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4182/BLUSEC
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 11, 1994
MERRY-GO-ROUND ENTERPRISES, INC.
(Exact Name of Registrant as Specified in Charter)
Maryland 1-10491 52-0913402
(State or Other (Commission File Number) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
3300 Fashion Way, Joppa, Maryland 21085
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (410) 538-1000
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
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Item 3(a). Bankruptcy or Receivership.
On January 11, 1994, voluntary petitions (the
"Petitions") were filed with respect to the Registrant and two of
its subsidiaries, MGR Distribution Corporation and MGRR, Inc.,
seeking protection under Chapter 11 of the Federal Bankruptcy
Code (the "Bankruptcy Code") in the United States Bankruptcy
Court for the District of Maryland (the "Bankruptcy Court")
(Chapter 11 Case Nos. 94-5-0161, 0162 and 0163 (SD)). The
Registrant and such subsidiaries are in possession of their
respective properties and are maintaining and operating their
respective businesses as debtors-in-possession pursuant to the
provisions of Sections 1107 and 1108 of Chapter 11. On January
21, 1994, the Bankruptcy Court entered an interim order approving
on an interim basis a $40,000,000 revolving credit facility with
a $40,000,000 subfacility for letters of credit. A copy of this
order is filed as Exhibit 99.1 to this Form 8-K. This financing
is described in greater detail in Item 5. below under the caption
"Revolving Credit Agreement."
The Registrant intends and desires to continue the
operation of its businesses and the management of its properties
and intends to propose a plan or plans of reorganization pursuant
to Chapter 11 of the Bankruptcy Code.
Item 5. Other Events.
I. Revolving Credit Agreement.
On January 11, 1994, prior to and in contemplation
of the filing of the Petitions, the Registrant, MGR Distribution
Corporation and MGRR, Inc. executed a commitment letter and a
related fee letter (the "Fee Letter") with respect to a
$125,000,000 revolving credit facility. A copy of the Fee letter
is filed as Exhibit 99.2 to this Form 8-K. The Registrant and
MGR Distribution Corporation, as Borrowers, and MGRR, Inc., as
Guarantor, have entered into a Revolving Credit Agreement dated
as of January 14, 1994 (the "Original Credit Agreement"), as
amended by a First Amendment dated as of January 21, 1994 (the
"First Amendment," with the Original Credit Agreement as amended
by the First Amendment being referred to herein as the "Credit
Agreement") with the financial institutions from time to time
party thereto (the "Lenders") and The CIT Group/Business Credit,
Inc., as Agent. The proceeds of the loans to be made pursuant to
the Credit Agreement are intended to be used solely to fund
working capital in the Borrowers' and the Guarantor's businesses
and for other general corporate purposes.
The following is a brief summary of certain
portions of the Credit Agreement and are qualified in their
entirety by reference to the Original Credit Agreement and the
First Amendment, which are filed as Exhibits 99.3 and 99.4 to
this Form 8-K. Pursuant to the terms of the Credit Agreement,
the Lenders have agreed, subject to the limitations described
below, to provide the Borrowers with a $125,000,000 revolving
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credit facility, including a $90,000,000 subfacility for the
issuance of letters of credit (of which not more than $10,000,000
may be used for standby letters of credit). Until the final
order of the Bankruptcy Court approving the loans made and to be
made in accordance with the Credit Agreement (the "Final
Bankruptcy Court Order") is duly entered, the revolving credit
facility is limited to $40,000,000 and the letter of credit
subfacility is limited to $40,000,000 (of which not more than
$5,000,000 may be used for standby letters of credit).
Under the subfacility, CIT has agreed to assist the
Borrowers in joining in applications for documentary and standby
letters of credit and/or guaranteeing payment or performance of
such letters of credit to be issued by a bank mutually acceptable
to CIT and the Borrowers. Letters of credit issued under the
subfacility would be limited to terms not exceeding one year from
their respective dates of issuance. No letter of credit (a) may
expire later than 15 days prior to the Termination Date (as
defined below) unless such letter of credit is cash
collateralized in an amount equal to 105% of the face amount
thereof, or (b) may be issued for the benefit of domestic trade
creditors in connection with the purchase of merchandise by
either Borrower in excess of $12,000,000.
The Lender's commitment to make revolving credit loans
and the obligation to assist in the issuance of letters of credit
will expire on the earliest to occur of: (i) the date which is
twenty-seven (27) months after January 21, 1994; (ii) 30 days
after January 21, 1994 if the Final Bankruptcy Court Order shall
not have been entered during such 30-day period; and (iii) the
date of substantial consummation (as defined in Section 1101(2)
of the Bankruptcy Code) of a plan of reorganization in the
Borrowers' and the Guarantor's jointly administered cases that
has been confirmed by an order of the Bankruptcy Court. The
occurrence of the earliest of these events is referred to in the
Credit Agreement as the "Termination Date."
No Lender has an obligation to make revolving credit
loans or arrange for the issuance of letters of credit (except in
certain circumstances with respect to letters of credit which are
cash collateralized at 105% as provided in the Credit Agreement)
if the proposed loan or letter of credit, when added to the
aggregate amount of all outstanding and contemporaneous revolving
credit loans and the letter of credit exposure at such time,
would cause the aggregate of such loans and letter of credit
exposure at any time to exceed the "Current Commitment" at such
time. The "Current Commitment" at any time is an aggregate
amount equal to the stated commitment set forth above (as the
same may be voluntarily reduced by the Borrowers from time to
time), or, if less, the borrowing base availability at that
time. The borrowing base availability is computed as an amount
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equal to the difference between (i) the sum of (A) 60% of the
"book value" (as defined in the Credit Agreement) of the
Borrowers' eligible inventory, subject to certain qualifications
and deductions, and from and after the date on which the Agent
has received certain evidence establishing the absence of liens
on certain inventory (B) 60% of "L/C Inventory" (the undrawn
stated amount of documentary letters of credit for the
importation of finished goods inventory) and (ii) $2,500,000. If
at any time the Current Commitment is less than the aggregate
unpaid principal amount of the revolving credit loans then
outstanding plus the letter of credit exposure at such time, the
Borrowers shall prepay revolving credit loans in an amount of not
less than the amount of such difference or, if the outstanding
revolving credit loans are less than the amount of such
difference, the Borrowers are required to provide cash collateral
to the Agent in an amount equal to 105% of such excess.
Under the Credit Agreement, the Borrowers are required
to maintain inventory at certain specified levels, which vary
during the term of the Credit Agreement. The Credit Agreement
also requires that the Borrowers' earnings before interest,
taxes, depreciation and amortization (EBITDA), computed on a
first in-first out basis and as otherwise provided in the Credit
Agreement, equal or exceed the minimum levels specified in the
Credit Agreement. In addition, the Credit Agreement establishes
restrictions on the Borrowers with respect to indebtedness,
guarantees, liens, capital expenditures, loans, investments,
dividends, asset dispositions, markups and markdowns and the
payment of certain pre-petition obligations, among other matters.
Loans made under the Credit Agreement will bear
interest, (i) in the case of a Prime Loan, at a rate per annum
for each day equal to the Prime Rate for such day plus 1% and
(ii) in the case of a Eurodollar Loan, at the "Eurodollar Rate"
(the rate determined by the Agent to be the rate at which
deposits in dollars are offered by Chemical Bank in the London
interbank market two business days prior to the first day of the
relevant interest period, in the approximate amount of the
relevant Eurodollar Loan and having as maturity equal to such
interest period) plus 2 1/2%. "Prime Rate" is defined in the
Credit Agreement as the interest rate per annum publicly
announced from time to time by Chemical Bank in New York, New
York as its Prime Rate. Such interest rate is to change
automatically from time to time effective as of the announced
effective date of each change in such Prime Rate.
As security for the joint and several obligations of the
Borrowers to the Agent, CIT and the Lenders under the Credit
Agreement and related documents, each Borrower has granted to the
Agent for the ratable benefit of each of the Lenders a lien
solely on the letter of credit cash collateral account
establishable under the Credit Agreement. The Credit Agreement
provides for no other liens on any other assets of the Borrowers
or the Guarantor.
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The Credit Agreement provides for the payment of certain
fees by the Borrowers, including (a) an unused line fee of 0.375%
per annum from and after January 21, 1994 until the Termination
Date, on the excess, if any, of the revolving credit commitment
over the sum of the loans and letter of credit exposure
outstanding from time to time, (b) a letter of credit fees at
rates ranging from 1.25% to 1.50%, and (c) an agent's fee
aggregating $100,000 per annum. The Fee Letter provides for the
payment of a facility fee of $1,250,000, $650,000 of which has
been paid and $600,000 of which will be paid upon the entry of
the Final Bankruptcy Court Order.
II. NYSE's Review of Registrant's Listing Status.
On January 12, 1994, the New York Stock Exchange, Inc.
(the "Exchange") announced that it was reviewing the eligibility
for continued listing of the Registrant's common stock in view of
the Registrant's announcement that it had filed a Petition in the
Bankruptcy Court.
Item 7. Financial Statements and Exhibits.
(c). Exhibits.
99.1 Interim Order of the Bankruptcy Court, dated January
21, 1994.
99.2 Fee Letter dated January 11, 1994 among Merry-Go-Round
Enterprises, Inc., MGR Distribution Corporation, MGRR,
Inc. and CIT Group/Business Credit, Inc.
99.3 Revolving Credit Agreement, dated as of January 14, 1994
among Merry-Go-Round Enterprises, Inc. and MGR
Distribution Corporation as Borrowers, MGRR, Inc. as
Guarantor, the financial institutions party thereto, as
Lenders, and The CIT Group/Business Credit, Inc., as
Agent.
99.4 First Amendment, dated as of January 21, 1994, among the
Borrowers, the Guarantor, the Lenders and the Agent.
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Signatures
Pursuant to the requirements of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused
this report to be signed on its behalf by the undersigned
hereunto duly authorized.
MERRY-GO-ROUND ENTERPRISES, INC.
January 26, 1994 By: /s/ Isaac Kaufman
Isaac Kaufman
Executive Vice President,
Secretary and Treasurer
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EXHIBIT INDEX
99.1 Interim Order of the Bankruptcy Court,
dated January 21, 1994
99.2 Fee Letter dated January 11, 1994
among Merry-Go-Round Enterprises, Inc., MGR
Distribution Corporation, MGRR, Inc.
and CIT Group/Business Credit, Inc.
99.3 Revolving Credit Agreement, dated as of
January 14, 1994, among Merry-Go-Round
Enterprises, Inc. and MGR Distribution
Corporation as Borrowers, MGRR, Inc. as
Guarantor, the financial institutions party
thereto, as Lenders, and The CIT
Group/Business Credit, Inc., as Agent.
99.4 First Amendment, dated as of January 21, 1994
among the Borrowers, the Guarantor, the
Lenders and the Agent.
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4171/BLUSEC
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UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF MARYLAND
BALTIMORE DIVISION
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:
In re: : Chapter 11
:
MERRY-GO-ROUND ENTERPRISES, INC., : Case No.
MGRR, INC. AND MGR DISTRIBUTION : (JOINTLY ADMINISTERED UNDER
CORPORATION, : CASE NO. _________)
Debtors. :
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INTERIM ORDER, PURSUANT TO SECTIONS 364(c)(1) AND (2) OF
THE BANKRUPTCY CODE AND FED. R. BANKR. P. 4001,
AUTHORIZING MERRY-GO-ROUND ENTERPRISES, INC. AND MGR
DISTRIBUTION CORPORATION TO OBTAIN AND INCUR, AND MGRR,
INC. TO GUARANTEE, POST-PETITION FINANCING AND
POST-PETITION INDEBTEDNESS WITH SUPERPRIORITY OVER CERTAIN
ADMINISTRATIVE EXPENSES AND SECURED BY A LIEN ON LETTER OF
CREDIT CASH COLLATERAL AND LETTER OF CREDIT CASH
COLLATERAL ACCOUNT
MERRY-GO-ROUND ENTERPRISES, INC. ("MGRE"), MGRR, INC.
("MGRR") and MGR DISTRIBUTION CORPORATION ("MGRD")
(collectively, the "Debtors"), having filed with this Court
voluntary petitions for relief under chapter 11 of title 11 of
the United States Code on January 11, 1994 (the "Filing Date");
and having filed a motion on January 14, 1994 pursuant to 11
U.S.C. Section 364(c) and Fed. R. Bankr. P. 4001 (the "Motion")
for an order, inter alia:
(1) Authorizing MGRE and MGRD to borrow or
obtain cash advances and letters of credit on a revolving
credit basis from The CIT Group/Business Credit, Inc. (as
Agent for the financial institutions identified in the
Loan Documents, collectively, "CITBC"), guaranteed by
MGRR, up to the aggregate principal amount of $125 million
(inclusive of a $90 million subfacility for the issuance
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of letters of credit) outstanding at any one time pursuant
to the terms of a Revolving Credit Agreement, dated as of
January 14, 1994 and the Related Documents (as defined in
the Revolving Credit Agreement) (collectively, the "Loan
Documents"), substantially in the form annexed as Exhibit
"A" to the Motion (the "CITBC Facility");
(2) Approving the terms and conditions of the
Loan Documents and authorizing the Debtors to execute and
enter into the Loan Documents;
(3) Authorizing the Debtors to execute and
deliver, from time to time, all such other documents,
instruments and agreements and perform such other acts as
may be required in connection with the Loan Documents;
(4) Authorizing MGRE and MGRD, under 11 U.S.C.
Section 364(c)(1), to obtain post-petition financing and
incur post-petition indebtedness under the CITBC Facility,
guaranteed by MGRR, which indebtedness due and owing by
MGRE and MGRD, and guaranty obligations owing by MGRR, to
CITBC shall (a) pursuant to 11 U.S.C. Section 364(c)(1),
have priority over any and all expenses and claims of the
kind specified in, inter alia, 11 U.S.C. Sections 105,
326, 328, 503(b), 506(c), 507(a), 507(b), 726 and 1114 and
(b) pursuant to 11 U.S.C. Section 364(c)(2), be secured by
a first priority lien on and security interest in all cash
maintained in the Letter of Credit Cash Collateral Account
defined in the Revolving Credit Agreement and any direct
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investment of funds contained therein (all of the
foregoing property being hereinafter referred to in this
Order as the "Letter of Credit Cash Collateral"), in each
case, subject and subordinate only to (i) Permitted Liens
(as defined in the Loan Documents), including existing
liens and (ii) the Carveout (as defined in Paragraph 10
below);
(5) Authorizing, after an interim hearing on
the Motion, MGRE and MGRD to obtain, and MGRR to
guarantee, interim financing of up to $40 million
(including a $40 million subfacility for the issuance of
Letters of Credit pursuant to the Loan Documents) from
CITBC on an interim basis, under the same terms and
conditions as set forth in the Loan Documents, pending
entry of an order in respect of a final hearing on the
Motion (the "Final Hearing") in accordance with Fed. R.
Bankr. P. 4001; and
(6) Granting the Debtors such other and further
relief as the Court deems necessary, appropriate,
equitable and proper.
The Debtors having requested in the Motion, pursuant to Fed. R.
Bankr. P. 4001, that the Court consider, on an expedited basis,
the proposed interim financing requested in the Motion; and
pursuant to Fed. R. Bankr. P. 4001(c)(1), it appearing that any
and all necessary notice of the interim hearing has been duly
provided; and upon the record of the hearing held this day
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before this Court; and this Court having noted the appearances
of all parties in interest in the record of this Court; and it
appearing to this Court that the relief requested in the Motion
is in the best interests of the Debtors and their respective
creditors and is essential for the continued operation of their
businesses; and it further appearing that the Debtors are unable
to obtain unsecured credit for money borrowed allowable as an
administrative expense under 11 U.S.C. Section 503(b)(1); and
due deliberation having been had; and sufficient cause appearing
therefor;
THE COURT HEREBY FINDS as follows:
A. Capitalized terms used in this Order and not
otherwise defined herein have the meanings ascribed to such
terms in the Loan Documents and the exhibits thereto, the terms
of which shall be, and they hereby are, incorporated herein by
reference as if fully set forth at length.
B. On the Filing Date, the Debtors each filed with
this Court voluntary petitions for relief under chapter 11 of
the Bankruptcy Code and are continuing to manage their
properties and operate their businesses as debtors-in-possession
pursuant to 11 U.S.C. Sections 1107 and 1108. Pursuant to an
order of the Bankruptcy Court, the Debtors' chapter 11 cases are
being jointly administered.
C. This Court has jurisdiction over these cases and
the parties and property affected hereby pursuant to 28 U.S.C.
Sections 157(b)(2)(D) and 1334.
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D. MGRE owns 100% of the stock of MGRD and MGRR.
MGRE also directly or indirectly owns 100% of the stock of other
related corporations for which no petitions under Title 11 have
been filed.
E. MGRE is a specialty retailer of young men's and
women's contemporary fashions. MGRE operates over 1,400 stores
in 44 states and the District of Columbia. Over 1,200 stores
are leased by MGRE or affiliates other than MGRD or MGRR. MGRE
leases over 200 additional stores in California, Illinois and
New York, which leases it has assigned to MGRD. Pursuant to
certain agreements, MGRE manages and operates all of the leased
locations assigned to MGRD, and undertakes to pay all lease
obligations. Thus, MGRE and MGRD have many common creditors.
F. MGRD serves as the distributor for apparel sold
in stores operated by MGRE. MGRD purchases apparel from
manufacturers and provides MGRE with such apparel for all
Debtor-operated stores. Under its agreements with MGRD, MGRE
leases its employees to MGRD and manages the billing and payment
system for all inventory purchases. MGRE also undertakes to pay
all vendors and other creditors for such apparel.
G. MGRR is a Delaware holding company, wholly-owned
by MGRE. MGRR holds rights to the trademarks and tradenames
used by MGRE, including the name "Merry-Go-Round". MGRR is a
party to certain royalty and licensing agreements with MGRE and
certain of its affiliates.
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H. Pursuant to 11 U.S.C. Sections 102(1) and 364(c)
and Fed. R. Bankr. P. 2002 and 4001(c), the Debtors have
provided due and sufficient notice of the hearing on the Motion
held this day, and their request for the relief set forth in the
Motion insofar as it relates to the interim financing and the
relief granted in this Order, and no further notice of the
request for the relief granted in this Order is required. The
Debtors have provided actual notice, whether oral notice by
telephone or written notice, of the Motion and the terms of this
Order to CITBC, the Office of the United States Trustee, the
Securities Exchange Commission and their respective twenty (20)
largest unsecured creditors or their counsel. Such notice is
appropriate, adequate and proper under the circumstances of this
case as set forth herein, in the Motion and as presented to the
Court.
I. In order to continue the ordinary course
operations of the business of each of the Debtors, it is
necessary for MGRE and MGRD to borrow money and otherwise obtain
credit from CITBC to facilitate, among other things, the
purchase of post-petition merchandise needs.
J. MGRE and MGRD are unable to obtain working
capital financing allowable under 11 U.S.C. Section 503(b)(1) as
an administrative expense pursuant to 11 U.S.C. Section 364(a)
or 364(b) or without the guaranty of MGRR and granting a first
priority lien and security interest on the Letter of Credit Cash
Collateral and the Letter of Credit Cash Collateral Account, in
accordance with the Revolving Credit Agreement, under 11 U.S.C.
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Section 364(c)(2). After considering all alternatives, the
Debtors have concluded, in the exercise of their respective best
and reasonable business judgment, that the CITBC Facility
represents the best working capital financing available.
K. Good cause has been shown for the immediate
entry of this Order. Among other things, the ability of the
Debtors to finance their operations and the availability of
interim financing pursuant to this Order and the Loan Documents
is vital. The preservation and maintenance of the going-concern
value of the Debtors (collectively and independently) is of the
utmost significance and importance to their successful
reorganization pursuant to the provisions of chapter 11 of the
Bankruptcy Code. The terms of the borrowings and issuance of
Letters of Credit authorized hereby are fair under the
circumstances. Entry of this Order will be in the best
interests of each of the Debtors, their estates and their
creditors.
Accordingly, it is hereby FOUND, ORDERED, DETERMINED
AND DECREED, as follows:
1. The Motion of the Debtors, as it relates to
interim approval of the CITBC Facility, shall be, and it hereby
is, approved in all respects.
2. Good and sufficient notice of the Motion's
request for interim approval of the CITBC Facility and the
hearing thereon has been provided in accordance with, inter
alia, 11 U.S.C. Sections 102(1) and 364(c) and Fed. R. Bankr. P.
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2002 and 4001(c), and any requirement for other and further
notice shall be, and it hereby is, dispensed with and waived.
3. The relief granted by this Court pursuant to
this Order is necessary to avoid the immediate and irreparable
harm to the Debtors' estates pending the Final Hearing on the
Motion.
4. An immediate need exists for MGRE and MGRD to
have the ability to obtain cash advances and letters of credit
in order to continue the ordinary course operation of its
business.
5. MGRE and MGRD are unable to obtain cash advances
and letters of credit facilities as unsecured credit allowable
under 11 U.S.C. Section 503(b)(1) and without the guarantee of
MGRR. Without the availability of the CITBC Financing, it is
unlikely that MGRE will be able to acquire the levels of
inventory it needs in order to ensure adequate sales and
continued customer loyalty. If sales and customer loyalty are
not maintained, the Debtors' ability to preserve the
going-concern value of their businesses will be quickly eroded.
The preservation and maintenance of the going-concern values of
the Debtors (collectively and independently) is of utmost
significance and importance to a successful reorganization of
the Debtors pursuant to the provisions of chapter 11 of the
Bankruptcy Code.
6. As set forth in the Motion and based upon the
record of these proceedings, this Court finds that the terms of
the interim financing requested in the Motion have been
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negotiated in good faith and at arm's length between each Debtor
and CITBC, and any credit extended by CITBC pursuant to the
terms of the Loan Documents and this Order shall be, and it
hereby is, deemed to have been extended in good faith (as that
term is used in 11 U.S.C. Section 364(e)).
7. MGRE and MGRD will receive post-petition loans
and/or advances and credit and MGRR will receive proceeds of
such borrowings and other direct or indirect benefits from the
CITBC Facility authorized by this Order.
8. MGRE and MGRD are immediately authorized to
borrow or obtain cash advances and letters of credit up to the
aggregate principal amount of $40 million outstanding at any one
time pursuant to the terms of the Loan Documents, which
authorization is without prejudice to the Debtors' request for
authorization at the final hearing on the Motion to borrow funds
and obtain Letters of Credit in such amounts as are permissible
under the Loan Documents, which Loan Documents are hereby
approved in all respects (including all rights and remedies set
forth or referred to in the Loan Documents).
9. The Debtors are authorized to do and perform all
acts, to make, execute and deliver all instruments and documents
(including, without limitation, the execution of the Loan
Documents and Letter of Credit applications and reimbursement
agreements with third parties as contemplated by the Loan
Documents, all of which are hereby approved) and to pay all fees
and other amounts which may be required or necessary for the
performance of the Debtors under the terms of this Order, the
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Loan Documents and the interim financing hereby approved.
10. The Debtors' obligations to CITBC with respect
to the indebtedness arising in respect of this interim approval
of the CITBC Facility shall be joint and several, and are hereby
authorized and granted superpriority administrative expense
status, in accordance with 11 U.S.C. Section 364(c)(1), over any
and all expenses and claims of each of the Debtors, whether
heretofore or hereafter incurred, of the kind specified in 11
U.S.C. Sections 105, 326, 328, 503(b), 506(c), 507(a), 507(b),
726, or 1114 but shall be subject and subordinate only to:
(i) amounts payable to the United States
Trustee pursuant to 28 U.S.C.
Section 1930(a)(6); and
(ii) the payment of allowed fees and expenses of
the attorneys, accountants and other
professionals retained in the chapter 11
case pursuant to 11 U.S.C. Sections 327 and
1103, by the Debtors or any official
committee, not to exceed $5 million in the
aggregate outstanding at any time
(inclusive of any holdbacks on interim
compensation required by this Court) (the
"Professional Expense Cap"); provided,
however, that (a) after the occurrence and
during the continuance of an Event of
Default any payments actually made to such
professionals after or during such period,
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under 11 U.S.C. Sections 330 and 331 or
otherwise, in respect of fees and expenses
shall reducethe Professional Expense Cap
and (b) if any such Event of Default shall
have been cured, the Professional Expense
Cap shall be reinstated to $5 million.
All of the dollar amounts set forth in subparagraphs (i) and
(ii) are collectively referred to as the "Carveout". No other
claim or expense, having a priority senior or pari passu to that
granted to CITBC in this Order, shall be granted in these
chapter 11 cases, or any superseding chapter 7 cases, while any
portion of the Obligations, the CITBC Facility or the commitment
thereunder remains outstanding.
11. Notwithstanding the foregoing, the Debtors shall
be permitted to pay, as the same may become due and payable (i)
administrative expenses of the kind specified in 11 U.S.C.
Section 503(b) incurred in the ordinary course of their
businesses and (ii) subject to the provisions of Paragraph 10
hereof, compensation and reimbursement of expenses to
professionals allowed and payable under 11 U.S.C. Sections 330
and 331.
12. As security for the full and timely payment and
performance of each of the Obligations of the Debtors with
respect to the issuance of Letters of Credit under and pursuant
to the Loan Documents and the CITBC Facility authorized hereby,
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CITBC is hereby granted (in each of the above-captioned chapter
11 cases), pursuant to 11 U.S.C. Section 364(c)(2), a first
priority lien on and security interest in all of the Letter of
Credit Cash Collateral, senior to all other liens and security
interests therein.
13. The lien and security interest granted to CITBC
with respect to the Letter of Credit Cash Collateral and the
Letter of Credit Cash Collateral Account hereunder shall not be
subordinated to or pari passu with any other lien or security
interest, however arising, including but not limited to under 11
U.S.C. Section 364(d) or otherwise.
14. (a) The lien and security interest in favor of
CITBC with respect to the Letter of Credit Cash Collateral and
the Letter of Credit Cash Collateral Account described herein
and in the Loan Documents shall be deemed valid, binding,
enforceable and perfected upon entry of this Order;
(b) CITBC shall not be required to file any
financing statements, notice of lien or similar instruments in
any jurisdiction or filing office, or to take possession of the
Letter of Credit Cash Collateral, or to take any other action in
order to validate or perfect the lien and security interest with
respect to the Letter of Credit Cash Collateral or the Letter of
Credit Cash Collateral Account granted by or pursuant to this
Order or pursuant to the Loan Documents;
(c) Should CITBC, in its sole discretion, from
time to time, choose to file such financing statements, notices
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of lien or similar instruments, take possession of any
collateral securing the indebtedness hereby authorized, or take
any other action to validate or perfect any such security
interest or lien, all such documents shall be deemed to have
been filed or recorded at the time and on the date of entry of
this Order; and
(d) A certified photocopy of this Order may, in
the discretion of CITBC, be filed with or recorded in filing or
recording offices in addition to or in lieu of such financing
statements, notices of lien or similar instruments, and all
filing offices are hereby directed to accept such certified copy
of this Order for filing and recording.
15. In making decisions to make advances to or issue
Letters of Credit under the Loan Documents or to collect the
indebtedness and Obligations of the Debtors or to exercise any
other rights under the Loan Documents, CITBC shall not be deemed
to be in control of the operations of the Debtors or to be
acting as a "responsible person" or "owner or operator" with
respect to the operation or management of the Debtors (as such
terms, or any similar terms, are used in the United States
Comprehensive, Environmental Response, Compensation and
Liability Act, as amended, or any similar Federal or state
statute).
16. The provisions of this Order shall be binding
upon and inure to the benefit of CITBC, the Debtors and their
respective successors and assigns (including, without
PAGE
<PAGE>
limitation, any chapter 11 or chapter 7 trustee or other
fiduciary hereafter appointed for any of the Debtors or with
respect to any of their respective properties and any purchaser
of an assignment of all or a portion of CITBC's interest in the
CITBC Facility);
17. The Debtors shall promptly mail copies of this
Order to (a) their respective twenty (20) largest unsecured
creditors or a committee of unsecured creditors and its counsel,
if one has been appointed, (b) The Office of the United States
Trustee for the District of Maryland, (c) CITBC, (d) any other
party which has filed, as of the date hereof, a request for
notices with the Clerk of the Court, and (e) the Securities
Exchange Commission. Any other further obligation for notice of
the relief granted herein be, and hereby is, dispensed with and
waived.
18. Except as otherwise provided for in the Loan
Documents, no order (i) dismissing the chapter 11 case of any of
the Debtors under 11 U.S.C. Sections 305 or 1112 or otherwise
shall be entered unless prior to the entry thereof all
obligations and indebtedness owing to CITBC under the Loan
Documents shall have been paid in full in Cash and all
outstanding Letters of Credit shall have been terminated or cash
collateralized in accordance with the provisions of the Loan
Documents, and CITBC's obligation to make loans and issue
Letters of Credit has been terminated; (ii) converting any of
the Debtors' chapter 11 casesunder 11 U.S.C. Section 1112 or
PAGE
<PAGE>
otherwise shall be entered unless such order expressly provides
that the priority of the claims of CITBC granted herein shall be
senior in right of payment to any claim allowed under 11 U.S.C.
Section 503(b) which is incurred or arises on or after the date
of such order, notwithstanding the provisions of 11 U.S.C.
Section 726(b); or (iii) confirming any plan of reorganization
in any of the Debtors' chapter 11 cases shall be entered unless
such order provides for the payment in full in Cash of all
obligations and indebtedness payable or owing to CITBC under the
Loan Documents and the termination or cash collateralization of
all outstanding Letters of Credit in accordance with the
provisions of the Loan Documents, on or before the effective
date of, or substantial consummation of, the plan of
reorganization that is the subject of such order.
19. The provisions of this Order shall be effective
immediately upon entry of this Order by the Court and any
actions taken pursuant hereto shall survive entry of, and shall
govern with respect to any conflict with, any Order which may be
entered confirming any plan of reorganization or which may be
entered converting any Debtor's chapter 11 case from chapter 11
to chapter 7. The terms and provisions of this Order, as well
as the priority of CITBC's claims, lien and security interest in
the Letter of Credit Cash Collateral and Letter of Credit Cash
Collateral Account, and all rights of CITBC and Obligations of
each Debtor created or arising pursuant hereto or the Loan
Documents, shall constitute a valid and binding obligation of
PAGE
<PAGE>
each of the Debtors, enforceable against each such Debtor in
accordance with its terms, and shall continue in the Debtors'
chapter 11 cases and in any superseding chapter 7 cases under
the Bankruptcy Code, and such claims, lien and security interest
shall maintain their priority as provided by this Order until
satisfied and discharged in accordance with the terms of the
Loan Documents.
20. Consistent with 11 U.S.C. Section 364(e), if any
or all of the provisions of this Order are hereafter modified,
vacated or stayed:
(a) such stay, modification or vacation shall
not affect the validity of any obligation, indebtedness,
liability, security interest or lien granted or incurred by any
Debtor to CITBC prior to the effective date of such stay,
modification or vacation, or the validity and enforceability of
any security interest, lien, priority or right authorized or
created hereby pursuant to the documents; and
(b) any indebtedness, obligation or liability
incurred by the Debtors to CITBC prior to the effective date of
such stay, modification or vacation shall be governed in all
respects by the provisions of this Order, and CITBC shall be
entitled to all the rights, remedies, privileges and benefits,
including the priority, security interest and lien granted
herein and pursuant to the Loan Documents, with respect to any
such indebtedness, obligation or liability.
21. All advances under the Loan Documents (including
the issuance of Letters of Credit by CITBC or other Letter of
PAGE
<PAGE>
Credit Issuers) are made in reliance upon this Order, and,
therefore, the indebtedness evidenced by such advances (and
reimbursement obligations relating to Letters of Credit) prior
to the effective date of any stay, modification or vacation of
this Order cannot (i) be subordinated (except as otherwise
provided in this Order as to the Carveout), (ii) lose its first
priority lien with respect to the Letter of Credit Cash
Collateral and the Letter of Credit Cash Collateral Account or
its superpriority claim status, or (iii) be deprived of the
benefit of the status of the claims, lien and security interest
in the Letter of Credit Cash Collateral and the Letter of Credit
Cash Collateral Account granted to CITBC under this Order or the
Loan Documents, as a result of any subsequent order in the
Debtors' respective chapter 11 cases, or any superseding chapter
7 cases.
22. Except as otherwise provided in the Loan
Documents, so long as CITBC's commitment or any Obligation,
liability or indebtedness under the Loan Documents and this
Order shall remain outstanding, (i) the Debtors shall not,
directly or indirectly, create, incur, assume or permit to exist
any security interest, encumbrance, lien or other security
arrangement of any kind, on or with respect to any of their
respective assets, including, but not limited to, their
inventory, or take or fail to take any action which would grant
or create a lien or security interest in favor of any person
(other than CITBC) in such assets and (ii) there shall not be
entered in the Debtors' respective chapter 11 cases or any
PAGE
<PAGE>
subsequent chapter 7 cases any further order which authorizes
under any section of the Bankruptcy Code, including 11 U.S.C.
Sections 105, 363 or 364, the procurement of credit or the
incurring of indebtedness secured by a lien or which is entitled
to superpriority administrative status which is equal to or
superior to that granted to CITBC herein, unless in each
instance (x) CITBC shall have given its prior written consent
thereto and no such consent shall ever be implied from any other
action, inaction or acquiescence by CITBC or (y) such other
order requires that the Obligations be indefeasibly paid in full
and discharged.
23. Subject to the provisions of the Loan Documents,
and upon the expiry of five days after CITBC shall have filed
with the Bankruptcy Court an affidavit identifying any default
or Event of Default under the Loan Documents and served the same
by hand delivery, telecopier or overnight mail upon counsel to
the Debtors and any official creditors' committee appointed in
these cases, the automatic stay provisions of 11 U.S.C.
Section 362 are vacated and modified to the extent necessary so
as to permit CITBC to exercise all rights and remedies provided
for in the Loan Documents, without filing further pleadings or
application to or order of this Court, upon the occurrence and
continuance of any Event of Default as defined in the Loan
Documents (collectively, "Events of Default"). Upon the
occurrence of any Event of Default, CITBC shall be relieved of
any and all
<PAGE> <PAGE>
obligations to make additional advances. Subject only to the
provisions of the Loan Documents, CITBC shall be and is hereby
authorized, in its discretion, to take any and all actions and
remedies which CITBC may deem appropriate to proceed against and
realize upon its collateral, including, without limitation, (x)
application of any Letter of Credit Cash Collateral in
accordance with the Loan Documents and (y) resort to the Letter
of Credit Cash Collateral and the Letter of Credit Cash
Collateral Account in accordance with the Loan Documents; and
the Debtors hereby are directed to cooperate with CITBC in the
exercise of such rights.
24. To the extent any of the terms and conditions of
the Loan Documents are in conflict with the terms and conditions
of this Order, the provisions and intent of this Order shall
control.
25. The Final Hearing on this Motion, pursuant to
Fed. R. Bankr. P. 4001, shall be held on February 1, 1994 at
10:00 a.m. in Courtroom 9C, United States Bankruptcy Court, 101
West Lombard Street, Baltimore, Maryland.
26. Service of this Order, the Motion and upon
request, the exhibits attached to the Motion, by the Debtors
upon (i) their respective 20 largest unsecured creditors or a
committee of unsecured creditors, and its counsel, if one has
been appointed, (ii) the Office of the United States Trustee for
the District of Maryland, (iii) CITBC, (iv) all parties who have
filed requests for notice under Fed. R. Bankr. P. 2002, and (v)
PAGE
<PAGE>
the Securities Exchange Commission, by first class mail on or
before January 24, 1994, shall constitute good and sufficient
notice of the Final Hearing on the Motion.
27. Objections, if any, to the relief sought in the
Motion shall be in writing, shall set forth with particularity
the grounds for such objections or other statement of position,
shall be filed with the Clerk of the Bankruptcy Court, the
Office of the United States Trustee for the District of Maryland
and personally served upon the attorneys for the Debtors,
Swidler & Berlin, Chartered, 3000 K Street, N.W., Suite 3000,
Washington, D.C. 20007-5116, Attention: Roger Frankel, Esq., and
the attorneys for CITBC, Schulte Roth & Zabel, 900 Third Avenue,
New York, NY 10022, Attention: Mark A. Neporent, Esq., so that
they are delivered on or before 5:00 p.m. E.S.T. on January 21,
1994.
28. The Clerk of Court is hereby directed to
forthwith enter this order on the docket of this Court
maintained with regard to this case.
Dated: Baltimore, Maryland
January 21, 1994
/s/
United States Bankruptcy Judge
cc: Debtor's Counsel
U.S. Trustee
man\15386\014\intr-ord.3
##
Merry-Go-Round
Enterprises, Inc.
January 11, 1994
Page #
##
THE CIT GROUP/BUSINESS CREDIT, INC.
1211 Avenue of the Americas
New York, New York 10036
January 11, 1994
Merry-Go-Round Enterprises, Inc.
3300 Fashion Way
Joppa, Maryland 21085-3205
Attention: Mr. Isaac Kaufman
Chief Financial Officer
Re: DIP Financing Commitment
Dear Mr. Kaufman:
Reference is made to the letter of even date herewith
(the "Commitment Letter"), from The CIT Group/Business Credit,
Inc. ("CIT") to Merry-Go-Round Enterprises, Inc. (the "Parent")
and each of its wholly-owned subsidiaries party thereto
(collectively, the "Subsidiaries") concerning a $125 million
debtor-in-possession revolving credit facility (the "Financing
Facility") proposed to be made available by CIT to the Parent,
as debtor-in-possession. All capitalized terms used and not
defined herein shall have the respective meanings ascribed
thereto in the Commitment Letter. This letter will supplement
the Commitment Letter by setting forth the arrangement relating
to compensation for certain services rendered and to be rendered
by CIT.
The Companies agree, jointly and severally, to pay to
CIT a non-refundable facility fee in connection with the
Financing Facility (the "Facility Fee") of $1,250,000. The
Companies have previously advanced to CIT $275,000, (i) $150,000
of which constitutes a deposit (the "Deposit") to fund the
Expenses incurred by CIT and (ii) $125,000 of which constitutes
a non-refundable up-front fee (which CIT shall credit against
the Facility Fee upon the approval of the Interim Order by the
Bankruptcy Court). If less than $150,000 of Expenses are
incurred by or on behalf of CIT prior to the date on which the
Bankruptcy Court approves the Interim Order, the unused portion
of the Deposit will be returned to the Companies.
The balance of the Facility Fee shall be payable as
follows:
<PAGE>
<PAGE>
(i) on the date the Commitment Letter is executed
and delivered to CIT by the Companies, the
Companies shall pay $200,000 to CIT;
(ii) on the date the Bankruptcy Court enters the
Interim Order, the Companies shall pay $325,000
to CIT; and
(iii) on the date the Bankruptcy Court enters the
Final Order, the Companies shall pay $600,000 to
CIT; provided, however, that if the entry of the
Final Order occurs prior to the entry of the
Interim Order, $925,000 shall be paid to CIT on
the date of entry of the Final Order.
It is acknowledged and agreed that references to
"this commitment letter" contained in the indemnification
paragraph of the Commitment Letter are understood to refer to
the Commitment Letter as supplemented by this letter.
Each of the Companies agrees not to make any public
or private disclosure to third parties (other than its advisors
from whom it shall obtain their agreement not to make further
disclosure or as required by any governmental agency or
representative thereof or pursuant to legal process) of this
letter or its contents until such time as CIT may consent to
such disclosure.
This letter shall be governed by the laws of the
State of New York, without giving effect to the conflict of laws
provisions thereof, and shall be binding upon the Companies and
CIT and their respective successors and assigns. This letter
may only be amended, modified or waived in a writing signed by
the parties hereto.
CIT's offers contained in this letter and in the
Commitment Letter can only be accepted by your acceptance and
execution of both such letters on or before January 14, 1994.
If you are in agreement with the foregoing, please
sign and return an enclosed counterpart of this letter
concurrently with the execution and delivery of the Commitment
Letter.
<PAGE>
<PAGE>
This letter may be executed in any number of
counterparts, each of which shall be an original and all of
which, when taken together, shall constitute one agreement.
Very truly yours,
THE CIT GROUP/BUSINESS CREDIT, INC.
By:
Name:
Title:
Agreed and accepted on
January , 1994.
MERRY-G0-ROUND ENTERPRISES, INC.
By:/s/
Name:
Title:
MGRR, INC.
By:/s/
Name:
Title:
MGR DISTRIBUTION CORPORATION
By:/s/
Name:
Title:
4173/BLUSEC
man/15386/dip-comm.lt2
##
##
## -#-
4169/BLUSEC##
15386098.G
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT, dated as of January
14, 1994, among MERRY-GO-ROUND ENTERPRISES, INC., a Maryland
corporation ("MGRE"), MGR DISTRIBUTION CORPORATION, a Maryland
corporation ("MGRD", and together with MGRE, collectively, the
"Borrowers" and individually, a "Borrower"), MGRR, INC., a
Delaware corporation (the "Guarantor"), the financial
institutions from time to time party hereto (collectively, the
"Lenders" and individually, a "Lender"), and THE CIT
GROUP/BUSINESS CREDIT, INC. ("CIT"), as agent for the Lenders
(in such capacity, the "Agent").
BACKGROUND
On January 11, 1994, the Borrowers and the Guarantor
filed a petition under chapter 11 of Title 11 of the United
States Code. The Borrowers have requested the Lenders to
provide the Borrowers with a $125 million revolving credit
facility including a $90 million subfacility for the issuance
of letters of credit (which facility shall be limited to $50
million with a $40 million subfacility for the issuance of
letters of credit until the Final Bankruptcy Court Order (as
hereinafter defined) shall have been duly entered), and,
subject to the terms and conditions set forth herein, the
Lenders have agreed to provide such facility.
In consideration of the mutual covenants herein
contained and intending to be legally bound hereby, the parties
hereto agree as follows:
ARTICLE
DEFINITIONS; CONSTRUCTION
1.0 Certain Definitions. In addition to other words
and terms defined elsewhere in this Agreement, as used herein
the following words and terms shall have the following
meanings, respectively, unless the context hereof otherwise
clearly requires:
"Affiliate" of a Person shall mean any Person which
directly or indirectly controls, or is controlled by, or is
under common control with, such Person. The term "control"
means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of
a Person, whether through the ownership of voting securities,
by contract or otherwise.
"Agent Account" shall mean an account in the name of
the Agent designated to the Borrowers from time to time into
which the Borrowers shall make all payments to the Agent under
this Agreement.
<PAGE>
<PAGE>
"Agent Advances" shall have the meaning given that
term in Section 12.08 hereof.
"Agreed Administrative Expense Priorities" shall mean
that administrative expenses with respect to the Borrowers and
the Guarantor and, with respect to clause (ii) of clause first,
any official committee appointed by the Bankruptcy Court, shall
have the following order of priority:
first, (i) amounts payable pursuant to 28 U.S.C.
Section 1930(a)(6) and (ii) allowed fees and expenses of
attorneys and accountants retained in the Chapter 11 Cases
pursuant to SectionSection 327 and 1103 of the Bankruptcy
Code, but the amount entitled to priority under clause
(ii) of this clause first ("Priority Professional
Expenses") shall not exceed $5 million in the aggregate at
any time (inclusive of any holdbacks required by the
Bankruptcy Court) (the "Professional Expense Cap");
provided, however, that (A) after the occurrence of an
Event of Default any payments actually made to such
professionals after such occurrence or during such
continuance, under Sections 330 and 331 of the Bankruptcy
Code or otherwise, shall reduce the Professional Expense
Cap and (B) if any such Event of Default shall have been
cured, the Professional Expense Cap shall be reinstated to
$5 million,
second, all Obligations, and
third, all other allowed administrative expenses.
"Agreement" shall mean this Revolving Credit
Agreement as amended, modified, supplemented or restated from
time to time.
"Assignment and Acceptance" shall mean an assignment
and acceptance entered into by CIT and an assignee, and accepted
by the Agent, substantially in the form of Exhibit F hereto.
"Availability Date" shall mean the first date on
which each of the conditions set forth in Section 7.01 shall
have been satisfied.
"Bank" shall mean Chemical Bank, a New York Banking
Corporation, its successors or any other bank designated by
Borrower to the Agent from time to time that is reasonably
acceptable to the Agent.
"Bankruptcy Code" shall mean Title 11, United States
Code, 11 U.S.C. SectionSection 101 et seq., as amended from time
to time.
<PAGE>
<PAGE>
"Bankruptcy Court" shall mean the United States
Bankruptcy Court for the District of Maryland or such other
court having original jurisdiction over the Chapter 11 Cases.
"Benefit Plan" shall mean a defined benefit plan as
defined in Section 3(35) of ERISA and subject to Title IV of
ERISA (other than a Multiemployer Plan) in respect of which any
of the Borrowers, the Guarantor or any ERISA Affiliate is or
within the immediately preceding six (6) years was an "employer"
as defined in Section 3(5) of ERISA.
"Book Value" shall mean, as to any Inventory in
respect of which such amount is to be determined, the lower of
(i) cost (as reflected in the general ledgers of a Borrower or
MGRR) or (ii) market value (both cost and market value being
determined in accordance with GAAP calculated on the first in
first out basis).
"Borrower" or "Borrowers" shall have the meaning
given that term in the introductory paragraph to this Agreement.
"Borrowers' Account" shall have the meaning given
that term in Section 2.08(a) hereof.
"Borrowing Base" shall mean at any time an amount
equal to the difference between (i) the sum of (A) 60% of the
Book Value of Eligible Inventory and (B) 60% of the value of L/C
Inventory and (ii) $2,500,000. If the Lenders determine, in
their reasonable discretion based upon information previously
unknown to the Lenders, that the Tax Refund will be received by
MGRE on or before September 30, 1994, and the Lenders and MGRE
agree in writing upon an advance rate for the Tax Refund, the
Borrowing Base will be increased during the Tax Refund Period
(as hereinafter defined) by an amount equal to the product of
(A) such agreed upon advance rate and (B) the amount of the Tax
Refund. For purposes of this definition, the Tax Refund Period
shall mean the period commencing on the date, if any, on which
MGRE and the Lenders enter into a written agreement with respect
to the advance rate for the Tax Refund and ending on the
earliest of (1) the date that the Lenders determine, in their
sole discretion, that the Tax Refund will not be received by
MGRE on or before September 30, 1994, (2) the date on which MGRE
receives all or a portion of the Tax Refund, and (3) September
30, 1994. Following the filing of the consolidated tax return
filed by MGRE for its taxable year ended January 29, 1994, the
Lenders agree to use their reasonable good faith efforts to
determine (in their sole discretion) whether or not the Tax
Refund will be received by MGRE. MGRE shall provide the Lenders
with all information and documents requested by the Lenders to
assist the Lenders with making such determination.
<PAGE>
<PAGE>
"Borrowing Base Certificate" shall have the meaning
given that term in Section 4.04(a) hereof.
"Borrowing Date" shall mean any date on which a Loan
is made pursuant to Section 2.03, which date shall be a Business
Day.
"Business Day" shall mean any day other than a
Saturday, Sunday or other day on which banking institutions are
authorized or obligated to close in New York, New York,
provided, that with respect Eurodollar Loans, Business Day shall
also mean a day on which dealings in Dollars are carried on in
the London interbank market.
"Capital Expenditures" shall mean, for any period,
the sum, without duplication, of (i) the aggregate amount of all
expenditures, except interest capitalized during construction,
during such period which, in accordance with GAAP, are required
to be included in property, plant or equipment or similar fixed
asset account plus (ii) the entire principal amount of any debt
obligations (including obligations under leases which have been
or should be, in accordance with GAAP, recorded as capital
leases, to the extent required to be so recorded) assumed in
connection with any such expenditures.
"Capitalized Lease" shall mean at any time any lease
which is required under GAAP to be capitalized on the balance
sheet of the lessee at such time, and "Capitalized Lease
Obligation" of any Person at any time shall mean the aggregate
amount which is required under GAAP to be reported as a
liability on the balance sheet of such Person at such time as
lessee under a Capitalized Lease.
"Carve-Out Expenses" shall mean those amounts, fees,
expenses and claims set forth in clause "first" of the
definition of the term "Agreed Administrative Expense
Priorities."
"Cash Concentration Account" shall mean the deposit
account listed as the Cash Concentration Account on Schedule
1.01(c) hereto and maintained by MGRE at the Cash Concentration
Account Bank, which deposit account shall be under the sole
dominion and control of the Agent.
"Cash Concentration Account Bank" shall mean Signet
Bank or such other bank as MGRE may select with the written
approval of the Agent.
"Cash Concentration Account Blockage Date" shall mean
the date on which the Agent, after the occurrence and during the
continuance of an Event of Default, instructs the Cash
<PAGE>
<PAGE>
Concentration Account Bank, pursuant to the Restricted Account
Agreement, to remit all amounts deposited in the Cash
Concentration Account to the Agent or as the Agent shall direct.
"Chapter 11 Cases" shall mean the Borrowers' and the
Guarantor's jointly administered reorganization cases under
chapter 11 of the Bankruptcy Code, pending in the Bankruptcy
Court.
"CIT" shall have the meaning given that term in the
introductory paragraph to this Agreement.
"Code" shall mean the Internal Revenue Code of 1986,
as amended, and any successor statute of similar import, and
regulations thereunder, in each case as in effect from time to
time. References to sections of the Code shall be construed
also to refer to any successor sections.
"Collateral" shall have the meaning given to such
term in Section 5.01 hereof.
"Collection Accounts" shall mean the accounts
maintained by MGRE and listed as the Collection Account on
Schedule 1.01(c) hereto.
"Collection Account Agreements" shall have the
meaning given that term in Section 5.02 hereto.
"Consolidated Subsidiary" of a Person at any time
shall mean those Subsidiaries or other Affiliates of such Person
whose accounts are or should in accordance with GAAP be
consolidated with those of such Person.
"Contaminant" means any waste, pollutant, hazardous
substance, toxic substance or hazardous waste, including any
such substance regulated under any Environmental Law.
"Credit Extension" shall mean (a) the making of any
Loan by a Lender or the Agent on behalf of the Lenders or (b)
the issuance, or extension of the expiration date of, any Letter
of Credit which CIT or any Lender assists the Borrowers in
opening or establishing.
"Cumulative FIFO EBITDA" shall mean (i) for each
fiscal month of MGRE up to and including the fiscal month ended
January 28, 1995, the aggregate FIFO EBITDA for the period
beginning January 30, 1994 and ending at the end of such fiscal
month and (ii) for each fiscal month of MGRE after the fiscal
month ended January 28, 1995, the aggregate FIFO EBITDA for the
twelve month period ended at the end of such fiscal month.
<PAGE>
<PAGE>
"Current Commitment" shall have the meaning assigned
to that term in Section 2.01 hereof.
"Depository Accounts" shall mean the lock-box,
blocked depository or deposit accounts maintained by the
Borrowers and the Guarantor for the collection of the cash of
the Borrowers and the Guarantor and the proceeds from the sale
of the Inventory of the Borrowers.
"Designated Borrowing Officer" shall mean Frank
Peters or Isaac Kaufman, or such other officer as shall be
designated in writing by the Borrowers to the Agent.
"Designated Financial Officer" of a Person shall mean
the individual designated from time to time by the Board of
Directors or governing body performing like functions of such
Person to be the chief financial officer or Treasurer of such
Person (and individuals designated from time to time by the
Board of Directors or governing body performing like functions
of such Person to act in lieu of the chief financial officer or
the Treasurer).
"Disbursement Account" shall mean the deposit account
in the name of MGRE maintained at a bank in the United States
designated by the Borrowers to CIT into which there shall be
deposited proceeds of Loans and funds disbursed to the Borrowers
by CIT.
"Dollar," "Dollars" and the symbol "$" shall mean
lawful money of the United States of America.
"Eligible Inventory" shall mean finished goods
Inventory of either of the Borrowers, which at the time of
determination meets all the following qualifications:
(i) it is lawfully owned by such Borrower and not
subject to any Lien, security interest or prior
assignment, it is not held on consignment and
may be lawfully sold;
(ii) it is (a) located in such Borrower's
distribution center, warehouses or retail
locations listed on Schedule 1.01(A) hereto;
provided, however, that prior to the entry of
the Final Bankruptcy Court Order, such Inventory
must be located in (x) one of the jurisdictions
listed on Schedule 1.01(B) hereto or (y) any
other jurisdiction for which the Agent has
received UCC searches or other evidence
reasonably satisfactory to the Agent
establishing the absence of any Liens on the
<PAGE>
<PAGE>
Inventory of such Borrower in such jurisdiction,
or (b) located in other locations in the United
States as the Agent shall have approved in
writing from time to time, which approval shall
be given upon such Borrower providing the Agent
with evidence, reasonably satisfactory to the
Agent, of the absence of any Liens on any assets
of such Borrower located in such locations;
(iii) it is determined in the reasonable judgment
of the Agent to be, when taken as a whole,
substantially similar in quality and mix to
the Inventory maintained by such Borrower
in recent historical operations prior to
the Filing Date; and
(iv) it is Inventory that has been valued after
deducting reserves for (a) markdowns, (b)
shrinkage, (c) lay-a-ways, (d) displays and open
stock to the extent such stock is the type of
stock that is customarily sold in the package,
(e) rejected, damaged, aged or otherwise
unsalable, and (f) other reserves required by
the Agent in the exercise of its reasonable
business judgement.
"Entry Date" shall mean the date the Interim
Bankruptcy Court Order is entered.
"Environmental Law" means all federal, state and
local laws, statutes, ordinances and regulations, now or
hereafter in effect relating to the regulation and protection of
human health, safety, the environment and natural resources.
Environmental Laws include but are not limited to the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended (42 U.S.C. Section 9601 et seq.)
("CERCLA"); the Hazardous Material Transportation Act, as
amended (49 U.S.C. Section 180 et seq.); the Resource
Conservation and Recovery Act, as amended (42 U.S.C. Section
6901 et seq.) ("RCRA"); the Toxic Substance Control Act, as
amended (42 U.S.C. Section 7401 et seq.); the Clean Air Act, as
amended (42 U.S.C. Section 740 et seq.); the Federal Water
Pollution Control Act, as amended (33 U.S.C. Section 1251 et
seq.); and their state and local counterparts or equivalents.
"Environmental Liabilities and Costs" means, as to
any Person, all liabilities, monetary obligations, Remedial
Actions, losses, damages, punitive damages, consequential
damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, expert
and consulting and costs of investigation and feasibility
studies), fines, penalties, sanctions and interest incurred as a
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result of any claim or demand by any other Person, and which
relate to any environmental condition or a Release.
"Environmental Lien" means any Lien in favor of any
Governmental Authority for Environmental Liabilities and Costs.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended, and any successor statute of
similar import, and regulations thereunder, in each case as in
effect from time to time. References to sections of ERISA shall
be construed also to refer to any successor sections.
"ERISA Affiliate" shall mean any (i) corporation
which is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Code) as either
Borrower or the Guarantor, (ii) partnership or other trade or
business (whether or not incorporated) under common control
(within the meaning of Section 414(c) of the Code) with either
Borrower or the Guarantor, or (iii) member of the same
affiliated service group (within the meaning of Section 414(m)
of the Code) as either Borrower, the Guarantor, any corporation
described in clause (i) above or any partnership or trade or
business described in clause (ii) above.
"Eurodollar Loan" shall mean a Loan bearing interest
at the Eurodollar Rate.
"Eurodollar Rate" shall mean, with respect to a
Eurodollar Loan for the relevant Interest Period, the rate
determined by the Agent to be the rate at which deposits in
Dollars are offered by Chemical Bank to first-class banks in the
London interbank market at approximately 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest
Period, in the approximate amount of the relevant Eurodollar
Loan and having a maturity equal to such Interest Period.
"Event of Default" shall mean any of the Events of
Default described in Section 10.01 hereof.
"Fee Letter" shall mean the letter agreement, dated
January 11, 1994, among the Borrowers, the Guarantor and CIT
obligating the Borrowers and the Guarantor to pay certain fees
in connection with this Agreement, as such letter agreement may
be modified, supplemented or amended from time to time.
"FIFO EBITDA" shall mean, for any period, the
consolidated net income (or net loss) of MGRE and its
Consolidated Subsidiaries for such period as determined in
accordance with GAAP, plus (a) the sum of, without duplication
the following for MGRE and its Consolidated Subsidiaries, (i)
depreciation expense, (ii) amortization expense, (iii) the
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excess, if any, of gross interest expense for such period over
gross interest income for such period, in each case determined
in accordance with GAAP, (iv) total income tax expense, (v)
extraordinary or unusual non-cash losses including extraordinary
or unusual non-cash losses related to store closings (provided,
that (A) such extraordinary or unusual losses do not at any time
result in a cash outlay by MGRE or any of its Consolidated
Subsidiaries and (B) such extraordinary or unusual losses do not
result from the write-down of the Inventory of either Borrower),
which include the cumulative effect on earnings from the
adoption of GAAP pronouncements, and (vi) chapter 11 expenses
(or administrative costs reflecting chapter 11 expenses) as
shown on the consolidated statement of income of MGRE and its
Consolidated Subsidiaries for such period not exceeding the
aggregate amount of $16 million for any consecutive twelve month
period, less (b) extraordinary non-cash gains.
"Filing Date" shall mean January 11, 1994.
"Final Bankruptcy Court Order" shall mean the order
of the Bankruptcy Court approving the Loans made and to be made
to the Borrowers in accordance with this Agreement in form and
substance satisfactory to the Agent, substantially in the form
of the Interim Bankruptcy Court Order, as the same may be
amended, modified or supplemented from time to time with the
express written joinder or consent of the Agent, the Borrowers
and the Guarantor.
"GAAP" shall mean generally accepted accounting
principles as such principles shall be in effect in the United
States at the Relevant Date.
"Governmental Authority" shall mean any nation or
government, any federal, state, city, town, municipality,
county, local or other political subdivision thereof or thereto
and any department, commission, board, bureau, instrumentality,
agency or other entity exercising executive, legislative,
judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee" of or by any Person shall mean any
obligation of such Person guaranteeing any Indebtedness of any
other Person (the "primary obligor"), directly or indirectly
through an agreement (i) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness
or to purchase (or to advance or supply funds for the purchase
of) any security for the payment of such Indebtedness, (ii) to
purchase property, securities, or services for the purpose of
assuring the owner of such Indebtedness against loss, or (iii)
to maintain working capital, equity capital or other financial
statement condition or liquidity of the primary obligor so as to
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enable the primary obligor to pay such Indebtedness; provided,
however, that the term Guarantee shall not include endorsements
for collection or deposit, in either case in the ordinary course
of business.
"Guarantor" shall have the meaning given that term in
the introductory paragraph to this Agreement.
"Indebtedness" shall mean as to any Person (i)
indebtedness for borrowed money; (ii) indebtedness for the
deferred purchase price of property or services (other than
property including Inventory and services purchased in the
ordinary course of business); (iii) indebtedness evidenced by
bonds, debentures, notes or other similar instruments (other
than performance, surety and appeal or other similar bonds
arising in the ordinary course of business); (iv) obligations
and liabilities secured by a Lien, claim or encumbrance, upon
property owned by such Person, whether or not owing by such
Person and even though such Person has not assumed or become
liable for the payment thereof; (v) obligations and liabilities
directly or indirectly Guaranteed by such Person; and (vi)
obligations or liabilities created or arising under any
conditional sales contract or other title retention agreement
with respect to property used and/or acquired by such Person,
even though the rights and remedies of the lessor, seller and/or
lender thereunder are limited to repossession of such property.
"Indemnified Parties" shall have the meaning given
that term in Section 11.06 hereof.
"Interest Period" shall mean, with respect to any
Eurodollar Loan, the period commencing on the Borrowing Date or
the date of any continuation or conversion for such Eurodollar
Loan, as the case may be, and ending one, three or six months
thereafter as a Borrower may elect in the applicable notice
given to the Agent pursuant to Section 2.03 and/or Section 2.15;
provided that (i) any Interest Period that would otherwise end
on a day that is not a Business Day shall be extended to the
next succeeding Business Day, unless such Business Day falls in
another calendar month, in which case such Interest Period shall
end on the next preceding Business Day; (ii) any Interest Period
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 the applicable calendar month; and
(iii) no Interest Period for any Loan shall end after the
Termination Date. Interest shall accrue from and include the
first date of an Interest Period but exclude the last day of
such Interest Period.
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"Interim Bankruptcy Court Order" shall mean the order
of the Bankruptcy Court with respect to the Borrowers and the
Guarantor in the form of Exhibit B hereto, as the same may be
amended, modified or supplemented from time to time with the
express written joinder or consent of the Agent, the Borrowers
and the Guarantor.
"Inventory" shall mean, with respect to either
Borrower, all goods held for sale or eventual sale by such
Borrower in the normal course of business, provided that
Inventory shall not include inventory held by such Borrower on
consignment.
"Law" shall mean any law (including common law),
constitution, statute, treaty, regulation, rule, ordinance,
order, injunction, writ, decree or award of any Governmental
Authority.
"L/C Inventory" shall mean the undrawn stated amount
of documentary Letters of Credit for the importation of finished
goods Inventory.
"Lenders" shall have the meaning given that term in
the introductory paragraph to this Agreement.
"Letter of Credit" shall have the meaning given to
that term in Section 3.01.
"Letter of Credit Application" shall have the meaning
given to that term in Section 3.01 hereof.
"Letter of Credit Cash Collateral Account" shall mean
the deposit account maintained at Chemical Bank in New York, New
York or such other bank as CIT may select which deposit account
shall be under the sole dominion and control of CIT.
"Letter of Credit Exposure" at any time shall mean
the sum at such time of (a) the aggregate amount of all
Unreimbursed Draws under Letters of Credit (whether or not such
Letters of Credit are then outstanding) and (b) the aggregate
Undrawn Letter of Credit Availability under all outstanding
Letters of Credit.
"Letter of Credit Fee" shall have the meaning given
to that term in Section 2.08(f) hereof.
"Letter of Credit Guaranty" shall mean the guaranty
delivered by CIT to the Letter of Credit Issuer, guaranteeing
either Borrower's reimbursement obligations under a
reimbursement agreement, Letter of Credit Application or other
like document.
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"Letter of Credit Issuer" shall mean the issuer of a
Letter of Credit, which issuer shall be mutually acceptable to
the Agent and MGRE.
"Lien" shall mean any mortgage, deed of trust,
pledge, lien, security interest, charge or other encumbrance or
security arrangement of any nature whatsoever, including but not
limited to any conditional sale or title retention arrangement,
and any assignment, deposit arrangement or lease intended as, or
having the effect of, security.
"Loan" or "Loans" shall mean any and all loan or
loans (including Unreimbursed Draws) made by the Lenders or by
the Agent on behalf of the Lenders to the Borrower under this
Agreement.
"Loan Documents" shall have the meaning given to that
term in the definition of "Related Documents" set forth in this
Section 1.01.
"Majority Lenders" shall mean, at any time, the Agent
and Lenders whose Pro Rata Shares aggregate at least sixty-six
and two-thirds percent (66-2/3%).
"Material Adverse Effect" shall mean a material
adverse effect upon (i) the business, operations, condition
(financial or otherwise) or prospects of MGRE and its
Subsidiaries, taken as a whole, (ii) the ability of the
Borrowers and the Guarantor, to perform their obligations
hereunder, under the Fee Letter or under any other Related
Document, (iii) the legality, validity or enforceability of this
Agreement or any Related Document, or (iv) the aggregate value
of the property included in the calculation of the Borrowing
Base.
"MGRD" shall have the meaning given that term in the
introductory paragraph to this Agreement.
"MGRE" shall have the meaning given that term in the
introductory paragraph to this Agreement.
"Monthly Compliance Certificate" shall have the
meaning given that term in Section 8.01(c) hereof.
"Multiemployer Plan" shall mean a "multiemployer
plan" as defined in Section 4001(a)(3) of ERISA and subject to
Title IV of ERISA which is, or within the immediately preceding
six (6) years was, contributed to by either Borrower, the
Guarantor or any ERISA Affiliate.
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"Notes" shall mean the promissory notes of the
Borrowers executed and delivered to the Lenders under this
Agreement and substantially in the form of Exhibit A hereto, as
modified or restated from time to time and any promissory note
or notes issued in exchange or replacement thereof, including
all extensions, renewals, refinancings or refundings thereof in
whole or part.
"Obligations" shall mean all post-Filing Date
indebtedness, obligations and liabilities of either Borrower or
the Guarantor to any Lender or the Agent incurred under or
related to this Agreement, the Notes, the Fee Letter or any
other Related Document, whether such indebtedness, obligations
or liabilities are direct or indirect, secured or unsecured,
joint or several, absolute or contingent, due or to become due,
whether for payment or performance, now existing or hereafter
arising, which are described in either of the following clauses
(i) or (ii):
(i) All indebtedness, obligations (including
Reimbursement Obligations) and liabilities of any
nature whatsoever, including amounts due under
Section 11.06 hereof and similar agreements contained
in the other Related Documents, from time to time
arising under or in connection with or evidenced or
secured by this Agreement, the Notes, the Letters of
Credit or any other Related Document, including but
not limited to the principal amount of Loans
outstanding, together with interest thereon, the
amount of the Letter of Credit Exposure, together
with interest thereon and all expenses, fees and
indemnities hereunder or under any other Related
Document. Without limitation, such amounts include
all Loans and interest thereon and the amount of all
Letter of Credit Exposure whether or not such Loans
were made or any Letters of Credit to which such
Letter of Credit Exposure relates were issued in
compliance with the terms and conditions hereof or in
excess of any Lender's obligation to lend and arrange
for the issuance of Letters of Credit hereunder or
any Lender's obligation to participate therein. If
and to the extent any amounts in any account
(including the Agent Account, the Letter of Credit
Cash Collateral Account, the Depository Accounts, the
Collection Account, the Cash Concentration Account or
otherwise) constituting collateral are applied to
Obligations hereunder, and any Lender or the Agent is
subsequently obligated to return or repay any such
amounts to any Person for any reason, the amount so
returned or repaid shall be deemed a Loan hereunder
and shall constitute an Obligation.
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(ii) All indebtedness, obligations and
liabilities from time to time arising under or in
connection with any account from time to time
maintained by either Borrower or the Guarantor with
any Lender or the Agent, including but not limited to
all Reimbursement Obligations, service charges and
interest in connection with any overdrafts or
returned items from time to time arising in
connection with any such account, or arising under or
in connection with any investment services, cash
management services or other services from time to
time performed by any Lender or the Agent pursuant to
or in connection with this Agreement or any other
Related Document.
"Office" when used in connection with the Agent shall
mean its office located at 1211 Avenue of the Americas, New
York, New York 10036 or at such other office or offices of the
Agent as may be designated in writing from time to time by the
Agent to MGRE and when used in connection with the Bank or the
Letter of Credit Issuer shall mean the office of such entity
designated in writing from time to time by the Agent to MGRE.
In the event Chemical Bank shall be the Bank or the Letter of
Credit Issuer, the Office for such entity shall until further
written notice from the Agent to MGRE be its office located at
55 Water Street, New York, New York 10004.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation or any successor thereto.
"Permitted Liens" shall have the meaning given that
term in Section 9.03 hereof.
"Person" shall mean an individual, corporation,
partnership, trust, unincorporated association, joint venture,
joint-stock company, government (including political
subdivisions), Governmental Authority or agency, or any other
entity.
"Plan" shall mean an employee benefit plan defined in
Section 3(3) of ERISA in respect of which the Borrower, the
Guarantors or any ERISA Affiliate is, or within the immediately
preceding six (6) years was, an "employer" as defined in Section
3(5) of ERISA.
"Potential Default" shall mean any event or condition
which has occurred or exists which with notice or passage of
time, or any combination of the foregoing, would constitute an
Event of Default.
"Prime Loan" shall mean a Loan bearing interest at
the Regular Rate.
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"Prime Rate" shall mean the interest rate per annum
publicly announced from time to time by Chemical Bank in New
York, New York as its Prime Rate, such interest rate to change
automatically from time to time effective as of the announced
effective date of each change in the Prime Rate. The Prime Rate
is not intended to be the lowest rate of interest charged by
Chemical Bank to its borrowers.
"Priority Professional Expenses" shall mean those
expenses entitled to a priority as set forth in clause (ii) of
the clause "first" of the definition of the term "Agreed
Administrative Expense Priorities".
"Pro Rata Share" shall mean, with respect to any
Lender, a fraction (expressed as a percentage), the numerator of
which shall be the amount of such Lender's Revolving Credit
Commitment and the denominator of which shall be the aggregate
amount of all of the Lenders' Revolving Credit Commitments, as
adjusted from time to time in accordance with the provisions of
Section 11.13 hereof, provided that, if the Revolving Credit
Commitments have been terminated, the numerator shall be the
unpaid amount of such Lender's Loans and Letter of Credit
Exposure and the denominator shall be the aggregate amount of
all of the Lenders' unpaid Loans and Letter of Credit Exposure.
"Register" shall have the meaning given that term in
Section 11.13(c) hereof.
"Regular Rate" shall mean, for any day, the Prime
Rate for such day plus 1%.
"Reimbursement Obligation" shall mean the joint and
several obligation of the Borrowers to reimburse CIT or the
Lenders for amounts payable by CIT or the Lenders under a Letter
of Credit Guaranty in respect of any drawings made under any
Letter of Credit issued by the Letter of Credit Issuer, together
with interest thereon.
"Related Documents" or "Loan Documents" means this
Agreement, the Notes, the Letters of Credit, each Letter of
Credit Application, each Letter of Credit Guaranty, the Interim
Bankruptcy Order, if any, the Final Bankruptcy Court Order, the
Fee Letter, the other documents, instruments and agreements
referred to in Section 7.01 hereof, and all other instruments,
agreements and documents from time to time delivered in
connection with or otherwise relating to any Related Document.
"Release" means, as to any Person, any release,
spill, emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching or migration by such Person of a
Contaminant into the indoor or outdoor environment or into or
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out of any property owned by such Person or any of its
Subsidiaries, including the movement of Contaminants through or
in the air, soil, surface water, groundwater or property.
"Relevant Date" shall mean the time a relevant
computation or determination is to be made or the date of
relevant financial statements.
"Remedial Action" means all actions required by a
Governmental Authority to (i) clean up, remove, treat or in any
other way address Contaminants in the indoor or outdoor
environment; (ii) prevent a Release or condition that is
reasonably likely to result in a Release or minimize further
release of Contaminants so they do not migrate or endanger or
threaten to endanger public health or welfare or the indoor or
outdoor environment; or (iii) perform pre-remedial studies and
investigations and post-remedial monitoring and care, unless
such action shall have been stayed or enjoined by a court of
competent jurisdiction.
"Reportable Event" shall mean any of the events
described in Sections 4043(b) of ERISA (other than events for
which the notice requirements have been waived).
"Reserve Requirement" means, with respect to any
Interest Period, the reserve percentage (expressed as a decimal)
equal to the aggregate reserve requirement (including, without
limitation, any marginal, basic, emergency, supplemental or
other reserves and taking into account any transitional
adjustments or other scheduled changes in reserve requirements)
specified under regulations issued from time to time by the
Board of Governors of the Federal Reserve System under
Regulation D as being then applicable to assets or liabilities
of any member bank of the Federal Reserve Systems (whether or
not applicable to a Lender) consisting of and including
"Eurocurrency liabilities" (as such term is from time to time
defined in Regulation D) with maturities comparable to such
Interest Period, but without the benefit or credit for
proration, exemptions or offsets that might otherwise be
available from time to time under Regulation D.
"Restricted Account Agreement" shall have the meaning
given to that term in Section 5.02.
"Revolving Credit Commitment" shall mean, with
respect to each Lender, the amount set forth on Schedule 1.02 to
this Agreement or assigned to such Lender in accordance with
Section 11.13, as such amount may be reduced from time to time
pursuant to the terms of this Agreement, and "Revolving Credit
Commitments" shall, collectively, mean the aggregate amount of
the Revolving Credit Commitments of all the Lenders, the maximum
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amount of which shall not exceed $50 million during the period
when the Interim Bankruptcy Court Order is in effect and $125
million during the period when the Final Bankruptcy Court Order
is in effect.
"Settlement Period" shall have the meaning set forth
in Section 2.03(e)(ii) hereof.
"Stated Amount" of a Letter of Credit shall mean the
face amount thereof, drawn or undrawn, regardless of the
existence or satisfaction of any conditions or limitations on
drawing.
"Subsidiary" shall mean, with respect to any Person,
any corporation, limited or general partnership, trust,
association or other business entity of which an aggregate of
50% or more of the outstanding stock or other interests entitled
to vote in the election of the board of directors of such
corporation (irrespective of whether, at the time, stock of any
other class or classes of such corporation shall have or might
have voting power by reason of the happening of any
contingency), managers, trustees or other controlling persons,
or an equivalent controlling interest therein, of such Person
is, at the time, directly or indirectly, owned or controlled by
such Person and/or one or more Subsidiaries of such Person.
"Tax Refund" shall mean the Federal income tax refund
claimed by MGRE from the Internal Revenue Service in the
consolidated Federal income tax return to be filed by MGRE for
its taxable year ended January 29, 1994.
"Termination Date" shall have the meaning given that
term in Section 2.01(a) hereof.
"Termination Event" shall mean (i) a Reportable Event
with respect to any Benefit Plan, other than the commencement of
the Chapter 11 Cases; (ii) the withdrawal of either Borrower,
the Guarantor or any ERISA Affiliate from a Benefit Plan during
a plan year in which either Borrower, the Guarantor or any ERISA
Affiliate was a "substantial employer" as defined in Section
4001(a)(2) of ERISA; (iii) the imposition of an obligation on
either Borrower, the Guarantor or any ERISA Affiliate under
Section 4041 of ERISA to provide affected parties written notice
of intent to terminate a Benefit Plan in a distress termination
described in Section 4041(c) of ERISA; (iv) the institution by
the PBGC of proceedings to terminate a Benefit Plan; or (v) the
partial or complete withdrawal of either Borrower, the Guarantor
or any ERISA Affiliate from a Multiemployer Plan.
"Undrawn Letter of Credit Availability" with respect
to a Letter of Credit at any time shall mean the maximum amount
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available to be drawn under such Letter of Credit at such time,
regardless of the existence or satisfaction of any conditions or
limitations on drawing.
"Unreimbursed Draws" with respect to a Letter of
Credit at any time shall mean the aggregate amount at such time
of all payments made by a Letter of Credit Issuer or payments
made by CIT or the Lenders under a Letter of Credit Guaranty in
respect of such payments under such Letter of Credit, to the
extent not repaid by the Borrowers.
"Unused Line Fee" shall have the meaning given to
that term in Section 2.08(c).
"WARN" shall mean the Worker Adjustment and
Retraining Notification Act, as amended, and any successor
statute of similar import, and regulations thereunder, in each
case as in effect from time to time.
1.0 Construction. Unless the context of this
Agreement otherwise clearly requires, references to the plural
include the singular, the singular the plural and the part the
whole and "or" has the inclusive meaning represented by the
phrase "and/or." References in this Agreement to
"determination" by the Agent include good faith estimates by the
Agent (in the case of quantitative determinations) and good
faith beliefs by the Agent (in the case of qualitative
determinations). The words "hereof," "herein," "hereunder" and
similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement.
The section and other headings contained in this Agreement and
the Table of Contents preceding this Agreement are for reference
purposes only and shall not control or affect the construction
of this Agreement or the interpretation thereof in any respect.
Section, subsection and exhibit references are to this Agreement
unless otherwise specified.
1.03. Accounting Principles. Except as otherwise
provided in this Agreement, all computations and determinations
as to accounting or financial matters and all financial
statements to be delivered pursuant to this Agreement shall be
made and prepared in accordance with GAAP (including principles
of consolidation where appropriate), and all accounting or
financial terms shall have the meanings ascribed to such terms
by GAAP.
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ARTICLE
THE CREDITS
2.0 Revolving Credit Loans.
The Revolving Credit Commitment. Subject
to the terms and conditions and relying upon the representations
and warranties herein set forth and subject to the Interim
Bankruptcy Court Order and the Final Bankruptcy Court Order,
each Lender severally agrees to make loans to the Borrowers (the
"Loans") at any time and from time to time on or after the date
hereof and to, but not including, the Termination Date (as
defined below), in an aggregate principal amount not exceeding
at any one time its Pro Rata Share of the Current Commitment at
such time. The Current Commitment at any time shall be equal to
the lesser of (A) $50 million during the period when the Interim
Bankruptcy Court Order is in effect, and $125 million during the
period when the Final Bankruptcy Court Order is in effect, as
such amount may have been reduced under Section 2.04(a) hereof
at such time, and (B) the Borrowing Base. No Lender shall have
an obligation to make Loans hereunder or arrange for the
issuance of Letters of Credit on or after the Termination Date
or which, when added to the aggregate amount of all outstanding
and contemporaneous Loans and the Letter of Credit Exposure at
such time, would cause the amount of all Loans and the Letter of
Credit Exposure at any time to exceed the Current Commitment at
such time. The Termination Date means the date on which the
Revolving Credit Commitment of each Lender expires, which shall
be the earliest of (i) January 18, 1994, if the Interim
Bankruptcy Court Order has not been entered on or prior to such
date, (ii) the date which is twenty-seven (27) months after the
Entry Date, (iii) 30 days from the Entry Date if the Final
Bankruptcy Court Order shall not have been entered during such
30 day period, and (iv) the date of the substantial consummation
(as defined in Section 1101(2) of the Bankruptcy Code) of a plan
of reorganization in the Chapter 11 Cases that has been
confirmed by an order of the Bankruptcy Court.
Revolving Credit. Within the limits of
time and amount set forth in this Section 2.01, and subject to
the provisions of this Agreement, the Borrowers may borrow,
repay and reborrow hereunder.
2.0 Notes. The joint and several obligation of the
Borrowers to repay the unpaid principal amount of the Loans made
to them by each Lender and to pay interest thereon shall be
evidenced in part by a Note dated the date of this Agreement in
the principal amount of such Lender's Revolving Credit
Commitment with the blanks appropriately filled in. An executed
Note for each Lender, payable jointly and severally by the
Borrowers, shall be delivered by the Borrowers to the Agent on
the date of the execution and delivery of this Agreement.
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2.0 Notice of Borrowing; Making of Loans.
Whenever the Borrowers desire to borrow,
they shall provide notice to the Agent of such proposed
borrowing, each such notice to be given (i) not later than 12:00
noon (New York City time) on the date of such proposed
borrowing, in the case of a borrowing consisting of Prime Loans,
or (ii) not later than 12:00 noon (New York City time) on the
third Business Day before the date of such borrowing, in the
case of a borrowing consisting of Eurodollar Loans, setting
forth: (a) the date, which shall be a Business Day, on which
such borrowing is to occur, (b) whether such Loan is requested
to be a Prime Loan or a Eurodollar Loan and, if a Eurodollar
Loan, the Interest Period requested with respect thereto, (c)
the principal amount of the Loan being borrowed, and (d) the
account information where such Loan is to be received. Such
notice shall be given by telephone or in writing by a Designated
Borrowing Officer, provided, that, if requested by the Agent,
any such telephonic notice shall be confirmed in writing by
delivery to the Agent on the date on which such Loan is to be
made a notice containing the original or facsimile signature of
a Designated Borrowing Officer. On the date specified in such
notice, each Lender shall, subject to the terms and conditions
of this Agreement, make its Pro Rata Share of such Loan in
immediately available funds by wire transfer to the Agent at its
Office not later than 2:00 p.m. (New York City time). Unless
the Agent determines that any applicable conditions in Section
7.02 have not been satisfied, the Agent shall make the funds so
received from the Lenders available to the Borrowers not later
than 2:30 p.m (New York City time), on the date specified in
such notice in immediately available funds by (i) depositing
such proceeds in the Disbursement Account if the Disbursement
Account is located at the Bank and (ii) initiating a wire
transfer if the Disbursement Account is not located at the Bank.
The Agent and each Lender shall be entitled
to rely conclusively on each Designated Borrowing Officer's
authority to request a Loan on behalf of the Borrowers until the
Agent receives written notice to the contrary. The Agent and
the Lenders shall have no duty to verify the authenticity of the
signature appearing on any written notice of borrowing and, with
respect to an oral request for a Loan, the Agent and the Lenders
shall have no duty to verify the identity of any Person
representing himself as a Designated Borrowing Officer.
The Agent and the Lenders shall not incur
any liability to the Borrowers in acting upon any telephonic
notice referred to above which the Agent and the Lenders believe
in good faith to have been given by a Designated Borrowing
Officer or for otherwise acting in good faith under this Section
2.03 and, upon the funding of a Loan by the Lenders (or by the
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Agent on behalf of the Lenders) in accordance with this
Agreement pursuant to any such telephonic notice, the Borrowers
shall have effected a Loan hereunder.
Each notice of borrowing pursuant to this
Section 2.03 shall be irrevocable and the Borrowers shall be
bound to make a borrowing in accordance therewith. Each Prime
Loan shall be in a minimum amount of $1,000,000 and in multiples
of $100,000 if in excess thereof, and each Eurodollar Loan shall
be in a minimum amount of $2,000,000 and in multiples of
$500,000 if in excess thereof.
(i) Except as otherwise provided in this
subsection 2.03(e), all Loans under this Agreement shall jointly
and severally be made by the Lenders simultaneously and
proportionately to their Pro Rata Shares, it being understood
that no Lender shall be responsible for any default by any other
Lender in that other Lender's obligation to make a Loan
requested hereunder nor shall the Revolving Credit Commitment of
any Lender be increased or decreased as a result of the default
by any other Lender in that other Lender's obligation to make a
Loan requested hereunder.
(ii) Notwithstanding any other provision of
this Agreement, and in order to reduce the number of fund
transfers among the Borrowers, the Lenders and the Agent, the
Borrowers, the Lenders and the Agent agree that the Agent may
(but shall not be obligated to), and the Borrowers and the
Lenders hereby irrevocably authorize the Agent to, fund, on
behalf of the Lenders, Loans pursuant to subsection 2.01(a),
subject to the procedures for settlement set forth in subsection
2.03(f); provided, however, that (a) the Agent shall in no event
fund such Loans if the Agent shall have received written notice
from the Majority Lenders on the Business Day prior to the day
of the proposed Loan that one or more of the conditions
precedent contained in Section 7.02 will not be satisfied on the
day of the proposed Loan, and (b) the Agent shall not otherwise
be required to determine that, or take notice whether, the
conditions precedent in Section 7.02 have been satisfied.
(iii) Unless (A) the Agent has notified
the Lenders that the Agent, on behalf of the Lenders, will fund
a particular Loan pursuant to subsection 2.03(e)(ii), or (B) the
Agent shall have been notified by any Lender on the Business Day
prior to the day of a proposed Loan that such Lender does not
intend to make available to the Agent such Lender's Pro Rata
Share of the Loan requested on such day, the Agent may assume
that such Lender has made such amount available to the Agent on
such day and the Agent, in its sole discretion, may, but shall
not be obligated to, cause a corresponding amount to be made
available to the Borrowers on such day. If the Agent makes such
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corresponding amount available to the Borrowers and such
corresponding amount is not in fact made available to the Agent
by such Lender, the Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with
interest thereon, for each day from the date such payment was
due until the date such amount is paid to the Agent, at the
customary rate set by the Agent for the correction of errors
among banks for three Business Days and thereafter at the
Regular Rate. During the period in which such Lender has not
paid such corresponding amount to the Agent, notwithstanding
anything to the contrary contained in this Agreement or any
other Related Document, the amount so advanced by the Agent to
the Borrowers shall, for all purposes hereof, be a Loan made by
the Agent for its own account. Upon any such failure by a
Lender to pay the Agent, the Agent shall promptly thereafter
notify the Borrowers of such failure and the Borrowers shall
immediately pay such corresponding amount to the Agent for its
own account.
(iv) Nothing in this subsection 2.03(e)
shall be deemed to relieve any Lender from its obligation to
fulfill its Revolving Credit Commitment hereunder or to
prejudice any rights that the Agent or the Borrowers may have
against any Lender as a result of any default by such Lender
hereunder.
With respect to all periods for which
the Agent has funded Loans pursuant to Subsection 2.03(e),
within 15 days after the last day of each calendar month, or
such shorter period as it may from time to time select (any such
month or shorter period being herein called a "Settlement
Period"), the Agent shall notify each Lender of the average
daily unpaid principal amount of the Loans outstanding during
such Settlement Period. In the event that such amount is
greater than the average daily unpaid principal amount of the
Loans outstanding during the Settlement Period immediately
preceding such Settlement Period (or, if there has been no
preceding Settlement Period, the amount of the Loans made on the
date of such Lender's initial funding), each Lender shall
promptly make available to the Agent its Pro Rata Share of the
difference in immediately available funds. In the event that
such amount is less than such average daily unpaid principal
amount, the Agent shall promptly pay over to each other Lender
its Pro Rata Share of the difference in immediately available
funds. In addition, if the Agent shall so request at any time
when an Event of Default shall have occurred and be continuing,
or any other event shall have occurred as a result of which the
Agent shall determine that it is desirable to present claims
against the Borrowers for repayment, each Lender shall promptly
remit to the Agent or, as the case may be, the Agent shall
promptly remit to each Lender, sufficient funds to adjust the
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interests of the Lenders in the then outstanding Loans to such
an extent that, after giving effect to such adjustment, each
Lender's interest in the then outstanding Loans will be equal to
its Pro Rata Share thereof. The obligations of each Lender
under this subsection 2.03(f) shall be absolute and
unconditional.
(ii) In the event that any Lender fails to
make any payment required to be made by it pursuant to
subsection 2.03(f)(i), the Agent shall be entitled to recover
such corresponding amount on demand from such Lender together
with interest thereon, for each day from the date such payment
was due until the date such amount is paid to the Agent, at the
customary rate set by the Agent for the correction of errors
among banks for three Business Days and thereafter at the
Regular Rate. During the period in which such Lender has not
paid such corresponding amount to the Agent, notwithstanding
anything to the contrary contained in this Agreement or any
other Related Document, the amount so advanced by the Agent to
the Borrowers shall, for all purposes hereof, be a Loan made by
the Agent for its own account. Upon any such failure by a Lender
to pay the Agent, the Agent shall promptly thereafter notify the
Borrowers of such failure and the Borrowers shall immediately
pay such corresponding amount to the Agent for its own account.
Nothing in this subsection 2.03(f)(ii) shall be deemed to
relieve any Lender from its obligation to fulfill its Revolving
Credit Commitment hereunder or to prejudice any rights that the
Borrowers may have against any Lender as a result of any default
by such Lender hereunder.
2.0 Reduction of Commitment; Mandatory Prepayment;
Optional Prepayment.
Reduction of the Commitment. The Borrowers
may at any time or from time to time and without penalty or
premium reduce the Revolving Credit Commitments of the Lenders
to an amount (which may be zero) not less than the sum of the
unpaid principal amount of all Loans then outstanding plus the
principal amount of all Loans not yet made as to which notice
has been given by the Borrowers under Section 2.03 hereof plus
the Letter of Credit Exposure plus the Stated Amount of all
Letters of Credit not yet issued as to which a request has been
made unless the request is withdrawn and the Letter of Credit is
not issued by the Letter of Credit Issuer under Section 3.01
hereof. Any reduction shall be in an amount which is an
integral multiple of $5 million. Reduction of the Revolving
Credit Commitments of the Lenders shall be made by providing not
less than two Business Days' written notice (which notice shall
be irrevocable) to such effect to the Agent (which notice the
Agent shall promptly transmit to each Lender). Reductions of
the Revolving Credit Commitments of the Lenders are irrevocable
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and may not be reinstated. Each such reduction shall reduce the
Revolving Credit Commitment of each Lender proportionately in
accordance with its Pro Rata Share.
Mandatory Prepayment. Exceeding Current
Commitment. If at any time the Current Commitment is less than
the aggregate unpaid principal amount of the Loans then
outstanding plus the Letter of Credit Exposure at such time, the
Borrowers shall prepay an amount of the Loans not less than the
amount of such difference or, if the Loans then outstanding are
less than the amount of such difference, provide cash collateral
to the Agent in an amount equal to 105% of such excess, which
cash collateral shall be deposited and held in the Letter of
Credit Cash Collateral Account until such time as such excess no
longer exists. Any such prepayment will not otherwise reduce
the Revolving Credit Commitments of the Lenders. Concurrently
with any notice of reduction of the Revolving Credit Commitments
of the Lenders, the Borrowers shall give notice to the Agent of
any mandatory prepayment which notice shall specify a prepayment
date no later than the effective date of such reduction of the
Revolving Credit Commitments of the Lenders.
Failure to Obtain Final Bankruptcy
Court Order. Without limiting any other provision of this
Agreement or any other Related Document permitting or requiring
prepayment of the Loans in whole or part, the Borrowers shall
prepay the Loans in whole without premium or penalty on the
thirtieth (30th) day following the Entry Date in the event the
Final Bankruptcy Court Order shall not have been entered on or
before such date and shall provide cash collateral to the Agent
in an amount equal to 105% of the stated amount of all
outstanding Letters of Credit, which cash collateral shall be
deposited and held in the Letter of Credit Cash Collateral
Account until all Obligations have been paid in full in cash.
Other Mandatory Prepayments. The
Agent may on the Cash Concentration Account Blockage Date and on
each Business Day thereafter, apply all funds deposited in the
Cash Concentration Account to the payment, in whole or in part,
of the Obligations outstanding.
Optional Prepayment. The Borrowers may at
any time or from time to time prepay, in whole or in part, any
or all Loans then outstanding. Any such prepayment (i) shall be
in an aggregate principal amount equal to $1,000,000 or an
integral multiple of $100,000 in excess of $1,000,000, provided,
that any such partial prepayment of a Eurodollar Loan shall not
reduce the aggregate principal amount of such Eurodollar Loan to
less than $2,000,000, and (ii) shall not reduce the Revolving
Credit Commitments.
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Prepayment Penalty. All prepayments of
Loans under this Section 2.04 shall be without premium or
penalty, except that any prepayment of Eurodollar Loans shall be
subject to the provisions of Section 2.12 hereof.
2.0 Interest Rate.
Each Prime Loan shall bear interest for
each day until paid at a rate per annum for each day equal to
the Regular Rate for such day.
Each Eurodollar Loan shall bear interest at
a rate per annum equal to the Eurodollar Rate for the Interest
Period in effect for such Eurodollar Loan plus 2 1/2%, together
with any additional interest owing pursuant to Section 2.14
hereof.
2.0 Interest Payment Dates. The Borrowers shall pay
interest on the unpaid principal amount of each Loan from the
date of such Loan until such principal amount shall be paid in
full, which interest shall be payable (i) if such Loan is a
Prime Loan, monthly in arrears on the first Business Day of each
month, commencing February 1, 1994, and (ii) if such Loan is a
Eurodollar Loan, (A) on the last day of the Interest Period of
such Eurodollar Loan and (B) for any Interest Period longer than
three months, on the day that occurs during such Interest Period
every three (3) months from the first day of such Interest
Period. After maturity of any principal amount of any Loan (by
acceleration, at scheduled maturity or otherwise), interest on
such amount shall be due and payable on demand.
2.0 Amortization. To the extent not due and payable
earlier pursuant to the terms of this Agreement, the entire
unpaid principal amount of each of the Loans shall be due and
payable on the Termination Date.
2.0 Payments.
Time, Place and Manner. Except as
otherwise provided in Section 2.04(b) hereof, all payments and
prepayments to be made in respect of principal, interest,
commitment fee, facility fee or other amounts due from the
Borrowers hereunder, under the Fee Letter, the Notes or any
other Related Document shall be payable at or before 12:00 Noon,
New York City time, on the day when due without presentment,
demand, protest or notice of any kind, all of which are hereby
expressly waived. Such payments shall be made to the Agent for
the account of the Agent, CIT or the Lenders, as the case may
be, at the Agent Account in Dollars in funds immediately
available at the Agent's Office without setoff, counterclaim or
other deduction of any nature. The Agent shall maintain a
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common loan account (the "Borrowers' Account") on its books in
the joint names of MGRE and MGRD in which the Borrowers will be
charged with Loans made by the Agent or the Lenders to the
Borrowers hereunder and with any other Obligations. The
Borrowers and the Lenders hereby authorize the Agent to, and the
Agent may, from time to time charge the Borrowers' Account with
any interest, fees or expenses that are due and payable under
this Agreement. The Borrowers and the Lenders confirm that any
charges which the Agent may so make to the Borrowers' Account as
herein provided will be made as an accommodation to the
Borrowers and solely at the Agent's discretion and shall
constitute a Loan to the Borrowers funded by the Agent on behalf
of the Lenders and subject to subsections 2.03(e) and 2.03(f) of
this Agreement. It is expressly understood and agreed that the
Agent and the Lenders shall have no responsibility to inquire
into the correctness of the apportionment, allocation or
disposition of any Loans made to the Borrowers or of any
reimbursement obligations fees, costs or expenses for which the
Borrowers are jointly and severally obligated under this
Agreement. Each of the Lenders and the Borrowers agrees that
the Agent shall have the right to make such charges regardless
of whether any Event of Default or Potential Default shall have
occurred and be continuing or whether any of the conditions
precedent in Section 7.02 have been satisfied. The Borrowers'
Account will be credited upon receipt of "good funds" in the
Agent Account with all amounts actually received by the Agent
from the Borrowers or others for the account of the Borrowers.
Interest on all Loans and all fees that accrue on a per annum
basis shall be computed on the basis of the actual number of
days elapsed in the period during which interest or such fee
accrues and a year of 360 days. In computing interest on any
Loan, the date of the making of such Loan shall be included and
the date of payment shall be excluded; provided, however, that
if a Loan is repaid on the same day in which it is made, one
day's interest shall be paid on such Loan.
Periodic Statements. The Agent shall
provide the Lenders and the Borrowers promptly after the end of
each calendar month a summary statement (in the form from time
to time used by the Agent) of (A) the opening and closing daily
balances in the Borrowers' Account during such month, (B) the
amounts and dates of all Loans made during such month, (C) the
amounts and dates of all payments on account of the Loans during
such month and each Lender's interest in the Loans, (D) the
amount of interest accrued on the Loans during such month, (E)
any Letters of Credit issued by a Letter of Credit Issuer during
such month, specifying the Stated Amount thereof, (F) the amount
of charges to the Borrowers' Account or Loans to be made during
such month to reimburse CIT, the Lenders or the Letter of Credit
Issuer for drawings made under Letters of Credit or payments
made by CIT or the Lenders under the Letter of Credit Guaranty,
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and (G) the amount and nature of any charges to the Borrowers'
Account made during such month on account of interest, fees and
expenses and other Obligations. All entries on any such
statement shall, 30 days after the same is sent, be presumed to
be correct and shall constitute prima facie evidence of the
information contained in such statement, subject to the
Borrower's and each Lender's express right to rebut such
presumption by conclusively demonstrating the existence of any
error on the part of the Agent.
Apportionment of Payments. Except as
otherwise provided in this subsection, aggregate principal and
interest payments shall be apportioned among all outstanding
Loans to which such payments relate and payments of the fees
required to be paid by the Borrowers under subsections 2.08(e)
and (f) shall, as applicable, be apportioned ratably among the
Lenders, in each case according to their Pro Rata Shares. All
payments shall be remitted to the Agent and all such payments
and any other amounts, including, without limitation, proceeds
of Collateral received by the Agent from or as to the Borrowers
or the Guarantor shall be applied subject to the provisions of
this Agreement first, to pay principal of and interest on any
Loans funded by the Agent on behalf of the Lenders and any fees,
expense reimbursements or indemnities then due to the Agent from
the Borrowers; second, to pay any fees, expense reimbursements
or indemnities then due to the Lenders or the Letter of Credit
Issuer hereunder; third, to pay interest due in respect of Loans
and Unreimbursed Draws under Letters of Credit; and fourth, to
pay, prepay or provide cash collateral in respect of principal
on Loans and Letter of Credit Exposure. The Agent shall
promptly distribute to each Lender at its primary address set
forth on the appropriate signature page hereof, or at such other
address as such Lender may designate in writing, such funds as
it may be entitled to receive. The foregoing apportionment of
payments is solely for the purpose of determining the
obligations of the Borrowers hereunder and, notwithstanding such
apportionment, any Lender may on its books and records allocate
payments received by it in a manner different from that
contemplated hereby. No such different allocation shall alter
the rights and joint and several obligations of the Borrowers
under this Agreement determined in accordance with the
apportionments contemplated by this Section 2.08(c). To the
extent that the Borrowers make a payment or payments to the
Agent or the Agent receives any payment or other amount, which
payment(s) or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set
aside and/or required to be repaid to a trustee, receiver 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 proceeds received, the Obligations or part thereof
intended to be satisfied shall be revived and continue in full
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force and effect, as if such payment or proceeds had not been
received by the Agent.
Interest Upon Events of Default. To the
extent permitted by law, after there shall have occurred and so
long as there is continuing an Event of Default pursuant to
Section 10.1, any principal, interest, commitment fee, facility
fee, indemnity or any other amounts due from the Borrowers
hereunder, under the Fee Letter or under any Note or any other
Related Document (and including interest accrued under this
subsection 2.08(d)) shall compound on a daily basis as provided
in this subsection 2.08(d) and shall bear interest for each day
until paid (before and after judgment), payable on demand, at a
rate per annum of 4 1/2% above the Eurodollar Rate for such day
in the case of Eurodollar Loans and 3.00% above the Prime Rate
for such day in the case of Prime Loans, such interest rate
relating to Prime Loans to change automatically from time to
time effective as of the announced effective date of each change
in the Prime Rate.
Unused Line Fee. From and after the Entry
Date until the Termination Date, the Borrowers shall pay to the
Agent, for the account of each Lender in accordance with such
Lender's Pro Rata Share, subject to Section 11.18, an unused
line fee (the "Unused Line Fee") accruing at the rate of
three-eighths of one percent (0.375%) per annum from and after
the Entry Date until the Termination Date, on the excess, if
any, of the Revolving Credit Commitment over the sum of the
Loans and Letter of Credit Exposure outstanding from time to
time. All Unused Line Fees accruing after the Entry Date shall
be payable monthly in arrears on the first day of each month
commencing February 1, 1994.
Letter of Credit Fees. From and after the
Entry Date until the Termination Date, the Borrowers shall pay
to the Agent, for the account of each Lender in accordance with
such Lender's Pro Rata Share, subject to Section 11.18, a letter
of credit fee (the "Letter of Credit Fee") accruing at the rate
of (i) 1.50% per annum on the average daily Undrawn Letter of
Credit Availability of standby Letters of Credit and (ii) 1.375%
per annum on the average daily Undrawn Letter of Credit
Availability of documentary Letters of Credit; provided, that
for any documentary Letter of Credit that is cash collateralized
in an amount equal to at least 105% of the Stated Amount thereof
(such cash collateral to be deposited in the Letter of Credit
Cash Collateral Account), the Letter of Credit Fee with respect
to such documentary Letter of Credit shall accrue at the rate of
1.25% per annum on the average daily Undrawn Letter of Credit
Availability of such documentary Letter of Credit during the
period such Letter of Credit is cash collateralized. All Letter
of Credit Fees shall be payable monthly in arrears on the first
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day of each month commencing February 1, 1994. The Borrowers
shall also pay the nominal letter of credit fees and charges of
the Letter of Credit Issuer for the administration, issuance and
processing of any Letters of Credit issued by such Letter of
Credit Issuer. Following the Agent's receipt of any Letter of
Credit Fees described above, the Agent shall pay to each Lender
its Pro Rata share of an amount equal to the difference between
(A) the amount of the Letter of Credit Fees received by the
Agent and (B) the letter of credit fees payable to the Letter of
Credit Issuer in connection with the issuance of the Letters of
Credit.
Agent Fee. The Borrowers shall pay to the
Agent for its own account an annual Agent Fee of $100,000
payable as follows: (i) $100,000 payable to the Agent on the
Entry Date and (ii) $8,333.33 payable to the Agent on the first
day of each month commencing on the first day of the thirteenth
(13th) month following the Entry Date, until the Revolving
Credit Commitments of all Lenders have been terminated and all
Obligations have been paid in full; provided, that the fee
payable on the first day of the thirteenth (13th) month
following the Entry Date shall be increased by an amount equal
to that portion of the $100,000 annual fee allocable to the
period from the first anniversary of the Entry Date to the first
day of such thirteenth (13th) month.
Fees. All fees required to be paid
pursuant to the Fee Letter, this Agreement and any other Related
Document shall be paid to the Agent for its own account as
required therein. All fees under this Agreement and the other
Related Documents are non-refundable under all circumstances.
2.0 Use of Proceeds. The Borrowers hereby jointly
and severally covenant, represent and warrant that the proceeds
of the Loans made to them will be used solely to fund working
capital in the ordinary course of the Borrowers' and Guarantor's
businesses and for other general corporate purposes (including,
without limitation, payments of fees and expenses to
professionals under Sections 330 and 331 of the Bankruptcy Code
and administrative expenses of the kind specified in Section
503(b) of the Bankruptcy Code incurred in the ordinary course of
business of the Borrowers and the Guarantor) of the Borrowers
and the Guarantor. Nothing herein shall limit the right of the
Agent under Section 11.14 hereof to object to any use or
proposed use of proceeds of Loans to the extent inconsistent
with this Section or otherwise not permitted by this Agreement.
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2. Eurodollar Rate Not Determinable; Inability to
Determine Interest Rate; Illegality or Impropriety.
If prior to the first day of any Interest
Period:
the Agent shall have determined (which
determination shall be conclusive and binding upon the
Borrowers) that adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, or
the Agent has received notice from the
Majority Lenders that the Eurodollar Rate determined or to be
determined for such Interest Period will not adequately and
fairly reflect the cost to such Lenders of making or maintaining
their Eurodollar Loans during such Interest Period, or
Dollar deposits in the principal
amounts of the Eurodollar Loans to which such Interest Period is
to be applicable are not generally available in the London
interbank market,
the Agent shall give notice to the Borrowers and the Lenders by
fax or telephone as soon as practicable thereafter. If such
notice is given (1) any Eurodollar Loans requested to be made on
the first day of such Interest period shall be made as Prime
Loans and (2) any Loans that were to have been converted to or
continued as Eurodollar Loans on the first day of such Interest
Period shall be converted to or continued as Prime Loans. Until
such notice has been withdrawn by the Agent, no Loans shall be
made as or converted to or continued as Eurodollar Loans.
In the event that any Lender shall have
determined at any time that the introduction of, or any change
in, any applicable law, rule, regulation, order or decree or in
the interpretation or the administration thereof by any
Governmental Authority charged with the interpretation or
administration thereof, or compliance by such Lender with any
request or directive (whether or not having the force of law) of
any such Governmental Authority, shall make it unlawful or
improper for such Lender to make, maintain or fund any
Eurodollar Loan as contemplated by this Agreement, then such
Lender shall forthwith give notice thereof to the Agent and the
Borrowers describing such illegality or impropriety in
reasonable detail. Effective immediately upon the giving of
such notice, the obligation of such Lender to make Eurodollar
Loans shall be suspended for the duration of such illegality or
impropriety and, if and when such illegality or impropriety
ceases to exist, such suspension shall cease, and such Lender
shall notify the Agent and the Borrowers. If any such change
shall make it unlawful or improper for any Lender to maintain
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any outstanding Eurodollar Loan as a Eurodollar Loan, such
Lender shall, upon the happening of such event, notify the Agent
and the Borrowers, and the Borrowers shall immediately, or if
permitted by applicable law, rule, regulation, order, decree,
interpretation, request or directive, no later than the date
permitted thereby, convert each such Eurodollar Loan into a
Prime Loan.
2. Increased Costs; Capital Adequacy Circumstances.
Notwithstanding any other provision herein,
if after the date of this Agreement any change in applicable law
or regulation or in the interpretation or administration thereof
by any Governmental Authority charged with the interpretation or
administration thereof (whether or not having the force of law)
shall impose any tax on or change the basis of taxation of
payments to any Lender or any Affiliate of the Lender of the
principal of or interest on any Eurodollar Loan made by such
Lender (other than taxes imposed on the overall net income of
such Lender or such Affiliate of such Lender by the jurisdiction
in which such Lender has its principal office or by any
political subdivision or taxing authority therein), or shall
impose, modify or deem applicable any reserve, special deposit
or similar requirement against assets of, deposits with or for
the account of or credit extended by such Lender or any
Affiliate of such Lender (except any such reserve requirement
that is reflected in the additional interest payable pursuant to
Section 2.14) or shall impose on such Lender or any Affiliate of
such Lender any other condition affecting this Agreement or any
Eurodollar Loans made by such Lender, and the result of any of
the foregoing shall be to increase the cost to such Lender or
any Affiliate of such Lender of making or maintaining any
Eurodollar Loan or to reduce the amount of any sum received or
receivable by such Lender hereunder (whether of principal,
interest or otherwise) in respect thereof by an amount deemed by
such Lender to be material, then the Borrowers shall pay to such
Lender such additional amount or amounts as will compensate such
Lender for such additional costs incurred or reduction
suffered. Any amount or amounts payable by the Borrowers to any
Lender in accordance with the provisions of this Section 2.11(a)
shall be paid by the Borrowers to such Lender within ten (10)
days after receipt by the Borrowers from such Lender of a
statement setting forth in reasonable detail the amount or
amounts due and the basis for the determination from time to
time of such amount or amounts, which statement shall be
conclusive and binding absent manifest error.
If any Lender shall have determined that
the adoption after the date of this Agreement of any applicable
law, rule or regulation regarding capital adequacy, or any
change therein, or any change in the interpretation or
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administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Lender, any
lending office of such Lender, or any Affiliate of such Lender,
with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority,
central bank or comparable agency, has the effect of reducing
the rate of return on such Lender's capital or on the capital of
such Lender's Affiliate, as a consequence of such Lender's
obligations under the this Agreement and the Related Documents
to a level below that which such Lender or such Lender's
Affiliate, could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's policies or
such Lender's Affiliate's policies, with respect to capital
adequacy) by an amount deemed by such Lender to be material,
then, from time to time, the Borrowers shall reimburse such
Lender or such Lender's Affiliate, for such reduction. Any
amount or amounts payable by the Borrowers to any Lender in
accordance with the provisions of this Section 2.11(b) shall be
paid by the Borrowers to such Lender within ten (10) days after
receipt by the Borrowers from such Lender of a statement setting
forth in reasonable detail the amount or amounts due and the
basis for the determination from time to time of such amount or
amounts, which statement shall be conclusive and binding absent
manifest error.
Each Lender agrees to use reasonable
efforts to change its lending office to avoid or minimize (i)
any amounts that might otherwise be payable to such Lender
pursuant to this Section 2.11 or (ii) the effect of any event
referred to in Section 2.10(b); provided that such change shall
not cause the imposition on such Lender of any additional cost
or legal, regulatory or administrative burdens deemed by such
Lender, in its sole discretion, to be material.
Any Lender may demand compensation for any
increased costs or reduction in amounts received or receivable
or reduction in return on capital with respect to any period;
provided that such Lender makes such a demand within ninety (90)
days after obtaining actual knowledge of such increased costs,
reduction in amounts received or receivable or reduction in
return on capital. The protection of this Section 2.11 shall be
available to any Lender regardless of any possible contention of
the invalidity or inapplicability of the law, rule, regulation,
guideline or other change or condition which shall have occurred
or been imposed.
2. Indemnity.
The Borrowers agree, jointly and severally, to
indemnify each Lender against any loss or expense that such
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Lender actually sustains or incurs as a consequence of (a) any
failure by the Borrowers to fulfill on the date of any borrowing
hereunder the applicable conditions set forth in Article VII,
(b) any failure by the Borrowers to borrow any Eurodollar Loan
hereunder or to convert any Prime Loan into a Eurodollar Loan,
after notice of such borrowing or conversion has been given
pursuant to Section 2.03 or Section 2.15, as the case may be,
(c) any payment, prepayment (mandatory or optional) or
conversion of a Eurodollar Loan required by any provision of
this Agreement or otherwise made on a date other than the last
day of the Interest Period applicable thereto, (d) any default
in payment or prepayment of the principal amount of any
Eurodollar Loan or any part thereof or interest accrued thereon,
as and when due and payable (at the due date thereof, by notice
of prepayment or otherwise), or (e) the occurrence of any Event
of Default, including, in each such case, any loss or reasonable
expense sustained or incurred in liquidating or employing
deposits from third parties acquired to effect or maintain such
Loan or any part thereof as a Eurodollar Loan. Such loss or
reasonable expense shall include but not be limited to an amount
equal to the excess, if any, as reasonably determined by such
Lender, of (i) its cost of obtaining the funds for the Loan
being paid, prepaid or converted or not borrowed or converted
(based on the Eurodollar Rate applicable thereto) for the period
from the date of such payment, prepayment, conversion or failure
to borrow or convert on the last day of the Interest Period for
such Loan (or, in the case of a failure to borrow or convert,
the last day of the Interest Period for such Loan that would
have commenced on the date of such failure to borrow or convert)
over (ii) the amount of interest (as reasonably determined by
such Lender) that would be realized by such Lender in
re-employing the funds so paid, prepaid or converted or not
borrowed or converted for such Interest Period. A certificate
of any Lender setting forth in reasonable detail any amount or
amounts that such Lender is entitled to receive pursuant to this
Section 2.12 and the basis for the determination of such amount
or amounts shall be delivered to the Borrowers and shall be
conclusive and binding absent manifest error.
2. Sharing of Setoffs.
Each Lender agrees that if it shall, through the
exercise of a right of banker's lien, setoff or counterclaim
against the either Borrower or the Guarantor or pursuant to a
superpriority administrative expense claim under Section
364(c)(1) of the Bankruptcy Code or other security or interest
arising from, or in lieu of, such secured claim, received by
such Lender under any applicable bankruptcy, insolvency or other
similar law or otherwise, or by any other means, obtain payment
(voluntary or involuntary) in respect of any Obligation as a
result of which the aggregate unpaid amount of the Obligations
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owing to it shall be proportionately less than the aggregate
unpaid amount of the Obligations owing to any other Lender, it
shall simultaneously purchase from such other Lender at face
value a participation in the Obligations owing to such other
Lender, so that the aggregate unpaid amount of the Obligations
and participations in Obligations held by each Lender shall be
in the same proportion to the aggregate unpaid amount of all
Obligations owing to such Lender prior to such exercise of
banker's lien, setoff or counterclaim or other event was to the
aggregate unpaid amount of all Obligations outstanding prior to
such exercise of banker's lien, setoff or counterclaim or other
event; provided that, if any such purchase or purchases or
adjustments shall be made pursuant to this Section 2.13 and the
payment giving rise thereto shall thereafter be recovered, such
purchase or purchases or adjustments shall be rescinded to the
extent of such recovery and the purchase price or prices or
adjustments restored without interest. The Borrowers expressly
consent to the foregoing arrangements and agree that any Lender
holding a participation in an Obligation deemed to have been so
purchased may exercise any and all rights of banker's lien,
setoff or counterclaim with respect to any and all moneys owing
by the Borrowers to such Lender by reason thereof as fully as if
such Lender had made a loan directly to the Borrowers in the
amount of such participation.
2. Regulation D Compensation.
For so long as any Lender or any Affiliate of a
Lender maintains reserves against "eurocurrency liabilities" (or
any other category of liabilities that includes deposits by
reference to which the interest rate on Eurodollar Loans is
determined or any category of extensions of credit or other
assets that includes loans by a non-United States office of such
Lender or any Affiliate of such Lender to United States
residents), and as a result the cost to such Lender or any
Affiliate of such Lender (or its eurodollar lending office) of
making or maintaining its Eurodollar Loans is increased, then
such Lender may require the Borrowers to pay, contemporaneously
with each payment of interest on the Eurodollar Loans,
additional interest on the related Eurodollar Loans of such
Lender at a rate per annum up to but not exceeding the excess of
(i) (A) the applicable Eurodollar Rate divided by (B) one minus
the Reserve Requirement over (ii) the applicable Eurodollar
Rate. Any Lender wishing to require payment of such additional
interest shall so notify the Borrowers, the Agent and the other
Lenders and provide to the Borrowers and the Agent, along with
such notice, an officer's certificate setting forth the amount
to which such Lender is then entitled under this Section 2.14
(which shall be consistent with such Lender's good faith
estimate of the level at which the related reserves are
maintained by it). Each such certificate provided to the
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Borrowers under this Section 2.14 shall be conclusive and
binding absent manifest error.
2. Continuation and Conversion of Loans. Subject to
Section 2.03 and Section 2.10 hereof, the Borrowers shall have
the right, at any time, (i) on three (3) Business Days' prior
irrevocable written or telecopy notice to the Agent, to continue
any Eurodollar Loan or any portion thereof into a subsequent
Interest Period or to convert any Prime Loan or portion thereof
into a Eurodollar Loan, or (ii) on one (1) Business Day's prior
irrevocable written or telecopy notice to the Agent, to convert
any Eurodollar Loan or portion thereof into a Prime Loan,
subject to the following:
no Event of Default or Potential Default
shall have occurred and be continuing at the time of
such continuation or conversion;
in the case of a continuation or conversion
of less than all Loans, the aggregate principal
amount of any Eurodollar Loan continued or converted
shall not be less than $2,000,000 and in multiples of
$500,000 if in excess thereof;
each conversion shall be effected by the
Lenders by applying the proceeds of the new Loan to
the Loan (or portion thereof) being converted;
accrued interest on the Loan (or portion thereof)
being converted shall be paid by the Borrowers at the
time of conversion;
if the new Loan made in respect of a
conversion shall be a Eurodollar Loan, the first
Interest Period with respect thereto shall commence
on the date of conversion;
no portion of any Loan shall be continued
or converted to a Eurodollar Loan with an Interest
Period ending later than the Termination Date; and
if any conversion of a Eurodollar Loan
shall be effected on a day other than the last day of
an Interest Period, the Borrowers shall jointly and
severally reimburse each Lender on demand for any
loss incurred or to be incurred by it in the
reemployment of the funds released by such conversion
as provided in Section 2.12 hereof.
In the event that the Borrowers shall not give notice to
continue any Eurodollar Loan into a subsequent Interest Period,
such Loan (unless repaid) shall automatically become a Prime
Loan at the expiration of the then current Interest Period.
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2. Taxes.
All payments made by the Borrowers under this
Agreement and the Notes shall be made free and clear of, and
without deduction 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 net income taxes and
franchise taxes imposed in lieu of net income taxes imposed on
the Agent or any Lender as a result of a present or former
connection between the jurisdiction of the Governmental
Authority imposing such tax and the Agent or such Lender (except
a connection arising solely from the Agent or such Lender having
executed, delivered or performed its obligations or received a
payment under, or enforced, this Agreement or the Notes)) (all
such non-excluded taxes, levies, imposts, duties, charges, fees,
deductions and withholdings being hereinafter called "Taxes").
If any Taxes are required to be withheld from any amounts
payable to the Agent or any Lender hereunder or under the Notes,
the amounts so payable to the Agent or such Lender shall be
increased to the extent necessary to yield to the Agent or such
Lender (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 Notes. The Borrower shall
not, however, be required to pay any amount pursuant to the
preceding sentence to any Lender that is not organized under the
laws of the United States of America or any state thereof or the
Agent, if it is not organized under the laws of the United
States of America or any state thereof, if such Lender or Agent
fails to comply with the requirements of Section 2.16(b).
Whenever any Taxes are payable by the Borrowers, as promptly as
possible thereafter the Borrowers shall send to the Agent for
its own account or for the account of such Lender, as the case
may be, a certified copy of an original official receipt
received by the Borrowers showing payment thereof. If the
Borrowers fail to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Agent the required
receipts or other required documentary evidence, the Borrowers
shall indemnify the Agent and the Lenders for any incremental
taxes, interest or penalties that may become payable by the
Agent or any Lender as a result of any such failure.
Each Lender that is not incorporated under
the laws of the United States of America or a state thereof
shall:
deliver to the Borrowers and the Agent
(A) two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224 or successor applicable form, as the
case may be, and (B) an Internal Revenue Service Form W-8 or W-9
or successor applicable form;
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deliver to the Borrowers and the Agent
two further copies of such forms or other appropriate
certification of such forms on or before the date that any such
form expires or becomes obsolete and after the occurrence of any
event requiring a change in the most recent form delivered to
the Borrowers;
obtain such extensions of the time for
filing and shall renew such forms and certifications thereof as
may reasonably be requested by the Borrower or the Agent, unless
an event (including, without limitation, any change in treaty,
law or regulation) has occurred prior to the date on which any
such delivery otherwise would be required which renders all such
forms inapplicable or which would prevent such Lender from duly
completing and delivering any such form and such Lender so
advises the borrower and the Agent. Each such Lender shall
certify (i) in the case of a Form 1001 or 4224, that such Lender
is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income
taxes and (ii) in the case of a Form W-8 or W-9, that such
Lender is entitled to an exemption from United States backup
withholding tax.
ARTICLE
LETTERS OF CREDIT
3.0 Letters of Credit.
General. In order to assist the Borrowers
in establishing or opening documentary and standby letters of
credit, which shall not have expiration dates that exceed one
year from the date of issuance (the "Letters of Credit") with
the Letter of Credit Issuer, the Borrowers have jointly
requested CIT to join in the applications for such Letters of
Credit, and/or guarantee payment or performance of such Letters
of Credit and any drafts or acceptances thereunder through the
issuance of a Letter of Credit Guaranty, thereby lending CIT's
credit to the Borrowers, and CIT has agreed to do so. These
arrangements shall be handled by CIT subject to the terms and
conditions set forth below. Except as otherwise provided in
paragraph (ix) of this Section 3.01, CIT shall have no
obligation to arrange for the issuance of Letters of Credit on
or after the Termination Date or which, when added to the
aggregate amount of all outstanding and contemporaneous Loans
and the Letter of Credit Exposure at such time, would cause the
amount of all Loans and the Letter of Credit Exposure at any
time to exceed the Current Commitment at such time. In
addition, CIT shall not be required to be the issuer of any
Letter of Credit. The Letter of Credit Issuer shall be a bank
mutually acceptable to CIT and the Borrowers. One of the
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Borrowers will be the account party for any application for a
Letter of Credit, which shall be substantially in the form of
Exhibit C hereto or such other form as may from time to time be
approved by the Letter of Credit Issuer and CIT, and shall be
duly completed in a manner acceptable to CIT, together with such
other certificates, documents and other papers and information
as the Letter of Credit Issuer or CIT may request (the "Letter
of Credit Application").
During the period when the Interim
Bankruptcy Court Order is in effect, the aggregate Letter of
Credit Exposure shall not exceed $40 million, of which not more
than $5 million shall be Letter of Credit Exposure with respect
to standby Letters of Credit. During the period when the Final
Bankruptcy Court Order is in effect, the aggregate Letter of
Credit Exposure shall not exceed $90 million, of which not more
than $10 million shall be Letter of Credit Exposure with respect
to standby Letters of Credit. In addition, changes or
modifications of the Letters of Credit by either Borrower and/or
the Letter of Credit Issuer of the terms and conditions thereof
shall in all respects be subject to the prior approval of CIT in
the exercise of its reasonable discretion, provided, however,
that (x) the expiry date of all Letters of Credit shall be no
later than 15 days prior to the Termination Date unless on or
prior to 15 days prior to the Termination Date such Letters of
Credit shall be cash collateralized in an amount equal to at
least 105% of the Stated Amount of such Letters of Credit, (y)
the Letters of Credit and all documentation in connection
therewith shall be in form and substance satisfactory to CIT and
the Letter of Credit Issuer, and (z) Letters of Credit shall not
be issued for the benefit of domestic trade creditors in
connection with the purchase of merchandise or goods by either
Borrower.
The Agent shall have the right,
without notice to the Borrowers, to charge the Borrowers'
Account with the amount of any and all indebtedness, liability
or obligation of any kind (including indemnification for
breakage costs, capital adequacy and reserve requirement
charges) incurred by the Agent, CIT or the Lenders under the
Letter of Credit Guaranty at the earlier of (x) payment by CIT
or the Lenders under the Letter of Credit Guaranty, or (y) with
respect to any Letter of Credit which is not cash collateralized
as provided in this Agreement, the occurrence of an Event of
Default. Any amount charged to the Borrowers' Account shall be
deemed a Loan hereunder made by the Lenders to the Borrowers,
funded by the Agent on behalf of the Lenders and subject to
subsections 2.03(e) and (f). Any charges, fees, commissions,
costs and expenses charged to CIT for the account of either
Borrower by the Letter of Credit Issuer in connection with or
arising out of Letters of Credit issued pursuant to this
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Agreement or out of transactions relating thereto will be
charged to the Borrowers' Account in full when charged to or
paid by CIT and any such charges by CIT to the Borrowers'
Account shall be conclusive on the Borrowers absent manifest
error. Each of the Lenders and the Borrowers agree that the
Agent shall have the right to make such charges regardless of
whether any Event of Default or Potential Default shall have
occurred and be continuing or whether any of the conditions
precedent in Section 7.02 have been satisfied.
The Borrowers agree, jointly and
severally to unconditionally indemnify the Agent, CIT and each
Lender and to hold the Agent, CIT and each Lender harmless from
any and all loss, claim or liability incurred by the Agent, CIT
or any such Lender arising from any transactions or occurrences
relating to Letters of Credit established or opened for either
Borrower's account and any drafts or acceptances thereunder, and
all Obligations thereunder, including any such loss or claim due
to any action taken by the Letter of Credit Issuer, other than
for any such loss, claim or liability arising out of the gross
negligence or willful misconduct of the Agent, CIT or any Lender
as determined by a final judgment of a court of competent
jurisdiction. The Borrowers further agree jointly and severally
to hold the Agent, CIT and each Lender harmless from any errors
or omission, negligence or misconduct by the Letter of Credit
Issuer. The Borrowers' unconditional joint and several
obligation to the Agent, CIT and each Lender hereunder shall not
be modified or diminished for any reason or in any manner
whatsoever, other than as a result of the Agent's, CIT's or such
Lender's gross negligence or willful misconduct as determined by
a final judgment of a court of competent jurisdiction. The
Borrowers agree that any charges incurred by CIT for either
Borrower's account by the Letter of Credit Issuer shall be
conclusive on the Borrowers absent manifest error and may be
charged to the Borrowers' Account.
None of the Agent, CIT, the Letter of
Credit Issuer or any of the Lenders shall be responsible for the
existence, character, quality, quantity, condition, packing,
value or delivery of the goods purporting to be represented by
any documents; any difference or variation in the character,
quality, quantity, condition, packing, value or delivery of the
goods from that expressed in the documents; the validity,
sufficiency or genuineness of any documents or of any
endorsements thereof even if such documents should in fact prove
to be in any or all respects invalid, insufficient, fraudulent
or forged; the time, place, manner or order in which shipment is
made; partial or incomplete shipment, or failure or omission to
ship any or all of the goods referred to in the Letters of
Credit or documents; any deviation from instructions; delay,
default, or fraud by the shipper and/or anyone else in
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connection with any such goods or the shipping thereof; or any
breach of contract between the shipper or vendors and either
Borrower. Furthermore, without being limited by the foregoing,
none of the Agent, CIT, the Letter of Credit Issuer or any of
the Lenders shall be responsible for any act or omission with
respect to or in connection with any goods covered by Letters of
Credit.
The Borrowers agree that any action
taken by the Agent, CIT or any Lender, if taken in good faith,
and any action taken by the Letter of Credit Issuer, under or in
connection with the Letters of Credit, the guarantees, the
drafts or acceptances, or the goods purported to be represented
by any documents, shall be binding on the Borrowers (with
respect to the Letter of Credit Issuer, the Agent, CIT and the
Lenders) and shall not put the Agent, CIT or the Lenders in any
resulting liability to either Borrower. In furtherance thereof,
CIT shall have the full right and authority to clear and resolve
any questions of non-compliance of documents; to give any
instructions as to acceptance or rejection of any documents or
goods; to execute any and all steamship or airways guaranties
(and applications therefore), indemnities or delivery orders; to
grant any extensions of the maturity of, time of payment for, or
time of presentation of, any drafts, acceptances, or documents;
and to agree to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms or
conditions of any of the applications, Letters of Credit, drafts
or acceptances; all in CIT's sole name, and the Letter of Credit
Issuer shall be entitled to comply with and honor any and all
such documents or instruments executed by or received solely
from CIT, all without any notice to or any consent from either
Borrower.
Without CIT's express consent and
endorsement in writing, each Borrower agrees: (x) not to
execute any applications for steamship or airway guaranties,
indemnities or delivery orders; to grant any extensions of the
maturity of, time of payment for, or time of presentation of,
any drafts, acceptances or documents; or to agree to any
amendments, renewals, extensions, modifications, changes or
cancellations of any of the terms or conditions of any of the
applications, Letters of Credit, drafts or acceptances; and (y)
after the occurrence of an Event of Default which is not cured
within any applicable grace period, if any, or waived by the
Agent, not to (A) clear and resolve any questions of
non-compliance of documents, or (B) give any instructions as to
acceptances or rejection of any documents or goods.
Each Borrower agrees that any
necessary and material import, export or other license or
certificates for the import or handling of Inventory will have
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been promptly procured; all foreign and domestic material
governmental laws and regulations in regard to the shipment and
importation of Inventory or the financing thereof will have been
promptly and fully complied with, in each case, where the
failure to obtain such certificate or license or the failure to
comply with such laws would result in a Material Adverse Effect;
and any certificates in that regard that CIT may at any time
reasonably request will be promptly furnished. In this
connection, each Borrower jointly and severally warrants and
represents that all shipments made under any such Letters of
Credit are in accordance with the laws and regulations of the
countries in which the shipments originate and terminate, and
are not prohibited by any such laws and regulations. As between
the Borrowers, on the one hand, and the Agent, CIT, the Lenders
and the Letter of Credit Issuer, on the other hand, the
Borrowers jointly and severally assume all risk, liability and
responsibility for, and jointly and severally agree to pay and
discharge, all present and future local, state, federal or
foreign taxes, duties, or levies. As between the Borrowers, on
the one hand, and the Agent, CIT, the Lenders and the Letter of
Credit Issuer, on the other hand, any embargo, restriction,
laws, customs or regulations of any country, state, city, or
other political subdivision, where such Inventory is or may be
located, or wherein payments are to be made, or wherein drafts
may be drawn, negotiated, accepted, or paid, shall be solely the
Borrowers' risk, liability and responsibility.
Upon any payments made to the Letter
of Credit Issuer under the Letter of Credit Guaranty, CIT or the
Lenders, as the case may be, shall, without prejudice to its
rights under this Agreement (including that such unreimbursed
amounts shall constitute Loans hereunder), acquire by
subrogation, any rights, remedies, duties or obligations granted
or undertaken by either Borrower to the Letter of Credit Issuer
in any application for Letters of Credit, any standing agreement
relating to Letters of Credit or otherwise, all of which shall
be deemed to have been granted to the Agent and apply in all
respects to the Agent and shall be in addition to any rights,
remedies, duties or obligations contained herein.
On or prior to the date on which any
documentary Letter of Credit is issued by the Letter of Credit
Issuer for the account of either Borrower (but not after the
issuance of any such Letter of Credit), such Borrower may
provide cash collateral for the Reimbursement Obligations with
respect to such documentary Letter of Credit in an amount equal
to 105% of the Stated Amount thereof by depositing such cash
collateral into the Letter of Credit Cash Collateral Account.
Such Borrower may request that all (but not less than all) of
the cash collateral provided for a Letter of Credit be returned
to such Borrower, provided, that, both before and immediately
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after giving effect to the release of such cash collateral to
such Borrower (A) no Event of Default or Potential Default shall
have occurred and be continuing, (B) the aggregate amount of all
outstanding and contemporaneous Loans and the Letter of Credit
Exposure does not exceed the Borrowing Base, and (C) the expiry
date of such documentary Letter of Credit will be no later than
15 days prior to the Termination Date.
In the event that the Borrowers are
required to provide cash collateral for any Letter of Credit,
the Borrower shall deposit such cash collateral in the Letter of
Credit Cash Collateral Account, which cash collateral shall be
held in the Letter of Credit Cash Collateral Account until all
Obligations have been paid in full in cash.
Request for Issuance. The Borrowers may
from time to time, upon notice not later than 12:00 noon, New
York City time, at least three Business Days in advance, request
CIT to assist either Borrower in establishing or opening a
Letter of Credit by delivering to the Agent, with a copy to the
Letter of Credit Issuer, a Letter of Credit Application,
together with any necessary related documents. CIT shall not
provide support, pursuant to the Letter of Credit Guaranty, if
the Agent shall have received written notice from the Majority
Lenders on the Business Day immediately preceding the proposed
issuance day for such Letter of Credit that one or more of the
conditions precedent in Section 7.02 will not have been
satisfied on such date, and neither CIT nor the Agent shall
otherwise be required to determine that, or take notice whether,
the conditions precedent set forth in Section 7.02 have been
satisfied.
3.0 Participations.
Purchase of Participations. Immediately upon
the issuance by the Letter of Credit Issuer of any Letter of
Credit in accordance with the procedures set forth in Section
3.01, each Lender (other than CIT) shall be deemed to have
irrevocably and unconditionally purchased and received from CIT,
without recourse or warranty, an undivided interest and
participation, to the extent of such Lender's Pro Rata Share, in
all obligations of CIT in such Letter of Credit (including,
without limitation, all Reimbursement Obligations of the
Borrowers with respect thereto pursuant to the Letter of Credit
Guaranty or otherwise).
Sharing of Letter of Credit Payments. In
the event that CIT makes any payment in respect of the Letter of
Credit Guaranty and the Borrowers shall not have repaid such
amount to the Agent for the account of CIT, the Agent shall
charge the Borrowers' Account in the amount of the Reimbursement
Obligation, in accordance with Section 3.01(a)(ii).
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Obligations Irrevocable. The obligations
of a Lender to make payments to the Agent for the account of the
Agent or CIT with respect to a Letter of Credit shall be
irrevocable, not subject to any qualification or exception
whatsoever and shall be made in accordance with, but not subject
to, the terms and conditions of this Agreement under all
circumstances, including, without limitation, any of the
following circumstances:
any lack of validity or enforceability
of this Agreement or any of the other Related Documents;
the existence of any claim, setoff,
defense or other right which either Borrower may have at any
time against a beneficiary named in a Letter of Credit or any
transferee of any Letter of Credit (or any Person for whom any
such transferee may be acting), the Agent, Letter of Credit
Issuer, any Lender, or any other Person, whether in connection
with this Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including any
underlying transactions between either Borrower or any other
party and the beneficiary named in any Letter of Credit);
any draft, certificate or any other
document presented under the Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect;
the surrender or impairment of any
security for the performance or observance of any of the terms
of any of the Related Documents;
any failure by the Agent to provide
any notices required pursuant to this Agreement relating to
Letters of Credit; or
the occurrence of any Event of Default
or Potential Event of Default.
ARTICLE
BORROWING BASE
4.0 Condition of Lending and Assisting in
Establishing or Opening Letters of Credit. CIT shall have no
obligation to make a Loan or assist in establishing or opening a
Letter of Credit to the extent that the aggregate unpaid
principal amount of the Loans plus the Letter of Credit Exposure
exceeds, or after giving effect to a requested Loan or Letter of
Credit would exceed, the Current Commitment at such time.
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4.0 Mandatory Prepayment. Concurrently with the
delivery of any Borrowing Base Certificate, the Borrowers shall
give notice to the Agent of any mandatory prepayment pursuant to
Section 2.04(b), which notice shall specify a prepayment date no
later than the earlier of the date on which such Borrowing Base
Certificate is given and the date on which such Borrowing Base
Certificate is required to be provided to the Lenders.
4.0 Rights and Obligations Unconditional. Without
limitation of any other provision of this Agreement, the rights
of the Agent, CIT and the Lenders and the joint and several
obligations of the Borrowers under this Article IV are absolute
and unconditional, and the Agent, CIT and the Lenders shall not
be deemed to have waived the condition set forth in Section 4.01
hereof or their right to payment in accordance with Section 4.02
hereof in any circumstance whatever, including but not limited
to circumstances wherein, the Agent or the Lenders (knowingly or
otherwise) make an advance hereunder in excess of the Borrowing
Base.
4.0 Borrowing Base Certificate.
By 12:00 noon, New York City time (i) seven
(7) days after the Friday of each week and (ii) thirty days
after the end of each fiscal month (and on any other date on
which the Agent reasonably requests), the Borrowers shall
furnish to the Agent a certificate ("Borrowing Base
Certificate") substantially in the form attached hereto as
Exhibit D, executed by a Designated Financial Officer, setting
forth the Borrowing Base and the other information required
therein as of the Borrowers' close of business on the Saturday
of the preceding week (in the case of the weekly Borrowing Base
Certificates), or as of Borrowers' close of business on the last
day of each fiscal month (in the case of subsequent monthly
Borrowing Base Certificates), in each case together with such
other information with respect to the Inventory of the Borrowers
as the Agent may reasonably request. The weekly Borrowing Base
Certificate may be prepared based upon a good faith estimate by
the Borrowers of their Inventory.
In the event of any dispute about the
eligibility of any asset for inclusion in the Borrowing Base or
the valuation thereof, the Agent's good faith judgment shall
control.
The Borrowing Base set forth in a Borrowing
Base Certificate shall be effective from and including the date
such Borrowing Base Certificate is duly received by the Agent to
but not including the date on which a subsequent Borrowing Base
Certificate is duly received by the Agent, unless the Agent
disputes the eligibility of any asset for inclusion in the
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Borrowing Base or the valuation thereof by notice of such
dispute to the Borrowers.
Each Borrowing Base Certificate shall be
accompanied by backup schedules showing the derivation thereof
and containing such detail and such other and further
information as the Agent may reasonably request from time to
time.
4.0 General Provisions. Notwithstanding anything to
the contrary in this Article IV, in no event shall any single
element of value or asset be counted twice in determining the
Borrowing Base.
ARTICLE
SECURITY; ADMINISTRATIVE PRIORITY
5.0 Grant of Lien and Security Interest.
To secure the joint and several Obligations
of the Borrowers to the Agent, CIT and the Lenders under this
Agreement and the Related Documents, each Borrower hereby
assigns, pledges, transfers, grants, bargains and sells,
mortgages, conveys, aliens, releases, confirms and sets over
unto the Agent for the ratable benefit of each of the Lenders
and hereby grants and creates in favor of the Agent for the
ratable benefit of each of the Lenders a security interest in
and to, all right, title and interest of such Borrower in, to or
under the Letter of Credit Cash Collateral Account, all funds
held therein from time to time and all certificates and
instruments, if any, from time to time representing or
evidencing the same and all proceeds and profits of any of the
foregoing (all property of the Borrowers subject to the security
interest referred to in this Section 5.01 being hereinafter
referred to as the "Collateral").
The lien and security interest in favor of
the Agent referred to in Section 5.01(a) hereof shall be a valid
and perfected lien and security interest, prior to all other
liens and interests hereafter arising, except for Carve-Out
Expenses having a priority over the Obligations to the extent
set forth in the definition of Agreed Administrative Expense
Priorities. Such lien and security interest and its priority
shall remain in effect until the Revolving Credit Commitments
have been terminated and all Obligations have been repaid in
full in cash.
5.0 Collections and Cash Concentration Account
Arrangements. All cash of the Borrowers and the Guarantor, all
proceeds from the sale of the Inventory of the Borrowers and all
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proceeds of Collateral shall be deposited in Depository Account
or Collection Accounts established by the Borrowers and the
Guarantor in the ordinary course of business consistent with
past practice. Pursuant to the customary operating procedures
of the Borrowers and the Guarantor and the financial
institutions maintaining the Depository Accounts, all funds
contained in the Depository Accounts shall be transferred
promptly to the Collection Accounts or the Cash Concentration
Account. Pursuant to agreements ("Collection Account
Agreements") in form and substance reasonably satisfactory to
the Agent, or other similar arrangements, all funds contained in
the Collection Account shall be transferred promptly into the
Cash Concentration Account. Any collection by the Borrowers and
the Guarantor of cash and proceeds of the sale of the Inventory
of the Borrowers shall be made for the Agent, and the Borrowers
shall receive all payments thereon as the Agent's trustee, and
immediately transfer all such payments into the Cash
Concentration Account, any Collection Account or any Depository
Account in their original form. With respect to the Cash
Concentration Account, the Borrowers shall, in accordance with
Section 8.08, deliver to the Agent an agreement, duly executed
by the Borrowers and the Cash Concentration Account Bank in form
and substance reasonably satisfactory to the Agent (the
"Restricted Account Agreement"), authorizing and directing the
Cash Concentration Account Bank to remit all amounts deposited
in the Cash Concentration Account to the Agent or as the Agent
may direct. After the occurrence and during the continuance of
an Event of Default, the Agent may instruct the Cash
Concentration Account Bank to remit all amounts deposited in the
Cash Concentration Account to the Agent or as the Agent shall
direct. In the absence of an Event of Default, the Agent shall
direct the Cash Concentration Account Bank to make all cash in
the Cash Concentration Account available to the Borrowers for
general corporate purposes in accordance with Section 2.09.
5.0 Administrative Priority. The Borrowers and the
Guarantors hereby agree that the Obligations of the Borrowers
and the Guarantor shall constitute allowed administrative
expenses in the Chapter 11 Cases having priority over all
administrative expenses and unsecured claims against either
Borrower or the Guarantor in the Chapter 11 Cases or in any
superseding chapter 7 case for either Borrower or the Guarantor,
now existing or hereafter arising, of any kind or nature
whatsoever, including without limitation, all administrative
expenses of the kind specified in Sections 503(b) and 507(b) of
the Bankruptcy Code, subject, as to priority, only to allowed
administrative expenses having priority over the Obligations to
the extent set forth in the definition of Agreed Administrative
Expense Priorities.
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5.0 Grants, Rights and Remedies Cumulative. The
lien and security interest granted pursuant to Section 5.01
hereof and administrative priority granted pursuant to Section
5.03 hereof may be independently granted by the Related
Documents and by other Related Documents as may be hereafter
entered into. This Agreement, the Interim Bankruptcy Court
Order, the Final Bankruptcy Court Order and such other Related
Documents supplement each other, and the grants, priorities,
rights and remedies of the Lenders, CIT and the Agent hereunder
and thereunder are cumulative.
5.0 No Filings Required. The lien and security
interest referred to in Section 5.01 hereof and in the Related
Documents shall be deemed valid and perfected by entry of the
Interim Bankruptcy Court Order and the Final Bankruptcy Court
Order, as the case may be, which entry of the Interim Bankruptcy
Court Order shall have occurred on or before the date of the
initial Credit Extension hereunder. The Lenders, CIT and the
Agent shall not be required to file any financing statements,
notices of lien or similar instruments in any jurisdiction or
filing office, or to take any other action in order to validate
or perfect the lien and security interest granted by or pursuant
to this Agreement, the Interim Bankruptcy Court Order, the Final
Bankruptcy Order or any other Related Document.
5.0 Survival. The Lien, lien priority,
administrative priorities and other rights and remedies granted
to the Lenders, CIT and the Agent pursuant to this Agreement,
the Interim Bankruptcy Court Order or the Final Bankruptcy Court
Order and the other Related Documents (specifically including
but not limited to the existence, perfection and priority of the
lien and security interest provided herein and therein, and the
administrative priority provided herein and therein) shall not
be modified, altered or impaired in any manner including,
without limitation, by any other financing or extension of
credit or incurrence of debt by either Borrower or the Guarantor
(pursuant to Section 364 of the Bankruptcy Code or otherwise),
or by any dismissal or conversion of the Chapter 11 Cases, or by
any other act or omission whatever. Without limitation,
notwithstanding any such order, financing, extension,
incurrence, dismissal, conversion, act or omission:
except for the Carve-Out Expenses having
priority over the Obligations to the extent set forth in
the definition of Agreed Administrative Expense
Priorities, no costs or expenses of administration which
have been or may be incurred in the Chapter 11 Cases or
any conversion of the same to a superseding chapter 7 case
or in any other proceedings related thereto or to the
Chapter 11 Cases, and no priority claims, are or will be
prior to or on a parity with any claim of the Lenders and
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the Agent against either Borrower or the Guarantor in
respect of any Obligation,
the Lien in favor of the Lenders and the
Agent set forth in Section 5.01 hereof and in the Related
Documents shall constitute a valid and perfected first
priority Lien, subject only to the Carve-Out Expenses
having a priority over the Obligations to the extent set
forth in the definition of Agreed Administrative Expense
Priorities, to which such Lien may be subordinate and
junior, and shall be prior to all other liens and
interests, now existing or hereafter arising, in favor of
any other creditor or any other Person whatever, and
the Lien in favor of the Lenders and the
Agent set forth in Section 5.01 hereof and in the Related
Documents shall continue valid and perfected without the
necessity that the Agent file financing statements or
otherwise perfect its Lien under applicable nonbankruptcy
law.
ARTICLE
REPRESENTATIONS AND WARRANTIES
Each of the Borrowers and the Guarantor hereby
represents and warrants to the Agent and the Lenders as follows:
6.0 Organization and Qualification. Each of the
Borrowers and the Guarantor is a corporation duly organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation. Such Borrower is duly qualified
to do business as a foreign corporation and is in good standing
in all jurisdictions in which failure to qualify would have a
Material Adverse Effect. Schedule 6.01 hereto correctly sets
forth as of the date hereof the jurisdictions in which the
Borrowers and the Guarantor are qualified to do business.
6.0 Authority and Authorization. Each of the
Borrowers and the Guarantor and the has the corporate power and
authority to execute and deliver this Agreement and the other
Related Documents to which it is or is to be a party. As of the
Entry Date, each of the Borrowers and the Guarantor will have
the power and authority to perform its obligations hereunder and
thereunder, and all such action has or will have been duly and
validly authorized by all necessary corporate and judicial
action during the period between the Entry Date and the date of
the Final Bankruptcy Court Order.
6.0 Execution and Binding Effect. As of the Entry
Date, this Agreement and each of the other Related Documents
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required to be executed and delivered on or prior to the date
hereof will have been duly and validly executed and delivered by
each of the Borrowers and the Guarantor, and, constitute legal,
valid and binding obligations of the Borrowers and the
Guarantor, enforceable in accordance with the terms hereof or
thereof, except as enforceability thereof may be limited by any
applicable bankruptcy, reorganization, insolvency or other laws
affecting creditors' rights generally or by general principles
of equity, regardless of whether such enforceability is
considered in equity or at law. Each Related Document that is
not required to be executed and delivered by the Borrowers or
the Guarantor prior to the Entry Date will, when executed and
delivered, be validly executed and delivered by each of the
Borrowers and the Guarantor, and will constitute legal, valid
and binding obligations of the Borrowers and the Guarantors,
enforceable in accordance with the terms thereof, except as
enforceability thereof may be limited by any applicable
bankruptcy, reorganization, insolvency or other laws affecting
creditors' rights generally or by general principles of equity,
regardless of whether such enforceability is considered in
equity or at law.
6.0 Authorizations and Filings. No authorization,
consent, approval, license, exemption or other action by, and no
registration, qualification, designation, declaration or filing
with, any Governmental Authority is or will be necessary in
connection with execution and delivery by the Borrowers and the
Guarantor, of this Agreement or the other Related Documents,
consummation of the transactions herein or therein contemplated,
performance of or compliance with the terms and conditions
hereof or thereof or to ensure the legality, validity,
enforceability and admissibility in evidence hereof or thereof,
except for the Interim Bankruptcy Court Order and the Final
Bankruptcy Court Order.
6.0 Financial Statements. Historical Statements.
MGRE has heretofore furnished to the Agent a consolidated
balance sheet of MGRE and its Consolidated Subsidiaries as of
January 30, 1993 and the related consolidated statements of
operations and shareholders' equity and cash flows for the
fiscal year then ended, as examined and reported on by KPMG Peat
Marwick, independent certified public accountants, and
consolidated financial statements of MGRE and its Consolidated
Subsidiaries for and as of the end of the three (3) and nine (9)
month periods ending October 31, 1993 as certified by a
Designated Financial Officer. Such financial statements
(including the notes thereto) present fairly, in all material
respects, the financial condition of MGRE and its Consolidated
Subsidiaries as of the end of such fiscal year and as of the end
of such quarter and the results of their operations and the cash
flows for the fiscal year and months then ended, all in
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conformity with GAAP applied on a basis consistent with that of
the preceding fiscal year, subject (in the case of the interim
financial statements) to year-end adjustments.
Projections. The Borrowers and the
Guarantor have heretofore furnished to the Agent projections for
the period from November 1, 1993 through February 3, 1996, and
such projections have been prepared in accordance with the
standard set forth in the second sentence of Section 6.16 hereof.
6.0 No Event of Default. No event has occurred and
is continuing and no condition exists which constitutes an Event
of Default or Potential Default. Neither of the Borrowers nor
the Guarantor is in violation of any term of its charter or
by-laws.
6.0 Litigation. Except as set forth in the
financial statements referred to in Section 6.05 hereof and on
Schedule 6.07 hereof (which has previously been delivered to the
Agent), there is not, to the best knowledge of the Borrowers and
the Guarantor, any pending proceeding or any proceeding
threatened in writing by or before any Governmental Authority,
arbitrator or grand jury against or affecting either Borrowers,
the Guarantor or any ERISA Affiliate, with respect to any
Environmental Law or ERISA law, which, if adversely decided, can
reasonably be expected to have a Material Adverse Effect.
6.0 Absence of Conflicts. Neither the execution and
delivery of this Agreement or the other Related Documents to
which either Borrower or the Guarantor is a party nor the
consummation of the transactions herein or therein contemplated
nor the performance of or compliance with the terms and
conditions hereof or thereof will (a) violate any Law, (b)
conflict with or result in a breach of or default under its
charter or by-laws, or any material agreement or instrument to
which either Borrower or the Guarantor is a party or by which it
or any of its properties (now owned or hereafter acquired) may
be subject or bound (other than conflicts, breaches and defaults
the enforcement of which will be stayed by virtue of the filing
of the Chapter 11 Cases) or (c) result in the creation or
imposition of any Lien upon any property (now owned or hereafter
acquired) of either Borrower or the Guarantor.
6.0 ERISA. Schedule 6.09 correctly sets forth a
complete list of all Benefit Plans and Multiemployer Plans.
Neither of the Borrowers, the Guarantor nor any ERISA Affiliate
nor any fiduciary of any Plan which is not a Multiemployer Plan
(i) has engaged in a nonexempt prohibited transaction described
in Sections 406 of ERISA or 4975 of the Code or (ii) has taken
any action which would constitute or result in a Termination
Event which in each case would have a Material Adverse Effect on
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or before the Termination Date. Neither of the Borrowers, the
Guarantor nor any ERISA Affiliate has made a complete or partial
withdrawal under Section 4203 or 4205 of ERISA from a
Multiemployer Plan in either case which would have a Material
Adverse Effect on or before the Termination Date. Except as
required by Section 4980B of the Code, no welfare benefit plan
(as defined in Section 3(1) of ERISA) provides benefits or
coverage beyond an employee's termination of employment other
than severance or plans that would not have a Material Adverse
Effect on or before the Termination Date. The contributions
required under Section 412 of the Code for each Benefit Plan
have been made when due and no event has occurred which could
result in the imposition of a Lien under Section 412(n) of the
Code. Neither of the Borrowers, the Guarantor nor any ERISA
Affiliate has any outstanding waivers or variances from the
minimum funding requirements under Section 412 of the Code with
respect to any Benefit Plan. For purposes of this Section,
representations with respect to an ERISA Affiliate prior to the
time that such entity became an ERISA Affiliate shall be based
on the best knowledge of the Borrowers and the Guarantor.
6. Taxes. All tax returns required to be filed by
the Borrowers and the Guarantor have been properly prepared,
executed and filed. All taxes, assessments, fees and other
governmental charges upon the Borrowers and the Guarantor or
upon any of their properties, income, sales or franchises which
are shown thereon as due and payable have been paid, except as
set forth in Schedule 6.10. The reserves and provisions for
taxes, if any, on the books of the Borrowers and the Guarantor
are adequate for all open years and for its current fiscal
period. Neither of the Borrowers nor the Guarantor knows of any
proposed additional assessment or basis for any material
assessment for additional taxes (whether or not reserved
against). The federal income tax liabilities of the Borrowers
and the Guarantor have been finally determined by the Internal
Revenue Service, or the time for audit has expired, for all
fiscal periods ending on or prior to January 31, 1991, and all
such liabilities (including all deficiencies assessed following
audit) have been satisfied.
6. Financial Accounting Practices, etc.
The Borrowers and the Guarantor each make
and keep books, records and accounts which, in reasonable
detail, accurately and fairly reflect their transactions and
dispositions of their respective assets and each maintains a
system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in
accordance with management's general or specific authorization,
(ii) transactions are recorded as necessary (A) to permit
preparation of financial statements in conformity with GAAP
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except as previously disclosed to the Agent and (B) to maintain
accountability for assets, and (iii) the recorded accountability
for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.
The Borrowers maintain a system of internal
procedures and controls sufficient to provide reasonable
assurance that the information required to be set forth in each
Borrowing Base Certificate (including, without limitation,
information relating to the identification of assets which are
Inventory as provided herein and the valuation thereof) is
accurate.
6. Power To Carry On Business. Each of the
Borrowers and the Guarantor has all requisite power and
authority to own and operate its properties and to carry on its
business as now conducted and as presently planned to be
conducted (subject to Bankruptcy Court approval with respect to
transactions outside the ordinary course of business).
6. No Material Adverse Change. Between December 15,
1993 and the date hereof there has not occurred any event which
may be reasonably expected to have a Material Adverse Effect,
other than events that customarily occur as a result of events
leading up to and following the commencement of a proceeding
under Chapter 11 of the Bankruptcy Code.
6. Existing Liens; Capitalized Leases. There are no
Liens on any assets of either Borrower or the Guarantor other
than (a) the Lien created as of the Entry Date in favor of the
Agent hereunder and under the other Related Documents, (b) Liens
with respect to Capitalized Leases, and (c) Permitted Liens. As
of the Entry Date, Capitalized Lease Obligations of the Borrower
and the Guarantors do not exceed $500,000 in the aggregate.
6. Compliance with Laws. Neither of the Borrowers
nor the Guarantor is in violation of or otherwise liable under
any Law (including but not limited to violations pertaining to
the conduct of its business or the use, maintenance or operation
of the real and personal properties owned or possessed by it),
except for violations which in the aggregate do not have a
Material Adverse Effect and violations or any enforcement
actions which will be stayed by virtue of the filing of the
Chapter 11 Cases.
6. Accurate and Complete Disclosure. No
representation or warranty made by either Borrower or the
Guarantor under this Agreement or any other Related Document and
no written statement made by either Borrower or the Guarantor in
any financial statement (furnished pursuant to this Agreement or
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otherwise), certificate, report, exhibit or document furnished
by either Borrower or the Guarantor to the Agent or the Lenders
pursuant to or in connection with this Agreement or any other
Related Document is or was or will be, when delivered, when
taken together with all other information supplied by the
Borrowers and the Guarantor to the Agent or the Lenders, false
or misleading in any material respect (including by omission of
material information necessary to make such representation,
warranty or statement, in light of the circumstances under which
it was made, not misleading). To the extent the Borrowers and
the Guarantor furnish any projections of the financial position
and results of operations of the Borrowers and the Guarantor
for, or as at the end of, certain future periods, such
projections were believed at the time furnished to be
reasonable, have been or will have been prepared on a reasonable
basis and in good faith by the Borrowers and the Guarantor, and
have been or will be based on assumptions believed by the
Borrower and the Guarantors to be reasonable at the time made
and upon the best information then reasonably available to the
Borrowers and the Guarantor. The Borrowers and the Guarantor
have disclosed to the Agent all relevant information which to
the best of its knowledge is reasonably likely to result in a
Material Adverse Effect.
6. Insurance. The Borrowers and the Guarantor
maintain adequate insurance with respect to their properties and
businesses and those of their Subsidiaries. Schedule 6.17
hereto sets forth a list of all insurance currently maintained
by MGRE and its Subsidiaries.
6. Environmental Matters.
MGRE and its Subsidiaries are in compliance
in all material respects with all applicable Environmental Laws;
MGRE and its Subsidiaries have obtained all
material permits, approvals, authorizations and licenses
required by Environmental Laws necessary for their operations,
and all such permits, approvals, authorizations and licenses are
in good standing and MGRE and its Subsidiaries are in material
compliance with all material terms and conditions of such
permits, approvals, authorizations and licenses;
Neither MGRE nor any of its Subsidiaries
nor any of their respective currently owned or leased property
or operations is subject to any outstanding written order from
or agreement with any Governmental Authority or other Person or
is subject to any judicial or docketed administrative proceeding
respecting (i) Environmental Laws, (ii) Remedial Action or (iii)
any Environmental Liabilities and Costs arising from a Release
or threatened Release except for any such order or proceeding
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which would not reasonably be expected to have a Material
Adverse Effect; and
Neither MGRE nor any of its Subsidiaries
has received any written notice or claim to the effect that it
is or is reasonably expected to be liable to any Person as a
result of a Release that can reasonably be expected to have a
Material Adverse Effect.
6. Administrative Priority; Lien Priority.
After the Entry Date, the Obligations of
the Borrowers and the Guarantor will constitute allowed
administrative expenses in the Chapter 11 Cases and any
superseding chapter 7 case for either Borrower or the Guarantor
having priority over all administrative expenses and unsecured
claims against either Borrower or the Guarantor now existing or
hereafter arising, of any kind or nature whatsoever, including
without limitation all administrative expenses of the kind
specified in Sections 503(b) and 507(b) of the Bankruptcy Code,
subject, as to priority, only to Carve-Out Expenses having
priority over the Obligations to the extent set forth in the
definition of Agreed Administrative Expense Priorities.
The Lien on the Collateral shall be a valid
and perfected first priority Lien.
6. Bankruptcy Court Order. The Interim Bankruptcy
Court Order (following the Entry Date) or the Final Bankruptcy
Court Order (following its entry), as the case may be, is in
full force and effect, and has not been reversed, stayed,
modified or amended absent the joinder and consent of the
Majority Lenders and the Borrowers.
6. Use of Proceeds. The Borrowers will use the
proceeds of the Loans and the Letters of Credit, respectively,
in accordance with Section 2.09 hereof.
6. Location of Bank Accounts. Schedule 6.22 hereto
sets forth a complete and accurate list as of the date hereof of
all deposit accounts and investment accounts, including all
Depository Accounts, Collection Accounts and Cash Concentration
Accounts, maintained by the Borrowers and the Guarantor together
with a description thereof (i.e. the bank or institution at
which such deposit account or investment account is maintained
and the account number and the purpose thereof). As of the
Entry Date, all cash maintained in all accounts set forth in
Schedule 6.22 is cash of the Borrowers and the Guarantor and, as
of the date hereof, the aggregate amount of cash in such
accounts is not less than $90 million.
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6. Tradenames. Schedule 6.23 hereto sets forth a
complete and accurate list as of the date hereof of all
tradenames used by the Borrowers and the Guarantor.
ARTICLE
CONDITIONS OF CREDIT EXTENSIONS
7.0 Conditions Precedent to Initial Credit
Extension. The obligation of each Lender to make the initial
Credit Extension hereunder (whether such Credit Extension shall
consist of the making of a Loan or assistance to the Borrowers
in establishing or opening Letters of Credit) is subject to the
satisfaction on or before the date thereof of each of the
following conditions, in addition to the conditions set forth in
Section 7.02:
The Interim Bankruptcy Court Order or the
Final Bankruptcy Court Order, as the case may be, shall
have been entered by the Bankruptcy Court, and the Agent
shall have received a certified copy of the same, and such
order shall be in full force and effect and shall not have
been reversed, stayed, modified or amended.
The Borrowers shall have executed and
delivered to the Agent the Notes in substantially the form
of Exhibit A hereto, which shall be dated the Entry Date.
The Borrowers shall have paid to the Agent
all fees, including fees of counsel to the Agent, when due
and other amounts due and payable to the Agent when due,
including but not limited to amounts due under Section
2.08 and 11.06 hereof. The Borrowers shall have paid to
counsel to CIT all reasonable fees and other client
charges due to such counsel on the date of the initial
Credit Extension.
The Agent shall have received certificates
satisfactory in form and substance to it from the
Borrowers and the Guarantor, signed by its Secretary, an
Assistant Secretary or Treasurer, certifying as to (i)
true copies of the charter documents of each of Borrowers
or the Guarantor, as the case may be, (ii) true copies of
all corporate action taken by the Borrowers or the
Guarantor, as the case may be, relative to the Related
Documents and the transactions contemplated thereby (which
shall designate one or more Designated Financial Officers
and Designated Borrowing Officers), (iii) the true
signatures and incumbency of the Designated Borrowing
Officers and (iv) such other matters as the Agent may
request.
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The Agent shall have received a certified
copy of the initial Borrowing Base Certificate described
in Section 4.04(a) hereof in form and substance reasonably
satisfactory to the Agent.
The Lien in favor of the Agent (on behalf
of the Lenders) with respect to the Collateral shall be a
valid and perfected first priority Lien prior to all other
Liens in the Collateral.
The Borrowers and the Guarantor shall have
caused all property insurance policies to show the Agent
(on behalf of the Lenders) as loss payee as its interest
may appear and, with respect to Inventory, all such
policies shall name the Agent (on behalf of the Lenders)
as first payee.
The Agent shall have received copies of the
most recent Annual Report (Form 5500), including Schedule
B thereto, and the most recent actuarial report for each
Benefit Plan. In addition, the Agent shall have received
evidence in the form of an officer's certificate, in form
and substance reasonably satisfactory to the Agent, of the
material compliance by each Borrower and the Guarantor
with all Environmental Laws, ERISA, labor and WARN matters.
The Agent shall have received from counsel
to the Borrowers and the Guarantor, a favorable opinion
substantially in the form of Exhibit E hereto, and
covering, among other things, entry of the Interim
Bankruptcy Court Order and notice having been given in
accordance with the applicable provisions of the
Bankruptcy Code, the Bankruptcy Rules and any order of the
Bankruptcy Court.
The Agent shall have received certified
copies of requests for copies or information on Form
UCC-11 or reports from a reporting company satisfactory to
the Agent, listing all effective UCC financing statements,
tax liens and judgment liens in each of the jurisdictions
listed on Schedule 1.01(B) hereto, which name as debtor
each of the Borrowers and the Guarantor, together with
copies of such financing statements, none of which (other
than those consented to by the Agent), shall cover any of
the Inventory of either Borrower.
The Borrowers shall provide to the Agent a
certificate from the Borrowers signed by a Designated
Borrowing Officer of the Borrowers certifying that as of
the Filing Date the Borrowers have aggregate cash balances
of not less than $65 million.
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All legal proceedings in connection with
the transactions contemplated by this Agreement and the
other Related Documents shall be satisfactory to the Agent
and the Agent shall have received all such counterpart
originals or certified or other copies of such documents
and proceedings in connection with such transactions, in
form and substance reasonably satisfactory to the Agent,
as the Agent may from time to time request.
7.0 Conditions Precedent to Each Credit Extension.
The obligation of each Lender to make any Credit Extension
hereunder (whether such Credit Extension shall consist of the
making of a Loan or assistance to the Borrowers in establishing
or opening Letters of Credit) is subject to the performance by
the Borrowers and the Guarantor of their obligations to be
performed hereunder or under the Related Documents on or before
the date of such Credit Extension and to the satisfaction of the
following further conditions:
The representations and warranties of the
Borrowers and the Guarantor contained in Article VI hereof
and in each Related Document shall be true on and as of
the date of each Credit Extension hereunder with the same
effect as though made on and as of each such date.
No Event of Default and no Potential
Default shall have occurred and be continuing or exist or
shall occur or exist after giving effect to such Credit
Extension.
On the date of such Credit Extension, the
Interim Bankruptcy Court Order or the Final Bankruptcy
Court Order, as the case may be, shall have been entered
by the Bankruptcy Court, and the Agent shall have received
a certified copy of the same and such order shall be in
full force and effect and shall not have been reversed,
stayed, modified or amended.
Except as provided in Section 3.01(a)(ix),
the aggregate unpaid principal amount of the Loans and the
Letter of Credit Exposure shall not exceed, and after
giving effect to the requested Credit Extension will not
exceed, the Current Commitment.
The Agent shall have received from the
Borrowers a written or an oral (promptly confirmed in
writing as set forth in Section 2.03(a) of this Agreement)
notice of borrowing from a Designated Borrowing Officer
specifying the date, which shall be a Business Day, on
which such Loan is to be made, the principal amount of
such Loan, whether such Loan is requested to be a
<PAGE>
<PAGE>
Eurodollar Loan or a Prime Loan (and if a Eurodollar Loan
is requested, the length of the Interest Period with
respect thereto) and the account information where such
Loan is to be received and a completed Letter of Credit
Application, as appropriate.
With respect to any Credit Extension on or
after the thirtieth day following the Entry Date, the
Final Bankruptcy Court Order shall be in full force and
effect and shall not have been reversed, stayed, modified
or amended.
All legal proceedings in connection with
the transactions contemplated by this Agreement and the
other Related Documents shall be reasonably satisfactory
to the Agent and the Agent shall have received all such
counterpart originals or certified or other copies of such
documents and proceedings in connection with such
transactions, in form and substance reasonably
satisfactory to the Agent, as the Agent may from time to
time reasonably request.
Any oral or written request by the Borrowers for any Credit
Extension hereunder shall constitute a representation and
warranty by the Borrowers and the Guarantor that the conditions
set forth in this Section 7.02 have been satisfied as of the
date of such request. Failure of the Agent to receive notice
from the Borrowers to the contrary before such Credit Extension
is made shall constitute a further representation and warranty
by the Borrowers and the Guarantor that the conditions set forth
in this Section 7.02 (other than those set forth in clause (g)
hereof) have been satisfied as of the date of such Credit
Extension.
ARTICLE
AFFIRMATIVE COVENANTS
The Borrowers and the Guarantor jointly and severally
covenant to the Agent and the Lenders as follows, subject to
waiver by the Majority Lenders as provided herein:
8.0 Reporting and Information Requirements.
Annual Reports. As soon as practicable
and in any event within 90 days after the close of each fiscal
year of MGRE, MGRE shall furnish to each of the Lenders a
consolidated statement of operations, shareholders' equity and
cash flows of MGRE and its Consolidated Subsidiaries for such
fiscal year and a consolidated balance sheet of MGRE and its
Consolidated Subsidiaries as of the close of such fiscal year,
<PAGE>
<PAGE>
and notes to each, all in reasonable detail, setting forth in
comparative form the corresponding figures for the preceding
fiscal year, with such consolidated statements and balance sheet
to be certified by KPMG Peat Marwick or other independent
certified public accountants of recognized national standing
selected by MGRE and reasonably satisfactory to the Agent. The
certificate or report of such accountants shall be free of
exceptions or qualifications with respect to such statements and
balance being prepared in compliance with GAAP and shall in any
event contain a written statement of such accountants
substantially to the effect that (i) such accountants examined
such consolidated statements and balance sheet in accordance
with generally accepted auditing standards and accordingly made
such tests of accounting records and such other auditing
procedures as such accountants considered necessary in the
circumstances and (ii) in the opinion of such accountants such
consolidated statements and balance sheet present fairly, in all
material respects, the financial position of MGRE and its
Consolidated Subsidiaries as of the end of such fiscal year and
the results of their operations and the changes in their
financial position for such fiscal year, in conformity with GAAP
applied on a basis consistent with that of the preceding fiscal
year (except for changes in application in which such
accountants concur). A copy of such certificate or report shall
be delivered to the Agent and signed by such independent public
accountants. As soon as it becomes available, MGRE shall
promptly notify the Agent that any management letter received by
MGRE from its independent public accountants has been prepared
and MGRE shall deliver a copy of such management letter to the
Agent.
Each set of consolidated statements
and balance sheets delivered pursuant to this Section 8.01(a)
shall be accompanied by a certificate or report dated the date
of such statements and balance sheet by the accountants who
certified or reported on such statements and balance sheet
stating in substance that they have reviewed this Agreement and
that in making the examination necessary for their certification
of such statements and balance sheet they did not become aware
of any Event of Default or Potential Default based upon any
financial covenant, or if they did become so aware, such
certificate or report shall state the nature and period of
existence thereof, if determinable. In addition, each set of
consolidated statements and balance sheets delivered pursuant to
Section 8.01(a)(i) shall be accompanied by a certificate of the
Designated Financial Officer stating that the Borrowers have
complied with the Cumulative FIFO EBITDA, Capital Expenditures
and Maintenance of Inventory covenants set forth in Sections
9.02, 9.12 and 9.16, respectively, in form and substance
satisfactory to the Agent.
<PAGE>
<PAGE>
Quarterly Reports. As soon as
practicable and in any event within 45 days after the close of
each fiscal quarter of MGRE, MGRE shall furnish to each of the
Lenders an unaudited consolidated statement of operations and
cash flows of MGRE and its Consolidated Subsidiaries and a
consolidated balance sheet of MGRE and its Consolidated
Subsidiaries as of the close of such fiscal quarter, all in
reasonable detail setting forth in comparative form the
corresponding fiscal quarter for the preceding fiscal year, and
certified by a Designated Financial Officer as presenting
fairly, in all material respects, the financial position of MGRE
and its Consolidated Subsidiaries as of the end of such quarter
and the results of their operations and the changes in their
financial position for such quarter, in conformity with GAAP
applied in a manner consistent except as otherwise disclosed
therein with that of the most recent audited financial
statements furnished to the Lenders, subject to year-end
adjustments.
Each set of consolidated statements
and balance sheets delivered pursuant to Section 8.01(b) shall
be accompanied by a certificate dated the date of such
statements and balance sheet by a Designated Financial Officer
stating in substance that he has reviewed this Agreement and
that to the best of his knowledge he did not become aware of any
Event of Default or Potential Default, or if he did become so
aware, such certificate shall state the nature and period of
existence thereof, if determinable.
Monthly Reports. As soon as practicable
and in any event within thirty (30) days after the end of each
fiscal month (including the fiscal month in which this Agreement
is executed) of MGRE, MGRE shall furnish to each of the Lenders
unaudited consolidated statements of operations and cash flows
for MGRE and its Consolidated Subsidiaries for such fiscal month
and for the period from the beginning of such fiscal year to the
end of such fiscal month, and an unaudited consolidated balance
sheet of MGRE and its Consolidated Subsidiaries as of the end of
such fiscal month, all in reasonable detail, setting forth in
comparative form the corresponding figures for the same periods
during the preceding fiscal year (except for the consolidated
balance sheet, which shall set forth in comparative form the
corresponding balance sheet as of the prior fiscal year end),
and certified by a Designated Financial Officer as presenting
fairly, in all material respects, the financial position of MGRE
and its Consolidated Subsidiaries as of the end of such fiscal
month and the results of their operations and cash flows for
such fiscal month, in conformity with GAAP applied in a manner
consistent except as otherwise disclosed therein with that of
the most recent adjusted financial statements furnished to the
Lenders, subject to year-end adjustments.
<PAGE>
<PAGE>
Each set of consolidated statements
and balance sheets delivered pursuant to Section 8.01(c) shall
be accompanied by a certificate dated the date of such
statements and balance sheet by a Designated Financial Officer
stating in substance that he has reviewed this Agreement and
that to the best of his knowledge he did not become aware of any
Event of Default or Potential Default, or if he did become so
aware, such certificate shall state the nature and period of
existence thereof, if determinable. In addition, each set of
consolidated statements and balance sheets delivered pursuant to
Section 8.01(c)(i) shall be accompanied by a certificate stating
that the Borrowers have complied with the Cumulative FIFO EBITDA
and Maintenance of Inventory covenants set forth in Sections
9.02 and 9.16, respectively.
As soon as practicable and in any
event within thirty (30) days after the end of each fiscal month
(including the fiscal month in which this Agreement is
executed), the Borrowers shall furnish to each of the Lenders a
monthly inventory report and Borrowing Base Certificate in form
and substance reasonably satisfactory to the Agent, and
certified by a Designated Financial Officer, which shall be
accompanied by a reconciliation from the weekly inventory report
and Borrowing Base Certificate delivered by the Borrowers to the
Lenders pursuant to Section 8.01(d).
Weekly Reports. As soon as practicable and
in any event within seven (7) days after the end of each week
(including the week in which this Agreement is executed), the
Borrowers shall furnish to each of the Lenders weekly sales
reports for the Borrowers in form and substance reasonably
satisfactory to the Agent, and certified by a Designated
Financial Officer. As soon as practicable and in any event
within seven (7) days after the end of each week (including the
week in which this Agreement is executed), the Borrowers shall
furnish to each of the Lenders a weekly Inventory report and
Borrowing Base Certificate for the Borrowers in form and
substance reasonably satisfactory to the Agent, and certified by
a Designated Financial Officer.
Certain Reports. Upon the reasonable
request of the Agent, the Borrowers and the Guarantor shall
provide the Agent with copies of all consultants' reports,
investment bankers' reports, final business plans, and similar
documents. The Borrowers and the Guarantor shall not be
obligated to provide copies of any documents which are subject
to an evidentiary privilege and as to which disclosure to the
Agent would cause such privilege to be waived, but if the
Borrowers claim that any document is so privileged, they shall
promptly provide the Agent with a letter describing the document
and stating the basis for such claim of privilege.
<PAGE>
<PAGE>
Pleadings, etc. The Borrowers and the
Guarantor shall give or cause to be given or served on the Agent
and its counsel copies of all pleadings, motions, applications,
financial information and other papers and documents filed by
either Borrower or the Guarantor in the Chapter 11 Cases.
Reports to Committees. Promptly after the
sending thereof, the Borrowers and the Guarantor shall give the
Agent copies of all written reports given by either Borrower or
the Guarantor to any official or unofficial creditors' committee
in the Chapter 11 Cases.
Other Reports and Information. Promptly
upon their becoming available, the Borrowers and the Guarantor
shall deliver to the Agent a copy of (i) all reports, financial
statements or other information delivered by MGRE to its
shareholders, (ii) all reports, proxy statements, financial
statements and other information generally distributed by either
Borrower or the Guarantor to their bondholders or the financial
community in general and (iii) any audit or other reports
submitted to either Borrower or the Guarantor by independent
accountants in connection with any annual, interim or special
audit of either Borrower or the Guarantor.
Further Information. The Borrowers and the
Guarantor will promptly furnish to the Agent such other
information and in such form as the Agent may reasonably request.
Projections. The Borrowers shall furnish
to each of the Lenders on or before February 28, 1995 revised
financial projections, in form and substance reasonably
satisfactory to the Agent, for the fiscal year ended February 3,
1996, and such projections shall be prepared in accordance with
the standard set forth in the second sentence of Section 6.16
hereof.
Notice of Event of Default. Promptly upon
an officer of either Borrower or the Guarantor becoming aware of
any Event of Default or Potential Default, such Borrower or the
Guarantor shall give the Agent notice thereof, together with a
written statement of a Designated Financial Officer setting
forth the details thereof and any action with respect thereto
taken or contemplated to be taken by such Borrower or the
Guarantor.
Notice of Material Adverse Change.
Promptly upon an officer of either Borrower or the Guarantor
becoming aware thereof, such Borrower or the Guarantor shall
give the Agent notice of any Material Adverse Effect.
<PAGE>
<PAGE>
Visitation and Verification. The Borrowers
and the Guarantor shall permit the Agent or such professionals
or other Persons as the Agent may designate (i) to examine and
inspect the books and records of the Borrowers and the Guarantor
and take copies and extracts therefrom at reasonable times and
during normal business hours upon the reasonable request of the
Agent, (ii) to verify materials, leases, notes, receivables,
deposit accounts and other assets of the Borrowers and the
Guarantor from time to time, and (iii) to conduct a physical
Inventory count and/or valuation at the distribution center and
retail stores of the Borrowers, provided, that the Borrowers
shall cause to be conducted at least one physical Inventory
count in the twelve month period commencing on each of (A) the
Entry Date and (B) the first anniversary of the Entry Date, and
shall promptly after it becomes available provide to the Agent a
copy of the written results of such physical Inventory count.
In addition to the physical Inventory count referred to in the
preceding sentence, in the absence of continuing Event of
Default, any additional count and/or valuation shall be
conducted upon the reasonable request of the Agent (which
additional count and/or valuation shall be based upon a
representative random sample of the physical Inventory) provided
that, during the continuance of an Event of Default, the
Borrowers shall conduct additional counts and/or valuations
based upon procedures satisfactory to the Agent upon the request
of the Agent.
Environmental.
The Borrowers and the Guarantor shall
notify the Agent in writing, promptly upon, and in any event
within 10 days after, an officer of either Borrower or the
Guarantor learns of any of the following:
the receipt by either Borrower or
the Guarantor of written notification that any real or
personal property of either Borrower or the Guarantor is
subject to any Environmental Lien;
notice of violation of any
Environmental Law which could reasonably be expected to
subject the Borrowers and the Guarantor in the aggregate
to Environmental Liabilities and Costs of $250,000 or
more; and
notice of the commencement of any
judicial or administrative proceeding or investigation
alleging a violation by either Borrower or the Guarantor
of any Environmental Law, which if adversely determined
could reasonably be expected to have a Material Adverse
Effect.
<PAGE>
<PAGE>
UCC Search Results. On or before the date
on which the Final Bankruptcy Court Order is entered, the
Borrowers shall have provided the Agent with certified copies of
requests for copies or information on Form UCC-11 or reports
from a reporting company satisfactory to the Agent, listing as
of the Filing Date all effective UCC financing statements, tax
liens and judgment liens in each of the jurisdictions in which
either Borrower or the Guarantor has a warehouse, distribution
center, retail store or office, which name as debtor each of the
Borrowers and the Guarantors, together with copies of such
financing statements.
8.0 Preservation of Existence and Franchises.
Subject to Section 9.09 hereof, each of the Borrowers and the
Guarantor shall maintain (which may be by virtue of the stay
imposed in the Chapter 11 Cases) its corporate existence, rights
and franchise in full force and effect in its jurisdiction of
incorporation. Each of the Borrowers and the Guarantor shall
qualify and remain qualified (which may be by virtue of the stay
imposed in the Chapter 11 Cases) as a foreign corporation in
each jurisdiction in which failure to qualify would have a
Material Adverse Effect.
8.0 Insurance. The Borrowers and the Guarantor
shall maintain insurance at the levels currently in effect with
financially sound and reputable insurers as listed on Schedule
6.17 hereto and promptly cause all such policies to show the
Agent as loss payee or additional insured as its interest may
appear on such policies and with respect to Inventory, all
relevant policies shall name the Agent as loss payee on such
policies, provided that, in the absence of a continuing Event of
Default, the proceeds of any such insurance shall be paid to the
Borrowers and used in the ordinary course of the Borrowers'
businesses. Upon the request of the Agent, the Borrowers shall
promptly, but in any event not later than fifteen days after any
such request, provide to the Agent a copy of each such policy
listed on Schedule 6.17.
8.0 Maintenance of Properties. The Borrowers and
the Guarantor shall (i) maintain or cause to be maintained in
good repair, working order and condition the properties now or
hereafter owned by them and (ii) make or cause to be made all
needful and proper repairs, renewals, replacements and
improvements thereto to the extent required so that the business
carried on in connection therewith may be properly and
advantageously conducted at all times, and (iii) maintain all
leased property in compliance with the requirements of any
applicable lease, in each case other than sales of property or
rejection of leases approved by the Bankruptcy Court and
otherwise permitted by the terms of this Agreement.
<PAGE>
<PAGE>
8.0 Financial Accounting Practices, etc.
The Borrowers and the Guarantor shall make
and keep books, records and accounts which, in reasonable
detail, accurately and fairly reflect their transactions and
dispositions of their assets and maintain a system of internal
accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with
management's general or specific authorization, (ii)
transactions are recorded as necessary (A) to permit preparation
of financial statements in conformity with GAAP and (B) to
maintain accountability for assets, and (iii) the recorded
accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with
respect to any differences.
The Borrowers shall maintain a system of
internal procedures and controls sufficient to provide
reasonable assurance that the information required to be set
forth in each Borrowing Base Certificate (including, without
limitation, information relating to the identification of assets
which are Eligible Inventory as provided herein and the
valuation thereof) is accurate in all material respects.
8.0 Compliance with Laws. The Borrowers and the
Guarantor shall comply with all applicable Laws (including but
not limited to compliance in respect of products that they sell
or service they perform, conduct of their businesses, or use,
maintenance or operation of real and personal properties owned
or possessed by them) with respect to which failure to comply
would have a Material Adverse Effect.
8.0 Further Assurances. The Borrowers and the
Guarantor promptly shall do, execute, acknowledge, deliver,
record, file, register and perform any and all such further
acts, deeds, conveyances, estoppel certificates, assurances and
other instruments as the Agent or the Majority Lenders may
reasonably request from time to time in order (a) to carry out
more effectively the purposes of this Agreement or any other
Related Document, (b) to perfect and maintain the validity,
effectiveness and priority of the Lien in the Collateral and the
liens and security interests intended to be created by this
Agreement and by any of the other Related Documents, and (c) to
better assure, convey, grant, assign, transfer, preserve,
protect and confirm unto the Lenders and Agent the rights
granted or now or hereafter intended to be granted to the
Lenders and the Agent under any Related Document. The
assurances contemplated by this Section 8.07 shall be given
under applicable nonbankruptcy Law as well as the Bankruptcy
Code, it being the intention of the parties that the Agent or
the Majority Lenders may request assurances under applicable
<PAGE>
<PAGE>
nonbankruptcy Law, and such request shall be complied with (if
otherwise made in good faith by the Agent or the Majority
Lenders) whether or not the Interim Bankruptcy Court Order or
the Final Bankruptcy Court Order, as the case may be, is in
force and whether or not dismissal of the Chapter 11 Cases or
any other action by the Bankruptcy Court is imminent, likely or
threatened.
8.0 Maintenance of Accounts. The Borrowers and the
Guarantor shall enter into Collection Account Agreements and a
Restricted Account Agreement satisfactory to the Agent with
respect to the accounts and financial institutions set forth on
Schedule 8.08 hereto and enter into similar agreements, in form
and substance reasonably satisfactory to the Agent, with respect
to any account that receives remittances and other proceeds of
credit card sales of the Borrowers and the Guarantors, in each
case, within 15 days after the Entry Date. Each of the
Borrowers and the Guarantor agrees and covenants that all cash,
all proceeds of the Inventory and all proceeds of Collateral,
including, without limitation, all remittances from credit card
sales by the Borrowers and the Guarantor, shall be deposited in
a Depositary Account, a Collection Account or the Cash
Concentration Account in a manner consistent with past
practices. Each of the Borrowers and the Guarantor shall cause
all funds in the Depository Accounts to be promptly transferred
to a Collection Account or the Cash Concentration Account and
shall cause all funds in the Collection Accounts to be promptly
transferred to the Cash Concentration Account. In addition,
each of the Borrowers and the Guarantor shall cause all
remittances or other proceeds of credit card sales to be
promptly transferred from the financial institution that
receives such remittances or other proceeds to a Collection
Account or the Cash Concentration Account.
8.0 Taxes. Each of the Borrowers and the Guarantor
shall pay and discharge, to the extent consistent with the
rights and obligations of the Borrowers and the Guarantor as
debtors-in-possession under the Bankruptcy Code, all
post-petition taxes, assessments and governmental charges upon
it, its income and its properties prior to the date on which
penalties are attached thereto, unless and to the extent only
that (a) such taxes, assessments and governmental charges shall
be contested in good faith and by appropriate proceedings by
either Borrower or the Guarantor, as the case may be, and (b)
adequate reserves are maintained by such Borrower or the
Guarantor with respect thereto.
8. Pension Plans.
Each of the Borrowers and the Guarantor and
each ERISA Affiliate will furnish to the Agent forthwith upon
<PAGE>
<PAGE>
filing or receipt, as the case may be, a copy of (A) any notice
by either Borrower, the Guarantor or any ERISA Affiliate of a
Benefit Plan termination sent to the PBGC under Section 4041 of
ERISA, or (B) any notice sent or received by either Borrower,
the Guarantor or any ERISA Affiliate under Section 4041, 4042,
4043, 4063, 4065, 4066 or 4068 or ERISA.
Each of the Borrowers and the Guarantor
will notify the Agent within ten (10) Business Days after it
knows or has reason to know that a prohibited transaction
(defined in Section 406 of ERISA and 4975 of the Code) has
occurred with respect to a Plan and shall send a statement of
the chief financial officer of such Person describing such
transaction and the action which such Person has taken, is
taking or proposes to take with respect thereto.
Each of the Borrowers and the Guarantor
shall notify the Agent within ten (10) Business Days after
receipt by either Borrower, the Guarantor or any ERISA Affiliate
of a notice from a Multiemployer Plan regarding the imposition
of withdrawal liability and shall send copies of each such
notice.
Each of the Borrowers and the Guarantor
shall notify the Agent within ten (10) Business Days after it
sends notice of a plant closing or mass layoff (as defined in
WARN) to employees.
Each of the Borrowers and the Guarantor and
each ERISA Affiliate will furnish to the Agent as soon as
practicable upon filing a copy of each Annual Report (Form 5500)
in respect of each Benefit Plan.
ARTICLE
NEGATIVE COVENANTS
The Borrowers and the Guarantor jointly and severally
covenant to the Agent and the Lenders as follows, subject to
waiver by the Majority Lenders as provided herein:
9.0 Interim Bankruptcy Court Order; Final Bankruptcy
Court Order; Administrative Priority; Lien Priority; Payment of
Claims.
Neither the Borrowers nor the Guarantor
shall at any time seek, consent to or suffer to exist any
modification, stay, vacation or amendment of the Interim
Bankruptcy Court Order or the Final Bankruptcy Court Order
except for modifications and amendments mutually agreed to by
the Majority Lenders.
<PAGE>
<PAGE>
Neither the Borrowers nor the Guarantor
shall at any time suffer to exist a priority for any
administrative expense or unsecured claim against either
Borrower or the Guarantor (now existing or hereafter arising of
any kind or nature whatsoever, including without limitation any
administrative expenses of the kind specified in Sections 503(b)
and 507(b) of the Bankruptcy Code) equal or superior to the
priority of the Lenders and the Agent in respect of the
Obligations, except for the Carve-Out Expenses having priority
over the Obligations to the extent set forth in the definition
of Agreed Administrative Expense Priorities.
Neither the Borrowers nor the Guarantor
shall at any time suffer to exist any Lien on any Collateral
having a priority equal or superior to the Lien in favor of the
Lenders and the Agent in respect of the Collateral, except for
Permitted Liens, or any Liens on Inventory.
Prior to the date on which the Obligations
have been paid in full in cash and the Revolving Credit
Commitment of each Lender have been terminated, neither the
Borrowers nor the Guarantor shall pay any administrative expense
claims except (i) Priority Professional Expenses and (ii) other
administrative expense claims incurred in the ordinary course of
the business of the Borrowers and the Guarantor, in each case to
the extent and having the order of priority set forth in the
definition of Agreed Administrative Expense Priorities.
9.0 Cumulative FIFO EBITDA.
The Borrowers shall not permit Cumulative FIFO
EBITDA for the fiscal months listed below to be less than the
amount specified opposite each such date:
<TABLE>
<CAPTION>
Month Ending FIFO EBITDA
<S> <C>
February 1994 ($3,987,000)
March 1994 ($5,550,000)
April 1994 ($7,461,000)
May 1994 ($7,942,000)
June 1994 ($5,642,000)
July 1994 ($7,163,000)
August 1994 ($548,000)
September 1994 $4,642,000
October 1994 $3,817,000
November 1994 $6,713,000
December 1994 $30,567,000
January 1995 $20,425,000
February 1995 $21,189,000
March 1995 $22,145,000
April 1995 $23,014,000
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<S> <C>
May 1995 $23,965,000
June 1995 $25,151,000
July 1995 $26,009,000
August 1995 $27,351,000
September 1995 $28,713,000
October 1995 $29,611,000
November 1995 $27,971,000
December 1995 $25,075,000
January 1996 (and thereafter)
$24,463,000
</TABLE>
9.0 Liens. Neither the Borrowers nor the Guarantor
shall at any time create, incur, assume or suffer to exist Liens
on any of its properties or assets, tangible or intangible, now
owned or hereafter acquired, or agree or become liable to do so,
except for the following ("Permitted Liens"):
the Lien in favor of the Agent on behalf of
the Lenders with respect to the Collateral and the Lien in
favor of the Letter of Credit Issuer in connection with
the issuance of Letters of Credit by the Letter of Credit
Issuer in connection with this Agreement;
Liens which were in existence on the Filing
Date and which are listed on Schedule 9.03 hereof;
Deposits or pledges to secure utility and
similar services, to secure workmen's compensation,
unemployment insurance, old age benefits or other social
security obligations, or in connection with or to secure
the performance of bids, tenders, trade contracts or
leases, or to secure statutory obligations, or stay,
surety, appeal or custom bonds, or other pledges or
deposits of like nature, and all in the ordinary course of
business;
Liens on property to be used by the
Borrowers or the Guarantor in the ordinary course of their
business other than Inventory, securing payment of all or
part of the purchase price thereof, and Liens with respect
to equipment leases which equipment is used by the
Borrowers or the Guarantor in the ordinary course of their
business, provided that the aggregate amount of
Indebtedness at any one time outstanding and secured by
such Liens shall not exceed $5 million, and further
provided that such Liens are confined solely to the
property so purchased, improvements thereto and proceeds
thereof;
Zoning restrictions, rights of way,
consents, covenants, reservations, encumbrances,
<PAGE>
<PAGE>
easements, minor restrictions on the use of real property,
minor irregularities in title thereto and other minor
Liens, charges and encumbrances that do not secure the
payment of money or the performance of an obligation and
that do not in the aggregate materially detract from the
value of a property or asset to, or materially impair its
use in the business of, the Borrowers and the Guarantor
taken as a whole;
Nonconsensual Liens of warehousemen,
materialmen, mechanics, carriers and landlords and other
like Persons, which Liens arise in the ordinary course of
either the Borrower's or the Guarantor's business;
Liens in connection with any taxes,
assessments, charges, levies or claims that are not yet
due and payable or which either Borrower or the Guarantor
is contesting in good faith and by appropriate proceedings
diligently conducted so long as reserves or other
appropriate provisions as may be required by GAAP have
been made therefor and so long as the failure to pay the
same does not have a Material Adverse Effect; and
extensions, renewals or replacements of any
Lien permitted pursuant to clauses (a) through (g) above;
provided that the principal amount of the obligation
secured thereby is not increased and that any such
extension, renewal or replacement is limited to the
property originally encumbered thereby.
9.0 Indebtedness. Neither Borrower nor the
Guarantor shall create, incur, assume or suffer to exist any
Indebtedness, except for the following ("Permitted
Indebtedness"):
Indebtedness in favor of the Agent on
behalf of the Lenders and to any Letter of Credit Issuer
under any Letter of Credit Application;
Indebtedness secured by a Permitted Lien;
Indebtedness in existence on the Filing
Date;
Indebtedness contemplated by the Interim
Bankruptcy Court Order or the Final Bankruptcy Court Order;
accounts payable and accrued expenses
arising out of transactions (other than borrowings) in the
ordinary course of business; and
intercompany indebtedness between either
Borrower and the Guarantor or between the Borrowers.
<PAGE>
<PAGE>
9.0 Guarantees and Contingent Liabilities. Neither
the Borrowers nor the Guarantor shall at any time be or become
liable under any Guarantee, except:
Guarantees in favor of the Agent on behalf
of the Lender;
Guarantees in existence on the Filing Date
and which are listed on Schedule 9.05 hereto; and
contingent liabilities arising from the
endorsement of negotiable or other instruments for deposit
or collection or similar transactions in the ordinary
course of business.
9.0 Loans, Advances and Investments. Except as
otherwise expressly permitted by this Section 9.06, neither the
Borrowers nor the Guarantor shall at any time make or suffer to
remain outstanding any loan or advance to, or purchase or
acquire any stock, bond, note or security of, or any partnership
interest (whether general or limited) in, or any other interest
in, or make any capital contribution to, any other Person. By
way of illustration, and without limitation of the foregoing, it
is understood that the Borrowers and the Guarantor will be
deemed to have made an advance to a Person: (x) to the extent
that either the Borrowers or the Guarantor performs any service
for such Person (including but not limited to management
services), or transfers any property to such Person, and is not
reimbursed for such service or property and (y) to the extent
that either the Borrowers or the Guarantor pays any obligation
on behalf of such Person. The amount of such advance shall be
deemed to be the fair value of the services so performed or
property so transferred (in the case of clause (x)) or the
amount so paid by the Borrower or the Guarantors (in the case of
clause (y)).
The following are excepted from the operation of this
Section 9.06:
advances to employees to meet expenses
incurred by such employees or with respect to salary
advances and other similar advances, in each case to
non-Affiliates and in the ordinary course of business;
advances to employees not permitted by clause
(a) above in an aggregate amount not in excess of $50,000;
the Letter of Credit Cash Collateral
Account and the other accounts permitted or required to be
maintained pursuant hereto, any investment of funds on deposit
in the foregoing to the extent expressly permitted hereunder,
<PAGE>
<PAGE>
subject to the provisions of 11 U.S.C. Section 345 or as
otherwise authorized by the Bankruptcy Court;
loans and advances between either Borrower
and the Guarantor or among the Guarantors; and
advances to or for the benefit of
Subsidiaries of MGRE (which are not debtors in the Chapter
11 Cases), in an aggregate amount not to exceed $4 million
each calendar month, to pay the lease payments for the
retail stores.
9.0 Dividends and Related Distributions. Neither
the Borrowers and nor Guarantor shall declare, make, pay or
agree to pay, any dividend or other distribution of any nature
(whether in cash, property, securities or otherwise) on account
of or in respect of any shares of its capital stock or on
account of the purchase, redemption, retirement or acquisition
of any partnership interests or shares of capital stock (or
warrants, options or rights therefor).
9.0 Merger, etc. Neither the Borrowers nor the
Guarantor shall merge with or into or consolidate with any other
Person, or sell, lease (as lessor) or otherwise dispose of all
or substantially all of its assets (whether in one transaction
or in a series of transactions), or agree to do any of the
foregoing.
9.0 Dispositions of Assets. Neither the Borrowers
nor the Guarantor shall sell, convey, assign, lease, abandon or
otherwise transfer or dispose of, voluntarily or involuntarily
(any of the foregoing being referred to in this Section 9.09 as
a "transaction" and any series of related transactions
constituting but a single transaction), any of its properties or
assets, tangible or intangible (including but not limited to
sale, assignment, discount or other disposition of accounts,
contract rights, chattel paper or general intangibles with or
without recourse), except that the Borrowers and the Guarantor
may engage in any of the following transactions without the
release or consent of the Agent or the Majority Lenders:
transactions in the ordinary course of
business;
(i) the disposition of assets in connection
with store closings as a result of lease expirations, (ii)
dispositions of assets (other than dispositions permitted
by clauses (i) and (iii) of this Section 9.09(b)), other
than Inventory, for fair market value, provided that the
Book Value of the assets disposed of pursuant to this
clause (ii) plus the Book Value of the equipment or
<PAGE>
<PAGE>
fixtures sold under paragraph (c) of this Section 9.09, in
the aggregate, do not exceed $10,000,000, (iii)
dispositions of Inventory in connection with store
closings, provided that the Borrowers shall use their best
efforts to maximize the proceeds of the Inventory disposed
of in connection with such store closings, and (iv)
disposition of assets approved by the Majority Lenders in
its sole judgment exercised reasonably, provided, further,
that (A) not more than two hundred fifty (250) stores, in
the aggregate, shall be closed pursuant to clauses (i),
(ii) and (iii) of this Section 9.09(b) and (B) MGRE shall
promptly report each such transaction under this Section
9.09(b) to the Lenders; and
(c) sales of equipment or fixtures which are
worn out or obsolete, provided that the Book Value of such
equipment and fixtures plus the Book Value of the assets
disposed of under clause (ii) of paragraph (b) of this Section
9.09, in the aggregate, do not exceed $10,000,000.
9. Affiliates. Neither the Borrowers nor the
Guarantor will provide funds to any Affiliate except:
the Borrowers and the Guarantor may pay
wages, salaries, directors' fees and related benefits and
may make expense reimbursements to Affiliates in the
ordinary course of business;
the Borrowers and the Guarantor may advance
funds to their Subsidiaries for the payment of the normal
and customary operating expenses of such Subsidiaries,
provided that the aggregate amount of such normal and
customary operating expenses shall not exceed $100,000; and
as permitted by Section 9.06(e).
9. Continuation of or Change In Business. Each of
the Borrowers and the Guarantor shall continue to engage in its
business substantially as conducted and operated during the
present and preceding fiscal year, and the Borrowers and the
Guarantor will not engage in any other business.
9. Capital Expenditures. MGRE shall not permit
aggregate Capital Expenditures for MGRE and its Consolidated
Subsidiaries to exceed in the aggregate (i) $18,000,000 during
each of the periods from (A) the Entry Date through January 31,
1995 and (B) February 1, 1995 through January 31, 1996, and (ii)
$4,500,000 during the period from February 1, 1997 through the
Termination Date.
<PAGE>
<PAGE>
9. Markup and Markdown Policies. The Borrowers
shall not engage in policies or procedures with respect to
markups or markdowns of Inventory which policies and procedures,
including the timing, amount and implementation of such markups
and markdowns, are inconsistent in any material respect with the
past practices of the Borrowers absent the prior written consent
of the Majority Lenders, which shall not be unreasonably
withheld or delayed.
9. Environmental. Neither the Borrowers nor the
Guarantor shall dispose of any Contaminant by placing it in or
on the ground or waters of any property owned or leased by it
if, as the consequence of all such disposals, the Borrowers and
the Guarantor would incur Environmental Liabilities and Costs in
excess of $1,000,000.
9. ERISA. Neither the Borrowers nor the Guarantor
will, so long as any of the Obligations are outstanding and this
Agreement has not been terminated:
engage in any prohibited transaction
described in Section 406 of ERISA or 4975 of the Code for
which a statutory or class exemption is not available or a
private exemption has not previously been obtained from
the Department of Labor;
permit, or permit any ERISA Affiliate to
permit, any enforceable Lien from arising under Section
412(n) of the Code;
amend or permit any ERISA Affiliate to
amend any Benefit Plan in a manner that would require
security under Section 307 of ERISA; or
request or permit any ERISA Affiliate to
request a waiver of the minimum funding requirements under
Section 412 of the Code in respect of any Benefit Plan.
9. Maintenance of Inventory. The Borrowers shall
not permit the aggregate amount of their Inventory (valued at
Book Value) at the end of each fiscal month set forth below to
be less than or more than the amounts specified opposite such
month set forth below:
<TABLE>
<CAPTION>
Fiscal Month Minimum Amount Maximum Amount
<S> <C> <C>
February 1994 $ 84,790,000 $127,186,000
March 1994 $100,768,000 $151,152,000
April 1994 $101,955,000 $152,933,000
May 1994 $105,222,000 $157,834,000
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<S> <C> <C>
June 1994 $111,282,000 $166,922,000
July 1994 $121,824,000 $182,736,000
August 1994 $120,461,000 $180,691,000
September 1994 $114,189,000 $171,283,000
October 1994 $122,713,000 $184,069,000
November 1994 $132,782,000 $199,172,000
December 1994 $ 87,137,000 $130,705,000
January 1995 $ 88,748,000 $133,122,000
February 1995 $ 83,449,000 $125,173,000
March 1995 $ 99,472,000 $149,208,000
April 1995 $100,813,000 $151,219,000
May 1995 $104,256,000 $156,384,000
June 1995 $110,538,000 $165,806,000
July 1995 $121,123,000 $181,685,000
August 1995 $119,942,000 $179,914,000
September 1995 $113,976,000 $170,964,000
October 1995 $122,604,000 $183,906,000
November 1995 $132,634,000 $198,952,000
December 1995 $ 87,378,000 $131,066,000
January 1996 $ 89,440,000 $134,160,000
February 1996 $ 83,449,000 $125,173,000
March 1996 $ 99,472,000 $149,208,000
April 1996 $100,813,000 $151,219,000
</TABLE>
9. Payments. Neither the Borrowers nor the
Guarantor shall make any payment of principal or interest or
otherwise on account of any Indebtedness or trade payable
incurred prior to the Filing Date, provided that such payments
may be made: (i) to the holders of, or in respect of, wage,
salary, commission and employee benefit obligations (including
expense reimbursements) which arose prior to the Filing Date;
(ii) to landlords in connection with the assumption of unexpired
leases under Section 365 of the Bankruptcy Code in an aggregate
amount not to exceed $4,000,000; (iii) to holders of secured
indebtedness of the Borrowers and the Guarantor in such amounts
as are determined by the Bankruptcy Court, not to exceed (A) the
regularly scheduled payments of principal and interest on the
$5,000,000 of Indebtedness described on Schedule 9.17 hereto and
(B) the scheduled payments of interest on the $10,000,000 of
Indebtedness described on Schedule 9.17 hereto; and (iv) to
other Persons in an aggregate amount not to exceed $3,000,000,
in each case after prior written notice of such payment has been
given by MGRE to the Agent and subject to approval of the
Bankruptcy Court. Nothing contained in this Section 9.17 shall
prevent the Borrowers from effecting the payment of or otherwise
issuing goods or refunds in connection with payroll taxes, trust
fund taxes, sales taxes, gift certificates and layaways.
<PAGE>
<PAGE>
ARTICLE
DEFAULTS
10.0 Events of Default. An Event of Default shall
mean the occurrence or existence of one or more of the following
events or conditions (whatever the reason for such Event of
Default and whether voluntary, involuntary or effected by
operation of Law):
The Borrowers or the Guarantor shall fail
to make any payment of principal under this Agreement or
any Reimbursement Obligation when due; or the Borrowers or
the Guarantor shall fail to pay when due any other amount
payable under this Agreement or any other Related Document
(including but not limited to the making of deposits in
the Depository Accounts, the Collection Accounts, the Cash
Concentration Account or the Letter of Credit Cash
Collateral Account), including any interest or fee due
hereunder or under the Fee Letter or any other Related
Document and such failure shall continue unremedied for
more than five business days; or
Any representation or warranty made by the
Borrowers or the Guarantor under this Agreement or any
other Related Document or any material statement made by
the Borrowers or the Guarantor in any financial statement,
certificate, report, or document furnished to the Agent or
the Lenders pursuant to or in connection with this
Agreement or any other Related Document, shall, when taken
together with all other information supplied by the
Borrowers and the Guarantor to the Agent or the Lenders,
prove to have been false or misleading in any material
respect as of the time when made (including by omission of
material information necessary to make such
representation, warranty or statement, in light of the
circumstances under which it was made, not misleading); or
The Borrowers or the Guarantor shall
default in the performance or observance of any covenant
contained in Section 8.03, Section 8.08 or Article IX
hereof; or
The Borrowers or the Guarantor shall
default in the performance or observance of (i) the
covenants contained in Section 8.01 and such default shall
continue unremedied for a period of five (5) days, or (ii)
any other covenant, agreement or duty under this Agreement
or any other Related Document (to the extent not otherwise
set forth in this Section 10.01) and such default shall
have continued unremedied for a period of 30 days; or
<PAGE>
<PAGE>
An order with respect to any of the Chapter
11 Cases shall be entered by the Bankruptcy Court, or
either the Borrower or the Guarantor shall file an
application for an order with respect to any of the
Chapter 11 Cases (i) appointing a trustee under Section
1104 in any such Case or (ii) appointing an examiner in
such Case with enlarged powers (beyond those set forth in
Section 1106(a)(3)and (4) of the Bankruptcy Code) relating
to the operation of the business under Section 1106(b) of
the Bankruptcy Code; or
An order with respect to any of the Chapter
11 Cases shall be entered by the Bankruptcy Court
converting such chapter 11 case to a chapter 7 case; or
An order shall be entered by the Bankruptcy
Court confirming a plan or plans of reorganization in any
of the Chapter 11 Cases which does not contain a provision
for termination of the Revolving Credit Commitments and
payment in full in cash of all Obligations of the
Borrowers and the Guarantor hereunder and under the other
Related Documents on or before the effective date of such
plan or plans upon entry thereof; or
An order shall be entered by the Bankruptcy
Court dismissing any of the Chapter 11 Cases which does
not contain a provision for termination of the Revolving
Credit Commitments and payment in full in cash of all
Obligations of the Borrowers and the Guarantor hereunder
and under the other Related Documents upon entry thereof;
or
An order with respect to any of the Chapter
11 Cases shall be entered by the Bankruptcy Court without
the express prior written consent of the Majority Lenders
(i) to revoke, reverse, stay, modify, supplement or amend
the Interim Bankruptcy Court Order or the Final Bankruptcy
Court Order, or (ii) to permit any administrative expense
or any claim (now existing or hereafter arising, of any
kind or nature whatsoever) to have administrative priority
as to either Borrower or the Guarantor equal or superior
to the priority of the Lenders and the Agent in respect of
the Obligations, except for allowed administrative
expenses having priority over the Obligations to the
extent set forth in the definition of Agreed
Administrative Expense Priorities, or (iii) to grant or
permit the grant of a Lien on the Collateral or the
Inventory; or
An application for any of the orders
described in clauses (e), (f), (g), (h) or (i) above shall
<PAGE>
<PAGE>
be made by a Person other than the Borrowers or the
Guarantor and such application is not contested by the
Borrowers and the Guarantor in good faith and the relief
requested is granted in an order that is not stayed
pending appeal; or
An order shall be entered by the Bankruptcy
Court that is not stayed pending appeal granting relief
from the automatic stay to any creditor of either Borrower
or the Guarantor with respect to any claim in an amount
equal to or exceeding $2,000,000 in the aggregate for the
Borrowers and the Guarantor; provided, however, that it
shall not be an Event of Default if relief from the
automatic stay is granted (i) solely for the purpose of
allowing such creditor to determine the liquidated amount
of its claim against the Borrower or such Guarantor, (ii)
to permit the commencement of and/or prosecution of a
proceeding to collect against an insurance company, or
(iii) to permit a landlord to exercise its rights in
connection with the rejection or expiration of a lease for
a retail store; or
Either Borrower or the Guarantor shall have
entered into any consent or settlement decree or agreement
or similar arrangement with a Governmental Authority or
any judgment, order, decree or similar action shall have
been entered against either Borrower or the Guarantor
based on or arising from the violation of or pursuant to
any Environmental Law, or the generation, storage,
transportation, treatment, disposal or Release of any
Contaminant and, in connection with all of the foregoing,
the Borrowers and the Guarantor incur Environmental
Liabilities and Costs which are unstayed, due and owing in
an aggregate amount in excess of $1,000,000; or
Any Termination Event occurs which the
Agent believes would be reasonably likely to obligate
either Borrower or the Guarantor to make payment on or
before the Termination Date in an aggregate amount in
excess of $1,000,000.
10.0 Consequences of an Event of Default. If an
Event of Default shall occur and be continuing or shall exist
the Agent may, and upon the direction of the Majority Lenders,
shall by notice to MGRE,
declare the Revolving Credit Commitment of
each Lender and the Current Commitment terminated,
whereupon the Revolving Credit Commitment of each
Lender and the Current Commitment will terminate
immediately and any fees hereunder shall be
<PAGE>
<PAGE>
immediately due and payable without further order of
or application to the Bankruptcy Court, presentment,
demand, protest or further notice of any kind, all of
which are hereby expressly waived, and an action
therefor shall immediately accrue; or
declare the unpaid principal amount of the
Notes, interest accrued thereon, the total amount of
the Letter of Credit Exposure that is not cash
collateralized in accordance with this Agreement and
all other amounts owing by the Borrowers and the
Guarantor hereunder or under the Notes to be
immediately due and payable without further order of
or application to the Bankruptcy Court, presentment,
demand, protest or further notice of any kind, all of
which are hereby expressly waived, and an action
therefor shall immediately accrue; or
give notice to MGRE of the occurrence and
continuance of an Event of Default; or
at any time when there are no Loans
outstanding, maintain cash collateral (to the extent
the Borrowers have or receive cash) equal to 105% of
all outstanding Letters of Credit; or
apply all funds deposited in the Cash
Concentration Account, Collection Accounts and in the
Letter of Credit Cash Collateral Account to the
payment, in whole or in part, of the Obligations; or
set-off amounts in the Cash Concentration
Account, the Letter of Credit Collateral Account,
Collection Accounts or any other account under the
dominion and control of the Agent and apply such
amounts to the Obligations of the Borrowers and the
Guarantor hereunder and under the Related Documents.
10.0 Certain Remedies. If an Event of Default
occurs, each of the Agent and the Lenders may exercise all
rights and remedies which it may have hereunder or under any
other Related Document or at law (including but not limited to
the Bankruptcy Code and the Uniform Commercial Code) or in
equity or otherwise. All such remedies shall be cumulative and
not exclusive.
<PAGE>
<PAGE>
ARTICLE
MISCELLANEOUS
11.0 Holidays. Except as otherwise provided herein,
whenever any payment or action to be made or taken hereunder or
under the Notes shall be stated to be due on a day which is not
a Business Day, such payment or action shall be made or taken on
the next following Business Day and such extension of time shall
be included in computing interest or fees, if any, in connection
with such payment or action.
11.0 Records. The unpaid principal amount of the
Notes, the unpaid interest accrued thereon, the interest rate or
rates applicable to such unpaid principal amount, the duration
of such applicability, the Current Commitment, the Stated Amount
of each Letter of Credit, the principal amount of all
Reimbursement Obligations, the Letter of Credit Exposure, and
the accrued and unpaid commitment fee, facility fee, agent's
fee, Unused Line Fee and Letter of Credit fees shall at all
times be ascertained from the records of the Agent, which shall
be conclusive absent manifest error.
11.0 Amendments and Waivers. No amendment or
modification of any provision of this Agreement or of any of the
Notes shall be effective without the written agreement of the
Majority Lenders, the Borrowers and the Guarantor and no
termination or waiver of any provision of this Agreement or of
any of the Notes, or consent to any departure by the Borrowers
and the Guarantor therefrom, shall in any event be effective
without the written concurrence of the Majority Lenders, which
the Majority Lenders shall have the right to grant or withhold
at their sole discretion; except that any amendment,
modification, or waiver of (i) any provision of Article II or
III which amendment, modification or waiver increases the
Revolving Credit Commitment of any Lender, changes the principal
amount or the final maturity of the Loans or Letters of Credit,
or reduces the interest rate applicable to the Loans or the
amount of the fees payable pursuant hereto, (ii) the definitions
of "Termination Date", "Majority Lenders" and "Pro Rata Shares",
(iii) any provision in this Agreement or any Related Document
which amendment, modification or waiver releases or subordinates
the super priority claim status of the Obligations (except as
permitted in this Agreement and the Related Documents) or
releases the Guarantor, (iv) any provision of this Agreement
that would permit Liens on Inventory of the Borrowers (except as
otherwise permitted in this Agreement) or (v) the provisions
contained in this Section 11.03, shall be effective only if
evidenced by a writing signed by or on behalf of all Lenders.
No amendment, modification, termination, or waiver of any
provision of Article XII or any other provision referring to the
Agent shall be effective without the written concurrence of the
<PAGE>
<PAGE>
Agent. Any waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was
given. No notice to or demand on either Borrower or the
Guarantor in any case shall entitle the Borrowers or the
Guarantor to any other or further notice or demand in similar or
other circumstances. Any amendment, modification, waiver or
consent effected in accordance with this Section 11.03 shall be
binding on each Lender, each future Lender, and, if signed by
the Borrowers and the Guarantor, on the Borrowers and the
Guarantor.
Notwithstanding anything to the contrary
contained in subsection 11.03(a), in the event that the
Borrowers request that this Agreement be amended or otherwise
modified in a manner which would require the unanimous consent
of all of the Lenders and such amendment or other modification
is agreed to by the Majority Lenders, then, with the consent of
the Borrowers and the Majority Lenders, the Borrowers and the
Majority Lenders may amend this Agreement without the consent of
the Lender or Lenders which did not agree to such amendment or
other modification (collectively the "Minority Lenders") to
provide for (w) the termination of the Revolving Credit
Commitment of each of the Minority Lenders, (x) the addition to
this Agreement of one or more other Lenders, or an increase in
the Revolving Credit Commitment of one or more of the Majority
Lenders, so that the Revolving Credit Commitments after giving
effect to such amendment shall be in the same aggregate amount
as the Revolving Credit Commitments immediately before giving
effect to such amendment, (y) if any Loans are outstanding at
the time of such amendment, the making of such additional Loans
by such new Lenders or Majority Lenders, as the case may be, as
may be necessary to repay in full the outstanding Loans of the
Minority Lenders immediately before giving effect to such
amendment and (z) the payment of all fees and other Obligations
payable or accrued in favor of the Minority Lenders and such
other modifications to this Agreement as the Borrowers and the
Majority Lenders may determine to be appropriate.
11.0 No Implied Waiver; Cumulative Remedies. No
course of dealing and no delay or failure of the Lenders or the
Agent in exercising any right, power or privilege under this
Agreement, the Notes or any other Related Document shall affect
any other or future exercise thereof or exercise of any other
right, power or privilege; nor shall any single or partial
exercise of any such right, power or privilege or any
abandonment or discontinuance of steps to enforce such a right,
power or privilege preclude any further exercise thereof or of
any other right, power or privilege. The rights and remedies of
the Lenders or the Agent under this Agreement, the Notes and the
other Related Documents are cumulative and not exclusive of any
rights or remedies which the Lenders or the Agent have
<PAGE>
<PAGE>
thereunder or at law or in equity or otherwise. The Lenders or
the Agent may exercise their rights and remedies against the
Borrowers, the Guarantor and the Collateral as the Lenders and
the Agent may elect, and regardless of the existence or adequacy
of any other right or remedy.
11.0 Notices.
All notices, requests, demands, directions
and other communications (collectively "notices") under the
provisions of this Agreement or the Notes shall be in writing
(including telexed and telecopied communication) unless
otherwise expressly permitted hereunder and shall be sent by
first-class or first-class express mail, or by telex or telecopy
with confirmation in writing mailed first-class, or by overnight
courier, or by personal delivery, in all cases with charges
prepaid. Any properly given notice shall be effective when
received. All notices shall be sent to the applicable party at
the address stated on the signature page hereof together with,
in the case of a letter of credit request and Letter of Credit
Application sent pursuant to Section 3.01(a), a copy to the
Agent at the address for the Agent provided on the signature
page hereof, or in accordance with the last unrevoked written
direction from such party to the other parties hereto.
Nothing in this Agreement or in any other
Related Document shall be construed to limit or affect the
obligation of the Borrowers, the Guarantor or any other Person
to serve upon the Agent in the manner prescribed by the
Bankruptcy Code any pleading or notice required to be given to
the Agent pursuant to the Bankruptcy Code.
The Lenders and the Agent may rely, and
shall be fully protected in relying, on any notice purportedly
made by or on behalf of either Borrower or the Guarantor, and
the Lenders and the Agent shall have no duty to verify the
identity or authority of any Person giving such notice. The
preceding sentence shall apply to all notices whether or not
made in a manner authorized or required by this Agreement or any
other Related Document.
Unless the context otherwise requires, the
obligations, duties, agreements, representations and warranties
of the Borrowers and the Guarantor hereunder shall for all
purposes be joint and several. In addition, in acting
hereunder, the Agent and the Lenders shall be entitled (i)
conclusively to rely upon the direction, notice, request or
other communication received from MGRE without the need to
confirm or otherwise communicate with MGRD or the Guarantor
hereunder, and (ii) to give any direction, notice, request or
other communication to MGRE without the need to confirm or
<PAGE>
<PAGE>
otherwise communicate with MGRD or the Guarantor hereunder, and
any such direction, notice, request or other communication
(whether from or to MGRE) shall be conclusive, binding and
enforceable against the Borrowers and the Guarantor.
11.0 Expenses; Taxes; Attorneys' Fees;
Indemnification. The Borrowers jointly and severally agree to
pay or cause to be paid, on demand, and to save the Agent (and,
in the case of clauses (c) through (m) below, the Lenders)
harmless against liability for the payment of, all reasonable
out-of-pocket expenses, regardless of whether the transactions
contemplated hereby are consummated, including but not limited
to reasonable fees and expenses of counsel for the Agent (and,
in the case of clauses (c) through (m) below, the Lenders),
accounting, due diligence, periodic field audits, investigation,
monitoring of assets, syndication, miscellaneous disbursements,
examination, travel, lodging and meals, incurred by the Agent
(and, in the case of clauses (c) through (m) below, the Lenders)
from time to time arising from or relating to: (a) the
negotiation, preparation, execution, delivery, performance and
administration of this Agreement and the other Related
Documents, (b) any requested amendments, waivers or consents to
this Agreement or the other Related Documents whether or not
such documents become effective or are given, (c) the
preservation and protection of any of the Agent's and the
Lender's rights under this Agreement or the other Related
Documents, (d) the defense of any claim or action asserted or
brought against the Agent or the Lenders by any Person that
arises from or relates to this Agreement, any other Related
Document, the Agent's or the Lender's claims against the
Borrowers, or any and all matters in connection therewith, (e)
the commencement or defense of, or intervention in, any court
proceeding arising from or related to this Agreement or any
other Related Document, (f) the filing of any petition,
complaint, answer, motion or other pleading by the Agent or the
Lenders, or the taking of any action in respect to Collateral or
other security, in connection with this Agreement or any other
Related Document, (g) the protection, collection, lease, sale,
taking possession of or liquidation of, any Collateral or other
security in connection with this Agreement or any other Related
Document, (h) any attempt to enforce any lien or security
interest in any Collateral or other security in connection with
this Agreement or any other Related Document, (i) any attempt to
collect from either Borrower or the Guarantor, (j) the receipt
of any advice with respect to any of the foregoing, (k) all
Environmental Liabilities and Costs arising from or in
connection with the past, present or future operations of
Borrowers or the Guarantor or any of their Subsidiaries
involving any damage to real or personal property or natural
resources or harm or injury alleged to have resulted from any
Release of Contaminants on, upon or into such property, (l) any
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costs or liabilities incurred in connection with the
investigation, removal, cleanup and/or remediation of any
Contaminant present or arising out of the operations of any
facility of either Borrower or the Guarantor or any of their
Subsidiaries, or (m) any costs or liabilities incurred in
connection with any Environmental Lien. Without limitation of
the foregoing or any other provision of any Related Document:
(x) the Borrowers and the Guarantor jointly and severally agree
to pay all stamp, document, transfer, recording or filing taxes
or fees and similar impositions now or hereafter determined by
the Agent or any of the Lenders to be payable in connection with
this Agreement or any other Related Document, and the Borrowers
and the Guarantor agree jointly and severally to save the Agent
and the Lenders harmless from and against any and all present or
future claims, liabilities or losses with respect to or
resulting from any omission to pay or delay in paying any such
taxes, fees or impositions, and (y) if either Borrower or the
Guarantor fail to perform any covenant or agreement contained
herein or in any other Related Document, the Agent may itself
perform or cause performance of such covenant or agreement, and
the expenses of the Agent incurred in connection therewith shall
be reimbursed on demand by the Borrowers and the Guarantor. The
Borrowers and the Guarantor jointly and severally agree to
indemnify and defend the Agent and the Lenders and their
directors, officers, agents, employees and affiliates
(collectively the "Indemnified Parties") from, and hold each of
them harmless against, any and all losses, liabilities, claims,
damages, costs or expenses of any nature whatsoever (including
reasonable attorneys' fees and amounts paid in settlement)
incurred by, imposed upon or asserted against any of them
arising out of or by reason of any investigation, litigation or
other proceeding brought or threatened relating to, or otherwise
arising out of or relating to, the execution of this Agreement
or any other Related Document, the transactions contemplated
hereby or thereby or any Loan or proposed Loan or Letter of
Credit or proposed Letter of Credit hereunder (including, but
without limitation, any use made or proposed to be made by the
Borrowers or any of their affiliates of the proceeds of any
thereof, or the delivery or use or transfer of or the payment or
failure to pay under any Loan or Letter of Credit) but excluding
any such losses, liabilities, claims, damages, costs or expenses
to the extent finally judicially determined to have resulted
from the gross negligence or willful misconduct of the
Indemnified Parties.
11.0 Application. Except to the extent, if any,
expressly set forth in this Agreement or in the Related
Documents, the Agent and the Lenders shall have the right to
apply any payment received or applied by it in connection with
the Obligations to such of the Obligations then due and payable
as it may elect.
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11.0 Severability. The provisions of this Agreement
are intended to be severable. If any provision of this
Agreement shall be held invalid or unenforceable in whole or in
part in any jurisdiction such provision shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or
enforceability thereof in any other jurisdiction or the
remaining provisions hereof in any jurisdiction.
11.0 Governing Law. This Agreement and the Notes
shall be deemed to be contracts under the laws of the State of
New York, without regard to choice of law principles, and for
all purposes shall be governed by and construed and enforced in
accordance with the laws of said State except as the law is
governed by the Bankruptcy Code.
11. Prior Understandings. This Agreement supersedes
all prior understandings and agreements, whether written or
oral, among the parties hereto relating to the transactions
provided for herein other than the Fee Letter.
11. Duration; Survival. All representations and
warranties of the Borrowers and the Guarantor contained herein
or made in connection herewith shall survive the making of and
shall not be waived by the execution and delivery of this
Agreement, the Notes or any other Related Document, any
investigation by or knowledge of the Agent or the Lenders, the
making of any Loan hereunder, or any other event whatever. All
covenants and agreements of the Borrowers and the Guarantor
contained herein shall continue in full force and effect from
and after the date hereof so long as the Borrowers may borrow
hereunder and until the Obligations have been paid in full and
no Letters of Credit remain outstanding. Without limitation, it
is understood that all obligations of the Borrowers and the
Guarantor to make payments to or indemnify the Agent and the
Lenders (including, without limitation, obligations arising
under Section 11.06 hereof) shall survive the payment in full of
the Notes and all Reimbursement Obligations and of all other
obligations of the Borrowers and the Guarantor thereunder and
hereunder, termination of this Agreement and all other events
whatsoever and whether or not any Loans are made or Letters of
Credit issued hereunder.
11. 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, shall
be deemed an original, but all such counterparts shall
constitute but one and the same instrument.
11. Assignments; Participations. (a) CIT shall
have the right at any time to assign to one or more commercial
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banks or other financial institutions a portion of its rights
and obligations under this Agreement (including, without
limitation, a portion of its Revolving Credit Commitment, the
Loans owing to it and its rights and obligations as a Lender
with respect to Letters of Credit); provided, however, that (i)
CIT shall retain at least 36% of the aggregate Revolving Credit
Commitments subject to any reductions of the Revolving Credit
Commitment set forth in the Interim Bankruptcy Court Order, the
Final Bankruptcy Court Order and this Agreement, (ii) the
identity of each such assignee shall be subject to the consent
of the Borrower, which consent shall not be unreasonably
withheld or delayed, and (iii) the parties to each such
assignment shall execute and deliver to the Agent, for its
acceptance and recording in the Register (as hereinafter
defined), an Assignment and Acceptance. Upon such execution,
delivery, acceptance and recording, from and after the effective
date specified in each Assignment and Acceptance, (A) the
assignee thereunder shall be a party hereto and, to the extent
that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, have the rights and
obligations (including, without limitation, the obligation to
participate in Letters of Credit) of a Lender hereunder and (B)
CIT shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its
obligations under this Agreement.
(b) By executing and delivering an Assignment
and Acceptance, CIT and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows:
(i) other than as provided in such Assignment and Acceptance,
CIT makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Related
Document furnished pursuant hereto; (ii) CIT makes no
representation or warranty and assumes no responsibility with
respect to the financial condition of either Borrower, the
Guarantor or any of their Subsidiaries or the performance or
observance by either Borrower, the Guarantor or any of their
Subsidiaries of any of their obligations under this Agreement or
any other Related Document furnished pursuant hereto; (iii) such
assignee confirms that it has received a copy of this Agreement,
together with such other documents and information it has deemed
appropriate to make its own credit analysis and decision to
enter into such Assignment and Acceptance; (iv) such assignee
will, independently and without reliance upon the Agent or any
Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement;
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(v) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under
this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental
thereto; and (vi) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the
terms of this Agreement are required to be performed by it as a
Lender.
(c) The Agent shall maintain at its address
referred to on the signature page hereto, a copy of each
Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the
Lenders and the Revolving Credit Commitment of, and principal
amount of the Loans owing to, each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the
Borrowers, the Guarantor, the Agent and the Lenders may treat
each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register
shall be available for inspection by the Borrowers, the
Guarantor and any Lender at any reasonable time and from time to
time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and
Acceptance executed by CIT, an assignee, the Agent, the
Borrowers and the Guarantor, the Agent shall, if such Assignment
and Acceptance has been completed and is in form and substance
satisfactory to the Agent, (i) accept such Assignment and
Acceptance and (ii) record the information contained therein in
the Register.
(e) Each Lender may sell participations to one
or more banks or other entities in or to all or a portion of its
rights and obligations under this Agreement (including, without
limitation, all or a portion of its Revolving Credit Commitment
and the Loans owing to it and its participation in Letters of
Credit); provided that (a) such Lender's obligations under this
Agreement (including, without limitation, its Revolving Credit
Commitment hereunder) shall remain unchanged; (b) such Lender
shall remain solely responsible to the other parties hereto for
the performance of such obligations, and the Borrowers, the
Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's
rights and obligations under this Agreement; (c) a participant
shall not be entitled to require such Lender to take or omit to
take any action hereunder except (y) action directly effecting
an extension of the maturity dates of the Loans, or (z) action
directly effecting an increase of any of the Revolving Credit
Commitments or principal amounts of Loans or a decrease in the
rate of interest payable on the Loans; and (d) such Lender shall
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require any participant to which it has sold a participation to
agree that it shall not, in turn, sell less than all of such
participation to any Person other than an Affiliate of such
Lender; provided that any such sale of all of a participation
shall be subject to the conditions of this subsection 11.13(e)
to the same extent as if it were a sale of a participation by a
Lender.
(f) Notwithstanding the foregoing provisions of
this Section 11.13, each Lender may at any time sell, assign,
transfer, or negotiate all or any part of its rights and
obligations under this Agreement to any Affiliate of such Lender.
11. Successors and Assigns. This Agreement and the
other Related Documents shall be binding upon and inure to the
benefit of the parties hereto and their respective successors
and assigns (including, except for the right to request Loans or
Letters of Credit, any trustee succeeding to the rights of
either Borrower or the Guarantor pursuant to chapter 11 of the
Bankruptcy Code or pursuant to any conversion to a case under
chapter 7 of the Bankruptcy Code), except that neither the
Borrowers nor the Guarantor may assign or transfer any of its
rights hereunder without the prior written consent of all of the
Lenders.
11. Lenders and Agent as Parties in Interest. The
Borrowers and the Guarantor hereby stipulate and agree that the
Lenders and the Agent are and shall remain parties in interest
in the Chapter 11 Cases and shall have the right to participate,
object and be heard in any motion or proceeding in connection
therewith. Nothing in this Agreement or any other Related
Document shall be deemed to be a waiver of any of any Lender's
or the Agent's rights or remedies under applicable law or
documentation. Without limitation of the foregoing, each Lender
and the Agent shall have the right to make any motion or raise
any objection it deems to be in its interest (specifically
including but not limited to objections to use of proceeds of
the Loans, use of Letters of Credit, to payment of professional
fees and expenses or the amount thereof, to sales or other
transactions outside the ordinary course of business or to
assumption or rejection of any executory contract or lease),
provided that neither the Agent nor any Lender will exercise
such right if the action or inaction by either Borrower or the
Guarantor which is the subject of such motion or objection is
expressly permitted by any covenant or provision of this
Agreement.
11. Confidentiality. Upon delivering to any Lender
or the Agent, or permitting any Lender or the Agent to inspect,
any written information pursuant to this Agreement, each Lender
and the Agent shall treat such information as confidential to
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the extent such information is conspicuously marked
confidential. Each Lender and the Agent agrees to hold such
information in confidence from the date of disclosure thereof.
Subject to the other provisions of this Section 11.16, each
Lender and the Agent may disclose confidential information to
its officers, directors, employees, attorneys, accountants or
other professionals engaged by any Lender or the Agent only
after determining that such third party has signed a
confidentiality agreement obligating such third party to hold
such information in confidence to the same extent as if it were
a Lender. Notwithstanding the foregoing, the provisions of this
Section 11.16 shall not apply to information within any one of
the following categories or any combination thereof: (i)
information the substance of which, at the time of disclosure by
any Lender or the Agent, has been disclosed to or is known to
any creditor or official or unofficial creditors' committee
(other than information as to which such creditor or creditor's
committee is then under an obligation of nondisclosure), or any
Person other than (A) a director, officer, employee or agent of
any of either Borrower or the Guarantor or a professional
engaged by either Borrower or the Guarantor and (B) a Person who
is then under an obligation of nondisclosure (otherwise than as
a consequence of a wrongful act of any Lender or the Agent),
(ii) information which any Lender or the Agent had in its
possession prior to receipt thereof from the disclosing party,
or (iii) information received by any Lender or the Agent from a
third party having no obligations of nondisclosure with respect
thereto. Nothing contained in this Section 11.16 shall prevent
any disclosure: (x) believed in good faith by any Lender or the
Agent to be required by any Law or guideline or interpretation
or application thereof by any Governmental Authority, arbitrator
or grand jury charged with the interpretation or administration
thereof or compliance with any request or directive of any
Governmental Authority, arbitrator or grand jury (whether or not
having the force of law), (y) determined by counsel for any
Lender or the Agent to be necessary or advisable in connection
with enforcement or preservation of rights under or in
connection with this Agreement or any other Related Document or
(z) of any information which has been made public by a Person
other than any Lender or the Agent. The Lenders and the Agent
shall have the right to disclose any confidential information
described in this Section 11.16 to the Letter of Credit Issuer
and to an assignee or prospective assignee or to a participant
or prospective participant in Loans hereunder, provided that the
assigning or selling Lender shall have obtained from such
assignee or prospective assignee or participant or prospective
participant an agreement to hold such information in confidence
to the same extent as if it were a Lender.
11. Waiver of Jury Trial. BY ITS EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWERS AND THE
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GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES
ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH, THIS AGREEMENT, THE NOTES OR ANY OTHER RELATED
DOCUMENT, ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS, THE
BORROWERS OR THE GUARANTOR IN CONNECTION HEREWITH OR THEREWITH.
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE
LENDERS TO ENTER INTO THIS AGREEMENT.
11.18 Defaulting Lender. Notwithstanding anything
to the contrary contained herein, in the event that any Lender
(x) refuses (which refusal constitutes a breach by such Lender
of its obligations under this Agreement and which has not been
retracted) to make available its portion of any Loan or (y)
notifies the Agent and/or the Borrowers that it does not intend
to make available its portion of any Loan (each, a "Lender
Default"), all rights and obligations hereunder of the Lender (a
"Defaulting Lender") as to which a Lender Default is in effect
and of the other parties hereto shall be modified by this
Section 11.18 while such Lender Default remains in effect.
Loans shall be incurred pro rata from the
Lenders (the "Non-Defaulting Lenders") which are not Defaulting
Lenders based on their respective Revolving Credit Commitments,
and no Revolving Credit Commitment shall be increased as a
result of such Lender Default. Amounts received in respect of
principal of the Loans shall be applied to reduce the Loans of
each of the Lenders pro rata based on the aggregate of the
outstanding Loans of all of the Lenders at the time of such
application; provided that, such amount shall not be applied to
any Loan of a Defaulting Lender at any time when, and to the
extent that, the aggregate amount of Loans of any Non-Defaulting
Lender exceeds such Non-Defaulting Lenders' Pro Rata Share of
all Loans then outstanding.
The Non-Defaulting Lenders shall participate
in Letters of Credit on the basis of their respective Pro Rata
Shares, determined, however, as if the Revolving Credit
Commitment of a Defaulting Lender is zero, and shall receive
Letter of Credit Fees on such basis. A Defaulting Lender shall
not be entitled to receive any portion of the Unused Line Fees,
the Letter of Credit Fees or any indemnity arising from its
commitment to make Loans and/or participate in Letters of Credit.
A Defaulting Lender shall not be entitled to
give instructions to the Agent or to approve, disapprove,
consent to or vote on any matters relating to this Agreement and
the Related Documents. All amendments, waivers and other
modifications of this Agreement and the Related Documents may be
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made without regard to a Defaulting Lender and, for purposes of
the definition of "Majority Lenders", a Defaulting Lender shall
be deemed not to be a Lender, not to have a Revolving Credit
Commitment and not to have Loans outstanding.
Other than as expressly set forth in this
Section 11.18, the rights and obligations of a Defaulting Lender
(including the obligation to indemnify the Agent) and the other
parties hereto shall remain unchanged. Nothing in this Section
11.18 shall be deemed to release any Defaulting Lender from its
Revolving Credit Commitment hereunder, shall alter such
Revolving Credit Commitment, shall operate as a waiver of any
default by such Defaulting Lender hereunder, or shall prejudice
any rights which the Borrowers, the Agent or any Lender may have
against any Defaulting Lender as a result of any default by such
Defaulting Lender hereunder.
ARTICLE
THE AGENT
12.0 Appointment. Each Lender hereby designates and
appoints CIT as its Agent under this Agreement and the Related
Documents, and each Lender hereby irrevocably authorizes the
Agent to take such action on its behalf under the provisions of
this Agreement and the Related Documents and to exercise such
powers as are set forth herein or therein, together with such
other powers as are reasonably incidental thereto. The Agent
agrees to act as such on the express conditions contained in
this Article XII. The provisions of this Article XII are solely
for the benefit of the Agent and the Lenders and the Borrowers
nor the Guarantor shall have any rights as a third party
beneficiary of any of the provisions hereof (other than as
expressly set forth in Section 12.07). In performing its
functions and duties under this Agreement, the Agent shall act
solely as agent of the Lenders and does not assume and shall not
be deemed to have assumed any obligation toward or relationship
of agency or trust with or for either Borrower or the
Guarantor. The Agent may perform any of its duties hereunder,
or under the Related Documents, by or through its agents or
employees.
12.0 Nature of Duties. The Agent shall have no
duties or responsibilities except those expressly set forth in
this Agreement or in the Related Documents. The duties of the
Agent shall be mechanical and administrative in nature. The
Agent shall not have by reason of this Agreement a fiduciary
relationship in respect of any Lender. Nothing in this
Agreement or any of the Related Documents, express or implied,
is intended to or shall be construed to impose upon the Agent
any obligations in respect of this Agreement or any of the
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Related Documents except as expressly set forth herein or
therein. Each Lender shall make its own independent
investigation of the financial condition and affairs of the
Borrowers and the Guarantor in connection with the making and
the continuance of the Loans hereunder and with the issuance of
the Letters of Credit and shall make its own appraisal of the
creditworthiness of the Borrowers and the Guarantor, and the
Agent shall have no duty or responsibility, either initially or
on a continuing basis, to provide any Lender with any credit or
other information with respect thereto, whether coming into its
possession before the initial Credit Extension hereunder or at
any time or times thereafter, provided that, upon the reasonable
request of a Lender, the Agent shall provide to such Lender any
documents or reports delivered to the Agent by either Borrower
or the Guarantor pursuant to the terms of this Agreement or any
Related Document. If the Agent seeks the consent or approval of
the Majority Lenders to the taking or refraining from taking any
action hereunder, the Agent shall send notice thereof to each
Lender. The Agent shall promptly notify each Lender any time
that the Majority Lenders have instructed the Agent to act or
refrain from acting pursuant hereto.
12.0 Rights, Exculpation, Etc. Neither the Agent
nor any of its officers, directors, employees or agents shall be
liable to any Lender for any action taken or omitted by them
hereunder or under any of the Related Documents, or in
connection herewith or therewith, except that the Agent shall be
obligated on the terms set forth herein for performance of its
express obligations hereunder and except that no Person shall be
relieved of any liability imposed by law for intentional tort.
The Agent shall not be liable for any apportionment or
distribution of payments made by it in good faith pursuant to
Section 2.08(c), and if any such apportionment or distribution
is subsequently determined to have been made in error the sole
recourse of any Lender to whom payment was due but not made,
shall be to recover from other Lenders any payment in excess of
the amount which they are determined to be entitled. The Agent
shall not be responsible to any Lender for any recitals,
statements, representations or warranties herein or for any
execution, effectiveness, genuineness, validity, enforceability,
collectibility, or sufficiency of this Agreement or any of the
Related Documents or the transactions contemplated thereby, or
for the financial condition of either Borrower or the
Guarantor. The Agent shall not be required to make any inquiry
concerning either the performance or observance of any of the
terms, provisions or conditions of this Agreement or any of the
Related Documents or the financial condition of either Borrower
or the Guarantor, or the existence or possible existence of any
Potential Event of Default or Event of Default. The Agent may
at any time request instructions from the Lenders with respect
to any actions or approvals which by the terms of this Agreement
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or of any of the Related Documents the Agent is permitted or
required to take or to grant, and if such instructions are
promptly requested, the Agent shall be absolutely entitled to
refrain from taking any action or to withhold any approval under
any of the Related Documents until it shall have received such
instructions from the Majority Lenders. Without limiting the
foregoing, no Lender shall have any right of action whatsoever
against the Agent as a result of the Agent acting or refraining
from acting under this Agreement, the Notes, or any of the other
Related Documents in accordance with the instructions of the
Majority Lenders.
12.0 Reliance. The Agent shall be entitled to rely
upon any written notices, statements, certificates, orders or
other documents or any telephone message believed by it in good
faith to be genuine and correct and to have been signed, sent or
made by the proper Person, and with respect to all matters
pertaining to this Agreement or any of the Related Documents and
its duties hereunder or thereunder, upon advice of counsel
selected by it.
12.0 Indemnification. To the extent that the Agent
is not reimbursed and indemnified by either Borrower or the
Guarantor, the Lenders will reimburse and indemnify the Agent
for and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses,
advances or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by, or asserted against the Agent in
any way relating to or arising out of this Agreement or any of
the Related Documents or any action taken or omitted by the
Agent under this Agreement or any of the Related Documents, in
proportion to each Lender's Pro Rata Share, including, without
limitation, advances and disbursements made pursuant to Section
12.08; provided, however, that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, advances
or disbursements resulting from the Agent's recklessness or
willful misconduct. The obligations of the Lenders under this
Section 12.05 shall survive the payment in full of the Loans and
Reimbursement Obligations and the termination of this
Agreement. If so requested or required by a bank party to a
Collection Account Agreement or Restricted Account Agreement,
the Agent may agree to indemnify such bank for losses, costs and
expenses incurred by such bank in connection with the operation
of a Collection Account or Cash Concentration Account, as the
case may be. Such indemnification shall be in such amount and
on such terms as the Agent deems reasonable. The Borrowers
jointly and severally agree to reimburse the Agent for any
amounts paid by the Agent under any such indemnification
arrangement relating to such Collection Account or Cash
Concentration Account, as the case may be, and each Lender
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agrees to indemnify the Agent for any amounts not so reimbursed
by the Borrowers.
12.0 CIT Individually. With respect to its Pro Rata
Share of the Revolving Credit Commitments hereunder, the Loans
made by it and the Note issued to or held by it, CIT shall have
and may exercise the same rights and powers hereunder and is
subject to the same obligations and liabilities as and to the
extent set forth herein for any other Lender or holder of a
Note. The terms "Lenders" or "Majority Lenders" or any similar
terms shall, unless the context clearly otherwise indicates,
include CIT in its individual capacity as a Lender or one of the
Majority Lenders. CIT may accept deposits from, lend money to,
and generally engage in any kind of banking, trust or other
business with the Borrowers or any of their Subsidiaries as if
it were not acting as Agent pursuant hereto.
12.0 Successor Agent.
(a) The Agent may resign from the performance of all
its functions and duties hereunder at any time by giving at
least thirty (30) Business Days' prior written notice to MGRE
and each Lender. Such resignation shall take effect upon the
acceptance by a successor Agent of appointment pursuant to
clauses (b) and (c) below or as otherwise provided below.
(b) Upon any such notice of resignation, the
Majority Lenders shall appoint a successor Agent who shall be
reasonably satisfactory to MGRE.
(c) If a successor Agent shall not have been so
appointed within said thirty (30) Business Day period, the
retiring Agent, with the consent of MGRE, shall then appoint a
successor Agent who shall serve as Agent until such time, if
any, as the Majority Lenders, with the consent of MGRE, appoint
a successor Agent as provided above.
12.0 Collateral Matters.
(a) The Agent may from time to time, during the
occurrence and continuance of an Event of Default, make such
disbursements and advances ("Agent Advances") which the Agent,
in its sole discretion, deems necessary or desirable to preserve
or protect the Collateral or any portion thereof, to enhance the
likelihood or maximize the amount of repayment by the Borrowers
and the Guarantor of the Loans and other Obligations or to pay
any other amount chargeable to the Borrower pursuant to the
terms of this Agreement, including, without limitation, costs,
fees and expenses as described in Section 11.06. The Agent
Advances shall be repayable on demand and be secured by the
Collateral. The Agent Advances shall not constitute Loans but
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shall otherwise constitute Obligations hereunder. The Agent
shall notify each Lender and MGRE in writing of each such Agent
Advance, which notice shall include a description of the purpose
of such Agent Advance. Without limitation to its obligations
pursuant to Section 12.05, each Lender agrees that it shall make
available to the Agent, upon the Agents's demand, in Dollars in
immediately available funds, the amount equal to such Lender's
Pro Rata Share of each such Agent Advance. If such funds are
not made available to the Agent by such Lender the Agent shall
be entitled to recover such funds, on demand from such Lender
together with interest thereon, for each day from the date such
payment was due until the date such amount is paid to the Agent,
at the customary rate set by the Agent for the correction of
errors among banks for three Business Days and thereafter at the
Regular Rate.
(b) The Lenders hereby irrevocably authorize the
Agent, at its option and in its discretion, to release any Lien
granted to or held by the Agent upon any Collateral upon
termination of the Revolving Credit Commitments and payment and
satisfaction of all Loans, Reimbursement Obligations, other
Letter of Credit Exposure (whether or not due) and all other
Obligations which have matured and which the Agent has been
notified in writing are then due and payable; or constituting
property in which the Borrower owned no interest at the time the
Lien was granted or at any time thereafter; or if approved,
authorized or ratified in writing by the Majority Lenders. Upon
request by the Agent at any time, the Lenders will confirm in
writing the Agent's authority to release particular types or
items of Collateral pursuant to this Section 12.08(b).
(c) Without in any manner limiting the Agent's
authority to act without any specific or further authorization
or consent by the Majority Lenders (as set forth in Section
12.08(b)), each Lender agrees to confirm in writing, upon
request by the Agent, the authority to release Collateral
conferred upon the Agent under Section 12.08(b). So long as no
Event of Default is then continuing, upon receipt by the Agent
confirmation from the Majority Lenders of its authority to
release any particular item or types of Collateral, and upon at
least five (5) Business Days' prior written request by the
Borrowers, the Agent shall (and is hereby irrevocably authorized
by the Lenders to) execute such documents as may be necessary to
evidence the release of the Liens granted to the Agent for the
benefit of the Lenders herein or pursuant hereto upon such
Collateral; provided, however, that (i) the Agent shall not be
required to execute any such document on terms which, in the
Agent's opinion, would expose the Agent to liability or create
any obligations or entail any consequence other than the release
of such Liens without recourse or warranty, and (ii) such
release shall not in any manner discharge, affect or impair the
<PAGE>
<PAGE>
Obligations or any Lien upon (or obligations of either Borrower
in respect of) all interests in the Collateral retained by the
Borrowers.
(d) The Agent shall have no obligation whatsoever to
any Lenders to assure that the Collateral exists or is owned by
the Borrowers or the Guarantor or is cared for, protected or
insured or has been encumbered or that the Lien granted to the
Agent herein or pursuant hereto has been properly or
sufficiently or lawfully created, perfected, protected or
enforced or is entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of
care, disclosure or fidelity, or to continue exercising, any of
the rights, authorities and powers granted or available to the
Agent in this Section 12.08 or in any of the Related Documents,
it being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto, the
Agent may act in any manner it may deem appropriate, in its sole
discretion, given the Agent's own interest in the Collateral as
one of the Lenders and that the Agent shall have no duty or
liability whatsoever to any other Lender.
ARTICLE
GUARANTY
13.0 Guaranty. In consideration of financial
accommodations given or to be given or continued to the
Borrowers by the Agent, CIT and the Lenders pursuant to this
Agreement, the Guarantor irrevocably and unconditionally
guarantees to the Agent, CIT and the Lenders payment when due,
whether by acceleration or otherwise, of any and all of the
Obligations, together with all interest thereon and all
reasonable attorneys' fees, costs and expenses of collection
incurred by the Agent, CIT and the Lenders in enforcing any of
such liabilities.
13.0 Waiver. The Guarantor waives notice of
acceptance of this guaranty and notice of any liability to which
it may apply, and waives presentment, demand of payment,
protest, notice of dishonor or nonpayment of any such
liabilities, suit or taking other action by the Agent or the
Lenders against, and any other notice to, any party liable
thereon (including the Guarantor). The Lenders and the Agent
may at any time and from time to time (whether or not after
revocation or termination of this guaranty) without the consent
of, or notice to the Guarantor (except as shall be required by
applicable statutes and cannot be waived), without incurring
responsibility to the Guarantor, without impairing or releasing
the obligations of the Guarantor hereunder, upon or without any
terms or conditions and in whole or in part:
<PAGE>
<PAGE>
change the manner, place or terms of
payment, and/or change or extend the time of payment of,
renew or alter, any Obligations, any security therefor, or
any liability incurred directly or indirectly with respect
thereto, and the guaranty herein made shall apply to the
Obligations as so changed, extended, renewed or altered;
modify in any manner whatsoever any of the
Related Documents notwithstanding that such amendments or
modifications may result in the Obligations exceeding
the aggregate principal sums set forth in this Agreement
and the other Related Documents;
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 to secure,
or howsoever securing, the Obligations hereby guaranteed
or any Obligations and/or any offset there against;
fail to perfect, or continue the perfection
of, any lien or security interest in any such property,
or delay in the perfection of any such lien or security
interest;
exercise or refrain from exercising any
rights against the Borrowers or others (including the
Guarantors) or otherwise act or refrain from acting;
settle or compromise any Obligation hereby
guaranteed or any security therefor, 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
creditors of the Borrowers other than the Lenders and the
Guarantor; and
apply any sums by whomsoever paid or
howsoever realized to any Obligations to the Agent or the
Lenders regardless of what Obligations remain unpaid.
No invalidity, irregularity or unenforceability of all or any
part of the Obligations, or of any security therefor shall
affect, impair or be a defense to this guaranty, and this
guaranty is a primary obligation of the undersigned.
This guaranty is a continuing one and all
Obligations to which it now or hereafter applies or may apply
under the terms hereof shall be conclusively presumed to have
been created in reliance hereon. As to the Guarantor, this
guaranty shall continue until all Obligations shall have been
indefeasibly repaid in full, notwithstanding a revocation by, or
complete or partial release for any cause of, any other
<PAGE>
<PAGE>
guarantor, either Borrower or anyone liable in any manner for
the Obligations.
Upon the occurrence of an Event of Default
and at any time thereafter, the Agent may, without notice to the
Borrowers or any other Person, make the Obligations to the Agent
and the Lenders, whether or not then due, immediately due and
payable hereunder as to the Guarantor, and the Lenders and the
Agent shall be entitled to enforce the Obligations hereunder.
No delay on the part of the Agent in
exercising any of its options, powers or rights, or partial or
single exercise thereof, shall constitute a waiver thereof. No
waiver of any of its rights hereunder, and no modification or
amendment of this guaranty, shall be deemed to be effective
unless the same shall be in writing, signed by a duly authorized
officer of the Agent, and the same shall be effective only for
the period, on the condition and for the specific instances and
purposes specified therein and the same shall in no way impair
the rights of the Lenders and the Agent or the obligations of
the Guarantor to the Lenders and the Agent in any other respect
at any other time.
The Guarantor agrees that, should the Agent
bring any judicial proceedings in relation to this guaranty and
the Related Documents, the Guarantor will not interpose any
counterclaim or setoff of any nature.
13.0 Subordination. Any and all rights and claims
of the Guarantor against the Borrowers or any of their property,
arising by reason of any payment by the undersigned to the
Lenders or the Agent pursuant to the provisions of this
guaranty, shall be subordinate and subject in right of payment
to the prior indefeasible payment in full in cash of all
liabilities of the Borrowers to the Lenders and the Agent.
13.0 Covenants. The Guarantor will ensure that each
financial statement of the Guarantor, including without
limitation, any audited or unaudited financial statement or
balance sheet and any condensed balance sheet, which is
delivered by or on behalf of the Guarantor or any of its
Subsidiaries to any person other than a shareholder of the
Guarantor, shall contain, or shall be accompanied by, an
accurate written disclosure of the existence and amount of this
guaranty.
13.0 Costs of Collection. In the case of any
proceedings to collect any liabilities of the Guarantor to the
Lenders and the Agent, the Guarantor shall pay all costs and
expenses of every kind for collection, including reasonable
attorneys' fees, and after deducting such costs and expenses
<PAGE>
<PAGE>
from the proceeds of collection, the Lenders and the Agent may
apply any residue to any of such liabilities of the Guarantor,
who shall continue to be liable for any deficiency, all such
amounts payable on demand. As used herein "attorneys' fees"
shall include, without limitation, all reasonable fees of
counsel (including, without limitation, those incurred on
appeals) arising from such services and all reasonably incurred
expenses, costs, charges and other fees of such counsel, and all
such fees shall constitute liabilities of the Guarantor to the
Lenders and the Agent.
13.0 Claims. If claim is ever made upon the Lenders
or the Agent for repayment or recovery of any amount or amounts
received by the Lenders or the Agent in payment or on account of
any Obligations and the Lenders or the Agent repays all or part
of said amount by reason of (a) any judgment, decree or order of
any court or administrative body having jurisdiction over the
Lenders or the Agent or any of its property, or (b) any
settlement or compromise of any such claim effected by the
Lenders or the Agent with any such claimant (including the
Borrower), then and in such event the Guarantor agrees that any
such judgment, decree, order, settlement or compromise shall be
binding upon the Guarantor, notwithstanding any revocation
hereof or the cancellation of any note or other instrument
evidencing any liability of the Borrowers, and the Guarantor
shall be and remain liable to the Lenders or the Agent hereunder
for the amount so repaid or recovered to the same extent as if
such amount had never originally been received by the Lenders or
the Agent.
IN WITNESS WHEREOF, the parties hereto, by their
officers thereunto duly authorized, have executed and delivered
this Agreement as of the date first above written.
BORROWERS:
MERRY-GO-ROUND ENTERPRISES, INC.,
as debtor and as debtor-in-
possession
By:
Name:
Title:
<PAGE>
<PAGE>
MGR DISTRIBUTION CORPORATION,
as debtor and as debtor-in-
possession
By:
Name:
Title:
GUARANTOR:
MGRR, INC.,
as debtor and as debtor-in-
possession
By:
Name:
Title:
Address for Notices to Borrowers
and Guarantor:
Merry-Go-Round Enterprises, Inc.
3300 Fashion Way
Joppa, Maryland 21085
Attention: Isaac Kaufman
Telephone: (410) 538-1000
Telecopier: (410) 676-5577
with a copy to:
Swidler & Berlin
3000 K Street, N.W.
Suite 300
Washington, DC 20007-5116
Attention: Roger Frankel, Esq.
Telephone: (202) 424-7500
Telecopier: (202) 424-7643
AGENT AND LENDER:
THE CIT GROUP/BUSINESS
CREDIT, INC.
By:
Name:
Title:
<PAGE>
<PAGE>
Address for Notices:
The CIT Group/Business
Credit, Inc.
1211 Avenue of the Americas
New York, New York 10036
Attention: Craig Hamrah
Telephone: (212) 536-1211
Telecopier: (212) 536-1296
with a copy to:
Schulte Roth & Zabel
900 Third Avenue
New York, New York 10022
Attention: Mark A. Neporent, Esq.
Telephone: (212) 756-2238
Telecopier: (212) 593-5955
<PAGE>
<PAGE>
15386098.G
REVOLVING CREDIT AGREEMENT
dated as of January 14, 1994
among
MERRY-GO-ROUND ENTERPRISES, INC., and
MGR DISTRIBUTION CORPORATION
AS BORROWERS,
MGRR, INC.,
AS GUARANTOR,
THE FINANCIAL INSTITUTIONS PARTY HERETO,
AS LENDERS,
and
THE CIT GROUP/BUSINESS CREDIT, INC.,
AS AGENT
$125,000,000
<PAGE>
<PAGE>
Table of Contents
ARTICLE I DEFINITIONS; CONSTRUCTION 1
1.01 Certain Definitions 1
1.02 Construction 17
1.03 Accounting Principles 18
ARTICLE II THE CREDITS 18
2.01 Revolving Credit Loans 18
(a) The Revolving Credit Commitment 18
(b) Revolving Credit 19
2.02 Notes 19
2.03 Notice of Borrowing; Making of Loans 19
2.04 Reduction of Commitment;
Mandatory Prepayment; Optional Prepayment 22
(a) Reduction of the Commitment 22
(b) Mandatory Prepayment 23
(c) Optional Prepayment 24
(d) Prepayment Penalty 24
2.05 Interest Rate 24
2.06 Interest Payment Dates 24
2.07 Amortization 24
2.08 Payments 25
(a) Time, Place and Manner 25
(b) Periodic Statements 25
(c) Apportionment of Payments 26
(d) Interest Upon Events of Default 27
(e) Unused Line Fee 27
(f) Letter of Credit Fees 27
(g) Agent Fee 28
(h) Fees 28
2.09 Use of Proceeds 28
2.10 Eurodollar Rate Note Determinable; Inability
to Determine Interest Rate Illegality or
Impropriety 29
2.11 Reserve Requirements; Capital Adequacy
Circumstances 30
2.12 Indemnity 31
2.13 Sharing of Setoffs 32
2.14 Regulation D Compensation 33
2.15 Continuation and Conversion of Loans 33
2.16 Taxes 34
(i)
4151/BLUSEC
<PAGE>
<PAGE>
ARTICLE III LETTERS OF CREDIT 36
3.01 Letters of Credit 36
(a) General 36
(b) Request for Issuance 41
3.02 Participations 41
(a) Purchase of Participations 41
(b) Sharing of Letter of Credit Payments 41
(c) Obligations Irrevocable 40
ARTICLE IV BORROWING BASE 42
4.01 Condition of Lending and Assisting in
Establishing or Opening Letters of Credit 42
4.02 Mandatory Prepayment 42
4.03 Rights and Obligations Unconditional 42
4.04 Borrowing Base Certificate 43
4.05 General Provisions 43
ARTICLE V SECURITY; ADMINISTRATIVE PRIORITY 44
5.01 Grant of Lien and Security Interest 44
5.02 Collections and Cash Concentration
Account Arrangements 44
5.03 Administrative Priority 45
5.04 Grants, Rights and Remedies Cumulative 45
5.05 No Filings Required 45
5.06 Survival 46
ARTICLE VI REPRESENTATIONS AND WARRANTIES 47
6.01 Organization and Qualification 47
6.02 Authority and Authorization 47
6.03 Execution and Binding Effect 47
6.04 Authorizations and Filings 47
6.05 Financial Statements 48
(a) Historical Statements 48
(b) Projections 48
6.06 No Event of Default 48
6.07 Litigation 48
6.08 Absence of Conflicts 49
6.09 ERISA. . 49
6.10 Taxes 49
6.11 Financial Accounting Practices, etc. 50
6.12 Power To Carry On Business 50
6.13 No Material Adverse Change 50
6.14 Existing Liens; Capitalized Leases 50
6.15 Compliance with Laws 51
6.16 Accurate and Complete Disclosure 51
(ii)
<PAGE>
<PAGE>
6.17 Insurance 51
6.18 Environmental Matters 52
6.19 Administrative Priority; Lien Priority 52
6.20 Bankruptcy Court Order 52
6.21 Use of Proceeds 53
6.22 Location of Bank Accounts 53
6.23 Tradenames 53
ARTICLE VII CONDITIONS OF CREDIT EXTENSIONS 53
7.01 Conditions Precedent to Initial
Credit Extension 53
7.02 Conditions Precedent to Each
Credit Extension 55
ARTICLE VIII AFFIRMATIVE COVENANTS 57
8.01 Reporting and Information Requirements 57
(a) Annual Reports 57
(b) Quarterly Reports 58
(c) Monthly Reports 58
(d) Weekly Reports 59
(e) Certain Reports 60
(f) Pleadings, etc. 60
(g) Reports to Committees 60
(h) Other Reports and Information 60
(i) Further Information 60
(j) Projections 60
(k) Notice of Event of Default 60
(l) Notice of Material Adverse Change 61
(m) Visitation and Verification 61
(n) Environmental 61
(o) UCC Search Results 62
8.02 Preservation of Existence and Franchises 62
8.03 Insurance 62
8.04 Maintenance of Properties 62
8.05 Financial Accounting Practices, etc. 63
8.06 Compliance with Laws 63
8.07 Further Assurances 63
8.08 Maintenance of Accounts 64
8.09 Taxes 64
8.10 Pension Plans 65
ARTICLE IX NEGATIVE COVENANTS 65
9.01 Interim Bankruptcy Court Order; Final
Bankruptcy Court Order; Administrative
Priority; Lien Priority; Payment
(iii)
<PAGE>
<PAGE>
of Claims 65
9.02 Cumulative FIFO EBITDA 66
9.03 Liens 67
9.04 Indebtedness 68
9.05 Guarantees and Contingent Liabilities 69
9.06 Loans, Advances and Investments 69
9.07 Dividends and Related Distributions 70
9.08 Merger, etc. 70
9.09 Dispositions of Assets 70
9.10 Affiliates 71
9.11 Continuation of or Change in Business 71
9.12 Capital Expenditures 71
9.13 Markup and Markdown Policies 71
9.14 Environmental 71
9.15 ERISA. . 72
9.16 Maintenance of Inventory 72
9.17 Payments 73
ARTICLE X DEFAULTS 73
10.01 Events of Default 73
10.02 Consequences of an Event of Default 76
10.03 Certain Remedies 77
ARTICLE XI MISCELLANEOUS 77
11.01 Holidays 77
11.02 Records 77
11.03 Amendments and Waivers 77
11.04 No Implied Waiver; Cumulative Remedies 79
11.05 Notices 79
11.06 Expenses; Taxes; Attorneys' Fees;
Indemnification 80
11.07 Application 82
11.08 Severability 82
11.09 Governing Law 82
11.10 Prior Understandings 82
11.11 Duration; Survival 82
11.12 Counterparts 83
11.13 Assignment; Participations 83
11.14 Successors and Assigns 85
11.15 Lenders and Agent as Parties in Interest 85
11.16 Confidentiality 85
11.17 Waiver of Jury Trial 87
11.18 Defaulting Lender 87
ARTICLE XII THE AGENT 88
12.01 Appointment 88
(iv)
<PAGE>
<PAGE>
12.02 Nature of Duties 88
12.03 Rights, Exculpation, Etc. 89
12.04 Reliance 90
12.05 Indemnification 90
12.06 CIT Individually 90
12.07 Successor Agent 91
12.08 Collateral Matters 91
ARTICLE XIII GUARANTY 93
13.01 Guaranty 93
13.02 Waiver 93
13.03 Subordination 95
13.04 Covenants 95
13.05 Costs of Collection 95
13.06 Claims 95
Exhibit A Form of Note
Exhibit B Form of Interim Bankruptcy Court Order
Exhibit C Form of Letter of Credit Application
Exhibit D Form of Borrowing Base Certificate
Exhibit E Form of Borrowers' Counsel Opinion
Exhibit F Form of Assignment and Acceptance
Schedule 1.01(A) Locations of Eligible Inventory
Schedule 1.01(B) Initial Locations of Eligible Inventory
Schedule 1.01(C) Collection Accounts and Cash Concentration
Account
Schedule 1.02 Revolving Credit Commitments
Schedule 6.01 Organization and Qualification
Schedule 6.07 Litigation
Schedule 6.17 Insurance
Schedule 6.22 Depository Accounts
Schedule 6.23 Trademarks
Schedule 8.08 Bank Accounts
Schedule 9.03 Existing Liens
Schedule 9.05 Existing Guarantees
Schedule 9.17 Permitted Principal and Interest Payments
(v)
##
##
## -#-
4170/BLUSEC##
FIRST AMENDMENT
TO
REVOLVING CREDIT AGREEMENT
First Amendment, dated as of January 21, 1994, to the
Revolving Credit Agreement, dated as of January 14, 1994 (the
"Credit Agreement"), among MERRY-GO-ROUND ENTERPRISES, INC., a
Maryland corporation ("MGRE"), MGR DISTRIBUTION CORPORATION, a
Maryland corporation ("MGRD", and together with MGRE,
collectively, the "Borrowers" and individually, a "Borrower"),
MGRR, INC., a Delaware corporation (the "Guarantor"), the
financial institutions from time to time party thereto
(collectively, the "Lenders" and individually, a "Lender"), and
THE CIT GROUP/BUSINESS CREDIT, INC. ("CIT"), as agent for the
Lenders (in such capacity, the "Agent").
The Borrowers, the Guarantor and the Lenders desire
to amend the definition of the term "Termination Date" contained
in the Credit Agreement and to make certain technical changes
with respect to cash collateralized letters of credit issued
pursuant to the Credit Agreement. Accordingly, the Borrowers,
the Guarantor and the Lenders hereby agree as follows:
1. Definitions. All capitalized terms used herein
and not otherwise defined herein are used herein as defined in
the Credit Agreement.
2. Interim Facility.
(a) The second sentence of the "Background"
recitals of the Credit Agreement is hereby amended by deleting
the dollar amount "$50 million" referred to therein and
substituting therefor the dollar amount "$40 million."
(b) The second sentence of Section 2.01(a) of
the Credit Agreement is hereby amended by deleting the dollar
amount "$50 million" referred to therein and substituting
therefor the dollar amount "$40 million."
3. L/C Inventory: Borrowing Base. Clause (i)(B) of
the first sentence of the definition of "Borrowing Base" in
Section 1.01 of the Credit Agreement is hereby amended in its
entirety to read as follows:
"(B) from and after the date on which the Agent
has received UCC searches or other evidence
reasonably satisfactory to the Agent
establishing the absence of any Liens on the
Inventory of the Borrowers located in the
<PAGE>
<PAGE>
Borrowers' distribution center in Joppa,
Maryland, 60% of the value of L/C Inventory and"
4. Termination Date. Clause (i) of the last
sentence of Section 2.01(a) of the Credit Agreement is hereby
amended in its entirety to read as follows:
"(i) January 21, 1994, if the Interim Bankruptcy
Court Order has not been entered on or prior to such date,"
5. Documentary Letters of Credit.
(a) The definition of "L/C Inventory" in
Section 1.01 of the Credit Agreement is hereby amended by adding
the following parenthetical clause at the end thereof:
"(and shall not include inventory supported by
Letters of Credit issued for the benefit of
domestic trade creditors)"
(b) Clause (z) of paragraph (ii) of Section
3.01(a) of the Credit Agreement is hereby amended in its
entirety to read as follows:
"(z) aggregate Letter of Credit Exposure at any
one time in excess of $12 million resulting from
the issuance of Letters of Credit for the
benefit of domestic trade creditors in
connection with the purchase of merchandise or
goods of either Borrower shall not be permitted."
6. Technical Changes with Respect to Cash
Collateralized Letters of Credit.
(a) The third sentence of Section 2.01(a) of
the Credit Agreement is hereby amended by adding the following
at the end thereof:
", provided that, for purposes of Letters of Credit
issued pursuant to paragraph (ix) of Section 3.01(a)
hereof that are supported by cash collateral, the
Borrowing Base limitation shall be excluded from the
Current Commitment"
(b) The third sentence of Section 3.01(a) of
the Credit Agreement is hereby amended in its entirety to read
as follows:
"CIT shall have no obligation to arrange for the
issuance of Letters of Credit on or after the
<PAGE>
<PAGE>
Termination Date or which, when added to the
aggregate amount of all outstanding and
contemporaneous Loans and the Letter of Credit
Exposure at such time, would cause the amount of all
Loans and the Letter of Credit Exposure at any time
to exceed the Current Commitment at such time,
provided that, for purposes of Letters of Credit
issued pursuant to paragraph (ix) of this Section
3.01(a) that are supported by cash collateral, the
Borrowing Base limitation shall be excluded from the
Current Commitment"
(c) Section 7.02(d) of the Credit Agreement is
hereby amended in its entirety to read as follows:
"(d) The aggregate unpaid principal amount of
the Loans and the Letter of Credit Exposure
shall not exceed, and after giving effect to the
requested Credit Extension will not exceed, the
Current Commitment, provided that, for purposes
of Letters of Credit issues pursuant to
paragraph (ix) of Section 3.01(a) hereof that
are supported by cash collateral, the Borrowing
Base limitation shall be excluded from the
Current Commitment."
(d) Exhibit D to the Credit Agreement is hereby
amended to read in its entirety as set forth in Annex I to this
Amendment.
7. Increased Costs. The first sentence of Section
2.11(d) of the Credit Agreement is hereby amended by adding the
following proviso at the end thereof:
"; provided further, that such Lender shall
provide to the Borrowers and the Agents a
certificate setting forth the basis on
which such demand is made"
8. Maintenance of Inventory. Section 9.16 of the
Credit Agreement is hereby amended by adding the following
proviso at the end thereof:
", provided that the Borrowers and the
Agent shall negotiate in good faith to
determine an adjustment to the minimum
amount and maximum amount of Inventory set
forth above in connection with the store
closings permitted by Section 9.09(b)(i)
and (iii) hereof"
<PAGE>
<PAGE>
9. Schedules. Schedule 6.23 to the Credit
Agreement is hereby amended by adding immediately after the
heading "Trademarks" the following sentence:
"All Trademarks are owned by MGRR, Inc."
10. Exhibits. Exhibit B to the Credit Agreement is
hereby amended to read in its entirety as set forth in Annex II
to this Amendment.
11. Conditions to Effectiveness. This Amendment
shall become effective only upon satisfaction in full of the
following conditions precedent (the first date upon which all
such conditions have been satisfied being herein called the
"Effective Date");
(ii) The Agent shall have received counterparts of
this Amendment which bear the signatures of the Borrowers, the
Guarantor and the Lenders.
(iii) All legal matters incident to this Amendment
shall be satisfactory to the Agent and its counsel.
12. Representations and Warranties. Each of the
Borrowers and the Guarantor represents and warrants to the
Lenders as follows:
(a) The execution, delivery and performance by
the Borrowers and the Guarantor of this Amendment and the
performance by the Borrowers and the Guarantor of the Credit
Agreement as amended hereby (A) have been duly authorized by all
necessary corporate action and (B) do not and will not
contravene their organizational documents or any applicable law.
(b) This Amendment and the Credit Agreement, as
amended hereby, constitute the legal, valid and binding
obligations of the Borrowers and the Guarantor, enforceable
against the Borrowers and the Guarantor in accordance with their
terms.
(c) The representations and warranties
contained in Article VI of the Credit Agreement are correct on
and as of the Effective Date as though made on and as of the
Effective Date (except to the extent such representations and
warranties expressly relate to an earlier date), and no Event of
Default or Potential Default, has occurred and is continuing on
and as of the Effective Date.
13. Continued Effectiveness of Credit Agreement.
Each of the Borrowers and the Guarantor hereby (i) confirms and
agrees that each Related Document to which it is a party is, and
<PAGE>
<PAGE>
shall continue to be, in full force and effect and is hereby
ratified and confirmed in all respects except that on and after
the Effective Date of this Amendment all references in any such
Related Document to "the Credit Agreement", "thereto",
"thereof", "thereunder" or words of like import referring to the
Credit Agreement shall mean the Credit Agreement as amended by
this Amendment, and (ii) confirms and agrees that to the extent
that any such Related Document purports to assign or pledge to
the Agent, or to grant to the Agent a security interest in or
lien on, any collateral as security for the Obligations of the
Borrowers or the Guarantor from time to time existing in respect
of the Credit Agreement and the Related Documents, such pledge,
assignment and/or grant of the Credit Agreement and security
interest or lien is hereby ratified and confirmed in all
respects.
14. Miscellaneous.
a. This Amendment may be executed in any
number of counterparts and by different parties hereto in
separate counterparts, each of which shall be deemed to be an
original, but all of which taken together shall constitute one
and the same agreement.
b. Section and paragraph headings herein are
included for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose.
c. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of New York.
d. The Borrowers will pay on demand all fees,
costs and expenses of the Agent in connection with the
preparation, execution and delivery of this Amendment,
including, without limitation, the reasonable fees,
disbursements and other charges of Schulte Roth & Zabel, counsel
to the Agent.
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be executed by their respective officers
thereunto duly authorized as of the day and year first above
written.
BORROWERS:
MERRY-GO-ROUND ENTERPRISES, INC.,
as debtor and as
debtor-in-possession
<PAGE>
<PAGE>
By: /s/ Isaac Kaufman
Name:
Title: Executive Vice
President
MGR DISTRIBUTION CORPORATION, as
debtor and as debtor-in-possession
By: /s/ Isaac Kaufman
Name:
Title: Vice President
Guarantor:
MGRR, INC., as debtor and as
debtor-in-possession
By: /s/ Isaac Kaufman
Name:
Title: Vice President
AGENT AND LENDER:
THE CIT GROUP/BUSINESS CREDIT,
INC.
By: /s/
Name:
Title:
