Exhibit 4.81
CREDIT AGREEMENT
among
SPECIALTY RETAILERS, INC.,
as Borrower
STAGE STORES, INC.,
as Guarantor
THE BANKS NAMED HEREIN,
and
CREDIT SUISSE FIRST BOSTON,
as Administrative Agent and Collateral Agent
Dated as of March 6, 2000
$35,000,000
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS 1
Section 1.1 Definitions 1
SECTION 2. AMOUNT AND TERMS OF CREDIT FACILITIES 25
Section 2.1 Revolving Loans 25
Section 2.2 Notice of Borrowing 25
Section 2.3 Disbursement of Funds 26
Section 2.4 Evidence of Indebtedness; Revolving Notes 26
Section 2.5 Interest 27
Section 2.6 Interest Periods 28
Section 2.7 Minimum Amount of Eurodollar Loans 28
Section 2.8 Conversion or Continuation 28
Section 2.9 Voluntary and Mandatory Reductions of
Commitments 29
Section 2.10 Voluntary Prepayments 29
Section 2.11 Mandatory Prepayments 29
Section 2.12 Application of Prepayments 31
Section 2.13 Method and Place of Payment 31
Section 2.14 Fees 32
Section 2.15 Interest Rate Unascertainable, Increased
Costs, Illegality 32
Section 2.16 Funding Losses 34
Section 2.17 Increased Capital 34
Section 2.18 Taxes 35
Section 2.19 Action of Affected Banks 36
Section 2.20 Use of Proceeds 36
SECTION 3. CONDITIONS PRECEDENT 36
Section 3.1 Conditions Precedent to Initial Loans 36
Section 3.2 Conditions Precedent to All Loans 39
SECTION 4. REPRESENTATIONS AND WARRANTIES 40
Section 4.1 Corporate Status 40
Section 4.2 Corporate Power and Authority 40
Section 4.3 No Violation 41
Section 4.4 Litigation 41
Section 4.5 Financial Statements; Financial Condition;
etc. 41
Section 4.6 [Intentionally left blank]. 41
Section 4.7 Projections 41
Section 4.8 Material Adverse Effect 41
Section 4.9 Use of Proceeds; Margin Regulations 42
Section 4.10 Governmental Approvals 42
Section 4.11 Security Interests and Liens 42
Section 4.12 Tax Returns and Payments 42
Section 4.13 ERISA 42
Section 4.14 Investment Company Act; Public Utility
Holding Company Act 43
Section 4.15 Representations and Warranties in Loan
Documents 43
Section 4.16 True and Complete Disclosure 43
Section 4.17 Corporate Structure; Capitalization 43
Section 4.18 Environmental Matters 44
Section 4.19 Insurance 44
Section 4.20 Patents, Trademarks, etc. 45
Section 4.21 Ownership of Property 45
Section 4.22 No Default 45
Section 4.23 Licenses, etc. 45
Section 4.24 Compliance With Law 45
Section 4.25 No Burdensome Restrictions 45
Section 4.26 Labor Matters 45
Section 4.27 Parent Business 46
Section 4.28 Cash Balances 46
SECTION 5. AFFIRMATIVE COVENANTS 46
Section 5.1 Information Covenants 46
Section 5.2 Books, Records and Inspections 50
Section 5.3 Maintenance of Insurance 50
Section 5.4 Taxes 50
Section 5.5 Corporate Franchises 51
Section 5.6 Compliance with Law 51
Section 5.7 Performance of Obligations 51
Section 5.8 Maintenance of Properties 51
Section 5.9 Further Assurances 51
Section 5.10 Receivables Program Refinancings. 52
Section 5.11 Maintenance of Corporate Separateness 52
Section 5.12 Post Closing Opinions 52
Section 5.13 Corporate Concentration Account 52
Section 5.14 Cash Sweep 53
Section 5.15 Cash Equivalents 53
Section 5.16 Projections 53
SECTION 6. NEGATIVE COVENANTS 53
Section 6.1 Financial Covenants 53
Section 6.2 Indebtedness 55
Section 6.3 Liens 56
Section 6.4 Restriction on Fundamental Changes 57
Section 6.5 Sale of Assets 57
Section 6.6 Contingent Obligations 58
Section 6.7 Dividends 58
Section 6.8 Advances, Investments and Loans 59
Section 6.9 Transactions with Affiliates 60
Section 6.10 Limitation on Voluntary Payments and
Modifications of Certain Documents 60
Section 6.11 Changes in Business 60
Section 6.12 Certain Restrictions 60
Section 6.13 Sales and Leasebacks 61
Section 6.14 Plans 61
Section 6.15 Limitation on Dispositions of Subsidiary
Stock 61
Section 6.16 Fiscal Year; Fiscal Quarter 61
Section 6.17 Receivables Program 61
SECTION 7. EVENTS OF DEFAULT 62
Section 7.1 Events of Default 62
Section 7.2 Rights and Remedies 64
SECTION 8. THE ADMINISTRATIVE AGENT AND COLLATERAL AGENT 65
Section 8.1 Appointment 65
Section 8.2 Delegation of Duties 65
Section 8.3 Exculpatory Provisions 66
Section 8.4 Reliance by Agent 66
Section 8.5 Notice of Default 66
Section 8.6 Non-Reliance on Agent and Other Banks 66
Section 8.7 Indemnification 67
Section 8.8 Agent in its Individual Capacity 67
Section 8.9 Successor Agent 67
SECTION 9. MISCELLANEOUS 68
Section 9.1 Payment of Expenses, Indemnity, etc. 68
Section 9.2 Right of Setoff 69
Section 9.3 Notices 69
Section 9.4 Successors and Assigns; Participation;
Assignments 70
Section 9.5 Amendments and Waivers 71
Section 9.6 No Waiver; Remedies Cumulative 72
Section 9.7 Sharing of Payments 72
Section 9.8 Governing Law; Submission to Jurisdiction 73
Section 9.9 Counterparts 73
Section 9.10 Effectiveness 73
Section 9.11 Headings Descriptive 73
Section 9.12 Marshalling; Recapture 73
Section 9.13 Severability 74
Section 9.14 Survival 74
Section 9.15 Domicile of Loans 74
Section 9.16 Limitation of Liability 74
Section 9.17 Calculations; Computations 74
Section 9.18 Waiver of Trial by Jury 75
Section 9.19 Nature of Borrowers' Obligations 75
SECTION 10. PARENT GUARANTY 76
Section 10.1 The Parent Guaranty 76
Section 10.2 Bankruptcy 76
Section 10.3 Nature of Liability 77
Section 10.4 Independent Obligation 77
Section 10.5 Authorization 77
Section 10.6 Reliance 78
Section 10.7 Subordination 78
Section 10.8 Waiver 78
Section 10.9 Maximum Liability 79
EXHIBITS
Exhibit A - Form of Notice of Borrowing
Exhibit B - Form of Revolving Note
Exhibit C-1 - Form of Notice of Conversion
Exhibit C-2 - Form of Notice of Continuation
Exhibit D - Form of Security Agreement
Exhibit E - Form of Subsidiary Guaranty
Exhibit F - Form of Warrant Agreement
Exhibit G - Form of Opinion of CW&T, counsel to the Loan Parties
Exhibit H - Form of Monthly Financials
Exhibit I - Form of Monthly Reports
Exhibit J - Form of Compliance Certificate
Exhibit K - Form of Excess Cash Flow Certificate
Exhibit L - Form of Transfer Supplement
Exhibit M - Form of Intercompany Note
SCHEDULES
Schedule I - Material Subsidiaries of Specialty and Stage
Schedule II - Receivables Program Documents
Schedule 4.8 - Material Adverse Changes
Schedule 4.10 - Governmental Approvals
Schedule 4.13 - ERISA
Schedule 4.17 - Corporate Structure; Capitalization
Schedule 4.18 - Environmental Matters
Schedule 4.19 - Insurance
Schedule 4.21 - Ownership of Property
Schedule 4.26 - Labor Matters
Schedule 6.2 - Existing Indebtedness
Schedule 6.3 - Existing Liens
Schedule 6.6 - Contingent Obligations
Schedule 6.9 - Leases
CREDIT AGREEMENT, dated as of March 6, 2000, among
SPECIALTY RETAILERS, INC., a Texas corporation (the "Borrower"),
STAGE STORES, INC., a Delaware corporation (the "Parent"), the
Banks (such term and each other capitalized term used herein
having the meaning assigned to such term in Section 1), and
CREDIT SUISSE FIRST BOSTON, acting in its capacity as agent for
the Banks (in such capacity, the "Administrative Agent") and in
its capacity as collateral agent for the Banks (in such capacity,
the "Collateral Agent").
The Borrower has requested that the Banks extend credit
to the Borrower to enable the Borrower to borrow on a revolving
basis Revolving Loans in an aggregate principal amount up to (but
not to exceed) $35,000,000.
The proceeds of the Revolving Loans will be used for
working capital of the Borrower and its Subsidiaries.
Accordingly, the Borrower, the Parent, the Banks, the
Administrative Agent and the Collateral Agent hereby agree as
follows:
SECTION 10 DEFINITIONS.
Section 1.1 Definitions. As used herein, the fol
lowing terms shall have the meanings herein specified unless the
context otherwise requires. Defined terms in this Agreement
shall include in the singular number the plural and in the plural
number the singular.
"Adjusted Leverage Ratio" shall mean on any day the
ratio on such day of (i) Consolidated Total Debt on such day
determined on a Pro Forma Basis to (ii) Consolidated Adjusted
EBITDA for the four consecutive quarters of the Parent (taken as
one accounting period) most recently ended.
"Administrative Agent" shall mean Credit Suisse First
Boston acting in its capacity as administrative agent for the
Banks and any successor agent appointed in accordance with
Section 8.9.
"Administrative Agent's Office" shall mean the office
of the Administrative Agent located at Eleven Madison Avenue, New
York, New York, 10010, or such other office as the Administrative
Agent may hereafter designate in writing as such to the other
parties hereto.
"Affiliate" shall mean, with respect to any Person, any
other Person directly or indirectly controlling (including but
not limited to all directors and officers of such Person),
controlled by, or under direct or indirect common control with
such Person. A Person shall be deemed to control a corporation
if such Person possesses, directly or indirectly, the power to
(i) vote 10% or more of the securities having ordinary voting
power for the election of directors of such corporation or (ii)
direct or cause the direction of the management and policies of
such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Agent" shall have the meaning provided in Section 8.1.
"Agreement" shall mean this Credit Agreement as the
same may from time to time hereafter be modified, supplemented,
restated, or amended.
"Anticipated Reinvestment Amount" shall mean, with
respect to any Reinvestment Election exercised with respect to an
Eligible Asset Sale, the amount specified in the Reinvestment
Notice delivered by the Borrower in connection therewith as the
amount of the Net Cash Proceeds from the related Eligible Asset
Sale that the Borrower intends to use to purchase, construct or
otherwise acquire Reinvestment Assets.
"Asset Sale" shall mean the sale, transfer or other
disposition (whether voluntary or involuntary) by the Parent or
any of its Subsidiaries (including, without limitation, by way of
the damage, destruction or condemnation thereof) to any Person
other than any Loan Party of (a) any capital stock of any
Subsidiary of the Parent or any of its Subsidiaries; (b) substan
tially all the assets of any geographic or other division or line
of business of the Parent or any of its Subsidiaries; or (c) any
other asset or assets (excluding inventory and other assets pur
chased for sale to others in the ordinary course of business and
sales of Receivables pursuant to the Receivables Program) of the
Parent or any of its Subsidiaries, provided that (i) any asset
sale included in clause (c) above shall be deemed not to be an
"Asset Sale" until the aggregate amount of all such sales after
the Closing Date by the Parent and its Subsidiaries, taken togeth
er, that have not previously become Asset Sales under this
Agreement equals or exceeds $1,000,000, (ii) any asset sale or
series of related asset sales described in clause (c) above
having a value less than $100,000 shall not be deemed an "Asset
Sale" for purposes of this Agreement and (iii) any sale of (x)
the aircraft owned by the Borrower, (y) any asset sale or series
of asset sales related to the sale of the C.R. Anthony Company
corporate headquarters building located in Oklahoma City,
Oklahoma or the sale of equipment located at the C.R. Anthony
Company distribution center located in Oklahoma City, Oklahoma
and (z) the sale of not more than five leasehold interests per
year relating to stores closed in the ordinary course of business
(so long as the value of each such leasehold interest does not
exceed $500,000), shall be deemed not to be an "Asset Sale"
hereunder.
"Authorized Officer" shall mean with respect to any
Person such Person's Chairman, President or Principal Financial
Officer.
"Bankruptcy Code" shall mean Title 11 of the United
States Code entitled "Bankruptcy", as amended from time to time,
and any successor statute or statutes, together with all rules
promulgated in connection therewith.
"Banks" shall mean the Persons listed on Annex 1 hereto
and the Persons which from time to time become a party hereto in
accordance with Section 9.4(c).
"Base Rate" shall mean, for any day, a rate per annum
equal to the greater of (a) the Prime Rate in effect on such day
and (b) the Federal Funds Effective Rate in effect on such day
plus 1/2 of 1%. If for any reason the Administrative Agent shall
have determined (which determination shall be conclusive absent
manifest error) that it is unable to ascertain the Federal Funds
Effective Rate for any reason, including the inability of the
Administrative Agent to obtain sufficient quotations in
accordance with the terms thereof, the Base Rate shall be deter
mined without regard to clause (b) of the first sentence of this
definition until the circumstances giving rise to such inability
no longer exist. Any change in the Base Rate due to a change in
the Prime Rate or the Federal Funds Effective Rate shall be
effective on the effective date of such change in the Prime Rate
or the Federal Funds Effective Rate, respectively, without notice
to the Borrower.
"Base Rate Loans" shall mean Loans made and/or being
maintained at a rate of interest based upon the Base Rate.
"Bealls Subordinated Notes" shall mean (i) the
$14,982,914 12% Bealls Holding Subordinated Notes due 2002, (ii)
the $14,312,959 7% Bealls Junior Subordinated Debentures due 2003
and (iii) the $4,381,185 7% FB Holdings Subordinated Notes due
2000.
"Borrower" shall have the meaning provided in the first
paragraph of this Agreement.
"Borrower's Share of Excess Cash Flow" shall mean the
amount of Excess Cash Flow, determined on a cumulative basis from
January 30, 2000 through the last day of the fiscal year most
recently ended prior to the date of determination, that is not
required to be applied to the prepayment of the Loans pursuant to
the Existing Credit Agreement or Section 2.11(a)(iii) minus the
amount thereof previously applied to make additional Capital
Expenditures pursuant to Section 6.1(d).
"Borrowing" shall mean the incurrence of one Type of
Loan from all the Banks on a given date (or resulting from conver
sions or continuations on a given date), having in the case of
Eurodollar Loans the same Interest Period.
"Business Day" shall mean (i) for all purposes other
than as covered by clause (ii) below, any day excluding Saturday,
Sunday and any day which shall be in New York City a legal
holiday or a day on which banking institutions are authorized or
required by law or other government actions to close and (ii)
with respect to all notices and determinations in connection
with, and payments of principal and interest on, Eurodollar
Loans, any day which is a Business Day described in clause (i)
and which is also a day for trading by and between banks for U.S.
dollar deposits in the London Interbank Eurodollar market.
"Capital Expenditures" shall mean, for any period, the
sum of expenditures (whether paid in cash or accrued as a
liability, including the portion of Capital Leases originally
incurred during such period that is capitalized on the
consolidated balance sheet of the Parent and its Subsidiaries) by
the Parent and its Subsidiaries during such period that, in
conformity with GAAP, are included in "capital expenditures",
"additions to property, plant or equipment" or comparable items
in the consolidated financial statements of the Parent and its
Subsidiaries.
"Capital Lease" shall mean (i) any lease of property,
real or personal, the obligations under which are capitalized on
the consolidated balance sheet of the Parent and its
Subsidiaries, and (ii) any other such lease to the extent that
the then present value of the minimum rental commitment
thereunder should, in accordance with GAAP, be capitalized on a
balance sheet of the lessee.
"Capital Lease Obligations" shall mean all obligations
of the Parent and its Subsidiaries under or in respect of Capital
Leases.
"Cash Equivalents" shall mean (i) securities issued or
directly and fully guaranteed or insured by the United States of
America or any agency or instrumentality thereof (provided that
the full faith and credit of the United States of America is
pledged in support thereof) having maturities of not more than
365 days from the date of acquisition, (ii) time deposits and
certificates of deposit of any Bank or any domestic commercial
bank of recognized standing having capital and surplus in excess
of $500,000,000 with maturities of not more than 365 days from
the date of acquisition, (iii) fully secured repurchase
obligations with a term of not more than 7 days for underlying
securities of the types described in clause (i) entered into with
any bank meeting the qualifications specified in clause (ii)
above, and (iv) commercial paper issued by the parent corporation
of any Bank or any domestic commercial bank of recognized
standing having capital and surplus in excess of $500,000,000 and
commercial paper rated at least A-1 or the equivalent thereof by
Standard & Poor's or at least P-1 or the equivalent thereof by
Moody's and in each case maturing within 270 days after the date
of acquisition.
"Change of Control" shall mean (a) the Parent shall
cease to own, beneficially and of record, 100% of the outstanding
capital stock of the Borrower, (b) any Person or group of Persons
(within the meaning of Section 13 or 14 of the Exchange Act)
shall have acquired beneficial ownership (within the meaning of
Rule 13d-3 promulgated by the Securities and Exchange Commission
under the Exchange Act) of 35% or more of the outstanding shares
of any class of outstanding common stock of the Parent,
(c) Continuing Directors shall cease to constitute a majority of
the board of directors of the Parent. "Continuing Director"
shall mean at any date a member of the Parent's board of
directors who was either a member of such board on the Closing
Date or was nominated for election to such board by at least two-
thirds of the Continuing Directors then in office or (d) a
"Change of Control" as defined in either the Senior Note
Indenture or the Senior Subordinated Note Indenture.
"Cleanup" shall mean all actions required to: (a)
cleanup, remove, treat or remediate Materials of Environmental
Concern in the indoor or outdoor environment, (b) prevent the
Release of Materials of Environmental Concern so that they do not
migrate, endanger or threaten to endanger public health or
welfare or the indoor or outdoor environment, (c) perform
pre-remedial studies and investigations and post-remedial
monitoring and care, or (d) respond to any government requests
for information or documents in any way relating to cleanup,
removal, treatment or remediation or potential cleanup, removal,
treatment or remediation of Materials of Environmental Concern in
the indoor or outdoor environment.
"Closing Date" shall mean the date on which the
conditions precedent set forth in Section 3.1 have been
satisfied.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and any successor statute, together
with all rules and regulations promulgated in connection
therewith.
"Collateral" shall mean all property and interests in
property now owned or hereafter acquired in or upon which a Lien
has been or is purported or intended to have been granted to the
Collateral Agent under any of the Security Documents.
"Collateral Agent" shall mean Credit Suisse First
Boston acting in its capacity as collateral agent for the Secured
Creditors under the Security Documents and any successor collater
al agent appointed in accordance with Section 8.9.
"Commitment" shall mean, for each Bank at any given
time, its Revolving Loan Commitment.
"Commitment Fee" shall have the meaning set forth in
Section 2.14(b).
"Commitment Letter" shall mean that certain letter
agreement among the Borrower, the Parent and each of the Banks,
dated as of February 18, 2000, relating to the Transactions.
"Compliance Certificate" shall mean a certificate of
the Principal Financial Officer of the Borrower in the form of
Exhibit J hereto and delivered pursuant to Section 5.1(h) hereto.
"Consolidated Adjusted EBITDA" shall mean, for any peri
od, the Consolidated EBITDA for such period determined on a Pro
Forma Basis.
"Consolidated Cash Interest Expense" shall mean, for
any period, Consolidated Interest Expense for such period minus
the amount of such Consolidated Interest Expense not paid or
payable in cash.
"Consolidated Current Assets" shall mean, at any time,
the current assets (other than cash and Cash Equivalents) of the
Parent and its Subsidiaries at such time, determined on a
consolidated basis in accordance with GAAP.
"Consolidated Current Liabilities" shall mean, at any
time, the current liabilities (other than the current portion of
all long-term Indebtedness) of the Parent and its Subsidiaries at
such time, determined on a consolidated basis in accordance with
GAAP.
"Consolidated EBITDA" shall mean, for any period, the
sum, without duplication, of (i) Consolidated Net Income for such
period plus (ii) Consolidated Interest Expense for such period
plus (iii) amortization of deferred Indebtedness issuance costs
and expenses for such period plus (iv) federal and state income
taxes deducted in calculating Consolidated Net Income for such
period, plus (v) to the extent deducted in the calculation of
Consolidated Net Income for such period, depreciation and amorti
zation expense plus (vi) to the extent deducted in the
calculation of Consolidated Net Income for such period, any
noncash charges related to the issuance by the Parent or any of
its Subsidiaries of stock, warrants or options to any employee
thereof (or any exercise of any such warrants or options) or any
re-valuation of such stock, warrants or options, minus to the
extent added to the calculation of Consolidated Net Income for
such period, any noncash gain related to the issuance by the
Parent or any of its Subsidiaries of stock, warrants or options
to any employee thereof (or any exercise of any such warrants or
options) or any re-valuation of such stock, warrants or options,
all determined on a consolidated basis for the Parent and its
Subsidiaries in accordance with GAAP plus, (vii) special charges
for restructuring (consisting of store closures, downsizing and
inventory and other valuation reserves) of up to $65,000,000 in
the aggregate taken in the fourth quarter of fiscal year 1999 and
the first two fiscal quarters of fiscal year 2000 as specified on
Schedule 1 to the Fifth Amendment Agreement, dated as of February
3, 2000, to the Existing Credit Agreement, by and among the
parties thereto, or other costs, expenses or losses associated
with the termination of employment of such executives not to
exceed amounts otherwise payable under any such executive's
existing employment contract plus (viii) executive severance
payments pursuant to the current terms of existing employment
contracts, plus (ix) any special charges (to the extent such
charges affect Consolidated EBITDA) relating to the closing of
any stores other than stores listed on Schedule 1 to the Sixth
Amendment Agreement, dated as of February 18, 2000, to the
Existing Credit Agreement, by and among the parties thereto.
"Consolidated Fixed Charges" shall mean, without
duplication, for any period, the sum of (i) all Consolidated
Interest Expense for such period, plus (ii) scheduled payments
due in the next succeeding four quarters for principal of the
Expansion Loans (as defined in the Existing Credit Agreement) and
other Indebtedness (including the principal component of Capital
Leases but excluding amounts due on the Final Maturity Date),
plus (iii) Consolidated Rental Expense plus (iv) all federal and
state income taxes paid or payable in cash during such period,
all as determined on a consolidated basis in accordance with
GAAP.
"Consolidated Interest Expense" shall mean, for any
fiscal period of the Parent, the total interest expense
(including, without limitation, interest expense attributable to
Capital Leases in accordance with GAAP) of the Parent and its
Subsidiaries for such period, minus all interest earnings
received by the Parent and its Subsidiaries in cash during such
period, minus amortization of deferred Indebtedness issuance
costs and expenses for such period, in each case determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Income" for any period, means the net
income (or loss) of the Parent and its Subsidiaries on a
consolidated basis for such period (taken as a single accounting
period) determined in accordance with GAAP provided that there
shall be excluded (a) the income (or loss) of any Person in which
any other Person (other than the Borrower or any of its wholly
owned Subsidiaries or any directors holding qualifying shares)
has a joint interest, except to the extent of the amount of divi
dends or other distributions actually paid to the Borrower or any
of its wholly owned Subsidiaries by such Person during such
period, (b) the income (or loss) of any Person accrued prior to
the date it becomes a Subsidiary or is merged into or
consolidated with the Borrower or any of its Subsidiaries or that
Person's assets are acquired by the Borrower or any of its
Subsidiaries, (c) the income of any Subsidiary to the extent that
the declaration or payment of dividends or similar distributions
by such Subsidiary of that income is not at the time permitted by
operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Subsidiary, (d) any
after tax gains or losses attributable to Asset Sales and (e) (to
the extent not included in clauses (a) through (d) above) any net
extraordinary gains or net non-cash extraordinary losses.
"Consolidated Net Tangible Assets" shall mean, at any
particular time, the aggregate amount of all assets (less
applicable reserves and other properly deductible items) after
deducting therefrom all goodwill, trade names, trademarks,
patents, unamortized debt issue costs (to the extent included in
said aggregate amount of assets) and other like intangibles, as
set forth on the most recent consolidated balance sheet of the
Parent and its Subsidiaries and computed in accordance with GAAP.
"Consolidated Rental Expense" shall mean for any period
all rents accrued during such period under operating leases under
which the Parent or any of its Subsidiaries is the lessee, as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Total Debt" shall mean, at any time, all
Indebtedness of the Parent and its Subsidiaries, as determined on
a consolidated basis in accordance with GAAP.
"Consolidated Total Senior Debt" shall mean, at any
time, all Indebtedness of the Parent and its Subsidiaries other
than the Senior Subordinated Notes and Indebtedness which by its
terms is expressly subordinated to the Obligations and all other
senior obligations of the Parent and its Subsidiaries.
"Consolidated Working Capital" shall mean at any time
an amount equal to Consolidated Current Assets minus Consolidated
Current Liabilities at such time.
"Contingent Obligation" as to any Person shall mean any
obligation of such Person guaranteeing or intended to guarantee
any Indebtedness, leases, dividends or other obligations
("Primary Obligations") of any other Person (the "Primary
Obligor") in any manner, whether directly or indirectly, in
cluding, without limitation, any obligation of such Person,
whether or not contingent, (i) to purchase any such Primary
Obligation or any property constituting direct or indirect
security therefor, (ii) to advance or supply funds (x) for the
purchase or payment of any such Primary Obligation or (y) to
maintain working capital or equity capital of the Primary Obligor
or otherwise to maintain the net worth or solvency of the Primary
Obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such
Primary Obligation of the ability of the Primary Obligor to make
payment of such Primary Obligation or (iv) otherwise to assure or
hold harmless the owner of such Primary Obligation against loss
in respect thereof; provided, however, that the term Contingent
Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The
amount of any Contingent Obligation shall be deemed to be an
amount equal to the stated or determinable amount of the Primary
Obligation in respect of which such Contingent Obligation is made
or, if not stated or determinable, the maximum anticipated
liability in respect thereof (assuming such Person is required to
perform thereunder) as determined by such Person in good faith.
"Corporate Concentration Account" shall mean that
certain deposit account at Chase Bank of Texas, account number
, or the Successor Corporate Concentration Account.
"Credit Exposure" shall have the meaning provided in
Section 9.4(b).
"Custodial Account" shall have the meaning provided in
Section 4.28.
"Default" shall mean any event, act or condition which
with notice or lapse of time, or both, would constitute an Event
of Default.
"Default Rate" shall have the meaning provided in
Section 2.5(c).
"Dividends" shall have the meaning provided in Section
6.7.
"Domestic Lending Office" shall mean, as to any Bank,
the office of such Bank designated as such on Annex 1, or such
other office designated by such Bank from time to time by written
notice to the Administrative Agent and the Borrower.
"Eligible Asset Sale" shall mean any Asset Sale, the
Net Cash Proceeds of which shall not exceed 5% of Consolidated
Net Tangible Assets at the time of such sale in the case of any
individual Asset Sale or 10% of Consolidated Net Tangible Assets
in the aggregate for all such Asset Sales.
"Environmental Affiliate" shall mean, with respect to
any Person, any other Person whose liability for any Environ
mental Claim such Person has or may have retained, assumed or
otherwise become liable for (contingently or otherwise), either
contractually or by operation of law.
"Environmental Approvals" shall mean any permit,
license, approval, ruling, variance, exemption or other authoriza
tion required under applicable Environmental Laws.
"Environmental Claim" shall mean, with respect to any
Person, any notice, claim, demand or similar communication
(written or oral) by any other Person alleging potential lia
bility for investigatory costs, cleanup costs, governmental
response costs, natural resources damages, property damages,
personal injuries, fines or penalties arising out of, based on or
resulting from (i) the presence, or release into the environment,
of any Material of Environmental Concern at any location, whether
or not owned by such Person or (ii) circumstances forming the
basis of any violation, or alleged violation, of any Environ
mental Law.
"Environmental Laws" shall mean all federal, state,
local and foreign laws and regulations relating to pollution or
protection of human health or the environment (including, without
limitation, ambient air, surface water, ground water, land
surface or subsurface strata), including without limitation, laws
and regulations relating to emissions, discharges, releases or
threatened releases of Materials of Environmental Concern, or
otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern.
"Equity Issuance" shall mean any issuance or sale by
the Parent or any of its Subsidiaries of any shares of capital
stock or other equity securities of such Person, or any
obligations convertible into or exchangeable for, or giving any
Person a right, option or warrant to acquire such securities or
such convertible or exchangeable obligations, other than (a)
sales or issuances to the Parent or any of its wholly owned
Subsidiaries and (b) sales or issuances of common stock or
options to management or employees of the Parent or any of its
Subsidiaries under any employee stock option or stock purchase
plan or plan established pursuant to Section 401(k) of the Code
in existence from time to time.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time, together with
all rules and regulations promulgated in connection therewith.
Section references to ERISA are to ERISA, as in effect at the
date of this Agreement and any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Controlled Group" means a group consisting of
any ERISA Person and all members of a controlled group of
corporations and all trades or businesses (whether or not incorpo
rated) under common control with such Person that, together with
such Person, are treated as a single employer under regulations
of the PBGC.
"ERISA Person" shall have the meaning set forth in Sec
tion 3(9) of ERISA for the term "person."
"ERISA Plan" means any Plan that (i) is a Multiemployer
Plan or (ii) has Unfunded Benefit Liabilities in excess of
$500,000.
"Eurodollar Lending Office" shall mean, as to any Bank,
the office of such Bank designated as such on Annex 1, or such
other office designated by such Bank from time to time by written
notice to the Administrative Agent and the Borrower.
"Eurodollar Loans" shall mean Loans made and/or being
maintained at a rate of interest based upon the Eurodollar Rate.
"Eurodollar Rate" shall mean, for any Interest Period
for each Eurodollar Loan, an interest rate per annum equal to the
rate determined by the Administrative Agent at approximately
11:00 a.m. (London time) two Business Days before the first day
of such Interest Period by reference to the British Bankers'
Association Interest Settlement Rates for deposits in dollars (as
set forth by any services selected by the Administrative Agent
which has been nominated by the British Bankers' Association as
an authorized information vendor for the purpose of displaying
such rates) for a period equal to the relevant Interest Period;
provided that, to the extent that an interest rate is not
ascertainable pursuant to the foregoing provisions of this
definition, the "Eurodollar Rate" shall be the interest rate per
annum determined by the Administrative Agent to be the average
(rounded upward to the nearest whole multiple of one-sixteenth of
one percent (0.0625%) per annum, if such average is not such a
multiple) of the rates per annum at which deposits in dollars are
offered to major banks in the London interbank market in London,
England by the Reference Banks at approximately 11:00 a.m.
(London time) two Business Days before the first day of such
Interest Period for such Interest Period.
"Event of Default" shall have the meaning provided in
Section 7.
"Excess Cash Flow" shall mean, with respect to any
fiscal period of the Borrower, an amount equal to (i)
Consolidated Net Income for such fiscal period, plus (ii)
depreciation and amortization expense to the extent deducted in
determining Consolidated Net Income for such fiscal period, plus
(iii) Consolidated Interest Expense (other than Consolidated Cash
Interest Expense) during such fiscal period plus amortization of
deferred Indebtedness issuance costs and expenses for such
period, plus (or minus) (iv) any increase (or decrease) in
deferred taxes during such fiscal period, plus (or minus) (v)
decreases (or increases) in Consolidated Working Capital from the
last day of the preceding fiscal period to the last day of such
fiscal period (excluding, however, decreases in Consolidated Work
ing Capital to the extent such decreases are attributable to
Asset Sales), minus (vi) the aggregate amount paid or payable in
cash by the Borrower and its Subsidiaries during such fiscal
period for Capital Expenditures permitted pursuant to Section
6.1(d) (except to the extent financed with Capital Leases, the
proceeds of purchase money Indebtedness, insurance proceeds,
Retained Equity Proceeds, Retained Offering Proceeds or the
Borrower's Share of Excess Cash Flow and except to the extent
already deducted in the calculation of Excess Cash Flow for any
prior period), minus (vii) all scheduled principal repayments and
voluntary prepayments of the Loans (as defined in the Existing
Credit Agreement) made during such fiscal period, but only to the
extent accompanied by a permanent reduction in the Expansion Loan
Commitment (as defined in the Existing Credit Agreement) or
Revolving Loan Commitment (as defined in the Existing Credit
Agreement), as the case may be, minus (vii) all regularly sched
uled principal payments made during such fiscal period in respect
of other Indebtedness to the extent such Indebtedness and
payments are permitted to be incurred and made hereunder minus
(viii) the aggregate amount actually paid in cash by the Parent
and its Subsidiaries for Permitted Acquisitions (except to the
extent financed with the proceeds of any Indebtedness, including
the Loans, or any Equity Issuance) minus (x) all payments made in
respect of the outstanding principal of the Bealls Subordinated
Notes to the extent permitted pursuant to Section 6.10(a)(iii).
"Excess Cash Flow Certificate" shall mean a certificate
of the Principal Financial Officer of the Borrower in the form of
Exhibit K hereto and delivered pursuant to Section 5.1(h) hereof.
"Existing Credit Agreement" shall mean the Amended and
Restated Credit Agreement, dated as of June 17, 1997, by and
among Specialty Retailers, Inc., Stage Stores, Inc., the various
lending institutions party thereto and Credit Suisse First
Boston, as Administrative Agent, Collateral Agent, Swingline
Bank, and L/C Bank, as amended and restated by the Amendment
Agreement, dated as of June 26, 1997, by and among the parties
thereto, the Second Amendment Agreement, dated as of October 1,
1997, by and among the parties thereto, the Third Amendment
Agreement, dated as of October 7, 1998, by and among the parties
thereto, the Fourth Amendment Agreement, dated as of January 27,
1999, by and among the parties thereto, the Fifth Amendment
Agreement, dated as of February 3, 2000, by and among the parties
thereto, and the Sixth Amendment Agreement, dated as of February
18, 2000, by and among the parties thereto and as amended,
modified or otherwise supplemented from time to time.
"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 that 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.
"Federal Reserve Board" shall mean the Board of Gover
nors of the Federal Reserve System as constituted from time to
time.
"Fees" shall mean all fees and other amounts payable
pursuant to the Loan Documents including, without limitation, the
fees payable pursuant to Section 2.14.
"Final Maturity Date" shall mean June 14, 2002.
"GAAP" shall mean United States generally accepted ac
counting principles as in effect on the date hereof and
consistent with those utilized in the preparation of the finan
cial statements referred to in Section 4.5.
"Guaranteed Creditors" shall mean and include each of
the Administrative Agent, the Collateral Agent and the Banks to
the extent such party constitutes a Secured Creditor under the
Security Documents.
"Guaranteed Obligations" shall mean (i) the full and
prompt payment when due (whether at the stated maturity, by
acceleration or otherwise) of the principal of and interest on
each Note issued by the Borrower to each Bank, and Loans made,
under this Agreement, together with all the other obligations
(including obligations which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code or any similar provision,
would become due) and liabilities (including, without limitation,
indemnities, fees and interest thereon) of the Borrower to such
Bank now existing or hereafter incurred under, arising out of or
in connection with this Agreement or any other Loan Document and
the due performance and compliance with all the terms, conditions
and agreements contained in the Loan Documents by the Borrower
and (ii) the full and prompt payment when due (whether by
acceleration or otherwise) of all obligations (including
obligations which, but for the automatic stay under Section
362(a) of the Bankruptcy Code, would become due) of each
Guarantor owing under the Parent Guaranty or the Subsidiary
Guaranty.
"Guarantor" shall mean the Parent and each Material
Subsidiary of the Borrower or the Parent specified on Schedule I
hereto and any Material Subsidiary of the Borrower or the Parent
which shall have executed and delivered a Subsidiary Guaranty
pursuant to Section 5.9(c) hereof, other than the Receivables
Subsidiary.
"Indebtedness" of any Person shall mean, without
duplication, (i) all indebtedness of such Person for borrowed
money or for the deferred purchase price of property or services
(other than trade payables on terms of 90 days or less incurred
in the ordinary course of business of such Person), (ii) all
indebtedness of such Person evidenced by a note, bond, debenture
or similar instrument, (iii) the principal component of all
Capital Lease Obligations of such Person, (iv) the face amount of
all letters of credit issued for the account of such Person and,
without duplication, all unreimbursed amounts drawn thereunder,
(v) all indebtedness of any other Person secured by any Lien on
any property owned by such Person, whether or not such
indebtedness has been assumed, (vi) all Contingent Obligations of
such Person, (vii) all net payment obligations of such Person
under any interest rate protection agreement (including, without
limitation, any interest rate swaps, caps, floors, collars and
similar agreements) and currency swaps and similar agreements and
(viii) all indebtedness created or arising under any conditional
sale or other title retention agreement with respect to property
acquired by such Person (even if the rights and remedies of the
seller or lender thereunder upon a default are limited to
repossession or sale of such property) .
"Intercompany Note" shall mean a promissory note issued
by the Parent to the Borrower substantially in the form of
Exhibit M hereto evidencing the loans, if any, made by the
Borrower to the Parent pursuant to Section 6.8 (b)(ii) hereof.
"Interest Period" shall mean with respect to any
Eurodollar Loan:
(i) initially, the period commencing on the borrowing
or the conversion date, as the case may be, with respect to
such Eurodollar Loan and ending on the numerically
corresponding calendar day in the calendar month that is one
month thereafter, as selected by the Borrower in its Notice
of Borrowing, Notice of Conversion or Notice of Contin
uation, as the case may be, given with respect thereto; and
(ii) thereafter, each period commencing on the last
day of the next preceding Interest Period applicable to such
Eurodollar Loan and ending one month thereafter, as selected
by the Borrower by irrevocable notice to the Administrative
Agent not less than three Business Days prior to the last
day of the then current Interest Period with respect
thereto;
provided that, all of the foregoing provisions relating to
Interest Periods are subject to the following:
(A) if any Interest Period pertaining to a Eurodollar
Loan would otherwise end on a day that is not a Business
Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension
would be to carry such Interest Period into another calendar
month in which event such Interest Period shall end on the
immediately preceding Business Day;
(B) no Interest Period shall extend beyond any date
upon which a scheduled reduction of the Revolving Loan
Commitments will be required pursuant to Section 2.9 if the
aggregate principal amount of Revolving Loans having
Interest Periods extending beyond such date will exceed the
aggregate principal amount of the Revolving Loan Commitments
after giving effect to such scheduled reduction;
(C) any Interest Period that would otherwise extend
beyond the Final Maturity Date shall end on the Final
Maturity Date; and
(D) any Interest Period pertaining to a Eurodollar
Loan that 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 the end of such
Interest Period) shall end on the last Business Day of a
calendar month.
"Inventory" shall mean all of the Borrower's and its
Subsidiaries' inventory, including, without limitation (a) all
goods, wares and merchandise held for sale or lease or leased or
furnished or to be furnished under contracts of service; and (b)
all goods returned to, reclaimed by or repossessed by the
Borrower.
"Investment" shall have the meaning provided in Section
6.8.
"Lending Office" shall mean, with respect to any Bank,
a collective reference to such Bank's Eurodollar Lending Office
and Domestic Lending Office.
"Leverage Ratio" shall mean on any day the ratio on
such day of (i) Consolidated Total Debt on such day to (ii)
Consolidated EBITDA for the four consecutive fiscal quarters of
the Parent (taken as one accounting period) most recently ended.
"Lien" shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, charge, lien (stat
utory or other), or preference, priority or other security
agreement of any kind or nature whatsoever, including, without
limitation, any conditional sale or other title retention agree
ment, any financing lease having substantially the same effect as
any of the foregoing and the filing of any financing statement or
similar instrument under the Uniform Commercial Code or
comparable law of any jurisdiction, domestic or foreign.
"Loans" shall mean the Revolving Loans.
"Loan Documents" shall mean this Agreement, the
Revolving Notes, the Subsidiary Guaranty, the Warrant Agreement
and the Security Documents and any other documents or instruments
executed or delivered in connection therewith, together with all
amendments, restatements and modifications thereto or thereof.
"Loan Party" shall mean and include the Borrower, the
Parent and each Guarantor.
"Margin Percentage" shall mean at any time that
percentage (a) to be added to the Base Rate or the Eurodollar
Rate, as appropriate, pursuant to Section 2.5, for purposes of
determining the per annum rate of interest applicable from time
to time to Base Rate Loans or Eurodollar Loans and (b) to be used
in computing the Commitment Fee pursuant to Section 2.14, which
in each case on any date shall be the applicable percentage set
forth under the appropriate column below opposite the category in
which the Adjusted Leverage Ratio, determined (subject to the
last sentence hereof) as of the end of the most recent fiscal
quarter for which financial statements and Compliance
Certificates are required to have been delivered under Section
5.1(a), (b) and (h) (whether or not such financial statements and
Compliance Certificates for any subsequent quarter shall in fact
have been delivered):
Adjusted Eurodollar Base Rate
Leverage Margin Margin
Ratio
Category 1 <= 2.0 to 1.0 1.00% 0.00%
Category 2 <= 3.0 to 1.0 1.50% 0.50%
and > 2.0 to 1.0
Category 3 <= 3.50 to 1.0 1.75% 0.75%
and > 3.0 to 1.0
Category 4 <= 4.0 to 1.0 2.00% 1.00%
and > 3.50 to 1.0
Category 5 <= 4.5 to 1 2.25% 1.25%
and > 4.0 to 1
Category 6 <= 5.0 to 1 3.0% 2.0%
and > 4.5 to 1
Category 7 >5.0 to 1 3.25% 2.25%
provided that, notwithstanding the foregoing, (i) from the
Closing Date until a Compliance Certificate for the most recently
ended fiscal quarter has been received, the Margin Percentage
shall be determined by reference to Category 7 and (ii) at any
time during which the Borrower has failed to deliver the
financial statements and Compliance Certificates described in
Section 5.1(a), (b) and (h) with respect to a fiscal quarter or
fiscal year in accordance with the provisions thereof, or at any
time during which an Event of Default shall have occurred and
shall be continuing, the Margin Percentage shall be determined by
reference to Category 7. Each change in the Margin Percentage
shall be applicable with respect to the Commitment Fees and out
standing Revolving Loans on the Business Day after the date on
which the Administrative Agent shall have received the financial
statements and Compliance Certificates required to be delivered
pursuant to Section 5.1(a), (b) and (h) provided, however, that
on the effective date of any Permitted Acquisition, the Borrower
shall be required to deliver an additional Compliance Certificate
(together with pro forma financial statements) which calculates
the Adjusted Leverage Ratio as of such date after giving effect
to such Permitted Acquisition and any other Permitted Acquisition
occurring during such period and any change in the Margin Percent
age shall become effective on the Business Day after the date of
delivery of such additional Compliance Certificate.
"Margin Stock" shall have the meaning provided such
term in Regulation U and Regulation G of the Federal Reserve
Board.
"Material Adverse Effect" shall mean a material adverse
effect upon (i) the business, operations, properties, assets or
condition (financial or otherwise) of the Parent and its
Subsidiaries taken as a whole or (ii) the ability of any Loan
Party to perform, or of the Administrative Agent, the Collateral
Agent or any of the Banks to enforce, any of the Obligations.
"Materials of Environmental Concern" shall mean and
include chemicals, pollutants, contaminants, wastes, toxic
substances, petroleum and petroleum products.
"Material Subsidiary" means, as of any date, any
Subsidiary of the Parent (other than the Borrower), either alone
or together with its Subsidiaries, that has assets with a fair
market value of $250,000 or more as of the last day of the most
recently ended fiscal quarter of the Parent or annual revenues
(or annualized revenues in the case of any Person that has not
been a Subsidiary of the Parent for a full year) of $1,000,000 or
more as of the most recently ended fiscal quarter of the Parent.
"Maximum Amount" shall have the meaning set forth in
Section 6.1(d).
"Moody's" shall mean Moody's Investors Service, Inc. or
any of its successors.
"Multiemployer Plan" shall mean a Plan which is a
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" shall mean (a) with respect to any
Asset Sale, the cash payments (including cash payments received
by way of insurance proceeds, deferred payment pursuant to a note
receivable or otherwise, but only as and when so received)
received therefrom, net of (i) bona fide direct costs of sale
(including payment of (x) the outstanding principal amount of,
premium or penalty, if any, and interest on any Indebtedness
(other than Loans) secured by or required to be repaid under the
terms thereof as a result of such Asset Sale and (y) reasonable
fees associated with such Asset Sale paid to Persons that are not
Affiliates of the Parent and (ii) income taxes paid or reasonably
estimated to be payable in the year such Asset Sale occurs or in
the following year as a result thereof) and (b) with respect to
any incurrence or disposition of Indebtedness or any Equity
Issuance, the cash proceeds received therefrom net of
underwriting commissions or placement fees and expenses directly
incurred in connection therewith.
"Notes" shall mean and include each Revolving Note.
"Notice of Borrowing" shall mean a notice of borrowing
in the form of Exhibit A hereto.
"Notice of Conversion" shall mean a notice of
conversion in the form of Exhibit C-1 hereto.
"Notice of Continuation" shall mean a notice of
continuation in the form of Exhibit C-2 hereto.
"Obligations" shall mean all obligations, liabilities
and indebtedness of every nature of the Borrower and the Guar
antors from time to time owing to the Administrative Agent, the
Collateral Agent or any Bank, under or in connection with this
Agreement or any other Loan Document.
"Parent" shall have the meaning provided in the first
paragraph of this Agreement.
"Parent Guaranty" shall mean the guaranty of the Parent
pursuant to Section 10.
"Participant" shall have the meaning provided in
Section 9.4(b).
"Payment Date" shall mean the last Business Day of each
March, June, September and December of each year.
"PBGC" shall mean the Pension Benefit Guaranty Corpora
tion established under ERISA, or any successor thereto.
"Permitted Acquired Indebtedness" shall mean
Indebtedness of any Subsidiary of the Parent or the Borrower
acquired pursuant to a Permitted Acquisition, which Indebtedness
existed at the time of the consummation of any such acquisition
and was not created in contemplation thereof (and the provisions
of which were not altered in contemplation thereof), so long as
(x) the Parent or the Borrower and its other respective
Subsidiaries (other than the Subsidiary being so acquired) have
no liability with respect to any such Indebtedness other than the
assumption of any such Indebtedness in connection with a merger
of such Subsidiary with, or the acquisition of all or
substantially all of the assets of such Person by, the Borrower
or any Subsidiary of the Parent or the Borrower and (y) any Liens
securing such Indebtedness apply only to assets of the Subsidiary
so acquired (and so long as additional assets of such Subsidiary
are not granted as security following, or in contemplation of,
the respective Permitted Acquisition).
"Permitted Acquisition" shall mean the acquisition by
the Parent or the Borrower of assets constituting part of or an
entire business, division or product line of any Person not
already a Subsidiary of the Parent or the Borrower, as the case
may be, or of 100% (or such lesser amount as shall be necessary
to immediately consummate a statutory "short-form" merger under
the laws of the relevant jurisdiction and which merger is
thereafter immediately consummated) of the capital stock of any
such Person, which Person shall, as a result of such acquisition,
become a Subsidiary; provided that an acquisition shall only be a
Permitted Acquisition if the following terms and conditions shall
be satisfied:
(a) (i) the consideration paid by the Parent or
the Borrower, as the case may be, consists of cash or common
stock, the issuance of Indebtedness otherwise permitted in
Section 6.2 and the assumption/acquisition of any Permitted
Acquired Indebtedness (calculated at face value) relating to
such business, division or product line of any Person which
is permitted to remain outstanding in accordance with the
requirements of Section 6.2;
(ii) the assets acquired, or the business of
the Person whose stock is acquired shall (A) be in the same
line of business or reasonably incidental thereto as the
business of the Parent or the Borrower, as the case may be,
and (B) be merged with or into the Borrower or any
Subsidiary of the Borrower or the Parent or become a direct
Subsidiary of the Borrower or any Subsidiary of the Borrower
or the Parent;
(iii) in the case of the acquisition of 100%
of the capital stock of any Person, such Person shall own no
capital stock of any other Person unless such Person owns
100% of the capital stock of such other Person or such
Investment is otherwise permitted by Section 6.8(h);
(iv) no Default or Event of Default shall be
in existence at the time of the consummation of the proposed
Permitted Acquisition or immediately after giving effect
thereto;
(v) the Parent or the Borrower, as the case
may be, shall have given the Administrative Agent at least
13 Business Days' prior written notice of any Permitted
Acquisition for which the consideration to be paid is in
excess of $25,000,000 or at least 8 Business Days' prior
written notice of any Permitted Acquisition for which the
consideration to be paid is equal to or less than
$25,000,000 (such notices to include the compliance
calculations referred to in clauses (vi) and (vii) below and
a brief business description of the Permitted Acquisition
and copies of which notices the Administrative Agent shall
promptly furnish to the Banks);
(vi) calculations are made by the Parent or
the Borrower, as the case may be, of compliance with the
covenants contained in Section 6.1 on a Pro Forma Basis for
the period of four consecutive fiscal quarters (taken as one
accounting period) most recently ended prior to the date of
such Permitted Acquisition (each, a "Calculation Period"),
as if the respective Permitted Acquisition (as well as all
other Permitted Acquisitions theretofore consummated after
the first day of such Calculation Period) had occurred on
the first day of such Calculation Period, and such
recalculations shall show that such financial covenants
would have been complied with if the Permitted Acquisition
had occurred on the first day of such Calculation Period
(for this purpose, if the first day of the respective
Calculation Period occurs prior to the Closing Date,
calculated as if the covenants contained in said Section 6.1
had been applicable from the first day of the Calculation
Period); provided that for the purposes of this clause (vi)
and clause (vii) below the Adjusted Leverage Ratio
demonstrated by such recalculations must be equal to or less
than 4.0:1 from the Closing Date until the third anniversary
of the Closing Date and must be equal to or less than 3.75:1
at any time thereafter;
(vii) based on good faith projections
prepared by the Borrower for the period from the date of the
consummation of the Permitted Acquisition to the date which
is one year thereafter, the level of financial performance
measured by the covenants set forth in Section 6.1 shall be
better than or equal to such level as would be required to
provide that no Default or Event of Default would exist
under the financial covenants contained in Section 6.1 as
compliance with such covenants would be required through the
date which is one year from the date of the consummation of
the respective Permitted Acquisition;
(viii) the Administrative Agent shall have
been satisfied in its reasonable discretion that the
proposed Permitted Acquisition could not reasonably be
expected to result in materially increased tax, ERISA,
environmental or other contingent liabilities with respect
to the Parent, the Borrower or any of their respective
Subsidiaries;
(ix) all representations and warranties
contained herein and in the other Loan Documents 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 Permitted
Acquisition (both before and after giving effect thereto),
unless stated to relate to a specific earlier date, in which
case such representations and warranties shall be true and
correct in all material respects as of such earlier date;
(x) the Parent or the Borrower, as the case
may be, provides to the Administrative Agent as soon as
available but not later than 5 Business Days after the
execution thereof, a copy of any executed purchase agreement
or similar agreement with respect to such Permitted
Acquisition;
(xi) the Parent or the Borrower, as the case
may be, shall have delivered to the Administrative Agent an
officer's certificate executed by an Authorized Officer of
the Borrower, certifying to the best of his knowledge, com
pliance with the requirements of preceding clauses (iv)
through (vii), inclusive, (ix), and containing the calcu
lations required by the preceding clauses (vi) and (vii);
and
(xii) if the total cash purchase price
(including Indebtedness assumed) of any acquisition exceeds
$50,000,000, the Administrative Agent and the Required Banks
shall have given their prior written consent thereto.
(b) The Borrower shall cause each Material
Subsidiary which it or the Parent forms to effect, or it or the
Parent acquires pursuant to, a Permitted Acquisition to comply
with, and to execute and deliver, all of the documentation
required by, Section 5.9, to the satisfaction of the Adminis
trative Agent.
(c) The consummation of each Permitted Acqui
sition shall be deemed to be a representation and warranty by the
Parent and the Borrower that the certifications by the Borrower
(or by one or more of its Authorized Officers) required by clause
(a) above are true and correct and that all conditions thereto
have been satisfied and that such Permitted Acquisition is
permitted in accordance with the terms of this Agreement, which
representation and warranty shall be deemed to be a
representation and warranty for all purposes hereunder,
including, without limitation, Sections 3 and 7.
"Permitted Senior Debt" shall mean unsecured
Indebtedness of the Borrower if (i) such Indebtedness has no
amortization or required sinking fund payments and a final maturi
ty no earlier than, and provisions no more onerous or restrictive
on the Borrower and no less favorable to the Banks in any respect
deemed material by the Required Banks than, those terms and
provisions of the Senior Notes, (ii) the interest rate payable in
respect of such Indebtedness shall be a market interest rate as
of the time of the incurrence thereof and shall not, in case of
Indebtedness bearing interest at a floating rate, exceed the rate
of interest payable on the Loans, (iii) each of the covenants,
events of default and other provisions thereof shall be customary
for issuances of similar indebtedness by companies in a similar
financial condition to the Borrower in accordance with prevailing
market conditions in effect at the time of the issuance thereof
and in any event shall be no more onerous or restrictive on the
Borrower than those contained in the Senior Notes and (iv) the
Net Cash Proceeds thereof shall have been applied to the
prepayment of the Loans to the extent provided in the Existing
Credit Agreement or Section 2.11(a)(ii).
"Permitted Subordinated Debt" shall mean unsecured
subordinated Indebtedness of the Borrower if (i) such
Indebtedness has no amortization or required sinking fund
payments and a final maturity no earlier than, and subordination
provisions no more onerous or restrictive on the Borrower and no
less favorable to the Banks in any respect deemed material by the
Required Banks than, those terms and provisions of the Senior
Subordinated Notes, (ii) the interest rate payable in respect of
such Indebtedness shall be a market interest rate as of the time
of the incurrence thereof and shall not, in case of Indebtedness
bearing interest at a floating rate, exceed the rate of interest
payable on the Revolving Loans, (iii) each of the covenants,
events of default and other provisions thereof shall be customary
for issuances of similar indebtedness by companies in a similar
financial condition to the Borrower in accordance with prevailing
market conditions in effect at the time of the issuance thereof
and in any event shall be no more onerous or restrictive on the
Borrower than those contained in the Senior Subordinated Notes
and (iv) the Net Cash Proceeds thereof shall have been applied to
the prepayment of the Loans to the extent provided in the
Existing Credit Agreement or Section 2.11(a)(ii).
"Person" shall mean and include any individual, partner
ship, joint venture, firm, corporation, limited liability
company, association, trust or other enterprise or any government
or political subdivision or agency, department or instrumentality
thereof.
"Plan" means any employee benefit plan covered by Title
IV of ERISA, the funding requirements of which:
(a) were the responsibility of the Borrower or a
member of its ERISA Controlled Group at any time within the five
years immediately preceding the date hereof,
(b) are currently the responsibility of the
Borrower or a member of its ERISA Controlled Group, or
(c) hereafter become the responsibility of the
Borrower or a member of its ERISA Controlled Group,
including any such plans as may have been, or may hereafter be,
terminated for whatever reason.
"Prime Rate" shall mean the rate of interest per annum
publicly announced from time to time by the Administrative Agent
as its Prime Rate in effect at its principal office in New York
City. The Prime Rate is a reference rate and is not intended to
be the lowest rate of interest charged by the Administrative
Agent in connection with extensions of credit. Each change in
the Prime Rate shall be effective on the date such change is
publicly announced as being effective without notice to the
Borrower or the Guarantors.
"Principal Financial Officer" shall mean, with respect
to any Person, such Person's Chief Financial Officer, Treasurer
or Assistant Treasurer.
"Pro Forma Basis" shall mean, in connection with any
calculation of the Adjusted Leverage Ratio, Consolidated Adjusted
EBITDA or compliance with any financial covenant or financial
term, the calculation thereof after giving effect on a pro forma
basis to (i) the incurrence of any Indebtedness to finance
Permitted Acquisitions after the first day of the relevant
Calculation Period as if such Indebtedness had been incurred (and
the proceeds thereof applied) on the first day of the relevant
Calculation Period; (ii) the permanent repayment of any
Indebtedness after the first day of the relevant Calculation
Period as if such Indebtedness had been retired or redeemed on
the first day of the relevant Calculation Period; and (iii) the
Permitted Acquisitions, if any, then being consummated as well as
any other Permitted Acquisitions consummated after the first day
of the relevant Calculation Period and on or prior to the date of
the respective Permitted Acquisitions then being effected, with
the following rules to apply in connection therewith:
(a) all such Indebtedness (x) incurred or issued
after the first day of the relevant Calculation Period shall be
deemed to have been incurred or issued (and the proceeds thereof
applied) on the first day of the respective Calculation Period
and remain outstanding through the date of determination (and
thereafter in the case of projections pursuant to clause (vii) of
the definition of Permitted Acquisition) and (y) permanently
retired or redeemed after the first day of the relevant Calcula
tion Period shall be deemed to have been retired or redeemed on
the first day of the respective Calculation Period and remain
retired through the date of determination (and thereafter in the
case of projections pursuant to clause (vii) of the definition of
Permitted Acquisition);
(b) all such Indebtedness assumed to be
outstanding pursuant to the preceding clause (i) shall be deemed
to have borne interest or dividends at (x) the rate applicable
thereto, in the case of fixed rate indebtedness or (y) the rates
which would have been applicable thereto during the respective
period when same was deemed outstanding, in the case of floating
rate Indebtedness (although interest or dividends expense with
respect to any Indebtedness actually outstanding during the
respective period shall be calculated using the actual rates
applicable thereto during such period); provided that for purpos
es of the calculations pursuant to clause (vii) of the definition
of Permitted Acquisition, all Indebtedness (whether actually out
standing or deemed outstanding) bearing interest at a floating
rate of interest shall be tested on the basis of the rates
applicable at the time the determination is made pursuant to said
provisions; and
(c) in making any determination of Consolidated
Adjusted EBITDA, (i) in the case of the acquisition of 100% of
the stock of a Person, pro forma effect shall be given to any
Permitted Acquisition for the periods described above, taking
into account, cost savings and expenses which would otherwise be
accounted for as an adjustment pursuant to Article 11 of
Regulation S-X under the Securities Act of 1933, as amended and
as in effect on the Closing Date, as if such cost savings or
expenses were realized on the first day of the relevant
Calculation Period and (ii) in the case of an asset purchase, pro
forma effect shall be given to any Permitted Acquisition for the
period described above, taking into account, cost savings and
expenses reasonably estimated to be realized based upon the good
faith estimates of management, as if such cost savings and
expenses were realized on the first day of the relevant
Calculation Period.
"Pro Rata Share" as to any Bank shall mean a fraction
(expressed as a percentage), the numerator of which shall be the
aggregate amount of such Bank's Revolving Loan Commitment and the
denominator of which shall be the Total Revolving Loan Commit
ment.
"Purchasing Banks" shall have the meaning provided in
Section 9.4(c).
"Receivables" means accounts, general intangibles or
other rights to payment from obligors arising from extensions of
credit to obligors, together with any finance charges or other
fees or charges related thereto, and any related assets which are
transferred under the Receivables Program Documents.
"Receivables Program" shall mean the receivables
securitization program conducted by the Borrower, the Receivables
Subsidiary and any other special purpose receivables Subsidiary
that may be formed or become a Subsidiary in the future pursuant
to the Receivables Program Documents as in effect from time to
time in accordance with the terms hereof.
"Receivables Program Documents" shall mean the
documents listed on Schedule II hereto, and all other
documentation, agreements and instruments entered into in
connection therewith or pursuant to any other receivables
financing program created in the future (including, without
limitation, any such program of a Person in existence at the time
such Person is acquired pursuant to a Permitted Acquisition), as
the same may hereafter be amended, modified, supplemented or
refinanced from time to time in accordance with the provisions
hereof and thereof.
"Receivables Subsidiary" shall mean the collective
reference to (i) SRI Receivables Purchase Company, Inc., a Dela
ware corporation, (ii) any other Subsidiary established by the
Parent or the Borrower in connection with the Receivables Program
and whose sole business is to implement and carry out such
Receivables Program and (iii) any Subsidiary of the Borrower that
is a bank formed for the sole purpose, and whose sole business
is, financing any credit card program implemented by the
Borrower.
"Reference Banks" shall mean Credit Suisse First Boston
and Union Bank of California.
"Regulation D" shall mean Regulation D of the Federal
Reserve Board as from time to time in effect and any successor to
all or any portion thereof.
"Regulation T" shall mean Regulation T of the Federal
Reserve Board as from time to time in effect and any successor to
all or a portion thereof.
"Regulation U" shall mean Regulation U of the Federal
Reserve Board from time to time in effect and any successor to
all or a portion thereof.
"Regulation X" shall mean Regulation X of the Federal
Reserve Board as from time to time in effect and any successor to
all or a portion thereof.
"Reinvestment Assets" shall mean any assets to be
employed in the business of the Borrower and its Subsidiaries as
conducted on the date hereof.
"Reinvestment Election" shall have the meaning provided
in Section 2.11(a)(i).
"Reinvestment Notice" shall mean a written notice
signed by an authorized officer of the Borrower stating that the
Borrower, in good faith, intends and expects to use all or a
specified portion of the Net Cash Proceeds of an Eligible Asset
Sale to purchase, construct or otherwise acquire Reinvestment
Assets.
"Reinvestment Prepayment Amount" shall mean, with
respect to any Reinvestment Election, the amount, if any, on the
Reinvestment Prepayment Date relating thereto by which (a) the
Anticipated Reinvestment Amount in respect of such Reinvestment
Election exceeds (b) the aggregate amount thereof expended by the
Borrower and its Subsidiaries to acquire Reinvestment Assets.
"Reinvestment Prepayment Date" shall mean, with respect
to any Reinvestment Election, the earliest of (i) the date, if
any, upon which the Administrative Agent, on behalf of the
Required Banks, shall have delivered a written termination notice
to the Borrower, provided that such notice may only be given
while an Event of Default exists, (ii) the date occurring one
year after such Reinvestment Election and (iii) the date on which
the Borrower shall have determined not to, or shall have
otherwise ceased to, proceed with the purchase, construction or
other acquisition of Reinvestment Assets with the related Antici
pated Reinvestment Amount.
"Release" shall mean any release, spill, emission,
discharge, leaking, pumping, injection, deposit, disposal, dis
charge, dispersal, leaching or migration into the indoor or
outdoor environment (including, without limitation, ambient air,
surface water, groundwater, and surface or subsurface strata) or
into or out of any property, including the movement of Materials
of Environmental Concern through or in the air, soil, surface
water, groundwater or property.
"Reportable Event" has the meaning set forth in Section
4043(b) of ERISA (other than a Reportable Event as to which the
provision of 30 days notice to the PBGC is waived under
applicable regulations), or is the occurrence of any of the
events described in Section 4068 or 4063(a) of ERISA.
"Required Banks" shall mean Banks holding more than 50%
of the principal amount of Loans outstanding or, if no Loans are
outstanding, more than 50% of the Total Revolving Loan Commit
ment.
"Restricted Payment" shall mean (i) the authorization,
declaration or payment of any Dividend by the Parent or any of
its Subsidiaries or (ii) the making of any payment by the
Borrower or any of its Subsidiaries to the Parent, including,
without limitation, any payments under the Tax Sharing Agreement.
"Retained Equity Proceeds" shall mean at any time the
cumulative amount of Net Cash Proceeds received by the Borrower
from Equity Issuances to the extent such Net Cash Proceeds are
not required to be applied to the prepayment of the Revolving
Loans pursuant to the Existing Credit Agreement or Section
2.11(a)(v) minus the amount thereof previously applied to make
additional Capital Expenditures pursuant to Section 6.1(d).
Notwithstanding the foregoing, only 75% of the first $50,000,000
of Net Cash Proceeds received from New Equity Issuances during
the period from September 30, 1998 and thereafter, shall be
included in Retained Equity Proceeds.
"Retained Offering Proceeds" shall mean at any time the
cumulative amount of (i) 30% of the Net Cash Proceeds received by
the Borrower from the issuance of Permitted Senior Debt and (ii)
40% of the Net Cash Proceeds received by the Borrower from the
issuance of Permitted Subordinated Debt, in each case, to the
extent such Net Cash Proceeds are not required to be applied to
the prepayment of the Revolving Loans pursuant to the Existing
Credit Agreement or Section 2.11(a)(ii) minus the amount thereof
previously applied to make additional Capital Expenditures
pursuant to Section 6.1(d).
"Revolving Loan Commitment" shall mean at any time, for
any Bank, the amount set forth opposite such Bank's name on Annex
1 hereto under the heading "Revolving Loan Commitment," as such
amount may be reduced from time to time pursuant to Sections 2.9
or 9.4(c).
"Revolving Loans" shall have the meaning provided in
Section 2.1(a).
"Revolving Note" shall have the meaning provided in
Section 2.4(b).
"Secured Creditors" shall mean the Administrative
Agent, the Collateral Agent and the Banks.
"Secured Obligations" shall mean all Obligations owed
by the Loan Parties to the Administrative Agent, the Collateral
Agent and the Banks.
"Security Agreement" shall have the meaning provided in
Section 3.1(a)(iii) hereof.
"Security Documents" shall mean and include the
Security Agreement and any agreements, documents or instruments
executed in connection therewith.
"Senior Notes" shall mean the 81/2% Notes due 2005 issued
by the Borrower pursuant to the Senior Note Indenture.
"Senior Note Documents" shall mean the Senior Note
Indenture, the Senior Notes and the Purchase Agreement, dated
June 11, 1997, among the Parent, the Borrower, Credit Suisse
First Boston Corporation, Bear, Stearns & Co. Inc, and Donaldson,
Lufkin & Jenrette Securities Corporation.
"Senior Note Indenture" shall mean the Indenture dated
as of June 17, 1997 between the Borrower and the Senior Note
Trustee pursuant to which the Borrower issued the Senior Notes.
"Senior Note Trustee" shall mean State Street Bank and
Trust Company, in its capacity as trustee under the Senior Note
Indenture.
"Senior Subordinated Notes" shall mean the 9% Notes due
2007 issued by the Borrower pursuant to the Senior Subordinated
Note Indenture.
"Senior Subordinated Note Documents" shall mean the
Senior Subordinated Note Indenture, the Senior Subordinated Notes
and the Purchase Agreement, dated June 11, 1997, among the
Parent, the Borrower, Credit Suisse First Boston Corporation,
Bear, Stearns & Co. Inc, and Donaldson, Lufkin & Jenrette
Securities Corporation.
"Senior Subordinated Note Indenture" shall mean the
Indenture dated as of June 17, 1997 between the Borrower and the
Senior Subordinated Note Trustee pursuant to which the Borrower
issued the Senior Subordinated Notes.
"Senior Subordinated Note Trustee" shall mean State
Street Bank and Trust Company in its capacity as trustee under
the Senior Subordinated Note Indenture.
"Standard & Poor's" shall mean Standard & Poor's Rating
Services, a division of the McGraw-Hill Companies, Inc. or any of
its successors.
"Subsidiary" of any Person shall mean and include (i)
any corporation 50% or more of whose stock of any class or
classes having by the terms thereof ordinary voting power to
elect a majority of the directors of such corporation (irre
spective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power
by reason of the happening of any contingency) is at the time
owned by such Person directly or indirectly through Subsidiaries
and (ii) any partnership, association, joint venture, limited
liability company or other entity in which such Person, directly
or indirectly through Subsidiaries, is either a general partner
or has a 50% or more equity interest at the time.
"Subsidiary Guaranty" shall have the meaning provided
in Section 3.1(a)(iv).
"Successor Corporate Concentration Account" shall have
the meaning provided in Section 5.13.
"Tax Sharing Agreement" shall mean a tax sharing
agreement among the Parent, the Borrower and its Subsidiaries, in
form and substance satisfactory to the Required Banks.
"Termination Event" shall mean (i) a Reportable Event,
or (ii) the initiation of any action by the Borrower, any member
of the Borrower's ERISA Controlled Group or any ERISA Plan
fiduciary to terminate an underfunded ERISA Plan (determined on a
Plan termination basis) or the treatment of an amendment to an
underfunded ERISA Plan (determined on a Plan termination basis)
as a termination under ERISA, or (iii) the institution of
proceedings by the PBGC under Section 4042 of ERISA to terminate
an ERISA Plan or to appoint a trustee to administer any ERISA
Plan.
"Total Revolving Loan Commitment" shall have the
meaning set forth in Section 2.1(a).
"Transactions" shall mean each of the transactions con
templated by the Loan Documents.
"Transferee" shall have the meaning provided in Section
9.4(d).
"Transfer Supplement" shall have the meaning provided
in Section 9.4(c).
"Type" shall mean any type of Loan determined with re
spect to the interest option applicable thereto, i.e., a Base
Rate Loan or a Eurodollar Loan.
"Unfunded Benefit Liabilities" means with respect to
any Plan at any time, the amount (if any) by which (i) the
actuarial present value of all benefit liabilities under such
Plan as defined in Section 4001(a)(16) of ERISA, exceeds (ii) the
fair market value of all Plan assets allocable to such benefits,
all determined as of the then most recent valuation date for such
Plan (on the basis of assumptions utilized by such Plan for
minimum funding purposes under ERISA).
"Warrant Agreement" shall have the meaning provided in
Section 3.1(a)(v) hereof.
"Weighted Average Life to Maturity" means, when applied
to any Indebtedness at any date, the number of years obtained by
dividing (a) the then outstanding principal amount of such
Indebtedness into (b) the total of the product obtained by
multiplying (x) the amount of each then remaining installment,
sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect
thereof by (y) the number of years (calculated to the nearest one-
twelfth) that will elapse between such date and the making of
such payment.
SECTION 2. AMOUNT AND TERMS OF CREDIT FACILITIES.
Section 2.1 Revolving Loans. (a) Subject to and upon
the terms and conditions herein set forth, each Bank severally
and not jointly agrees, at any time and from time to time on and
after the Closing Date and prior to the Final Maturity Date, to
make revolving loans (collectively, "Revolving Loans") to the
Borrower, which Revolving Loans shall not exceed in the aggregate
principal amount at any time outstanding the Revolving Loan
Commitment of such Bank at such time; provided that no Revolving
Loan shall be made if, after giving effect thereto and the use of
the proceeds thereof, the sum of the outstanding principal amount
of Revolving Loans would exceed the sum of the Revolving Loan
Commitments of all the Banks (the "Total Revolving Loan Commit
ment"). The Total Revolving Loan Commitment on the Closing Date
shall be $35,000,000. The Revolving Loans of each Bank shall be
maintained at the option of the Borrower as Base Rate Loans
and/or Eurodollar Loans, in accordance with the provisions here
of.
(b) Revolving Loans may be voluntarily prepaid
pursuant to Section 2.10, and, subject to the other provisions of
this Agreement, any amounts so prepaid may be reborrowed. Each
Bank's Revolving Loan Commitment shall expire, and each Revolving
Loan shall mature on, the Final Maturity Date, without further
action on the part of the Banks or the Administrative Agent.
(c) Each Borrowing of Revolving Loans shall be in
the aggregate minimum amount of $2,000,000 (or in the aggregate
minimum amount of $1,000,000 if the Borrowing of $2,000,000 is
prohibited by the terms of the Senior Note Documents or the
Senior Subordinated Note Documents) or any integral multiple of
$100,000 in excess thereof.
Section 2.2 Notice of Borrowing. (a) Whenever the
Borrower desires to borrow Revolving Loans, the Borrower shall
give the Administrative Agent at the Administrative Agent's
Office prior to 11:00 a.m., (New York City time), at least one
Business Day's prior telecopy or telephonic notice (promptly
confirmed in writing) of each Base Rate Loan, and at least three
Business Days' prior telecopy or telephonic notice (promptly
confirmed in writing) of each Eurodollar Loan to be made here
under. Each such notice (a "Notice of Borrowing") shall be
irrevocable, shall be in the form of Exhibit A hereto, and in any
event shall specify (i) the aggregate principal amount of the
requested Revolving Loans, (ii) the date of Borrowing (which
shall be a Business Day), and (iii) whether such Revolving Loans
shall consist of Base Rate Loans or Eurodollar Loans and, if
Eurodollar Loans, the initial Interest Period to be applicable
thereto, provided that no Notice of Borrowing with respect to a
Eurodollar Loan shall be delivered during any period when a
Default or Event of Default shall have occurred and be
continuing.
(b) Promptly after receipt of a Notice of Borrow
ing, the Administrative Agent shall provide each Bank with the
details of the Notice of Borrowing and inform each Bank as to its
Pro Rata Share of the Loans requested thereunder.
Section 2.3 Disbursement of Funds. (a) No later than
12:00 p.m. (New York City time), on the date specified in each
Notice of Borrowing, each Bank will make available its Pro Rata
Share of the Revolving Loans requested to be made on such date,
in U.S. dollars and immediately available funds, at the
Administrative Agent's Office. Promptly after the Administrative
Agent's receipt of the proceeds of such Revolving Loans, the
Administrative Agent will make available to the Borrower by depos
iting in the Borrower's account designated in writing to the
Administrative Agent the aggregate of the amounts so made
available in the type of funds actually received.
(b) Unless the Administrative Agent shall have
been notified by any Bank prior to the date of a Borrowing that
such Bank does not intend to make available to the Administrative
Agent its portion of the Revolving Loans to be made on such date,
the Administrative Agent may assume that such Bank has made such
amount available to the Administrative Agent on such date and the
Administrative Agent in its sole discretion may, in reliance upon
such assumption, make available to the Borrower a corresponding
amount. If such corresponding amount is not in fact made avail
able to the Administrative Agent by such Bank and the
Administrative Agent has made such amount available to the
Borrower, the Administrative Agent shall be entitled to recover
such corresponding amount on demand from such Bank. If such Bank
does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent
shall promptly notify the Borrower and the Borrower shall imme
diately repay such corresponding amount to the Administrative
Agent. The Administrative Agent shall also be entitled to
recover from such Bank or the Borrower, as the case may be,
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 Borrower to the date such corre
sponding amount is recovered by the Administrative Agent, at a
rate per annum equal to (a) in the case of the Borrower, the then
applicable rate of interest, calculated in accordance with
Section 2.5, for the respective Revolving Loans, and (b) in the
case of any Bank, the Federal Funds Effective Rate. Nothing
herein shall be deemed to relieve any Bank from its obligation to
fulfill its commitments hereunder or to prejudice any rights
which the Borrower may have against any Bank as a result of any
default by such Bank hereunder. Notwithstanding anything
contained herein or in any other Loan Document to the contrary,
the Administrative Agent may apply all funds and proceeds of
Collateral available for the payment of any Obligations first to
repay any amount owing by any Bank to the Administrative Agent as
a result of such Bank's failure to fund its Revolving Loans
hereunder.
Section 2.4 Evidence of Indebtedness; Revolving Notes.
(a) Each Bank shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness to
such Bank and resulting from each Revolving Loan from time to
time, including the amounts of principal and interest payable and
paid to such Bank from time to time under this Agreement. The
Administrative Agent shall maintain accounts in which it will
record (i) the amount of each Revolving Loan made hereunder, the
Type of each Revolving Loan and the Interest Period applicable
thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each
Bank hereunder and (iii) the amount of any sum received by the
Administrative Agent hereunder from the Borrower and each Bank's
Pro Rata Share thereof. The entries made in the accounts
maintained pursuant to this Section 2.4(a) shall be prima facie
evidence of the existence and amounts of the obligations therein
recorded; provided, however, that the failure of any Bank or the
Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligations of the
Borrower to repay the Revolving Loans in accordance with their
terms.
(b) Notwithstanding the foregoing, if requested
by any Bank, the Borrower's obligation to pay the principal of,
and interest on, such Bank's Revolving Loans shall be evidenced
by a promissory note (a "Revolving Note") duly executed and
delivered by the Borrower substantially in the form of Exhibit B
hereto in a principal amount equal to such Bank's Revolving Loan
Commitment, with blanks appropriately completed in conformity
herewith. Each Revolving Note issued to a Bank shall (x) be
payable to such Bank, (y) be dated the Closing Date and (z)
mature on the Final Maturity Date.
(c) Each Bank is hereby authorized, at its
option, either (i) to endorse on the schedule attached to its
Revolving Note (or on a continuation of such schedule attached to
such Revolving Note and made a part thereof) an appropriate
notation evidencing the date and amount of each Revolving Loan
evidenced thereby and the date and amount of each principal and
interest payment in respect thereof, or (ii) to record such
Revolving Loans and such payments in its books and records. Such
schedule or such books and records, as the case may be, shall con
stitute prima facie evidence of the accuracy of the information
contained therein. Failure to make any such endorsements or
recordations or any error in any such endorsements or notations
shall not affect the Borrower's obligations in respect of any
Revolving Loan hereunder.
Section 2.5 Interest. (a) The Borrower agrees to pay
interest in respect of the unpaid principal amount of each Base
Rate Loan from the date of the making of such Base Rate Loan
until such Base Rate Loan shall be paid in full at a rate per
annum which shall be equal to the sum of the applicable Margin
Percentage plus the Base Rate in effect from time to time, such
rate to change as and when the Base Rate changes.
(b) The Borrower agrees to pay interest in
respect of the unpaid principal amount of each Eurodollar Loan
from the date of the making of such Eurodollar Loan until such
Eurodollar Loan shall be paid in full at a rate per annum which
shall be equal to the sum of the applicable Margin Percentage
plus the relevant Eurodollar Rate.
(c) In the event that, and for so long as, any
Event of Default shall have occurred and be continuing, the out
standing principal amount of all Revolving Loans and overdue
interest in respect of all Revolving Loans and interest thereon,
shall bear interest at a rate per annum (the "Default Rate")
equal to the greater of (i) the sum of (x) two percent (2%) and
(y) the Base Rate and the highest Base Rate Margin Percentage
applicable and (ii) the rate which is two percent (2%) in excess
of the interest rate otherwise applicable hereunder to such
principal amount in effect from time to time.
(d) Interest on each Revolving Loan shall accrue
from and including the date of the Borrowing thereof to but
excluding the date of any repayment thereof (provided that any
Revolving Loan borrowed and repaid on the same day shall accrue
one day's interest) and shall be payable (i) in respect of each
Base Rate Loan, quarterly in arrears on each Payment Date, (ii)
in respect of each Eurodollar Loan, on the last day of each
Interest Period applicable to such Loan, and (iii) in the case of
all Revolving Loans, on any prepayment or conversion (on the
amount prepaid or converted); provided that if such Revolving
Loans are Base Rate Loans, interest accrued on such Loans shall
be paid quarterly in arrears on each Payment Date, at maturity
(whether by acceleration or otherwise) and, after such maturity,
on demand.
(e) The Administrative Agent shall, upon
determining the Eurodollar Rate for any Interest Period, promptly
notify the Borrower and the Banks thereof.
(f) The Reference Banks shall provide to the
Administrative Agent the information to be provided by them under
the definition of "Eurodollar Rate" in accordance with the terms
hereof.
Section 2.6 Interest Periods. (a) The Borrower
shall, in each Notice of Borrowing, Notice of Conversion or
Notice of Continuation in respect of the making of, conversion
into or continuation of a Eurodollar Loan, select the Interest
Period applicable to such Eurodollar Loan.
(b) If upon the expiration of any Interest Period
for any Eurodollar Loan, the Borrower has failed to elect a new
Interest Period to be applicable to the respective Eurodollar
Loan as provided above, the Borrower shall be deemed to have
elected to convert such Eurodollar Loans into Base Rate Loans
effective as of the expiration date of such current Interest
Period.
Section 2.7 Minimum Amount of Eurodollar Loans. All
borrowings, conversions, continuations, payments, prepayments and
selections of Interest Periods hereunder shall be made or
selected so that, after giving effect thereto, (i) the aggregate
principal amount of any Borrowing comprised of Eurodollar Loans
shall not be less than $2,000,000 (or in the aggregate minimum
amount of $1,000,000 if the Borrowing of $2,000,000 is prohibited
by the terms of the Senior Note Documents or the Senior
Subordinated Note Documents) or an integral multiple of $100,000
in excess thereof, and (ii) there shall be no more than 18
Borrowings comprised of Eurodollar Loans outstanding at any time.
Section 2.8 Conversion or Continuation. (a) Subject
to the other provisions hereof, the Borrower shall have the
option (i) to convert at any time all or any part of outstanding
Base Rate Loans which comprise part of the same Borrowing to
Eurodollar Loans, (ii) to convert all or any part of outstanding
Eurodollar Loans which comprise part of the same Borrowing to
Base Rate Loans, on the expiration date of the Interest Period
applicable thereto, or (iii) to continue all or any part of
outstanding Eurodollar Loans which comprise part of the same
Borrowing as Eurodollar Loans for an additional Interest Period,
on the expiration of the Interest Period applicable thereto;
provided that no Revolving Loan may be continued as, or converted
into, a Eurodollar Loan when any Default or Event of Default has
occurred and is continuing.
(b) In order to elect to convert or continue a
Revolving Loan under this Section 2.8, the Borrower shall deliver
an irrevocable Notice of Continuation or a Notice of Conversion
to the Administrative Agent no later than 11:00 a.m., (New York
City time), (i) at least one Business Day in advance of the
proposed conversion date in the case of a conversion to a Base
Rate Loan and (ii) at least three Business Days in advance of the
proposed conversion or continuation date in the case of a conver
sion to, or a continuation of, a Eurodollar Loan. Each Notice of
Conversion or Notice of Continuation shall be in the forms of
Exhibits C-1 and C-2 hereto and in any event shall specify (w)
the requested conversion or continuation date (which shall be a
Business Day), (x) the amount of the Revolving Loan to be
converted or continued, (y) whether a conversion or continuation
is requested, and (z) in the case of a conversion to, or a contin
uation of, a Eurodollar Loan, the requested Interest Period.
Promptly after receipt of a Notice of Conversion or Notice of
Continuation under this Section 2.8(b), the Administrative Agent
shall notify each Bank of the details thereof.
Section 2.9 Voluntary and Mandatory Reductions of
Commitments. (a) Upon at least three Business Days' prior irrevo
cable written notice (or telephonic notice promptly confirmed in
writing) to the Administrative Agent (which notice the
Administrative Agent shall promptly transmit to each of the
Banks), the Borrower shall have the right, without premium or
penalty, to permanently reduce each Bank's Pro Rata Share of all
or part of the Total Revolving Loan Commitment, provided that any
such partial reductions shall be in a minimum aggregate amount of
$1,000,000 or any integral multiple of $100,000 in excess thereof
(or any lesser amounts if the Total Revolving Loan Commitment
shall be reduced in full).
(b) Simultaneously with any required prepayment
of the Revolving Loans in accordance with the provisions of
Section 2.11 or 2.12, each Bank's Total Revolving Loan Commitment
shall be permanently reduced by such Bank's Pro Rata Share of the
amount of such prepayment.
Section 2.10 Voluntary Prepayments. The Borrower
shall have the right to prepay the Revolving Loans in whole or in
part from time to time on the following terms and conditions:
(i) the Borrower shall give the Administrative Agent written
notice (or telephonic notice promptly confirmed in writing) not
later than 10:00 a.m. (New York City time), which notice shall be
irrevocable, of its intent to prepay the Revolving Loans, at
least three Business Days prior to a prepayment of Eurodollar
Loans and at least one Business Day prior to a prepayment of Base
Rate Loans, which notice shall specify the amount of such prepay
ment and what Types of Revolving Loans are to be prepaid and, in
the case of Eurodollar Loans, the specific Borrowing(s) pursuant
to which made, and which notice the Administrative Agent shall
promptly transmit to each of the Banks, (ii) each prepayment
shall be in an aggregate principal amount of $1,000,000 or any
integral multiple of $100,000 in excess thereof (or, any lesser
amounts if all of the Loans shall be prepaid in full), and (iii)
any such prepayment shall be accompanied by any additional amount
due pursuant to Section 2.16 hereof.
Section 2.11 Mandatory Prepayments. (a) On and after
the date upon which all Obligations (as defined in the Existing
Credit Agreement) then due and payable have been paid in full or
the Existing Credit Agreement shall have been refinanced
substantially in its entirety, mandatory prepayments shall be
made hereunder with respect to the following:
(i) Asset Sales. On each Business Day
immediately after the date on which the Parent or any of its
Subsidiaries receives any Net Cash Proceeds from an Asset
Sale, the Borrower shall prepay the outstanding Revolving
Loans in an amount equal to 100% of the amount of such Net
Cash Proceeds, in accordance with the provisions of Section
2.12, provided that Net Cash Proceeds from Eligible Asset
Sales shall not be required to be used to so repay Revolving
Loans to the extent the Borrower elects, as hereinafter
provided, to cause such Net Cash Proceeds to be reinvested
in Reinvestment Assets (a "Reinvestment Election"). The
Borrower may exercise its Reinvestment Election with respect
to an Eligible Asset Sale if (x) no Default or Event of
Default exists and (y) the Borrower delivers a Reinvestment
Notice to the Administrative Agent on the Business Day after
the date of the consummation of the respective Eligible
Asset Sale, with such Reinvestment Election being effective
with respect to the Net Cash Proceeds of such Eligible Asset
Sale equal to the Anticipated Reinvestment Amount specified
in such Reinvestment Notice. Notwithstanding the foregoing,
the Borrower shall in any event prepay the Revolving Loans
to the extent necessary to avoid any requirement to make an
"Offer" under and as defined in Section 5.07 of the Senior
Note Indenture and the Senior Subordinated Note Indenture.
(ii) Issuance of Indebtedness. On each date
on which the Parent or any of its Subsidiaries receives any
Net Cash Proceeds from the issuance of any debt securities
or the incurrence of any other Indebtedness (other than
Indebtedness permitted by Section 6.2 (other than clause (g)
thereof) as in effect on the Closing Date), the Borrower
shall prepay the outstanding Revolving Loans in an amount
equal to 50% of such Net Cash Proceeds, if on such date the
Borrower's senior unsecured Indebtedness is rated less than
BBB by Standard & Poor's or Baa2 by Moody's, in accordance
with the provisions of Section 2.12. No prepayments under
this Section shall be required if the preceding sentence is
not applicable at the time such prepayment would be
otherwise required hereby.
(iii) Excess Cash Flow. On the date
occurring 90 days after the close of each fiscal year of the
Borrower (or, if earlier, the seventh day following delivery
of the financial statements referred to in Section 5.1(b) in
respect of such fiscal year) commencing with the fiscal year
ending January 30, 2000, the Borrower shall prepay the out
standing Revolving Loans in an amount equal to (i) if the
Adjusted Leverage Ratio as of the last day of such fiscal
year is greater than 3.5:1.0, 75% of the Excess Cash Flow
for such preceding fiscal year and (ii) if the Adjusted
Leverage Ratio as of the last day of such fiscal year is
less than or equal to 3.5:1.0 and greater than 2.5:1.0, 50%
of the Excess Cash Flow for such preceding fiscal year, each
in accordance with the provisions of Section 2.12. No
prepayments under this Section shall be required if neither
clause (i) or (ii) hereof is applicable at the time such
prepayment would be otherwise required hereby.
(iv) Reinvestment Prepayment Date. On the
Reinvestment Prepayment Date with respect to a Reinvestment
Election, an amount equal to the Reinvestment Prepayment
Amount, if any, for such Reinvestment Election shall be
applied as a repayment of the principal amount of the then
outstanding Revolving Loans in accordance with the
provisions of Section 2.12.
(v) Equity Issuances. On each date on which
the Parent or any of its Subsidiaries receives any Net Cash
Proceeds from any Equity Issuance (other than an Equity
Issuance substantially contemporaneous with any Permitted
Acquisition to the extent that the Net Cash Proceeds thereof
are used to finance such Permitted Acquisition), if the
Adjusted Leverage Ratio as of the last day of the fiscal
quarter most recently ended prior to such date for which
financial statements have been delivered pursuant to Section
5.1(a) or (b) is greater than 3.5:1.0, the Borrower shall
prepay the outstanding Revolving Loans in an amount equal to
50% of such Net Cash Proceeds, in accordance with the provi
sions of Section 2.12. Notwithstanding the foregoing, no
prepayment of Revolving Loans under this Section 2.11(a)(v)
shall be required for the first $50,000,000 of Net Cash
Proceeds received by the Parent or any of its Subsidiaries
from Equity Issuances other than Equity Issuances in
connection with the exercise of outstanding options,
warrants, purchase rights or conversion rights ("New Equity
Issuances"). The amount of Net Cash Proceeds received from
New Equity Issuances in excess of $50,000,000 shall be
applied in accordance with the first sentence of this
Section 2.11(a)(v).
(vi) Store Closings. On the tenth Business
Day after the end of the fiscal month after the termination
of business at a store (other than the stores listed on
Schedule 1 to the Sixth Amendment Agreement, dated as of
February 18, 2000), the Borrower shall prepay the
outstanding Revolving Loans in an amount equal to 100% of
the amount of the Net Cash Proceeds in respect of such
store.
Notwithstanding anything to the contrary contained in
this Section 2.11, no Net Cash Proceeds shall be payable under
this Agreement until all prepayments required to be prepaid under
the Existing Credit Agreement are made thereunder, or the
Existing Credit Agreement has been substantially refinanced or
the Loans (as defined in the Existing Credit Agreement) have been
paid in full.
(b) Voluntary and Mandatory Commitment
Reductions. On each day on which the Total Revolving Loan
Commitment is reduced pursuant to Section 2.9, the Borrower shall
prepay the Revolving Loans, to the extent, if any, that the
outstanding principal amount of the Revolving Loans at such time
exceeds such reduced Total Revolving Loan Commitment.
Section 2.12 Application of Prepayments. All pre
payments of the Revolving Loans required by Section 2.11 shall be
applied first to Base Rate Loans to the full extent thereof
before application to Eurodollar Loans, in each case in a manner
which minimizes the amount of any payments required to be made by
the Borrower pursuant to Section 2.16.
Section 2.13 Method and Place of Payment. (a) Except
as otherwise specifically provided herein, all payments and
prepayments under this Agreement and the Revolving Notes shall be
made to the Administrative Agent for the account of the Banks
entitled thereto not later than 12:00 p.m. (New York City time),
on the date when due and shall be made in lawful money of the
United States of America in immediately available funds at the
Administrative Agent's Office, and any funds received by the
Administrative Agent after such time shall, for all purposes
hereof (including the following sentence), be deemed to have been
paid on the next succeeding Business Day. Except as otherwise
specifically provided herein, the Administrative Agent shall
thereafter cause to be distributed on the date of receipt thereof
to each Bank in like funds its Pro Rata Share of payments so
received.
(b) Whenever any payment to be made hereunder or
under any Revolving Note shall be stated to be due on a day which
is not a Business Day, the due date thereof shall be extended to
the next succeeding Business Day and, with respect to payments of
principal, interest and Fees shall be payable at the applicable
rate during such extension.
(c) All payments made by the Borrower hereunder
and under the other Loan Documents shall be made irrespective of,
and without any reduction for, any setoff or counterclaims.
Section 2.14 Fees. (a) The Borrower agrees to pay to
the Administrative Agent for its own account and for distribution
to the Banks as separately agreed between each Bank and the
Administrative Agent the fees and expenses in the amounts and on
the dates specified in the Commitment Letter.
(b) The Borrower agrees to pay to the
Administrative Agent for the account of each Bank a commitment
fee (the "Commitment Fee"), computed at a per annum rate equal to
0.50% on the average daily unused portion of such Bank's
Revolving Loan Commitment, from and including the Closing Date to
the Final Maturity Date, payable quarterly in arrears on each
Payment Date and on the Final Maturity Date or such earlier date,
if any, on which the Total Revolving Loan Commitment shall
terminate in accordance with the terms hereof.
Section 2.15 Interest Rate Unascertainable, Increased
Costs, Illegality. (a) In the event that the Administrative
Agent, in the case of clause (i) below, or any Bank, in the case
of clauses (ii) and (iii) below, shall have determined (which
determination shall, absent manifest error, be final and con
clusive and binding upon all parties hereto):
(i) on any date for determining the Eurodol
lar Rate for any Interest Period, that by reason of any
changes arising after the date of this Agreement affecting
the interbank Eurodollar market, adequate and fair means do
not exist for ascertaining the applicable interest rate on
the basis provided for in the definition of the Eurodollar
Rate; or
(ii) at any time, that the relevant
Eurodollar Rate applicable to any of its Revolving Loans
shall not represent the effective pricing to such Bank for
funding or maintaining a Eurodollar Loan, or such Bank shall
incur increased costs or reductions in the amounts received
or receivable hereunder in respect of any Eurodollar Loan,
in any such case because of (x) any change since the date of
this Agreement in any applicable law or governmental rule,
regulation, guideline or order or any interpretation thereof
and including the introduction of any new law or govern
mental rule, regulation, guideline or order (such as for
example but not limited to a change in official reserve re
quirements, but, in all events, excluding reserves required
under Regulation D to the extent included in the computation
of the Eurodollar Rate), whether or not having the force of
law and whether or not failure to comply therewith would be
unlawful, and/or (y) other circumstances affecting such Bank
or the interbank Eurodollar market or the position of such
Bank in such market; or
(iii) at any time, that the making or
continuance by it of any Eurodollar Loan has become unlawful
by compliance by such Bank in good faith with any law or
governmental rule, regulation, guideline or order (whether
or not having the force of law and whether or not failure to
comply therewith would be unlawful) or has become impractica
ble as a result of a contingency occurring after the date of
this Agreement which materially and adversely affects the
interbank Eurodollar market;
then, and in any such event, the Administrative Agent or such
Bank shall, promptly after making such determination, give notice
(by telephone promptly confirmed in writing) to the Borrower and
(if applicable) the Administrative Agent of such determination
(which notice the Administrative Agent shall promptly transmit to
each of the other Banks). Thereafter (x) in the case of clause
(i) above, the Borrower's right to request Eurodollar Loans shall
be suspended, and any Notice of Borrowing, Notice of Conversion
or Notice of Continuation given by the Borrower with respect to
any Borrowing of Eurodollar Loans, which has not yet been made
shall be deemed cancelled and rescinded by the Borrower, (y) in
the case of clause (ii) above, the Borrower shall pay to such
Bank, upon such Bank's delivery of written demand therefor to the
Borrower, with a copy to the Administrative Agent, such addition
al amounts (in the form of an increased rate of interest, or a
different method of calculating interest, or otherwise, as such
Bank in its sole discretion shall determine) as shall be required
to compensate such Bank for such increased costs or reduction in
amounts received or receivable hereunder and (z) in the case of
clause (iii) above, the Borrower shall take one of the actions
specified in clause (b) below as promptly as possible and, in any
event, within the time period required by law. The written
demand provided for in clause (y) shall demonstrate in reasonable
detail the calculation of the amounts demanded and shall, absent
manifest error, be final and conclusive and binding upon all of
the parties hereto.
(b) In the case of any Eurodollar Loan or
requested Eurodollar Loan affected by the circumstances described
in clause (a)(ii) above, the Borrower may, and in the case of any
Eurodollar Loan affected by the circumstances described in clause
(a)(iii) above the Borrower shall, either (i) if any such
Eurodollar Loan has not yet been made but is then the subject of
a Notice of Borrowing, a Notice of Conversion or Notice of
Continuation, be deemed to have cancelled and rescinded such
notice, or (ii) if any such Eurodollar Loan is then outstanding,
require the affected Bank to convert each such Eurodollar Loan
into a Base Rate Loan at the end of the applicable Interest
Period or such earlier time as may be required by law, in each
case by giving the Administrative Agent notice (by telephone
promptly confirmed in writing) thereof on the Business Day that
the Borrower was notified by the Bank pursuant to clause (a)
above; provided, however, that all Banks whose Eurodollar Loans
are affected by the circumstances described in clause (a) above
shall be treated in the same manner under this clause (b).
(c) In the event that the Administrative Agent
determines at any time following its giving of notice based on
the conditions described in clause (a)(i) above that none of such
conditions exist, the Administrative Agent shall promptly give
notice thereof to the Borrower and the Banks, whereupon the
Borrower's right to request Eurodollar Loans from the Banks and
the Banks' obligation to make Eurodollar Loans shall be restored.
(d) In the event that a Bank determines at any
time following its giving of a notice based on the conditions
described in clause (a)(iii) above that none of such conditions
exist, such Bank shall promptly give notice thereof to the
Borrower and the Administrative Agent, whereupon the Borrower's
right to request Eurodollar Loans from such Bank and such Bank's
obligation to make Eurodollar Loans shall be restored.
(e) If any Bank determines that any applicable
law, rule, or regulation or any change therein, or any change in
the interpretation or administration thereof by any governmental
authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by such
Bank with any request or directive (whether or not having the
force of law) of any such authority, central bank, or comparable
agency shall make it unlawful or impossible for such Bank to
maintain its Commitment, then upon notice to the Administrative
Agent and the Borrower by the Bank, the Commitment of such Bank
shall terminate.
Section 2.16 Funding Losses. The Borrower shall
compensate each Bank, upon such Bank's delivery of a written
demand therefor to the Borrower, with a copy to the Adminis
trative Agent (which demand shall, absent manifest error, be
final and conclusive and binding upon all of the parties hereto),
for all reasonable losses, expenses and liabilities (including,
without limitation, any loss, expense or liability incurred by
such Bank in connection with the liquidation or reemployment of
deposits or funds required by it to make or carry its Eurodollar
Loans but excluding anticipated profits), that such Bank
sustains: (i) if for any reason (other than a default by such
Bank) a Borrowing of, or conversion from or into, or a continu
ation of, Eurodollar Loans does not occur on a date specified
therefor in a Notice of Borrowing, Notice of Conversion or Notice
of Continuation, (whether or not rescinded, cancelled or with
drawn or deemed rescinded, cancelled or withdrawn, pursuant to
Section 2.15(a) or 2.15(b) or otherwise), (ii) if any repayment
(including, without limitation, payment after acceleration) or
conversion of any of its Eurodollar Loans occurs on a date which
is not the last day of the Interest Period applicable thereto,
(iii) if any prepayment of any of its Eurodollar Loans is not
made on any date specified in a notice of prepayment given by the
Borrower, or (iv) as a consequence of any default by the Borrower
in repaying its Eurodollar Loans, or any other amounts owing
hereunder in respect of its Eurodollar Loans when required by the
terms of this Agreement. Calculation of all amounts payable to a
Bank under this Section 2.16 shall be made on the assumption that
such Bank has funded its relevant Eurodollar Loan through the
purchase of a Eurodollar deposit bearing interest at the Euro
dollar Rate in an amount equal to the amount of such Eurodollar
Loan with a maturity equivalent to the Interest Period applicable
to such Eurodollar Loan, and through the transfer of such
Eurodollar deposit from an offshore office of such Bank to a
domestic office of such Bank in the United States of America,
provided that each Bank may fund its Eurodollar Loans in any
manner that it in its sole discretion chooses and the foregoing
assumption shall only be made in order to calculate amounts
payable under this Section 2.16.
Section 2.17 Increased Capital. If at any time any
Bank determines that the introduction after the Closing Date of,
or any change after the Closing Date in, any applicable law or
governmental rule, regulation, order, guideline, directive or
request (whether or not having the force of law) concerning
capital adequacy, or any change after the Closing Date in
interpretation or administration thereof by any governmental
authority, central bank or comparable agency, will have the
effect of increasing the amount of capital required or expected
to be maintained by such Bank or any corporation controlling such
Bank based on the existence of such Bank's Commitments hereunder
or its obligations hereunder, or shall change the basis of
taxation of any amounts payable to any Bank under this Agreement
or the Revolving Notes in respect of any such Revolving Loans
(other than taxes imposed on the overall net income of any Bank
for any of such Loans by the jurisdiction where such Bank is
located) then the Borrower shall pay to such Bank, within 15 days
after its written demand therefor, such additional amounts as
shall be required to compensate such Bank or such other
corporation for the increased cost to such Bank or such other
corporation or the reduction in the rate of return to such Bank
or such other corporation as a result of such increase of capital
or change in basis. In determining such additional amounts, each
Bank will act reasonably and in good faith and will use averaging
and attribution methods which are reasonable, provided that such
Bank's reasonable good faith determination of compensation owing
under this Section 2.17 shall, absent manifest error, be final
and conclusive and binding on all the parties hereto. Each Bank,
upon determining that any additional amounts will be payable
pursuant to this Section 2.17, will give prompt written notice
thereof to the Borrower, which notice shall show the basis for
calculation of such additional amounts, although the failure to
give any such notice shall not release or diminish any of the
Borrower's Obligations to pay additional amounts pursuant to this
Section 2.17.
Section 2.18 Taxes. (a) All payments made by the
Borrower under this Agreement shall be made free and clear of,
and without reduction or withholding for or on account of, any
present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any
governmental authority excluding, in the case of the
Administrative Agent and each Bank, net income and franchise
taxes imposed on the Administrative Agent or such Bank by the
jurisdiction under the laws of which the Administrative Agent or
such Bank is organized or any political subdivision or taxing
authority thereof or therein, or by any jurisdiction in which
such Bank's Lending Office, as the case may be, is located or any
political subdivision or taxing authority thereof or therein (all
such non-excluded taxes, levies, imposts, deductions, charges or
withholdings being hereinafter called "Taxes"). If any Taxes are
required to be withheld from any amounts payable to the
Administrative Agent or any Bank hereunder or under the Revolving
Notes, the amounts so payable to the Administrative Agent or such
Bank shall be increased to the extent necessary to yield to the
Administrative Agent or such Bank (after payment of all Taxes)
interest or any such other amounts payable hereunder at the rates
or in the amounts specified in this Agreement and the Revolving
Notes. Whenever any Taxes are payable by the Borrower, as
promptly as possible thereafter, the Borrower shall send to the
Administrative Agent for its own account or for the account of
such Bank, a certified copy of an original official receipt
received by the Borrower showing payment thereof or other
evidence of payment reasonably satisfactory to the Administrative
Agent or such Bank. If the Borrower fails to pay any Taxes when
due to the appropriate taxing authority or fails to remit to the
Administrative Agent the required receipts or other required
documentary evidence, the Borrower shall indemnify the
Administrative Agent and the Banks for any incremental taxes,
interest or penalties that may become payable by the
Administrative Agent or any Bank as a result of any such failure.
The agreements in this Section 2.18 shall survive the termination
of this Agreement and the payment of the Revolving Notes and all
other Obligations.
(b) Each Bank (including each Purchasing Bank
that becomes a party to this Agreement pursuant to Section 9.4)
that is not incorporated under the laws of the United States of
America or a state thereof (a "Non-U.S. Bank") agrees that, prior
to the first date on which any payment is due to it hereunder, it
will deliver to the Borrower and the Administrative Agent (i) two
duly completed copies of United States Internal Revenue Service
Form W-8BEN or W-8ECI or successor applicable form, as the case
may be, certifying in each case that such Bank is entitled to
receive payments under this Agreement and the Revolving Notes
payable to it, without deduction or withholding of any United
States federal income taxes, or (ii) in the case of a Non-U.S.
Bank claiming exemption from U.S. federal withholding taxes under
Section 871(h) or 881(c) of the Code with respect to payments of
"portfolio interest," an Internal Revenue Service Form W-8 or
successor applicable form, as the case may be, to establish an
exemption from United States backup withholding tax together with
a certificate to the effect that such Non-U.S. Bank is not a bank
for purposes of Section 881(c) of the Code, is not a 10 percent
shareholder (within the meaning of Section 871(h)(3)(B) of the
Code) of the Borrower, is not a controlled foreign corporation
related to the Borrower (within the meaning of Section 864(d)(4)
of the Code) and is entitled to a complete exemption from U.S.
federal withholding taxes. Each Bank which delivers to the
Borrower and the Administrative Agent a Form W-8BEN or W-8ECI and
Form W-8 pursuant to the preceding sentence further undertakes to
deliver to the Borrower and the Administrative Agent two further
copies of Form W-8BEN or W-8ECI and Form W-8 (together with the
accompanying certificate), or successor applicable forms, or
other manner of certification, as the case may be, on or before
the date that any such form expires or becomes obsolete or after
the occurrence of any event requiring a change in the most recent
form previously delivered by it to the Borrower, and such
extensions or renewals thereof as may reasonably be requested by
the Borrower, certifying in the case of a Form W-8BEN or W-8ECI
that such Bank is entitled to receive payments under this Agree
ment without deduction or withholding of any United States
federal income taxes, unless in any such case an event (includ
ing, without limitation, any change in treaty, law or regulation)
has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable
or which would prevent such Bank from duly completing and
delivering any such form with respect to it and such Bank advises
the Borrower that it is not capable of receiving payments without
any deduction or withholding of United States federal income tax,
and in the case of a Form W-8, establishing an exemption from
United States backup withholding tax.
Section 2.19 Action of Affected Banks. Upon the
written request of the Borrower, each Bank agrees to use
reasonable efforts (including reasonable efforts to change the
lending office for its Loans) to avoid or minimize any illegality
or any amounts which might otherwise be payable by the Borrower
pursuant to Sections 2.15 or 2.18; provided, however, that such
efforts shall not cause, in the sole determination of such Bank,
the imposition on such Bank of any additional costs or legal or
regulatory burdens and shall not be deemed by such Bank to be
otherwise contrary to its policies. In the event that such
reasonable efforts are insufficient to avoid all such illegality
or all amounts that might be payable pursuant to Sections 2.15 or
2.18, then such Bank (the "Affected Bank") shall use its
reasonable efforts to transfer to any other Bank (which itself is
not then an Affected Bank) its Loans and Commitments, subject to
the provisions of Section 9.4; provided, however, that such
transfer shall not be deemed by such Affected Bank, in its sole
discretion, to be disadvantageous to it or contrary to its
policies. In the event that the Affected Bank is unable, or
otherwise is unwilling, so to transfer its Loans and Commitments,
the Borrower may designate an alternate lender (reasonably
acceptable to the Administrative Agent) to purchase the Affected
Bank's Loans and Commitments, at par and including accrued
interest, and, subject to the provisions of Section 9.4, the
Affected Bank shall transfer its Commitments to such alternate
lender and such alternate lender shall become a Bank hereunder.
Any fee payable to the Administrative Agent pursuant to
subsection 9.4(c) in connection with such transfer shall be for
the account of the Borrower.
Section 2.20 Use of Proceeds. The proceeds of the
Revolving Loans shall be used for working capital of the Borrower
and its Subsidiaries in accordance with customary and typical
past historical practice.
SECTION 3. CONDITIONS PRECEDENT.
Section 3.1 Conditions Precedent to Initial Loans.
The obligation of each Bank to make its initial Loans, is subject
to the satisfaction on the Closing Date (unless otherwise waived
in writing by the Administrative Agent) of the following condi
tions precedent:
(a) Loan Documents.
(i) Credit Agreement. The Borrower, the
Parent and each other party to this Agreement shall have
executed and delivered this Agreement to the Administrative
Agent.
(ii) Revolving Notes. The Borrower shall
have executed and delivered to each Bank which has requested
Revolving Notes the appropriate Revolving Notes in the
amount, maturity and as otherwise provided herein.
(iii) Security Agreement. Each of the Bor
rower, the Parent and the Material Subsidiaries shall have
executed and delivered to the Collateral Agent a security
agreement substantially in the form set forth as Exhibit D
hereto (as amended, modified or supplemented from time to
time, the "Security Agreement").
(iv) Subsidiary Guaranty. Each of the
Parent and the Material Subsidiaries shall have executed and
delivered to the Collateral Agent a guaranty substantially
in the form set forth as Exhibit E hereto (as amended,
modified or supplemented from time to time, the "Subsidiary
Guaranty").
(v) Warrant Agreement. The Parent shall
have executed and delivered to the Administrative Agent
separate warrant agreements for each Bank for further
delivery to such Bank substantially in the form set forth as
Exhibit F hereto (as amended, modified or supplemented from
time to time, the "Warrant Agreement").
(b) Opinions of Counsel.
(i) The Administrative Agent shall have re
ceived a legal opinion, dated the Closing Date, from
Cadwalader, Wickersham & Taft, counsel to the Loan Parties,
substantially in the form set forth as Exhibit G hereto, and
the Borrower hereby instructs such counsel to deliver such
opinion.
(ii) The Administrative Agent shall have
received a legal opinion, dated the Closing Date, from
Skadden, Arps, Slate, Meagher & Flom (Illinois), special
counsel to the Administrative Agent.
(c) Corporate Documents. The Administrative
Agent shall have received the Articles or Certificate of
Incorporation of each of the Loan Parties as amended, modified or
supplemented to the Closing Date, certified to be true, correct
and complete by the appropriate Secretary of State as of a date
not more than five days prior to the Closing Date, together with
a good standing certificate from such Secretary of State and a
good standing certificate from the Secretaries of State (or the
equivalent thereof) of each other State in which each of them is
required to be qualified to transact business, each to be dated a
date not more than five days prior to the Closing Date.
(d) Certified Resolutions, etc. The
Administrative Agent shall have received a certificate of the
Secretary or Assistant Secretary of each of the Loan Parties and
dated the Closing Date certifying (i) the names and true
signatures of the incumbent officers of such Person authorized to
sign the applicable Loan Documents, (ii) the By-Laws of such
Person as in effect on the Closing Date, (iii) the resolutions of
such Person's Board of Directors approving and authorizing the
execution, delivery and performance of all Loan Documents
executed by such Person, and (iv) that there have been no changes
in the Articles or Certificate of Incorporation of such Person
since the date of the most recent certification thereof by the
appropriate Secretary of State.
(e) Officer's Certificate. The Administrative
Agent and the Banks shall have received a certificate of an
Authorized Officer of the Borrower, dated the Closing Date,
certifying that (i) each of the Loan Parties and, to the best of
his or her knowledge, the other parties to the Loan Documents,
have performed or complied in all material respects with all
agreements and conditions contained in such Loan Documents and
any agreements or documents referred to therein required to be
performed or complied with by each of them on or before the
Closing Date, and (ii) subject to the foregoing, neither any Loan
Party nor, to the best of his or her knowledge, any such other
party is in default in the performance or compliance with any of
the terms or provisions thereof, except to the extent that
performance thereof or compliance therewith or default has been
waived with the prior written consent of the Banks.
(f) Insurance. The Administrative Agent shall
have received a certificate of insurance demonstrating insurance
coverage in respect of each of the Loan Parties of types, in
amounts, with insurers and with other terms satisfactory to the
Banks.
(g) Lien Search Reports. The Administrative
Agent shall have received satisfactory reports of UCC and tax
lien searches conducted by a search firm acceptable to the
Administrative Agent and the Banks with respect to the Loan
Parties in such locations as the Administrative Agent may
request.
(h) UCC-1 Financing Statements. The Administra
tive Agent shall have received copies (or other evidence of fil
ing) of each UCC-1 financing statement signed by Borrower and the
other Loan Parties as debtors naming the Collateral Agent as
secured party to be filed in each of the jurisdictions set forth
on Annex C to the Security Agreement and such other locations as
the Administrative Agent may request.
(i) Financial Statements. The Administrative
Agent shall have received the audited financial statements of the
Parent and the Borrower for the fiscal years ending January 30,
1999, January 31, 1998 and February 1, 1997 and the unaudited
financial statements of the Borrower for the fiscal period ending
on October 30, 1999.
(j) Environmental Matters. The Administrative
Agent shall be satisfied that neither the Borrower, any of its
Subsidiaries nor any Loan Party is subject to any present or
contingent environmental liability which could reasonably be
expected to have a Material Adverse Effect.
(k) Fees and Expenses. The Administrative Agent
shall have received, for its account and for the account of each
Bank, as applicable, all Fees and other fees and expenses due and
payable hereunder on or before the Closing Date (if then
invoiced), including, without limitation, the fees and expenses
set forth in the Commitment Letter and the reasonable fees and
expenses accrued through the Closing Date, of Skadden, Arps,
Slate, Meagher & Flom (Illinois) and its affiliates in connection
with the Transactions.
(l) Consents, Licenses, Approvals, etc. The
Administrative Agent shall have received copies of all consents,
licenses and approvals, if any, required in connection with the
execution, delivery and performance by the Borrower, the Loan
Parties or any of their respective Subsidiaries, and the validity
and enforceability, of the Loan Documents, or in connection with
any of the Transactions, and such consents, licenses and approv
als shall be in full force and effect.
(m) Projections. The Administrative Agent shall
have received projections prepared by the Parent demonstrating
the projected consolidated financial condition and results of
operations of the Parent and its Subsidiaries after giving effect
to the Transactions, for each fiscal year for the period
commencing on the Closing Date and ending on the Final Maturity
Date and for each fiscal quarter for the fiscal year ending
February 3, 2001, which projections shall be accompanied by a
written statement of the assumptions underlying the projections,
and all of the foregoing shall be satisfactory to the Banks.
(n) [Intentionally left blank.]
(o) Amendment. The Administrative Agent shall
have received evidence that all conditions to the effectiveness
of the Sixth Amendment, dated as of February 18, 2000, to the
Existing Credit Agreement have been fully satisfied or waived by
the parties thereto.
(p) Additional Matters. The Administrative Agent
shall have received such other certificates, opinions, documents
and instruments relating to the Transactions as may have been
reasonably requested by the Administrative Agent or any Bank, and
all corporate and other proceedings and all other documents
(including, without limitation, all documents referred to herein
and not appearing as exhibits hereto) and all legal matters in
connection with the Transactions shall be satisfactory in form
and substance to the Banks.
Section 3.2 Conditions Precedent to All Loans. The
obligation of each Bank to make any Revolving Loan, including the
initial Revolving Loan on the Closing Date, is subject to the
satisfaction on the date of such Revolving Loan of the following
conditions precedent:
(a) Representations and Warranties. The repre
sentations and warranties contained herein and in the other Loan
Documents (other than representations and warranties which
expressly speak only as of a different date which representations
and warranties shall be true and correct in all material respects
as of such date) shall be true and correct in all material
respects on such date both before and after giving effect to such
Revolving Loan.
(b) No Default or Event of Default. No Default
or Event of Default shall have occurred and be continuing on such
date either before or after giving effect to such Revolving Loan.
(c) No Injunction or Litigation. No law or
regulation shall have been adopted, no order, judgment or decree
of any governmental authority shall have been issued, and no
litigation, proceeding or investigation shall be pending or
threatened, which has not been previously disclosed on or prior
to February 22, 2000 and which in the reasonable judgment of the
Banks would (i) enjoin, prohibit or restrain, or impose or result
in the imposition of any Material Adverse Effect upon, the making
or repayment of the Revolving Loans or the Transactions or (ii)
affect the legality, validity or enforceability of this
Agreement, any of the Loan Documents, the Transactions, or any
document to be executed in connection therewith and the Banks
shall be satisfied as to any other material litigation and
contingent obligations to which the Borrower or its Subsidiaries
may be subject.
(d) No Material Adverse Effect. No event, act or
condition shall have occurred from and after the Closing Date
which, in the reasonable judgment of the Required Banks, has had
or could reasonably be expected to have a Material Adverse
Effect.
(e) Notice of Borrowing. The Administrative
Agent shall have received a fully executed Notice of Borrowing in
respect of the Loans, if any, to be made on such date.
The acceptance of the proceeds of each Revolving Loan
shall constitute a representation and warranty by the Borrower to
each of the Banks that all of the conditions required to be
satisfied under this Section 3 in connection with the making of
such Revolving Loan have been satisfied.
All of the Revolving Notes, certificates, agreements,
legal opinions and other documents and papers referred to in this
Section 3, unless otherwise specified, shall be delivered to the
Administrative Agent for the account of each of the Banks and,
except for the Revolving Notes, in sufficient counterparts for
each of the Banks, and shall be satisfactory in form and
substance to each Bank in its sole discretion.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
In order to induce the Administrative Agent, the
Collateral Agent and Banks to enter into this Agreement and to
make the Revolving Loans, each of the Parent and the Borrower
makes the following representations and warranties, which shall
survive the execution and delivery of this Agreement and the
Revolving Notes and the making of the Revolving Loans:
Section 4.1 Corporate Status. Each Loan Party (i) is
a duly organized and validly existing corporation in good
standing under the laws of the jurisdiction of its incorporation,
(ii) has the corporate power and authority to own its property
and assets and to transact the business in which it is engaged or
presently proposes to engage and (iii) has duly qualified and is
authorized to do business and is in good standing as a foreign
corporation in every jurisdiction in which it owns or leases real
property or in which the nature of its business requires it to be
so qualified, except where the failure to so qualify,
individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
Section 4.2 Corporate Power and Authority. Each Loan
Party has the corporate power and authority to execute, deliver
and carry out the terms and provisions of each of the Loan
Documents to which it is a party and has taken all necessary
corporate action to authorize the execution, delivery and
performance by it of such Loan Documents. Each Loan Party has
duly executed and delivered each such Loan Document, and each
such Loan Document constitutes its legal, valid and binding
obligation, enforceable in accordance with its terms.
Section 4.3 No Violation. Neither the execution,
delivery or performance by any Loan Party of the Loan Documents
to which it is a party, nor compliance by it with the terms and
provisions thereof nor the consummation of the Transactions, (i)
will contravene any applicable provision of any law, statute,
rule, regulation, order, writ, injunction or decree of any court
or governmental instrumentality or (ii) will conflict or be
inconsistent with or result in any breach of any of the terms,
covenants, conditions or provisions of, or constitute a default
under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien (except pursuant to the
Security Documents) upon any of the property or assets of any
Loan Party pursuant to the terms of any indenture, mortgage, deed
of trust, agreement or other instrument to which such Loan Party
is a party or by which it or any of its property or assets is
bound or to which it may be subject, or (iii) will violate any
provision of the Articles or Certificate of Incorporation or
By-Laws of any Loan Party.
Section 4.4 Litigation. There are no actions, suits,
investigations or proceedings pending, or to the Parent's or the
Borrower's best knowledge, threatened which have not been
disclosed to the Administrative Agent on or before February 22,
2000 (i) with respect to any of the Loan Documents or the
Transactions or (ii) that could, individually or in the aggre
gate, reasonably be expected to result in a Material Adverse
Effect.
Section 4.5 Financial Statements; Financial Condition;
etc. Each of the financial statements delivered pursuant to
Section 3.1(i) were prepared in accordance with GAAP consistently
applied and fairly present the financial condition and the
results of operations of the entities covered thereby on the
dates and for the periods covered thereby, except as disclosed in
the notes thereto and, with respect to interim financial
statements, subject to normally recurring year-end adjustments.
As of the Closing Date, no Loan Party has any material liability
(contingent or otherwise) not reflected in such financial
statements or in the notes thereto other than as set forth on
Schedule 6.6 hereto.
Section 4.6 [Intentionally left blank.]
Section 4.7 Projections. The projections delivered
pursuant to Section 3.1(m) have been prepared on the basis of the
assumptions accompanying them, and such projections and
assumptions, as of the date of preparation thereof and as of the
Closing Date, are reasonable and represent the Parent's good
faith estimate of its future financial performance, it being
understood that nothing contained in this Section 4.7 shall con
stitute a representation or warranty that such future financial
performance or results of operations will in fact be achieved.
Section 4.8 Material Adverse Effect. Except as set
forth on Schedule 4.8, from and after the Closing Date, there has
occurred no event, act or condition which has had, or could
reasonably be expected to have, a Material Adverse Effect.
Section 4.9 Use of Proceeds; Margin Regulations. All
proceeds of each Revolving Loan will be used by the Borrower only
in accordance with the provisions of Section 2.20. No part of
the proceeds of any Revolving Loan will be used by the Borrower
to purchase or carry any Margin Stock or to extend credit to
others for the purpose of purchasing or carrying any Margin
Stock. Neither the making of any Revolving Loan nor the use of
the proceeds thereof will violate or be inconsistent with the
provisions of Regulations T, U or X of the Federal Reserve Board.
Section 4.10 Governmental Approvals. No order,
consent, approval, license, authorization, or validation of, or
filing, recording or registration with, or exemption by, any
governmental or public body or authority, or any subdivision
thereof, is required to authorize, or is required in connection
with (i) the execution, delivery and performance of any Loan
Document or the consummation of any of the Transactions or (ii)
the legality, validity, binding effect or enforceability of any
Loan Document, except (x) those listed on Schedule 4.10 that have
already been duly made or obtained and remain in full force and
effect and (y) the filing of UCC-1 financing statements in the
appropriate filing offices.
Section 4.11 Security Interests and Liens. The
Security Documents create, as security for the Secured Obli
gations, valid and enforceable Liens on all of the Collateral, in
favor of the Collateral Agent for the ratable benefit of the
Secured Creditors, and subject to no other Liens other than Liens
permitted by Section 6.3 hereunder. Upon the satisfaction of the
conditions precedent described in Section 3.1(h), such Liens on
the Collateral shall be superior to and prior to the rights of
all third parties (except as disclosed on Schedule 6.3), and no
further recordings or filings are or will be required in connec
tion with the creation, perfection or enforcement of such Liens,
other than the filing of continuation statements in accordance
with applicable law.
Section 4.12 Tax Returns and Payments. The Parent and
each of its Subsidiaries has filed all tax returns required to be
filed by it and has paid all taxes and assessments payable by it
which have become due, other than those not yet delinquent or
those that are reserved against in accordance with GAAP which are
being diligently contested in good faith by appropriate
proceedings.
Section 4.13 ERISA. As of the Closing Date, no Loan
Party has any Plans other than those listed on Schedule 4.13. No
accumulated funding deficiency (as defined in Section 412 of the
Code or Section 302 of ERISA) or Reportable Event has occurred
with respect to any Plan. As of the Closing Date, Unfunded
Benefit Liabilities under the Plans do not, in the aggregate,
exceed $6,000,000. As of the Closing Date, neither the Borrower
nor any member of its ERISA Controlled Group is a party to or has
any responsibility, contingent or otherwise, with respect to any
Multiemployer Plan. To the best knowledge of the Borrower and
each member of its ERISA Controlled Group, no Multiemployer Plan
is or is likely to be in reorganization (as defined in Section
4241 of ERISA or Section 418 of the Code) or is insolvent (as
defined in Section 4245 of ERISA) which reorganization or
insolvency could reasonably be expected to have a Material
Adverse Effect. No liability to the PBGC (other than required
premium payments), the Internal Revenue Service, any Plan or any
trust established under Title IV of ERISA has been, or is
expected by the Borrower or any member of its ERISA Controlled
Group to be, incurred by the Borrower or any member of its ERISA
Controlled Group which liability could reasonably be expected to
result in a Material Adverse Effect. Except as otherwise
disclosed on Schedule 4.13 hereto, neither the Borrower nor any
member of its ERISA Controlled Group has any material contingent
liability with respect to any post-retirement benefit under any
"welfare plan" (as defined in Section 3(1) of ERISA), other than
liability for continuation coverage under Part 6 of Title I of
ERISA or other similar statute. No lien under Section 412(n) of
the Code or Section 302(f) of ERISA or requirement to provide
security under Section 401(a)(29) of the Code or Section 307 of
ERISA has been or is reasonably expected by the Borrower or any
member of its ERISA Controlled Group to be imposed on the assets
of the Borrower or any member of its ERISA Controlled Group.
Section 4.14 Investment Company Act; Public Utility
Holding Company Act. No Loan Party nor any of its Subsidiaries
is (x) an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment
Company Act of 1940, as amended, (y) a "holding company" or a
"subsidiary company" of a "holding company" or an "affiliate" of
either a "holding company" or a "subsidiary company" within the
meaning of the Public Utility Holding Company Act of 1935, as
amended, or (z) subject to any other federal or state law or
regulation which purports to restrict or regulate its ability to
borrow money.
Section 4.15 Representations and Warranties in Loan
Documents. All representations and warranties made by any Loan
Party in the Loan Documents, and, to the best of the Borrower's
knowledge, all representations made by each other Person in such
Loan Documents, are true and correct in all material respects as
of the Closing Date. None of such representations and warranties
are inconsistent in any material respect with the representations
and warranties of any Loan Party made herein or in any other Loan
Document.
Section 4.16 True and Complete Disclosure. All
factual information (taken as a whole) furnished by or on behalf
of any Loan Party in writing to the Administrative Agent or any
Bank on or prior to the Closing Date, for purposes of or in
connection with this Agreement or any of the Transactions is, and
all other such factual information (taken as a whole) hereafter
furnished by or on behalf of any Loan Party in writing to the
Administrative Agent or any Bank will be, true and accurate in
all material respects on the date as of which such information is
dated or furnished and not incomplete by omitting to state any
material fact necessary to make such information (taken as a
whole) not misleading at such time. As of the Closing Date,
there are no facts, events or conditions known to the Borrower
which, individually or in the aggregate, have or could reasonably
be expected to have a Material Adverse Effect.
Section 4.17 Corporate Structure; Capitalization. As
of the Closing Date, Schedule 4.17 hereto sets forth, both before
and after giving effect to the Transactions to be consummated on
the Closing Date, the number of authorized and issued shares of
capital stock of the Parent, the Borrower and each of its
Subsidiaries, the par value thereof and, in the case of
Subsidiaries, the registered owner(s) thereof. All of such
issued stock has been duly and validly issued and is fully paid
and non-assessable. Except as set forth in such Schedule, as of
the Closing Date neither the Parent, the Borrower nor any such
Subsidiary has outstanding any securities convertible into or
exchangeable for its capital stock nor does the Parent, the
Borrower or any such Subsidiary have outstanding any rights to
subscribe for or to purchase, or any options for the purchase of,
or any agreements providing for the issuance (contingent or other
wise) of, or any calls, commitments or claims of any character
relating to, its capital stock.
Section 4.18 Environmental Matters. (a) Except as
set forth in Schedule 4.18, (i) each Loan Party and its
Subsidiaries are in compliance with all applicable Environmental
Laws, (ii) each Loan Party and its Subsidiaries have all Environ
mental Approvals required to operate their businesses as pres
ently conducted or as reasonably anticipated to be conducted, all
such Environmental Approvals are in effect, no appeal or other
action is pending to revoke any such Environmental Approval, and
each Loan Party and each of its Subsidiaries are in full compli
ance with all terms and conditions of such Environmental Approv
als, (iii) no Loan Party, its Subsidiaries nor any of their Envi
ronmental Affiliates has received any communication (written or
oral), whether from a governmental authority, citizens group,
employee or otherwise, that alleges that a Loan Party or such
Subsidiary or Environmental Affiliate is not in full compliance
with all Environmental Laws, and (iv) to the Parent's and the
Borrower's best knowledge after due inquiry, there are no circum
stances that may prevent or interfere with such full compliance
in the future.
(b) Except as set forth in Schedule 4.18, there
is no Environmental Claim pending or threatened against any Loan
Party, any of its Subsidiaries or any Environmental Affiliate.
(c) Except as set forth in Schedule 4.18, there
are no past or present actions, activities, circumstances, condi
tions, events or incidents, including, without limitation, the
release, emission, discharge or disposal of any Material of
Environmental Concern, that could form the basis of any Envi
ronmental Claims against any Loan Party, any of its Subsidiaries
or any of their Environmental Affiliates, which Environmental
Claims, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
(d) No Release or Cleanup has occurred at any
property currently or formerly owned or leased by any Loan Party
or its Subsidiaries that could reasonably be expected to result
in the assertion or creation of a Lien on said property by any
governmental body or agency with respect thereto, nor has any
such assertion of a Lien been made by any governmental body or
agency with respect thereto.
(e) The Borrower has heretofore delivered true
and correct copies of all environmental studies, assessments or
reports conducted of the Parent or any of its Subsidiaries and of
each property currently or formerly owned or operated by the
Parent or any of its Subsidiaries, including but not necessarily
limited to Phase I or Phase II environmental assessments, under
ground storage tank investigation reports, or asbestos surveys,
that were prepared within the last five years, except that such
time limitation shall not apply to asbestos surveys.
(f) Without in any way limiting the generality of
the foregoing, except as disclosed in Schedule 4.18, (i) there
are no underground storage tanks located on property owned or
leased by any Loan Party or any of its Subsidiaries and (ii) no
polychlorinated biphenyls (PCB's) are used or stored at any
property owned or leased by the Borrower or any of its Subsidiar
ies.
Section 4.19 Insurance. Schedule 4.19 sets forth a
complete and accurate description of all policies of insurance
maintained by the Parent and its Subsidiaries as of the Closing
Date. The Borrower has paid all premiums due on or prior to the
Closing Date in respect of such policies and all such policies
are in full force and effect.
Section 4.20 Patents, Trademarks, etc. Each Loan
Party and its Subsidiaries has obtained and holds in full force
and effect all patents, trademarks, servicemarks, trade names,
copyrights and other such rights, free from burdensome
restrictions, which are reasonably necessary for the operation of
its business as presently conducted. No material product,
process, method, substance, part or other material presently sold
by or employed by any Loan Party or any of its Subsidiaries in
connection with such business infringes any patent, trademark,
service mark, trade name, copyright, license or other right owned
by any other Person. There is not pending or overtly threatened
any claim or litigation against or affecting any Loan Party or
any of its Subsidiaries contesting its right to sell or use any
such product, process, method, substance, part or other material
which would be reasonably likely to have a Material Adverse
Effect.
Section 4.21 Ownership of Property. Schedule 4.21
sets forth all the real property owned or leased by the Parent or
any of its Subsidiaries as of the Closing Date and identifies the
street address, whether such property is leased or owned and, if
owned, the current owner thereof. The Parent and its
Subsidiaries have good and marketable fee simple title to or
valid leasehold interests in all of such real property and good
title or valid leasehold interests to all of their personal
property subject to no Lien of any kind except Liens permitted
hereby. The Parent and its Subsidiaries enjoy peaceful and undis
turbed possession under all of their respective leases, except
where the failure would not reasonably be expected to have a
Material Adverse Effect.
Section 4.22 No Default. No Loan Party nor any of its
Subsidiaries is in default under or with respect to Loan Document
or any other agreement, instrument or undertaking to which it is
a party or by which it or any of its property is bound in any re
spect which could reasonably be expected to result in a Material
Adverse Effect. No Default or Event of Default exists.
Section 4.23 Licenses, etc. Each Loan Party and its
Subsidiaries have obtained and hold in full force and effect, all
material franchises, licenses, permits, certificates, authoriza
tions, qualifications, easements, rights of way and other rights,
consents and approvals which are reasonably necessary for the
operation of their respective businesses as presently conducted.
Section 4.24 Compliance With Law. Each Loan Party and
each of its Subsidiaries is in compliance with all laws, rules,
regulations, orders, judgments, writs and decrees except where
such non-compliance, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
Section 4.25 No Burdensome Restrictions. No Loan
Party nor any of its Subsidiaries is a party to any agreement or
instrument or subject to any other obligation or any charter or
corporate restriction or any provision of any applicable law,
rule or regulation which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
Section 4.26 Labor Matters. Except as set forth on
Schedule 4.26, as of the Closing Date there are no collective
bargaining agreements or Multiemployer Plans covering the em
ployees of any Loan Party or any of its Subsidiaries. None of
the Loan Parties has suffered any strikes, walkouts, work
stoppages or other material labor difficulty within the last five
years and to the best knowledge of such Persons, there are none
now threatened.
Section 4.27 Parent Business. As of the Closing Date,
the Parent conducts no business other than the ownership of 100%
of the capital stock of the Borrower and has no assets or
liabilities other than those reflected in the financial
statements previously delivered to the Banks. At any time after
the Closing Date, the Parent conducts no business other than that
expressly permitted by the terms of this Agreement, including,
without limitation, the consummation of, and ownership of
Subsidiaries purchased or created pursuant to, Permitted
Acquisitions.
Section 4.28 Cash Balances. The aggregate amount of
readily available cash or Cash Equivalent in the Corporate
Concentration Account of the Borrower and its Subsidiaries shall
not at any time in the aggregate exceed $20 million, including at
all such times, after giving effect to any proposed Borrowing.
SECTION 5. AFFIRMATIVE COVENANTS.
The Parent and the Borrower covenant and agree that on
and after the Closing Date and until the Total Revolving Loan
Commitment has terminated, and the Obligations are paid in full:
Section 5.1 Information Covenants. With respect to
the information required to be delivered pursuant to clauses (a)
through (d) below, the Borrower shall furnish to the
Administrative Agent sufficient copies of such information for
the Administrative Agent to promptly furnish such information to
the Banks and with respect to the information required to be
delivered in clauses (e) through (k), the Borrower shall furnish
to each Bank and to the Administrative Agent:
(a) Quarterly Financial Statements. Within 45
days after the close of each quarterly accounting period in each
fiscal year of the Parent (other than the fourth quarterly
accounting period), the consolidated and consolidating balance
sheet of the Parent and its Subsidiaries as at the end of such
quarterly period and the related consolidated statements of
income, cash flow and shareholders' equity and consolidating
statements of income, for such quarterly period and for the
elapsed portion of the fiscal year ended with the last day of
such quarterly period, and in the case of such consolidated
statements of income setting forth comparative figures for the
related periods in the prior fiscal year.
(b) Annual Financial Statements. Within 90 days
after the close of each fiscal year of the Parent, the consoli
dated and consolidating balance sheet of the Parent and its
Subsidiaries as at the end of such fiscal year and the related
consolidated statements of income, cash flow and shareholders'
equity and consolidating statements of income for such fiscal
year, setting forth, in the case of such consolidated financial
statements, comparative figures for the preceding fiscal year
and, with respect to such consolidated financial statements,
certified without qualification by Price Waterhouse or any other
independent certified public accountants of recognized national
standing reasonably acceptable to the Required Banks, in each
case together with a report of such accounting firm stating that
in the course of its regular audit of the consolidated financial
statements of the Borrower, which audit was conducted in
accordance with generally accepted auditing standards, such
accounting firm has obtained no knowledge of any Default or Event
of Default under Section 6.1, or if in the opinion of such
accounting firm such a Default or Event of Default has occurred
and is continuing, a statement as to the nature thereof.
(c) Monthly Financial Statements. Within 30 days
after the end of each monthly reporting period following the
Closing Date, the consolidated and consolidating balance sheet of
the Parent and its Subsidiaries as at the end of such monthly
reporting period and the related consolidated and consolidating
statements of income for such monthly reporting period and for
the elapsed portion of current fiscal year ended on the last day
of such monthly reporting period, and in each case setting forth,
in the case of such consolidated financial statements, compara
tive figures for the related periods in the prior fiscal year,
including, without limitation, a division sales analysis in the
form of Exhibit H attached hereto.
(d) Monthly Reporting. Within 30 days after the
end of each month a monthly report and officer's certificate in
the form of Exhibit I attached hereto.
(e) Weekly Cash Flow Reports. Within 3 business
days after the close of each calendar week, a cash flow report
for the preceding week and a cash flow projection for not less
than the next five weeks thereafter, in each case in form,
substance and detail reasonably satisfactory to the Required
Banks.
(f) Management Letters. Promptly after the
Borrower's or the Parent's receipt thereof, a copy of any
"management letter" or other material report received by the
Borrower or the Parent from its certified public accountants.
(g) Budgets. Within 45 days after the first day
of each fiscal year of the Parent, a quarterly budget and
quarterly financial forecast of results of operations and sources
and uses of cash (in form satisfactory to the Required Banks) for
the Parent and its Subsidiaries and for the Borrower and its
Subsidiaries prepared by the Parent for such fiscal year, accompa
nied by a written statement of the assumptions used in connection
therewith, together with a certificate of the Principal Financial
Officer of the Parent to the effect that such budget and finan
cial forecast and assumptions are reasonable and represent the
Borrower's good faith estimate of its future financial
requirements and performance. The financial statements required
to be delivered pursuant to clauses (a), (b) and (c) above shall
be accompanied by a comparison of the actual financial results
set forth in such financial statements to those contained in the
forecasts delivered pursuant to this clause (e) together with an
explanation of any material variations from the results
anticipated in such forecasts.
(h) Officer's Certificates. At the time of the
delivery of the financial statements under clauses (a), (b) and
(c) above, a compliance certificate of the Principal Financial
Officer of the Borrower in the form of Exhibit J (a "Compliance
Certificate") which certifies that such financial statements
fairly present the financial condition and the results of opera
tions of the Parent and the Borrower and their respective Subsid
iaries on the dates and for the periods indicated, subject, in
the case of interim financial statements, to normally recurring
year-end adjustments and at the time of delivery of the financial
statements under clauses (a) and (b) above, such Compliance
Certificate shall certify that such officer has reviewed the
terms of the Loan Documents and has made, or caused to be made
under his or her supervision, a review in reasonable detail of
the business and condition of the Parent and the Borrower and
their respective Subsidiaries during the accounting period
covered by such financial statements, and that as a result of
such review such officer has concluded that no Default or Event
of Default has occurred during the period commencing at the
beginning of the accounting period covered by the financial
statements accompanied by such certificate and ending on the date
of such certificate or, if any Default or Event of Default has
occurred, specifying the nature and extent thereof and, if
continuing, the action the Borrower has taken or proposes to take
in respect thereof. The Compliance Certificate delivered
pursuant to the financial statements delivered under clauses (a)
and (b) above shall also set forth the calculations as required
to establish (i) whether the Parent was in compliance with the
provisions of Section 6.1 during and as at the end of the
accounting period covered by the financial statements accompanied
by such certificate, (ii) the Adjusted Leverage Ratio as in
effect on the date of such statements for purposes of determining
the Margin Percentage, and (iii) the amount of the Borrower's
Share of Excess Cash Flow and Retained Equity Proceeds as of the
date of such statements. At the time of delivery of the finan
cial statements delivered pursuant to clause (b) above, the
Borrower shall furnish a certificate in the form of Exhibit K
hereto (the "Excess Cash Flow Certificate") of the Principal
Financial Officer of the Borrower setting forth the calculation
of the amount of Excess Cash Flow for the relevant fiscal year.
(i) Notice of Default or Litigation. Promptly
and in any event within three Business Days after any Loan Party
obtains knowledge thereof, notice of (i) the occurrence of any
Default or Event of Default, (ii) any litigation or governmental
proceeding pending or threatened against any Loan Party which
could reasonably be expected to result in a Material Adverse
Effect and (iii) any other event, act or condition which could
reasonably be expected to result in a Material Adverse Effect.
(j) ERISA.
(i) As soon as possible and in any event
within 10 days after any Loan Party or any member of its
ERISA Controlled Group knows, that:
(A) any Termination Event has occurred
or will occur, or
(B) any condition exists with respect
to a Plan which, in the case of an ERISA Plan, presents a
material risk of termination of the ERISA Plan and, in the
case of any Plan, presents a material risk of the imposition
of a material excise tax or other liability on any Loan
Party or any member of its ERISA Controlled Group, or
(C) any Loan Party or any member of its
ERISA Controlled Group has applied for a waiver of the mini
mum funding standard under Section 412 of the Code or
Section 302 of ERISA, or
(D) any Loan Party or any member of its
ERISA Controlled Group has engaged in a "prohibited transac
tion," as defined in Section 4975 of the Code or as
described in Section 406 of ERISA, that is not exempt under
Section 4975 of the Code and Section 408 of ERISA where such
transaction could reasonably be expected to have a Material
Adverse Effect, or
(E) the aggregate present value of the
Unfunded Benefit Liabilities under all Plans has in any year
increased to an amount in excess of $10,000,000, or
(F) any condition exists with respect
to a Multiemployer Plan which presents a material risk of a
partial or complete withdrawal (as described in Section 4203
or 4205 of ERISA) by any Loan Party or any member of its
ERISA Controlled Group from a Multiemployer Plan that would
have a Material Adverse Effect, or
(G) any Loan Party or any member of its
ERISA Controlled Group is in "default" (as defined in
Section 4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan, or
(H) a Multiemployer Plan is in
"reorganization" (as defined in Section 418 of the Code or
Section 4241 of ERISA) or is "insolvent" (as defined in
Section 4245 of ERISA), or
(I) the potential withdrawal liability
(as determined in accordance with Title IV of ERISA) of any
Loan Party and the members of its ERISA Controlled Group
with respect to all Multiemployer Plans has in any year in
creased to an amount in excess of $5,000,000, or
(J) there is an action brought against
any Loan Party or any member of its ERISA Controlled Group
under Section 502 of ERISA with respect to its failure to
comply with Section 515 of ERISA,
a certificate of an Authorized Officer of the
Borrower setting forth the details of each of the
events described in clauses (A) through (F) above
as applicable and the action which the Borrower or
the applicable member of its ERISA Controlled
Group has taken or proposes to take with respect
thereto, together with a copy of any notice or
filing from the PBGC or which may be required by
the PBGC or other agency of the United States
government with respect to each of the events de
scribed in clauses (A) through (J) above, as appli
cable.
(ii) As soon as possible and in any event
(i) within three Business Days after the receipt by any Loan
Party or (ii) within ten Business Days after the receipt by
any member of its ERISA Controlled Group of a demand letter
from the PBGC notifying such Loan Party or such member of
its ERISA Controlled Group of its final decision finding
liability and the date by which such liability must be paid,
a copy of such letter, together with a certificate of the
president or Principal Financial Officer of the Borrower
setting forth the action which such Loan Party or such
member of its ERISA Controlled Group has taken or proposes
to take with respect thereto.
(k) SEC Filings. Promptly upon transmission
thereof, copies of all regular and periodic financial informa
tion, proxy materials and other information and reports, if any,
which any Loan Party shall file with the Securities and Exchange
Commission or any governmental agencies substituted therefore or
which any Loan Party shall send to its stockholders.
(l) Environmental. Promptly and in any event
within two Business Days after the existence of any of the
following conditions, a certificate of an Authorized Officer of
the Borrower specifying in detail the nature of such condition
and the applicable Loan Party's proposed response thereto: (i)
the receipt by any Loan Party of any communication (written or
oral), whether from a governmental authority, citizens group,
employee or otherwise, that alleges that such Loan Party or an
Environmental Affiliate is not in compliance with applicable
Environmental Laws, or (ii) any Loan Party shall obtain actual
knowledge that there exists any Environmental Claim pending or
threatened against such Loan Party or Environmental Affiliate.
(m) Other Information. From time to time, such
other information or documents (financial or otherwise) as the
Administrative Agent or any Bank may reasonably request.
Section 5.2 Books, Records and Inspections. Each Loan
Party shall, and shall cause each of its Subsidiaries to, keep
proper books of record and account in which full, true and
correct entries in conformity with GAAP and all requirements of
law shall be made of all dealings and transactions in relation to
its business and activities. Each Loan Party shall, and shall
cause each of its Subsidiaries to, permit officers and designated
representatives of any Bank to visit and inspect any of its
properties, and to examine its books of record and account, and
discuss the affairs, finances and accounts of each Loan Party or
any of its Subsidiaries with, and be advised as to the same by,
its and their officers and independent accountants, all upon
reasonable notice and at such reasonable times as such Bank may
desire. Nothing contained in this Section 5.2 shall preclude any
Loan Party from attending any meeting with such Loan Party's
independent accountants.
Section 5.3 Maintenance of Insurance. Each Loan Party
shall, and shall cause each of its Subsidiaries to, maintain with
financially sound and reputable insurance companies insurance on
itself and its properties in at least such amounts and against at
least such risks as are customarily insured against in the same
general area by companies engaged in the same or a similar
business, which insurance shall in any event not provide for
materially less coverage than the insurance in effect on the
Closing Date as set forth on Schedule 4.19.
Section 5.4 Taxes. (a) Each Loan Party shall pay or
cause to be paid, and shall cause each of its Subsidiaries to pay
or cause to be paid, when due, all taxes, charges and assessments
and all other lawful claims required to be paid by such Loan
Party or such Subsidiaries, except as contested in good faith and
by appropriate proceedings diligently conducted, if adequate
reserves have been established with respect thereto in accordance
with GAAP.
(b) No Loan Party shall, and shall not permit any
of its Subsidiaries to, file or consent to the filing of any
consolidated tax return with any Person (other than the Borrower
and its Subsidiaries and the Parent).
Section 5.5 Corporate Franchises. Each Loan Party
shall, and shall cause each of its Subsidiaries to, do or cause
to be done, all things necessary to preserve and keep in full
force and effect its existence and its patents, trademarks,
servicemarks, tradenames, copyrights, franchises, licenses,
permits, certificates, authorizations, qualifications,
accreditation, easements, rights of way and other rights,
consents and approvals except where the failure to so preserve
any of the foregoing (other than existence) could not, individu
ally or in the aggregate, reasonably be expected to result in a
Material Adverse Effect.
Section 5.6 Compliance with Law. Each Loan Party
shall, and shall cause each of its Subsidiaries to, comply with
all applicable laws, rules, statutes, regulations, decrees and
orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the
conduct of their business and the ownership of their property,
including, without limitation, all Environmental Laws, except
such non-compliance as could not, individually or in the aggre
gate, reasonably be expected to result in a Material Adverse
Effect.
Section 5.7 Performance of Obligations. Each Loan
Party shall, and shall cause each of its Subsidiaries to, perform
all of its obligations under the terms of each mortgage, inden
ture, security agreement, debt instrument, lease, undertaking and
contract by which it or any of its properties is bound or to
which it is a party if the failure to so perform, individually or
in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.
Section 5.8 Maintenance of Properties. Each Loan
Party shall, and shall cause each of its Subsidiaries to, ensure
that its properties reasonably necessary to its business are kept
in good repair, working order and condition, normal wear and tear
excepted, except to the extent no Material Adverse Effect could
result therefrom.
Section 5.9 Further Assurances. (a) The Parent
shall, and shall cause each Loan Party to, execute any and all
further documents, financing statements, agreements and
instruments, and take all further action (including filing
Uniform Commercial Code and other financing statements, mortgages
and deeds of trust), that may be required under applicable law or
which the Required Banks, the Administrative Agent or the
Collateral Agent may reasonably request, in order to effectuate
the Transactions and in order to grant, preserve, protect and
perfect the validity and first priority of the Liens created or
intended to be created by the Security Documents.
(b) In addition, from time to time, each Loan
Party, at its own cost and expense, will promptly secure the
Secured Obligations by pledging or creating, or causing to be
pledged or created, perfected Liens with respect to its assets
and properties (and the assets and properties of its Subsidiar
ies) of a nature similar to the Collateral as of the Closing Date
as the Administrative Agent or the Required Banks shall
reasonably request (it being understood that it is the intent of
the parties that the Secured Obligations shall be secured by
substantially all such assets of the Loan Parties granted
pursuant to the Security Documents (including those acquired
subsequent to the Closing Date)). Such Liens will be created
under the Security Documents or such other security agreements,
mortgages, deeds of trust and other instruments and documents as
are satisfactory to the Collateral Agent, and each Loan Party
shall deliver or cause to be delivered to the Administrative
Agent all such instruments and documents (including legal
opinions, title insurance policies, surveys and lien searches) as
the Collateral Agent shall reasonably request to evidence
compliance with this Section 5.9. The Borrower agrees to provide
such evidence as the Collateral Agent or the Required Banks shall
reasonably request as to the perfection and priority status of
each such Lien.
(c) The Parent shall cause each Material Subsid
iary incorporated or organized after the Closing Date (other than
a Receivables Subsidiary) to promptly execute and deliver a
counterpart of the Subsidiary Guaranty, the Security Agreement
and any other instruments or documents related thereto as the
Collateral Agent shall reasonably request.
Section 5.10 Receivables Program Refinancings. On or
prior to 45 days before the maturity date of the Receivables
Program, the Borrower shall furnish evidence reasonably
satisfactory to the Required Banks demonstrating either (x) that
the Borrower has refinanced, extended, renewed or replaced the
Receivables Program, or has written binding commitments therefor,
in either case in such amounts and pursuant to such terms and
provisions as are sufficient to provide the Borrower with
sufficient liquidity for the twelve months following such date or
(y) that on a Pro Forma Basis, it shall have sufficient liquidity
for such twelve month period without the renewal, refinancing,
extension or replacement of the Receivables Program.
Section 5.11 Maintenance of Corporate Separateness.
The Parent will, and will cause each of its Subsidiaries to,
satisfy customary corporate formalities, including the holding of
regular board of directors' and shareholders' meetings or action
by directors or shareholders without a meeting and the
maintenance of corporate offices and records. Other than
pursuant to any Parent Guaranty or Subsidiary Guaranty entered
into pursuant to this Agreement, neither the Parent nor any of
its Subsidiaries shall make any payment to a creditor of any
other Subsidiary in respect of any liability of any such Subsid
iary, and no bank account of any Subsidiary shall be commingled
with any bank account of the Parent or any other Subsidiary. Any
financial statements distributed to any creditors of any Subsid
iary shall clearly establish or indicate the corporate
separateness of such Subsidiary from the Parent and its other
Subsidiaries. Finally, neither the Parent nor any of its
Subsidiaries shall take any action, or conduct its affairs in a
manner, which is likely to result in the corporate existence of
the Parent or any of its Subsidiaries being ignored, or in the
assets and liabilities of the Parent or any of its Subsidiaries
being substantively consolidated with those of any other such
Person in a bankruptcy, reorganization or other insolvency
proceeding.
Section 5.12 Post Closing Opinions. On or before 10
Business Days following the Closing Date, the Administrative
Agent shall have received favorable legal opinions from local
counsel satisfactory to the Administrative Agent in Texas,
Oklahoma, Louisiana and Arkansas with respect to the perfection
of security interests in the Collateral.
Section 5.13 Corporate Concentration Account. On or
before 45 days following the Closing Date, the Borrower shall
transfer the cash in the Corporate Concentration Account to a
bank account in either California or Illinois (the "Successor
Corporate Concentration Account") and shall grant the Banks (as
defined in the Existing Credit Agreement) a first priority lien
in the Successor Corporate Concentration Account.
Section 5.14 Cash Sweep. The Borrower hereby
covenants on each Business Day to sweep cash held at stores and
local deposit or concentration accounts to the Corporate
Concentration Account in accordance with customary and typical
past historical practices of the Borrower.
Section 5.15 Cash Equivalents. The Borrower and its
Subsidiaries shall hold, directly or beneficially, Cash
Equivalents only in a custodial account in which the Banks (as
defined in the Existing Credit Agreement) have a perfected
security interest held at the same institution as the Corporate
Concentration Account (the "Custodial Account") and in no other
account.
Section 5.16 Projections. On or before 30 days
following the Closing Date, the Borrower shall deliver to the
Administrative Agent projections for each fiscal quarter for the
fiscal year ending closest to December 31, 2001 in a form
satisfactory to the Administrative Agent.
SECTION 6. NEGATIVE COVENANTS.
Each of the Parent and the Borrower covenants and
agrees that on and after the Closing Date until the Total
Revolving Loan Commitment has terminated, and the Obligations are
paid in full:
Section 6.1 Financial Covenants.
(a) Leverage Ratios. (i) From February 3, 2001
and thereafter, the Parent shall not permit the Adjusted Leverage
Ratio, as of the last day of each four consecutive fiscal quarter
period then ended (taken as one accounting period), to exceed the
ratio of 4.5:1.
(ii) From February 3, 2001 and thereafter,
the Parent shall not permit the ratio of Consolidated Total
Senior Debt to Consolidated Adjusted EBITDA, as of the last day
of each four consecutive fiscal quarter period then ended (taken
as one accounting period) to exceed the ratio of 4.0:1.
(b) Interest Coverage Ratio. The Parent shall
not permit the ratio of Consolidated EBITDA to Consolidated
Interest Expense for each four consecutive fiscal quarter period
ended during the time periods set forth below (taken as one
accounting period), to be less than the ratio set forth below:
Four Fiscal
Quarters Ending on Ratio
February 3, 2001 2.24:1
From May 5, 2001 2.25:1
and thereafter
(c) Fixed Charge Coverage Ratio. From February
3, 2001 and thereafter, the Parent shall not permit the ratio of
(x) the sum of (i) Consolidated EBITDA plus (ii) Consolidated
Rental Expense to (y) Consolidated Fixed Charges for each four
consecutive fiscal quarter period (taken as one accounting
period), ending on or after the Closing Date to be less than the
ratio of 1.25:1.
(d) Capital Expenditures. The Parent and the
Borrower shall not make or incur (or commit to make or incur) and
shall not permit any of its Subsidiaries to make or incur (or
commit to make or incur) any Capital Expenditures, except Capital
Expenditures of the Parent and its Subsidiaries in any fiscal
year of the Borrower set forth below not in excess, in the
aggregate of the amount (the "Maximum Amount") set forth below
opposite such fiscal year:
Fiscal Year Ending
Closest to December 31 Maximum Amount
2000 $15,000,000
2001 $20,000,000 plus 2/3 of the
Retained Equity Proceeds
not to exceed $76,000,000
2002 $20,000,000 plus 2/3 of the
Retained Equity Proceeds
not to exceed $84,000,000
provided that (a) up to $15,000,000 of any Capital Expenditures
permitted to be incurred during any fiscal year and not made in
such fiscal year may be carried over and expended during the next
succeeding fiscal year (it being understood and agreed that any
Capital Expenditures made during such next succeeding fiscal year
shall count, first, against the amount permitted to be carried
over to such next succeeding fiscal year pursuant to this proviso
and, second, against any amounts permitted to be made during such
next succeeding fiscal year as set forth in the table above) and
(b) the amount of Capital Expenditures permitted to be incurred
during any fiscal year may be increased to the extent of the then
available Retained Equity Proceeds and Retained Offering Proceeds
and the Borrower's Share of Excess Cash Flow. Any Permitted
Acquisition that would otherwise constitute a Capital Expenditure
in accordance with GAAP shall not be included in the computation
of the amount of Capital Expenditures permitted under this
Section 6.1(d). Upon the occurrence of a Permitted Acquisition
(the Banks hereby agree that the Maximum Amount for the fiscal
year in which such Permitted Acquisition occurs (the "Subject
Year") and each fiscal year thereafter will increase by $20,000
per store (net of any stores scheduled to be closed as a result
of such Permitted Acquisition) being acquired pursuant to such
Permitted Acquisition, with the amount of such increase for the
Subject Year to be proportionately decreased by multiplying such
amount by a fraction where the numerator equals the remaining
number of full months remaining in the Subject Year and the
denominator is twelve.
(e) Minimum Consolidated EBITDA. The Parent
shall not permit the Consolidated EBITDA as determined on a
cumulative basis for the periods beginning on January 30, 2000,
and ending on the last day of each fiscal quarter ending on a
date set forth below (in each case taken as one accounting
period), to be less than the amount set forth opposite such date:
Minimum Consolidated
Date EBITDA
First Quarter $8,000,000
Second Quarter $20,000,000
Third Quarter $36,000,000
Section 6.2 Indebtedness. The Parent shall not, and
shall not permit any of its Subsidiaries to, create, incur, as
sume, suffer to exist or otherwise become or remain directly or
indirectly liable with respect to, any Indebtedness, other than:
(a) Indebtedness hereunder and under the other
Loan Documents and any Indebtedness, if any, in relation to the
Receivables Program;
(b) Indebtedness outstanding on the Closing Date
and set forth on Schedule 6.2 hereto and (without duplication)
Indebtedness (whether or not outstanding) under the Existing
Credit Agreement (including, without limitation and without
duplication, with respect to the Existing Credit Agreement, the
Senior Notes and the Senior Subordinated Notes, including the
guarantees thereof by the Parent, in the aggregate principal
amount not in excess of $500,000,000);
(c) Indebtedness of the Borrower or any of its
Subsidiaries permitted under Section 6.6;
(d) Indebtedness of the Borrower or any of its
Subsidiaries with respect to Capital Leases and other purchase
money Indebtedness, in each case incurred to finance Capital
Expenditures permitted under Section 6.1(d), not in excess of
$6,000,000 in the aggregate at any one time outstanding; provided
that any such Indebtedness shall not exceed the purchase price or
the fair market value of the asset so financed;
(e) Indebtedness owed by (x) Subsidiaries of the
Borrower to the Borrower or (y) by any Loan Party to any other
Loan Party;
(f) Unsecured letters of credit in an aggregate
stated amount equal to the L/C Sublimit (as defined in the
Existing Credit Agreement) minus the Letters of Credit
Outstanding (as defined in the Existing Credit Agreement);
(g) Permitted Acquired Indebtedness;
(h) Any other unsecured Indebtedness of the
Parent and its Subsidiaries in an aggregate outstanding principal
amount not to exceed at any time $1,000,000;
(i) Indebtedness of the Borrower resulting from
the refinancing of Indebtedness permitted by Sections (b) through
(i) above; provided, however, that (i) the principal amount of
any such refinancing Indebtedness (as determined as of the date
of the incurrence of such refinancing Indebtedness in accordance
with GAAP) does not exceed the principal or face amount of the
Indebtedness refinanced thereby on such date; (ii) the Weighted
Average Life to Maturity of such Indebtedness is not decreased;
(iii) the covenants, defaults and similar provisions applicable
to such refinancing Indebtedness or obligations are no more
restrictive in any material respect than the Indebtedness being
refinanced and do not conflict in any material respect with the
provisions of this Agreement and (iv) such refinancing
Indebtedness is otherwise upon terms and conditions no more
onerous or restrictive in any material respect (as determined by
the Required Banks) on the Borrower than the Indebtedness being
refinanced; and
(j) Indebtedness consisting of trade payables on
terms of more than 90 days incurred in the ordinary course of
business to the extent that such Indebtedness is being contested
in good faith and by proper proceedings and appropriate reserves
are being maintained with respect thereto; provided, however, the
aggregate amount of such Indebtedness outstanding at any one time
shall not exceed $2.5 million.
Section 6.3 Liens. The Parent shall not, and shall
not permit any of its Subsidiaries to, create, incur, assume or
suffer to exist, directly or indirectly, any Lien on any of its
property now owned or hereafter acquired, other than:
(a) Liens existing on the Closing Date and set
forth on Schedule 6.3 hereto;
(b) Liens created or contemplated by the Re
ceivables Program Documents on the Receivables of the Borrower
and its Subsidiaries transferred to the Receivables Subsidiary
pursuant thereto;
(c) inchoate Liens for taxes, assessments or
governmental charges not yet due or which are being contested in
good faith by appropriate proceedings diligently conducted and
with respect to which adequate reserves are being maintained in
accordance with GAAP;
(d) Statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and other Liens
imposed by law (other than any Lien imposed by ERISA or pursuant
to any Environmental Law) or created in the ordinary course of
business for amounts not yet due or which are being contested in
good faith by appropriate proceedings diligently conducted and
with respect to which adequate bonds have been posted or which
are solely informational in nature and do not, and do not purport
to, create a security interest;
(e) Liens (other than any Lien imposed by ERISA
or pursuant to any Environmental Law) incurred or deposits made
in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social
security, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of
borrowed money);
(f) Easements (including construction, operating
and reciprocal easement agreements), rights-of-way, zoning and
similar restrictions and other similar charges, covenants or
encumbrances not interfering with the ordinary conduct of the
business of the Borrower or any of its Subsidiaries and which do
not detract materially from the value of the property to which
they attach or impair materially the use thereof by the Borrower
or any of its Subsidiaries or materially adversely affect the
Liens of the Collateral Agent or the Banks therein;
(g) Liens granted to the Collateral Agent for the
benefit of the Secured Creditors pursuant to the Security
Documents securing the Secured Obligations;
(h) Judgment Liens so long as the claims secured
thereby do not exceed $10,000,000 in the aggregate and are being
contested in good faith pursuant to appropriate proceedings;
(i) Liens created pursuant to Capital Leases and
to secure other purchase-money Indebtedness permitted pursuant to
Section 6.2(d), provided that such Liens are only in respect of
the property or assets subject to, and secure only, the
respective Capital Lease or other purchase-money Indebtedness;
(j) Liens in addition to those listed above
provided that the obligations secured thereby shall not exceed
$50,000 for any such Lien or $1,000,000 in the aggregate for all
such Liens; and
(k) Liens under the Existing Credit Agreement.
Section 6.4 Restriction on Fundamental Changes.
(a) The Parent shall not, and shall not permit
any of its Subsidiaries to, enter into any merger or
consolidation, or liquidate, wind-up or dissolve (or suffer any
liquidation or dissolution), discontinue its business or convey,
lease, sell, transfer or otherwise dispose of, in one transaction
or series of transactions, all or any substantial part of its
business or property, whether now or hereafter acquired, except
(i) as otherwise permitted under Section 6.5, and (ii) any
wholly-owned Subsidiary of the Borrower may merge into or convey,
sell, lease or transfer all or substantially all of its assets
to, the Borrower or any other wholly-owned Subsidiary of the
Borrower.
(b) The Parent shall not and shall not permit any
of its Subsidiaries to, amend its certificate of incorporation or
by-laws to the extent such amendment is adverse to the Banks in
any respect.
Section 6.5 Sale of Assets. The Parent shall not, and
shall not permit any of its Subsidiaries to, convey, lease, sell,
transfer or otherwise dispose of (or agree to do so at any future
time) all or any part of its property or assets, except (i) sales
of inventory in the ordinary course of business; (ii) sales in
the ordinary course of business of furniture, fixtures, leasehold
improvements and equipment which, consistent with past practice,
is uneconomic, obsolete or no longer useful in its business;
(iii) sales of Receivables pursuant to and in accordance with the
provisions of the Receivables Program Documents; (iv) sales in
connection with store closings provided that such party complies
with the Existing Credit Agreement and Section 2.11(a)(vi)
hereof; (v) sale of the Hawker 400 corporate aircraft for a fair
value provided the parties comply with the Existing Credit
Agreement and sales permitted under Section 6.13 hereof and (vi)
sales of other assets of the Borrower and its Subsidiaries
provided that (x) at least 80% of the aggregate consideration
therefor shall be in the form of cash or Cash Equivalents, (y)
the aggregate Net Cash Proceeds or net book value, whichever is
greater, of all assets sold or otherwise disposed of pursuant to
this clause (vi) shall not exceed 5% of Consolidated Net Tangible
Assets during any fiscal year of the Borrower and (z) the Net
Cash Proceeds of each such sale are applied in accordance with
the provisions of the Existing Credit Agreement or Section
2.11(a).
Section 6.6 Contingent Obligations. The Parent shall
not, and shall not permit any of its Subsidiaries to, create or
become or be liable with respect to any Contingent Obligation,
except:
(a) pursuant to the Parent Guaranty, Subsidiary
Guaranty, the Security Documents or the Receivables Program
Documents; and
(b) Contingent Obligations which are in existence
on the Closing Date and which are set forth on Schedule 6.6,
including, without limitation, the guarantees, if any, by the
Borrower of the obligations under the Existing Credit Agreement,
of the Senior Notes and of the Senior Subordinated Notes.
Section 6.7 Dividends. The Parent shall not, and
shall not permit any of its Subsidiaries to (x) make any
Restricted Payment or (y) declare or pay any dividends (other
than dividends payable solely in common stock), or return any
capital to, its stockholders or authorize or make any other
distribution, payment or delivery of property or cash to its
stockholders as such, or redeem, retire, purchase or otherwise ac
quire, directly or indirectly, any shares of any class of its
capital stock now or hereafter outstanding (or any options or
warrants issued with respect to its capital stock), or set aside
any funds for any of the foregoing purposes (all the foregoing
"Dividends"), except that
(a) Dividends may be made to the Borrower or any
of its Subsidiaries by any of its wholly-owned Subsidiaries;
(b) so long as there shall exist no Default or
Event of Default (both before and after giving effect to the
payment thereof) the Borrower may make Restricted Payments to the
Parent, so long as the proceeds thereof are promptly used by the
Parent to pay operating and administrative expenses in the
ordinary course of business and other similar corporate overhead
costs and expenses; provided that the maximum amount of
Restricted Payments made pursuant to this clause (b) in any
fiscal year of the Borrower shall not exceed $500,000 in the
aggregate and shall only be made if there exists no Default or
Event of Default (both before and after giving effect to the
payment thereof);
(c) so long as the Borrower is a member of the
same consolidated group as the Parent for federal income tax
purposes, payments required by such Person pursuant to the Tax
Sharing Agreement as in effect on the Closing Date shall be
permitted; and
(d) the Parent may make, and the Borrower may pay
cash Restricted Payments to the Parent to enable the Parent to
make, payments to repurchase the Parent's common stock and/or
options to purchase the Parent's common stock held by directors,
executive officers, member of management or employees of the
Parent or any of its Affiliates upon the death, disability,
retirement or termination of such director, executive officers,
member of management or employee, so long as (x) no Default or
Event of Default then exists or would exist after giving effect
thereto and (y) the aggregate net amount of cash expended by the
Borrower and the Parent pursuant to this clause (d) in any fiscal
year shall not exceed $2,000,000.
Section 6.8 Advances, Investments and Loans. The
Parent shall not, and shall not permit any of its Subsidiaries
to, lend money or credit or make advances to any Person, or di
rectly or indirectly purchase or acquire any stock, obligations
or securities of, or any other interest in, or purchase all or
substantially all of the assets of, or make any capital contribu
tion to any Person (each an "Investment"), except that the
following shall be permitted:
(a) accounts receivable owned by the Parent and
its Subsidiaries, if created in the ordinary course of the
business of the Parent and its Subsidiaries and payable or
dischargeable in accordance with customary trade terms;
(b) (i) intercompany loans and advances permitted
by Section 6.2(e) and (ii) loans by the Borrower to the Parent
to finance the cash portion of Permitted Acquisitions, the
proceeds of which shall be used within one Business Day directly
or indirectly by the Parent to consummate such Permitted
Acquisition, which loans shall be evidenced by an Intercompany
Note pledged by the Borrower to the Collateral Agent;
(c) loans and advances by the Borrower and its
Subsidiaries to their employees in the ordinary course of its
business not exceeding $5,000,000 in the aggregate at any one
time outstanding;
(d) Investments by the Borrower in the Re
ceivables Subsidiary to the extent contemplated by the
Receivables Program;
(e) evidences of Indebtedness issued by the pur
chaser of assets and received by the Borrower or any of its
Subsidiaries in connection with asset sales to the extent
permitted by Section 6.5(vi);
(f) extensions of credit to the customers of the
Parent or its Subsidiaries in the ordinary course of the business
of the Parent or such Subsidiary pursuant to any credit card
programs to enable such customer to purchase inventory from the
Parent or any of its Subsidiaries;
(g) Investments by the Parent or the Borrower
constituting a Permitted Acquisition and related Investments by
the Parent or the Borrower in one or more of their Subsidiaries
in connection with, and substantially contemporaneously with,
such Permitted Acquisition; provided that the Parent and the
Borrower shall have complied with all of the terms and conditions
set forth in the definition of Permitted Acquisition;
(h) other Investments by the Parent, the Borrower
or any Subsidiary not to exceed $5,000,000 in any fiscal year of
the Borrower;
(i) Investments in customers of the Parent or its
Subsidiaries received in the ordinary course of business in
exchange for receivables owed by such customer to the Parent or
such Subsidiary as a result of the workout of such receivable or
the bankruptcy of such customer; and
(j) the Borrower and its Subsidiaries may acquire
and hold Cash Equivalents held in the Custodial Account.
Section 6.9 Transactions with Affiliates. The Parent
shall not, and shall not permit any of its Subsidiaries to, enter
into any transaction or series of related transactions, whether
or not in the ordinary course of business, with any Affiliate
(other than a Loan Party), other than (i) on terms and conditions
substantially as favorable to the Parent or such Subsidiary as
would be obtainable at the time in a comparable arm's-length
transaction with a Person other than an Affiliate, (ii) pursuant
to the Receivables Program, (iii) Restricted Payments permitted
to be paid to the extent provided in Section 6.7, (iv) leases in
existence on the date hereof entered into with PR Investments and
described on Schedule 6.9 hereto, (v) the consulting agreement
dated as of February 1, 1997, by and among the Parent and Bernie
Fuchs and described on Schedule 6.9 hereto and (vi) those
Investments permitted pursuant to Section 6.8.
Section 6.10 Limitation on Voluntary Payments and
Modifications of Certain Documents. The Parent shall not, and
shall not permit any of its Subsidiaries to, (a) make any vol
untary or optional payment or prepayment on or redemption or
acquisition for value of (including, without limitation, by way
of depositing with the trustee with respect thereto money or
securities before due for the purpose of paying when due) or ex
change of any Indebtedness other than (i) the Indebtedness
hereunder and under the other Loan Documents, (ii) so long as no
Default or Event of Default has occurred and is continuing, any
Indebtedness outstanding under the Existing Credit Agreement and
the Loan Documents (as defined in the Existing Credit Agreement),
(b) amend, modify, supplement, or waive, or permit the amendment,
modification, supplementation, or waiver of, any provision of any
Transaction Document (as defined in the Existing Credit
Agreement) provided, however, that any such Transaction Document
may be amended, modified, supplemented or waived in a manner not
materially adverse to the Administrative Agent or the Banks or
(c) resign as Servicer under the Receivables Program.
Section 6.11 Changes in Business. The Parent shall
not, and shall not permit any of its Subsidiaries to, enter into
any business which is substantially different from, or not
reasonably incidental to, that conducted by the Parent or such
Subsidiary, as the case may be, on the Closing Date after giving
effect to the Transactions; provided that the Parent shall not
incur, and shall not become liable with respect to, any
Indebtedness other than as expressly permitted pursuant to
Section 6.2.
Section 6.12 Certain Restrictions. The Parent shall
not, and shall not permit any of its Subsidiaries or any Person
controlling the Borrower to, enter into any agreement (other than
the Loan Documents and agreements evidencing Indebtedness
outstanding on the Closing Date, in each case as in effect on the
Closing Date) which restricts the ability of the Parent or any of
its Subsidiaries (other than the Receivables Subsidiary) to (a)
enter into amendments, modifications or waivers of the Loan Docu
ments, (b) sell, transfer or otherwise dispose of its assets
(other than the Receivables), (c) create, incur, assume or suffer
to exist any Lien upon any of its property (other than the
Receivables), (d) create, incur, assume, suffer to exist or
otherwise become liable with respect to any Indebtedness, or (e)
pay any Dividend, provided that Capital Leases or agreements
governing purchase money Indebtedness which contain restrictions
of the types referred to in clauses (b) or (c) with respect to
the property covered thereby shall be permitted. The Parent
shall not, and shall not permit any of its Subsidiaries or any
Person controlling the Borrower to, enter into any amendment of
the Receivables Program Documents as in effect on the Closing
Date or any refinancing of the Receivables Program that would
materially and adversely affect any Loan Party's ability to
perform its Obligations under this Agreement or any other Loan
Document.
Section 6.13 Sales and Leasebacks. The Parent shall
not, and shall not permit any of its Subsidiaries to, become lia
ble, directly or indirectly, with respect to any lease, whether
an operating lease or a Capital Lease, of any property (whether
real or personal or mixed) whether now owned or hereafter
acquired, (i) which the Parent or such Subsidiary has sold or
transferred or is to sell or transfer to any other Person, or
(ii) which the Parent or such Subsidiary intends to use for sub
stantially the same purposes as any other property which has been
or is to be sold or transferred by the Borrower or such
Subsidiary to any other Person in connection with such Lease,
other than such transactions the Net Cash Proceeds of which in
the aggregate do not exceed $10,000,000 plus the Net Cash
Proceeds from any sale, transfer or assignment of the
Jacksonville Distribution Center; provided, however,
notwithstanding anything contained in this Agreement, the Parent
and any of its Subsidiaries may sell, transfer or assign the
Jacksonville Distribution Center provided that the Net Cash
Proceeds resulting therefrom are used to prepay the loans under
the Existing Credit Agreement in accordance with that certain
letter dated February 3, 2000.
Section 6.14 Plans. The Parent shall not, nor shall
it permit any member of its ERISA Controlled Group to, take any
action which would increase the aggregate present value of the
Unfunded Benefit Liabilities under all Plans to an amount in
excess of $15,000,000.
Section 6.15 Limitation on Dispositions of Subsidiary
Stock. The Parent shall not, nor shall it permit any of its
Subsidiaries to, directly or indirectly sell, assign, pledge or
otherwise encumber or dispose of, or issue or permit any of its
Subsidiaries to issue to any other Person, any shares of capital
stock or other equity securities of (or warrants, rights or
options to acquire shares or other equity securities of) any of
their Subsidiaries except (i) to the extent permitted by the Loan
Documents, (ii) to qualify directors if and to the extent
required by applicable law, (iii) to the Borrower or any wholly-
owned Subsidiary of the Borrower and (iv) sales of equity securi
ties pursuant to the Receivables Program as in effect on the date
hereof.
Section 6.16 Fiscal Year; Fiscal Quarter. The Parent
shall not, and shall not permit any of its Subsidiaries to,
change its fiscal year or any of its fiscal quarters, except that
any Subsidiary acquired after the date hereof shall be permitted
to change its fiscal quarters and fiscal year to conform to the
fiscal quarters and fiscal year of the Parent.
Section 6.17 Receivables Program. The Borrower shall
not take any action to diminish the equity value of the
Receivables Subsidiary other than to pay dividends in the
ordinary course of business consistent with past practice and
will continue to operate the Receivables Subsidiary in the
ordinary course of business consistent with past practice.
Section 6.18 Custodial Account. The Borrower shall
not grant any party control over, or allow any party to enter
into a control agreement with respect to, the Custodial Account
except for the Administrative Agent (as defined in the Existing
Credit Agreement) for the benefit of the Banks (as defined in the
Existing Credit Agreement).
SECTION 7. EVENTS OF DEFAULT.
Section 7.1 Events of Default. Each of the following
events, acts, occurrences or conditions shall constitute an Event
of Default under this Agreement, regardless of whether such
event, act, occurrence or condition is voluntary or involuntary
or results from the operation of law or pursuant to or as a
result of compliance by any Person with any judgment, decree,
order, rule or regulation of any court or administrative or
governmental body:
(a) Failure to Make Payments. The Borrower shall
(i) default in the payment when due of any principal of the
Revolving Loans or (ii) default, and such default shall continue
unremedied for three or more Business Days, in the payment when
due of any interest on the Revolving Loans or in the payment when
due of any Fees or any other amounts owing hereunder.
(b) Breach of Representation or Warranty. Any
representation or warranty made by any Loan Party herein or in
any other Loan Document or in any certificate or statement deliv
ered pursuant hereto or thereto shall prove to be false or
misleading in any material respect on the date as of which made
or deemed made.
(c) Breach of Covenants.
(i) Any Loan Party shall fail to perform or
observe any agreement, covenant or obligation arising under
Sections 5.1(i), 5.5 or 6.
(ii) Any Loan Party shall fail to perform or
observe any agreement, covenant or obligation arising under
this Agreement (except those described in subsections (a),
(b) and (c)(i) above), and such failure shall continue for
fifteen days.
(iii) Any Loan Party shall fail to perform
or observe any agreement, covenant or obligation arising
under any provision of the Loan Documents other than this
Agreement, which failure shall continue after the end of the
applicable grace period, if any, provided therein.
(d) Default Under Other Agreements. Any Loan
Party shall default in the payment when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise)
of any amount owing in respect of any Indebtedness (other than
the Obligations or Indebtedness pursuant to Section 6.2(j)
hereof) in the aggregate principal amount of $2,000,000 or more;
or any Loan Party shall default in the performance or observance
of any obligation or condition with respect to any such Indebted
ness or any other event shall occur or condition exist, if the
effect of such default, event or condition is to accelerate the
maturity of any such Indebtedness or to permit (without regard to
any required notice or lapse of time) the holder or holders
thereof, or any trustee or agent for such holders, to accelerate
the maturity of any such Indebtedness, or any such Indebtedness
shall become or be declared to be due and payable prior to its
stated maturity other than as a result of a regularly scheduled
payment.
(e) Receivables Program. Any default shall have
occurred and be continuing under any Receivable Program Document
and as a result of such default, the Receivables Program or any
successor program may be terminated or be suspended prior to the
Final Maturity Date.
(f) Bankruptcy, etc. (i) Any Loan Party or any
of its Subsidiaries shall commence a voluntary case concerning
itself under the Bankruptcy Code; or (ii) an involuntary case is
commenced against any Loan Party or any of its Subsidiaries and
the petition is not controverted within 10 days, or is not dis
missed within 60 days, after commencement of the case; or (iii) a
custodian (as defined in the Bankruptcy Code) is appointed for,
or takes charge of, all or substantially all of the property of
any Loan Party or any of its Subsidiaries or any Loan Party or
any of its Subsidiaries commences any other proceedings under any
reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of
any jurisdiction whether now or hereafter in effect relating to
any Loan Party or any of its Subsidiaries or there is commenced
against any Loan Party or any of its Subsidiaries any such
proceeding which remains undismissed for a period of 60 days; or
(iv) any order of relief or other order approving any such case
or proceeding is entered; or (v) any Loan Party or any of its
Subsidiaries is adjudicated insolvent or bankrupt; or (vi) any
Loan Party or any of its Subsidiaries suffers any appointment of
any custodian or the like for it or any substantial part of its
property which continues undischarged or unstayed for a period of
60 days; or (vii) any Loan Party or any of its Subsidiaries makes
a general assignment for the benefit of creditors; or (viii) any
Loan Party or any of its Subsidiaries shall fail to pay, or shall
state that it is unable to pay, or shall be unable to pay, its
debts generally as they become due; or (ix) any Loan Party or any
of its Subsidiaries shall call a meeting of its creditors with a
view to arranging a composition or adjustment of its debts; or
(x) any Loan Party or any of its Subsidiaries shall by any act or
failure to act consent to, approve of or acquiesce in any of the
foregoing; or (xi) any corporate action is taken by any Loan
Party or any of its Subsidiaries for the purpose of effecting any
of the foregoing.
(g) ERISA. (i) Any Termination Event shall
occur, or (ii) any Plan shall incur an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302
of ERISA), whether or not waived or (iii) any Loan Party or any
member of its ERISA Controlled Group shall fail to pay when due
any amount which it shall have become liable to pay to the PBGC,
any Plan or a trust established under Title IV of ERISA, or (iv)
a condition shall exist by reason of which the PBGC would be enti
tled to obtain a decree adjudicating that, for financial reasons,
an ERISA Plan must be terminated or a trustee must be appointed
to administer any ERISA Plan, or (v) any Loan Party or a member
of its ERISA Controlled Group is in "default" (as defined in
Section 4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan, or (vi) any other event or condition shall
occur or exist with respect to any Plan which could subject any
Loan Party or any member of its ERISA Controlled Group to any
tax, penalty or other liability, which in any such case described
in clauses (i) through (vi) above could reasonably be expected to
result in a Material Adverse Effect.
(h) Loan Documents. Any of the Loan Documents
(i) shall for any reason cease to be in full force and effect or
the Borrower or any other Loan Party which is a party to any of
the Loan Documents shall so assert, or (ii) shall cease to give
the Administrative Agent or the Banks, as the case may be, the
Liens, rights, powers and privileges purported to be created
thereby including, without limitation, a perfected first priority
security interest in, and Lien on, all of the Collateral in accor
dance with the terms thereof.
(i) Parent Guaranty and Subsidiary Guaranty. The
Parent Guaranty, the Subsidiary Guaranty or any provision thereof
shall cease to be in full force and effect, or any Guarantor or
any Person acting by or on behalf of any Guarantor shall deny or
disaffirm all or any portion of such Guarantor's obligations
hereunder or under such Parent Guaranty or Subsidiary Guaranty.
(j) Change of Control. A Change of Control shall
have occurred.
(k) Judgments. One or more judgments or decrees
in an aggregate amount of $2,000,000 or more shall be entered by
a court or courts of competent jurisdiction against the Parent
and/or its Subsidiaries (other than any judgment as to which, and
only to the extent, a reputable insurance company has acknowl
edged coverage of such claim in writing) and (i) any such
judgments or decrees shall not be stayed, discharged, paid,
bonded or vacated within 30 days or (ii) enforcement proceedings
shall be commenced by any creditor on any such judgments or
decrees.
(l) Environmental Matters. (i) Any Environmen
tal Claim shall have been asserted against the Parent or any of
its Subsidiaries or any Environmental Affiliate thereof which, if
determined adversely, could be reasonably expected to have a
Material Adverse Effect, or (ii) the Parent or any of its Subsid
iaries or Environmental Affiliates shall have failed to obtain
any Environmental Approval necessary for the management, use, con
trol, ownership, or operation of its business, property or assets
or any such Environmental Approval shall be revoked, terminated,
or otherwise cease to be in full force and effect, in each case,
if the existence of such condition could be reasonably expected
to have a Material Adverse Effect.
(m) Inventory Value. The value of the Inventory
(at cost) as set forth on the Borrower's financial statements
furnished pursuant hereto and in accordance with GAAP, shall at
any time be less than $100,000,000.
Section 7.2 Rights and Remedies. Upon the occurrence
of any Event of Default described in Section 7.1(f) with respect
to any Loan Party, the Commitments shall automatically and immedi
ately terminate and the unpaid principal amount of and any and
all accrued interest on the Revolving Loans and any and all
accrued Fees and other Obligations shall automatically become
immediately due and payable, with all additional interest from
time to time accrued thereon and without presentation, demand, or
protest or other requirements of any kind (including, without
limitation, valuation and appraisement, diligence, presentment,
notice of intent to demand or accelerate and notice of accel
eration), all of which are hereby expressly waived by Borrower,
and the obligation of each Bank to make any Revolving Loan
hereunder shall thereupon terminate; and upon the occurrence and
during the continuance of any other Event of Default, the Admin
istrative Agent shall at the request, or may with the consent, of
the Required Banks, by written notice to Borrower, (i) declare
that the Commitments are terminated, whereupon the Commitments
and the obligation of each Bank to make any Revolving Loan
hereunder shall immediately terminate, and (ii) declare the
unpaid principal amount of and any and all accrued and unpaid
interest on the Revolving Loans and any and all accrued Fees and
other Obligations to be, and the same shall thereupon be, immedi
ately due and payable with all additional interest from time to
time accrued thereon and without presentation, demand, or protest
or other requirements of any kind (including, without limitation,
valuation and appraisement, diligence, presentment, notice of
intent to demand or accelerate and notice of acceleration), all
of which are hereby expressly waived by the Borrower.
Upon an Event of Default, each of the Parent and its
Subsidiaries shall permit any designated representative or repre
sentatives of the Administrative Agent, including, but not limit
ed to, environmental consultants or other professionals, upon
reasonable notice to the Borrower or its Subsidiaries, to enter
any property owned or operated by the Borrower or its Subsidiar
ies for the purpose of conducting an environmental investigation
of said property. Said investigations may include, but not be
limited to, testing the integrity of underground storage tanks;
taking soil and groundwater borings and samples; testing for the
presence of radon; and collecting samples to test for the
presence of asbestos. The Borrower shall reimburse the
Administrative Agent for all reasonable costs and expenses
incurred in connection with any investigation conducted
hereunder.
SECTION 8. THE ADMINISTRATIVE AGENT AND COLLATERAL AGENT.
Section 8.1 Appointment. Each Bank hereby irrevoca
bly, subject to Section 8.9 hereof, designates and appoints
Credit Suisse First Boston as the Administrative Agent and Credit
Suisse First Boston as Collateral Agent (the Administrative Agent
and the Collateral Agent for the purposes of this Section are
collectively referred to as the "Agent") of such Bank under this
Agreement and each other Loan Document, and each such Bank
irrevocably authorizes Credit Suisse First Boston as the Agent
for such Bank, to take such action on its behalf under the provi
sions of this Agreement and each other Loan Document and to
exercise such powers and perform such duties as are expressly
delegated to the Agent by the terms of this Agreement and each
other Loan Document, together with such other powers as are rea
sonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement, the Agent shall not have
any duties or responsibilities, except those expressly set forth
herein, or any fiduciary relationship with any Bank, and no
implied covenants, functions, responsibilities, duties, obliga
tions or liabilities on the part of the Agent shall be read into
this Agreement or otherwise exist against the Agent. The provi
sions of this Section 8 are solely for the benefit of the Agent
and the Banks and no Loan Party shall have any rights as a third
party beneficiary or otherwise under any of the provisions
hereof. In performing its functions and duties hereunder and
under the other Loan Documents, the Agent shall act solely as the
agent of the Banks and does not assume nor shall be deemed to
have assumed any obligation or relationship of trust or agency
with or for any Loan Party or any of their respective successors
and permitted assigns.
Section 8.2 Delegation of Duties. The Agent may
execute any of its duties under this Agreement or the other Loan
Documents by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining
to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
Section 8.3 Exculpatory Provisions. The Agent shall
not be (i) liable for any action lawfully taken or omitted to be
taken by it or any Person described in Section 8.2 under or in
connection with this Agreement or any other Loan Document (except
for its own gross negligence or willful misconduct), or (ii)
responsible in any manner to any of the Banks for any recitals,
statements, representations or warranties made by any Loan Party
contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or
provided for in, or received under or in connection with, this
Agreement or any other Loan Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this
Agreement, or any other Loan Document or for any failure of any
Loan Party to perform their obligations hereunder or thereunder.
The Agent shall not be under any obligation to any Bank to ascer
tain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or
any other Loan Document, or to inspect the properties, books or
records of any Loan Party. This Section is intended solely to
govern the relationship between the Agent, on the one hand, and
the Banks, on the other.
Section 8.4 Reliance by Agent. The Agent shall be
entitled to rely, and shall be fully protected in relying, upon
any Revolving Note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document or
conversation 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 any Loan Party), independent accountants
and other experts selected by the Agent. The Agent may deem and
treat the payee of any Revolving Note as the owner thereof for
all purposes unless the Agent shall have received an executed
Transfer Supplement in respect thereof. The Agent shall be fully
justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Banks as it
deems appropriate or it shall first be indemnified to its
satisfaction by the Banks against any and all liability and
expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases
be fully protected in acting, or in refraining from acting, under
this Agreement and the other Loan Documents in accordance with a
request of the Required Banks, and such request and any action
taken or failure to act pursuant thereto shall be binding upon
all the Banks and all future holders of the Revolving Notes.
Section 8.5 Notice of Default. The Agent shall not be
deemed to have knowledge or notice of the occurrence of any
Default or Event of Default unless the Agent has received notice
from a Bank or the Borrower referring to this Agreement, describ
ing such Default or Event of Default and stating that such notice
is a "notice of default". In the event that the Agent receives
such a notice, the Agent shall promptly give notice thereof to
the Banks. The Agent shall take such action with respect to such
Default or Event of Default as shall be directed by the Required
Banks; provided that unless and until the Agent shall have
received such directions, the Agent may (but shall not be obli
gated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as the Agent
shall deem advisable and in the best interests of the Banks.
Section 8.6 Non-Reliance on Agent and Other Banks.
Each Bank expressly acknowledges that neither the 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 Agent hereafter taken, including, without
limitation, any review of the affairs of any Loan Party, shall be
deemed to constitute any representation or warranty by the Agent.
Each Bank represents and warrants to the Agent that it has,
independently and without reliance upon the Agent or any other
Bank and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the
business, operations, property, prospects, financial and other
conditions and creditworthiness of the Loan Parties and made its
own decision to make its Loans hereunder and enter into this
Agreement. Each Bank also represents that it will, independently
and without reliance upon the Agent or any other Bank, and based
on such documents and information as it shall deem appropriate at
the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agree
ment, and to make such investigation as it deems necessary to
inform itself as to the business, operations, property, pros
pects, financial and other condition and creditworthiness of the
Loan Parties. Except for notices, reports and other documents
expressly required under the Loan Documents to be furnished to
the Banks by the Agent, the Agent shall not have any duty or
responsibility to provide any Bank with any credit or other
information concerning the business, operations, property, pros
pects, financial and other condition or creditworthiness of the
Loan Parties which may come into the possession of the Agent or
any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.
Section 8.7 Indemnification. The Banks agree to
indemnify the Agent and its officers, directors, employees,
representatives and agents (to the extent not reimbursed by the
Loan Parties and without limiting the obligation of the Loan
Parties to do so), ratably according to their Pro Rata Shares,
from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever (including, with
out limitation, the fees and disbursements of counsel for the
Agent or such Person in connection with any investigative, or
judicial proceeding commenced or threatened, whether or not the
Agent or such Person shall be designated a party thereto) that
may at any time (including, without limitation, at any time
following the payment of the Obligations) be imposed on, incurred
by or asserted against the Agent or such Person as a result of,
or arising out of, or in any way related to or by reason of, any
of the Transactions or the execution, delivery or performance of
any Loan Document (but excluding any such liabilities, obliga
tions, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the gross
negligence or willful misconduct of the Agent or such Person as
finally determined by a court of competent jurisdiction). In the
event the Agent shall recover any amounts paid by any Bank pur
suant to this Section 8.7, it shall reimburse such payments to
each Bank on a Pro Rata basis.
Section 8.8 Agent in its Individual Capacity. The
Agent and its affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Loan
Parties as though the Agent were not the Agent hereunder or under
any other Loan Document. With respect to Revolving Loans made or
renewed by it and any Revolving Note issued to it, the Agent
shall have the same rights and powers under this Agreement as any
Bank and may exercise the same as though it were not the Agent,
and the terms "Bank" and "Banks" shall include the Agent in its
individual capacity.
Section 8.9 Successor Agent. The Agent may resign as
Agent upon 30 days' written notice to the Borrower and the
Banks. If the Agent shall resign as Agent under this Agreement,
then the Required Banks during such 30-day period shall appoint
from among the Banks a successor agent which shall be reasonably
acceptable to the Borrower. If no successor shall have been so
appointed by the Required Banks and shall have accepted such
appointment within 30 days after the retiring Agent gives written
notice of its resignation, then the retiring Agent may, on behalf
of the Banks, appoint a successor Agent, which shall be a bank
with an office in New York, New York, having a combined capital
and surplus of at least $500,000,000 or an Affiliate of any such
bank which shall be reasonably acceptable to the Borrower. Any
such successor agent shall succeed to the rights, powers and
duties of the Agent and the term "Agent" shall mean such
successor agent, effective upon its appointment, and the former
Agent's rights, powers and duties as Agent shall be terminated,
without any other or further act or deed on the part of such
former Agent or any of the parties to this Agreement or any
holders of the Notes. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Section 8 and Section
9.1 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement.
SECTION 9. MISCELLANEOUS.
Section 9.1 Payment of Expenses, Indemnity, etc. The
Parent and the Borrower shall:
(a) whether or not the transactions hereby contem
plated are consummated, pay all reasonable out-of-pocket costs
and expenses of the Administrative Agent and the Collateral Agent
in connection with the negotiation, preparation, execution or
delivery of the Loan Documents and the documents and instruments
referred to therein, the creation, perfection or protection of
the Liens in the Collateral (including, without limitation, fees
and expenses for title and lien searches and filing and recording
fees); and the reasonable fees and disbursements of Skadden,
Arps, Slate, Meagher & Flom (Illinois) and its affiliates,
special counsel to the Administrative Agent and any other attor
neys retained by the Administrative Agent);
(b) pay all reasonable out-of-pocket costs and
expenses of the Administrative Agent and Collateral Agent in
connection with any amendment, waiver or consent relating to any
of the Loan Documents (including, without limitation, the
reasonable fees and disbursements of counsel for the Administra
tive Agent and Collateral Agent);
(c) pay all reasonable out-of-pocket costs and
expenses of the Administrative Agent, the Collateral Agent and
each Bank in connection with the preservation of rights under,
and enforcement of, the Loan Documents and the documents and
instruments referred to therein or in connection with any
restructuring or rescheduling of the Obligations (including,
without limitation, the reasonable fees and disbursements of
counsel for each of the Administrative Agent, the Collateral
Agent and each of the Banks), including, without limitation, if
requested by the Administrative Agent no more than once each
fiscal year, the reasonable costs and expenses of a bank audit of
the assets of the Borrower and its Subsidiaries (the scope of
such bank audit to be acceptable to the Administrative Agent),
provided that after the occurrence of an Event of Default
hereunder, the Parent and the Borrower shall pay the reasonable
costs and expenses of any additional bank audit as may be
requested by the Administrative Agent;
(d) pay, and hold the Administrative Agent, the
Collateral Agent and each of the Banks harmless from and against,
any and all present and future stamp, excise and other similar
taxes with respect to the foregoing matters and hold the Adminis
trative Agent, the Collateral Agent and each Bank harmless from
and against any and all liabilities with respect to or resulting
from any delay or omission (other than to the extent attributable
to such Bank) to pay such taxes; and
(e) indemnify the Administrative Agent, the
Collateral Agent and each Bank, its officers, directors,
employees, representatives, affiliates and agents (each an "In
demnitee") from, and hold each of them harmless against, any and
all losses, liabilities, claims, damages, expenses, obligations,
penalties, actions, judgments, suits, costs or disbursements of
any kind or nature whatsoever (including, without limitation, the
fees and disbursements of counsel for such Indemnitee in connec
tion with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not such
Indemnitee shall be designated a party thereto) that may at any
time (including, without limitation, at any time following the
payment of the Obligations) be imposed on, asserted against or in
curred by any Indemnitee as a result of, or arising out of, or in
any way related to or by reason of, (i) any of the Transactions
or the execution, delivery or performance of any Loan Document,
(ii) any violation by any Loan Party or its Environmental Affili
ate of any applicable Environmental Law, (iii) any Environmental
Claim arising out of the management, use, control, ownership or
operation of property or assets by any of the Loan Parties or any
of their Environmental Affiliates, including, without limitation,
all on-site and off-site activities involving Materials of
Environmental Concern, (iv) the breach of any environmental
representation or warranty set forth in Section 4.18, (v) the
grant to the Administrative Agent, the Collateral Agent or the
Banks of any Lien in any property or assets of any of the Loan
Parties or any stock or other equity interest in any of the Loan
Parties, and (vi) the exercise by the Administrative Agent, the
Collateral Agent or the Banks of their rights and remedies
(including, without limitation, foreclosure) under any agreements
creating any such Lien (but excluding, as to any Indemnitee, any
such losses, liabilities, claims, damages, expenses, obligations,
penalties, actions, judgments, suits, costs or disbursements
incurred solely by reason of the gross negligence or willful
misconduct of such Indemnitee as finally determined by a court of
competent jurisdiction). The Borrower's obligations under this
Section shall survive the termination of this Agreement and the
payment of the Obligations.
Section 9.2 Right of Setoff. In addition to any
rights now or hereafter granted under applicable law or other
wise, and not by way of limitation of any such rights, upon the
occurrence and during the continuance of any Event of Default,
each Bank is hereby authorized at any time or from time to time,
without presentment, demand, protest or other notice of any kind
to any Loan Party or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and apply
any and all deposits (general or special, time or demand,
provisional or final) and any other indebtedness at any time held
or owing by such Bank (including, without limitation, by branches
and agencies of such Bank wherever located) to or for the credit
or the account of any Loan Party against and on account of the
Obligations of the Loan Parties to such Bank under this Agreement
or under any of the other Loan Documents, including, without limi
tation, all interests in Obligations purchased by such Bank
pursuant to Section 9.7, and all other claims of any nature or de
scription arising out of or connected with this Agreement or any
other Loan Document, irrespective of whether or not such Bank
shall have made any demand hereunder and although said
Obligations, liabilities or claims, or any of them, shall be
contingent or unmatured.
Section 9.3 Notices. Except as otherwise expressly
provided herein, all notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing
(including by telecopy), and shall be deemed to have been duly
given or made when delivered by hand, or five days after being
sent by certified or registered United States mail, postage
prepaid, or, in the case of telecopy notice, when sent, or, in
the case of a nationally recognized overnight courier service,
one Business Day after delivery to such courier service, ad
dressed, in the case of each party hereto, at its address
specified opposite its signature below or on the appropriate
Transfer Supplement, or to such other address as may be desig
nated by any party in a written notice to the other parties
hereto, provided that notices and communications to the
Administrative Agent shall not be effective until received by the
Administrative Agent.
Section 9.4 Successors and Assigns; Participation;
Assignments.
(a) Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the Parent, the
Borrower, the Banks, the Administrative Agent, the Collateral
Agent, all future holders of the Revolving Notes and their respec
tive successors and assigns, except that neither the Parent nor
the Borrower may assign or transfer any of its rights or obliga
tions under this Agreement without the prior written consent of
each Bank. No Bank may participate, assign or sell any of its
Credit Exposure (as defined in clause (b) below) except as
required by operation of law, in connection with the merger,
consolidation or dissolution of any Bank or as provided in this
Section 9.4.
(b) Participation. Any Bank may at any time sell
to one or more Persons (each a "Participant") participating inter
ests in any Loan owing to such Bank, any Revolving Note held by
such Bank, any Commitment of such Bank, or any other interest of
such Bank hereunder (in respect of any such Bank, its "Credit
Exposure"). Notwithstanding any such sale by a Bank of
participating interests to a Participant, such Bank's rights and
obligations under this Agreement shall remain unchanged, such
Bank shall remain solely responsible for the performance thereof,
such Bank shall remain the holder of any such Revolving Note for
all purposes under this Agreement (except as expressly provided
below), and the Borrower and the Administrative Agent shall
continue to deal solely and directly with such Bank in connection
with such Bank's rights and obligations under this Agreement.
The Borrower agrees that if any Obligations are due and unpaid,
or shall have been declared or shall have become due and payable
upon the occurrence and during the continuance of an Event of De
fault, each Participant shall be deemed, to the fullest extent
permitted by law, to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement and
any Revolving Note to the same extent as if the amount of its
participating interest were owing directly to it as a Bank under
this Agreement or any Revolving Note, provided that such right of
setoff shall be subject to the obligations of such Participant to
share with the Banks as provided in Section 9.7. The Borrower
also agrees that each Participant shall be entitled to the
benefits of Sections 2.15, 2.16, 2.17, 2.18 and 9.1, provided
that no Participant shall be entitled to receive any greater
amount pursuant to such sections than the transferor Bank would
have been entitled to receive in respect of the amount of the
participating interest transferred by such transferor Bank to
such Participant had no such transfer occurred. Each Bank agrees
that any agreement between such Bank and any such Participant in
respect of such participating interest shall not restrict such
Bank's right to agree to any amendment, supplement, waiver or
modification to this Agreement or any other Loan Document, except
where the result of any of the foregoing would be to extend the
final maturity of any Obligation or any regularly scheduled
installment thereof or reduce the rate or extend the time of
payment of interest or fees thereon or reduce the principal
amount thereof or release all or substantially all of the
Collateral (except as expressly provided in the Loan Documents).
(c) Assignments to Purchasing Banks. Any Bank
may, in the ordinary course of its business and in accordance
with applicable law, at any time assign to any Bank or any
affiliate thereof or, with the prior written consent of the
Borrower and the Administrative Agent, which consent shall not be
unreasonably withheld, to any other Person ("Purchasing Banks")
all or any part of its Credit Exposure pursuant to a supplement
to this Agreement, substantially in the form of Exhibit L hereto
(a "Transfer Supplement"), executed by such Purchasing Bank, such
transferor Bank and the Administrative Agent; provided that the
minimum amount of the Credit Exposure of any Bank so assigned
shall not be less than $5,000,000 (or if the assignor shall
assign its entire Credit Exposure, any lesser amount). Upon (i)
such execution of such Transfer Supplement, (ii) delivery of an
executed copy thereof to the Borrower and the Administrative
Agent and (iii) payment by such Purchasing Bank to such transfer
or Bank of an amount equal to the purchase price agreed between
such transferor Bank and such Purchasing Bank and payment to the
Administrative Agent by such Purchasing or Transferor Bank a non-
refundable processing fee of $3,500, such transferor Bank shall
be released from its obligations hereunder to the extent of such
assignment and such Purchasing Bank shall for all purposes be a
Bank party to this Agreement and shall have all the rights and
obligations of a Bank under this Agreement to the same extent as
if it were an original party hereto, and no further consent or
action by the Borrower, the Banks or the Administrative Agent
shall be required. Such Transfer Supplement shall be deemed to
amend this Agreement to the extent, and only to the extent,
necessary to reflect the addition of such Purchasing Bank as a
Bank and the resulting adjustment of the Commitments, if any,
arising from the purchase by such Purchasing Bank of all or a
portion of the Credit Exposure of such transferor Bank. If the
transferor Bank shall then be in possession of a Revolving Note
and if requested by the Purchasing Bank, promptly after the
consummation of any transfer to a Purchasing Bank pursuant
hereto, the transferor Bank, the Administrative Agent and the Bor
rower shall, at the expense of the Purchasing Bank, make appropri
ate arrangements so that a replacement Note is issued to such
transferor Bank and a new Revolving Note is issued to such Pur
chasing Bank, in each case in principal amounts reflecting such
transfer.
(d) Disclosure of Information. The Borrower au
thorizes each Bank to disclose to any Participant or Purchasing
Bank (each, a "Transferee") and any prospective Transferee any
and all financial and other information in such Bank's possession
concerning the Borrower which has been delivered to such Bank by
the Borrower pursuant to this Agreement or which has been
delivered to such Bank by the Borrower in connection with such
Bank's credit evaluation of the Borrower prior to entering into
this Agreement.
(e) Federal Reserve Banks. Notwithstanding the
limitations set forth in paragraph (c) above, any Bank may at any
time assign all or any portion of its rights under this Agreement
or any Revolving Note for purposes of assignment to a Federal
Reserve Bank without the prior written consent of the Borrower or
the Administrative Agent, provided that no such assignment shall
release a Bank from any of its obligations hereunder or
substitute any such Federal Reserve Bank for such Bank as a party
hereto.
Section 9.5 Amendments and Waivers. Neither this
Agreement, any Revolving Note, any other Loan Document to which
the Parent or the Borrower is a party nor any terms hereof or
thereof may be amended, supplemented, modified or waived except
in accordance with the provisions of this Section. The Required
Banks, the Parent and the Borrower may, from time to time, enter
into written amendments, supplements, modifications or waivers
for the purpose of adding, deleting, changing or waiving any
provisions to this Agreement, the Revolving Notes, or the other
Loan Documents to which the Parent or the Borrower is a party,
provided that no such amendment, supplement, modification or
waiver shall (a) extend the Final Maturity Date or reduce the
rate or extend the time of payment of interest on any Obliga
tions, or reduce the principal amount of any Obligations or re
duce any fee payable to the Banks hereunder, or release all or
substantially all of the Collateral (except as expressly
contemplated by the Loan Documents) or change the amount of any
Commitment of any Bank, or amend, modify or waive any provision
of this Section 9.5 or the definition of Required Banks, or
consent to or permit the assignment or transfer by the Borrower
of any of its rights and obligations under this Agreement or any
other Loan Document, in each case without the written consent of
all the Banks effected thereby, (b) amend, modify or waive any
provision of Section 8 or any other provision of any Loan Docu
ment if the effect thereof is to affect the rights or duties of
the Administrative Agent, without the written consent of the then
Administrative Agent, or (c) release the Parent from any of its
obligations under Section 10. Any such amendment, supplement,
modification or waiver shall apply to each of the Banks equally
and shall be binding upon the Parent, the Borrower, the Banks,
the Administrative Agent and all future holders of the Revolving
Notes. In the case of any waiver, the Parent, the Borrower, the
Banks and the Administrative Agent shall be restored to their
former position and rights hereunder and under the outstanding
Notes, and any Default or Event of Default waived shall be deemed
to be cured and not continuing, but no such waiver shall extend
to any subsequent or other Default or Event of Default, or impair
any right consequent thereon.
Section 9.6 No Waiver; Remedies Cumulative. No fail
ure or delay on the part of the Administrative Agent, the
Collateral Agent, any Bank, or any holder of a Revolving Note in
exercising any right, power or privilege hereunder or under any
other Loan Document and no course of dealing between any Loan
Party and the Administrative Agent, the Collateral Agent, any
Bank or the holder of any Revolving Note shall operate as a
waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder or under any other Loan
Document preclude any other or further exercise thereof of the
exercise of any other right, power or privilege hereunder or
thereunder. The rights and remedies herein expressly provided
are cumulative and not exclusive of any rights or remedies which
the Administrative Agent, the Collateral Agent, any Bank or the
holder of any Revolving Note would otherwise have. No notice to
or demand on any Loan Party in any case shall entitle any Loan
Party to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the rights of the
Administrative Agent, the Banks, the Collateral Agent or the
holder of any Revolving Note to any other or further action in
any circumstances without notice or demand.
Section 9.7 Sharing of Payments. Each of the Banks
agrees that if it should receive any amount hereunder (whether by
voluntary payment, by realization upon security, by the exercise
of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Loan Documents,
or otherwise) which is applicable to the payment of any
Obligations, of a sum which with respect to the related sum or
sums received by other Banks is in a greater proportion than the
total of such Obligation then owed and due to such Bank bears to
the total of such Obligation then owed and due to all of the
Banks immediately prior to such receipt, then such Bank receiving
such excess payment shall purchase for cash without recourse or
warranty from the other Banks an interest in such Obligations
owing to such Banks in such amount as shall result in a
proportional participation by all of the Banks in such amount;
provided that if all or any portion of such excess amount is
thereafter recovered from such Bank, such purchase shall be
rescinded and the purchase price restored to the extent of such
recovery, but without interest.
Section 9.8 Governing Law; Submission to Jurisdiction.
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL,
EXCEPT AS OTHERWISE PROVIDED IN THE MORTGAGES, BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING TO
CONFLICTS OF LAW).
(b) Any legal action or proceeding with respect
to this Agreement or any other Loan Document and any action for
enforcement of any judgment in respect thereof may be brought in
the courts of the State of New York or of the United States of
America for the Southern District of New York, and, by execution
and delivery of this Agreement, the Borrower hereby accepts for
itself and in respect of its property, generally and uncondi
tionally, the non-exclusive jurisdiction of the aforesaid courts
and appellate courts from any thereof. The Borrower irrevocably
consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail,
postage prepaid, the Borrower at its address set forth opposite
its signature below. The Borrower hereby irrevocably waives any
objection which it may now or hereafter have to the laying of
venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Agreement or any other Loan
Document brought in the courts referred to above and hereby
further irrevocably waives and agrees not to plead or claim in
any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum. Nothing
herein shall affect the right of the Administrative Agent, any
Bank, or any holder of a Revolving Note to serve process in any
other manner permitted by law or to commence legal proceedings or
otherwise proceed against the Borrower in any other jurisdiction.
Section 9.9 Counterparts. This Agreement may be
executed in any number of counterparts and by the different
parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
Section 9.10 Effectiveness. This Agreement shall
become effective on the date on which all of the parties hereto
shall have signed a counterpart hereof and shall have delivered
the same to the Administrative Agent which delivery, in the case
of the Banks, may be given to the Administrative Agent by
telecopy (with the originals delivered promptly to the Adminis
trative Agent via overnight courier service).
Section 9.11 Headings Descriptive. The headings of
the several Sections and subsections of this Agreement are
inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement.
Section 9.12 Marshalling; Recapture. Neither the
Administrative Agent, the Collateral Agent nor any Bank shall be
under any obligation to marshall any assets in favor of any Loan
Party or any other party or against or in payment of any or all
of the Obligations. To the extent any Bank receives any payment
by or on behalf of any Loan Party, which payment or any part
thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to such Loan
Party or its estate, trustee, receiver, custodian or any other
party under any bankruptcy law, state or federal law, common law
or equitable cause, then to the extent of such payment or repay
ment, the obligation or part thereof which has been paid, reduced
or satisfied by the amount so repaid shall be reinstated by the
amount so repaid and shall be included within the liabilities of
such Loan Party to such Bank as of the date such initial payment,
reduction or satisfaction occurred.
Section 9.13 Severability. In case any provision in
or obligation under this Agreement or the Notes or the other Loan
Documents shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the
remaining provisions or obligations, or of such provision or
obligation in any other jurisdiction, shall not in any way be af
fected or impaired thereby.
Section 9.14 Survival. All indemnities set forth
herein including, without limitation, in Sections 2.15, 2.16,
2.17, 2.18, 8.7 and 9.1 and the limitation of liability set forth
in Section 9.16 shall survive the execution and delivery of this
Agreement and the Revolving Notes and the making and repayment of
the Revolving Loans hereunder.
Section 9.15 Domicile of Loans. Each Bank may
transfer and carry its Revolving Loans at, to or for the account
of any branch office, subsidiary or affiliate of such Bank.
Section 9.16 Limitation of Liability. No claim may be
made by any Loan Party or any other Person against the Administra
tive Agent, the Collateral Agent, any Bank, or the Affiliates,
directors, officers, employees, attorneys or agent of any of them
for any special, indirect, consequential or punitive damages in
respect of any claim for breach of contract or any other theory
of liability arising out of or related to the transactions contem
plated by this Agreement or any other Transactions, or any act,
omission or event occurring in connection therewith; and each
Loan Party hereby waives, releases and agrees not to sue upon any
claim for any such damages, whether or not accrued and whether or
not known or suspected to exist in its favor.
Section 9.17 Calculations; Computations. The finan
cial statements to be furnished to the Administrative Agent and
the Banks pursuant hereto shall be made and prepared in accor
dance with GAAP consistently applied throughout the periods
involved and consistent with GAAP as used in the preparation of
the financial statements referred to in Section 4.5, and, except
as otherwise specifically provided herein, all computations of
Excess Cash Flow, Borrower's Share of Excess Cash Flow and
Retained Equity Proceeds and computations determining compliance
with Section 6 hereof shall utilize GAAP. All computations of
interest (other than interest calculated by reference to the Base
Rate during such periods that the Base Rate is determined by
reference to the Prime Rate), Commitment Fees and other Fees
shall be made on the basis of a year of 360 days for the actual
number of days (including the first day but excluding the last
day) occurring in the period for which such interest, Commitment
Fee or other Fees are payable. All computations of interest
calculated by reference to the Base Rate during such periods that
the Base Rate is determined by reference to the Prime Rate shall
be made on the basis of a year of 365 days for the actual number
of days (including the first day but excluding the last day)
occurring in the period for which such interest is payable.
Section 9.18 Waiver of Trial by Jury. TO THE EXTENT
PERMITTED BY APPLICABLE LAW, EACH OF THE PARENT, THE BORROWER,
THE ADMINISTRATIVE AGENT, THE CO-AGENTS, THE COLLATERAL AGENT AND
THE BANKS HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY
MATTER ARISING HEREUNDER OR THEREUNDER.
Section 9.19 Nature of Borrowers' Obligations. (a)
The Borrower agrees that the Obligations will be paid strictly in
accordance with the terms of this Agreement, the Revolving Notes
and the other Loan Documents, regardless of any law, regulation
or order now or hereafter in effect in any jurisdiction affecting
any of such terms or the rights of any Secured Creditor with
respect thereto. The liability of the Borrower shall be absolute
and unconditional, in accordance with its terms and shall remain
in full force and effect without regard to, and shall not be
released, suspended, discharged, terminated or otherwise affected
by, any circumstance or occurrence whatsoever, including, without
limitation: (i) any change in the time, place or manner of
payment of, or in any other term of, all or any of the Obliga
tions, any waiver, indulgence, renewal, extension, amendment or
modification of, or addition, consent or supplement to, or
deletion from, or any other action or inaction under, or in re
spect of this Agreement, any Revolving Note, any other Loan
Document or any documents, instruments or agreements relating to
the Obligations or any other instrument or agreement referred to
therein or any assignment or transfer of any thereof; (ii) any
lack of validity or enforceability of this Agreement, any
Revolving Note, any other Loan Document or any other documents,
instruments or agreements referred to therein or any assignment
or transfer of any thereof; (iii) any furnishing of any addi
tional security to the Secured Creditors or their assignees or
any acceptance thereof or any release of any security by the
Secured Creditors, or their assignees; (iv) any limitation on any
party's liability or obligations under any such instrument or
agreement or any invalidity or unenforceability, in whole or in
part, of any such instrument or agreement, or any term thereof;
(v) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding
relating to the Borrower, or any action taken with respect to
this Agreement by any trustee or receiver, or by any court, in
any such proceeding, whether or not the Borrower shall have
notice or knowledge of any of the foregoing and the Borrower
waives any right to the deferral or modification of its obliga
tions hereunder by reason of any such proceeding; (vi) any ex
change, release or nonperfection of any other collateral, or any
release, or amendment or waiver of, or consent to, departure from
any guaranty or security, for all or any of the Obligations;
(vii) any direction as to application of payment by the Borrower
or by any other party; (viii) any dissolution, termination or
increase, decrease or change in personnel by the Borrower; or
(ix) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Borrower. This
Agreement shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Obligations
is rescinded or must otherwise be returned by any Secured
Creditor upon the insolvency, bankruptcy or reorganization of the
Borrower or any Guarantor or otherwise, all as though such
payment had not been made.
(c) The Borrower hereby irrevocably agrees to
subordinate any Subrogation Rights (as defined below) to the
rights of any Secured Creditor to recover from the Borrower all
Obligations. "Subrogation Rights" shall mean any and all rights
of subrogation, reimbursement, exoneration, contribution or indem
nification, any right to participate in any claim or remedy of
the Secured Creditors or any collateral which the Administrative
Agent, any other Secured Creditor or the Collateral Agent now has
or hereafter acquires in connection with the payment, performance
or enforcement of the Borrower's obligations under this Agreement
or any Loan Document, whether or not such claim, remedy or right
arises in equity, or under contract, statute or common law,
including the right to take or receive, directly or indirectly,
in cash or other property or by set-off or in any other manner,
payment or security on account of such claim or other rights. To
effectuate such subordination, the Borrower hereby agrees that it
shall not be entitled to any payment by the Borrower in respect
of any Subrogation Right until all of the Obligations have been
indefeasibly paid in full. If any amount shall be paid to the
Borrower in violation of the preceding sentence and the Obliga
tions shall not have been paid in full or any commitment of any
Secured Creditor under this Agreement shall not have been irrevo
cably terminated, such amount shall be deemed to have been paid
to the Borrower for the benefit of, and held in trust for, the
Administrative Agent for the benefit of the Secured Creditors,
and shall forthwith be paid to the Administrative Agent to be
credited and applied to the Obligations, whether matured or unma
tured. The Borrower acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated by
this Agreement and that the subordination set forth in this
Section is knowingly made in contemplation of such benefits.
SECTION 10. PARENT GUARANTY.
Section 10.1 The Parent Guaranty. In order to induce
the Administrative Agent and the Banks to enter into this
Agreement and to extend credit hereunder, and in recognition of
the direct benefits to be received by the Parent from the
proceeds of the Revolving Loans, the Parent hereby agrees with
the Guaranteed Creditors as follows: the Parent hereby uncon
ditionally and irrevocably guarantees as primary obligor and not
merely as surety the full and prompt payment when due, whether
upon maturity, acceleration or otherwise, of any and all of the
Guaranteed Obligations of the Borrower to the Guaranteed
Creditors. If any or all of the Guaranteed Obligations of the
Borrower to the Guaranteed Creditors become due and payable
hereunder, the Parent irrevocably and unconditionally promises to
pay such indebtedness to the Guaranteed Creditors, or order, on
demand, together with any and all expenses which may be incurred
by the Guaranteed Creditors in collecting any of the Guaranteed
Obligations. If claim is ever made upon any Guaranteed Creditor
for repayment or recovery of any amount or amounts received in
payment or on account of any of the Guaranteed Obligations and
any of the aforesaid payees repays all or part of said amount by
reason of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over such payee or any of
its property or (ii) any settlement or compromise of any such
claim effected by such payee with any such claimant (including
the Borrower), then and in such event the Parent agrees that any
such judgment, decree, order, settlement or compromise shall be
binding upon the Parent, notwithstanding any revocation of this
Parent Guaranty, and the Parent shall be and remain liable to the
aforesaid payees hereunder for the amount so repaid or recovered
to the same extent as if such amount had never originally been
received by any such payee.
Section 10.2 Bankruptcy. Additionally, the Parent
unconditionally and irrevocably guarantees the payment of any and
all of the Guaranteed Obligations to the Guaranteed Creditors
whether or not due or payable by the Borrower upon the occurrence
of any of the events specified in Section 7.1(f), and uncondi
tionally promises to pay such indebtedness to the Guaranteed
Creditors, or order, on demand, in lawful money of the United
States.
Section 10.3 Nature of Liability. The liability of
the Parent hereunder is exclusive and independent of any security
for or other guaranty of the Guaranteed Obligations whether
executed by the Parent, any other guarantor or by any other
party, and the liability of the Parent hereunder is not affected
or impaired by (a) any direction as to application of payment by
the Borrower or by any other party, or (b) any other continuing
or other guaranty, undertaking or maximum liability of a
guarantor or of any other party as to the Guaranteed Obligations,
or (c) any payment on or in reduction of any such other guaranty
or undertaking, or (d) any dissolution, termination or increase,
decrease or change in personnel by the Borrower, or (e) any
payment made to any Guaranteed Creditor on the Guaranteed Obliga
tions which any such Guaranteed Creditor repays to the Borrower
pursuant to court order in any bankruptcy, reorganization,
arrangement, moratorium or other debtor relief proceeding, and
Parent waives any right to the deferral or modification of its
obligations hereunder by reason of any such proceeding.
Section 10.4 Independent Obligation. The obligations
of the Parent hereunder are independent of the obligations of any
other guarantor, any other party or the Borrower, and a separate
action or actions may be brought and prosecuted against the
Parent whether or not action is brought against any other guar
antor, any other party or the Borrower and whether or not any
other guarantor, any other party or the Borrower be joined in any
such action or actions. The Parent waives, to the full extent
permitted by law, the benefit of any statute of limitations
affecting its liability hereunder or the enforcement thereof.
Any payment by the Borrower or other circumstance which operates
to toll any statute of limitations as to the Borrower shall
operate to toll the statute of limitations as to the Parent.
This Parent Guaranty is a continuing one and all liabilities to
which it applies or may apply under the terms hereof shall be
conclusively presumed to have been created in reliance hereon.
Section 10.5 Authorization. The Parent authorizes the
Guaranteed Creditors without notice or demand (except as shall be
required by applicable statute and cannot be waived), and without
affecting or impairing its liability hereunder, from time to time
to:
(a) change the manner, place or terms of payment
of, and/or change or extend the time of payment of, renew,
increase, accelerate or alter, any of the Guaranteed Obligations
(including any increase or decrease in the rate of interest
thereon), any security therefor, or any liability incurred
directly or indirectly in respect thereof, and the Parent
Guaranty herein made shall apply to the Guaranteed Obligations as
so changed, extended, renewed or altered;
(b) take and hold security for the payment of the
Guaranteed Obligations and sell, exchange, release, surrender,
realize upon or otherwise deal with in any manner and in any
order any property by whomsoever at any time pledged or mortgaged
to secure, or howsoever securing, the Guaranteed Obligations or
any liabilities (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or any
offset there against;
(c) exercise or refrain from exercising any
rights against the Borrower, any other Loan Party or others or
otherwise act or refrain from acting;
(d) release or substitute any one or more
endorsers, guarantors, the Borrower or other obligors;
(e) settle or compromise any of the Guaranteed
Obligations, any security therefor or any liability (including
any of those hereunder) incurred directly or indirectly in
respect thereof or hereof, and may subordinate the payment of all
or any part thereof to the payment of any liability (whether due
or not) of the Borrower to its creditors other than the Guaran
teed Creditors;
(f) apply any sums by whomsoever paid or howso
ever realized to any liability or liabilities of the Borrower to
the Guaranteed Creditors regardless of what liability or liabili
ties of the Parent, the Borrower remain unpaid;
(g) consent to or waive any breach of, or any
act, omission or default under, this Agreement or any of the
instruments or agreements referred to herein, or otherwise amend,
modify or supplement this Agreement or any of such other
instruments or agreements; and/or
(h) take any other action which would, under
otherwise applicable principles of common law, give rise to a
legal or equitable discharge of the Parent from its liabilities
under this Parent Guaranty.
Section 10.6 Reliance. It is not necessary for any
Guaranteed Creditor to inquire into the capacity or powers of the
Borrower or the officers, directors, partners or agents acting or
purporting to act on their behalf, and any Guaranteed Obligations
made or created in reliance upon the professed exercise of such
powers shall be guaranteed hereunder.
Section 10.7 Subordination. Any of the indebtedness
of the Borrower now or hereafter owing to the Parent, is hereby
subordinated to the Guaranteed Obligations of the Borrower owing
to the Guaranteed Creditors; and if the Administrative Agent so
requests at a time when an Event of Default exists, all such
indebtedness of the Borrower to the Parent shall be collected,
enforced and received by the Parent for the benefit of the
Guaranteed Creditors and be paid over to the Administrative Agent
on behalf of the Guaranteed Creditors on account of the
Guaranteed Obligations of the Borrower to the Guaranteed Credi
tors, but without affecting or impairing in any manner the
liability of the Parent under the other provisions of this Parent
Guaranty. Prior to the transfer by the Parent of any note or
negotiable instrument evidencing any of the indebtedness of the
Borrower to the Parent, the Parent shall mark such note or
negotiable instrument with a legend that the same is subject to
this subordination. Without limiting the generality of the
foregoing, the Parent hereby agrees with the Guaranteed Creditors
that it will not exercise any right of subrogation which it may
at any time otherwise have as a result of this Parent Guaranty
(whether contractual, under Section 509 of the Bankruptcy Code or
otherwise) until all Guaranteed Obligations have been irrevocably
paid in full in cash.
Section 10.8 Waiver. (a) The Parent waives any right
(except as shall be required by applicable statute and cannot be
waived) to require any Guaranteed Creditor to (i) proceed against
the Borrower, any other guarantor or any other party, (ii)
proceed against or exhaust any security held from the Borrower,
any other guarantor or any other party or (iii) pursue any other
remedy in any Guaranteed Creditor's power whatsoever. The Parent
waives any defense based on or arising out of any defense of the
Borrower, any other guarantor or any other party, other than
payment in full of the Guaranteed Obligations, based on or
arising out of the disability of the Borrower, any other
guarantor or any other party, or the validity, legality or
unenforceability of the Guaranteed Obligations or any part
thereof from any cause, or the cessation from any cause of the
liability of the Borrower other than payment in full of the
Guaranteed Obligations. The Guaranteed Creditors may, at their
election, foreclose on any security held by the Collateral Agent,
or any other Guaranteed Creditor by one or more judicial or
nonjudicial sales, whether or not every aspect of any such sale
is commercially reasonable (to the extent such sale is permitted
by applicable law), or exercise any other right or remedy the
Guaranteed Creditors may have against the Borrower, any other
party or any security, without affecting or impairing in any way
the liability of the Parent hereunder except to the extent the
Guaranteed Obligations have been paid. The Parent waives any
defense arising out of any such election by the Guaranteed
Creditors, even though such election operates to impair or extin
guish any right of reimbursement or subrogation or other right or
remedy of the Parent against the Borrower, any other party or any
security.
(b) The Parent waives all presentments, demands
for performance, protests and notices, including without
limitation notices of nonperformance, notices of protest, notices
of dishonor, notices of acceptance of this Parent Guaranty, and
notices of the existence, creation or incurring of new or
additional Guaranteed Obligations. The Parent assumes all
responsibility for being and keeping itself informed of the
Borrower's financial condition and assets, and of all other
circumstances bearing upon the risk of nonpayment of the
Guaranteed Obligations and the nature, scope and extent of the
risks which the Parent assumes and incurs hereunder, and agrees
that neither the Agents nor any Bank shall have any duty to
advise the Parent of information known to them regarding such
circumstances or risks.
Section 10.9 Maximum Liability. It is the desire and
intent of the Parent and the Guaranteed Creditors that this
Parent Guaranty shall be enforced against the Parent to the
fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought. If,
however, and to the extent that, the obligations of the Parent
under this Parent Guaranty shall be adjudicated to be invalid or
unenforceable for any reason (including, without limitation,
because of any applicable state or federal law relating to
fraudulent conveyances or transfers), then the amount of the
Guaranteed Obligations of the Parent shall be deemed to be re
duced and the Parent shall pay the maximum amount of the
Guaranteed Obligations which would be permissible under
applicable law.
IN WITNESS WHEREOF, the parties hereto have caused
their duly authorized officers to execute and deliver this Agree
ment as of the date first written above.
SPECIALTY RETAILERS, INC., AS BORROWER
By: /s/ James A. Marcum
Name: James A. Marcum
Title: Vice Chairman/CFO
10201 Main Street
Houston, Texas 77025
Attn: James A. Marcum
Telephone: (713) 669-2832
Facsimile: (713) 669-2709
STAGE STORES, INC., AS GUARANTOR
By: /s/ James A. Marcum
Name: James A. Marcum
Title: Vice Chairman/CFO
10201 Main Street
Houston, Texas 77025
Attn: James A. Marcum
Telephone: (713) 669-2832
Facsimile: (713) 669-2709
CREDIT SUISSE FIRST BOSTON, as Adminis
trative Agent and Collateral Agent, and
as a Bank
By: /s/ Julia P. Kingsbury
Name: Julia P. Kingsbury
Title: Vice President
By: /s/ Didier Siffer
Name: Didier Siffer
Title: Vice President
Eleven Madison Avenue
New York, New York 10010-3629
Attn: Jan Kofol
Telephone: (212) 325-9057
Facsimile: (212) 325-0304
BANK UNITED
By: /s/ Gordon A. Kovacs
Name: Gordon A. Kovacs
Title: Senior Special Asset Manager
& Vice President
3200 Southwest Freeway
19th Floor
Houston, Texas 77027
Attn: Gordon Kovacs
Telephone: (713) 543-7951
Facsimile: (713) 543-7117
PARIBAS
By: /s/ Albert A. Young, Jr.
Name: Albert A. Young, Jr.
Title: Director
By: /s/ Amy Kirschner
Name: Amy Kirschner
Title: Vice President
787 Seventh Avenue
New York, New York 10019
Attn: Albert Young
Telephone: (212) 841-2329
Facsimile: (212) 841-3565
STEIN, ROE & FARNHAM, AS AGENT FOR
KEYPORT LIFE INSURANCE COMPANY
By: /s/ James R. Fellows
Name: James R. Fellows
Title: Vice President
One South Wacker Drive
33rd Floor
Chicago, Illinois 60606
Attn: Jim Fellows
Telephone: (312) 368-5641
Facsimile: (312) 368-7857
BANKERS LIFE AND CASUALTY COMPANY
By: /s/ Eric R. Johnson
Name: Eric R. Johnson
Title: Vice President
(By Conseco Capital Management, Inc.
acting as Investment Advisor.)
11825 N. Pennsylvania Street
Carmel, Indiana 46032
Attn: John Nasser
Telephone: (317) 817-6069
Facsimile: (317) 575-2001
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Richard P. DeGrey
Name: Richard P. DeGrey
Title: Vice President
445 South Figueroa Street
15th Floor
Los Angeles, California 90071-1602
Attn: Richard P. DeGrey, Vice
President
Telephone: (213) 236-6064
Facsimile: (213) 236-6089
Annex 1 to
Credit Agreement
Banks and Commitments
Name of Bank Revolving Commitment
Credit Suisse First Boston $10,208,334.00
Bank United $10,208,333.00
Union Bank of California, N.A. $10,208,333.00
Paribas $ 1,750,000.00
Stein, Roe & Farnham, as agent for
Keyport Life Insurance Company $ 1,750,000.00
Bankers Life and Casualty Company $ 875,000.00
Total Commitment: $35,000,000.00
_______________________________
1FOOTER B CONTAINS FILENAME ONLY
