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BA3DOCS1/0019611.04
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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): July 18,
1995
MERRY-GO-ROUND ENTERPRISES, INC.
(Exact Name of Registrant as Specified in its Charter)
Maryland 1-10491 52-0913402
(State of (Commission (IRS Employer
Incorporation) File Number) Identification No.)
3300 Fashion Way, Joppa, Maryland 21085
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (410)
538-1000
Item 5. Other Events.
I. Debtor-In-Possession Financing
The Registrant and two of its subsidiaries, MGR
Distribution Corporation, and Worths Stores Corp., as
Borrowers, (the "Borrowers") have entered into a Debtor-In-
Possession Credit Agreement dated as of July 18, 1995 (the
"Credit Agreement") with General Electric Capital
Corporation and Citicorp USA, as co-agents (the "Co-Agents")
and the lenders named therein (the "Lenders"). The proceeds
of the initial loans and letters of credit made under the
Credit Agreement are to repay substantially all obligations
and terminate substantially all commitments in respect of
the credit facilities provided by a Revolving Credit
Agreement dated as of January 14, 1994, as amended (the
"Previous Credit Agreement"), among the Registrant, certain
of its subsidiaries, the financial institutions from time to
time party thereto and The CIT Group/Business Credit, Inc.,
as agent, and any excess proceeds are to be applied for
working capital and for other general corporate purposes.
The Credit Agreement was approved by the United States
Bankruptcy Court for the District of Maryland on July 13,
1995. Concurrent with the execution of the Credit
Agreement, the Registrant, MGR Distribution Corporation and
MGRR, Inc., entered into a Termination and Release Agreement
with The CIT Group/Business Credit, Inc. terminating the
Previous Credit Agreement.
The following is a brief summary of certain
portions of the Credit Agreement and is qualified in its
entirety by reference to the Credit Agreement which is filed
as Exhibit 99.1 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 $90,000,000 revolving credit facility.
Under the Credit Agreement, the Borrowers may
borrow in the form of cash borrowings, documentary letters
of credit and standby letters of credit an aggregate of the
lesser of $90,000,000 or the Borrowing Base described below.
Letters of credit are further limited to the lesser of
$75,000,000 for commercial letters of credit and $15,000,000
for standby letters of credit or the Borrowing Base.
In addition to any Borrower requesting that the
Lenders make loans pursuant to the Credit Agreement, any
Borrower may request that letters of credit be issued for
the purpose of (i) providing the primary payment mechanism
in connection with the purchase of any materials, goods or
services in the ordinary course of business ("Commercial
Letters of Credit") or (ii) supporting (A) workers'
compensation liabilities of the Borrowers or any of their
subsidiaries, (B) the obligations of third party insurers of
the Borrowers or any of their subsidiaries arising by virtue
of the laws of any jurisdiction requiring third party
insurers, (C) obligations with respect to capital leases or
operating leases of the Borrowers or their subsidiaries,
(D) performance, payment deposit or surety obligations of
Borrowers or any of their subsidiaries, in any case if
required by law or governmental rule or regulation or in
accordance with custom and practice in the industry,
(E) obligations of the Registrant to its new chief executive
officer pursuant to an employment agreement, (F) obligations
of the Borrowers or any of their subsidiaries to insurance
companies providing insurance to Borrowers and their
subsidiaries in an aggregate amount not to exceed $8,000,000
at any time, (G) obligations to customs and revenue
authorities to secure payment of custom duties in connection
with the importation of goods, (H) certain obligations under
the Previous Credit Agreement and (I) other obligations
determined acceptable by the Co-Agents and Citibank, N.A. as
Issuing Lender ("Standby Letters of Credit"); provided that
Standby Letters of Credit may not be issued for the purpose
of supporting (a) trade payables or (b) indebtedness
constituting "antecedent debt" (as that term is used in
Section 547 of the United States Bankruptcy Code).
The Lenders' commitment to make loans and issue
letters of credit expires on the earlier of (i) October 15,
1996, (ii) the effective date of a plan of reorganization in
the cases filed by the Registrant and certain of its
subsidiaries pursuant to Chapter 11 of the U.S. Bankruptcy
Code (the "Chapter 11 Cases"), and (iii) the date of
termination of the Lenders' commitments pursuant to an
"Event of Default" as defined in the Credit Agreement (the
"Commitment Termination Date").
Generally, no Standby Letter of Credit may have an
expiration date later than the earlier of (a) the Commitment
Termination Date and (b) the date which is one year from the
date of issuance of such Standby Letter of Credit.
Generally, no Commercial Letter of Credit may have an
expiration date (x) later than the earlier of (i) 30 days
prior to the Commitment Termination Date and (ii) the date
which is 180 days from the date of issuance of such
Commercial Letter of Credit or (y) that is otherwise
unacceptable to Issuing Lender in its reasonable discretion.
The Borrowing Base is defined as of any date of
determination, as an amount equal to the applicable
percentage of the "Eligible Inventory" (as defined in the
Credit Agreement) determined at the lower of cost using the
retail method or market. For the fiscal months of
September, October and November 1995, the applicable
percentage used in the determination of the Borrowing Base
is 55% if both of the following conditions have been met to
the reasonable satisfaction of the Co-Agents: (a) the Co-
Agents shall have received an updated appraisal of all
inventory of the Borrowers in form and substance and with
results satisfactory to Co-Agents, and (b) consolidated
adjusted earnings before interest, taxes, depreciation and
amortization, as defined in the Credit Agreement ("EBITDA")
as of July 29, 1995 for the two fiscal quarter period then
ended shall be equal to or greater than the projected EBITDA
for such period set forth in the financial plan of the
Registrant and its subsidiaries. The Co-Agents shall be
entitled, at any time, to (i) establish, increase or
decrease reserves against Eligible Inventory or the
Borrowing Base, and (ii) impose additional requirements (or
eliminate the same) to the standards of eligibility set
forth in the definition of "Eligible Inventory," in each
case in the exercise of their reasonable business
discretion.
Each loan shall bear interest on the unpaid
principal amount thereof from the date made through maturity
at a rate per annum equal to the sum of the "Base Rate" (as
defined in the Credit Agreement) plus one and one-half
percent (1.5%) per annum. The Base Rate is defined as a
fluctuating interest rate per annum in effect from time to
time, which rate is equal to the highest of: (i) the rate
of interest announced publicly by Citibank, N.A. from time
to time, as Citibank, N.A.'s base rate; (ii) the sum of
(a) 1/2 of 1% per annum, plus (b) the rate obtained by
dividing (1) the latest three-week moving average of
secondary market morning offering rates in the United States
for three-month certificates of deposit of major United
States money market banks by (2) a percentage equal to 100%
minus the average of the daily percentages specified during
such three-week period by the Board of Governors of the
Federal Reserve System (or any successor) for determining
the maximum reserve requirement (including, but not limited
to, any emergency supplemental or other marginal reserve
requirement) for Citibank, N.A. with respect to liabilities
consisting of or including (among other liabilities) three-
month U.S. dollar non-personal time deposits in the United
States, plus (c) the average during such three-week period
of the annual assessment rates estimated by Citibank, N.A.
for determining the then current annual assessment payable
by Citibank, N.A. to the Federal Deposit Insurance
Corporation for insuring U.S. dollar deposits of Citibank,
N.A. in the United States; and (iii) 1/2 of 1% per annum
above the "Federal Funds Rate" (as defined in the Credit
Agreement).
The Credit Agreement provides for a letter of
credit fee equal to 2.25% per annum of the average daily
maximum amount available to be drawn under such Standby
Letter of Credit, and a letter of credit fee equal to 2.00%
per annum of the aggregate maximum amount outstanding for
all Commercial Letters of Credit.
The Credit Agreement also provides for the payment
of commitment fees equal to (i) the average of the daily
excess of the commitments over the sum of (a) the aggregate
principal amount of loans outstanding plus (b) the letter of
credit usage multiplied by (ii) 1/2 of 1% per annum. The
Borrowers have also agreed to pay to the Co-Agents certain
other fees due and payable pursuant to a Fee Letter dated
June 9, 1995, by and among the Registrant and the Co-Agents.
The Credit Agreement provides that all obligations
under the loan documents shall constitute allowed
administrative expense claims in the Chapter 11 Cases
against each Borrower and the subsidiaries of the Registrant
which have executed and delivered a guaranty (collectively,
the "Credit Parties") which are debtors in the Chapter 11
Cases with priority under Section 364(c)(1) of the United
States Bankruptcy Code over any and all other administrative
expenses of the kind specified or ordered pursuant to any
provision of the United States Bankruptcy Code; provided
that, upon the occurrence and during the continuation of an
"Event of Default" (as defined in the Credit Agreement) or
the exercise by any Co-Agent, General Electric Capital
Corporation, as secured party ("Secured Party") or any
Lender of its remedies after an Event of Default, such
claims shall be subject to: (i) unpaid professional fees
and expenses allowed in the Chapter 11 Cases in an aggregate
amount not to exceed $5,000,000; and (ii) fees payable to
the United States Trustee pursuant to 28 U.S.C. 1930(a)(6).
In addition, the Borrowers and certain subsidiaries of the
Registrant that have executed a guaranty have granted to
Secured Party, on behalf of the Lenders, a first or second
priority interest in substantially all of their assets as
set forth in a Pledge and Security Agreement and certain
other documents.
The Credit Agreement requires that certain
financial tests be met or exceeded, including with respect
to (i) EBITDA, (ii) the ratio of EBITDA to "Consolidated
Fixed Charges," and (iii) "Consolidated Net Worth," each as
defined in the Credit Agreement. In addition, the Credit
Agreement establishes certain restrictions on the Borrowers
including the maintenance of a cash management system,
indebtedness, guarantees, liens, capital expenditures,
investments, dividends, asset dispositions, and maximum
restructuring fees and disbursements.
II. Change in Management
On July 11, 1995, the Registrant announced the
election of Richard Crystal as Chief Executive Officer,
President and Director. Stephen Wertheimer was appointed
Chairman of the Board of Directors. In connection with
these appointments, Thomas Shull and James Kenney resigned
as Chairman, Chief Executive Officer, and President and
Chief Operating Officer, respectively.
Item 7. Financial Statements and Exhibits
(c) Exhibits
99.1 Debtor-In-Possession Credit Agreement dated
as of July 18, 1995
99.2 Press Releases Announcing Change in
Management dated June 28, 1995 and
July 11, 1995
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.
August 8, 1995 By: /s/ Isaac Kaufman
Isaac Kaufman
Executive Vice President,
Secretary and Treasurer
(Principal Financial
Officer)
EXHIBIT INDEX
99.1 Debtor-In-Possession Credit Agreement dated as of
July 18, 1995
99.2 Press Releases Announcing Change in Management
dated June 28, 1995 and July 11, 1995
Exhibit 99.1
DEBTOR-IN-POSSESSION CREDIT AGREEMENT
DATED AS OF JULY 18, 1995
among
MERRY-GO-ROUND ENTERPRISES, INC.,
MGR DISTRIBUTION CORPORATION,
WORTHS STORES CORP.,
each a Debtor-in-Possession,
as Borrowers,
THE LENDERS LISTED HEREIN,
as Lenders,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
and
CITICORP USA,
as Co-Agents
<PAGE>
DEBTOR-IN-POSSESSION CREDIT AGREEMENT
SECTION 1
DEFINITIONS
1.1 Certain Defined Terms
1.2 Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement
1.3 Other Definitional Provisions
SECTION 2
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 Commitments; Loans; Notes
2.2 Interest on the Loans.
2.3 Fees
2.4 Reductions in Commitments and Mandatory Prepayments;
General Provisions Regarding Payments.
2.5 Use of Proceeds.
2.6 Increased Costs; Taxes; Capital Adequacy
2.7 Obligation of Lenders and Issuing Lender to Mitigate.
2.8 Superpriority Nature of Obligations.
2.9 Joint and Several Liability; Payment Indemnifications
SECTION 3
LETTERS OF CREDIT
3.1 Issuance of Letters of Credit and Lenders' Purchase of
Participations Therein.
3.2 Letter of Credit Fees
3.3 Drawings and Reimbursement of Amounts Drawn Under
Letters of Credit.
3.4 Obligations Absolute
3.5 Indemnification; Nature of Issuing Lender's Duties
3.6 Increased Costs and Taxes Relating to Letters of Credit
3.7 Letter of Credit Agent.
SECTION 4
CONDITIONS TO LOANS AND LETTERS OF CREDIT
4.1 Conditions to Initial Loans and Letters of Credit.
4.2 Conditions to All Loans.
4.3 Conditions to Letters of Credit
SECTION 5
BORROWERS' REPRESENTATIONS AND WARRANTIES
5.1 Organization, Powers, Qualification, Good Standing,
Business and Subsidiaries.
5.2 Authorization of Borrowing, etc.
5.3 Financial Condition.
5.4 No Material Adverse Change; No Restricted Junior
Payments.
5.5 Title to Properties; Liens.
5.6 Litigation; Adverse Facts.
5.7 Payment of Taxes.
5.8 Performance of Agreements; Materially Adverse
Agreements.
5.9 Governmental Regulation.
5.10 Securities Activities.
5.11 Employee Benefit Plans.
5.12 Certain Fees.
5.13 Environmental Protection
5.14 Employee Matters.
5.15 Inventory.
5.16 Representations Concerning Cash Management System.
5.17 Intellectual Property.
5.18 Disclosure.
SECTION 6
BORROWERS' AFFIRMATIVE COVENANTS
6.1 Financial Statements and Other Reports.
6.2 Corporate Existence, etc.
6.3 Payment of Taxes and Claims; Tax Consolidation.
6.4 Maintenance of Properties; Insurance.
6.5 Inspection; Lender Meeting.
6.6 Compliance with Laws, etc.
6.7 Environmental Matters.
6.8 Environmental Indemnity
6.9 Borrowing Base.
6.10 Cash Management System.
<PAGE>
6.11 Agreements.
6.12 Direction Letters.
SECTION 7
BORROWERS' NEGATIVE COVENANTS
7.1 Indebtedness.
7.2 Liens and Related Matters.
7.3 Investments; Joint Ventures
7.4 Contingent Obligations.
7.5 Restricted Junior Payments
7.6 Financial Covenants.
7.7 Restriction on Fundamental Changes; Asset Sales.
7.8 Consolidated Capital Expenditures
7.9 Restriction on Leases.
7.10 Sales and Lease-Backs.
7.11 Chapter 11 Claims.
7.12 Transactions with Shareholders and Affiliates.
7.13 Disposal of Subsidiary Stock.
7.14 Conduct of Business.
7.15 Limitation on Repayments.
7.16 Markup and Markdown Policies.
7.17 Fiscal Year
7.18 Operating Agreement.
7.19 Restructuring Charges.
SECTION 8
EVENTS OF DEFAULT
8.1 Failure to Make Payments When Due.
8.2 Breach of Certain Covenants.
8.3 Other Defaults Under Loan Documents.
8.4 Breach of Warranty.
8.5 Bankruptcy Proceeding Events.
8.6 Involuntary Bankruptcy; Appointment of Receiver,
Dissolution, Etc.
8.7 Voluntary Bankruptcy; Appointment of Receiver, Etc.
8.8 Judgments.
8.9 Employee Benefit Plans.
8.10 Impairment of Collateral.
8.11 Impairment of Guaranty.
8.12 Default Under Material Contracts.
8.13 Material Adverse Effect
<PAGE>
8.14 Change of Control.
SECTION 9
AGENT
9.1 Appointment.
9.2 Powers; General Immunity.
9.3 Representations and Warranties; No Responsibility For
Appraisal of Creditworthiness.
9.4 Right to Indemnity.
9.5 Payee of Note Treated as Owner
9.6 Successor Agent.
9.7 Collateral Documents.
SECTION 10
MISCELLANEOUS
10.1 Assignments and Participations in Loans and Letters of
Credit.
10.2 Expenses.
10.3 Indemnity.
10.4 Set-Off; Security Interest in Deposit Accounts.
10.5 Ratable Sharing.
10.6 Amendments and Waivers.
10.7 Independence of Covenants.
10.8 Notices.
10.9 Survival of Representations, Warranties and Agreements.
10.10 Failure or Indulgence Not Waiver; Remedies
Cumulative.
10.11 Marshalling; Payments Set Aside.
10.12 Severability.
10.13 Obligations Several; Independent Nature of
Lenders' Rights.
10.14 Headings.
10.15 Applicable Law.
10.16 Successors and Assigns.
10.17 Consent to Jurisdiction and Service of Process
10.18 Waiver of Jury Trial
10.19 Confidentiality.
10.20 Counterparts; Effectiveness.
10.21 Parties Including Trustees; Court Proceedings.
Signature pages S-1
<PAGE>
EXHIBITS
I. FORM OF BORROWING ORDER
II. FORM OF NOTICE OF BORROWING
III. FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT
IV. FORM OF NOTE
V. FORM OF BORROWING BASE CERTIFICATE
VI. FORM OF COMPLIANCE CERTIFICATE
VII. FORM OF GUARANTY
VIII. FORM OF PLEDGE AND SECURITY AGREEMENT
IX. FORM OF TRADEMARK ASSIGNMENT
X. FORM OF MORTGAGE
XI. FORM OF CASH MANAGEMENT LETTER
XII. FORM OF OPINION OF CREDIT PARTY COUNSEL
XIII. FORM OF OPINION OF O'MELVENY & MYERS
XIV. FORM OF ASSIGNMENT AND ACCEPTANCE
XV FORM OF COLLATERAL ACCOUNT AGREEMENT
<PAGE>
SCHEDULES
1.1A MORTGAGED PROPERTY
1.1B PETITION DATES
1.1C MATERIAL CONTRACTS
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
5.1 SUBSIDIARIES OF BORROWERS; NON-OPERATING SUBSIDIARIES;
COLLATERAL MATTERS
5.2 CONSENTS
5.3 PROOFS OF CLAIM
5.5 REAL ESTATE AND LEASES
5.6 LITIGATION
5.7 TAX MATTERS
5.11 ERISA MATTERS
5.13 ENVIRONMENTAL MATTERS
5.14 EMPLOYEE MATTERS
5.16 CASH MANAGEMENT SYSTEM
5.17 INTELLECTUAL PROPERTY
7.2 EXISTING LIENS
7.3 EXISTING INVESTMENTS
7.4 EXISTING CONTINGENT OBLIGATIONS
7.15 PERMITTED PREPETITION REPAYMENTS
BA3DOCS1\0019656.01
<PAGE>
DEBTOR-IN-POSSESSION CREDIT AGREEMENT
This DEBTOR-IN-POSSESSION CREDIT AGREEMENT is dated as
of July 18, 1995 and entered into by and among MERRY-GO-
ROUND ENTERPRISES, INC., a Maryland corporation, as debtor
and debtor-in-possession ("MGRE"), MGR DISTRIBUTION
CORPORATION, a Maryland corporation, as debtor and debtor-in-
possession ("MGRD"), WORTHS STORES CORP., a Delaware
corporation, as debtor and debtor-in-possession ("Worths";
and, together with MGRE and MGRD, each individually referred
to herein as a "Borrower" and collectively as "Borrowers"),
THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES
HEREOF (each individually referred to herein as a "Lender"
and collectively as "Lenders"), GENERAL ELECTRIC CAPITAL
CORPORATION ("GE Capital"), as co-agent for Lenders (in such
capacity, including its successors and assigns, "GE Co-
Agent"), CITICORP USA ("CUSA"), as a co-agent for Lenders
(in such capacity, including its successors and assigns,
"CUSA Co-Agent"; and, together with GE Co-Agent, the "Co-
Agents").
R E C I T A L S
WHEREAS, on January 11, 1994, MGRE and certain of its
Subsidiaries (such term and other capitalized terms used in
these Recitals without definition have the meanings set
forth in subsection 1.1 of this Agreement) filed voluntary
petitions for relief under the Bankruptcy Code, with the
United States Bankruptcy Court for District of Maryland,
Baltimore Division (the "Court") and Worths and certain
other Subsidiaries of MGRE have since filed petitions for
relief under the Bankruptcy Code with the Court (such
proceedings, Case Nos. 94-5-0161-SD et al. are hereinafter
referred to as the "Chapter 11 Cases"). Each Borrower
continues to operate its businesses and manage its
properties as a debtor-in- possession pursuant to Sections
1107 and 1108 of the Bankruptcy Code.
WHEREAS, Borrowers have requested Lenders to provide,
subject to the Borrowing Base (as defined below), a
revolving credit facility (including letters of credit) of
up to $90,000,000 (including a standby letter of credit
subfacility of up to $15,000,000 and a commercial letter of
credit subfacility of up to $75,000,000) to fund working
capital, issue letters of credit, repay and terminate the
Existing Credit Facilities and make certain other payments
during the Chapter 11 Cases, all as set forth herein and
Lenders are willing to extend such postpetition credit to
Borrowers in accordance with and on the terms and conditions
set forth in this Agreement.
WHEREAS, each of the Guarantors desires to guarantee
the obligations of Borrowers hereunder pursuant to the
Guaranty.obligations hereunder and under the other Loan
Documents by granting to Secured Party, on behalf of
Lenders, a first or second priority (as the case may be)
security interest in substantially all of their assets as
set forth in the Pledge and Security Agreement and other
Collateral Documents.
<PAGE>
NOW, THEREFORE, in consideration of the premises and
the agreements, provisions and covenants herein contained,
Borrowers, Lenders and Co-Agents hereby agree as follows:
SECTION 1.
DEFINITIONS
1.1. Certain Defined Terms.
The following terms used in this Agreement shall have
the following meanings:
"Acceleration" means the declaration (whether
automatic, by notice or otherwise) of all or any portion of
the Loans or other Obligations to be immediately due and
payable pursuant to Section 8.
"Accounts" means all accounts, accounts receivable,
other receivables and rights to payment of every nature,
contract rights, chattel paper, instruments, documents and
notes, whether now owned or hereafter acquired by any
Borrower or any of its Subsidiaries and whether or not
earned by performance.
"Advance Percentage" means 50% at all times during the
term of this Agreement; provided that the Advance Percentage
shall be 55% for the fiscal months of September, October and
November 1995, if both of the following conditions have been
met to the reasonable satisfaction of Co-Agents: (a) Co-
Agents shall have received an updated appraisal of all
Inventory of Borrowers from Gordon Brothers Partners, Inc.
in form and substance and with results satisfactory to Co-
Agents; and (b) Consolidated Adjusted EBITDA as of July 29,
1995 for the two fiscal quarter period then ended shall be
equal to or greater than the projected Consolidated Adjusted
EBITDA amount for such period set forth in the Management
Plan.
"Affiliate", as applied to any Person, means any other
Person directly or indirectly controlling, controlled by, or
under common control with, that Person. For the purposes of
this definition, "control" (including, with correlative
meanings, the terms "controlling", "controlled by" and
"under common control with"), as applied to any Person,
means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and
policies of that Person, whether through the ownership of
voting securities or by contract or otherwise.
"Agent" means, individually, each of the Co-Agents and
Secured Party, and "Agents" means Co-Agents and Secured
Party collectively.
"Agreement" means this Debtor-In-Possession Credit
Agreement dated as of July 18, 1995.
2
<PAGE>
"Asset Sale" means the sale by MGRE or any Credit Party
to any Person other than MGRE or any other Credit Party of
(i) any of the capital stock of any of their respective
Subsidiaries, (ii) substantially all of the assets of any
division or line of business or product brands of MGRE or
any of its Subsidiaries, or (iii) any assets (whether
tangible or intangible) of MGRE or any of its Subsidiaries
outside of the ordinary course of business.
"Assignment and Acceptance" means an Assignment and
Acceptance entered into by a Lender and an Eligible
Assignee, and accepted by Co-Agents, in substantially the
form of Exhibit XIV annexed hereto.
"Bankruptcy Code" means Title 11 of the United States
Code entitled "Bankruptcy", now in effect as hereafter
amended from time to time, or any successor statute.
"Base Rate" means a fluctuating interest rate per annum
in effect from time to time, which rate per annum shall at
all times be equal to the highest of:
(i) the rate of interest announced publicly by
Citibank in New York, New York, from time to time, as
Citibank's base rate;
(ii) the sum (adjusted to the nearest 1/4 of 1% or, if
there is no nearest 1/4 of 1%, to the next higher 1/4 of 1%)
of (a) 1/2 of 1% per annum, plus (b) the rate obtained by
dividing (1) the latest three-week moving average of
secondary market morning offering rates in the United States
for three-month certificates of deposit of major United
States money market banks, such three-week moving average
(adjusted to the basis of a year of 360 days) being
determined weekly on each Monday (or, if such day is not a
Business Day, on the next succeeding Business Day) for the
three-week period ending on the previous Friday by Citibank
on the basis of such rates reported by certificate of
deposit dealers to and published by the Federal Reserve Bank
of New York or, if such publication shall be suspended or
terminated, on the basis of quotations for such rates
received by Citibank from three New York certificate of
deposit dealers of recognized standing selected by Citibank
by (2) a percentage equal to 100% minus the average of the
daily percentages specified during such three-week period by
the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement
(including, but not limited to, any emergency, supplemental
or other marginal reserve requirement) for Citibank with
respect to liabilities consisting of or including (among
other liabilities) three-month U.S. dollar non-personal time
deposits in the United States, plus (c) the average during
such three-week period of the annual assessment rates
estimated by Citibank for determining the then current
annual assessment payable by Citibank to the Federal Deposit
Insurance Corporation (or any successor) for insuring U.S.
dollar deposits of Citibank in the United States; and
3
<PAGE>
(iii) 1/2 of 1% per annum above the Federal Funds
Rate.
"Borrower" and "Borrowers" has the meaning assigned to
that term in the introduction to this Agreement.
"Borrower's Account" means, with respect to Borrowers,
the account of Borrowers maintained by Borrowers with
Citibank at its offices at 399 Park Avenue, New York, New
York 10043, as Disbursement Account No. 40676929, Account
Name: "Merry-Go-Round Enterprises, Inc. - Disbursement
Account"; or any such other account as designated in writing
by CUSA Co-Agent.
"Borrowing Base" means, as of any date of
determination, an amount equal to the Advance Percentage of
the Dollar value of Eligible Inventory determined at the
lower of cost using the retail method or market (less such
reserves as Co-Agents in their reasonable business
discretion may elect to establish including, without
limitation, reserves for markdowns, shrinkage, the Seasonal
Reserve referenced below and reserves for payment of
professional fees and expenses related to the Chapter 11
Cases described in subsection 2.8). Co-Agents shall be
entitled, at any time, to (i) establish and increase or
decrease reserves against Eligible Inventory or the
Borrowing Base, and (ii) impose additional requirements (or
eliminate the same) to the standards of eligibility set
forth in the definition of "Eligible Inventory", in each
case in the exercise of their reasonable business
discretion; it being understood and agreed that, in
furtherance of, and not in limitation of, the foregoing,
during the period from and including December 1, 1995
through and including February 28, 1996, Co-Agents may, in
addition to any other reserves established and in their sole
discretion, establish the Seasonal Reserve which shall be
applied against the Borrowing Base. Co-Agents shall give
Borrowers written notice of the establishment of, or any
change in, any reserves or standards of eligibility, and
such reserves or standards shall take effect for the
Borrowing Base Certificate delivered by Borrowers in the
next succeeding week following the date of such notice. Co-
Agents may, but shall not be required to, rely on each
Borrowing Base Certificate and any other schedules or
reports delivered to Co-Agents in connection herewith in
determining the then eligibility of Inventory. Reliance
thereon by Co-Agents from time to time shall not be deemed
to limit the right of Co-Agents to revise standards of
eligibility as provided herein.
"Borrowing Base Certificate" means a certificate
substantially in the form of Exhibit V annexed hereto
delivered by Borrowers to Co-Agents pursuant to subsection
6.9.
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"Borrowing Order" shall mean an order of the Court
entered in the Chapter 11 Cases after a final hearing under
Bankruptcy Rule 4001(c)(2) in the form attached hereto as
Exhibit I with any modifications approved by Co-Agents in
their sole discretion.
"Business Day" means for all purposes any day excluding
Saturday, Sunday and any day which is a legal holiday under
the laws of the States of New York and Maryland or is a day
on which banking institutions located in such states are
authorized or required by law or other governmental action
to close.
"Capital Lease", as applied to any Person, means any
lease of any property (whether real, personal or mixed) by
that Person as lessee that, in conformity with GAAP, is
accounted for as a capital lease on the balance sheet of
that Person.
"Cash" means money, currency or a credit balance in a
Deposit Account.
"Cash Equivalents" means (i) marketable securities
issued or directly and unconditionally guaranteed by the
United States Government or issued by any agency thereof and
backed by the full faith and credit of the United States, in
each case maturing within 60 days from the date of
acquisition thereof; (ii) marketable direct obligations
issued in certificated form by any state of the United
States of America or any political subdivision of any such
state or any public instrumentality thereof maturing within
60 days from the date of acquisition thereof and, at the
time of acquisition, having the highest rating obtainable
from either Standard & Poor's Corporation or Moody's
Investors Service, Inc.; (iii) commercial paper maturing no
more than 60 days from the date of creation thereof and, at
the time of acquisition, having a rating of at least A-1
from Standard & Poor's Corporation or at least P-1 from
Moody's Investors Service, Inc.; (iv) certificates of
deposit or bankers' acceptances maturing within 60 days from
the date of acquisition thereof issued by any Lender or any
commercial bank organized under the laws of the United
States of America or any state thereof or the District of
Columbia having unimpaired capital and surplus of not less
than $500,000,000 (each Lender and each such commercial bank
herein called a "Cash Equivalent Bank"); (v) time deposits
having a maturity of 30 days or less with any Cash
Equivalent Bank (whether such deposit is with such Cash
Equivalent Bank or any other Cash Equivalent Bank) and
(vi) balances maintained in Deposit Accounts included in the
Cash Management System.
"Cash Management Letters" means (i) the First National
Cash Management Letter, the Citibank Cash Management Letter
and each of the other letter agreements among each Credit
Party, its Subsidiaries (if applicable), the financial
institutions at which Deposit Accounts are located pursuant
to the Cash Management System and Co-Agents, in each case
substantially in the form of Exhibit XI annexed hereto with
such changes as are acceptable to Co-Agents, (ii) the
Direction Letters, and (iii) all other agreements with or
directions to the financial institutions at which Deposit
Accounts are located satisfactory to Co-Agents, in either
case pursuant to which, in accordance with
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subsection 6.10, such financial institutions are to direct
funds from such Deposit Accounts to the Collection Account
(it being understood that funds may be transferred through
intermediary accounts in the Cash Management System subject
to Cash Management Letters prior to ultimate transfer to the
Collection Account).
"Cash Management System" means the system of Deposit
Accounts of Credit Parties and their Subsidiaries pursuant
to which all Receipts of Credit Parties and such
Subsidiaries are collected and distributed all as described
in Schedule 5.16 annexed hereto, as it may be modified from
time to time in accordance with the terms hereof.
"Cash Restructuring Professional Fees" means cash
professional fees paid in connection with the Chapter 11
Cases regardless of the period in which they were incurred.
"Change of Control" means the occurrence of any of the
following on or after the Closing Date:
(i) any Person or "group" (within the meaning of
Section 13(d) of the Exchange Act) of Persons becomes the
beneficial owner, directly or indirectly, of outstanding
shares of capital stock of MGRE entitling such Person or
Persons to exercise more than 30% of the total votes
entitled to be cast at a regular or special meeting, or by
action by written consent, of the shareholders of MGRE; or
(ii) a majority of the Board of Directors of MGRE or
any successor thereto shall consist of Persons other than
(a) members of the Board of Directors of MGRE on the Closing
Date, or (b) other members of the Board of Directors who
shall have been recommended, approved or elected to succeed
or to become a director by a majority of the members of the
Board of Directors of MGRE on the Closing Date.
"Chapter 11 Cases" means (i) the Chapter 11 Cases as
defined in the recital clauses of this Agreement and (ii)
any future cases in which any Credit Party has filed a
petition for relief under the Bankruptcy Code.
"CIT" means the CIT Group/Business Credit, Inc.
"Citibank" means Citibank, N.A. in New York, New York.
"Citibank Cash Management Letter" means the letter
agreement substantially in the form of Exhibit XI annexed
hereto, by and among Borrowers, Secured Party and Citibank
and delivered pursuant to subsection 4.1D, which letter
agreement shall be in form and substance reasonably
satisfactory to Co-Agents.
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"Citibank Third-Party Account Agreement" means a Third-
Party Account Agreement substantially in the form of Annex 1
to Exhibit XV annexed hereto, by and among MGRE, Secured
Party and Citibank pursuant to which MGRE may maintain and
own Investments in the Restricted Investment Account which
Third-Party Account Agreement shall be in form and substance
reasonably satisfactory to Co-Agents.
"Closing Date" means the date on or before July 18,
1995, on which the initial Letters of Credit are issued.
"Co-Agents" has the meaning assigned that term in the
introduction to this Agreement.
"Collateral" means all the real, personal and mixed
property made subject to a Lien in favor of Secured Party
pursuant to the Collateral Documents.
"Collateral Account" means the Collateral Account
established by Borrowers pursuant to the Pledge and Security
Agreement pursuant to which Borrowers may pledge cash to
Secured Party to secure the obligations of Borrowers to
reimburse Issuing Lender for payments made under one or more
Letters of Credit as provided in subsection 3.1A or Section
8.
"Collateral Account Agreement" means a Collateral
Account Agreement substantially in the form of Exhibit XV
annexed hereto, by and among MGRE or MGRR, as the case may
be, Secured Party and a financial institution reasonably
acceptable to Co-Agents, and entered into pursuant to
subsection 7.3(v), which Collateral Account Agreement shall
be in form and substance reasonably satisfactory to Co-
Agents.
"Collateral Documents" means, collectively, the Pledge
and Security Agreement, the Trademark Assignment, the
Mortgage, the Cash Management Letters, the Collateral
Account Agreement, the Citibank Third-Party Account
Agreement and any other security agreements, pledge
agreements, assignments, financing statements or other
agreement, document or certificate now or hereafter granting
Liens on the property of any Credit Party or any of its
Subsidiaries to Secured Party for the benefit of Lenders.
"Collection Account" means the Collection Account
maintained in the name of Secured Party at Citibank pursuant
to the Pledge and Security Agreement, pursuant to which all
funds on deposit in the Deposit Accounts included in the
Cash Management System are directed by Secured Party in
accordance with subsection 6.10.
"Commercial Letter of Credit" means any letter of
credit or similar instrument issued in each case for the
purpose of providing the primary payment mechanism in
connection with the purchase of any materials, goods or
services by any Borrower or any
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<PAGE>
of its Subsidiaries in the ordinary course of business of
such Borrower or such Subsidiary.
"Commitment" means the commitment of a Lender to make
Loans to Borrowers pursuant to subsection 2.1A, and
"Commitments" means such commitments of all Lenders in the
aggregate.
"Commitment Termination Date" means the earliest of (i)
October 15, 1996, (ii) the effective date of a plan of
reorganization in the Chapter 11 Cases, and (iii) the date
of termination in whole of the Commitments pursuant to
Section 8.
"Compliance Certificate" means a certificate
substantially in the form of Exhibit V annexed hereto
delivered to Co-Agents and Lenders by Borrowers pursuant to
subsection 6.1(iv).
"Consolidated Adjusted EBITDA" means, for any period,
the sum of the amounts for such period of (i) Consolidated
Net Income, (ii) Consolidated Interest Expense and, (iii) to
the extent utilized in the calculation of Consolidated Net
Income (a) provisions for taxes based on income, (b) total
depreciation expense, (c) total amortization expense, (d)
restructuring expenses and (e) other non-cash items reducing
Consolidated Net Income less other non-cash items increasing
Consolidated Net Income (as provided in the definition
thereof), all of the foregoing as determined on a
consolidated basis for MGRE and its Subsidiaries in
conformity with GAAP.
"Consolidated Capital Expenditures" means, for any
period, the aggregate of all expenditures (whether paid in
cash or other consideration or accrued as a liability and
including that portion of Capital Leases which is
capitalized on the consolidated balance sheet of MGRE and
its Subsidiaries) by MGRE and its Subsidiaries during that
period that, in conformity with GAAP, are included in
"additions to property, plant or equipment" or comparable
items reflected in the consolidated statement of cash flows
of MGRE and its Subsidiaries; provided that Consolidated
Capital Expenditures shall not include (i) that portion of
any Capital Lease which relates to the point of sale
register system up to an aggregate amount of $8,000,000 and
(ii) expenditures made from the proceeds of any insurance
awards received by MGRE and its Subsidiaries to repair or
replace the damaged property with respect to which such
proceeds were received.
"Consolidated Cash Interest Expense" means Consolidated
Interest Expense excluding interest expense not paid in
cash.
"Consolidated Fixed Charges" means, for any period, the
sum of the amounts for such period of (i) Consolidated Cash
Interest Expense, (ii) Consolidated Capital Expenditures,
(iii) Cash Restructuring Professional Fees, and (iv) cure
payments made in
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<PAGE>
connection with leases assumed in the Chapter 11 Cases, all
of the foregoing as determined on a consolidated basis for
MGRE and its Subsidiaries in conformity with GAAP; provided
that for purposes of this definition only, Consolidated
Capital Expenditures shall be an amount equal to
Consolidated Capital Expenditures for the applicable period
minus the aggregate Net Cash Proceeds received by MGRE and
its Subsidiaries for the period which are applied to capital
expenditures as set forth in reasonable detail in an
Officer's Certificate delivered to Co-Agents.
"Consolidated Fixed Charge Coverage Ratio" means, for
any period, the ratio of (i) Consolidated Adjusted EBITDA to
(ii) Consolidated Fixed Charges for such period.
"Consolidated Interest Expense" means, for any period,
total interest expense (including that portion attributable
to Capital Leases in accordance with GAAP and capitalized
interest) of MGRE and its Subsidiaries on a consolidated
basis with respect to all outstanding Indebtedness of MGRE
and its Subsidiaries, including without limitation, all
commissions, discounts and other fees and charges with
respect to letters of credit, but excluding, however, any
amounts referred to in subsection 2.3B payable to any Agent
or Lenders on or before the Closing Date and extraordinary
amounts paid in respect of the Existing Credit Facilities on
the Closing Date related to the prepayment and refinancing
of such debt.
"Consolidated Net Income" means, for any period, the
net income (or loss) of MGRE and its Subsidiaries on a
consolidated basis for such period taken as a single
accounting period determined in conformity with GAAP.
"Consolidated Net Worth" means, as at any date of
determination, the sum of the capital stock and additional
paid-in capital plus retained earnings (or minus accumulated
deficits) of MGRE and its Subsidiaries on a consolidated
basis determined in conformity with GAAP.
"Consolidated Rental Payments" means, for any period,
the aggregate amount of all rents and other occupancy costs
paid or payable by MGRE and its Subsidiaries on a
consolidated basis during that period under all Capital
Leases and Operating Leases to which MGRE or any of its
Subsidiaries is a party as lessee.
"Contingent Obligation", as applied to any Person,
means any direct or indirect liability, contingent or
otherwise, of that Person (i) with respect to any
Indebtedness, lease, dividend or other obligation of another
if the primary purpose or intent thereof by the Person
incurring the Contingent Obligation is to provide assurance
to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that
any agreements relating thereto will be complied with, or
that the holders of such obligation will be protected (in
whole or in part) against loss in respect thereof, (ii) with
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<PAGE>
respect to any letter of credit issued for the account of
that Person or as to which that Person is otherwise liable
for reimbursement of drawings, or (iii) under Interest Rate
Agreements and Currency Agreements. Contingent Obligations
shall include, without limitation, (a) the direct or
indirect guaranty, endorsement (otherwise than for
collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse
by such Person of the obligation of another, (b) the
obligation to make take-or-pay or similar payments if
required regardless of non-performance by any other party or
parties to an agreement, and (c) any liability of such
Person for the obligation of another through any agreement
(contingent or otherwise) (1) to purchase, repurchase or
otherwise acquire such obligation or any security therefor,
or to provide funds for the payment or discharge of such
obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise) or (2) to
maintain the solvency or any balance sheet item, level of
income or financial condition of another if, in the case of
any agreement described under subclauses (1) or (2) of this
sentence, the primary purpose or intent thereof is as
described in the preceding sentence. The amount of any
Contingent Obligation shall be equal to the amount of the
obligation so guaranteed or otherwise supported or, if less,
the amount to which such Contingent Obligation is
specifically limited.
"Contractual Obligation", as applied to any Person,
means any provision of any Security issued by that Person or
of any material indenture, mortgage, deed of trust,
contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any of its
properties is bound or to which it or any of its properties
is subject.
"Court" shall have the meaning assigned to it in the
recital clauses hereof.
"Credit Exposure" means, with respect to any Lender as
of any date of determination (i) prior to the termination of
the Commitments, that Lender's Commitment and (ii) after the
termination of the Commitments, the sum of (a) the aggregate
outstanding principal amount of the Loans of that Lender
plus (b) in the event that Lender is Issuing Lender, the
aggregate amount of all drawings under Letters of Credit
honored by that Lender and not theretofore reimbursed by
Borrowers (in each case net of any participations purchased
by other Lenders in the applicable Letters of Credit) plus
(c) the aggregate amount of all participations purchased by
that Lender in any drawings under Letters of Credit honored
by Issuing Lender and not theretofore reimbursed by
Borrowers plus (d) the aggregate amount of all
participations purchased by that Lender in the undrawn
amounts of all outstanding Letters of Credit.
"Credit Party" means each Borrower and each Guarantor.
"Currency Agreement" means any foreign exchange
contract, currency swap agreement, futures contract, option
contract, synthetic cap or other similar agreement or
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<PAGE>
arrangement designed to protect any Borrower or any of its
Subsidiaries against fluctuations in currency values.
"CUSA Co-Agent" has the meaning assigned to that term
in the introduction to this Agreement.
"CUSA Co-Agent's Account" means the account of CUSA Co-
Agent maintained by CUSA Co-Agent with CUSA at its office at
399 Park Avenue, New York, New York 10043, Account No. 3885-
8061, Account Name: Citibank Concentration Account,
Attention: Patricia Ellis, Ref: "Merry-Go-Round" or any
other account as designated in writing by CUSA Co-Agent.
"Deposit Account" means a demand, time, savings,
passbook or like account with a bank, savings and loan
association, credit union or like organization, other than
an account evidenced by a negotiable certificate of deposit.
"Direction Letters" means, collectively, the direction
letters from the Credit Parties and Secured Party to the
financial institutions at which Deposit Accounts are located
informing such institutions of, among other things, Secured
Party's interest in such Deposit Accounts, which direction
letters shall be in form an substance satisfactory to Co-
Agents.
"Dollars" and the sign "$" mean the lawful money of the
United States of America.
"Eligible Assignee" means (A) (i) a commercial bank
organized under the laws of the United States or any state
thereof; (ii) a savings and loan association or savings bank
organized under the laws of the United States or any state
thereof; (iii) a commercial bank organized under the laws of
any other country or a political subdivision thereof;
provided that (a) such bank is acting through a branch or
agency located in the United States or (b) such bank is
organized under the laws of a country that is a member of
the Organization for Economic Cooperation and Development or
a political subdivision of such country; and (iv) any other
entity which is an "accredited investor" (as defined in
Regulation D under the Securities Act) which extends credit
or buys loans as one of its businesses including, but not
limited to, insurance companies, mutual funds and lease
financing companies, in each case (under clauses (i) through
(iv) above) that is acceptable to Co-Agents and has agreed
to make Loans in accordance with the terms hereof and (B)
any Lender and any Affiliate of any Lender.
"Eligible Inventory" means, as determined by Co-Agents,
based upon the most recent information delivered to Co-
Agents, pursuant to this Agreement or other information
available to Co-Agents, that portion of Inventory owned by
any Borrower
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<PAGE>
that shall be deemed to be "Eligible Inventory" for purposes
of determining the amounts to be advanced, if any, pursuant
to this Agreement. Without limiting the foregoing, in
determining that portion of Inventory that constitutes
Eligible Inventory, Co-Agents shall apply to the extent
applicable the following requirements:
(a) Title to the Inventory is held by a Borrower and
the Inventory is subject to a perfected first priority
security interest in favor of Secured Party and is not
subject to any other adverse claim, interest or right;
(b) The Inventory consists of (i) finished goods
purchased or manufactured by a Credit Party in the ordinary
course of its business, (ii) raw materials or piece goods or
(iii) identifiable finished goods carried as work-in-
progress by a Credit Party in the ordinary course of
business prior to the matching of the jackets and slacks;
(c) The Inventory is in good condition and meets in
all material respects all standards imposed by any Person
having regulatory authority over such goods, its use and/or
sale, is not obsolete or damaged, and is currently saleable
in the normal course of such Credit Party's business;
(d) None of the representations, warranties or
covenants contained in this Agreement and the other Loan
Documents in respect of such Inventory has been breached by
such Credit Party;
(e) Except as provided in clause (h) below, the
Inventory is located at one of the warehouses or retail
locations operated by a Credit Party or is in-transit
between Credit Parties;
(f) The Inventory (1) has not been consigned or leased
to or by any Person (other than consignment by a Credit
Party to another Credit Party) and (2) is not, except as
otherwise provided in clauses (e) or (h) of this definition,
in-transit;
(g) The Inventory has not been returned to a Credit
Party from customers and not yet returned to regular stock
at one of the locations permitted pursuant to clause (e)
above;
(h) The Inventory is being purchased pursuant to a
Commercial Letter of Credit issued under this Agreement or a
Remaining Documentary Letter of Credit and, at the time of
issuance (or in the case of the Remaining Documentary
Letters of Credit, on the date hereof), Co-Agents, in their
sole discretion, are satisfied that, at the time of the
drawing, on such Commercial Letter of Credit or Remaining
Documentary Letter of Credit, (1) such Inventory will be in
transit to one of the manufacturing facilities, warehouses
or retail locations operated by Credit Parties, (2) all of
the requirements set
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forth in clauses (a), (b), (c), (d), (f)(1), (g) and (i)
shall have been satisfied, (3) Co-Agents shall have received
reasonably satisfactory evidence that such Inventory is
fully insured against risk of loss and that Secured Party is
named as a loss payee thereunder and (4) Co-Agents and
Issuing Lender shall have received such other instruments or
documents as they may reasonably request; and
(i) The Inventory is not determined by Co-Agents, in
their reasonable business discretion, to be unacceptable for
inclusion in the Borrowing Base.
"Employee Benefit Plan" means any "employee benefit
plan" as defined in Section 3(3) of ERISA which is, or was
at any time during the past five years, maintained or
contributed to by Credit Parties or any Persons who are or
were, at the relevant time, their ERISA Affiliates and with
respect to which any Credit Party could have any liability.
"Environmental Claim" means any notice of violation,
claim, demand, abatement order or other order or direction
(conditional or otherwise) by any governmental authority or
any Person for any damage, including, without limitation,
personal injury (including sickness, disease or death),
tangible or intangible property damage, contribution,
indemnity, indirect or consequential damages, damage to the
environment, nuisance, pollution, contamination or other
adverse effects on the environment, or for fines, penalties
or restrictions, in each case relating to, resulting from or
in connection with Hazardous Materials and relating to any
Credit Party, any of its Subsidiaries, any of their
respective Affiliates or any Facility.
"Environmental Laws" means all statutes, ordinances,
orders, rules, regulations, policies or decrees relating to
(i) environmental matters, including, without limitation,
those relating to fines, injunctions, penalties, damages,
contribution, cost recovery compensation, losses or injuries
resulting from the Release or threatened Release of
Hazardous Materials, (ii) the generation, use, storage,
transportation or disposal of Hazardous Materials, or (iii)
occupational safety and health, industrial hygiene, land use
or the protection of human, plant or animal health or
welfare, in any manner applicable to any Credit Party or any
of its Subsidiaries or any of their respective properties,
including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act (42
U.S.C. 9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. 6901 et seq.),
the Federal Water Pollution Control Act ( 33 U.S.C. 1251
et seq.), the Clean Air Act (42 U.S.C. 7401 et seq.), the
Toxic Substances Control Act (15 U.S.C. 2601 et seq.), the
Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C.
136 et seq.), the Occupational Safety and Health Act (29
U.S.C. 651 et seq.) and the Emergency Planning and
Community Right-to-Know Act (42 U.S.C. 11001 et seq.),
each as amended or supplemented, and any analogous future or
present local, state and federal
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statutes and regulations promulgated pursuant thereto, each
as in effect as of the date of determination.
"Equipment" means all equipment in all of its forms
including, but not limited to, all machinery, furnishings,
tools, supplies, motor vehicles and other equipment of any
kind and nature, together with all parts thereof (including
spare parts) and accessions thereto.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, and any successor
statute.
"ERISA Affiliate", as applied to any Person, means (i)
any corporation which is, or was at the relevant time, a
member of a controlled group of corporations within the
meaning of Section 414(b) of the Internal Revenue Code of
which that Person is, or was at the relevant time, a member;
(ii) any trade or business (whether or not incorporated)
which is, or was at the relevant time, a member of a group
of trades or businesses under common control within the
meaning of Section 414(c) of the Internal Revenue Code of
which that Person is, or was at any time, a member; and
(iii) any member of an affiliated service group within the
meaning of Section 414(m) or (o) of the Internal Revenue
Code of which that Person, any corporation described in
clause (i) above or any trade or business described in
clause (ii) above is, or was at the relevant time, a member.
"ERISA Event" means (i) a "reportable event" within the
meaning of Section 4043 of ERISA and the regulations issued
thereunder with respect to any Pension Plan (excluding those
for which the provision for 30-day notice to the PBGC has
been waived by regulation); (ii) the failure to meet the
minimum funding standard of Section 412 of the Internal
Revenue Code with respect to any Pension Plan (whether or
not waived in accordance with Section 412(d) of the Internal
Revenue Code) or the failure to make by its due date a
required installment under Section 412(m) of the Internal
Revenue Code with respect to any Pension Plan or the failure
to make any required contribution (other than contributions
that are being contested in good faith and as to which
adequate reserves have been provided for in accordance with
GAAP) to a Multiemployer Plan; (iii) the provision by the
administrator of any Pension Plan pursuant to Section
4041(a)(2) of ERISA of a notice of intent to terminate such
plan in a distress termination described in Section 4041(c)
of ERISA; (iv) the withdrawal by any Credit Party or any of
its ERISA Affiliates from any Pension Plan with two or more
contributing sponsors or the termination of any such Pension
Plan resulting in liability pursuant to Sections 4063 or
4064 of ERISA; (v) the institution by the PBGC of
proceedings to terminate any Pension Plan, or the occurrence
of any event or condition which would constitute grounds
under ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan; (vi) the imposition
of liability on any Credit Party or any of its ERISA
Affiliates pursuant to Section 4062(e) or 4069 of ERISA or
by reason of the application of Section
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4212(c) of ERISA; (vii) the withdrawal by any Credit Party
or any of its ERISA Affiliates in a complete or partial
withdrawal (within the meaning of Sections 4203 and 4205 of
ERISA) from any Multiemployer Plan if there is any potential
liability therefor, or the receipt by any Credit Party or
any of its ERISA Affiliates of notice from any Multiemployer
Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA, or that it intends to
terminate or has terminated under Section 4041A or 4042 of
ERISA; (viii) the occurrence of an act or omission which
could reasonably be expected to give rise to the imposition
on any Credit Party or any of its ERISA Affiliates of fines,
penalties, taxes or related charges under Chapter 43 of the
Internal Revenue Code or under Section 409 or 502(c), (i) or
(l) or 4071 of ERISA in respect of any Employee Benefit
Plan; (ix) the assertion of a material claim (other than
routine claims for benefits) against any Employee Benefit
Plan other than a Multiemployer Plan or the assets thereof,
or against any Credit Party or any of its ERISA Affiliates
in connection with any such Employee Benefit Plan; (x)
receipt from the Internal Revenue Service of notice of the
failure of any Pension Plan (or any other Employee Benefit
Plan intended to be qualified under Section 401(a) of the
Internal Revenue Code) to qualify under Section 401(a) of
the Internal Revenue Code, or the failure of any trust
forming part of any Pension Plan to qualify for exemption
from taxation under Section 501(a) of the Internal Revenue
Code; or (xi) the imposition of a Lien pursuant to Section
401(a)(29) or 412(n) of the Internal Revenue Code or
pursuant to ERISA with respect to any Pension Plan.
"Event of Default" means each of the events set forth
in Section 8.
"Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, and any successor
statute.
"Existing Credit Facility" means, collectively, (i) the
Revolving Credit Agreement dated as of January 14, 1994, as
amended through the Closing Date, among MGRE and MGRD, as
borrowers, MGRR, as guarantor, the financial institutions
party thereto and CIT, as agent, (ii) all agreements,
documents and instruments pursuant to which any interest in
collateral is granted or purported to be granted, created
evidenced or perfected pursuant to such Revolving Credit
Agreement, including without limitation, all deeds of trust,
mortgages, security agreements, pledge agreements,
assignments, licenses, landlord consents and releases,
financing statements, fixture filings, registrations or
similar documents and (iii) all ancillary agreements as to
which any holder of any of the obligations evidenced by such
Revolving Credit Agreement is a party or a beneficiary and
all other agreements, instruments, documents and
certificates including promissory notes, consents,
assignments, contracts, and notices delivered in connection
with any of the foregoing or the transactions contemplated
thereby, in each case as any of the foregoing may be in
effect as of the Closing Date.
"Existing Letters of Credit" means the letters of
credit outstanding prior to, and with an expiration date
later than, the Closing Date and issued under the Existing
Credit
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Facilities as set forth in the Officer's Certificate
delivered to Co-Agents pursuant to subsection 4.1I.
"Facilities" means any and all real property
(including, without limitation, all buildings, fixtures or
other improvements located thereon) now, hereafter or
heretofore owned, leased or operated or used (for
manufacturing, warehousing, sales or other business
operations) by any Credit Party or any of its Subsidiaries
or any of their respective predecessors or Affiliates.
"Federal Funds Rate" means, for any period, a
fluctuating interest rate per annum equal for each day
during such period to the weighted average of the rates on
overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average of
the quotations for such day for such transactions received
by CUSA Co-Agent from three Federal funds brokers of
recognized standing selected by it.
"Final Order" means an order, judgment or other decree
of the Court or any other court or judicial body with proper
jurisdiction, as the case may be, which has not been
reversed, stayed, modified or amended and to which (i) any
right to appeal or seek certiorari, review or rehearing has
been waived or (ii) the time to appeal or seek certiorari,
review or rehearing has expired and as to which no appeal or
petition for certiorari, review or rehearing is pending.
"First National Cash Management Letter" means the
letter agreement substantially in the form of Exhibit XI
annexed hereto, by and among MGRE, Secured Party and First
National Bank of Maryland and delivered pursuant to
subsection 4.1D, which letter agreement shall be in form and
substance reasonably satisfactory to Co-Agents.
"Fiscal Year" means the fiscal year or fiscal period of
Borrowers and their Subsidiaries, as the case may be, ending
on the Saturday closest to January 31 of each calendar year.
For purposes of this Agreement, any particular Fiscal Year
shall be designated by reference to the calendar year in
which such Fiscal Year ends.
"Funding Date" means the date of the funding of a Loan.
"GAAP" means, subject to the limitations on the
application thereof set forth in subsection 1.2, generally
accepted accounting principles set forth in opinions and
pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other
entity as may be
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approved by a significant segment of the accounting
profession, in each case as the same are applicable to the
circumstances as of the date of determination.
"GE Capital" has the meaning assigned to that term in
the introduction to this Agreement.
"GE Co-Agent" has the meaning assigned to that term in
the introduction to this Agreement.
"Governmental Authorization" means any permit, license,
authorization, directive, consent order or consent decree of
or from any federal, state or local governmental authority,
agency or court.
"Guarantors" means each direct and indirect wholly
owned subsidiary of MGRE party to the Guaranty.
"Guaranty" means the Guaranty to be executed and
delivered by each Guarantor on the Closing Date,
substantially in the form of Exhibit IX annexed hereto.
"Hazardous Materials" means (i) any chemical, material
or substance at any time defined as or included in the
definition of "hazardous substances", "hazardous wastes",
"hazardous materials", "extremely hazardous waste",
"restricted hazardous waste", "infectious waste", "toxic
substances" or any other formulations intended to define,
list or classify substances by reason of deleterious
properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, "TCLP
toxicity" or "EP toxicity" or words of similar import under
any applicable Environmental Laws or publications
promulgated pursuant thereto; (ii) any oil, petroleum,
petroleum fraction or petroleum derived substance; (iii) any
drilling fluids, produced waters and other wastes associated
with the exploration, development or production of crude
oil, natural gas or geothermal resources; (iv) any flammable
substances or explosives; (v) any radioactive materials;
(vi) asbestos in any form; (vii) urea formaldehyde foam
insulation; (viii) electrical equipment which contains any
oil or dielectric fluid containing levels of polychlorinated
biphenyls in excess of fifty parts per million; (ix)
pesticides; and (x) any other chemical, material or
substance, exposure to which is prohibited, limited or
regulated by any governmental authority pursuant to any
Environmental Laws.
"Indebtedness", as applied to any Person, means (i) all
indebtedness for borrowed money, (ii) that portion of
obligations with respect to Capital Leases that is properly
classified as a liability on a balance sheet in conformity
with GAAP, (iii) notes payable and drafts accepted
representing extensions of credit whether or not
representing obligations for borrowed money, (iv) any
obligation owed for all or any part of the deferred purchase
price of property or services (excluding any such
obligations incurred
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under ERISA), which purchase price is (a) due more than six
months from the date of incurrence of the obligation in
respect thereof or (b) evidenced by a note or similar
written instrument, and (v) all indebtedness secured by any
Lien on any property or asset owned or held by that Person
regardless of whether the indebtedness secured thereby shall
have been assumed by that Person or is nonrecourse to the
credit of that Person. Obligations under Interest Rate
Agreements and Currency Agreements constitute Contingent
Obligations and not Indebtedness.
"Indemnitee" has the meaning assigned to that term in
subsection 10.3.
"Intellectual Property" means all patents, trademarks,
tradenames, copyrights, technology, know-how and processes
used in or necessary for the conduct of the business of
Credit Parties and their Subsidiaries as currently conducted
that are material to the financial condition, business or
operations of Credit Parties and their Subsidiaries, taken
as a whole including, without limitation, any of the
foregoing licensed to Credit Parties or any of their
Subsidiaries by other Persons.
"Interest Rate Agreement" means any interest rate swap
agreement, interest rate cap agreement, interest rate collar
agreement or other similar agreement or arrangement designed
to protect Borrowers or any of their Subsidiaries against
fluctuations in interest rates.
"Internal Revenue Code" means the Internal Revenue Code
of 1986, as amended to the date hereof and from time to time
hereafter.
"Inventory" means all inventory in all of its forms
including, but not limited to, (i) all goods and merchandise
held by any Credit Party for sale or lease or to be
furnished under contracts of service or so leased or
furnished, (ii) all raw materials, work in process, finished
goods, and materials used or consumed in the manufacture,
packing, shipping, advertising, selling, leasing, furnishing
or production of such inventory or otherwise used or
consumed in any Credit Party's business, (iii) all goods in
which any Credit Party has a joint or other interest or
right of any kind, and (iv) all goods which are returned to
or repossessed by any Credit Party and all accessions
thereto and products thereof and all negotiable documents of
title (including, without limitation, warehouse receipts,
dock receipts and bills of lading) issued by any Person
covering any Inventory.
"Investment" means (i) any direct or indirect purchase
or other acquisition by any Credit Party or any of their
Subsidiaries of, or of a beneficial interest in, stock or
other Securities of any other Person, or (ii) any direct or
indirect loan, advance (other than (a) advances to employees
for moving, entertainment and travel expenses, drawing
accounts and similar expenditures in the ordinary course of
business and (b) advances to or for the benefit of vendors
made in connection with the purchase of Inventory) or
capital
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contribution by any Credit Party or any of their
Subsidiaries to any other Person, including all indebtedness
and accounts receivable from that other Person that are not
current assets or did not arise from sales to that other
Person in the ordinary course of business. The amount of any
Investment shall be the original cost of such Investment
plus the cost of all additions thereto, without any
adjustments for increases or decreases in value, or write-
ups, write-downs or write-offs with respect to such
Investment.
"Issuing Lender" means with respect to all Letters of
Credit, Citibank.
"Joint Venture" means a joint venture, partnership or
other similar arrangement, whether in corporate, partnership
or other legal form; provided that in no event shall any
corporate Subsidiary of any Person be considered to be a
Joint Venture to which such Person is a party.
"Lender" and "Lenders" means the persons identified as
"Lenders" and listed on the signature pages of this
Agreement, together with their successors and permitted
assigns pursuant to subsection 10.1.
"Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Lending Office"
opposite its name on Schedule 2.1 hereto or in the
Assignment and Acceptance pursuant to which it became a
Lender, or such other office of such Lender as such Lender
may from time to time specify in writing to Borrowers and
CUSA Co-Agent.
"Letter of Credit" or "Letters of Credit" means
Commercial Letters of Credit and Standby Letters of Credit
issued or to be issued by Issuing Lender for the account of
any Borrower pursuant to subsection 3.1.
"Letter of Credit Usage" means, as at any date of
determination, the sum of (i) the maximum aggregate undrawn
amount which is or at any time thereafter may become
available for drawing under all Letters of Credit then
outstanding plus (ii) the aggregate amount of all drawings
under Letters of Credit honored by Issuing Lender and not
theretofore reimbursed by Borrowers (whether such
reimbursement is out of the proceeds of Loans pursuant to
subsection 3.3B or otherwise).
"License Agreements" has the meaning assigned that term
in subsection 5.17.
"Lien" means any lien, mortgage, pledge, assignment,
security interest, charge or encumbrance of any kind
(including any conditional sale or other title retention
agreement, any lease in the nature thereof, and any
agreement to give any security
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<PAGE>
interest) and any option, trust or other preferential
arrangement having the practical effect of any of the
foregoing.
"Loan Documents" means (i) this Agreement, (ii) the
Notes, (iii) the Letters of Credit (and any applications
for, or reimbursement agreements or other documents or
certificates executed by any Borrower in favor of Issuing
Lender relating to, the Letters of Credit), (iv) the
Guaranty, (v) the Collateral Documents, (vi) any Interest
Rate Agreements and (vii) any other agreements entered into
between Credit Parties and Co-Agents relating to or in
connection with the Cash Management System.
"Loans" means the Loans made by Lenders to Borrowers
pursuant to subsection 2.1A. Borrowings.
"Management Plan" means the financial plan of MGRE and
its Subsidiaries set forth in an Officer's Certificate
delivered to Co-Agents pursuant to subsection 4.1J.
"Margin Stock" has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.
"Material Adverse Effect" means (i) a material adverse
effect upon the business, operations, properties, assets,
financial condition or prospects of Credit Parties, taken as
a whole, or (ii) the material impairment of any material
Collateral or (iii) the impairment of the ability of any
Credit Party to perform any of their material obligations
under the Loan Documents, or of any Agent or Lenders to
enforce, the Obligations.
"Material Contracts" means the contracts and agreements
listed on Schedule 1.1C annexed hereto.
"Meridian Ventures" means Meridian Ventures, Inc., a
South Carolina corporation.
"MGRD" has the meaning assigned that term in the
introduction to this Agreement.
"MGRE" has the meaning assigned that term in the
introduction to this Agreement.
"MGRR" means MGRR, Inc., a Delaware corporation.
"Mortgaged Property" has the meaning assigned to that
term in subsection 4.1C.
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"Mortgage" means the deed of trust, dated as of the
Closing Date and delivered by MGRE in favor of Secured
Party, on behalf of Lenders, substantially in the form of
Exhibit X annexed hereto, pursuant to which MGRE is granting
to Secured Party a second priority lien on the real property
described on Schedule 1.1A.
"Multiemployer Plan" means an Employee Benefit Plan
that is a "multiemployer plan", as defined in Section 3(37)
of ERISA.
"Net Cash Proceeds" means, with respect to any Asset
Sale, cash payments received from such Asset Sale net of
bona fide direct costs of sale, including without
limitation, (i) income taxes reasonably estimated to be
actually payable as a result of such Asset Sale within two
years of the date of such Asset Sale, (ii) payment of the
outstanding principal amount, or premium or penalty, if any,
and interest on any indebtedness (other than the Loans)
required to be repaid under the terms thereof as a result of
such Asset Sale, and (iii) any other costs or expenses
incurred as a result of such Asset Sale, including without
limitation, costs incurred in connection with leasing
alternative facilities or relocation of Inventory.
"Non-Operating Subsidiary" means as of any date of
determination, any Subsidiary of any Borrower designated as
such on Schedule 5.1 annexed hereto by such Borrower (as
such Schedule 5.1 may be supplemented from time to time to
reflect the designation of any other Subsidiary of a
Borrower as a Non-Operating Subsidiary as set forth in an
Officer's Certificate of such Borrower delivered to, and in
form and substance reasonably satisfactory to, Co-Agents)
and with respect to each such Subsidiary, each of the
following statements is true: (i) such Subsidiary is not
currently engaged in the conduct of business and does not
plan to engage in the conduct of business in the future and
(ii) such Subsidiary does not have any material assets.
"Notes" means (i) the promissory notes of Borrowers
issued pursuant to subsection 2.1C on the Closing Date and
(ii) any promissory notes issued by any Borrower pursuant to
the last sentence of subsection 10.1B(i) in connection with
assignments of the Commitments and Loans of any Lenders, in
each case substantially in the form of Exhibit IV annexed
hereto.
"Notice of Borrowing" means a notice substantially in
the form of Exhibit II annexed hereto delivered by any
Borrower to CUSA Co-Agent pursuant to subsection 2.1B with
respect to a proposed borrowing.
"Notice of Issuance of Letter of Credit" means a notice
substantially in the form of Exhibit III annexed hereto
delivered by any Borrower to Issuing Lender together with
any application that Issuing Lender requires in accordance
with its customary practice for
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the issuance of letters of credit pursuant to subsection
3.1B(i) with respect to the proposed issuance of a Letter of
Credit of the type requested.
"Obligations" means all obligations of every nature of
Credit Parties under the Loan Documents, including, without
limitation, any liability of such Credit Party on any claim,
whether or not the right to payment in respect of such claim
is reduced to judgment, liquidated, unliquidated, fixed or
contingent, matured, disputed, undisputed, legal, equitable,
secured or unsecured, and whether or not such claim is
discharged, stayed or otherwise affected by any bankruptcy,
insolvency, reorganization or other similar proceeding.
Without limiting the generality of the foregoing, the
Obligations of the Credit Parties under the Loan Documents
include (a) the obligation to pay principal, interest,
Letter of Credit commissions, charges, expenses, fees,
attorneys' fees and disbursements, indemnities and other
amounts payable by any Credit Party under any Loan Document
(including, without limitation, in the case of the
Guarantors, the obligations to pay amounts pursuant to the
Guaranty) and (b) the obligation to reimburse any amount in
respect of any of the foregoing that any Lender, in its sole
discretion, may elect to pay or advance on behalf of such
Credit Party.
"Officer" means, as applied to any corporation, its
chairman of the board (if an officer), chief executive
officer, president, its executive vice president or chief
financial officer or its vice president of finance or
controller.
"Officer's Certificate" means a certificate executed on
behalf of such corporation by an Officer; provided that
every Officer's Certificate with respect to the compliance
with a condition precedent to the making of any Loans
hereunder shall include (i) a statement that the officer
making or giving such Officer's Certificate has read such
condition and any definitions or other provisions contained
in this Agreement relating thereto, (ii) a statement that,
to the best knowledge of the signer, such officer has made
or has caused to be made such examination or investigation
as is reasonably necessary to enable such officer to express
an informed opinion as to whether or not such condition has
been complied with, and (iii) a statement as to whether, to
the best knowledge of the signer, such condition has been
complied with in all material respects.
"Operating Agreements" means collectively (i) that
certain Agreement, dated July 14, 1995, by and among MGRE
and its Subsidiaries listed on the signature pages thereof
relating to the ownership of Inventory and (ii) that certain
Agreement, dated as of July 14, 1995, by and among MGRD and
certain Subsidiaries of MGRE relating to the ownership of
Inventory.
"Operating Lease" means, as applied to any Person, any
lease (including, without limitation, leases that may be
terminated by the lessee at any time) of any property
22
<PAGE>
(whether real, personal or mixed) that is not a Capital
Lease other than any such lease under which that Person is
the lessor.
"PBGC" means the Pension Benefit Guaranty Corporation
(or any successor thereto).
"Pension Plan" means any Employee Benefit Plan, other
than a Multiemployer Plan, which is subject to Section 412
of the Internal Revenue Code or Section 302 of ERISA.
"Permitted Encumbrances" means the following types of
Liens (other than any such Lien imposed pursuant to Section
401(a)(29) or 412(n) of the Internal Revenue Code or by
ERISA):
(i) Liens for taxes, assessments or governmental
charges or claims the payment of which is not, at the time,
required by subsection 6.3;
(ii) Liens of carriers, warehousemen, mechanics and
materialmen and other Liens imposed by law incurred in the
ordinary course of business for sums not yet 60 days past
due and with respect to which no enforcement action has been
taken or being contested in good faith, if such reserve or
other appropriate provision, if any, as shall be required by
GAAP shall have been made therefor;
(iii) Liens incurred or deposits made in the
ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of
social security, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids,
leases, government contracts, trade contracts, utility
contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the
payment of borrowed money);
(iv) any attachment or judgment Lien not constituting
an Event of Default under subsection 8.8;
(v) leases or subleases granted to others not
interfering in any material respect with the ordinary
conduct of the business of Credit Parties or any of their
Subsidiaries;
(vi) easements, rights-of-way, restrictions, minor
defects, encroachments or irregularities in title and other
similar charges or encumbrances not interfering in any
material respect with the ordinary conduct of the business
of Credit Parties or any of their Subsidiaries;
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(vii) any (a) interest or title of a lessor or
sublessor under any lease permitted by subsection 7.9, (b)
restriction or encumbrance that the interest or title of
such lessor or sublessor may be subject to, or (c)
subordination of the interest of the lessee or sublessee
under such lease to any restriction or encumbrance referred
to in the preceding clause (b); and
(viii) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of
customs duties in connection with the importation of goods;
provided that none of the foregoing shall be a "Permitted
Encumbrance" to the extent it constitutes a Lien on
Inventory other than (a) Liens described in clause (i) to
the extent the aggregate amount secured by such Liens does
not exceed $100,000 at any time and (b) Liens described in
clause (viii) to the extent such Liens are terminated within
three Business Days after the creation of such Lien.
"Person" means and includes natural persons,
corporations, limited partnerships, general partnerships,
joint stock companies, Joint Ventures, associations,
companies, trusts, banks, trust companies, land trusts,
business trusts or other organizations, whether or not legal
entities, and governments and agencies and political
subdivisions thereof.
"Petition Date" means, with respect to any Credit Party
which is a debtor in the Chapter 11 Cases, the date set
forth opposite such Credit Party's name on Schedule 1.1B
annexed hereto (as such Schedule may be supplemented from
time to time to reflect the filing of petitions for relief
under the Bankruptcy Code by additional Credit Parties as
set forth in an Officer's Certificate of any such Credit
Party delivered to, and in form and substance reasonably
satisfactory to, Co-Agents).
"Pledge and Security Agreement" shall mean the Pledge
and Security Agreement, in substantially the form of Exhibit
VIII annexed hereto entered into between Secured Party and
the Credit Parties.
"Potential Event of Default" means a condition or event
that has occurred or exists and with notice or lapse of time
or both, would constitute an Event of Default.
"Prepetition Indebtedness" means Indebtedness of any
Credit Party which is a debtor in the Chapter 11 Cases
outstanding on the Petition Date.
"Pro Rata Share" means, with respect to each Lender,
the percentage obtained by dividing (i) the Credit Exposure
of that Lender by (ii) the aggregate Credit Exposure of all
Lenders, as such percentage may be adjusted by assignments
permitted pursuant to subsection 10.1. The initial Pro Rata
Share of each Lender is set forth opposite the name of that
Lender in Schedule 2.1 annexed hereto.
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"Receipts" shall mean all cash, Cash Equivalents,
checks, notes, drafts and any items of payment or collection
received, by or on behalf of any Borrower or any of its
Subsidiaries, or by any officers, employees or agents of any
Borrower or any of its Subsidiaries or other Persons acting
for or in concert with such Borrower or such Subsidiary to
make collections on such Borrower's or such Subsidiary's
behalf in connection with or in any way relating to Borrower
or such Subsidiary or the operation of such Borrower's or
such Subsidiary's business, including, without limitation,
any proceeds received from (i) any sales of, or loans
against, Accounts of any Borrower or any of its Subsidiaries
(other than the Loans and Letters of Credit pursuant to this
Agreement), (ii) any disposition of assets (including,
without limitation, any disposition of assets permitted
hereunder or consented to by Requisite Lenders, but
excluding amounts applied to the repayment of indebtedness
secured by a Lien on the assets subject to such disposition)
or issuance or sale of equity securities by any Borrower or
any of its Subsidiaries, (iii) the issuance or sale of
Indebtedness by any Borrower or any of its Subsidiaries
(other than the Obligations and other Indebtedness permitted
by this Agreement), (iv) insurance policies (other than
liability insurance payable directly or indirectly to a
third party) maintained by any Borrower or any of its
Subsidiaries, whether or not Secured Party is an additional
insured or named as loss payee thereunder and (v) the
successful prosecution (including any settlement) of any
claims, actions or other litigation or proceeding by or on
behalf of or against any Borrower or any of its
Subsidiaries; it being understood and agreed that nothing
contained in this definition shall in any respect be deemed
to permit any transactions by any Borrower or any of its
Subsidiaries otherwise restricted or prohibited by this
Agreement.
"Regulation D" means Regulation D of the Board of
Governors of the Federal Reserve System, as in effect from
time to time.
"Reimbursement Date" has the meaning assigned to that
term in subsection 3.3B.
"Release" means any release, spill, emission, leaking,
pumping, pouring, injection, escaping, deposit, disposal,
discharge, dispersal, dumping, leaching or migration of
Hazardous Materials into the indoor or outdoor environment
(including, without limitation, the abandonment or disposal
of any barrels, containers or other closed receptacles
containing any Hazardous Materials), or into or out of any
Facility, including the movement of any Hazardous Material
through the air, soil, surface water, groundwater or
property.
"Remaining Documentary Letters of Credit" means the
Existing Letters of Credit which are documentary letters of
credit identified in an Officers' Certificate delivered to
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Co-Agents pursuant to subsection 4.1I, which will remain
outstanding after the Closing Date.
"Remaining Standby Letters of Credit" means the
Existing Letters of Credit which are standby letters of
credit identified in an Officers' Certificate delivered to
Co-Agents pursuant to subsection 4.1.I, which will remain
outstanding after the Closing Date.
"Requisite Lenders" means (i) Lenders having or holding
more than 51% of the aggregate Credit Exposure of all
Lenders and (ii) each Co-Agent, to the extent such Co-
Agent's Pro Rata Share exceeds 33-1/3%.
"Restricted Investment Account" means the restricted
investment account maintained in the name of Secured Party
at Citibank pursuant to the Citibank Third-Party Account
Agreement.
"Restricted Junior Payment" means (i) any dividend or
other distribution, direct or indirect, on account of any
shares of any class of stock of any Credit Party now or
hereafter outstanding, except a dividend payable solely in
shares of stock to the holders of such shares, (ii) any
redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect,
of any shares of any class of stock of any Credit Party now
or hereafter outstanding, (iii) any payment made to retire,
or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire shares of any class of
stock of any Credit Party now or hereafter outstanding, and
(iv) any Investment other than an Investment permitted
pursuant to subsection 7.3.
"Restructuring Professional Fees" means all
professional fees incurred in connection with the Chapter 11
Cases.
"Seasonal Reserve" means an additional reserve in an
amount equal to the Seasonal Reserve Percentage times
Eligible Inventory, with the Seasonal Reserve Percentage
being equal to (i) 1.25% from December 1 through December 8,
1995, (ii) 2.50% from December 9 through December 15, 1995,
(iii) 3.75% from December 16 through December 22, 1995, and
(iv) 5.00% thereafter through February 28, 1996.
"Secured Party" means GE Capital acting in its capacity
as agent on behalf of the Lenders under the Collateral
Documents.
"Securities" means any stock, shares, partnership
interests, voting trust certificates, certificates of
interest or participation in any profit-sharing agreement or
arrangement, options, warrants, bonds, debentures, notes, or
other evidences of indebtedness, secured or unsecured,
convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any
certificates of interest, shares or
26
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participations in temporary or interim certificates for the
purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing.
"Securities Act" means the Securities Act of 1933, as
amended from time to time, and any successor statute.
"Settlement Date" has the meaning assigned to that term
in subsection 2.1B(vi).
"Standby Letter of Credit" means any standby letter of
credit or similar instrument issued in each case for the
purpose of supporting (i) workers' compensation liabilities
of Borrowers or any of their Subsidiaries, (ii) the
obligations of third party insurers of Borrowers or any of
their Subsidiaries arising by virtue of the laws of any
jurisdiction requiring third party insurers, (iii)
obligations with respect to Capital Leases or Operating
Leases of Borrowers or any of their Subsidiaries, (iv)
performance, payment, deposit or surety obligations of
Borrowers or any of their Subsidiaries, in any case if
required by law or governmental rule or regulation or in
accordance with custom and practice in the industry, (v)
obligations of MGRE to its new chief executive officer
pursuant to an employment agreement, (vi) obligations of
Borrowers or any of their Subsidiaries to insurance
companies providing insurance to Borrowers and their
Subsidiaries in an aggregate amount not to exceed $8,000,000
at any time, (vii) obligations to customs and revenue
authorities to secure payment of custom duties in connection
with the importation of goods, (viii) obligations of Credit
Parties under Remaining Documentary Letters of Credit,
Remaining Standby Letters of Credit and Steamship Guaranties
and (ix) other obligations determined acceptable by Co-
Agents and Issuing Lender; provided that Standby Letters of
Credit may not be issued for the purpose of supporting (a)
trade payables or (b) Indebtedness constituting "antecedent
debt" (as that term is used in Section 547 of the Bankruptcy
Code).
"Steamship Guaranties" means those certain guaranties
issued by Chemical Bank pursuant to and in connection with
certain letters of credit issued under the Existing Credit
Agreement in favor of certain shippers and other parties
contracting with MGRE, which guaranties are outstanding on
the Closing Date.
"Subsidiary" means, with respect to any Person, any
corporation, partnership, association, joint venture or
other business entity of which more than 50% of the total
voting power of shares of stock or other ownership interests
entitled (without regard to the occurrence of any
contingency) to vote in the election of the Person or
Persons (whether directors, managers, trustees or other
Persons performing similar functions) having the power to
direct or cause the direction of the management and policies
thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof.
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"Tax" or "Taxes" means any present or future tax, levy,
impost, duty, charge, fee, deduction or withholding of any
nature and whatever called, by any federal, state or local
governmental authority or any political subdivision or
taxing authority thereof, on whomsoever and wherever
imposed, levied, collected, withheld or assessed; provided
that "Tax on the overall net income" of a Person shall be
construed as a reference to a tax imposed by the
jurisdiction in which that Person's principal office
(and/or, in the case of a Lender, its lending office) is
located or by any political subdivision or taxing authority
thereof or in which that Person is deemed to be doing
business on all or part of the net income, profits or gains
of that Person (whether worldwide, or only insofar as such
income, profits or gains are considered to arise in or to
relate to a particular jurisdiction, or otherwise).
"Total Utilization of Commitments" means, as at any
date of determination, the sum of (i) the aggregate
principal amount of all outstanding Loans (other than Loans
made for the purpose of repaying any Loans reimbursing the
Issuing Lender for any amount drawn under any Letter of
Credit but not yet so applied) plus (ii) the Letter of
Credit Usage.
"Trademark Assignment" means that certain Trademark
Assignment in substantially the form of Exhibit IX annexed
hereto entered into between Secured Party and Credit
Parties.
"UCC" shall mean the Uniform Commercial Code of the
jurisdiction with respect to which such term is used, as in
effect from time to time.
1.2. Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement.
Except as otherwise expressly provided in this
Agreement, all accounting terms not otherwise defined herein
shall have the meanings assigned to them in conformity with
GAAP. Financial statements and other information required
to be delivered by Borrowers to Lenders pursuant to clauses
(i), (ii), (iii) and (xiii) of subsection 6.1 shall be
prepared in accordance with GAAP as in effect at the time of
such preparation (and delivered together with the
reconciliation statements provided for in subsection
6.1(v)). Calculations in connection with the definitions,
covenants and other provisions of this Agreement shall
utilize accounting principles and policies in conformity
with those used to prepare the financial statements referred
to in subsection 5.3. If any changes in accounting
principles from those used in the preparation of the
financial statements referred to in subsection 5.3 are
hereafter required or permitted by the rules, regulations,
pronouncements and opinions of the Financial Accounting
Standards Board or the American Institute of Certified
Public Accountants (or successors thereto or agencies with
similar functions) and are adopted by Borrowers with the
agreement of its
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independent certified public accountants and such changes
result in a change of the components of the calculation of
any of the definitions, covenants or other provisions
referred to in the immediately preceding sentence,
Borrowers, Co-Agents and Lenders agree to enter into
negotiations in order to amend such provisions so as to
equitably reflect such changes with the desired result that
the criteria for evaluating the financial condition of MGRE
and its Subsidiaries shall be the same after such changes as
if such changes had not been made; provided, however, that
no change in GAAP that would affect the components of the
calculation of any of such definitions, covenants or other
provisions shall be given effect in such calculations until
such provisions are amended, in a manner satisfactory to
Requisite Lenders, to reflect such change in accounting
principles.
1.3. Other Definitional Provisions.
For purposes of this Agreement and the other Loan
Documents, the following additional rules of construction
shall apply: (a) wherever from the context it appears
appropriate, each term stated in either the singular or
plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender
shall include the masculine, the feminine and the neuter;
(b) the term "including" shall not be limiting or exclusive,
unless specifically indicated to the contrary; (c) all
references to statutes and related regulations shall include
any amendments of same and any successor statutes and
regulations; (d) all references to any instruments or
agreements, including references to any of the Loan
Documents, shall include any and all modifications or
amendments thereto and any and all extensions or renewals
thereof; and (e) all references to "Sections" or
"subsections" in a Loan Document shall be to Sections or
subsections of such Loan Document unless otherwise
specifically provided.
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1. Commitments; Loans; Notes.
A. Commitments. Subject to the terms and conditions
of this Agreement and in reliance upon the representations
and warranties of each Borrower, herein set forth, each
Lender hereby severally agrees, subject to the limitations
set forth below with respect to the maximum amount of Loans
permitted to be outstanding from time to time, to lend to
Borrowers, as joint and several obligors, from time to time
during the period from the Closing Date to but excluding the
Commitment Termination Date an aggregate amount not
exceeding its Pro Rata Share of the aggregate amount of the
Commitments to be used for the purposes identified in
subsection 2.5A. The original amount of each Lender's
Commitment is set forth opposite its name on Schedule 2.1
annexed hereto and
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the aggregate original amount of the Commitments is
$90,000,000; provided that the Commitments of Lenders shall
be adjusted to give effect to any assignments of the
Commitments pursuant to subsection 10.1B; and provided,
further that the amount of the Commitments shall be reduced
from time to time by the amount of any reductions thereto
made pursuant to subsections 2.4A(i) and 2.4A(ii). Each
Lender's Commitment shall expire on the Commitment
Termination Date and all Loans and all other amounts owed
hereunder with respect to the Loans and the Commitments
shall be paid in full no later than that date; provided that
each Lender's Commitment shall expire immediately and
without further action on July 18, 1995 if the initial Loans
or Letters of Credit are not made or issued on or before
that date. Amounts borrowed under this subsection 2.1A may
be repaid and reborrowed to but excluding the Commitment
Termination Date. Borrowers shall be jointly and severally
liable with respect to the obligations under the Loans and
with respect to all other Obligations.
Anything contained in this Agreement to the contrary
notwithstanding, the Loans and the Commitments shall be
subject to the following limitations in the amounts and
during the periods indicated:
i) in no event shall the Total Utilization of Commitments
at any time exceed the lesser of (i) the aggregate
Commitments and (ii) the Borrowing Base, in each case as
then in effect; and
ii) for 30 consecutive days during the month of January
1996, there shall be no outstanding Loans, it being
understood that during such period Letters of Credit may be
issued and may remain outstanding.
B. Borrowing Mechanics.
(i) Each Loan (other than Loans made pursuant to
subsection 3.3B for the purpose of reimbursing Issuing
Lender for the amount of a drawing under a Letter of Credit)
shall be made upon a Notice of Borrowing, given not later
than 11:00 A.M. (New York City time) on the proposed Funding
Date, by the applicable Borrower to CUSA Co-Agent. Each
such Notice of Borrowing shall be by telex, telecopier or
cable, confirmed promptly in writing, specifying therein (i)
the identity of such Borrower, (ii) the proposed Funding
Date (which shall be a Business Day) and (iii) aggregate
amount of the proposed Loans. Each Notice of Borrowing
shall be irrevocable and binding on the Borrower requesting
Loans thereunder.
(ii) Upon receiving any Notice of Borrowing, CUSA Co-
Agent, in its sole discretion, may (but shall not be
obligated), upon prior notice to Lenders, make such Loans
for its own account on behalf of Lenders (each such Loan, a
"Disproportionate Loan") subject to fulfillment of the
applicable conditions set forth in Section 4, and shall
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be entitled to settlement with Lenders, and Lenders shall be
unconditionally obligated to make such settlement, in
accordance with subsection 2.1B(v); provided, however, that
the failure of CUSA Co-Agent to provide such notice to
Lenders shall not affect the obligations of Lenders to
participate in such Disproportionate Loan in accordance with
the provisions set forth herein. CUSA Co-Agent shall make
available any such Disproportionate Loan in same day funds
for disbursement to the applicable Borrower in accordance
with subsection 2.1B(iv). Immediately upon the making of
each Disproportionate Loan, CUSA Co-Agent shall be deemed to
have sold and transferred to each Lender, and each Lender
shall be deemed to have purchased and received from CUSA Co-
Agent, in each case irrevocably and without any further
action by any party, an undivided interest and participation
in such Disproportionate Loan and the Obligations of
Borrowers under this Agreement in respect thereof in an
amount equal to such Lender's Pro Rata Share of such
Disproportionate Loan. Notwithstanding the preceding
sentence, if CUSA Co-Agent makes any such Disproportionate
Loan for its own account on behalf of Lenders, such
Disproportionate Loan shall constitute a Loan by CUSA Co-
Agent for all purposes under the Loan Documents; provided,
however, that forthwith upon demand by CUSA Co-Agent, each
other Lender shall pay for its participation in each
outstanding Disproportionate Loan by making a Loan in an
amount equal to the amount of its participation in such
Disproportionate Loan (but without any requirement for
compliance with the provisions of subsections 2.1A and 2.1B
or the applicable conditions set forth in Section 4) and
shall make available for the account of its Lending Office
to CUSA Co-Agent at CUSA Co-Agent's Account, in same day
funds, such Lender's Pro Rata Share of such Loan. If and to
the extent that any Lender shall not have so made the amount
of such Loan available to CUSA Co-Agent, such Lender and
Borrowers severally agree to pay to CUSA Co-Agent forthwith
on demand such amount together with interest thereon, for
each day from the date of demand by CUSA Co-Agent until the
date such amount is paid to CUSA Co-Agent, at (i) in the
case of any Borrower, the interest rate applicable at such
time under subsection 2.2 to Loans and (ii) in the case of
such Lender, the Federal Funds Rate. If such Lender shall
pay to CUSA Co-Agent such amount, such amount so paid shall
constitute such Lender's Loan for purposes of this
Agreement. All interest accrued on any such
Disproportionate Loan shall be for CUSA Co-Agent's Account;
provided that from and after the date on which a Lender pays
for its participation, interest accrued on the Loans made to
pay for such participation shall be for the account of such
Lender.
(iii) If CUSA Co-Agent receives a Notice of
Borrowing and does not make Disproportionate Loans for its
own account as provided in subsection 2.1B(ii), CUSA Co-
Agent shall give each Lender not later than 12:00 P.M. (New
York City time) on the Proposed Funding Date a copy of such
Notice of Borrowing by telex, telecopier or cable. In such
case, each Lender shall, not later than 3:00 P.M. (New York
City time) on the proposed Funding Date, make available to
CUSA Co-Agent such Lender's Pro Rata Share of such Loan by
depositing same day funds in CUSA Co-Agent's Account.
Unless
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CUSA Co-Agent shall have received notice from a Lender prior
to the date of any Loan that such Lender will not make
available to CUSA Co-Agent such Lender's Pro Rata Share of
such Loan, CUSA Co-Agent may assume that such Lender has
made such portion available to CUSA Co-Agent on the proposed
Funding Date in accordance with this subsection 2.1B(iii)
and CUSA Co-Agent may, in reliance upon such assumption,
make available to the applicable Borrower on such date a
corresponding amount pursuant to subsection 2.1B(iv). If
and to the extent that such Lender shall not have so made
such Pro Rata Share available to CUSA Co-Agent, such Lender
and Borrowers severally agree to repay or pay to CUSA Co-
Agent forthwith on demand such corresponding amount and to
pay interest thereon, for each day from the date such amount
is made available to the applicable Borrower until the date
such amount is repaid or paid to CUSA Co-Agent, at (i) in
the case of any Borrower, the interest rate applicable at
such time under subsection 2.2 to Loans and (ii) in the case
of such Lender, the Federal Funds Rate. If such Lender
shall pay to CUSA Co-Agent such corresponding amount, such
amount so paid shall constitute such Lender's Loan as part
of such borrowing for purposes of this Agreement.
(iv) Upon fulfillment of the applicable conditions set
forth in Section 4, CUSA Co-Agent shall make funds for any
Loan available to the applicable Borrower by crediting the
applicable Borrower's Account; provided, however, that in
the case of a Loan that is made pursuant to subsection
2.1B(iii), CUSA Co-Agent shall only make available to such
Borrower any funds received or assumed to have been received
from Lenders in accordance with subsection 2.1B(iii);
provided further, however, that in the case of any Loan,
CUSA Co-Agent shall first make a portion of such funds equal
to any unreimbursed drawing under any Letter of Credit
available to Issuing Lender for reimbursement of such
drawing; and provided still further, however, that,
notwithstanding anything in this Section 2 to the contrary,
the amount of funds made available as Loans pursuant to this
subsection 2.1B(iv) shall be reduced by an amount equal to
the net remaining amount of Available Funds on deposit in
the Collection Account and transferred to Borrower's Account
pursuant to subsection 6.10B(v) on the Funding Date; it
being understood and agreed that to the extent funds made
available as Loans are so reduced, the Notice of Borrowing
applicable to such Loans shall be deemed to be a Notice of
Borrowing for the amount of Loans actually made pursuant to
this subsection 2.1B(iv) and CUSA Co-Agent shall give
Borrowers written notice on the Funding Date of such amount
which notice shall be conclusive and binding absent manifest
error.
(v) CUSA Co-Agent shall notify Lenders not later than
12:00 P.M. (New York City time) (a) on Thursday of each week
with respect to amounts due from Lenders pursuant to
subsection 2.1B(ii), (b) upon the date of receipt by CUSA Co-
Agent of any payments of principal (including reimbursements
of drawings under Letters of Credit), interest, or fees
under this Agreement or the other Loan Documents, (c) on the
Commitment Termination Date and (d) at such other times as
CUSA Co-Agent in its
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discretion deems necessary or appropriate (each such date a
"Settlement Date") of the aggregate amount of Loans
outstanding and the aggregate amounts payable by CUSA Co-
Agent to each Lender or from each Lender to CUSA Co-Agent.
On each Settlement Date, all amounts due from CUSA Co-Agent
to each Lender shall be (after deduction of any amounts due
from such Lender to CUSA Co-Agent) unconditionally paid by
CUSA Co-Agent before 3:00 P.M. (New York City time) on such
Settlement Date by depositing same day funds in an account
identified in writing to CUSA Co-Agent by such Lender. On
each Settlement Date, all amounts due from each Lender to
CUSA Co-Agent (after deduction of any amounts due from CUSA
Co-Agent to such Lender) shall be unconditionally paid by
such Lender before 3:00 P.M. (New York City time) on such
Settlement Date by depositing same day funds in CUSA Co-
Agent's Account. If any Lender does not make any payment to
CUSA Co-Agent on any Settlement Date in accordance with this
subsection 2.1B(v), Borrowers shall make such payment
immediately upon CUSA Co-Agent's demand therefor and shall
pay interest thereon at the Base Rate plus 1/2%.
(vi) The failure of any Lender to make the Loan to be
made by it as part of any borrowing requested hereunder or
to make any payment on any Settlement Date or as payment for
any participation in any Disproportionate Loan shall not
relieve any other Lender of its obligation, if any,
hereunder to make its Loan on any Funding Date or to make
any payment on any Settlement Date or as payment for any
participation in any Disproportionate Loan, but no Lender
shall be responsible for the failure of any other Lender to
make the Loan to be made by such other Lender on any Funding
Date or to make any payment on any Settlement Date or as
payment for any participation in any Disproportionate Loan.
Nothing in this subsection 2.1 shall be deemed to prejudice
any rights Borrowers may have against any Lender resulting
from any default by a Lender under this subsection 2.1.
C. Notes. Borrowers shall execute and deliver on the
Closing Date to each Lender a Note substantially in the form
of Exhibit IV annexed hereto to evidence that Lender's
Loans, in the principal amount of that Lender's Commitment
and with other appropriate insertions.
2.2. Interest on the Loans.
A. Rate of Interest. Subject to the provisions of
subsections 2.2E, each Loan shall bear interest on the
unpaid principal amount thereof from the date made through
maturity (whether by acceleration or otherwise) at a rate
per annum equal at all times to the sum of the Base Rate
plus one and one-half percent (1.5%) per annum payable in
arrears (i) monthly through the last day of each month on
the first Business Day of the
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next succeeding month; (ii) upon any prepayment of that Loan
(to the extent accrued on the amount being prepaid) and
(iii) on the Commitment Termination Date.
B. Default Rate. Upon the occurrence and during the
continuation of any Potential Event of Default or Event of
Default, the outstanding principal amount of all Loans and,
to the extent permitted by applicable law, any interest
payments thereon not paid when due and any fees and other
amounts then due and payable hereunder, shall thereafter
bear interest payable upon demand at a rate that is 2% per
annum in excess of the interest rate otherwise payable under
this Agreement with respect to Loans; provided that if a
Potential Event of Default is cured prior to becoming an
Event of Default, Borrowers shall not be required to pay any
default rate of interest accrued as a result of such
Potential Event of Default. Payment or acceptance of the
increased rates of interest provided for in this subsection
2.2B is not a permitted alternative to timely payment and
shall not constitute a waiver of any Event of Default or
otherwise prejudice or limit any rights or remedies of
Agents or any Lender. Payment of increased rates of
interest by Borrowers pursuant to this subsection 2.2B shall
not be deemed an admission of the existence of an Event of
Default.
C. Computation of Interest. Interest on the Loans
shall be computed on the basis of a 360-day year, in each
case for the actual number of days elapsed in the period
during which it accrues. In computing interest on any Loan,
the date of the making of such Loan shall be included, and
the date of payment of such Loan shall be excluded; provided
that if a Loan is repaid on the same day on which it is
made, one day's interest shall be paid on that Loan.
2.3. Fees.
Commitment Fees. Borrowers agree to pay to CUSA Co-
Agent, for distribution to each Lender in proportion to that
Lender's Pro Rata Share, commitment fees for the period from
and including the Closing Date to and excluding the
Commitment Termination Date equal to (i) the average of the
daily excess of the Commitments over the sum of (a) the
aggregate principal amount of Loans outstanding plus (b) the
Letter of Credit Usage multiplied by (ii) 1/2 of 1% per
annum, such commitment fees to be calculated on the basis of
a 360-day year and the actual number of days elapsed and to
be payable monthly in arrears, commencing on the first such
date to occur after the Closing Date, and on the Commitment
Termination Date.
Other Fees. Borrowers agree to pay to Co-Agents all
other fees due and payable pursuant to that certain Fee
Letter dated June 9, 1995, by and among MGRE and Co-Agents.
2.4. Reductions in Commitments and Mandatory Prepayments;
General Provisions Regarding Payments.
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A. Reductions in Commitments and Mandatory
Prepayments.
(i) Voluntary Reductions of Commitments. Borrowers
may, upon not less than three Business Days' prior written
or telephonic notice confirmed in writing to Co-Agents
(which notice Co-Agents will promptly transmit by telegram,
telex or telephone to each Lender), at any time and from
time to time terminate in whole or permanently reduce in
part, without premium or penalty, the Commitments in an
amount up to the amount by which the Commitments exceed the
Total Utilization of Commitments at the time of such
proposed termination or reduction; provided that any such
partial reduction of the Commitments shall be in an
aggregate minimum amount of $5,000,000 and integral
multiples of $1,000,000 in excess of that amount; and
provided further that, the Commitments shall not be reduced
to less than $50,000,000 pursuant to this subsection 2.4A(i)
except pursuant to a termination in whole of the
Commitments. Borrowers' notice to Co-Agents shall designate
the date (which shall be a Business Day) of such termination
or reduction and the amount of any partial reduction, and
such termination or reduction of the Commitments shall be
effective on the date specified in Borrowers' notice and
shall reduce the Commitment of each Lender proportionately
to its Pro Rata Share.
(ii) Mandatory Prepayments and Mandatory Reductions of
Commitments.
(a) Prepayments from the Collection Account.
Borrowers hereby irrevocably authorize Secured Party to
apply on a daily basis all available funds on deposit in the
Collection Account to the prepayment of Loans then
outstanding.
(b) Prepayments Due to Reductions or Restrictions of
Commitments. Borrowers shall from time to time prepay the
Loans to the extent necessary (1) so that the Total
Utilization of Commitments shall not at any time exceed the
lesser of (x) the Commitments and (y) the Borrowing Base, in
each case then in effect and (2) to give effect to the
limitations set forth in clause (ii) of the second paragraph
of subsection 2.1A.
B. General Provisions Regarding Payments.
(i) Manner and Time of Payment. Notwithstanding
anything herein to the contrary, all payments by Borrowers
of principal, interest, fees, reimbursements of drawings
under Letters of Credit and other Obligations hereunder and
under the Notes shall be made without defense, setoff or
counterclaim, and free of any restriction or condition, from
funds on deposit in the Collection Account. Borrowers
hereby irrevocably authorize Secured Party to apply
available funds on deposit in the Collection Account to make
all such payments due. Any payments received by CUSA Co-
Agent
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after 1:00 P.M. (New York City time) shall be deemed to have
been paid by the applicable Borrower on the next succeeding
Business Day. CUSA Co-Agent shall disburse to each Lender
and Issuing Lender, as the case may be, the amount of any
such payment made on behalf of such Lender or Issuing
Lender, when and as received.
(ii) Application of Payments to Principal and Interest.
All payments in respect of the principal amount of any Loan
shall include payment of accrued interest on the principal
amount being repaid or prepaid. All payments shall be
applied in the following order: (a) then due and payable
fees, costs and expenses owing to Agents and Lenders; (b)
then due and payable interest payments; (c) principal
payments (including reimbursements of drawings under Letters
of Credit); (d) any other Obligations then due and payable;
and (e) cash collateralization of Letters of Credit to the
extent then required pursuant to this Agreement.
(iii) Apportionment of Payments. Aggregate
principal and interest payments shall be apportioned among
all outstanding Loans to which such payments relate, in each
case proportionately to Lenders' respective Pro Rata Shares.
CUSA Co-Agent shall in accordance with subsection 2.1B(v)
distribute to each Lender, at its primary address set forth
below its name on the appropriate signature page hereof or
at such other address as such Lender may request, its Pro
Rata Share of all such payments received by CUSA Co-Agent
and the commitment fees of such Lender when received by CUSA
Co-Agent pursuant to subsection 2.3.
(iv) Payments on Business Days. Whenever any payment
to be made hereunder shall be stated to be due on a day that
is not a Business Day, such payment shall be made on the
next succeeding Business Day and such extension of time
shall be included in the computation of the payment of
interest hereunder or of the commitment fees hereunder, as
the case may be.
(v) Notation of Payment. Each Lender agrees that
before disposing of the Note held by it, or any part thereof
(other than by granting participations therein), that Lender
will make a notation thereon of all Loans evidenced by that
Note and all principal payments previously made thereon and
of the date to which interest thereon has been paid;
provided that the failure to make (or any error in the
making of) a notation of any Loan made under such Note shall
not limit or otherwise affect the obligations of any
Borrower hereunder or under such Note with respect to any
Loan or any payments of principal or interest on such Note.
2.5. Use of Proceeds.
A. Loans and Letters of Credit. The proceeds of the
initial Loans and Letters of Credit shall be applied by
Borrowers to repay all obligations and terminate all
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commitments in respect of the Existing Credit Facilities
(other than the Remaining Documentary Letters of Credit,
Remaining Standby Letters of Credit and the Steamship
Guaranties), and any excess proceeds of the initial Loans
and Letters of Credit and the proceeds of any subsequent
Loans and Letters of Credit shall be applied by Borrowers
for working capital and general corporate purposes.
B. Margin Regulations. No portion of the proceeds of
any borrowing under this Agreement shall be used by any
Credit Party in any manner that might cause the borrowing or
the application of such proceeds to violate Regulation G,
Regulation U, Regulation T or Regulation X of the Board of
Governors of the Federal Reserve System or any other
regulation of such Board or to violate the Exchange Act, in
each case as in effect on the date or dates of such
borrowing and such use of proceeds.
2.6. Increased Costs; Taxes; Capital Adequacy.
A. Compensation for Increased Costs and Taxes.
Subject to the provisions of subsection 2.6B, in the event
that any Lender shall determine (which determination shall,
absent manifest error, be final and conclusive and binding
upon all parties hereto) that any change after the date
hereof in any law, treaty or governmental rule, regulation
or order, or in the interpretation, administration or
application thereof (including the introduction of any new
law, treaty or governmental rule, regulation or order), or
any determination of a court or governmental authority, in
each case that becomes effective after the date hereof, or
compliance by such Lender with any guideline, request or
directive issued or made after the date hereof by any
central bank or other governmental or quasi-governmental
authority (whether or not having the force of law):
(i) subjects such Lender (or its applicable lending
office) to any additional Tax (other than any Tax on the
overall net income of such Lender) with respect to this
Agreement or any of its obligations hereunder or any
payments to such Lender (or its applicable lending office)
of principal, interest, fees or any other amount payable
hereunder;
(ii) imposes, modifies or holds applicable any reserve
(including without limitation any marginal, emergency,
supplemental, special or other reserve), special deposit,
compulsory loan, FDIC insurance or similar requirement
against assets held by, or deposits or other liabilities in
or for the account of, or advances or loans by, or other
credit extended by, or any other acquisition of funds by,
the applicable lending office of such Lender; or
(iii) imposes any other condition (other than with
respect to a Tax matter) on or affecting such Lender (or its
applicable lending office) or its obligations hereunder;
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and the result of any of the foregoing is to increase the
cost to such Lender of agreeing to make, making or
maintaining Loans hereunder or to reduce any amount received
or receivable by such Lender (or its applicable lending
office) with respect thereto; then, in any such case,
Borrowers shall promptly pay to such Lender, upon receipt of
the statement referred to in the next sentence, such
additional amount or amounts (in the form of an increased
rate of, or a different method of calculating, interest or
otherwise as such Lender in its sole discretion shall
determine) as may be necessary to compensate such Lender for
any such increased cost or reduction in amounts received or
receivable hereunder. Such Lender shall deliver to
Borrowers (with a copy to Co-Agents) a written statement,
setting forth in reasonable detail the basis for calculating
the additional amounts owed to such Lender under this
subsection 2.6A, which statement shall be conclusive and
binding upon all parties hereto absent manifest error.
B. Withholding of Taxes.
(i) Payments to Be Free and Clear. All sums payable
by Borrowers under this Agreement and the other Loan
Documents shall be paid free and clear of and (except to the
extent required by law) without any deduction or withholding
on account of any Tax (other than a Tax on the overall net
income of any Lender (for which payment need not be free and
clear but no deduction or withholding shall be made unless
required under applicable law)) imposed, levied, collected,
withheld or assessed by or within the United States of
America or any political subdivision in or of the United
States of America or any other jurisdiction from or to which
a payment is made by or on behalf of Borrowers or by any
federation or organization of which the United States of
America or any such jurisdiction is a member at the time of
payment.
(ii) Grossing-up of Payments. If any Borrower or any
other Person is required by law to make any deduction or
withholding on account of any such Tax from any sum paid or
payable by such Borrower to CUSA Co-Agent or any Lender
under any of the Loan Documents:
(a) such Borrower shall notify CUSA Co-Agent of any
such requirement or any change in any such requirement as
soon as such Borrower has knowledge of it;
(b) such Borrower shall pay any such Tax before the
date on which penalties attach thereto, such payment to be
made (if the liability to pay is imposed on such Borrower)
for its own account or (if that liability is imposed on CUSA
Co-Agent or such Lender, as the case may be) on behalf of
and in the name of CUSA Co-Agent or such Lender;
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(c) the sum payable by such Borrower to CUSA Co-Agent
or a Lender in respect of which the relevant deduction,
withholding or payment is required shall be increased to the
extent necessary to ensure that, after the making of that
deduction, withholding or payment, CUSA Co-Agent or such
Lender, as the case may be, receives on the due date a net
sum equal to what it would have received had no such
deduction, withholding or payment been required or made; and
(d) within 30 days after paying any sum from which it
is required by law to make any deduction or withholding, and
within 30 days after the due date of payment of any Tax
which it is required by clause (b) above to pay, such
Borrower shall deliver to CUSA Co-Agent evidence
satisfactory to the other affected parties of such
deduction, withholding or payment and of the remittance
thereof to the relevant taxing or other authority;
provided that no such additional amount shall be required to
be paid to any Lender under clause (c) above except to the
extent that any change after the date hereof (in the case of
each Lender listed on the signature pages hereof) or after
the date of the Assignment and Acceptance pursuant to which
such Lender became a Lender (in the case of each other
Lender) in any such requirement for a deduction, withholding
or payment as is mentioned therein shall result in an
increase in the rate of such deduction, withholding or
payment from that in effect at the date of this Agreement or
at the date of such Assignment and Acceptance, as the case
may be, in respect of payments to such Lender.
(iii) U.S. Tax Certificates. Each Lender that is
organized under the laws of any jurisdiction other than the
United States or any state or other political subdivision
thereof shall deliver to CUSA Co-Agent for transmission to
Borrowers, on or prior to the Closing Date (in the case of
each Lender listed on the signature pages hereof) or on the
date of the Assignment and Acceptance pursuant to which it
becomes a Lender (in the case of each other Lender), and at
such other times as may be necessary in the determination of
Borrowers or CUSA Co-Agent (each in the reasonable exercise
of their discretion), such certificates, documents or other
evidence, properly completed and duly executed by such
Lender (including, without limitation, Internal Revenue
Service Form 1001 or Form 4224 or any other certificate or
statement of exemption required by Treasury Regulations
Section 1.1441-4(a) or Section 1.1441-6(c) or any successor
thereto) to establish that such Lender is not subject to
deduction or withholding of United States federal income tax
under Section 1441 or 1442 of the Internal Revenue Code or
otherwise (or under any comparable provisions of any
successor statute) with respect to any payments to such
Lender of principal, interest, fees or other amounts payable
under any of the Loan Documents. Borrowers shall not be
required to pay any additional amount to any such Lender
under clause (c) of subsection 2.6B(ii) if such Lender shall
have failed to satisfy the requirements of the immediately
preceding sentence; provided that if such Lender shall have
satisfied such requirements on the Closing Date (in the case
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of each Lender listed on the signature pages hereof) or on
the date of the Assignment and Acceptance pursuant to which
it became a Lender (in the case of each other Lender),
nothing in this subsection 2.6B(iii) shall relieve Borrowers
of their obligation to pay any additional amounts pursuant
to clause (c) of subsection 2.6B(ii) in the event that, as a
result of any change in applicable law, such Lender is no
longer properly entitled to deliver certificates, documents
or other evidence at a subsequent date establishing the fact
that such Lender is not subject to withholding as described
in the immediately preceding sentence.
C. Capital Adequacy Adjustment. If any Lender shall
have determined that the adoption, effectiveness, phase-in
or applicability of any law, rule or regulation (or any
provision thereof) regarding capital adequacy, or any change
therein or in the interpretation or administration thereof,
in each case after the date hereof, by any governmental
authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance
by any Lender (or its applicable lending office) with any
guideline, request or directive regarding capital adequacy
(whether or not having the force of law) of any such
governmental authority, central bank or comparable agency,
has or would have the effect of reducing the rate of return
on the capital of such Lender or any corporation controlling
such Lender as a consequence of, or with reference to, such
Lender's Loans or Commitment or Letters of Credit or
participations therein or other obligations hereunder with
respect to the Loans or the Letters of Credit to a level
below that which such Lender or such controlling corporation
could have achieved but for such adoption, effectiveness,
phase-in, applicability, change or compliance, then from
time to time, within five Business Days after receipt by any
Borrower from such Lender of the statement referred to in
the next sentence, Borrowers shall pay to such Lender such
additional amount or amounts as will compensate such Lender
or such controlling corporation on an after-tax basis for
such reduction. Such Lender shall deliver to Borrowers (with
a copy to CUSA Co-Agent) a written statement, setting forth
in reasonable detail the basis of the calculation of such
additional amounts, which statement shall be conclusive and
binding upon all parties hereto absent manifest error.
2.7. Obligation of Lenders and Issuing Lender to Mitigate.
Each Lender and Issuing Lender agrees that, as promptly
as practicable after the officer of such Lender or Issuing
Lender responsible for administering the Loans or Letters of
Credit of such Lender or Issuing Lender, as the case may be,
becomes aware of the occurrence of an event or the existence
of a condition that would entitle such Lender or Issuing
Lender to receive payments under subsection 2.6 or
subsection 3.6, it will, to the extent not inconsistent with
any applicable legal or regulatory restrictions, use
reasonable efforts (i) to make, issue, fund or maintain the
Commitment of such Lender or the affected Loans or Letters
of Credit of such Lender or Issuing Lender through another
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lending or letter of credit office of such Lender or Issuing
Lender, or (ii) take such other measures as such Lender or
Issuing Lender may deem reasonable, if as a result thereof
the additional amounts which would otherwise be required to
be paid to such Lender or Issuing Lender pursuant to
subsection 2.6 or subsection 3.6 would be materially reduced
and if, as determined by such Lender or Issuing Lender in
its sole discretion, the making, issuing, funding or
maintaining of such Commitment or Loans or Letters of Credit
through such other lending or letter of credit office or in
accordance with such other measures, as the case may be,
would not otherwise materially adversely affect such
Commitment or Loans or Letters of Credit or the interests of
such Lender or Issuing Lender; provided that such Lender or
Issuing Lender will not be obligated to utilize such other
lending or letter of credit office pursuant to this
subsection 2.7 unless Borrowers agree to pay all incremental
expenses incurred by such Lender or Issuing Lender as a
result of utilizing such other lending or letter of credit
office as described in clause (i) above; provided further
that such Lender or Issuing Lender shall not be obligated to
utilize such lending or letter of credit office if it
determines in its sole discretion that it is economically
disadvantageous to do so. A certificate as to the amount of
any such expenses payable by any Borrower pursuant to this
subsection 2.7 (setting forth in reasonable detail the basis
for requesting such amount) submitted by such Lender or
Issuing Lender to such Borrower (with a copy to CUSA Co-
Agent) shall be conclusive absent manifest error.
2.8. Superpriority Nature of Obligations.
All Obligations under the Loan Documents shall
constitute allowed administrative expense claims in the
Chapter 11 Cases against Credit Parties which are debtors in
the Chapter 11 Cases with priority under Section 364(c)(1)
of the Bankruptcy Code over any and all other administrative
expenses of the kind specified or ordered pursuant to any
provision of the Bankruptcy Code, including, but not limited
to, Sections 105, 326, 328, 503(b), 506(c), 507(a), 507(b)
and 726 of the Bankruptcy Code; provided that, upon the
occurrence and during the continuance of an Event of Default
under this Agreement or the exercise by any Agent or any
Lender of its remedies after an Event of Default, such
claims shall be subject to: (i) unpaid professional fees and
expenses allowed in the Chapter 11 Cases in an aggregate
amount (determined without regard to fees and expenses
awarded or otherwise paid on an interim basis) not to exceed
$5,000,000; and (ii) fees payable to the United States
Trustee pursuant to 28 U.S.C. 1930(a)(6).
2.9. Joint and Several Liability; Payment Indemnifications.
(i) All Obligations of Borrowers under the Loan
Documents shall be the joint and several Obligations of each
Borrower. The Obligations of and the Liens granted by any
such Borrower under the Loan Documents shall not be impaired
or released by any
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ction or inaction on the part of any Agent or any Lender
with respect to any other Credit Party, including any action
or inaction which would otherwise release a surety.
(ii) In order to provide for just and equitable
contribution between the Borrowers if any payment is made by
a Borrower (a "Funding Borrower") in discharging any of the
Obligations, that Funding Borrower shall be entitled to a
contribution from the other Borrowers for all payments,
damages and expenses incurred by that Funding Borrower in
discharging the Obligations, in the manner and to the extent
required to allocate liabilities in an equitable manner
among Borrowers on the basis of the relative benefits
received by Borrowers. If and to the extent that a Funding
Borrower makes any payment to any Lender or any other Person
in respect of the Obligations, any claim which said Funding
Borrower may have against the other Borrower by reason
thereof shall be subject and subordinate to the prior cash
payment in full of the Obligations. The parties hereto
acknowledge that the right to contribution hereunder shall
constitute an asset of the party to which such contribution
is owing. Notwithstanding any of the foregoing to the
contrary, such contribution arrangements shall not limit in
any manner the joint and several nature of the Obligations,
limit, release or otherwise impair any rights of any Agent
or any Lender under the Loan Documents, or alter, limit or
impair the obligation of each Borrower, which is absolute
and unconditional, to repay the Obligations. The obligation
of any Borrower to make any contribution to another Borrower
under this subsection 2.9 shall be deemed an expense of
administration of such Borrower arising under Section 503(b)
of the Bankruptcy Code and shall be junior in priority to
all Obligations of such Borrower under the Loan Documents.
SECTION 3.
LETTERS OF CREDIT
3.1. Issuance of Letters of Credit and Lenders' Purchase of
Participations Therein.
A. Letters of Credit. In addition to any Borrower
requesting that Lenders make Loans pursuant to subsection
2.1A, any Borrower may request, in accordance with the
provisions of this subsection 3.1, from time to time during
the period from the Closing Date to but excluding the
Commitment Termination Date, that Issuing Lender issue
Letters of Credit for the account of such Borrower for the
purposes specified in the definitions of Commercial Letters
of Credit and Standby Letters of Credit. Subject to the
terms and conditions of this Agreement and in reliance upon
the representations and warranties of Borrowers herein set
forth, Issuing Lender shall issue such Letters of Credit in
accordance with the provisions of this subsection 3.1;
provided that no Borrower shall request that Issuing Lender
issue (and Issuing Lender shall not issue):
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(i) any Letter of Credit if, after giving effect to
such issuance, the Total Utilization of Commitments would
exceed the lesser of (a) the aggregate Commitments or (b)
the Borrowing Base, in each case as then in effect; provided
that Issuing Lender may assume the foregoing conditions are
met to the extent CUSA Co-Agent has not notified Issuing
Lender otherwise;
(ii) any Letter of Credit if, after giving effect to
such issuance, the Letter of Credit Usage (a) with respect
to Commercial Letters of Credit would exceed $75,000,000 and
(b) with respect to Standby Letters of Credit would exceed
$15,000,000 (provided that the Letter of Credit Usage with
respect to Standby Letters of Credit may exceed $15,000,000
by an amount not to exceed the amount available for drawing
under the Standby Letter of Credit issued to CIT on the
Closing Date as long as the total Letter of Credit Usage at
no time exceeds $90,000,000);
(iii) any Standby Letter of Credit having an
expiration date later than the earlier of (a) the Commitment
Termination Date and (b) the date which is one year from the
date of issuance of such Standby Letter of Credit; provided
that the immediately preceding clause (b) shall not prevent
Issuing Lender from agreeing that a Standby Letter of Credit
will automatically be extended for one or more successive
periods not to exceed one year each unless Issuing Lender
elects not to extend for any such additional period;
provided, further that Issuing Lender shall deliver a
written notice to CUSA Co-Agent setting forth the last day
on which Issuing Lender may give notice that it will not
extend such Standby Letter of Credit (the "Notification
Date" with respect to such Standby Letter of Credit) at
least ten Business Days prior to such Notification Date; and
provided, further that, unless Requisite Lenders otherwise
consent, Issuing Lender shall give notice that it will not
extend such Standby Letter of Credit if it has knowledge
that an Event of Default has occurred and is continuing on
such Notification Date; or
(iv) any Commercial Letter of Credit having an
expiration date (a) later than the earlier of (1) 30 days
prior to the Commitment Termination Date (except as
otherwise provided in the next succeeding sentence) and (2)
the date which is 180 days from the date of issuance of such
Commercial Letter of Credit or (b) that is otherwise
unacceptable to Issuing Lender in its reasonable discretion.
Notwithstanding the provisions of clause (iv)(a)(1) of the
this subsection 3.1A, Issuing Lender may issue Commercial
Letters of Credit otherwise in accordance with the
provisions of this Agreement with an expiration date later
than the Commitment Termination Date but on or prior to
December 15, 1996; provided that, (x) the aggregate face
amount of all such Commercial Letters of Credit shall not
exceed $40,000,000 and (y) no later than 30 days prior to
the Commitment Termination Date, Borrowers shall pay to CUSA
Co-Agent Cash or Cash Equivalents in an amount equal to 105%
of the maximum amount that may at any time be drawn under
all such Commercial Letters of Credit then outstanding, such
amounts to be held in the Collateral Account.
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B. Mechanics of Issuance.
(i) Notice of Issuance. Whenever a Borrower desires
the issuance of a Letter of Credit, it shall deliver to
Issuing Lender a Notice of Issuance of Letter of Credit no
later than 11:00 A.M. (New York City time) at least five
Business Days, in the case of a request for issuance of a
Standby Letter of Credit, or at least one Business Day, in
the case of a request for issuance of a Commercial Letter of
Credit, or, in each case such shorter period as may be
agreed to by the Issuing Lender in any particular instance,
in advance of the proposed date of issuance. The Notice of
Issuance of Letter of Credit shall specify (a) the proposed
date of issuance (which shall be a Business Day), (b) the
face amount of the Letter of Credit, in Dollars, (c) the
expiration date of the Letter of Credit, (d) the name and
address of the beneficiary, and (e) the verbatim text of the
proposed Letter of Credit or the proposed terms and
conditions thereof, including a precise description of any
documents and the verbatim text of any certificates to be
presented by the beneficiary which, if presented by the
beneficiary prior to the expiration date of the Letter of
Credit, would require the Issuing Lender to make payment
under the Letter of Credit; provided that the Issuing
Lender, in its sole discretion, may require changes in the
text of the proposed Letter of Credit or any such documents
or certificates; and provided, further that no Letter of
Credit shall require payment against a conforming draft to
be made thereunder on the same business day (under the laws
of the jurisdiction in which the office of the Issuing
Lender to which such draft is required to be presented is
located) that such draft is presented if such presentation
is made after 10:00 A.M. (in the time zone of such office of
the Issuing Lender) on such business day; provided further
that anything to the contrary in this Agreement
notwithstanding, any Borrower may, with Issuing Lender's
consent, deliver a Notice of Issuance of Letter of Credit
electronically to Issuing Lender, in which such event such
Borrower shall be deemed for all purposes hereunder and the
other Loan Documents to have delivered a written Notice of
Issuance of Letter of Credit hereunder.
Borrowers shall notify the Issuing Lender and Co-Agents
prior to the issuance of any Letter of Credit in the event
that any of the matters to which any Borrower is required to
certify in the applicable Notice of Issuance of Letter of
Credit is no longer materially true and correct as of the
proposed date of issuance of such Letter of Credit, and upon
the issuance of any Letter of Credit such Borrower shall be
deemed to have re-certified, as of the date of such
issuance, as to the matters to which such Borrower is
required to certify in the applicable Notice of Issuance of
Letter of Credit.
(ii) Notification to Lenders. Issuing Lender shall
furnish to each Lender by 12:00 Noon (New York City time) on
Thursday of each week, a written report summarizing issuance
and expiration dates of all Letters of Credit issued during
the
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previous week (together with copies thereof) and drawings
during such week of all Letters of Credit and setting forth
each Lender's participation therein.
(iii) Issuance of Letter of Credit. Upon
satisfaction or waiver (in accordance with subsection 10.6)
of the conditions set forth in subsection 4.3, the Issuing
Lender shall issue the requested Letter of Credit in
accordance with the Issuing Lender's standard operating
procedures.
(iv) Reports to Lenders. Within 15 days after the end
of each month ending after the Closing Date, so long as any
Letter of Credit shall have been outstanding during such
month, Issuing Lender shall deliver to each other Lender a
report setting forth the average for such month of the daily
maximum amount available to be drawn under the Letters of
Credit issued by Issuing Lender that were outstanding during
such month and a copy of the same shall be delivered to
Borrowers.
C. Lenders' Purchase of Participations in Letters of
Credit. Immediately upon the issuance of each Letter of
Credit, each Lender shall be deemed to, and hereby severally
agrees to, have irrevocably purchased from the Issuing
Lender a participation in such Letter of Credit and drawings
thereunder in an amount equal to such Lender's Pro Rata
Share of the maximum amount which is or at any time may
become available to be drawn thereunder.
3.2. Letter of Credit Fees.
Borrowers agree to pay the following amounts to CUSA Co-
Agent on behalf of Issuing Lender and Lenders with respect
to Letters of Credit issued by it:
(i) with respect to each Standby Letter of Credit, (a)
a letter of credit fee equal to 2.25% per annum of the
average daily maximum amount available to be drawn under
such Standby Letter of Credit, payable monthly in arrears on
the first Business Day of the next succeeding month and
computed on the basis of a 360-day year for the actual
number of days elapsed;
(ii) with respect to Commercial Letters of Credit, a
letter of credit fee equal to 2.00% per annum of the
aggregate maximum amount outstanding for all such Commercial
Letters of Credit, in each case payable monthly in arrears
on the first Business Day of the next succeeding month and
computed on the basis of a 360-day year and the actual
number of days elapsed; and
(iii) with respect to the issuance, amendment or
transfer of each Letter of Credit and each drawing made
thereunder (without duplication of the fees payable under
clauses (i) and (ii) above), documentary and processing
charges in accordance with
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Issuing Lender's standard schedule for such charges in
effect at the time of such issuance, amendment, transfer or
drawing, as the case may be.
Upon the occurrence and during the continuation of a
Potential Event of Default or Default the Letter of Credit
fees otherwise payable pursuant to clauses (i) and (ii)
above shall be increased by 2.00%; provided that if a
Potential Event of Default is cured prior to becoming an
Event of Default, Borrower shall not be required to pay the
additional Letter of Credit fees accrued as a result of such
Potential Event of Default. All fees payable with respect
to Letters of Credit shall continue to accrue and be payable
as provided herein as long as any Letters of Credit remain
outstanding irrespective of whether or not the Commitment
Termination Date has occurred.
Promptly upon receipt by CUSA Co-Agent of (a) any
amount described in clause (i) or (ii) of this subsection
3.2, CUSA Co-Agent shall distribute to each other Lender its
Pro Rata Share of such amount and (b) any other amount
described in clause (iii) above, CUSA Co-Agent shall
distribute such amount to Issuing Lender.
3.3. Drawings and Reimbursement of Amounts Drawn Under
Letters of Credit.
A. Responsibility of Issuing Lender With Respect to
Requests For Drawings. In determining whether to honor any
request for drawing under any Letter of Credit by the
beneficiary thereof, the Issuing Lender shall be responsible
only to determine that the documents and certificates
required to be delivered under such Letter of Credit have
been delivered and that they comply on their face with the
requirements of such Letter of Credit.
B. Reimbursement by Borrower of Amounts Drawn Under
Letters of Credit. In the event Issuing Lender has
determined to honor a request for drawing under a Letter of
Credit issued by it, Issuing Lender shall immediately notify
the applicable Borrower and Co-Agents, and such Borrower
shall reimburse Issuing Lender on or before the Business Day
immediately following the date on which such drawing is
honored (the "Reimbursement Date") in an amount in Dollars
in same day funds equal to the amount of such drawing from
funds on deposit in the Collection Account; provided that,
anything contained in this Agreement to the contrary
notwithstanding, if the funds on deposit in the Collection
Account are insufficient to reimburse Issuing Lender for
such drawing (i) such Borrower shall be deemed to have given
a timely Notice of Borrowing to CUSA Co-Agent requesting
Lenders to make Loans on the Reimbursement Date in an amount
equal to the amount of such drawing and (ii) subject to
satisfaction or waiver of the conditions specified in
subsection 4.2B, Lenders shall, on the Reimbursement Date,
make Loans in the amount of such drawing, the proceeds of
which shall be applied directly by CUSA Co-Agent to
reimburse Issuing Lender for the amount of such drawing; and
provided, further that if for any reason proceeds of Loans
are not received by Issuing
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Lender on the Reimbursement Date in an amount in Dollars
equal to the amount of such drawing, such Borrower shall
reimburse Issuing Lender, on demand, in an amount in same
day funds equal to the excess of the amount of such drawing
over the aggregate amount of such Loans, if any, which are
so received. Nothing in this subsection 3.3B shall be
deemed to relieve any Lender from its obligation to make
Loans on the terms and conditions set forth in this
Agreement, and Borrowers shall retain any and all rights
they may have against any Lender resulting from the failure
of such Lender to make such Loans under this subsection
3.3B.
C. Payment by Lenders of Unreimbursed Drawings Under
Letters of Credit.
(i) Payment by Lenders. In the event that any
Borrower shall fail for any reason to reimburse Issuing
Lender as provided in subsection 3.3B by the close of
business of Issuing Lender on the Reimbursement Date in an
amount equal to the amount of any drawing honored by Issuing
Lender under a Letter of Credit issued by it, Issuing Lender
shall notify each other Lender by 12:00 Noon (New York City
time) on the next Business Day immediately following the
Reimbursement Date of the unreimbursed amount of such
drawing and of such other Lender's respective participation
therein based on such Lender's Pro Rata Share. Each Lender
shall make available to Issuing Lender an amount equal to
its respective participation, in Dollars and in same day
funds, at the office of Issuing Lender specified in such
notice, not later than 12:00 Noon (New York City time) on
the first business day (under the laws of the jurisdiction
in which such office of Issuing Lender is located) after the
date notified by Issuing Lender. In the event that any
Lender fails to make available to Issuing Lender on such
business day the amount of such Lender's participation in
such Letter of Credit as provided in this subsection 3.3C,
Issuing Lender shall be entitled to recover such amount on
demand from such Lender together with interest thereon at
the rate customarily used by Issuing Lender for the
correction of errors among banks for three Business Days and
thereafter at the Federal Funds Rate. Nothing in this
subsection 3.3C shall be deemed to prejudice the right of
any Lender to recover from Issuing Lender any amounts made
available by such Lender to Issuing Lender pursuant to this
subsection 3.3C in the event that it is determined by the
final judgment of a court of competent jurisdiction that the
payment with respect to a Letter of Credit by Issuing Lender
in respect of which payment was made by such Lender
constituted gross negligence or willful misconduct on the
part of Issuing Lender.
(ii) Distribution to Lenders of Reimbursements Received
From Borrowers. In the event Issuing Lender shall have been
reimbursed by other Lenders pursuant to subsection 3.3C(i)
for all or any portion of any drawing honored by Issuing
Lender under a Letter of Credit issued by it, Issuing Lender
shall distribute to each other Lender which has paid all
amounts payable by it under subsection 3.3C(i) with respect
to such drawing such other Lender's Pro Rata Share of all
payments subsequently received
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by Issuing Lender from Borrower in reimbursement of such
drawing when such payments are received. Any such
distribution shall be made by wire transfer of funds to a
Lender in accordance with the written payment instructions
provided by such Lender to Issuing Lender.
D. Interest on Amounts Drawn Under Letters of Credit.
(i) Payment of Interest by Borrower. Borrowers agree
to pay to Issuing Lender, with respect to drawings made
under any Letters of Credit issued by it, interest on the
amount paid by Issuing Lender in respect of each such
drawing from the date of such drawing to but excluding the
date such amount is reimbursed by Borrowers (including any
such reimbursement out of the proceeds of Loans pursuant to
subsection 3.3B) at a rate equal to (a) for the period from
the date of such drawing to but excluding the Reimbursement
Date, the rate then in effect under this Agreement with
respect to Loans and (b) thereafter, a rate which is 2% per
annum in excess of the rate of interest otherwise payable
under this Agreement with respect to Loans (excluding any
default rate of interest which may then be payable on
Loans). Interest payable pursuant to this subsection
3.3D(i) shall be computed on the basis of a 360-day year for
the actual number of days elapsed in the period during which
it accrues and shall be payable on demand or, if no demand
is made, on the date on which the related drawing under a
Letter of Credit is reimbursed in full.
(ii) Distribution of Interest Payments by Issuing
Lender. Promptly upon receipt by Issuing Lender of any
payment of interest pursuant to subsection 3.3D(i), (a)
Issuing Lender shall distribute to each other Lender by 3:00
P.M. (New York City time), out of the interest received by
Issuing Lender in respect of the period from the date of the
applicable drawing under a Letter of Credit issued by
Issuing Lender to but excluding the date on which Issuing
Lender is reimbursed for the amount of such drawing
(including any such reimbursement out of the proceeds of
Loans pursuant to subsection 3.3B), the amount that such
other Lender would have been entitled to receive in respect
of the letter of credit fee that would have been payable in
respect of such Letter of Credit for such period pursuant to
subsection 3.2 if no drawing had been made under such Letter
of Credit, and (b) in the event Issuing Lender shall have
been reimbursed by other Lenders pursuant to subsection
3.3C(i) for all or any portion of such drawing, Issuing
Lender shall distribute to each other Lender which has paid
all amounts payable by it under subsection 3.3C(i) with
respect to such drawing such other Lender's Pro Rata Share
of any interest received by Issuing Lender in respect of
that portion of such drawing so reimbursed by other Lenders
for the period from the date on which Issuing Lender was so
reimbursed by other Lenders to and including the date on
which such portion of such drawing is reimbursed by
Borrowers. Any such distribution shall be made by wire
transfer to a Lender in accordance with the written payment
instructions provided by such Lender to Issuing Lender.
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3.4. Obligations Absolute.
The obligation of Borrowers to reimburse Issuing Lender
for drawings made under the Letters of Credit issued by it
and to repay any Loans made by Lenders pursuant to
subsection 3.3B and the obligations of Lenders under
subsection 3.3C(i) shall be unconditional and irrevocable
and shall be paid strictly in accordance with the terms of
this Agreement under all circumstances including, without
limitation, the following circumstances:
(i) any lack of validity or enforceability of any
Letter of Credit;
(ii) the existence of any claim, set-off, defense or
other right which any Borrower or any Lender may have at any
time against a beneficiary or any transferee of any Letter
of Credit (or any Persons for whom any such transferee may
be acting), Issuing Lender or other Lender or any other
Person or, in the case of a Lender, against any Borrower,
whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction (including
any underlying transaction between such Borrower and the
beneficiary for which any Letter of Credit was procured);
(iii) any draft, demand, certificate or other
document presented under any Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any
respect;
(iv) payment by Issuing Lender under any Letter of
Credit against presentation of a demand, draft or
certificate or other document which does not comply with the
terms of such Letter of Credit;
(v) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or
prospects of such Borrower;
(vi) any breach of this Agreement or any other Loan
Document by any party thereto;
(vii) any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing;
or
(viii) the fact that an Event of Default or a
Potential Event of Default shall have occurred and be
continuing;
provided, in each case, that payment by Issuing Lender under
the applicable Letter of Credit shall not have constituted
gross negligence or willful misconduct of Issuing Lender or
its officers, employees or agents under the circumstances in
question (as determined by a final judgment of a court of
competent jurisdiction).
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3.5. Indemnification; Nature of Issuing Lender's Duties.
A. Indemnification. In addition to amounts payable
as provided in subsection 3.6, Borrowers hereby jointly and
severally agree to protect, indemnify, pay and save harmless
Issuing Lender and its officers, employees or agents from
and against any and all claims, demands, liabilities,
damages, losses, and reasonable costs, charges and expenses
(including reasonable fees, expenses and disbursements of
counsel) which Issuing Lender may incur or be subject to as
a consequence, direct or indirect, of (i) the issuance of
any Letter of Credit by Issuing Lender, other than as a
result of (a) the gross negligence or willful misconduct of
Issuing Lender or its officers, employees or agents as
determined by a final judgment of a court of competent
jurisdiction or (b) subject to the following clause (ii),
the wrongful dishonor by Issuing Lender of a proper demand
for payment made under any Letter of Credit issued by it or
(ii) the failure of Issuing Lender to honor a drawing under
any such Letter of Credit as a result of any act or
omission, whether rightful or wrongful, of any present or
future de jure or de facto government or governmental
authority (all such acts or omissions herein called
"Governmental Acts").
B. Nature of Issuing Lender's Duties. As between
Borrowers and Issuing Lender, Borrowers assume all risks of
the acts and omissions of, or misuse of the Letters of
Credit issued by Issuing Lender by, the respective
beneficiaries of such Letters of Credit. In furtherance and
not in limitation of the foregoing, Issuing Lender shall not
be responsible for: (i) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application
for and issuance of any such Letter of Credit, even if it
should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) the
validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any such
Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) failure of the
beneficiary of any such Letter of Credit to comply fully
with any conditions required in order to draw upon such
Letter of Credit; (iv) errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise, whether or not they be
in cipher; (v) errors in interpretation of technical terms;
(vi) any loss or delay in the transmission or otherwise of
any document required in order to make a drawing under any
such Letter of Credit or of the proceeds thereof; (vii) the
misapplication by the beneficiary of any such Letter of
Credit of the proceeds of any drawing under such Letter of
Credit; or (viii) any consequences arising from causes
beyond the control of Issuing Lender, including without
limitation any Governmental Acts, and none of the above
shall affect or impair, or prevent the vesting of, any of
Issuing Lender's rights or powers hereunder.
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In furtherance and extension and not in limitation of
the specific provisions set forth in the first paragraph of
this subsection 3.5B, any action taken or omitted by Issuing
Lender under or in connection with the Letters of Credit
issued by it or any documents and certificates delivered
thereunder, if taken or omitted in good faith, shall not put
Issuing Lender under any resulting liability to Borrowers.
Notwithstanding anything to the contrary contained in
this subsection 3.5, Borrowers shall retain any and all
rights they may have against Issuing Lender and its
officers, employees or agents for any liability arising
solely out of the gross negligence or willful misconduct of
Issuing Lender or its officers, employees or agents, as
determined by a final judgment of a court of competent
jurisdiction.
3.6. Increased Costs and Taxes Relating to Letters of
Credit.
Without limiting the provision of subsection 2.6, in
the event that Issuing Lender or any Lender shall determine
(which determination shall, absent manifest error, be final
and conclusive and binding upon all parties hereto) that any
change after the date hereof in any law, treaty or
governmental rule, regulation or order, or any change
therein or in the interpretation, administration or
application thereof (including the introduction of any new
law, treaty or governmental rule, regulation or order), or
any determination of a court or governmental authority, in
each case that becomes effective after the date hereof, or
compliance by Issuing Lender or any Lender with any
guideline, request or directive issued or made after the
date hereof by any central bank or other governmental or
quasi-governmental authority (whether or not having the
force of law):
(i) subjects Issuing Lender or such Lender (or its
applicable lending or letter of credit office) to any
additional Tax (other than any Tax on the overall net income
of Issuing Lender or such Lender) with respect to the
issuing or maintaining of any Letters of Credit or the
purchasing or maintaining of any participations therein or
any other obligations under this Section 3, whether directly
or by such being imposed on or suffered by Issuing Lender;
(ii) imposes, modifies or holds applicable any reserve
(including without limitation any marginal, emergency,
supplemental, special or other reserve), special deposit,
compulsory loan, FDIC insurance or similar requirement in
respect of any Letters of Credit issued by Issuing Lender or
participations therein purchased by any Lender; or
(iii) imposes any other condition on or affecting
Issuing Lender or such Lender (or its applicable lending or
letter of credit office) regarding this Section 3 or any
Letter of Credit or any participation therein;
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and the result of any of the foregoing is to increase the
cost to Issuing Lender or such Lender of agreeing to issue,
issuing or maintaining any Letter of Credit or agreeing to
purchase, purchasing or maintaining any participation
therein or to reduce any amount received or receivable by
Issuing Lender or such Lender (or its applicable lending or
letter of credit office) with respect thereto; then, in any
case, Borrowers shall promptly pay to Issuing Lender or such
Lender, upon receipt of the statement referred to in the
next sentence, such additional amount or amounts as may be
necessary to compensate Issuing Lender or such Lender for
any such increased cost or reduction in amounts received or
receivable hereunder. Issuing Lender or such Lender shall
deliver to Borrowers a written statement, setting forth in
reasonable detail the basis for calculating the additional
amounts owed to Issuing Lender or such Lender under this
subsection 3.6, which statement shall be conclusive and
binding upon all parties hereto absent manifest error.
3.7. Letter of Credit Agent.
With respect to all documents of title, certificates
and other documentation delivered in connection with any
Commercial Letters of Credit, Issuing Lender shall act as
agent for Secured Party. Secured Party hereby appoints
Issuing Lender as its agent for such purposes and Issuing
Lender hereby accepts such appointment.
SECTION 4.
CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of Lenders to make Loans and the
issuance of Letters of Credit hereunder are subject to the
satisfaction of the following conditions:
4.1. Conditions to Initial Loans and Letters of Credit.
The obligations of Lenders to make any Loans or issue
any Letters of Credit to be made or issued on the Closing
Date are, in addition to the conditions precedent specified
in subsection 4.2, subject to prior or concurrent
satisfaction of the following conditions:
A. Credit Party Documents. On or before the Closing
Date, each Credit Party shall deliver or cause to be
delivered to Lenders (or to Co-Agents for Lenders with
sufficient originally executed copies, where appropriate,
for each Lender and its counsel) the following, each, unless
otherwise noted, dated the Closing Date:
(i) Certified copies of its Certificate or Articles of
Incorporation, together with a good standing certificate
from the Secretary of State of the State of its
incorporation and each other state in which it is qualified
as a foreign corporation to do business, each dated a recent
date prior to the Closing Date;
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(ii) Copies of its Bylaws, certified as of the Closing
Date by its corporate secretary or an assistant secretary;
(iii) Resolutions of its Board of Directors
approving and authorizing the execution, delivery and
performance of this Agreement and the other Loan Documents
to which it is a party, certified as of the Closing Date by
its corporate secretary or an assistant secretary as being
in full force and effect without modification or amendment;
(iv) Signature and incumbency certificates of its
officers executing this Agreement and the other Loan
Documents;
(v) Originals of this Agreement and the Notes (duly
executed by Borrowers in accordance with subsection 2.1D,
drawn to the order of each Lender and with appropriate
insertions) and the other Loan Documents; and
(vi) Such other documents as Co-Agents or Issuing
Lender may reasonably request.
B. Security Interests. Each Credit Party shall have
taken or caused to be taken (and Secured Party shall have
received satisfactory evidence thereof) such actions in such
a manner so that Secured Party has (or shall have upon the
filing of the financing statements and Trademark Assignment
delivered to Secured Party on the Closing Date) a valid and
perfected first priority security interest as of such date
in the entire Collateral (to the extent required by the
Pledge and Security Agreement and Collateral Documents
related thereto). Such actions shall include, without
limitation, (i) delivery of appropriate Lien, judgment and
tax searches as Co-Agents shall request in all applicable
jurisdictions for the Credit Parties in form and substance
satisfactory to Co-Agents, (ii) the delivery pursuant to the
Pledge and Security Agreement by each Credit Party of such
certificates (which certificates shall be registered in the
name of Secured Party or properly endorsed in blank for
transfer or accompanied by irrevocable undated stock powers
duly endorsed in blank, all in form and substance
satisfactory to Co-Agents) representing all of the capital
stock of each Subsidiary of each Credit Party required to be
pledged pursuant to the Pledge and Security Agreement, (iii)
filing of Uniform Commercial Code financing statements and
the Trademark Assignment, as to the Collateral for all
jurisdictions as Co-Agents deem necessary or desirable to
perfect Lenders' security interests in the Collateral and
(iv) delivery of all other evidence reasonably satisfactory
to Secured Party that all other filings, recordings and
other actions as Co-Agents deem necessary or advisable to
establish, preserve and perfect the first priority Liens
granted to Secured Party on behalf of Lenders shall have
been made or provided for.
C. Mortgage. MGRE shall have executed and delivered
to Secured Party, for the benefit of Lenders, a Mortgage and
such other agreements, instruments and
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documents as Co-Agents may reasonably require in order to
effect a valid, perfected and enforceable second priority
lien and security interest in favor of Secured Party on
behalf of Lenders in the real property described on Schedule
1.1A and in all improvements now or hereafter located
thereon (each such property, a "Mortgaged Property") (it
being understood that Secured Party will rely on the
Borrowing Order as to perfection and will not record the
Mortgage). Co-Agents shall have received from MGRE, a title
report on the Mortgaged Property issued by a company
satisfactory to Co-Agents, and which shall indicate that (i)
the Obligations are secured by a valid second Lien on the
Mortgaged Property subject only to the title exceptions
approved by Co-Agents, and (ii) MGRE is current in the
payment of all applicable state and local taxes, charges and
assessments affecting the Mortgaged Property. Co-Agents
shall have received evidence satisfactory to Co-Agents as to
whether (a) the Mortgaged Property is in an area designated
by the Federal Emergency Management Agency as having special
flood or mud slide hazards (a "Flood Hazard Property") and
(b) the community in which such Flood Hazard Property is
located is participating in the National Flood Insurance
Program; and, if such Mortgaged Property contains any Flood
Hazard Property, Co-Agents shall have received MGRE's
written acknowledgement of receipt of written notification
from Co-Agents (1) as to the existence of such Flood Hazard
Property and (2) as to whether the community in which such
Flood Hazard Property is located is participating in the
National Flood Insurance Program.
D. Cash Management System. The Cash Management
System shall be in place in form and substance satisfactory
to Co-Agents, and (i) (other than to the extent Co-Agents
shall have otherwise consented in their sole discretion)
Secured Party shall have received Cash Management Letters
from each financial institution at which a Deposit Account
is located (which, in any event, shall include the First
National Cash Management Letter, the Citibank Cash
Management Letter and any other Cash Management Letters for
any such Deposit Accounts located at any Lender or its
Affiliates) pursuant to the Cash Management System, (ii)
Secured Party shall have received the Citibank Third-Party
Account Agreement duly executed and (iii) Borrowers and Co-
Agents shall have agreed upon the form of a Direction Letter
to be sent to the financial institutions maintaining Deposit
Accounts, all of the foregoing in form and substance
satisfactory to Co-Agents.
E. Delivery of Compliance Certificate. Borrowers
shall have delivered to Co-Agents a Compliance Certificate
substantially in the form of Exhibit V annexed hereto, dated
as of the Closing Date and calculated to give effect to the
initial funding under this Agreement and the other
transactions on the Closing Date, demonstrating compliance
with the covenants set forth in this Agreement as of the
Closing Date.
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F. Evidence of Insurance. Co-Agents shall have
received an Officer's Certificate of Borrowers setting forth
a schedule of insurance with respect to each of the
insurance policies required to be maintained hereunder, and
Co-Agents shall be satisfied that the nature and scope of
these insurance policies meet the requirements of subsection
6.4 each such insurance policy shall name Secured Party on
behalf of Lenders as loss payee and/or additional insured,
as appropriate, and Co-Agents shall have received an
original certificate of insurance from or on behalf of the
issuer of each such policy.
G. Borrowing Order. The Borrowing Order shall be in
full force and effect.
H. Termination of Existing Credit Facilities. Prior
to or concurrently with the funding of the initial Loans or
the issuance of the initial Letters of Credit under this
Agreement, MGRE and MGRD shall repay all principal and
interest on outstanding loans and other obligations owed
under or related to the Existing Credit Facilities,
including without limitation all fees, expenses and other
costs arising thereunder, and shall terminate the obligation
to lend or make other extensions of credit under the
provisions of the Existing Credit Facilities; provided
however that (i) Credit Parties may remain liable with
respect to the Steamship Guarantees and (ii) Remaining
Documentary Letters of Credit and Remaining Standby Letters
of Credit may remain outstanding to the extent a Standby
Letter of Credit has been issued hereunder to CIT to support
the obligations thereunder in an amount up to 105% of the
face amount thereof; it being understood and agreed that all
Existing Letters of Credit which are standby letters of
credit (other than Remaining Standby Letters of Credit)
shall be replaced by Letters of Credit issued hereunder as
of the Closing Date. Concurrently with such repayment, any
Liens granted to secure any obligations under or with
respect to the Existing Credit Facilities or the documents
delivered thereunder, shall be released and all cash
collateral shall be delivered to Secured Party for deposit
in the Collection Account. All lenders (or an authorized
agent on their behalf) under the Existing Credit Facilities
shall have delivered written acknowledgements of such
terminations and releases in form and substance satisfactory
to Co-Agents. All of the foregoing shall be accomplished in
form and substance satisfactory to Co-Agents.
I. Letters of Credit. Prior to the Closing Date,
Borrowers shall have delivered to Co-Agents in form and
substance satisfactory to Co-Agents, an Officer's
Certificate listing all Existing Letters of Credit and
specifying which Existing Letters of Credit are Remaining
Documentary Letters of Credit which shall remain outstanding
on and after the Closing Date.
J. Management Plan. On or before the Closing Date,
Co-Agents shall have received, in form and substance
satisfactory to Co-Agents, an Officer's Certificate setting
forth the Management Plan.
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K. Collateral Review; Borrowing Base. On or before
the Closing Date, Co-Agents shall have received an updated
review and analysis of all Collateral and verification of
the Borrowing Base, all in form and substance satisfactory
to Co-Agents.
L. Credit Availability. As of the Closing Date, and
after giving effect to all transactions on the Closing Date,
Co-Agents shall be satisfied that Borrowers have (i) a
minimum of at least $10,000,000 available to be drawn under
the Commitments, and (ii) a minimum of at least $10,000,000
in unencumbered Cash and Cash Equivalents.
M. Opinions of Credit Party's Counsel. Lenders and
their respective counsel shall have received (i) originally
executed copies of one or more favorable written opinions of
Swidler & Berlin, counsel for the Credit Parties, in form
and substance satisfactory to Co-Co-Agents and their
counsel, dated as of the Closing Date and setting forth
substantially the matters in the opinions designated in
Exhibit XII annexed hereto and as to such other matters as
Co-Agents acting on behalf of Lenders may reasonably
request, and (ii) evidence satisfactory to Co-Agents that
each Credit Party has requested each such counsel to deliver
such opinions to Lenders.
N. Opinions of Co-Agent's Counsel. Lenders shall
have received originally executed copies of one or more
favorable written opinions of O'Melveny & Myers, counsel to
Co-Agents, dated as of the Closing Date, substantially in
the form of Exhibit XIII annexed hereto and as to such other
matters as Agents acting on behalf of Lenders may reasonably
request.
O. Management of MGRE. 4.1.14.1. The chief executive
officer of MGRE and/or 4.1.14.1. the contract between
Meridian Ventures and MGRE and the proposed continued
involvement of Meridian Ventures in the management of MGRE
and its Subsidiaries shall be satisfactory to Co-Agents, in
their sole discretion.
P. Expenses. Borrowers shall have paid to Co-Agents
for distribution as appropriate, all reimbursable costs and
expenses incurred through the Closing Date in accordance
with subsection 10.2.
Q. Fees. Borrower shall have paid to Co-Agents, for
distribution (as appropriate) to Co-Agents and Lenders, the
fees payable on the Closing Date referred to in subsection
2.3.
R. No Material Adverse Effect. Since January 28,
1995, no Material Adverse Effect (in the sole opinion of Co-
Agents) except as disclosed in the Management Plan shall
have occurred.
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S. Operating Agreements. Co-Agents shall have
received a Final Order of the Court approving the Operating
Agreements, such Final Order and Operating Agreements to be
in form and substance satisfactory to Co-Agents, and Co-
Agents shall have received original executed copies of such
Operating Agreements.
T. UCC Financing Statements Filed by MGRE and MGRD.
MGRE shall have delivered to Co-Agents reasonably
satisfactory evidence that MGRE and MGRD have obtained
executed UCC-1 Financing Statements designating MGRE and
MGRD as secured parties and each of the Subsidiaries party
to an Operating Agreement as debtor, and that such UCC-1
Financings will be filed promptly following the Closing Date
to protect MGRE's and MGRD's right, title and interest in
the Inventory as set forth in such Operating Agreement.
U. Representations and Warranties; Performance of
Agreements. Borrowers shall have delivered to Co-Agents an
Officer's Certificate, in form and substance satisfactory to
Co-Agents, to the effect that the representations and
warranties in Section 5 hereof are true, correct and
complete in all material respects on and as of the Closing
Date to the same extent as though made on and as of that
date and that each Borrower shall have performed in all
material respects all agreements and satisfied all
conditions which this Agreement provides shall be performed
or satisfied by it on or before the Closing Date except as
otherwise disclosed to and agreed to in writing by Co-
Agents.
V. Auditor's Letter. Co-Agents shall have received
an executed Auditor's Letter in form and substance
satisfactory to Co-Agents.
W. Completion of Proceedings. All corporate and
other proceedings taken or to be taken in connection with
the transactions contemplated hereby and all documents
incidental thereto not previously found acceptable by Co-
Agents, acting on behalf of Lenders, and its counsel in
accordance with this subsection 4.1 shall be satisfactory in
form and substance to Co-Agents and such counsel, and Co-
Agents and such counsel shall have received all such
counterpart originals or certified copies of such documents
as Co-Agents may reasonably request.
4.2. Conditions to All Loans.
The obligations of each Lender to make Loans on each
Funding Date are subject to the following further conditions
precedent:
A. CUSA Co-Agent shall have received on or before
that Funding Date, in accordance with the provisions of
subsection 2.1B, a copy of an originally executed Notice of
Borrowing, in each case signed by the chief executive
officer, the chief financial officer or the treasurer of the
applicable Borrower or by any executive officer of
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such Borrower designated by any of the above-described
officers on behalf of such Borrower in a writing delivered
to CUSA Co-Agent.
B. As of that Funding Date:
(i) The representations and warranties contained
herein and in the other Loan Documents shall be true,
correct and complete in all material respects on and as of
that Funding Date to the same extent as though made on and
as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in
which case such representations and warranties shall have
been true, correct and complete in all material respects on
and as of such earlier date;
(ii) No event shall have occurred and be continuing or
would result from the consummation of the borrowing
contemplated by such Notice of Borrowing that would
constitute an Event of Default or a Potential Event of
Default;
(iii) No order, judgment or decree of any court,
arbitrator or governmental authority shall purport to enjoin
or restrain such Lender from making the Loans to be made by
it on that Funding Date;
(iv) The Borrowing Order shall be in full force and
effect;
(v) The making of the Loans requested on such Funding
Date shall not violate any law including, without
limitation, Regulation G, Regulation T, Regulation U or
Regulation X of the Board of Governors of the Federal
Reserve System; and
(vi) There shall not be pending or, to the knowledge of
Borrowers, threatened, any action, suit, proceeding,
governmental investigation or arbitration against or
affecting the Credit Parties or any property of the Credit
Parties that has not been disclosed by Borrowers in writing
pursuant to subsection 5.6 or 6.1(x) prior to the making of
the last preceding Loans (or, in the case of the initial
Loans, prior to the execution of this Agreement), and there
shall have occurred no development not so disclosed in any
such action, suit, proceeding, governmental investigation or
arbitration so disclosed, that, in either event, in the
opinion of Co-Agents or of Requisite Lenders, would be
expected to have a Material Adverse Effect; and no
injunction or other restraining order shall have been issued
and no hearing to cause an injunction or other restraining
order to be issued shall be pending or noticed with respect
to any action, suit or proceeding seeking to enjoin or
otherwise prevent the consummation of, or to recover any
damages or obtain relief as a result of, the transactions
contemplated by this Agreement or the making of Loans
hereunder.
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Acceptance by any Borrower of the proceeds of any Loans
or of amounts released from the Collection Account upon
request of Borrowers in accordance with the terms of the
Pledge and Security Agreement shall constitute a
certification by Borrowers, as of the date of receipt of
such funds, that all of the conditions set forth in this
subsection 4.2B have been satisfied.
4.3. Conditions to Letters of Credit.
The issuance of any Letter of Credit hereunder is
subject to the following conditions precedent:
A. On or before the date of issuance of such Letter
of Credit, Issuing Lender shall have received, in accordance
with the provisions of subsection 3.1B(i), an originally
executed Notice of Issuance of Letter of Credit, in each
case signed by the chief executive officer, the chief
financial officer or the treasurer of the applicable
Borrower or by any executive officer of such Borrower
designated by any of the above-described officers on behalf
of such Borrower in a writing delivered to Issuing Lender,
together with all other information specified in subsection
3.1B(i) and such other documents or information as Issuing
Lender may reasonably require in connection with the
issuance of such Letter of Credit.
B. On the date of issuance of such Letter of Credit,
all conditions precedent described in subsection 4.2B shall
be satisfied to the same extent as if the issuance of such
Letter of Credit were the making of a Loan and the date of
issuance of such Letter of Credit were a Funding Date.
SECTION 5.
BORROWERS' REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement
and to make the Loans, to induce Issuing Lender to issue
Letters of Credit and to induce other Lenders to purchase
participations therein, Borrowers represent and warrant to
each Lender, on the date of this Agreement, on each Funding
Date and on the date of issuance of each Letter of Credit,
that the following statements are true, correct and
complete:
5.1. Organization, Powers, Qualification, Good Standing,
Business and Subsidiaries.
A. Organization and Powers. Each Credit Party is a
corporation duly organized, validly existing and in good
standing under the laws of the State of its incorporation
except for Subsidiaries of Credit Parties, which after the
Closing Date, may not be in good standing if such failure
has not had and will not have a Material Adverse Effect or
result in any Lien not permitted hereunder. Subject to
compliance with any
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applicable provisions of the Bankruptcy Code, each Credit
Party has all requisite corporate power and authority to own
and operate its properties, to carry on its business as now
conducted and as proposed to be conducted, to enter into the
Loan Documents to which it is a party, to carry out the
transactions contemplated thereby and, in the case of
Borrowers, to issue and pay the Notes. Each Credit Party is
in compliance with its Articles of Incorporation and Bylaws
and all applicable orders of the Court.
B. Qualification and Good Standing. Each Credit
Party is qualified to do business and is in good standing in
every jurisdiction necessary to carry out its business and
operations, except in jurisdictions where the failure to be
so qualified or in good standing has not had and will not
have a Material Adverse Effect or result in any Lien not
permitted hereunder.
C. Conduct of Business. Each Credit Party and its
Subsidiaries are engaged only in the businesses permitted to
be engaged in pursuant to subsection 7.14.
D. Subsidiaries. All of the Subsidiaries (including
all Non-Operating Subsidiaries) of each Credit Party as of
the Closing Date are identified in Part One of Schedule 5.1
annexed hereto. The capital stock of each Subsidiary of
each Credit Party identified in Part One of Schedule 5.1
annexed hereto is duly authorized, validly issued, fully
paid and nonassessable and none of such capital stock
constitutes Margin Stock. Part One of Schedule 5.1 annexed
hereto correctly sets forth the ownership interest of each
Credit Party in each of its Subsidiaries identified therein
as of the Closing Date. Each of the statements contained in
the definition of Non-Operating Subsidiary are true with
respect to each Non-Operating Subsidiary.
E. Collateral Matters. Other than as may be
supplemented by written notices delivered to Secured Party
pursuant to the Pledge and Security Agreement:
(i) the chief executive office and principal place of
business of each Credit Party is as set forth in Part Two of
Schedule 5.1 annexed hereto;
(ii) the office where each Credit Party keeps its
records concerning Accounts and all originals of all chattel
paper which evidence any Accounts are located at the
addresses specified for such Credit Party in Part Three of
Schedule 5.1 annexed hereto;
(iii) all Inventory of each Credit Party is located
on the premises specified for such Credit Party on Part Four
of Schedule 5.1 annexed hereto (or is in transit thereto)
and except as specified in Part Four of Schedule 5.1 annexed
hereto, no such Inventory is stored with a bailee,
warehouseman or similar party;
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(iv) all Equipment of each Credit Party is located on
the premises specified for such Equipment on Part Four of
Schedule 5.1 annexed hereto; and
(v) other than as set forth in Part Five of Schedule
5.1 annexed hereto, no Credit Party does any business under
any fictitious business names or tradenames or has done
business under any fictitious business names or tradenames
during the five years preceding the Closing Date.
5.2. Authorization of Borrowing, etc.
A. Authorization of Borrowing. The execution,
delivery and performance of the Loan Documents and the
issuance, delivery and payment of the Notes 5.2.0.1. have
been duly authorized by all necessary corporate action on
the part of each applicable Credit Party and 5.2.0.1. have
been or by the Closing Date will be, duly authorized by the
Court.
B. No Conflict. The execution, delivery and
performance by each Credit Party of the Loan Documents, the
issuance, delivery and payment of the Notes (in the case of
Borrowers) and the consummation of the transactions
contemplated by the Loan Documents do not and will not (i)
subject to Court approval, violate any provision of any law
or any governmental rule or regulation applicable to any
Credit Party or any of its Subsidiaries, the Certificate or
Articles of Incorporation or Bylaws of any Credit Party or
any of its Subsidiaries or any order, judgment or decree of
any court or other agency of government binding on any
Credit Party or any of its Subsidiaries, (ii) conflict with,
result in a breach of or constitute (with due notice or
lapse of time or both) a default under any material
Contractual Obligation of any Credit Party or any of its
Subsidiaries (performance or enforceability of which has not
been excused by the Bankruptcy Code or an applicable order
of the Court), (iii) result in or require the creation or
imposition of any Lien upon any of the properties or assets
of any Credit Party or any of its Subsidiaries (other than
any Liens created under any of the Loan Documents in favor
of Secured Party on behalf of Lenders), or (iv) require any
approval of stockholders or any approval or consent of any
Person under any Contractual Obligation to which any Credit
Party or any of its Subsidiaries is a party (performance of
which has not been excused by the Bankruptcy Code), except
for such approvals or consents which are not required to be
obtained under the Bankruptcy Code or an applicable order of
the Court or which will be obtained on or before the Closing
Date and are disclosed on Schedule 5.2 annexed hereto.
C. Governmental Consents. The execution, delivery
and performance by each Credit Party of the Loan Documents,
the issuance, delivery and payment of the Notes and the
consummation of the transactions contemplated by the Loan
Documents do not and will not require any registration with,
consent or approval of, or notice to, or other action to,
with or by, any federal, state or other governmental
authority or regulatory body, except for the Court, and
other than filings expressly contemplated by the Loan
Documents.
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D. Binding Obligation. Each of the Loan Documents
has been duly executed and delivered by each Credit Party
thereto and is the legally valid and binding obligation of
such Credit Party, enforceable against such Credit Party in
accordance with its respective terms except as may be
limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting
creditors' rights generally and by general equitable
principles relating to enforceability.
5.3. Financial Condition.
Borrowers have heretofore delivered to Lenders, at
Lenders' request, the following financial statements and
information: (i) the audited consolidated balance sheet of
MGRE and its Subsidiaries as at January 28, 1995 and the
related consolidated statements of income, stockholders'
equity and cash flows of MGRE and its Subsidiaries for the
Fiscal Year then ended and (ii) the unaudited consolidated
balance sheets of MGRE and its Subsidiaries as at April 29,
1995 and the related unaudited consolidated statements of
income and consolidated cash flows of MGRE and its
Subsidiaries for the three months then ended and (iii) the
unaudited income statements by store concept as at April 29,
1995. All such consolidated statements were prepared in
conformity with GAAP (except, with respect to the unaudited
financials, the omission of footnotes and schedules) and
fairly present the financial position (on a consolidated
basis) of the entities described in such financial
statements as at the respective dates thereof and the
results of operations and cash flows (on a consolidated
basis) of the entities described therein for each of the
periods then ended, subject, in the case of any such
unaudited financial statements, to changes resulting from
audit and normal year-end adjustments. Credit Parties do
not have any Contingent Obligation, contingent liability or
liability for taxes, long-term lease or unusual forward or
long-term commitment that is not reflected in the foregoing
financial statements or the notes thereto and which in any
such case is material in relation to the business,
operations, properties, assets, financial condition or
prospects of MGRE or any of its Subsidiaries. A true and
correct list of all proofs of claims filed in the Chapter 11
Cases with respect to MGRE, MGRD and MGRR, is set forth on
Schedule 5.3 annexed hereto.
5.4. No Material Adverse Change; No Restricted Junior
Payments.
Since January 28, 1995, no event or change, except as
set forth in the Management Plan, has occurred that has
caused or evidences, either in any case or in the aggregate,
a Material Adverse Effect. No Credit Party nor any of its
Subsidiaries has directly or indirectly declared, ordered,
paid or made, or set apart any sum or property for, any
Restricted Junior Payment or agreed to do so.
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5.5. Title to Properties; Liens.
Except as described in Schedule 5.5, the real estate
listed in Schedule 5.5 constitutes all of the real property
owned, leased, or used in its business by each Credit Party
and its Subsidiaries. Each Credit Party and its
Subsidiaries holds (i) good and marketable fee simple title
to all of its real estate described in Schedule 5.5, (ii)
valid leasehold interests in all of its real property leases
(whether as lessor and lessee, sublessee or assignee)
described in Schedule 5.5, and (iii) good and marketable
title to, or valid leasehold interests in, all of its other
properties and assets, except for such defects of title as
would not have a Material Adverse Effect. None of the
properties and assets of any Credit Party or any of its
Subsidiaries are subject to any Liens, except (a) Permitted
Encumbrances and Liens set forth in Schedule 7.2 and (b)
from and after the Closing Date, the Lien in favor of Lender
pursuant to the Loan Documents. Each Credit Party and its
Subsidiaries has received all deeds, assignments, waivers,
bills of sale and other documents, and duly effected all
recordings, filings and other actions necessary to
establish, protect and perfect such Credit Party's or such
Subsidiary's right, title and interest in and to all such
real estate and other assets or property. Except as
described in Schedule 5.5, (i) no Credit Party nor any
Subsidiary of any Credit Party, nor, to any Credit Party's
knowledge, any other party to any such lease described in
Schedule 5.5 is in default thereunder or has delivered or
received any notice of default under any such lease, and no
event has occurred which, with the giving of notice, the
passage of time, or both, would constitute a default under
any such lease (other than defaults excused under the
Bankruptcy Code or by an applicable order of the Court);
(ii) no Credit Party nor any of its Subsidiaries owns or
holds, and is obligated under or a party to, any option,
right of first refusal or any other contractual right to
purchase, acquire, sell, assign or dispose of any real
property owned or leased by such Credit Party or such
Subsidiary except as set forth in Schedule 5.5; and (iii) no
portion of any material real property (or portion thereof)
owned or leased by any Credit Party or any of its
Subsidiaries has suffered any material damage by fire or
other casualty loss which has not heretofore been repaired
and restored to its original condition. All material
permits required to have been issued or appropriate to
enable the real property owned or leased by any Credit Party
or any of its Subsidiaries to be lawfully occupied and used
for all of the purposes for which they are currently
occupied and used, have been lawfully issued and are, as of
the date hereof, in full force and effect.
5.6. Litigation; Adverse Facts.
Except as set forth in Schedule 5.6 annexed hereto,
there is no action, suit, proceeding, arbitration or, to
Borrowers' knowledge, governmental investigation (whether or
not purportedly on behalf of a Credit Party or any of its
Subsidiaries) at law or in equity or before or by any
federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality,
domestic or foreign, pending or, to
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the knowledge of Borrowers, threatened against or affecting
any Credit Party or any of its Subsidiaries or any property
of any Credit Party or any of its Subsidiaries that has had,
or could reasonably be expected to result in, a Material
Adverse Effect. No Credit Party nor any of its Subsidiaries
is (i) in violation of any applicable law that has had, or
could reasonably be expected to result in, a Material
Adverse Effect or (ii) subject to or in default with respect
to any final judgment, writ, injunction, decree, rule or
regulation of any court or any federal, state, municipal or
other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, that has
had, or could reasonably be expected to result in, a
Material Adverse Effect.
5.7. Payment of Taxes.
Except to the extent permitted by subsection 6.3 and to
the extent payment has been excused by the Bankruptcy Code
or an applicable order of the Court, all tax returns and
reports of MGRE and its Subsidiaries required to be filed by
any of them have been timely filed, and all taxes,
assessments, fees and other governmental charges upon MGRE
and its Subsidiaries and upon their respective properties,
assets, income, businesses and franchises which are due and
payable have been paid when due and payable. Borrowers know
of no proposed tax assessment against MGRE or any of its
Subsidiaries which is not being actively contested by MGRE
or such Subsidiary in good faith and by appropriate
proceedings; provided that such reserves or other
appropriate provisions, if any, as shall be required in
conformity with GAAP shall have been made or provided
therefor. Proper and accurate amounts have been withheld by
MGRE and its Subsidiaries from its employees for all periods
in full and complete compliance with the tax, social
security and unemployment withholding provisions of
applicable federal, state, local and foreign law and such
withholdings have been timely paid to the respective
Governmental Authorities, except to the extent such
noncompliance would not have a Material Adverse Effect.
Schedule 5.7 sets forth those taxable years for which any of
the tax returns of MGRE and its Subsidiaries are currently
being audited by the IRS or any other applicable
Governmental Authority; and any assessments or threatened
assessments in connection with such audit or otherwise
currently outstanding. Except as described in Schedule 5.7,
MGRE and its Subsidiaries has not executed or filed with the
IRS or any other Governmental Authority any agreement or
other document extending, or having the effect of extending,
the period for assessment or collection of any taxes.
Neither MGRE nor its Subsidiaries have any obligation under
any written tax sharing agreement except as described in
Schedule 5.7.
5.8. Performance of Agreements; Materially Adverse
Agreements.
A. No Credit Party nor any of its Subsidiaries is in
default and to Borrowers' knowledge, no third party is in
default, in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in
any of its Material Contracts,
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and no condition exists that, with the giving of notice or
the lapse of time or both, would constitute such a default,
except in any case where the consequences, direct or
indirect, of such default or defaults, if any, would not
have a Material Adverse Effect. Schedule 5.8 sets forth a
complete and accurate list of all Material Contracts of each
Credit Party, including, without limitation, all License
Agreements.
B. No contract, lease, agreement or other instrument
to which any Credit Party is a party or by which it or any
of its properties or assets is bound or affected and no
provision of any charter, corporate restriction, applicable
law or governmental regulation has resulted in or will
result in a Material Adverse Effect.
5.9. Governmental Regulation.
No Credit Party nor any of its Subsidiaries is subject
to regulation under the Public Utility Holding Company Act
of 1935, the Federal Power Act, the Interstate Commerce Act
(to the extent applicable to the transactions contemplated
hereby) or the Investment Company Act of 1940 or under any
other federal or state statute or regulation which in any
case may limit its ability to incur Indebtedness or which
may otherwise render all or any portion of the Obligations
unenforceable.
5.10. Securities Activities.
No Credit Party nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing
or carrying any Margin Stock.
5.11. Employee Benefit Plans.
A. Except as set forth on Schedule 5.11, each Credit
Party and each of its ERISA Affiliates are in compliance in
all material respects with all applicable provisions and
requirements of ERISA and the regulations and published
interpretations thereunder with respect to each Employee
Benefit Plan, and have performed in all material respects
all their obligations under each Employee Benefit Plan.
B. There has been no ERISA Event which is continuing
or in respect of which there is any outstanding liability of
any Credit Party or any of its ERISA Affiliates, except for
ERISA Events that will not result in a Material Adverse
Effect. No such ERISA Event is reasonably expected to
occur.
C. Except to the extent required under Section 4980B
of the Internal Revenue Code or except as set forth in
Schedule 5.11 annexed hereto, no Employee Benefit Plan
provides health or welfare benefits (through the purchase of
insurance or otherwise) for any retired or former employees
of any Credit Party or any of its ERISA Affiliates.
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D. None of the Credit Parties nor any of their ERISA
Affiliates maintains or has ever maintained any Pension Plan
or Multiemployer Plan or has or ever has had any obligation
to contribute to any such Pension Plan or Multiemployer
Plan.
5.12. Certain Fees.
No broker's or finder's fee or commission will be
payable by any Credit Party with respect to this Agreement
or any of the transactions contemplated hereby (except to
Lenders as set forth herein), and Borrowers hereby indemnify
Lenders against, and agree that they will hold Lenders
harmless from, any claim, demand or liability for any such
broker's or finder's fees claiming by, through or under any
Credit Party alleged to have been incurred in connection
herewith or therewith and any expenses (including reasonable
fees, expenses and disbursements of counsel) arising in
connection with any such claim, demand or liability.
5.13. Environmental Protection.
Except as set forth in Schedule 5.13 annexed hereto:
(i) the operations of each Credit Party and each of
its Subsidiaries (including, without limitation, all
operations and conditions at or in the Facilities) comply
with all Environmental Laws except to the extent such
noncompliance would not have a Material Adverse Effect;
(ii) each Credit Party and each of its Subsidiaries
have obtained all Governmental Authorizations under
Environmental Laws necessary to their respective operations,
and all such Governmental Authorizations are in good
standing, and each Credit Party and each of its Subsidiaries
are in compliance with all material terms and conditions of
such Governmental Authorizations;
(iii) no Credit Party nor any of its Subsidiaries
has received (a) any notice or claim to the effect that it
is or may be liable to any Person as a result of or in
connection with any Hazardous Materials or (b) any letter or
request for information under Section 104 of the
Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. 9604) or comparable state laws,
and, to the best of such Credit Party's knowledge, none of
the operations of any Credit Party or any of its
Subsidiaries is the subject of any federal or state
investigation relating to or in connection with any
Hazardous Materials at any Facility or at any other
location;
(iv) none of the operations of any Credit Party or any
of its Subsidiaries is subject to any judicial or
administrative proceeding alleging the violation of or
liability under any Environmental Laws which if adversely
determined could reasonably be expected to have a Material
Adverse Effect;
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(v) no Credit Party nor any of its Subsidiaries nor
any of their respective Facilities or operations are subject
to any outstanding written order or agreement with any
governmental authority or private party relating to (a) any
Environmental Laws or (b) any Environmental Claims;
(vi) to the best knowledge of Borrowers, no Credit
Party nor any of its Subsidiaries has any contingent
liability in connection with any Release of any Hazardous
Materials by such Credit Party or any of its Subsidiaries;
(vii) no Credit Party nor any of its Subsidiaries
nor, to the best knowledge of Credit Parties, any
predecessor of any Credit Party or any of its Subsidiaries
has filed any notice under any Environmental Law indicating
past or present treatment or Release of Hazardous Materials
at any Facility, and no Credit Party's or any of its
Subsidiaries' operations involves the generation,
transportation, treatment, storage or disposal of hazardous
waste, as defined under 40 C.F.R. Parts 260-270 or any state
equivalent;
(viii) no Hazardous Materials exist on, under or
about any Facility in a manner that could reasonably be
expected to give rise to an Environmental Claim having a
Material Adverse Effect, and no Credit Party nor any of its
Subsidiaries has filed any notice or report of a Release of
any Hazardous Materials that could reasonably be expected to
give rise to an Environmental Claim having a Material
Adverse Effect;
(ix) no Credit Party nor any of its Subsidiaries nor,
to the best knowledge of such Credit Party, any of their
respective predecessors has disposed of any Hazardous
Materials in a manner that could reasonably be expected to
give rise to an Environmental Claim having a Material
Adverse Effect;
(x) no underground storage tanks or surface
impoundments are on or at any Facility; and
(xi) no Lien in favor of any Person relating to or in
connection with any Environmental Claim has been filed or
has been attached to any Facility.
5.14. Employee Matters.
Except as set forth in Schedule 5.14, there are no
strikes or other labor disputes against any Credit Party or
any of its Subsidiaries that are pending or, to any Credit
Party's knowledge, threatened. Hours worked by and payment
made to employees of MGRE and its Subsidiaries have not been
in violation of the Fair Labor Standards Act or any other
applicable law dealing with such matters which could have a
Material Adverse Effect. All material payments due from any
Credit Parties or their Subsidiaries on
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account of employee health and welfare insurance have been
paid or accrued as a liability on the books of Credit
Parties or such Subsidiaries, as applicable. Except as set
forth in Schedule 5.14, no Credit Party nor any of its
Subsidiaries has any obligation under any collective
bargaining agreement, management agreement, or any
employment agreement, and a correct and complete copy of
each agreement listed on Schedule 5.14 has been provided to
Co-Agents. There is no organizing activity involving any
Credit Party or its Subsidiaries pending or, to Borrowers'
knowledge, threatened by any labor union or group of
employees. Except as set forth in Schedule 5.14, there are
no representation proceedings pending or, to Borrowers'
knowledge, threatened with the National Labor Relations
Board, and no labor organization or group of employees of
any Credit Party or its Subsidiaries has made a pending
demand for recognition. There are no complaints or charges
against any Credit Party or such Subsidiaries pending or, to
Borrowers' knowledge, threatened to be filed with any
federal, state, local or foreign court, governmental agency
or arbitrator based on, arising out of, in connection with,
or otherwise relating to the employment or termination of
employment by any Credit Party or any of its Subsidiaries of
any individual which in the aggregate could reasonably be
expected to result in a Material Adverse Effect.
5.15. Inventory.
Except as disclosed in the information provided to Co-
Agents by Borrowers under subsection 6.9 or otherwise
disclosed to Co-Agents in writing, with respect to all
Inventory:
(a) Co-Agents may rely upon all statements,
warranties, or representations made in any Borrowing Base
Certificate or other written report regarding Inventory
delivered hereunder by Borrowers in determining which items
of Inventory are to be deemed Eligible Inventory;
(b) No such Inventory is subject to any Lien
whatsoever, except for Liens of Secured Party hereunder and
Permitted Encumbrances; and
(c) No such Inventory has been consigned to any
Person.
5.16. Representations Concerning Cash Management System.
The summary of the Cash Management System attached
hereto as Schedule 5.16 is accurate and complete in all
material respects as of the Closing Date and does not omit
to state any material fact necessary to make the statements
set forth therein not misleading. No Credit Party nor any
of its Subsidiaries owns any Deposit Account which is not
described in Schedule 5.16 or otherwise permitted pursuant
to subsections 6.10 or 7.3. There has been no change to the
Cash Management System (other than as permitted
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by subsection 6.10) since the Closing Date except such
changes as have been disclosed to Co-Agents in writing and
approved by Co-Agents. A Cash Management Letter covering
each Deposit Account included in the Cash Management System
has been delivered to Secured Party.
5.17. Intellectual Property.
A. Except as provided in Schedule 5.17 annexed
hereto, the Credit Parties own, or are licensed to use or
otherwise have the lawful right to use, the Intellectual
Property and all such registered Intellectual Property is
fully protected (except as set forth on Schedule 5.17
annexed hereto) and duly and properly registered, filed or
issued in the appropriate office and jurisdictions for such
registrations, filing or issuances. All registered
Intellectual Property and all pending applications and the
Credit Party holding rights therein is identified in
Schedule 5.17 annexed hereto. Each of the license
agreements (together with any such agreements entered into
after the Closing Date, the "License Agreements") pursuant
to which any Credit Party has rights to use Intellectual
Property as of the Closing Date is identified in Schedule
5.17 annexed hereto. Each Credit Party is in compliance
with the material terms of each License Agreement to which
it is a party and each such License Agreement is in full
force and effect the failure of which would result in a
Material Adverse Effect or an Event of Default hereunder.
B. No material claim has been asserted by any Person
with respect to the use of any such Intellectual Property,
or challenging or questioning the validity or effectiveness
of any such Intellectual Property which could reasonably be
expected to result in a Material Adverse Effect. To
Borrowers' knowledge, the use of such Intellectual Property
by each Credit Party does not infringe on the rights of any
Person, subject to such claims and infringements as do not,
in the aggregate, give rise to any liabilities on the part
of any Credit Party that could reasonably be expected to
result in a Material Adverse Effect. The consummation of
the transactions contemplated by this Agreement will not in
any material manner or to any material extent impair the
ownership of (or the license to use, as the case may be) any
of such Intellectual Property by any Credit Party.
5.18. Disclosure.
No representation or warranty of any Credit Party or
any of its Subsidiaries contained in any Loan Document or in
any other document, certificate or written statement
furnished to Lenders by or on behalf of any Credit Party or
any of its Subsidiaries for use in connection with the
transactions contemplated by this Agreement contains any
untrue statement of a material fact or omits to state a
material fact (known to Borrowers, in the case of any
document not furnished by them) necessary in order to make
the statements contained herein or therein not misleading in
light of the
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circumstances in which the same were made. Any projections
and pro forma financial information contained in such
materials are based upon good faith estimates and
assumptions believed by Borrowers to be reasonable at the
time made, it being recognized by Lenders that such
projections as to future events are not to be viewed as
facts and that actual results during the period or periods
covered by any such projections may differ from the
projected results. There is no fact known (or which should
upon the reasonable exercise of diligence be known) to
Borrowers (other than matters of a general economic nature)
that has had, or could reasonably be expected to result in,
a Material Adverse Effect and that has not been disclosed
herein or in such other documents, certificates and
statements furnished to Lenders for use in connection with
the transactions contemplated hereby.
SECTION 6.
BORROWERS' AFFIRMATIVE COVENANTS
Each Borrower covenants and agrees that, so long as the
Commitments hereunder shall remain in effect and until
payment in full of all of the Loans and other Obligations
and the cancellation, expiration or cash collateralization
of all Letters of Credit in accordance with the terms
hereof, unless Requisite Lenders shall otherwise give prior
written consent, such Borrower shall perform, and shall
cause each of its Subsidiaries to perform, all covenants in
this Section 6.
6.1. Financial Statements and Other Reports.
MGRE and its Subsidiaries will maintain a system of
accounting established and administered in accordance with
sound business practices to permit preparation of financial
statements in conformity with GAAP. Borrowers will deliver
to Co-Agents and Lenders:
(i) Monthly Financials: as soon as available and in
any event within 30 days after the end of each fiscal month
ending after the Closing Date, for each month other than the
last month of each fiscal quarter and each Fiscal Year, (a)
the consolidated balance sheets and consolidated statement
of income of MGRE and its Subsidiaries as at the end of such
month and consolidated statements of income and consolidated
statements of cash flows of MGRE and its Subsidiaries for
the period from the beginning of the then current Fiscal
Year to the end of such month, setting forth in comparative
form the corresponding figures for the corresponding periods
of the previous Fiscal Year and the corresponding figures
from the consolidated plan and financial forecast for the
current Fiscal Year delivered pursuant to subsection
6.1(xiii), and (b) the statements of income by store concept
as currently prepared, all in reasonable detail and
certified by the
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chief financial officer, chief accounting officer,
controller or treasurer of MGRE that they fairly present the
financial condition of MGRE and its Subsidiaries as at the
dates indicated and the results of their operations and
their cash flows for the periods indicated, subject to
changes resulting from audit and normal quarterly and year-
end adjustments.
(ii) Quarterly Financials: as soon as available and in
any event within 45 days after the end of each of the first
three fiscal quarters of each Fiscal Year, the consolidated
balance sheets and consolidated statement of income of MGRE
and its Subsidiaries as at the end of such fiscal quarter
and consolidated statement of cash flows of MGRE and its
Subsidiaries for the period from the beginning of the then
current Fiscal Year to the end of such fiscal quarter,
setting forth in comparative form the corresponding figures
for the corresponding periods of the previous Fiscal Year
and the corresponding figures from the consolidated plan and
financial forecast for the current Fiscal Year delivered
pursuant to subsection 6.1(xiii), all in reasonable detail
and certified by the chief financial officer, chief
accounting officer, controller or treasurer of MGRE that
they fairly present the financial condition of MGRE and its
Subsidiaries as at the dates indicated and the results of
their operations and their cash flows for the periods
indicated, subject to changes resulting from audit and
normal year-end adjustments;
(iii) Year-End Financials: as soon as available
and in any event (a) within 45 days after the end of each
Fiscal Year (but, in any event, not sooner than the same is
released by MGRE to the public) a preliminary statement of
income for such Fiscal Year and (b) within 90 days after the
end of each Fiscal Year, (1) the consolidated balance sheets
of MGRE and its Subsidiaries as at the end of such Fiscal
Year and the related consolidated statements of income, and
consolidated statement of stockholders' equity and cash
flows of MGRE and its Subsidiaries for such Fiscal Year,
setting forth in each case in comparative form the
corresponding figures for the previous Fiscal Year and the
corresponding figures from the consolidated plan and
financial forecast delivered pursuant to subsection
6.1(xiii) for the Fiscal Year covered by such financial
statements, all in reasonable detail and certified by the
chief financial officer, chief accounting officer,
controller or treasurer of MGRE that they fairly present the
financial condition of MGRE and its Subsidiaries as at the
dates indicated and the results of their operations and
their cash flows for the periods indicated and (2) in the
case of such consolidated financial statements, a report
thereon of KMPG Peat Marwick or other independent certified
public accountants of recognized national standing selected
by MGRE and reasonably satisfactory to Co-Agents, which
report shall be unqualified other than with respect to MGRE
and its Subsidiaries' ability to continue as a going concern
as a result of the Chapter 11 Cases, and shall state that
such consolidated financial statements fairly present the
consolidated financial position of MGRE and its Subsidiaries
as at the dates indicated and the results of their
operations and their cash flows for the periods indicated in
conformity with GAAP (except as otherwise disclosed in such
financial statements) and that the examination by such
accountants in connection with such consolidated
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financial statements has been made in accordance with
generally accepted auditing standards;
(iv) Officer's and Compliance Certificates: together
with each delivery of financial statements of MGRE and its
Subsidiaries pursuant to subdivisions (ii) and (iii) above,
(a) an Officer's Certificate of MGRE stating that the signer
has reviewed the terms of this Agreement and has made, or
caused to be made under such officer's supervision, a review
in reasonable detail of the transactions and condition of
MGRE and its Subsidiaries during the accounting period
covered by such financial statements and that such review
has not disclosed the existence during or at the end of such
accounting period, and that the signer does not have
knowledge of the existence as at the date of such Officer's
Certificate, of any condition or event that constitutes an
Event of Default or Potential Event of Default, or, if any
such condition or event existed or exists, specifying the
nature and period of existence thereof and what action
Borrowers have taken, are taking and propose to take with
respect thereto and (b) a Compliance Certificate
demonstrating in reasonable detail compliance for such
applicable accounting periods with the restrictions
contained in Section 7;
(v) Reconciliation Statements: if, as a result of any
change in accounting principles and policies from those used
in the preparation of the audited financial statements
referred to in subsection 5.3, the consolidated financial
statements of MGRE and its Subsidiaries delivered pursuant
to subdivisions (ii) or (iii) of this subsection 6.1 will
differ in any material respect from the consolidated
financial statements that would have been delivered pursuant
to such subdivisions had no such change in accounting
principles and policies been made, then (a) together with
the first delivery of financial statements pursuant to
subdivision (ii) or (iii) of this subsection 6.1 following
such change, consolidated financial statements of MGRE and
its Subsidiaries for (1) the current Fiscal Year to the
effective date of such change and (2) the two full Fiscal
Years immediately preceding the Fiscal Year in which such
change is made, in each case prepared on a pro forma basis
as if such change had been in effect during such periods,
and (b) together with each delivery of financial statements
pursuant to subdivision (ii) or (iii) of this subsection 6.1
following such change, a written statement of the chief
accounting officer or chief financial officer of MGRE
setting forth the differences which would have resulted in
the calculation of the covenants set forth in Section 7 if
such financial statements had been prepared without giving
effect to such change.
(vi) Accountants' Certification: together with each
delivery of consolidated financial statements of MGRE and
its Subsidiaries pursuant to subdivision (iii) above, a
written statement by the independent certified public
accountants giving the report thereon (a) stating that their
audit examination has included a review of the terms of this
Agreement and the other Loan Documents as they relate to
accounting matters and
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(b) stating whether, in connection with their audit
examination, any condition or event that constitutes an
Event of Default or Potential Event of Default has come to
their attention and, if such a condition or event has come
to their attention, specifying the nature and period of
existence thereof; provided that such accountants shall not
be liable by reason of any failure to obtain knowledge of
any such Event of Default or Potential Event of Default that
would not be disclosed in the course of their audit
examination;
(vii) Accountants' Reports: promptly upon receipt
thereof, copies of all reports submitted to Credit Parties
by independent certified public accountants in connection
with each annual, interim or special audit of the financial
statements of MGRE and its Subsidiaries made by such
accountants, including, without limitation, any comment
letter submitted by such accountants to management in
connection with their annual audit;
(viii) SEC Filings and Press Releases: promptly
upon their becoming available, copies of (a) all financial
statements, reports, notices and proxy statements sent or
made available generally by MGRE to its security holders or
by any Subsidiary of MGRE generally to its security holders
other than MGRE or another Subsidiary of MGRE, (b) all
regular and periodic reports and all effective registration
statements (other than on Form S-8 or a similar form) and
prospectuses included therein, if any, filed by MGRE or any
of its Subsidiaries with any securities exchange or with the
Securities and Exchange Commission or any governmental or
private regulatory authority, and (c) all press releases and
other statements made available generally by MGRE or any of
its Subsidiaries to the public concerning material
developments in the business of any Credit Party or any of
its Subsidiaries;
(ix) Events of Default, etc.: promptly upon any
Officer of any Credit Party obtaining knowledge (a) of any
condition or event that constitutes an Event of Default or
Potential Event of Default, or obtaining knowledge that any
Lender has given any notice (other than to a Co-Agent) or
taken any other action with respect to a claimed Event of
Default or Potential Event of Default, (b) that any Person
has given any notice to any Credit Party or any of its
Subsidiaries or taken any other action with respect to a
claimed default or event or condition of the type referred
to in subsection 8.12, (c) of any condition or event
required to be disclosed in a current report filed by MGRE
with the Securities and Exchange Commission on Form 8-K
(Items 1, 2, 4, 5 and 6 of such Form as in effect on the
date hereof) concurrently with the filing of such Form 8-K
by MGRE or (d) of the occurrence of any event or change that
has caused or evidences, either in any case or in the
aggregate, a Material Adverse Effect, an Officer's
Certificate specifying the nature and period of existence of
such condition, event or change, or specifying the notice
given or action taken by any such Person and the nature of
such claimed Event of Default, Potential Event of Default,
default, event or condition, and what action Credit Parties
have taken, are taking and propose to take with respect
thereto;
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(x) Litigation or Other Proceedings: promptly upon
any Officer of any Credit Party obtaining knowledge of (a)
the institution of, or non-frivolous threat of, any action,
suit, proceeding (whether administrative, judicial or
otherwise), governmental investigation or arbitration
against or affecting any Credit Party or any of its
Subsidiaries or any property of any Credit party or any of
its Subsidiaries (collectively, "Proceedings") not
previously disclosed in writing by a Credit Party to Lenders
or (b) any material development in any Proceeding that, in
any case:
(1) could reasonably be expected to give rise to an
Event of Default or a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief
as a result of, the transactions contemplated hereby;
written notice thereof together with such other information
as may be reasonably available to Credit Parties to enable
Lenders and their counsel to evaluate such matters;
(xi) ERISA Events: promptly upon obtaining knowledge
of the occurrence of or notice of a forthcoming occurrence
of any ERISA Event, a written notice specifying the nature
thereof, what action Credit Parties or any of their ERISA
Affiliates have taken, are taking or propose to take with
respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, the Department
of Labor or the PBGC with respect thereto;
(xii) ERISA Notices: with reasonable promptness,
copies of (a) each Schedule B (Actuarial Information) to the
annual report (Form 5500 Series) filed by any Credit Party
or any of its Subsidiaries with the Internal Revenue Service
with respect to each Pension Plan; (b) all notices received
by any Credit Party or any of its Subsidiaries from a
Multiemployer Plan sponsor concerning an ERISA Event; and
(c) such other documents or governmental reports or filings
relating to any Employee Benefit Plan as either Co-Agent
shall reasonably request; provided that upon either Co-
Agent's reasonable request, Borrowers shall submit promptly
to each Multiemployer Plan identified by such Co-Agent a
request (together with payment of any reasonable charges
therefor) for an estimate of the withdrawal liability any
Credit Party or any of its ERISA Affiliates would incur upon
a complete withdrawal (within the meaning of Section 4203 of
ERISA) from such Multiemployer Plan and for a copy of the
actuarial valuation and review and a report on employer
withdrawal liability regularly prepared for such
Multiemployer Plan, and shall provide copies of the
information and materials supplied by each such
Multiemployer Plan in response to such submission;
(xiii) Financial Plans: on or before the Closing
Date, and thereafter as soon as practicable and in any event
no later than 30 days prior to the beginning of each
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Fiscal Year preliminary copies of, and as soon as available
and, in any event, by March 15 of the following Fiscal Year,
final copies of, a consolidated plan and financial forecast
for the next succeeding Fiscal Years on a month by month
basis through the Commitment Termination Date, including
without limitation (a) forecasted consolidated balance
sheets and forecasted consolidated statements of income and
consolidated cash flows of MGRE and its Subsidiaries for
each such Fiscal Year, together (with delivery of the final
copies of such plan and forecast) with pro forma Compliance
Certificates with respect to the covenants set forth in
subsection 7.6 for each such Fiscal Year and an explanation
of the material assumptions on which such forecasts are
based, (b) forecasted statements of income by store concept
for each such Fiscal Year and (c) such other information and
projections as any Lender may reasonably request;
(xiv) Insurance: as soon as practicable and in any
event by the last day of each Fiscal Year, an Officer's
Certificate in form and substance satisfactory to Co-Agents
outlining all material insurance coverage maintained as of
the date of such report by Credit Parties and their
Subsidiaries and all material insurance coverage planned to
be maintained by Credit Parties and their Subsidiaries in
the immediately succeeding Fiscal Year;
(xv) Environmental Audits and Reports: as soon as
practicable following receipt thereof, copies of all
environmental audits and reports, whether prepared by
personnel of Credit Parties or any of their Subsidiaries or
by independent consultants, with respect to environmental
matters at any Facility or an Environmental Claim which
could result in a Material Adverse Effect;
(xvi) Board of Directors: with reasonable
promptness (but in any event no earlier than such
information is generally made public), written notice of any
change in the Board of Directors of any Credit Party;
(xvii) Borrowing Base Certificate: as of the last
Business Day of each week ending after the Closing Date, a
Borrowing Base Certificate as of the last day of the
immediately preceding week in form and substance reasonably
satisfactory to Co-Agents, it being understood and agreed
that reports by store concept in such Borrowing Base
Certificate shall be made on a monthly basis;
(xviii) Weekly Reports: as soon as available, copies
of the weekly reports of sales information by store concept
regularly prepared for the management of Borrowers;
(xix) Store Level Operating Reports: within 45
days after the end of each fiscal month, a report on store
operating results for such month and from the beginning of
the Fiscal Year to the end of such month;
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(xx) Notice of Certain Store Closings: written notice
at least 15 days prior to the closing of any store by any
Credit Party in any of the states of Arkansas,
Massachusetts, Missouri, Michigan, Hew Hampshire, New York,
North Carolina, Ohio, Pennsylvania or Virginia, if, as a
result of such closing, such Credit Party shall cease to do
business in two or more counties within such state;
(xxi) Defaults under Leases: promptly upon receipt
by any Credit Party of any notice of default under any
Operating Lease or Capital Lease to which a Credit Party is
party, a copy of such notice and a written notice specifying
the nature thereof and what action Credit Parties have
taken, are taking or propose to take with respect thereto;
and
(xxii) Other Information: with reasonable
promptness, such other information and data with respect to
any Credit Party or any of its Subsidiaries as from time to
time may be reasonably requested by either Co-Agent or any
Lender.
6.2. Corporate Existence, etc.
Except as permitted under subsection 7.7, each Credit
Party will, and will cause each of its Subsidiaries to, at
all times preserve and keep in full force and effect its
corporate existence and all rights and franchises material
to its business, except where the failure to maintain the
same would not reasonably be expected to have a Material
Adverse Effect.
6.3. Payment of Taxes and Claims; Tax Consolidation.
A. Except as prohibited by the Borrowing Order, this
Agreement or the Bankruptcy Code or an applicable order of
the Court, each Credit Party will, and will cause each of
its Subsidiaries to, (i) use its best efforts to pay and
discharge or cause to be paid and discharged all its
Indebtedness, including all of the Obligations, as and when
due and payable and (ii) pay all taxes, assessments and
other governmental charges imposed upon it or any of its
properties or assets or in respect of any of its income,
businesses or franchises before any penalty accrues thereon,
and all claims (including, without limitation, claims for
labor, services, materials and supplies) for sums that have
become due and payable and that by law have or may become a
Lien upon any of its properties or assets, prior to the time
when any penalty or fine shall be incurred with respect
thereto; provided that no such charge or claim need be paid
if being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted and if such
reserve or other appropriate provision, if any, as shall be
required in conformity with GAAP shall have been made
therefor.
B. Credit Parties will not, nor will they permit any
of their respective Subsidiaries to, file or consent to the
filing of any consolidated income tax return with
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any Person (other than MGRE or any of its Subsidiaries).
6.4. Maintenance of Properties; Insurance.
A. Each Credit Party will, and will cause each of its
Subsidiaries to, take all reasonable action to maintain or
cause to be maintained in good repair, working order and
condition, ordinary wear and tear excepted, all material
properties used or useful in the business of such Credit
Party and its Subsidiaries (including, without limitation,
Intellectual Property) and from time to time will make or
cause to be made all reasonably necessary repairs, renewals
and replacements thereof. Each Credit Party will maintain
or cause to be maintained, with financially sound and
reputable insurers, insurance with respect to its properties
and business and the properties and businesses of its
Subsidiaries against loss or damage consistent with the
policies and programs in effect as of the Closing Date and
of the kinds customarily carried or maintained under similar
circumstances by corporations of established reputation
engaged in similar businesses and in such amounts and
covering such risks as is reasonably acceptable to Co-
Agents; provided that each Credit Party and its Subsidiaries
may maintain workers compensation self insurance programs
and such other additional self insurance programs as are
customary for their size and industry and as are established
and administered in accordance with prudent business
practices. Each such policy of insurance shall name Secured
Party for the benefit of Lenders as an additional insured
and/or as the loss payee thereunder as appropriate and shall
provide for at least 30 days prior written notice to Secured
Party of any modification or cancellation of such policy.
B. If any portion of any Mortgaged Property is
situated in an area now or subsequently designated as having
special flood hazards as defined by the Flood Disaster
Protection Act of 1973, as amended by the National Flood
Insurance Reform Act of 1994, and as further amended from
time to time, then the types of insurance that MGRE is
required to maintain or cause to be maintained shall include
flood insurance in such amounts as Co-Agents shall
reasonably require, but not less than the amount required by
law. If MGRE fails to obtain flood insurance as required,
Co-Agents may purchase such flood insurance, and MGRE shall
pay all premiums and other costs and expenses incurred by Co-
Agents.
6.5. Inspection; Lender Meeting.
Each Credit Party shall, and shall cause each of its
Subsidiaries to, permit any authorized representatives
designated by any Lender to visit and inspect any of the
properties of such Credit Party or any of its Subsidiaries,
including its and their financial and accounting records,
and to make copies and take extracts therefrom, and to
discuss its and their affairs, finances and accounts with
its and their officers and independent public accountants
(provided that such Credit Party may, if it so chooses, be
present at or
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participate in any such discussion), all upon reasonable
notice and at such reasonable times during normal business
hours and as often as such Credit Party and such Lender
may reasonably agree. Without in any way limiting the
foregoing, each Credit Party will, upon the request of
either Co-Agents or Requisite Lenders, participate in a
meeting of Co-Agents and Lenders once during each Fiscal
Year to be held at MGRE's corporate offices (or such other
location as may be agreed to by Borrowers and Co-Agents) at
such time as may be agreed to by Borrowers and Co-Agents.
6.6. Compliance with Laws, etc.
Except to the extent compliance is excused by the
Bankruptcy Code or order of the Bankruptcy Court, each
Credit Party shall, and shall cause each of its Subsidiaries
to, comply with the requirements of all applicable laws,
rules, regulations and orders of any governmental authority,
noncompliance with which would reasonably be expected to
cause a Material Adverse Effect.
6.7. Environmental Matters.
A. Each Credit Party shall, and shall cause each of
its Subsidiaries to, exercise reasonable care in order to
comply and cause (i) all tenants under any leases or
occupancy agreements affecting any portion of the Facilities
and (ii) all other Persons on or occupying such property, to
comply with all Environmental Laws.
B. Each Credit Party agrees that Agent may, from time
to time and in its sole and absolute discretion, retain, at
Credit Parties' reasonable expense, an independent
professional consultant to review any report relating to
Hazardous Materials prepared by or for any Credit Party and
to conduct its own investigation of any Facility currently
owned, leased, operated or used by any Credit Party or any
of its Subsidiaries, and each Credit Party agrees to use its
reasonable efforts to obtain permission for Co-Agents'
professional consultant to conduct its own investigation of
any Facility previously owned, leased, operated or used by
any Credit Party or any of its Subsidiaries. Each Credit
Party hereby grants to the extent no consent of a landlord
is required or, if landlord consent is required, to use its
reasonable efforts to obtain a landlord consent to grant, to
each Co-Agent and its agents, employees, consultants and
contractors the right to enter into or on to the Facilities
currently owned, leased, operated or used by such Credit
Party or any of its Subsidiaries to perform such tests on
such property as are reasonably necessary to conduct such a
review and/or investigation. Any such investigation of any
Facility shall be conducted, unless otherwise agreed to by
Credit Parties and Co-Agents, upon prior notice during
normal business hours and, to the extent reasonably
practicable, shall be conducted so as not to interfere with
the ongoing operations at any such Facility or to cause any
damage or loss to any property at such Facility. Each
Credit Party and each Co-Agent hereby acknowledge and agree
that any report of any investigation conducted
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at the request of either Co-Agent pursuant to this
subsection 6.7B will be obtained and shall be used by Co-
Agents and Lenders for the purposes of Lenders' internal
credit decisions, to monitor the Loans and to protect
Secured Party's and Lenders' security interests, if any,
created by the Loan Documents. Co-Agents agree to deliver a
copy of any such report to Borrowers and the applicable
Credit Party with the understanding that each Credit Party
acknowledges and agrees that (i) it will indemnify and hold
harmless each Co-Agent and each Lender from any costs,
losses or liabilities relating to such Credit Party's use of
or reliance on such report, (ii) no Agent nor any Lender
makes any representation or warranty with respect to such
report, and (iii) by delivering such report to such Credit
Party, no Co-Agent nor any Lender is requiring or
recommending the implementation of any suggestions or
recommendations contained in such report.
C. Each Credit Party shall promptly advise Lenders in
writing and in reasonable detail of:
(i) any Release of any Hazardous Materials known by
such Credit Party to have occurred which is required to be
reported to any federal, state or local governmental or
regulatory agency under any applicable Environmental Laws;
(ii) any and all written communications with respect to
any Environmental Claims that could reasonably be expected
to give rise to a Material Adverse Effect or with respect to
any Release of Hazardous Materials required to be reported
to any federal, state or local governmental or regulatory
agency;
(iii) any remedial action taken by any Credit Party
or, to the extent known by the Credit Party, any other
Person in response to (a) any Hazardous Materials on, under
or about any Facility, the existence of which could
reasonably be expected to result in an Environmental Claim
having a Material Adverse Effect, or (b) any Environmental
Claim that could reasonably be expected to give rise to a
Material Adverse Effect; and
(iv) any request for information from any governmental
agency that indicates such agency is investigating or may
investigate whether any Credit Party or any of its
Subsidiaries may be potentially responsible for a Release of
Hazardous Materials.
D. Each Credit Party shall promptly notify Lenders of
(i) any proposed acquisition of stock, assets, or property
by such Credit Party or any of its Subsidiaries that could
reasonably be expected to expose any Credit Party or any of
its Subsidiaries to, or result in, Environmental Claims that
could have a Material Adverse Effect or that could
reasonably be expected to have a material adverse effect on
any Governmental Authorization then held by any Credit Party
or any of its Subsidiaries and (ii) any proposed action to
be taken by such Credit Party or any of its Subsidiaries to
commence
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manufacturing, industrial or other operations that could
reasonably be expected to subject any Credit Party or any of
its Subsidiaries to additional laws, rules or regulations,
including, without limitation, laws, rules and regulations
requiring additional environmental permits or licenses.
E. Each Credit Party shall, at its own expense,
provide copies of such documents or information in the
possession of such Credit Party or its Subsidiaries as Co-
Agents may reasonably request in relation to any matters
disclosed pursuant to this subsection 6.7.
6.8. Environmental Indemnity.
Each Credit Party shall fully and promptly pay,
perform, discharge, defend, indemnify and hold harmless each
Indemnitee from and against any action, suit, proceeding,
claim or loss suffered or incurred by that Indemnitee under
or on account of any Environmental Laws or Release of any
Hazardous Materials relating to the Facilities other than,
to the extent that, such liability is a result of the gross
negligence or willful misconduct of the Indemnitee, all as
evidenced by a final judgment of a court of competent
jurisdiction.
6.9. Borrowing Base.
(i) Borrowing Base Certificates. Borrowers shall
deliver the Borrowing Base Certificate to Co-Agents
sufficiently in advance of the Closing Date to permit Co-
Agents to determine the Borrowing Base to be in effect on
the Closing Date. Thereafter Borrowers shall deliver
Borrowing Base Certificates on a weekly basis on or before
the last Business Day of each week; each such Borrowing Base
Certificate shall be dated as of the last day of the
immediately preceding week. Co-Agents shall notify
Borrowers if Co-Agents disagree with Borrowers' calculation
of the Borrowing Base, such notice to include Co-Agents'
redetermination of the Borrowing Base. The Borrowing Base
set forth in the Borrowing Base Certificate or, if
applicable, Co-Agents' notice of redetermination of the
Borrowing Base, shall remain in effect until the next
Borrowing Base Certificate or Co-Agents' notice of
redetermination, as the case may be, shall have been
delivered in accordance with the provisions of this
subsection 6.9.
(ii) Inventory Reports.
(a) Borrowers shall, at their expense, conduct, and
permit Co-Agents to monitor, a comprehensive detailed count
of and evaluation of all Inventory upon request of Co-Agents
in accordance with Borrowers' usual and customary practices
for such count and evaluation; provided that at least once
per year Borrowers shall, at their expense, have their
independent certified public accountants oversee such count
and
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evaluation in accordance with standard audit procedures.
(b) Co-Agents, in their reasonable discretion, may
review or have an outside consultant selected by them, upon
reasonable prior written notice to Borrowers and at
reasonable times, the quality and amount of Inventory.
6.10. Cash Management System.
A. Cash Management System. Each Credit Party shall
maintain the Cash Management System as described in Schedule
5.16; provided that each Credit Party may open and close
Deposit Accounts and make other changes to the Cash
Management System in the ordinary course of business upon
prior written notice to Co-Agents and as long as (i) no
Event of Default or Potential Event of Default has occurred
and is continuing or would result therefrom, (ii) such
changes, either individually or in the aggregate are not
adverse to either Co-Agent or any Lender (in its capacity as
a Lender) or impair any rights of Secured Party under the
Collateral Documents and (iii) all Receipts of each Credit
Party continue to be collected and distributed pursuant to
procedures subject to Cash Management Letters at all times.
B. Secured Party Rights. All funds on deposit in the
Deposit Accounts of each Credit Party and each of its
Subsidiaries (net of (a) cash in the stores and minimal
balances in the Deposit Accounts listed on Schedule 5.16B
not to exceed $6,000 per day per store and (b) such balances
in Disbursement Accounts (as defined on Attachment 1 to
Schedule 5.16A) as are set forth on Schedule 5.16A) shall be
transferred on a daily basis to the Collection Account (it
being understood that funds may be transferred through
intermediary accounts in the Cash Management System subject
to Cash Management Letters prior to ultimate transfer to the
Collection Account), and Borrowers agree to perform and
comply and to cause each of their respective Subsidiaries to
perform and comply with the following covenants and
agreements:
(i) Receipts shall be received and held by each Credit
Party and any of their respective officers, employees,
agents or other Persons acting for or in concert with any
Credit Party to make collections for or on behalf of any
Credit Party ("Collecting Agents"), in trust for Secured
Party as Collateral. Notwithstanding any other provision of
this Agreement or any other Loan Document, all Receipts
shall be paid by the obligor thereon into the Deposit
Accounts subject to the Cash Management System. On a daily
basis, each Credit Party, or any Collecting Agent, shall
deposit or shall cause to be deposited, all Receipts into
Deposit Accounts included in the Cash Management System and
subject to Cash Management Letters on or before the first
Business Day following receipt thereof after receipt in the
applicable lockbox or accounting office of such Credit
Party, and as soon as practical in the case of Receipts
received in any other manner (it being understood that the
foregoing does not limit each Credit Party's obligation to
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instruct all obligors to make payments into lockboxes).
(ii) On each Business Day, Secured Party shall apply
any Receipts on deposit in the Collection Account consisting
of cash or wire or electronic transfers in immediately
available funds to the Loans and other Obligations as set
forth in subsection 6.10B(iii) ("Available Funds").
(iii) Available Funds shall be applied by Secured
Party in the following order: (a) any due and payable fees,
expenses or other charges in respect of the Obligations; (b)
any due and payable interest payments on the Loans; (c)
principal payments on the Loans (whether or not due and
payable); (d) other due and payable Obligations or to
collateralize Letters of Credit to the extent required
hereunder and (e) as provided in subsection 6.10B(v).
(iv) Effective upon the occurrence and during the
continuance of an Event of Default without the need of any
further action by Credit Parties, each Credit Party
irrevocably makes, constitutes and appoints Secured Party,
and all Persons designated by Secured Party for that
purpose, at any time, as such Credit Party's true and lawful
attorney and agent-in-fact to endorse such Credit Party's
name on any checks, notes, drafts or any other form of
payment relating to Collateral or Receipts or proceeds of
Collateral or Receipts that come into Secured Party's
possession or under Secured Party's control; provided,
however, that such appointment by such Credit Party of
Secured Party as such Credit Party's attorney-in-fact shall
in no case impose upon Secured Party any obligation or duty
to take any actions on behalf of such Credit Party or any
fiduciary obligations with respect to such Credit Party.
(v) On any Business Day, after application of all
Available Funds against the Obligations in the order set
forth in subsection 6.10B(iii), as long as no Event of
Default shall have occurred and be continuing, (i) to the
extent that Co-Agents have received a Notice of Borrowing
pursuant to subsection 2.1B(i) requesting that Loans be made
on such Business Day, Secured Party shall transfer the net
remaining amount of Available Funds to Borrower's Account to
the extent of the requested borrowing or (ii) if no such
Notice of Borrowing has been received by Co-Agents, Secured
Party shall, upon written request of a Borrower, transfer
from the Collection Account to Borrower's Account, the net
remaining amount of Available Funds to the extent, and only
to the extent, such funds are required by the Credit Parties
for the conduct of their business in the ordinary course.
6.11. Agreements.
Except to the extent performance is otherwise excused
by the Bankruptcy Code or an applicable order of the Court,
each Credit Party shall, and shall cause each of its
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Subsidiaries to, perform, within all required time periods
(after giving effect to any applicable grace periods), all
of its obligations and enforce all of its rights under each
agreement, contract, instrument or other document to which
it is a party, including each License Agreement, any leases
and customer contracts to which it is a party where the
failure to so perform and enforce could reasonably be
expected to result in a Material Adverse Effect. Each
Credit Party shall not, and shall not permit any of its
Subsidiaries to, terminate or modify any provision of any
agreement, contract, instrument or other document (including
any License Agreement or that certain Service Agreement
dated April 27, 1995 by and between MGRE and American
Consolidation Services, as amended through the date hereof)
to which it is a party which termination or modification
could reasonably be expected to result in a Material Adverse
Effect.
6.12. Direction Letters.
Within 30 days following the Closing Date, Credit
Parties shall have executed and delivered to Secured Party
Direction Letters to be sent to each financial institution
at which Deposit Accounts are located (to the extent Cash
Management Letters have not already been executed with such
financial institutions pursuant to subsection 4.1D).
SECTION 7.
BORROWERS' NEGATIVE COVENANTS
Each Borrower covenants and agrees that, so long as the
Commitments hereunder shall remain in effect and until
payment in full of all of the Loans and other Obligations
and the cancellation, expiration or cash collateralization
of all Letters of Credit in accordance with the terms
hereof, unless Requisite Lenders shall otherwise give prior
written consent, such Borrower shall perform, and shall
cause each of its Subsidiaries to perform, all covenants in
this Section 7.
7.1. Indebtedness.
Credit Parties shall not, and shall not permit any of
their respective Subsidiaries to, directly or indirectly,
create, incur, assume or guaranty, or otherwise become or
remain directly or indirectly liable with respect to, any
Indebtedness, except:
(i) Borrowers may become and remain liable with
respect to the Obligations;
(ii) each Credit Party and its Subsidiaries may become
and remain liable with respect to Contingent Obligations
permitted by subsection 7.4 and, upon any matured
obligations actually arising pursuant thereto, the
Indebtedness corresponding to
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the Contingent Obligations so extinguished;
(iii) each Credit Party and its Subsidiaries may
become and remain liable with respect to Indebtedness in
respect of Capital Leases; provided that such Capital Leases
are permitted under the terms of subsection 7.9;
(iv) Borrowers may become and remain liable with
respect to Indebtedness to other Borrowers;
(v) each Credit Party which is a debtor in the Chapter
11 Cases may become and remain liable with respect to
Prepetition Indebtedness without giving effect to any
extensions, renewals, refinancings, supplemental borrowings
or other incurrences thereof;
(vi) Credit Parties may become and remain liable with
respect to Indebtedness incurred in connection with the
rejection of leases in the Chapter 11 Cases; provided, that
the obligation of any Credit Party in respect of such
Indebtedness shall be determined by a Court order entered at
the time of such rejection, to be a general, unsecured, non-
priority claim, subject to the provisions of Section
502(b)(6) of the Bankruptcy Code;
(vii) (a) MGRE may become and remain liable with
respect to Indebtedness incurred in connection with accrued
royalty payments due to MGRR from MGRE under that certain
Amended and Restated License Agreement dated January 25,
1993, by and between MGRE and MGRR and (b) MGRD may become
and remain liable with respect to Indebtedness incurred in
connection with accrued royalty payments due to MGRR from
MGRD under that certain License Agreement dated February 3,
1991 by and between MGRD and MGRR; and
(viii) in addition to the Indebtedness permitted by
clauses (i) through (vii), Credit Parties may become and
remain liable with respect to unsecured Indebtedness in an
aggregate outstanding amount not to exceed $50,000 at any
time; provided that no such Indebtedness shall be incurred
to any financial institution where a Deposit Account is
maintained.
7.2. Liens and Related Matters.
A. Prohibition on Liens. Credit Parties shall not,
and shall not permit any of their respective Subsidiaries
to, directly or indirectly, create, incur, assume or permit
to exist any Lien on or with respect to any property or
asset of any kind (including any document or instrument in
respect of goods or accounts receivable) of any Credit Party
or any such Subsidiary, whether now owned or hereafter
acquired, or any income or profits therefrom, or file or
permit the filing of, or permit to remain in effect, any
financing
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statement or other similar notice of any Lien with respect
to any such property, asset, income or profits under the
Uniform Commercial Code of any State or under any similar
recording or notice statute (other than filings or
recordings in respect of the Existing Credit Facilities for
which appropriate termination documents have been delivered
to Secured Party), or apply to the Court for the authority
to do any of the foregoing, except:
(i) Permitted Encumbrances;
(ii) Liens created pursuant to the Collateral
Documents;
(iii) Liens incurred by Subsidiaries of MGRE in
connection with the UCC Financing Statements filed in
connection with the Operating Agreements;
(iv) Liens in existence as of the Petition Date as set
forth in Schedule 7.2 annexed hereto; and
(v) nonconsensual Liens not otherwise permitted under
this subsection 7.2 which secure Indebtedness or other
obligations permitted to be incurred hereunder not exceeding
$50,000 at any one time.
B. Equitable Lien in Favor of Lenders. If any Credit
Party or any of its Subsidiaries shall create or assume any
Lien upon any of its properties or assets, whether now owned
or hereafter acquired, other than Liens excepted by the
provisions of subsection 7.2A, it shall make or cause to be
made effective provision whereby the Obligations will be
secured by such Lien equally and ratably with any and all
other Indebtedness secured thereby as long as any such
Indebtedness shall be so secured; provided that,
notwithstanding the foregoing, this covenant shall not be
construed as a consent by Requisite Lenders to the creation
or assumption of any such Lien not permitted by the
provisions of subsection 7.2A.
C. No Further Negative Pledges. Other than as
provided herein and the other Loan Documents, no Credit
Party and no Subsidiary of any Credit Party shall enter into
any agreement prohibiting the creation or assumption of any
Lien upon any of its properties or assets, whether now owned
or hereafter acquired.
D. No Restrictions on Subsidiary Distributions to
Borrower or Other Subsidiaries. Except as provided herein
and the other Loan Documents, each Credit Party will not,
and will not permit any of its respective Subsidiaries to,
create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any
kind on the ability of any such Subsidiary to (i) pay
dividends or make any other distributions on any of such
Subsidiary's capital stock owned by such Credit Party or any
other Subsidiary of such Credit Party, (ii) repay or prepay
any Indebtedness
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owed by such Subsidiary to such Credit Party or any other
Subsidiary of such Credit Party, (iii) make loans or
advances to such Credit Party or any other Subsidiary of
such Credit Party, or (iv) transfer any of its property or
assets to such Credit Party or any other Subsidiary of such
Credit Party.
7.3. Investments; Joint Ventures.
Credit Parties shall not, and shall not permit any of
their respective Subsidiaries to, directly or indirectly,
make or own any Investment in any Person, including any
Joint Venture, except:
(i) Borrowers may make and own Investments in Cash
Equivalents;
(ii) MGRE may make advances to or for the benefit of
Subsidiaries of MGRE (other than Non-Operating Subsidiaries)
in an amount not to exceed $30,000,000 per month, to cover
monthly rental payments and occupancy charges and other
store operating costs incurred in the ordinary course of
business;
(iii) each Credit Party and its Subsidiaries may
make Consolidated Capital Expenditures permitted by
subsection 7.8;
(iv) each Credit Party and its Subsidiaries may
continue to own the Investments owned by them as of the
Closing Date as set forth in Schedule 7.3 annexed hereto;
and
(v) each of MGRE and MGRR may own Investments in a
restricted investment account (including, with respect to
MGRE, the Restricted Investment Account) maintained at a
financial institution reasonably acceptable to Co-Agents;
provided that MGRE or MGRR, as applicable, and such
financial institution shall have executed and delivered to
Secured Party a Collateral Account Agreement substantially
in the form of Exhibit XV annexed hereto (or, in the case of
the Restricted Investment Account, the Citibank Third-Party
Account Agreement), together with such other instruments or
documents as Co-Agents may reasonably request in order to
ensure that Secured Party has a valid and perfected first
priority security interest in such account.
7.4. Contingent Obligations.
Credit Parties shall not, and shall not permit any of
their respective Subsidiaries to, directly or indirectly,
create or become or remain liable with respect to any
Contingent Obligation, except:
(i) each Credit Party and its Subsidiaries may become
and remain
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liable with respect to Contingent Obligations in respect of
the Obligations, including the Guaranty and the Letters of
Credit;
(ii) each Credit Party may become and remain liable
with respect to Contingent Obligations in existence on the
Petition Date;
(iii) each Credit Party may become and remain
liable with respect to Contingent Obligations arising after
the Petition Date and in existence on the date hereof as set
forth on Schedule 7.4;
(iv) each Borrower may continue to remain liable with
respect to Contingent Obligations in respect of the
Remaining Documentary Letters of Credit, the Remaining
Standby Letters of Credit and the Steamship Guaranties;
(v) each Borrower upon prior approval of Co-Agents,
may become and remain liable with respect to Contingent
Obligations under Interest Rate Agreements entered into with
either Co-Agent; and
(vi) in addition to the Contingent Obligations
permitted by clauses (i) through (v), Credit Parties may
become and remain liable with respect to Contingent
Obligations not exceeding at any one time $150,000 in the
aggregate.
7.5. Restricted Junior Payments.
Credit Parties shall not, and shall not permit any of
their respective Subsidiaries to, directly or indirectly,
declare, order, pay, make or set apart any sum for any
Restricted Junior Payment other than dividends paid by
Subsidiaries of MGRE to MGRE.
7.6. Financial Covenants.
A. Minimum Consolidated Fixed Charge Coverage Ratio.
Borrowers shall not permit the Consolidated Fixed Charge
Coverage Ratio for (i) the fiscal quarter ending October 28,
1995, (ii) the two fiscal quarters ending February 3, 1996,
(iii) the three fiscal quarters ending May 4, 1996, and (iv)
the four fiscal quarters ending August 3, 1996, to be less
than the correlative ratio indicated:
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<TABLE>
<CAPTION>
MINIMUM
CONSOLIDATED
FIXED CHARGE
FISCAL QUARTER PERIOD COVERAGE RATIO
<S> <C>
Fiscal Quarter ended October 28, 1995 0.80:1.00
Two Fiscal Quarters ended February 3, 1996 2.20:1.00
Three Fiscal Quarters ended May 4, 1996 1.30:1.00
Four Fiscal Quarters ended August 3, 1996 0.90:1.00
</TABLE>
B. Minimum Consolidated Adjusted EBITDA. Borrowers
shall not permit Consolidated Adjusted EBITDA for (i) the
fiscal quarter ending October 28, 1995, (ii) the two fiscal
quarters ending February 3, 1996, (iii) the three fiscal
quarters ending May 4, 1996, and (iv) the four fiscal
quarters ending August 3, 1996, to be less than the
correlative amount indicated below:
<TABLE>
<CAPTION>
MINIMUM
CONSOLIDATED
ADJUSTED
FISCAL QUARTER PERIOD ENDING EBITDA
<S> <C>
Fiscal Quarter ended October 28, 1995 $ 6,500,000
Two Fiscal Quarters ended February 3, 1996
$36,800,000
Three Fiscal Quarters ended May 4, 1996 $28,500,000
Four Fiscal Quarters ended August 3, 1996
$17,900,000
</TABLE>
C. Minimum Consolidated Net Worth. Borrowers shall
not permit Consolidated Net Worth at any time as of the last
day of any fiscal quarter set forth below to be less than
the correlative amount indicated:
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<PAGE>
<TABLE>
<CAPTION>
MINIMUM
CONSOLIDATED
FISCAL QUARTER ENDING NET WORTH
<S> <C>
October 28, 1995 ($80,200,000)
February 3, 1996 ($61,600,000)
May 4, 1996 ($79,000,000)
August 3, 1996 ($99,000,000)
</TABLE>
7.7. Restriction on Fundamental Changes; Asset Sales.
Each Credit Party shall not, and shall not permit any
of its Subsidiaries to, change its legal form, or enter into
any transaction of merger or consolidation, or liquidate,
wind-up or dissolve itself (or suffer any liquidation or
dissolution), make any Asset Sale or otherwise convey, sell,
lease, sub-lease, transfer or otherwise dispose of, in one
transaction or a series of transactions, all or any
substantial part of its business, Inventory, property or
fixed assets, whether now owned or hereafter acquired, or
acquire by purchase or otherwise all or substantially all
the business, property or fixed assets of, or stock or other
evidence of beneficial ownership of, any Person, except:
(i) Credit Parties and their Subsidiaries may make
Consolidated Capital Expenditures permitted under subsection
7.8;
(ii) subject to subsection 7.13, Credit Parties and
their Subsidiaries may sell or otherwise dispose of assets
in transactions that do not constitute Asset Sales; provided
that the consideration received for such assets shall be in
an amount at least equal to the fair market value thereof;
(iii) Credit Parties and their Subsidiaries may
sell or otherwise dispose of assets in connection with the
closing of stores; provided that Co-Agents shall be given 15
prior days written notice of such closings and not more than
130 stores shall be closed during the term of this
Agreement;
(iv) Credit Parties may wind-up, liquidate and dissolve
Non-Operating Subsidiaries; provided that, in such event, no
claims or liabilities shall arise against or be incurred by
any Credit Party in respect thereof except as otherwise
permitted under this Agreement;
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(v) Credit Parties may make Asset Sales to the extent
the aggregate book value of the assets subject to such Asset
Sales does not exceed $2,500,000; and
(vi) Credit Parties may make Asset Sales not otherwise
permitted hereunder with the prior written consent of
Requisite Lenders (such consent not to be unreasonably
withheld, provided that such consent shall be subject to
such conditions as Requisite Lenders may reasonably
require).
7.8. Consolidated Capital Expenditures.
Credit Parties shall not, and shall not permit any of
their respective Subsidiaries to, make or incur Consolidated
Capital Expenditures, in any fiscal quarter period indicated
below in an aggregate amount in excess of the corresponding
amount set forth below opposite such fiscal quarter period:
<TABLE>
<CAPTION>
MAXIMUM
CONSOLIDATED
FISCAL QUARTER PERIOD CAPITAL EXPENDITURES
<S> <C>
Fiscal Quarter ended October 28, 1995 $ 5,000,000
Two Fiscal Quarters ended February 3, 1996 $
9,000,000
Three Fiscal Quarters ended May 4, 1996 $12,000,000
Four Fiscal Quarters ended August 3, 1996
$17,000,000
</TABLE>
In addition, Credit Parties shall not, and shall not permit
any of their respective Subsidiaries to, make or incur
Consolidated Capital Expenditures during the period from
August 4, 1996 through the Commitment Termination Date in an
aggregate amount in excess of $5,000,000. Notwithstanding
anything in this subsection 7.8 to the contrary, Credit
Parties shall not, and shall not permit any of their
respective Subsidiaries to, make or incur Consolidated
Capital Expenditures in excess of $13,000,000 during the
four-fiscal quarter period ended August 3, 1996, unless the
Consolidated Fixed Charge Coverage Ratio at such time, after
giving effect to such Consolidated Capital Expenditures,
shall be at least 1.00:1.00.
7.9. Restriction on Leases.
Credit Parties shall not, and shall not permit any of
their respective Subsidiaries to, without the prior written
consent of Requisite Lenders (such consent not to be
unreasonably withheld), become liable in any way, whether
directly or by assignment or as a guarantor or other surety,
for the obligations of the lessee under any lease, whether
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<PAGE>
an Operating Lease or a Capital Lease (other than
intercompany leases between any Credit Party and any
Subsidiaries of any Credit Party), unless, immediately after
giving effect to the incurrence of liability with respect to
such lease, (i) the Consolidated Rental Payments (excluding
any cure payments made in connection with leases assumed in
the Chapter 11 Cases) at the time in effect during the then
current Fiscal Year shall not exceed $155,000,000 and (ii)
the aggregate payments applicable to principal with respect
to Capital Leases at the time in effect during the then
current Fiscal Year shall not exceed $13,000,000.
7.10. Sales and Lease-Backs.
Credit Parties shall not, and shall not permit any of
their respective Subsidiaries to, without the prior written
consent of Requisite Lenders (such consent not to be
unreasonably withheld, provided that such consent shall be
subject to such conditions as Requisite Lenders may
reasonably require), directly or indirectly, become or
remain liable as lessee or as a guarantor or other surety
with respect to any lease, whether an Operating Lease or a
Capital Lease, of any property (whether real, personal or
mixed), whether now owned or hereafter acquired, (i) which
any Credit Party or any of its Subsidiaries has sold or
transferred or is to sell or transfer to any other Person
(other than any Credit Party or any of its Subsidiaries) or
(ii) which any Credit Party or any of its Subsidiaries
intends to use for substantially the same purpose as any
other property which has been or is to be sold or
transferred by such Credit Party or any such Subsidiary to
any Person (other than a Credit Party or any of its
Subsidiaries) in connection with such lease.
7.11. Chapter 11 Claims.
Without limiting the provisions of subsection 7.2
hereof, Credit Parties shall not and shall not permit their
respective Subsidiaries to incur, create, assume, suffer or
permit any claim or Lien or encumbrance against it or any of
its property or assets in any Chapter 11 Case (other than
the claims specifically referred to in subsection 2.8 but
only to the extent therein described) to be pari passu with
or senior to the claims of Co-Agents, Secured Party and
Lenders against any Credit Party in respect of the
Obligations hereunder, or apply to the Court for authority
to do so, except to the extent permitted herein.
7.12. Transactions with Shareholders and Affiliates.
No Credit Party shall nor shall it permit any of its
Subsidiaries to, directly or indirectly, enter into or
permit to exist any transaction (including, without
limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any holder of
5% or more of any class of equity Securities of such Credit
Party or with any Affiliate of such Credit Party or of any
such holder unless the terms of such business,
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transaction or series of transactions are (i) set forth in
writing and (ii) at least as favorable to such Credit Party
or such Subsidiary as terms that would be obtainable at the
time for a comparable transaction or series of similar
transactions in arm's-length dealings with an unrelated
third person; provided that the foregoing requirements in
clauses (i) and (ii) shall not apply to (a) transactions
among Credit Parties and their Subsidiaries otherwise
permitted under this Agreement or (b) transactions with
Affiliates described in MGRE's Form 10-K, as amended, or the
related proxy statement, as filed with the Securities and
Exchange Commission for the fiscal year ended January 28,
1995.
7.13. Disposal of Subsidiary Stock.
Other than as permitted by subsections 7.2 and 7.7, no
Credit Party shall:
(i) directly or indirectly sell, assign, pledge or
otherwise encumber or dispose of any shares of capital stock
or other equity Securities of any of its Subsidiaries,
except to qualify directors if required by applicable law;
or
(ii) permit any of its Subsidiaries directly or
indirectly to sell, assign, pledge or otherwise encumber or
dispose of any shares of capital stock or other equity
Securities of any of its Subsidiaries (including such
Subsidiary), except to a Credit Party, or to qualify
directors if required by applicable law.
7.14. Conduct of Business.
From and after the Closing Date, Credit Parties shall
not, and shall not permit any of their respective
Subsidiaries to, engage in any business other than the
businesses engaged in by Credit Parties and such
Subsidiaries on the Closing Date.
7.15. Limitation on Repayments.
Credit Parties shall not and shall not permit any of
their respective Subsidiaries to (i) make any payment or
prepayment on or redemption or acquisition for value
(including, without limitation, by way of depositing with
the trustee with respect thereto money or securities before
due for the purpose of paying when due) of any Prepetition
Indebtedness or other pre-Petition Date obligations of such
Person, (ii) pay any interest on any Prepetition
Indebtedness of such Person (whether in cash, in kind
securities or otherwise), or (iii) make any payment or
create or permit any Lien pursuant to Section 361 of the
Bankruptcy Code, or apply to the Court for the authority to
do any of the foregoing; provided that (a) MGRE may upon
sale of the Mortgaged Property repay the indebtedness
secured by the first deed of trust on the Mortgaged
Property, (b) Credit Parties may pay Prepetition
Indebtedness arising in connection with the assumption of
store leases in the Chapter 11 Cases, (c) MGRE may make
adequate protection payments
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to the Aid Association for Lutherans as required by the
applicable order of the Court dated June 9, 1994 and (d)
MGRE may make payments to the claimants listed on Schedule
7.15 annexed hereto in an aggregate amount not to exceed
$212,000 and may make payments to such other claimants and
in such amounts as may be consented to by Requisite Lenders.
7.16. Markup and Markdown Policies.
Credit Parties shall not, and shall not permit their
Subsidiaries to, 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 practices of
Credit Parties in respect of such matters as of the Closing
Date, absent the prior written consent of Requisite Lenders,
which consent shall not be unreasonably withheld.
7.17. Fiscal Year
Borrowers shall not change their Fiscal Year-end from
the Saturday closest to January 31.
7.18. Operating Agreement.
Credit Parties shall not amend or terminate the
Operating Agreements without the prior written consent of
Requisite Lenders; provided that the closing of stores in
accordance with subsection 7.7(iii) shall not be deemed an
amendment or termination of the Operating Agreements.
7.19. Restructuring Charges.
(i) Restructuring Professional Fees shall not in the
aggregate exceed (a) $10,000,000 during the four-fiscal
quarter period ended August 3, 1996 or (b) $13,000,000
during the term of this Agreement; and (ii) all other cash
restructuring disbursements in connection with the Chapter
11 Cases shall not in the aggregate exceed (a) $4,500,000
for the four-fiscal quarter period ended August 3, 1996 or
(b) $6,000,000 during the term of this Agreement.
SECTION 8.
EVENTS OF DEFAULT
Notwithstanding the provisions of Section 362 of the
Bankruptcy Code and without application or motion to, or
order from, the Court, the occurrence of any one or
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more of the following events, regardless of the reason
therefore, shall constitute an "Event of Default" hereunder:
8.1. Failure to Make Payments When Due.
Failure to pay any installment of principal of or
interest on any Loan when due, whether at stated maturity,
by acceleration, by notice of prepayment or otherwise;
failure to pay when due any amount payable to Issuing Lender
in reimbursement of any drawing under a Letter of Credit; or
failure to pay when due any other amount due under this
Agreement; or
8.2. Breach of Certain Covenants.
Failure of any Borrower to perform or comply with any
term or condition contained in subsections 2.4, 2.5, 6.2,
6.9(i), 6.10, 6.12 or Section 7 of this Agreement; or
8.3. Other Defaults Under Loan Documents.
Any Credit Party shall default in the performance of or
compliance with any term contained in this Agreement or any
of the other Loan Documents, other than any such term
referred to in any other subsection of this Section 8, and
such default shall not have been remedied or waived within
30 days after the earlier of (i) an Officer of any Credit
Party obtaining knowledge of such default or (ii) receipt by
such Credit Party of notice from either Co-Agent or any
Lender of such default; or
8.4. Breach of Warranty.
Any representation, warranty, certification or other
statement made by any Credit Party or any of its
Subsidiaries in any Loan Document or in any statement or
certificate at any time given by any Credit Party or any of
its Subsidiaries in writing pursuant hereto or thereto or in
connection herewith or therewith shall be false in any
material respect on the date as of which made; or
8.5. Bankruptcy Proceeding Events.
With respect to any Credit Party which is a debtor in
the Chapter 11 Cases, (i) the entry of an order authorizing
any Credit Party in any of the Chapter 11 Cases to obtain
additional financing under Section 364(c) or (d) of the
Bankruptcy Code, or authorizing any Person to recover from
any portions of the Collateral any costs or expenses of
preserving or disposing of such Collateral under Section
506(c) of the Bankruptcy Code, or authorizing the use of
Cash Collateral without Requisite Lenders prior written
consent under Section 363(c) of the Bankruptcy Code; (ii)
the appointment of an interim or
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permanent trustee in any of the Chapter 11 Cases or the
appointment of an examiner in any of the Chapter 11 Cases
with expanded powers to operate or manage the financial
affairs, the business, or reorganization of any Credit
Party; (iii) the dismissal of any of the Chapter 11 Cases,
or the conversion of any of the Chapter 11 Cases to a case
under Chapter 7 of the Bankruptcy Code; (iv) the entry of an
order granting relief from or modifying the automatic stay
of Section 362 of the Bankruptcy Code (a) to allow any
creditor to execute upon or enforce a Lien on any Collateral
or on any other property or assets of any Credit Party or
(b) with respect to any Lien of, or the granting of any Lien
on any Collateral or any other property or assets of any
Credit Party to, any State or local environmental or
regulatory agency or authority; (v) the entry of an order
amending, supplementing, staying, vacating or otherwise
modifying any of the Borrowing Order or this Agreement or
any other Loan Document or any of Co-Agents' or Lenders'
rights, benefits, privileges or remedies under the Borrowing
Order, this Agreement or any other Loan Document, in any
case without Requisite Lenders prior consent; (vi) an order
shall be entered approving, or there shall arise, any other
administrative expense claim (other than those specifically
referred to in subsection 2.8) having any priority over, or
being pari passu with the administrative expenses priority
of the Obligations in respect of any of the Chapter 11
Cases; or
8.6. Involuntary Bankruptcy; Appointment of Receiver,
Dissolution, Etc.
With respect to any Credit Party which is not a debtor
in the Chapter 11 Cases, (i) a court having jurisdiction in
the premises shall enter a decree or order for relief in
respect of any such Credit Party in an involuntary case
under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in
effect, which decree or order is not stayed; or any other
similar relief shall be granted under any applicable federal
or state law which is not stayed; or (ii) an involuntary
case shall be commenced against any such Credit Party under
the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in
effect which case shall not have been superseded by a
voluntary case filed in accordance with subsection 8.7; or a
decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having
similar powers over such Credit Party, or over all or a
substantial part of its property, shall have been entered;
or there shall have occurred the involuntary appointment of
an interim receiver, trustee or other custodian of any such
Credit Party for all or a substantial part of its property;
or a warrant of attachment, execution or similar process
shall have been issued against any substantial part of the
property of any such Credit Party, and any such event
described in this clause (ii) shall continue for sixty days
unless dismissed, bonded or discharged; or (iii) any order,
judgment or decree shall be entered against any such Credit
Party decreeing the dissolution or split up of such Credit
Party and such order shall remain undischarged or unstayed
for a period in excess of thirty days; or
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8.7. Voluntary Bankruptcy; Appointment of Receiver, Etc.
With respect to any Credit Party which is not subject
to a Borrowing Order, (i) any such Credit Party shall have
an order for relief entered with respect to it or commence a
voluntary case under the Bankruptcy Code or under any other
applicable bankruptcy, insolvency or similar law now or
hereafter in effect, or shall consent to the entry of an
order for relief in an involuntary case, or the conversion
of an involuntary case to a voluntary case, under any such
law, or shall consent to the appointment of or taking
possession by a receiver, trustee or other custodian for all
or a substantial part of its property; or any such Credit
Party shall make any general assignment for the benefit of
creditors; or (ii) any such Credit Party shall be unable, or
shall fail generally, or shall admit in writing its
inability to pay its debts as such debts become due; or the
Board of Directors of any such Credit Party (or any
committee thereof) shall adopt any resolution or otherwise
authorize any action to approve any of the actions referred
to in clause (i) above or this clause (ii); provided that
any such event shall not constitute an Event of Default or
Potential Event of Default unless a Court order shall not
have been entered within 45 days after the petition date
either (a) affirming all Obligations of such Credit Party
under the Loan Documents and the superpriority nature of
such Obligations in accordance with subsection 2.8, or (b)
immediately transferring all of the assets of such Credit
Party or proceeds thereof to MGRE; or
8.8. Judgments.
(i) One or more judgments or orders as to post-Petition
Date liability or debt shall be entered against any Credit
Parties involving in the aggregate for Credit Parties a
liability (to the extent not paid or fully covered by
insurance) in excess of $250,000 and either (a) enforcement
proceedings shall have been commenced and shall be
continuing by any creditor upon such judgment or orders or
(b) there shall be any period of 30 consecutive days during
which a stay of enforcement of such judgments or orders, by
reason of a pending appeal or otherwise, shall not be in
effect; or (ii) any non-monetary judgment or order with
respect to a post-Petition Date event shall be rendered
against any Credit Party which could reasonably be expected
to result in a Material Adverse Effect and there shall be
any period of 30 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or
8.9. Employee Benefit Plans.
There shall occur one or more ERISA Events which
individually or in the aggregate results in or might
reasonably be expected to result in liability of any Credit
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Party or any of its ERISA Affiliates in excess of $500,000
during the term of this Agreement; or
8.10. Impairment of Collateral.
Any material provision of any Collateral Document shall
for any reason cease to be valid and enforceable in
accordance with its terms, any Collateral Document shall be
repudiated or terminated, including by operation of law, or
any Lien created under any Collateral Document or the Orders
shall cease to be a valid and perfected first priority
security interest or Lien (except as otherwise permitted
herein) in any Collateral purported to be covered thereby;
or
8.11. Impairment of Guaranty.
The Guaranty shall for any reason cease to be valid or
enforceable in accordance with its terms or the Guaranty
shall be repudiated or terminated, including by operation of
law, or any Credit Party denies it has any further
liability, including without limitation with respect to
future advances by Lenders, under any Loan Document to which
it is a party, or gives notice to such effect; or
8.12. Default Under Material Contracts.
Any termination or material default or breach under any
Material Contract shall occur, and shall not have been cured
or waived within 30 days of the earlier of (i) an Officer of
any Credit Party having knowledge of such termination,
default or breach or (ii) receipt by a Credit Party of
notice from either Co-Agents or any Lender of such default.
8.13. Material Adverse Effect.
Any event or change shall occur that has caused or
evidences, either in any case or in the aggregate, a
Material Adverse Effect; or
8.14. Change of Control.
Any Change of Control shall occur;
THEN upon the occurrence and during the continuance of any
Event of Default each Co-Agent may and, upon written request
of Requisite Lenders, shall (notwithstanding the provisions
of Section 362 of the Bankruptcy Code and without
application or motion to, or order from, the Court) by
written notice to Borrowers declare (i) the unpaid principal
amount of and accrued interest on the Loans, (ii) an amount
equal to the maximum
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amount that may at any time be drawn under all Letters of
Credit then outstanding (whether or not any beneficiary
under any such Letter of Credit shall have presented, or
shall be entitled at such time to present, the drafts or
other documents or certificates required to draw under such
Letter of Credit), and (iii) all other Obligations
immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are
hereby expressly waived by Borrowers, and the same shall
forthwith become, immediately due and payable, and the
obligation of each Lender to make any Loan, the obligation
of Issuing Lender to issue any Letter of Credit and the
right of Issuing Lender to issue any Letter of Credit
hereunder shall thereupon terminate; provided that the
foregoing shall not affect in any way the obligations of
Lenders under subsection 3.3C(i) to purchase participations
in any unreimbursed Letters of Credit. Any amounts
described in clause (ii) above, when received by CUSA Co-
Agent, shall be deposited and held in the Collateral Account
pursuant to the terms of the Pledge and Security Agreement
and shall be applied as therein provided.
Further upon the occurrence and during the continuance
of any Event of Default, Secured Party may (i) exercise all
rights and remedies of Secured Party set forth in any of the
Collateral Documents, in addition to all rights and remedies
allowed by applicable laws of the United States and of any
state thereof, including but not limited to the UCC, and
(ii) revoke Borrowers' rights to use Cash Collateral in
which Secured Party has an interest; provided that, any
other provision of this Agreement or any other Loan Document
to the contrary notwithstanding, with respect to the
foregoing, Secured Party shall give Borrower and counsel to
any official committees in respect of the Chapter 11 Cases,
Bear Stearns & Co., Inc. and Fidelity Management and
Research Company three Business Days' prior notice (which
notice shall be delivered by facsimile or overnight courier)
of the exercise of its rights and remedies with respect to
the Collateral and file a copy of such notice with the clerk
of the Court. Neither Co-Agents, Secured Party nor Lenders
shall have any obligation of any kind to make a motion or
application to the Bankruptcy Court to exercise their rights
and remedies set forth or referred to in this Agreement or
in the other Loan Documents. The enumeration of the
foregoing rights and remedies is not intended to be
exhaustive and the exercise of any right or remedy shall not
preclude the exercise of any other rights or remedies, all
of which shall be cumulative and not alternative.
Borrowers waive, (i) presentment, demand and protest
and notice of presentment, dishonor, notice of intent to
accelerate, notice of acceleration, protest, default,
nonpayment, maturity, release, compromise, settlement,
extension or renewal of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel
paper and guaranties or other property at any time held by
Co-Agents, Secured Party or Lenders on which Borrowers may
in any way be liable and hereby ratify and confirm whatever
Co-Agents, Secured Party and Lenders may do in this regard,
(ii) subject to the notice provisions of the preceding
paragraph, all rights to notice and hearing prior to Secured
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Party's taking possession or control of, or to Co-Agents or
Lenders replevy, attachment or levy upon, the Collateral, or
any bond or security which might be required by any court
prior to allowing Co-Agents or Lenders to exercise any of
their remedies, and (iii) the benefit of all valuation,
appraisal and exemption laws. Borrowers acknowledge they
have been advised by counsel of their choice with respect to
the effect of the foregoing waivers and this Agreement, the
other Loan Documents and the transactions evidenced by this
Agreement and the other Loan Documents.
SECTION 9.
AGENT
9.1. Appointment.
GE Capital is hereby appointed a Co-Agent and to act in
its capacity as Secured Party hereunder and under the
Collateral Documents, and CUSA is hereby appointed a Co-
Agent, hereunder and under the other Loan Documents and each
Lender hereby authorizes each such Agent to act as its agent
in accordance with the terms of this Agreement and the other
Loan Documents. Each Agent agrees to act upon the express
conditions contained in this Agreement and the other Loan
Documents, as applicable. With respect to determinations
regarding the Borrowing Base or any components thereof
(including, without limitation, the Advance Percentage,
Eligible Inventory and reserves), Co-Agents shall discuss
such determinations and attempt to reach an agreement;
provided that if Co-Agents cannot agree, the most
conservative position from the Lenders' point of view shall
be adopted. The provisions of this Section 9 are solely for
the benefit of Agents and Lenders and Borrowers shall have
no rights as a third party beneficiary of any of the
provisions thereof. In performing its functions and duties
under this Agreement, each Agent shall act solely as an
agent of Lenders and does not assume and shall not be deemed
to have assumed any obligation towards or relationship of
agency or trust with or for any Credit Party or any of their
Subsidiaries.
9.2. Powers; General Immunity.
A. Duties Specified. Each Lender irrevocably
authorizes each Agent to take such action on such Lender's
behalf and to exercise such powers hereunder and under the
other Loan Documents as are specifically delegated to such
Agent by the terms hereof and thereof, together with such
powers as are reasonably incidental thereto. Each Agent
shall have only those duties and responsibilities that are
expressly specified in this Agreement and the other Loan
Documents and it may perform such duties by or through its
agents or employees. No Agent shall have, by reason of this
Agreement or any of the other Loan Documents, a fiduciary
relationship in respect of any Lender; and nothing in
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this Agreement or any of the other Loan Documents, expressed
or implied, is intended to or shall be so construed as to
impose upon any Agent any obligations in respect of this
Agreement or any of the other Loan Documents except as
expressly set forth herein or therein.
B. No Responsibility for Certain Matters. No Agent
shall be responsible to any Lender for the execution,
effectiveness, genuineness, validity, enforceability,
collectibility or sufficiency of this Agreement or any other
Loan Document or for any representations, warranties,
recitals or statements made herein or therein or made in any
written or oral statement or in any financial or other
statements, instruments, reports or certificates or any
other documents furnished or made by any Agent to Lenders or
by or on behalf of any Credit Party or any of its
Subsidiaries to any Agent or any Lender in connection with
the Loan Documents and the transactions contemplated thereby
or for the financial condition or business affairs of Credit
Parties or any of their Subsidiaries or any other Person
liable for the payment of any Obligations, nor shall any
Agent be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the
Loan Documents or as to the use of the proceeds of the Loans
or the use of the Letters of Credit or as to the existence
or possible existence of any Event of Default or Potential
Event of Default. Anything contained in this Agreement to
the contrary notwithstanding, no Agent shall have any
liability arising from confirmations of the amount of
outstanding Loans or the Letter of Credit Usage or the
component amounts thereof.
C. Exculpatory Provisions. Neither any Agent nor any
of its officers, directors, employees or agents shall be
liable to Lenders for any action taken or omitted by such
Agent under or in connection with any of the Loan Documents
except to the extent caused by such Agent's gross negligence
or willful misconduct. If any Agent shall request
instructions from Lenders with respect to any act or action
(including the failure to take an action) in connection with
this Agreement or any of the other Loan Documents, such
Agent shall be entitled to refrain from such act or taking
such action unless and until such Agent shall have received
instructions from Requisite Lenders. Without prejudice to
the generality of the foregoing, (i) each Agent shall be
entitled to rely, and shall be fully protected in relying,
upon any communication, instrument or document believed by
it to be genuine and correct and to have been signed or sent
by the proper person or persons, and shall be entitled to
rely and shall be protected in relying on opinions and
judgments of attorneys (who may be attorneys for Credit
Parties), accountants, experts and other professional
advisors selected by it; and (ii) no Lender shall have any
right of action whatsoever against any Agent as a result of
any Agent acting or (where so instructed) refraining from
acting under this Agreement or any of the other Loan
Documents in accordance with the instructions of Requisite
Lenders. Each Agent shall be entitled to refrain from
exercising any power, discretion or authority vested in it
under
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this Agreement or any of the other Loan Documents unless and
until it has obtained the instructions of Requisite Lenders.
D. Agents Entitled to Act as Lender. The agency
hereby created shall in no way impair or affect any of the
rights and powers of, or impose any duties or obligations
upon, any Agent in its individual capacity as a Lender
hereunder. With respect to its participation in the Loans
and the Letters of Credit, each Agent shall have the same
rights and powers hereunder as any other Lender and may
exercise the same as though it were not performing the
duties and functions delegated to it hereunder, and the term
"Lender" or "Lenders" or any similar term shall, unless the
context clearly otherwise indicates, include Agent in its
individual capacity. Each Agent and its Affiliates may
accept deposits from, lend money to and generally engage in
any kind of banking, trust, financial advisory or other
business with Borrowers or any of their Affiliates as if it
were not performing the duties specified herein, and may
accept fees and other consideration from Credit Parties for
services in connection with this Agreement and otherwise
without having to account for the same to Lenders.
9.3. Representations and Warranties; No Responsibility For
Appraisal of Creditworthiness.
Each Lender represents and warrants that it has made
its own independent investigation of the financial condition
and affairs of Credit Parties and their respective
Subsidiaries in connection with the making of the Loans and
the issuance of Letters of Credit hereunder and that it has
made and shall continue to make its own appraisal of the
creditworthiness of Credit Parties and such Subsidiaries.
No Agent shall have any duty or responsibility, either
initially or on a continuing basis, to make any such
investigation or any such appraisal on behalf of Lenders or
to provide any Lender with any credit or other information
with respect thereto, whether coming into its possession
before the making of the Loans or at any time or times
thereafter, and no Agent shall have any responsibility with
respect to the accuracy of or the completeness of any
information provided to Lenders.
9.4. Right to Indemnity.
Each Lender, in proportion to its Pro Rata Share,
severally agrees to indemnify each Agent, to the extent that
such Agent shall not have been reimbursed by Credit Parties,
for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits,
costs, expenses (including, without limitation, counsel fees
and disbursements) or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted
against such Agent in performing its duties hereunder or
under the other Loan Documents or otherwise in its capacity
as Agent in any way relating to or arising out of this
Agreement or the other Loan Documents; provided that no
Lender shall
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be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from such Agent's
gross negligence or willful misconduct. If any indemnity
furnished to any Agent for any purpose shall, in the opinion
of such Agent, be insufficient or become impaired, Agent may
call for additional indemnity and cease, or not commence, to
do the acts indemnified against until such additional
indemnity is furnished.
9.5. Payee of Note Treated as Owner.
Each Agent may deem and treat the payee of any Note as
the owner thereof for all purposes hereof unless and until
an Assignment and Acceptance effecting the assignment or
transfer thereof shall have been accepted by Co-Agents as
provided in subsection 10.1B(ii). Any request, authority or
consent of any person or entity who, at the time of making
such request or giving such authority or consent, is the
holder of any Note shall be conclusive and binding on any
subsequent holder, transferee or assignee of that Note or of
any Note or Notes issued in exchange therefor.
9.6. Successor Agent.
Any Agent may resign at any time by giving 30 days'
prior written notice thereof to Lenders and Credit Parties,
and any Agent may be removed at any time with or without
cause by an instrument or concurrent instruments in writing
delivered to Borrowers and such Agent and signed by
Requisite Lenders. Upon any such notice of resignation or
any such removal, Requisite Lenders shall have the right,
upon five Business Days' notice to Borrowers, to appoint a
successor Agent. Upon the acceptance of any appointment as
an Agent hereunder by a successor Agent, that successor
Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring or
removed Agent and the retiring or removed Agent shall be
discharged from its duties and obligations under this
Agreement. After any retiring or removed Agent's
resignation or removal hereunder as an Agent, the provisions
of this Section 9 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was
Agent under this Agreement.
9.7. Collateral Documents.
A. Secured Party. Each Lender hereby further
authorizes Secured Party to enter into the Collateral
Documents as secured party on behalf of and for the benefit
of Lenders and agrees to be bound by the terms of the
Collateral Documents; provided that Secured Party shall not
enter into or consent to any amendment, modification,
termination or waiver of any provision contained in the
Collateral Documents without the prior consent of Requisite
Lenders; provided further, that anything in this Agreement
or
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the other Loan Documents to the contrary notwithstanding:
(i) Secured Party is authorized on behalf of all
Lenders, without the necessity of any notice to or further
consent from the Lenders, from time to time to take any
action with respect to any Collateral or the Collateral
Documents which may be necessary to perfect and maintain
perfected the security interest in and Liens upon the
Collateral granted pursuant to the Collateral Documents.
(ii) The Lenders irrevocably authorize Secured Party,
at its option and in its discretion, to release any Lien
granted to or held by Secured Party upon any Collateral (a)
upon termination of the Commitments and payment in full of
the Loans and all other Obligations payable under this
Agreement and under any other Loan Document; (b)
constituting property sold or to be sold or disposed of as
part of or in connection with any disposition permitted
hereunder; or (c) if otherwise approved, authorized or
ratified in writing by Requisite Lenders, subject to
Subsection 10.6. Upon request by Secured Party at any time,
Lenders will confirm in writing Secured Party's authority to
release particular types or items of Collateral pursuant to
this subsection 9.7.
B. Lender Action. Anything contained in any of the
Loan Documents to the contrary notwithstanding, each Lender
agrees that no Lender shall have any right individually to
realize upon any of the Collateral under the Collateral
Documents (including without limitation through the exercise
of a right of set-off against call deposits of such Lender
in which any funds on deposit in the Collateral Documents
may from time to time be invested), it being understood and
agreed that all rights and remedies under the Collateral
Documents may be exercised solely by Secured Party for the
benefit of Lenders in accordance with the terms thereof.
SECTION 10.
MISCELLANEOUS
10.1. Assignments and Participations in Loans and
Letters of Credit.
A. General. Subject to the provisions of this
subsection 10.1, each Lender shall have the right at any
time to (i) sell, assign, transfer or negotiate to any
Eligible Assignee, or (ii) sell participations to any Person
in, all or any part of its Commitment or any Loan or Loans
made by it or its Letters of Credit or participations
therein or any other interest herein or in any other
Obligations owed to it; provided that no such assignment or
participation shall, without the prior written consent of
Borrowers, require any Borrower to file a registration
statement with the Securities and Exchange Commission or
apply to qualify such assignment or participation under the
securities laws of any state. Except as otherwise provided
in this subsection 10.1, no Lender shall, as between
Borrowers and
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such Lender, be relieved of any of its obligations hereunder
as a result of any sale, assignment, transfer or negotiation
of, or any granting of participations in, all or any part of
its Commitment or the Loans, the Letters of Credit or
participations therein or the other Obligations owed to such
Lender.
B. Assignments.
(i) Amounts and Terms of Assignments. Each Lender's
Commitment, Loan, Letter of Credit or participation therein
or other Obligation may (a) be assigned in any amount (of a
constant and not a varying percentage) of not less than
$1,000,000 and integral multiples of $1,000,000 in excess of
that amount to another Lender, or to an Affiliate (which is
an Eligible Assignee) of the assigning Lender or another
Lender, with the giving of notice to Borrowers and Co-Agents
or (b) be assigned in an aggregate amount (of a constant and
not a varying percentage) of not less than 10% of the
aggregate Commitments and integral multiples of $1,000,000
in excess of that amount to any other Eligible Assignee with
the giving of notice to Borrowers and Co-Agents and with the
prior written consent of Co-Agents and MGRE (such consent
not to be unreasonably withheld); provided that no Lender's
Commitment shall at any time be less than 10% of the
aggregate Commitments. To the extent of any such assignment
in accordance with either clause (a) or (b) above and upon
execution and delivery of an Assignment and Acceptance with
respect thereto as provided below, the assigning Lender
shall be relieved of its obligations with respect to its
Commitment, Loans, Letters of Credit or participations
therein or other Obligations or the portion thereof so
assigned. The parties to each such assignment shall execute
and deliver to each Co-Agent, for its acceptance, an
Assignment and Acceptance, together with an aggregate
processing fee of $2,500 to be shared equally by Co-Agents
and such certificates, documents or other evidence, if any,
with respect to United States federal income tax withholding
matters as the assignee under such Assignment and Acceptance
may be required to deliver to each Co-Agent pursuant to
subsection 2.6B(iii). Upon such execution, delivery and
acceptance, from and after the effective date specified in
such Assignment and Acceptance, (1) 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, shall have the rights and
obligations of a Lender hereunder and (2) the assigning
Lender thereunder 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 (and, in
the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to
be a party hereto). The Commitments hereunder shall be
modified to reflect the Commitment of such assignee and any
remaining Commitment of such assigning Lender and, if any
such assignment occurs after the issuance of the Notes
hereunder, new Notes shall, upon surrender of the assigning
Lender's Note, be issued to the assignee and to the
assigning Lender,
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substantially in the form of Exhibit IV annexed hereto with
appropriate insertions, to reflect the new Commitments of
the assignee and the assigning Lender.
(ii) Acceptance by Co-Agents. Upon its receipt of an
Assignment and Acceptance executed by an assigning Lender
and an assignee representing that it is an Eligible
Assignee, together with the processing fee referred to in
subsection 10.1B(i) and any certificates, documents or other
evidence with respect to United States federal income tax
withholding matters that such assignee may be required to
deliver to Co-Agents pursuant to subsection 2.6B(iii), each
Co-Agent shall, if such Assignment and Acceptance has been
completed and is in substantially the form of Exhibit VIII
hereto and if such Co-Agent has consented to the assignment
evidenced thereby, to the extent such consent is required
pursuant to subsection 10B(i), (a) accept such Assignment
and Acceptance by executing a counterpart thereof as
provided therein (which acceptance shall evidence any
required consent of Co-Agents to such assignment) and (b)
give prompt notice thereof to Borrowers (with a copy of such
Assignment and Acceptance) and each other Co-Agent. Each Co-
Agent shall maintain a copy of each Assignment and
Acceptance delivered to and accepted by it as provided in
this subsection 10.1B(ii).
(iii) By executing and delivering an Assignment and
Acceptance, the Lender assignor thereunder 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, such assigning Lender
makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement
or the other Loan Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value
of this Agreement or any other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto;
(ii) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the
financial condition of or the performance or observance by
any Borrower of any of its obligations under this Agreement
or any other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; (iii) such
assignee confirms that it has received a copy of this
Agreement, together with copies of such documents and
information as 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 Agents, such assigning Lender or any
other Lender and based on such documents and information as
it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under
this Agreement; (v) such assignee confirms that it is an
Eligible Assignee; (vi) such assignee appoints and
authorizes each Agent to take such action as agent on its
behalf and to exercise such powers and discretion under this
Agreement and the other Loan Documents as are delegated to
such Agent by the terms hereof, together with such powers
and discretion as are reasonably incidental thereto; and
(vii) such assignee agrees that it will
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perform in accordance with their terms all of the
obligations that by the terms of this Agreement are required
to be performed by it as a Lender.
C. Participations. Each Lender may sell
participations as permitted pursuant to subsection 10.1A;
provided that no participation shall be for an amount less
than $5,000,000 (excluding any participations purchased by
Lenders pursuant to the terms of this Agreement). The
holder of any participation, other than an Affiliate of the
Lender granting such participation, shall not be entitled to
require such Lender to take or omit to take any action
hereunder except action directly affecting (i) the extension
of the regularly scheduled maturity of any portion of the
principal amount of or interest on any Loan allocated to
such participation, (ii) a reduction of the principal amount
of or the rate of interest payable on any Loan allocated to
such participation or (iii) the release of all or any
substantial portion of the Collateral, and all amounts
payable by Borrowers hereunder (including without limitation
amounts payable to such Lender pursuant to subsections 2.6
and 3.6) shall be determined as if such Lender had not sold
such participation. Borrower and each Lender hereby
acknowledge and agree that, solely for purposes of
subsections 10.4 and 10.5, (a) any participation will give
rise to a direct obligation of Borrowers to the participant
and (b) the participant shall be considered to be a
"Lender"; provided that no Person shall be eligible to be a
participant hereunder if such Person would not be an
Eligible Assignee pursuant to the terms of the final proviso
of the definition of Eligible Assignee.
D. Assignments to Federal Reserve Banks. In addition
to the assignments and participations permitted under the
foregoing provisions of this subsection 10.1, any Lender may
assign and pledge all or any portion of its Loans, the other
Obligations owed to such Lender and its Note to any Federal
Reserve Bank as collateral security pursuant to Regulation A
of the Board of Governors of the Federal Reserve System and
any operating circular issued by such Federal Reserve Bank.
No Lender shall, as between Borrowers and such Lender, be
relieved of any of its obligations hereunder as a result of
any such assignment and pledge.
E. Information. Each Lender may furnish any
information concerning Credit Parties and their Subsidiaries
in the possession of that Lender from time to time to
assignees and participants (including prospective assignees
and participants), subject to subsection 10.19.
10.2. Expenses.
Borrowers shall reimburse Agents for all reasonable
expenses of Agents in connection with the underwriting, due
diligence analysis and credit approval with respect to, and
the preparation of, the Loan Documents and any amendment,
modification or waiver of, or consent with respect to, any
of the Loan Documents (including the
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reasonable fees and out-of-pocket expenses of any Agents'
counsel retained in connection with the Loan Documents and
the transactions contemplated thereby). If, at any time or
times, regardless of the existence of an Event of Default,
any Agent or any Lender shall incur reasonable expenses
itself or employ counsel or other professional advisors,
including, but not limited to, environmental, financial and
management consultants, for advice or other representation
or shall incur legal, appraisal, accounting, consulting or
other reasonable costs and expenses in connection with:
A. any litigation, contest, dispute, suit, proceeding
or action (whether instituted by any Agent, any Lender, any
Credit Party or any other Person) in any way relating to the
Collateral, any of the Loan Documents, or any other
agreements to be executed or delivered in connection
therewith or herewith, including any litigation, contest,
dispute, suit, case, proceeding or action, and any appeal or
review thereof, in connection with a case commenced by or
against any Credit Party or any other Person that may be
obligated to any Agent or any Lender by virtue of the Loan
Documents, under the Bankruptcy Code, or any other
applicable Federal, state, or foreign bankruptcy or other
similar law;
B. any attempt to enforce any rights or remedies of
any Agent or any Lender against any Credit Party, or any
other Person that may be obligated to any Agent or any
Lender by virtue of being a party to any of the Loan
Documents;
C. any attempt to appraise, inspect, verify, protect,
collect, sell, liquidate or otherwise dispose of the
Collateral; or
D. any Chapter 11 Case (including, without
limitation, the on-going monitoring by Agents of any Chapter
11 Case, including attendance by Agents and their counsel at
hearings or other proceedings and the on-going review of
documents filed with the Court in respect thereof) and
Agents' and Lenders' interests with respect to any Credit
Party (including, without limitation, the on-going review of
any Credit Party's business, assets, operations, prospects
or financial condition as Co-Agents shall deem necessary),
the Collateral or the Obligations;
then, and in any such event, the reasonable fees and
expenses incurred by such Agent, such Lender and such
attorneys and other professional advisors and consultants
arising from such services, including those of any appellate
proceedings, and all reasonable expenses, costs, charges and
other fees incurred by such counsel or other professionals
in any way or respect arising in connection with or relating
to any of the events or actions described in this Section
10.2 shall be payable, on demand, by Borrowers to such Agent
and such Lender and shall be additional Obligations secured
under the Collateral Documents and the other Loan Documents.
Without limiting the generality of the foregoing, such
expenses, costs, charges and fees may include: paralegal
fees, costs and
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expenses; accountants' and experts' fees, costs and
expenses; appraisers' fees, costs and expenses; management
and other consultants' fees, costs and expenses; court costs
and expenses; photocopying and duplicating expenses; court
reporter fees, costs and expenses; long distance telephone
charges; communication charges, air express charges;
telegram charges; secretarial overtime charges; and expenses
for travel, lodging and food paid or incurred in connection
with the performance of such legal or other professional
services.
10.3. Indemnity.
In addition (but without duplication) to the payment of
expenses pursuant to subsection 10.2, whether or not the
transactions contemplated hereby shall be consummated,
Borrowers jointly and severally agree to defend, indemnify,
pay and hold harmless Agents and Lenders, and the officers,
directors, employees, agents and affiliates of, Agents and
Lenders (collectively called the "Indemnitees") from and
against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature
whatsoever (including without limitation the reasonable fees
and disbursements of counsel for such Indemnitees in
connection with any investigative, administrative or
judicial proceeding commenced or threatened by any Person,
whether or not any such Indemnitee shall be designated as a
party or a potential party thereto), whether direct,
indirect or consequential and whether based on any federal,
state or foreign laws, statutes, rules or regulations
(including without limitation securities and commercial
laws, statutes, rules or regulations and Environmental
Laws), on common law or equitable cause or on contract or
otherwise, that may be imposed on, incurred by, or asserted
against any such Indemnitee, in any manner relating to or
arising out of this Agreement or the other Loan Documents or
the Chapter 11 Cases or the transactions contemplated hereby
or thereby (including without limitation Lenders' agreement
to make the Loans hereunder or the use or intended use of
the proceeds of any of the Loans or the issuance of Letters
of Credit hereunder or the use or intended use of any of the
Letters of Credit) or the statements contained in the
commitment letter delivered by Co-Agents to MGRE with
respect thereto (collectively called the "Indemnified
Liabilities"); provided that Borrowers shall not have any
obligation to any Indemnitee hereunder with respect to any
Indemnified Liabilities to the extent such Indemnified
Liabilities arise solely from the gross negligence or
willful misconduct of that Indemnitee (or its officers,
agents or employees) as determined by a final judgment of a
court of competent jurisdiction. To the extent that the
undertaking to defend, indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable because
it is violative of any law or public policy, each Borrower
shall contribute the maximum portion that it is permitted to
pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by the
Indemnitees or any of them.
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<PAGE>
10.4. Set-Off; Security Interest in Deposit Accounts.
In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any
such rights, and notwithstanding the provisions of Section
362 of the Bankruptcy Code and without application or motion
to, or order from, the Court, upon the occurrence of any
Event of Default each Co-Agent is hereby authorized by
Borrowers at any time or from time to time, without notice
to any Borrower, or to any other Person, any such notice
being hereby expressly waived, to set off and to appropriate
and to apply any and all deposits (general or special,
including, but not limited to, Indebtedness evidenced by
certificates of deposit, whether matured or unmatured, but
not including trust accounts) and any other Indebtedness at
any time held or owing by that Co-Agent to or for the credit
or the account of any Borrower against and on account of the
obligations and liabilities of Borrowers to that Co-Agent
under this Agreement, the Notes, the Letters of Credit and
participations therein, including, but not limited to, all
claims of any nature or description arising out of or
connected with this Agreement, the Notes, the Letters of
Credit and participations therein or any other Loan
Document, irrespective of whether or not (i) that Co-Agent
shall have made any demand hereunder or (ii) the principal
of or the interest on the Loans or any amounts in respect of
the Letters of Credit or any other amounts due hereunder
shall have become due and payable pursuant to Section 8 and
although said obligations and liabilities, or any of them,
may be contingent or unmatured; provided that, with respect
to the foregoing, Co-Agents shall give Borrower and counsel
to any official committees in respect of the Chapter 11
Cases, Bear Stearns & Co., Inc. and Fidelity Management and
Research Company three Business Days' prior notice (which
notice shall be delivered by facsimile or overnight courier)
of the exercise of its right to set-off hereunder and file a
copy of such notice with the clerk of the Court. Borrowers
hereby further grant to each Co-Agent a security interest in
all deposits and accounts maintained with such Agent or such
Co-Agent as security for the Obligations.
10.5. Ratable Sharing.
Lenders hereby agree among themselves that if any of
them shall, whether by voluntary payment, by realization
upon security, through the exercise of any right of set-off
or banker's lien, by counterclaim or cross action or by the
enforcement of any right under the Loan Documents or
otherwise, or as adequate protection of a deposit treated as
cash collateral under the Bankruptcy Code, receive payment
or reduction of a proportion of the aggregate amount of
principal, interest, amounts payable in respect of Letters
of Credit, fees and other amounts then due and owing to that
Lender hereunder or under the other Loan Documents
(collectively, the "Aggregate Amounts Due" to such Lender)
which is greater than the proportion received by any other
Lender in respect of the Aggregate Amounts Due to such other
Lender, then the Lender receiving such proportionately
greater payment shall (i) notify each Agent and each other
Lender of the receipt of such payment and (ii) apply a
portion of such payment to purchase
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participations without recourse except as provided below
(which it shall be deemed to have purchased from each seller
of a participation simultaneously upon the receipt by such
seller of its portion of such payment) in the Aggregate
Amounts Due to the other Lenders so that all such recoveries
of Aggregate Amounts Due shall be shared by all Lenders in
proportion to the Aggregate Amounts Due to them; provided
that if all or part of such proportionately greater payment
received by such purchasing Lender is thereafter recovered
from such Lender pursuant to an order of the Court or
otherwise, those purchases shall be rescinded and the
purchase prices paid for such participations shall be
returned to such purchasing Lender ratably to the extent of
such recovery, but without interest. Each Borrower
expressly consents to the foregoing arrangement and agrees
that any holder of a participation so purchased may exercise
any and all rights of banker's lien, set-off or counterclaim
with respect to any and all monies owing by such Borrower to
that holder with respect thereto as fully as if that holder
were owed the amount of the participation held by that
holder.
10.6. Amendments and Waivers.
No amendment, modification, termination or waiver of
any provision of this Agreement or of the Notes, or consent
to any departure by Borrowers therefrom, shall in any event
be effective without the written concurrence of Requisite
Lenders; provided that any such amendment, modification,
termination, waiver or consent which: (i) increases the
amount of any of the Commitments or reduces the principal
amount of any of the Loans; (ii) increases the maximum
amount of Letters of Credit; (iii) changes any Lender's Pro
Rata Share; (iv) changes in any manner the percentage
constituting "Requisite Lenders"; (v) provides for the
release of all or any substantial portion of the Collateral
or the release of any Guarantor from it obligations under
the Guaranty; (vi) changes in any manner any provision of
this Agreement which, by its terms, expressly requires the
approval or concurrence of all Lenders; (vii) postpones the
scheduled final maturity date of any of the Loans; (viii)
postpones the date on which any interest or any fees are
payable; (ix) decreases the interest rate borne by any of
the Loans (other than any waiver of any increase in the
interest rate applicable to any of the Loans pursuant to
subsection 2.2B) or the amount of any fees payable
hereunder; (x) reduces the amount or postpones the due date
of any amount payable in respect of, or extends the required
expiration date of, any Letter of Credit; (xi) changes in
any manner the obligations of Lenders relating to the
purchase of participations in Letters of Credit; or (xii)
changes in any manner the provisions contained in subsection
8.1 or this subsection 10.6; shall be effective only if
evidenced by a writing signed by or on behalf of all
Lenders. In addition, no amendment, modification,
termination or waiver of any provision of Section 9 or of
any other provision of this Agreement which, by its terms,
expressly requires the approval or concurrence of an Agent
shall be effective without the written concurrence of such
Agent and any other Agent affected thereby, and no
amendment, modification, termination or waiver of any
provision of Section 3 or any provision of this Agreement
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<PAGE>
related to Letters of Credit shall be effective without the
written concurrence of Issuing Lender. Each Co-Agent may,
but shall have no obligation to, with the concurrence of any
Lender, execute amendments, modifications, waivers or
consents on behalf of that Lender. 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 any Borrower in any case shall entitle such
Borrower to any other or further notice or demand in similar
or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with
this subsection 10.6 shall be binding upon each Lender at
the time outstanding, each future Lender and, if signed by
any Borrower, on such Borrower.
10.7. Independence of Covenants.
All covenants hereunder shall be given independent
effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would
be permitted by an exception to, or would otherwise be
within the limitations of, another covenant shall not avoid
the occurrence of an Event of Default or Potential Event of
Default if such action is taken or condition exists.
10.8. Notices.
Unless otherwise specifically provided herein, any
notice or other communication herein required or permitted
to be given shall be in writing and may be personally
served, telecopied, telexed or sent by United States mail or
courier service and shall be deemed to have been given when
delivered in person or by courier service, upon receipt of
telecopy or telex, or four Business Days after depositing it
in the United States mail, registered or certified, with
postage prepaid and properly addressed; provided that
notices to any Agent shall not be effective until received.
For the purposes hereof, the address of each party hereto
shall be as set forth under such party's name on the
signature pages hereof or (i) as to any Borrower and any
Agent, such other address as shall be designated by such
Person in a written notice delivered to the other parties
hereto and (ii) as to each other party, such other address
as shall be designated by such party in a written notice
delivered to Co-Agents.
10.9. Survival of Representations, Warranties and
Agreements.
A. All representations, warranties and agreements
made herein shall survive the execution and delivery of this
Agreement and the making of the Loans and the issuance of
the Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or
implied by law to the contrary, the agreements of Borrowers
set forth in subsections 2.6, 10.2 and 10.3 and the
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<PAGE>
agreements of Lenders set forth in subsections 9.2C, 9.4,
10.3, 10.5 and 10.19 shall survive the payment of the Loans,
the cancellation or expiration of the Letters of Credit and
the reimbursement of any amounts drawn thereunder, and the
termination of this Agreement.
10.10. Failure or Indulgence Not Waiver; Remedies
Cumulative.
No failure or delay on the part of any Agent or any
Lender in the exercise of any power, right or privilege
hereunder or under any other Loan Document shall impair such
power, right or privilege or be construed to be a waiver of
any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other
power, right or privilege. All rights and remedies existing
under this Agreement and the other Loan Documents are
cumulative to, and not exclusive of, any rights or remedies
otherwise available.
10.11. Marshalling; Payments Set Aside.
Neither any Agent nor any Lender shall be under any
obligation to marshal any assets in favor of any Borrower or
any other party or against or in payment of any or all of
the Obligations. To the extent that any Borrower makes a
payment or payments to any Agent or Lenders (or to an Agent
for the benefit of Lenders), or any Agent or Lenders enforce
any security interests or exercise their rights of setoff,
and such payment or payments or the proceeds of such
enforcement or setoff 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, any other state or
federal law, common law or any equitable cause, then, to the
extent of such recovery, the obligation or part thereof
originally intended to be satisfied, and all Liens, rights
and remedies therefor or related thereto, shall be revived
and continued in full force and effect as if such payment or
payments had not been made or such enforcement or setoff had
not occurred.
10.12. Severability.
In case any provision in or obligation under this
Agreement or the Notes shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired
thereby.
10.13. Obligations Several; Independent Nature of
Lenders' Rights.
The obligations of Lenders hereunder are several and no
Lender shall be responsible for the obligations or
Commitment of any other Lender hereunder. Nothing
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<PAGE>
contained herein or in any other Loan Document, and no
action taken by Lenders pursuant hereto or thereto, shall be
deemed to constitute Lenders as a partnership, an
association, a joint venture or any other kind of entity.
The amounts payable at any time hereunder to each Lender
shall be a separate and independent debt, and each Lender
shall be entitled to protect and enforce its rights arising
out of this Agreement and it shall not be necessary for any
other Lender to be joined as an additional party in any
proceeding for such purpose.
10.14. Headings.
Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other
purpose or be given any substantive effect.
10.15. Applicable Law.
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS
OF THE STATE OF NEW YORK (INCLUDING, WITHOUT LIMITATION,
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAWS OF THE STATE
OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES.
10.16. Successors and Assigns.
This Agreement shall be binding upon the parties hereto
and their respective successors and assigns and shall inure
to the benefit of the parties hereto and the successors and
assigns of Lenders (it being understood that Lenders' rights
of assignment are subject to subsection 10.1). No
Borrower's rights or obligations hereunder or any interest
therein may be assigned or delegated by such Borrower
without the prior written consent of all Lenders.
10.17. Consent to Jurisdiction and Service of Process.
SUBJECT TO THE JURISDICTION OF THE COURT, ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST BORROWERS ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY
OBLIGATION MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE OF NEW YORK, AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT EACH BORROWER
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION
OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
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<PAGE>
CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY
JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT,
SUCH OTHER LOAN DOCUMENT OR SUCH OBLIGATION. Each Borrower
hereby agrees that service of all process in any such
proceeding in any such Court may be made by registered or
certified mail, return receipt requested, to such Borrower
at its address provided in subsection 10.8, such service
being hereby acknowledged by Borrower to be sufficient for
personal jurisdiction in any action against Borrower in any
such Court and to be otherwise effective and binding in
every respect. Nothing herein shall affect the right to
serve process in any other manner permitted by law or shall
limit the right of any Lender to bring proceedings against
any Borrower in the courts of any other jurisdiction.
10.18. Waiver of Jury Trial.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO
WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT
OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN
THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION
OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING
ESTABLISHED. The scope of this waiver is intended to be all-
encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this
transaction, including without limitation contract claims,
tort claims, breach of duty claims and all other common law
and statutory claims. Each party hereto acknowledges that
this waiver is a material inducement to enter into a
business relationship, that each has already relied on this
waiver in entering into this Agreement, and that each will
continue to rely on this waiver in their related future
dealings. Each party hereto further warrants and represents
that it has reviewed this waiver with its legal counsel and
that it knowingly and voluntarily waives its jury trial
rights following consultation with legal counsel. THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING
TO THE LOANS MADE HEREUNDER. In the event of litigation,
this Agreement may be filed as a written consent to a trial
by the court.
10.19. Confidentiality.
Each Agent and each Lender agrees that it will hold and
keep confidential any non-public information from time to
time supplied by Credit Parties or any of its Subsidiaries,
which has been identified as confidential, pursuant to the
terms of this Agreement or the Loan Documents in accordance
with such Agent's and such Lender's
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<PAGE>
customary procedures for handling confidential information
of this nature and in accordance with safe and sound banking
practices, and in all cases, in a manner consistent with
which such Agent and such Lender protects its own non-public
confidential information, it being understood and agreed by
Borrowers that Agents and Lenders may make disclosures: (i)
to the extent required by law, to any governmental agency or
representative thereof or pursuant to legal process;
provided that, unless specifically prohibited by applicable
law or court order, each Agent and each Lender shall notify
Borrowers of any request by any governmental agency or
representative for disclosure of any such non-public
information prior to the disclosure of such information;
(ii) counsel to any Agent or any Lender or to any such
respective parties' accountants or other advisors; (iii)
bank examiners and auditors; (iv) any other Lender; (v) an
Eligible Assignee of any Lender or Participant, that agrees
in writing to be bound by the terms and provisions of this
subsection 10.19; or (vi) the extent that such information
becomes public other than as a result of a breach of this
subsection 10.19. It is understood and agreed that in no
event shall any Agent or any Lender be obligated or required
to return any materials furnished by any Credit Party or any
of its Subsidiaries, and it is further understood and agreed
that this subsection 10.19 supersedes any prior
confidentiality agreements executed by Agents and Lenders in
favor of Borrowers regarding the transactions contemplated
hereby. Each Agent and each Lender agree that the terms and
provisions of this subsection 10.19 shall survive the
payment of the Loans, the cancellation or expiration of the
Letters of Credit and the reimbursement of any amounts drawn
thereunder, and the termination of this Agreement and the
Loan Documents.
10.20. Counterparts; Effectiveness.
This Agreement and any amendments, waivers, consents or
supplements hereto or in connection herewith may be executed
in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from
multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically
attached to the same document. This Agreement shall become
effective upon the execution of a counterpart hereof by each
of the parties hereto and receipt by Borrowers and Agents of
written or telephonic notification of such execution and
authorization of delivery thereof.
10.21. Parties Including Trustees; Court Proceedings.
This Agreement and the other Loan Documents shall be
binding upon, and inure to the benefit of, the successors of
each Agent and each Lender, and the assigns, transferees and
endorsees of each Agent and each Lender. The security
interests and Liens created in this Agreement, the
Collateral Documents and the other Loan
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Documents shall be and remain valid and perfected, and the
claims of Agents and Lenders hereunder valid and enforceable
in accordance with the terms hereof, notwithstanding the
discharge of any Borrower or any other Credit Party pursuant
to 11 U.S.C. 1141, the conversion of any Chapter 11 Case
or any other bankruptcy case of any Credit Party to a case
under Chapter 7 of the Bankruptcy Code, the dismissal of any
Chapter 11 Case or any subsequent Chapter 7 case or the
release of any Collateral from the property of any Credit
Party. Further, with respect to Credit Parties which are
debtors in the Chapter 11 Cases, the security interests and
Liens created in this Agreement, the Collateral Documents
and the other Loan Documents shall be and remain valid and
perfected without the necessity that Secured Party file
financing statements or otherwise perfect its security
interests or Liens under applicable law. This Agreement,
the claims of Agents and Lenders hereunder, and all security
interests or Liens created hereby or pursuant hereto or by
or pursuant to the Collateral Documents or any other Loan
Document shall at all times be binding upon Credit Parties,
the estates of Credit Parties and any trustee appointed in
any Chapter 11 Case or any Chapter 7 case, or any other
successor in interest to Credit Parties. This Agreement
shall not be subject to Section 365 of the Bankruptcy Code.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their
respective officers thereunto duly authorized as of the date
first written above.
BORROWERS:
MERRY-GO-ROUND ENTERPRISES, INC.,
as Debtor and Debtor-In-Possession
By: /s/ Isaac Kaufman
Isaac Kaufman
Executive Vice President
MGRD DISTRIBUTION CORPORATION
as Debtor and Debtor-In-Possession
By: /s/ Isaac Kaufman
Isaac Kaufman
Vice President
WORTHS STORES CORP.,
as Debtor and Debtor-In-Possession
By: /s/ Isaac Kaufman
Isaac Kaufman
President
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Notice Address for each Borrower:
c/o Merry-Go-Round Enterprises,
Inc.
3300 Fashion Way
Joppa, Maryland 21085
Attention: Executive Vice
President and Chief Financial
Officer
With a copy to:
Swidler & Berlin, Chartered
4th Floor
3000 K Street, NW
Washington, DC 20007
Attention: David Martin, Esq.
LENDERS:
GENERAL ELECTRIC CAPITAL
CORPORATION,
individually, as a Co-Agent and as
Secured Party
By: /s/ Charles Chiodo
Charles Chiodo
Duly Authorized Signatory
Notice Address:
3rd Floor
501 Merritt Seven
Norwalk, Connecticut 06851
Attention: Charles Chiodo
118
<PAGE>
CITICORP USA,
individually and as a Co-Agent
By: /s/ Robert Kosian
Robert Kosian
Attorney-In-Fact
Notice Address:
6th Floor, Zone 4
399 Park Avenue
New York, New York 10043
Attention: Robert Kosian
CITIBANK, N.A.,
as Issuing Lender
By: /s/ Robert Kosian
Robert Kosian
Attorney-In-Fact
Notice Address:
6th Floor, Zone 4
399 Park Avenue
New York, New York 10043
Attention: Robert Kosian
119
<PAGE>
<TABLE>
SCHEDULE 2.1
LENDERS' COMMITMENTS AND PRO RATA SHARES
<CAPTION>
Lender Revolving Loan Pro Rata
Commitment Share
<S> <C> <C>
General Electric Capital Corporation
Citicorp USA
Citibank, N.A. $50,000,000
40,000,000
0 55.55555%
44.44445%
0.00000%
TOTAL ____________
$90,000,000 ____________
100.0000000%
Sched2.1-1
</TABLE>
90
Exhibit 99.2
CONTACT: MWW/Strategic Communications, Inc.
Michael T. Lennon -- 201-507-9500
Merry-Go-Round Enterprises, Inc.
Isaac Kaufman -- 410-538-1000
FOR IMMEDIATE RELEASE
MERRY-GO-ROUND ENTERPRISES ANNOUNCES INTENTION TO APPOINT
FEDERATED EXECUTIVE RICHARD P. CRYSTAL AS NEW CEO
Joppa, MD -- June 28, 1995 -- Merry-Go-Round
Enterprises, Inc. (NYSE:MGR) today announced that it reached
agreement with Richard P. Crystal to assume responsibilities
as its new chief executive officer effective August 1, 1995,
pending Bankruptcy court approval. Crystal, who resigned
his employment with Federated Department Stores effective
July 31, 1995, formerly served as chairman of Federated's
highly regarded Product Development Division where he was
responsible for all private label product development
worldwide, and also as chairman and CEO of the specialty
stores division which included all Aeropostale and Charter
Club specialty stores.
Crystal, age 50, said, "I am looking forward to the
exciting opportunities and challenges at Merry-Go-Round. I
hope to offer the expertise and leadership necessary to
further refine the merchandising packages and strategies at
<PAGE>
each of the company's core concepts and to continue to
improve on the execution of those strategies. At the same
time, I intend to place immediate effort on creating a
seamless transition and on sustaining the many expense
management and planning improvements implemented at MGRE
over the past several months."
In announcing the move, Thomas Shull, MGRE's outgoing
CEO, said, "We feel confident that Richard has the unique
blend of merchandising skills and management disciplines
needed at this juncture of the reorganization process.
Having worked with him extensively during the Macy's
reorganization, I think he offers continuity of direction
with respect to the many positive changes that have been
made at MGRE. He is also a highly skilled merchant and
manager whose leadership and vision will help fuel growth in
the top line."
Crystal has been with Macy's since 1974 in various
positions, except during a period from 1979 to 1982 when he
served as a senior executive for Petrie Stores, Inc. He
holds a Bachelor of Arts Degree from New York University.
<PAGE>
Since November of last year, the company has been under
the interim management of Meridian Ventures, a turnaround
and crisis consulting firm. Meridian partners Tom Shull and
Jim Kenney have served as MGRE's chairman/CEO and
president/COO, respectively, since that time to develop and
revise the company's business plan, eliminate unprofitable
stores and reduce expenses.
Crystal added, "Tom Shull and Jim Kenney, along with
the rest of the MGRE team, have developed a solid strategic
business plan and made some dramatic and difficult changes.
I am looking forward to continuing to build upon those
changes and leading MGRE out of Chapter 11."
Merry-Go-Round Enterprises, Inc. is a specialty apparel
chain, made up of Merry-Go-Round, Chess King, Dejaiz/Attivo
and Cignal store concepts, selling contemporary fashions for
young men and women.
<PAGE>
CONTACT: MWW/Strategic Communications, Inc.
Michael T. Lennon -- 201-507-9500
Merry-Go-Round Enterprises, Inc.
Isaac Kaufman -- 410-538-1000
FOR IMMEDIATE RELEASE
RICHARD CRYSTAL ASSUMES POST AS NEW CEO AND DIRECTOR OF
MERRY-GO-ROUND ENTERPRISES; STEPHEN WERTHEIMER APPOINTED
CHAIRMAN
Joppa, MD - July 11, 1995 -- Merry-Go-Round
Enterprises, Inc. (NYSE:MGR) announced today that Richard
Crystal had assumed the role of chief executive officer of
the company, and was also elected to MGRE's Board. As
previously reported in June, Crystal had been named as the
company's new CEO pending Bankruptcy Court approval.
Additionally, the company announced that Stephen Wertheimer
was appointed Chairman of its Board of Directors.
Wertheimer was formerly co-chairman of MGRE's official
Equity Committee, a position from which he resigned in
connection with his election to the Board in May, 1995. He
has been a private investor since 1991. Previously,
Wertheimer served as Managing Director, Group Head of
Investment Banking - Asia, for PaineWebber from 1988 to
<PAGE>
1991. He also serves on the boards of other public
companies.
Thomas Shull, MGRE's outgoing chairman, will remain on
the company's Board. He had served as MGRE's chairman since
January of last year, when the company was placed under the
interim management of Meridian Ventures, a turnaround and
crisis consulting firm which Shull manages.
Merry-Go-Round Enterprises, Inc. is a specialty apparel
chain selling contemporary fashions for young men and women.
The company operates stores under the Merry-Go-Round, Chess
King, Dejaiz/Attivo, Cignal and Boogies Diner names.
