks and which, in the
judgment of a physician who certifies to such judgment, is expected to
be of indefinite duration or to result in imminent death.
I. EBS means Edison Brothers Stores, Inc., a Delaware
corporation.
J. Effective Date shall have the meaning ascribed to that
term in the Debtors' Amended Joint Plan of Reorganization, dated
May 21, 1997, as such plan may be amended or modified, or such
alternative plan of reorganization as is ultimately confirmed by the
Bankruptcy Court.
K. Initial Options means the options to be granted for such
numbers of shares of Common Stock (not to exceed in the aggregate
500,000 shares), on such terms and to such individuals as have been
designated by the Special Compensation Subcommittee prior to the
Effective Date.
L. Key Employee means an executive or other person who is
employed in a position of administrative or managerial responsibility
by EBS or a Subsidiary, including store managers.
M. Plan means the Edison Brothers Stores, Inc. 1997 Stock
Option Plan.
N. Special Compensation Subcommittee means the Special
Compensation Subcommittee of the Compensation Committee of the Board
of Directors of EBS, as constituted and existing prior to the
Effective Date.
O. Subsidiary means any corporation (other than EBS) in an
unbroken chain of corporations beginning with EBS if, at the time of
the granting of an option, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing fifty
percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
3. Stock Subject to the Plan
The total number of shares of Common Stock available for grants of
options under the Plan shall be 800,000. No individual may be granted
options in respect of more than 200,000 shares of Common Stock in any
twelve-month period. If any option shall expire or terminate or be
canceled for any reason without having been exercised in full, the
unpurchased shares subject thereto shall again be available for the
purposes of the Plan. The shares of Common Stock subject to issuance upon
exercise of options under the Plan may be either authorized but unissued
shares or shares held in the treasury of EBS.
4. Administration
The Plan shall be administered by the Compensation Committee of the
Board or such other committee as the Board may designate (the Committee ).
The Committee shall be appointed by the Board and shall consist of two or
more members of the Board each of whom (i) meets the definition of outside
director as such term is used in Section 162(m) of the Internal Revenue
Code of 1986, as amended, and (ii) meets the definition of non-employee
director as such term is used in Rule 16b-3(b)(3) under the Securities
Exchange Act of 1934, as amended. Except as otherwise provided in the
Plan, the Committee shall have complete authority to:
(a) interpret the Plan;
(b) prescribe, amend and rescind rules and regulations relating
to the Plan;
(c) determine the individuals to whom, and the time or times at
which, options shall be granted;
(d) determine the number of shares to be subject to each option,
the price at which such shares may be purchased, and all other
terms and provisions of each option agreement;
(e) make all determinations not specifically set forth in (a)
through (d) above which it considers necessary or desirable for
the administration of the Plan.
Except as otherwise provided in the Plan, the decisions of the Committee
with respect to the matters set forth in (a) through (e) above shall be
final.
5. Grants of Options
All Initial Options shall, for all purposes of this Plan, be deemed to
have been granted hereunder on and as of the Effective Date, except that no
Initial Options shall be deemed to have been granted to any person who, as
of the Effective Date, was not in the employ of EBS or one of its
Subsidiaries. Within six months after the Effective Date, the Committee
shall grant options with respect to all remaining shares of Common Stock
available for grants of options under the Plan. Options may be granted
under the Plan only to Key Employees.
6. Option Price
The purchase price of the Common Stock under each option issued
hereunder shall be the fair market value of the Common Stock at the time of
the grant of the option. The Committee may adopt any criterion for the
determination of such fair market value as it may in good faith determine
to be appropriate.
7. Manner of Exercise and Payment
An option shall be exercised by delivery of a written notice of
exercise to EBS and payment of the full price of the shares being purchased
pursuant to the option. An optionee may exercise an option with respect to
less than the total number of shares for which the option may then be
exercised. The price of the shares purchased pursuant to an option may be
paid either (i) in cash, (ii) by the tender to EBS of shares of Common
Stock owned by the optionee and registered in the name of the optionee
having an aggregate fair market value on the date of exercise equal to the
price of the shares being purchased, such fair market value to be
determined in such manner as may be provided for by the Committee or as may
be required in order to comply with any applicable law or regulation,
(iii) by delivery of irrevocable instructions to a financial institution to
deliver promptly to EBS sale or loan proceeds with respect to the shares
sufficient to pay the purchase price, (iv) through the written election of
the optionee to have shares of Common Stock withheld by EBS from the shares
otherwise to be received, with such withheld shares having an aggregate
fair market value on the date of exercise equal to the price of the shares
being purchased, or (v) by any combination of the payment methods specified
in clauses (i) through (iv) hereof. The proceeds received by EBS from the
sale of Common Stock subject to an option are to be added to the general
funds of EBS or to the Common Stock held in its treasury, and used for its
corporate purposes as the Board shall determine.
8. Term and Exercise of Options
The term of each option shall be not more than ten years from the date
of granting thereof. Within such limit, options will be exercisable at
such time or times, and subject to such restrictions and conditions, as the
Committee shall approve, which need not be uniform for all optionees;
provided, however, that except as provided in paragraph 9, no option may be
exercised at any time unless the optionee is then an employee of EBS or a
Subsidiary and has been employed continuously by EBS or a Subsidiary since
the granting of the option.
9. Termination of Employment
A. If an optionee ceases to be employed by the Company, any
option held by such optionee, to the extent the optionee was entitled
to exercise it at the date of termination of employment, may be
exercised at any time within three months after such termination but
not after the date of expiration of the option. Notwithstanding the
foregoing, if the employment of any optionee is terminated by the
Company for Cause, all unexercised options of such optionee shall
thereupon terminate and thereafter be unexercisable.
B. If an optionee's employment is terminated by reason of death
or Disability, any or all of the optionee's unexercised options,
whether otherwise eligible for immediate exercise by the terms of the
option agreement or not, may be exercised at any time within one year
after such termination but not after the date of expiration of the
option.
C. If an optionee retires after reaching age 65, any or all of
the optionee's unexercised options, whether otherwise eligible for
immediate exercise by the terms of the option agreement or not, may be
exercised at any time within three months after the optionee's
retirement but not after the date of expiration of the option.
D. If an optionee retires after attaining age 55 but not age 65,
the Committee, in its sole discretion, may permit any or all of the
optionee's unexercised unexpired options, whether otherwise eligible
for immediate exercise by the terms of the option agreement or not, to
be exercised within three months after the optionee's retirement but
not after the date of expiration of the option.
10. Nontransferability of Options
Each option granted under the Plan shall, by its terms, be
nontransferable otherwise than by will or the laws of descent and
distribution and an option may be exercised, during the lifetime of an
optionee, only by the optionee.
11. Successive Option Grants
Successive option grants may be made to any holder of options under
the Plan.
12. Amendment and Termination of the Plan
Subject to the provisions of paragraph 14G hereof, the Board may at
any time terminate the Plan or make such modifications of the Plan as it
shall deem advisable; provided, however, that the Board may not, without
approval by the holders of Common Stock of EBS, increase the number of
shares as to which options may be granted under the Plan (except pursuant
to the provisions of paragraph 14F), change the class of persons to whom
options may be granted, or materially increase the benefits accruing to
participants under the Plan.
13. Term of the Plan
This Plan shall take effect as of the Effective Date and shall
terminate ten years after such date. No option shall be granted hereunder
after the expiration of such ten-year period. Options outstanding at the
termination of the Plan shall continue in full force and effect and shall
not be affected thereby.
14. Miscellaneous
A. Rights as Stockholder. An optionee shall have none of the
rights of a stockholder with respect to Common Stock subject to an
option, until such shares are issued to such optionee upon exercise of
the option.
B. Rights to Continued Employment. Nothing in the Plan or in
any option granted pursuant to the Plan shall confer on any individual
any right to continue in the employ of the Company or interfere with
the right of the Company to terminate such individual's employment at
any time.
C. Leaves of Absence. The option agreements issued pursuant to
the Plan may contain such provisions as the Committee shall determine
with respect to the effect of approved leaves of absence.
D. Pension Rights. Benefits received under the Plan by an
optionee shall not affect or be used in the calculation of pension or
other retirement benefits under any other plan of EBS.
E. Investment Purpose. Each option under the Plan shall be
granted only on the condition that all purchases of stock thereunder
shall be for investment purposes, and not with a view to resale or
distribution, except that the Committee may make such provision in
options granted under the Plan as it deems necessary or advisable for
the release of such condition upon the registration with the
Securities and Exchange Commission of stock subject to the options, or
upon the happening of any other contingency warranting the release of
such condition.
F. Adjustments Upon Changes in Capitalization. In the event of
changes in the outstanding Common Stock by reason of stock dividends,
recapitalizations, mergers, consolidations, split-ups, spin-offs,
combinations or exchanges of shares and the like, the aggregate number
and class of shares as to which options may be granted under the Plan
or granted to any individual participant as set forth in paragraph 3,
and the number, class and price of shares subject to outstanding
options, shall be appropriately adjusted by the Committee.
G. Adverse Effect on Optionee of Amendment or Termination of
Plan. No amendment or termination of the Plan may, without the
written consent of an employee to whom any option shall have been
granted, adversely affect the rights of such employee under such
option, which rights shall include all rights of the optionee under
the Plan as it existed as of the date of grant of the option.
H. Time of Granting of Options. Except as otherwise provided in
paragraph 5 hereof, an option grant under the Plan shall be deemed to
be made on the date on which the Committee, by formal action of its
members, duly recorded in the records thereof, makes an award of an
option to an eligible employee of EBS or a Subsidiary.
I. Effect of a Change in Control. In the event of a Change in
Control, all options then outstanding under the Plan shall become
immediately and fully exercisable.
15. Tax Withholding
An optionee shall be required to pay to EBS at the time of exercise of
an option the amount that EBS deems necessary to satisfy its withholding
obligation with respect to Federal, state or local income or other taxes
(which for purposes of this paragraph 15 includes an optionee's FICA
obligation) incurred by reason of the exercise. Upon the exercise of an
option requiring tax withholding, an optionee may make a written election
to have shares of Common Stock withheld by EBS from the shares otherwise to
be received. The number of shares so withheld shall have an aggregate fair
market value on the date of exercise sufficient to satisfy the applicable
withholding taxes.
16. Tax-Offset Bonus Rights
The Committee, in its sole discretion, may grant tax-offset bonus
rights ( TOBR's ) with respect to options. Such TOBR's may be granted to
an optionee at the time of the grant of the related option or subsequent
thereto. A TOBR shall entitle the optionee to receive from EBS upon
exercise of the related option an amount in cash equal to (1) the excess,
if any, of the aggregate market price of the shares acquired by the
exercise of the option on the date of exercise over the aggregate purchase
price of the shares acquired by such exercise multiplied by (2) a
percentage (either fixed or by formula) determined solely by the Committee.
The Committee shall determine all other terms and provisions of any TOBR.
No TOBR shall be assignable or transferable except to the extent the
Committee permits such TOBR to be assigned by will or through the laws of
descent and distribution.
EDISON BROTHERS STORES, INC.
1997 DIRECTORS STOCK OPTION PLAN
1. Purpose of the Plan
The purpose of the Edison Brothers Stores, Inc. 1997 Directors Stock
Option Plan is to encourage qualified individuals to serve as directors of
EBS and, by acquiring a financial stake in the success of the Company, to
have a greater concern for the welfare of EBS and its stockholders.
2. Definitions
A. Board means the Board of Directors of EBS.
B. Cause means the willful commission by an optionee of a
criminal or other act that causes or will probably cause substantial
economic damage to EBS or substantial injury to the business
reputation of EBS. For purposes of this definition, no act on the
optionee's part shall be considered willful unless done, or omitted
to be done, by the optionee in bad faith and without reasonable belief
that the optionee's action was in the best interests of EBS.
C. Chapter 11 Case means the case commenced by EBS on
November 3, 1995 under Chapter 11 of Title 11 of the United States
Code in the United States Bankruptcy Court in Delaware (Case No. 95-
1354 (PJW)).
D. Committee has the meaning set forth in Section 4 hereof.
E. Common Stock means shares of the common stock of EBS, par
value $.01 per share, authorized and issued pursuant to the terms of a
plan of reorganization of EBS under Chapter 11 of Title 11 of the
United States Code as confirmed by the Bankruptcy Court in the
Chapter 11 Case.
F. Director means a member of the Board who is not an
employee of EBS or any of its Subsidiaries.
G. Disability means the inability of an optionee to perform
the duties of a Director by reason of a medically determined physical
or mental impairment which has existed for a continuous period of at
least 26 weeks.
H. EBS means Edison Brothers Stores, Inc., a Delaware
corporation.
I. Effective Date shall have the meaning ascribed to that
term in the Debtors' Amended Joint Plan of Reorganization, dated
May 21, 1997, as such plan may be amended or modified, or in such
alternative plan of reorganization as is ultimately confirmed by the
Bankruptcy Court.
J. Fair Market Value, when used with reference to a share of
Common Stock as of a particular date, means the average of the highest
and lowest selling prices of a share of Common Stock as reported for
that date (or, if no prices are quoted for that date, for the last
preceding date for which such prices are quoted) on the New York Stock
Exchange, or, if the Common Stock is not then listed on the New York
Stock Exchange, on such other national securities exchange on which
the Common Stock is listed or, if not so listed, then on the Nasdaq
National Market. If, as of a particular date, the Common Stock is not
listed or quoted on any national securities exchange or on the Nasdaq
National Market, then the Fair Market Value of a share of Common Stock
as of such date shall be determined according to such criteria as the
Committee in good faith shall deem appropriate.
K. Plan means the Edison Brothers Stores, Inc. 1997
Directors Stock Option Plan.
L. Subsidiary means any corporation (other than EBS) in an
unbroken chain of corporations beginning with EBS if, at the time of
the granting of an option, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing fifty
percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
3. Stock Subject to the Plan
The total number of shares of Common Stock available for grants of
options under the Plan shall be 200,000. If any option shall expire or
terminate or be canceled for any reason without having been exercised in
full, the unpurchased shares subject thereto shall again be available for
the purposes of the Plan. The shares of Common Stock subject to issuance
upon exercise of options under the Plan may be either authorized but
unissued shares or shares held in the treasury of EBS.
4. Administration
The Plan shall be administered by a committee appointed by the Board
(the Committee ) consisting of two or more members of the Board each of
whom is a non-employee director as such term is defined in Rule 16b-
3(b)(3) under the Securities Exchange Act of 1934, as amended. Except as
otherwise provided in the Plan, the Committee shall have complete authority
to interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to the Plan, and to make all other determinations
necessary or desirable for the administration of the Plan. The decisions
of the Committee with respect to the matters set forth in this Section 4
shall be final and binding on all interested parties.
5. Grants of Options
A. Options may be granted under this Plan only to Directors.
B. Each person who is a Director at the close of business on
the Effective Date shall be automatically granted, effective on such
day, and without further action by the Board or the Committee, an
option to purchase 3,500 shares of Common Stock at a price per share
determined as of such date pursuant to Section 6.
C. Each person who is first elected or appointed a Director
after the Effective Date, shall be automatically granted, effective on
the date of such election or appointment, and without further action
by the Board or the Committee, an option to purchase 3,500 shares of
Common Stock at a price per share determined as of such date pursuant
to Section 6.
D. Each Director who receives an option under Section 5B or 5C
hereof and who remains a Director effective at the completion of an
Annual Meeting of Stockholders commencing with the Annual Meeting of
Stockholders held in the calendar year following the calendar year in
which such Director received an option under Section 5B or Section 5C
shall be automatically granted, effective on the day of completion of
each such Annual Meeting, and without further action by the Board or
the Committee, an option to purchase that number of shares of Common
Stock (rounded to the nearest whole number) equal to $20,000 divided
by the Fair Market Value of a share of Common Stock as of such date,
such option to be exercisable at a price per share equal to such Fair
Market Value.
E. In the event that the number of shares available for grant
under the Plan is insufficient to make all grants hereby specified on
the applicable date, then all Directors who are entitled to a grant on
such date shall share ratably in the number of shares then available
for grant under the Plan.
6. Option Price
The purchase price per share of Common Stock under each option issued
hereunder shall be the Fair Market Value of a share of Common Stock at the
time of the grant of the option.
7. Manner of Exercise and Payment
An option shall be exercised by delivery of a written notice of
exercise to EBS and payment of the full price of the shares being purchased
pursuant to the option. An optionee may exercise an option with respect to
less than the total number of shares for which the option may then be
exercised. The price of the shares purchased pursuant to an option may be
paid either (i) in cash, (ii) by the tender to EBS of shares of Common
Stock owned by the optionee and registered in the name of the optionee
having an aggregate Fair Market Value on the date of exercise equal to the
price of the shares being purchased, (iii) by delivery of irrevocable
instructions to a financial institution to deliver promptly to EBS sale or
loan proceeds with respect to the shares sufficient to pay the purchase
price, (iv) through the written election of the optionee to have shares of
Common Stock withheld by EBS from the shares otherwise to be received, with
such withheld shares having an aggregate Fair Market Value on the date of
exercise equal to the price of the shares being purchased, or (v) by any
combination of the payment methods specified in clauses (i) through (iv)
hereof. The proceeds received by EBS from the sale of Common Stock subject
to an option are to be added to the general funds of EBS or to the Common
Stock held in its treasury, and used for its corporate purposes as the
Board shall determine.
8. Term and Exercise of Options
Each option granted hereunder shall expire ten years from the date of
granting thereof, subject to earlier termination as provided in Section 9.
Within such limit, each option shall become exercisable for one-third of
the shares covered thereby after one year from the date of grant, shall
become exercisable for an additional one-third of the shares covered
thereby after two years from the date of grant, and shall become
exercisable for the remaining one-third of the shares covered thereby after
three years from the date of grant; provided, however, that no option shall
be exercisable within the first six months after the date of grant (except
in the event of the death of the optionee), and provided further that,
except as permitted by paragraph 9, no option may be exercised at any time
unless the optionee is then a Director and has been a Director continuously
since the granting of the option.
9. Termination of Service
If a Director's service as a Director is terminated by reason of
(i) Disability, (ii) death, (iii) failure of the Board to nominate such
Director for re-election other than for Cause, or (iv) his ineligibility
for re-election pursuant to the By-laws of EBS, if applicable, such
termination shall be considered a Qualifying Termination. In the event
of a Qualifying Termination, the Director, his legal representative, or
legatee, as the case may be, may exercise any option held by such Director,
to the extent such option was exercisable as of the date such Director
ceased to be a Director, within one year after his termination of service
on the Board (but not after the date of expiration of the option). If a
Director's service is terminated as a result of his determination not to
stand for re-election, such Director may exercise any option held by such
Director, to the extent such option was exercisable as of the date such
Director ceased to be a Director, within three months after the termination
of his service on the Board (but not after the date of expiration of the
option). If a Director's service as a Director is terminated for any other
reason, including for Cause, such termination shall be considered a Non-
Qualifying Termination. In the event of a Non-Qualifying Termination, all
outstanding unexercised options held by such Director shall terminate as of
the date of the Non-Qualifying Termination.
10. Nontransferability of Options
Each option granted under the Plan shall, by its terms, be
nontransferable otherwise than by will or the laws of descent and
distribution and an option may be exercised, during the lifetime of an
optionee, only by the optionee.
11. Amendment and Termination of the Plan
Subject to the provisions of Section 13E hereof, the Board may at any
time terminate the Plan or make such modifications of the Plan as it shall
deem advisable.
12. Term of the Plan
This Plan shall take effect as of the Effective Date and shall
terminate ten years after such date. No option shall be granted hereunder
after the expiration of such ten-year period. Options outstanding at the
termination of the Plan shall continue in full force and effect and shall
not be affected thereby.
13. Miscellaneous
A. Service as Director. Nothing in this Plan shall be construed
as conferring any right upon any Director to continue as a member of
the Board.
B. Rights as Stockholder. An optionee shall have none of the
rights of a stockholder with respect to Common Stock subject to an
option, until such shares are issued to such optionee upon exercise of
the option.
C. Investment Purpose. Each option under the Plan shall be
granted only on the condition that all purchases of stock thereunder
shall be for investment purposes, and not with a view to resale or
distribution, except that the Committee may make such provision in
options granted under the Plan as it deems necessary or advisable for
the release of such condition upon the registration with the
Securities and Exchange Commission of stock subject to the options, or
upon the happening of any other contingency warranting the release of
such condition.
D. Adjustments Upon Changes in Capitalization. In the event of
changes in the outstanding Common Stock by reason of stock dividends,
recapitalizations, mergers, consolidations, split-ups, spin-offs,
combinations or exchanges of shares and the like, the aggregate number
and class of shares as to which options may be granted under the Plan,
and the number, class and price of shares subject to outstanding
options, shall be appropriately adjusted by the Committee.
E. Adverse Effect on Optionee of Amendment or Termination of
Plan. No amendment or termination of the Plan may, without the
written consent of an optionee to whom any option shall have been
granted, adversely affect the rights of such optionee under such
option, which rights shall include all rights of the optionee under
the Plan as it existed as of the date of grant of the option.
14. Tax Withholding
An optionee shall be required to pay to EBS at the time of exercise of
an option the amount that EBS deems necessary to satisfy its withholding
obligation with respect to federal, state or local income or other taxes
(which for purposes of this paragraph 14 includes an optionee's FICA
obligation) incurred by reason of the exercise. Upon the exercise of an
option requiring tax withholding, an optionee may make a written election
to have shares of Common Stock withheld by EBS from the shares otherwise to
be received. The number of shares so withheld shall have an aggregate Fair
Market Value on the date of exercise sufficient to satisfy the applicable
withholding taxes.
June 4, 1997
[Name of Executive]
Dear [Name]:
Edison Brothers Stores, Inc. ( EBS ) hereby grants to you, as of the
Effective Date (as hereinafter defined) and subject to the conditions
hereinafter set forth, [number of shares] shares of the Common Stock (as
hereinafter defined) of EBS (the Restricted Stock ). This letter
agreement (the Restricted Stock Agreement ) shall evidence such grant.
Notwithstanding anything to the contrary contained herein, this Restricted
Stock Agreement and the grant evidenced hereby shall be of no force or
effect unless (a) this Restricted Stock Agreement is provided for or
contemplated by a plan of reorganization that is confirmed by the
Bankruptcy Court in the Chapter 11 Case (as hereinafter defined) and
(b) you are in the employ of EBS or one of its Subsidiaries (as hereinafter
defined) on the Effective Date.
1. Date of Grant: This grant shall take effect on the Effective
Date, which for all purposes hereunder shall be deemed the Date of Grant.
2. Cost of Shares of Restricted Stock: This grant of Restricted
Stock is considered additional compensation, for the periods specified in
paragraph 6, and shall be at no cost to you.
3. Delivery of Restricted Stock: The Restricted Stock shall be
issued to you as a matter of record as of the Date of Grant but shall not
be delivered to you until certain specified conditions, hereinafter set
forth, are met.
4. 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.
5. 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.
6. Vesting: One half of the shares of Restricted Stock shall be
deemed earned during the one-year period ending on the first anniversary of
the Date of Grant and shall vest and be delivered to you free of any
restriction imposed hereunder on the last day of such period, and one half
of the shares of Restricted Stock shall be deemed earned during the one-
year period ending on the second anniversary of the Date of Grant and shall
vest and be delivered to you free of any restriction imposed hereunder on
the last day of such period, provided, however, that except as provided in
paragraph 8 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 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 (collectively, the Company ), then at such time all shares of
Restricted Stock not yet vested shall be forfeited (except as provided in
paragraph 8 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.
7. Non-Transferability: No share of Restricted Stock shall be
transferable by you prior to vesting.
8. Accelerated Vesting:
(a) Death or Disability: In the event of your death or Disability
while in the employ of the Company, 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 shall mean your inability to
perform the duties of your position with the Company by reason of a
medically determined physical or mental impairment which has existed for a
continuous period of at least 26 weeks and which, in the judgment of a
physician who certifies to such judgment, is expected to be of indefinite
duration or to result in imminent death.
(b) Termination of Employment: In the event (i) your employment by
the Company is terminated Without Cause (as hereinafter defined) or
(ii) you voluntarily terminate your employment with the Company for Good
Reason (as hereinafter defined), then 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.
(c) Change in Control: In the event of a Change in Control (as
hereinafter defined), 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.
9. Definitions:
(a) Without Cause means any termination of your employment by the
Company which is not a termination of employment for Cause or for
Disability. Cause means (i) your willful or repeated failure
substantially to perform the duties of your position with the Company
(other than any such failure resulting from your Disability), which failure
is not or cannot be cured within five business days after the Company has
given you written notice specifying in detail the particulars of the acts
or omissions deemed to constitute such failure; (ii) your engaging in
willful misconduct which is materially injurious to the Company; (iii) your
engaging in any act of moral turpitude that is reasonably likely to
materially and adversely affect the Company or its business; or (iv) your
conviction of, or entry of a plea of nolo contendere with respect to, any
felony. For purposes of this definition, no act, or failure to act, on
your part shall be considered willful unless done, or omitted to be
done, by you in bad faith and without reasonable belief that your action or
omission was in the best interests of the Company. You shall not be deemed
to have been terminated for Cause unless and until the Board of Directors
of EBS finds that your termination for Cause is justified and has given you
written notice of termination, specifying in detail the particulars of your
conduct found by the Board to justify such termination for Cause.
(b) Good Reason, when used with reference to your voluntary
termination of your employment with the Company, means (i) a reduction in
your base salary as in effect on the date hereof or as the same may be
increased from time to time; (ii) the assignment to you of any duties
materially inconsistent with your status as an executive of the Company; or
(iii) your mandatory transfer by the Company to another geographic
location, except for required travel on Company business to an extent
substantially consistent with your business travel obligations as of the
date hereof.
(c) Change in Control means the occurrence of any of the
following events: (i) any person or group (as such terms are used
in Section 13(d) of the Securities Exchange Act of 1934, as amended (the
Exchange Act )) becomes the beneficial owner (as determined pursuant
to Rules 13d-3 and 13d-5 promulgated under the Exchange Act), directly or
indirectly, of securities of EBS having more than 33% of the total voting
power of all classes of capital stock of EBS entitled to vote generally in
the election of directors of EBS; (ii) at any time during any 24-month
period, individuals who at the beginning of such period constituted the
Board of Directors of EBS (together with any new directors whose election,
or nomination for election by the stockholders of EBS, to the Board of
Directors was approved by a majority of the directors then still in office
who either were directors at the beginning of such period or whose election
or nomination for election was previously so approved) cease for any reason
to constitute a majority of the Board of Directors of EBS then in office;
(iii) the Board of Directors of EBS approves an agreement providing for the
sale, lease, transfer or other disposition of all or substantially all of
the assets of EBS, in one transaction or a series of related transactions,
to any person or group (as such terms are used in Section 13(d) of
the Exchange Act) other than a wholly-owned subsidiary of EBS; (iv) the
Board of Directors of EBS approves an agreement providing for the merger or
consolidation of EBS with another corporation, other than a merger in which
EBS would be the surviving corporation and which would result in
(a) securities having more than 50% of the total voting power of all
classes of capital stock entitled to vote generally in the election of
directors of the surviving corporation being beneficially owned (as
determined pursuant to Rules 13d-3 and 13d-5 under the Exchange Act) by the
holders of the capital stock of EBS immediately prior to such merger and
(b) no person or group (as such terms are used in Section 13(d) of
the Exchange Act) beneficially owning (as determined pursuant to
Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly,
securities having more than 33% of the total voting power of all classes of
capital stock entitled to vote generally in the election of directors of
the surviving corporation; or (v) the Board of Directors of EBS approves a
plan for the liquidation or dissolution of EBS; provided, however, that no
such event shall be deemed a Change in Control if it occurs as part of the
implementation of, and pursuant to the express terms of, a plan of
reorganization of EBS under Chapter 11 of Title 11 of the United States
Code that has been confirmed by the Bankruptcy Court in the Chapter 11
Case, and provided further that two or more entities shall not be deemed to
constitute a person or group for purposes hereof in respect of any
securities of EBS received by them pursuant to such plan of reorganization
merely by virtue of the fact that such entities were each members of the
statutory Creditors' Committee appointed in the Chapter 11 Case.
(d) Chapter 11 Case means the case commenced by EBS on
November 3, 1995 under Chapter 11 of Title 11 of the United States Code in
the United States Bankruptcy Court in Delaware (Case No. 95-1354 (PJW)).
(e) Common Stock means shares of the common stock of EBS, par
value $.01 per share, authorized and issued pursuant to the terms of a plan
of reorganization of EBS under Chapter 11 of the United States Code as
confirmed by the Bankruptcy Court in the Chapter 11 Case.
(f) Effective Date shall have the meaning ascribed to that term
in the Debtors' Amended Joint Plan of Reorganization, dated May 21, 1997,
as such plan may be amended or modified, or such alternative plan of
reorganization as is ultimately confirmed by the Bankruptcy Court.
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 or 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. Taxes: When shares of Restricted Stock are vested or upon your
earlier election pursuant to Section 83(b) of the Internal Revenue Code of
1986, as amended (the Code ), to be taxed at the time of the transfer to
you of the 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. If you do not
elect pursuant to Section 83(b) of the Code to be taxed at the time of the
transfer to you of the shares of the Restricted Stock, then at such time or
times as the shares of Restricted Stock are vested (unless such vesting
occurs pursuant to paragraph 8(a) or 8(b) hereof), EBS shall pay to you in
cash such sum as is necessary (after taking into account all federal, state
and local income taxes payable by you as a result of the receipt of such
sum) to place you in the same after-tax position as you would have been in
if no federal, state or local income taxes were payable by you in respect
of the vesting of such shares of Restricted Stock. EBS may withhold from
such sum such amounts as may be necessary to satisfy federal and state
income tax withholding 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: In the event the Restricted Stock to
be delivered to you is not registered under the Securities Act of 1933, as
amended (the 1933 Act ), 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 if the Restricted Stock to be delivered to you is
not registered under the 1933 Act, on the grounds that the issuance of such
Restricted Stock is exempt from registration under the 1933 Act pursuant to
Section 4(2) thereof, EBS' reliance on such exemption will be 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 thereafter be sold, transferred or
otherwise disposed of without registration under the 1933 Act or an
exemption therefrom.
Very truly yours,
EDISON BROTHERS STORES, INC.
By: _/S/___________________________
Name: Alan D. Miller
Title: Chairman, President and
Chief Executive Officer
Agreed to and accepted
________________________________
[Name of Executive]
EMPLOYMENT TERMINATION AGREEMENT
THIS EMPLOYMENT TERMINATION AGREEMENT (this Agreement ) dated
September 4, 1997 between ALAN D. MILLER, currently residing at 135
Wyckliffe Place, St. Louis, Missouri 63141 ( Employee ), and EDISON
BROTHERS STORES, INC., a Delaware corporation (the Company ).
RECITALS
WHEREAS, in November 1995, the Company, along with 65 of its
affiliates (collectively the Debtors ), filed a petition under Chapter 11
of the United States Bankruptcy Code (the Bankruptcy Code ) in the United
States Bankruptcy Court in Delaware (Case No. 95-1354 (PJW)) (the Chapter
11 Case ) and has since been operating its business as a debtor-in-
possession; and
WHEREAS, Employee has been serving as Chairman of the Board, President
and Chief Executive Officer of the Company since April, 1995 and is
currently serving in such capacity; and
WHEREAS, during his tenure with the Company, Employee's service and
leadership have been critical in significantly increasing the value of the
Company and successfully guiding the Company through the Chapter 11 Case
and its reorganization; and
WHEREAS, on June 30, 1997, the Debtors filed with the Bankruptcy Court
their Amended Joint Plan of Reorganization (as said Plan may be amended or
modified, the Plan of Reorganization ) and expect to emerge from Chapter
11 in September, 1997; and
WHEREAS, the statutory creditors committee appointed in the Chapter 11
Case has expressed its desire that the Company recruit a new Chief
Executive Officer for the Company but has requested that Employee remain in
his current positions with the Company through the Company's emergence from
Chapter 11 and until the commencement of employment of a new Chief
Executive Officer in order to ensure an orderly management transition, and
Employee has agreed to so remain, all on the terms and conditions of this
Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto do hereby agree as follows:
AGREEMENT
1. Resignation. Employee shall resign as Chairman of the Board, a
member of the Board of Directors, President and Chief Executive Officer of
the Company effective upon the commencement of employment of the successor
Chief Executive Officer of the Company (the Termination Date ).
2. Payments and Benefits. Employee shall be entitled to receive the
following payments and benefits:
(a) On the Termination Date the Company shall pay or
cause to be paid to Employee (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 prior to the
Termination Date, plus (iii) any monies owing to Employee in reimbursement
for travel or other business expenses incurred by Employee in the
performance of his duties prior to the Termination Date, plus (iv) any
other amounts earned by or owing to Employee and unpaid as of the
Termination Date.
(b) On the Termination Date the Company shall pay or cause
to be paid to Employee a lump sum cash amount of $1,575,000,
representing Employee's current annual salary, which the parties
acknowledge and agree is Five Hundred Twenty-Five Thousand Dollars
($525,000.00), multiplied by three (3).
(c) On the Termination Date the Company shall pay or cause
to be paid to Employee a lump sum cash amount equal to Seven Hundred
Eighty-Seven Thousand Five Hundred Dollars ($787,500.00), which
represents an aggregate amount equal to Employee's target bonus
under the Company's EBITDA Bonus Plan of Two Hundred Sixty-Two
Thousand Five Hundred Dollars ($262,500.00) for each of fiscal years
1997, 1998 and 1999.
(d) On the Effective Date of the Plan of Reorganization
as that term is defined therein (the Effective Date ) the Company
shall pay or cause to be paid to Employee a lump sum cash bonus equal
to One Million Five Hundred Thousand Dollars ($1,500,000.00)
(representing a performance bonus ).
(e) On September 17, 1997 the Company shall pay or cause to
be paid to Employee a lump sum cash amount equal to Eighty-Seven
Thousand Five Hundred Dollars ($87,500.00) (representing the amount to
be paid to Employee on that date pursuant to Section 3.D of the
Amended and Restated Employment Agreement, dated June 21, 1996,
between the Company and Employee).
(f) The Company acknowledges and agrees that options for
50,000 shares of New Common Stock (as such term is defined in the Plan
of Reorganization) (the Common Stock ) were to have been granted to
Employee pursuant to the Company's 1997 Stock Option Plan. The said
stock options shall not be issued to Employee but instead shall be
reallocated by the Board of Directors of the Company, or any
authorized compensation committee or compensation subcommittee
thereof, to other employees of the Company as such Board or authorized
compensation committee or compensation subcommittee shall determine in
its absolute discretion. The Company shall grant to Employee, as of
the Effective Date, 75,000 shares of Common Stock, which shares shall
be restricted as to transferability (except in the event of Employee's
death) until the latter of the Effective Date or the Termination Date.
In addition, on the Termination Date the Company shall pay or cause to
be paid to Employee a lump sum cash payment in such amount as is
necessary (after taking into account all federal, state and local
income taxes payable by Employee as a result of the receipt of such
sum) to place Employee in the same after-tax position he would have
been in if no federal, state or local income taxes were payable by
Employee in respect of the vesting of such shares. The Company has
caused the aggregate number of shares of Common Stock authorized for
issuance to Management pursuant to Section 9.8 of the Plan of
Reorganization to be increased from 200,000 shares to 225,000 shares
in order to fulfill the Company's obligations pursuant to this Section
2(f).
(g) The Company shall maintain in full force and effect for
Employee's continued benefit, for a period of three years from the
Termination Date, 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 or is otherwise prevented, 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 2(g) shall not be counted towards the benefits
extension period mandated by the Consolidated Omnibus Budget
Reconciliation Act of 1985.
(i) On the Termination Date the Company shall pay or cause to be paid to
Employee all benefits to which Employee would be entitled under the
Company's Pension and Pension Restoration Plans as if his employment had
continued until January 1, 1998, including 100% vesting and payout of
benefits, each with contribution made on behalf of Employee for the year
1997.
3. Tax Indemnity. If any amounts or benefits payable by the Company to
Employee pursuant to this Agreement are determined to be subject to any
excise or similar tax pursuant to Sections 280G and 4999 of the Internal
Revenue Code of 1986, as amended (the IRC ), or any successor or other
comparable federal, state or local tax laws, the Company shall pay to
Employee, at the time such excise or similar tax payments are payable by
Employee, without extension of any returns, such additional sum as is
necessary (after taking into account all federal, state and local income
taxes payable by 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. Employee
hereby agrees to explore with the Company a tax efficient solution to any
potential excise or similar tax payment pursuant to this Section 3. In the
event of a subsequent controversy (including audit, administrative appeal
or litigation) with the Internal Revenue Service (the IRS ), or any state
or local authority with respect to any excise or similar tax pursuant to
Sections 280G and 4999 of the IRC, the Company shall reimburse Employee for
any attorneys' and accounting fees incurred by Employee with respect to
such controversy, and shall make an additional tax gross up payment as
described above if additional excise or similar taxes pursuant to Section
280G and 4999 of the IRC are subsequently determined to be due and payable,
which additional payment shall include reimbursement for any interest
expense and penalties payable to any taxing authority which is attributable
to any increased excise or similar taxes pursuant to Sections 280G and 4999
of the IRC and related attorney's or accountant's fees. If Employee is
subject to an audit by the IRS or any state or local authority, Employee
shall give prompt notice thereof to the Company. In such an event, the
Company shall provide legal representation at audit, administrative appeal
and in litigation on Employee's behalf with respect to any such action with
an attorney reasonably acceptable to Employee; provided, however,
Employee's counsel shall be kept advised of all proceedings and shall be
permitted to participate therein and Employee shall be entitled to
reimbursement as provided above. Notwithstanding the foregoing, no
settlement shall be agreed to with respect to any such audit without the
prior written consent of Employee.
4. Private Letter Ruling.
(a) Without affecting the Company's obligations under
Section 3 hereof, the Company, or such other appropriate party, at the
Company's sole expense, shall submit to the IRS a request for a
private letter ruling (hereinafter the request for private letter
ruling shall be referred to as the PLR Request and the private
letter ruling issued or to be issued in response to the PLR Request
shall be referred to as the PLR ) in a form reasonably acceptable to
Employee substantially to the effect that the payments received under
this Agreement will not constitute amounts that would be subject to
any excise or similar tax pursuant to Sections 280G and 4999 of the
IRC, or any successor or other comparable federal tax laws.
(b) From and after the Termination Date, the Company at its
expense shall obtain and keep in effect (until drawn upon or
terminated as set out below) an irrevocable stand-by letter of credit
(the Letter of Credit ) in a form and amount acceptable to Employee
(including a provision that permits Employee to immediately draw down
on the Letter of Credit if any notice of non-renewal is sent out by
the issuer) which will ensure that amounts will be available to make
any payments to Employee contemplated by Section 3 hereof including
interest and penalties and any other gross up payments contemplated
by this Agreement. Said Letter of Credit shall remain in force and
effect for the period determined as follows:
(i) Upon the receipt of a favorable PLR from the
IRS, with conclusions reasonably acceptable to Employee, the
Letter of Credit shall be terminated.
(ii) Upon the receipt from the IRS of a PLR which
in the Employee's reasonable opinion is adverse or if, prior
to the issuance by the IRS of a PLR, the Company withdraws
the PLR Request, Employee shall either timely file his
individual federal, state and local income tax returns for
the appropriate year (the Employee Returns ) reflecting the
excise tax of Sections 280G and 4999 of the IRC (or
comparable state or local statutes or ordinances, as
appropriate) as payable, or, if Employee Returns have been
filed reflecting no such excise tax payable, said Employee
Returns shall be amended to reflect the amount as payable,
and Employee shall pay the appropriate excise taxes,
interest and penalties, and Employee immediately shall draw
down on the Letter of Credit in an amount sufficient to pay
the amount Employee is entitled to receive pursuant to
Section 3 hereof.
(iii) If the IRS informs the Company that it will
not issue a PLR with respect to all of the matters presented
in the PLR Request, Employee agrees that he will file, or
shall have filed, his Employee Returns reflecting the
amounts in issue as not being subject to the excise or
similar tax pursuant to Sections 280G and 4999 of the IRC
(or comparable state or local statutes or ordinances, as
appropriate) and the said Letter of Credit shall remain in
effect. If, at the expiration of time (including
extensions) during which said excise tax can be assessed by
the IRS against Employee, the IRS has not begun, or sent to
Employee a notice that it intends to begin, an audit of
Employee's individual federal income tax return for the year
during which said excise tax would be payable, the Letter of
Credit shall be terminated. If, however, prior to the
expiration of time (including extensions) during which said
excise tax can be assessed by the IRS against Employee, an
audit by the IRS has begun, or Employee has received a
notice from the IRS that it intends to begin an audit, for
the applicable year, the Letter of Credit shall remain in
effect (a) until the closing of the audit by the IRS with no
adjustment with respect to the excise tax in issue at which
time the Letter of Credit shall be terminated by the Company
or (b) after the closing of the audit by the IRS at any
administrative level with an adjustment with respect to the
applicable excise which is (i) agreed to by the Company and
Employee or (ii) unagreed to by Company and Employee and the
IRS issues a statutory notice of deficiency pursuant to
Section 6212 of the IRC. Upon the occurrence of clause (i)
or (ii) above, Employee shall pay the amount of the
adjustment and shall draw down on the Letter of Credit in an
amount sufficient to pay the amount Employee is entitled to
receive pursuant to Section 3 hereof.
(iv) If Employee pays the excise tax in issue
pursuant to Section 4(b)(ii) or 4(b)(iii)(b), and if the
Company requests in writing, Employee, at Company's expense,
promptly shall file a claim for refund for the full amount
of the applicable excise taxes and the Company may pursue
said claim for refund at the Company's sole expense on
Employee's behalf. Employee agrees to cooperate with the
Company in any such effort. If a refund is received by
Employee, Employee shall promptly forward said refund to
Company.
5. Employee's Outplacement Expenses. The Company shall reimburse
Employee for any out-of-pocket costs and expenses actually incurred by
Employee for outplacement services in an aggregate amount not to exceed
Twenty Five Thousand Dollars ($25,000.00). For purposes of this Section 5,
outplacement services shall be broadly defined and liberally construed.
6. Employee's Attorney's Fees. The Company shall reimburse Employee
for any reasonable attorney's fees and expenses actually incurred by
Employee in connection with the implementation of this Agreement and the
terms and conditions hereof; provided, however, that the amount to be
reimbursed by the Company under this Section 6 shall in no event exceed
Fifteen Thousand Dollars ($15,000.00).
7. The Company's Release and Indemnification.
(a) The Company, on its own behalf and on behalf of its
subsidiaries, hereby releases, acquits, and forever discharges
Employee from any and all claims, demands, actions, causes of action
and liabilities, whether known or unknown, absolute or contingent,
presently existing or hereafter discovered, that the Company may now
have or that might subsequently accrue to the Company against Employee
arising out of or related to Employee's service as an employee,
officer or director of the Company. Except for the Avoidance Claims
as referenced in Section 7.2(ii) of the Plan of Reorganization, which
are not released hereunder, to the extent this release and the release
set out in section 7.2 of the Plan of Reorganization are not
consistent, the language which grants the broadest release to Employee
shall control.
(b) The Company shall provide Employee with coverage under
a directors and officers liability insurance policy, with tail
coverage, with respect to actions of Employee as an officer or
director of the Company occurring prior to the Termination Date, in an
amount equal to or greater than that regularly carried on behalf of
other officers and directors of the Company and reasonably acceptable
to Employee.
(c) The Company shall indemnify, defend and hold harmless
Employee against all losses, expenses, damages, and liabilities
incurred in connection with any claims by anyone against Employee with
respect to his duties or actions as an employee, officer or director
of the Company prior to the Termination Date.
8. Employee's Release. Employee hereby releases, acquits, and
forever discharges the Company and the past, present and future directors,
shareholders, officers, employees, agents, attorneys, representatives and
affiliates of the Company, from any and all claims, demands, actions,
causes of action and liabilities, whether known or unknown, absolute or
contingent, presently existing or hereafter discovered, other than claims
or other actions or proceedings under or related to this Agreement, that
Employee may now have or that might subsequently accrue to Employee against
such parties arising out of or related to Employee's service as an
employee, officer or director of the Company.
9. 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 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.
10. 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.
11. 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.
12. Entire Agreement. This instrument constitutes the entire
agreement of the parties with respect to the subject matter hereof and
shall supersede any other agreement between the parties, oral or written,
concerning the same subject matter, except as otherwise expressly provided
herein.
13. 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.
14. 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.
The parties (a) agree that any action, suit or other proceeding initiated
by either party pursuant to or in connection with this Agreement shall be
brought in a State or Federal court situated in the City or County of St.
Louis, Missouri, and (b) irrevocably submit to the jurisdiction of any such
court in any such action, suit or proceeding.
15. Binding Effect and Assignment. The rights and obligations under
this Agreement shall inure to and be binding on the Company and its
respective successors and assigns and the rights and obligations under this
Agreement shall inure to and be binding upon Employee and his legal
representatives, legatees and heirs. This Agreement may not be assigned by
either party hereto without the prior written consent of the other party.
16. Further Assurances. The parties hereto agree to execute and
deliver such further instruments and documents as may be reasonably
necessary in order to fully effectuate the purpose and intent of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
Alan D. Miller, Employee
EDISON BROTHERS STORES, INC.,
on its own behalf and on
behalf of its subsidiaries
By:
Title:
By:
Title:
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the Agreement ) dated September 4, 1997
between ______________________, currently residing at
_________________________________ ( Employee ), and Edison Brothers
Stores, Inc., a Delaware corporation (the Company ), replacing and
superseding the Amended and Restated Employment Agreement dated June 21,
1996 between Employee and the Company.
WHEREAS, in November 1995, the Company, along with 65 of its
subsidiaries, filed a petition for reorganization under Chapter 11 of the
United States Bankruptcy Code in the United States Bankruptcy Court in
Delaware (Case No. 95-1354 (PJW)) and has since been operating its business
as a debtor-in-possession; and
WHEREAS, the Company has filed a plan of reorganization and expects to
emerge from Chapter 11 later this month; and
WHEREAS, in order to assure the continued availability of the services
of Employee after the Company's emergence from Chapter 11, the Company
wishes to extend the term of and otherwise modify the Amended and Restated
Employment Agreement dated June 21, 1996 between Employee and the Company;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained herein, the parties hereto agree as follows:
1. Effective Date. This Agreement shall take effect as of the
effective date as that term is defined in the Debtors' Amended Joint Plan
of Reorganization, dated June 30, 1997, as such plan may be amended or
modified, or such alternative plan of reorganization as is ultimately
confirmed by the Bankruptcy Court (the Commencement Date ).
2. 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 (the
Employment Term ) beginning on the Commencement Date. The Employment Term
may be extended by mutual written agreement of the parties or terminated
pursuant to the provisions of Section 5 or Section 6 hereof. In the event
a Change in Control (as hereinafter defined) occurs less than eighteen
months before the end of the Employment Term and at a time when Employee is
still employed hereunder, the Employment Term shall be extended for a
period ending eighteen months after the date of occurrence of the Change in
Control.
3. 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.
4. 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 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 6 and 7 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, Stock Options and Restricted Stock. In recognition of
Employee's contributions to the Company's restructuring efforts, Employee
shall be entitled to receive a lump sum cash bonus of $__________, payable
on the Commencement Date. Employee shall also be eligible for such other
bonus payments and shall be granted such shares of common stock of the
Company and/or options to purchase common stock of the Company on such
terms and in such amounts 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 (as hereinafter defined), except as
otherwise provided herein or in any applicable employee benefit plan or
program.
5. Termination of Employment of Employee by the Company.
(a) Employee's employment may be terminated by the Company for
Cause (as hereinafter defined) upon following the procedures
hereinafter specified. Employee may not be terminated for Cause
unless and until the Board of Directors of the Company finds that
termination of Employee for Cause is justified. Termination of
Employee's employment for Cause shall become effective after such
finding has been made by the Board and upon the giving to Employee of
a written notice of termination, specifying in detail the particulars
of the conduct of Employee found by the Board to justify such
termination for Cause.
(b) Employee's employment may be terminated by the Company
Without Cause (as hereinafter defined) 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 7 of this Agreement. Upon a termination
by the Company of Employee's employment Without Cause, Employee shall
be entitled to the payments and benefits specified in subparagraphs
(a), (b), (c) and (d) of Section 7 of this Agreement.
(d) Employee's employment may be terminated by the Company for
Disability (as hereinafter defined), effective upon the giving to
Employee of a written notice of termination specifying that such
termination is for Disability. Upon a termination of Employee's
employment for Disability, Employee shall be entitled to the payments
specified in subparagraph (a) of Section 7 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 impairment (a
Disability Period ), Employee shall continue to receive the
compensation and benefits provided for in Section 4 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.
6. Termination of Employment by Employee. Employee shall be entitled
to terminate his employment with the Company at any time. If such
termination is for other than Good Reason (as hereinafter defined),
Employee shall be entitled to the payments specified in subparagraph (a) of
Section 7. If such termination is for Good Reason, Employee shall be
entitled to the payments and benefits specified in subparagraphs (a), (b),
(c) and (d) of Section 7. 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.
7. Payments and Benefits Upon Termination. To the extent provided in
Sections 5 and 6 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 Commencement Date 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 pay to Employee on the Termination Date a
lump sum cash amount equal to 1/12 of Employee's target bonus for
the then-current fiscal year under the Company's Executive Performance-
Based Bonus Plan (or any replacement or successor plan then in
effect), multiplied by the greater of (i) twelve or (ii) the number of
months (including partial months) remaining until the Completion Date.
(d) 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 7(d) shall not be
counted towards the benefits extension period mandated by the
Consolidated Omnibus Budget Reconciliation Act of 1985.
Employee shall not be required to mitigate the amount of any payment
provided for in this Section 7 by seeking other employment or otherwise,
nor shall the amount of any payment provided for in this Section 7 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.
8. 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 (including, without limitation, any
stock options issued to Employee under the Company's 1997 Stock Option Plan
and any restricted stock agreement between the Company and Employee) are
determined to be subject to an excise or similar tax pursuant to
Sections 280G and 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.
9. Employee's Expenses. All costs and expenses (including reasonable
legal and accounting fees) incurred by Employee (a) to defend the validity
of this Agreement, (b) if Employee's employment has been terminated by the
Company for Cause, to contest such termination, (c) to contest any
determinations by the Company concerning the amounts payable by the Company
under this Agreement or (d) to otherwise obtain or enforce any right or
benefit provided to Employee by this Agreement (including, without
limitation, any right or benefit under this Section 9), shall be paid by
the Company unless it is expressly found by a court of competent
jurisdiction that the actions of Employee pursuant to subparts (a), (b),
(c) and/or (d) of this Section 9 (whichever is applicable) were taken in
bad faith or without a reasonable basis.
10. 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.
11. 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: Chief Executive Officer
(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.
12. 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 (other than any
such failure resulting from his Disability), 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 willful misconduct which is
materially injurious to the Company; (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. For purposes of this definition, no act, or failure to
act, on Employee's part shall be considered willful unless done,
or omitted to be done, by Employee in bad faith and without reasonable
belief that his action or omission was in the best interests of the
Company.
(b) Change in Control shall mean the occurrence of any of the
following events:
(i) any person or group (as such terms are used in
Section 13(d) of the Securities Exchange Act of 1934, as amended
(the Exchange Act )) becomes the beneficial owner (as
determined pursuant to Rules 13d-3 and 13d-5 promulgated under
the Exchange Act), directly or indirectly, of securities of the
Company having more than 33% of the total voting power of all
classes of capital stock of the Company entitled to vote
generally in the election of directors of the Company; or
(ii) at any time during any 24-month period, individuals who
at the beginning of such period constituted the Board of
Directors of the Company (together with any new directors whose
election, or nomination for election by the stockholders of the
Company, to the Board of Directors was approved by a majority of
the directors then still in office who either were directors at
the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of the Company
then in office; or
(iii) the sale, lease, transfer or other disposition of all
or substantially all of the assets of the Company, in one
transaction or a series of related transactions, to any person
or group (as such terms are used in Section 13(d) of the
Exchange Act) other than a wholly-owned subsidiary of the
Company; or
(iv) the merger or consolidation of the Company with or into
another corporation, unless immediately after such merger or
consolidation (a) securities having more than 50% of the total
voting power of all classes of capital stock entitled to vote
generally in the election of directors of the surviving or
resulting corporation are then beneficially owned (as
determined pursuant to Rules 13d-3 and 13d-5 under the Exchange
Act) by the holders of the capital stock of the Company
immediately prior to such merger or consolidation, and (b) no
person or group (as such terms are used in Section 13(d) of
the Exchange Act) beneficially owns (as determined pursuant
to Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, securities having more than 33% of the total voting
power of all classes of capital stock entitled to vote generally
in the election of directors of the surviving or resulting
corporation; or
(v) the Company is liquidated or dissolved or adopts a plan
of liquidation or dissolution;
provided, however, that no such event shall be deemed a Change in
Control if it occurs as part of the implementation of, and pursuant to
the express terms of, a plan of reorganization of the Company that has
been confirmed by the Bankruptcy Court in the Company's Chapter 11
case, and provided further that two or more entities shall not be
deemed to constitute a person or group for purposes of this
Section 12 in respect of any securities of the Company received by
them pursuant to such plan of reorganization merely by virtue of the
fact that such entities were each members of the statutory Creditors'
Committee appointed in the Company's Chapter 11 case.
(c) Company shall have the definition set forth in Section 13
hereof.
(d) Completion Date shall mean the date the Employment Term
would have ended under the provisions of Section 2 hereof had it not
been terminated pursuant to Section 5 or Section 6.
(e) Disability shall mean Employee's inability to perform the
duties of Employee's position with the Company by reason of a
medically determined physical or mental impairment which has existed
for a continuous period of at least 26 weeks and which, in the
judgment of a physician who certifies to such judgment, is expected to
be of indefinite duration or to result in imminent death.
(f) Good Reason, when used with reference to a voluntary
termination by Employee of his employment with the Company prior to
the occurrence of a Change in Control, shall mean:
(i) a reduction in Employee's base salary as in effect on
the Commencement Date or as the same may be increased from time
to time;
(ii) the assignment to Employee of any duties materially
inconsistent with his status as an executive of the Company; or
(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 as of the Commencement Date;
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) a reduction in Employee's base salary as in effect on
the Commencement Date or as the same may be increased from time
to time;
(ii) 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;
(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 per annum
to which Employee was entitled immediately prior to the Change in
Control; or
(v) any purported termination of Employee's employment by
the Company which is not effected pursuant to the requirements of
this Agreement.
(g) Termination Date shall mean the effective date as
provided hereunder of the termination of Employee's employment.
(h) 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 or for Disability.
13. 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 13(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.
14. 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.
15. 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.
16. 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.
17. 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.
18. Entire Agreement. This instrument constitutes the entire
agreement of the parties in this matter and as of the Commencement Date
shall supersede any other agreement between the parties, oral or written,
concerning the same subject matter, including the Amended and Restated
Employment Agreement dated June 21, 1996 between the Company and Employee;
provided that, this Agreement shall not affect or supersede any rights
Employee may have under any incentive bonus, stock option, restricted
stock, pension, medical, dental, life insurance or any other employee
benefit plan, program or arrangement sponsored or maintained by the
Company.
19. 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.
20. 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.
21. 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 eighteen months
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 the payments and benefits
specified in subparagraphs (a), (b), (c) and (d) of Section 7 of this
Agreement. For purposes hereof, the term Completion Date as used in
Section 7 shall be deemed to be the last day of such eighteen-month period.
22. 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: Alan D. Miller
Title: Chairman, President
and Chief Executive
Officer
_______________________________
[name of employee]
Schedule to Exhibit 10.6
One executive's employment agreement differs from the form of
agreement attached as Exhibit 10.6 in the following respects:
1. Section 5(b) of such agreement reads as follows:
(b) Employee's employment may be terminated by the Company Without Cause
(as hereinafter defined) at any time, effective upon the giving to
Employee of a written notice of termination specifying that such
termination is Without Cause, provided that if such termination is to
be effective before April 1, 1998, the Company's notice to Employee
must be given not less than sixty (60) days prior to the effective
date of such termination.
2. Section 6 of such agreement contains the following provision:
Notwithstanding the other provisions of this Section 6, if Employee gives
the Company at least ten (10) days prior written notice that such
termination is to be effective on April 1, 1998, whether such
termination is for Good Reason or for other than Good Reason, then
Employee shall be entitled to the payments and benefits specified in
subparagraphs (a), (b), (c) and (d) of Section 7.
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the Agreement ) dated September 4, 1997
between ______________________, currently residing at
_________________________________ ( Employee ), and Edison Brothers
Stores, Inc., a Delaware corporation (the Company ), replacing and
superseding the Amended and Restated Employment Agreement dated June 21,
1996 between Employee and the Company.
WHEREAS, in November 1995, the Company, along with 65 of its
subsidiaries, filed a petition for reorganization under Chapter 11 of the
United States Bankruptcy Code in the United States Bankruptcy Court in
Delaware (Case No. 95-1354 (PJW)) and has since been operating its business
as a debtor-in-possession; and
WHEREAS, the Company has filed a plan of reorganization and expects to
emerge from Chapter 11 later this month; and
WHEREAS, in order to assure the continued availability of the services
of Employee after the Company's emergence from Chapter 11, the Company
wishes to extend the term of and otherwise modify the Amended and Restated
Employment Agreement dated June 21, 1996 between Employee and the Company;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained herein, the parties hereto agree as follows:
1. Effective Date. This Agreement shall take effect as of the
effective date as that term is defined in the Debtors' Amended Joint Plan
of Reorganization, dated June 30, 1997, as such plan may be amended or
modified, or such alternative plan of reorganization as is ultimately
confirmed by the Bankruptcy Court (the Commencement Date).
2. 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 (the
Employment Term ) beginning on the Commencement Date. The Employment Term
may be extended by mutual written agreement of the parties or terminated
pursuant to the provisions of Section 5 or Section 6 hereof. In the event
a Change in Control (as hereinafter defined) occurs less than eighteen
months before the end of the Employment Term and at a time when Employee is
still employed hereunder, the Employment Term shall be extended for a
period ending eighteen months after the date of occurrence of the Change in
Control.
3. 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.
4. 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 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 6 and 7 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, Stock Options and Restricted Stock. In recognition of
Employee's contributions to the Company's restructuring efforts, Employee
shall be entitled to receive a lump sum cash bonus of $__________, payable
on ____________________, or such earlier date following the Commencement
Date as there occurs a Change in Control (the Bonus Date ), provided
that Employee is still in the employ of the Company as of that date.
Notwithstanding the foregoing, if prior to the Bonus Date, 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 such bonus shall be paid to Employee on the Termination Date
(as hereinafter defined). Employee shall also be eligible for such other
bonus payments and shall be granted such shares of common stock of the
Company and/or options to purchase common stock of the Company on such
terms and in such amounts 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.
5. Termination of Employment of Employee by the Company.
(a) Employee's employment may be terminated by the Company for
Cause (as hereinafter defined) upon following the procedures
hereinafter specified. Employee may not be terminated for Cause
unless and until the Board of Directors of the Company finds that
termination of Employee for Cause is justified. Termination of
Employee's employment for Cause shall become effective after such
finding has been made by the Board and upon the giving to Employee of
a written notice of termination, specifying in detail the particulars
of the conduct of Employee found by the Board 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 7 of this Agreement. Upon a termination
by the Company of Employee's employment Without Cause, Employee shall
be entitled to the payments and benefits specified in subparagraphs
(a), (b), (c) and (d) of Section 7 of this Agreement.
(d) Employee's employment may be terminated by the Company for
Disability (as hereinafter defined), effective upon the giving to
Employee of a written notice of termination specifying that such
termination is for Disability. Upon a termination of Employee's
employment for Disability, Employee shall be entitled to the payments
specified in subparagraph (a) of Section 7 of this Agreement. During
any period that Employee fails to perform Employee's duties hereunder
s a result of incapacity due to physical or mental impairment (a
Disability Period ), Employee shall continue to receive the
compensation and benefits provided for in Section 4 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.
6. Termination of Employment by Employee. Employee shall be entitled
to terminate his employment with the Company at any time. If such
termination is for other than Good Reason, Employee shall be entitled to
the payments specified in subparagraph (a) of Section 7. If such
termination is for Good Reason, Employee shall be entitled to the payments
and benefits specified in subparagraphs (a), (b), (c) and (d) of Section 7.
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.
7. Payments and Benefits Upon Termination. To the extent provided in
Sections 5 and 6 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 Commencement Date 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 pay to Employee on the Termination Date a
lump sum cash amount equal to 1/12 of Employee's target bonus for
the then-current fiscal year under the Company's Executive Performance-
Based Bonus Plan (or any replacement or successor plan then in
effect), multiplied by the greater of (i) twelve or (ii) the number of
months (including partial months) remaining until the Completion Date.
(d) 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 7(d) shall not be
counted towards the benefits extension period mandated by the
Consolidated Omnibus Budget Reconciliation Act of 1985.
Employee shall not be required to mitigate the amount of any payment
provided for in this Section 7 by seeking other employment or otherwise,
nor shall the amount of any payment provided for in this Section 7 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.
8. 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 (including, without limitation, any
stock options issued to Employee under the Company's 1997 Stock Option Plan
and any restricted stock agreement between the Company and Employee) are
determined to be subject to an excise or similar tax pursuant to
Sections 280G and 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.
9. Employee's Expenses. All costs and expenses (including reasonable
legal and accounting fees) incurred by Employee (a) to defend the validity
of this Agreement, (b) if Employee's employment has been terminated by the
Company for Cause, to contest such termination, (c) to contest any
determinations by the Company concerning the amounts payable by the Company
under this Agreement or (d) to otherwise obtain or enforce any right or
benefit provided to Employee by this Agreement (including, without
limitation, any right or benefit under this Section 9), shall be paid by
the Company unless it is expressly found by a court of competent
jurisdiction that the actions of Employee pursuant to subparts (a), (b),
(c) and/or (d) of this Section 9 (whichever is applicable) were taken in
bad faith or without a reasonable basis.
10. 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.
11. 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: Chief Executive Officer
(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.
12. 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 (other than any
such failure resulting from his Disability), 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 willful misconduct which is
materially injurious to the Company; (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. For purposes of this definition, no act, or failure to
act, on Employee's part shall be considered willful unless done,
or omitted to be done, by Employee in bad faith and without reasonable
belief that his action or omission was in the best interests of the
Company.
(b) Change in Control shall mean the occurrence of any of the
following events:
(i) any person or group (as such terms are used in
Section 13(d) of the Securities Exchange Act of 1934, as amended
(the Exchange Act )) becomes the beneficial owner (as
determined pursuant to Rules 13d-3 and 13d-5 promulgated under
the Exchange Act), directly or indirectly, of securities of the
Company having more than 33% of the total voting power of all
classes of capital stock of the Company entitled to vote
generally in the election of directors of the Company; or
(ii) at any time during any 24-month period, individuals who
at the beginning of such period constituted the Board of
Directors of the Company (together with any new directors whose
election, or nomination for election by the stockholders of the
Company, to the Board of Directors was approved by a majority of
the directors then still in office who either were directors at
the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of the Company
then in office; or
(iii) the sale, lease, transfer or other disposition of all
or substantially all of the assets of the Company, in one
transaction or a series of related transactions, to any person
or group (as such terms are used in Section 13(d) of the
Exchange Act) other than a wholly-owned subsidiary of the
Company; or
(iv) the merger or consolidation of the Company with or into
another corporation, unless immediately after such merger or
consolidation (a) securities having more than 50% of the total
voting power of all classes of capital stock entitled to vote
generally in the election of directors of the surviving or
resulting corporation are then beneficially owned (as
determined pursuant to Rules 13d-3 and 13d-5 under the Exchange
Act) by the holders of the capital stock of the Company
immediately prior to such merger or consolidation, and (b) no
person or group (as such terms are used in Section 13(d) of
the Exchange Act) beneficially owns (as determined pursuant
to Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, securities having more than 33% of the total voting
power of all classes of capital stock entitled to vote generally
in the election of directors of the surviving or resulting
corporation; or
(v) the Company is liquidated or dissolved or adopts a plan
of liquidation or dissolution;
provided, however, that no such event shall be deemed a Change in
Control if it occurs as part of the implementation of, and pursuant to
the express terms of, a plan of reorganization of the Company that has
been confirmed by the Bankruptcy Court in the Company's Chapter 11
case, and provided further that two or more entities shall not be
deemed to constitute a person or group for purposes of this
Section 12 in respect of any securities of the Company received by
them pursuant to such plan of reorganization merely by virtue of the
fact that such entities were each members of the statutory Creditors'
Committee appointed in the Company's Chapter 11 case.
(c) Company shall have the definition set forth in Section 13
hereof.
(d) Completion Date shall mean the date the Employment Term
would have ended under the provisions of Section 2 hereof had it not
been terminated pursuant to Section 5 or Section 6.
(e) Disability shall mean Employee's inability to perform the
duties of Employee's position with the Company by reason of a
medically determined physical or mental impairment which has existed
for a continuous period of at least 26 weeks and which, in the
judgment of a physician who certifies to such judgment, is expected to
be of indefinite duration or to result in imminent death.
(f) Good Reason, when used with reference to a voluntary
termination by Employee of his employment with the Company prior to
the occurrence of a Change in Control, shall mean:
(i) a reduction in Employee's base salary as in effect on
the Commencement Date or as the same may be increased from time
to time;
(ii) the assignment to Employee of any duties materially
inconsistent with his status as an executive of the Company; or
(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 as of the Commencement Date;
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) a reduction in Employee's base salary as in effect on
the Commencement Date or as the same may be increased from time
to time;
(ii) 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;
(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 per annum
to which Employee was entitled immediately prior to the Change in
Control; or
(v) any purported termination of Employee's employment by
the Company which is not effected pursuant to the requirements of
this Agreement.
(g) Termination Date shall mean the effective date as
provided hereunder of the termination of Employee's employment.
(h) 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 or for Disability.
13. 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 13(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.
14. 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.
15. 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.
16. 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.
17. 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.
18. Entire Agreement. This instrument constitutes the entire
agreement of the parties in this matter and as of the Commencement Date
shall supersede any other agreement between the parties, oral or written,
concerning the same subject matter, including the Amended and Restated
Employment Agreement dated June 21, 1996 between the Company and Employee;
provided that, this Agreement shall not affect or supersede any rights
Employee may have under any incentive bonus, stock option, restricted
stock, pension, medical, dental, life insurance or any other employee
benefit plan, program or arrangement sponsored or maintained by the
Company.
19. 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.
20. 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.
21. 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 eighteen months
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 the payments and benefits
specified in subparagraphs (a), (b), (c) and (d) of Section 7 of this
Agreement. For purposes hereof, the term Completion Date as used in
Section 7 shall be deemed to be the last day of such eighteen-month period.
22. 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: Alan D. Miller
Title: Chairman, President
and Chief Executive
Officer
_______________________________
[name of employee]
Schedule to Exhibit 10.7
One executive's employment agreement differs from the form of agreement
attached as Exhibit 10.7 in the following respects:
1. In Section 2 of such agreement, the Employment Term is defined as
a three-year period beginning on the Commencement Date rather than a two-
year period.
2. Sections 7(b) and 7(c) of such agreement read as follows:
(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 Commencement Date and the Termination
Date multiplied by thirty-six.
(c) The Company shall pay to Employee on the Termination Date a lump
sum cash amount equal to 1/12 of Employee's target bonus for the
then-current fiscal year under the Company's Executive Performance-
Based Bonus Plan (or any replacement or successor plan then in
effect), multiplied by thirty-six.
3. Section 21 of such agreement reads as follows:
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 eighteen
months 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
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 Commencement Date and the
Termination Date multiplied by the greater of (i) twelve or (ii) the
number of months remaining until the Completion Date, including
partial months.
(c) The Company shall pay to Employee on the Termination Date a
lump sum cash amount equal to 1/12 of Employee's target bonus for
the then-current fiscal year under the Company's Executive Performance-
Based Bonus Plan (or any replacement or successor plan then in
effect), multiplied by the greater of (i) twelve or (ii) the number of
months (including partial months) remaining until the Completion Date.
(d) 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 21(d) shall not be
counted towards the benefits extension period mandated by the
Consolidated Omnibus Budget Reconciliation Act of 1985.
Employee shall not be required to mitigate the amount of any payment
provided for in this Section 21 by seeking other employment or
otherwise, nor shall the amount of any payment provided for in this
Section 21 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. For purposes hereof, the
term Completion Date as used in this Section 21 shall be deemed to
be the last day of such eighteen-month period.
LEASE
TABLE OF CONTENTS
SECTION PAGE
I. BASIC LEASE PROVISIONS 1
II. LEASE OF PREMISES: 2
III. RIGHT OF FIRST REFUSAL 4
IV. PARTIAL SURRENDER 4
V. RENT 4
VI. UTILITIES AND SERVICES 8
VII. USE 10
VIII.INSURANCE 10
IX. REPAIRS AND MAINTENANCE; ALTERATIONS 11
X. MECHANICS LIENS 12
XI. OPTION TO EXTEND 13
XII. DEFAULTS OF TENANT 15
XIII.DESTRUCTION AND RESTORATION 17
XIV. CONDEMNATION 17
XV. ASSIGNMENT AND SUBLETTING 18
XVI. SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT 19
XVII.LANDLORD'S ACCESS 19
XVIII.SURRENDER AND HOLDING-OVER 20
XIX. HAZARDOUS AND TOXIC MATERIALS 20
XX. DEFAULTS BY LANDLORD 22
XXI. ATTORNEYS' FEES 22
XXII.FORCE MAJEURE 22
XXIIIMISCELLANEOUS PROVISIONS 22
LEASE
I. BASIC LEASE PROVISIONS
I. DATE OF LEASE: _________,19 .
J. LANDLORD (hereafter referred to as Landlord ):
EBS Building, L.L.C.
K. TENANT (hereafter referred to as Tenant ):
Edison Brothers Stores, Inc.
501 North Broadway
St. Louis, Missouri 63102
L. BUILDING:
501 North Broadway
St. Louis, Missouri 63102
M. PREMISES: 260,060 square feet (hereinafter referred to as
the Rentable Area of the Premises ) located on Floors 1 through
7 of the Building (more particularly shown on Exhibit A
attached hereto); plus a 1st Floor mezzanine area containing
approximately 9,421 square feet and a 2nd Floor mezzanine area
containing approximately 3,587 square feet, which areas will be
included as part of the Premises but not included in the Rentable
Area of the Premises. The Premises contain approximately
273,068 square feet located as follows:
Floor 1 34,065 square feet
Floor 1 (mezzanine) 9,421 square feet
Floor 2 25,187 square feet
Floor 2 (mezzanine) 3,587 square feet
Floor 3 46,008 square feet
Floor 4 46,008 square feet
Floor 5 46,008 square feet
Floor 6 31,392 square feet
Floor 7 31,392 square feet
273,068 square feet
N. COMMENCEMENT DATE: The date (hereinafter referred to as the
Commencement Date ) on which Landlord first holds fee simple
title to the Building.
O. LEASE YEAR: A period of twelve consecutive calendar months,
the first Lease Year beginning on the Commencement Date and
extending through the last day of the twelfth (12th) full
calendar month following the Commencement Date. Subsequent Lease
Years will expire on the anniversary date of the first Lease
Year. If the Commencement Date occurs on the first day of a
month, the month in which such Commencement Date occurs will be
the first full calendar month of the first Lease Year. If the
Commencement Date occurs on other than the first day of a month,
the month following the month in which the Commencement Date
occurs will be the first full calendar month of the first Lease
Year.
P. LEASE TERM: The term of this Lease (hereinafter referred to
as the Lease Term ) will commence on the Commencement Date and
will expire at midnight on the last day of the third (3rd) Lease
Year (hereinafter referred to as the Expiration Date ).
Q. ANNUAL BASE RENT: $9.00 per square foot of Rentable Area of
the Premises per year during Lease Years 1-3 of the Lease Term.
R. TENANT'S PRO RATA SHARE: Tenant's Pro Rata Share as used
in this Lease shall mean fifty-nine and eight-tenths percent
(59.8%) , which is the quotient (expressed as a percentage)
derived by dividing the Rentable Area of the Premises (260,060
square feet) by the Rentable Area of the Building (434,136 square
feet).
S. COMMON AREAS: Those portions of the Building intended for
use in common by Landlord, Tenant, the other tenants of the
Building and the employees, agents, concessionaires, vendors,
customers and invitees of each of them, such Common Areas to
include the portions of Floors 1 and 2 shown outlined in red on
Exhibit B attached hereto and, with respect to the other Floors
of the Building that are not occupied entirely by one (1) tenant,
the elevator lobby, toilet rooms, mechanical rooms, common
stairwells and common hallways on each such Floor.
T. EXHIBITS:
1. EXHIBIT A: Floor plans
depicting Floors 1 through 7 of the Building
and indicating the Rentable Floor Area on
each Floor.
2. EXHIBIT B: Floor plans
depicting Floors 1 and 2 of the Building and
showing the Common Areas on each Floor
outlined in red, the Meeting and Media Areas
crosshatched in green and the Atrium cross-
hatched in blue.
3. EXHIBIT C: A plan showing
the St. Louis Centre Access Area outlined
in red.
4. EXHIBIT D: Floor plans
depicting levels B-l and B-2 of the
Building's parking garage.
5. EXHIBIT E: Building Rules
and Regulations.
6. EXHIBIT F: A plan showing
the 11th Floor conference area.
II. LEASE OF PREMISES:
For and in consideration of the rental and of the covenants and
agreements hereinafter set forth to be kept and performed by Landlord and
Tenant, Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord the premises as described in Section I.E. (referred to herein as
the Premises ) which are contained in the building (which, together with
the land on which such building is located and all appurtenances thereto,
is referred to herein as the Building ) located at 501 North Broadway,
St. Louis, Missouri, for the term and upon the conditions provided in this
Lease.
Tenant has taken possession of the Premises and is conclusively deemed
to have accepted the Premises in the condition existing on the Commencement
Date and to have waived all claims against Landlord relating to the
condition of the Premises and the Building on the Commencement Date.
Landlord hereby waives all claims against Tenant relating to the condition
of the Premises and the Building on the Commencement Date. No agreement of
Landlord or Tenant to alter, remodel, decorate, clean or improve the
Premises or the Building and no representation regarding the condition of
the Premises or the Building has been made by or on behalf of Landlord or
Tenant, except as stated in this Lease.
The Rentable Area of the Premises shall be as stated in Section I.E.
In the event the Rentable Area of the Premises is hereafter expanded or
reduced so as to be more or less than the area described in Section I.E.
the Annual Base Rent shall be proportionately adjusted on the basis of the
per square foot Annual Base Rent as set forth in Section I.I.
The Common Areas shown outlined in red on Exhibit B hereto, as
well as the Common Areas located on other Floors of the Building, will be
provided and maintained by Landlord during the Lease Term as areas for use
by Tenant in common with Landlord, the other tenants or occupants of the
Building and the employees, agents, concessionaires, vendors, customers and
invitees of each of them and Tenant is hereby granted the non-exclusive
right to use and enjoy all such Common Areas in and around the Building
during the Lease Term. The Common Areas, including the Meeting and Media
Areas and the Atrium, will continue during the Lease Term to be used for
the same purposes and in the same manner as those areas are being used at
the date of this Lease.
Tenant shall have the exclusive right to conduct special events ,
such as rallies, meetings, fashion shows, special sales and promotions,
receptions, parties and luncheons in the Atrium from time to time as Tenant
deems appropriate. Tenant shall be permitted to decorate the Atrium as
Tenant sees fit for any such special event, but Tenant shall be responsible
for removing such decorations and restoring the Atrium to its customary
configuration and condition immediately following any such special event.
No other person or entity will be permitted to use or control the Atrium to
the exclusion of Tenant and, except for Tenant's special events, the Atrium
will be maintained at all times by Landlord in a manner that will minimize
noise or other interruptions of or distractions from the business being
conducted by Tenant in the Premises.
The personal property located in and/or serving the Atrium and the
Meeting and Media Areas will continue to be owned and maintained by Tenant.
Such property includes, without limitation, tables, chairs, benches, plants
and other decorative items, cooking equipment and utensils, electronic and
audio-visual equipment. Tenant may remove or replace any such property or
equipment at any time.
No modification, alteration or addition to the Common Areas of the
Building will be permitted without the advance written consent of Tenant,
which consent will not be unreasonably withheld.
No change in the decor or ambiance of the Atrium or Meeting and Media
Areas will be permitted without the advance written consent of Tenant,
which consent will not be unreasonably withheld.
Scheduling of the use of the Meeting and Media Areas will remain under
the control of Tenant during the Lease Term. Tenant will use reasonable
efforts to accommodate the needs of Landlord and the other tenants of the
Building with regard to their use of the Meeting and Media Areas.
The St. Louis Centre Access Area (the Access Area ) shown outlined in
red on Exhibit C hereto will be considered a Common Area for all purposes
hereunder even though it is not a part of the Building. The Access Area is
presently leased by Tenant from the Land Clearance For Redevelopment
Authority of the City of St. Louis (the LCRA ) pursuant to a lease dated
December 22, 1982 (the Access Lease ). The Access Lease is for a term of
twenty (20) years plus ten (10) consecutive options to extend the term of
five (5) years each (the Access Term ). The Access Area will be subleased
to Landlord by Tenant for a term corresponding to the Access Term. Rent
payable by Landlord pursuant to such sublease will be Zero Dollars ($0.00)
for so long as Tenant occupies all or any portion of the Premises.
Thereafter, Landlord shall pay directly to the LCRA, as rent for the Access
Area, that portion of the rent and other charges payable pursuant to the
Access Lease that is attributable to the Access Area. The intent of the
parties is that Tenant should have no responsibility whatsoever for the
Access Area if Tenant does not lease or occupy any portion of the Building.
The Access Area will be maintained by Landlord during the Lease Term as a
means of access to and from the Building and the St. Louis Centre and
St. Louis Centre Garage. Security will be provided by Landlord controlling
access to the Building from the St. Louis Centre and St. Louis Centre
Garage in substantially the same manner as is provided at the date of this
Lease.
Tenant shall have the right to occupy the 8th Floor of the Building
and a conference area located on the 11th Floor of the Building (more
particularly shown on Exhibit F attached hereto) on a rent-free basis for a
period of up to one (1) year from and after the Commencement Date.
Notwithstanding the foregoing, if (i) Landlord leases all or any part of
the 8th Floor to any third party, Landlord shall promptly notify Tenant in
writing and Tenant shall thereafter vacate the 8th Floor or such portion
thereof as has been leased by Landlord within sixty (60) days after the
date of such notice, and (ii) Landlord leases the 11th Floor conference
area to any third party, Landlord shall promptly notify Tenant in writing
and Tenant shall thereafter vacate the 11th Floor conference area within
five (5) days after the date of such notice.
III. RIGHT OF FIRST REFUSAL:
If, at any time after the date of this Lease and while this Lease is
in full force and effect, Landlord should receive from a bona fide, arm's-
length prospective tenant a bona fide written offer ( Bona Fide Offer ) to
lease any space in the Building that is available for lease (the Offer
Space ), and should Landlord desire to accept the Bona Fide Offer, Landlord
shall first make a written offer (the Tenant Offer ) to lease the Offer
Space to Tenant at the rent and upon the terms and conditions set forth in
the Bona Fide Offer. The Tenant Offer shall be accompanied by a copy of
the Bona Fide Offer. Tenant may accept the Tenant Offer by service of
notice of acceptance on Landlord on or before the thirtieth (30th) day
following delivery of the Tenant Offer to Tenant (the Acceptance Period ).
If the Tenant Offer is accepted, Landlord and Tenant will, within ninety
(90) days following the date of Tenant's notice of acceptance, enter into a
lease of the Offer Space in the form of this Lease, but substituting only
the terms of the Bona Fide Offer to the extent such terms are inconsistent
with the terms of this Lease. If Tenant fails to fully and timely accept
the Tenant Offer as herein provided, Landlord may lease the Offer Space to
the bona fide prospective tenant making the Bona Fide Offer in accordance
with the terms thereof; provided, however, that if Landlord fails to
consummate the lease of the Offer Space on the same terms and conditions as
are set forth in the Bona Fide Offer within ninety (90) days following the
expiration of the Acceptance Period, the Offer Space shall again be subject
to Tenant's right of first refusal.
IV. PARTIAL SURRENDER
Tenant shall have the right, upon at least nine (9) months written
notice to Landlord, to surrender the sixth (6th) floor of the Building to
Landlord. Tenant shall also have the right, independent of the right
granted in the previous sentence, upon at least nine (9) months written
notice to Landlord, to surrender the seventh (7th) floor of the Building to
Landlord. Tenant will vacate any space thus surrendered in accordance with
Section XVIII below, whereupon this Lease will be deemed automatically
amended so as to remove the surrendered space from the Premises and the
Rentable Area of the Premises for all purposes, including the payment of
Annual Base Rent and Additional Base Rent.
V. RENT
Commencing with the Commencement Date Tenant agrees to pay as Rent for
the Premises, at the times and in the manner hereinafter provided and
without offset or reduction of any kind whatsoever, the following sums of
money.
A. ANNUAL BASE RENT: The Annual Base Rent set forth in Section I.I
shall be payable in twelve (12) equal monthly installments during each
Lease Year in advance, on the first day of each calendar month. Should the
Commencement Date occur on a day of the month other than the first day of
such month, then the rental for the first fractional month shall be pro
rated based upon a thirty (30) day month.
B. ADDITIONAL BASE RENT: During each Lease Year of the Extension
Period (as defined in Section XI below), Tenant shall pay to Landlord, as
Additional Base Rent hereunder, Tenant's Pro Rata Share of the amount, if
any, by which Basic Costs (hereinafter defined) for the applicable Lease
Year exceed Basic Costs for the Base Year. Base Year shall mean the
third (3rd) Lease Year of the Lease Term. Tenant's Pro Rata Share of such
excess, if any, for any such Lease Year is hereinafter referred to as the
Excess . In the event that Basic Costs in any such Lease Year decrease
below the amount of Basic Costs for the Base Year, Tenant's Pro Rata Share
of Basic Costs for such Lease Year shall be deemed to be $0.
Tenant shall pay to Landlord, on the first day of each month during
the Extension Period, an estimated payment on account of Additional Base
Rent for the current Lease Year in the amount Landlord shall reasonably
specify from time to time by written notice to Tenant.
Within sixty (60) days following the end of each Lease Year during the
Extension Period, Landlord shall provide to Tenant a statement (a
Statement ) of the actual Basic Costs associated with the Building during
the Lease Year just concluded and the amount of the Excess, if any, for
such Lease Year. On or before thirty (30) days after delivery of such
Statements, Tenant will pay to Landlord the Excess, if any, attributable to
such Lease Year, minus any monthly installments of Additional Base Rent
previously paid by Tenant to Landlord for such Lease Year.
If the monthly installments of Additional Base Rent actually paid by
Tenant for any Lease Year prove to be in excess of the actual Excess for
such Lease Year, then Landlord shall apply any such excess amount as a
credit against Tenant's estimated Additional Base Rent or Base Rent next
becoming due and payable hereunder, or if no further Additional Base Rent
or Base Rent will be due hereunder and Tenant is not in default hereunder,
promptly refund such overpayment to Tenant. Failure or delay in delivering
any Statement, or failure or delay in computing the Excess, shall not be
deemed a waiver by Landlord of its right to deliver such items nor shall
any such failure or delay be deemed a release of Tenant's obligations with
respect to any Statement, or constitute a default hereunder. The
provisions of this paragraph shall survive the expiration of the Lease Term
or the termination of this Lease.
Notwithstanding the above, Tenant will in no event be responsible to
pay any portion of any Excess for any Lease Year that is more than three
percent (3%) of the Basic Costs actually paid by Landlord during the
immediately preceding Lease Year.
Basic Costs shall mean all costs and expenses paid or incurred in
each Lease Year in connection with owning, operating, managing, maintaining
and repairing the Building, including, but not limited to, the following:
1. All labor costs for all persons performing services required
or utilized in connection with the operation, management, repair,
maintenance and control of access to the Building, including but not
limited to amounts incurred for wages, salaries and other compensation
for services, payroll, social security, unemployment and other similar
taxes, workers' compensation insurance, uniforms, training, disability
benefits, pensions, hospitalization, retirement plans, group insurance
or any other similar or like expenses or benefits.
2. All rental and/or purchase costs of materials, supplies,
tools and equipment used in the operation, management, repair,
maintenance and control of access to the Building.
3. All amounts charged to Landlord by contractors and/or
suppliers for services, materials, equipment and supplies furnished in
connection with the operation, repair, maintenance, and control of
access to any part of the Building, including, without limitation, the
heating, air conditioning, ventilating, plumbing, electrical, elevator
and other systems and equipment.
4. All insurance premiums and costs paid by Landlord for fire
and extended coverage insurance, earthquake and extended coverage
insurance, liability and extended coverage insurance, rental loss
insurance, elevator insurance, boiler insurance and other insurance
customarily carried from time to time by lessors of comparable office
buildings in downtown St. Louis.
5. Charges for all utilities, including but not limited to
water, electricity, gas and sewer, but excluding those charges for
which Landlord is otherwise reimbursed by Tenant or by other tenants.
6. Taxes, which, for purposes hereof, shall mean: (a) all
real estate taxes and assessments on the Building or the Premises, and
taxes and assessments levied in substitution or supplementation in
whole or in part of such taxes, (b) all personal property taxes for
the Building's personal property, including license expenses, (c) all
other taxes, fees or assessments now or hereafter levied by any
governmental authority on the Building or its contents or on the
operation and use thereof (except as relate to specific tenants), and
(d) all costs and fees incurred in connection with seeking reductions
in or refunds of Taxes (whether or not successful) including, without
limitation, any costs incurred by Landlord to challenge the tax
valuation of the Building, but excluding income taxes. For the
purpose of determining real estate taxes and assessments for any given
year, the amount to be included in Taxes for such year shall be as
follows: (1) with respect to any special assessment that is payable in
installments, Taxes for such year shall include the amount of the
installment due and payable during such year; and (2) with respect to
all other real estate taxes, Taxes for such year shall be the amount
due and payable for such year. If a reduction in Taxes is obtained
for any year of the Lease Term, then Basic Costs for such year will be
retroactively adjusted and Landlord shall promptly refund to Tenant
its Pro Rata Share of such reduction.
7. The cost of all maintenance service pursuant to written
agreements, including those for equipment, alarm service, window
cleaning, drapery or venetian blind cleaning, janitorial services,
pest control, uniform supply, plant maintenance and landscaping.
8. The cost of all repairs and general maintenance of the
Building neither specified above nor directly billed to tenants.
9. The amortized cost of capital improvements made to the
Building which are: (a) primarily for the purpose of reducing
operating expense costs or otherwise improving the operating
efficiency of the Building; or (b) required to comply with any laws,
rules or regulations of any governmental authority or a requirement of
Landlord's insurance carrier. The cost of such capital improvements
shall be amortized over the useful life of such improvements
consistent with the guidelines established by the Internal Revenue
Service.
10. Legal expenses; provided, however, that legal expenses shall
not include the cost of negotiating leases, collecting rents, evicting
tenants nor shall it include costs incurred in legal proceedings with
or against any tenant or to enforce the provisions of any lease (other
than the Building rules and regulations).
Specifically excluded from Basic Costs are the following:
(1) Repairs or other work occasioned by (i) fire, windstorm, or
other casualty to the extent Landlord receives insurance proceeds
therefor (except to the extent that lack of proceeds is due to
Landlord's failure to carry insurance as required hereunder or
Landlord's use of deductibles or self-insurance), or (ii) the
exercise of the right of eminent domain to the extent Landlord
receives a condemnation award therefor;
(2) Leasing commissions, brochures, marketing supplies,
attorneys' fees, costs, and disbursements and other expenses
incurred in connection with seeking tenants for the Building and
negotiation of leases with prospective tenants;
(3) Rental concessions granted to specific tenants and expenses
incurred in renovating or otherwise improving or decorating,
painting, or redecorating space for specific tenants;
(4) Landlord's cost of electricity and other services sold or
provided to tenants in the Building and for which Landlord is
entitled to be reimbursed by such tenants as a separate
additional charge or rental over and above the base rental or
additional base rental payable under the lease with such tenant;
(5) Overhead and profit increment paid to subsidiaries or other
affiliates of Landlord for services on or to the Building and/or
Premises to the extent only that the costs of such services
exceed the competitive cost for such services;
(6) All items (including repairs) and services for which Tenant
or other tenants pay directly to third parties or for which
Tenant or other tenants reimburse Landlord (other than through
Basic Costs);
(7) Advertising and promotional expenditures;
(8) Costs incurred in connection with the sale, financing,
refinancing, mortgaging or sale of the Building, including
brokerage commissions, attorneys' and accountants' fees, closing
costs, title insurance premiums, transfer taxes and interest
charges;
(9) Costs, fines, interest, penalties, legal fees or costs of
litigation incurred due to the late payments of taxes, utilities
bills and other costs incurred by Landlord's failure to make such
payments when due unless such failure is due to Landlord's good
faith and reasonable efforts in contesting the amount of such
payments;
(10) Costs incurred by Landlord for trustee's fees,
organizational expenses and accounting fees to the extent
relating to Landlord's general corporate overhead and general
administrative expenses;
(11) Costs and fees charged or incurred by Landlord for or
attributable to the management of the Building, however such
costs or fees may be characterized, computed or expressed;
(12) Any penalties or liquidated damages that Landlord pays to
Tenant under this Lease or to any other tenants in the Building
under their respective leases;
(13) Attorneys' fees, costs and disbursements and other expenses
incurred in connection with negotiations or disputes with tenants
or other occupants of the Building or with prospective tenants
(other than attorneys' fees, costs and disbursements and other
expenses incurred by Landlord in seeking to enforce Building
rules and regulations).
(14) Capital expenditures of any kind other than those included
in paragraph 9 of the definition of Basic Costs recited above.
Landlord shall maintain books and records of Basic Costs in accordance
with sound accounting and management practices, which records shall be
available to Tenant for inspection and audit, at Tenant's expense, at the
Building during normal business hours upon reasonable prior notice.
Notwithstanding the foregoing, Tenant shall not be entitled to claim a
readjustment in respect of Tenant's payment of Additional Base Rent for any
Lease Year unless a notice to such effect shall be delivered to Landlord
within ninety (90) days after the delivery of the Statement for such Lease
Year.
C. RENT TAX: In addition to Annual Base Rent, Additional Base Rent
and other charges to be paid by Tenant hereunder, Tenant shall reimburse to
Landlord, within 30 days of receipt of a demand therefore, any and all
taxes, charges, and/or surcharges payable by Landlord (other than a tax on
net income) whether or not now customary or within the contemplation of the
parties hereto (a) upon, allocable to, or measured by the Rentable Area of
the Premises or on the rent payable hereunder, including without limitation
any gross income tax or excise tax levied by the State, any political
subdivision thereof, City or Federal Government with respect to the receipt
of such rent; or (b) upon or with respect to the possession, leasing,
operation, management, maintenance, alteration, repair, use or occupancy by
Tenant of the Premises or any portion thereof; or (c) upon this transaction
or any document to which Tenant is a party creating or transferring an
interest or an estate in the Premises.
Tenant also agrees to pay, before delinquency, any and all taxes
levied or assessed and which become payable during the term hereof upon or
measured by the value of Tenant's equipment, furniture, fixtures and
personal property located in the Premises. Tenant shall comply with the
provisions of any law, ordinance or rule of the taxing authorities which
requires Tenant to file a report of Tenant's property located in the
Premises.
D. The term Rent in this Lease shall be defined to include the
Base Annual Rent, Additional Base Rent and all other charges payable by
Tenant to Landlord under this Lease. If such amounts or charges are not
paid at the time provided in this Lease, they shall bear interest from the
date due until paid at a rate of 1.5% per month or the maximum rate of
interest permitted by law on the date of execution of this Lease, whichever
is less, in order to reimburse Landlord for the loss Tenant agrees Landlord
will incur by reason of Tenant's failure to pay that amount in a timely
manner. In addition, Landlord shall have all of the rights available to it
at law and equity for the collection of rent to collect such overdue
amounts. If no due date is set forth for any amount payable hereunder,
such amount shall be paid within twenty (20) days from the date Landlord
renders statements of account.
VI. UTILITIES AND SERVICES
Landlord and Tenant acknowledge that utilities and services are
presently provided to the Building and the Premises on an around the clock
basis. Landlord agrees to operate and maintain the Building as a full
service building throughout the Lease Term. Landlord will continue to
provide utilities and services to or for the benefit of the Premises in
substantially the same fashion, quality and capacity and during
substantially the same times as such utilities and services are provided to
or for the benefit of the Premises at the date of this Lease. Such
utilities and services will be provided by Landlord as part of Basic Costs
and will include the following:
A. ELECTRIC: Landlord shall furnish the same total connected load of
electricity during the same days and hours as is being provided to the
Premises at the date of this Lease.
If Tenant shall require electric service in excess of that which is
being provided at the date of this Lease, Tenant shall first procure the
consent of Landlord for the use thereof, which consent Landlord may not
unreasonably refuse to grant. Landlord may require that an electric
current meter be installed in the Premises so as to measure the amount of
such excess electric current consumed and the demand load. The cost of
providing the additional service, the meter and its installation,
maintenance and repair shall be paid for by Tenant. Tenant agrees to pay
Landlord promptly upon demand the cost of all such electric current
consumed as reasonably determined by Landlord or as shown by said meters,
at the rates (including any surcharges, taxes, etc.) charged for such
services by the City, agency, private utility or the local public utility,
as the case may be, furnishing the same.
B. HEATING AND AIR CONDITIONING: Landlord shall provide seasonable
heating and air conditioning in the Premises in the same manner, on such
days and during such hours as heating and air conditioning are being
provided to the Premises at the date of this Lease.
C. WATER AND TOILET SERVICE: Landlord shall provide and maintain
drinking water and toilet facilities in their existing locations in the
Building for use by Tenant, its employees and customers.
D. JANITORIAL AND WINDOW WASHING: Landlord shall continue to provide
full service janitorial and window washing services to the Premises
consistent with premier corporate headquarters and/or Class A multi-tenant
facilities.
E. ELEVATOR SERVICE: Landlord shall provide passenger and freight
elevator service in the same manner, on such days and during such hours as
such service is being provided at the date of this Lease. Landlord shall
dedicate four (4) of the Building's passenger elevators to serve Floors 1
through 7 exclusively. None of the other passenger elevators will be
permitted to stop on Floors 2 through 7. Tenant shall comply with all
reasonable rules and regulations governing elevator service.
F. PHONE SERVICE: Telephone service and its costs shall be the
responsibility of Tenant.
G. SECURITY: Landlord shall provide access to the Premises and the
Building and security service for the benefit of the Premises and the
Building in the same manner, on such days and during such hours as such
service is being provided at the date of this Lease.
H. PARKING: Landlord will provide and maintain the parking garage
located in the Building throughout the Lease Term for the use of Tenant and
other tenants of the Building. Tenant shall have the right to utilize all
of the 80 parking spaces on Level B-l of the Building's garage and, in
addition, spaces 200-223 located on Level B-2 at no cost to Tenant. Such
parking areas and spaces are shown on Exhibit D attached hereto as a part
of this Lease. All cars shall be parked at the sole risk of the Tenant and
Landlord shall not be liable for damage or loss to any automobile or the
contents thereof. Tenant shall furnish to Landlord a list of employees
entitled to park in the Building's garage and the license number of all
vehicles that will use the Building's garage. Tenant and each of its
authorized employees shall comply with all reasonable and non-
discriminatory rules and regulations of the parking garage.
I. VENDING: Landlord shall provide and maintain vending facilities
on each Floor of the Building in locations existing at the date of this
Lease and providing service substantially identical to that being provided
at the date of this Lease.
J. NON-LIABILITY: Except in cases involving the willful or negligent
act or omission of Landlord, its employees, agents or contractors, Landlord
shall not be liable for, and Tenant shall not be entitled to, any damages,
actual or consequential, by reason of Landlord's failure to furnish any
utilities or services when such failure is caused by accidents, breakage,
repairs, strikes, lockouts or other labor disturbances or labor disputes of
any character, or by any other cause, similar or dissimilar, beyond the
reasonable control of Landlord, nor shall such interruption be construed as
a constructive or other eviction of Tenant.
Notwithstanding the foregoing, if: (i) Landlord ceases to furnish any
service in the Building for a period in excess of two (2) consecutive days,
(ii) such cessation docs not arise as a result of an act or omission of
Tenant, (iii) such cessation is not caused by a fire or other casualty, and
(iv) as a result of such cessation, the Premises or a material portion
thereof is rendered untenantable (meaning that Tenant is unable to use the
Premises in the normal course of its business) and Tenant in fact ceases to
use the Premises, or a material portion thereof, then Tenant, as its sole
remedy, shall be entitled to receive an abatement of Base Rent and
Additional Base Rent payable hereunder during the period beginning on the
third (3rd) consecutive day of such cessation and ending on the day when
the service in question has been restored. In the event the entire
Premises has not been rendered untenantable by the cessation in service,
the amount of abatement that Tenant is entitled to receive shall be
prorated based upon the percentage of the Premises so rendered untenantable
and not used by Tenant.
K. ADDITIONAL SERVICE: Landlord shall in no event be obligated to
furnish any services or utilities, other than those specified above. If
Landlord elects to furnish services or utilities requested by Tenant in
addition to those specified above, Tenant shall pay Landlord's then
prevailing rates for such services and utilities within ten (10) days after
receipt of Landlord's invoices therefor. If Tenant shall fall to make any
such payment, Landlord may, without notice to Tenant and in addition to
Landlord's other remedies under this Lease, discontinue any or all of the
additional services.
VII. USE
The Premises may be used for general office purposes only and for no
other purpose without the prior written consent of Landlord.
Tenant will maintain the Premises in a clean and healthful condition,
and comply with all laws, ordinances, orders, rules and regulations of any
governmental entity with reference to the use, condition, configuration or
occupancy of the Premises, including without limitation, the Americans With
Disabilities Act (collectively referred to as Laws ). Tenant shall
provide Landlord with copies of any notices its receives with respect to a
violation or alleged violation of any Laws. Tenant will comply with the
rules and regulations of the Building attached hereto as Exhibit E and such
other reasonable and nondiscriminatory rules and regulations as may be
adopted by Landlord from time to time.
Tenant shall not do, permit or suffer any act or thing which is
injurious to the Premises or the Building, which is immoral, a nuisance,
contrary to Laws or in violation of the certificate of occupancy issued for
the Building or which would result in the cancellation of, or any increase
in premiums for, insurance maintained by Landlord with respect to the
Premises or the Building.
VIII. INSURANCE
A. Landlord shall insure the Building against loss or damage by fire
and broad form extended coverage perils, and shall carry public liability
insurance, all in such reasonable amounts with such reasonable deductibles
as would be carried by a prudent owner of a similar building in the
downtown St. Louis area. Landlord may carry any other forms of insurance
as it may deem advisable. Tenant shall have no right to any proceeds from
such policies. Landlord shall not carry any insurance on any of Tenant's
personal property, and shall not be obligated to repair or replace any of
it.
B. Tenant shall procure and maintain policies of insurance, at its
own cost and expense, insuring:
1. against all claims, demands or actions for injury to or
death of any person in an amount of not less than $1,000,000.00, for
injury to or death of more than one person in any one accident to the
limit of $2,000,000.00, and for damage to property in an amount of not
less than $100,000.00 made by, or on behalf of, any person or persons,
firm or corporation arising from, related to or connected with the
Premises, covering Landlord as an additional insured;
2. personal property of Tenant or the personal property of
others kept, stored or maintained on the Premises against loss or
damage by fire, windstorm or other casualties. (Landlord shall have
no rights to proceeds from such personal property insurance.)
3. such other insurance as Landlord may reasonably require from
time to time.
C. All insurance policies procured by Tenant shall be issued by
responsible insurance companies satisfactory to Landlord and shall name
Landlord as an additional insured (as its interest may appear).
Certificates of such policies, together with receipt evidencing payment of
the premiums, shall be delivered to Landlord prior to the Commencement
Date. Not less than thirty (30) days prior to the expiration date of such
policies, certificates of renewal thereof (bearing notations evidencing the
payment of the renewal premiums) shall be delivered to Landlord. Such
policies shall further provide that not less than thirty (30) days' written
notice shall be given to Landlord before any such policy may be canceled or
changed to reduce the insurance coverage provided thereby.
D. Certificates of insurance policies procured by Landlord, together
with receipt evidencing payment of the premiums, shall be delivered to
Tenant prior to the Commencement Date. Not less than thirty (30) days
prior to the expiration date of such policies, certificates of renewal
thereof (bearing notations evidencing the payment of the renewal premiums)
shall be delivered to Tenant.
Notwithstanding any other provision of this Lease to the contrary, and
without limitation of the provisions of this Section VIII, whenever (a) any
loss, cost, damage or expense resulting from fire, explosion or any other
casualty or occurrence is incurred by either of the parties hereto, or
anyone claiming by, through, or under it in connection with the Building or
the Premises, and (b) such party then is covered in whole or in part by
insurance with respect to such loss, cost, damage or expense or is required
under this Lease to be so insured, then the party so insured (or so
required) hereby waives any claims against and releases the other party
from any liability said other party may have on account of such loss, cost,
damage or expense to the extent of any amount recovered by reason of such
insurance (or which could have been recovered had such insurance been
carried as so required). The parties agree to furnish to each insurance
company which has or will issue policies of casualty insurance on the
Building or the leasehold improvements in the Premises, written notice of
said waivers and to have the insurance policies properly endorsed, if
necessary, to acknowledge such subrogation waivers. Such release of
liability and waiver of the right of subrogation shall not be operative in
any case where the effect thereof is to invalidate such insurance coverage
or increase the cost thereof (except that in the case of increased cost,
the other party shall have the right, within thirty (30) days following
written notice, to pay such increased cost, thereby keeping such release
and waiver in full force and effect).
IX. REPAIRS AND MAINTENANCE; ALTERATIONS
Landlord, at its expense, which expense will not be included in Basic
Costs and will not be subject to reimbursement or contribution by Tenant,
agrees to keep, maintain and replace, if necessary, (A) the foundations,
exterior walls, roof, roof membrane and roof covering (including interior
ceilings if damaged by leaking) of the Building, (B) the sprinkler mains,
plumbing, electric and other utility lines serving the Building or
connecting the Premises and the Building, and (C) the major components of
the heating, ventilating and air conditioning system serving the Building
(the HVAC ) in good condition and repair.
Landlord, at its expense and as a part of Basic Costs, agrees to keep,
maintain and replace, if necessary, the entrance and Common Areas of the
Building, including, but not limited to, the plumbing systems, electrical
systems and toilet facilities, whether by way of janitorial, maintenance or
service contracts, or otherwise.
In the event of the failure of Landlord to comply with the terms of
this Section IX within ten (10) days after Landlord has received written
notice from Tenant of such failure or if compliance cannot reasonably be
completed within such ten (10) day period and Landlord shall fail to
commence such compliance within three (3) days after notice and proceed
diligently thereafter, then Tenant may prosecute such compliance itself and
Landlord shall be obligated to reimburse Tenant for the reasonable cost
thereof within five (5) days after receipt of a statement from Tenant
accompanied by copies of invoices or other supporting documentation.
Notwithstanding the foregoing, in the case of an emergency (such as,
without limitation, a leaky roof or HVAC breakdown), Tenant shall have the
right to prosecute immediately any and all necessary repairs and shall
deliver contemporaneous notification to Landlord of the emergency and
related repairs; provided, further, that if contemporaneous notice is not
practicable, as determined by Tenant in its reasonable judgment, then
Tenant shall provide such notice as soon thereafter as reasonably
practicable. In no event shall Tenant have the right to offset the cost of
any such repairs against Rent due hereunder.
Notwithstanding anything to the contrary contained herein, Tenant
shall reimburse Landlord for the cost of performing any of said maintenance
or repairs caused by the negligence of Tenant, its employees, agents,
subtenants, contractors or invitees.
Tenant, at Tenant's sole cost and expense, shall maintain the Premises
in good order, condition and repair, including, but not limited to, the
interior surfaces of the ceilings, walls and floors, all doors, interior
windows, and interior glass surfaces, all plumbing pipes, electrical
wiring, switches, fixtures, and items and equipment. Tenant expressly
waives the benefits of any statute now or hereafter in effect which would
otherwise afford Tenant the right to make repairs at Landlord's expense or
to terminate this Lease because of Landlord's failure to keep the Premises
in good order, condition and repair.
Tenant shall not make any alterations to the exterior of the Premises
or to any structural portions of the Building for which Landlord has
maintenance responsibility. Tenant shall be permitted to make other
interior, non-structural alterations, additions and improvements to the
Premises without Landlord's prior consent. All alterations, additions and
improvements to the Premises erected by Tenant which are in the nature of
real property shall be and remain the property of Tenant during the term of
this Lease; provided, however, that such alterations, additions and
improvements shall become the property of Landlord as of the Expiration
Date or upon earlier termination of the Lease. With respect to furniture,
fixtures, equipment and improvements erected by Tenant which are in the
nature of personal property, Tenant shall remove all such items and restore
the Premises to its original condition by the Expiration Date or upon
earlier termination of the Lease. All such removals and restoration shall
be accomplished in a good workmanlike manner by contractors approved in
writing by Landlord so as not to damage the primary structure or structural
qualities of the Building. All alterations, additions or improvements
proposed by Tenant shall be constructed in accordance with all governmental
laws, ordinances, rules and regulations.
X. MECHANICS LIENS
Tenant shall not suffer or permit any mechanic's lien or other lien to
be filed against the Building, or any portion thereof, by reason of work,
labor, skill, services, equipment or materials supplied or claimed to have
been supplied to the Building at the request of Tenant, or of anyone
holding the Building, or any portion thereof, by through or under Tenant.
If any such mechanic's lien or other lien at any time shall be filed
against the Building or any portion thereof, Tenant, within thirty (30)
days after the date Tenant first becomes aware of the filing of the same,
at Tenant's election, shall cause said lien either to be discharged of
record or to be bonded over in a manner which is reasonably acceptable to
Landlord. If Tenant shall fall to discharge such mechanic's lien or other
lien or to provide security or an indemnity covering potential liability
arising out of such lien within such period, then Landlord may, but shall
not be obligated to, discharge the same by paying to the claimant the
amount claimed to be due or discharge such lien in such manner as is now or
may in the future be provided by present or future law for the discharge of
such lien as a lien against the Building. Any amount paid by Landlord, or
the value of any deposit so made by Landlord, together with all costs, fees
and expenses in connection therewith (including reasonable attorneys'
fees), shall be repaid by Tenant to Landlord within thirty (30) days after
demand therefor. Tenant shall indemnify, defend and hold harmless Landlord
and the Building from all losses, costs, damages, expenses, liabilities,
suits, penalties, claims, demands and obligations, including, without
limitation, reasonable attorneys , fees, resulting from the assertion,
filing, foreclosure or other legal proceedings with respect to any such
mechanic's lien or other lien.
XI. OPTION TO EXTEND
Subject to the provisions hereinafter set forth in this Section XI,
and provided that Tenant is not in default hereunder at any time from the
exercise of the option until the Expiration Date, Landlord hereby grants
Tenant the option to extend the Lease Term on the same terms, conditions
and provisions as contained in this Lease, except as otherwise expressly
provided herein, for one (1) period of either one (1) year (the One Year
Extension Period ) or seven (7) years (the Seven Year Extension Period )
Such period, regardless of its duration, may also be referred to herein
generally as the Extension Period ). If exercised in accordance herewith,
the Extension Period shall commence on the first (1st) day after the
Expiration Date.
If Tenant delivers an Extension Notice as hereinafter provided, the
Lease Term shall be extended on the same terms, conditions and provisions
as contained herein except that the Annual Base Rent during the One Year
Extension Period, if elected by Tenant, shall be $12.00 per square foot of
Rentable Area of the Premises per year, and the Annual Base Rent during the
Seven Year Extension Period, if elected by Tenant, shall reflect the
Prevailing Market rate, as determined in accordance with this Section XI.
Not less than twelve (12) months prior to the Expiration Date, Tenant
may request, by written notice to Landlord (the Preliminary Notice ), that
Landlord determine the Prevailing Market rate for the Premises as it would
be during the Seven Year Extension Period if Tenant elected to exercise its
option for such Seven Year Extension Period. Within ten (10) days
following Landlord's receipt of the Preliminary Notice, Landlord will
notify Tenant of such Prevailing Market rate as reasonably determined by
Landlord. If Tenant does not agree with Landlord's determination of such
Prevailing Market rate, Tenant, by written notice to Landlord (the
Arbitration Notice ) within five (5) days after being advised of Landlord's
determination of the Prevailing Market rate, shall have the right to have
the Prevailing Market rate determined using the following procedures:
If Tenant provides Landlord with an Arbitration
Notice, each party shall, at its own expense, select and
retain an appraiser, with the qualifications set forth below
and notify the other party of its selection within ten (10)
days after Landlord's receipt of the Arbitration Notice.
Each appraiser so selected shall be certified as an MAI
appraiser or as an ASA appraiser and shall have had at least
three (3) years experience within the previous ten (10)
years as a real estate appraiser working in the downtown
St. Louis area, with working knowledge of current rental
rates and practices. For purposes of this Lease, an MAI
appraiser means an individual who holds an MAI designation
conferred by, and is an independent member of, the American
Institute of Real Estate Appraisers (or its successor
organization, or in the event there is no successor
organization, the organization and designation most
similar), and an ASA appraiser means an individual who
holds the Senior Member designation conferred by, and is an
independent member of, the American Society of Appraisers
(or its successor organization, or, in the event there is no
successor organization, the organization and designation
most similar). Within thirty (30) days after Landlord's
receipt of the Arbitration Notice, each appraiser shall
determine the Prevailing Market rate and shall notify the
other appraiser and both parties of such appraiser's
determination. In the event only one party selects an
appraiser and notifies the other party of its selection
during the ten (10) day period specified above, and such
party's appraiser gives such notice within the thirty (30)
day period, or in the event an appraiser duly selected by
one party fails to give such notice within the thirty (30)
day period, then the determination of the Prevailing Market
rate made by the selected appraiser who gave such notice
shall be deemed to be the Prevailing Market rate. If the
determination of the appraisers are within five percent (5%)
of each other, the Prevailing Market rate shall be the
average of the two (2) determinations. If both appraisers
notify each other and both of the parties of their
respective determination of the Prevailing Market rate
within the thirty (30) day period, and their determinations
do not agree within five percent (5%) on the Prevailing
Market rate, then within fifteen (15) days after both
appraisers notify both parties of their respective
determination of the Prevailing Market rate, each party will
cause the appraiser selected by it to confer with the other
appraiser and the two (2) appraisers shall select a third
appraiser (the Third Appraiser ) having the qualifications
set forth above. In the event the appraisers selected by
Landlord and Tenant cannot agree upon the Third Appraiser
within such fifteen (15) day period, each party will, within
ten (10) days thereafter, cause the appraiser selected by it
to supply the name of one (1) appraiser having the
qualifications as set forth above, and a representative of
Landlord, with a representative of Tenant present, shall
make a blind draw of one (1) name of the two (2) provided,
who shall serve at the Third Appraiser. In the event only
one (1) of the appraisers supplies the name of a prospective
third appraiser during such ten (10) day period, the
appraiser named by such appraiser shall be the Third
Appraiser. Within twenty (20) days from the date of his
appointment, the Third Appraiser shall make his
determination of the Prevailing Market rate and will submit
a written determination thereof to both parties and both
appraisers. With a fifteen (15) day period after delivery
of the Third Appraiser's determination of the Prevailing
Market rate, the three (3) appraisers shall confer and
attempt to reach agreement as to the Prevailing Market rate.
In the event the three (3) appraisers cannot within the
fifteen (15) day conference period reach a determination of
the Prevailing Market rate, then the determination of any
two (2) of the three (3) appraisers shall be deemed to be
the Prevailing Market rate. If the Third Appraiser fails to
make his determination within the twenty (20) day period, or
if two (2) appraisers cannot agree with the fifteen (15) day
conference period, the parties shall repeat the selection
procedure hereinabove described and shall thereby choose a
new Third Appraiser. If the Third Appraiser believes that
expert advice would materially assist him, he may retain one
or more qualified persons to provide such expert advise.
The parties shall share equally in the costs of the Third
Appraiser and of any experts retained by the Third
Appraiser. Any fees of any appraiser, counsel or experts
engaged directly by Landlord or Tenant, however, shall be
borne by the party retaining such appraiser, counsel or
expert. In the event that the Prevailing Market rate has
not been determined by the commencement date of the
Extension Period, Tenant shall pay Annual Base Rent upon the
terms and conditions in effect for the Premises until such
time as the Prevailing Market rate has been determined.
Upon such determination, the Annual Base Rent shall be
retroactively adjusted to the commencement of the Extension
Period. If such adjustment results in an underpayment of
Annual Base Rent by Tenant, Tenant shall pay Landlord the
amount of such underpayment within thirty (30) days after
the determination thereof. If such adjustment results in an
overpayment of Annual Base Rent by Tenant, Landlord shall
credit such overpayment against the next installment of
Annual Base Rent due under the Lease and, to the extent
necessary, any subsequent installments until the entire
amount of such overpayment has been credited against Annual
Base Rent.
Not less than eight (8) months prior to the Expiration Date, Tenant,
by written notice to Landlord ( Extension Notice ), may exercise Tenant's
option to extend for either the One Year Extension Period or the Seven Year
Extension Period; provided, however, that if Tenant shall fall to give any
such Extension Notice, Tenant's right to exercise such option nevertheless
shall continue until ten (10) days after Landlord shall have given Tenant
notice of Landlord's election to terminate such option to extend, and
Tenant may exercise such option at any time until the expiration of said
ten (10) day period by the giving of an Extension Notice, it being the
intention of the parties to avoid forfeiture of Tenant's right to extend
the Lease Term through failure to deliver an Extension Notice within the
time limit prescribed. If the option to extend the Lease Term is not
exercised in the aforesaid manner, the Lease Term and Tenant's rights
hereunder and its rights to occupy and possess the Premises shall expire on
the Expiration Date.
XII. DEFAULTS OF TENANT
A. The occurrence of any one or more of the following events shall
constitute an Event of Default :
1. If default shall be made in the due and punctual payment of
any Rent or in the payment of any other amount to be paid by Tenant to
Landlord, when and as the same shall become due and payable, and such
default shall continue for a period of thirty (30) days after written
notice thereof to Tenant; or
2. If default shall be made by Tenant in keeping, observing or
performing any of the terms contained in this Lease, other than as
referred to in subsection 1. of this Section XII and such default
shall continue for a period of thirty (30) days after written notice
thereof given by Landlord to Tenant, or such longer period as is
reasonable to cure said default, if said default cannot, in good
faith, be cured within said thirty (30) days, provided that Tenant
promptly and in good faith commences the cure of the same within the
thirty (30) day period and thereafter prosecutes the curing of such
default in good faith.
3. If Tenant shall abandon any substantial portion of the
Premises.
B. If an Event of Default occurs, Landlord shall have the rights and
remedies hereinafter set forth, which shall be distinct, separate and
cumulative.
1. Landlord may terminate this Lease by giving Tenant written
notice of its election to do so, in which event the Lease Term shall
end and all right, title and interest of Tenant hereunder shall expire
on the date stated in such notice, and Landlord may immediately
recover the amount by which all current and future rent and all other
charges and monetary obligations due hereunder during the remainder of
the Lease Term exceeds the amount of such rental loss that Tenant
proves could be reasonably avoided, and all other damages to which
Landlord is entitled under law, specifically including, without
limitation, all Landlord's expenses of reletting (including repairs,
alterations, improvements, additions, decorations, legal fees and
brokerage commissions);
2. Landlord may terminate Tenant's right to possess the
Premises without terminating this Lease by giving written notice to
Tenant that Tenant's right of possession shall end on the date stated
in such notice, whereupon Tenant's right to possess the Premises or
any part thereof shall cease on the date stated in such notice; and
3. Landlord may enforce the provisions of this Lease and may
enforce and protect the rights of Landlord hereunder by a suit or
suits in equity or at law for the specific performance of any covenant
or agreement contained herein, and for the enforcement of any other
appropriate legal or equitable remedy, including, without limitation,
injunctive relief, and for recovery of all monies due or to become due
from Tenant under any of the provisions of this Lease.
C. If Landlord exercises either of the remedies provided for in
Sections B. 1. and B.2 above, Tenant shall surrender possession of and
vacate the Premises and immediately deliver possession thereof to Landlord,
and Landlord may re-enter and take complete and peaceful possession of the
Premises, with process of law.
D. If Landlord terminates Tenant's right to possess the Premises
without terminating this Lease, Landlord may, at Landlord's option, enter
into the Premises, remove Tenant's signs and other evidences of tenancy,
and take and hold possession thereof, without such entry and possession
terminating the Lease or releasing Tenant, in whole or in part, from any
obligation, including Tenant's obligation to pay the Rent, including any
amounts treated as additional rent, hereunder for the full Lease Term. In
any such case, Tenant shall pay forthwith to Landlord, if Landlord so
elects, a sum equal to the entire amount of the Rent, including any amounts
treated as additional rent hereunder, for the residue of the stated Lease
Term plus any other sums provided herein to be paid by Tenant for the
remainder of the Lease Term. Landlord may, but need not, relet the
Premises or any part thereof for such rent and upon such terms as Landlord,
in its sole discretion, shall determine (including the right to relet the
Premises for a greater or lesser term than that remaining under this Lease,
the right to relet the Premises as a part of a larger area, and the right
to change the character or use made of the Premises). If Landlord decides
to relet the Premises or a duty to relet is imposed upon Landlord by law,
Landlord and Tenant agree that Landlord shall only be required to use the
same efforts Landlord then uses to lease other properties Landlord owns or
manages (or if the Premises is then managed for Landlord, then Landlord
will instruct such manager to use the same efforts such manager then uses
to lease other space or properties which it owns or manages); provided,
however, that Landlord (or its manager) shall not be required to give any
preference or priority to the showing or leasing of the Premises over any
other space that Landlord (or its manager) may be leasing or have available
and may place a suitable prospective tenant in any such available space
regardless of when such alternative space becomes available; provided,
further, that Landlord shall not be required to observe any instruction
given by Tenant about such reletting or accept any tenant offered by Tenant
unless such offered tenant has a creditworthiness acceptable to Landlord
and agrees to use the Premises in a manner consistent with the Lease. In
any such case, Landlord may, but shall not be required to, make repairs,
alterations and additions in or to the Premises and redecorate the same to
the extent Landlord deems necessary or desirable, and Tenant shall, upon
demand, pay the cost thereof, together with Landlord's expenses of
reletting, including, without limitation, any broker's commission incurred
by Landlord. If the consideration collected by Landlord upon any such
reletting plus any sums previously collected from Tenant are not sufficient
to pay the full amount of all Rent, including any amounts treated as
additional rent hereunder and other sums reserved in this Lease for the
remaining Lease Term, together with the costs of repairs, alterations,
additions, redecorating, and Landlord's expenses of reletting and the
collection of the Rent accruing therefrom (including attorney's fees and
broker's commissions), Tenant shall pay to Landlord the amount of such
deficiency upon demand. Tenant agrees that Landlord may file suit to
recover sums falling due under this Section D from time to time.
XIII. DESTRUCTION AND RESTORATION
A. If the Building or the Premises or a substantial portion of
either are rendered untenantable by fire or other casualty, and if such
damage cannot, in Landlord's reasonable estimation, be materially restored
within one hundred twenty (120) days of such damage, then Landlord may, at
its sole option, terminate this Lease as of the date of such fire or
casualty. Landlord shall exercise its option provided herein by written
notice within thirty (30) days of such fire or other casualty. For
purposes hereof, the Building or the Premises shall be deemed materially
restored if they are in such condition as would not prevent or materially
interfere with Tenant's use of the Premises for the purpose for which it
was then being used.
B. If this Lease is not terminated pursuant to Section XIII.A, then
Landlord shall proceed with all due diligence to repair and restore the
Building or the Premises, as the case may be (except that either Landlord
or Tenant may elect not to rebuild and may terminate this Lease if such
damage occurs during the last year of the Lease Term exclusive of any
option which is unexercised at the date of such damage).
C. If this Lease shall be terminated pursuant to this Section XIII,
the Lease Term shall end on the date of such damage as if that date had
been originally fixed in this Lease as the Expiration Date. If this Lease
shall not be terminated pursuant to this Section XIII and if the Premises
is rendered untenantable in whole or in part following such damage, the
Rent payable during the period in which the Premises is untenantable shall
be reduced in proportion to that part of the Premises which is rendered
untenantable. In the event that Landlord should fail to complete such
repairs and material restoration within one hundred fifty (150) days after
the date of such damage, Tenant may at its option and as its sole remedy
terminate this Lease by delivering written notice to Landlord, whereupon
this Lease shall end on the date of such notice as if the date of such
notice were the date originally fixed in this Lease as the Expiration Date;
provided however, that if construction is delayed because of changes,
deletions, or additions in construction requested by Tenant, strikes,
lockouts, casualties, acts of God, war, material or labor shortages,
governmental regulation or control or other causes beyond the reasonable
control of Landlord, the period for restoration, repair or rebuilding shall
be extended for the amount of time Landlord is so delayed.
D. In no event shall Landlord be required to rebuild, repair or
replace any part of the partitions, fixtures, and other personal property
which may have been placed in or about the Premises by Tenant.
XIV. CONDEMNATION
If, during the Lease Term, all or any material portion of the Premises
shall be taken as the result of the exercise of the power of eminent domain
or conveyed under threat thereof (hereinafter referred to as the
Proceedings ), this Lease and all right, title and interest of Tenant
hereunder shall terminate on the earlier of taking of possession by the
condemning authority or the date of vesting of title pursuant to such
Proceedings. Landlord and Tenant each shall be entitled to an allocation
of the award to be made in such Proceedings relative to their respective
interests in the Premises; provided that Tenant shall not be entitled to
receive any award for Tenant's loss of its leasehold interest, the right to
such award being hereby assigned by Tenant to Landlord. For purposes
hereof, any portion so taken shall be deemed material if the taking would
prevent or materially interfere with the use of the Building or the
Premises for the purpose for which it is then being used.
If, during the Lease Term, less than a material portion of the
Premises shall be taken, this Lease, upon the earlier of taking of
possession by the condemning authority or vesting of title in the
Proceedings, shall terminate as to the parts so taken, and the proceeds of
the award for such taking shall be delivered to Landlord to restore that
portion of the Premises not so taken to a complete architectural and
mechanical unit and otherwise to make the remaining Premises appropriate
for the use and occupancy of Tenant.
In the event of any termination of this Lease, or any part thereof, as
a result of any such Proceedings, Tenant shall pay to Landlord all Rent and
all other charges payable hereunder with respect to that portion of the
Premises so taken, apportioned to the date of such termination.
In the event of a taking of less than a material portion of the
Premises, the Rent payable hereunder during the period from and after the
earlier of the taking of possession by the condemning authority and the
date of vesting of title in such Proceedings through to the expiration or
termination of this Lease (as the Lease Term may be extended) shall abate
and be diminished in proportion to that part of the Premises which has been
taken.
XV. ASSIGNMENT AND SUBLETTING
A. For the first three (3) Lease Years, Tenant shall be prohibited
from assigning or pledging this Lease or subletting the whole or any part
of the Premises, whether voluntarily or by operation of law, or permitting
the use or occupancy of the Premises by anyone other than Tenant.
Thereafter, Tenant shall not have the right to assign or pledge this Lease
or to sublet the whole or any part of the Premises, whether voluntarily or
by operation of law, or permit the use or occupancy of the Premises by
anyone other than Tenant, without the prior written consent of Landlord,
and such restrictions shall be binding upon any assignee or subtenant to
which Landlord has consented. Notwithstanding the foregoing, Tenant, upon
at least ten (10) days prior notice to Landlord, shall be permitted to
assign this Lease or to sublet the whole or any part of the Premises to a
wholly owned subsidiary or to an entity with which Tenant may merge or
consolidate (a Tenant Affiliate ) without the necessity of obtaining
Landlord's consent.
B. In the event Tenant desires to sublet the Premises, or any
portion thereof, or assign this Lease, Tenant shall give written notice
thereof to Landlord within a reasonable time prior to the proposed
commencement date of such subletting or assignment, which notice shall set
forth the name of the proposed subtenant or assignee, the relevant terms of
any sublease and copies of financial reports and other relevant financial
information of the proposed subtenant or assignee. Tenant shall pay to
Landlord, on demand, a reasonable service charge for the processing of the
application for the consent and for the preparation of the consent.
C. In the event Landlord consents to any such assignment or
subletting, and as a condition thereto, Tenant shall pay to Landlord fifty
percent (50%) of all profit derived by Tenant from such assignment or
subletting. For purposes of the foregoing, profit shall be deemed to
include, but shall not be limited to, the amount paid or payable to Tenant
to effect or to induce Tenant to enter into any such transaction, and the
amount of all rent and other consideration of whatever nature payable by
such assignee or sublessee in excess of the Rent payable by Tenant under
this Lease. If a part of the consideration for such assignment or
subletting shall be payable other than in cash, the payment to Landlord of
its share of such non-cash consideration shall be in such form as is
satisfactory to Landlord. Tenant shall furnish to Landlord upon request
from Landlord a complete statement setting forth in detail the computation
of all profit derived and to be derived from such assignment or subletting,
such computation to be in accordance with generally accepted accounting
principles. Tenant agrees that Landlord or its authorized representatives
shall be given access at all reasonable times to the books, records and
papers of Tenant relating to any such assignment or subletting, and
Landlord shall have the right to make copies thereof. The percentage of
Tenant's profit due to Landlord hereunder shall be paid to Landlord within
two (2) days of receipt by Tenant of any payment made from time to time by
such assignee or sublessee to Tenant.
D. Notwithstanding any permitted assignment or subletting,
including, without limitation, an assignment or subletting to a Tenant
Affiliate, Tenant shall at all times remain directly, primarily and fully
responsible and liable for the payment of the Rent herein specified and for
compliance with all of its other obligations under the terms, provisions
and covenants of this Lease. Upon the occurrence of an Event of Default,
if the Premises or any part thereof are then assigned or sublet, Landlord,
in addition to any other remedies herein provided or provided by law, may,
at its option, collect directly from such assignee or subtenant all Rents
due and becoming due to Tenant under such assignment or sublease and apply
such Rent against any sums due to Landlord from Tenant hereunder, and no
such collection shall be construed to constitute a novation or a release of
Tenant from the further performance of Tenant's obligations hereunder.
XVI. SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT
A. Provided that Tenant has received a reasonable Non-Disturbance
Agreement (as hereinafter defined) from each Mortgagee (as hereinafter
defined), Tenant's rights under this Lease are and shall remain subject and
subordinate to the operation and effect of any mortgage, deed of trust or
other security instrument now or hereafter affecting the Premises or the
Building and all renewals, modifications, replacements, consolidations and
extensions thereof or participations therein, whether the same shall be in
existence on the date hereof or created hereafter (any such lease,
mortgage, deed of trust or other instrument being referred to as a
Mortgage and the person or persons having the benefit of same being
referred to as a Mortgagee ). Tenant's acknowledgment and agreement of
subordination provided for in this Section XVI.A is self-operative and no
further instrument of subordination shall be required; however, Tenant
shall execute such further assurances thereof as may be requested, from
time to time, by Landlord and upon Tenant's failure to execute and deliver
to Landlord any such further assurances, Landlord is hereby authorized to
execute the same for and on behalf of Tenant as Tenant's attorney-in-fact.
As used herein, the term Non-Disturbance Agreement shall mean an
agreement executed by a Mortgagee providing that, so long as Tenant is not
then in default under the terms of this Lease, (1) such Mortgagee will not
disturb Tenant's right to possess the Premises, (2) such Mortgagee will not
name or join Tenant in any action or proceeding to foreclose the Mortgage
unless required to do so by law or court rules or procedures, and (3) any
sale of the mortgaged property or exercise by such Mortgagee of any of its
rights under the Mortgage shall be subject to all rights of Tenant under
this Lease.
B. If and as a Mortgagee may so elect, this Lease and Tenant's
rights hereunder shall be superior and prior in right to any Mortgage, with
the same force and effect as if this Lease had been executed, delivered and
recorded prior to the execution, delivery and recording of such Mortgage.
C. If any person shall succeed to all or part of Landlord's interest
in the Premises, whether by purchase, foreclosure, deed in lieu of
foreclosure, power of sale, termination of Lease or otherwise, and if and
as so requested or required by such successor-in-interest, Tenant shall,
without charge, attorn to such successor-in-interest.
XVII. LANDLORD'S ACCESS
Tenant agrees to permit Landlord and its authorized representatives to
enter upon the Premises at all reasonable times during ordinary business
hours (or at any time in case of an emergency), upon reasonable prior
notice, for the purpose of inspecting the same and making any necessary
repairs or replacements which are the obligation of Landlord.
Landlord shall also have the right at all reasonable times during
ordinary business hours, upon reasonable prior notice, to enter upon the
Premises and to exhibit the same for the purpose of mortgaging or selling
the same or, during the final twelve (12) months of the Lease Term, leasing
the same.
In exercising its rights hereunder, Landlord shall refrain from any
acts which may interfere with Tenant's use or occupancy of the Premises or
access thereto. Without limiting the generality of the foregoing, Landlord
acknowledges that it is necessary for Tenant to control access to the
Premises in order to avoid unauthorized persons from viewing Tenant's trade
secrets, proprietary products, technology and processes. Accordingly,
while within the Premises, Landlord and its representatives, at Tenant's
option, shall be accompanied by a representative of Tenant and shall comply
with reasonable directions of such representative relative to safety and to
the protection of Tenant's trade secrets and other proprietary information.
XVIII. SURRENDER AND HOLDING-OVER
Upon the termination of this Lease, whether by forfeiture, lapse of
time or otherwise, or upon termination of Tenant's right to possession of
the Premises, Tenant will at once surrender and deliver up the Premises,
together with all improvements thereon (except as hereinafter provided), to
Landlord, in good condition and repair, reasonable wear and tear and damage
by casualty and condemnation excepted. Said improvements shall include all
plumbing, lighting, electrical, heating, cooling and ventilating fixtures
and equipment, and all alterations, (excluding trade fixtures and equipment
of Tenant). All permanent alterations, additions and improvements made in
or upon the Premises by Tenant (excluding trade fixtures and equipment of
Tenant) shall become Landlord's property and shall remain upon the Premises
on any such termination without compensation, allowance or credit to
Tenant.
Upon the termination of this Lease, Tenant shall remove Tenant's
personal property, trade fixtures and equipment; provided, however, that
Tenant shall repair any injury or damage to the Premises which may result
from such removal. If Tenant does not remove Tenant's personal property,
trade fixtures and equipment from the Premises prior to the expiration or
earlier termination of the Lease Term, Landlord, upon thirty (30) days'
notice to Tenant, at its option, may remove the same (and repair any damage
occasioned thereby) and dispose thereof or deliver the same to any other
place of business of Tenant or warehouse the same, and Tenant shall pay the
cost of such removal, repair, delivery and warehousing to Landlord within
thirty (30) days of demand therefor.
If Tenant or any party claiming under Tenant remains in possession of
the Premises or any part thereof after any termination or expiration of
this Lease, Landlord may treat such holdover as an automatic renewal of
this Lease for a month-to-month tenancy at the rate of Rent last payable
under this Lease, subject to all the terms and conditions provided herein,
or as a tenant at sufferance, as Landlord's sole remedies.
XIX. HAZARDOUS AND TOXIC MATERIALS
As used herein:
(a) Claim shall mean and include any demand, cause of action,
proceeding or suit (i) for damages, losses, injuries to person or
property, damages to natural resources, fines, penalties,
interest, or contribution; (ii) for the costs of site
investigations, feasibility studies, information requests, health
or risk assessments or Response actions; or (iii) for enforcing
this Section XIX.
(b) Environmental Law shall mean and include all federal,
state and local statutes, ordinances, regulations and rules
relating to environmental quality, health, safety, contamination
and clean-up, including, without limitation, the Clean Air Act,
42 U.S.C. Section 7401 et seq.; the Clean Water Act, 33 U.S.C.
Section 1251 et seq., and the Water Quality Act of 1987; the
Federal Insecticide, Fungicide, and Rodenticide Act ( FIFRA ), 7
U.S.C. Section 136 et seq.; the Marine Protection, Research, and
Sanctuaries Act, 33 U.S.C. Section 1401 et seq.; the National
Environmental Policy Act, 42 U.S.C. Section 4321 et seq.; the
Noise Control Act, 42 U.S.C. Section 4901 et seq.; the
Occupational Safety and Health Act, 29 U.S.C. Section 651 et
seq.; the Resource Conservation and Recovery Act ( RCRA ), 42
U.S.C. Section 6901 et seq., as amended by the Hazardous and
Solid Waste Amendments of 1984; the Safe Drinking Water Act, 42
U.S.C. Section 300f et seq.; the Comprehensive Environmental
Response, Compensation and Liability Act ( CERCLA ), 42 U.S.C.
Section 9601 et seq., as amended by the Superfund Amendments and
Reauthorization Act, the Emergency Planning and Community Right-
to-Know Act., and Radon Gas and Indoor Air Quality Research Act;
the Toxic Substances Control Act. ( TSCA ), 15 U.S.C.
Section 2601 et seq.; the Atomic Energy Act, 42 U.S.C.
Section 2011 et seq., and the Nuclear Waste Policy Act. of 1982,
42 U.S.C. Section 10101 et seq.; and any state lien and superlien
and environmental clean-up statutes, with implementing
regulations and guidelines. Environmental Laws shall also
include all state, regional, county, municipal and other local
laws, regulations and ordinances insofar as they are equivalent
or similar to the federal laws recited above or purport to
regulate Hazardous Materials.
(c) Hazardous Materials shall mean and include the following,
including mixtures thereof: any hazardous substance, pollutant,
contaminant., waste, by-product or constituent regulated under
CERCLA; oil and petroleum products and natural gas, natural gas
liquids, liquefied natural gas and synthetic gas usable for fuel;
pesticides regulated under the FIFRA; asbestos and asbestos-
containing materials, PCBs and other substances regulated under
TSCA; source material, special nuclear material, byproduct
material and any other radioactive materials or radioactive
wastes, however produced, regulated under the Atomic Energy Act
or the Nuclear Waste Policy Act.; chemicals subject to the OSHA
Hazard Communication Standard, 29 C.F.R. 1910.1200 et seq.
(d) Manage or Management means to generate, manufacture,
process, treat, store, use, re-use, refine, recycle, reclaim,
blend or burn for energy recovery, incinerate, accumulate
speculatively, transport, transfer, dispose of or abandon
Hazardous Materials.
(e) Release or Released shall mean any actual or threatened
spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping or disposing
of Hazardous Materials into the environment, as environment is
defined in CERCLA.
(f) Response or Respond shall mean action taken in
compliance with Environmental Laws to correct, remove, remediate,
cleanup, prevent, mitigate, monitor, evaluate, investigate,
assess or abate the Release of a Hazardous Material.
During the Lease Term, Tenant, at its sole cost and expense, shall
(a) comply with all Environmental Laws and permits issued thereunder;
(b) secure, maintain and comply with all permits required by Environmental
Laws, and (c) not cause or allow the Release of any Hazardous Materials on,
to or from the Premises.
If Tenant's Management of Hazardous Materials at the Premises
(a) results in or causes a Release which is not in compliance with
Environmental Laws or permits issued thereunder; (b) gives rise to
liabIlity or a Claim or requires a Response under common law or any
Environmental Law or permit issued thereunder; or (c) causes a significant
public health effect; then, in any and all such occurrences, Tenant shall,
at its sole cost and expense, promptly take all applicable action in
Response.
Tenant agrees to indemnify, defend and hold Landlord and its officers,
partners, directors, shareholders, employees and agents harmless from any
Claims which arise from or are attributable to Tenant's breach of any of
its obligations in this Section XIX or Claims which arise during or after
the Lease Term, or in connection with the presence or suspected presence or
Release of Hazardous Materials in, on or under the Premises, provided such
Claims arise or such Hazardous Materials are present as the result of the
acts of Tenant, its officers, employees or agents. Without limiting the
generality of the foregoing, this indemnification shall survive the
expiration of this Lease for a period of three (3) years and does
specifically cover costs incurred in connection with any investigation of
site conditions or any Response because of the presence or suspected
presence or Release of Hazardous Materials in, on or under the Premises,
provided the Hazardous Materials are present as the result of the acts of
Tenant, its officers, agents or employees.
XX. DEFAULTS BY LANDLORD
If Landlord should be in default in the performance of any of its
obligations under this Lease, which default continues for a period of more
than thirty (30) days after receipt of written notice from Tenant
specifying such default, or if such default is of a nature that requires
more than thirty (30) days for remedy and continues beyond the time
reasonably necessary to cure (and Landlord has not undertaken procedures to
cure the default within such thirty (30) day period and diligently pursued
such efforts to complete such cure), Tenant may, in addition to its other
remedies at law, in equity or as set forth in this Lease, seek to recover
any and all direct damages (but not consequential or speculative damages)
sustained by Tenant as a result of Landlord's breach.
XXI. ATTORNEYS' FEES
In the event that at any time during the Lease Term either Landlord or
Tenant shall institute any action or proceeding against the other relating
to the provisions of this Lease or any default hereunder, the unsuccessful
party in such action or proceeding agrees to reimburse the successful party
for the reasonable expenses of attorneys' fees and paralegal fees and
disbursements incurred therein by the successful party. Such reimbursement
shall include all legal expenses incurred prior to trial, at trial and at
all levels of appeal and post-judgment proceedings.
XXII. FORCE MAJEURE
In the event that either party hereto shall be delayed or hindered in
or prevented from the performance required hereunder by reason of strikes,
lockouts, labor troubles, failure of power, riots, insurrection, war, acts
of God, or other reason of like nature not the fault of the party delayed
in performing work or doing acts (hereinafter, Permitted Delay or
Permitted Delays ), such party shall be excused for the period of time
equivalent to the delay caused by such Permitted Delay. Notwithstanding
the foregoing, any extension of time for a Permitted Delay shall be
conditioned upon the party seeking an extension of time delivering written
notice of such Permitted Delay to the other party within ten (10) days of
the event causing the Permitted Delay.
XXIII. MISCELLANEOUS PROVISIONS
A. Indemnity.
1. To the extent not expressly prohibited by law, Landlord and
Tenant each (in either case, the Indemnitor ) agrees to hold harmless
and indemnify the other and the other's respective agents, partners,
shareholders, officers, directors and employees (collectively, the
Indemnitees ) from any losses, damages, judgments, claims, expenses,
costs and liabilities imposed upon or incurred by or asserted against
the Indemnitees, including reasonable attorney's fees and expenses,
for death or injury that may arise from or be caused directly or
indirectly by any negligent act or omission or any willful misconduct
of Indemnitor or any of Indemnitor' s respective agents, partners, or
employees. Such third parties shall not be deemed third party
beneficiaries of this Lease. In case any action, suit or proceeding
is brought against any of Indemnitees by reason of any such act of
Indemnitor or any of Indemnitor's respective agents, partners or
employees, then Indemnitor will, at Indemnitor's expense and at the
option of said Indemnitees, by counsel approved or selected by said
Indemnitees, resist and defend such action, suit or proceeding.
2. In addition to the indemnification set forth above, Tenant
shall indemnify, defend and hold Landlord, its principals, agents,
employees and any Mortgagee(s) harmless against and from all
liabilities, obligations, damages, penalties, claims, costs, charges
and expenses, including, without limitation, reasonable architects'
and attorneys' fees, which may be imposed upon, incurred by or
asserted against Landlord and arising, directly or indirectly out of
or in connection with the use or occupancy of the Premises by, through
or under Tenant and (without limiting the generality of the foregoing)
any of the following occurring during the Term: (i) any work or thing
done in, on or about the Premises or any part thereof by Tenant or any
of its assignees, concessionaires, agents, contractors, employees or
invitees; (ii) any use, non-use, possession, occupation, condition,
operation, maintenance or management of the Premises or any part
thereof; (iii) any act or omission of Tenant or any of its assignees,
concessionaires, agents, contractors, employees or invitees; (iv) any
injury or damage to any person or property occurring in on or about
the Premises or any part thereof; or (v) any failure on the part of
Tenant to perform or comply with any of the covenants, agreements,
terms or conditions contained in this Lease with which Tenant, on its
part must comply or perform. In case any action or proceeding is
brought against Landlord by reason of any of the foregoing, Tenant
shall, at Tenant's sole cost and expense, resist or defend such action
or proceeding by counsel approved by Landlord.
B. Notices. All notices, demands and requests which may be or are
required to be given, demanded or requested by either party to the other
shall be in writing. All notices, demands and requests by Landlord to
Tenant shall be sent by United States registered or certified mail, postage
prepaid, or by commercial overnight delivery service or other personal
service (with evidence of receipt), addressed to Tenant as follows:
501 North Broadway
St. Louis, Missouri 63102
Attention: Legal Department
or at such other place as Tenant may from time to time designate by written
notice to Landlord. All notices, demands and requests by Tenant to
Landlord shall be sent by United States registered or certified mail,
postage prepaid, or by commercial overnight delivery service or other
personal service (with evidence of receipt), addressed to Landlord as
follows:
Attention:
or at such other place as Landlord from time to time may designate by
written notice to Tenant. Notices, demands and requests which shall be
served upon Landlord by Tenant, or upon Tenant by Landlord, by mail in the
manner aforesaid, shall be deemed to be sufficiently served or given for
all purposes hereunder on the second (2nd) business day after mailing, and
notices served by overnight delivery service shall be deemed served or
given on the first (1st) business day after delivery to such service.
C. Quiet Possession. Landlord covenants and agrees that Tenant upon
paying the Rent, and upon observing and keeping the covenants, agreements
and conditions of this Lease on its part to be kept, observed and
performed, shall lawfully and quietly hold, occupy and enjoy the Premises
(subject to the provisions of this Lease) during the Lease Term (as it may
be extended from time to time as expressly provided herein) without
hindrance or molestation by Landlord or by any person or persons claiming
under Landlord.
D. Estoppels. Tenant, without charge, at any time and from time to
time, within twenty (20) days after written request by Landlord, shall
certify by written instrument, duly executed, acknowledged and delivered to
any Mortgagee, assignee of a Mortgagee, proposed Mortgagee, or to any
purchaser or proposed purchaser or transferee of the Landlord, the Building
or the Premises or any interest therein:
1. That this Lease is unmodified and in full force and effect
(or, if there have been modifications, that the same is in full force
and effect, as modified, and stating the modifications);
2. The dates to which the Rent has been paid in advance;
3. Whether or not there are then existing any breaches or
defaults by Tenant or by Landlord and known by Tenant under any of the
covenants, conditions, provisions, terms or agreements of this Lease,
and specifying such breach or default, if any, or any set-offs or
defenses against the enforcement of any covenant, condition,
provision, term or agreement of this Lease upon the part of Tenant to
be performed or complied with (and, if so, specifying the same and the
steps being taken to remedy the same);
4. That Tenant has made no advancements to or on behalf of
Landlord for which it has the right to deduct from, or offset against,
future Rent payments;
5. Tenant has accepted the Premises and is in full and complete
possession thereof; and
6. Such other statements or certificates as Landlord or any
Mortgagee may reasonably request.
E. No Waiver. Landlord shall not be deemed to have waived any
breach of any term, covenant, or condition herein contained unless the same
has been specifically waived by Landlord in writing. Any such waiver shall
not be deemed to be a waiver of any subsequent breach of the same or any
other term, covenant or condition herein contained.
F. Partial Invalidity. If any covenant, condition, provision, term
or agreement of this Lease shall, to any extent, be held invalid or
unenforceable, the remaining covenants, conditions, provisions, terms and
agreements of this Lease shall not be affected thereby, but each covenant,
condition, provision, term or agreement of this Lease shall be valid and in
force to the fullest extent permitted by law. This Lease shall be
construed and be enforceable in accordance with the laws of the State of
Missouri.
G. Binding on Successors. The covenants and agreements herein
contained shall bind and inure to the benefit of Landlord and its
successors and assigns, and Tenant and its successors and assigns. Upon
any sale or other transfer by Landlord of its interest in the Building,
Landlord shall be relieved of any obligations under this Lease occurring
subsequent to such sale or other transfer.
H. Captions. The caption of each section of this Lease is for
convenience and reference only and in no way defines, limits or describes
the scope or intent of such section or of this Lease.
I. No Partnership. This Lease does not create the relationship of
principal and agent, or of partnership, joint venture, or of any
association or relationship between Landlord and Tenant, the sole
relationship between Landlord and Tenant established by this Lease being
that of landlord and tenant.
J. Complete Agreement. All preliminary and contemporaneous
negotiations are merged into and incorporated in this Lease. This Lease
contains the entire agreement between the parties and shall not be modified
or amended in any manner except by an instrument in writing executed by the
parties hereto.
K. Time of the Essence. Time is of the essence of this Lease, and
all provisions herein relating thereto shall be strictly construed.
L. No Brokers. Each party represents and warrants to the other that
it has not dealt with any broker in connection with this Lease and agrees
to indemnify and hold the other party and its agents, officers, directors
and employees harmless from all losses, damages, liabilities, claims,
liens, costs and expenses, including, without limitation, attorneys' fees,
arising from any claims or demands of any broker or brokers, salespersons
or finders for any commission or fee alleged to be due such broker or
brokers, salespersons or finders based upon such broker or brokers,
salespersons or finders having dealt with the indemnifying party in
connection with this Lease.
M. Consents. Subject to specific conditions as to consents and
approvals provided for in other sections of this Lease, no consent or
approval required under this Lease shall be unreasonably withheld or
delayed.
N. Counterparts. This Lease may be executed in counterparts, each
of which when taken together shall constitute one instrument..
O. Jointly Drafted. This Lease represents the product of the joint
negotiation , preparation and agreement of and between the parties hereto
and is not to be construed against one party or the other as the principal
drafter.
P. Authority. Landlord has full power, right and authority to enter
into this Lease and to perform each and all of the terms, provisions,
covenants, agreements, matters and things herein provided to be performed
by Landlord, and to execute and deliver all documents provided hereunder to
be executed and delivered by Landlord; and this Lease does not, nor does or
will the performance by Landlord of its obligations hereunder, contravene
any provision of law or any covenant, indenture or agreement binding upon
Landlord. Tenant has full power, right and authority to enter into this
Lease and to perform each and all of the terms, provisions, covenants,
agreements, matters and things herein provided to be performed by Tenant,
and to execute and deliver all documents provided hereunder to be executed
and delivered by Tenant; and this Lease does not, nor does or will the
performance by Tenant of its obligations hereunder, contravene any
provision of law or any covenant, indenture or agreement binding upon
Tenant.
Q. Remedies Cumulative. No reference to any specific right or
remedy in this Lease shall preclude Landlord from exercising any other
right, from having any other remedy, or from maintaining any action to
which it may otherwise be entitled under this Lease, at law or in equity.
Without limiting the generality of the foregoing sentence, the maintenance
of any action or proceeding to recover possession of the Premises or any
installment or installments of Rent or any other monies that may be due or
become due from Tenant to Landlord shall not preclude Landlord from
thereafter instituting and maintaining subsequent actions or proceedings
for the recovery of possession of the Premises or of any other monies that
may be due or become due from Tenant. Any entry or reentry into the
Premises by Landlord shall not be deemed to absolve or discharge Tenant
from liability under this Lease.
R. Building Name. So long as Tenant remains in possession of fifty
percent (50%) or more of the Rentable Area of the Building, the Building
will continue to be called The Edison Building, references to or
identification of portions of the Building by reference to members of the
founding Edison family, by name or collectively as the Founders and the
street or mailing address of Tenant will not be changed without the consent
of Tenant, which consent Tenant may withhold at its sole discretion. In
addition, no other person or entity will be permitted to use the street or
mailing address of Tenant.
S. Limitation on Right of Recovery against Landlord. It is
specifically understood and agreed that there shall be no personal
liability of Landlord (nor Landlord's agent) in respect to any of the
covenants, conditions or provisions of this Lease. In the event of a
breach or default by Landlord of any of its obligations under this Lease,
Tenant shall look solely to the equity of the Landlord in the Building for
the satisfaction of Tenant's remedies.
T. Survival. Notwithstanding anything to the contrary contained in
this Lease, the expiration of the Term of the Lease, whether by lapse of
time or otherwise, shall not relieve Tenant from Tenant's obligations
accruing prior to the expiration of the term.
U. Certain Rights Reserved To Landlord. Landlord reserves and may
exercise any of the following rights without affecting Tenant's obligations
hereunder:
1. to change the name or street address of the Building (except as
restricted in Section XXIII.R above);
2. to install and maintain a sign or signs on the exterior of the
Building;
3. to have access for Landlord and the other tenants of the Building
to any mail chutes located on the Premises according to the rules of
the United States Post Office;
4. to designate all sources furnishing sign painting and lettering,
ice, drinking water, towels, coffee cart service and toilet supplies,
lamps and bulbs used on the Premises; and
5. to close the Building after regular working hours and on the
legal holidays subject, however, to Tenant's right to admittance,
under such reasonable regulations as Landlord may prescribe from time
to time, which may include by way of example but not of limitation,
that persons entering or leaving the Building identify themselves to a
watchman by registration or otherwise and that said persons establish
their right to enter or leave the Building.
The Landlord may enter upon the Premises and may exercise any or all of the
foregoing rights hereby reserved without being deemed guilty of an eviction
or disturbance of the Tenant's use or possession and without being liable
in any manner to the Tenant and without abatement of Rent or affecting any
of the Tenant's obligations hereunder.
IN WITNESS WHEREOF, each of the parties has caused this Lease to be
duly executed as of the day and year first above written.
TENANT: LANDLORD:
EDISON BROTHERS STORES, INC., EBS BUILDING, L.L.C., a Delaware
a Delaware corporation limited liability company
By: By:
Its: Its:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted fromthe condensed
consoldiated balance sheet as of November 1,1997, and the condensed consoldiated
statement of operation of the Comapny as reorganized for the 4 weeks ended
November 1, 1997, and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 1-MO
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> NOV-01-1997
<CASH> 13,300
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 211,200
<CURRENT-ASSETS> 322,300
<PP&E> 125,700
<DEPRECIATION> 2,300
<TOTAL-ASSETS> 530,000
<CURRENT-LIABILITIES> 210,000
<BONDS> 0
0
0
<COMMON> 10,225
<OTHER-SE> 130,600
<TOTAL-LIABILITY-AND-EQUITY> 530,000
<SALES> 62,700
<TOTAL-REVENUES> 62,700
<CGS> 48,700
<TOTAL-COSTS> 20,000
<OTHER-EXPENSES> (300)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,000
<INCOME-PRETAX> (6,700)
<INCOME-TAX> 100
<INCOME-CONTINUING> (6,800)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,800)
<EPS-PRIMARY> (.67)
<EPS-DILUTED> (.67)
</TABLE>
