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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MAY 12, 1994
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(APRIL 28, 1994)
AMES DEPARTMENT STORES, INC.
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(Exact Name of Registrant As Specified In Its Charter)
DELAWARE
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(State Or Other Jurisdiction Of Incorporation)
1-5380 04-2269444
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(Commission File Number) (IRS Employer Identification No.)
2418 MAIN STREET; ROCKY HILL, CONNECTICUT 06067-0801
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(Address Of Principal Executive Offices) (Zip Code)
(203) 257-2000
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(Registrant's Telephone Number, Including Area Code)
NOT APPLICABLE
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(Former Name Or Former Address, If Changed Since Last Report)
Exhibit Index on Page 3
Page 1 of 158 (Including Exhibit)
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ITEM 5: OTHER EVENTS
As reported in its Form 10-K for the fiscal year ended
January 29, 1994, which was filed on April 29, 1994, Ames
Department Stores, Inc. (the "Company") entered into an
agreement on April 28, 1994 with BankAmerica Business
Credit, Inc., as agent, and a syndicate consisting of seven
other banks and financial institutions, for a secured
revolving credit facility of up to $300 million (the "New
Facility"). The New Facility has a sublimit of $100 million
for letters of credit. A copy of the New Facility is
attached as Exhibit 4 and is incorporated by reference
herein.
Management believes that the New Facility contains terms,
covenants and interest rates that are generally more
favorable than those in the credit agreement in effect since
the Company's emergence from bankruptcy and in its current
letter of credit facility. The New Facility expires on the
third anniversary from the initial Advance (as defined in
the New Facility). A summary of the material features of
the New Facility is set forth in the Company's January 29,
1994 Form 10-K (Note 6 to the Consolidated Financial
Statements).
As a result of the refinancing, the Company is expected to
report, in the first quarter of the fiscal year ending
January 28, 1995 ("Fiscal 1995"), a non-cash extraordinary
charge of approximately $2.3 million, before any tax
benefit, relating to the extinguishment of debt. In
addition, as a consequence of, among other things, the
refinancing, the benefit to the Company from the Wertheim
settlement (Note 11 to the Consolidated Financial
Statements), an expected non-cash income tax provision, and
stock appreciation rights expense accruals, the Company
anticipates filing a revised Fiscal 1995 summary financial
plan on a Form 8-K in late May or early June, 1994. The
Company currently anticipates that the net effect of all of
the above adjustments, including the extraordinary charge,
will not result in a material change in the projected net
income for the year as presented in the Form 8-K dated
February 17, 1994.
ITEM 7: FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
Exhibit: 4 Credit Agreement, dated April 28, 1994,
between BankAmerica Business Credit, Inc.,
as Agent, and Ames Department Stores, Inc.
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INDEX TO EXHIBITS
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EXHIBIT NO. EXHIBIT PAGE NO.
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4 Credit Agreement, dated April 28, 1994, 5
between BankAmerica Business Credit, Inc.,
as Agent, and Ames Department Stores, Inc.
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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.
AMES DEPARTMENT STORES, INC.
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Registrant
Dated: May 9, 1994 By: /S/ PETER THORNER
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Peter Thorner
President, Chief Operating
Officer and Director
Dated: May 9, 1994 By: /S/ WILLIAM C. NAJDECKI
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William C. Najdecki
Senior Vice President,
Chief Accounting Officer
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U.S. $300,000,000
CREDIT AGREEMENT
Dated as of April 28, 1994,
Among
BANKAMERICA BUSINESS CREDIT, INC.,
individually and in its capacity as Agent and Administrative Agent,
GENERAL ELECTRIC CAPITAL CORPORATION,
individually and in its capacity as Co-Agent,
CONGRESS FINANCIAL CORPORATION,
individually and in its capacity as Co-Agent,
CERTAIN OTHER FINANCIAL INSTITUTIONS PARTIES HERETO,
ZAYRE NEW ENGLAND CORP.,
AMES STORES,
AMES DEPARTMENT STORES, INC.,
AND
CERTAIN AFFILIATES THEREOF
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS AND ACCOUNTING TERMS.
1.1. CERTAIN DEFINED TERMS 1
1.2. TERMS DEFINED IN THE UNIFORM COMMERCIAL CODE 25
1.3. COMPUTATION OF TIME PERIODS 25
1.4. ACCOUNTING TERMS 25
1.5. OTHER PROVISIONS REGARDING DEFINITIONS 25
SECTION 2. AMOUNT AND TERMS.
2.1. REVOLVING ADVANCES 26
2.2. REVOLVING CREDIT FACILITY COMMITMENT AND
BORROWING LIMIT 26
2.3. NOTES 27
2.4. NOTICE OF BORROWING; BORROWER'S CERTIFICATE 28
2.5. TERMINATION OR REDUCTION OF THE REVOLVING CREDIT
FACILITY COMMITMENT 32
2.6. INTEREST 33
2.7. CONVERSION OF BORROWINGS; RENEWALS 34
2.8. COMPUTATION OF INTEREST 35
2.9. INCREASED COSTS 35
2.10. CHANGE IN LAW RENDERING EURODOLLAR ADVANCES
UNLAWFUL 36
2.11. EURODOLLAR AVAILABILITY 37
2.12. INDEMNITIES 38
2.13. DISBURSEMENT 41
2.14. ADMINISTRATIVE AGENT'S AVAILABILITY ASSUMPTION 41
2.15. PRO RATA TREATMENT AND PAYMENTS 42
2.16. EURODOLLAR OFFICES 42
2.17. TELEPHONIC NOTICE 42
2.18. MAXIMUM INTEREST 43
2.19. RECEIPT OF PAYMENTS 43
2.20. APPLICATION OF PROCEEDS 44
2.21. ACCOUNTING 45
2.22. TAXES 45
2.23. LENDER DEFAULT. 48
2.24. DETERMINATIONS BY THE AGENTS 48
2.25. SUBSTITUTION OF LENDERS 49
SECTION 3. AMOUNT AND TERMS OF LETTERS OF
CREDIT AND PARTICIPATION THEREIN.
3.1. LETTERS OF CREDIT 50
3.2. ISSUING THE LETTERS OF CREDIT 51
3.3. REIMBURSEMENT OBLIGATIONS 51
3.4. REVOLVING ADVANCES 51
3.5. SETTLEMENT BY LENDERS WITH ISSUING BANK 52
3.6. LETTER OF CREDIT FEES 53
3.7. INDEMNIFICATION: NATURE OF THE ISSUING BANK'S DUTIES 54
3.8. INCREASED COSTS 55
3.9. UNIFORM CUSTOMS AND PRACTICE 56
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SECTION 4. PAYMENTS AND PREPAYMENTS.
4.1. MANDATORY PAYMENTS 56
4.2. PAYMENT FROM INSURANCE AND OTHER PROCEEDS 58
4.3. OPTIONAL PREPAYMENTS 59
4.4. PROCEDURES FOR PAYMENT 59
4.5. COMMITMENT FEES 60
4.6. FACILITY FEES 61
4.7. ADMINISTRATIVE AGENT'S FEES 61
4.8. COMMITMENT REDUCTION FEES 62
SECTION 5. SECURITY AND GUARANTIES.
5.1. PLEDGE AGREEMENTS 62
5.2. SECURITY AGREEMENT - TRADEMARK, PATENT AND
COPYRIGHT 63
5.3. SECURITY AGREEMENTS 63
5.4. REAL PROPERTY; MORTGAGES; TITLE INSURANCE 64
5.5. ADDITIONAL COLLATERAL 65
5.6. FILING AND RECORDING 66
5.7. INTERPRETATION OF SECURITY DOCUMENTS 66
5.8. GUARANTIES 66
5.9. RELEASE OF REAL ESTATE AND EQUIPMENT UPON ISSUANCE
OF $30,000,000 OF ACCEPTABLE SUBORDINATED DEBT 66
SECTION 6. CONDITIONS PRECEDENT TO INITIAL BORROWINGS AND
ISSUANCE OF LETTERS OF CREDIT.
6.1. OPINIONS OF COUNSEL 67
6.2. FINANCIAL STATUS AND STATEMENTS 67
6.3. QUALIFICATION 68
6.4. SECURITY DOCUMENTS AND INSTRUMENTS 68
6.5. EVIDENCE OF INSURANCE 68
6.6. INTENTIONALLY OMITTED 69
6.7. TOTAL AVAILABILITY 69
6.8. NOTES 69
6.9. FEES AND EXPENSES 69
6.10. INTERCOMPANY NOTES 69
6.11. DISBURSEMENT AUTHORIZATION 69
6.12. CASH MANAGEMENT 70
6.13. NO LITIGATION 70
6.14. INTENTIONALLY OMITTED 70
6.15. INTENTIONALLY OMITTED 70
6.16. INTENTIONALLY OMITTED 70
6.17. COMPLIANCE WITH LAW 70
6.18. PROCEEDINGS; RECEIPT OF DOCUMENTS 70
6.19. SOLVENCY 71
6.20. SPECIAL COUNSEL FEES 71
6.21. TERMINATION OF EXISTING DEBT 71
6.22. AMENDMENT TO MANAGEMENT AGREEMENT;
SUBORDINATION AGREEMENTS 71
6.23. ACCOUNTANTS' LETTER 72
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SECTION 7. CONDITIONS PRECEDENT TO EACH BORROWING
AND ISSUANCE OF LETTERS OF CREDIT.
7.1. CONDITIONS 72
7.2. ACTIONS BY ADMINISTRATIVE AGENT. 73
SECTION 8. USE OF PROCEEDS
SECTION 9. AFFIRMATIVE COVENANTS.
9.1. FINANCIAL STATEMENTS AND OTHER INFORMATION 74
9.2. TAXES AND CLAIMS 77
9.3. INSURANCE 78
9.4. BOOKS AND RESERVES 80
9.5. PROPERTIES IN GOOD CONDITION 80
9.6. MAINTENANCE OF EXISTENCE, ETC. 80
9.7. FIELD EXAMINATIONS AND INSPECTIONS 80
9.8. PAY INDEBTEDNESS TO LENDERS AND PERFORM OTHER
COVENANTS 81
9.9. CYCLE COUNTS 81
9.10. REPORTING OF MISREPRESENTATIONS 81
9.11. COMPLIANCE WITH LAW 81
9.12. ERISA 81
9.13. FURTHER ASSURANCES 82
9.14. APPRAISALS 82
9.15. ENVIRONMENTAL MATTERS, ETC. 83
9.16. FINANCIAL COVENANTS 86
9.17. LEASES; NEW REAL ESTATE 87
9.18. SUPPLEMENTAL DISCLOSURE 88
9.19. AGREEMENTS 88
9.20. COLLECTION AND PAYMENT; BANK ACCOUNTS 88
SECTION 10. NEGATIVE COVENANTS
10.1. CAPITAL EXPENDITURES 89
10.2. LIENS 91
10.3. INDEBTEDNESS 92
10.4. LOANS, INVESTMENTS AND GUARANTEES 93
10.5. MERGER, SALE OF ASSETS, DISSOLUTION, ETC. 94
10.6. DIVIDENDS, REDEMPTIONS AND OTHER PAYMENTS 95
10.7. TRANSACTIONS WITH AFFILIATES 95
10.8. ACCOUNTS 96
10.9. MANAGEMENT COMPENSATION AND OTHER PAYMENTS 96
10.10. COMPROMISE OF RECEIVABLES 96
10.11. INTENTIONALLY OMITTED 96
10.12. AMENDMENT AND MODIFICATION OF CERTAIN
DOCUMENTS 96
10.13. FISCAL YEAR 96
10.14. CHANGE OF BUSINESS 97
10.15. NO NEGATIVE PLEDGES 97
10.16. RENTAL OBLIGATIONS 97
10.17. LEASE-BACKS 97
10.18. EQUITY INTERESTS 97
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SECTION 11. DEFAULTS AND REMEDIES.
11.1. EVENTS OF DEFAULT 98
11.2. SUITS FOR ENFORCEMENT 102
11.3. RIGHTS AND REMEDIES CUMULATIVE 102
11.4. RIGHTS AND REMEDIES NOT WAIVED 103
11.5. APPLICATION OF PROCEEDS 103
SECTION 12. REPRESENTATIONS AND WARRANTIES.
12.1. CORPORATE AND PARTNERSHIP STATUS 104
12.2. POWER AND AUTHORITY 105
12.3. NO VIOLATION OF AGREEMENTS 105
12.4. NO LITIGATION 106
12.5. GOOD TITLE TO PROPERTIES 106
12.6. FINANCIAL STATEMENTS AND CONDITION 108
12.7. TRADEMARKS, PATENTS, ETC. 109
12.8. TAX LIABILITY 109
12.9. GOVERNMENTAL ACTION 109
12.10. DISCLOSURE 109
12.11. FEDERAL RESERVE REGULATIONS; SECURITIES LAWS 110
12.12. INVESTMENT COMPANY 110
12.13. EMPLOYEE BENEFIT PLANS 110
12.14. PERMITS, LAWS, ETC. 111
12.15. ENVIRONMENTAL STATUS 112
12.16. SOLVENCY 113
12.17. INTENTIONALLY OMITTED 113
12.18. BANK ACCOUNTS 113
12.19. LABOR MATTERS 113
12.20. OTHER VENTURES 114
12.21. BROKERS AND CONSULTANTS 114
12.22. MATERIAL CONTRACTS 114
SECTION 13. MISCELLANEOUS.
13.1. COLLECTION COSTS 114
13.2. AMENDMENT, MODIFICATION AND WAIVER 114
13.3. NEW YORK LAW 116
13.4. NOTICES 116
13.5. FEES AND EXPENSES 117
13.6. STAMP OR OTHER TAX 117
13.7. WAIVERS 117
13.8. TERMINATION OF AGREEMENT 118
13.9. CAPTIONS 119
13.10. LIEN; SET-OFF BY LENDERS 119
13.11. PAYMENT DUE ON NON-BUSINESS DAY 119
13.12. SERVICE OF PROCESS 120
13.13. BANKAMERICA BUSINESS CREDIT, INC., AS
ADMINISTRATIVE AGENT 120
13.14. CO-AGENTS 125
13.15. BENEFIT OF AGREEMENT 128
13.16. COUNTERPARTS; FACSIMILE SIGNATURE 131
13.17. INVALIDITY 132
13.18. CONFIDENTIALITY 132
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SCHEDULES AND EXHIBITS
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Schedule 1.1(a) - Existing Debt
Schedule 1.1(b) - Reinstated Debt
Schedule 1.1(c) - Landlord Lien States
Schedule 2.6(e) - Pricing Adjustments
Schedule 4.1(b) - Inventory Leverage Test
Schedule 4.6 - Facility Fees
Schedule 5.3 - Excluded Collateral
Schedule 5.4 - Mortgaged Real Property
Schedule 6.12 - Unblocked Accounts
Schedule 9.3 - Insurance
Schedule 10.2 - Existing Liens
Schedule 10.3 - Indebtedness
Schedule 12.1 - Capitalization and Subsidiaries
Schedule 12.4 - Litigation
Schedule 12.5 - Real Property
Schedule 12.5(b) - Defective Properties
Schedule 12.8 - Taxes
Schedule 12.13 - ERISA
Schedule 12.15 - Environmental Matters
Schedule 12.18 - Bank Accounts
Schedule 12.19 - Collective Bargaining Agreements
Schedule 12.20 -Other Ventures
Schedule 12.22 - Material Contracts
Schedule 13.2(c)(ii) - Assets Held For Sale
Exhibit A - Lenders, Commitments and Initial Eurodollar Offices
Exhibit 2.3(a) - Form of Note
Exhibit 2.4(a) - Form of Borrower's Certificate
Exhibit 2.4(e) - Form of Settlement Report
Exhibit 5.1(a)-1 - Form of Pledge Agreement (Capital Stock)
Exhibit 5.1(a)-2 - Form of Pledge Agreement (Partnership Interests)
Exhibit 5.1(b) - Form of Note Pledge Agreement
Exhibit 5.2 - Form of Trademark, Patent and
Copyright Security Agreement
Exhibit 5.3(a) - Form of Security Agreement
Exhibit 5.8 - Form of Guaranty
Exhibit 6.10(a) - Form of Intercompany Note
Exhibit 6.10(b) - Form of Subordinated Intercompany Note
Exhibit 6.10(c) - Form of Intercompany Security Agreement
Exhibit 6.19 - Form of Solvency Certificate
Exhibit 6.22(i) - Form of Amendment to Management Agreement
Exhibit 6.22(ii) - Form of Intercompany Subordination Agreement
Exhibit 6.22(iii) - Form of Bill of Sale
Exhibit 6.23 - Form of Accountants Letter
Exhibit 9.1(k) - Form of Borrowing Base Certificate
Exhibit 10.1 - Form of Settlement Agreement
Exhibit 12.6(b) - Projections
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CREDIT AGREEMENT, dated as of April 28, 1994, among ZAYRE
NEW ENGLAND CORP., a Delaware corporation ("Zayre New England"), AMES
STORES, a Delaware general partnership ("Ames Stores"), AMES
DEPARTMENT STORES, INC., a Delaware corporation ("Ames"), AMD, INC.,
a Delaware corporation, AMES REALTY II, INC., a Delaware corporation,
AMES TRANSPORTATION SYSTEMS, INC., a Delaware corporation, ZAYRE
CENTRAL CORP., a Delaware corporation, BANKAMERICA BUSINESS CREDIT,
INC., a Delaware corporation having an office at 40 East 52nd Street,
New York, New York 10022, individually ("BABC") and as administrative
agent for each of the Lenders hereunder (BABC, in its capacity as
administrative agent, together with any successor administrative
agent under Section 13.13 hereof, being the "Administrative Agent"),
GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation having
an office at 501 Merritt Seven, Norwalk, Connecticut 06851,
individually ("GE Capital") and as co-agent for each of the Lenders
hereunder (GE Capital, in such capacity, being a "Co-
Agent"), CONGRESS FINANCIAL CORPORATION, a California corporation
having an office at 1133 Avenue of the Americas, New York, New York
10036, individually ("Congress") and as co-agent for each of the
Lenders hereunder (Congress, in such capacity, being a "Co-Agent"),
and the other banks and other financial institutions named herein and
whose signatures appear on the signature pages hereto (BABC, GE
Capital and Congress, and such other banks and other financial
institutions and their respective successors and assigns,
individually, a "Lender" and collectively, the "Lenders").
WHEREAS, the Borrowers (as hereinafter defined) have
requested the Lenders to make secured revolving credit advances and
other financial accommodations to the Borrowers from time to time of
up to $300,000,000 in aggregate principal amount outstanding at any
one time for the purposes set forth in Section 8 hereof;
WHEREAS, the Lenders are willing, subject to and upon the
terms and conditions herein set forth, to extend such financial
accommodations to the Borrowers;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. DEFINITIONS AND ACCOUNTING TERMS.
1.1. CERTAIN DEFINED TERMS. For all purposes of this
Agreement, unless the context otherwise requires the following terms
shall have the meanings set forth below (the following meanings to be
equally applicable to both the singular and plural forms of the terms
defined):
"Acceptable Equity" shall mean common equity securities of
Ames issued (i) in a public offering or (ii) otherwise on terms and
conditions that, prior to the issuance thereof, are deemed acceptable
in writing by the Majority Lenders.
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"Acceptable Subordinated Debt" shall mean Indebtedness for
Borrowed Money of one or more of the Credit Parties (i) that is
subordinated to the Lender Debt or (ii) for which recourse is limited
solely to certain real property or equipment of one or more Credit
Parties, which cannot become recourse to any one or more Credit
Parties or any assets other than such real property or equipment
under any circumstances whatsoever, including, without limitation,
those contemplated by section 1111(b) of the Federal Bankruptcy Code
(as to which an effective waiver must be provided), and is in all
respects upon terms and conditions (including, without limitation,
terms restricting the ability of the obligor thereof to make or the
obligee thereof to receive payments during a Default or Event of
Default and similar provisions which are customarily contained in
"subordination" provisions) acceptable to the Majority Lenders, and
in each case is otherwise on terms and conditions (including, without
limitation, provisions relating to intercreditor arrangements with
the Administrative Agent for the benefit of the Agents and the
ratable benefit of the Lenders) that, prior to the issuance thereof,
are deemed acceptable in writing by the Majority Lenders (it being
understood that no Lender shall base its determination as to the
acceptability of any Acceptable Subordinated Debt on considerations
relating to income derived by the Lenders from the inclusion of the
Tranche B Facility Amount within the Revolving Credit Facility
Commitment).
"Account Debtor" shall mean any Person who is or who may
become obligated to any Borrower under, with respect to, or on
account of, an Account.
"Accounts" shall mean all accounts, accounts receivable,
other receivables and general intangibles for money due or to become
due, contract rights, chattel paper, instruments, documents and
notes, whether now owned or hereafter acquired by any Borrower.
"Additional Indebtedness" shall mean all Lender Debt other
than principal of Advances and interest thereon.
"Administrative Agent" shall have the meaning set forth in
the preamble to this Agreement.
"Advance" shall mean and include each Revolving Advance.
"Adverse Environmental Condition" shall mean any of the
matters referred to in clause (i), (ii) or (iii) of the definition of
Environmental Claim.
"Affiliate" of any specified Person shall mean any other
Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person or which
is a director, officer or partner (limited or general) of such
specified Person. For the purposes of this definition, "control,"
when used with respect to any specified Person, means the possession,
direct or indirect, of the power to vote ten percent (10%) or more of
the securities having ordinary voting power for the election of
directors or the power to direct or cause the direction of 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.
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"Agents" shall mean and include the Administrative Agent and
the Co-Agents.
"Aggregate Borrowing Base" shall mean the sum of the
Borrowing Bases of all the Borrowers.
"Aggregate Revolving Commitments" shall mean at any time the
sum of the Revolving Commitments of the Lenders at such time.
"Agreement" shall mean this Credit Agreement, as amended,
modified, restated or supplemented from time to time.
"Ames" shall have the meaning set forth in the preamble to
this Agreement.
"Ames Stores" shall have the meaning set forth in the
preamble to this Agreement.
"Ames Stores Promissory Note" shall mean the non-negotiable
Promissory Note, dated as December 28, 1992, by Ames Stores to the
order of Ames (for itself and as agent) in the principal amount of
$428,753,544, as in effect on the date of this Agreement.
"Applicable Margin" shall mean (i) with respect to
Eurodollar Advances, three and three-quarters percentage points
(3.75%) per annum, (ii) with respect to Reference Rate Advances, that
are Tranche A Advances, and to the extent due and payable, Additional
Indebtedness, two percentage points (2%) per annum and (iii) with
respect to Reference Rate Advances that are Tranche B Advances, five
percentage points (5%) per annum, subject, in the case of clauses (i)
and (ii) above, to adjustment pursuant to Section 2.6(e) hereof.
"Approved Delegate" shall have the meaning set forth in
Section 13.13(n) hereof.
"Asset Sale" with respect to any Person shall mean any sale,
lease, transfer or other disposition of any asset by such Person or
any of its Subsidiaries, other than sales of Inventory by such Person
or any of its Subsidiaries in the ordinary course of business.
"Asset Sale Agreement" shall mean the Asset Sale and
Security Agreement, dated as of December 28, 1992, among Ames Stores,
Ames and certain of the subsidiaries, as in effect on the date of
this Agreement.
"Authorized Representative" shall mean each Person
designated from time to time, as appropriate, in a Written Notice to
the Administrative Agent for the purposes of giving notices of
borrowing, requests for issuances of Letters of Credit, or conversion
or renewal of, Advances, which designation shall continue in force
and effect until terminated in a Written Notice to the Administrative
Agent.
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"BABC" shall have the meaning set forth in the preamble to
this Agreement.
"Board" shall mean the Board of Governors of the Federal
Reserve System or any successor agency or entity performing
substantially the same functions.
"Blocked Account" shall mean a deposit account of any Credit
Party maintained at the First National Bank of Maryland, Key Bank
(New York) or Fleet Bank or any other major depositary bank of any
such Person, into which Proceeds shall be deposited and which is
subject to a Blocked Account Agreement.
"Blocked Account Agreement" shall have the meaning set forth
in Section 9.20(a) hereof.
"Borrower's Certificate" shall have the meaning set forth
in Section 2.4 hereof.
"Borrower" shall mean and include each of Zayre New England
and Ames Stores.
"Borrowing Base" with respect to any Borrower at any time
shall mean the sum of (i) an amount equal to fifty-five percent (55%)
of the aggregate value (lower of cost (on a first-in, first-out
basis) and current market value) of Eligible Inventory of such
Borrower not covered by any outstanding Merchandise Letter of Credit
in each case as indicated on the most recent weekly Borrowing Base
Certificate delivered to the Agents by or on behalf of such Borrower
as of such time, unless a more recent Borrowing Base Certificate has
been requested by any Agent and delivered by or on behalf of such
Borrower to the Agents, in which case as indicated on such more
recent Borrowing Base Certificate (subject to adjustment by the
Agents in accordance with the provisions of this Agreement), PLUS
(ii) an amount equal to fifty percent (50%) of the aggregate value
(lower of cost (on a first-in, first-out basis) and current market
value) of Eligible Inventory of such Borrower covered by any
outstanding Merchandise Letter of Credit.
Each of the Agents reserves the right in good faith, based
on such collateral considerations as such Agent may in its sole
discretion deem necessary or appropriate, to adjust the Borrowing
Base of any Borrower by establishing reserves, making determinations
of Eligible Inventory, revising standards of eligibility of Eligible
Inventory or decreasing from time to time the percentages set forth
above, in which case the "Borrowing Base" of such Borrower shall be
defined to include such reserves, revisions or decreased percentages
and limited to Eligible Inventory as so determined.
"Borrowing Base Certificate" shall have the meaning set
forth in Section 9.1(k) hereof.
"Borrowing Limit" shall have the meaning set forth in
Section 2.2(a)(ii)(y) hereof.
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"Business Day" shall mean:
(a)for all Reference Rate Advances, any day other than a
Saturday, Sunday or other day on which banks in New York, New
York or San Francisco, California are authorized or required to
close, and
(b)for all Eurodollar Advances, the Business Days described
in the immediately preceding subclause (a) for the definition of
Business Day, but excluding therefrom any day on which commercial
banks are not open for dealings in Dollar deposits in the London
(England) interbank market.
"Capital Expenditures" shall mean, for any Person, any
expenditures or costs made by such Person for the acquisition,
maintenance or repair of fixed or capital assets (which are required
to be capitalized on the balance sheet of such Person in accordance
with GAAP), including, without limitation, the incurrence or
assumption of any Indebtedness in respect of such fixed or capital
asset; provided, however, that the expenditure of proceeds of
casualty insurance on tangible property for any replacement, repair
or restoration of such tangible property, the loss or destruction of
or damage to which gave rise to such proceeds, shall not constitute a
Capital Expenditure.
"Capital Lease" of any Person shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee
which, in conformity with GAAP, is, or is required to be, accounted
for as a capital lease on the balance sheet of such Person.
"Capitalized Lease Obligations" of any Person shall at any
time mean all obligations under Capital Leases of such Person in each
case taken at the amount thereof accounted for as liabilities in
accordance with GAAP at such time.
"Cash Flow" for any Fiscal Year shall mean the sum of (i)
actual EBITDA for the immediately preceding Fiscal Year (determined
in accordance with the financial statements for such preceding Fiscal
Year furnished pursuant to Section 9.1(b) hereof) LESS (ii) Cash
Interest Expense for the immediately preceding Fiscal Year LESS (iii)
the aggregate amount of payments in respect of Capital Expenditures
made by Ames and its Subsidiaries on a consolidated basis during the
immediately preceding Fiscal Year LESS (iv) the aggregate amount of
all payments of principal on Indebtedness for Borrowed Money,
including, without limitation, Capitalized Lease Obligations (other
than payments in respect of the Existing Debt made on the Closing
Date with the proceeds of the initial Advances) made by Ames and its
Subsidiaries during the immediately preceding Fiscal Year LESS (v)
the amount of cash income taxes of Ames and its Subsidiaries paid
during the immediately preceding Fiscal Year.
"Cash Interest Expense" shall mean for any period, the
aggregate amount of cash required to be paid by Ames and its
Subsidiaries on a consolidated basis during such period in respect of
Interest Expense of Ames and its Subsidiaries on a consolidated basis
during such period.
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"Change in Control" shall mean such time as (i) any Credit
Party liquidates or dissolves except to the extent expressly
permitted under Section 10.5 hereof, (ii) Ames shall cease to own and
control, directly or indirectly, 100% of each class of capital stock
or other ownership interests (on a fully diluted basis) of each
Credit Party (other than Ames), (iii) Zayre Central and Zayre New
England shall cease to be the sole general partners of Ames Stores,
or (iv) there occurs any transaction or series of transactions
(including, without limitation, a tender offer, merger or
consolidation) the result of which is that any "person" or "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange
Act) becomes the "beneficial owner" (as defined in Rule 13(d)(3) of
the Exchange Act) of more than 20% of the total aggregate voting
power of the voting capital stock of Ames and/or warrants or options
to acquire such voting capital stock, calculated on a fully diluted
basis.
"Charge" shall mean all Federal, state, county, city,
municipal, local, foreign or other governmental taxes at the time due
and payable, levies, assessments, charges, liens, claims or
encumbrances upon or relating to (i) any Collateral, (ii) any Lender
Debt, (iii) any of Ames' or any of its Subsidiaries' employees,
payroll, income or gross receipts, (iv) Ames' or any of its
Subsidiaries' ownership or use of any of its assets, or (v) any other
aspect of Ames' or any of its Subsidiaries' business.
"Claims" shall have the meaning set forth in Section 2.12(c)
hereof.
"Cleanup Period" shall have the meaning set forth in Section
4.1(d) hereof.
"Closing Date" shall mean the date and time that the initial
Advance is made, but in no event later than July 15, 1994.
"Closing Uses" shall have the meaning set forth in Section
8(a) hereof.
"Co-Agent" shall mean each of GE Capital and Congress, in
each such Person's capacity as a co-agent under this Agreement.
"COBRA" shall have the meaning set forth in Section 12.13
hereof.
"Code" shall mean, at any date, the Internal Revenue Code of
1986, as the same shall be in effect at such date.
"Collateral" shall mean all property and interests therein
(real or personal, tangible or intangible) in which a Lien is now or
hereafter granted to the Administrative Agent or any one or more of
the Lenders, in each case for the benefit of the Agents and the
ratable benefit of the Lenders, by any Credit Party or any Subsidiary
thereof or any other Person as security for all or any portion of the
Lender Debt or any guarantee thereof.
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"Collection Account" shall mean and include all Blocked
Accounts, all Concentration Accounts and all other bank accounts into
which any Proceeds are deposited.
"Commitment Letter" shall mean the commitment letter, dated
April 5, 1994, among the Borrowers, Ames, Zayre Central, BABC, GE
Capital, Sanwa Business Credit Corporation, and Transamerica Business
Credit Corporation.
"Common Paymaster Agreement" shall mean the Common Paymaster
Agreement, dated as of December 28, 1992, among Ames and certain of
its Subsidiaries, as in effect on the date of this Agreement.
"Concentration Account" shall mean each deposit account of
any Credit Party, established pursuant to Section 9.20(b) hereof,
into which Proceeds shall be deposited (either directly or by wire
transfer from the other Collection Accounts), and which is subject to
a Concentration Account Agreement.
"Concentration Account Agreement" shall have the meaning set
forth in Section 9.20(b) hereof.
"Congress" shall have the meaning set forth in the preamble
to this Agreement.
"Contaminant" shall mean all Hazardous Materials and all
those substances which are regulated by or form the basis of
liability under Federal, state or local environmental, health and
safety statutes or regulations including, without limitation,
asbestos, polychlorinated biphenyls ("PCBs"), and radioactive
substances, or any other material or substance which constitutes a
material health, safety or environmental hazard to any Person or
property.
"Contingent Obligations" of any Person shall mean any direct
or indirect liability, contingent or otherwise, of such Person:
(i) with respect to any indebtedness, lease,
dividend, letter of credit or other obligation of another if
the primary purpose or intent in creating such liability is
to provide assurance to the obligee of such obligation of
another that such obligation of another will be paid or
discharged, or that any agreements relating thereto will be
complied with, or that the holders of such obligation will
be protected (in whole or in part) against loss in respect
thereof;
(ii) under any letter of credit (including,
without limitation, any Letter of Credit) issued for the
account of such Person or for which such Person is otherwise
liable for reimbursement thereof;
(iii) under any Hedge Agreement; or
(iv) to advance or supply funds or otherwise to
assure or hold harmless the owner of any primary obligation
against loss in respect thereof.
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Contingent Obligations shall include, without limitation:
(a) the direct or indirect guarantee, endorsement
(otherwise than for collection or deposit in the ordinary
course of business), co-making, discounting with recourse or
sale with recourse by such Person of the obligation of
another, and
(b) any liability of such Person for the obligations
of another through any agreement (contingent or otherwise):
(i) to purchase, repurchase or otherwise acquire
such obligation or any security therefor, or to provide
funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases,
capital contributions or otherwise);
(ii) to maintain the solvency or any balance sheet
item, level of income or financial condition of another; or
(iii) to make take-or-pay or similar payments if
required regardless of non-performance by any other party or
parties to an agreement,
if in the case of any agreement described under subclause (i) or
(ii) of this clause (b) the primary purpose or intent thereof is
as described in clause (i) of the immediately preceding sentence.
The amount of any Contingent Obligation shall be equal to the
amount of the obligation so guaranteed or otherwise supported.
"Credit Parties" shall mean and include each Borrower and
each Guarantor.
"Default" shall mean an event, act or condition which with
the giving of notice or the lapse of time, or both, would constitute
an Event of Default.
"Designated Event of Default" shall mean and include each
Event of Default under Section 11.1(f) (other than under clause (i)
or clause (vi) thereof) or 11.1(g) hereof (involving Ames or any
Borrower), and each Event of Default resulting from a default under
Section 4.1(a), 4.1(c), 9.20(b) (but only to the extent that such
default results from the failure of Ames or any Borrower to maintain
a Concentration Account), 9.20(c), 9.20(e), 10.2 (but only to the
extent that such default results from a Lien that is not an
involuntary Lien in respect of which a reserve has been established
against the applicable Borrowing Base(s)) or Section 10.5 hereof.
"Designated Officer" with respect to any Borrower shall mean
such Borrower's chief executive officer, president, any senior vice
president or any vice president, treasurer, assistant treasurer or
controller.
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"Direction Letter" shall mean a written direction to the
Administrative Agent from (i) both Co-Agents or (ii) the Lenders
having fifty percent (50%) or more of the Aggregate Revolving
Commitments, instructing the Administrative Agent to cease or limit
making Revolving Advances and/or to cease or limit issuing or causing
to be issued Letters of Credit.
"Disbursement Account" shall mean and include each deposit
account of each Borrower into which shall be deposited only proceeds
of Advances, which shall be subject to a blocked account agreement in
form and substance satisfactory to the Agents and which is designated
as the "Disbursement Account" on Schedule 12.18 hereto.
"EBITDA" shall mean, for Ames and its Subsidiaries, on a
consolidated basis for any period, the sum of:
(i) the net income (or net loss) of Ames and its
Subsidiaries on a consolidated basis (determined in
accordance with GAAP) for such period, without giving effect
to any GAAP extraordinary gains or losses (other than
restructuring charges); plus (or minus)
(ii) to the extent that any of the items referred
to in any of clauses (A) through (C) below were deducted (or
added) in calculating such net income:
(A) Interest Expense of Ames and its
Subsidiaries, on a consolidated basis for such
period;
(B) income tax expense of Ames and its
Subsidiaries, on a consolidated basis with respect
to operations for such period; and
(C) the amount of all depreciation,
amortization, LIFO inventory expense, stock
appreciation right accruals, restructuring charges
and other noncash charges in accordance with GAAP,
in each case of Ames and its Subsidiaries on a
consolidated basis for such period; plus (or
minus)
(iii) the amount of cash received or expended in such
period in respect of any amount which, under clause (C) above,
was taken into account in determining EBITDA for such or any
prior period.
"EBITDA Test" shall mean that for any single period of four
consecutive fiscal quarters ending on or after the EBITDA Test
Trigger Date EBITDA shall, subject to Section 9.16(c) hereof, equal
or exceed $40,000,000.
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"EBITDA Test Trigger Date" shall mean the earlier to occur
of (i) the latest date by which financial statements for Fiscal Year
1995 are required to be delivered under Section 9.1(b) hereof or (ii)
the date that such financial statements are delivered as required by
such Section 9.1(b) hereof.
"Eligible Inventory" means finished goods Inventory held for
sale that:
(a) is not, in the good faith judgment of any of the Agents,
obsolete or unmerchantable or otherwise ineligible based on such
collateral considerations as any Agent may from time to time in
its sole discretion deem necessary or appropriate;
(b) is owned by a Borrower and upon which the Administrative
Agent has for the benefit of the Agents and the ratable benefit
of the Lenders a first priority perfected security interest and
which is not subject to any other Lien unless a reserve in
respect of such Lien has been established by the Agents (it being
understood that nothing contained in this definition shall be
deemed to permit any Lien prohibited under Section 10.2 hereof
and that reserves for Liens of the type described in clause (c)
of this definition shall be established under such clause);
(c) is located at premises owned by or leased to a Borrower
or on premises otherwise reasonably acceptable to each Agent
(unless such Inventory is in-transit and also is subject to a
Merchandise Letter of Credit); PROVIDED, HOWEVER, that Inventory
located (i) in any warehouse not owned by a Borrower (or
otherwise held by any bailee), (ii) on premises leased to a
Borrower in (x) any jurisdiction in which, as of the date hereof,
no Credit Party maintains any leased premises to the extent that
the law of such jurisdiction provides for a Lien in favor of
lessors on inventory located on leased premises or (y) any
jurisdiction which is listed in Schedule 1.1(c) hereto as in
effect on the date hereof or any jurisdiction which, by virtue of
any change in law enacted or effective after the date hereof,
provides a Lien in favor of lessors on inventory located on
leased premises or (iii) on premises owned by such Borrower and
subject to a mortgage the mortgagee of which shall hold a Lien on
inventory located on such premises by virtue of such mortgage or
possession by the mortgagee of the premises, shall in each case
not be Eligible Inventory unless (A) such Borrower shall have
delivered to the Agents a Lien Waiver Certificate for the
Inventory at any such premises or (B) a reserve has been
established by the Agents for the Inventory at such premises
which, in the case of Inventory located at such premises, shall
not exceed an amount equal to 3 months' rent or mortgage
amortization, as applicable, at such premises (currently
estimated to be $2,600,000 for all such premises located in the
jurisdictions described in clauses (i), (ii) and (iii) of this
paragraph (c), it being understood that no such reserve in
respect of a change of law described in clause (ii) of this
paragraph (c) shall be imposed prior to the sixty-first day
following the date such change becomes effective); and
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(d) is not in-transit unless such Inventory also is subject
to an outstanding Merchandise Letter of Credit.
Notwithstanding the foregoing, goods covered by an outstanding
Merchandise Letter of Credit shall not be ineligible solely because
such goods may not yet exist, or are not yet owned by a Borrower, or
the Administrative Agent shall not have a Lien thereon, provided
that, in any event, goods which are in-transit while still subject to
an outstanding Merchandise Letter of Credit shall in no event
constitute Eligible Inventory unless such goods are covered by
insurance deemed adequate by the Administrative Agent. Without
intending to limit the discretion of any Agent to establish other
criteria of eligibility, packaging and shipping material, lay-away
Inventory, Inventory held for return to vendors, supplies, bill and
hold Inventory, non-first quality returned Inventory, defective
Inventory, raw materials, work-in-
process or Inventory delivered to any Borrower on consignment shall
not constitute Eligible Inventory.
"Employee Plan" shall mean an "employee benefit plan" as
defined in Section 3(3) of ERISA, which is maintained for, or
contributions are made on behalf of, employees of any Credit Party,
and any ERISA Affiliate, other than a Multiemployer Plan.
"Environmental Claim" shall mean any Written Notice of
violation, claim, demand, abatement or order by any governmental
authority or any person for personal injury (including sickness,
disease or death), property damage, damage to the environment,
nuisance, pollution, contamination or other adverse effects on the
environment, or for fines, penalties or deed or use restrictions,
resulting from or based upon (i) the existence, or the continuation
of the existence, of a Release (including, without limitation, sudden
or non-sudden, accidental or nonaccidental Releases), of, or exposure
to, any Contaminant, odor or audible noise or other release or
emission in, into or onto the environment (including, without
limitation, the air, ground, water or any surface) at, in, by or from
any of the Facilities, (ii) the environmental aspects of the
transportation, storage, treatment or disposal of Contaminants in
connection with the operation of any of the Facilities or (iii) the
violation, or alleged violation by Ames or any of its Subsidiaries,
of any statutes, ordinances, orders, rules, regulations, Permits or
licenses of or from any governmental authority, agency or court
relating to environmental matters connected with any of the
Facilities, under any applicable Environmental Law.
"Environmental Laws" shall mean the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C.
9601 ET SEQ.), the Hazardous Material Transportation Act (49 U.S.C.
1801 ET SEQ.), the Resource Conservation and Recovery Act (42 U.S.C.
6901 ET SEQ.), the Federal Water Pollution Control Act (33 U.S.C.
1251 ET SEQ.), the Oil Pollution Act of 1990 (P.L. 101-380), the Safe
Drinking Water Act (42 U.S.C. 300(f), ET SEQ.), the Clean Air Act
(42 U.S.C. 7401 ET SEQ.), the Toxic Substances Control Act, as
amended (15 U.S.C. 2601 ET SEQ.), the Federal Insecticide,
Fungicide, and Rodenticide Act (7 U.S.C. 136 ET SEQ.),
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and the Occupational Safety and Health Act (29 U.S.C. 651 ET SEQ.),
as such laws have been and hereafter may be amended or supplemented,
and any analogous present or future federal, state or local, statutes
and regulations promulgated pursuant thereto.
"Equipment" shall mean all of the equipment of the Credit
Parties, including, without limitation, machinery, data processing
hardware, furniture, motor vehicles, aircraft, dies, tools, jigs,
fixtures, office equipment and other tangible personal property
(excluding any Inventory) of the Credit Parties, and all accessions,
accretions, and additions to Equipment, and all other component and
auxiliary parts used or to be used in connection with or attached to
any of the same, and all substitutes therefor and all manuals,
equipment drawings, instructions, warranties and rights with respect
thereto, wherever located, whether now owned or hereafter acquired.
"ERISA" shall mean, at any date, the Employee Retirement
Income Security Act of 1974 and the applicable regulations
promulgated and rulings issued thereunder, all as the same shall be
in effect at such date.
"ERISA Affiliate" shall mean any trade or business (whether
or not incorporated), any individual, trust, firm, partnership or
joint venture that for purposes of Title I and Title IV of ERISA and
Section 412 of the Code is a member of any Credit Party's controlled
group or is under common control with any Credit Party within the
meaning of Section 414(b), (c), (m) or (o) of the Code, and the
applicable regulations promulgated and rulings issued thereunder.
"ERISA Event" shall mean, with respect to any Credit Party
or any ERISA Affiliate and with respect to any Pension Benefit Plan,
(a) a Reportable Event (other than a Reportable Event not subject to
the provision for 30-day notice to the PBGC under subsection .13,
.14, .15, .18 or .19 of PBGC Reg. 2615), (b) the withdrawal of any
Credit Party or any ERISA Affiliate from a Pension Benefit Plan
during a plan year in which it was a "substantial employer" as
defined in Section 4001(a)(2) of ERISA, (c) the provision of a notice
of intent to terminate a Pension Benefit Plan under Section 4041 of
ERISA, (d) the institution of proceedings to terminate a Pension
Benefit Plan by the PBGC under Section 4042 of ERISA, (e) the failure
to make required contributions which would result in the imposition
of a Lien under Section 412 of the Code or Section 302 of ERISA, or
(f) any other event or condition which might reasonably be expected
to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension
Benefit Plan or to cause the imposition of any liability on any
Credit Party or any ERISA Affiliate under Title IV of ERISA.
"Eurodollar Rate" means, for each Interest Period in respect
of any Eurodollar Advance, an interest rate per annum (rounded upward
to the nearest 1/16th of 1%) determined pursuant to the following
formula:
Eurodollar Rate = LIBOR
--------------------------------------
1.00 - Eurodollar Reserve Percentage
Where
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"Eurodollar Reserve Percentage" means the maximum reserve
percentage (expressed as a decimal, rounded upward to the nearest
1/100th of 1%) in effect on the date LIBOR for such Interest Period
is determined (whether or not applicable to Bank of America National
Trust and Savings Association) under regulations issued from time to
time by the Federal Reserve Board for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal
reserve requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities") having a term comparable
to such Interest Period; and
"LIBOR" means the rate of interest per annum determined by Bank
of America National Trust and Savings Association to be the
arithmetic mean (rounded upward, if necessary, to the nearest
one-hundredth of one percent (1/100%)) of the rates of interest per
annum notified to Bank of America National Trust and Savings
Association as the rate of interest at which dollar deposits in an
amount approximately equal to the amount of the Revolving Loan to be
made or continued as, or converted into, a Eurodollar Advance by the
Lenders and having a maturity equal to such Interest Period would be
offered to major banks in the London interbank market at their
request at or about 11:00 a.m. (London time) on the second Business
Day before the commencement of such Interest Period.
"Eurodollar Advance" shall mean a Revolving Advance bearing
interest based on the Eurodollar Rate in accordance with Section 2
hereof.
"Events of Default" shall have the meaning set forth in
Section 11.1 hereof.
"Excess EBITDA" shall mean:
(i) for Fiscal Year 1996, the lesser of (x) $10,000,000 and
(y) the amount by which actual EBITDA for Fiscal Year 1995 (as
determined in accordance with the financial statements for such
Fiscal Year furnished pursuant to Section 9.1(b) hereof) exceeded
the EBITDA covenant requirement for Fiscal Year 1995 under
Section 9.16(a) hereof; or
(ii) for Fiscal Year 1997, the lesser of (x) $20,000,000 and
(y) the amount by which actual EBITDA for Fiscal Year 1996 (as
determined in accordance with the financial statements for such
Fiscal Year furnished pursuant to Section 9.1(b) hereof) exceeded
the EBITDA covenant requirement for Fiscal Year 1996 under
Section 9.16(a) hereof.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
"Excluded Claims" shall have the meaning set forth in
Section 2.12(c) hereof.
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"Excluded Taxes" shall mean franchise taxes and taxes upon
or determined by reference to any Lender's net income, in each case,
imposed by the United States of America or any political subdivision
or taxing authority thereof or therein or by any jurisdiction in
which the Initial Eurodollar Office or other branch of any Lender is
located, is resident or in which any Lender is organized or has its
principal or registered office (including, without limitation, branch
taxes imposed by the United States or similar taxes imposed by any
subdivision thereof).
"Existing Debt" shall mean and include the Indebtedness of
Ames described in Schedule 1.1(a) hereto.
"Facilities" shall mean real property owned, operated or
leased by any Credit Party.
"Federal Bankruptcy Code" shall mean Title 11 of the United
States Code entitled "Bankruptcy," as now or hereafter in effect, or
any successor thereto.
"Federal Funds Effective Rate" shall mean, for any day, the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers, as published on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the
Administrative Agent from three Federal funds brokers of recognized
standing selected by it.
"Financial Statements" shall have the meaning set forth in
Section 6.2(b) hereof.
"FIRREA" shall mean the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989, as amended from time to time.
"Fiscal Year" shall mean a fiscal year of Ames and its
consolidated Subsidiaries for financial accounting purposes, which in
any event shall end on the last Saturday of January of each year.
"Foreign Lender" shall mean any Lender which is not a
"United States person" (as such term is defined in Section
7701(a)(30) of the Code).
"GAAP" shall mean, for Ames or any of its Subsidiaries,
generally accepted accounting principles in the United States of
America, consistent with those applied in the preparation of the
financial statements of Ames and its Subsidiaries from time to time;
PROVIDED, HOWEVER, that for the purposes of determining compliance
with the financial covenants contained in Section 9.16 hereof and the
financial tests contained in Schedules 2.6(e) and 4.1(b) hereto (and
the definitions contained herein to the extent employed in
determining such compliance) only, GAAP shall mean such accounting
principles as in effect on the Closing Date.
"GE Capital" shall have the meaning set forth in the
preamble to this Agreement.
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"Guarantor" shall mean, at any time, Ames and each present
or future direct and indirect Subsidiary thereof, or other Person, in
any case, which shall have executed and delivered a Guaranty as of
such time.
"Guaranty" shall mean any guaranty executed and delivered
pursuant to Section 5.8 hereof, as each may be amended, supplemented
or otherwise modified from time to time in accordance with its terms.
"Guaranty Obligations" shall mean the obligations of any
Guarantor under the Guaranty to which such Guarantor is a party.
"Hazardous Material" shall mean any pollutant, contaminant,
chemical, or industrial or hazardous, toxic or dangerous waste,
substance or material, defined or regulated as such in (or for
purposes of) any Environmental Law and any other toxic, reactive, or
flammable chemicals, including (without limitation) any asbestos, any
petroleum (including crude oil or any fraction), any radioactive
substance and any polychlorinated biphenyls; PROVIDED, in the event
that any Environmental Law is amended so as to broaden the meaning of
any term defined thereby, such broader meaning shall apply subsequent
to the effective date of such amendment; and PROVIDED, FURTHER, to
the extent that the applicable laws of any state establish a meaning
for "hazardous material," "hazardous substance," "hazardous waste,"
"solid waste" or "toxic substance" which is broader than that
specified in any Environmental Law, such broader meaning shall apply.
"Hedge Agreements" shall have the meaning specified in
clause (iv) of the definition of Indebtedness.
"Indebtedness" of any Person shall mean all items which, in
accordance with GAAP, would be included in determining total
liabilities of such Person as shown on the liability side of a
balance sheet as at the date Indebtedness of such Person is to be
determined and, in any event, shall include (without limitation and
without duplication):
(i) all Indebtedness for Borrowed Money of such
Person;
(ii) any liability of such Person secured by any
Lien on property owned or acquired by such Person, whether
or not such liability shall have been assumed;
(iii) all Contingent Obligations of such Person;
and
(iv) all obligations (other than obligations to
pay fees in connection therewith) of such Person in respect
of interest rate swap agreements, currency swap agreements,
commodities or futures contracts and other similar
agreements designed to hedge against fluctuations in
interest rates or foreign exchange rates (each, a "Hedge
Agreement").
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"Indebtedness for Borrowed Money" of any Person shall mean
all indebtedness for borrowed money or evidenced by notes, bonds,
debentures or similar evidences of indebtedness of such Person, all
obligations of such Person for the deferred and unpaid purchase price
of any property, service, or business (other than trade accounts
payable incurred in the ordinary course of business and constituting
Current Liabilities), all obligations of such Person under Capital
Leases and all deferred payment obligations of such Person under the
Plan of Reorganization.
"Indemnified Party" shall have the meaning set forth in
Section 2.12(c) hereof.
"Initial Eurodollar Office" shall mean, for any Lender, the
branch or affiliate of such Lender designated as the Initial
Eurodollar Office of such Lender in Exhibit A hereto.
"Intercompany Notes" shall have the meaning set forth in
Section 6.10(a) hereof.
"Intercompany Security Agreements" shall have the meaning
set forth in Section 6.10(c) hereof.
"Intercompany Subordination Agreement" shall have the
meaning set forth in Section 6.22(ii) hereof.
"Interest Expense" shall mean, with respect to any Person
for any period, interest expense net of interest income of such
Person on a consolidated basis during such period determined in
accordance with GAAP, and shall include in any event, without
limitation, interest expense with respect to Indebtedness for
Borrowed Money and payments under Hedge Agreements.
"Interest Payment Date" shall mean, with respect to each
Eurodollar Advance, the last day of the Interest Period for such
Eurodollar Advance; PROVIDED, HOWEVER, that with respect to each
Interest Period for any Eurodollar Advance of a duration of three or
more months, the Interest Payment Date with respect to such
Eurodollar Advance shall include, in addition to the last day of such
Interest Period, each day which occurs every third month after the
initial date of such Interest Period.
"Interest Period" shall mean, with respect to each
Eurodollar Advance, initially, the period commencing on, as the case
may be, the borrowing or conversion date with respect to such
Eurodollar Advance and ending one, two, three or (if available) six
months thereafter, as selected by the applicable Borrower; and
thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Eurodollar Advance and
ending one, two, three or (if available) six months thereafter, as
selected by the applicable Borrower; PROVIDED, HOWEVER, that no
Interest Period may be selected for a Eurodollar Advance which
expires later than the Maturity Date; PROVIDED, FURTHER, that any
Interest Period in respect of a Eurodollar Advance which begins on
the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at
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the end of such Interest Period) shall, subject to the foregoing
proviso, end on the last Business Day of a calendar month; and
PROVIDED, FURTHER, that interest shall accrue from and including the
first day of an Interest Period to but excluding the last day of such
Interest Period. Notwithstanding the above, all Interest Periods
shall be adjusted in accordance with Section 13.11 hereof.
"Inventory" shall mean any and all now owned or hereafter
acquired (i) inventory, goods, merchandise, and other tangible
personal property (including, without limitation, all raw materials,
work-in-process, finished goods, lay-away inventory, returned and
repossessed goods) that are intended for sale or lease in the
ordinary course of business, and (ii) materials and supplies of any
kind, nature or description which are or might be used or consumed in
any Credit Party'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, and
all books and records relating thereto, including, without
limitation, computer records, disks, tapes and other media on which
any information relating to inventory, inventory control systems or
Accounts is stored or recorded and all computer software, management
information systems and other similar systems of any kind, in the
case of (i) or (ii), in the custody or possession, actual or
constructive, of any of the Credit Parties, or in transit to any of
the Credit Parties, and including, without limitation, such inventory
as is on consignment to third parties, leased to customers of any of
the Credit Parties, or otherwise temporarily out of the custody or
possession of the Credit Parties.
"Investment" shall have the meaning set forth in Section
10.4 hereof.
"Issuance" shall mean the issuance by any Credit Party or
any of their Subsidiaries of (i) Indebtedness for Borrowed Money
(other than the Revolving Loan and the other Indebtedness listed as
being permitted by Section 10.3 hereof) or the like or (ii) any
equity security or any security convertible into or exchangeable for
an equity security (other than the issuance of equity by a
wholly-owned Subsidiary of any Borrower or Guarantor to such Borrower
or Guarantor or another wholly-owned Subsidiary of any Borrower or
Guarantor to the extent such issuance constitutes an Investment
permitted under Section 10.4 hereof).
"Issuing Bank" shall mean and include each Issuing Lender
and each Issuing Non-Lender Bank.
"Issuing Lender" shall mean (i) BABC (as to issuance of L/C
Indemnity Agreements treated as Letters of Credit under Section 3
hereof), and (ii) any Lender which issues a Letter of Credit pursuant
to Section 3 hereof.
"Issuing Non-Lender Bank" shall mean Bank of America
National Trust and Savings Association or any other commercial bank
(other than a Lender) which shall be selected by BABC, which is
acceptable to the Borrowers and which has issued a Letter of Credit.
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"J. Baker Shoe Agreement" shall mean the Agreement, dated as
of November 17, 1987, among Ames, certain of its Affiliates and JBI
Holding Company, Inc., as amended by an Amendment No. 1 to Agreement,
dated as of April 29, 1989, a letter agreement, dated as of April 29,
1989 and an Amendment No. 2 to Agreement, dated as of December 18,
1992, as in effect on the date of this Agreement.
"L/C Indemnity Agreement" shall mean an indemnity, guaranty,
letter of credit or similar agreement, in form and substance
satisfactory to BABC, by BABC in favor of an Issuing Non-Lender Bank
with respect to Letters of Credit issued by such Issuing Non-
Lender Bank for the account of any Borrower. Unless otherwise
specified herein, the term Letter of Credit, when used in Section 3
hereof shall include any L/C Indemnity Agreement and BABC shall for
such purpose be deemed to be the Issuing Lender with respect to such
Letter of Credit.
"Land" shall have the meaning set forth in the definition of
Real Estate herein.
"Lease" shall mean each lease or sublease of real property
existing on the date hereof under which any Credit Party is the
lessee or sublessee and each future lease or sublease of real
property under which any Credit Party is the lessee or sublessee.
"Lender" and "Lenders" shall have the respective meanings
set forth in the preamble to this Agreement.
"Lender Debt" shall mean and include all Advances, and all
other Indebtedness owing at any time by any Credit Party to any of
the Agents or any one or more of the Lenders (including, without
limitation, all interest, fees, indemnities, costs, charges and other
amounts now or hereafter payable under the Loan Documents) now or
hereafter arising under or in connection with this Agreement, the
Notes, any Security Document, any of the other Loan Documents or any
Guaranty in favor of the Administrative Agent or any one or more of
the Lenders in each instance, whether absolute or contingent, secured
or unsecured, due or not, arising by operation of law or otherwise,
and all interest and other charges thereon including, without
limitation, interest arising following the commencement of any
proceeding under any bankruptcy or similar law (including, without
limitation, the Federal Bankruptcy Code) involving any Credit Party,
whether or not such interest is an allowed claim in any such
proceeding. In no event shall the Lender Debt include any credit
card receivables (or obligations arising in connection with the sale
or financing thereof) owing by any Credit Party to GE Capital or any
Affiliate thereof, or any other indebtedness not arising under or in
connection with any of the Loan Documents.
"Letter of Credit" shall mean any letter of credit issued
for the account of any of the Borrowers under the terms of this
Agreement and shall include, for the purposes of Section 3 hereof
(including, without limitation, Section 3.6 hereof), any L/C
Indemnity Agreement issued by the Administrative Agent.
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"Letter of Credit Agreement" shall mean an application and
agreement with respect to the issuance of a Letter of Credit, in form
and substance satisfactory to the applicable Issuing Bank and the
Administrative Agent.
"Letter of Credit Cash Collateral" shall mean cash
collateral, on terms and pursuant to documents and agreements (each
of which shall constitute a Security Document) satisfactory in all
respects to the Administrative Agent, securing outstanding Letter of
Credit Obligations and fees and other amounts owing in respect
thereof.
"Letter of Credit Obligations" shall mean and include at any
time (i) the undrawn amount of outstanding Letters of Credit which is
available for drawing thereunder at such time, (ii) the unreimbursed
amount of drawings under Letters of Credit at such time and (iii)
(without duplication) the unreimbursed amounts of payments made under
L/C Indemnity Agreements at such time.
"Lien" shall mean any lien, mortgage, pledge, security
interest or other type of charge or encumbrance of any kind, or any
other type of preferential arrangement, including, without
limitation, the lien or retained security title of a conditional
vendor and any easement, right of way or other encumbrance on title
to real property and any financing statement filed in respect of any
of the foregoing (other than precautionary filings in respect of true
leases of Equipment).
"Lien Waiver Certificate" shall mean an agreement, waiver,
subordination or other certificate, in form and substance
satisfactory to the Agents, with respect to personal property of the
Credit Parties that is located at a leased Facility, stored in a
public warehouse, placed on consignment, or otherwise held by any
bailee or other third party, duly executed on behalf of the
appropriate warehouseman, bailee, consignee, landlord, mortgagee or
such other third party.
"Loan Documents" shall mean this Agreement, each Security
Document, each Guaranty, the Notes, each Letter of Credit Agreement
and each L/C Indemnity Agreement, the Intercompany Subordination
Agreement, each Borrower's Certificate, each Borrowing Base
Certificate, each Blocked Account Agreement, each Concentration
Account Agreement and each other document or instrument now or
hereafter delivered by or on behalf of a Credit Party to any Agent or
any Lender pursuant to or in connection herewith or therewith.
"Majority Lenders" shall mean, (i) at any time when the
Agents collectively have fifty percent (50%) or more of the Aggregate
Revolving Commitments, Lenders having sixty-six and two-thirds
percent (66 2/3 %) or more of the amount of the Aggregate Revolving
Commitments of the Lenders at such time and (ii) at any time when the
Agents collectively have less than fifty percent (50%) of the
Aggregate Revolving Commitments, Lenders having more than fifty
percent (50%) of the Aggregate Revolving Commitments of the Lenders
at such time.
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"Management Agreement" shall mean the Amended and Restated
Administrative Services and Consultation Agreement, dated as of
December 31, 1992, between Ames and Ames Stores, Zayre Central, Zayre
New England, Ames Transportation Systems, Inc. and Ames Realty II,
Inc., as in effect on the date of this Agreement, except as amended on
the Closing Date pursuant to an amendment agreement in the form
annexed hereto as Exhibit 6.22(i).
"Management Agreements" shall mean and include the Management
Agreement and the Common Paymaster Agreement.
"Master Sublease" shall mean that certain sublease agreement
dated as of December 28, 1992 between Ames Realty II, Inc., as
sublessor and Ames Stores, as sublessee with respect to each leased
Ames Stores location, as in effect on the date of this Agreement.
"Material Adverse Effect" shall mean a material adverse
effect on (i) the business, assets, properties, prospects,
performance, operations or financial or other condition of any Credit
Party, (ii) the ability of any Credit Party to pay its obligations
under the Lender Debt in accordance with the terms hereof or (iii) the
Administrative Agent's Lien on any material portion of the Collateral
or the priority of any such Lien (other than by reason of acts or
omissions of any Agent or Lender except to the extent such act or
omission has occurred and is continuing as the result or consequence
of a Default or Event of Default by any Credit Party or the failure of
a Credit Party to deliver any instruments or agreements requested by
any of the Agents to perfect or protect the priority of such Lien).
"Material Contracts" shall mean and include the Master
Sublease, the Intercompany Notes, the Management Agreements, the J.
Baker Shoe Agreement, the Subordinated Intercompany Notes, the
Intercompany Security Agreements, the Trademark License Agreement, the
Asset Sale and Security Agreement, the Ames Stores Promissory Note,
any agreement or instrument evidencing, creating or governing any
Acceptable Subordinated Debt, and the agreement listed as item 3 in
Schedule 12.22 hereto as in effect on the date hereof.
"Maturity Date" shall mean the third anniversary of the
Closing Date.
"Maximum Lawful Rate" shall have the meaning set forth in
Section 2.18(a) hereof.
"Maximum Permissible Rate" shall have the meaning set forth
in Section 2.18(b) hereof.
"Merchandise Letter of Credit" shall mean a documentary
Letter of Credit issued for the account of any Borrower to provide the
intended means of making payment when due by such Borrower for the
purchase of foreign Inventory and available for drawing against
presentation of, INTER ALIA, negotiable documents of title covering
such foreign Inventory (and shall include, for the purposes of Section
3 hereof (and without double counting), an L/C Indemnity Agreement
issued in respect of such a Letter of Credit).
"Mortgage" shall have the meaning set forth in Section
5.4(a)(i) hereof.
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"Multiemployer Plan" shall mean a "multiemployer plan" (as
defined in Section 4001(a)(3) in ERISA) maintained or contributed to
for employees of (i) Ames or any of its Subsidiaries; (ii) any Credit
Party; or (iii) any ERISA Affiliate.
"Net Cash Proceeds" shall mean, with respect to any
transaction to which any Borrower is a party, (i) cash (freely
convertible into U.S. dollars) received by such Borrower from such
transaction (including cash received as consideration for the
assumption or incurrence of liabilities incurred in connection with or
anticipation of such transaction), after (a) provision for all income,
title, recording or other taxes measured by or resulting from such
transaction (after utilization of all tax credits, carryforwards and
the like), (b) payment of all brokerage commissions, reasonable
investment banking and legal fees and other fees and expenses related
to such transaction, and (c) amounts paid to satisfy Indebtedness
(other than any Lender Debt) which are required to be repaid in
connection with any such transaction and (ii) promissory notes or
other deferred payment obligations received by such Borrower from such
transaction or such other disposition upon the liquidation or
conversion of such notes or other obligations into cash.
"Non-Ratable Advance" shall have the meaning set forth in
Section 2.4(e)(iii) hereof.
"Note" and "Notes" shall have the respective meanings set
forth in Section 2.3(a) hereof.
"Note Pledge Agreement" shall have the meaning set forth in
Section 5.1(b) hereof.
"Other Taxes" shall have the meaning set forth in Section
2.22(c) hereof.
"Payment Account" shall have the meaning set forth in Section
2.4(c) hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation,
or any successor thereof under ERISA.
"PCBs" shall have the meaning set forth in the definition of
Contaminant herein.
"Pension Benefit Plan" shall mean any Employee Plan which is
an "employee pension benefit plan" (as defined in Section 3(2) of
ERISA) and which is subject to Title IV of ERISA, other than a
Multiemployer Plan.
"Permits" shall mean any permit, approval, authorization,
license or variance required from a governmental authority having
jurisdiction under an applicable Environmental Law.
"Permitted Issuance" shall mean and include an Issuance of
common equity interests by Ames to any Person (i) in a public
offering, (ii) otherwise for fair consideration, (iii) in respect of
warrants outstanding on the date hereof or (iv) under the Ames
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Department Stores, Inc. 1994 Management Stock Option Plan as in
effect on the date hereof, in each case so long as a result of any
such Issuance no Default or Event of Default shall occur.
"Person" shall mean an individual, trust, firm, partnership,
corporation (including business trust), unincorporated association,
joint venture, government or any political subdivision or agency
thereof or any other form of public, private or governmental entity
or authority.
"Plan of Reorganization" shall mean the Third Amended and
Restated Joint Plan of Reorganization of Ames Department Stores, Inc.
and Other Members of the Ames Group.
"Pledge Agreement" shall have the meaning set forth in
Section 5.1 hereof.
"Proceeds" shall have the meaning set forth in Section
9.20(c) hereof.
"Projections" shall have the meaning set forth in Section
12.6(b) hereof.
"pro rata" shall mean, with respect to each Lender, a
percentage equal to the ratio that (x) the Revolving Commitment of
such Lender bears to (y) the Aggregate Revolving Commitments of all
Lenders.
"Real Estate" shall mean all of those plots, pieces or
parcels of land (the "Land") now owned or hereafter acquired by any
Credit Party or any interest therein including, without limitation,
those listed on Schedule 12.5 hereto and more particularly described
in the Mortgages, together with the right, title and interest of any
Credit Party, if any, in and to the streets, the land lying in the
bed of any streets, roads or avenues, opened or proposed, in front
of, adjoining, or abutting the Land to the center line thereof, the
air space and development rights pertaining to the Land and right to
use such air space and development rights, all rights of way,
privileges, liberties, tenements, hereditaments, and appurtenances
belonging or in any way appertaining thereto, awards from any
condemnation or eminent domain proceedings and insurance proceeds
resulting from any casualty or other damage to the buildings and
other improvements on the Land, all fixtures, all easements now or
hereafter benefiting the Land and all royalties and rights
appertaining to the use and enjoyment of the Land, including, without
limitation, all alley, vault, drainage, mineral, water, oil, coal,
gas, timber and other similar rights, together with all of the
buildings and other improvements now or hereafter erected on the
Land, all fixtures and all additions thereto and substitution and
replacement thereof.
"Reference Date" shall have the meaning set forth in Section
6.2(a) hereof.
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"Reference Rate" means the rate of interest publicly
announced from time to time by Bank of America National Trust and
Savings Association in San Francisco, California, as its reference
rate. It is a rate set by Bank of America National Trust and Savings
Association based upon various factors including the Bank of America
National Trust and Savings Association's costs and desired return,
general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above
or below such announced rate.
"Reference Rate Advance" shall mean a Revolving Advance
other than a Eurodollar Advance.
"Regulation D" shall mean Regulation D of the Board as from
time to time in effect and any successor to all or a portion thereof
establishing reserve requirements.
"Reinstated Debt" shall mean any and all debt of and claims
against any member of the Ames Group (as defined in the Plan of
Reorganization) which pursuant to the Plan of Reorganization was
Reinstated (as defined in the Plan of Reorganization), and shall
include, in any event, any and all debt and claims included in Class
AG-3 or Class AG-4 (as defined in the Plan of Reorganization) for
which any member of the Ames Group (and including, in any event, any
Credit Party) remained liable in any manner after the Consummation
Date (as defined in the Plan of Reorganization).
"Reinstated Debt Documents" shall mean all documents,
agreements and instruments evidencing or governing any of the
Reinstated Debt, as such documents, agreements and instruments are in
effect on the date of this Agreement.
"Reinstated Debt Reserve" shall mean at any time an amount
equal to (i) $36,000,000, LESS (ii) the aggregate amount of all
regularly scheduled principal installments paid after April 30, 1994
(as and when such installments become due and payable in accordance
with the Reinstated Debt Documents) by one or more of the Borrowers
in respect of the unpaid principal balance of the Indebtedness
described on Schedule 1.1(b) hereto to the extent such payments are
permitted to be paid hereunder and subject to the Agents' receipt of
satisfactory evidence of such payments.
"Release" shall mean any releasing, spilling, escaping,
leaking, seepage, pumping, pouring, emitting, emptying, discharging,
injecting, leaching, disposing or dumping. The meaning of the term
shall also include any threatened Release.
"Remedial Action" shall mean all actions required to (i)
clean up, remove, treat or dispose of Contaminants in the indoor or
outdoor environment; (ii) prevent the Release or threat of Release or
minimize the further Release of Contaminants so they do not migrate
or otherwise endanger or threaten to endanger public health or
welfare or the indoor or outdoor environment; or (iii) perform
pre-remedial studies and investigations and post-remedial monitoring
and care in respect of actions contemplated in the preceding clauses
(i) and (ii).
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"Rentals" shall have the meaning set forth in Section 10.16
hereof.
"Reportable Event" shall have the meaning set forth in
Section 9.12(b)(i) hereof.
"Responsible Officer" of any Person shall mean any
Designated Officer of such Person and any officer or director of such
Person and any other member of the management of such Person having
executive responsibilities.
"Retest Date" shall have the meaning set forth in Section
9.16(c) hereof.
"Revolving Advance" shall have the meaning set forth in
Section 2.1(a) hereof.
"Revolving Commitment" as to any Lender shall have the
meaning set forth in Section 2.2(c) hereof.
"Revolving Credit Facility" shall mean, collectively, the
facilities provided hereunder to make Revolving Advances and to
provide Letters of Credit and L/C Indemnity Agreements.
"Revolving Credit Facility Commitment" shall mean an amount
equal to $300,000,000.
"Revolving Loan" shall have the meaning set forth in Section
2.1(a) hereof.
"Security Agreement" shall have the meaning specified in
Section 5.3 hereof.
"Security Documents" shall have the meaning specified in
Section 5.3 hereof.
"Settlement Date" shall mean the second Business Day of each
week (with each week being deemed to commence on Monday) or any other
day designated in a writing given by the Administrative Agent to the
Lenders at least one Business Day in advance, it being understood
that in no event shall there be less than one Settlement Date each
week.
"Settlement Report" shall mean each report, substantially in
the form attached hereto as Exhibit 2.4(e) hereto.
"Solvent" and "Solvency" shall mean, with respect to any
Person on a particular date, that on such date,
(a) the fair value of the property of such Person (valued
as a going concern) is greater than the total amount of liabilities,
including, without limitation, contingent liabilities, of such
Person; and
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(b) the present fair salable value of the assets of such
Person (valued as a going concern) is not less than the amount that
will be required to pay the probable liability of such Person on its
debts as they become absolute and matured; and
(c) such Person does not intend to, and does not believe
that it will, incur debts or liabilities beyond such Person's ability
to pay as such debts and liabilities mature; and
(d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction,
for which such Person's property would constitute an unreasonably
small capital.
"Specified Event of Default" shall mean and include an Event
of Default under Section 11.1(a), (b), (f), (g), (h), (k) or (l).
"Standby Letter of Credit" shall mean any Letter of Credit
other than a Merchandise Letter of Credit.
"Subordinated Intercompany Notes" shall have the meaning set
forth in Section 6.10(b) hereof.
"Subsidiary" of any Person shall mean any corporation or
partnership of which more than fifty percent (50%) of the issued and
outstanding securities or ownership interests having ordinary voting
power (for the election of directors in the case of a corporation) is
owned or controlled (as such term is used in the definition of
"Affiliate"), directly or indirectly, by such Person and/or one or
more of its Subsidiaries. In any event, Ames Stores shall be a
Subsidiary of Ames.
"Supervisory Policy" shall have the meaning set forth in
Section 10.4(b) hereof.
"Taxes" shall have the meaning set forth in Section 2.22(a)
hereof.
"Total Availability" shall mean at any time the amount, if
any, by which (A) the excess of (1) the Aggregate Borrowing Base over
(2) the sum of (x) the Reinstated Debt Reserve plus (y) an amount
equal to all other reserves which, based on collateral
considerations, any Agent in its sole discretion deems necessary or
appropriate at such time to maintain with respect to the account of
the Borrowers, including without limitation, any amounts which any
Agent or any Lender may be obligated to pay in the future for the
account of any Borrower exceeds (B) the sum of (1) the amount of the
initial Revolving Advances requested to be made on the Closing Date
plus (2) the amount of Letter of Credit Obligations requested to be
created on the Closing Date plus (3) the aggregate amount of
outstanding accounts payable of Ames and its Subsidiaries which, as
of the Closing Date, are more than 45 days past due (excluding
accounts payable that are subject to trade disputes arising in the
ordinary course of business).
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"Trademark License Agreement" shall mean the Trademark
License Agreement, dated as of December 28, 1992, by and between AMD,
Inc., as licensor, and Ames Stores, as licensee, as in effect on the
date of this Agreement.
"Trademark, Patent and Copyright Security Agreement" shall
have the meaning set forth in Section 5.2 hereof.
"Tranche A Advances" shall mean at any time that portion of
the outstanding Advances which, when added to the aggregate unpaid
amount of Letter of Credit Obligations at such time, do not exceed
the Tranche A Commitment Amount.
"Tranche A Commitment Amount" shall mean, at the Closing
Date, $270,000,000, and thereafter, such amount or such lower amount
to which the Tranche A Commitment Amount has been reduced in
accordance with Section 2.5 hereof.
"Tranche B Advances" shall mean, at any time, those Advances
which are not Tranche A Advances.
"Tranche B Commitment Amount" shall mean, at the Closing
Date, $30,000,000 and thereafter, such amount or such lower amount to
which the Tranche B Commitment Amount has been reduced in accordance
with Section 2.5 hereof.
"UCC" shall mean the Uniform Commercial Code (or any
successor statute) of (i) the State of New York and (ii) each other
state to the extent the Uniform Commercial Code of which is required
by Section 9-103 of the UCC of New York to be applied in connection
with the perfection of a security interest in favor of the
Administrative Agent hereunder or under any Security Document.
"UCP" shall have the meaning set forth in Section 3.9
hereof.
"Uninsured Amount" shall have the meaning set forth in
Section 9.16(c) hereof.
"U.S. dollars" and "$" shall mean lawful currency of the
United States of America.
"Written Notice" and "in writing" shall mean any form of
written communication or a communication by means of telex,
telecopier device, telegraph or cable and for the purposes of Section
2.4(a) hereof shall include verbal notice promptly confirmed by such
a written confirmation.
"Zayre Central" shall mean Zayre Central Corp., a Delaware
corporation.
"Zayre New England" shall have the meaning set forth in the
preamble to this Agreement.
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1.2. TERMS DEFINED IN THE UNIFORM COMMERCIAL CODE. Each
term defined in the UCC of the State of New York and used herein
shall have the meaning given therein unless otherwise defined herein.
1.3. COMPUTATION OF TIME PERIODS. In this Agreement in
the computation of periods of time from a specified date to a later
specified date, the word "from" shall mean "from and including", the
words "to" and "until" each shall mean "to but excluding" and the
word "through" shall mean "to and including".
1.4. ACCOUNTING TERMS. All accounting terms not
specifically defined herein shall be construed, as to a specified
Person, in accordance with GAAP.
1.5. OTHER PROVISIONS REGARDING DEFINITIONS. (a) The
words "hereof," "herein" and "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement.
(b) The terms defined in this Section 1, unless the context
requires otherwise, will have the meanings applied to them in this
Section 1, references to an "Exhibit," "exhibit," "Schedule" or
"schedule" are, unless otherwise specified, to one of the exhibits or
schedules attached to this Agreement and references to a "section" or
"Section" are, unless otherwise specified, to one of the sections of
this Agreement.
(c) The term "or" is not exclusive.
(d) References to "the date hereof" and "the date of this
Agreement" and similar phrases shall mean April 28, 1994.
SECTION 2. AMOUNT AND TERMS.
2.1. REVOLVING ADVANCES. (a) Each of the Lenders
severally agrees to make available to the Borrowers, subject to and
upon the terms and conditions herein set forth (including, without
limitation, Section 2.4(e) hereof), at any time or from time to time
on or after the Closing Date and before the Maturity Date, such
Lender's pro rata share of such borrowings as may be requested or be
deemed requested by any Borrower in accordance with the terms of this
Agreement (each such borrowing made by any Borrower, a "Revolving
Advance" and the outstanding principal balance of all Revolving
Advances from time to time, the "Revolving Loan"), in each case
subject to the limitations contained in Section 2.2 hereof.
(b) Each Revolving Advance shall be made on the date
specified in the Written Notice as described in Section 2.4(a)
hereof; PROVIDED, HOWEVER, that if any Borrower shall be deemed to
request a Revolving Advance under Section 3.4 hereof, no notice of a
borrowing by such Borrower shall be necessary and such Revolving
Advance shall be in the amount of the reimbursement obligation of
such Borrower for the drawing made under the Letter of Credit for
which such Revolving Advance is deemed requested. Each Revolving
Advance shall be either a Reference Rate Advance or a Eurodollar
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Advance, or a combination thereof, as the applicable Borrower shall
request, subject to and in accordance with the provisions of this
Agreement. Any portion of a Revolving Advance which shall be a
Eurodollar Advance shall be in an amount equal to $10,000,000 or any
greater integral multiple of $1,000,000.
2.2. REVOLVING CREDIT FACILITY COMMITMENT AND BORROWING
LIMIT. (a) No Revolving Advance shall be made to any Borrower and
no Letter of Credit shall be issued for the account of any Borrower
if, after giving effect to such Revolving Advance or Letter of
Credit:
(i) the sum of (x):
(A) the aggregate unpaid principal amount of the
Revolving Advances made to all Borrowers, plus
(B) the aggregate unpaid amount of the Letter of
Credit Obligations of all Borrowers, less
(C) in the case of any Revolving Advance to be
made under Section 3.4 hereof, the Letter of Credit
Obligation to be satisfied with the proceeds of such
Revolving Advance,
shall exceed (y) the Revolving Credit Facility Commitment;
or (ii),
except in the case of any Revolving Advance to be made under
Section 3.4 hereof to which the limitations set forth in
this clause (ii) shall not apply,
the sum of (x):
(A) the aggregate unpaid principal amount of the
Revolving Advances of such Borrower, plus
(B) the aggregate unpaid amount of the Letter of
Credit Obligations of such Borrower,
shall exceed (y) an amount (as to such Borrower, the
"Borrowing Limit") equal to the sum of (A) such Borrower's
Borrowing Base LESS (B) an amount equal to that portion of
the Reinstated Debt Reserve at such time that is apportioned
to such Borrower by the Administrative Agent in its
discretion, LESS (C) an amount equal to all other reserves
which any Agent in good faith based on collateral
considerations deems in its sole discretion to be necessary
or appropriate to maintain with respect to the account of
such Borrower, including, without limitation, shrinkage
reserves (to the extent shrinkage is not otherwise accounted
for in such Borrower's Borrowing Base) and any amounts which
any Agent or any Lender may be obligated to pay in the
future for the account of such Borrower.
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(b) Notwithstanding the foregoing, except for Revolving
Advances to be made under Section 3.4 hereof and Revolving Advances
in excess of the limitations contained in Section 4.1(b)(ii) (but not
in excess of the limitations contained in Section 4.1(b)(i)) hereof
made pursuant to an election of the Administrative Agent under
Section 7.2 hereof and as to which no contrary Direction Letter has
been received by the Administrative Agent, no Revolving Advance shall
be made if, after giving effect to the making of such Revolving
Advance, the Borrowers would be required under Section 4.1(b) hereof
to make a prepayment or provide Letter of Credit Cash Collateral.
(c) Subject to the limitations of Sections 2 and 4 hereof,
each Borrower may borrow, repay and reborrow the Revolving Loan. The
portion of the Revolving Loan to be funded by each Lender to the
Borrowers shall not exceed in aggregate principal amount at any one
time outstanding, and no Lender shall have any obligation to fund its
pro rata share of any Revolving Advance if after giving effect
thereto the outstanding portions of Revolving Advances made by such
Lender plus the pro rata share of such Lender's Letter of Credit
Obligations shall be in the aggregate in excess of, the revolving
commitment amount set forth opposite such Lender's name on Exhibit A
hereto for the Revolving Credit Facility Commitment, as reduced from
time to time (for each Lender, its "Revolving Commitment").
2.3. NOTES. (a) The pro rata portion of the Revolving
Advances made by each Lender to the Borrowers shall be evidenced by,
and be repayable with interest in accordance with the terms of, a
promissory note issued by each Borrower payable to the order of such
Lender, which shall be in the maximum principal amount of such
Lender's Revolving Commitment. Each Note shall be in the form of
Exhibit 2.3(a) hereto (together with any replacement, modification,
renewal or substitution thereof, individually, a "Note" and
collectively, the "Notes").
(b) Each Note shall be dated the Closing Date and be duly
completed, executed and delivered by the applicable Borrower.
(c) Each of the Notes shall mature on the Maturity Date (or
earlier as hereinafter provided), and shall be subject to payment and
prepayment as provided in Sections 2 and 4 hereof.
2.4. NOTICE OF BORROWING; BORROWER'S CERTIFICATE. (a)
Whenever any Borrower desires to make a borrowing of a Revolving
Advance (other than the initial Revolving Advance), it shall give the
Administrative Agent, at its address set forth in Section 13.4
hereof, not later than 12:00 noon (New York time), at least three (3)
Business Days' prior Written Notice (or on the same Business Day as
the Business Day of such Written Notice in the case of a Revolving
Advance which shall be a Reference Rate Advance) from an Authorized
Representative (which notice shall be irrevocable and shall
conclusively evidence the obligation of such Borrower to repay such
Revolving Advance) of its desire to make a borrowing of a Revolving
Advance. The Borrowers shall give to the Administrative Agent such
prior Written Notice of the initial Revolving Advance as shall be
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acceptable to the Administrative Agent. Each notice of borrowing
under this Section 2.4(a) shall be substantially in the form of
Exhibit 2.4(a) hereto (each a "Borrower's Certificate"). If such
notice shall be with respect to a borrowing of a Eurodollar Advance
but fails to state an applicable Interest Period therefor, then such
notice shall be deemed to be a request for a one-month Interest
Period. If (x) the applicable Borrower shall fail to state in any
such notice whether such Revolving Advance shall be a Reference Rate
Advance or a Eurodollar Advance or (y) the applicable Borrower shall
be deemed to make a borrowing of a Revolving Advance pursuant to
Section 3 hereof, then the Borrower shall be deemed to have selected
a Reference Rate Advance. Subject to the other provisions of this
Agreement, Advances of more than one type may be outstanding at the
same time; PROVIDED, HOWEVER, that no more than five (5) Eurodollar
Advances in the aggregate may be outstanding at any one time. The
Administrative Agent shall notify each Lender of the Administrative
Agent's receipt of any request for the making or renewal of or
conversion to a Eurodollar Advance. Such notice shall be given on
the same day such request is received by the Administrative Agent if
received prior to 12:00 noon on such Business Day, and otherwise on
the next Business Day.
(b) Notwithstanding anything to the contrary contained
elsewhere in this Agreement, (i) no Borrower shall be permitted to
make a borrowing request hereunder during any Cleanup Period and (ii)
no Borrower shall be permitted to select a borrowing of or conversion
into a Eurodollar Advance in any Borrower's Certificate or Written
Notice, as applicable, (x) to the extent such selection would be
prohibited by Section 2.10 or Section 2.11 hereof, (y) if a Default
or an Event of Default shall be in existence as of the date of
selection or commencement of the applicable Interest Period or (z) to
the extent that such proposed Eurodollar Advance would constitute a
Tranche B Advance.
(c) On the Closing Date, and, subject to Section 2.4(e)
hereof and Section 7 hereof, on each subsequent date on which a
Revolving Advance is made, each Lender shall make available to the
Administrative Agent such Lender's pro rata portion of the Revolving
Advance to be made on the date specified in the aforementioned notice
(which for purposes of Revolving Advances made pursuant to Section 3
hereof shall be deemed to be the Business Day after receipt of the
written or telephonic notice by the Administrative Agent to each such
Lender of such borrowing) not later than 12:00 noon (New York time)
on such specified date in U.S. dollars in immediately available
funds, at the account of the Administrative Agent located at The
Chase Manhattan Bank, N.A., 4 Chase Metrotech Center, Brooklyn, New
York 11245, ABA #021 000 021, for the account of BankAmerica Business
Credit, Inc., Account Number 910-2-640704, Reference: Ames, or such
other account as the Administrative Agent may from time to time
direct (the "Payment Account"). The portion of each Revolving
Advance to be funded by each Lender shall be such Lender's pro rata
share thereof.
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(d) Except for Revolving Advances made pursuant to Section
3.4 hereof (which Revolving Advances shall be applied to the
reimbursement of drawings under the Letter of Credit for which such
Revolving Advance was made in accordance with such Section 3 hereof),
proceeds of each Revolving Advance received by the Administrative
Agent shall be made available to the applicable Borrower by the
Administrative Agent at the Disbursement Account of such Borrower
upon satisfaction of all applicable conditions.
(e) It is agreed that each Lender's funded portion of the
Revolving Loan is intended by the Lenders to be equal at all times to
such Lender's pro rata share of the outstanding Revolving Loan.
Notwithstanding such agreement, the Administrative Agent, BABC and
the other Lenders agree (which agreement shall not be for the benefit
of or enforceable by any Credit Party) that in order to facilitate
the administration of this Agreement and the other Loan Documents,
settlement among them as to the Revolving Loan shall, subject to the
provisions of clause (f) below, take place on a periodic basis in
accordance with the following provisions:
(i) To the extent and in the manner hereinafter provided
in this Section 2.4(e), settlement among the Lenders as to the
Revolving Loan shall occur on each Settlement Date, which may
occur before or after the occurrence or during the continuance of
a Default or Event of Default and whether or not all or any of
the conditions to the making of any Revolving Advance set forth
in Section 6 or 7 would be met if determined on such Settlement
Date. On each Settlement Date, payments shall be made to the
Administrative Agent for the account of BABC or the Lenders, as
the case may be, in the manner provided in this Section 2.4(e)
and in accordance with the Settlement Report delivered by the
Administrative Agent pursuant to the provisions of this Section
2.4(e) in respect of such Settlement Date, so that as of each
Settlement Date, and after giving effect to the transactions on
such Settlement Date, each Lender's outstanding Revolving
Advances shall equal such Lender's pro rata share of the
outstanding Revolving Loan.
(ii) On each Settlement Date, the Administrative Agent
shall deliver to each Lender a Settlement Report not later than
12:00 noon (New York time), which Settlement Report shall be with
respect to the period beginning on the next preceding Settlement
Date and ending on such Settlement Date.
(iii) Between Settlement Dates, the Administrative Agent
shall request and BABC as a Lender shall, subject to the
provisions of clause (f) below and within the limits and subject
to the conditions (except as contemplated by Section 7.2 hereof)
of this Agreement, advance to the Borrowers out of BABC's own
funds, the entire principal amount of any Revolving Advance
requested or deemed requested pursuant to the terms of this
Agreement (any such Revolving Advance being referred to as a
"Non-Ratable Advance"). The making of each Non-Ratable Advance
by BABC shall be deemed to be the making by each other Lender of
such Lender's pro rata share of such Non-Ratable Advance and the
concurrent purchase by BABC and a sale (without representation,
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warranty or recourse) by each other Lender of a 100%
participation in such pro rata share of such Non-Ratable Advance.
All payments of principal, interest and any other amount with
respect to such Non-Ratable Advance shall be payable to and
received by the Administrative Agent for the account of BABC.
Any payments received by the Administrative Agent between
Settlement Dates which in accordance with the terms of this
Agreement are to be applied to the reduction of the outstanding
principal balance of the Revolving Loan, shall be paid over to
and retained by BABC for such application, and such payment to
and retention by BABC shall be deemed, to the extent of each
other Lender's pro rata share of such payment, to be a purchase
by each such other Lender and a sale by BABC (without
representation, warranty or recourse) of a participation in the
Revolving Advances (applied first to the repurchase of a
participation in Non-Ratable Advances) held by BABC immediately
prior to the receipt and application of such payment.
(iv) If on any Settlement Date, (1) the pro rata share
of any Lender in Non-Ratable Advances made since the next
preceding Settlement Date is less than (2) such Lender's pro rata
share of amounts received since the next preceding Settlement
Date by the Administrative Agent and paid only to BABC and
applied by BABC in accordance with clause (iii) above to the
reduction of the outstanding principal balance of the Revolving
Loan, such Lender and the Administrative Agent shall apply such
difference to a decrease in such Lender's Revolving Advances, and
BABC shall pay to the Administrative Agent for the account of
such Lender an amount equal to such difference. If the amount in
(1) and (2) are equal then no settlement shall be required.
(v) If on any Settlement Date, (1) the pro rata share of
any Lender in Non-Ratable Advances made since the next preceding
Settlement Date exceeds (2) such Lender's pro rata share of
amounts received since the next preceding Settlement Date by the
Administrative Agent and paid only to BABC and applied by BABC in
accordance with clause (iii) above to the reduction of the
outstanding principal balance of the Revolving Loan, such Lender
and the Administrative Agent shall apply such excess to an
increase in such Lender's Revolving Advances, and such Lender
shall pay to the Administrative Agent for the account of BABC an
amount equal to such excess.
(vi) If any amounts received by BABC in respect of the
Lender Debt are later required to be returned or repaid by BABC
to any Borrower or any other obligor or their respective
representatives or successors in interest, whether by court
order, settlement or otherwise, and such amounts repaid or
returned by BABC are in excess of BABC's pro rata share of all
such amounts required by virtue of the making of the Non-Ratable
Advances to be returned by all Lenders, each other Lender shall,
upon demand by BABC with notice to the Administrative Agent, pay
to the Administrative Agent for the account of BABC, an amount
equal to the excess of such Lender's pro rata share of all such
amounts required to be returned by all Lenders over the amount,
if any, returned directly by such Lender.
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(vii) Payment under this Section 2.4(e) by any Lender
(including, without limitation, BABC) to the Administrative Agent
shall be made not later than 4:00 p.m. (New York time) on the
Business Day such payment is due, provided that if such payment
is due on written demand by another Lender, including pursuant to
clause (f) below, such written demand shall be made on the paying
Lender not later than 12:00 noon (New York time) on such Business
Day. Payment by the Administrative Agent to any Lender shall be
made by wire transfer, promptly following the Administrative
Agent's receipt of funds for the account of such Lender and in
the type of funds received by the Administrative Agent, and the
Administrative Agent shall promptly notify the other Lenders of
any such payment; PROVIDED, HOWEVER, that if the Administrative
Agent receives such funds at or prior to 2:00 p.m. (New York
time), the Administrative Agent shall pay such funds to such
Lender on such Business Day. If a demand for payment is made
after the applicable time set forth above, the payment due shall
be made by on the first Business Day following the date of such
demand.
(viii) As to each Settlement Period, BABC, on the one
hand, and each Lender, on the other hand, shall be entitled to
interest at the rate payable under this Agreement and the Notes,
on the actual amount of funds employed by BABC and the other
Lenders, respectively, during such Settlement Period and the
Administrative Agent in applying payments received from any
Credit Party or any Collateral to interest on the Revolving Loan
shall treat the owner of a participation deemed purchased under
Section 2.4(e)(iii) as though such owner were a direct Lender as
to such participation and remit such payments received directly
to such owner in respect of such participation. In the event
that there shall be as of the end of any Settlement Period no
source of payment for accrued interest owing to the purchaser of
any outstanding participation under Section 2.4(e)(iii) hereof
(in the reasonable opinion of the Administrative Agent) or an
Event of Default of the type described in Section 11.1(f) (other
than clause (i) thereof) or 11.1(g) hereof, then interest accrued
on such participation at the Federal Funds Effective Rate for
such Settlement Period shall be paid, on demand, by the seller of
such participation to the purchaser thereof, and without
prejudice to any other claim which such seller may have, such
seller shall be entitled to claim such interest from the Credit
Parties.
(f) The Administrative Agent or BABC shall by Written
Notice to each Lender have the right at any time to suspend the
provisions of Section 2.4(e) of this Agreement. From and after the
giving of such Written Notice (and until such time, if any, as the
Administrative Agent notifies the Lenders of its determination to
return to a periodic settlement basis in accordance with the
provisions of Section 2.4(e) hereof) and the settlement occurring at
the end of the Settlement Period, if any, during which such Written
Notice was given, the provisions of Section 2.4(e) hereof shall be of
no force and effect. In addition to, and without limiting the right
of the Administrative Agent to suspend the periodic settlement
pursuant to the foregoing sentence, upon written demand by BABC with
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Written Notice thereof to the Administrative Agent, each other Lender
shall pay to the Administrative Agent, for the account of BABC, such
amount as may be necessary for such other Lender to repurchase from
BABC, at par, any outstanding participation interest previously
purchased by BABC under Section 2.4(e)(iii) hereof. Payments made
pursuant to the foregoing sentence shall be made not later than 4:00
p.m. (New York time) on any Business Day if demand for such payment
is received by such Lender not later than 12:00 noon (New York time)
on such Business Day; otherwise, any such payment shall be made on
the next Business Day after demand is received therefor.
2.5. TERMINATION OR REDUCTION OF THE REVOLVING CREDIT
FACILITY COMMITMENT. (a) The Revolving Credit Facility Commitment
shall terminate on the Maturity Date. Upon termination of the
Revolving Credit Facility Commitment for any reason, the Revolving
Loan (together with all other Lender Debt) shall become automatically
immediately due and payable together with all accrued interest
thereon to such date plus any fees, premiums, charges or costs
provided for hereunder, together with the cancellation or termination
of any outstanding Letters of Credit (or the provision of Letter of
Credit Cash Collateral equal to the undrawn amount under all
outstanding Letters of Credit) and the reimbursement of any
unreimbursed Letters of Credit.
(b) The Borrowers shall have the right, upon not less than
five (5) Business Days' prior Written Notice to the Administrative
Agent (which shall promptly notify each Lender thereof in writing or
by telephone confirmed promptly in writing), to reduce (in whole or
in part) the Tranche A Commitment Amount, in which case the Tranche A
Commitment Amount and the Revolving Credit Facility Commitment shall
be permanently reduced by the amount of such reduction; PROVIDED,
HOWEVER, that any such reduction shall be accompanied by (i)
prepayment of any amount required to be prepaid pursuant to Section
4.1(b) hereof as a result of such reduction, (ii) payment of any
unpaid fees owing with respect to that portion of the Revolving
Credit Facility Commitment that is reduced, (iii) payment of all
other fees, premiums, costs, and charges required to be paid by the
Borrowers pursuant to Section 2.12 or Section 4.8 hereof and (iv)
payment of all accrued interest on any amount that the Borrowers are
required to prepay pursuant to Section 4.1(b) hereof as a result of
such reduction.
(c) Following receipt by one or more Credit Parties of at
least $30,000,000 as the gross cash proceeds from the issuance of
Acceptable Subordinated Debt or Acceptable Equity, and so long as the
Borrowers are in compliance with each of the financial covenants set
forth in 9.16 hereof, the Borrowers shall have the right, upon not
less than five (5) Business Days' prior Written Notice to the
Administrative Agent (which shall notify each Lender thereof in
writing or by telephone confirmed promptly in writing), to reduce (in
whole or in part) the Tranche B Commitment Amount, in which case the
Tranche B Commitment Amount and the Revolving Credit Facility
Commitment shall be permanently reduced by the amount of such
reduction, without premium or penalty, PROVIDED, HOWEVER, that any
such reduction shall be accompanied by (x) prepayment of any amount
required to be prepaid pursuant to Section 4.1(b) hereof as a result
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of such reduction, (y) payment of any unpaid fees owing with respect
to that portion of the Revolving Credit Facility Commitment that is
reduced and (z) payment of all accrued interest on any amount that
the Borrowers are required to pay pursuant to Section 4.1(b) hereof
as a result of such reduction.
(d) Notwithstanding anything to the contrary contained
herein, in no event shall the Revolving Credit Facility Commitment at
any time be reduced to an amount that is less than the aggregate
amount of all Letter of Credit Obligations then outstanding.
2.6. INTEREST. (a) INTEREST ON EURODOLLAR ADVANCES.
Except as provided in Sections 2.6(c) hereof, the Borrowers shall pay
interest on the unpaid principal amount of each Eurodollar Advance
which is outstanding from time to time, on each Interest Payment Date
with respect to such Eurodollar Advance, at the date of conversion of
such Eurodollar Advance (or portion thereof) to a Reference Rate
Advance and at maturity of such Eurodollar Advance at an interest
rate per annum during the Interest Period for such Eurodollar Advance
equal to the Eurodollar Rate for the Interest Period in effect for
such Eurodollar Advance plus the Applicable Margin, and after
maturity of such Eurodollar Advance (whether by acceleration or
otherwise) upon demand.
(b) INTEREST ON REFERENCE RATE ADVANCES. Except as
provided in Sections 2.6(c) hereof, the Borrowers shall pay interest
on the unpaid principal amount of each Reference Rate Advance and, to
the extent due and payable, Additional Indebtedness incurred by it,
in each case, which is outstanding from time to time at an interest
rate per annum equal to the Reference Rate in effect from time to
time plus the Applicable Margin. Interest on all Reference Rate
Advances shall be payable monthly in arrears on the first day of each
month commencing with the first day of the first month commencing
after the month in which the Closing Date occurs, and at maturity
(whether by acceleration or otherwise) and thereafter on demand.
Interest on Additional Indebtedness shall be payable upon demand.
(c) DEFAULT INTEREST. During the continuation of any Event
of Default, interest on Eurodollar Advances and Reference Rate
Advances, shall accrue and be payable at a rate two percentage points
(2%) in excess of the rate of interest otherwise applicable to
Eurodollar Advances or Reference Rate Advances, as the case may be,
and interest on any interest in default shall accrue and shall be
payable upon demand at a rate equal to two percentage points (2%) in
excess of the rate then applicable to the Advance on which such
interest accrued, or in the case of interest accrued on Additional
Indebtedness, at a rate of four percentage points (4%) in excess of
the Reference Rate.
(d) EURODOLLAR RATE DETERMINATION. The Administrative
Agent, upon determining the Eurodollar Rate for any Interest Period,
shall promptly notify by telephone (confirmed promptly in writing) or
in writing the applicable Borrower and the Lenders thereof. Such
determination shall, in the absence of manifest error, be conclusive
and binding upon the Borrowers, the Agents and the Lenders.
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(e) STEP-DOWN/STEP-UP PRICING ADJUSTMENTS. In the event
that the financial statements for any Fiscal Year delivered pursuant
to Section 9.1(b) hereof demonstrate compliance as of the date of
such financial statements with "Level 2", "Level 3", "Level 4" or
"Level 5" of each of the financial tests set forth in Schedule 2.6(e)
hereto, then the Applicable Margin with respect to Tranche A Advances
and the fees payable to the Administrative Agent pursuant to Section
4.7 hereof shall be adjusted to the applicable amounts set forth in
said Schedule 2.6(e) (in each case subject to Section 2.6(c) hereof).
Each such adjustment shall take effect (if at all) as of the latest
date the applicable financial statements described in the immediately
preceding sentence were required to be delivered under Section 9.1
hereof and shall remain in effect until the latest date delivery of
financial statements are required to be delivered pursuant to Section
9.1(b) hereof that demonstrate either compliance with a higher
"Level" of each of the financial tests set forth in said Schedule
2.6(e) or the failure to maintain compliance with the "Level" of each
such test achieved as of the end of the immediately prior Fiscal
Year, whereupon (subject to Section 2.6(c) hereof) such amounts shall
be decreased or increased, as the case may be, to the applicable
amounts set forth in said Schedule 2.6(e).
2.7. CONVERSION OF BORROWINGS; RENEWALS. (a) Each
Borrower may, from time to time prior to the Maturity Date convert
(i) all or a portion of its outstanding Reference Rate Advances which
are Tranche A Advances to one or more Eurodollar Advances, except as
provided in the last sentence of Section 2.4(a) or in Section 2.4(b),
2.10 or 2.11 hereof, and only in aggregate amounts of $10,000,000 or
any greater integral multiple of $1,000,000 or (ii) all or a portion
of outstanding Eurodollar Advances to one or more Reference Rate
Advances so long as the aggregate principal balance of the portion of
the Eurodollar Advances not being converted, if any, is $10,000,000
or any greater integral multiple of $1,000,000. Interest on any
Reference Rate Advance which is accrued and unpaid as of the time of
such conversion shall be paid on the next date interest becomes due
and payable under Section 2.6(b) hereof. Each conversion by a
Borrower of any Advance or portion thereof (other than a conversion
pursuant to Section 2.10 or 2.11 hereof) shall be made not later than
12:00 noon (New York time) on a Business Day on at least three (3)
Business Days' prior Written Notice from an Authorized Representative
to the Administrative Agent (and the Administrative Agent shall
promptly notify each Lender thereof in writing or by telephone
confirmed promptly in writing) from such Borrower. Each such notice
(which notice shall be irrevocable and shall conclusively evidence
the joint and several obligation of the Borrowers to repay such
Revolving Advance) shall specify (i) the date of the conversion and
the amount to be converted, (ii) the particular Reference Rate
Advance which is a Tranche A Advance, or portion thereof, to be
converted, and (iii) in the case of conversion of any Reference Rate
Advance which is a Tranche A Advance, or portion thereof, to a
Eurodollar Advance, the duration of the Interest Period for such
Eurodollar Advance. Notwithstanding the above, no Borrower shall be
entitled to convert any Reference Rate Advance, or portion thereof,
to a Eurodollar Advance to the extent such Borrower is prohibited by
Section 2.4(b) from requesting conversion thereof. Except as
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provided in Section 2.10 hereof, any conversion of a Eurodollar
Advance, or portion thereof, to a Reference Rate Advance shall be
made only on the last day of the Interest Period with respect to such
Eurodollar Advance.
(b) Each renewal by a Borrower of an outstanding Eurodollar
Advance or portion thereof shall be made on Written Notice to the
Administrative Agent (and the Administrative Agent shall promptly
notify each Lender thereof in writing or by telephone confirmed
promptly in writing) given not later than 12:00 noon (New York time)
on the third Business Day prior to the last day of the Interest
Period just ending for such Eurodollar Advance. Each notice (which
notice shall be irrevocable and shall conclusively evidence the joint
and several obligation of the Borrowers to repay such Revolving
Advance) by a Borrower of the renewal of a Eurodollar Advance or
portion thereof, shall be in writing from an Authorized
Representative and shall specify (i) the amount of such renewal of
the Eurodollar Advance or portion thereof and (ii) the duration of
the Interest Period for such renewal; PROVIDED, HOWEVER, that if such
Borrower fails to select the duration of any Interest Period for the
renewal of such Eurodollar Advance or portion thereof, the duration
of such Interest Period shall be one month. Notwithstanding the
above, no Borrower shall be entitled to renew a Eurodollar Advance or
a portion thereof, (i) if at the time of the selection of such
renewal there shall exist a Default, or (ii) to the extent such
renewal would be prohibited by the last sentence of Section 2.4(a)
hereof, by clause (z) of Section 2.4(b) hereof or by Section 2.10 or
2.11 hereof.
(c) Any Eurodollar Advance or portion thereof as to which
the Administrative Agent shall not have received a proper notice of
conversion or renewal as provided in Section 2.7(a) or 2.7(b) hereof
or notice of payment or prepayment by 12:00 noon (New York time) at
least three (3) Business Days prior to the last day of the Interest
Period just ending for such Eurodollar Advance shall (whether or not
any Default or Event of Default has occurred) automatically be
converted to a Reference Rate Advance on the last day of the Interest
Period for such Eurodollar Advance.
2.8. COMPUTATION OF INTEREST. All interest payable
hereunder and all fees and other amounts calculated on the basis of a
rate per annum shall be computed on the basis of actual days elapsed
over a 360-day year. Any rate of interest on Reference Rate
Advances, Additional Indebtedness, or interest which is computed on
the basis of the Reference Rate shall change when and as the
Reference Rate changes.
2.9. INCREASED COSTS. In the case of the pro rata share
of any Lender in any Eurodollar Advance, in the event any law,
treaty, order, directive, rule or regulations shall be adopted,
issued or becoming effective after the Closing Date or in the event
of any change in any law, treaty, order, directive, role or
regulation (including, without limitation, in any case Regulation D)
from that in effect on the Closing Date or in the interpretation
thereof by any governmental or other regulatory authority charged
with the administration thereof (in any case, whether or not having
the force of law), in any case, which:
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(i) subjects such Lender or any branch or Affiliate of
such Lender to any tax, duty or other charge with respect to such
share of such Eurodollar Advance (other than Excluded Taxes); or
(ii) changes the basis of taxation (including without
limitation an increase in any applicable tax rate) of payments to
any Lender or any branch or Affiliate of such Lender of principal
of and/or interest on such share of such Eurodollar Advance
and/or other fees and amounts payable hereunder with respect
thereto (other than Excluded Taxes); or
(iii) imposes, modifies or deems applicable any reserve,
deposit, special deposit, insurance assessment or similar
requirement against any assets held by, deposits with or for the
account of, or loans by, an office of any Lender or any branch or
Affiliate of such Lender; or
(iv) imposes upon such Lender or any branch or
affiliate of such Lender any other condition with respect to such
share of such Eurodollar Advance or this Agreement (excluding any
event referred to in clause (i), (ii) or (iii) of Section 2.12(b)
hereof).
and the result of any of the foregoing is to increase the actual cost
by an amount such Lender deems to be material to such Lender or any
branch or Affiliate of such Lender of making, funding or maintaining
such share of such Eurodollar Advance hereunder, or to reduce the
amount of any payment (whether of principal, interest, or otherwise)
received or receivable by such Lender or any branch or Affiliate of
such Lender, or to require such Lender or any branch or Affiliate of
such Lender to make any payment, in each case by or in an amount
which such Lender in its reasonable judgment deems material and, in
any case, is not compensated for by the Eurodollar Reserve
Percentage, then and in any such case:
(1) such Lender shall promptly notify the Borrowers,
the Administrative Agent and the other Lenders in writing of the
happening of such event;
(2) such Lender shall promptly deliver to the
Borrowers, the Administrative Agent and the other Lenders a
certificate stating the change which has occurred, or the reserve
requirements or other conditions which have been imposed on such
Lender or branch or Affiliate of such Lender, or the request,
directive or requirement with which it has complied, together
with the date thereof, the amount of such increased cost,
reduction or payment and the way in which such amount has been
calculated; and
(3) the Borrowers hereby agree to pay to the
Administrative Agent for the benefit of such Lender on demand by
such Lender (with a notice of such demand to be sent by such
Lender to the Administrative Agent) such an amount or amounts as
will compensate such Lender or its branch or Affiliate for such
additional cost, reduction or payment.
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The certificate of such Lender as to the additional amounts payable
pursuant to this Section 2.9 delivered to the Borrowers and the
Administrative Agent shall in the absence of manifest error be
conclusive of the amount thereof. The protection of this Section 2.9
shall be available to such Lender regardless of any possible
contention of invalidity or inapplicability of the law, regulation,
treaty, order, directive, interpretation or condition which has been
imposed.
2.10. CHANGE IN LAW RENDERING EURODOLLAR ADVANCES
UNLAWFUL. (a) Notwithstanding anything to the contrary herein
contained, in the event that any law, treaty, order, directive, rule
or regulation adopted, issued or becoming effective after the Closing
Date or any change in any law, treaty, order, directive, rule or
regulation from that in effect on the Closing Date or in the
interpretation thereof by any governmental or other regulatory
authority charged with the administration thereof (in any case,
whether or not having the force of law), should make it unlawful for
any Lender to fund any portion of a Eurodollar Advance or to give
effect to its obligations as contemplated hereby with respect to
Eurodollar Advances, such Lender shall, upon the happening of such
event, notify the Administrative Agent, the other Lenders and the
Borrowers thereof in writing stating the reason therefor, and the
obligation of such Lender to allow conversion to or selection or
renewal with respect to its pro rata share of any Eurodollar Advance
by any Borrower shall, upon the happening of such event, forthwith be
suspended for the duration of such illegality and during such
illegality such Lender shall fund its share of all Revolving Advances
as Reference Rate Advances and there shall be no renewal of, or
conversion to, any share of such Lender in any Eurodollar Advance.
If and when such illegality ceases to exist, such suspension shall
cease and such affected Lender shall similarly notify the
Administrative Agent, the other Lenders and the Borrowers.
(b) Notwithstanding anything to the contrary contained
herein, in the event that any treaty, order, directive, rule or
regulation adopted, issued or becoming effective after the Closing
Date or any change in any law, treaty, order, directive, rule or
regulation from that in effect on the Closing Date or in the
interpretation thereof by any governmental or other regulatory
authority charged with the administration thereof (in any case,
whether or not having the force of law) shall make it commercially
impracticable or unlawful for any Lender to continue in effect the
funding of any portion of a Eurodollar Advance previously made by it
hereunder and then outstanding, such Lender shall, upon the happening
of such event, notify the Administrative Agent, the other Lenders and
the Borrowers thereof in writing stating the reasons therefor, and
such Lender's pro rata share of such Eurodollar Advance shall
automatically be converted to a Reference Rate Advance. The
Borrowers shall pay to the Administrative Agent for the benefit of
such Lender accrued interest owing on such converted portion of such
Eurodollar Advance made to the applicable Borrower through the date
of such conversion, together with any amounts payable under Section
2.12 hereof with respect to such prepayment. After such notice shall
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have been given and until the circumstances giving rise to such
notice no longer exist, each request for such Lender's pro rata share
of a Eurodollar Advance or for conversion to or renewal of such
Lender's pro rata share of a Eurodollar Advance shall be deemed a
request by the applicable Borrower for a Reference Rate Advance. If
and when such impracticability or illegality ceases to exist, such
suspension shall cease and such affected Lender shall similarly
notify the Administrative Agent, the other Lenders and the Borrowers.
2.11. EURODOLLAR AVAILABILITY. (a) In the event, and on
each occasion, that on the day two (2) Business Days prior to the
commencement of any Interest Period for a Eurodollar Advance, the
Administrative Agent shall have determined in good faith (which
determination shall, in the absence of manifest error, be conclusive
and binding upon the Borrowers) that dollar deposits in the amount of
the principal amount of such Eurodollar Advance are not generally
available in the London (England) interbank market, or that the rate
at which such dollar deposits are being offered will not accurately
reflect the cost to one or more Lenders of making or funding the
principal amount of their portions of such Eurodollar Advance during
such Interest Period, or that reasonable means do not exist for
ascertaining the Eurodollar Rate, the Administrative Agent shall, as
soon as practicable thereafter, give written or telephonic notice of
such determination to the Lenders and the Borrowers, and any request
by a Borrower for a Eurodollar Advance pursuant to Section 2.4 hereof
or for conversion to or renewal of a Eurodollar Advance pursuant to
Section 2.7 hereof shall thereupon, and until the circumstances
giving rise to such notice no longer exist (as notified by the
Administrative Agent to the Borrowers and the Lenders), be deemed a
request by any Borrower for the making of or conversion to a
Reference Rate Advance.
(b) If, at any time, the Administrative Agent shall have
determined (which determination shall, in the absence of manifest
error, be conclusive and binding upon the Borrowers) that any
contingency has occurred which adversely affects the London (England)
interbank market or that any law, treaty, order, directive, rule or
regulation that is adopted, or issued or that becomes effective after
the Closing Date or any change in any existing law, treaty, order,
directive, rule or regulation from that in effect on the Closing Date
or in the interpretation thereof (in any case, whether or not having
the force of law) or other circumstance affecting one or more Lenders
or the London (England) interbank market makes the funding of any
portion of a Eurodollar Advance impracticable, the Administrative
Agent shall, as soon as practicable thereafter, give written or
telephonic notice of such determination to the Lenders and the
Borrowers and any request by a Borrower for a Eurodollar Advance
pursuant to Section 2.4 hereof or for conversion to or renewal of a
Eurodollar Advance pursuant to Section 2.7 hereof shall thereupon,
and until the circumstances giving rise to such notice no longer
exist (as notified by the Administrative Agent to the Borrowers and
the Lenders), be deemed a request by any Borrower for the making of
or conversion to a Reference Rate Advance.
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2.12 INDEMNITIES. (a) Each Borrower hereby indemnifies
each Lender on demand against any loss or expense which such Lender
or its branch or affiliate may sustain or incur as a consequence of:
(i) to the extent such loss or expense is not compensated
by the accrual of interest under Section 2.6(d) hereof or the
conversion of any Eurodollar Advance to a Reference Rate Advance,
any default in payment or prepayment of the principal amount of
any Eurodollar Advance made to it or any portion of any thereof
or interest accrued thereon, as and when due and payable (at the
due date thereof, by irrevocable notice of payment or prepayment,
or otherwise),
(ii) the effect of the occurrence of any Event of Default
upon any Eurodollar Advance made to it, including, but not
limited to, any loss or expense sustained or incurred in
liquidating or employing deposits from third parties acquired to
effect or maintain such Eurodollar Advance or any portion
thereof,
(iii) the payment or prepayment of the principal amount of
any Eurodollar Advance made to it or any portion of any thereof,
pursuant to Section 2 or 4 hereof, or otherwise, on any day other
than the Maturity Date or (except in the case of payments of
interest on an Interest Payment Date) the last day of an Interest
Period (in the case of any Eurodollar Advance), or the payment of
any interest on any Eurodollar Advance made to it, or portion
thereof, on a day other than an Interest Payment Date for such
Eurodollar Advance, or
(iv) the failure by any Borrower to accept or make a
borrowing of a Eurodollar Advance or a conversion to or renewal
of a Eurodollar Advance after it has given notice of such
borrowing, conversion or renewal.
Each Lender shall provide to the Borrowers, the Administrative Agent
and the other Lenders a statement, supported where applicable by
documentary evidence, explaining the amount and calculation of any
such loss or expense it incurs, which statement shall be conclusive
absent manifest error.
(b) If any law, treaty, order, directive, rule or
regulation shall be adopted, issued or become effective after the
Closing Date or if any change in any law, treaty, order, directive,
role or regulation from that in effect on the Closing Date or in the
interpretation thereof by any governmental or other regulatory
authority charged with the administration thereof (in any case,
whether or not having the force of law), and including, without
limitation, all risk based capital guidelines heretofore adopted by
the Comptroller of the Currency, the Board or any other banking
regulatory agency, domestic or foreign, to the extent that any
provision contained therein does not have to be complied with as of
the date hereof, shall, or if the compliance by any Lender with any
guideline or request from any central bank or other governmental
authority, shall:
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(i) impose upon, modify, require, make or deem applicable
to any one or more Lenders, or any of their Affiliates or
branches, any reserve requirement, special deposit requirement,
insurance assessment or similar requirement against or affecting
the Revolving Commitment of such Lender or Lenders or such
Affiliates or branches, or
(ii) impose any condition upon or cause in any manner
the addition of, any supplement to or any increase of any kind to
the capital or cost base of such Lender or Lenders, or such
Affiliates or branches thereof, for extending or maintaining the
Revolving Commitment of such Lender, which results in an increase
in the capital requirement supporting the Revolving Commitment,
or
(iii) impose upon, modify, require, make or deem
applicable to such Lender or Lenders or any such Affiliates or
branches any capital requirement, increased capital requirement
or similar requirement,
and the result of any events referred to in clause (i), (ii) or (iii)
above shall be to (A) increase the amount of capital required or
expected to be required to be maintained by such Lender or any such
Affiliate or branch and such Lender determines that the amount of
such capital requirement is incurred by or based on the Revolving
Commitment of such Lender or other commitments of this type or (B)
increase the costs or decrease the benefit in any way to such Lender
or Lenders, or any such Affiliate or branch, of extending or
maintaining the Revolving Commitment or extending or maintaining such
Lender's or Lenders' portion of the Loans or holding any Collateral;
THEN and in such event the Borrowers shall, on or prior to the tenth
(10th) Business Day after the giving of Written Notice of such
increased costs and/or decreased benefits to the Borrowers and the
Administrative Agent by such Lender or Lenders (or any such Affiliate
or branch), pay to the Administrative Agent for the benefit of such
Lender or Lenders all such additional amounts which in the sole good
faith calculation of such Lender or Lenders are properly allocable to
the Revolving Commitment of such Lender, such Lender's or Lenders'
portion of the Loans and/or the Collateral, as the case may be, and
which:
(1) in the case of events referred to in clause (i)
above, shall be sufficient to compensate it for all such
increased costs and/or decreased benefits, and/or
(2) in the case of events referred to in clauses (ii)
and (iii) above, shall be an amount equal to the reduction, as
reasonably determined by such Lender, in the after-tax rate of
return on such Lender's capital resulting from any such capital
or increased capital or similar requirement (including, without
limitation, any such Lender's or Lender's Affiliates' or
branches' cost of taking action in anticipation of the
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efectiveness of any event described in clause (ii) or (iii) in
order to enable such Lender, Lenders, Affiliate or branch to be
in compliance therewith upon such effectiveness), all as
certified by such Lender or Lenders in said Written Notice to the
Borrowers. Such certification shall be conclusive and binding on
the Borrowers absent manifest error.
(c) Each Borrower hereby indemnifies and holds harmless
each of the Agents and each Lender and each Agent's and each Lender's
Affiliates, and each of such Agent's, Lender's and Affiliate's
directors, officers, agents, representatives, counsel and employees
and each other Person, if any, controlling them or any of their
Affiliates within the meaning of either Section 15 of the Securities
Act of 1933, as amended, or Section 20(a) of the Securities Exchange
Act of 1934 (each an "Indemnified Party"), from and against any and
all losses, claims, damages, costs, expenses (including reasonable
counsel fees and disbursements and the allocated costs and expenses
of in-house counsel) and liabilities which may be incurred by or
asserted against such Indemnified Party with respect to or arising
out of the financing contemplated by this Agreement, the commitments
hereunder to make, or the making of Revolving Advances or the
financing contemplated hereby, the other Loan Documents, the
Collateral (including, without limitation, the use of the financing
by any Credit Party, the exercise by any of the Agents or any Lender
of rights and remedies or any power of attorney with respect thereto,
and any action or inaction of any of the Agents or any Lender under
any Security Document), the use of proceeds of any financial
accommodations provided hereunder, or any investigation, litigation
or other proceeding brought or threatened relating to the financing
provided hereunder, or any of the transactions contemplated hereby or
otherwise in connection herewith or the role of any Person or Persons
in connection with the foregoing, whether or not they or any other
Indemnified Party is named as a party to any legal action or
proceeding ("Claims"). No Borrower will, however, be responsible to
any Indemnified Party hereunder for any Claims to the extent that any
such Claim shall have arisen out of or resulted from actions taken or
omitted to be taken by such Indemnified Party which constitute the
gross negligence or willful misconduct of such Indemnified Party as
determined by a final judgment of a court of competent jurisdiction
("Excluded Claims"). Further, should any of the Agents' or any of
the Lender's employees be involved in any legal action or proceeding
in connection with the transactions contemplated hereby (other than
relating to an Excluded Claim), the Borrowers hereby agree to pay to
such Agent and such Lender an amount equal to the actual per diem
compensation for each employee for each day or portion thereof that
such employee is involved in preparing for or giving testimony
(including, without limitation, deposition testimony) pertaining to
any such legal action or proceeding. The Indemnified Party shall
give the Borrowers prompt Written Notice of any Claim setting forth a
description of those elements of the Claim of which such Indemnified
Party has knowledge. As to any Claim, the Indemnified Party shall
have the right to select counsel and control the defense of such
Claims; PROVIDED, HOWEVER, that so long as no Specified Event of
Default is continuing no Indemnified Party shall settle any Claim as
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to which it is controlling the defense without the consent of the
Borrowers, which consent shall not be unreasonably withheld or
delayed. The Indemnified Parties and the Borrowers and their
respective counsel shall cooperate with each other in all reasonable
respects in any investigation, trial and defense of any such Claim
and any appeal arising therefrom.
(d) If for any reason the foregoing indemnity is
unavailable to any Indemnified Party or insufficient to hold it free
and harmless as contemplated by the preceding paragraph (c), then the
Borrowers shall contribute to the amount paid or payable by the
Indemnified Party as a result of any Claim in such proportion as is
appropriate to reflect, not only the relative benefits received by
the Borrowers on the one hand and such Indemnified Party on the other
hand, but also the relative fault of the Borrowers and such
Indemnified Party, as well as any other relevant equitable
considerations.
2.13 DISBURSEMENT. Each Advance to any Borrower shall be
disbursed by the Administrative Agent from the Payment Account
provided in Section 2.4(c) hereof (or such other account as the
Administrative Agent shall from time to time elect) to the
Disbursement Account of such Borrower (or such other account as such
Borrower may, with the prior consent of the Administrative Agent,
designate), shall be charged, together with interest, fees and other
amounts payable by the Borrowers hereunder, to the account of the
Borrowers on the books of the Administrative Agent from time to time,
and shall be payable to the Payment Account or to such other account
or office as the Administrative Agent may specify in writing to the
Borrowers.
2.14. ADMINISTRATIVE AGENT'S AVAILABILITY ASSUMPTION.
During any period after the Closing Date when the settlement
procedures under Section 2.4(e) hereof are not in effect:
(a) Unless the Administrative Agent shall have been
notified by any Lender by Written Notice prior to a borrowing date
that such Lender does not intend to make available to the
Administrative Agent such Lender's pro rata portion of any Advance to
any Borrower which it shall be obligated to make on such date, the
Administrative Agent may assume that such Lender has made or will
make such amount available to the Administrative Agent on the date
for such borrowing and the Administrative Agent may, in reliance upon
such assumption, make available to such Borrower a corresponding
amount. If such corresponding amount is not in fact made available
to the Administrative Agent by such Lender on such date of borrowing,
the Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Lender, which demand shall
be made in a reasonably prompt manner. If such Lender does not pay
such corresponding amount forthwith upon the Administrative Agent's
demand therefor, the Administrative Agent shall promptly notify the
Lenders and the Borrowers and the Borrowers shall pay such
corresponding amount to the Administrative Agent on demand.
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(b) The Administrative Agent shall also be entitled to
recover from such Lender or the Borrowers interest on such
corresponding amount in respect of each day from the date such
corresponding amount was made available by the Administrative Agent
to the applicable Borrower to the date such corresponding amount is
recovered by the Administrative Agent, at a rate per annum equal to
(x) if paid by such Lender, the Federal Funds Effective Rate or (y)
if paid by one or more of the Borrowers, the applicable rate for
Reference Rate Advances or Eurodollar Advances, as the case may be.
(c) In the event that any Lender shall fail to fund its pro
rata share of any Revolving Advance made pursuant to Section 3.4
hereof or its letter of credit participation under Section 3.5
hereof, the Administrative Agent on behalf of the applicable Issuing
Lender shall be entitled to recover such amount on demand from such
Lender, which demand shall be made in a reasonably prompt manner. If
such Lender does not pay such amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent
shall notify promptly the Lenders and the Borrowers thereof and the
Borrowers shall pay such amount to the Administrative Agent. The
Administrative Agent on behalf of the applicable Issuing Lender shall
also be entitled to recover from such Lender or the Borrowers, as the
case may be, interest on such corresponding amount in respect of each
day from the date such Revolving Advance was made, or the date such
purchase was to have been made or funded, to the date such amount is
recovered by the Administrative Agent, at a rate per annum equal to
(x) if paid by such Lender, the cost (based on the Federal Funds
Effective Rate) to the applicable Issuing Lender of funding the
payment of the drawing under the Letter of Credit for which the
Revolving Advance was made in the case of a Revolving Advance made
pursuant to Section 3.4 or a participation under Section 3.5 hereof,
or (y) if paid by one or more of the Borrowers, the applicable rate
for Reference Rate Advances in the case of a Revolving Advance made
pursuant to Section 3.4 hereof or a participation purchased under
Section 3.5 hereof.
(d) Nothing herein shall be deemed to relieve any Lender
from its obligation to fund or purchase its pro rata share of any
Advance or purchase any participation as required hereunder, or to
prejudice any rights which any Borrower may have against any Lender
as a result of any default by such Lender hereunder. No Lender shall
be responsible for any default of any other Lender in respect of any
other Lender's obligation to make its pro rata share of any Advances
hereunder nor shall the Revolving Commitment of any Lender hereunder
be increased as a result of such default of any other Lender. Each
Lender shall be obligated to the extent provided herein regardless of
the failure of any other Lender to fulfill its obligations hereunder.
2.15. PRO RATA TREATMENT AND PAYMENTS. Except as
contemplated by Sections 2.4(e), 2.9, 2.10, 2.12, 2.14, 2.18, 4.6,
13.1, 13.5, 13.6, 13.13(h), 13.14(g) and 13.15(e) hereof, each
Advance and each payment (including each prepayment) on account of
the principal of and interest on the Revolving Loan and fees
described in this Agreement shall be made pro rata to each Lender
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according to the respective percentages of each Lender set forth
opposite its name on Exhibit A hereto. The Administrative Agent
will, subject to Section 2.4(e) hereof, distribute each payment to
the Lenders in accordance with Section 2.19 hereof.
2.16. EURODOLLAR OFFICES. Each Lender may initially
fulfill its commitment with respect to such Lender's pro rata share
of any Eurodollar Advance by causing the Initial Eurodollar Office of
such Lender to make such Lender's proportionate share of such
Eurodollar Advance or in any other manner or from any other source;
PROVIDED, HOWEVER, that each Lender may at its option fulfill such
commitment by causing another branch or an Affiliate of such Lender
to make such Lender's pro rata share of such Eurodollar Advance; and
PROVIDED, FURTHER, that the selection by such Lender of the Initial
Eurodollar Office of such Lender or any other such branch or
Affiliate shall not affect the obligations of the Borrowers to repay
such Lender's pro rata share of the Eurodollar Advances in accordance
with the terms of this Agreement.
2.17. TELEPHONIC NOTICE. Without in any way limiting the
obligation of each Borrower to confirm in writing any telephonic
notice by such Borrower of a borrowing, conversion or renewal, the
Administrative Agent may act without liability upon the basis of
telephonic notice believed by the Administrative Agent in good faith
to be from an Authorized Representative of such Borrower prior to
receipt of written confirmation.
2.18. MAXIMUM INTEREST. (a) No provision of this
Agreement or any Note shall require the payment to any Lender or
permit the collection by any Lender of interest in excess of the
maximum rate permitted by any applicable law (the "Maximum Lawful
Rate").
(b) If the amount of interest computed without giving
effect to this Section 2.18 and payable on any interest payment date
in respect of the preceding interest computation period would exceed
the amount of interest computed in respect of such period at the
maximum rate of interest from time to time permitted (after taking
into account all consideration which constitute interest) by laws
applicable to any Lender (such maximum rate being such Lender's
"Maximum Permissible Rate"), the amount of interest payable to such
Lender on such date in respect of such period shall be computed at
such Lender's Maximum Permissible Rate.
(c) If at any time and from time to time (i) the amount of
interest payable to any Lender on any interest payment date shall be
computed at such Lender's Maximum Permissible Rate pursuant to the
preceding paragraph (b) and (ii) in respect of any subsequent
interest computation period the amount of interest otherwise payable
to such Lender would be less than the amount of interest payable to
such Lender computed at such Lender's Maximum Permissible Rate, then
the amount of interest payable to such Lender in respect of such
subsequent interest computation period shall continue to be computed
at such Lender's Maximum Permissible Rate until the amount of
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interest payable to such Lender shall equal the total amount of
interest which would have been payable to such Lender if the total
amount of interest had been computed without giving effect to the
preceding paragraph (b).
2.19 RECEIPT OF PAYMENTS. (a) The Borrowers shall make
each payment under this Agreement without deduction, set-off, defense
(other than the defense of payment), recoupment, claim or
counterclaim, all of which are waived but may be used in an
independent proceeding, not later than 12:00 noon (New York time) on
the day when due in lawful money of the United States of America in
immediately available funds to the Payment Account. Subject to
Section 2.4(e) hereof, the Administrative Agent will, upon any such
payment to the Payment Account, promptly thereafter (and in any event
on the same Business Day as the date when received if such payment is
received at or prior to 12:00 noon (New York time), cause to be
distributed like funds relating to the payment of principal or
interest ratably to the Lenders or as otherwise provided above, and
like funds relating to the payment of any other amount payable to any
Lender to such Lender, in each case to be applied in accordance with
the terms of this Agreement.
(b) Pursuant and subject to Section 9.20 hereof, each
Borrower has agreed (i) to cause all of such Borrower's Proceeds to
be deposited into one or more of its Collection Accounts, and to
cause all such Proceeds to be transferred to such Borrower's
Concentration Account, and (ii) to cause all Proceeds in such
Borrower's Concentration Account to be transferred to the Payment
Account in accordance with the applicable Concentration Account
Agreement. Subject to Section 2.20(a) hereof, on each Business Day,
the Administrative Agent shall apply to the Lender Debt (or invest as
hereinafter provided) effective as of such Business Day, all Proceeds
credited in immediately available funds to the Payment Account on
such Business Day (and which shall not have theretofore been credited
to the Lender Debt) as follows: (i) first, to the Revolving Loan, as
a prepayment thereof until the amount so applied shall equal the then
unpaid principal balance of the Revolving Loan and (ii) second,
invested in accordance with and subject to the requirements of
Section 2.20(b) hereof.
In the event any Borrower (or any Affiliate of any Borrower
or any Person acting for or in concert with any Borrower) shall
receive any monies, checks, drafts or other similar negotiable items
of payment made with respect to Accounts, such Borrower shall no
later than the Business Day following receipt thereof deposit or
cause the same to be deposited, in kind, in a Collection Account or
as otherwise directed by the Administrative Agent.
2.20. APPLICATION OF PROCEEDS. (a) During the
continuance of any Event of Default, each Borrower irrevocably (x)
waives the right to direct the application of any and all payments or
Proceeds or Letter of Credit Cash Collateral received or held at any
time or times during such period by the Administrative Agent or any
Lender from or on behalf of any Borrower pursuant to the terms of
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this Agreement, and (y) agrees that the Administrative Agent and
Lenders shall have the continuing exclusive right to apply any and
all such payments, Proceeds and Letter of Credit Cash Collateral
against any Lender Debt of any Borrower as the Administrative Agent
may deem advisable or as otherwise provided herein. Unless otherwise
provided herein (including, without limitation, under the immediately
preceding sentence or under Section 2.19(b) hereof or Section 11.5
hereof) or in the absence of a specific determination by the
Administrative Agent with respect thereto, any and all payments or
Proceeds received at any time by the Administrative Agent, shall,
when in the form of immediately available funds, be applied in the
following manner and order: (i) payment of then due and payable fees
and expenses owing under the Loan Documents; (ii) payment of then due
and payable interest payments on the Lender Debt owing under the Loan
Documents; (iii) payment of then due and payable principal payments
on the Revolving Loan; (iv) prepayment of principal outstanding under
the Revolving Loan until the amount so applied shall equal the then
unpaid principal balance of the Revolving Loan; (v) provision of
Letter of Credit Cash Collateral until the amount so applied shall
equal the then outstanding Letter of Credit Obligations not then
secured by Letter of Credit Cash Collateral; and (vi) payment of
other Lender Debt outstanding under the Loan Documents then due and
payable. Any amounts remaining after application of all items in
clauses (i) through (vi) above may, at the option of the
Administrative Agent, be deposited in a deposit account of the
Administrative Agent as provided in paragraph (b) below or be
remitted to the Borrowers. The Administrative Agent may apply any
Letter of Credit Cash Collateral to Letter of Credit Obligations
which have become due and payable and fees and other amounts due and
owing in respect thereof.
(b) Subject to paragraph (a) above, all amounts remaining
after application as provided in the second sentence of paragraph (a)
above, may, at the option of the Administrative Agent, be deposited
into a deposit account maintained by the Administrative Agent or be
remitted to the Borrowers. So long as no Event of Default or Default
shall be continuing the Borrowers may direct that the Administrative
Agent release any and all amounts (and earnings thereon) from such
deposit account. Any amounts on deposit in such deposit account may
be, unless and until withdrawn by the Borrowers, applied by the
Administrative Agent to the payment of Lender Debt under the Loan
Documents as provided in paragraph (a) above. Any monies remaining
in such deposit account shall be invested and reinvested (so long as
in such deposit account) by and in the name of the Administrative
Agent in investments of the type permitted under Section 10.4(b)
hereof with the type and maturity of such investments to be mutually
agreed to by the Administrative Agent and the Borrowers (until an
Event of Default shall occur and be continuing, at which time the
Administrative Agent shall have the sole right to choose such
investments). All interest and other income on such investments
shall be for the account and risk of the Borrowers. As collateral
security for the Lender Debt, each Borrower hereby grants to the
Administrative Agent, for the benefit of the Agents and the ratable
benefit of the Lenders, a security interest in (x) all monies in such
deposit account and all investments thereof, including, without
limitation, any certificates or instruments evidencing such
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investments, and all claims and choses in action in respect of the
foregoing, (y) any interest or other payment made in respect of such
investments and (z) any and all proceeds of any of the above and all
claims and choses in action in respect of the foregoing (all of the
foregoing constituting part of the Collateral). To the extent the
Administrative Agent makes any such investments, each Borrower hereby
authorizes the Administrative Agent to hold any certificate or
instrument evidencing such investments.
(c) Subject to the contrary instructions contained in a
Direction Letter, the Administrative Agent is authorized by the
Lenders and the Borrowers to, and at its option may, make advances
for the account of the Borrowers for payment of all fees, expenses,
charges, costs and interest incurred by the Borrowers hereunder.
Such advances, to the extent not prohibited by a Direction Letter,
shall be made when and as the Borrowers fail promptly to pay such
fees, expenses, charges, costs and interest and, at the
Administrative Agent's option to the extent not prohibited by law and
within the Revolving Commitments of the Lenders, shall be deemed
Revolving Advances made by the Lenders and shall be part of the
Revolving Loan hereunder to the extent that such advances would not
(if so deemed) require a prepayment or the provision of Letter of
Credit Cash Collateral under Section 4.1(b) hereof.
2.21 ACCOUNTING. The Administrative Agent will provide a
monthly accounting of transactions under the Revolving Loan to the
Borrowers and each Lender. Each and every such accounting shall
(absent manifest error) be deemed final, binding and conclusive upon
the Borrowers in all respects as to all matters reflected therein,
unless the Borrowers, within 30 days after the date any such
accounting is rendered, shall notify the Administrative Agent in
writing of any objection which the Borrowers may have to any such
accounting, describing the basis for such objection with specificity.
In that event, only those items expressly objected to in such notice
shall be deemed to be disputed by the Borrowers.
2.22 TAXES. (a) Subject to Sections 2.22 (b) and (c)
hereof, each payment or prepayment hereunder and under the Notes
shall be made without set-off or counterclaim and free and clear of,
and without deduction for, any present or future withholding or other
taxes, duties or charges and all liabilities with respect thereto, of
any nature imposed on such payments or prepayments by or on behalf of
any government or any political subdivision or agency thereof or
therein, except for Excluded Taxes (all such taxes, levies, duties,
imposts, deductions, charges and liabilities, except Excluded Taxes,
being hereinafter referred to as "Taxes"). If any such Taxes are so
levied or imposed on any payment or prepayment to any Lender or the
Administrative Agent or paid by such Lender or the Administrative
Agent, the Borrowers will make additional payments to the
Administrative Agent in such amounts as may be necessary so that the
net amount received by such Lender or the Administrative Agent after
withholding or deduction for or on account of such Taxes, including
deductions applicable to additional sums payable under this Section
2.22(a) (other than Excluded Taxes), will be equal to the amount
provided for herein or in such Lender's Notes. Whenever any Taxes
are payable by the Borrowers with respect to any payments or
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prepayments hereunder or under any of the Notes, the Borrowers shall
furnish promptly to the Administrative Agent for the account of the
applicable Lender official receipts (to the extent that the relevant
governmental authority delivers such receipts) evidencing payment of
any such Taxes so withheld or deducted. If the Borrowers fail to pay
any such Taxes when due to the appropriate taxing authority or fails
to remit to the Administrative Agent for the account of the
applicable Lender or the Administrative Agent, as applicable, the
required receipts evidencing payment of any such Taxes so withheld or
deducted, the Borrowers shall indemnify the affected Lender or the
Administrative Agent, as applicable, for any incremental Taxes and
any incremental Excluded Taxes or interest or penalties that may
become payable by such Lender or the Administrative Agent, as
applicable, as a result of any such failure.
(b) (i) Except as provided in Section 2.22(b)(ii) below,
each Lender (which, for purposes of Section 2.22 of this
Agreement, shall include any Affiliate of a Lender that makes any
Eurodollar Advance pursuant to Section 2.16 of this Agreement)
that is not a "United States person" (as such term is defined in
Section 7701(a)(30) of the Code) shall submit to the Borrowers
and the Administrative Agent on or before the Closing Date (or,
in the case of a Person that becomes a Lender after the Closing
Date, promptly upon such assignment), two duly completed and
signed copies of either (1) Form 1001 of the United States
Internal Revenue Service entitling such Lender to a complete
exemption from withholding on all amounts to be received by such
Lender pursuant to this Agreement and/or the Notes or (2) Form
4224 of the United States Internal Revenue Service relating to
all amounts to be received by such Lender pursuant to this
Agreement and/or the Notes. Each such Lender shall, from time to
time after submitting either such form, submit to the Borrowers
and the Administrative Agent such additional duly completed and
signed copies of one or the other such forms (or such successor
forms or other documents as shall be adopted from time to time by
the relevant United States taxing authorities) as may be (1)
reasonably requested in writing by the Borrowers or the
Administrative Agent and (2) appropriate under then current
United States law or regulations to avoid United States
withholding taxes on payments in respect of any amounts to be
received by such Lender pursuant to this Agreement and/or the
Notes. Upon the reasonable request of the Borrowers or the
Administrative Agent, each Lender that has not provided the forms
or other documents, as provided above, on the basis of being a
United States person shall submit to the Borrowers and the
Administrative Agent a certificate to the effect that it is such
a "United States person."
(ii) If any Lender which is not a "United States
person" determines that it is unable to submit to the Borrowers
or the Administrative Agent any form or certificate that such
Lender is requested to submit pursuant to the preceding
paragraph, or that it is required to withdraw or cancel any such
form or certificate, or that any such form or certificate
previously submitted has otherwise become ineffective or
inaccurate, such Lender shall promptly notify the Borrowers and
the Administrative Agent of such fact.
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(iii) Except as provided in Section 2.22(c) and
Section 13.6 hereof, the Borrowers shall not be required to pay
any additional amount in respect of Taxes to any Lender if and
only to the extent that (A) such Lender is subject to such Taxes
(in such case, only to the extent of the tax rate then in effect)
on the date this Agreement is executed by such Lender (or in the
case of a Person that became a Lender after the Closing Date by
assignment, on the date of such assignment) or would be subject
to such Taxes on such date if a payment hereunder or on the Notes
had been received by it on such date; (B) such Lender becomes
subject to such Taxes subsequent to the date referred to in
clause (A) above as a result of a change in the circumstances of
such Lender, other than a change in applicable law (including
without limitation an increase in any applicable tax rate),
including without limitation a change in the residence, place of
incorporation or principal place of business of the Lender, a
change in the branch or lending office of the Lender
participating in the transactions set forth herein or as a result
of the sale by the Lender of participating interests in such
Lender's creditor position(s) hereunder; PROVIDED, HOWEVER, that
the Borrowers will be required to pay any additional amount in
respect of Taxes to any Lender to the extent that after a change
in the circumstances (as described above) of such Lender a
subsequent change in any applicable law results in an additional
amount that such Lender is subject to with respect to Taxes; or
(C) such Taxes would not have been incurred but for the failure
of such Lender to file with the appropriate tax authorities
and/or provide to the Borrowers or the Administrative Agent any
form or certificate that it was required so to do pursuant to
paragraph (b) of this Section and entitled so to do under
applicable law.
(c) In addition, the Borrowers agree to pay any present or
future stamp or documentary taxes, any intangibles tax or any other
sales, excise or property taxes, charges or similar levies now or
hereafter assessed that arise from and are attributable to the
execution, delivery of, or otherwise with respect to, this Agreement,
the Notes, the Mortgages or other Security Documents and any and all
recording fees relating to any Loan Documents securing any Lender
Debt (hereinafter referred to as "Other Taxes").
(d) Each Borrower shall indemnify and pay to each Lender
and each of the Agents the full amount of Taxes or Other Taxes which
the Borrowers are required to pay to any Lender or any Agent pursuant
to this Section 2.22 (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.22) duly paid or payable by such Lender or such of the
Agents and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto. Indemnification payments
shall be made within 30 days from the date such Lender or such of the
Agents makes written demand therefor.
(e) Without prejudice to the survival of any other
agreement of the Borrowers hereunder, the agreements and obligations
of the Borrowers contained in this Section 2.22 shall survive the
payment in full of principal and interest hereunder and under the
Notes indefinitely.
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2.23. LENDER DEFAULT. Notwithstanding anything contained
herein to the contrary, so long as any Lender shall be in default in
its obligation to fund its pro rata share of any Revolving Advance or
make payment in respect of any settlement or purchase under Section
2.4(e) or 2.4(f) hereof or Section 3.5 hereof, or shall have rejected
any Revolving Commitment (it being understood that a Lender's refusal
to fund its pro rata share of an Advance as a result of the failure
to satisfy any condition set forth in Section 6 or 7 (unless such
failure is waived by the requisite percentage hereunder of the
Lenders (to the extent required hereunder), or unless such Advance
constitutes an Advance properly made pursuant to Section 3.4 or 7.2
hereof) shall not constitute such a rejection), then such Lender
shall not be entitled to receive any payments of principal of or
interest on its pro rata share of the Revolving Loan or its share of
any commitment or other fees payable hereunder or pursuant to any
settlement under Section 2.4(e) hereof unless and until (x) the
Revolving Loan, all outstanding Letter of Credit Obligations and all
other Lender Debt have been paid in full, (y) such failure to fulfill
its obligation to fund is cured and such Lender shall have paid, as
and to the extent provided in this Section 2.23, to the applicable
party, if any, interest on the amount of funds that such Lender
failed to timely fund or (z) the Lender Debt under this Agreement
shall have been declared or shall have become immediately due and
payable, and until the earlier to occur of (x) or (y) above, for
purposes of voting or consenting to matters with respect to the Loan
Documents, such Lender shall be deemed not to be a "Lender" hereunder
and such Lender's Revolving Commitment shall each be deemed to be
zero ($0). No Revolving Commitment of any Lender shall be increased
or otherwise affected by any such failure or rejection by any Lender.
Any payments of principal of or interest on Lender Debt which would,
but for this Section 2.23, be paid to any Lender, shall be paid to
the Lenders who shall not be in default under their respective
Revolving Commitments and who shall not have rejected any Revolving
Commitment (it being understood that a Lender's refusal to fund its
pro rata share of an Advance as a result of the failure to satisfy
any condition set forth in Section 6 or 7 (unless such failure is
waived by the requisite percentage hereunder of the Lenders (to the
extent required hereunder), or unless such Advance constitutes an
Advance properly made pursuant to Section 3.4 or 7.2 hereof) shall
not constitute such a rejection), for application to Lender Debt or
to provide Letter of Credit Cash Collateral in such manner and order
(pro rata among such Lenders) as shall be determined by the
Administrative Agent.
2.24. DETERMINATIONS BY THE AGENTS. Notwithstanding
anything to the contrary contained in this Agreement, all
determinations regarding the inclusion of any Inventory as Eligible
Inventory, the standards to be applied generally in determining
Eligible Inventory or the establishment of any reserves against the
Borrowing Base of any Borrower or the making of any other adjustment
to the Borrowing Base of any Borrower permitted by this Agreement
shall be made in the first instance by the Administrative Agent and
in all instances shall be communicated to the Borrowers by the
Administrative Agent. The Administrative Agent shall promptly notify
the Co-Agents of any such determinations communicated to the Borrower
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to the extent that the Co-Agents were not previously informed
thereof. In the event that any Co-Agent notifies the Administrative
Agent in writing that such Co-Agent has made a determination based on
collateral considerations to exclude any Inventory not then excluded
from Eligible Inventory, or to establish a more restrictive standard
of eligibility with respect to Eligible Inventory generally, or to
establish a new reserve or increase any existing reserve against the
Borrowing Base of any Borrower or to make any other downward
adjustment to the Borrowing Base, in each case permitted by this
Agreement, the Administrative Agent shall promptly communicate same
to the Borrowers and such determination of such Co-Agent shall
thereafter apply. The Administrative Agent shall give the Lenders
prompt notice of each adjustment to the Borrowing Base of any
Borrower pursuant to this Section 2.24.
2.25. SUBSTITUTION OF LENDERS. (a) In the event that
any Lender claims any increased costs under Section 2.9, 2.12(a),
2.12(b) or 3.8 hereof, and (i) as a consequence of such increased
costs the effective rate of interest payable to such Lender under
this Agreement with respect to its pro rata share of the Revolving
Advances is more than 20 basis points per annum in excess of the
effective average annual rate of interest payable to the Majority
Lenders under this Agreement and (ii) Lenders holding at least 75% of
the Aggregate Revolving Commitments are not subject to such increased
costs (any such Lender, an "Affected Lender"), the Borrowers may give
not less than 30 days prior Written Notice (which Written Notice must
be given within 90 days following the receipt by the Borrowers of
such claim) to the Administrative Agent and the Affected Lender that
the Borrowers intend to substitute another financial institution,
which substitute financial institution must be reasonably acceptable
to the Administrative Agent and the Majority Lenders, provided that
if more than one Lender claims increased costs arising from the same
act or condition and such claims are received by a Borrower within 60
days of each other then the Borrowers may substitute all, but not
less than all, Lenders making such claims. In the event that the
proposed substitute financial institution is reasonably acceptable to
the Administrative Agent and the Majority Lenders and the Written
Notice was properly issued under this Section 2.25, the Affected
Lender shall sell at par plus accrued interest and the substitute
financial institution shall purchase, pursuant to assignment
documentation that is reasonably acceptable to the Affected Lender
(and in any event provides that such assignment shall be without
recourse, representation or warranty to the Affected Lender), the
Notes of the Affected Lender and all rights and claims of such
Affected Lender under the Loan Documents and the substitute financial
institution shall assume and the Affected Lender shall be relieved of
its Revolving Commitment and all other theretofore unperformed
obligations of the Affected Lender under the Loan Documents. Upon
the effectiveness of such sale, purchase and assumption (which, in
any event shall be conditioned upon the payment in full by the
Borrowers to the Affected Lender in cash of all fees, unreimbursed
costs and expenses and indemnities accrued and unpaid through such
effective date, except that such Affected Lender shall not be
entitled to any accrual in respect of the Tranche B Facility Fee),
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the substitute financial institution shall become a "Lender"
hereunder for all purposes of this Agreement having a Revolving
Commitment in the amount of such Affected Lender's Revolving
Commitment assumed by it and such Revolving Commitment of the
Affected Lender shall be terminated, provided that all indemnities
under the Loan Documents shall continue in favor of such Affected
Lender.
(b) In the event that the Affected Lender as to which the
requirements of paragraph (a) above apply is a participant which,
under Section 13.15(c) hereof, is treated as a Lender, except as
provided below, the Lender which created such participation shall,
subject to the last sentence of this paragraph, be obligated to
repurchase such participation from such Affected Lender and at the
option of such Affected Lender either sell an equivalent interest in
the Notes and Revolving Commitment (or a like participation) to the
substitute financial institution (or to another financial institution
selected by the Lender who granted such participation which other
financial institution will not require reimbursement for such higher
costs as triggered the application of this Section 2.25(b)) or retain
such participation for its own account and the claim by such Affected
Lender for increased costs under Section 2.9, 2.12(a) or 2.12(b)
hereof shall constitute an offer by such Affected Lender to sell to
the Lender creating such participation the participation of such
Affected Lender in the event such sale becomes required under this
Section 2.25. Notwithstanding anything to the contrary contained in
this Section 2.25(b), no Lender creating such participation shall be
obligated to effect any such purchase of a participation under this
Section 2.25 until such Lender shall have been provided good
collected funds therefor by the substitute financial institution and
until the Borrowers have made all payments required under this
Section 2.25.
SECTION 3. AMOUNT AND TERMS OF LETTERS OF
CREDIT AND PARTICIPATION THEREIN.
3.1. LETTERS OF CREDIT. Upon the request of a Borrower
not less than one (1) Business Day in advance, each Issuing Lender
agrees, on the terms and conditions hereinafter set forth, to issue
(or in the case of BABC cause, through the issuance of one or more
L/C Indemnity Agreements, an Issuing Non-Lender Bank to issue) for
the account of the Borrowers one or more Letters of Credit from time
to time during the period from the Closing Date until the date which
occurs 30 days before the Maturity Date in an aggregate amount for
all Letters of Credit not to exceed at any time $100,000,000, each
such Letter of Credit upon its issuance to expire on or before the
earlier of (i) (x) in the case of Merchandise Letters of Credit, the
date which occurs 180 days from the date of its issuance and (y) in
the case of Standby Letters of Credit, the date which immediately
precedes the first anniversary of the date of its issuance and (ii)
the Maturity Date; PROVIDED, HOWEVER, that no Letter of Credit shall
be issued if:
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(a) after giving effect to such issuance of such Letter of
Credit, (i) the then outstanding aggregate amount of all Letter
of Credit Obligations would exceed $100,000,000, (ii) if such
Letter of Credit is a Standby Letter of Credit, the then
outstanding aggregate amount of all Letter of Credit Obligations
in respect of all Standby Letters of Credit would exceed
$45,000,000, (iii) as a result of the issuance of such Letter of
Credit, a prepayment or Letter of Credit Cash Collateral would be
required under Section 4.1(b) hereof or (iv) as a result of the
issuance of such Letter of Credit, any Eurodollar Advance would
be deemed as a Tranche B Advance;
(b) the applicable Borrower shall have failed to satisfy
any condition precedent contained in Section 7 hereof (subject to
Section 7.2 hereof); or
(c) without limiting the rights of the Administrative Agent
or an Issuing Bank under Section 3.2 hereof, in the case of a
Merchandise Letter of Credit, such Merchandise Letter of Credit,
provides that a drawing can be made without presentation to the
Issuing Bank (or a confirming or negotiating bank acting
therefor) of documents of title covering the goods subject to
such Merchandise Letter of Credit, does not provide that the
Issuing Bank is required to be named as consignee on all bills of
lading and other documents of title covering such goods or does
not require, where customary in the ordinary course of business
to require, delivery of a certificate as to inspection of such
goods to the Issuing Bank (or a confirming or negotiating bank
acting therefor) as a condition to drawing thereunder.
3.2 ISSUING THE LETTERS OF CREDIT. Each Letter of Credit
shall be issued on Written Notice in the form attached hereto as
Exhibit 2.4(a) or by notice provided by computer, in each case by the
applicable Borrower to the Administrative Agent at least one (1)
Business Day (or such other period as the Administrative Agent and
the applicable Borrower may agree from time to time) in advance,
which Written Notice shall specify the date, amount, expiry,
beneficiary and issuer thereof, and shall be accompanied by the
Letter of Credit Agreements required by the Issuing Bank and
acceptable to the Administrative Agent (which shall include the form
of Letter of Credit requested by the applicable Borrower as agreed to
by the Issuing Bank), each in form and substance satisfactory to the
Administrative Agent and the Issuing Bank. On the date specified by
the applicable Borrower in such notice and upon fulfillment of the
applicable conditions set forth in Section 3.1 hereof, the Issuing
Bank will issue such Letter of Credit in the form specified in such
notice and such Letter of Credit Agreements. In the event that a
Letter of Credit is to be issued by an Issuing Non-Lender Bank, then
the Written Notice issued by the applicable Borrower hereunder shall
refer to an L/C Indemnity Agreement to be issued by BABC (and shall
also describe the Letter of Credit to be issued by such Issuing
Non-Lender Bank) which L/C Indemnity Agreement shall be deemed to be
a Letter of Credit under this Section 3 as to which BABC shall be
deemed to be the Issuing Lender. The form of each Letter of Credit
and the identity of each Issuing Non-Lender Bank shall be
satisfactory to BABC and the Administrative Agent. Each Letter of
Credit must be payable solely in United States dollars.
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3.3 REIMBURSEMENT OBLIGATIONS. Notwithstanding any
provisions to the contrary in any Letter of Credit Agreement with
respect to any Letter of Credit, the Borrowers shall:
(a) pay to the Administrative Agent for the account of the
Issuing Bank an amount equal to, and in reimbursement for, each
amount which the Issuing Bank pays under any Letter of Credit on
or before the earlier of (i) the time specified therefor in the
applicable Letter of Credit Agreement, and (ii) the date on which
payment of such amount is made by the Issuing Bank under such
Letter of Credit; and
(b) pay to the Administrative Agent for the account of the
Issuing Lender interest on any amount remaining unpaid by the
Borrowers to the Issuing Lender under subsection (a) above from
the date on which the Issuing Lender pays such amount under any
Letter of Credit until such amount is reimbursed in full to the
Issuing Lender pursuant to subsection (a) above, payable on
demand, at a fluctuating rate per annum (subject to Section
2.6(c) hereof) equal to the sum of the Reference Rate in effect
from time to time plus two percentage points (2%).
3.4. REVOLVING ADVANCES. (a) Subject to availability
under Section 2.2 hereof, and so long as the Lender Debt under the
Loan Documents shall not have been accelerated and there shall be no
Event of Default under Section 11.1(f) or Section 11.1(g) hereof and
to the extent that Letter of Credit Cash Collateral is not available
to immediately satisfy any Letter of Credit Obligation required to be
paid under Section 3.3 hereof, the Borrowers shall make each payment
required under Section 3.3 hereof with the proceeds of a Revolving
Advance. Each such Revolving Advance shall be deemed to be requested
by each Borrower, whether or not any Borrower actually requests such
Revolving Advance in accordance with Section 2.4 hereof, and subject
to such Borrower's Borrowing Limit and the provisions of Section
2.4(e) hereof, the Lenders shall make such Revolving Advance unless
the Lender Debt shall have been accelerated, an Event of Default
under Section 11.1(f) (other than clause (i) or clause (vi) thereof)
hereof or Section 11.1(g) (involving a Borrower) hereof has occurred
and is continuing or such Letter of Credit was not properly issuable
under Section 3.1 hereof (it being understood that any Letter of
Credit issued pursuant to an election by the Administrative Agent
made under Section 7.2 hereof and as to which no contrary Direction
Letter has been received by the Administrative Agent shall be deemed
properly issuable under Section 3.1 hereof).
(b) Each Borrower hereby irrevocably requests each such
Revolving Advance and irrevocably authorizes and directs the
Administrative Agent to apply the proceeds thereof directly to the
Issuing Bank in satisfaction of the obligations of the Borrowers
under Section 3.3 hereof in respect of such Letter of Credit.
(c) No Revolving Advance shall be required to be made by
the Lenders under this Section 3.4 to the extent prohibited by
applicable law, following any acceleration of the Lender Debt under
the Loan Documents or while any Event of Default under Section
11.1(f) (other than clause (i) or clause or clause (vi) thereof) or
Section 11.1(g) (involving a Borrower) hereof has occurred and is
continuing.
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3.5. SETTLEMENT BY LENDERS WITH ISSUING BANK. (a) With
respect to any Letter of Credit issued or caused to be issued by an
Issuing Lender in accordance with the provisions of Section 3.1
hereof, the Issuing Lender shall be deemed irrevocably and
unconditionally to have sold and transferred to each other Lender
without recourse or warranty, and each such other Lender shall be
deemed to have irrevocably and unconditionally purchased and received
from the Issuing Lender an undivided interest and participation, to
the extent of such Lender's pro rata share of the Revolving Credit
Facility Commitment in effect from time to time, in such Letter of
Credit and all Letter of Credit Obligations relating to such Letter
of Credit and all Letter of Credit Agreements and Loan Documents
securing, guaranteeing, supporting or otherwise benefiting the
payment of such Letter of Credit Obligations.
(b) With respect to any Letter of Credit in which the
Lenders have purchased participation, if any reimbursement or other
obligation under Section 3.3 hereof is not paid when due to the
Issuing Lender with respect to any such Letter of Credit in
accordance with the provisions of this Agreement, the Issuing Lender
shall promptly notify the Administrative Agent to that effect, and
the Administrative Agent shall promptly notify the other Lenders of
the amount of such obligation and each Lender shall, subject to
Section 2.4(e) hereof, immediately pay to the Administrative Agent
for the benefit of the Issuing Lender, in lawful money of the United
States and in same day funds, an amount equal to such Lender's pro
rata share (based on its share of the Revolving Credit Facility
Commitment at such time) of the amount of such unpaid obligation, it
being understood that the Issuing Lender shall not be paid its pro
rata share (based on its share of the Revolving Credit Facility
Commitment then in effect) of such reimbursement or other obligation.
Promptly after the Issuing Lender receives a payment on account of
such an obligation with respect to any such Letter of Credit (other
than under this paragraph (b)), the Issuing Lender shall promptly pay
to the Administrative Agent, and the Administrative Agent shall
promptly pay to each other Lender which funded its participation
therein, in lawful money of the United States and in the kind of
funds so received, an amount equal to such Lender's ratable share
thereof.
(c) Upon the request of any Lender having purchased a
participation in a Letter of Credit, the Administrative Agent shall
furnish to such Lender copies of such Letter of Credit and any Letter
of Credit Agreements related thereto as may be reasonably requested
by such Lender.
(d) The obligation of each Lender to make payments under
paragraph (b) above shall be unconditional and irrevocable and shall
be made under all circumstances (except as otherwise expressly
provided in paragraph (a) above), including, without limitation, any
of the circumstances referred to in Section 3.7(b) hereof.
(e) If any payment received on account of any reimbursement
or other obligation with respect to a Letter of Credit and
distributed to a Lender as a participant under Section 3.5(b) or (f)
is thereafter recovered from the Issuing Lender in connection with
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any bankruptcy or insolvency proceeding relating to any Borrower, any
other Credit Party or otherwise, each Lender which received such
distribution shall, upon demand by the Administrative Agent, repay to
the Issuing Lender such Lender's ratable share of the amount so
recovered together with an amount equal to such Lender's ratable
share (according to the proportion of (i) the amount of such Lender's
required repayment to (ii) the total amount so recovered) of any
interest or other amount paid or payable by the Issuing Lender in
respect of the total amount so recovered.
(f) Upon the expiration of any Letter of Credit or receipt
by the Issuing Lender of payment on account of any reimbursement or
other obligation with respect to any Letter of Credit, the Issuing
Lender, in its capacity as Lender, shall, subject to Section 2.4(e)
hereof, unconditionally settle with the Lenders and, with respect to
the receipt of a reimbursement obligation, pay to the Administrative
Agent, by paying to the Payment Account in same day funds, for
reimbursement to the Lenders, such amount as may be necessary to
adjust the aggregate of the Revolving Loan and Letter of Credit
Obligations of each Lender so that all Lenders are, with respect to
the Revolving Loan and Letter of Credit Obligations, pro rata.
(g) Nothing contained herein shall be deemed to waive any
rights of any Lender against the Administrative Agent or any Issuing
Lender arising from any such Person's gross negligence or wilful
misconduct.
3.6 LETTER OF CREDIT FEES. (a) Subject to Section
3.6(c) hereof, the Borrowers shall pay to the Administrative Agent
for the pro rata benefit of the Lenders on the last day of each
calendar month of each year and on the date of the full drawing,
cancellation, expiration or termination of any Letter of Credit, a
fee in respect of such Letter of Credit for such calendar month or
shorter period, at a rate of, with respect to Standby Letters of
Credit, two percent (2%) per annum and with respect to Merchandise
Letters of Credit, one and three-quarters percent (1-3/4%) per annum
(in each case calculated on the average daily undrawn amount of such
Letter of Credit for such calendar month or shorter period and
computed on the basis of the actual number of days elapsed over a
year of 360 days).
(b) In addition to other amounts payable under this Section
3.6, the Borrowers shall pay to each Issuing Bank, on demand, sums
equal to all fees, charges and expenses including, without
limitation, any fee for the extension of credit, which such Issuing
Bank may impose, pay or incur in connection with the issuance,
amendment, administration, transfer or cancellation of any or all
Letters of Credit or in connection with any payment by such Issuing
Bank thereunder; PROVIDED, HOWEVER, that in the event that the
Issuing Bank which has issued a Letter of Credit is Bank of America
National Trust and Savings Association or a Lender (other than BABC
which has issued an L/C Indemnity Agreement), the Borrowers shall not
be obligated to pay a fee under this Section 3.6(b) that is payable
solely in respect of the extension of credit; PROVIDED, FURTHER, that
in the event that Bank of America National Trust and Savings
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Association shall charge any such fee in respect of the extension of
credit, such fee shall be paid solely by BABC. Each Borrower hereby
acknowledges that Bank of America National Trust and Savings
Association has provided to such Borrower a schedule of fees and
charges for opening, amending, transferring or negotiating a letter
of credit and the like, which fees and charges may change from time
to time based on Bank of America National Trust and Savings
Association's desired return and other factors, including, without
limitation, volume of letter of credit business and reserve
requirements.
(c) During the continuation of any Event of Default, fees
payable in respect of Letters of Credit shall accrue and be payable
at a per annum rate two percent (2%) in excess of the fees otherwise
payable in respect of Letters of Credit pursuant to Section 3.6(a)
hereof.
3.7. INDEMNIFICATION: NATURE OF THE ISSUING BANK'S
DUTIES. (a) Each Borrower agrees to indemnify and save harmless
each Agent, the Issuing Bank and each Lender from and against any and
all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys' fees and the allocated
costs and expenses of in-house counsel) which such Agent, the Issuing
Bank or such Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit or
any action taken or omitted to be taken in connection therewith by
the Issuing Bank or (ii) any action or proceeding arising from or in
connection with the Letter of Credit, including, without limitation,
any action or proceeding relating to a court order, injunction, or
other process or decree restraining or seeking to restrain the
Issuing Bank from paying any amount under any Letter of Credit. The
indemnities contained in this Section 3.7 shall survive the
expiration or termination of the Letters of Credit and this Agreement
and shall be payable upon demand.
(b) In furtherance and not in limitation of the foregoing,
the obligations of the Borrowers to the Lenders in respect of Letter
of Credit Obligations shall be absolute, unconditional and
irrevocable, and shall be paid without off-set, deduction or
withholding of any kind and strictly in accordance with the terms
hereof under all circumstances and happenings whatsoever, including,
without limitation, any of the following circumstances (or any
others, whether or not similar to any of the following
circumstances):
(i) any renewal, extension or modification of any
Letter of Credit (but not any increase in the outstanding amount
thereof) so long as the terms of such Letter of Credit after
giving effect to such extension, renewal or modification would be
permitted hereunder, or any lack of validity or enforceability of
or any change in the terms of any Letter of Credit or any
agreement or instrument relating thereto;
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(ii) the existence of any claim, setoff, defense or
other right which any Borrower may have at any time against the
beneficiary, or any transferee, of any Letter of Credit, or the
Issuing Bank, the Administrative Agent, any Lender or any other
Person;
(iii) any draft, certificate or other document
presented under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;
(iv) any lack of validity, effectiveness or
sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in
part;
(v) any loss or delay in the transmission or otherwise
of any document required in order to make a drawing under any
Letter of Credit or of the proceeds thereof;
(vi) any failure of the beneficiary of a Letter of
Credit to substantially comply with the conditions required in
order to draw upon any Letter of Credit; or
(vii) any misapplication by the beneficiary of any
Letter of Credit of the proceeds of any drawing under such Letter
of Credit;
PROVIDED that the Administrative Agent, the Issuing Bank and each
Lender shall not be relieved of any liability it may otherwise have
as a result of its gross negligence or wilful misconduct. In the
event that the Borrowers are compelled by applicable law to make any
deduction or withholding from any amount payable under this Section
3, then, unless prohibited by applicable law and except as provided
in Section 2.22(b)(iii) hereof, the Borrowers shall pay to each
Issuing Bank such additional amount as will result in the receipt by
such Issuing Bank of a net sum equal to the sum it would have
received if no such deduction or withholding had been required to be
made.
3.8. INCREASED COSTS. (a) CHANGE IN LAW GENERALLY. If
any law, treaty, order, directive, rule or regulation adopted, issued
or becoming effective after the Closing Date or any change in any law
or regulation or in the interpretation thereof by any court or
administrative or governmental authority charged with the
administration thereof (in any case, whether or not having the force
of law) or compliance by any Issuing Lender or Lender with respect
thereto from that in effect as of the Closing Date shall either (i)
impose, modify or deem applicable any reserve, special deposit or
similar requirement against letters of credit issued by the Issuing
Lender or any Lender or participation therein or (ii) impose on the
Issuing Lender or such Lender any other condition regarding letters
of credit or participation therein, and the result of any event
referred to in the preceding clause (i) or (ii) shall be to increase
the cost to the Issuing Lender of issuing or maintaining, or, in the
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case of such Lender, having a participation in, Letters of Credit
then, upon demand by the Issuing Lender or such Lender (with a copy
to the Administrative Agent), the Borrowers shall promptly pay to the
Administrative Agent for the benefit of the Issuing Lender or such
Lender from time to time as specified by the Issuing Lender or such
Lender (with a copy to the Administrative Agent), additional amounts
which shall be sufficient to compensate the Issuing Lender or such
Lender for such increased cost. A certificate as to such increased
cost, and amount and computation thereof, incurred by the Issuing
Lender or such Lender as a result of any event mentioned in clause
(i) or (ii) above, submitted by the Issuing Lender or such Lender to
the Borrowers and the Administrative Agent, shall be conclusive and
binding for all purposes, absent manifest error.
(b) CAPITAL. If any law, treaty, order, directive, rule or
regulations shall be adopted, issued or becoming effective after the
Closing Date or if any change in any law, treaty, order, directive,
role or regulation from that in effect on the Closing Date or in the
interpretation thereof by any governmental or other regulatory
authority charged with the administration thereof (in any case,
whether or not having the force of law) and including in any event,
all risk based capital guidelines heretofore adopted by the
Comptroller of the Currency, the Board or any other banking
regulatory agency, domestic or foreign, to the extent that any
provision contained therein does not have to be complied with as of
the date hereof, shall, or if the compliance by any Issuing Lender or
any Lender with any guideline or request from any central bank or
other governmental authority, shall affect or would affect the amount
of capital required or expected to be maintained by the Issuing
Lender or such Lender or any affiliate of such Issuing Lender or
Lender, and the Issuing Lender or such Lender determines that the
amount of such capital is increased by or based upon the existence of
letters of credit or participation therein (or similar contingent
obligations), then, upon demand by the Issuing Lender or such Lender,
as the case may be (with a copy to the Administrative Agent), the
Borrowers shall pay to the Administrative Agent for the benefit of
the Issuing Lender or such Lender from time to time such additional
amounts as may be specified by the Issuing Lender or such Lender as
sufficient to compensate it in light of such circumstances, to the
extent that the Issuing Lender or such Lender determines such
increase in capital to be allocable to the issuance or maintenance of
the Letters of Credit, or, in the case of such Lender, to its
participation in the Letters of Credit. A certificate as to such
amounts submitted to the Borrowers by the Issuing Lender or such
Lender shall be conclusive and binding for all purposes, absent
manifest error.
3.9. UNIFORM CUSTOMS AND PRACTICE. The Uniform Customs
and Practice for Documentary Credits as most recently published by
the International Chamber of Commerce and as revised from time to
time ("UCP") shall in all respects be deemed a part of this Section 3
as if incorporated herein with respect to the Letters of Credit.
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SECTION 4 PAYMENTS AND PREPAYMENTS.
4.1. MANDATORY PAYMENTS. (a) The outstanding principal
balance of the Revolving Loan shall, subject to earlier prepayment
and payment as hereinafter provided, be due and payable on the
Maturity Date.
(b) (i) If at any time (A) while the Borrowers are in
compliance with the financial test contained in Schedule 4.1(b)
hereto and (B) following satisfaction (subject to Section 9.16(c)
hereof) of the EBITDA Test at least once if such time is on or after
the EBITDA Test Trigger Date, (x) the sum of (1) the then outstanding
principal amount of the Revolving Advances made to any Borrower, PLUS
(2) the outstanding amount of Letter of Credit Obligations of such
Borrower reduced by all Letter of Credit Cash Collateral held by the
Administrative Agent therefor, exceeds such Borrower's Borrowing
Limit at such time, the Borrowers shall (to the extent necessary to
eliminate such excess) immediately prepay the Revolving Loan until
the Revolving Loan has been reduced to zero and thereafter provide to
the Administrative Agent additional Letter of Credit Cash Collateral
for all then outstanding Letter of Credit Obligations.
(ii) If at any time the Borrowers either (A) are not
in compliance with the financial test contained in Schedule 4.1(b)
hereto or (B) have not satisfied (subject to Section 9.16(c) hereof)
the EBITDA Test at least once if such time is on or after the EBITDA
Test Trigger Date, and the sum of (x) the then outstanding principal
amount of the Revolving Advances made to any Borrower, PLUS (y) the
outstanding amount of Letter of Credit Obligations of such Borrower
reduced by all Letter of Credit Cash Collateral held by the
Administrative Agent therefor, exceeds 90% of such Borrower's
Borrowing Limit at such time, the Borrowers shall (to the extent
necessary to eliminate such excess) immediately prepay the Revolving
Loan until the Revolving Loan has been reduced to zero and thereafter
provide to the Administrative Agent additional Letter of Credit Cash
Collateral for all then outstanding Letter of Credit Obligations.
(iii) If at any time, the sum of the amounts referred
to in clauses (A) and (B) of Section 2.2(a)(i)(x) hereof exceeds the
Revolving Credit Facility Commitment, the Borrowers shall (to the
extent necessary to eliminate such excess) immediately prepay the
Revolving Loan until the Revolving Loan has been reduced to zero and
thereafter provide to the Administrative Agent Letter of Credit Cash
Collateral for all then outstanding Letter of Credit Obligations.
(c) Upon the cancellation or termination of the entire
Revolving Credit Facility, whether pursuant to Section 2.5 hereof or
otherwise, the Borrowers shall immediately pay the Revolving Loan,
all interest thereon and all fees, costs, indemnities (to the extent
such indemnities are then due and payable) and other Additional
Indebtedness and Lender Debt and shall provide Letter of Credit Cash
Collateral for all then outstanding Letter of Credit Obligations.
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(d) The Borrowers shall designate, upon prior Written
Notice to the Administrative Agent, a period of at least thirty (30)
consecutive days during each three month period which commences on
November 15 and ends on February 15 (any such thirty day period so
designated, a "Cleanup Period"). Each Written Notice under this
paragraph shall be given prior to January 10 for the three month
period ending on the immediately following February 15. At all times
during each Cleanup Period the Borrowers shall cause the aggregate
outstanding principal balance of the Revolving Loan to be zero ($0))
except that any Revolving Advance made under Section 3.4 hereof may
remain outstanding for up to one Business Day during any Cleanup
Period.
(e) Any prepayment of principal of the Revolving Loan
pursuant to this Section 4.1 shall be made, except as provided in
Section 4.8 hereof, without premium or penalty, but shall be subject
to payment of any applicable indemnity obligations pursuant to
Section 2.12 hereof. Each prepayment of principal of the Revolving
Loan required under Section 4.1(a) or Section 4.1(c) hereof shall be
accompanied by the payment of interest accrued and unpaid on the
amount of such prepayment through the date of prepayment. Each
prepayment of the Revolving Loan required under Section 4.1(b),
Section 2.19(b) or Section 2.20(a) hereof shall be applied in the
manner and order as provided in Section 4.4 hereof.
4.2 PAYMENT FROM INSURANCE AND OTHER PROCEEDS. (a)
Except as provided in paragraph (b) below, not later than the
fifteenth (15th) calendar day following the receipt by the
Administrative Agent or any Credit Party of any proceeds of any
insurance required to be maintained pursuant to any Loan Document on
account of each separate loss, damage or injury in excess of
$1,000,000 (or, if there shall be continuing an Event of Default, of
any amount of proceeds) to any tangible property of such Credit Party
in which the Credit Parties are required hereunder to provide a Lien
in favor of the Administrative Agent, such Credit Party shall notify
the Administrative Agent of any such receipt by such Credit Party in
writing or by telephone promptly confirmed in writing, and not later
than the fifteenth (15th) calendar day following receipt by the
Administrative Agent or such Credit Party of $1,000,000 or more of
such proceeds (or, if there shall be continuing an Event of Default,
of any amount of proceeds), there shall become due and payable a
prepayment of principal in an amount equal to such proceeds (with
permanent reduction (except to the extent of any reserve created upon
prepayment as contemplated in Section 4.2(b)(ii) hereof), occurring
on the making of such prepayment, in the Revolving Credit Facility
Commitment (applied first to the Tranche A Commitment Amount until
reduced to zero ($0) and then to the Tranche B Commitment Amount
until reduced to zero ($0)) in the case of loss of or damage or
injury to property other than Inventory). Each prepayment from such
proceeds shall be applied in the manner and order provided in Section
4.4 hereof and shall be accompanied by the payment of interest
accrued and unpaid on the amount of such prepayment through the date
of such prepayment. Any such prepayment of the Revolving Loan shall
be made without penalty or premium but shall be subject to payment of
any applicable indemnity obligations pursuant to Section 2.12 hereof.
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(b) (i) In the case of the receipt of proceeds described in
paragraph (a) of this Section 4.2 in respect of tangible property of
a Credit Party other than Inventory, such Credit Party may elect, by
Written Notice delivered to the Administrative Agent not later than
the day on which a prepayment would otherwise be required, to apply
all or a portion of such Net Cash Proceeds for the purpose of
replacing, repairing, restoring or rebuilding the relevant tangible
property, and, in such event, any required prepayment under the first
sentence of this Section 4.2, shall be reduced dollar for dollar by
the amount of such election. An election under this paragraph
4.2(b)(i) shall not be effective unless:
(A) at the time of such election no Default or
Event of Default is continuing;
(B) such Credit Party shall have certified to the
Administrative Agent that:
(x) the proceeds of the insurance adjustment for
such loss, damage or injury, together with other
funds available to such Credit Party (including
proceeds of Revolving Advances) and which such
Credit Party is permitted to utilize for such
purpose, shall be sufficient to completely effect
such replacement, repair, restoration or
rebuilding in accordance with all applicable laws,
regulations and ordinances; and
(y) to the best knowledge of such Credit Party no
Default or Event of Default will arise as a result
of such loss, damage, injury, replacement, repair
or rebuilding; and
(C) if the amount of proceeds in question exceeds
$10,000,000, such Credit Party shall have obtained the prior
written consent of the Majority Lenders (which consent will
not be unreasonably withheld or delayed) to such election.
(ii) In the event of an election by a Credit Party under
Section 4.2(b)(i) hereof, such Credit Party shall nonetheless apply
the proceeds of any insurance received in respect of the applicable
tangible property to the repayment of the Revolving Loan at the time
required under Section 4.2(a) hereof, and the Administrative Agent
shall create a reserve against the Borrowing Base of each Borrower
(as allocated by the Administrative Agent) under the Revolving Credit
Facility Commitment in the amount of such prepayment, which reserve
shall be reduced, dollar for dollar, by the amount expended by or on
behalf of such Credit Party from time to time for the replacement
(which shall include rebuilding within the same geographical area),
repair, restoration or rebuilding of such tangible property. In
addition, the Administrative Agent shall be entitled to require
proof, as a condition to the making of any reduction in such reserve,
that the proceeds of such withdrawal or advance are being applied to
the purposes permitted hereunder and that no Default or Event of
Default shall have occurred and be continuing.
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(c) In the event that any Credit Party receives any
proceeds of any condemnation, confiscation, taking or similar award
in an amount exceeding $1,000,000 (or, if an Event of Default or
Default is then continuing, of any amount), in respect of property of
any Credit Party in which the Credit Parties are required hereunder
to provide a Lien in favor of the Administrative Agent, then such
proceeds shall be treated in the same manner and subject to the same
prepayment provisions as proceeds of insurance on property other than
Inventory under this Section 4.2.
4.3 OPTIONAL PREPAYMENTS. Each Borrower may, in
accordance with the provisions of this Agreement, from time to time
borrow, prepay and re-borrow Revolving Advances.
4.4 PROCEDURES FOR PAYMENT. (a) Unless otherwise
requested by any Borrower in a Written Notice to the Administrative
Agent, all prepayments of the Revolving Loan under Sections 2.19(b),
2.20(b), 4.1(b) and 4.2 shall be applied first to Reference Rate
Advances which are Tranche B Advances until paid in full, then to
Reference Rate Advances which are Tranche A Advances until paid in
full and last to Eurodollar Advances. Unless requested to do so in a
Written Notice by any Borrower to the Administrative Agent, such
prepayments of the Revolving Loan remaining after application to all
Reference Rate Advances shall not be applied to any portion of the
Revolving Loan that constitutes a Eurodollar Advance until the last
day of the respective Interest Period therefor or the earlier
maturity of such portion of such Revolving Advance by acceleration or
otherwise, and pending such application, and subject to Section 2.20
hereof, such remaining portion of such prepayment shall be invested
and reinvested by and in the name of the Administrative Agent in
investments of the type permitted under Section 10.4(b) hereof with
the type and maturity of such investments to be mutually agreed to by
the Administrative Agent and the Borrowers; PROVIDED, that, so long
as no Default or Event of Default shall have occurred and be
continuing, the Administrative Agent shall upon the written request
of the Borrowers release any such funds to the Borrowers. All
interest earned on such investments shall be for the account and risk
of the Borrowers. Interest earned on any portion of principal
applied to the Eurodollar Advance shall be, so long as no Default or
Event of Default shall have occurred and be continuing, and to the
extent received by the Administrative Agent, turned over to the
Borrowers promptly following application of such principal to such
Eurodollar Advance, as the Administrative Agent shall determine. As
additional collateral security for the Lender Debt, each Borrower
hereby grants to the Administrative Agent for the benefit of the
Agents and the ratable benefit of the Lenders a security interest in
(x) any such prepayments and any investments thereof, including,
without limitation, any certificates or instruments evidencing any
such investments, and all claims and choses in action in respect of
the foregoing, (y) any interest or other payment made in respect of
such investments and (z) any and all proceeds of any of the above and
all claims and causes in action in respect of the foregoing (all of
the foregoing constituting part of the Collateral). To the extent
the Administrative Agent makes any such investments, each Borrower
hereby authorizes the Administrative Agent to hold any certificate or
instrument evidencing such investments.
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(b) Subject to Section 2.20 hereof, all amounts received by
the Administrative Agent from any Credit Party during any Cleanup
Period shall be invested and reinvested by and in the name of the
Administrative Agent in investments of the type permitted under
Section 10.4 hereof with the type and maturity of such investments to
be mutually agreed to by the Administrative Agent and the Borrowers;
PROVIDED, that so long as no Default or Event of Default shall have
occurred and be continuing, the Administrative Agent shall upon the
request of the Borrowers release any such funds to the Borrowers.
All interest earned on such investments shall be for the account and
risk of the Borrowers. As additional collateral security for the
Lender Debt, each Borrower hereby grants to the Administrative Agent
for the benefit of the Agents and the ratable benefit of the Lenders
a security interest in (x) any such prepayments and any investments
thereof, including, without limitation, any certificates or
instruments evidencing any such investments, and all claims and
causes in action in respect of the foregoing, (y) any interest or
other payment made in respect of such investments and (z) any and all
proceeds of any of the above and all claims and causes in action in
respect of the foregoing (all of the foregoing constituting part of
the Collateral). To the extent the Administrative Agent makes any
such investments, each Borrower hereby authorizes the Administrative
Agent to hold any certificate or instrument evidencing such
investments.
4.5 COMMITMENT FEES. The Borrowers shall pay to the
Administrative Agent for the ratable benefit of the Lenders on the
first day of the first fiscal quarter commencing after the date of
this Agreement and thereafter on the first day of each fiscal quarter
commencing thereafter, until the date of the expiration, termination
or cancellation of the Revolving Credit Facility Commitment and on
such date, a commitment fee for the quarter or shorter period just
ended of one-half of one percent (.5%) per annum on the amount equal
to the excess of (i) the daily average of the sum of the Tranche A
Commitment Amount plus the Tranche B Commitment Amount during such
quarter or shorter period over (ii) the sum of (A) the average daily
outstanding principal balance of the Revolving Loan during such
quarter or shorter period and (B) the average daily outstanding
Letter of Credit Obligations during such quarter or shorter period.
In the event that the Closing Date shall not occur on or prior to
July 15, 1994, the Revolving Credit Facility Commitment shall expire
on July 16, 1994.
4.6. FACILITY FEES. (a) On the Closing Date, the
Borrowers shall pay to the Administrative Agent for the account of
the Lenders (to be distributed to the Lenders in accordance with
Schedule 4.6 hereof) a facility fee in respect of the Tranche A
Commitment Amount (the "Tranche A Facility Fee") in the amount of
$5,400,000.
(b) The Borrowers shall pay to the Administrative Agent for
the account of the Lenders (to be distributed to the Lenders in
accordance with Schedule 4.6 hereof) a facility fee of $3,000,000 in
respect of the Tranche B Commitment Amount (the "Tranche B Facility
Fee"), payable as follows: (i) on the Closing Date, the sum of
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$1,000,000; and (ii) on the first anniversary of the Closing Date and
at the end of each period of three months thereafter, a payment of
$250,000; PROVIDED, HOWEVER, that the Borrowers' obligation to
continue to make payments under this clause (ii) shall cease from and
after the date, if any, that the Tranche B Commitment Amount has been
reduced to zero in accordance with Section 2.5(c) hereof.
(c) The entire Tranche A Facility Fee and the entire
Tranche B Facility Fee shall be earned on the date hereof. The
Borrowers shall not be entitled to the refund of any amounts paid in
respect of the Tranche A Facility Fee or the Tranche B Facility Fee.
In the event that (i) the Closing Date does not occur on or prior to
July 15, 1994, (ii) no Lender shall have defaulted in respect of its
Revolving Commitment and (iii) either (x) the Borrowers shall have
failed to satisfy any condition to lending under this Agreement
which, through the good faith efforts (it being understood that such
good faith efforts will require that the Credit Parties not act based
on considerations motivated by the fact that if the Closing Date
shall not occur the Borrowers shall not be required to pay the
Tranche A Facility Fee and the Tranche B Facility Fee) of the Credit
Parties, was capable of being satisfied on or prior to July 15, 1994,
or (y) any Borrower or Ames or anyone authorized by any Borrower or
Ames shall negotiate prior to July 15, 1994 with any Person other
than a Lender regarding a credit facility as an alternative to the
facilities established hereunder, then and in any such event, the
Borrowers shall pay to the Administrative Agent for the benefit of
the Lenders, on July 18, 1994 and in immediately available funds
$5,400,000 in respect of the Tranche A Facility Fee and $1,000,000 in
respect of the Tranche B Facility Fee to be distributed to the
Lenders as provided in paragraphs (a) and (b), as applicable, of this
Section 4.6.
4.7. ADMINISTRATIVE AGENT'S FEES. Subject to Section
2.6(e) hereof, the Borrowers shall pay to the Administrative Agent,
for its own account, on the Closing Date and on each anniversary
thereof, an annual administrative fee of $250,000 and an annual
collateral management fee of $250,000. The Borrowers shall not be
entitled to the refund of any amounts paid in respect of any said
fees.
4.8 COMMITMENT REDUCTION FEES. Any reduction or
termination of the Tranche A Commitment Amount prior to the Maturity
Date pursuant to Section 2.5(b) hereof shall, regardless of the
reason therefor, be accompanied by a prepayment fee payable to the
Administrative Agent for the ratable benefit of the Lenders in an
amount equal to: (i) three percent (3%) of the amount reduced or
terminated in the event such reduction or termination occurs prior to
the first anniversary of the Closing Date; (ii) two percent (2%) of
the amount reduced or terminated in the event such reduction or
termination occurs on or after the first anniversary of the Closing
Date and prior to the second anniversary of the Closing Date; and
(iii) one percent (1%) of the amount reduced or terminated in the
event such reduction or termination occurs on or after the second
anniversary of the Closing Date and six months or more prior to the
Maturity Date.
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SECTION 5. SECURITY AND GUARANTIES.
As security for the full and timely payment and performance of the
Lender Debt, whether now existing or hereafter arising:
5.1. PLEDGE AGREEMENTS. (a) Each Credit Party shall (to the extent
of its interest therein) duly execute and deliver to the Administrative Agent
one or more pledge agreements, substantially in the form of Exhibit 5.1(a)-1
hereto (in the case where the interest being pledged constitutes the capital
stock of a corporation) or 5.1(a)-2 hereto in the case where the interest being
pledged constitutes a partnership interest) hereto (each as amended,
supplemented or otherwise modified from time to time in accordance with its
terms, a "Pledge Agreement"), covering, to the extent of its interest therein,
(i) all capital stock or partnership interests of each Credit Party (other than
Ames), now or hereafter issued, (ii) all capital stock or partnership interests
of all present and future Subsidiaries of each Credit Party, now or hereafter
issued and (iii) all proceeds thereof, pursuant to which the Credit Parties
shall grant to the Administrative Agent for the benefit of the Agents and the
ratable benefit of the Lenders a valid, perfected and enforceable (subject to
bankruptcy, insolvency, moratorium and other similar laws affecting the
enforcement of creditors' rights generally and by general equity principles)
first priority Lien on all of the foregoing, together with certificates
representing the equity interests or capital stock referred to therein (to the
extent, with respect to Ames Stores, that such certificates exist), accompanied
by undated stock powers or assignments thereof executed in blank.
(b) Each Borrower shall duly execute and deliver to the Administrative
Agent one or more pledge agreements substantially in the form of Exhibit 5.1(b)
hereto (each as amended, supplemented or otherwise modified from time to time
in accordance with its terms, a "Note Pledge Agreement"), covering the
Intercompany Notes and all collateral security therefor held by such Borrower
and all other promissory notes now or hereafter owned by such Borrower
evidencing Indebtedness owed by Ames to such Borrower, and all proceeds
thereof, pursuant to which such Borrower shall grant to the Administrative
Agent for the benefit of the Agents and the ratable benefit of the Lenders a
valid, perfected and enforceable (subject to bankruptcy, insolvency, moratorium
and other similar laws affecting the enforcement of creditors' rights generally
and by general equity principles) first priority Lien on all of the foregoing,
and shall deliver to the Administrative Agent the originals of the Intercompany
Notes and such other promissory notes, in each case, duly endorsed to the order
of the Administrative Agent.
5.2 SECURITY AGREEMENT - TRADEMARK, PATENT AND COPYRIGHT. Each of
the Credit Parties shall duly execute and deliver to the Administrative Agent
one or more security agreements, substantially in the form of Exhibit 5.2
hereto, covering the trademarks, patents and copyrights of such Credit Party
(each as amended, supplemented or otherwise modified from time to time in
accordance with its terms, a "Trademark, Patent and Copyright Security
Agreement"), now owned and hereafter acquired, together with
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notices of trademarks, patents and copyrights and other similar
documents in form suitable for filing with the United States Patent
and Trademark Office, the United States Copyright Office or any other
applicable governmental office or agency, as the case may be, and one
or more special powers of attorney and all other supplementary notices
and instruments requested by the Administrative Agent in connection
therewith.
5.3 SECURITY AGREEMENTS. (a) Each of the Credit Parties
shall duly execute and deliver to the Administrative Agent one or more
security agreements, pledge agreements or assignments, substantially
in the form of Exhibit 5.3(a) hereto (each, as amended, supplemented
or modified from time to time in accordance with its terms, a
"Security Agreement", and, together with the Pledge Agreements, the
Note Pledge Agreements, the Mortgages, the Trademark, Patent and
Copyright Security Agreements, the Blocked Account Agreements, the
Concentration Account Agreements and any other agreement, now existing
or hereafter created providing collateral security for the payment or
performance of any Lender Debt, in each case, as amended, modified or
supplemented from time to time, collectively referred to as the
"Security Documents"), and all amendments and consents of third
parties deemed necessary or desirable by the Administrative Agent to
permit the effective granting of the Liens created in such security
agreements in respect of each property subject to a Lease (including,
without limitation, each property subject to the Master Sublease or
third party mortgage) and any Lien Waiver Certificates and
assignments, as may be required by any Agent to grant to the
Administrative Agent for the benefit of the Agents and the ratable
benefit of the Lenders a valid, perfected and enforceable (subject to
bankruptcy, insolvency, moratorium and other similar laws affecting
the enforcement of creditors' rights generally and by general equity
principles) first priority Lien on all personal property and assets of
such Credit Party (including, without limitation, all rights of any
Borrower under any Intercompany Security Agreement, but excluding any
personal property or other assets listed in Schedule 5.3 hereto, it
being understood that the Collateral shall not include any personal
property listed in Schedule 5.3 hereto or other assets listed in
Schedule 5.3 hereto) subject only to Liens specifically permitted
under Section 10.2 hereof, now owned or hereafter acquired, tangible
and intangible, including, without limitation, all cash, securities
(whether or not marketable), instruments (whether or not negotiable),
inventory, machinery, equipment, fixtures, accounts, accounts
receivable, general intangibles (including, without limitation,
pension reversions, income tax refunds, patents, trademarks, trade
names, copyrights, license agreements, know-how and other intellectual
property), chattel paper, letters of credit, deposit accounts and
insurance policies, and all proceeds of every kind and nature of the
foregoing, together with:
(A) evidence of the completion of all recordings and
filings of or with respect to the Security Documents that the
Administrative Agent may deem necessary or desirable in order to
perfect and protect the Liens created thereby,
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(B) evidence of the insurance required by the terms of
any Security Document or this Agreement,
(C) copies of each assigned agreement identified in
any Security Document, together with a consent to such assignment
in form and substance reasonably satisfactory to the
Administrative Agent, duly executed by each party to such
assigned agreements, and
(D) evidence that all other action that the
Administrative Agent may deem necessary or desirable in order to
perfect and protect the Liens created by the Security Documents
(and the priority of such Liens required hereunder) has been
taken.
(b) The Administrative Agent shall have received (unless
otherwise consented to in writing by the Administrative Agent):
(A) acknowledgment copies or stamped receipt copies of
proper financing statements, duly filed on or before the day of
the initial borrowing hereunder under the UCC of all
jurisdictions that the Administrative Agent may deem necessary or
desirable in order to perfect and protect the Liens created by
the Security Documents, covering the collateral described in the
Security Documents, and
(B) completed requests for information, dated on or
before the date of the initial borrowing hereunder, listing the
financing statements referred to in clause (A) above and all
other effective financing statements filed in the jurisdictions
referred to in clause (A) above that name any Credit Party as
debtor, together with copies of such other financing statements.
5.4. REAL PROPERTY; MORTGAGES; TITLE INSURANCE. (a) To
the extent requested by the Administrative Agent:
(i) each Credit Party shall duly execute and deliver to the
Administrative Agent mortgages or deeds of trust (each such
mortgage or deed of trust, as it may be amended, modified or
supplemented from time to time in accordance with its terms, a
"Mortgage") in respect of real property listed in Schedule 5.4
hereto that is owned by such Credit Party so as to create in the
Administrative Agent's favor, for the benefit of the Agents and
the ratable benefit of the Lenders, upon recordation thereof, a
valid, perfected and enforceable (subject to bankruptcy,
insolvency, moratorium and other similar laws affecting the
enforcement of creditors' rights generally and by general equity
principles) first priority Lien on the real property and
improvements described therein (subject only to Liens
specifically permitted under Section 10.2 hereof), such Mortgages
to be in form, scope and substance satisfactory to the
Administrative Agent and the Lenders;
(ii) each Credit Party shall cause the Mortgages executed
and delivered by it to be duly recorded in the appropriate
recording office or offices and shall pay all fees and taxes
payable in connection therewith.
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(b) Each Credit Party shall cause to be executed and
delivered to the Administrative Agent such amendments to the Master
Sublease, such consents of third parties to the Mortgages executed
and delivered by it, and such non-disturbance agreements, estoppel
certificates and waivers as the Administrative Agent shall reasonably
request (in each case in form and substance satisfactory to the
Administrative Agent). The appropriate Credit Parties shall execute
and deliver to the Administrative Agent a collateral assignment of
the Master Sublease (which assignment shall constitute a Security
Document), in form, scope and substance satisfactory to the
Administrative Agent and the Lenders.
(c) Each Credit Party shall furnish to the Administrative
Agent, in sufficient copies for each Lender, for the benefit of the
Administrative Agent and the Lenders, at such Credit Party's expense,
one or more policies of mortgagee title insurance, in form, substance
and amount satisfactory to the Administrative Agent and the Lenders,
insuring that each of the Mortgages executed and delivered by it
pursuant to Section 5.4(a) hereof is a valid and perfected first
priority Lien in favor of the Administrative Agent for the benefit of
the Agents and the ratable benefit of the Lenders on the fee interest
of such Credit Party (subject only to Liens specifically permitted
under Section 10.2 hereof), in real property and improvements
described therein, and that such Credit Party has good and marketable
title thereto (subject to customary exceptions), issued by a title
insurance company reasonably satisfactory to the Agents, together
with satisfactory evidence that all title insurance premiums have
been fully paid. If requested by the Administrative Agent or any
Lender, each Credit Party shall furnish to the Administrative Agent,
in sufficient copies for each Lender, certified surveys of real
property to be subject to any Mortgage to be executed and delivered
by it on or prior to the Closing Date and such other certificates and
documents as the any Agent may reasonably request. In addition, the
Borrowers shall and shall cause each of the Credit Parties to provide
to each Lender with respect to any real property subject to a
Mortgage on or prior to the taking of such Mortgage such appraisals
of such real property as shall be required under applicable law,
including without limitation FIRREA; it being understood that no such
appraisals shall be required with respect to any real property that
is subject to a Mortgage on the Closing Date.
5.5. ADDITIONAL COLLATERAL. Each Credit Party
acknowledges that it is its intention to provide the Administrative
Agent for the benefit of the Agents and the ratable benefit of the
Lenders with a Lien on all its property (personal, real and mixed),
whether now owned or hereafter acquired (other than any property
listed in Schedule 5.3 hereto), subject only to Liens permitted
hereunder. Without limitation of Section 5.4 hereof, each Credit
Party shall from time to time promptly notify the Administrative
Agent of the acquisition by it of any material property in which the
Administrative Agent does not then hold a perfected Lien (including,
without limitation, any real property with a value (based on the
greater of cost and fair market value) in excess of $500,000), or the
creation or existence of any such property, and such person shall,
upon request by the Administrative Agent, promptly execute and
deliver to the Administrative Agent or cause to be executed and
delivered to the Administrative Agent pledge agreements, security
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agreements, mortgages or other like agreements with respect to such
property, together with such other documents, certificates, title
insurance, surveys, consents of third parties, opinions of counsel
and the like as the Administrative Agent shall reasonably request in
connection therewith, in form and substance satisfactory to the
Administrative Agent and the Lenders, such that the Administrative
Agent shall receive valid and perfected first priority Liens (subject
only to Liens specifically permitted under Section 10.2 hereof) on
all such property for the benefit of the Agents and the ratable
benefit of the Lenders.
5.6. FILING AND RECORDING. (a) The Credit Parties
shall, at their cost and expense, cause all instruments and documents
given as security pursuant to this Agreement to be duly recorded
and/or filed or otherwise perfected in all places necessary, in the
opinion of the Agents and the Lenders, to perfect and protect the
Lien of the Administrative Agent in the property covered thereby.
(b) Each of the Credit Parties hereby authorizes the
Administrative Agent to file one or more financing statements
(including, without limitation, assignments of UCC financing
statements) or continuation statements or amendments thereto or
assignments thereof in respect of any Lien created pursuant to this
Agreement and the Security Documents which may at any time be
required or which, in the opinion of the Agents, may at any time be
desirable without the signature of such Credit Party where permitted
by law.
(c) In the event that any re-recording or refiling of any
financing statement (or the filing of any statements of continuation
or amendment or assignment of any financing statement) is required to
protect and preserve such Lien, the Credit Parties shall, at their
cost and expense, cause the same to be recorded and/or refiled at the
time and in the manner requested by the Administrative Agent.
5.7 INTERPRETATION OF SECURITY DOCUMENTS. In the case of
any conflict between the terms and provisions of a Security Document
and this Agreement, the terms and provisions of this Agreement shall
control, unless the terms of such Security Document expressly provide
otherwise.
5.8 GUARANTIES. (a) Each Credit Party shall execute and
deliver to the Administrative Agent a guaranty, substantially in the
form of Exhibit 5.8 hereto, of all present and future Lender Debt.
(b) Upon the formation, after the Closing Date, of any
Subsidiary of any Credit Party such Subsidiary shall execute and
deliver to the Administrative Agent a guaranty, substantially in the
form of Exhibit 5.8 hereto (modified in form and substance
satisfactory to each Agent to remove references to any existing
Credit Party as a party thereto), of all then existing or thereafter
incurred Lender Debt (or in the sole discretion of the Agents, an
amendment, in form and substance satisfactory to each Agent, to any
guaranty executed and delivered pursuant to Section 5.8(a) above to
add such Subsidiary as a guarantor thereunder) and such other
Security Documents and related documents, instruments and
certificates, in form and substance satisfactory to the
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Administrative Agent, as the Administrative Agent shall request in
order to grant to the Administrative Agent for the benefit of the
Agents and the ratable benefit of the Lenders a valid, perfected and
enforceable first priority Lien on all assets of such Subsidiary.
Nothing contained in this Section 5.8 shall permit any Credit Party
or any Subsidiary thereof to form any Subsidiary which is otherwise
prohibited by this Agreement.
5.9 RELEASE OF REAL ESTATE AND EQUIPMENT UPON ISSUANCE OF
$30,000,000 OF ACCEPTABLE SUBORDINATED DEBT. (a) The Administrative
Agent, upon receipt of a written request by the Borrowers made
contemporaneously with or at any time after receipt by one or more
Credit Parties of at least $30,000,000 as the gross cash proceeds
from the issuance of Acceptable Subordinated Debt, shall, upon
receipt of the net cash proceeds of such issuance for application to
the Lender Debt as provided herein or the provision of Letter of
Credit Cash Collateral, release its Lien on all real property (other
than the Master Sublease) and Equipment (other than any computer data
processing hardware or other Equipment (including, without
limitation, any point-of-sale equipment) that is used to store,
generate or maintain any computer record, disks, tapes and other
media relating to Inventory, Inventory control systems or Accounts)
of the Credit Parties. The Administrative Agent shall, at the
Borrowers' expense, execute and deliver UCC-3 partial releases and/or
termination statements, satisfactions of mortgage and/or such other
documents and instruments as the applicable Credit Parties may
reasonably request to evidence such release.
(b) From and after the receipt by one or more Borrowers of
at least $30,000,000 as the gross cash proceeds from the issuance of
Acceptable Subordinated Debt and the receipt by the Administrative
Agent of the net cash proceeds of such issuance (as described in
paragraph (a) of this Section 5.9), any provisions of the Loan
Documents requiring any Credit Party to grant to the Administrative
Agent a Lien on such Credit Party's assets shall be deemed not to
apply to such Credit Party's real property (other than the Master
Sublease) and Equipment (other than any computer data processing
hardware or other Equipment (including, without limitation, any
point-of-sale equipment) that is used to store, generate or maintain
any computer record, disks, tapes and other media relating to
inventory, inventory control systems or Accounts).
SECTION 6CONDITIONS PRECEDENT TO INITIAL BORROWINGS AND
ISSUANCE OF LETTERS OF CREDIT.
The obligation of each Lender to lend its PRO RATA portion
of any Advance or to provide any other financial accommodations to
any Borrower on the Closing Date is subject to the following
conditions precedent being fulfilled to the satisfaction of the
Lenders in each instance (or waived in writing by the Lenders):
6.1 OPINIONS OF COUNSEL. The Administrative Agent and
each Lender shall have received favorable opinions of Weil, Gotshal &
Manges, counsel to the Credit Parties, in form and substance
satisfactory to the Administrative Agent and the Lenders (and such
other opinions of counsel, including, without limitation, of local
counsel, each in form and substance satisfactory to the
Administrative Agent and the Lenders, as any Lender may request).
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6.2 FINANCIAL STATUS AND STATEMENTS. (a) The Lenders
shall have received (i) Ames' annual 10-K report for Fiscal Year 1994
and (ii) audited consolidated financial statements for Ames' Fiscal
Year ended January 29, 1994 (the "Reference Date") which consolidated
financial statements shall be certified without qualification by
Arthur Andersen & Co., and shall not (x) differ in any material respects (as
determined by any Lender) from the unaudited financial statements as
of such date prepared by Ames' management and furnished to the
Administrative Agent on March 31, 1994 or (y) contain representations
or information materially and adversely different (as determined by
any Lender) from any representations or information previously
furnished to the Administrative Agent or any Lender. The Lenders
shall have received a pro forma opening consolidated balance sheet of
Ames and its Subsidiaries as of the last day of the most recently
available fiscal month prior to the Closing Date (or if the Closing
Date occurs on or prior to the fifteenth day of a month, for the next
preceding fiscal month) for which such statements have been completed
but giving effect to the transactions contemplated herein which
balance sheet shall reflect no material adverse changes from the most
recent pro forma consolidated balance sheet of Ames and its
Subsidiaries for such month previously delivered to the
Administrative Agent, and such projections as any Lender shall have
requested, in each case, in form and substance satisfactory to the
Lenders.
(b) As of the time immediately prior to the Closing Date,
(i) no material adverse change shall have occurred in the business,
operations, liabilities, assets, properties, prospects or condition,
financial or otherwise, of Ames and its Subsidiaries, since the
Reference Date as reflected on the audited consolidated financial
statements (the "Financial Statements") of Ames and its Subsidiaries
as at and for the period ending on the Reference Date (including,
without limitation, no material deterioration in trade support for
Ames and its Subsidiaries), and (ii) there shall have been since the
Reference Date no material increase in liabilities of Ames and its
Subsidiaries on a consolidated basis, liquidated or contingent,
whether or not reflected on any balance sheet, and no material
decrease in assets of Ames and its Subsidiaries on a consolidated
basis, other than in the ordinary course of business.
6.3 QUALIFICATION. Each Credit Party shall be duly
qualified and in good standing in each jurisdiction in which it owns
or leases property or in which the conduct of its business requires
it to so qualify, except where the failure to so qualify would not
have a material adverse effect on its business, operations,
liabilities, assets, properties, prospects or condition (financial or
otherwise).
6.4 SECURITY DOCUMENTS AND INSTRUMENTS. The
Administrative Agent shall have received, in sufficient copies for
each Lender, (a) all the instruments and documents then required to
be delivered pursuant to Section 5 hereof or any other provision of
this Agreement or pursuant to the instruments and documents referred
to in Section 5 hereof and the same shall be in full force and effect
and shall grant or create the Liens, rights, powers, priorities,
remedies and benefits contemplated herein or therein, as the case may
be, (b) all necessary consents relating thereto from third parties so
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that the same shall be valid and not result in any violation of any
material agreement running in favor of such third party and (c) all
satisfactions of mortgages, termination statements under the UCC and
other instruments releasing Liens of third parties (including,
without limitation, any Liens of trade creditors) on all or any
portion of the Collateral as may be necessary or desirable in
connection with the foregoing.
6.5 EVIDENCE OF INSURANCE. The Administrative Agent
shall have received, in sufficient copies for each Lender, evidence,
in form, scope and substance and with such insurance carriers
reasonably satisfactory to the Lenders, of all insurance policies
required pursuant to Section 9.3 hereof. Such insurance coverage
shall have been issued by responsible carriers acceptable to the
Lenders and shall include, without limitation, loss payee
endorsements in form and substance satisfactory to the Lenders and in
any event which require that at least thirty (30) (or, in the case of
nonpayment of premium, ten (10)) days' prior Written Notice be
provided to the Administrative Agent in the event of cancellation,
nonrenewal or material change thereof.
6.6. INTENTIONALLY OMITTED.
6.7. TOTAL AVAILABILITY. The Agents shall have received
a Borrowing Base Certificate dated the Closing Date from each of the
Borrowers (it being understood that the Agents shall not be bound by
such Borrowing Base Certificate, the Agents having the right to
determine the Borrowing Base as provided in the definition of
"Borrowing Base" in Section 1.1 hereof). The Agents shall be
satisfied that Total Availability immediately following the making of
the initial Revolving Advance and initial issuance of Letters of
Credit (without double counting Letters of Credit that constitute
indemnities for letters of credit outstanding immediately prior to
the Closing Date and constituting Existing Debt) shall be not less
than $30,000,000.
6.8. NOTES. Each Lender shall have received its Notes,
each duly completed, executed and delivered in accordance with
Section 2.3 hereof.
6.9. FEES AND EXPENSES. All fees and costs payable to
any of the Agents and the Lenders with respect to the financing
hereunder (including, without limitation, those under the Commitment
Letter) on or prior to the making of the initial Revolving Advance
hereunder shall have been paid in full to the Persons entitled
thereto in immediately available funds.
6.10. INTERCOMPANY NOTES. (a) Ames shall have issued to
each Borrower one or more promissory notes (together with any
replacement or substitution thereof and any amendment or modification
thereof, in each case permitted by the terms hereof, the
"Intercompany Notes") in the form annexed hereto as Exhibit 6.10(a).
The Intercompany Notes shall be assigned and pledged to the
Administrative Agent for the benefit of the Agents and the ratable
benefit of the Lenders as collateral security pursuant to a Note
Pledge Agreement.
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(b) Each Borrower shall have issued to Ames one or more
promissory notes (together with any replacement or substitution
thereof and any amendment or modification thereof, in each case
permitted by the terms hereof, the "Subordinated Intercompany Notes")
in the form annexed hereto as Exhibit 6.10(b).
(c) Ames shall have entered into a security agreement with
each Borrower (together with any replacement or substitution thereof
and any amendment or modification thereof, in each case permitted by
the terms hereof, the "Intercompany Security Agreements") each in the
form annexed hereto as Exhibit 6.10(c), and the Lenders shall have
received evidence satisfactory to them regarding the attachment,
perfection and priority of all Liens created thereunder.
6.11. DISBURSEMENT AUTHORIZATION. The Agents shall have
received a disbursement authorization letter, substantially in form
and substance satisfactory to the Agents, duly executed and delivered
by each of the Borrowers as to the disbursement on the Closing Date
of the proceeds of the initial Revolving Advance.
6.12 CASH MANAGEMENT. On or prior to the Closing Date,
the Borrowers and any Subsidiary of any thereof shall have
established Blocked Accounts and Concentration Accounts pursuant to
Blocked Account Agreements and the Concentration Account Agreements
to the extent required by Section 9.20 hereof. All deposit accounts
of each of the Borrowers and each Subsidiary thereof other than those
deposit accounts listed in Schedule 6.12 hereto shall be covered by
Blocked Account Agreements or the Concentration Account Agreements
which shall have been executed and delivered to the Administrative
Agent.
6.13 NO LITIGATION. There shall be no action, suit or
proceeding pending against any Lender before any court, arbitrator or
governmental or administrative body or agency which challenges the
validity or propriety of the transactions contemplated under this
Agreement or the other Loan Documents.
6.14 INTENTIONALLY OMITTED.
6.15 INTENTIONALLY OMITTED.
6.16 INTENTIONALLY OMITTED.
6.17 COMPLIANCE WITH LAW. Each Credit Party shall be in
compliance in all material respects with, and shall have obtained
appropriate approvals pertaining to, all applicable governmental,
environmental, labor, ERISA and other requirements, regulations and
laws. The credit facilities herein provided and all other
transactions contemplated herein shall be in compliance with all
applicable laws and regulations and shall not contravene any term or
condition of any charter, partnership agreement, bylaw, debt
instrument or other agreement of any Credit Party.
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6.18 PROCEEDINGS; RECEIPT OF DOCUMENTS. All requisite
corporate or partnership action, as applicable, and proceedings in
connection with the borrowings, the issuance of Letters of Credit and
the execution and delivery of the Loan Documents shall be
satisfactory in form and substance to the Lenders and the Lenders
shall have received all information and copies of all documents,
including, without limitation, records of requisite corporate or
partnership action, as applicable, and proceedings which any Lender
may have requested in connection therewith, such documents where
requested by any Lender to be certified by appropriate corporate
Persons or governmental authorities. Without limiting the generality
of the foregoing, the Administrative Agent shall have received on or
before the Closing Date the following, each dated such day (unless
otherwise specified), in form and substance satisfactory to the
Lenders (unless otherwise specified) and in sufficient copies for
each Lender:
(i) a copy of the certificate of incorporation of each
Credit Party that is a corporation and of the partnership
agreement of each Credit Party that is a partnership, including,
in each case, all amendments thereto, certified (as of a date
reasonably near the date of the initial financial accommodation
to be made hereunder), by the Secretary of State or other
applicable official of each of their respective states (in the
case of each Credit Party that is a corporation) or by a general
partner of such Credit Party (in the case of each Credit Party
that is a partnership) as being a true and correct copy thereof.
(ii) certified copies of the resolutions of the Board of
Directors of each Credit Party (and, where applicable, each
corporate general partner of each Credit Party) approving this
Agreement, the Notes, each other Loan Document, and of all
documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to this Agreement,
the Notes and each other Loan Document.
(iii) a copy of a certificate of the Secretary of State of
each State where each Credit Party is doing business dated a date
reasonably near the date of the initial financial accommodations
to be made hereunder, stating that each Credit Party, as the case
may be, is duly qualified and in good standing as a foreign
entity in such State.
(iv) a certificate of each Credit Party signed on behalf
of such Person by its president, any vice-president, secretary,
treasurer or assistant treasurer (in the case of each Credit
Party that is a corporation) or by any president, any
vice-president, treasurer, assistant treasurer or secretary of
any of its general partners (in the case of each Credit Party
that is a partnership), certifying as to (A) the absence of any
amendments to the charter or partnership agreement, as
applicable, of such Person since the date of the Secretary of
State's (or other official's) or general partner's certificate
for such Credit Party referred to above and (B) a true and
correct copy of the by-laws of each such Credit Party that is a
corporation as in effect on the date of the initial financial
accommodations to be made hereunder.
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(v) a certificate of the secretary or an assistant
secretary of each Credit Party (or, where applicable, of each
corporate general partner of each Credit Party that is a
partnership) certifying the names and true signatures of the
officers of such Person or such Person's corporate general
partners, as applicable, authorized to sign, on behalf of such
Person, this Agreement, the Notes, and each other Loan Document
to which such Person is a party or by which it is bound.
6.19 SOLVENCY. The Agents shall have received a solvency
certificate, substantially in the form of Exhibit 6.19 hereto, from
the senior vice president-treasurer and the vice president-treasury
operations of Ames or another Person acceptable to the Lenders.
6.20 SPECIAL COUNSEL FEES. Messrs. Kaye, Scholer,
Fierman, Hays & Handler, special counsel to the Agents, shall have received
payment in full of all reasonable fees, costs and expenses billed on
or prior to the Closing Date and remaining unpaid as of the Closing
Date.
6.21 TERMINATION OF EXISTING DEBT. The Agents shall have
received evidence in form and substance satisfactory to the Lenders
that contemporaneously with the initial Advance hereunder, all
Existing Debt shall be paid in full and any and all Liens securing
the Existing Debt shall be terminated.
6.22 AMENDMENT TO MANAGEMENT AGREEMENT; SUBORDINATION
AGREEMENTS; BILL OF SALE. Each of the Credit Parties shall have duly
executed and delivered (i) an agreement in the form attached hereto
as Exhibit 6.22(i) and (ii) a subordination agreement (together with
any replacement or substitution thereof and any amendment or
modification thereof, in each case permitted by the terms hereof, the
"Intercompany Subordination Agreement") in the form attached hereto
as Exhibit 6.22(ii). Ames shall have duly executed and delivered a
bill of sale in the form attached hereto as Exhibit 6.22(iii).
6.23. ACCOUNTANTS' LETTER. The Agents shall have
received evidence satisfactory to them that a letter in the form
annexed hereto as Exhibit 6.23 from the Credit Parties to Arthur
Andersen & Co., the independent certified public accountants of the Credit
Parties on the Closing Date, has been delivered to such accountants.
Funding by any Lender of its pro rata share of the initial
Revolving Advance shall be deemed to be confirmation by such Lender
that (i) all conditions precedent set forth in this Section 6 have
been fulfilled to the satisfaction of such Lender (except the
condition that all other Lenders be satisfied that all conditions
have been fulfilled as contemplated by the introduction to Section 6
hereof) and (ii) the decision of such Lender to fund its pro rata
share of the initial Revolving Advance was made by such Lender
independently and without reliance on any Agent or any other Lender
as to the satisfaction of any condition precedent set forth in this
Section 6.
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SECTION 7. CONDITIONS PRECEDENT TO EACH BORROWING
AND ISSUANCE OF LETTERS OF CREDIT.
7.1. CONDITIONS. No Lender shall have any obligation to
make any Advance (other than any Revolving Advances under Section 3.4
hereof) and no Issuing Lender shall cause the issuance of a Letter of
Credit unless, in each instance, (x) with respect to an Advance
(other than a Revolving Advance under Section 3.4 hereof), the
applicable Borrower delivers to the Administrative Agent a Borrower's
Certificate dated the date of such Advance and (y) the following
conditions precedent are fulfilled to the satisfaction of the
Administrative Agent (or waived in writing by the Majority Lenders):
(i) all representations and warranties made by each of the
Credit Parties contained herein or otherwise made in any Loan
Document (including, without limitation, each Borrower's
Certificate), officer's certificate or any agreement, instrument,
certificate, document or other writing delivered to the
Administrative Agent or any Lender in connection herewith or
therewith, 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 such borrowing
or issuance of a Letter of Credit (unless any such representation
or warranty speaks as of a particular date, in which case it
shall be deemed repeated as of such date);
(ii) on the date of such borrowing or issuance of a Letter
of Credit there shall exist no Default or Event of Default
(either immediately before or after giving effect thereto);
(iii) if a Borrower shall be requesting a Letter of Credit,
the Administrative Agent on behalf of the Issuing Bank shall have
(to the extent requested by any Issuing Bank) received a duly
executed and delivered Letter of Credit Agreement with respect
thereto; and
(iv) the applicable Borrower shall have complied with all
procedures and given all certificates, notices and other
documents required hereunder for such advance or issuance.
7.2 ACTIONS BY ADMINISTRATIVE AGENT. The Lenders hereby
acknowledge and agree that notwithstanding anything to the contrary
contained in Section 7.1 hereof: So long as no Designated Event of
Default shall have occurred and be continuing and the Administrative
Agent shall have notified the Lenders in writing of its intention to
make an election under this Section 7.2, (i) unless and until the
Administrative Agent receives a Direction Letter, the Administrative
Agent may waive the conditions set forth in this Section 7 with
respect to any Reference Rate Advance or Letter of Credit
notwithstanding the existence of any Default or Event of Default
(other than a Designated Event of Default), but only so long as the
making of such Reference Rate Advance or the issuance of such Letter
of Credit would not cause the applicable Borrower to exceed its
Borrowing Limit or result in any prepayment or the provision of any
Letter of Credit Cash Collateral being required under Section
4.1(b)(iii) hereof and (ii) if the Administrative Agent, in its sole
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and absolute discretion, elects pursuant to and in accordance with
this Section 7.2 to waive the conditions set forth in Section 7.1,
each Lender shall continue to be obligated to fund its pro rata share
of Reference Rate Advances unless and until the Administrative Agent
receives a Direction Letter and each Lender shall retain all of its
obligations under this Agreement (including, without limitation,
Section 3.4 hereof and Section 3.5 hereof) with respect to Letters of
Credit that are issued prior to the Administrative Agent's receipt of
a Direction Letter. The provisions of this Section 7.2 are intended
solely for the benefit of the Administrative Agent and the Lenders
and no Credit Party shall be entitled to enforce or otherwise be
entitled to the benefits of this Section 7.2 (as a third party
beneficiary or otherwise).
SECTION 8. USE OF PROCEEDS.
(a) Proceeds of the initial Revolving Advance shall be
applied on the Closing Date to the (i) the cash fees and expenses
relating to the transactions contemplated hereunder that have been
incurred by one or more of the Borrowers through the Closing Date and
(ii) retirement of Existing Debt ((i) and (ii) collectively, the
"Closing Uses").
(b) From and after the Closing Date, proceeds of Revolving
Advances to any Borrower not utilized for Closing Uses shall be used
to make advances to Ames, which advances shall be evidenced by the
Intercompany Notes and shall be made solely to the extent necessary
to enable Ames to perform its obligations under the Management
Agreements.
SECTION 9. AFFIRMATIVE COVENANTS.
Each Credit Party hereby covenants and agrees that, so long
as any Advance or Letter of Credit is outstanding or any Lender has
any Revolving Commitment hereunder, unless specifically waived by the
Majority Lenders in writing:
9.1. FINANCIAL STATEMENTS AND OTHER INFORMATION. The
Borrowers shall furnish or cause to be furnished to the
Administrative Agent and each Lender:
(a) Within 30 days after the end of each fiscal month of
Ames (or 45 days, in the case of a fiscal month that is the last
month of a fiscal quarter), (i) a copy of the unaudited consolidated
balance sheets of Ames and its Subsidiaries as of the end of such
month and the related consolidated statements of income and cash
flows for such month and for that portion of the Fiscal Year ending
as of the end of such month, each prepared in accordance with GAAP
(subject to normal year end adjustments and without footnotes), and
(ii) a copy of the unaudited consolidated statements of income of
Ames and its Subsidiaries setting forth the actual year to date
figures on a monthly basis, setting forth in comparative form in each
case referred to in clauses (i) and (ii) above, actual figures for
such period as against budgeted figures for such period in the
current Fiscal Year and actual figures as against actual figures for
the comparable period during the prior Fiscal Year and accompanied by
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(A) the certification of the Designated Officer of Ames certifying
that (i) all such financial statements are complete and correct and
present fairly in all material respects in accordance with GAAP
(subject to normal year end adjustments and without footnotes), the
consolidated financial position and the consolidated results of
operations and cash flows of Ames and its Subsidiaries as at the end
of such month, and (ii) no Default or Event of Default exists as of
such time or, if any Default or Event of Default then exists,
specifying the details and anticipated effect thereof and (B) for the
last month of each fiscal quarter only a schedule showing in
reasonable detail the calculations used in determining compliance
(for the fiscal quarters ending on the last day of each such month)
with the covenants contained in Sections 9.16 and 10.1 hereof and the
financial test contained in Schedule 4.1(b) hereto.
(b) Within 90 days after the close of each Fiscal Year
beginning with the Fiscal Year ending on or about January 28, 1995, a
copy of the annual audited consolidated financial statements of Ames
and its Subsidiaries, consisting of the annual consolidated balance
sheet, statement of income, cash flow and retained earnings, setting
forth in comparative form, in each case, consolidated figures for the
prior Fiscal Year, which financial statements shall be prepared in
accordance with GAAP, certified without qualification (other than a
qualification approved by the Majority Lenders) by Arthur Andersen & Co. or
other independent certified public accountants of recognized national
standing selected by Ames and reasonably acceptable to the
Administrative Agent, and accompanied by (i) a schedule prepared by
Ames' management, showing in reasonable detail the calculations used
in determining compliance with the financial covenants under Sections
9.16 and 10.1 hereof and the financial tests contained in Schedules
2.6(e) and 4.1(b) hereto as of the end of such Fiscal Year hereof and
setting forth an explanation of any variances from that which would
pertain if there were no proviso to the definition of "GAAP"
contained herein, (ii) a certificate from Ames' management to the
effect that nothing has come to their attention to cause them to
believe that a Default or Event of Default had occurred or, if they
believe a Default or Event of Default has occurred, specifying the
details thereof and (iii) a certification of the Designated Officer
of Ames certifying that (A) all such financial statements are
complete and correct and present fairly in all material respects in
accordance with GAAP the consolidated financial position and the
consolidated results of operations and cash flows of Ames and its
Subsidiaries as at the end of such Fiscal Year and (B) no Default or
Event of Default exists as of such time or, if any Default or Event
of Default then exists, specifying the details and anticipated effect
thereof.
(c) As soon as practicable, but in any event not later than
two (2) Business Days after any Credit Party becomes aware of the
existence of any Default or Event of Default or a default under any
other agreement in respect of Indebtedness for Borrowed Money as to
which Ames or any of its Subsidiaries is a party, or any development
or other information that could reasonably be expected to have a
Material Adverse Effect, Written Notice specifying the nature of such
Default or Event of Default or development or information, including
the anticipated effect thereof and the action such party proposes to
take with respect thereto.
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(d) Within 30 days after the beginning of each Fiscal Year,
an annual operating plan for Ames and its Subsidiaries for such
Fiscal Year, in form, scope and substance reasonably satisfactory to
the Administrative Agent, setting forth:
(i) projected consolidated balance sheets of Ames and
its Subsidiaries for such Fiscal Year, on a monthly basis;
(ii) projected consolidated statements of income of Ames
and its Subsidiaries for such Fiscal Year, on a monthly basis;
and
(iii) projected consolidated statements of cash flow of
Ames and its Subsidiaries, including summary details of Capital
Expenditures, for such Fiscal Year, on a monthly basis;
together with (x) projections of the nature requested in clauses (i)
through (iii) above, computed on an annual basis for each Fiscal Year
remaining until the Maturity Date and (y) appropriate supporting
details as reasonably requested by any Lender. The annual operating
plan delivered in connection with this Section 9.1(d) shall be
accompanied by evidence satisfactory to the Administrative Agent that
such plan shall have been approved by the board of directors of Ames.
(e) If requested by the Administrative Agent or any Lender,
copies of all federal, state, local and foreign tax returns and
reports in respect of income, franchise or other taxes on or measured
by income filed by Ames or any of its Subsidiaries.
(f) Concurrently with the delivery of the statements
referred to in Section 9.1(a) hereof, supplements or amendments to
Schedules, if any, as described in Section 9.18 hereof.
(g) As soon as available, but in any event not later than
thirty (30) days after the end of each Fiscal Year of Ames, a report,
in form and substance satisfactory to the Administrative Agent, (i)
updating the list of contracts, agreements and documents of Ames and
its Subsidiaries in existence at the end of such Fiscal Year which
are required to be set forth on Schedule 12.22 hereto so that the
representation and warranty made in Section 12.22 hereto shall be
true and correct as of such date and (ii) specifying which contracts,
agreements and documents included on such schedule at any time during
the Fiscal Year just ended have been terminated, entered into or
materially modified during such Fiscal Year, and, promptly after
requested by the Administrative Agent, copies of any such new
contracts, agreements or other documents and material modifications.
(h) Promptly and in any event within ten (10) Business Days
following the issuance thereof, copies of all reports, if any, to or
other documents filed by Ames or any of its Subsidiaries with the
Securities and Exchange Commission under the Securities Act of 1933
or the Securities Exchange Act of 1934 (other than on Form S-8 or 8-A
or similar forms), and all reports, notices or statements sent or
received by Ames or any of its Subsidiaries to or from the holders of
any equity interests of Ames or any such Subsidiary or of any
Indebtedness for Borrowed Money of Ames or any such Subsidiary
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registered under the Securities Act of 1933 or to or from the trustee
under any indenture under which the same is issued to the extent that
such report, notice or statement relates to the giving of notice of
or the exercise or prospective exercise of rights or obligations of
the parties under the terms of such equity interests or Indebtedness
for Borrowed Money.
(i) Promptly and in any event within ten (10) Business Days
following the commencement thereof, Written Notice of any litigation,
including arbitrations, and of any proceedings before any
governmental agency, affecting Ames or any of its Subsidiaries (other
than any described in paragraph (m) below), which, if successful,
could reasonably be expected to have a Material Adverse Effect.
(j) Within fifteen (15) days following the end of each
month, copies of all reports and returns (including evidence of
payment) in respect of sales, use or like taxes with respect to Ames
or any of its Subsidiaries.
(k) (x) On the Closing Date, (y) on Thursday of each week,
and (z) within three (3) days following the written request of any
Agent, a certificate dated such day from each Borrower, in each case
substantially in the form of Exhibit 9.1(k) hereto, each such
certificate to be signed by the Designated Officer of such Borrower
(each such certificate, a "Borrowing Base Certificate") (it being
understood that the Agents shall not be bound by such Borrowing Base
Certificate, the Agents having the right to determine the Borrowing
Base as provided in the definition of "Borrowing Base" in Section
1.1. hereof).
(l) Within fifteen (15) days after receipt thereof, a copy
of all management reports and management letters prepared for Ames
and its Subsidiaries by Arthur Andersen & Co. or such other independent
certified public accountants of recognized national standing selected
by Ames and acceptable to the Administrative Agent.
(m) Within thirty (30) days after the end of each fiscal
quarter of Ames, a reconciliation report in form and substance
satisfactory to the Agents and the Lenders with respect to variances
discovered during the cycle inventory count for the immediately
preceding fiscal quarter required under Section 9.9 hereof.
(n) Promptly, and in any event within ten (10) Business
Days thereof, notice:
(i) of any Environmental Claim or Adverse
Environmental Condition of which any Credit Party or any
Subsidiary thereof has knowledge or any Written Notice of an
allegation which may reasonably give rise to an Environmental
Claim or Adverse Environmental Condition, or a copy of any order,
notice, permit, report or other written communication received by
any Credit Party in connection with an Adverse Environmental
Condition or Environmental Claim or any allegation that could
reasonably be expected to give rise to any Adverse Environmental
Condition or Environmental Claim, in each case where such
Environmental Claim or Adverse Environmental Condition could
reasonably be expected to exceed $100,000;
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(ii) of the occurrence of a spill or other Release of a
Hazardous Material upon, under or affecting any Facilities, or
Hazardous Materials at levels or in amounts that may have to be
reported, remedied or responded to under any Environmental Law or
that have been detected on or in the soil or groundwater,
provided the cost to Ames or its Subsidiaries of investigating,
remedying, or responding to such Release could reasonably be
expected to exceed $100,000;
(iii) that a Credit Party or Subsidiary thereof is or
may be liable for any costs of cleaning up or otherwise
responding to a Release of Hazardous Materials, provided the cost
of cleanup or response could reasonably be expected to exceed
$100,000;
(iv) that Written Notice has been received that any part
of the Facilities is or may be subject to a Lien under any
Environmental Law; and
(v) that a Credit Party or Subsidiary will undertake or
has undertaken any cleanup or other response action with respect
to any Hazardous Material, provided the cost of cleanup or
response could reasonably be expected to exceed $100,000.
(o) With reasonable promptness, such other information
respecting the business, operations and financial condition of Ames
or any of its Subsidiaries as any Agent or Lender may from time to
time reasonably request.
9.2. TAXES AND CLAIMS. Each Credit Party shall, and
shall cause each of its Subsidiaries to, pay and discharge when due
(a) all taxes, assessments and governmental charges upon or against
it or its properties or assets prior to the date on which penalties
attach thereto and (b) all lawful claims, whether for labor,
materials, supplies, services or anything else, which might or could,
if unpaid, become a Lien or charge upon its properties or assets,
unless, in each case, the validity or amount thereof is being
contested in good faith by appropriate proceedings, such Credit Party
or such Subsidiary has established adequate reserves in accordance
with GAAP with respect thereto, Liens securing an aggregate amount of
$3,000,000 or more and arising from the non-payment thereof when due
have not attached to any Collateral in a manner which could have
priority over the Lien of the Administrative Agent thereon and there
is no imminent risk of the sale of or foreclosure on any property or
assets of any Credit Party by the holder of any Liens arising from
the non-payment thereof when due. Each Credit Party shall, and shall
cause each of its Subsidiaries to remit when due, all sales, use or
like taxes collected by such Credit Party or Subsidiary to the
appropriate governmental authority.
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9.3. INSURANCE. (a) Schedule 9.3 lists all insurance of
any nature maintained by Ames and its Subsidiaries (other than any
insurance plans described in Schedule 12.13 hereto). The Credit
Parties shall, at their sole cost and expense, maintain "All Risk"
physical damage insurance on all real and personal property of the
Credit Parties including, but not limited to, fire and extended
coverage, boiler and machinery coverage, coverage as to flood, theft,
explosion, collapse, and all other hazards and risks ordinarily
insured against by owners or users of such properties in similar
businesses. All policies of insurance on such real and personal
property as well as all other insurance required under this Section
9.3 shall be in form acceptable to the Administrative Agent and shall
be provided by recognized insurers reasonably acceptable to the
Administrative Agent. All insurance on such real and personal
property shall contain an endorsement, in form and substance
reasonably acceptable to the Administrative Agent, showing loss
payable to the Administrative Agent as its interest appears. Such
endorsement, or an independent instrument furnished to the
Administrative Agent, shall provide that the insurance companies add
the Administrative Agent as an additional insured (to the extent of
any liability coverage contained therein) and give the Administrative
Agent at least thirty (30) (or, in the case of nonpayment of premium,
ten (10)) days' prior Written Notice and (except in the case of
cancellation for non-payment of premium) obtain the Agents' and
Majority Lenders' prior written approval before any cancellation, or
material decrease in amount of, or other material change in, coverage
provided by or cancellation of such policy or policies of insurance
and that no act, omission or default of the Ames or any of its
Subsidiaries or any other Person shall affect the right of the
Administrative Agent or any Lender to recover under such policy or
policies of insurance in case of loss or damages.
(b) The Credit Parties shall, at their sole cost and
expense, maintain comprehensive general liability insurance covering
themselves and their Subsidiaries on an "occurrence basis" (unless
such insurance cannot be reasonably obtained at commercially
reasonable rates, in which case such insurance shall be on a "claims
made" basis) against claims for personal injury, bodily injury and
property damage with a minimum limit of $1,000,000 per occurrence
with excess coverage under umbrella liability insurance policies with
a minimum limit of $100,000,000 per occurrence and $100,000,000 in
the aggregate. Such coverage shall include but not be limited to
premises/operations, broad form contractual liability, underground,
explosion and collapse hazard, independent contractors, broad form
property coverage, products and completed operations liability.
(c) The Credit Parties shall, at their sole cost and
expense, maintain workers' compensation insurance covering themselves
and their Subsidiaries including employer's liability in the minimum
amount required by applicable law.
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(d) The Credit Parties shall, at their sole cost and
expense, maintain automobile liability insurance covering themselves
and their Subsidiaries for all owned, non-owned or hired automobiles
against claims for personal injury, bodily injury and property damage
with a minimum combined single limit of $1,000,000 per occurrence
with excess coverage under umbrella liability insurance policies with
a minimum limit of $100,000,000 per occurrence and $100,000,000 in
the aggregate.
(e) The Credit Parties shall, at their sole cost and
expense, maintain business interruption insurance covering themselves
and their Subsidiaries with the policy limits not less than those as
in effect immediately prior to the date hereof. All such policies
shall contain an endorsement in form and substance acceptable to the
Administrative Agent showing loss payable to the Administrative Agent
as its interest appears, and all such policies shall be collaterally
assigned to the Administrative Agent for the benefit of the Agents
and the ratable benefit of the Lenders pursuant to one or more
assignment agreements acceptable in form and substance to the
Administrative Agent.
(f) All policies of liability insurance required to be
maintained under this Agreement shall name the Administrative Agent
and shall cover each Lender as an additional insured, contain a
requirement for thirty (30) (or, in the case of nonpayment of
premium, ten (10)) day notice, and (except in the case of
cancellation for non-payment of premium) the Agents' and the Majority
Lenders' prior written approval, of any cancellation, or any material
decrease in amount of or other material change in, coverage, and be
in form and with insurers recognized as adequate by the
Administrative Agent and, except as required hereby, all such
policies shall be in such amounts as may be reasonably satisfactory
to the Agents and the Majority Lenders. Each Credit Party shall
deliver to the Administrative Agent a copy of each policy of
insurance and, at the Administrative Agent's request, evidence of
payment of all premiums therefor and of compliance with all
provisions of this Agreement. In addition, Each Credit Party shall
notify the Administrative Agent promptly of any occurrence (it being
understood that a general decline in the real estate market shall not
constitute such an occurrence) causing a material loss or decline in
value of any real or personal property and the estimated (or actual,
if available) amount of such loss or decline. Each Credit Party each
irrevocably makes, constitutes and appoints the Administrative Agent
(and all officers, employees or agents designated by the
Administrative Agent) as the and lawful attorney (and agent-in-fact),
acting at any time after the occurrence and during the continuance of
an Event of Default, for the purpose of making, settling and
adjusting claims under such policies of insurance, endorsing the name
of such Credit Party on any check, draft, instrument or other item of
payment for the proceeds of such policies of insurance, and for
making all determinations and decisions with respect to such policies
of insurance. In the event any Credit Party thereof at any time or
times hereafter shall fail to obtain or maintain any of the policies
of insurance required above or to pay any premium in whole or in part
relating thereto, the Administrative Agent, without waiving or
releasing any obligations or default of any Person hereunder, may at
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any time or times thereafter (but shall not be obligated to) obtain
and maintain such policies of insurance and pay such premium and take
any other action with respect thereto which the Administrative Agent
deems advisable. All sums so incurred by the Administrative Agent,
including reasonable attorneys' fees, allocated costs and expenses of
in-house counsel, court costs, expenses and other charges relating
thereto, shall be payable, on demand, by Ames or any of its
Subsidiaries to the Administrative Agent and shall be additional
Lender Debt hereunder secured by the Collateral.
(g) The Administrative Agent reserves the right at any
time, upon a material change of Ames' or any of its Subsidiaries'
risk profile, to require additional forms and limits of insurance
which, in the Administrative Agent's reasonable opinion, will
adequately protect any rights and interests of any Agent or any
Lender in or to the Collateral, the Lender Debt or any Loan
Documents.
(h) All insurance policy minimum amounts set forth in this
Section 9.3 are subject to the continuing availability of such
insurance at commercially reasonable rates, and to the extent such
policy minimum amounts are not so available, the Credit Parties shall
obtain policies with the maximum amounts of coverage then available
at commercially reasonable rates.
9.4. BOOKS AND RESERVES. Each Credit Party shall and
shall cause each of its Subsidiaries to:
(a) maintain, at all times, accurate and complete books,
records and accounts in which accurate and correct entries shall be
made of its transactions which, in the case of Ames, are in
accordance with GAAP; and
(b) by means of appropriate entries, reflect in its
accounts and in all financial statements furnished pursuant to
Section 9.1 hereof proper liabilities and reserves for all taxes and
proper provision for depreciation and amortization of its properties
and bad debts, all in accordance with GAAP.
9.5 PROPERTIES IN GOOD CONDITION. Each Credit Party
shall keep, and shall cause each of its Subsidiaries to keep, its
material properties in good repair, working order and condition,
ordinary wear and tear excepted, and, from time to time, make all
necessary and proper repairs, renewals, replacements, additions and
improvements thereto, so that the business carried on may be
conducted at all times in accordance with prudent business
management.
9.6 MAINTENANCE OF EXISTENCE, ETC. Subject to Section
10.5 hereof, each Credit Party shall preserve and maintain, and cause
each of its Subsidiaries to preserve and maintain, its statutory
existence and corporate or partnership franchises, as the case may
be.
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9.7 FIELD EXAMINATIONS AND INSPECTIONS. Each Credit
Party shall allow, and shall cause each of its Subsidiaries to allow,
(i) each of the Agents and their respective designees to perform such
field examinations of such Credit Party and its Subsidiaries, at the
Borrowers' expense as to reasonable expenses of such Agent and such
designees as such Agent may request and (ii) any representative of
any Agent, at the expense of the Borrowers, to visit and visually
inspect any of their respective properties, to receive copies of all
information generated by any Person performing inventory accounting
services for any Credit Party or Subsidiary thereof, to examine their
respective books of account and other records and files, to make
copies thereof and to discuss their respective affairs, business,
finances and accounts with their respective officers and employees
and independent accountants (and each of the Credit Parties hereby
irrevocably authorizes the independent accountants of the Credit
Parties to discuss with each of the Agents the financial affairs of
Ames and its Subsidiaries), all at such reasonable times during
normal business hours and as often as any Agent may reasonably
request upon reasonable notice (or, during the continuance of a
Default or Event of Default, without notice), and the Credit Parties
shall, to the extent reasonably requested by any Agent, confirm such
authorization by sending to such independent accountants a letter
substantially in the form attached hereto as Exhibit 6.23. Without
limiting the generality of the foregoing, the Administrative Agent
shall have the right to invite one or more Lenders to participate in
any field examination conducted pursuant to this Section 9.7. The
Borrowers hereby acknowledge that the Agents shall require at least
two field examinations pursuant to this Section 9.7 during each
Fiscal Year.
9.8. PAY INDEBTEDNESS TO LENDERS AND PERFORM OTHER
COVENANTS. The Borrowers shall (a) make full and timely payment of
all payments required to be made by the Borrowers in respect of the
Lender Debt, including without limitation, the Revolving Loan,
whether now existing or hereafter arising, (b) and each of the Credit
Parties shall comply with all the terms and covenants contained in
each Loan Document to which such Credit Party is a party, all at the
times and places and in the manner set forth therein and (c) except
for the filing of continuation statements and the making of other
filings by the Administrative Agent as secured party or assignee, at
all times take all action necessary to maintain the Liens provided
for under or pursuant to this Agreement or any Security Document as
valid and perfected Liens on the property intended to be covered
thereby (subject to no other Liens except those Liens expressly
permitted under Section 10.2 hereof) and supply all information to
the Administrative Agent or the Lenders necessary for such
maintenance.
9.9. CYCLE COUNTS. Each Borrower shall, and shall engage
one or more Persons acceptable to the Agents (it being understood
that each of Washington Inventory Service and RGIS Inventory Service
is acceptable to the Agents) to, conduct cycle counts of its
Inventory at such times and in such manner as is consistent with such
Borrower's historical practices.
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9.10. REPORTING OF MISREPRESENTATIONS. In the event that
any Credit Party discovers that any representation or warranty made
in any Loan Document by any Credit Party was incorrect in any
material respect when made, such Credit Party shall promptly report
the same to the Administrative Agent and take, or cause to be taken,
all available steps to correct such misrepresentation or breach of
warranty.
9.11. COMPLIANCE WITH LAW. Each Credit Party shall, and
shall cause each of its Subsidiaries to, comply and duly observe in
all material respects with all laws and regulations and all rules and
orders, in each case, applicable to it and all legal requirements
imposed by any governmental authorities, including, without
limitation, ERISA, those regarding the collection, payment and
deposit of employees' income, unemployment and social security taxes
and those relating to public and employee health and safety, except a
non-compliance or failure to observe that could not reasonably be
expected to have a Material Adverse Effect.
9.12. ERISA. (a) Each Credit Party shall pay and
discharge, and shall cause each ERISA Affiliate to pay and discharge,
when due (including any permissible extensions) any liability imposed
upon it pursuant to the provisions of Title IV of ERISA.
(b) Each Credit Party shall deliver to the Administrative
Agent promptly, and in any event within ten (10) days, after
(i) such party knows, or has reason to know, of the
occurrence of any Reportable Event (as defined in Section 4043(b)
of ERISA) with respect to any Pension Benefit Plan ("Reportable
Event"), a copy of the materials that are filed by the applicable
plan administrator with the PBGC, or the materials that would
have been filed if the PBGC had not waived the notice
requirements;
(ii) the receipt of notice by such Credit Party or any
ERISA Affiliate or any administrator of any Pension Benefit Plan
who is an employee of such Credit Party or any ERISA Affiliate
from the PBGC of the PBGC's intention to terminate any such
Pension Benefit Plan or to appoint a trustee to administer any
such Pension Benefit Plan, a copy of such notice;
(iii) the filing thereof with the Internal Revenue
Service, copies of each annual report that is filed on Treasury
Form 5500 with respect to any Pension Benefit Plan, together with
any actuarial statements on Schedule B to such Form 5500;
(iv) such Credit Party or any ERISA Affiliate or any
administrator of any Pension Benefit Plan who is an employee of
such Credit Party, or any ERISA Affiliate files with
participants, beneficiaries or the PBGC a notice of intent to
terminate any Pension Benefit Plan, a copy of any such notice;
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(v) such Credit Party or any ERISA Affiliate knows or
has reason to know of any event or condition which might
constitute grounds under the provisions of Section 4042 of ERISA
for the termination of (or the appointment of a trustee to
administer) any Pension Benefit Plan, an explanation of such
event or condition;
(vi) an application has been made to the Secretary of
the Treasury for a waiver of the minimum funding standard under
the provisions of Section 412 of the Code with respect to any
Pension Benefit Plan, a copy of such application;
(vii) the receipt by such Credit Party or any ERISA
Affiliate of an assessment of withdrawal liability under Section
4201 of ERISA from a Multiemployer Plan, a copy of such
assessment; and
in each case described above, together with a statement signed by an
appropriate officer of such Credit Party or ERISA Affiliate setting
forth details as to such Reportable Event, filing, notice, event or
condition, assessment or application and the action that will be
taken with respect thereto.
9.13. FURTHER ASSURANCES. Each Credit Party shall, and
shall cause each of its Subsidiaries to, at its cost and expense,
upon request of the Administrative Agent, duly execute and deliver,
or cause to be duly executed and delivered, to the Administrative
Agent such further instruments and do and cause to be done such
further acts as may be necessary or proper in the reasonable opinion
of the Administrative Agent to carry out more effectually the
provisions and purposes of this Agreement or any other Loan Document.
9.14. APPRAISALS. The Borrowers shall allow each of the
Agents and their respective designees to perform, and shall assist
each of the Agents and their respective designees in performing,
appraisals of the Borrowers' Inventory, at the expense of the
Borrowers from time to time as any of the Agents shall direct,
provided that no Agent shall be entitled to perform more than one
such inventory appraisal in any fiscal quarter unless an Event of
Default shall be continuing in which case such limitation shall not
apply. The Borrowers hereby acknowledge that the Agents shall
require at least one such inventory appraisal to be performed during
each Fiscal Year. Notwithstanding anything to the contrary contained
herein, so long as no Event of Default shall have occurred and be
continuing the Borrowers shall not be responsible under this Section
9.14 for costs and expenses of the Agents in connection with any such
appraisals in excess of $40,000 in any Fiscal Year.
9.15 ENVIRONMENTAL MATTERS, ETC. (a) Each Credit Party
shall and shall cause each of its Subsidiaries to (i) comply in all
material respects with the Environmental Laws applicable to it.
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(b) Each Credit Party shall fully and promptly pay,
discharge, defend, indemnify and hold harmless each Indemnified Party
from and against any action, claim, loss, liability, damage, cost,
deficiency, fine, penalty or expense (including, without limitation,
reasonable attorneys' fees, disbursements, investigation, removal,
cleanup and remedial costs and reasonable modification costs incurred
to permit continued or resumed normal operation of the Facilities)
suffered or incurred by such Indemnified Party, whether as mortgagee
pursuant to any Mortgage, as mortgagee in possession, or as successor
in interest to such Credit Party or any of its Subsidiaries as owner,
operator or lessee of any Facilities by virtue of foreclosure or
acceptance in lieu of foreclosure or otherwise: (i) under or on
account of the Environmental Laws as they may apply to any Credit
Party, any of its Subsidiaries or the Facilities, including the
assertion of any Lien thereunder; and (ii) with respect to any
Environmental Claim, Release or Contaminant affecting such
Facilities, whether or not the same originates or emanates from such
Facilities or any contiguous real estate, including any loss of value
of such Facilities as a result of a Release of any Contaminant. The
foregoing indemnity shall survive the expiration or earlier
termination of this Agreement and the satisfaction of the Lender Debt
under the Loan Documents. Further, the foregoing indemnity shall not
be available with respect to matters arising solely out of an act of
an Indemnified Party involving a release of Contaminant at, on, in or
under an affected Facility by such Indemnified Party, or out of the
gross negligence or willful misconduct of an Indemnified Party. The
indemnification rights provided by this Section 9.15(b) shall
constitute the sole indemnity available to Indemnified Parties with
respect to the matters addressed under this Section.
(c) The Administrative Agent and each Lender agree that in
the event any investigation, litigation or proceeding is asserted or
threatened in writing or instituted against it or any Indemnified
Party, or any Remedial Action is requested of it or any Indemnified
Party, for which indemnity is available under Section 9.15(b) hereof
and the Administrative Agent or any Lender may desire indemnity or
defense hereunder, the Administrative Agent or such Lender shall
promptly notify the Credit Parties in writing, setting forth a
description of those elements of which it has knowledge, but any
failure to so notify the Credit Parties shall not relieve the Credit
Parties of any of their obligations hereunder, except to the extent
such failure materially interferes with the ability of the Credit
Parties to defend the investigation, litigation, proceeding or
requested Remedial Action. The Credit Parties at the request of the
Administrative Agent or any Lender shall have the obligation to
defend against such investigation, litigation or proceeding or
requested Remedial Action, and the Credit Parties in any event may
participate in the defense or settlement thereof with legal counsel
of its choice; provided, however, that the Credit Parties shall not
be entitled to control the defense described above. The Credit
Parties shall have the right to participate in such defense, at such
party's expense, with legal counsel of its choice, and shall
cooperate with the Credit Parties in the conduct of such defense,
provided, that so long as no Event of Default is continuing, no
Indemnified Party shall settle any such investigation, litigation or
proceeding or requested Remedial Action without the consent of the
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Credit Parties, which consent shall not be unreasonably withheld or
delayed. No action taken by legal counsel chosen by the
Administrative Agent, the Administrative Agent or any Lender in
defending against any such investigation, litigation or proceeding or
requested Remedial Action shall vitiate or impair the obligation of
the Credit Parties and duty hereunder to indemnify and hold harmless
the Indemnified Parties. Any and all amounts payable by the Credit
Parties (or any of them) as indemnification under this Section
9.15(d), together with interest thereon at the rate set forth in
Section 2.6(b) hereof (and, if applicable, Section 2.6(c) hereof),
shall be due and payable upon receipt of Written Notice to the Credit
Parties and, until paid, shall be added to the Lender Debt.
(d) In the event of any Adverse Environmental Condition
affecting any Facilities, whether or not the same originates or
emanates from such Facilities or any contiguous real estate, and if
any Credit Party or any Subsidiary thereof shall fail to remedy such
condition in a manner that complies in all respects with any of the
material requirements of the applicable Environmental Laws, or, in
the case of a leasehold, if required to do so under the applicable
lease, the Administrative Agent (at the direction of the Majority
Lenders) may, but shall not be obligated to, cause such work to be
performed or take actions reasonably necessary to remedy such Adverse
Environmental Condition or cure such failure to comply after
providing Written Notice to the Credit Parties of an intent to do so,
allowing a reasonable time after receipt of such notice for the
Credit Parties to cure such failure and in no event less than 60
days; provided, however, that such work or action shall not interfere
unreasonably with such Credit Party or Subsidiary. Any amounts paid
by the Administrative Agent as a result thereof, together with
interest thereon at the rate set forth in Section 2.6(b) hereof (and,
if applicable, Section 2.6(c) hereof), shall be immediately due and
payable by the Credit Parties and, until paid, shall be added to the
Lender Debt. Nothing in this Agreement shall be construed as
limiting or impeding the rights or obligations of any of the Credit
Parties to take any and all actions necessary or desirable to remedy
any Adverse Environmental Condition. Any partial exercise by the
Administrative Agent of the remedies hereinabove set forth or any
partial undertaking on the part of the Administrative Agent to cure
any Credit Party's failure or the failure of any Subsidiary thereof
to comply with the Environmental Laws, shall not obligate the
Administrative Agent to complete the actions taken or require the
Administrative Agent to expend further sums to cure noncompliance by
any Credit Party or any Subsidiary thereof; neither shall the
exercise of any such remedy operate to place upon the Administrative
Agent or any Lender any additional responsibility for the operation,
control, care, management or repair of the Real Estate or make the
Administrative Agent or any Lender the "owner" or "operator" of the
Real Estate or "owner" or "generator" of Contaminants within the
meaning of the Environmental Laws.
(e) If an Event of Default occurs as the result of any
Adverse Environmental Condition or Environmental Claim, the
Administrative Agent (at its option or at the direction of the
Majority Lenders) in the reasonable exercise of its discretion and
with reasonable notice under the circumstances, may at any time, and
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at the sole cost and expense of the Credit Parties (which shall be
added to the Lender Debt), take such actions and incur such expenses
as are reasonably necessary to investigate the condition or claim
involved, including without limitation, to cause one or more
environmental assessments of the Facilities to be undertaken.
Environmental assessments may include a detailed visual inspection of
the Real Estate, including, without limiting the generality of the
foregoing, all storage areas, storage tanks, drains, dry wells, and
leaching areas, as well as the taking of soil samples, surface water
samples, and ground water samples, and such other investigation or
analysis as is reasonably necessary or appropriate for a complete
assessment of the compliance of the Real Estate and the use and
operation thereof with all Environmental Laws; PROVIDED, HOWEVER, any
such inspection and sampling shall be performed by a qualified, and
if necessary licensed, environmental consultant, retained by Agent
and PROVIDED FURTHER that no such inspection and sampling shall take
place on any real property leased to any Credit Party or any of its
Subsidiaries that requires the consent of the landlord for such
inspection and sampling without first obtaining such consent (each
Credit Party agreeing to use commercially reasonable efforts to
obtain such consent); provided, however, that such inspection shall
not interfere unreasonably with the business operations of such
Credit Party or Subsidiary. The Credit Parties shall be given the
opportunity to review and comment upon the scope of work and work
plan developed by the consultant for the environmental assessment
prior to such assessment; provided that such review and comments
shall not be unreasonably withheld or delayed. The Administrative
Agent shall give the Credit Parties ten (10) Business Days' advance
notice that the consultant intends to enter the Real Estate for the
purpose of conducting an environmental assessment. A representative
of the Credit Parties shall have the right to accompany the
consultant as the consultant performs any portion of the
environmental assessment, provided such representative is reasonably
available, and the consultant shall provide split samples to the
representative of the Credit Parties upon request. The consultant
shall take all reasonable measures to restore the property to the
condition in which the property was found prior to the environmental
assessment.
The Administrative Agent promptly shall provide the
Borrowers with a copy of any reports (including draft reports) and
analytical data prepared or gathered by the consultant relating to
the environmental assessment of the Real Estate; PROVIDED, HOWEVER,
that with respect to any such reports and other data provided by the
Administrative Agent to the Borrowers: (i) the Administrative Agent
makes no representation or warranty as to the accuracy thereof, and
shall not be liable for any information or lack of information
(including, without limitation, errors or omissions) contained
therein; (ii) the Borrowers expressly disclaim any reliance upon (A)
any information contained therein or (B) the Administrative Agent's
selection of any consultant(s) preparing such reports; and (iii)
without limiting the generality of any other indemnification
provision contained in this Section 9.15, the Borrowers agree to pay
and protect, and defend, indemnify and hold the Administrative
harmless from and against, any claims, damages, actions, suits,
proceedings, costs, expenses and other amounts (including, without
limitation, the reasonable fees, costs and expenses of the
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Administrative Agent's outside and in-house counsel) incurred by the
Administrative Agent as a result of the any Credit Party's or any
other party's reliance upon any information contained therein or the
selection of the consultant(s) preparing such reports.
(f) Each Credit Party shall, and shall cause each of its
Subsidiaries to, without regard to whether any such Person is in
default, and at such party's sole cost and expense, cause one or more
"phase I" environmental assessments to be undertaken by an
environmental consultant satisfactory to the Administrative Agent
(and in any event, in form and substance sufficient to entitle the
Administrative Agent and the Lenders to an exemption under any
applicable state or federal law for lenders or financial institutions
holding a lien or security interest) before any such party shall (i)
enter into a contract for the purchase of any real property or (ii)
enter into any lease with a term in excess of one year; PROVIDED,
HOWEVER, that no such "phase I" environmental assessments shall be
required prior to entry into a lease of real property to be used
solely for retail or office purposes. If any such "phase I"
environmental assessment shall identify any Adverse Environmental
Condition or Environmental Claim with respect to such real property,
such party shall refrain from entering into such contract or lease,
as the case may be, unless such party shall ensure to the
satisfaction of the Administrative Agent that such further Remedial
Action as any Lender may reasonably request is undertaken at the sole
expense of such party or a third party.
9.16 FINANCIAL COVENANTS.
(a) EBITDA. The Credit Parties shall cause EBITDA to be,
for each period of four consecutive fiscal quarters of Ames ending on
or about the dates set forth below (subject to Section 9.16(c)
hereof), not less than the amount set forth below opposite such date:
FISCAL QUARTERS ENDING ON OR ABOUT AMOUNT
July 31, 1994 $26,900,000
October 31, 1994 35,500,000
January 31, 1995 35,400,000
April 30, 1995 37,100,000
July 31, 1995 39,900,000
October 31, 1995 43,000,000
January 31, 1996 47,500,000
April 30, 1996 49,700,000
July 31, 1996 52,600,000
October 31, 1996 55,600,000
January 31, 1997
and thereafter 60,000,000
(b) EBITDA TO CASH INTEREST EXPENSE. The Credit Parties
shall cause the ratio of EBITDA to Cash Interest Expense to be, as of
the end of and for each period of four consecutive fiscal quarters of
Ames ending on or about the dates set forth below (subject to Section
9.16(c) hereof), not less than the ratio set forth below opposite
such date:
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FISCAL QUARTER ENDING ON OR ABOUT: RATIO
July 31, 1994 1.10:1
October 31, 1994 1.47:1
January 31, 1995 1.49:1
April 30, 1995 1.63:1
July 31, 1995 1.76:1
October 31, 1995 1.92:1
January 31, 1996 2.16:1
April 30, 1996 2.22:1
July 31, 1996 2.41:1
October 31, 1996 2.63:1
January 31, 1997
and thereafter 2.96:1
(c) EBITDA RETEST. In the event that any final judgment is
rendered against a Credit Party or any Credit Party enters into any
settlement of any lawsuit in which it is a defendant as to any claim
or counterclaim (the date such judgment is rendered or settlement
entered into, the "Retest Date"), and any portion of such judgment or
settlement is not covered by insurance or the insurer has denied
coverage for any portion thereof (each, an "Uninsured Amount"), then,
effective as of the last day of the fiscal quarter ending on or most
recently preceding the Retest Date, EBITDA for the period of four
consecutive fiscal quarters ending on such last day of such fiscal
quarter shall be reduced by the Uninsured Amount and (i) the Credit
Parties shall be required to satisfy on the Retest Date the covenants
contained in Section 9.16(a) and 9.16(b) of this Agreement as though
such period of four consecutive fiscal quarters, as adjusted by this
Section 9.16(c), ended on the Retest Date and any failure so to
satisfy each such covenant on the Retest Date shall be an Event of
Default hereunder, and (ii) if such reduction shall result in EBITDA
for such period of four consecutive fiscal quarters being less than
$40,000,000, then, effective on the Retest Date, the EBITDA Test for
such period shall be deemed, for the purposes of Section 4.1(b) of
this Agreement, as not having been met for such period, and any
payment under Section 4.1(b)(ii) which may become payable as a result
of such EBITDA Test not having been met shall be immediately due and
payable.
9.17 LEASES; NEW REAL ESTATE. Upon the request of any
Agent or any Lender each Credit Party shall provide, and shall cause
each of its Subsidiaries to provide, the Administrative Agent with
copies of all leases of real property or similar agreements (and all
amendments thereto) to which such Credit Party or such Subsidiary is
a party, whether as lessor or lessee. Each Credit Party shall comply
and shall cause each of its Subsidiaries to comply in all material
respects with all of its and their obligations under all Leases now
existing or hereafter entered into by it or them with respect to real
property including, without limitation, the Master Sublease and all
Leases listed on Schedule 12.5 hereto. Each Credit Party shall, and
shall cause each of its Subsidiaries to, (i) provide the
Administrative Agent with a copy of each notice of any payment
default or other material default received by such Credit Party or
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such Subsidiary under any such lease immediately upon receipt of any
such notice; (ii) notify each Agent promptly after it opens any new
Facility; and (iii) use reasonable commercial efforts to obtain and
deliver to the Agents a Lien Waiver Certificate with respect to any
new lease.
9.18 SUPPLEMENTAL DISCLOSURE. From time to time as may
be necessary (in the event that such information is not otherwise
delivered by the Borrowers to the Administrative Agent and the
Lenders pursuant to this Agreement), the Borrowers will promptly
supplement or amend each Schedule or representation herein with
respect to any matter hereafter arising which, if existing or
occurring at the date of this Agreement, would have been required to
be set forth or described in such Schedule or as an exception to such
representation or which is necessary to correct any information in
such Schedule or representation which has been rendered inaccurate
thereby in any material respect. No such supplement shall cure any
Default arising from any misrepresentation being corrected, unless
such supplement has been approved by the Majority Lenders.
9.19 AGREEMENTS. Each Credit Party shall, and shall
cause each of its Subsidiaries to, perform, within all required time
periods (after giving effect to any applicable grace periods), all of
its obligations and enforce all of its rights under each agreement to
which it is a party, including, without limitation, any leases to
which any such Credit Party is a party, where the failure to so
perform and enforce could reasonably be expected to have a Material
Adverse Effect. No Credit Party shall, or shall suffer or permit any
of its Subsidiaries to, enter into, or terminate or modify in any
manner adverse to any such Person, any agreement if the effect
thereof could reasonably be expected to have a Material Adverse
Effect.
9.20 COLLECTION AND PAYMENT; BANK ACCOUNTS. (a) Each
Credit Party shall use its best efforts to enter into and cause each
of its Subsidiaries to enter into blocked account agreements in form
and substance satisfactory to the Agents (with such modifications as
are acceptable to the Agents and as amended, modified or supplemented
from time to time, each a "Blocked Account Agreement") with respect
to Collection Accounts of such Credit Party or Subsidiary with any of
such Credit Party's or Subsidiary's major depositary banks.
(b) Each Credit Party shall establish on or prior to the
Closing Date and shall at all times thereafter maintain a
Concentration Account for such Credit Party at Citibank, N.A. or
another financial institution acceptable to the Agents and shall
deliver to the Administrative Agent on or prior to the Closing Date
with respect to a Concentration Account, a concentration account
agreement in form and substance satisfactory to the Agents (with such
modifications as are acceptable to the Agents, as amended, modified
or supplemented from time to time, each a "Concentration Account
Agreement").
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(c) Each Credit Party shall deposit into a Collection
Account maintained by such Credit Party all payments and proceeds
received or derived from or in connection with the operations and
business of such Credit Party, together with all other payments
constituting proceeds of any assets, including real or personal
property now owned or hereafter acquired by such Credit Party, and
all other proceeds, payments and other amounts received by such
Credit Party from any source whatsoever ("Proceeds"), in the
identical form received, whether in cash or by check or otherwise.
Notwithstanding the foregoing sentence, each Borrower shall be
entitled to maintain up to $20,000 in cash in the aggregate at each
store operated by such Borrower (or the respective operating bank
accounts for each such store).
(d) All funds, deposits, earnings and claims in respect
thereof in the Blocked Accounts and Concentration Accounts shall be
owned by the Administrative Agent as the sole and exclusive property
of the Administrative Agent (for the benefit of the Agents and the
ratable benefit of the Lenders), subject to the sole dominion and
control of the Administrative Agent, in accordance with the
provisions of Section 2.19(b) hereof, and the applicable Blocked
Account Agreements and Concentration Account Agreements.
(e) Subject to the last sentence of Section 9.20(c) hereof,
each Credit Party shall instruct each bank that maintains a
Collection Account (excluding any Concentration Account) for such
Credit Party to transfer, prior to the close of business on any
Business Day on which Proceeds are received by such bank, such
Proceeds (to the extent collected in good funds) to such Credit
Party's Concentration Account (in accordance with the terms of the
applicable Blocked Account Agreement if such Collection Account is a
Blocked Account). Each Credit Party shall instruct each bank that
maintains a Concentration Account to transfer, prior to the close of
business on any Business Day on which Proceeds are received by such
bank, such Proceeds (to the extent collected in good funds) to the
Payment Account (in accordance with the terms of the applicable
Concentration Account Agreement).
(f) Promptly upon the Administrative Agent's demand, the
Borrowers shall (i) pay to the Administrative Agent all fees, costs
and expenses which the Administrative Agent pays or incurs in
connection with maintaining or opening the Blocked Accounts or the
Concentration Accounts, collecting and depositing for collection all
checks and items of payment received or delivered to any bank for
deposit in the Blocked Accounts or the Concentration Accounts and
(ii) shall reimburse the Administrative Agent for all amounts which
the Administrative Agent may pay to any such bank arising from
obligations undertaken by the Administrative Agent under any Blocked
Account Agreement or any Concentration Account Agreement.
(g) Each Credit Party shall use its best efforts to cause
all payments in respect of its credit card receivables to be
deposited directly into such Credit Party's Concentration Account or
the Payment Account.
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SECTION 10. NEGATIVE COVENANTS.
The Credit Parties covenant and agree that, so long as any
Lender Debt is outstanding or any Lender has any Revolving Commitment
hereunder, the Credit Parties shall not, and shall not suffer or
permit any of their respective Subsidiaries to, without the prior
written consent of the Majority Lenders:
10.1. CAPITAL EXPENDITURES. Make Capital Expenditures in
any Fiscal Year in an aggregate amount for Ames and its Subsidiaries
in excess of $25,000,000 for any Fiscal Year; PROVIDED, HOWEVER, that
the maximum aggregate amount of Capital Expenditures permitted to be
made by Ames and its Subsidiaries in any Fiscal Year shall be
increased (but not decreased),
(i) with respect to Fiscal Year 1995, by the sum of (A) Net
Cash Proceeds received by the Credit Parties during such Fiscal Year
as a result of sales of property (to the extent such sales are
permitted pursuant to Section 10.5(b) or 10.5(c) hereof) to the
extent such Net Cash Proceeds are applied to Capital Expenditures of
the Borrowers during such Fiscal Year PLUS (B) amounts received by
one or more Credit Parties during such Fiscal Year after distribution
to those classes of creditors entitled thereto under the Plan of
Reorganization and trust created thereunder in respect of the
Settlement Agreement attached hereto as Exhibit 10.1 during such
Fiscal Year LESS (C) the amount of any unreimbursed costs and
expenses incurred by the Credit Parties during such Fiscal Year in
connection with the partial roof collapse of the Facility located in
Leesport, Pennsylvania LESS (D) the amount of cash payments, not
exceeding $4,000,000 in the aggregate, made by any Credit Party
during such Fiscal Year in respect of stock appreciation rights;
provided, however, that in no event shall the sum of the amounts in
clause (B) less clause (C) less clause (D) be less than zero;
(ii) with respect to Fiscal Year 1996, by the sum of (A)
Excess EBITDA for Fiscal Year 1996 PLUS (B) the amount by which the
applicable maximum amount allowable for Capital Expenditures (after
taking into account clause (i) above) for Fiscal Year 1995 exceeded
the actual Capital Expenditures of Ames and its Subsidiaries made
during Fiscal Year 1995 PLUS (C) Net Cash Proceeds received by the
Credit Parties during such Fiscal Year as a result of sales of
property (to the extent such sales are permitted pursuant to Section
10.5(b) or 10.5(c) hereof) to the extent such Net Cash Proceeds are
applied to Capital Expenditures of the Borrowers during such Fiscal
Year PLUS (D) amounts received by the Credit Parties during such
Fiscal Year after distribution to those classes of creditors entitled
thereto under the Plan of Reorganization and trust created thereunder
in respect of the Settlement Agreement attached hereto as Exhibit
10.1 during such Fiscal Year LESS (E) the amount of any unreimbursed
costs and expenses incurred by the Credit Parties during such Fiscal
Year in connection with the partial roof collapse of the Facility
located in Leesport, Pennsylvania PLUS (F) fifty percent (50%) of
Cash Flow for Fiscal Year 1996, provided, however, that in no event
shall the sum of the amounts in clause (D) less clause (E) be less
than zero;
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(iii) with respect to Fiscal Year 1997, by an amount equal to the
sum of (A) Excess EBITDA for Fiscal Year 1997 PLUS (B) the amount by
which the maximum amount allowable for Capital Expenditures (after
taking into account clause (ii) above but without regard to clause
(B) thereof except to the extent any amount was included in such
clause (B) by virtue of the sum of the amount reflected in clause
(i)(A) plus the amount, if any, by which the amount in clause (i)(B)
exceeded the sum of the amounts reflected in clause (i)(C) plus
clause (i)(D)) for Fiscal Year 1996 exceeded the actual Capital
Expenditures of Ames and its Subsidiaries made during Fiscal Year
1996 PLUS (C) Net Cash Proceeds received by the Credit Parties during
such Fiscal Year as a result of sales of property (to the extent such
sales are permitted pursuant to Section 10.5(b) or 10.5(c) hereof) to
the extent such Net Cash Proceeds are applied to Capital Expenditures
of the Borrowers during such Fiscal Year PLUS (D) amounts received by
the Borrowers during such Fiscal Year after distribution to those
classes of creditors entitled thereto under the Plan of
Reorganization and trust created thereunder in respect of the
Settlement Agreement attached hereto as Exhibit 10.1 during such
Fiscal Year LESS (E) the amount of any unreimbursed costs and
expenses incurred by the Credit Parties during such Fiscal Year in
connection with the partial roof collapse of the Facility located in
Leesport, Pennsylvania PLUS (F) fifty percent (50%) of Cash Flow
forFiscal Year 1997; provided, however, that in no event shall the
sum of the amounts in clause (D) less clause (E) be less than zero.
10.2. LIENS. Create, incur, assume or suffer to exist
any Lien upon or defect in title to or restriction upon the use of
any of its properties or assets of any character, whether owned at
the date hereof or hereafter acquired, or hold or acquire any
property or assets of any character under conditional sales, finance
lease or other title retention agreements, other than:
(a) Liens in favor of the Administrative Agent or the
Lenders pursuant to this Agreement or the Security Documents;
(b) (i) Liens for taxes, assessments or governmental
charges or levies, provided payment thereof shall not at the time
be required in accordance with the provisions of Section 9.2
hereof;
(ii) deposits, Liens or pledges of cash collateral to
secure payments of workmen's compensation and other payments,
unemployment and other insurance, old age pensions or other
social security obligations, or the performance of bids, tenders,
leases, contracts (other than contracts for the payment of
money), public or statutory obligations, surety, stay or appeal
bonds, or other similar obligations arising in the ordinary
course of business;
(iii) mechanics', workmen's, repairmen's,
warehousemen's, vendors' or carriers' Liens, or other similar
Liens arising in the ordinary course of business and securing
sums which are not past due, or deposits or pledges to obtain the
release of any such Liens;
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(iv) zoning restrictions, encroachments, easements,
rights of way, licenses and restrictions on the use of real
property or minor irregularities in title thereto, which do not
materially impair the use of such property in the normal
operation of the business of any of the Credit Parties or any of
their respective Subsidiaries or the value of such property for
the purpose of such business; and
(v) Liens created by statute or common law in favor of
landlords for unpaid rent and related amounts as to which the
Administrative Agent is entitled to create a reserve under clause
(c) of the definition of "Eligible Inventory."
(c) existing Liens set forth in Schedule 10.2 hereto and
any renewals thereof (it being understood that any Liens on said
Schedule that secure Existing Debt shall not be permitted to
exist after the Closing Date), but not any increase in amount
thereof and not any extension thereof to other property;
(d) purchase money mortgages or other purchase money Liens
(including, without limitation, Capital Leases) in favor of
non-Affiliates of the Credit Parties and their respective
Subsidiaries upon any fixed or capital assets hereafter acquired
by any Credit Party or any Subsidiary thereof constituting real
property interests or related machinery and equipment, or
purchase money mortgages (including, without limitation, Capital
Leases) on any such assets hereafter acquired or existing at the
time of acquisition of such assets by any Credit Party or any
Subsidiary thereof, whether or not assumed, so long as (i) any
such Lien does not extend to or cover any other asset of any
Credit Party or any of its Subsidiaries, (ii) such Lien secures
the obligation to pay the purchase price of such asset (or the
obligation under such Capital Leases), interest thereon and other
customary incidental obligations relating thereto only and (iii)
the scheduled amount required to be paid in respect of all
Indebtedness (including Capital Leases, but excluding
Indebtedness described on Schedule 1.1(b) hereto) secured by such
Liens, whether, for principal, interest or otherwise, shall,
together with all Rentals required to be paid, in each case, for
any Fiscal Year, shall not exceed $61,400,000;
(e) Liens on owned real property and Equipment (other than
any data processing hardware or other Equipment that is used to
store, generate or maintain any computer records, disks, tapes
and other media relating to Inventory, Inventory control systems
or Accounts) of any Credit Party or Subsidiary thereof released
under Section 5.9 hereof which secures Acceptable Subordinated
Debt; and
(f) Liens arising under the Intercompany Security
Agreements.
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10.3 INDEBTEDNESS. Create, incur, assume or suffer to
exist contingently or otherwise, any Indebtedness, other than:
(a) Indebtedness under the Loan Documents;
(b) unsecured Current Liabilities incurred in the ordinary
course of business other than unsecured Current Liabilities for
Indebtedness for Borrowed Money;
(c) Indebtedness of any Credit Party or any Subsidiary
thereof secured by Liens permitted by Sections 10.2(b), (c) and
(d) hereof, but not any increase in amount thereof;
(d) Indebtedness to the extent expressly permitted by
Sections 10.4 and 10.16 hereof;
(e) existing Indebtedness for Borrowed Money of any Credit
Party and its Subsidiaries listed in Schedule 1.1(b) or Schedule
10.3 hereto (but not any increase in or refinancings, renewals,
extensions, replacements or exchanges of any thereof except on
terms and conditions acceptable to the Majority Lenders);
(f) Acceptable Subordinated Debt;
(g) Indebtedness evidenced by the Ames Stores Promissory
Note, the Intercompany Notes and the Subordinated Intercompany
Notes;
(h) Indebtedness of any Credit Party to Ames pursuant to
the Management Agreements; and
(i) guarantees of any Credit Party (other than any
Borrower) of Indebtedness of any other Credit Party, but only to
the extent that such Indebtedness is permitted under any other
clause of this Section 10.3.
10.4. LOANS, INVESTMENTS AND GUARANTEES. Lend or advance
money or credit to any Person, or invest in (by capital contribution,
creation of Subsidiaries or otherwise), or purchase or repurchase the
stock or Indebtedness, or all or a substantial part of the assets or
properties, of any Person, or enter into any exchange of securities
with any Person, or guarantee, assume, endorse or otherwise become
responsible for (directly or indirectly or by any instrument having
the effect of assuring any Person's payment or performance or
capability) the Indebtedness, performance, obligations, stock or
dividends of any Person (each of the foregoing, an "Investment"), or
agree to do any of the foregoing, other than:
(a) endorsement of negotiable instruments for deposit or
collection in the ordinary course of business;
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(b) (i) Investments in securities issued, or that are
directly and fully guaranteed or insured, by the United States
Government or any agency or instrumentality thereof having
maturities of not more than twelve months from the date of
acquisition, (ii) time deposits and certificates of deposit
having maturities of not more than twelve months from the date of
acquisition of (x) any Lender or (y) any other domestic
commercial bank having capital and surplus in excess of
$500,000,000, the holding company of which has outstanding
commercial paper meeting the requirements specified in clause
(iv) below, (iii) repurchase agreements with a term of not more
than seven (7) days for underlying securities of the types
described in clauses (i) and (ii) above (PROVIDED that the
underlying securities of the type described in clause (i) may not
have maturities of more than six months from the date of
acquisition) entered into with any Lender or any other bank
meeting the qualifications specified in clause (ii) above or with
securities dealers of recognized national standing, PROVIDED that
the terms of such agreements comply with the guidelines set forth
in the Federal Financial Institutions Examination Council
Supervisory Policy Repurchase Agreements of Depositary
Institutions With Securities Dealers and Others as adopted by the
Comptroller of the Currency on October 31, 1985 (the "Supervisory
Policy"), and PROVIDED, FURTHER, that possession or control of
the underlying securities is established as provided in the
Supervisory Policy, and (iv) commercial paper rated (as of the
date of acquisition thereof) at least A-1 or the equivalent
thereof by Standard & Poor's Corporation and P-1 or the equivalent
thereof by Moody's Investors Service, Inc. and in either case
maturing within six (6) months after the date of its acquisition;
(c) Investments representing stock or obligations issued to
any Credit Party or any Subsidiary thereof in settlement of
claims against any other Person by reason of a composition or
readjustment of debt or a reorganization of any debtor of any
Credit Party or such Subsidiary;
(d) Investments representing the Indebtedness of any Person
owing as a result of the sale by any Credit Party or any
Subsidiary thereof in the ordinary course of business of products
or services (on customary trade terms);
(e) Investments in the equity of any present Subsidiary or
of any other Subsidiary created with the prior written consent of
the Majority Lenders, but for each of the foregoing, not any
additional investments therein other than increases in
Investments solely by reason of increases in the retained
earnings of such Subsidiary;
(f) the Guaranties and other Contingent Obligations
permitted under Section 10.3 hereof;
(g) Investments outstanding on the date hereof and
described on Schedule 10.4 hereto, but not any additional
investments therein;
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(h) Investments represented by the Collection Accounts and
the other bank accounts, if any, permitted hereunder;
(i) Investments in the Intercompany Notes and the
Subordinated Intercompany Notes; and
(j) Investments of Ames in Indebtedness of any Credit Party
pursuant to expenditures made under and contemplated by the
Management Agreements.
10.5 MERGER, SALE OF ASSETS, DISSOLUTION, ETC. Enter
into any transaction of merger or consolidation, change its name,
acquire all or a substantial portion of the assets of any Person, or
transfer, sell, assign, lease, or otherwise dispose of (other than
sales by any Borrower or any of its Subsidiaries of Inventory of such
Borrower or such Subsidiary in the ordinary course of business) all
or any part of its properties or assets, or any of its notes or
Accounts, or any stock or Indebtedness of any Credit Party or any
Subsidiary thereof, or wind up, liquidate or dissolve, or agree to do
any of the foregoing, except, so long as no Default or Event of
Default shall have occurred and be continuing for:
(a) sales for fair consideration of assets (other than
Inventory or real property) in the ordinary course of business
that constitute (i) worn out or obsolete personal property of
such Credit Party or any Subsidiary thereof or (ii) properties of
any Credit Party or any Subsidiary thereof no longer necessary
for the proper conduct of their respective businesses, having a
value in the case of (i) and (ii) taken together, together with
the value of all other such property of the Credit Parties and
their respective Subsidiaries so sold in the same Fiscal Year, of
not greater than $5,000,000;
(b) sales for fair consideration of properties (other than
Facilities that are distribution centers and other than Inventory
held for sale outside the ordinary course of business) owned or
leased by any Credit Party or any Subsidiary thereof, provided
that the aggregate value (based on the greater of cost and fair
market value) of all properties permitted to be sold pursuant to
this clause (b) shall not exceed, together with assets sold under
clause (c) below, $20,000,000 during the term of this Agreement;
(c) sales of assets set forth in Schedule 13.2(c)(ii)
hereof;
(d) the merger of a wholly-owned Subsidiary of any Credit
Party (other than any Subsidiary that is a Borrower) with such
Credit Party (so long as such Credit Party is the sole survivor
of such merger) or with another wholly-owned Subsidiary of such
Credit Party (other than any Subsidiary that is a Borrower); and
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(e) upon thirty days prior Written Notice to the
Administrative Agent, any Credit Party or Subsidiary thereof may
change its name provided that such entity executes all
documentation requested by the Administrative Agent (including,
without limitation, UCC financing statements and amendments
thereof) in order to protect the Administrative Agent's interest
in the Collateral or any other interest of the Administrative
Agent under the Loan Documents.
10.6 DIVIDENDS, REDEMPTIONS AND OTHER PAYMENTS. (a)
Declare or make any dividend payment or other distribution of assets,
properties, cash, rights, obligations or securities on account of any
of its capital stock, or purchase, redeem, retire, defease or
otherwise acquire for value any capital stock of any Credit Party or
any Subsidiary thereof or any other securities or any warrants,
rights or options to acquire any such capital stock or other
securities, whether now or hereafter outstanding, or make any payment
or transfer of any funds to any other Credit Party except for (i)
dividend payments made by any Credit Party that is not a Borrower to
Ames or any Borrower, (ii) required payments in respect of stock
appreciation rights which are outstanding on the date hereof, (iii)
the funding of loans evidenced by Intercompany Notes and Subordinated
Intercompany Notes (including, without limitation, amounts paid by
Ames to other Credit Parties in accordance with the Management
Agreement), (iv) amounts payable under the Master Sublease and (v)
payments by any Credit Party which is not a Borrower to Ames or a
Borrower.
(b) Make any payment or prepayment of principal or interest
on account of, or purchase, defease, acquire or redeem, any
Indebtedness for Borrowed Money (or give any notice thereof or
establish a sinking fund, reserve or like set aside of funds or other
property therefor) other than (i) the Lender Debt, (ii) payments
(other than prepayments) of Indebtedness of any Credit Party
permitted under paragraphs (b), (c), (d), (g) or (h) of Section 10.3
hereof, in each case, to the extent due and payable, (iii) regularly
scheduled payments of Indebtedness of any Credit Party permitted
under the Reinstated Debt Documents or under paragraphs (e) or (f) of
Section 10.3 hereof, in each case to the extent due and payable and
permitted to be paid by the terms thereof and (iv) a prepayment equal
to the lesser of (x) $700,000 and (y) sixty percent (60%) of the then
aggregate outstanding balance of the Indebtedness described in item 3
of Schedule 1.1(b) hereto, to retire in full said Indebtedness.
10.7. TRANSACTIONS WITH AFFILIATES. Except for
transactions specifically required or permitted by the terms of this
Agreement, enter into or perform any transaction, including, without
limitation, the purchase, leasing, sale or exchange of property or
assets or the rendering of any service, with any Affiliate of any
Credit Party except (i) for any transaction which is in the ordinary
course of business of any Credit Party or any Subsidiary thereof,
which transaction is upon fair and reasonable terms no less favorable
to such Credit Party or Subsidiary than those which could be obtained
in a comparable arm's length transaction with a Person not an
Affiliate of such Person or (ii) with respect to any transaction
between any Credit Party and any of its Subsidiaries, which is on
terms more favorable to such Credit Party than such Credit Party
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could obtain in a comparable arm'slength transaction with a Person
not an Affiliate of such Credit Party; PROVIDED, that the Credit
Parties may engage in all transactions contemplated by the Management
Agreements and all other transactions expressly permitted by this
Agreement.
10.8. ACCOUNTS. Without the prior written consent of the
Administrative Agent, voluntarily close any Blocked Account or any
Concentration Account.
10.9. MANAGEMENT COMPENSATION AND OTHER PAYMENTS. Pay,
directly or indirectly, any management, consulting or similar fees,
make any other payments of any kind in respect of employment,
management, consulting, servicing or similar services or in respect
of any non-competition or similar agreement or make any other kind of
payment of any nature to, any Affiliate of any Credit Party or to any
officer, director, member of management or stockholder of any Credit
Party or any Affiliate of any thereof, other than (i) payments of
salary and ordinary course of business compensation (excluding
bonuses) to employees of the Credit Parties and their Subsidiaries in
the ordinary course of business and consistent with past practices,
(ii) payments of bonuses to employees of the Credit Parties and their
Subsidiaries so long as such bonuses are consistent with the
historical practices of such Credit Party or Subsidiary, (iii)
payments to employees pursuant to severance arrangements existing on
the date hereof, (iv) payments in respect of employment, management,
consulting, servicing or similar services that would not be
prohibited under Section 10.7 hereof and (v) payments permitted under
Section 10.6 hereof.
10.10. COMPROMISE OF RECEIVABLES. Compromise or adjust
any of the Accounts (or extend the time for payment thereof) or grant
any discounts, allowances or credits thereon other than discounts,
allowances and credits granted with respect to accounts in the
ordinary course of business.
10.11. INTENTIONALLY OMITTED.
10.12. AMENDMENT AND MODIFICATION OF CERTAIN DOCUMENTS.
(a) Directly or indirectly, amend, modify, supplement, waive
compliance with, seek a waiver under, or assent to noncompliance
with, any material term (which, in the case of any debt agreement
shall include, without limitation, all payment terms and the timing
thereof), provision or condition of the Plan of Reorganization or any
material agreement entered into in connection therewith, or any
Material Contracts, or the articles or certificate of incorporation
or by-laws or partnership agreement of any Credit Party or any
Subsidiary thereof or any certificate of designation of preferred
stock of any thereof or suffer or permit any of the foregoing to
lapse or terminate, provided, that this Section 10.12 shall not
prohibit any change to the Material Contract listed as item number 3
in Schedule 12.22 hereto if such change shall have received the prior
written consent of the Agents.
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(b) Directly or indirectly, amend, modify, supplement,
waive compliance with, seek a waiver under, or assent to
noncompliance with, any material term or provision of any other
agreement, instrument or document to which any Credit Party or any
Subsidiary thereof is a party in a manner that could reasonably be
expected to have a Material Adverse Effect.
10.13. FISCAL YEAR. Change its Fiscal Year.
10.14. CHANGE OF BUSINESS. Alter the nature of its
business in any material respect.
10.15. NO NEGATIVE PLEDGES. After the Closing Date,
enter into or be subject to, directly or indirectly, including,
without limitation, as a non-party Subsidiary of a party to any
agreement, any agreement (including, without limitation, any
agreement existing on the date of this Agreement, but excluding any
document creating or governing any Acceptable Subordinated Debt or
any Reinstated Debt Document) prohibiting or restricting, in any
manner (including, without limitation, by way of covenant,
representation or event of default), (i) the incurrence, creation or
assumption of any Indebtedness, or any Lien upon any property of any
Credit Party, except restrictions in a Capital Lease or other
purchase money financing agreement permitted hereunder relating to
the asset financed thereunder, (ii) the sale, disposition or pledge
of any asset of any Credit Party, except restrictions in a Capital
Lease or other purchase money financing agreement permitted hereunder
relating to the asset financed thereunder, (iii) any Capital
Expenditures by any Credit Party or (iv) any amendment or supplement
to or waiver under this Agreement or any other Loan Document or other
document relating to the Lender Debt.
10.16 RENTAL OBLIGATIONS. Incur, create, assume or
permit to exist, in respect of leases of real or personal property,
rental obligations or other commitments thereunder (other than
Capitalized Lease Obligations) to make any direct or indirect
payment, whether as rent or otherwise, for fixed or minimum rentals
("Rentals") for any Fiscal Year, in an amount which would cause a
Default under Section 10.2(d) hereof.
10.17 LEASE-BACKS. Enter into any arrangements, directly
or indirectly, with any Person, whereby any Credit Party or any
Subsidiary thereof shall sell or transfer any property, whether now
owned or hereafter acquired, used or useful in its business, in
connection with the rental or lease of the property so sold or
transferred or of other property which any Credit Party or any
Subsidiary thereof intends to use for substantially the same purpose
or purposes as the property so sold or transferred.
10.18 EQUITY INTERESTS. Issue or sell any of its capital
stock or ownership interests or any rights, warrants or options to
acquire any of its capital stock or ownership interests, other than
Permitted Issuances.
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SECTION 11. DEFAULTS AND REMEDIES.
11.1 EVENTS OF DEFAULT. If any one or more of the
following events (herein called "Events of Default") shall occur for
any reason whatsoever (and whether such occurrence shall be voluntary
or involuntary or come about or be effected by operation of law or
pursuant to or in compliance with any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):
(a) default shall be made in the due and punctual payment
of the principal of any of the Revolving Loan or in the due and
punctual reimbursement of any payments made by any Issuing Bank
under any Letter of Credit (including any L/C Indemnity
Agreement) or of any payments made by the Administrative Agent or
any Lender to such Issuing Bank in respect of indemnity
obligations of such Lender to such Issuing Bank with respect to a
Letter of Credit, when and as the same shall become due and
payable whether pursuant to Section 2 or 3, at maturity, by
acceleration or otherwise; or
(b) default shall be made in the due and punctual payment
of any amount of interest on any of the Revolving Loan or of any
fee or other amount owing to any Lender, any Issuing Bank, or the
Administrative Agent pursuant to any of the Loan Documents,
within five (5) days after such amount of interest, fee or other
amount shall become due and payable; or
(c) default shall be made in the performance or observance
of, or shall occur under, any covenant, agreement or provision
(other than as described in clause (a) or (b) above) contained in
this Agreement or any other Loan Document or in any instrument or
document evidencing or creating any obligation, guaranty or Lien
in favor of the Administrative Agent or delivered to the Lenders,
any Issuing Bank or the Administrative Agent in connection with
or pursuant to this Agreement or any Lender Debt, and, except in
the case of the agreements and covenants contained in Sections
9.1(a), (b), (c), (i), (j), (m) and (n), 9.2, 9.3, 9.6 through
and including 9.14, 9.16, 9.19 and 9.20 hereof and Section 10
hereof (as to each of which Sections no notice or grace period
shall apply), continuance of such default for a period of thirty
(30) days (or one (1) day in the case of Section 9.1(k) hereof)
following the earlier to occur of the giving of Written Notice
from the Administrative Agent or any Lender to any Borrower or
actual knowledge of such default on the part of any Responsible
Officer of any Borrower, or if this Agreement or any other Loan
Document or any such other instrument or document shall terminate
or be terminated or become void or unenforceable for any reason
whatsoever or any Lien created under any Security Document shall
cease to be a valid and perfected first priority Lien (except as
otherwise permitted by this Agreement) in any of the Collateral
purported to be covered thereby, without the written consent of
the Administrative Agent; or
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(d) (i) one or more defaults shall occur in the payment of
any principal, interest or premium with respect to any
Indebtedness for Borrowed Money (including, without limitation,
obligations under conditional sales contracts, Capital Leases and
the like) of which any Credit Party is principal, guarantor or
other surety, and such default shall continue for more than the
period of grace, if any, specified therefor in the documents
governing same, or (ii) one or more defaults shall occur under
any agreement or instrument under or pursuant to which any such
Indebtedness for Borrowed Money or obligation may have been
issued, created, assumed, guaranteed or secured by any Credit
Party and, in the case of clause (ii) of this Subsection 11.1(d),
such default shall continue for more than the period of grace, if
any, therein specified, or (iii) any such Indebtedness for
Borrowed Money or obligation shall be declared due and payable
prior to the stated maturity thereof; and the aggregate principal
amount of all such Indebtedness for Borrowed Money and
obligations as to which any such matters under clause (i), (ii)
or (iii) occur shall exceed $3,000,000; or
(e) any representation, warranty or other statement of fact
given herein or in any writing, certificate, report or statement
at any time furnished to any Lender, any Issuing Bank or any of
the Agents pursuant to or in connection with this Agreement
(including, without limitation, any Borrower's Certificate and
any Borrowing Base Certificate), any other Loan Document, or any
other document or instrument furnished to any Lender, any Issuing
Bank or any of the Agents relating to the transactions
contemplated by this Agreement, shall be false in any material
respect when given or deemed given; or
(f) any Credit Party shall (i) be unable to pay its debts
generally as they become due or admit in writing its inability to
pay its debts generally; (ii) file a petition to take advantage
of any insolvency act; (iii) make an assignment for the benefit
of its creditors; (iv) commence a proceeding for the appointment
of a receiver, trustee, liquidator or conservator of itself or of
the whole or any substantial part of its property; (v) file a
petition or answer seeking reorganization or arrangement or
similar relief under the Federal Bankruptcy Code or any other
applicable law or statute of the United States of America, any
state or commonwealth thereof or otherwise; or (vi) by
appropriate proceedings of the board of directors of any Credit
Party or other governing body, authorize the filing of any such
petition, making of such assignment or commencement of such a
proceeding; or
(g) a court of competent jurisdiction shall enter an order,
judgment or decree appointing a custodian, receiver, trustee,
liquidator or conservator of any Credit Party or of the whole or
any substantial part of its properties, or approve a petition
filed against any Credit Party seeking reorganization or
arrangement or similar relief under the Federal Bankruptcy Code
or any other applicable law or statute of the United States of
America, any state or commonwealth thereof or otherwise; or if,
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under the provisions of any other law for the relief or aid of
debtors, a court of competent jurisdiction shall assume custody
or control of any Credit Party or of the whole or any substantial
part of its properties; or if there is commenced against any
Credit Party any proceeding for any of the foregoing relief and
such proceeding or petition remains undismissed for a period of
sixty (60) days; or if any Credit Party by any act indicates its
consent to or approval of any such proceeding or petition; or
(h) (i) a final judgment shall be rendered against a Credit
Party which, by itself or with other outstanding final judgments
against such or any other Credit Party, exceeds in the aggregate
$1,500,000 unless, within thirty (30) days after entry thereof,
such judgment shall not have been discharged or execution thereof
stayed pending appeal, or unless, within thirty (30) days after
the expiration of any such stay, such judgment shall not have
been discharged; or (ii) any of the assets of a Credit Party
shall be attached, seized, levied upon or subject to an
injunction, execution, writ or distress warrant and shall remain
unstayed or undismissed for a period of thirty (30) days, which
by itself or together with all other attachments, seizures,
levies, injunctions, executions, writs or distress warrants
against properties of such Credit Party remaining unstayed or
undismissed for a period of thirty (30) days, is for an amount in
excess of $1,500,000; or (iii) any final non-monetary judgment or
order shall be rendered against a Credit Party that could
reasonably be expected to have a Material Adverse Effect and if,
within thirty (30) days after entry thereof, such non-monetary
judgment or order shall not have been discharged or execution
thereof stayed pending appeal, or if, within thirty (30) days
after the expiration of any such stay, such judgment or order
shall not have been discharged; or
(i) (i) a Reportable Event shall have occurred with
respect to a Pension Benefit Plan other than a Reportable Event
as to which the provision of 30 days' notice to the PBGC is
waived under applicable provisions;
(ii) any Credit Party or any ERISA Affiliate or an
administrator of any Pension Benefit Plan that is subject to
Title IV of ERISA shall have terminated or filed a notice of
intent to terminate a Pension Benefit Plan under the provisions
of Section 4041(c) of ERISA;
(iii) any Credit Party or any ERISA Affiliate or an
administrator of a Pension Benefit Plan shall have received a
notice that the PBGC has instituted proceedings to terminate (or
appoint a trustee to administer) a Pension Benefit Plan;
(iv) any other event or condition exists which might
reasonably be expected, in the reasonable opinion of the Majority
Lenders, to constitute grounds under the provisions of Section
4042(a)(1) or (2) of ERISA for the termination of (or the
appointment of a trustee to administer) any Pension Benefit Plan
by the PBGC;
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(v) any Credit Party or any ERISA Affiliate has
incurred or is likely to incur a liability under the provisions
of Section 4063, 4064 or 4201 of ERISA;
(vi) any Person shall engage in any transaction in
connection with which any Credit Party or any ERISA Affiliate
could be subject to either a civil penalty assessed pursuant to
the provisions of Section 502(i) of ERISA or a tax imposed under
the provisions of Section 4975 of the Code;
(vii) any Credit Party or any ERISA Affiliate fails to
pay the full amount of any payment which, under the provisions of
any Employee Plan or Multiemployer Plan, it is required to pay as
contributions thereto or as premiums to the PBGC, or with respect
to any Pension Benefit Plans or any installment due under Section
412(m) of the Code or any "accumulated funding deficiency"
(within the meaning of Section 302 of ERISA and Section 412 of
the Code) shall exist with respect to any Pension Benefit Plan;
(viii) any Person shall adopt an amendment to any Pension
Benefit Plan requiring the provision of security under Section
307 of ERISA or Section 401(a)(29) of the Code;
(ix) any Person shall enter into an agreement that would
obligate a Credit Party or an ERISA Affiliate to make
contributions to a Multiemployer Plan or to create, extend or
increase an obligation to provide health or medical benefits for
retirees (other than at retiree's sole expense) of a Credit Party
or an ERISA Affiliate;
and in each case in clauses (i) through (ix) above, in the
opinion of the Majority Lenders, such event or condition,
together with all other such events or conditions, could subject
a Credit Party or any ERISA Affiliate to any tax, penalty or
other liabilities which in the aggregate would be material in
relation to the business, operations, liabilities, assets,
properties, prospects or condition (financial or otherwise) of
such Credit Party or such ERISA Affiliate; or
(j) a Change in Control shall occur; or
(k) any Credit Party shall suspend the operation of a
material portion of its business as presently conducted or there
shall occur the loss, theft, substantial damage to, condemnation
of, exercise of right of eminent domain with respect to or
destruction of, any Collateral not fully covered by insurance
(except for deductibles), which by itself or with other such
losses, thefts, damage, condemnation or destruction of, or
exercise of right of eminent domain with respect to, Collateral,
shall constitute a Material Adverse Effect; or
(l) one or more defaults shall occur under the Plan of
Reorganization or any Material Contract, and such default(s)
shall continue for more than the period of grace, if any, therein
specified;
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then, and in any such event and at any time thereafter, if such or
any other Event of Default shall then be continuing:
(A) all or any of the following actions may be taken:
the Administrative Agent may, at its option unless otherwise
directed in writing by the Majority Lenders, or, the
Administrative Agent shall, upon the direction of the Majority
Lenders, (i) declare any obligation to lend or issue or cause the
issuance of Letters of Credit hereunder terminated, whereupon
such obligation to make further loans or issue or cause the
issuance of Letters of Credit hereunder, as the case may be,
shall terminate immediately, (ii) demand that Letter of Credit
Cash Collateral be provided to secure all outstanding Letter of
Credit Obligations (and the Borrowers and the other Credit
Parties agree to provide such Letter of Credit Cash Collateral if
such demand is made), (iii) adjust the Borrowing Base of any
Borrower for any reason and based on any considerations
whatsoever by establishing reserves, making determinations of
Eligible Inventory, revising standards of eligibility of Eligible
Inventory or decreasing from time to time the advance rate
percentages set forth in the definition of "Borrowing Base" (as
such rates may theretofore have been reduced in accordance with
the provisions of this Agreement), and (iv) declare any or all of
the Lender Debt to be due and payable, and the same, all interest
accrued thereon and all other obligations of each of the
Borrowers to the Administrative Agent, each Issuing Bank and the
Lenders under or in connection with the Loan Documents shall
forthwith become due and payable without presentment, demand,
protest or notice of any kind, all of which are hereby expressly
waived, anything contained herein or in any instrument evidencing
the Lender Debt to the contrary notwithstanding; PROVIDED,
HOWEVER, that notwithstanding the above, if there shall occur an
Event of Default under paragraph (f) or (g) above (other than
under clause (i) of paragraph (f)), then the obligation of the
Lenders to lend and of any Issuing Bank to issue or cause the
issuance of any Letters of Credit hereunder shall automatically
terminate and any and all of the Lender Debt shall be immediately
due and payable without any action by the Administrative Agent,
any Issuing Bank or any Lender;
(B) subject to the terms of this Agreement and the other
Loan Documents, the Credit Parties hereby agree that to the
extent permitted by applicable law the Administrative Agent shall
have and may exercise all rights and remedies of a mortgagee or a
secured party under the UCC in effect in the State of New York at
such time, whether or not applicable to the affected Collateral,
and otherwise, including, without limitation, the right to
foreclose the Liens granted herein or in any of the Security
Documents by any available judicial procedure and/or to take
possession of any or all of the Collateral, the other security
for the Lender Debt and the books and records relating thereto,
with or without judicial process; for the purposes of the
preceding sentence, the Administrative Agent may enter upon any
or all of the premises where any of the Collateral, such other
security or books or records may be situated and take possession
and remove the same therefrom; and
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(C) the Administrative Agent shall have the right,
subject to the terms of this Agreement and the other Loan
Documents, to determine which rights, Liens or remedies it shall
at any time pursue, relinquish, subordinate, modify or take any
other action with respect thereto, without in any way modifying
or affecting any of them or any of the Lenders' or any Issuing
Bank's rights hereunder; and any moneys, deposits, Accounts,
balances or other property which may come into any Lender's, any
Issuing Bank's or the Administrative Agent's hands at any time or
in any manner, may be retained by such Lender, any Issuing Bank
or the Administrative Agent and applied to any of the Lender
Debt.
11.2. SUITS FOR ENFORCEMENT. In case any one or more
Events of Default shall occur and be continuing, the Administrative
Agent on behalf of the Administrative Agent, each Issuing Bank and
the Lenders may proceed to protect and enforce their rights or
remedies either by suit in equity or by action at law, or both,
whether for the specific performance of any covenant, agreement or
other provision contained herein or in any document or instrument
delivered in connection with or pursuant to this Agreement or any
other Loan Document, or to enforce the payment of the Lender Debt or
any other legal or equitable right or remedy.
11.3 RIGHTS AND REMEDIES CUMULATIVE. No right or remedy
herein conferred upon the Lenders, any Issuing Bank or the
Administrative Agent is intended to be exclusive of any other right
or remedy contained herein or in any instrument or document delivered
in connection with or pursuant to this Agreement or any other Loan
Document, and every such right or remedy shall be cumulative and
shall be in addition to every other such right or remedy contained
herein and therein or now or hereafter existing at law or in equity
or by statute, or otherwise.
11.4. RIGHTS AND REMEDIES NOT WAIVED. To the maximum
extent permitted by applicable law, no course of dealing between any
of the Credit Parties and any Lender, any Issuing Bank or any of the
Agents or any failure or delay on the part of any Lender, any Issuing
Bank or any of the Agents in exercising any rights or remedies
hereunder shall operate as a waiver of any rights or remedies of the
Lenders, any Issuing Bank or any of the Agents and no single or
partial exercise of any rights or remedies hereunder shall operate as
a waiver or preclude the exercise of any other rights or remedies
hereunder or of the same right or remedy on a future occasion.
11.5 APPLICATION OF PROCEEDS. After the occurrence of an
Event of Default and acceleration of the Lender Debt as herein
provided, the proceeds of the Collateral and of property of Persons
other than the Credit Parties securing the Lender Debt and
collections from each Guaranty shall be applied by the Administrative
Agent to payment of the Lender Debt in the following order, unless a
court of competent jurisdiction shall otherwise direct:
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(i) FIRST, to payment of all costs and expenses of the
Administrative Agent, each Issuing Lender and the Lenders
incurred in connection with the preservation, collection and
enforcement of the Lender Debt or any Guaranties, or of any of
the Liens granted to the Administrative Agent pursuant to the
Security Documents or otherwise, including, without limitation,
any amounts advanced by the Administrative Agent or any Lenders
to protect or preserve the Collateral;
(ii) SECOND, to payment of that portion of the Lender
Debt constituting accrued and unpaid interest and fees and
indemnities payable under Sections 2, 3 and 4 hereof, ratably
amongst the Administrative Agent, each Issuing Lender and the
Lenders in accordance with the proportion which the accrued
interest and fees and indemnities payable under Sections 2, 3 and
4 hereof constituting the Lender Debt owing to the Administrative
Agent, each Issuing Lender and each such Lender at such time
bears to the aggregate amount of accrued interest and fees and
indemnities payable under Sections 2, 3 and 4 hereof constituting
the Lender Debt owing to the Administrative Agent, each Issuing
Lender and all of the Lenders at such time until such interest,
fees and indemnities shall be paid in full;
(iii) THIRD, to the Administrative Agent in an amount
equal to the then aggregate contingent Letter of Credit
Obligations (to the extent that such obligations exceed Letter of
Credit Cash Collateral securing the payment of same) to be held
by the Administrative Agent for the payment of such Letter of
Credit Obligations when and if due and payable;
(iv) FOURTH, to payment of the principal of the Lender
Debt (which shall exclude all contingent Letter of Credit
Obligations and shall include all the other unpaid Letter of
Credit Obligations), ratably amongst the Lenders and each Issuing
Lender in accordance with the proportion which the principal
amount of such Lender Debt owing to each such Lender and Issuing
Lender bears to the aggregate principal amount of such Lender
Debt owing to all of such Lenders and Issuing Lenders until such
principal of such Lender Debt shall be paid in full;
(v) FIFTH, to the payment of all other Lender Debt,
ratably amongst the Lenders in accordance with the proportion
which the amount of such other Lender Debt owing to each such
Lender bears to the aggregate principal amount of such other
Lender Debt owing to all of the Lenders until such other Lender
Debt shall be paid in full; and
(vi) SIXTH, the balance, if any, after all of the Lender
Debt has been satisfied, shall, except as otherwise provided in
the Security Documents, be deposited by the Administrative Agent
in an account designated by the Borrowers, or paid over to such
other Person or Persons as may be required by law.
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In the event that the amount of monies received by the
Administrative Agent under clause (iii) above with respect to a
Letter of Credit for which there are contingent Letter of Credit
Obligations at the time of the Administrative Agent's receipt of such
monies shall, together with any Letter of Credit Cash Collateral
securing such contingent Letter of Credit Obligations which is not
securing other Lenders Debt, exceed the amount of actual payments the
applicable Issuing Bank shall have made with respect to such Letter
of Credit after the Administrative Agent's receipt of such monies,
which determination shall be made after such Letter of Credit has
been terminated or has expired, then the Administrative Agent shall
apply such excess monies and Letter of Credit Cash Collateral in
accordance with this Section 11.5.
SECTION 12. REPRESENTATIONS AND WARRANTIES.
Each of the Credit Parties hereby represents and warrants as
follows (which representations and warranties shall survive the
execution and delivery of this Agreement and the making of each
Revolving Advance and shall be deemed to be incorporated in each
Borrower's Certificate submitted to the Administrative Agent pursuant
to Section 2.4 hereof, and shall be deemed repeated and confirmed
with respect to, and as of the date of, each borrowing hereunder
(whether requested by any Borrower or deemed requested by any
Borrower) and of each issuance of a Letter of Credit):
12.1. CORPORATE AND PARTNERSHIP STATUS. (a) Each Credit
Party is a duly organized and validly existing corporation or
partnership, as the case may be, in good standing under the laws of
the state of its incorporation or organization with perpetual
corporate or partnership existence, as the case may be. Each Credit
Party has the corporate or partnership power and authority, as the
case may be, to own its properties and to transact the business in
which it is engaged or presently proposes to engage.
(b) Each Credit Party is qualified as a foreign corporation
or partnership, as the case may be, and in good standing in each
other jurisdiction in which it owns or leases property of a nature,
or transacts business of a type, that would make such qualification
necessary, except where the failure to so qualify could not
reasonably be expected to have a Material Adverse Effect.
(c) The capital stock or partnership interests, as the case
may be, of each Credit Party is owned as set forth on Schedule 12.1
hereto free and clear of all Liens, except in favor of the
Administrative Agent for the benefit of the Agents and the ratable
benefit of the Lenders.
(d) None of the Credit Parties has any Subsidiaries except
as set forth in Schedule 12.1 hereto, which Schedule 12.1 correctly
sets forth the name of each such Subsidiary, its jurisdiction of
incorporation or formation, as the case may be, and a statement of
the outstanding capitalization and ownership of capital stock or
partnership interests of each such Subsidiary as of the date of
delivery of said Schedule 12.1.
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12.2 POWER AND AUTHORITY. Each of the Credit Parties has
the corporate or partnership power and authority, as the case may be,
to execute, deliver and perform the terms and provisions of this
Agreement and the other Loan Documents to which it is a party and all
instruments and documents delivered by it pursuant thereto and hereto
and each of the Credit Parties has duly taken or caused to be duly
taken all necessary corporate or partnership action, as the case may
be, (including, without limitation, the obtaining of any consent of
stockholders or partners required by law or its certificate of
incorporation, by-laws or partnership agreement), to authorize the
execution, delivery and performance of this Agreement and each other
Loan Document, in each case, to which it is a party, and the
instruments and documents delivered by it pursuant thereto and
hereto. Each of this Agreement, the other Loan Documents and each of
the other instruments and documents executed and delivered by any of
the Credit Parties pursuant hereto and thereto to which it is a party
constitutes a legal, valid and binding obligation of such Person, and
is enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of
creditors' rights generally and by general equity principles.
12.3 NO VIOLATION OF AGREEMENTS. None of the Credit
Parties is in violation of any provision of its certificate or
articles of incorporation or its by-laws or its partnership
agreement, as the case may be, or is in default under any indenture,
mortgage, deed of trust, agreement or other instrument to which any
of them is a party or by which any of them may be bound, which
default could reasonably be expected to have a Material Adverse
Effect. Neither the execution and delivery of this Agreement, the
other Loan Documents or any of the instruments and documents to be
delivered pursuant hereto or thereto, the consummation of the
transactions herein and therein contemplated nor the compliance with
any of the provisions hereof or thereof, will violate any provision
of the certificate or articles of incorporation or by-laws or
partnership agreement, as the case may be, of any Credit Party or any
law or regulation, or any order or decree of any court or
governmental instrumentality, or will (i) conflict with, or result in
the breach of, or constitute a default or permit termination under,
any lease, indenture, mortgage, deed of trust, agreement or other
instrument to which any Credit Party is a party or by which any of
them or their respective properties may be bound, or (ii) except for
Liens in favor of the Administrative Agent for the benefit of the
Lenders, result in the creation or imposition of any Lien upon any
property of any Credit Party.
12.4. NO LITIGATION. (a) Except as set forth in
Schedule 12.4 hereto, there are no actions, suits or proceedings
pending, or, to the best knowledge of any Borrower threatened,
against any of the Credit Parties or any of their respective
Subsidiaries before any court, arbitrator or governmental or
administrative body or agency which challenge the validity or
propriety of the transactions contemplated under this Agreement, the
other Loan Documents or the documents, instruments and agreements
executed or delivered in connection herewith, therewith or related
thereto, or which, if adversely determined, could reasonably be
expected to have a Material Adverse Effect.
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(b) No Credit Party or any Subsidiary thereof is in default
under any applicable statute, rule, order, decree or regulation of
any court, arbitrator or governmental body or agency having
jurisdiction over such Credit Party or Subsidiary, which default
could reasonably be expected to have a Material Adverse Effect.
(c) No judgment, order, injunction or other similar
restraint with respect to any Credit Party or any Subsidiary thereof
exists which prohibits any of the other transactions contemplated
hereby or in connection therewith or herewith.
12.5. GOOD TITLE TO PROPERTIES. (a) Schedule 12.5
hereto correctly identifies, categorized by each Credit Party or
Subsidiary of any Credit Party, (x) each parcel of real estate owned
by any Credit Party or any Subsidiary of any Credit Party, together
in each case with an accurate street address and description of the
use of such parcel, (y) each parcel of real estate leased by or to
any Credit Party or any Subsidiary of any Credit Party, together in
each case with an accurate street address and description of the use
of such parcel, and (z) each other interest in real property owned,
leased or granted to or held by any Credit Party or any Subsidiary of
any Credit Party. Each of the Credit Parties and their respective
Subsidiaries owns good and marketable, indefeasible fee simple title
to all of the real estate described on Schedule 12.5 hereto as being
owned by such Credit Party or Subsidiary thereof free and clear of
all Liens or other encumbrances of any kind, except Liens permitted
under Section 10.2 hereof. Except as set forth on Schedule 12.5
hereto:
(i) no structure owned or leased by any Credit Party
or any Subsidiary thereof fails to conform with applicable
ordinances, regulations, zoning laws and restrictive covenants nor
encroaches upon property of others, nor is any such real property
encroached upon by structures of others in any case in any manner
that could reasonably be expected to have a Material Adverse Effect;
(ii) no charges or violations have been filed, served,
made or threatened, to the knowledge of any Credit Party against
or relating to any such property or structure or any of the
operations conducted at any such property or structure, as a
result of any violation or alleged violation of any applicable
ordinances, requirements, regulations, zoning laws or restrictive
covenants or as a result of any encroachment on the property of
others where the effect of same could reasonably be expected to
have a Material Adverse Effect;
(iii) other than pursuant to applicable laws, rules,
regulations or ordinances, covenants that run with the land,
Liens permitted under Section 10.2 hereof or provisions in the
applicable leases or matters described on Schedule 12.5 hereto,
there exists no restriction on the use, transfer or mortgaging of
any such property;
(iv) each Credit Party and each of its Subsidiaries has
adequate permanent rights of ingress to and egress from any such
property used by it for the operations conducted thereon;
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(v) there are no developments affecting any of the
real property or interests therein identified in Schedule 12.5
hereto pending or threatened that could reasonably be expected to
have a Material Adverse Effect;
(vi) neither any Credit Party nor any Subsidiary
thereof has any option (other than under any lease disclosed in
Schedule 12.5 hereto) in, or any right or obligation to acquire
any interest in, any real property;
(vii) all permits, licenses and approvals from
governmental bodies, agencies or authorities having jurisdiction
over each such property which are necessary or required to permit
the use and occupancy of such property for the purposes for which
it is now used have been duly and validly issued and are in full
force and effect, except for permits, licenses or approvals
which, if not in full force and effect could not reasonably be
expected to have a Material Adverse Effect;
(viii) the Credit Parties or their respective
Subsidiaries have all the right, title and interest of the lessee
in each such lease and presently occupy the property leased by
them as lessee under each such lease to the extent not subleased;
no consent under any such lease is necessary for the consummation
of the transactions contemplated hereby; no event has occurred
which (with the giving of notice or passage of time or both)
would impair any right of such party to exercise and obtain the
benefits of any options contained in any such lease; and there is
no default under or any reasonable basis for acceleration or
termination of, nor has any event occurred which (with the giving
of notice or passage of time or both) would constitute a default
under, any such lease, except for any such default which could
not reasonably be expected to have a Material Adverse Effect; and
(ix) municipal water service, storm sewer, sanitary
sewer facilities, and telephone, electric and gas service are
available to serve all parcels of real property identified in
Schedule 12.5 hereto at the lot lines of such parcels, except
where the failure to have such availability could not reasonably
be expected to have a Material Adverse Effect.
(b) Except as set forth on Schedule 12.5(b) hereto, the
buildings, improvements and fixtures of each Credit Party and their
respective Subsidiaries are in all material respects structurally
sound with no known material defects and are in good operating
condition and repair, normal wear and tear excepted.
(c) Neither the whole nor any material portion of the
property hereto or leaseholds of the Credit Parties or any of their
Subsidiaries described on Schedule 12.5 hereto is subject to any
governmental decree or order to be sold or is being condemned,
expropriated or otherwise taken by any governmental body or other
entity with or without payment of compensation therefor, nor has any
such condemnation, expropriation or taking been proposed to any
Credit Party or any Subsidiary thereof.
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(d) Each of the Credit Parties and their respective
Subsidiaries owns good and marketable title to, or valid leasehold
interests in or license rights in, all of the material property and
assets necessary to properly conduct its business subject to no Liens
except the Liens permitted pursuant to Section 10.2 hereof.
12.6. FINANCIAL STATEMENTS AND CONDITION. (a) Each of
the Financial Statements presents fairly in accordance with GAAP (i)
the financial position of Ames and its Subsidiaries as of the date of
such financial statements and (ii) the results of operations of Ames
and its Subsidiaries for such period. Neither Ames nor any of its
Subsidiaries had any direct or indirect material contingent
liabilities as of the date of the Financial Statements which are not
reserved for therein or which in accordance with GAAP would have to
be included in footnotes thereto. Each of the Financial Statements
has been prepared in accordance with GAAP applied on a basis
consistently maintained throughout the period involved (except as
otherwise described therein). There has been no material adverse
change in the business, operations, liabilities, assets, properties,
prospects or condition (financial or otherwise) of Ames and its
Subsidiaries, taken as a whole, since the Reference Date.
(b) Each Agent and each Lender has been furnished
projections, dated March 14, 1994 attached hereto as Exhibit 12.6(b)
hereto, (as the same may be supplemented or amended as required by,
and with the approval of, the Lenders, the "Projections") as to the
future performance of Ames and its Subsidiaries. No fact is known to
any Credit Party as of the Closing Date which would have a material
adverse effect on the business, operations, liabilities, assets,
properties, prospects or condition (financial or otherwise) of Ames
and its Subsidiaries, taken as a whole, that has not been set forth
in the financial statements referred to in this Section 12.6 or
disclosed herein or otherwise disclosed to the Administrative Agent
in writing prior to the Closing Date. The Projections are based upon
reasonable estimates and assumptions, all of which are reasonable in
light of the conditions which existed at the time the Projections
were made, have been prepared on the basis of the assumptions stated
therein, and reflect as of the Closing Date the reasonable estimate
of Ames of the results of operations and other information projected
therein, it being recognized that such Projections as to future
events are not to be viewed as facts and that actual results during
the period or periods covered by such Projections may differ
materially from the Projections.
(c) Pursuant to Section 6.2 of this Agreement, each Agent
and each Lender has been furnished with a pro forma balance sheet of
Ames and its Subsidiaries taking into account all transactions
contemplated hereby. As of the Closing Date, neither Ames nor any of
its Subsidiaries has any material liabilities, contingent or
otherwise, which are not referred to in such balance sheet or in the
notes thereto and which are required to be disclosed therein in
accordance with GAAP.
(d) As of the Closing Date, there has been no material
adverse change in the level of vendor and trade support for Ames and
its Subsidiaries.
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12.7. TRADEMARKS, PATENTS, ETC. Each of the Credit
Parties owns or possesses all the trademarks, trade names,
copyrights, patents, licenses or rights in any thereof adequate for
the conduct of its business, without, to the best of its knowledge,
conflict with the rights or claimed rights of others.
12.8. TAX LIABILITY. All federal income tax returns
required to be filed by Ames and its Subsidiaries (and each Affiliate
with which Ames or its Subsidiaries files consolidated, combined or
unitary returns) and all other material tax returns, reports and
statements, domestic or foreign, have been filed with the appropriate
governmental agencies in all jurisdictions in which such returns,
reports and statements are required to be filed, and all Charges and
other impositions shown thereon to be due and payable have been paid
prior to the date on which any fine, penalty, interest, late charge
or loss may be added thereto for nonpayment thereof, or any such
fine, penalty, interest, late charge or loss has been paid or
adequate reserves have been established in respect thereof in
accordance with GAAP. Each of Ames and its Subsidiaries (and each
such Affiliate) has paid when due and payable all material Charges
required to be paid by it. Proper and accurate amounts have been
withheld by Ames and its Subsidiaries (and each such Affiliate) from
their respective employees for all periods in full and complete
compliance with the tax, social security and unemployment withholding
provisions of applicable federal, state, local and foreign law and
such withholdings have been timely paid to the respective
governmental agencies. Schedule 12.8 sets forth, for each of Ames
and its Subsidiaries (and each such Affiliate), those taxable years
for which its tax returns have been within the twelve (12) month
period preceding the Closing Date or are being audited as of the date
hereof by the Internal Revenue Service or, in the case of any
material Tax, any other applicable governmental authority. No issue
has been raised in writing or, if not in writing, to any Credit
Party's knowledge in any such examination that, by application of
similar principles, reasonably may be expected to result in assertion
of a material deficiency for any other taxable year not so examined
that has not been accrued on the Financial Statements that would be
required to be so accrued in accordance with GAAP. Except as
described on Schedule 12.8 hereto, neither Ames nor any of its
Subsidiaries has, as of the date hereof, executed or filed with the
Internal Revenue Service or, to its knowledge, any other governmental
authority any agreement or other document extending, or having the
effect of extending, the period for assessment or collection of any
Charges. Neither Ames nor any of its Subsidiaries has agreed or has
been requested to make any adjustment under Code Section 481(a) by
reason of a change in accounting method initiated by Ames or any of
its Subsidiaries. Except as described on Schedule 12.8 hereto,
neither Ames nor any of its Subsidiaries has any obligation under any
tax sharing agreement.
12.9 GOVERNMENTAL ACTION. No action of, or filing with,
any governmental or public body or authority (other than normal
reporting requirements or filing as to Collateral under the
provisions of Section 5 hereof) is required to authorize, or is
otherwise required in connection with, the execution, delivery or
performance of this Agreement, the Security Documents, any Guaranty,
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the Notes, the other Loan Documents or any of the instruments or
documents to be delivered pursuant hereto or thereto, except such as
have been made or will be made as contemplated by such agreements.
12.10. DISCLOSURE. Neither the Schedules hereto, nor the
Financial Statements, nor the certificates, statements, reports or
other documents furnished to any Lender or the Administrative Agent
by or on behalf of any of the Credit Parties in connection herewith
or in connection with any transaction contemplated hereby, nor this
Agreement or any other Loan Document, contains, at the time
furnished, any untrue statement of a material fact or omits to state
any material fact (known to any such Person in the case of any docu-
ment not furnished by it) necessary in order to make the statements
contained herein or therein not misleading in light of the
circumstances in which the same were made.
12.11 FEDERAL RESERVE REGULATIONS; SECURITIES LAWS. None
of the Credit Parties or any of their respective Subsidiaries owns
any "margin stock" as such term is defined in Regulation U, as
amended (12 C.F.R. Part 221), of the Board. The proceeds of the
borrowings made hereunder will be used only for the purposes set
forth in Section 8 hereof. None of the proceeds will be used,
directly or indirectly, for the purpose of purchasing or carrying any
margin stock or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry
margin stock or for any other purpose which might constitute the
Loans under this Agreement a "purpose credit" within the meaning of
said Regulation U or Regulation X (12 C.F.R. Part 224) of the Board.
None of the Credit Parties or any of their respective Subsidiaries or
any agent acting in its behalf has taken or will take any action
which might cause this Agreement or any of the documents or
instruments delivered pursuant hereto to violate any regulation of
the Board (including, without limitation, Regulation G, T, U or X
thereof) or to violate the Exchange Act or any applicable state
securities laws.
12.12. INVESTMENT COMPANY. None of the Credit Parties or
any of their respective Subsidiaries is an "investment company," or
an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended (15 U.S.C. 80a-1, ET
SEQ.). None of the transactions contemplated by this Agreement or the
other Loan Documents shall violate the Investment Company Act of
1940, as amended.
12.13. EMPLOYEE BENEFIT PLANS. Neither any Credit Party
nor any ERISA Affiliate maintains or contributes to any Employee Plan
or any Multiemployer Plan other than those listed on Schedule 12.13
hereto. Each Employee Plan of any Credit Party or any ERISA
Affiliate, which is not a Multiemployer Plan and which is intended to
be tax qualified under Code Section 401(a) has been determined by the
Internal Revenue Service to qualify under Code Section 401, and the
trusts created thereunder have been determined to be exempt from tax
under the provisions of Code Section 501. Nothing has occurred which
would cause the loss of such qualification or the imposition of any
Code or ERISA material tax liability or penalty to any Credit Party,
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or any ERISA Affiliate. With respect to each Employee Plan, all
reports required under ERISA or any other applicable law or
regulation to be filed by any Credit Party or any ERISA Affiliate
with the relevant governmental authority have been duly filed and all
such reports are true and correct in all material respects as of the
date given. Neither any Credit Party nor any ERISA Affiliate has
engaged in a "prohibited transaction," as such term is defined in
Code Section 4975 and Title I of ERISA, in connection with any
Employee Plan which would subject any Credit Party or any ERISA
Affiliate (after giving effect to any exemption) to a material tax or
penalty on prohibited transactions imposed by Code Section 4975 or
Section 502 of ERISA. No Pension Benefit Plan has incurred an ERISA
Event, nor has any accumulated funding deficiency (as defined in Code
Section 412(a)) been incurred, nor has any funding waiver from the
Internal Revenue Service been received or requested with respect to
any Pension Benefit Plan. The value of the assets of each Pension
Benefit Plan subject to Title IV of ERISA equalled or exceeded the
present value of the "benefit liabilities," as defined in Title IV of
ERISA of each such Plan as of the end of the preceding plan year
using Plan actuarial assumptions as in effect for such plan year.
The funding methods used in connection with each Pension Benefit Plan
are acceptable under ERISA and the actuarial assumptions and methods
used in connection with such funding are reasonable. There are no
claims (other than claims for benefits in the normal course), actions
or lawsuits asserted or instituted against, and neither any Credit
Party nor any ERISA Affiliate has knowledge of any threatened
litigation or claims against (i) the assets of any Pension Benefit
Plan or against any fiduciary of such Plan with respect to the
operation of such Plan or (ii) the assets of any employee welfare
benefit plan within the meaning of ERISA Section 3(l) or against any
fiduciary thereof with respect to the operation of any such plan.
Neither any Credit Party nor any ERISA Affiliate has incurred (a) any
liability to the PBGC (other than routine claims and premium
payments), (b) any withdrawal liability (and no event has occurred
which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Section 4201 of ERISA as a result of
a complete or partial withdrawal (within the meaning of Section 4203
or 4205 of ERISA) from a Multiemployer Plan or (c) any liability
under ERISA Section 4062 to the PBGC, or to a trustee appointed under
ERISA Section 4042. No Credit Party or ERISA Affiliate has been
notified or otherwise has knowledge that any Multiemployer Plan is
insolvent or in reorganization within the meanings of Sections 4245
and 4241 of ERISA. Neither any Credit Party nor any ERISA Affiliate
nor any organization to which any Credit Party or any such ERISA
Affiliate is a successor or parent corporation within the meaning of
ERISA Section 4069(b) has engaged in a transaction within the meaning
of ERISA Section 4069. Neither any Credit Party nor any ERISA
Affiliate maintains an established welfare benefit plan within the
meaning of Section 3(1) of ERISA, other than those listed on Schedule
12.13 hereto, which provides for continuing benefits or coverage for
any participant or any beneficiary of a participant after such
participant's termination of employment except as may be required by
the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA"), and the regulations thereunder or by applicable
state statutory law. Each Credit Party and each ERISA Affiliate
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maintaining a welfare benefit plan within the meaning of Section 3(1)
of ERISA has complied with the notice and continuation coverage
requirements of COBRA and the regulations thereunder so as not to
result in any material loss of deduction under Section 162 of the
Code or any material tax, penalty or liability to any such Credit
Party or any such ERISA Affiliate.
12.14. PERMITS, LAWS, ETC. (a) Each Credit Party and
each Subsidiary thereof possesses all material permits, licenses,
approvals and consents of Federal, state and local governments and
regulatory authorities required to conduct properly its business as
presently conducted and proposed to be conducted;
(b) Each such permit, license, approval and consent is and
will be in full force and effect, and no event has occurred which
permits the revocation or termination of any such permit, license,
approval or consent or the imposition of any restriction thereon of
such nature as may materially limit the operation of the business
covered thereby;
(c) All approvals, applications, filings, registrations,
consents or other actions required of any local, state or Federal
authority to enable each Credit Party and its Subsidiaries to use any
such permit, license, approval or consent has been obtained or made;
(d) Neither any Credit Party nor any Subsidiary of any
Credit Party (i) is in violation of any governmental, environmental,
labor, ERISA or other regulation, rule or law or any duty or
obligation required by law or any regulation, rule or law applicable
to the operation of any of its businesses, or (ii) has received any
Written Notice from the granting body or any other governmental
authority with respect to any material breach of any covenant under,
or any material default with respect to, any such permit, license,
approval or consent;
(e) Immediately before and upon giving effect to this
Agreement, the Notes and the other Loan Documents, no material
default shall have occurred and be continuing under any such permit,
license, approval or consent;
(f) All consents and approvals of, filings and
registrations with, and all other actions in respect of, all
governmental agencies, authorities or instrumentalities required to
maintain any such permit, license, approval or consent in full force
and effect prior to the scheduled date of expiration thereof has
been, or, prior to the time when required, will have been, obtained,
given, filed or taken and are or will be in full force and effect;
(g) There is not pending or, to the knowledge of any
Borrower, threatened, any action to revoke, cancel, suspend, modify
or refuse to renew any such permit, license, approval or consent and
each business covered by each such permit, license, approval or
consent is being operated in substantial compliance with such permit,
license, approval or consent;
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(h) There is not now issued or outstanding or, to the
knowledge of any Borrower, threatened any notice of any hearing,
violation or complaint against such Credit Party or Subsidiary
thereof with respect to any such permit, license, approval or consent
and no Credit Party or Subsidiary thereof has any knowledge that any
Person intends to contest the renewal of any such permit, license,
approval or consent;
and in the case of clauses (a) through (h) of this Section 12.14, the
breach of which could not reasonably be expected to have a Material
Adverse Effect.
12.15. ENVIRONMENTAL STATUS. Except as disclosed on
Schedule 12.15 hereto (i) the operations of each of the Credit
Parties and each of their respective Subsidiaries comply in all
material respects with all applicable Environmental Laws; (ii) each
of the Credit Parties and each of their respective Subsidiaries have
obtained all material environmental, health and safety Permits
necessary for their operation, and all such Permits are valid, and in
good standing and each of the Credit Parties and each of their
respective Subsidiaries are in compliance in all material respects
with all terms and conditions of such Permits; (iii) each of the
Credit Parties and each of their respective Subsidiaries and all of
their present Facilities or operations, as well as to the knowledge
of each of the Credit Parties and their respective Subsidiaries their
past Facilities or operations, are not subject to any material
outstanding written order or agreement with any governmental
authority or private party respecting (a) any Environmental Laws, (b)
any Remedial Action, or (c) any Environmental Claims arising from the
Release of a Contaminant into the environment; (iv) none of the
operations of any Credit Party or any of their respective
Subsidiaries is subject to any material judicial or administrative
proceeding under any Environmental Law; (v) to the best of the
knowledge of the Credit Parties, none of the operations of any Credit
Party or any of their respective Subsidiaries is the subject of any
Federal or state investigation evaluating whether any material
Remedial Action is needed to respond to a Release of any Contaminant
into the environment; (vi) neither any Credit Party nor any
Subsidiary thereof or to the knowledge of the Credit Parties any
predecessor of any Credit Party or any Subsidiary thereof has filed
any notice under Federal or state law indicating past or present
treatment, storage, or disposal of a hazardous waste or reporting a
spill or Release of a Contaminant into the environment where such
treatment, storage and disposal would result in a material liability;
(vii) to the best of the knowledge of the Borrowers, neither any
Credit Party nor any of their respective Subsidiaries has any
material contingent liability in connection with any Release of any
Contaminant into the environment; (viii) none of the Credit Parties'
or any of their respective Subsidiaries' operations involve the
generation, transportation, treatment or disposal of hazardous waste,
as defined under 40 C.F.R. Parts 260-270 or any state equivalent,
other than in material compliance with Environmental Law; (ix)
neither any Credit Party nor any of their respective Subsidiaries has
disposed of any Contaminant by placing it in or on the ground or
waters of any premises owned, leased or used by any Credit Party or
such Subsidiary and to the knowledge of the Credit Parties neither
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has any lessee, prior owner, or other person where such disposal
could reasonably be expected to result in a material liability; (x)
no underground storage tanks or surface impoundments are on the
Facilities of any Credit Party or any Subsidiary thereof, other than
in material compliance with Environmental Law; and (xi) no Lien in
favor of any governmental authority for (A) any liability under
Environmental Laws or regulations, or (B) damages arising from or
costs incurred by such governmental authority in response to a
Release of a Contaminant into the environment, has been filed or
attached to the Facilities of any Credit Party or any subsidiary
thereof; provided that a breach of a representation under this
Section 12.15 by any Credit Party or any of their respective current
or former Subsidiaries shall not constitute an Event of Default under
Section 11.1 unless such breach could reasonably be expected to
result in a Material Adverse Effect. The foregoing representations
and warranties shall survive the expiration or earlier termination of
this Agreement until such time as the environmental indemnity
referred to in Section 9.15 hereof is terminated.
12.16. SOLVENCY. Both before and after giving effect to
the initial Advances, each of the Credit Parties is Solvent.
12.17. INTENTIONALLY OMITTED.
12.18. BANK ACCOUNTS. The names and addresses of all the
banks holding one or more deposit accounts of any Credit Party
(categorized by each Credit Party), together with the account numbers
of the bank accounts at such banks, are specified in Schedule 12.18
hereto. The Credit Parties have no other deposit accounts other than
as set forth on Schedule 12.18 hereto or as otherwise disclosed in a
Written Notice furnished to the Administrative Agent.
12.19. LABOR MATTERS. There are no strikes or other
labor disputes against any Credit Party or any of their respective
Subsidiaries pending or threatened which could reasonably be expected
to have a Material Adverse Effect. Hours worked by and payment made
to employees of the Credit Parties and their respective Subsidiaries
have not been in violation of the Fair Labor Standards Act or any
other applicable law dealing with such matters the violation of which
could reasonably be expected to have a Material Adverse Effect. All
payments due from any Credit Party or any of their respective
Subsidiaries on account of employee health and welfare insurance
which could reasonably be expected to have a Material Adverse Effect
if not paid have been paid or accrued as a liability on the books of
such Credit Party or such Subsidiary. Except as set forth on
Schedule 12.19 hereto, there are no collective bargaining or other
labor agreements covering any employees of any Credit Party or any of
its Subsidiaries.
12.20. OTHER VENTURES. Except as set forth in Schedule
12.20 hereto, neither any Credit Party nor any Subsidiary thereof is
engaged in any joint venture or partnership with any other Person,
except that Zayre Central and Zayre New England are the sole general
partners of Ames Stores.
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12.21 BROKERS AND CONSULTANTS. No broker, finder or
consultant acting on behalf of any Credit Party or any of their
respective Subsidiaries brought about the obtaining, making or
closing of the loans made pursuant to this Agreement and neither any
Credit Party nor any Subsidiary thereof has any obligation to any
Person in respect of any finder's, consulting or brokerage fees in
connection with the Advances contemplated by this Agreement.
12.22 MATERIAL CONTRACTS. Schedule 12.22 sets forth all
the contracts, agreements and documents (other than those set forth
on any other Schedule hereto or constituting an Exhibit hereto) that
materially affect or relate to the business or operations of any
Credit Party or any of their respective Subsidiaries (including,
without limitation, all Material Contracts).
SECTION 13. MISCELLANEOUS.
13.1. COLLECTION COSTS. If an Event of Default occurs,
the Borrowers shall pay all court costs and costs of collection paid
or incurred by the Administrative Agent, any Co-Agent and any Lender
in connection with the Lender Debt, the Collateral and the Loan
Documents, including, without limitation, reasonable fees, expenses
and disbursements of counsel (including the allocated costs and
expenses of in-house counsel) employed in connection with any and all
collection efforts. The attorney's fees arising from such services,
including those of any appellate proceedings, and all expenses,
costs, charges and other fees incurred by such counsel in any way or
with respect to or arising out of or in connection with or relating
to any of the events or actions described in this Section 13 shall be
payable by the Borrowers to the Administrative Agent, any Co-Agent,
each Issuing Lender or the Lenders, as the case may be, on demand,
and shall be additional obligations under this Agreement. Without
limiting the generality of the foregoing, such expenses, costs,
charges and fees may include: recording costs, appraisal costs,
paralegal fees, costs and expenses; accountants' fees, costs and
expenses; court costs and expenses; photocopying and duplicating
expenses; court reporter fees, costs and expenses; long distance
telephone charges; air express charges; telegram charges; telecopier
charges; secretarial overtime charges; and expenses for travel,
lodging and food paid or incurred in connection with any of the
foregoing.
13.2 AMENDMENT, MODIFICATION AND WAIVER. (a) No
amendment, modification or waiver of any provision of the Loan
Documents and no consent by the Administrative Agent, any Co-Agent,
any Issuing Lender or the Lenders to any departure therefrom by any
of the Credit Parties shall be effective unless such amendment,
modification or waiver shall be in writing and signed by a duly
authorized officer of the appropriate Credit Party, the
Administrative Agent, any Co-Agent, the Lenders, each Issuing Lender
or the Majority Lenders, as the case may be (as more fully described
below), and the same shall then be effective only for the period and
on the conditions and for the specific instances and purposes
specified in such writing.
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(b) Except as otherwise provided herein, no notice to or
demand on any of the Credit Parties in any case shall entitle any of
the Credit Parties to any other or further notice or demand in
similar or other circumstances.
(c) Any term or provision of any Loan Document may be
amended or modified and the observance of any provision of any Loan
Document may be waived with the written consent of the Credit Parties
being a party to such Loan Document and the Majority Lenders;
PROVIDED, HOWEVER, that no such amendment, modification or waiver
shall, without the prior written consent of the Administrative Agent,
amend or waive any of the provisions of Section 3, 4.7, 7.2, 13.13 or
13.15 of this Agreement, or otherwise change any of the rights or
obligations of the Administrative Agent in such capacity under any of
the Loan Documents; PROVIDED, FURTHER, that no such amendment,
modification or waiver shall, without the prior written consent of
the Co-Agents, amend or waive any of the provisions of Section 13.14
of this Agreement, or otherwise change any of the rights or
obligations of the Co-Agents in their capacities as such under any of
the Loan Documents; PROVIDED, FURTHER, that no such amendment,
modification or waiver shall, without the prior written consent of
each Issuing Lender which has any Letters of Credit, or any
commitment to issue Letters of Credit, outstanding, amend or waive
any of the provisions of Section 3 of this Agreement or otherwise
materially adversely affect any of the rights or obligations of such
Issuing Lender under any of the Loan Documents; and PROVIDED,
FURTHER, that no such amendment, modification or waiver shall,
without the prior written consent of the Agents and all of the
Lenders:
(i) extend the due date of any principal of the
Revolving Loan, or portion thereof, extend the final scheduled
maturity of the Revolving Loan or the Revolving Credit Facility
Commitment, reduce the rate of interest on the Revolving Loan
(provided that this clause shall not apply to any amendment,
modification or waiver of Section 2.6(c) hereof unless the
Administrative Agent is acting at such time under Section 7.2
hereof), or portion thereof, reduce the amount of any principal
or accrued interest payable on the Revolving Loan, or portion
thereof, or reduce any fee payable to any Lender hereunder or
increase any sublimit for Letters of Credit in Section 3.1
hereof;
(ii) substitute, discharge, release or surrender any
Collateral (which defined term for purposes of this clause (ii)
shall include any Guaranties of any or all the Lender Debt),
except for any Collateral released pursuant to Section 5.9
hereof, any Collateral listed in Schedule 13.2(c)(ii) hereto, any
other Collateral other than any of the foregoing released from
and after the Closing Date the aggregate value of which does not
exceed $1,000,000 provided, that the Administrative Agent shall
be permitted and is authorized to release Collateral which a
Credit Party is permitted to sell or has obtained consent or does
not require consent to sell under Section 10.5 hereof (unless
such Collateral is Inventory sold outside the ordinary course of
business, in which case there shall be no such release unless all
Lenders shall have consented to such sale) and in any event the
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Administrative Agent shall not release any such Collateral until
the Administrative Agent shall have obtained the Net Cash
Proceeds of such sale to the extent required by the terms of such
consent;
(iii) except as provided in Section 13.15 hereof, change
the proportion of any Lender's Revolving Commitment to the
Aggregate Revolving Commitments or change the amount of any
Lender's Revolving Commitment;
(iv) modify any provision of Section 4.1(b) (it being
understood that this clause (iv) shall not apply to Schedule
4.1(b) hereto), 7.2, 9.14 or clauses (c), (f), (i) or (j) of
Section 13.15 hereof or this Section 13.2, or any provision which
expressly requires the consent of all Lenders;
(v) modify the definition of "Closing Date" or
"Designated Event of Default" or "Direction Letter" or "Majority
Lenders" or "pro rata" or increase any advance percentage
contained in the definition of "Borrowing Base" above the amount
thereof in effect on the date hereof;
(vi) modify the last sentence of Section 5.4(c) hereof
or modify Section 11.5 hereof; or
(vii) amend or delete Section 4.1(d) hereof, it being
understood that this clause (vii) shall not apply to waivers of
said Section 4.1(d) hereof.
(d) Nothing contained in this Section 13.2 or elsewhere in
this Agreement shall be deemed to affect or limit any right of the
Administrative Agent or obligation of the Lenders arising pursuant to
Section 7.2 hereof.
13.3. NEW YORK LAW. THIS AGREEMENT AND THE NOTES SHALL
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE
OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS
PRINCIPLES THEREOF).
13.4. NOTICES. All notices, requests, demands or other
communications provided for herein shall be in writing (unless
otherwise expressly provided herein) and shall be deemed to have been
given (a) if by registered or certified mail, return receipt
requested, four (4) Business Days following the date when sent, (b)
if by telex, when sent and answerback received, (c) if by overnight
courier, when received, (d) if by telecopier, when received, or (e)
if personally delivered or delivered by messenger, when receipted
for, in each case, addressed to the appropriate Credit Party or to
the Administrative Agent, the Collateral Agent, any Issuing Lender or
any Lender, at its respective office under its name on the signature
pages of this Agreement and to the attention of the Person so
designated, or to such Person or address as any party hereto shall
designate to the other from time to time in writing forwarded in like
manner.
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13.5 FEES AND EXPENSES. Whether or not any Advances or
other financial accommodations are made hereunder, the Borrowers
shall pay all reasonable costs and expenses paid or incurred by any
of the Agents in connection with the Loan Documents and the financing
contemplated thereunder, including but not limited to reasonable
appraisal fees, title insurance fees, audit fees, recording fees,
travel and transportation fees, search and filing fees, and the
reasonable fees and expenses of Messrs. Kaye, Scholer, Fierman, Hays &
Handler, special counsel to the Agents, all local counsel to the
Agents and allocated costs and expenses of in-house counsel to the
Administrative Agent, and of any industry, environmental, tax,
accounting and other consultants retained by the Administrative Agent
in connection with the discharge of its duties under the Loan
Documents. Such expenses shall also include, without limitation, any
reasonable costs paid or incurred by any of the Agents (including,
without limitation, reasonable fees and disbursements of respective
special counsel to the Agents as well as the allocated costs and
expenses of in-house counsel to the Administrative Agent) in
connection with the administration of the financial accommodations
herein provided (including, without limitation, appraisals, audits,
inspections and verifications of the Collateral, including, without
limitation, customary per diem charges for field examinations and
audits and the preparation of reports thereof), any waivers,
amendments, modifications, extensions, renewals, renegotiations or
"work-outs" of this Agreement or any instrument or document delivered
in connection herewith and any consents or approvals provided
hereunder or otherwise requested by any Credit Party. Without
limiting the generality of the foregoing, such expenses, costs,
charges and fees may include recording costs, appraisal costs,
paralegal fees, costs and expenses; accountants' fees, costs and
expenses; photocopying and duplicating expenses; long distance
telephone charges; air express charges; telegram charges; telecopier
charges; secretarial overtime charges; and expenses for travel,
lodging and food paid or incurred in connection with any of the
foregoing. On the date of this Agreement, the Borrowers shall pay
all expenses of the Agents which are otherwise required to be paid
hereunder and under the Commitment Letter as to which invoices in
reasonable detail have been presented.
13.6 STAMP OR OTHER TAX. Should any stamp or excise tax
become payable in respect of this Agreement, any Note, any other Loan
Document, the Lender Debt, the Collateral or any modification hereof
or thereof, each of the Credit Parties shall pay, the liability of
which is joint and several, the same (including interest and
penalties, if any) and shall hold the Lenders and each of the Agents
harmless with respect thereto.
13.7 WAIVERS. In any litigation in any court with
respect to, in connection with, or arising out of this Agreement, any
of the Advances, any Letter of Credit, any of the Notes or other Loan
Documents, the Collateral, or any instrument or document delivered
pursuant to this Agreement, or the validity, protection,
interpretation, collection or enforcement thereof, (a) EACH OF THE
CREDIT PARTIES HEREBY, to the fullest extent it may effectively do
so, waives the right to interpose any set-off, recoupment,
counterclaim or cross-claim in connection with any such litigation,
irrespective of the nature of such set-off, recoupment, counterclaim
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or cross-claim, unless such set-off, recoupment, counterclaim or
cross-claim could not, by reason of any applicable Federal or State
procedural laws, be interposed, pleaded or alleged in any other
action and (b) EACH OF THE CREDIT PARTIES, THE AGENTS AND THE
LENDERS, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, WAIVES TRIAL
BY JURY IN CONNECTION WITH ANY SUCH LITIGATION AND ANY RIGHT IT MAY
HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER
THAN, OR IN ADDITION TO, ACTUAL DAMAGES. EACH OF THE AGENTS AND THE
CREDIT PARTIES AGREE THAT THIS SECTION 13.7 IS A SPECIFIC AND
MATERIAL ASPECT OF THIS AGREEMENT AND ACKNOWLEDGES THAT NONE OF THE
LENDERS WOULD EXTEND TO ANY OF THE BORROWERS ANY FINANCIAL
ACCOMMODATIONS HEREUNDER IF THIS SECTION 13.7 WERE NOT PART OF THIS
AGREEMENT.
13.8. TERMINATION OF AGREEMENT. (a) The Administrative
Agent on behalf of the Lenders shall, unless otherwise directed in
writing by the Majority Lenders, have the right to, and the
Administrative Agent upon the direction of the Majority Lenders
shall, terminate this Agreement immediately, at any time, during the
continuance of an Event of Default under Section 11 hereof.
(b) The termination of this Agreement shall not affect any
rights of the Credit Parties, the Lenders, any Issuing Lender or any
of the Agents or any obligation of any of the Credit Parties, the
Lenders, any Issuing Lender or any of the Agents to the others,
arising on or prior to the effective date of such termination, and
the provisions hereof shall continue to be fully operative until all
Lender Debt and obligations of the Credit Parties hereunder incurred
on or prior to such termination have been paid and performed in full.
(c) Upon the giving of notice of termination of this
Agreement, all Lender Debt (including, without limitation, the
Revolving Loan and amounts in respect of Letters of Credit) shall be
due and payable on the date of termination specified in such notice.
(d) The Liens and rights granted to the Administrative
Agent on behalf of the Administrative Agent and the Lenders hereunder
shall continue in full force and effect, notwithstanding the
termination of this Agreement, until all of the Lender Debt has been
paid (or in the case of Letters of Credit Obligations, cash
collateralized to the satisfaction of the Administrative Agent) in
full or the Credit Parties have furnished the Lenders, each Issuing
Lender, the Co-Agents and the Administrative Agent with an
indemnification satisfactory to the Lenders, such Issuing Lenders,
the Co-Agents and the Administrative Agent; PROVIDED that
notwithstanding anything herein or in any other Loan Document to the
contrary in the event that all Lender Debt is paid (or in the case of
Letters of Credit Obligations, cash collateralized to the
satisfaction of the Administrative Agent) in full (or such
satisfactory indemnification is provided) and this Agreement is
terminated, the Liens in favor of the Administrative Agent shall
terminate.
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(e) All representations, warranties, covenants, waivers and
agreements contained herein shall survive termination hereof unless
otherwise provided.
(f) Notwithstanding the foregoing, if after receipt of any
payment of all or any part of the Lender Debt, any of the Agents, any
Issuing Lender or any Lender is for any reason compelled to surrender
such payment to any Person or entity because such payment is deter-
mined to be void or voidable as a preference, an impermissible
set-off, a diversion of trust funds or for any other reason, this
Agreement shall continue in full force, and the Credit Parties, as
appropriate, shall be liable to, and shall indemnify and hold such
Lender, such Issuing Lender or such Agent, as the case may be,
harmless for, the amount of such payment surrendered until such
Lender, such Issuing Lender or such Agent, as the case may be, shall
have been finally and irrevocably paid in full. The provisions of
the foregoing sentence shall be and remain effective notwithstanding
any contrary action which may have been taken by the Lenders, such
Issuing Lender or such Agent in reliance upon such payment, and any
such contrary action so taken shall be without prejudice to the
Lenders', such Issuing Lender's or such Agent's rights under this
Agreement and shall be deemed to have been conditioned upon such
payment having become final and irrevocable.
(g) All indemnities provided for under this Agreement and
the other Loan Documents, including, without limitation, under
Sections 2.10 and 13.5 hereof and this Section 13.8, shall survive
the termination of this Agreement and the payment in full of the
Lender Debt.
13.9. CAPTIONS. The captions of the various sections and
paragraphs of this Agreement have been inserted only for the purposes
of convenience; such captions are not a part of this Agreement and
shall not be deemed in any manner to modify, explain, enlarge or
restrict any of the provisions of this Agreement.
13.10 LIEN; SET-OFF BY LENDERS. Each of the Credit
Parties hereby grants to each Lender, each of the Co-Agents and the
Administrative Agent a continuing Lien for all Lender Debt upon any
and all monies, securities and other property of such Credit Party
and the proceeds thereof, now or hereafter held or received by, or in
transit to, such Lender, such Co-Agent or the Administrative Agent
from or for such Credit Party, whether for safekeeping, custody,
pledge, transmission, collection or otherwise, and also upon any and
all deposits (general or special) and credits of such Credit Party
with, and any and all claims of such Credit Party against, any
Lender, the Co-Agents or the Administrative Agent, at any time
existing (which shall constitute part of the Collateral). Upon the
occurrence and during the continuance of an Event of Default, without
regard to the adequacy of any Collateral held as collateral for the
Lender Debt, each Lender, the each of the Co-Agents and the
Administrative Agent shall, unless otherwise directed in writing by
the Majority Lenders, be entitled at any time and from time to time,
without notice to such Credit Party, to set-off, appropriate and
apply any or all items hereinabove referred to against all Lender
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Debt in accordance with the Loan Documents (including, without
limitation, Section 13.13(k) hereof) and neither the Administrative
Agent nor any Co-Agent nor any Lender shall have any duty to
determine the adequacy of any Collateral in connection with any such
offset.
13.11 PAYMENT DUE ON NON-BUSINESS DAY. Whenever any
payment to be made hereunder or under any other Loan Document or on
any Advance shall be stated to be due and payable, or whenever the
last day of any Interest Period would otherwise occur, on a day which
is not a Business Day, such payment shall be made and the last day of
such Interest Period shall occur on the next succeeding Business Day
and such extension of time shall in such case be included in
computing interest on such payment; PROVIDED, HOWEVER, if such
extension would cause a payment of a Eurodollar Advance to be made,
or the last day of such Interest Period for a Eurodollar Advance to
occur, in the next following calendar month, such payment shall be
made and the last day of such Interest Period shall occur on the next
preceding Business Day.
13.12. SERVICE OF PROCESS. Each of the Credit Parties
hereby irrevocably consents to the non-exclusive jurisdiction of the
courts of the State of New York and of any Federal Court located in
the City of New York in connection with any action or proceeding
arising out of or relating to this Agreement, any Guaranty, any of
the Security Documents, all or any of the Lender Debt, the
Collateral, all or any of the Notes, any other Loan Document or any
document or instrument delivered pursuant to this Agreement. In any
such litigation, each of the Credit Parties waives, to the fullest
extent it may effectively do so, personal service of any summons,
complaint or other process and agrees that the service thereof may be
made by certified or registered mail directed to any Credit Party at
its address set forth in Section 13.4 hereof. Each of the Credit
Parties hereby waives, to the fullest extent it may effectively do
so, the defenses of forum non conveniens and improper venue.
13.13. BANKAMERICA BUSINESS CREDIT, INC., AS
ADMINISTRATIVE AGENT. (a) Each Lender hereby irrevocably designates
and appoints BABC as the administrative agent of such Lender under
each of the Loan Documents in which BABC is named as "Administrative
Agent", and each such Lender hereby irrevocably authorizes BABC, as
the administrative agent for such Lender to take such action on
behalf of each Lender under the provisions of the Loan Documents and
in the absence of other written instructions of the Majority Lenders
(or as required by this Agreement all of the Lenders), which
instructions the Administrative Agent shall follow, and to exercise
such powers and rights (including, without limitation, the right
(subject to Section 2.24 hereof) to determine whether any particular
item of Inventory constitutes Eligible Inventory and whether to
establish reserves that would have the effect of reducing any
Borrower's Borrowing Limit) and perform such duties as are expressly
delegated to the Administrative Agent by the terms of the Loan
Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary
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elsewhere in the Loan Documents, the Administrative Agent shall not
have any duties or responsibilities except those expressly set forth
in the Loan Documents, nor any fiduciary relationship with any Lender
and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into the Loan Documents or
otherwise exist against the Administrative Agent.
(b) The Administrative Agent may execute any of its duties
under the Loan Documents by or through agents or attorneys-in-fact
and shall be entitled to advice of counsel, and other specialists and
advisors (including affiliates of BABC) selected by it, concerning
all matters pertaining to such duties. The Administrative Agent
shall not be responsible for the negligence or misconduct of any such
agents, attorneys-in-fact, counsel and other specialists and advisors
selected by it with reasonable care.
(c) Neither the Administrative Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or
omitted to be taken by it or such Person under or in connection with
the Loan Documents (except for its or such Person's own gross
negligence or wilful misconduct), or (ii) responsible in any manner
to any Lender for any recitals, statements, errors, omissions,
representations or warranties made by any of the Credit Parties or
any of their respective Subsidiaries or any officer thereof contained
in the Loan Documents or in any certificate, report, statement or
other document referred to or provided for in, or received by the
Administrative Agent under or in connection with the Loan Documents,
or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of the Loan Documents or for any
failure of any of the Credit Parties or any of their respective
Subsidiaries to perform its obligations under the Loan Documents.
The Administrative Agent shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance
of any of the agreements contained in, or conditions of, the Loan
Documents, or to inspect the properties, books or records of any of
the Credit Parties or any of their respective Subsidiaries, except
that the Administrative Agent shall in each Fiscal Year, to the
extent not otherwise requested by any other Agent, request at least
one field examination under Section 9.7 hereof and one appraisal
under Section 9.14 hereof. The Administrative Agent in its capacity
as such shall not be liable or responsible in any manner to any
Person for any determinations made or instructions given by any
Co-Agent pursuant to Section 2.24 hereof.
(d) The Administrative Agent shall be entitled to rely, and
shall be fully protected in relying, upon any Note, writing,
resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement,
order or other document or conversation reasonably believed by it to
be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal
counsel (including, without limitation, counsel to the Credit
Parties), independent accountants and other experts selected by the
Administrative Agent.
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(e) The Administrative Agent shall be fully justified in
failing or refusing to take any action under the Loan Documents
unless it shall first receive such advice or concurrence of the
Majority Lenders as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking
or continuing to take any such action. The Administrative Agent
shall in all cases be fully protected in acting, or in refraining
from acting, under the Loan Documents in accordance with a request of
the Majority Lenders (or where required by the terms of this
Agreement, the Lenders) or, under Section 2.24, a Co-Agent, and such
request and any action taken or failure to act pursuant thereto shall
be binding upon all the Lenders and all future holders of the Notes.
(f) The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Administrative Agent shall have received
notice from a Lender or one of the Credit Parties referring to this
Agreement, describing such Default or Event of Default or stating
that such notice is a "notice of default." In the event that the
Administrative Agent receives such a notice, the Administrative Agent
shall give prompt notice thereof to the Lenders. Subject to Section
7.2 hereof, the Administrative Agent shall take such action or
refrain from taking such action with respect to such Default or Event
of Default as shall be reasonably directed by the Majority Lenders;
PROVIDED that, unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not
be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.
(g) Each Lender expressly acknowledges that neither the
Administrative Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates has made any representations
or warranties to it and that no act by the Administrative Agent
hereinafter taken, including any review of the affairs of any of the
Credit Parties or any of their respective Subsidiaries, shall be
deemed to constitute any representation or warranty by the
Administrative Agent to any Lender. Each Lender represents to the
Administrative Agent that it has, independently and without reliance
upon the Administrative Agent or any other Lender, and based on such
documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations,
property, financial and other condition and creditworthiness of each
of the Credit Parties and their respective Subsidiaries, and made its
own decision to make its loans and other financial accommodations
hereunder and enter into this Agreement. Each Lender also represents
that it will, independently and without reliance upon the
Administrative 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 analysis, appraisals and decisions in taking or
not taking action under this Agreement, and to make such
investigation as it deems necessary to inform itself as to the
business, operations, liabilities, assets, properties and condition
(financial or otherwise) and creditworthiness of each of the Credit
Parties and their respective Subsidiaries and whether or not such
Lender should obtain appraisals of any real property Collateral in
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order to comply with applicable law, it being understood that no such
appraisals were obtained by the Administrative Agent. Except for
notices, reports and other documents expressly required to be
furnished to the Lenders by the Administrative Agent hereunder and
for any other written materials received by the Administrative Agent
from any of the Credit Parties that any Lender has requested the
Administrative Agent to furnish, the Administrative Agent shall not
have any duty or responsibility to provide any Lender with any credit
or other information concerning the business, operations, property,
financial and other condition or creditworthiness of any of the
Credit Parties or any of their respective Subsidiaries which may come
into the possession of the Administrative Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or
affiliates.
(h) Each Lender agrees to indemnify the Administrative
Agent in its capacity as such and the Administrative Agent's
officers, directors, employees, agents, attorneys-in-
fact or affiliates (to the extent not reimbursed by the Credit
Parties and without limiting the obligation of the Credit Parties to
do so), ratably according to the total loan percentages set forth
opposite its name on Exhibit A hereto from and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including the allocated costs and
expenses of in-house legal counsel) or disbursements of any kind
whatsoever which may at any time (including without limitation at any
time following the payment of the Notes) be imposed on, incurred by
or asserted against the Administrative Agent in any way relating to
or arising out of the Loan Documents, the financing thereunder, or
any of the transactions contemplated thereby or any action taken or
omitted by the Administrative Agent under or in connection with any
of the foregoing; PROVIDED that no Lender shall be liable for the
payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Administrative Agent's gross
negligence or wilful misconduct. The agreements in this Section
13.13(h) shall survive the payment of the Notes and the Lender Debt.
(i) BABC and its affiliates may make loans to, accept
deposits from and generally engage in any kind of business with the
Credit Parties as though BABC were not the Administrative Agent
hereunder. With respect to its pro rata share of the Advances made
or renewed by it and any Note issued to it, BABC shall have the same
rights and powers under this Agreement as any Lender and may exercise
the same as though it were not the Administrative Agent. The terms
"Lender" and "Lenders" shall include BABC in its individual capacity.
(j) The Administrative Agent may resign as Administrative
Agent upon 30 days' Written Notice to the Lenders. If the
Administrative Agent shall resign as Administrative Agent under this
Agreement, the Majority Lenders shall appoint from among the Agents
or, with prior consent of the Borrowers (which shall not be withheld
or delayed unreasonably) any other Lender as successor administrative
agent for the Lenders. If no successor administrative agent is
appointed prior to the effective date of the resignation of the
Administrative Agent, the Administrative Agent may appoint, after
consulting with the Lenders, a successor administrative agent from
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among the Agents or, with prior consent of the Borrowers (which shall
not be withheld or delayed unreasonably) any other Lender. Upon the
acceptance of its appointment as successor administrative agent
hereunder, such successor administrative agent shall succeed to all
the rights, powers and duties of the retiring Administrative Agent
and the term "Administrative Agent" shall mean such successor
administrative agent and the retiring Administrative Agent's
appointment, powers and duties as Administrative Agent shall be
terminated. After any retiring Administrative Agent's resignation
hereunder as Administrative Agent, the provisions of this Section
13.13 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Administrative Agent under this
Agreement. In the event that the Administrative Agent shall enter
receivership or a proceeding in bankruptcy shall be commenced by or
against the Administrative Agent, then Lenders, excluding the Lender
that is the Administrative Agent, having sixty-six and two-thirds
percent (66 2/3%) of the Aggregate Revolving Commitments, may remove
the Administrative Agent under this Agreement. BABC may be removed
as Administrative Agent hereunder by the Majority Lenders in the
event that it shall acquire any equity interest in or subordinated
Indebtedness of any Credit Party, unless such equity interest or
subordinated Indebtedness was acquired by BABC pursuant to an
offering made to all the Lenders on a pro rata basis. Any removal of
the Administrative Agent hereunder shall be deemed as a resignation
for purposes of appointing a successor Administrative Agent.
(k) Each Lender agrees that (i) all obligations of the
Credit Parties to each Lender under this Agreement and under the
Notes rank PARI PASSU in all respects with each other, and (ii) if
any Lender shall, through the exercise of a right of banker's lien,
set-off, counterclaim or otherwise, obtain payment with respect to
its Revolving Commitment which results in its receiving more than its
pro rata share of the aggregate payments in respect of the Aggregate
Revolving Commitments, then (A) such Lender shall be deemed to have
simultaneously purchased from each of the other Lenders a share in
its Advances so that the amount of the Advances of all Lenders shall
be pro rata and (B) such other adjustments shall be made from time to
time as shall be equitable to insure that all Lenders share such
payments ratably. If all or any portion of any such excess payment
is thereafter recovered from the Lender which received the same, the
purchase provided in this Section 13.13(k) shall be deemed to have
been rescinded to the extent of such recovery, without interest.
Each of the Credit Parties expressly consents to the foregoing
arrangements and agrees that each Lender so purchasing a portion of
another Lender's loan may exercise all rights of payment (including,
without limitation, all rights of set-off, banker's lien or
counterclaim) with respect to such portion as fully as if such Lender
were the direct holder of such portion.
(l) The Administrative Agent agrees that it shall promptly,
and in any event within five (5) Business Days, deliver to each
Lender copies of all notices, demands, statements and communications
which the Administrative Agent gives to the Credit Parties, except
for routine notices of payments due under the Loan Documents and
other miscellaneous notices, demands, statements and communications,
which are not material to the interests of any Lender. The
Administrative Agent shall have no liability to any Lender, nor shall
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a cause of action arise against the Administrative Agent, as a result
of the failure of the Administrative Agent to deliver to any Lender
any such notice, demand, statement or communication.
(m) The Administrative Agent shall endeavor to exercise the
same care in its administration of the Loan Documents as it exercises
with respect to similar transactions in which it is involved and
where no other co-lenders or participants are involved; PROVIDED that
the liability of the Administrative Agent for failing to do so shall
be limited as provided in the preceding paragraphs of this Section
13.13.
(n) (i) If at any time or times it shall be necessary or
prudent in order to conform to any law of any jurisdiction in
which any of the Collateral shall be located, or the
Administrative Agent shall be advised by counsel, that it is so
necessary or prudent in the interest of the Lenders, or the
Administrative Agent shall deem it necessary for its own
protection in the performance of its duties hereunder, the
Administrative Agent and (to the extent required by the
Administrative Agent) each Credit Party shall execute and deliver
all instruments and agreements reasonably necessary or proper to
constitute another bank or trust company, or one or more
individuals approved by the Administrative Agent (to the extent
necessary or requested by the Administrative Agent) (each an
"Approved Delegate"), either to act as co-agent or co-agents or
trustee of all or any of the Collateral, jointly with the
Administrative Agent originally named herein or any successor, or
to act as separate agent or agents or trustee of any such
Collateral. In the event that any of the Credit Parties shall
not have joined in the execution of such instruments or
agreements with any Approved Delegate within thirty (30) Business
Days after the receipt of a written request from the
Administrative Agent to do so, or in case an Event of Default
shall have occurred and be continuing, each of the Credit Parties
hereby irrevocably appoints the Administrative Agent as its agent
and attorney to act for it under the foregoing provisions of this
Section 13.13(n) in such contingency.
(ii) Every separate agent and every co-agent and every
trustee, other than any agent which may be appointed as successor
to the Administrative Agent, shall, to the extent permitted by
applicable law, be appointed to act and be such, subject to the
following provisions and conditions, namely:
(A) except as otherwise provided herein, all rights,
remedies, powers, duties and obligations conferred upon,
reserved or imposed upon the Administrative Agent in respect
of the custody, control and management of moneys, paper or
securities shall be exercised solely by the Administrative
Agent hereunder;
(B) all rights, remedies, powers, duties and
obligations conferred upon, reserved to or imposed upon the
Administrative Agent hereunder shall be conferred, reserved
or imposed and exercised or performed by the Administrative
Agent except to the extent that the instrument appointing
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such separate agent or separate agents or co-agent or
co-agents or trustee shall otherwise provide, and except to
the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed, the
Administrative Agent shall be incompetent or unqualified to
perform such act or acts, in which event such rights,
remedies, powers, duties and obligations shall be exercised
and performed by such separate agents or co-agent or co-
agents to the extent specifically directed in writing by the
Administrative Agent;
(C) no power given hereby to, or which it is provided
hereby may be exercised by, any such separate agent or
separate agents or co-agent or co-agents or trustee shall be
exercised hereunder by such separate agent or separate
agents or co-agent or co-agents or trustee except jointly
with, or with the consent in writing of, the Administrative
Agent, anything herein contained to the contrary
notwithstanding;
(D) no separate agent or co-agent or trustee
constituted under this Section 13.13(n) shall be personally
liable by reason of any act or omission of any other agent,
separate agent, co-agent or trustee hereunder; and
(E) the Administrative Agent, at any time by an
instrument in writing, executed by it, may accept the
resignation of or remove any such separate agent or co-agent
or trustee, and in that case, by an instrument in writing
executed by the Administrative Agent and the Credit Parties
(to the extent necessary or requested by the Administrative
Agent) jointly, may appoint a successor to such separate
agent or co-agent or trustee, as the case may be, anything
herein contained to the contrary notwithstanding. In the
event that any of the Credit Parties shall not have joined
in the execution of any such instrument with a Person or
entity within ten (10) days after the receipt of a written
request from the Administrative Agent to do so, or in the
case an Event of Default shall have occurred and be
continuing, the Administrative Agent, acting alone, may
appoint a successor and may execute any instrument in
connection therewith, and the Credit Parties hereby
irrevocably appoint the Administrative Agent its agent and
attorney to act for it in such connection in either or such
contingencies.
(iii) None of the Co-Agents shall be deemed to be an
Approved Delegate or otherwise a co-agent or trustee for purposes
of paragraph (ii).
13.14. CO-AGENTS. (a) Each Lender hereby irrevocably
designates and appoints each of GE Capital and Congress as a co-agent
of such Lender under this Agreement, and each such Lender hereby
irrevocably authorizes GE Capital and Congress, as co-agents, for
such Lender to take such action on behalf of each Lender under the
provisions of this Agreement and in the absence of other written
instructions of the Majority Lenders (or as required by this
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Agreement all of the Lenders), which instructions the Co-Agents shall
follow, and to exercise such powers (including, without limitation,
the right to determine (subject to Section 2.24 hereof) whether any
particular item of Inventory constitutes Eligible Inventory and
whether to establish reserves that would have the effect of reducing
any Borrower's Borrowing Base) and perform such duties as are
expressly delegated to the Co-Agents by the terms of this Agreement,
together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in the Loan
Documents, the Co-Agents shall not have any duties or
responsibilities except those expressly set forth in this Agreement,
nor any fiduciary relationship with any Lender and no implied
covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or otherwise exist
against the Co-Agents.
(b) Neither any Co-Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates shall
be (i) liable for any action lawfully taken or omitted to be taken by
it or such Person under or in connection with this Agreement (except
for its or such Person's own gross negligence or wilful misconduct),
or (ii) responsible in any manner to any Lender for any recitals,
statements, errors, omissions, representations or warranties made by
any of the Credit Parties or any of their respective Subsidiaries or
any officer thereof contained in the Loan Documents or in any
certificate, report, statement or other document referred to or
provided for in, or received by any Co-Agent under or in connection
with this Agreement, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of the Loan Documents or
for any failure of any of the Credit Parties or any of their
respective Subsidiaries to perform its obligations under the Loan
Documents. The Co-Agents shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance
of any of the agreements contained in, or conditions of, the Loan
Documents, or to inspect the properties, books or records of any of
the Credit Parties or any of their respective Subsidiaries. No
Co-Agent in its capacity as such shall be liable or responsible in
any manner to any Person for any determinations made by the
Administrative Agent or by any determinations made or instructions
given by any other Co-Agent pursuant to Section 2.24 hereof.
(c) Each Co-Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram,
telecopy, telex or teletype message, statement, order or other
document or conversation reasonably believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Credit Parties), independent
accountants and other experts selected by such Co-Agent.
(d) Each Co-Agent shall be fully justified in failing or
refusing to take any action under the Loan Documents unless it shall
first receive such advice or concurrence of the Majority Lenders as
it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense
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which may be incurred by it by reason of taking or continuing to take
any such action. Each Co-Agent shall in all cases be fully protected
in acting, or in refraining from acting, under the Loan Documents in
accordance with a request of the Majority Lenders (or where required
by the terms of this Agreement, the Lenders), and such request and
any action taken or failure to act pursuant thereto shall be binding
upon all the Lenders and all future holders of the Notes.
(e) No Co-Agent shall be deemed to have knowledge or notice
of the occurrence of any Default or Event of Default hereunder unless
such Co-Agent shall have received notice from the Administrative
Agent, a Lender or one of the Credit Parties referring to this
Agreement, describing such Default or Event of Default or stating
that such notice is a "notice of default." In the event that any
Co-Agent receives such a notice from a Person other than the
Administrative Agent, such Co-Agent shall give prompt notice thereof
to the Administrative Agent.
(f) Each Lender expressly acknowledges that neither any
Co-Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates has made any representations or
warranties to it and that no act by any Co-Agent hereinafter taken,
including any review of the affairs of any of the Credit Parties or
any of their respective Subsidiaries, shall be deemed to constitute
any representation or warranty by such Co-Agent to any Lender. Each
Lender represents to each Co-Agent that it has, independently and
without reliance upon such Co-Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, operations,
property, financial and other condition and creditworthiness of each
of the Credit Parties and their respective Subsidiaries, and made its
own decision to make its loans and other financial accommodations
hereunder and enter into this Agreement. Each Lender also represents
that it will, independently and without reliance upon any Co-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
analysis, appraisals and decisions in taking or not taking action
under this Agreement, and to make such investigation as it deems
necessary to inform itself as to the business, operations,
liabilities, assets, properties and condition (financial or
otherwise) and creditworthiness of each of the Credit Parties and
their respective Subsidiaries. Except for written materials received
by any Co-Agent from any of the Credit Parties that any Lender has
requested such Co-Agent to furnish, no Co-Agent shall have any duty
or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, financial
and other condition or creditworthiness of any of the Credit Parties
or any of their respective Subsidiaries which may come into the
possession of such Co-Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates.
(g) Each Lender agrees to indemnify each Co-Agent in its
capacity as such and each Co-Agent's officers, directors, employees,
agents, attorneys-in-fact or affiliates (to the extent not reimbursed
by the Credit Parties and without limiting the obligation of the
Credit Parties to do so), ratably according to the total loan
percentages set forth opposite its name on Exhibit A hereto from and
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against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including the
allocated costs and expenses of in-house counsel) or disbursements of
any kind whatsoever which may at any time (including without
limitation at any time following the payment of the Notes) be
imposed on, incurred by or asserted against such Co-Agent in any way
relating to or arising out of the Loan Documents, the financing
thereunder, or any of the transactions contemplated thereby or any
action taken or omitted by such Co-Agent under or in connection with
any of the foregoing; PROVIDED that no Lender shall be liable for the
payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from such Co-Agent's gross negligence or
wilful misconduct. The agreements in this Section 13.14(h) shall
survive the payment of the Notes and the Lender Debt.
(h) GE Capital, Congress and their respective affiliates
may make loans to, accept deposits from and generally engage in any
kind of business with the Credit Parties as though GE Capital or
Congress, as the case may be, were not a Co-Agent hereunder. With
respect to its pro rata share of the Advances made or renewed by it
and any Note issued to it, GE Capital or Congress, as the case may
be, shall have the same rights and powers under this Agreement as any
Lender and may exercise the same as though it were not a Co-Agent.
The terms "Lender" and "Lenders" shall include GE Capital and
Congress in their individual capacity.
(i) Each Co-Agent may resign as a Co-Agent upon Written
Notice to the Administrative Agent. In the event that any Co-Agent
shall enter receivership or a proceeding in bankruptcy or insolvency
shall be commenced by or against any Co-Agent, then Lenders,
excluding the Lender which is such Co-Agent, having sixty-six and
two-thirds per cent (66 2/3%) of the Aggregate Revolving Commitments,
may remove such Co-Agent under this Agreement.
(j) Each Co-Agent shall endeavor to exercise the same
care in exercising its rights and duties under this Agreement as it
exercises with respect to similar transactions in which it is
involved and where no other co-lenders or participants are involved;
PROVIDED that the liability of each Co-Agent for failing to do so
shall be limited as provided in the preceding paragraphs of this
Section 13.14.
(k) Each Co-Agent shall be entitled to advice of counsel
and other specialists and advisors (including affiliates of such
Co-Agent) selected by it concerning all matters pertaining to such
Co-Agent's duties hereunder. No Co-Agent shall be responsible for
the negligence or misconduct of any such counsel and other
specialists and advisors selected by it with reasonable care.
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13.15. BENEFIT OF AGREEMENT. (a) This Agreement shall
be binding upon and inure to the benefit of the parties hereto, and
their respective successors and assigns, except that the obligation
of the Lenders and any Issuing Lender to make Advances and other
financial accommodations hereunder shall not inure to the benefit of
any successors and assigns of the Borrowers. Without limiting the
generality of the previous sentence, this Agreement shall also inure
to the benefit of any of the parties referred to in Section 13.13(b)
through which the Administrative Agent is entitled to execute its
duties under the Loan Documents.
(b) The Borrowers may not assign or transfer any of their
interests hereunder without the prior written consent of the Lenders.
Each of the Lenders may make, carry or transfer its pro rata share of
the Advances at, to or for the account of any of its branch offices
or the office of one or more of its Affiliates.
(c) Each Lender may assign its rights and delegate its
obligations under this Agreement and may assign, sell or grant
participation in, all or any part of its pro rata share of any
Advance or Advances made by it or its Revolving Commitment or any
other interest herein or in its Notes to another bank or other
financial institution (in the case of any assignment, pursuant to an
assignment in form and substance acceptable to the Administrative
Agent), in which event:
(i) in the case of an assignment, upon notice thereof by
such Lender to the Borrowers, the assignee shall have, to the
extent of such assignment (unless otherwise provided therein),
the same rights and benefits as it would have if it were such
Lender hereunder and the holder of a Note,
(ii) in the case of a participation by any Lender that is
not an Agent, the participant shall not have any rights under
this Agreement or any Note or any other Loan Document (the
participant's rights against such Lender in respect of such
participation to be those set forth in the agreement executed by
such Lender in favor of the participant relating thereto which
agreement shall not, in any event, grant to the participant the
right of consent as to any matters under the Loan Documents other
than those which require the consent of all Lenders except that
the participant shall, solely for the purposes of Sections 2.9,
2.12 and 3.8 hereof and in any event subject to Section 2.25
hereof, be deemed to be a Lender with all applicable rights and
obligations of a Lender under such Sections, and
(iii) in the case of a participation by any Lender that is
an Agent, the participant shall not have any rights under this
Agreement or any Note or any other Loan Document (the
participant's rights against such Lender in respect of such
participation to be those set forth in the agreement executed by
such Lender in favor of the participant relating thereto which
agreement shall not prevent such Lender from complying with the
proviso to this clause (iii) below and shall require that the
voting rights granted to the participant under such agreement
shall be subject to the proviso to this clause (iii)), except
that the participant shall, solely for the purposes of Sections
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2.9, 2.12 and 3.8 hereof and in any event subject to Section 2.25
hereof, be deemed to be a Lender with all applicable rights and
obligations of a Lender under such Sections; PROVIDED, that if,
in connection with any proposed action or inaction for which the
consent of the Majority Lenders is required hereunder or for
which a direction by the Majority Lenders may be given hereunder,
a Lender that is an Agent that would otherwise vote in favor of
such consent or direction is required to withhold its consent or
direction by virtue of voting rights granted to one or more of
its participants (each such Lender being referred to as a
"Constrained Lender"), then, such Constrained Lender shall cast
its vote in respect of such proposed consent or direction by
apportioning its vote (on a ratable basis based on the relative
percentages of beneficial interests in such Constrained Lender's
Revolving Commitment) with respect thereto.
(d) Subject to the confidentiality requirement set forth in
Section 13.18 hereof, each Lender may furnish any information
concerning the Credit Parties and their respective Subsidiaries in
the possession of such Lender from time to time to assignees and
participants (including prospective assignees and participants).
(e) In the event that any Lender shall assign or sell all
or any part of its pro rata share of any Advance or Advances made by
it or its Revolving Commitment or any other interests herein or in
its Notes, such Lender shall at the time of such assignment or sale
give Written Notice to the Administrative Agent of the name and
address of the assignee (including the name of the account officer if
applicable). Further, and as a condition to the effectiveness of any
such assignment or sale, the assignee shall pay to the Administrative
Agent a fee of $2,500 to record such assignment or sale.
(f) Notwithstanding anything herein to the contrary, except
as set forth in the proviso hereto, any partial assignment of the
Revolving Loan and the Revolving Credit Facility Commitment shall be
in an aggregate amount at least equal to $10,000,000 and any partial
participation of the Revolving Loan and the Revolving Credit Facility
Commitment shall be in an aggregate face (maximum) amount at least
equal to $10,000,000; provided, however, that the foregoing
limitations with respect to partial assignment of the Revolving Loan
and the Revolving Credit Facility Commitment and partial
participation of the Revolving Loan and the Revolving Credit Facility
Commitment shall be reduced to $5,000,000 in the case of up to three
participants of Congress and any replacements thereof and any
assignees of such participants or replacements thereof.
(g) The Borrowers will assist each Lender in effectuating
any such assignments, sales or participation by each Lender in
whatever manner such Lender reasonably deems necessary.
(h) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time create a security interest in
all or any portion of its rights to receive monies under this
Agreement (including, without limitation, under its share of the
Revolving Loan and Notes held by such Lender) in favor of any Federal
Reserve Bank of the Board of Governors of the Federal Reserve System.
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(i) Any assignment and delegation by a Lender of any
portion of its Revolving Commitment made in accordance with the terms
hereof after the Closing Date shall relieve such Lender of the
portion of its Revolving Commitment so assigned and delegated.
(j) (i) Subject to clause (vi) below, in the event that
any Lender which is an Agent (the "Agent Lender") intends to sell,
assign or transfer (other than by participation) any interest in its
Notes and Revolving Credit Commitment (a "Restricted Interest"), and
as a result of such sale, assignment or transfer (a "Restricted
Transfer") the percentage interest of the Agent Lender in the
Aggregate Revolving Commitments shall become less than that held by
any one or more Lenders for their own account unparticipated (each, a
"Benefitted Lender"), the Agent Lender shall notify each Benefitted
Lender in writing not less than ten (10) Business Days prior to the
date of such Restricted Transfer of the amount, principal financial
terms and proposed closing date of such Restricted Transfer and the
percentage interest in the Aggregate Revolving Commitments of the
Agent Lender as a result of such Restricted Transfer and such written
notice shall constitute an offer to each Benefitted Lender to
participate (to the exclusion of the Agent Lender) in the Restricted
Transfer to the extent of the "Required Percentage" (as defined
below), upon the same terms and conditions as those of the Restricted
Transfer and pursuant to substantially the same documentation as that
used by the Agent Lender in effecting its sale. Each Benefitted
Lender shall respond in writing to such offer not less than three (3)
Business Days after receiving such offer and shall be deemed to have
rejected such offer if no written response is received by the Agent
Lender within such time period. Acceptance by a Benefitted Lender of
such offer shall require that such Benefitted Lender consummate the
subject sale at the time by which the Agent Lender is required to
close under the terms described in the offer.
(ii) No Benefitted Lender shall be entitled to participate
in a Restricted Transfer as to any portion of the Restricted Interest
which was not accepted for sale by any other Benefitted Lender. The
Agent Lender may sell to its intended transferee any portion of the
Restricted Interest as to which a rejection was received or deemed to
have been received under this Section 13.15(j).
(iii) In the event that a Benefitted Lender defaults in
consummating a sale for which acceptance was given under this Section
13.15(j), such Benefitted Lender shall purchase from the Agent
Lender, at the request of the Agent Lender, the Required Percentage
of the Restricted Interest which such Benefitted Lender was obligated
to sell to the intended transferee.
(iv) For the purposes of this Section 13.15(j), the term
"Required Percentage" shall mean that percentage which, assuming each
Benefitted Lender entitled to notice under this Section 13.15(j)
participates in the Restricted Transfer, will result in the Agent
Lender and such Benefitted Lenders holding the same percentage in the
Aggregate Revolving Commitments immediately after giving effect to
such Restricted Transfer and the participation by the Agent Lender
and such Benefitted Lenders therein.
<PAGE>
<PAGE>
(v) The provisions of this Section 13.15(j) are intended
solely for the benefit of the Administrative Agent and the Lenders
and no Credit Party shall be entitled to enforce or otherwise be
entitled to the benefits of this Section 13.15(j) (as a third party
beneficiary or otherwise).
(vi) Notwithstanding anything to the contrary contained in
the foregoing provisions of this Section 13.15(j), no Agent shall be
required to issue a notice of an intended Restricted Transfer or
otherwise comply with the requirements of clause (i) above if such
Agent shall give notice of its resignation as Administrative Agent or
Co-Agent, as the case may be (which resignation may be conditioned
upon the consummation of such Restricted Transfer), on or prior to
the time such notification under clause (i) would be required, and
such resignation, subject to Section 13.13(i) or Section 13.13(j)
hereof, as applicable, shall be effective no later than the date of
consummation of such Restricted Transfer.
(k) Each Lender shall upon receipt of request from any
other Lender disclose to such requesting Lender the identity and
participating interest of any participant of such Lender that has
been granted a right to consent as to any matters under the Loan
Documents other than those which require the consent of all Lenders.
13.16 COUNTERPARTS; FACSIMILE SIGNATURE. (a) This
Agreement may be executed by the parties hereto individually or in
any combination, in one or more counterparts, each of which shall be
an original and all of which shall together constitute one and the
same agreement.
(b) Delivery of an executed counterpart of a signature page
to this Agreement by telecopier shall be effective as delivery of a
manually executed counterpart of this Agreement.
13.17 INVALIDITY. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective
and valid under all applicable laws and regulations. If, however,
any provision of this Agreement shall be prohibited by or invalid
under any such law or regulation, it shall be deemed modified to
conform to the minimum requirements of such law or regulation, or, if
for any reason it is not deemed so modified, it shall be ineffective
and invalid only to the extent of such prohibition or invalidity
without the remainder thereof or any of the remaining provisions of
this Agreement being prohibited or invalid.
13.18 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
any Credit Party and provided to it by any Credit Party or any
Subsidiary of any Credit Party, or by the Administrative Agent on
such Credit Party's or Subsidiary's behalf, in connection with this
Agreement or any other Loan Document, and neither it nor any of its
Affiliates shall use any such information for any purpose or in any
manner other than pursuant to the terms contemplated by this
Agreement; except to the extent such information (i) was or becomes
generally available to the public other than as a result of a
disclosure by such Lender, or (ii) was or becomes available on a
<PAGE>
<PAGE>
non-confidential basis from a source other than any Credit Party,
provided that such source is not bound by a confidentiality agreement
with any Credit Party known to the Lender; PROVIDED FURTHER, HOWEVER,
that any Lender may disclose such information (A) at the request or
pursuant to any requirement of any governmental authority to which
the Lender is subject or in connection with an examination of such
Lender by any such authority; (B) pursuant to subpoena or other court
process; (C) when required to do so in accordance with the provisions
of any applicable requirement of law; (D) to the extent reasonably
required in connection with any litigation or proceeding to which any
Agent, any Lender or any of their respective Affiliates and a Credit
Party may be party, (E) to the extent reasonably required in
connection with the exercise of any remedy hereunder or under any
other Loan Document, and (F) to such Lender's independent auditors
and other professional advisors. A Lender disclosing information
under clause (B) or (D) of the immediately preceding sentence shall
give reasonable prior notice to the Borrowers thereof, to the extent
not prohibited by law, provided, that no Lender shall be liable to
any Person for failure to give any such notice. Notwithstanding the
foregoing, the Credit Parties authorize each Lender to disclose to
any participant or assignee (each, a "Transferee") and to any
prospective Transferee, such financial and other information in such
Lender's possession concerning any Credit Party or its Subsidiaries
which has been delivered to any Agent or any Lender pursuant to this
Agreement or which has been delivered to any Agent or any Lender by
any Credit Party in connection with the Lenders' credit evaluation of
the Credit Party prior to entering into this Agreement; PROVIDED
that, unless otherwise agreed by the Credit Party, such Transferee
agrees in writing to such Lender to keep such information
confidential to the same extent required of the Lenders hereunder.
In no event shall the Administrative Agent, any Co-Agent or any
Lender be liable under this Section 13.18 for any direct, indirect,
consequential or punitive damages resulting from disclosure permitted
under this Section 13.18.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers thereunto
duly authorized as of the day and year first above written.
ZAYRE NEW ENGLAND CORP.
By: /s/ CORNELIUS F. MOSES III
-----------------------------
Name:
Title:
By: /s/ ANGELINA M. SPOTO
-----------------------------
Name:
Title:
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Neil Moses and David Lissy, Esq.
Telecopy No.: (203) 257-7806
<PAGE>
<PAGE>
AMES STORES
By: Zayre New England Corp.,
its general partner
By: /s/ CORNELIUS F. MOSES III
-----------------------------
Name:
Title:
By: /s/ ANGELINA M. SPOTO
-----------------------------
Name:
Title:
By: Zayre Central Corp.,
its general partner
By: /s/ CORNELIUS F. MOSES III
------------------------------
Name:
Title:
By: /s/ ANGELINA M. SPOTO
------------------------------
Name:
Title:
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Neil Moses and David Lissy, Esq.
Telecopy No.: (203) 257-7806
<PAGE>
<PAGE>
AMES DEPARTMENT STORES, INC.
By: /s/ CORNELIUS F. MOSES III
------------------------------
Name:
Title:
By: /s/ ANGELINA M. SPOTO
------------------------------
Name:
Title:
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Neil Moses and David Lissy, Esq.
Telecopy No.: (203) 257-7806
ZAYRE CENTRAL CORP.
By: /s/ CORNELIUS F. MOSES III
------------------------------
Name:
Title:
By: /s/ ANGELINA M. SPOTO
-----------------------------
Name:
Title:
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Neil Moses and David Lissy, Esq.
Telecopy No.: (203) 257-7806
<PAGE>
<PAGE>
AMD, INC.
By: /s/ CORNELIUS F. MOSES III
------------------------------
Name:
Title:
By: /s/ ANGELINA M. SPOTO
-----------------------------
Name:
Title:
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Neil Moses and David Lissy, Esq.
Telecopy No.: (203) 257-7806
AMES REALTY II, INC.
By: /s/ CORNELIUS F. MOSES III
------------------------------
Name:
Title:
By: /s/ ANGELINA M. SPOTO
------------------------------
Name:
Title:
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Neil Moses and David Lissy, Esq.
Telecopy No.: (203) 257-7806
<PAGE>
<PAGE>
AMES TRANSPORTATION SYSTEMS, INC.
By: /s/ CORNELIUS F. MOSES III
------------------------------
Name:
Title:
By: /s/ ANGELINA M. SPOTO
------------------------------
Name:
Title:
Address: 2418 Main Street
Rocky Hill, Connecticut 06067
Attn: Neil Moses and David Lissy, Esq.
Telecopy No.: (203) 257-7806
BANKAMERICA BUSINESS CREDIT, INC.,
Individually and as Administrative Agent
By: /s/ G. C. MARKOWSKY
------------------------------
Name:
Title:
Address: 40 East 52nd Street
New York, New York 10022
Attn: Division Manager
Telecopy No.: (212) 836-5167
<PAGE>
<PAGE>
GENERAL ELECTRIC CAPITAL CORPORATION,
Individually and as Co-Agent
By: /s/ TIMOTHY MORRIS
------------------------------
Name:
Title:
Address: 501 Merritt Seven
Norwalk, Connecticut 06851
Attn: Vice President - Portfolio
Telecopy No.: (203) 840-4560
CONGRESS FINANCIAL CORPORATION,
Individually and as Co-Agent
By: /s/ DANIEL E. WOLF
-------------------------------
Name:
Title: Vice President
Address: 1133 Avenue of the Americas
New York, New York 10036
Attn: Mark Fagnani
Telecopy No.: (212) 545-4555
SANWA BUSINESS CREDIT CORPORATION
By: /s/ PETER L. SKALVA
---------------------------------
Name:
Title:
Address: 500 Glenpointe Centre West
Teaneck, New Jersey 07666
Attn: Peter Skalva
Telecopy No.: (201) 836-4744
<PAGE>
<PAGE>
CHEMICAL BANK
By: /s/ ROBERT S. ARTH
--------------------------------
Name:
Title: Vice President
Address: 633 Third Avenue
New York, New York 10017
Attn: Credit Deputy
Telecopy No.: (212) 622-5218
TRANSAMERICA BUSINESS CREDIT CORPORATION
By: /s/ MICHAEL BURNS
--------------------------------------
Name:
Title: Vice President
Address: 555 Theodore Frend Avenue
Suite C-301
Rye, New York 10580
Attn: Steven R. Fisher
Telecopy No.: (914) 921-0110
LASALLE BUSINESS CREDIT, INC.
By: /s/ MARY ELLEN NIXON-MOORE
-------------------------------------
Name:
Title: Vice President
Address: 477 Madison Avenue
12th Floor
New York, New York 10022
Attn: Mary Ellen Nixon-Moore
Telecopy No.: (212) 371-2966
<PAGE>
<PAGE>
SHAWMUT BANK CONNECTICUT, N.A.
By: /s/ BRENT G. HAZZARD
------------------------------------
Name:
Title: Vice President
Address: 777 Main Street
Hartford, Connecticut 06115
Attn:
Telecopy No.:
<PAGE>
<PAGE>
<TABLE>
EXHIBIT A
---------
LENDERS, COMMITMENTS AND INITIAL EURODOLLAR OFFICES
---------------------------------------------------
<CAPTION>
AGGREGATE
LENDER AND INITIAL REVOLVING REVOLVING
EURODOLLAR OFFICE COMMITMENT COMMITMENTS
- - ------------------ ---------- -----------
AMOUNT APPROXIMATE %
------ -------------
<S> <C> <C>
BankAmerica Business Credit, Inc. $75,000,000 25%
40 East 52nd Street
New York, New York 10022
General Electric Capital Corporation $50,000,000 16.67%
501 Merritt Seven
Norwalk, Connecticut 06851
Congress Financial Corporation $75,000,000 25%
1133 Avenue of the Americas
New York, New York 10036
Sanwa Business Credit Corporation $30,000,000 10%
500 Glenpointe Centre West
Teaneck, New Jersey 07666-6802
Transamerica Business Credit Corporation $25,000,000 8.33%
555 Theodore Frend Avenue - Suite C-301
Rye, New York 10580
Chemical Bank $25,000,000 8.33%
633 Third Avenue
New York, New York 10017
LaSalle Business Credit, Inc. $10,000,000 3.33%
477 Madison Avenue - 20th Floor
New York, New York 10022
Shawmut Bank Connecticut, N.A. $10,000,000 3.33%
777 Main Street - MSN 240
Hartford, Connecticut 06115
</TABLE>
<PAGE>
<PAGE>
SCHEDULE 4.6
FACILITY FEES
-------------
A. TRANCHE A FACILITY FEE
----------------------
Each Lender shall be entitled to that portion of the Tranche A
Facility Fee set forth opposite such Lender's name when and as the
Tranche A Facility Fee is actually received by the Administrative
Agent pursuant to the Credit Agreement:
AMOUNT OF TRANCHE A
NAME OF LENDER FACILITY FEE
-------------- -------------------
BankAmerica Business Credit, Inc. $2,011,000
General Electric Capital Corporation 947,000
Congress Financial Corporation 1,181,000
Sanwa Business Credit Corporation 405,000
Chemical Bank 338,000
Transamerica Business Credit Corporation 338,000
LaSalle Business Credit, Inc. 90,000
Shawmut Bank Connecticut, N.A. 90,000
----------
$5,400,000
B. TRANCHE B FACILITY FEE
----------------------
Each Lender shall be entitled to that percentage of the Tranche
B Facility Fee set forth opposite such Lender's name when and as any
portion of the Tranche B Facility Fee is actually received by the
Administrative Agent pursuant to the Credit Agreement:
PERCENTAGE OF TRANCHE B
NAME OF LENDER FACILITY FEE
-------------- ---------------------
BankAmerica Business Credit, Inc. 35.2%
General Electric Capital Corporation 17.2
Congress Financial Corporation 22.5
Sanwa Business Credit Corporation 7.5
Chemical Bank 6.3
Transamerica Business Credit Corporation 6.3
LaSalle Business Credit, Inc. 2.5
Shawmut Bank Connecticut, N.A. 2.5
------
100%
<PAGE>
<PAGE>
<TABLE>
SCHEDULE 2.6(e)
- - ---------------------
<CAPTION>
The ratio, as of the date
of the applicable financial
statements, of (i) the sum of The ratio, as of the
EBITDA plus the aggregate date of the applicable
amount of Rentals of Ames financial statements,
and its Subsidiaries on a of (i) EBITDA to
consolidated basis to (ii) the (ii) the sum of
sum of Interest Expense of Interest Expense of Ames
Ames plus Rentals of Ames plus Capital Expenditures Applicable
and its Subsidiaries on a of Ames and its Subsidiaries Margin for
consolidated basis, in each on a consolidated basis, in Tranche A Applicable
case for the Fiscal Year each case for the Fiscal Reference Margin for Aggregate annual fees of
ending on such date, Year ending on such date, Rate LIBOR the Administrative Agent
equals or exceeds equals or exceeds Loans Loans under Section 4.7 hereof
------------------------------------ --------------------------- --------- --------- ---------------------------
<S> <C> <C> <C> <C> <C>
Level 1 0 to 1 0 to 1 2% 3-3/4% $500,000
Level 2 1.25 to 1 1.10 to 1 1-3/4% 3-1/2% $375,000
Level 3 1.50 to 1 1.25 to 1 1-1/2% 3-1/4% $250,000
Level 4 1.75 to 1 1.50 to 1 1-1/4% 3% $250,000
Level 5 2.00 to 1 1.75 to 1 1% 2-3/4% $250,000
</TABLE>
<PAGE>
SCHEDULE 4.1(B)
- - ---------------
INVENTORY LEVERAGE RATIO. The ratio of (i) the aggregate amount
of accounts payable of Ames and its Subsidiaries on a consolidated
basis to (ii) the aggregate amount of Inventory of the Borrowers on a
combined basis shall not, as of the last day of each fiscal quarter
of each Fiscal Year set forth below, be less than the ratio set forth
below opposite such day:
FISCAL QUARTER ENDING
ON OR ABOUT RATIO
--------------------- -----
July 31, 1994 0.128:1
October 31, 1994 0.216:1
January 31, 1995 0.179:1
April 30, 1995 0.119:1
July 31, 1995 0.140:1
October 31, 1995 0.238:1
January 31, 1996 0.193:1
April 30, 1996 0.141:1
July 31, 1996 0.169:1
October 31, 1996 0.276:1
January 31, 1997 0.229:1
<PAGE>
<PAGE>
The following schedules and exhibits to the New Facility have
been omitted:
Schedule 1.1(a) - Existing Debt
Schedule 1.1(b) - Reinstated Debt
Schedule 1.1(c) - Landlord Lien States
Schedule 5.3 - Excluded Collateral
Schedule 5.4 - Mortgaged Real Property
Schedule 6.12 - Unblocked Accounts
Schedule 9.3 - Insurance
Schedule 10.2 - Existing Liens
Schedule 10.3 - Indebtedness
Schedule 12.1 - Capitalization and Subsidiaries
Schedule 12.4 - Litigation
Schedule 12.5 - Real Property
Schedule 12.5(b) - Defective Properties
Schedule 12.8 - Taxes
Schedule 12.13 - ERISA
Schedule 12.15 - Environmental Matters
Schedule 12.18 - Bank Accounts
Schedule 12.19 - Collective Bargaining Agreements
Schedule 12.20 - Other Ventures
Schedule 12.22 - Material Contracts
Schedule 13.2(c)(ii) - Assets Held For Sale
Exhibit 2.3(a) - Form of Note
Exhibit 2.4(a) - Form of Borrower's Certificate
Exhibit 2.4(e) - Form of Settlement Report
Exhibit 5.1(a)-1 - Form of Pledge Agreement
(Capital Stock)
Exhibit 5.1(a)-2 - Form of Pledge Agreement
(Partnership Interests)
Exhibit 5.1 (b) - Form of Note Pledge Agreement
Exhibit 5.2 - Form of Trademark, Patent and
Copyright Security Agreement
Exhibit 5.3(a) - Form of Security Agreement
Exhibit 5.8 - Form of Guaranty
Exhibit 6.10(a) - Form of Intercompany Note
Exhibit 6.10(b) - Form of Subordinated Intercompany Note
Exhibit 6.10(c) - Form of Intercompany Security Agreement
Exhibit 6.19 - Form of Solvency Certificate
Exhibit 6.22(i) - Form of Amendment to
Management Agreement
Exhibit 6.22(ii) - Form of Intercompany
Subordination Agreement
Exhibit 6.22(iii) - Form of Bill of Sale
Exhibit 6.23 - Form of Accountants Letter
Exhibit 9.1(k) - Form of Borrowing Base Certificate
Exhibit 10.1 - Form of Settlement Agreement
Exhibit 12.6(b) - Projections
