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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 17, 1999
PAYLESS CASHWAYS, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-4437 42-0945849
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
800 NW Chipman Road, P.O. Box 648001, Lee's Summit, Missouri 64064-8001
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (816) 347-6000
2300 Main, P.O. Box 419466
Kansas City, MO 64141-0466
(Former name or former address, if changed since last report.)
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Item 5: Other Events.
New loan agreements completed.
On November 17, 1999, the Registrant completed a new, three-year, $260 million
revolving secured loan agreement with Congress Financial Corporation, as Lender
and Agent, a subsidiary of First Union National Bank. A portion of the proceeds
was used to retire the Registrant's existing revolving credit facility and to
reduce its term loan under the 1997 Credit Agreement. These payments allowed the
Registrant to secure an amendment to the 1997 Credit Agreement that removes all
current and future financial performance covenants. Also, semi-annual principal
payments on the remainder of the 1997 Credit Agreement term loan will be
deferred to the year 2001. The remaining amounts available under the Congress
Financial agreement will be used to fund the Company's working capital needs on
an on-going basis.
The Congress Financial agreement contains a minimum net worth covenant set at
$135 million for the length of the agreement. Adjusted net worth excludes any
extraordinary, unusual or non-recurring gains or non-cash losses or charges that
may occur after the date of the agreement. The agreement also contains other
customary financial covenants and events of default for financings of this type.
Loans under the Congress Financial agreement bear interest at fluctuating rates
of either the Prime Rate, as defined, plus 3/4% or the Euro Dollar Rate, as
defined, plus 2-3/4%.
The early extinguishment of the portion of the 1997 Credit Agreement will result
in an extraordinary charge of approximately $0.6 million, net of tax, in the
fourth quarter of the Registrant's 1999 fiscal year ending November 27, 1999.
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Item 7: Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
4.1 Second amendment to Amended and Restated Credit Agreement
dated November 17, 1999, among Payless, the Banks listed
on the signature pages thereof and Canadian Imperial Bank
of Commerce, New York Agency, as Coordinating and
Collateral Agent.
4.2 Loan and Security Agreement dated November 17, 1999, by
and among Payless and Congress Financial Corporation
(Central), as Lender and Agent for Lenders.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PAYLESS CASHWAYS, INC.
Dated: November 24, 1999 By:/s/ Raymond P. Springer
-----------------------------------------
Raymond P. Springer, Senior Vice President--
Finance and Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)
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EXHIBIT 4.1
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of November 17, 1999
HEADING
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of November 17,
1999, among PAYLESS CASHWAYS, INC., a Delaware corporation (the "Borrower"),
each of the financial institutions from time to time party hereto as lenders
(together with their successors and assigns, the "Lenders"), CANADIAN IMPERIAL
BANK OF COMMERCE (acting through one or more of its agencies, branches, or
affiliates, "CIBC"), as coordinating and collateral agent (in such capacity, the
"Agent") for the Lenders and the other Secured Parties (as hereinafter defined).
INTRODUCTORY STATEMENT
On July 21, 1997, Payless Cashways, Inc., an Iowa corporation, as
debtor and debtor-in-possession (the "Debtor"), filed a voluntary petition with
the Bankruptcy Court. On September 5, 1997, the Debtor filed its First Amended
Plan of Reorganization with the Bankruptcy Court, which Plan of Reorganization
was modified on October 9, 1997 and further modified by the Confirmation Order
entered by the Bankruptcy Court on November 19, 1997 and on the record at the
hearing with respect to the Confirmation Order (the "Plan of Reorganization").
On the effective date of the Plan of Reorganization, the Debtor merged into the
Borrower and the Borrower obtained post-effective date revolving credit in the
maximum amount of $150,000,000 pursuant to that certain amended and restated
credit agreement, dated as of December 2, 1997, among the Borrower, as successor
by merger to the Debtor, each of the financial institutions from time to time
party thereto as lenders (together with their successors and assigns, the
"Existing Lenders"), the Underwriters (as defined therein), CIBC, as the issuer
of standby letters of credit, U.S. BANK NATIONAL ASSOCIATION, in its capacity as
the issuer of documentary letters of credit and CIBC, as coordinating and
collateral agent for the Existing Lenders, the Fronting Banks (as defined
therein), the Underwriters and the other Secured Parties (as defined therein),
as amended by that certain First Amendment to the Amended and Restated Revolving
Credit Agreement dated as of August 13, 1998 (the "Existing Credit Agreement").
Contemporaneously herewith, the Borrower is entering into a new credit
facility with Congress Financial Corporation (Central) ("Congress Financial")
for a revolving credit and letter of credit facility in an aggregate principal
amount not to exceed $260,000,000 (the "Congress Facility"), the proceeds of
which will be used, in part, to repay (i) the outstanding principal amount
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of all of the New Revolving Loans owing under the Existing Credit Agreement (the
"Existing Revolving Loans"), (ii) any and all accrued interest, fees, costs and
expenses relating to the Existing Revolving Loans and the Existing Term Loans
(as hereinafter defined) pursuant to the Existing Credit Agreement and (iii)
$92,000,000 of the outstanding principal amount of New Term Loans (as defined in
the Existing Credit Agreement) under the Existing Credit Agreement (the
"Existing Term Loans" and, together with the Existing Revolving Loans, the
"Existing Loans"), which repayment of Existing Term Loans is to be shared pro
rata among the New Term Lenders under the Existing Credit Agreement (the
"Existing Term Lenders").
The Congress Facility will also provide for the issuance of
Back-to-Back Letters of Credit (as hereinafter defined) in favor of the Fronting
Banks under the Existing Credit Agreement which will provide credit support for
the Existing Documentary Letters of Credit (as hereinafter defined) and the
Existing Standby Letters of Credit (as hereinafter defined).
The Borrower is obligated to (i) the New Revolving Lenders under the
Existing Credit Agreement (the "Existing Revolving Lenders") with respect to (A)
Existing Revolving Loans in the aggregate principal amount of $90,000,000, (B)
undrawn Standby Letters of Credit issued for the account of the Borrower
pursuant to the Existing Credit Agreement in the aggregate principal amount of
$14,360,000 (the "Existing Standby Letters of Credit") and (C) undrawn
Documentary Letters of Credit issued for the account of the Borrower pursuant to
the Existing Credit Agreement in the aggregate principal amount of $2,572,759.82
(the "Existing Documentary Letters of Credit" and, together with the Existing
Standby Letters of Credit, the "Existing Letters of Credit"), (ii) the Existing
Term Lenders (together with the Existing Revolving Lenders, the "Existing
Lenders") in the aggregate principal amount of $201,415,478.98, and (iii) the
Agent, the Fronting Banks, the Existing Cash Management Bank (as defined herein)
and the Existing Revolving Lenders in respect of interest, fees, costs, expenses
and all other obligations of the Borrower under the Existing Credit Agreement
and the other documentation relating thereto.
The Existing Revolving Loans, together with a portion of the Existing
Term Loans, are being repaid as provided hereby, the Existing Letters of Credit
are being treated as provided herein and the Existing Credit Agreement is being
amended and restated in its entirety as herein set forth. Upon repayment of the
Existing Revolving Loans, issuance of the Back-to-Back Letters of Credit,
payment of all outstanding interest, fees and expenses, and the occurrence of
the other conditions precedent to the effectiveness of this Agreement, all
Revolving Credit Commitments under the Existing Credit Agreement shall be
terminated.
On the Effective Date, and in connection with the Borrower entering
into the Congress Facility Agreement (as hereinafter defined), the Agent, on
behalf of itself and the other Secured Parties under the Existing Credit
Agreement will terminate its current first priority perfected Lien on (i) all of
the Borrowers' property listed on Schedule 1.1(c) (the "Congress Financial
Collateral"). To maintain security for the repayment of the Term Loans (as
defined herein) and the payment of the other obligations of the Borrower
hereunder and under the other Loan Documents, the Agent,
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on behalf of itself and the Secured Parties (as defined herein), shall retain
(i) its present first perfected priority Lien on all of the Borrower's (A)
personal property which is not Congress Financial Collateral (including, without
limitation, Equipment, Vehicles (as each such term is defined in the Existing
Security Agreement), fixtures, and contracts, general intangibles and promissory
notes relating to the foregoing, and any replacement of, or substitution
for, any of the foregoing) and all proceeds and products thereof, and (B)
real property (with the exception of the seven (7) properties which constitute
Congress Financial Collateral ), including Leases upon such property and
related assets, any replacement or substitution thereof and all proceeds and
products thereof and (ii) its perfected second Lien on all Fortress Collateral
(subject to the prior Liens of Fortress with respect thereto) and all proceeds
and products thereof (collectively, the "CIBC Collateral").
Accordingly, in consideration of the mutual agreements herein set
forth, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS.
Section 1.1. Defined Terms.
As used in this Agreement, the following terms shall have the meanings
specified below:
"ABR Loan" shall mean any Loan bearing interest at a rate determined by
reference to the Alternate Base Rate in accordance with the provisions of
Section 2.3(a) and Section 2.4.
"Adjusted LIBOR Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/100 of 1%) equal to the quotient of (a) the LIBOR
Rate in effect for such Interest Period divided by (b) a percentage (expressed
as a decimal) equal to 100% minus Statutory Reserves. For purposes hereof, the
term "LIBOR Rate" shall mean the rate (rounded upwards, if necessary, to the
next 1/100 of 1%) at which dollar deposits approximately equal in principal
amount to such Eurodollar Borrowing and for a maturity comparable to such
Interest Period are offered to the principal London office of the Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.
"Affiliate" shall mean, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with such Person. For purposes of this definition, a Person (a
"Controlled Person") shall be deemed to be "controlled by" another Person (a
"Controlling Person") if the Controlling Person possesses, directly or
indirectly, power to direct or cause the direction of the management and
policies of the Controlled Person whether by contract or otherwise.
"Agent" shall have the meaning set forth in the Heading.
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"Agreement" shall mean this Second Amended and Restated Credit
Agreement, as the same may be amended, amended and restated, supplemented or
otherwise modified from time to time.
"Alternate Base Rate" shall mean, for any day, a rate per annum equal
to the higher of (a) the rate of interest most recently announced by CIBC at its
Domestic Lending Office as its base rate; and (b) the Federal Funds Rate in
effect on such day plus 1/2 of 1%. If for any reason the Agent shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Federal Funds Rate for any reason, including the
inability or failure of the Agent to obtain sufficient quotations in accordance
with the terms hereof, the Alternate Base Rate shall be determined without
regard to clause (b) of the first sentence of this definition, until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in CIBC's base rate or the Federal Funds
Rate shall be effective on the effective date of such change in CIBC's base rate
or the Federal Funds Rate, respectively.
"Annual Budget" shall have the meaning set forth in Section 5.1(f).
"Assignment and Acceptance" shall mean an assignment and acceptance by
a Lender and an Eligible Assignee, accepted by the Agent and agreed to by the
Borrower to the extent required by Section 9.3(b), substantially in the form of
Exhibit H.
"Available Property" shall mean all real property, buildings,
improvements and fixtures owned or leased by the Borrower or any Subsidiary
which were not subject to a Lien as of the Existing Effective Date, after
recordation of the Mortgages delivered on such date. To the extent that any real
property, buildings, improvements and fixtures owned or leased by the Borrower
or any Subsidiary, which do not constitute Available Property as of the Existing
Effective Date, become, after the Effective Date, unencumbered by the Lien of
the Colorado Mortgages or any other Lien, such real property, buildings,
improvements and fixtures shall, on the date such Lien is released, become
Available Property unless such property becomes encumbered by a Lien securing
Permitted Refinancing Debt concurrently with the release of such Lien or within
60 days of such release; provided, that on or prior to the date such Lien is
released, the Borrower shall have given written notice to the Agent of its
intention to refinance the Debt secured by such Lien with Permitted Refinancing
Debt. Any real property, buildings, fixtures or improvements which were leased
by the Borrower after the Existing Effective Date shall be considered Available
Property if the subject lease does not prohibit the granting to the Agent of a
Mortgage.
"Back-to-Back Letters of Credit" shall mean those certain irrevocable
letters of credit issued by First Union National Bank in favor of the Fronting
Banks as credit support for the Existing Documentary Letters of Credit and the
Existing Standby Letters of Credit in form and substance acceptable to the
relevant Fronting Bank.
"Bankruptcy Code" shall mean The Bankruptcy Reform Act of 1978, as
heretofore and hereafter amended, and codified as 11 U.S.C. Section 101 et seq.
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"Bankruptcy Court" shall mean the United States Bankruptcy Court for
the Western District of Missouri or any other court having jurisdiction over the
Case from time to time.
"Beneficial Ownership" by a Person when used with respect to any Voting
Shares shall mean beneficial ownership by such Person of such Voting Shares as
defined in Rule 13d-3 of the Exchange Act.
"Board" shall mean the Board of Governors of the Federal Reserve System
of the United States.
"Borrower" shall have the meaning set forth in the Heading.
"Borrowing" shall mean the refinancing of Loans of a single Type made
from the Lenders on a single date and having, in the case of Eurodollar Loans, a
single Interest Period (with any ABR Loan made pursuant to Section 2.10 being
considered a part of the related Borrowing of Eurodollar Loans).
"Business Day" shall mean any day other than a Saturday, Sunday or
other day on which banks in New York City are required or permitted to close;
provided, however, that when used in connection with a Eurodollar Loan, the term
"Business Day" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.
"Capitalized Lease" shall mean, as applied to any Person, any lease of
property by such Person as lessee which would be capitalized on a balance sheet
of such Person prepared in accordance with GAAP.
"Case" shall mean the Chapter 11 Case of the Debtor commenced on July
21, 1997 in the Bankruptcy Court.
"Cash Management Obligations" shall mean the obligations of the
Borrower to reimburse the Existing Cash Management Bank in respect of
overdrafts, uncollected funds, returned items and reasonable related expenses
arising prior to the Effective Date pursuant to the Existing Cash Management
Agreements.
"Change of Control" shall mean the occurrence of either of the
following events: (x) any Person or any Persons acting together which would
constitute a Group, together with any Affiliates thereof, after the Effective
Date, shall acquire or hold Voting Shares of the Borrower such that such Person
or Group, together with such Affiliates, have Beneficial Ownership of Voting
Shares of the Borrower entitling such Person or Group, together with such
Affiliates, to exercise at least 40% of the total voting power of all Voting
Shares of the Borrower; or (y) any Person or any Group, together with any
Affiliates thereof, shall succeed in having a sufficient number of its or their
nominees elected to the Board of Directors of the Borrower (other than nominees
elected to the Board of
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Directors of the Borrower pursuant to the Plan of Reorganization) such that
such nominees so elected (whether new or continuing as directors) shall
constitute a majority of the Board of Directors of the Borrower.
"CIBC" shall have the meaning set forth in the Heading.
"CIBC Collateral" shall have the meaning set forth in the Introductory
Statement.
"Closing Certificate" shall have the meaning set forth in Section
4.1(a)(iv).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Colorado Mortgages" shall mean, collectively, that certain Mortgage,
dated as of August 8, 1979, between Brookhart's, Inc. and Southwestern Life
Insurance Company (as assumed by the Borrower on July 28, 1982) and that certain
Mortgage, dated as of August 31, 1982, between the Borrower and Brookhart's,
Inc., each as amended, supplemented or otherwise modified from time to time.
"Confirmation Order" shall mean that certain Order Confirming Plan
dated and filed November 17, 1997 with the United States Bankruptcy Court,
Western District of Missouri.
"Congress Facility" shall have the meaning set forth in the Introductory
Statement.
"Congress Facility Agreement" shall mean that certain Loan and Security
Agreement dated November 17, 1999 by and among the Borrower and Congress
Financial, as lender and agent for the lenders thereunder, as same may be
amended, amended and restated, modified or supplemented from time to time.
"Congress Facility Documents" shall mean the Congress Facility
Agreement and any and all instruments and documents executed in connection
therewith, as same may be amended, amended and restated, modified or
supplemented from time to time.
"Congress Financial" shall have the meaning set forth in the Introductory
Statement.
"Congress Financial Collateral" shall have the meaning set forth in the
Introductory Statement.
"Congress Financing" shall mean the financing by Congress Financial
provided for in the Congress Facility Agreement and the other Congress Facility
Documents.
"Credit Card Lender" shall mean Household Bank, or any successor or
assign thereof.
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"Debt" of any Person shall mean, at any date, without duplication, (i)
all obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee under Capitalized
Leases, (v) all Debt of others secured by (or for which the holder of such Debt
has an existing right, contingent or otherwise, to be secured by) a Lien on any
asset owned, used or operated by such Person, whether or not such Debt is
assumed by such Person, (vi) all Debt of others Guaranteed by such Person,
directly or indirectly, or by an instrument having the effect of assuring
another's payment or performance of any Debt, (vii) indebtedness and other
obligations arising under acceptance facilities and the face amount of all
letters of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder or payment requests honored with
respect thereto, (viii) all obligations of such Person in respect of interest
rate protection agreements, foreign currency exchange agreements or other
interest or exchange rate hedging arrangements (other than fully paid interest
rate cap arrangements), (ix) all obligations of such Person under conditional
sale or other title retention agreements relating to property or assets
purchased by such Person, and (x) any withdrawal or other liability incurred
under ERISA by such Person (or, if such Person is the Borrower, the Borrower and
its ERISA Affiliates) to a Multiemployer Plan.
"Debt for Borrowed Money" of any Person shall mean Debt of such Person
of the type described in clauses (i) and (ii) of the definition of "Debt" in
this Section and Debt of such type of another Person which is Guaranteed by such
Person.
"Debtor" shall have the meaning set forth in the Introductory Statement.
"Default" shall mean any condition or event which would, with the
giving of notice or lapse of time or both, become an Event of Default.
"Defaulting Lender" shall mean, at any time, any Lender which shall not
have theretofore made available to the Agent its pro rata portion of any amounts
payable pursuant to Section 8.6 for which payment has been requested more than
45 days prior thereto.
"DIP Agent" shall mean CIBC, as coordinating and collateral agent under
the DIP Credit Agreement.
"DIP Credit Agreement" shall mean that certain Revolving Credit
Agreement, dated as of July 21, 1997, among the Borrower, the DIP Lenders, the
Underwriters, the Fronting Banks and CIBC, as coordinating and collateral agent
for the DIP Lenders, the Fronting Banks and the Underwriters, as amended,
amended and restated, modified or supplemented from time to time.
"DIP Financing Order" shall mean the orders of the Bankruptcy Court
authorizing the Debtor to enter into the DIP Credit Agreement, including orders
filed on July 21, 1997 and August 20, 1997.
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"DIP Lenders" shall have the meaning set forth in the Introductory
Statement.
"DIP Obligations" shall mean (a) the due and punctual payment of
principal of and interest on DIP Revolving Credit Loans (as defined in the DIP
Credit Agreement) and the reimbursement of all amounts drawn under the DIP
Letters of Credit (as defined in the DIP Credit Agreement), and (b) the due and
punctual payment of all other present and future, fixed or contingent, monetary
and performance obligations of the Borrower to the DIP Lenders, the DIP Fronting
Banks (as defined in the DIP Credit Agreement), the Underwriters (as defined in
the DIP Credit Agreement) and the DIP Agent under the DIP Credit Agreement.
"Dollars" and "$" shall mean lawful money of the United States of
America.
"Domestic Lending Office" shall mean initially, as to each Lender, its
office designated on the signature pages to this Agreement, and thereafter, upon
notice to the Borrower and the Agent, such other office of such Lender, if any,
which shall be making or maintaining ABR Loans.
"Effective Date" shall mean the first Business Day after which each of
the conditions set forth in Section 4.1 shall have been satisfied or waived in
accordance with the terms hereof, which Effective Date shall be no later than
November 30, 1999 unless such date shall have been extended in writing by the
Agent and the Existing Majority Term Lenders.
"Eligible Assignee" shall mean (i) a commercial bank having total
assets in excess of $1,500,000,000 and (ii) a finance company, insurance company
or other financial institution or fund, in each case acceptable to the Agent,
which in the ordinary course of business extends credit of the type herein and
has total assets in excess of $250,000,000 and whose becoming an assignee would
not constitute a prohibited transaction under Section 4975 of ERISA.
"Environmental Clean-up Site" shall have the meaning set forth in Section
6.12(d).
"Environmental Law" shall have the meaning set forth in Section 6.12(d).
"Environmental Lien" shall mean a Lien in favor of any Governmental
Authority for (i) any liability under any Environmental Law, or (ii) damages
arising from or costs incurred by such Governmental Authority in response to a
release or threatened release of a Hazardous Substance into the environment.
"Environmental Permit" shall have the meaning set forth in Section 6.12(d).
"Equipment" shall have the meaning assigned to such term in the
Security and Pledge Agreement.
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"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) which is a member of a group of which the Borrower or any
Subsidiary is a member and which is under common control within the meaning of
Section 414(b) or (c) of the Code and the regulations promulgated and rulings
issued thereunder.
"ERISA Event" shall mean (a) a "reportable event" as such term is
described in Section 4043 of ERISA (other than a "reportable event" not subject
to the provision for 30-day notice to the PBGC under 29 C.F.R. 2615), or (b) the
withdrawal of the Borrower, any Subsidiary or any ERISA Affiliate of either of
them from a Multiple Employer Plan or a Single Employer Plan during a Plan year
in which it was a "substantial employer", as such term is defined in Section
4001(a)(2) of ERISA, which would result in any liability to the Borrower, any
Subsidiary or any ERISA Affiliate of either of them, or the incurrence of
liability by the Borrower, any Subsidiary or any ERISA Affiliate of either of
them under Section 4064 of ERISA upon the termination of a Multiple Employer
Plan or a Single Employer Plan, or (c) an event described in Section 4068(f) of
ERISA, or (d) the distribution of a notice of intent to terminate a Plan
pursuant to Section 4041(a)(2) of ERISA or the treatment of a Plan amendment as
a termination under Section 4041 of ERISA where, in either case, such
termination would result in any liability to the Borrower, a Subsidiary or any
ERISA Affiliate of either of them, or (e) the failure by the Borrower, a
Subsidiary or any ERISA Affiliate of either of them to make a payment to a Plan
pursuant to Section 302(f)(1) of ERISA, or (f) the adoption of any amendment to
a Plan requiring the provision of security to such Plan pursuant to Section 307
of ERISA, or (g) the institution of proceedings to terminate a Plan by the PBGC
under Section 4042 of ERISA, or (h) any other event or condition which might
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan.
"Eurocurrency Liabilities" shall have the meaning assigned thereto in
Regulation D issued by the Board, as in effect from time to time.
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
Loans.
"Eurodollar Loan" shall mean any Loan bearing interest at a rate
determined by reference to the Adjusted LIBOR Rate in accordance with the
provisions of Section 2.3(b) and Section 2.4.
"Eurodollar Lending Office" shall mean, initially as to each Lender,
its office, designated on the signature pages to this Agreement or such other
office, branch or Affiliate of such Lender as it may hereafter designate as its
Eurodollar Lending Office by notice to the Borrower and the Agent.
"Event of Default" shall have the meaning set forth in Section 7.1.
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"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Existing Agreements" shall mean the Pre-Petition Credit Agreement, the
DIP Credit Agreement, the Existing Credit Agreement, the Existing Security
Agreement, and all of the agreements and the DIP Financing Order granting Liens
on Property and other assets of the Borrower to the Lenders, and such other
agreements, instruments and documents delivered in connection with any of the
foregoing, as each may have been amended, amended and restated, modified or
supplemented from time to time.
"Existing Cash Management Agreements" shall mean the documentation
evidencing the cash management arrangements between the Existing Cash Management
Bank and the Borrower, as in effect on and immediately prior to the Effective
Date.
"Existing Cash Management Bank" shall mean Bank of America and its
respective Affiliates, if applicable, each in its capacity as the holder of Cash
Management Obligations.
"Existing Credit Agreement" shall have the meaning set forth in the
Introductory Statement.
"Existing Documentary Letters of Credit" shall have the meaning set
forth in the Introductory Statement.
"Existing Effective Date" shall mean the Effective Date of the Existing
Credit Agreement.
"Existing Letters of Credit" shall have the meaning set forth in the
Introductory Statement.
"Existing Loans" shall have the meaning set forth in the Introductory
Statement.
"Existing Majority Term Lenders" shall mean the Majority Term Lenders
as such term is defined in the Existing Credit Agreement.
"Existing Obligations" shall mean all obligations owing by the Borrower
under the Existing Agreements.
"Existing Revolving Lenders" shall have the meaning set forth in the
Introductory Statement.
"Existing Revolving Loans" shall have the meaning set forth in the
Introductory Statement.
"Existing Secured Parties" shall mean the Secured Parties as defined in
the Existing Security Agreement.
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"Existing Security Agreement" shall mean that certain Amended and
Restated Security and Pledge Agreement, dated as of December 2, 1997, by and
between the Borrower and CIBC, as coordinating and collateral agent, for its
benefit and the benefit of the Existing Secured Parties.
"Existing Security Documents" shall mean the Security Documents as
defined in the Existing Credit Agreement.
"Existing Standby Letters of Credit" shall have the meaning set forth
in the Introductory Statement.
"Existing Term Lenders" shall have the meaning set forth in the
Introductory Statement.
"Existing Term Loans" shall have the meaning set forth in the
Introductory Statement.
"Federal Funds Rate" shall mean, 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 which is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Financial Officer" shall mean the Chief Financial Officer, Vice
President Finance or the Treasurer of the Borrower.
"Fortress" shall mean Fortress Investments Group LLC (as
successor-in-interest to UBS in respect of the obligations under the UBS Loan
Agreement and the documents executed in connection therewith) and Fortress'
successors and assigns.
"Fortress Collateral" shall mean the real property listed on Schedule
1.1(b) annexed hereto, together with the improvements, fixtures and
appurtenances relating thereto, which is collateral for the Fortress Real Estate
Financing.
"Fortress Loan Agreement" shall mean the UBS Loan Agreement as assigned
by UBS to Fortress, as the same may be amended, amended and restated,
supplemented or otherwise modified to the extent permitted by this Agreement.
"Fortress Loan Documents" shall mean the Fortress Loan Agreement, each
of the mortgages and deeds of trust delivered with respect to the Fortress
Collateral, and any and all documents, agreements and instruments related
thereto, each as amended, amended and restated, supplemented or otherwise
modified to the extent permitted by this Agreement.
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"Fortress Real Estate Financing" shall mean the financing by Fortress
provided for by the Fortress Loan Agreement and the other Fortress Loan
Documents.
"Fronting Banks" shall mean (i) with respect to Existing Standby
Letters of Credit, CIBC and (ii) with respect to the Existing Documentary
Letters of Credit, U.S. Bank National Association, successor by merger to First
Bank National Association.
"GAAP" shall mean generally accepted accounting principles applied on a
basis consistent with those used in preparing the financial statements referred
to in Section 3.4.
"Governmental Authority" shall mean any Federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality or any court, in each case whether of the United States or
foreign.
"Group" shall mean a "group" for purposes of Section 13(d) of the
Exchange Act.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation (i) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Debt or other obligation (whether arising by
virtue of partnership arrangements, by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for the purpose of
assuring in any other manner the obligee of such Debt or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part); provided, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Hazardous Substance" shall have the meaning set forth in Section 6.12(d).
"Household Bank" shall mean Household Bank (SB), N.A.
"Household Credit Program Documents" shall mean the Merchant Agreement
dated as of August 27, 1999 by and between Household Bank and the Borrower, as
such agreement may be amended, amended and restated, supplemented or otherwise
modified from time to time, together with any agreements entered into by the
Borrower in replacement of such agreement.
"Indemnified Party" shall have the meaning set forth in Section 9.6.
"Insufficiency" shall mean, with respect to any Plan, the amount, if
any, of its unfunded benefit liabilities within the meaning of Section
4001(a)(18) of ERISA.
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"Interest Payment Date" shall mean (i) as to any Eurodollar Loan, the
last calendar day of each month during each Interest Period with respect to such
Eurodollar Loan and the last day of each such Interest Period, and (ii) as to
all ABR Loans, the last calendar day of each month and the date on which any ABR
Loans are refinanced with Eurodollar Loans pursuant to Section 2.6.
"Interest Period" shall mean, as to any Borrowing of Eurodollar Loans
(as a result of a financing), the period commencing on the date of such
Borrowing (as a result of a refinancing) of ABR Loans or on the last day of the
preceding Interest Period applicable to such Borrowing (as a result of a
refinancing) of ABR Loans and ending on the numerically corresponding day (or if
there is no corresponding day, the last day) in the calendar month that is 1, 2,
3 or 6 months thereafter, as the Borrower may elect in the related notice
delivered pursuant to Section 2.6; provided, however, that (i) if any Interest
Period would end on a day which shall not be a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day and (ii) no
Interest Period shall end later than the Maturity Date for the Loans to which
such Interest Period relates.
"Investments" shall have the meaning set forth in Section 6.7.
"Lenders" shall have the meaning set forth in Section 2.1.
"Lender's Percentage" shall mean, as to each Lender, at any time, the
percentage equal to such Lender's share of the aggregate outstanding principal
amount of Term Loans. Each Lender's Percentage on and as of the Effective Date
is set forth on Schedule 1.1(a).
"Lending Office" shall mean, as to each Lender, its Domestic Lending
Office or its Eurodollar Lending Office, as the context may require.
"Lien" shall mean, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind whatsoever in
respect of such asset. For the purposes of this Agreement, the Borrower or any
Subsidiary shall be deemed to own subject to a Lien any asset which it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such asset.
"Loan" or "Loans" shall have the meaning set forth in Section 2.1(a).
"Loan Documents" shall mean this Agreement, the Security Documents, the
Existing Cash Management Agreements, and any other instrument or agreement
executed and delivered in connection herewith, as each may be amended, amended
and restated, supplemented or otherwise modified from time to time.
"Lumberjack" shall mean Lumberjack Stores, Inc.
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"Majority Lenders" shall mean, at any time, Lenders holding Term Loans
representing more than 50% of the aggregate principal amount of such Term Loans
outstanding; provided, that for purposes of this definition, the Term Loans of a
Lender shall be disregarded if and for so long as such Lender shall be a
Defaulting Lender.
"Material Adverse Effect" shall mean (i) with respect to the Borrower
and its Subsidiaries, any materially adverse change in the business, operations,
condition (financial or otherwise), properties, assets or prospects of the
Borrower and its Subsidiaries taken as a whole, or (ii) any fact or circumstance
which, singly or in the aggregate, could reasonably be expected to result in (a)
a materially adverse change described in clause (i) or (b) the inability of the
Borrower or any of its Subsidiaries to perform in any material respect its
obligations hereunder, under the other Loan Documents or under the Congress
Facility Documents.
"Maturity Date" shall mean November 30, 2002, or such earlier date on
which the Loans shall become due in accordance with Section 7.
"Maximum Rate" shall have the meaning set forth in Section 2.4(b).
"Minority Investment" shall mean any Investment consisting of the
acquisition of non-majority ownership interests in any Person.
"ML&B" shall have the meaning set forth in Section 4.1(j).
"Moody's" shall mean Moody's Investors Service, Inc. or if such company
shall cease to issue ratings, another nationally recognized statistical rating
company selected in good faith by mutual agreement of the Agent and the
Borrower.
"Mortgages" shall mean all of the mortgages executed and delivered by
the Borrower to CIBC, as coordinating and collateral agent, for its benefit and
the benefit of the Secured Parties pursuant to and in connection with the
Existing Credit Agreement, together with any mortgages and deeds of trust
executed and delivered by the Borrower to the Agent for its benefit and the
benefit of the Secured Parties after the Effective Date in respect of Available
Property, in each case as amended, amended and restated, supplemented or
otherwise modified from time to time.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower, any Subsidiary or any ERISA
Affiliate is making or accruing an obligation to make contributions, or has
within any of the preceding five plan years made or accrued an obligation to
make contributions.
"Multiple Employer Plan" shall mean an employee benefit plan, other
than a Multiemployer Plan, subject to Title IV of ERISA to which the Borrower,
any Subsidiary or any ERISA Affiliate of the Borrower or any Subsidiary, and
more than one employer other than the Borrower, any
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<PAGE>15
Subsidiary or an ERISA Affiliate of the Borrower or any Subsidiary, is making
or accruing an obligation to make contributions or, in the event that any such
plan has terminated, to which the Borrower, any Subsidiary or any ERISA
Affiliate of the Borrower or any Subsidiary made or accrued an obligation to
make contributions during any of the five plan years preceding the date of
termination of such plan.
"Net Cash Proceeds" shall mean, with respect to any sale, lease,
transfer or other disposition of property or other assets: (a) the cash proceeds
received by the Borrower or any Subsidiary (including, without limitation, all
cash proceeds received by way of (i) deferred payment of principal pursuant to a
note or installment receivable, but only as and when received and (ii) other
assets retained by the Borrower as part of the sales consideration), minus (b)
reasonable and customary brokerage commissions and other reasonable and
customary fees and expenses (including reasonable and customary fees and
expenses of counsel and investment bankers actually paid by the Borrower or such
Subsidiary) related to such financing, sale, lease or other disposition or
issuance, minus (c) payments made to retire Debt (other than the Loans) secured
by such assets being sold or otherwise disposed of where payment of such Debt is
required in connection with such sale or disposition.
"Obligations" shall mean the due and punctual payment of principal of
and interest on the Term Loans and all other present and future, fixed or
contingent, monetary and performance obligations owed to the Term Lenders and
the Agent under the Loan Documents.
"Other Amounts" shall have the meaning set forth in Section 2.4(b).
"Other Taxes" shall have the meaning set forth in Section 2.12(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor agency or entity performing substantially the same functions.
"Payment Letter" shall have the meaning set forth in Section 4.1(d).
"Payment Amount" shall have the meaning set forth in Section 4.1(d).
"Permitted Liens" shall mean (i) Liens imposed by law (other than
Environmental Liens and any Lien imposed by ERISA) for taxes, assessments or
charges of any Governmental Authority for claims not yet due or which are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves or other appropriate provisions are being maintained in
accordance with GAAP; (ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens (other than Environmental
Liens and any Lien imposed by ERISA) imposed by law created in the ordinary
course of business for amounts not yet due or which are being contested in good
faith by appropriate proceedings and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with GAAP; (iii)
Liens (other than any Lien imposed by ERISA) incurred or deposits made in the
ordinary course of
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business (including, without limitation, surety bonds and appeal bonds) in
connection with workers' compensation, unemployment insurance and other types
of social security benefits or to secure the performance of tenders, bids,
leases, contracts (other than for the repayment of Debt), statutory obligations
and other similar obligations or arising as a result of progress payments under
government contracts; (iv) easements (including, without limitation, reciprocal
easement agreements and utility agreements), rights-of-way, covenants,
consents, reservations, encroachments, variations and zoning and other
restrictions, charges or encumbrances (whether or not recorded), which do
not interfere materially with the ordinary conduct of the business of the
Borrower and which do not materially detract from the value of the property
to which they attach or materially impair the use thereof to the Borrower;
(v) purchase money Liens granted by the Borrower or its Subsidiaries upon
Inventory of the Borrower and its Subsidiaries securing the purchase price
therefor not to exceed $1,000,000 in unpaid purchase price in the aggregate for
the Borrower and its Subsidiaries at any one time and purchase money Liens upon
or in any other property acquired or held in the ordinary course of business to
secure the purchase price of such property or to secure Debt permitted by
Section 6.2(vi) solely for the purpose of financing the acquisition of such
property and Capitalized Leases permitted by Section 6.2 and true leases on
account of which financing statements have been filed; provided, that the
aggregate Debt secured by all such purchase money Liens (other than Capitalized
Leases) shall not exceed in the aggregate for the Borrower and its Subsidiaries
$2,000,000 outstanding at any time; (vi) judgment Liens, but only to the extent
that the related judgment does not constitute an Event of Default under Section
7.1(i); and (vii) extensions, renewals or replacements of any Lien referred to
in paragraphs (i) through (v) above, including in connection with the incurrence
of Permitted Refinancing Debt; provided, that the principal amount of the
obligation secured thereby is not increased and that any such extension, renewal
or replacement Lien is limited to the property originally encumbered thereby.
"Permitted Refinancing Debt" shall mean Debt incurred by the Borrower
to refinance the Congress Financing (or a portion thereof) or the Fortress Real
Estate Financing (or a portion thereof) in a principal amount not less than the
principal amount of the obligations (or the portion thereof) being refinanced;
provided, that (i) the principal amount of such Debt is not increased from its
then existing amount and such Debt is not secured by any assets of the Borrower
other than the assets securing the Debt being refinanced and, in the case of a
refinancing of less than the entire outstanding principal amount of the Fortress
Real Estate Financing or the Congress Facility, as the case may be, such Debt is
not secured by any assets of the Borrower not specifically allocated to the
portion of the Fortress Real Estate Financing or the Congress Financing being
refinanced and, in all cases, any Liens on such assets in favor of the Agent,
for its benefit and the benefit of the other Secured Parties, remain in full
force and effect and (ii) such Debt is incurred on terms and conditions
(including financial and other covenants and events of defaults) and with a
weighted average tenor which, taken as a whole, would be no less favorable to
the Borrower than the terms, conditions and tenor of the Debt being refinanced
as in effect on the date hereof.
"Person" shall mean any natural person, corporation, division of a
corporation, limited liability company, limited liability partnership,
partnership, trust, joint venture, association,
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company, estate, unincorporated organization or government or any agency or
political subdivision thereof.
"Plan" shall mean an employee benefit plan (other than a Multiemployer
Plan), including any Multiple Employer Plan, which is or, in the event that any
such plan has been terminated within five years after the occurrence of a
transaction described in Section 4069 of ERISA, was maintained for employees of
the Borrower, any Subsidiary or any ERISA Affiliate of the Borrower or any
Subsidiary and is subject to Title IV of ERISA.
"Plan of Reorganization" shall mean that certain First Amended Plan of
Reorganization, filed by the Debtor in the Case on September 5, 1997, as
modified on October 9, 1997 and as further modified in the Confirmation Order
and on the record at the hearing with respect thereto, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof as in effect on the date hereof.
"Pre-Petition Agent" shall mean CIBC, as administrative and collateral
agent for the Pre-Petition Lenders, the letter of credit bank and the co-agents
party to the Pre-Petition Credit Agreement.
"Pre-Petition Credit Agreement" shall mean that certain Amended and
Restated Credit Agreement, dated as of October 3, 1996, among Payless Cashways,
Inc., the Pre-Petition Lenders, the Pre-Petition Agent, the letter of credit
bank and the co-agents named therein, as amended, amended and restated,
supplemented or otherwise modified.
"Pre-Petition Lenders" shall mean the lenders from time to time party
to the Pre-Petition Credit Agreement.
"Pre-Petition Obligations" shall mean the loans made by the
Pre-Petition Lenders under the Pre-Petition Credit Agreement and all other
obligations of the Debtor to the Pre-Petition Agent and the Pre-Petition Lenders
pursuant to the Pre-Petition Credit Agreement and all documents and agreements
executed in connection therewith.
"Property" shall have the meaning set forth in Section 6.12(d).
"Register" shall have the meaning set forth in Section 9.3(d).
"Release" shall have the meaning set forth in Section 6.12(d).
"Remedial Work" shall have the meaning set forth in Section 6.12(c).
"Requirement of Law" shall mean, as to any Person, the articles or
certificate of incorporation and by-laws or other organizational or governing
documents of such Person, and any
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law, treaty, rule or regulation or determination of an arbitrator or a
court or other Governmental Authority, in each case applicable to or binding
upon such Person or any of its property or to which such Person or any of its
property is subject.
"Restricted Payments" shall mean (i) any dividend or other distribution
in cash or in kind on any shares of the Borrower's capital stock, (ii) any
payment in cash or in kind (including, without limitation, the setting aside of
assets or the deposit of funds therefor) on account of the purchase, redemption,
retirement or acquisition of (a) any shares of the Borrower's capital stock or
(b) any option, warrant or other right to acquire shares of the Borrower's
capital stock, (iii) any issuance of any capital stock (or any options,
warrants, rights or other equity securities relating to any capital stock)
except pursuant to the Plan of Reorganization or as contemplated by Section 9.2
thereof, (iv) any payment or prepayment of principal or interest on account of
Debt for Borrowed Money (other than the Loans) or any purchase, defeasance,
redemption, retirement or acquisition of any principal or interest on such Debt
or Obligations (including, without limitation, the setting aside of assets or
the deposit of funds therefor) or (v) any payment of management or consulting
fees to an Affiliate of the Borrower.
"S&P" shall mean Standard & Poor's Ratings Group (a division of
McGraw-Hill, Inc.) or, if such company shall cease to issue ratings, another
nationally recognized statistical rating company selected in good faith by
mutual agreement of the Agent and the Borrower.
"Secured Obligations" shall mean the Obligations, the Cash Management
Obligations, if any, and all other obligations owing to the Secured Parties (or
any of them) in their capacities as such.
"Secured Parties" shall mean the Agent, the Lenders, and the Existing
Cash Management Bank, and each of their respective successors and assigns.
"Security and Pledge Agreement" shall have the meaning set forth in
Section 4.1(f).
"Security Documents" shall mean the Security and Pledge Agreement, all
Subsidiary Security Agreements, all Subsidiary Guarantees, the Mortgages and all
other security agreements, mortgages, pledges and assignments at any time
delivered by the Borrower or any of the Subsidiaries to the Agent pursuant to
the terms of the Existing Agreements or this Agreement, each as amended, amended
and restated, supplemented or otherwise modified from time to time.
"Single Employer Plan" shall mean a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the
Borrower or an ERISA Affiliate or (ii) was also maintained and in respect of
which the Borrower could have liability under Section 4069 of ERISA in the event
such Plan has been or were to be terminated.
"Statutory Reserves" shall mean on any date the percentage (expressed
as a decimal) established by the Board and any other banking authority which is
the then stated maximum rate for
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all reserves (including, but not limited to, any emergency, supplemental or
other marginal reserve requirements) applicable to any member bank of the
Federal Reserve System in respect of Eurocurrency Liabilities (or any successor
category of liabilities under Regulation D issued by the Board, as in effect
from time to time). Such reserve percentages shall include, without limitation,
those imposed pursuant to said Regulation. The Statutory Reserves shall be
adjusted automatically on and as of the effective date of any change in such
percentage.
"Subsidiary" shall mean, with respect to any Person (herein referred to
as the "parent"), any corporation, association or other business entity (whether
now existing or hereafter organized) of which at least a majority of the
securities or other ownership interests having ordinary voting power for the
election of directors is, at the time as of which any determination is being
made, owned or controlled by the parent or one or more subsidiaries of the
parent or by the parent and one or more subsidiaries of the parent.
"Subsidiary Guarantee" shall mean the guarantee, substantially in the
form of Exhibit B hereto, to be entered into between each Subsidiary (whether
now existing or hereafter formed, purchased or otherwise acquired) and the Agent
for the benefit of the Secured Parties, as the same may be amended, amended and
restated, supplemented or otherwise modified from time to time.
"Subsidiary Security Agreement" shall mean the security agreement,
substantially in the form of Exhibit C hereto, to be made by each Subsidiary
(whether now existing or hereafter formed, purchased or otherwise acquired) in
favor of the Agent, for the benefit of the Secured Parties, as the same may be
amended, amended and restated, supplemented or otherwise modified from time to
time.
"Survey" shall mean a current survey of the real property covered by
any Mortgage certified to the Agent and the title insurance company insuring the
Mortgage and in form and substance satisfactory to the Agent and the title
insurance company, or in lieu thereof, a copy of the existing survey and, if
required by the title insurance company insuring such Mortgage, an affidavit in
form and substance satisfactory to such title company to remove any exceptions
in the Title Policy with respect to the absence of a current certified survey.
"Taxes" shall have the meaning set forth in Section 2.12.
"Temporary Cash Investments" shall mean any Investment in (i) direct
obligations of the United States or any agency thereof, or obligations
guaranteed by the United States or any agency thereof, in each case maturing
within one year from the date of the acquisition thereof by the Borrower or a
Subsidiary, or (ii) (x) commercial paper rated in the highest grade (A1+/P1 or
its equivalent) by S&P or Moody's or (y) time deposits with, including
certificates of deposit issued by, any office located in the United States of
any bank or trust company that has capital, surplus and undivided profits
aggregating at least U.S. $500,000,000, and whose long term Debt is rated A or
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higher by S&P and A2 or higher by Moody's, in each case maturing within 180 days
from the date of acquisition thereof by the Borrower or a Subsidiary.
"Term Lender" and "Term Lenders" shall have the meanings set forth in
Section 2.1(a).
"Term Loans" shall have the meaning set forth in Section 2.1(a).
"Title Policy" shall mean a mortgage policy of title insurance (ALTA or
the equivalent) insuring the first or second priority Lien of a Mortgage (as the
case may be) in favor of the Agent, in form and substance and issued by title
insurers satisfactory to the Agent and containing no exceptions to coverage
other than matters satisfactory to the Agent in its judgment reasonably
exercised.
"Transferee" shall have the meaning set forth in Section 2.12.
"Type" when used in respect of any Loan or Borrowing shall refer to the
rate of interest by reference to which interest on such Loan or on the Loans
comprising such Borrowing is determined. For purposes hereof, "rate" shall mean
the Adjusted LIBOR Rate and the Alternate Base Rate.
"UBS" shall mean UBS Mortgage Finance, Inc.
"UBS Loan Agreement" shall mean (i) that certain Amended and Restated
Loan Agreement, dated as of December 2, 1997, between the Borrower and UBS, as
heretofore amended, and (ii) that certain Loan Agreement, dated as of December
2, 1997, among the Borrower, the banks and financial institutions party thereto
(the "Synthetic Lease Banks") and BA Leasing and Capital Corporation, as agent
for the Synthetic Lease Banks.
"UCC" shall mean the Uniform Commercial Code as in effect at the
relevant time in the relevant jurisdiction.
"Vehicles" shall mean all cars, trucks, trailers, construction and
earth moving equipment and other vehicles covered by a certificate of title law
of any state or other jurisdiction and, in any event, shall include, without
limitation, the vehicles listed on Schedule 1 to the Security and Pledge
Agreement and any Subsidiary Security Agreements and all tires and other
appurtenances to any of the foregoing.
"Voting Shares" shall mean, with respect to any Person, shares of
capital stock of any class or classes (however designated) having general voting
power for the election of the board of directors, managers or trustees of such
Person (irrespective of whether at the time capital stock of any other class or
classes shall have or might have voting power by reason of the happening of any
contingency).
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"Withdrawal Liability" shall have the meaning specified under Part I of
Subtitle E of Title IV of ERISA.
Section 1.2. Terms Generally. The definitions in Section 1.1 shall apply equally
to both the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. All references herein to Sections, Exhibits and Schedules shall be
deemed references to Sections of, and Exhibits and Schedules to, this Agreement
unless the context shall otherwise require. Except as otherwise expressly
provided herein, all accounting or financial terms used herein shall be
construed in accordance with GAAP, as in effect from time to time.
SECTION 2. AMOUNT AND TERMS OF CREDIT.
Section 2.1. Assumption and Restructuring of Secured Obligations;
Amortization of Term Loans; etc.
(a) Subject to the terms and conditions and relying upon the
representations, warranties and covenants set forth herein, each of the parties
agrees that, as of the Effective Date, the Existing Credit Agreement is hereby
amended and restated and (i) (A) all outstanding Existing Revolving Loans
extended by the Existing Revolving Lenders pursuant to the Existing Credit
Agreement shall be repaid in full, (B) all accrued interest, fees, costs,
expenses and other monetary obligations relating to the Existing Revolving Loans
shall be repaid in full, (C) all Revolving Obligations (as defined in the
Existing Credit Agreement) under the Existing Credit Agreement (except for the
Borrower's obligations (1) in respect of the Existing Letters of Credit and (2)
as set forth in Sections 9.14 of the Existing Credit Agreement and in this
Agreement which shall remain in full force and effect) shall be deemed satisfied
in full and (D) the Revolving Credit Commitments shall be terminated and
extinguished, (ii) the Back-to-Back Letters of Credit shall be issued and (iii)
the Existing Term Loans extended by the Existing Term Lenders pursuant to the
Existing Credit Agreement shall be permanently reduced by $92,000,000 (each
Existing Term Lender, after the Effective Date, being hereinafter referred to as
a "Term Lender" or a "Lender" and, collectively, the "Term Lenders" or the
"Lenders" and such portion of the Existing Term Loans that shall remain
outstanding, being hereinafter referred to as the "Term Loans" or the "Loans").
The principal amount of Term Loans attributable to each Term Lender shall be in
an amount as is set forth opposite its name on Schedule 1.1(a) annexed hereto.
The Borrower confirms and agrees that it is truly and justly indebted to the
Term Lenders in the aggregate principal amount of $109,415,478.98, without
defense, offset or counterclaim of any kind or nature whatsoever. Principal
amounts outstanding on the Effective Date with respect to Existing Term Loans
(after reduction for principal amounts paid on the Effective Date) shall be
deemed to be principal amounts outstanding with respect to the Term Loans, as of
the Effective Date.
(b) The outstanding principal amount of Term Loans shall be payable in
semi-annual installments of $5,000,000 each on September 15 and May 15 of each
year, commencing
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May 15, 2001. To the extent not previously paid, all Term Loans shall be due
and payable on the Maturity Date. Each principal payment on the Term Loans
pursuant to this Section shall be accompanied by accrued interest on the
principal amount paid to but excluding the date of payment. Without limiting its
obligations under the first sentence of this Section or Section 2.7, the
Borrower unconditionally promises to pay the unpaid principal amount of the Term
Loans on the Maturity Date.
(c) Any amounts received by the Agent in connection with this Agreement
(other than amounts (i) to which the Agent is entitled pursuant to Sections 8.6,
9.5 and 9.6 and (ii) to which the Fronting Banks are entitled pursuant to
Section 2.2(f)) shall be credited to the relevant Term Lenders, as promptly as
practicable after collection by the Agent, in immediately available funds either
by wire transfer or deposit in that Term Lender's correspondent account with the
Agent, as such Term Lender and the Agent shall from time to time agree.
(d) Subject to the terms and conditions and relying upon the
representations, warranties and covenants set forth herein, the Existing Cash
Management Bank and the Borrower agree that (i) the Borrower shall be obligated
to promptly reimburse the Existing Cash Management Bank upon its submission of
an invoice to the Borrower for all Cash Management Obligations and (ii) the
Existing Cash Management Bank shall continue to have its Cash Management
Obligations secured by the CIBC Collateral to the same extent to which the Cash
Management Obligations were secured by such CIBC Collateral prior to the
Effective Date.
(e) The Borrower acknowledges and agrees that (i) the Existing Security
Documents remain in full force and effect with respect to the CIBC Collateral
and (ii) the Liens on the CIBC Collateral securing payment of the Existing
Obligations are in all respects continuing and in full force and effect and
secure the payment of the Existing Obligations and will, following the Effective
Date, secure, among other things, the payment of the Obligations.
Section 2.2. Repayment of Term Loans; Evidence of Debt.
(a) The Borrower hereby unconditionally promises to pay to the Agent for
the account of each Term Lender the then unpaid principal amount of each Term
Loan on the Maturity Date.
(b) Each Term Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to such Term
Lender resulting from each Term Loan made by such Term Lender, including the
amounts of principal and interest payable and paid to such Term Lender from time
to time hereunder.
(c) The Agent shall maintain accounts in which it shall record (i) the
amount of each Term Loan made hereunder, the Type thereof and the Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower
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to each Term Lender hereunder and (iii) the amount of any sum received by the
Agent hereunder for the account of the Term Lenders and each Term Lender's
share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph (b)
or (c) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein; provided that the failure of any
Term Lender or the Agent to maintain such accounts or any error therein shall
not in any manner affect the obligation of the Borrower to repay the Term Loans
in accordance with the terms of this Agreement.
(e) Any Term Lender may request that Term Loans made by it be evidenced by
a promissory note. In such event, the Borrower shall prepare, execute and
deliver to such Term Lender a promissory note payable to the order of such Term
Lender (or, if requested by such Term Lender, to such Term Lender and its
registered assigns) and in form and substance satisfactory to the Term Lender
and approved by the Agent. Thereafter, the Term Loans evidenced by such
promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.3) be represented by one or more promissory
notes in such form payable to the order of the payee named therein.
(f) (i) The Borrower hereby agrees to use its best efforts to replace the
Existing Letters of Credit as soon as practicable.
(ii) Each of the Fronting Banks is authorized to draw upon its
respective Back-to-Back Letter of Credit in accordance with the terms thereof
in order to reimburse itself for each and every draw (together with applicable
fees and expenses) under any Existing Letter of Credit without any notice
or action by any Person, under all circumstances, including, without
limitation: (u) any lack of validity or enforceability of any Existing
Letters of Credit; (v) the existence of any claim, setoff, defense or other
right which the Borrower may have at any time against a beneficiary of any of
the Existing Letters of Credit or against the relevant Fronting Bank, whether
in connection with this Agreement, the transactions contemplated herein
or any unrelated transaction; (w) payment by the relevant Fronting Bank against
any draft, demand, certificate or other document presented under any of the
Existing Letters of Credit which proves to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect; (x) payment by the relevant Fronting Bank of any of the Existing
Letters of Credit against presentation of a demand, draft or certificate or
other document which does not comply with the terms of such Existing Letters of
Credit(including, without limitation, payment by the Fronting Bank in accordance
with its usual practices and procedures, subsequent to the expiry date of an
Existing Letter of Credit, as long as the Fronting Bank has obtained the
consent of the Borrower; (y) any other circumstance or happening whatsoever,
which is similar to any of the foregoing; or (z) the fact that any Event of
Default shall have occurred and be continuing.
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(iii) Upon the issuance and delivery of the Back-to-Back Letters of Credit,
the Existing Revolving Lenders shall have no further obligations with respect to
the Existing Letters of Credit.
(iv) The Back-to-Back Letters of Credit are exclusively for the benefit of
the Fronting Banks and shall not be subject to the rights of any other Person
and shall remain in place for so long as any Existing Letter of Credit remains
outstanding (including all renewals or extensions thereof).
(v) The Borrower agrees to pay (A) to each Fronting Bank, such fees and
charges in connection with the processing of the Existing Letters of Credit as
are customarily imposed by such Fronting Bank from time to time in connection
with letter of credit transactions in the amounts, at the times and in such
manner as shall be specified by such Fronting Bank in accordance with its
judgment reasonably exercised, (B) to CIBC, as issuer of the Existing Standby
Letters of Credit, for its account, a fronting fee in respect of each Existing
Standby Letter of Credit, for the period from and including the date of issuance
of such Existing Standby Letter of Credit to and including the date of
termination of such Existing Standby Letter of Credit, computed at a rate of
0.125% per annum on the daily average of the aggregate undrawn stated amount of
all outstanding Existing Standby Letters of Credit; provided, however, that,
such rate shall be computed at a rate of 0.250% per annum on the daily average
of the aggregate undrawn stated amount of all outstanding Existing Standby
Letters of Credit if any Existing Standby Letters of Credit are outstanding on
or after February 29, 2000 and (C) to U.S. Bank National Association, as issuer
of the Existing Documentary Letters of Credit, for its account, a fronting fee
in respect of Existing Documentary Letters of Credit computed at a rate to be
determined by such Fronting Bank from time to time in its judgment reasonably
exercised.
All fees described above shall be payable to the Fronting Banks at times to be
determined by the relevant Fronting Bank in its judgment reasonably exercised.
All fees shall be paid in immediately available funds. Once paid, none of the
fees shall be refundable under any circumstances.
Section 2.3. Interest on Loans.
(a) Subject to the provisions of subsection (c) below and Section 2.4, each
Term Loan which is an ABR Loan shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 360 days) at a rate per annum equal
to the Alternate Base Rate plus 1-1/2%.
(b) Subject to the provisions of subsection (c) below and Section 2.4, each
Term Loan which is a Eurodollar Loan shall bear interest (computed on the basis
of the actual number of days elapsed over a year of 360 days) at a rate per
annum equal, during each Interest Period applicable thereto, to the Adjusted
LIBOR Rate for such Interest Period in effect for such Term Loan plus 2-1/2%.
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(c) Subject to Section 2.4, if the Borrower fails to reduce the principal
amount of the Term Loans in an aggregate amount of no less than $10,000,000 by
December 31, 2000 with the Net Cash Proceeds from the sale, refinancing or
sale-leaseback of any Property of the type described in item (i)(B) of the
definition of CIBC Collateral (and which is permitted under this Agreement),
then, from and after January 1, 2001 (i) each Term Loan which is an ABR Loan
shall bear interest at a rate per annum (computed on the basis of the actual
number of days elapsed over a year of 360 days) equal to the Alternate Base Rate
plus 1-3/4%; and (ii) each Term Loan which is a Eurodollar Loan shall bear
interest at a rate per annum (computed on the basis of the actual number of days
elapsed over a year of 360 days) equal, during each Interest Period applicable
thereto, to the Adjusted LIBOR Rate for such Interest Period in effect for such
Term Loan plus 2-3/4%.
(d) Accrued interest on all Terms Loans shall be payable in arrears on each
Interest Payment Date applicable thereto, on the Maturity Date, after the
Maturity Date on demand, and upon any repayment or prepayment thereof (on the
amount prepaid).
Section 2.4. Default Interest.
(a) If the Borrower shall default in the payment of the principal of or
interest on any Term Loan or in the payment of any other amount becoming due
hereunder, whether at stated maturity, by acceleration or otherwise or, if any
such amount shall be outstanding at the time of the occurrence of any Event of
Default specified in Section 7.1(e) or (f), the Borrower shall pay interest, to
the extent permitted by law, on such defaulted amount up to (but not including)
the date of actual payment (after as well as before judgment) at a rate per
annum (computed on the basis of the actual number of days elapsed over a year of
360 days) equal to (i) in the case of (A) Term Loans which are ABR Loans, and
(B) all other amounts due hereunder, the Alternate Base Rate plus 3-1/2% and
(ii) in the case of Term Loans which are Eurodollar Loans, the Adjusted LIBOR
Rate in effect for such Term Loans plus 4-1/2%; provided, that if the Borrower
shall have failed to reduce the principal amount of the Term Loans in an
aggregate amount of not less than $10,000,000 by December 31, 2000 with the Net
Cash Proceeds from the sale, refinancing or sale-leaseback of any Property of
the type described in item (i)(B) of the definition of CIBC Collateral (and
which is permitted under this Agreement), then, from and after January 1, 2001,
the Borrower shall pay interest, to the extent permitted by law, on such
defaulted amount up to (but not including) the date of actual payment (after as
well as before judgment) at a rate per annum (computed on the basis of the
actual number of days elapsed over a year of 360 days) equal to (iii) in the
case of (A) Term Loans which are ABR Loans, and (B) all other amounts due
hereunder, the Alternate Base Rate plus 3-3/4% and (iv) in the case of Term
Loans which are Eurodollar Loans, the Adjusted LIBOR Rate in effect for such
Term Loans plus 4-3/4%.
(b) Notwithstanding anything herein to the contrary, if at any time the
applicable interest rate, together with all fees and charges which are treated
as interest under applicable law (collectively, the "Other Amounts"), as
provided for herein or in any other document executed in
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connection herewith, or otherwise contracted for, charged, received, taken
or reserved by any Term Lender, shall exceed the maximum lawful rate (the
"Maximum Rate") which may be contracted for, charged, taken, received or
reserved by such Term Lender in accordance with applicable law, the rate of
interest payable to such Term Lender, together with all Other Amounts payable
to such Term Lender, shall be limited to the Maximum Rate.
Section 2.5. Alternate Rate of Interest. In the event, and on each occasion,
that on or prior to the first day of any Interest Period for a Eurodollar Loan,
the Agent shall have determined (which determination shall be conclusive and
binding upon the Borrower absent manifest error) that reasonable means do not
exist for ascertaining the applicable Adjusted LIBOR Rate, the Agent shall, as
soon as practicable thereafter, give written or telegraphic notice of such
determination to the Borrower and the Lenders, and any request by the Borrower
for a Borrowing of Eurodollar Loans (including pursuant to a refinancing with
Eurodollar Loans) pursuant to Section 2.6 shall be deemed a request for a
Borrowing of ABR Loans. After such notice shall have been given and until the
circumstances giving rise to such notice no longer exist, each request for a
Borrowing of Eurodollar Loans shall be deemed to be a request for a Borrowing of
ABR Loans.
Section 2.6. Refinancing of Loans. Except as contemplated by Section 2.4, Loans
shall be either ABR Loans or Eurodollar Loans as the Borrower may request
subject to and in accordance with this Section; provided, that all Term Loans
made pursuant to the same Borrowing shall, unless otherwise specifically
provided herein, be Loans of the same Type. With respect to the conversion of
any Term Loans, each Term Lender may convert any Term Loans with respect to any
Eurodollar Loan or ABR Term Loan by causing any Lending Office of such Term
Lender to convert such Term Loan; provided, that any such use of a Lending
Office shall not affect the obligation of the Borrower to repay such Term Loan
in accordance with the terms hereof. Each Term Lender shall, subject to its
overall policy considerations, use reasonable efforts (but shall not be
obligated) to select a Lending Office which will not result in the payment of
increased costs by the Borrower pursuant to Section 2.9. Subject to the other
provisions of this Section, Borrowings of Loans of more than one Type may be
incurred at the same time; provided, that no more than five (5) Borrowings of
Eurodollar Loans may be outstanding at any time. The Borrower shall have the
right, at any time, on three Business Days prior irrevocable notice to the
Agent, substantially in the form of Exhibit E hereto (which notice, to be
effective, must be completed and received by the Agent not later than 12:00
noon, New York City time, on the third Business Day preceding the date of any
refinancing), (x) to refinance any outstanding Borrowing or Borrowings of Loans
of one Type (or a portion thereof) with a Borrowing of Loans of the other Type
or (y) to continue an outstanding Borrowing of Eurodollar Loans for an
additional Interest Period, subject to the following:
(a) as a condition to the refinancing of ABR Loans with Eurodollar Loans
and to the continuation of Eurodollar Loans for an additional Interest Period,
(i) no Default or Event of Default shall have occurred and be continuing at the
time of such refinancing or continuation and (ii) at the time of such
refinancing or continuation, all representations and warranties contained in
this Agreement and the other Loan Documents shall be true and correct in all
material respects;
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(b) if less than a full Borrowing of the Loans shall be refinanced, such
refinancing shall be made pro rata among the Lenders in accordance with the
respective principal amounts of the Loans comprising such Borrowing held by such
Lenders immediately prior to such refinancing;
(c) the aggregate principal amount of Loans being refinanced shall be at
least $1,000,000; provided, that no partial refinancing of a Borrowing of
Eurodollar Loans shall result in the Eurodollar Loans remaining outstanding
pursuant to such Borrowing being less than $5,000,000 in aggregate principal
amount;
(d) each Lender shall effect each refinancing by applying the proceeds of
its new Eurodollar Loan or ABR Loan, as the case may be, to its Loan being
refinanced;
(e) the Interest Period with respect to a Borrowing of Eurodollar Loans
effected by a refinancing or in respect to the Borrowing of Eurodollar Loans
being continued as Eurodollar Loans shall commence on the date of refinancing or
the expiration of the current Interest Period applicable to such continuation of
Eurodollar Loans, as the case may be; and
(f) a Borrowing of Eurodollar Loans may be refinanced only on the last day
of an Interest Period applicable thereto.
In the event that the Borrower shall not give notice to refinance any Borrowing
of Eurodollar Loans, or to continue such Borrowing as Eurodollar Loans, or shall
not be entitled to refinance or continue such Borrowing as Eurodollar Loans, in
each case as provided above, such Borrowing shall automatically be refinanced
with a Borrowing of ABR Loans at the expiration of the then-current Interest
Period. The Agent shall, after it receives notice from the Borrower, promptly
give each Lender notice of any refinancing, in whole or part, of any Loan made
by such Lender.
Section 2.7. Mandatory Prepayments.
(a) Unless otherwise provided herein, upon receipt by the Borrower of any
Net Cash Proceeds from the sale, lease or other disposition (including as a
result of Condemnation (as defined in the Mortgages)) of any CIBC Collateral
(other than the sale, lease or other disposition of assets subject to the Liens
granted to Fortress pursuant to the Fortress Loan Documents to the extent that
the Net Cash Proceeds thereof are applied solely to repay the Fortress Real
Estate Financing), then 100% of such Net Cash Proceeds shall be immediately paid
to the Agent for the account of the Lenders, and applied as provided in Section
2.7(d); provided, that in the case of any fiscal year, the provisions of this
subsection (a) shall be applicable to the Net Cash Proceeds from the sale(s) of
Equipment and Vehicles which constitute CIBC Collateral only if and to the
extent that the aggregate amount of the Net Cash Proceeds from such sale(s)
received in such fiscal year exceeds $1,000,000.
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(b) The Borrower shall, from time to time until payment in full of the Term
Loans and the termination of this Agreement, within 10 days following the
receipt by the Borrower (or by the Agent as loss payee) of any payment of
proceeds of any insurance (other than business interruption insurance) required
to be maintained pursuant to this Agreement on account of each separate loss,
damage or injury in excess of $1,000,000 to any tangible property of the
Borrower or any of its Subsidiaries, to the extent such property constitutes
CIBC Collateral (unless no Default or Event of Default shall have occurred and
be continuing and such proceeds (or any portion thereof) shall have been
expended or irrevocably committed by the Borrower to repair or replace such
property within 24 months of such loss, damage or injury and the Borrower shall
have furnished to the Agent evidence satisfactory to the Agent of such
expenditure or commitment and shall have certified to the Agent that such
proceeds (or such proceeds together with other funds available to the Borrower)
are sufficient to repair or replace such property, pending which the Agent shall
hold such proceeds), apply or, to the extent the Agent is loss payee under any
insurance policy, irrevocably direct the Agent to apply, an amount equal to 100%
(or such lesser percentage which represents that portion of such proceeds not
expended or committed pursuant to the immediately preceding parenthetical
phrase) of such insurance proceeds as provided in Section 2.7(d); provided, that
if an Event of Default shall have occurred and be continuing, all proceeds of
insurance required to be maintained pursuant to this Agreement relating to the
CIBC Collateral which would otherwise be payable to the Borrower shall be paid
to the Agent and held or applied pursuant to Section 7.2; provided, however,
that with respect to tangible property subject to any Lien permitted under this
Agreement (including, without limitation, any Congress Financial Collateral), no
such prepayment or reduction shall be required to the extent that this Section
would require an application of insurance proceeds that would violate or breach
any of the provisions of the instruments or documents under which such Lien
arises or which governs the application of proceeds.
(c) If the Borrower incurs any Permitted Refinancing Debt with respect to
the Fortress Real Estate Financing, the Borrower shall, not later than the
second Business Day after the incurrence thereof, pay to the Agent an amount
equal to the excess, if any, of the Net Cash Proceeds of such Permitted
Refinancing Debt over the aggregate amount of the Debt so refinanced, which
excess Net Cash Proceeds shall be applied as provided in Section 2.7(d).
(d) If, contemporaneously with the payment of any amounts required under
this Section 2.7, no Default or Event of Default shall have occurred and be
continuing, the amounts paid under this Section shall be applied to the
prepayment of the principal of the Term Loans in the inverse order of maturity.
If a Default or Event of Default shall have occurred and be continuing, then the
amounts paid under this Section shall be applied in accordance with Section 7.2.
(e) Each prepayment of the Term Loans pursuant to this Section shall be
accompanied by payment of accrued and unpaid interest on the amount prepaid to
the date of prepayment and any amounts payable pursuant to Section 2.8.
Section 2.8. Optional Prepayment of Loans; Reimbursement of Lenders.
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(a) The Borrower shall have the right at any time and from time to time to
prepay any Term Loans, in whole or in part, (x) with respect to Eurodollar
Loans, upon at least three Business Days' prior written, telex or facsimile
notice to the Agent and (y) with respect to ABR Loans on the same Business Day
if written, telex or facsimile notice is received by the Agent prior to 12:00
noon, New York City time, and thereafter upon at least one Business Days prior
written, telex or facsimile notice to the Agent; provided, that (i) with respect
to Eurodollar Loans, each such partial prepayment shall be in integral multiples
of $5,000,000, (ii) with respect to ABR Loans, each such partial prepayment
shall be in integral multiples of $1,000,000, (iii) no prepayment of Eurodollar
Loans shall be permitted pursuant to this Section other than on the last day of
an Interest Period applicable thereto unless the Borrower pays breakage costs as
provided in Section 2.8(b)(i), and (iv) no partial prepayment of a Borrowing of
Eurodollar Loans shall result in the aggregate principal amount of the
Eurodollar Loans remaining outstanding pursuant to such Borrowing being less
than $5,000,000. Each notice of prepayment shall specify the prepayment date,
the principal amount of the Loans to be prepaid (and, in the case of Eurodollar
Loans, the Borrowing or Borrowings pursuant to which made), shall be irrevocable
and shall commit the Borrower to prepay such Loan by the amount and on the date
stated therein. The Agent shall, promptly after receiving notice from the
Borrower hereunder, notify each Lender of the principal amount of the Term Loans
held by such Lender which are to be prepaid, the prepayment date and the manner
of application of the prepayment.
(b) The Borrower shall reimburse each Lender on demand for any loss
incurred or to be incurred by it in the reemployment of the funds released
resulting from any prepayment (for any reason whatsoever, including, without
limitation, refinancing with ABR Loans) of any Eurodollar Loan required or
permitted under this Agreement, if such Term Loan is prepaid other than on the
last day of the Interest Period for such Term Loan. Such loss shall be the
amount as reasonably determined by such Lender as the excess, if any, of (A) the
amount of interest which would have accrued to such Lender on the amount so paid
or not borrowed at a rate of interest equal to the Adjusted LIBOR Rate for such
Term Loan, for the period from the date of such payment or failure to borrow to
the last day in the case of a payment or refinancing with ABR Loans other than
on the last day of the Interest Period for such Term Loan, of the then current
Interest Period for such Term Loan, over (B) the amount of interest which would
have accrued to such Lender on such amount by placing such amount on deposit for
a comparable period with leading banks in the London interbank market. Each Term
Lender shall deliver to the Borrower from time to time one or more certificates
setting forth the amount of such loss as determined by such Lender (which shall
be conclusive absent manifest error).
(c) In the event the Borrower fails to prepay any Term Loan on the date
specified in any prepayment notice delivered pursuant to Section 2.8(a), the
Borrower on demand by any Term Lender shall pay to the Agent for the account of
such Lender any amounts required to compensate such Lender for any loss incurred
by such Lender as a result of such failure to prepay, including, without
limitation, any loss, cost or expenses incurred by reason of the acquisition of
deposits or other funds by such Lender to fulfill deposit obligations incurred
in anticipation of such prepayment,
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but without duplication of any amounts paid under Section 2.8(b). Each Lender
shall deliver to the Borrower from time to time one or more certificates
setting forth the amount of such loss as determined by such Lender (which
shall be conclusive absent manifest error).
(d) Any partial prepayment of the Term Loans by the Borrower pursuant to
this Section shall be applied to prepayment of the principal of the Term Loans
in the inverse order of maturity.
Section 2.9. Reserve Requirements; Change in Circumstances.
(a) Notwithstanding any other provision herein, if after the date of this
Agreement any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender of the
principal of or interest on any Eurodollar Loan made by such Lender or any fees
or other amounts payable hereunder (other than changes in respect of Taxes,
Other Taxes and taxes imposed on, or measured by, the net income or overall
gross receipts or franchise taxes of such Lender by the jurisdiction in which
such Lender has its principal office or in which the applicable Eurodollar
Lending Office for such Eurodollar Loan is located or by any political
subdivision or taxing authority therein, or by any other jurisdiction or by any
political subdivision or taxing authority therein other than a jurisdiction in
which such Lender would not be subject to tax but for the execution and
performance of this Agreement), or shall impose, modify or deem applicable any
reserve, special deposit or similar requirement against assets of, deposits with
or for the account of or credit extended by such Lender (except any such reserve
requirement which is reflected in the Adjusted LIBOR Rate) or shall impose on
such Lender or the London interbank market any other condition affecting this
Agreement or the Eurodollar Loans made by such Lender, and the result of any of
the foregoing shall be to increase the cost to such Lender of making or
maintaining any Eurodollar Loan or to reduce the amount of any sum received or
receivable by such Lender hereunder (whether of principal, interest or
otherwise) by an amount deemed by such Lender to be material, then the Borrower
will pay to such Lender in accordance with paragraph (c) below such additional
amount or amounts as will compensate such Lender for such additional costs
incurred or reduction suffered.
(b) If any Lender shall have determined that the applicability of any
change in any law, rule, regulation or guideline adopted pursuant to or arising
out of the July 1988 report of the Base Committee on Banking Regulations and
Supervisory Practices entitled "International Convergence of Capital Measurement
and Capital Standards", or the adoption or effectiveness after the date hereof
of any law, rule, regulation or guideline regarding capital adequacy, or any
change in any of the foregoing or in the interpretation or administration of any
of the foregoing by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender (or any Lending Office of such Lender) or any Lender's holding
company with any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would
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have the effect of reducing the rate of return on such Lender's capital or on
the capital of such Lender's holding company, if any, as a consequence of this
Agreement, the Term Loans made by such Lender pursuant hereto, to a level
below that which such Lender or such Lender's holding company could have
achieved but for such adoption, change or compliance (taking into account such
Lender's policies and the policies of such Lender's holding company with respect
to capital adequacy) by an amount deemed by such Lender to be material, then
from time to time the Borrower shall pay to such Lender such additional amount
or amounts as will compensate such Lender or such Lender's holding company for
any such reduction suffered.
(c) A certificate of each Lender setting forth such amount or amounts as
shall be necessary to compensate such Lender or its holding company as specified
in paragraph (a) or (b) above, as the case may be, shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
each Lender the amount shown as due on any such certificate delivered to it
within 10 days after its receipt of the same. Any Lender receiving any such
payment shall promptly make a refund thereof to the Borrower if the law,
regulation, guideline or change in circumstances giving rise to such payment is
subsequently deemed or held to be invalid or inapplicable.
(d) Failure on the part of any Lender to demand compensation for any
increased costs or reduction in amounts received or receivable or any reduction
in return on capital with respect to any period shall not constitute a waiver of
such Lender's right to demand compensation with respect to such period or any
other period. The protection of this Section shall be available to each Lender
regardless of any possible contention of the invalidity or inapplicability of
the law, rule, regulation, guideline or other change or condition which shall
have occurred or been imposed.
Section 2.10. Change in Legality.
(a) Notwithstanding anything to the contrary contained elsewhere in this
Agreement, if (x) any change in any law or regulation or in the interpretation
thereof by any Governmental Authority charged with the administration thereof
shall make it unlawful for a Lender to make or maintain a Eurodollar Loan or to
give effect to its obligations as contemplated hereby with respect to a
Eurodollar Loan or (y) at any time any Lender determines that the making or
continuance of any of its Eurodollar Loans has become impracticable as a result
of a contingency occurring after the date hereof which adversely affects the
London interbank market or the position of such Lender in such market, then, by
written notice to the Borrower, such Lender may (i) declare that Eurodollar
Loans will not thereafter be made by such Lender hereunder, whereupon any
request by the Borrower for a Eurodollar Borrowing shall, as to such Lender
only, be deemed a request for an ABR Loan unless such declaration shall be
subsequently withdrawn; and (ii) require that all outstanding Eurodollar Loans
made by it be converted to ABR Loans, in which event all such Eurodollar Loans
shall be automatically converted to ABR Loans as of the effective date of such
notice as provided in paragraph (b) below. In the event any Lender shall
exercise its rights under clause (i) or (ii) of this paragraph (a), all payments
and prepayments of principal which would
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otherwise have been applied to repay the Eurodollar Loans that would have been
made by such Lender or the converted Eurodollar Loans of such Lender shall
instead be applied to repay the ABR Loans made by such Lender in lieu of, or
resulting from the conversion of, such Eurodollar Loans.
(b) For purposes of this Section, a notice to the Borrower by any Lender
pursuant to paragraph (a) above shall be effective, if any Eurodollar Loans
shall then be outstanding, on the last day of the then-current Interest Period
for such Eurodollar Loans (if lawful); otherwise, such notice shall be effective
on the date of receipt by the Borrower.
Section 2.11. Pro Rata Treatment, etc. All payments and repayments of principal
and interest in respect of the Term Loans (except as provided in Sections 2.9
and 2.10) shall be made pro rata among the Lenders in accordance with the then
outstanding principal amount of the Term Loans held by such Lenders hereunder.
All payments by the Borrower hereunder shall be (i) net of any tax applicable to
the Borrower and (ii) made in Dollars in immediately available funds at the
office of the Agent by 12:00 noon, New York City time, on the date on which such
payment shall be due. Interest in respect of any Term Loan hereunder shall
accrue from and including the date of such Term Loan to but excluding the date
on which such Term Loan is paid in full or converted to a Term Loan of a
different Type.
Section 2.12. Taxes.
(a) Any and all payments by the Borrower hereunder shall be made free and
clear of and without deduction for any and all current or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding (i) taxes imposed on or measured by the net income or overall
gross receipts of the Agent or any Lender (or any transferee or assignee
thereof, including a participation holder (any such entity being called a
"Transferee")) and franchise taxes imposed on the Agent or any Lender (or
Transferee) by the United States or any jurisdiction under the laws of which the
Agent or any such Lender (or Transferee) is organized or in which the applicable
Lending Office of any such Lender (or Transferee) is located or any political
subdivision thereof or by any other jurisdiction or by any political subdivision
or taxing authority therein other than a jurisdiction in which the Agent or such
Lender would not be subject to tax but for the execution and performance of this
Agreement and (ii) taxes, levies, imposts, deductions, charges or withholdings
("Amounts") with respect to payments hereunder to a Lender (or Transferee) in
accordance with laws in effect on the later of the date of this Agreement and
the date such Lender (or Transferee) becomes a Lender (or Transferee, as the
case may be), but not excluding, with respect to such Lender (or Transferee),
any increase in such Amounts solely as a result of any change in such laws
occurring after such later date or any Amounts that would not have been imposed
but for actions (other than actions contemplated by this Agreement) taken by the
Borrower after such later date (all such nonexcluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If the Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder to the Lenders (or any Transferee) or
the Agent, (i) the sum payable shall be increased by the amount necessary so
that after making all
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required deductions (including deductions applicable to additional sums
payable under this Section) such Lender (or Transferee) or the Agent(as the case
may be) shall receive an amount equal to the sum it would have received had no
such deductions been made, (ii) the Borrower shall make such deductions and
(iii) the Borrower shall pay the full amount deducted to the relevant taxing
authority or other Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower agrees to pay any current or future stamp or
documentary taxes or any other excise or property taxes, charges, assessments or
similar levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
other Loan Document (hereinafter referred to as "Other Taxes").
(c) The Borrower will indemnify each Lender (or Transferee) and the Agent
for the full amount of Taxes and Other Taxes paid by such Lender (or Transferee)
or the Agent, as the case may be, and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, whether or not
such Taxes or Other Taxes were correctly or legally asserted by the relevant
taxing authority or other Governmental Authority. Such indemnification shall be
made within 30 days after the date any Lender (or Transferee) or the Agent, as
the case may be, makes written demand therefor. If a Lender (or Transferee) or
the Agent shall become aware that it is entitled to receive a refund in respect
of Taxes or Other Taxes as to which it has been indemnified by the Borrower
pursuant to this Section, it shall promptly notify the Borrower of the
availability of such refund and shall, within 30 days after receipt of a request
by the Borrower, apply for such refund at the Borrower's expense. If any Lender
(or Transferee) or the Agent receives a refund in respect of any Taxes or Other
Taxes as to which it has been indemnified by the Borrower pursuant to this
Section, it shall promptly notify the Borrower of such refund and shall, within
30 days after receipt of a request by the Borrower (or promptly upon receipt, if
the Borrower has requested application for such refund pursuant hereto), repay
such refund to the Borrower (to the extent of amounts that have been paid by the
Borrower under this Section with respect to such refund plus interest that is
received by the Lender (or Transferee) or the Agent as part of the refund), net
of all out-of-pocket expenses of such Lender (or Transferee) or the Agent and
without additional interest thereon; provided, that the Borrower, upon the
request of such Lender (or Transferee) or the Agent, agrees to return such
refund (plus penalties, interest or other charges) to such Lender (or
Transferee) or the Agent in the event such Lender (or Transferee) or the Agent
is required to repay such refund. Nothing contained in this subsection (c) shall
require any Lender (or Transferee) or the Agent to make available any of its tax
returns (or any other information relating to its taxes that it deems to be
confidential).
(d) Within 30 days after the date of any payment of Taxes or Other Taxes
withheld by the Borrower in respect of any payment to any Lender (or Transferee)
or the Agent, the Borrower will furnish to the Agent, at its address referred to
on the signature pages hereof, the original or a certified copy of a receipt
evidencing payment thereof.
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<PAGE>34
(e) Without prejudice to the survival of any other agreement contained
herein, the agreements and obligations contained in this Section shall survive
the payment in full of the principal of and interest on all Loans made hereunder
and all other amounts due hereunder.
(f) Each Lender (or Transferee) that is organized under the laws of a
jurisdiction outside the United States shall, if legally able to do so, prior to
the immediately following due date of any payment by the Borrower hereunder,
deliver to the Borrower such certificates, documents or other evidence, as
required by the Code or Treasury Regulations issued pursuant thereto, including
(A) Internal Revenue Service Form W-8 or W-9, or successor applicable form, as
the case may be, and (B) Internal Revenue Service Form 1001 or Form 4224, or
successor applicable form, as the case may be, and any other certificate or
statement of exemption required by Treasury Regulation Section 1.1441-1,
1.1441-4 or 1.1441-6(c) or any subsequent version thereof or successors thereto,
properly completed and duly executed by such Lender (or Transferee) establishing
that such payment is (i) not subject to United States Federal withholding tax
under the Code because such payment is effectively connected with the conduct by
such Lender (or Transferee) of a trade or business in the United States or (ii)
totally exempt from United States Federal withholding tax or subject to a
reduced rate of such tax under a provision of an applicable tax treaty. Unless
the Borrower and the Agent have received forms or other documents satisfactory
to them indicating that such payments hereunder are not subject to United States
Federal withholding tax or are subject to such tax at a rate reduced by an
applicable tax treaty, the Borrower or the Agent shall withhold taxes from such
payments at the applicable statutory rate.
(g) The Borrower shall not be required to pay any additional amounts to any
Lender (or Transferee) in respect of United States Federal withholding tax
pursuant to subsection (a) above if the obligation to pay such additional
amounts would not have arisen but for a failure by such Lender (or Transferee)
to comply with the provisions of subsection (f) above.
(h) Any Lender (or Transferee) claiming any additional amounts payable
pursuant to this Section shall use reasonable efforts (consistent with legal and
regulatory restrictions) to file any certificate or document requested by the
Borrower or to change the jurisdiction of its applicable Lending Office if the
making of such a filing or change would avoid the need for or reduce the amount
of any such additional amounts that may thereafter accrue and would not, in the
sole determination of such Lender, be otherwise materially disadvantageous to
such Lender (or Transferee).
Section 2.13. Right of Set-Off. Upon the occurrence and during the continuance
of any Event of Default, the Agent and each of the other Secured Parties is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and any and all other
indebtedness at any time owing by such Secured Party to or for the credit or the
account of the Borrower against any and all of the obligations of the Borrower
now or hereafter existing under the Loan Documents, irrespective of whether or
not such Secured Party shall have made any demand
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<PAGE>35
under any Loan Document and although such obligations may be unmatured. Each
Secured Party agrees promptly to notify the Borrower after any such set-off
and application made by such Secured Party; provided, that the failure to give
such notice shall not affect the validity of such set-off and application.
Subject to Section 2.14, the rights of each Secured Party under this Section
are in addition to other rights and remedies which such Secured Party may have
upon the occurrence and during the continuance of any Event of Default.
Section 2.14. Sharing of Setoffs. Each Secured Party agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
the Borrower or any Subsidiary, including, but not limited to, a secured claim
under Section 506 of the Bankruptcy Code or other security or interest arising
from, or in lieu of, such secured claim and received by such Secured Party under
any applicable bankruptcy, insolvency or other similar law, or otherwise, obtain
payment in respect of its Secured Obligations, and the payment received is of a
proportion of the aggregate amount of principal and interest due with respect to
the Loans held by it or other Secured Obligations owing to it which is greater
than the proportion received by any other such Secured Party in respect of the
Loans held by such other Secured Party and the other Secured Obligations owing
to it, the Secured Party receiving such proportionately greater payment shall
purchase such participations in the Loans held by the other Secured Parties
and/or the other Secured Obligations owing to them, and such other adjustments
shall be made, as may be required so that all such payments of principal and
interest with respect to the Loans held by the Lenders or the other Secured
Obligations owing to the Secured Parties shall be shared by the Secured Parties
pro rata; provided, that nothing in this Section shall impair the right of any
Secured Party to exercise any right of set-off or counterclaim it may have and
to apply the amount subject to such exercise to the payment of indebtedness of
the Borrower other than its indebtedness existing hereunder or the other Secured
Obligations owing to it; provided, that if any such non-pro rata payment is
thereafter recovered or otherwise set aside such purchase of participations
shall be rescinded (without interest); provided further, that notwithstanding
anything to the contrary contained in this Section, the Existing Cash Management
Bank shall be entitled to retain any payments it receives in respect of its Cash
Management Obligations if any, or in respect of any cash management services
provided to the Borrower after the Effective Date, in each case as a result of
exercising any right of set-off or any similar right; and provided further, that
all references to "Secured Obligations" in this Section shall mean all Secured
Obligations other than pursuant to Sections 2.9, 2.12, 8.6, 9.5 and 9.6 and any
incremental Secured Obligations arising pursuant to Section 2.10. The Borrower
expressly consents to the foregoing arrangements and agrees that any Lender
holding (or deemed to be holding) a participation in the unpaid amount of a
Secured Obligation may exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing by the Borrower to such
Lender, as fully as if such Lender was the original obligee in connection with
such obligation, in the amount of such participation.
Section 2.15. Release of Secured Parties. For the benefit of the Secured
Parties, the Borrower hereby expressly releases and discharges the Secured
Parties and the Secured Parties' direct and indirect Subsidiaries and
Affiliates, together with each of their present and former
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<PAGE>36
shareholders, present and former officers, directors, agents and employees and
each of their present and former attorneys, advisors, consultants, attorneys-
in-fact, experts and other professional persons and representatives whether
presently or formerly retained by attorneys for the Secured Parties or by
the Secured Parties themselves, and the predecessors, successors and assigns
of all or any of them (collectively, the "Releasees") from any and all manner
of actions, claims, causes of action, suits, proceedings, debts, dues, sums
of money, accounts,accountings,reckonings,demands, liabilities, losses, damages,
acts, omissions, misfeasances, malfeasances, promises, breaches of contract,
breaches of duty, breaches of relationship, and all other controversies of
every type, kind, nature, description or character (all of the foregoing,
collectively, the "Claims") whatsoever, whether known or unknown, foreseen
or unforeseen, liquidated or unliquidated, and whether based upon facts now
known or unknown, direct or derivative, in law, admiralty, equity or bankruptcy,
against the Releasees, or any of them, which the Borrower, its Subsidiaries
or their Affiliates and the predecessors, successors or assigns of any or all
of them, ever jointly or individually had, now have or hereafter can, shall or
may have for, upon, or by reason of any matter, cause or thing whatsoever
from the beginning of the world to and including the Effective Date, directly
or indirectly arising from or relating in any way to any and all transactions,
relationships, or dealings relating in any way, directly or indirectly, to the
Existing Credit Agreement, any of the other Existing Agreements, the Existing
Cash Management Agreements, as well as any agreements entered into, or notes, or
other documents executed, in connection with the Existing Credit Agreement or
any of the other Existing Agreements, the Existing Cash Management Agreements or
as an adjunct or supplement thereto, and any prior agreements pursuant to which
the Secured Parties (or any of them or their respective predecessors or
successors) made (or did not make) loans or extensions of credit or any services
or accommodations of any type or kind whatsoever available to or on behalf of
the Borrower.
SECTION 3. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to each of the Agent, the Lenders
and the other Secured Parties as follows:
Section 3.1. Organization and Authority. The Borrower (i) as of the Effective
Date, is a corporation duly organized and validly existing under the laws of the
State of Delaware and is duly qualified as a foreign corporation and is in good
standing in each jurisdiction in which the failure to so qualify would have a
Material Adverse Effect, (ii) has the requisite corporate power and authority to
effect the transactions contemplated hereby and by the other Loan Documents to
which it is a party, and (iii) has all requisite corporate power and authority
and the legal right to own, pledge, mortgage and operate its properties, and to
conduct its business as now or currently proposed to be conducted.
Section 3.2. Due Execution. The execution, delivery and performance by the
Borrower of each of the Loan Documents to which it is a party (i) are within the
Borrower's corporate powers, have been duly authorized by all necessary
corporate action and do not (A) contravene the charter or by-laws of the
Borrower, (B) violate any law (including, without limitation, the Securities
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<PAGE>37
Exchange Act of 1934) or regulation (including, without limitation, Regulations
G, T, U or X of the Board, or any order or decree of any court or governmental
instrumentality, (C) violate or result in a breach of, or constitute a default
under, any material indenture, mortgage or deed of trust entered into as of the
Effective Date or any material lease, agreement or other instrument entered into
as of the Effective Date binding on the Borrower, any of its Subsidiaries or any
of its properties, or (D) result in or require the creation or imposition of any
Lien upon any of the property of the Borrower or any of its Subsidiaries other
than the Liens granted pursuant to this Agreement and the other Loan Documents;
and do not require the consent, authorization by or approval of or notice to or
filing or registration with any Governmental Authority. This Agreement has been
duly executed and delivered by the Borrower. This Agreement and each of the
other Loan Documents to which the Borrower is a party, on and after the
Effective Date, will be legal, valid and binding obligations of the Borrower,
enforceable against the Borrower, in accordance with their respective terms.
Section 3.3. Statements Made. The information that has been delivered in writing
by the Borrower to any of the Secured Parties in connection with any Loan
Document, and any financial statement delivered pursuant hereto or thereto
(other than to the extent that any such statements constitute projections),
contain no untrue statement of a material fact and do not omit to state a
material fact necessary to make such statements not misleading; and, to the
extent that any such information constitutes projections, such projections were
prepared in good faith on the basis of assumptions, methods, data, tests and
information believed by the Borrower to be reasonable at the time such
projections were furnished.
Section 3.4. Financial Statements. The Borrower has furnished the Lenders with
copies of (i) the audited consolidated financial statements of the Borrower and
its Consolidated Subsidiaries for the fiscal year ended November 30, 1998,
accompanied by an unqualified opinion of KPMG Peat Marwick LLP and (ii) the
unaudited consolidated financial statements of the Borrower and its Consolidated
Subsidiaries for the nine month period ended August 30, 1999. Such financial
statements present fairly the financial condition, the results of operations and
cash flows of the Borrower and its Consolidated Subsidiaries on a consolidated
basis as of such dates and for such periods; such balance sheets and the notes
thereto disclose all liabilities, direct or contingent, of the Borrower and its
Consolidated Subsidiaries as of the dates thereof required to be disclosed by
GAAP, and such financial statements were prepared in a manner consistent with
GAAP, subject (in the case of such nine month statements) to normal year end
adjustments. No Material Adverse Effect has occurred since November 28, 1998.
Section 3.5. Ownership. As of the date hereof, Lumberjack, which is wholly-owned
by the Borrower, is the only direct or indirect Subsidiary of the Borrower, is
inactive and has no significant assets.
Section 3.6. Liens. Except for Liens existing on the Effective Date as reflected
on Schedule 3.6, there are no Liens of any nature whatsoever on any assets of
the Borrower other than: (i) Liens granted pursuant to the Existing Agreements;
(ii) Permitted Liens; and (iii) Liens granted
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under the Loan Documents in favor of the Secured Parties. Neither the Borrower
nor its Subsidiaries is a party to any contract, agreement, lease or instrument
the performance of which, either unconditionally or upon the happening of an
event, will result in or require the creation of a Lien on any CIBC Collateral
or Available Property or otherwise result in a violation of this Agreement other
than the Liens granted to the Secured Parties as provided for in this Agreement
and the other Loan Documents.
Section 3.7. Compliance with Law. Neither the Borrower nor its Subsidiaries is,
to the best of the Borrower's knowledge, in violation of any Requirement of Law,
or in default with respect to any judgment, writ, injunction or decree of any
Governmental Authority the violation of which, or a default with respect to
which, would have a Material Adverse Effect.
Section 3.8. Insurance. All policies of insurance of any kind or nature owned by
or issued to the Borrower, including, without limitation, insurance policies
with respect to life, fire, theft, product liability, business interruption,
public liability, property damage, other casualty, employee fidelity, workers'
compensation, employee health and welfare, title, property and liability
insurance, are in full force and effect and are of a nature and provide such
coverage as is sufficient and as is customarily carried by companies of the size
and character of the Borrower.
Section 3.9. Litigation. Except as set forth on Schedule 3.9, there are no
unstayed actions, suits or proceedings pending or, to the knowledge of the
Borrower, threatened against or affecting the Borrower, its Subsidiaries or any
of its properties, before any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, which is
reasonably likely to be determined adversely to the Borrower and, if so
determined adversely to the Borrower, would have a Material Adverse Effect.
Section 3.10. Investment Company Act, etc. Neither the Borrower nor any of its
Subsidiaries will be after giving effect to the transactions contemplated hereby
(x) an "investment company" or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended
or (y) subject to regulation under the Public Utility Holding Company Act of
1935, the Federal Power Act or any foreign, federal or local statute or
regulation limiting its ability to incur indebtedness for money borrowed or
guarantee such indebtedness as contemplated hereby or by any of the other Loan
Documents.
Section 3.11. Tax Returns and Payments. The Borrower and each of its
Subsidiaries have filed all federal income tax returns and all other material
tax returns and reports, domestic and foreign, required to be filed by it and
have paid all material taxes, assessments, fees and other governmental charges
payable by it which have become due, other than those not yet delinquent. The
Borrower and each of its Subsidiaries have paid, or have provided adequate
reserves for the payment of, all material federal, state and foreign income
taxes applicable for all prior fiscal years and for the current fiscal year to
the date hereof. There is no proposed tax assessment against the Borrower or any
of its Subsidiaries which could, if the assessment were made, reasonably be
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expected to have a Material Adverse Effect. The last closed tax year of the
Borrower and its Consolidated Subsidiaries is the fiscal year ended November 27,
1993.
Section 3.12. ERISA.
(a) No ERISA Event has occurred or is expected to occur with respect to any
Plan in any fiscal year of the Borrower that would result in any liability of
the Borrower or any Subsidiary in excess, together with the amount of all other
liabilities of the Borrower and its Subsidiaries which would result from all
other ERISA Events that have occurred or are expected to occur with respect to
Plans during such fiscal year, of $3,000,000.
(b) Schedule B (Actuarial Information to the annual report (Form 5500
series)) most recently completed with respect to each Plan, copies of which have
been filed with the Internal Revenue Service and delivered to the Agent, is
complete and accurate in all material respects and to the best knowledge of the
Borrower represents a reasonable estimate of the funding status and financial
condition of such Plan as of the date of such report, and, since the date of
such Schedule B, to the best knowledge of the Borrower there has been no change
in such funding status or financial condition that could reasonably be expected
to have a Material Adverse Effect.
(c) Neither the Borrower, nor any Subsidiary nor any ERISA Affiliate of
either of them has incurred, or is expected to incur, any Withdrawal Liability
to Multiemployer Plans in excess in any fiscal year of the Borrower, of
$3,000,000 in the aggregate for the Borrower, its Subsidiaries and the ERISA
Affiliates of any of them.
(d) Neither the Borrower, nor any Subsidiary nor any ERISA Affiliate of
either of them has received any notification that any Multiemployer Plan is in
reorganization or has been terminated, within the meaning of Title IV of ERISA,
and to the best knowledge of the Borrower, no Multiemployer Plan is expected to
be in reorganization or to be terminated within the meaning of Title IV of
ERISA, in either case where all such reorganization or terminations would result
in any liability in any fiscal year of the Borrower in excess of $3,000,000 in
the aggregate for the Borrower, its Subsidiaries and the ERISA Affiliates of any
of them.
(e) With respect to each plan of the Borrower or any Subsidiary which is an
"employee pension benefit plan" within the meaning of Section 3(2) of ERISA and
which is intended to qualify under Section 401 of the Code, a favorable
determination letter has been received from the Internal Revenue Service stating
that such plan so qualifies, and nothing has occurred since the date of the
issuance of such determination letter which would cause such plan to cease to
qualify under Section 401 of the Code.
(f) None of the transactions contemplated by the Loan Documents or by any
plan of the Borrower or any Subsidiary which is an "employee pension benefit
plan" within the meaning
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of Section 3(2) of ERISA constitutes a prohibited transaction as such term is
defined in Section 406 of ERISA or Section 4975 of the Code.
(g) Neither the Borrower, nor any Subsidiary, nor any ERISA Affiliate of
any of them, nor any fiduciary of any plan of the Borrower or any Subsidiary
which is an "employee pension benefit plan" within the meaning of Section 3(2)
of ERISA, has engaged in any transaction in violation of Section 404 of ERISA,
which has resulted or could reasonably be expected to result in any liability in
excess of $3,000,000 in the aggregate for the Borrower, its Subsidiaries and the
ERISA Affiliates of any of them.
(h) Neither the Borrower, nor any Subsidiary, nor any ERISA Affiliate of
any of them, nor any plan of the Borrower or any Subsidiary which is an
"employee benefit plan" within the meaning of Section 3(3) of ERISA or fiduciary
thereof, is a party to any litigation relating to or seeking benefits from any
such plan, nor does there exist one or more facts or events which could form the
basis for any such litigation, where such litigation could reasonably be
expected to result in any liability in excess of $3,000,000 in the aggregate for
the Borrower, its Subsidiaries and the ERISA Affiliates of any of them.
(i) No event has occurred, in connection with which the Borrower, any
Subsidiary or any ERISA Affiliate of any of them, could be subject to any
material liability under any statute, regulation or governmental order relating
to any plan of the Borrower or any Subsidiary which is an "employee benefit
plan" within the meaning of Section 3(3) of ERISA or pursuant to any obligation
of the Borrower, any Subsidiary or any ERISA Affiliate to indemnify any Person
against any liability incurred under any such statute, regulation or order as
they relate to any such plan, which could reasonably be expected to result in
any liability in excess of $3,000,000 in the aggregate for the Borrower, its
Subsidiaries and the ERISA Affiliates of any of them.
(j) Except as set forth in Schedule 3.12 or as disclosed in the Borrower's
1998 Annual Report, neither the Borrower, nor any Subsidiary, nor any ERISA
Affiliate of any of them, nor any "employee benefit plan" within the meaning of
Section 3(3) of ERISA maintained by the Borrower, any Subsidiary or any ERISA
Affiliate of any of them has any present or future obligation to make any
payment to or with respect to any present or former employee, officer, director
or agent of the Borrower, any Subsidiary, or any ERISA Affiliate of any of them
pursuant to any retiree medical benefit plan, or other retiree welfare benefit
plan (and the aggregate liability of the Borrower, its Subsidiaries and the
ERISA Affiliates of any of them in respect of all obligations disclosed on
Schedule 3.12 or in the Borrower's 1998 Annual Report does not exceed
$22,000,000), and no condition exists which would prevent the Borrower, any
Subsidiary or any ERISA Affiliate of any of them from amending or terminating
any such benefit plan or "employee benefit plan" within the meaning of Section
3(3) of ERISA.
(k) Each welfare benefit plan which covers or has covered present or former
employees, officers, directors or agents of the Borrower, any Subsidiary, or any
ERISA Affiliate of
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any of them and which is a "group health plan" as defined in Section 607(1) of
ERISA, has been operated at all times in compliance with provisions of Part 6 of
Title I of ERISA and Sections 162(k) and 4980B of the Code.
Section 3.13. Good Title to Properties. Each of the Borrower and its
Subsidiaries has good and marketable title to substantially all its properties
and assets, including, without limitation, the CIBC Collateral, subject to no
Liens, except such as would be permitted under Section 6.1.
Section 3.14. Labor Matters. Neither the Borrower nor any Subsidiary has
experienced any strike, labor dispute, slowdown or work stoppage due to labor
disagreements which could reasonably be expected to have a Material Adverse
Effect, and to the best knowledge of the Borrower, there is no such strike,
dispute, slowdown or work stoppage threatened against the Borrower or any
Subsidiary.
Section 3.15. Environmental Matters. To the best of the Borrower's knowledge
after due inquiry, except as set forth on Schedule 3.15:
(a) the Property does not contain any Hazardous Substance in amounts or
concentrations which (i) constitute a violation of, or (ii) could reasonably
give rise to liability under, any Environmental Law except in either case
insofar as such violation or liability, or any aggregation thereof, could not
reasonably be expected to result in a Material Adverse Effect;
(b) the Property and all operations at the Property and operations of
Borrower and its Subsidiaries are in compliance, and have in the last three
years been in compliance, in all material respects with all applicable
Environmental Laws, and there is no contamination at or under the Property, or
violation of any Environmental Law with respect to the Property, the operations
at the Property or the operations of the Borrower and its Subsidiaries, which
could reasonably be expected to result in a Material Adverse Effect;
(c) neither the Borrower nor any of its Subsidiaries has received any
notice of violation, alleged violation, noncompliance, liability or potential
liability regarding environmental matters or compliance with any Environmental
Law with regard to any of the Property, the operations at the Property or the
Borrower's or any of its Subsidiaries' operations, nor does the Borrower or such
Subsidiary have knowledge or reason to believe that any such notice will be
received or is being threatened except insofar as such notice or threatened
notice, or any aggregation thereof, does not involve a matter or matters that
could reasonably be expected to result in a Material Adverse Effect;
(d) Hazardous Substances have not been transported or disposed of from any
of the Property by the Borrower or any of its Subsidiaries in violation of, or
in a manner or to a location which could reasonably give rise to liability
under, any Environmental Law, nor have any Hazardous Substances been generated,
treated, stored (other than materials stored in the normal course of its
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retail business in accordance with all applicable laws) or disposed of at, on or
under any of the Property in violation of, or in a manner that could reasonably
give rise to liability under, any applicable Environmental Law except insofar as
any such violation or liability referred to above, or any aggregation thereof,
could not reasonably be expected to result in a Material Adverse Effect;
(e) no judicial proceedings or governmental or administrative action is
pending or, to the knowledge of the Borrower after due inquiry, threatened,
under any Environmental Law to which the Borrower is or will be named as a party
with respect to the Property, the operations at the Property or the operations
of the Borrower or any of its Subsidiaries, nor are there any consent decrees or
other decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any Environmental Law
with respect to the Property or such operations except insofar as such
proceeding, action, decree, order or other requirement, or any aggregation
thereof, could not reasonably be expected to result in a Material Adverse
Effect;
(f) there has been no Release or threat of Release of any Hazardous
Substance at, to, on, in, under or from the Property, or arising from or related
to the operations of the Property or the operations of the Borrower or any of
its Subsidiaries in connection with the Property or otherwise in connection with
such operations in violation of or in amounts or in a manner that could
reasonably give rise to liability under any Environmental Law, except insofar as
any such violation or liability referred to above, or any aggregation thereof,
could not reasonably be expected to result in a Material Adverse Effect;
(g) No Property is a current, or to the knowledge of the Borrower or any of
its Subsidiaries, proposed Environmental Clean-up Site;
(h) There are no (1) underground storage tanks (active or abandoned), (2)
polychlorinated biphenyl containing equipment, or (3) asbestos-containing
material at any Property; and
(i) The Borrower and its Subsidiaries hold all Environmental Permits
required for their respective operations and the Borrower and its Subsidiaries
are in compliance with the terms and conditions of such Environmental Permits,
except to the extent the failure to hold or comply with such Environmental
Permits could not reasonably be expected to result in a Material Adverse Effect.
Section 3.16. Location and Divisions of the Borrower. As of the Effective Date,
all of the Borrower's stores, warehouses, distribution centers, offices,
headquarters and any other operating and organizational facilities and premises
are listed on Schedule 3.16. The Borrower uses each of the division names set
forth on Schedule 3.16 only in the states listed below each such name, and the
Borrower does not do business under any names other than its own and the names
of such divisions.
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Section 3.17. Solvency. On and as of the Effective Date, after giving effect to
the transactions contemplated herein and the transactions contemplated in the
Congress Facility Agreement (including the loans incurred or to be incurred by
the Borrower and the Liens created, or to be created, in connection therewith):
(a) the Borrower has no reason to believe that any final judgments against the
Borrower or any affected Subsidiary in actions for money damages with respect to
pending or threatened litigation will be rendered at a time when, or in an
amount such that, the Borrower or such affected Subsidiary will be unable to
satisfy any such judgments promptly in accordance with their terms (taking into
account the maximum reasonable amount of such judgments in any such actions and
the earliest reasonable time at which such judgments might be rendered) and the
cash available to the Borrower and its Subsidiaries, after taking into account
all other anticipated uses of the cash of the Borrower and its Subsidiaries
(including the payments on or in respect of debt referred to in clause (c) of
this Section), is anticipated to be sufficient to pay all such judgments
promptly in accordance with their terms; (b) the sum of the present fair
saleable value of the assets of the Borrower and its Subsidiaries will exceed
the probable liability of the Borrower and its Subsidiaries on their respective
debts; (c) neither the Borrower nor any of its Subsidiaries will have incurred
or intends to, or believes that it will, incur debts beyond its ability to pay
such debts as such debts mature (taking into account the timing and amounts of
cash to be received by the Borrower and its Subsidiaries from any source, and of
amounts to be payable on or in respect of debts of the Borrower and its
Subsidiaries and the amounts referred to in clause (a) of this Section) and the
cash available to the Borrower and its Subsidiaries, after taking into account
all other anticipated uses of the cash of the Borrower and its Subsidiaries, is
anticipated to be sufficient to pay all such amounts on or in respect of debts
of the Borrower and its Subsidiaries, when such amounts are required to be paid;
and (d) the Borrower and each of its Subsidiaries will have sufficient capital
with which to conduct its present and proposed business and the property of the
Borrower and each of its Subsidiaries does not constitute unreasonably small
capital with which to conduct its present or proposed business. For purposes of
this Section, "debt" means any liability on a claim, and "claim" means (i) any
right to payment whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured, or (ii) any right to an equitable remedy
for breach of performance if such breach gives rise to a payment, whether or not
such right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured. With respect to clauses (b) and (d) of this Section, with respect to
the Borrower, such representations and warranties are made to the best of the
knowledge of the Borrower, except that such representations and warranties are
made without qualification to the extent that the untruth or inaccuracy of any
such representation or warranty would result in a Material Adverse Effect.
Section 3.18. Trademarks, Patents, etc. Each of the Borrower and its
Subsidiaries possesses all of the trademarks, copyrights, patents, licenses, or
rights in any thereof, adequate in all material respects for the conduct of its
business as now conducted and presently proposed to be conducted, without
conflict with the rights or, to the best knowledge of the Borrower, any
presently claimed rights of others.
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SECTION 4. CONDITIONS TO EFFECTIVENESS AND EXTENSIONS OF CREDIT
Section 4.1. Conditions Precedent. The effectiveness of the amendment and
restatement of the Borrower's obligations arising under the Existing Credit
Agreement is subject to the following conditions precedent, each of which shall
have been satisfied or waived by the Agent (except as otherwise provided in this
Section):
(a) Supporting Documents. The Agent shall have received:
(i) a copy of the Borrower's certificate of incorporation, certified
as of a recent date by the Secretary of State of Delaware;
(ii) a certificate of the Secretary of State of Delaware, dated as
of a recent date, as to the good standing of the Borrower and as to the
charter documents on file in the office of the Secretary of State;
(iii)a certificate of the Secretary or an Assistant Secretary of the
Borrower, dated as of a recent date, delivered as part of the Closing
Certificate referred to in clause (iv) below and certifying (A) that
attached thereto is a true and complete copy of the by-laws of the Borrower
as in effect on the date of such certification, (B) that attached thereto
is a true and complete copy of resolutions adopted by the Board of
Directors of the Borrower authorizing (u) the entry into the Congress
Financial Facility and the transactions contemplated thereby, (v) the
amendment and restatement of the Existing Credit Agreement on the terms set
forth herein, (w) the repayment of the Existing Revolving Loans and any
accrued interest, fees, costs and expenses relating thereto and any other
amounts owing pursuant to the Existing Credit Agreement, (x) the repayment
of $92,000,000 of Existing Term Loans, (y) the issuance of the Back-to-Back
Letters of Credit and (z) the execution, delivery and performance in
accordance with their respective terms of this Agreement, the other Loan
Documents and any other documents required or contemplated hereunder or
thereunder, (C) that the certificate of incorporation of the Borrower has
not been amended since the date of the certificate of the Secretary of
State furnished pursuant to clause (i) above and (D) as to the incumbency
and specimen signature of each officer of the Borrower executing this
Agreement, and the other Loan Documents or any other document delivered by
it in connection herewith or therewith (such certificate to contain a
certification by another officer of the Borrower as to the incumbency and
signature of the officer signing the certificate referred to in this clause
(iii)); and
(iv) receipt by the Agent of a closing certificate signed by an
executive officer of the Borrower, substantially in the form of Exhibit F
(the "Closing
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Certificate"), with appropriate insertions and attachments satisfactory in
form and substance to the Agent.
(b) Agreement. On or before the Effective Date, the Agent shall have
received executed counterparts of this Agreement from each of the parties
hereto.
(c) Congress Facility. On or before the Effective Date, (i) all
conditions precedent to the effectiveness of the Congress Facility Agreement
shall have occurred or been waived by the applicable party, (ii) Congress
Financial shall have funded the loans pursuant thereto, and (iii) the Agent
shall have received a duly executed copy of the Congress Facility Agreement
which shall be in form and substance satisfactory to the Agent and the Majority
Term Lenders.
(d) Payment Letter and Payment Amount. On or before the Effective
Date, the Agent shall have received (i) an executed Payment Letter from the
Borrower which shall be in form and substance satisfactory to the Agent and
(ii) the payment of the Payment Amount set forth therein in immediately
available and good funds.
(e) Existing Letters of Credit. On or before the Effective Date, the
Back-to-Back Letters of Credit shall have been issued to the relevant Fronting
Banks.
(f) Security and Pledge Agreement. The Borrower shall have duly
executed and delivered to the Agent, for its benefit and the benefit of the
other Secured Parties, a Second Amended and Restated Security and Pledge
Agreement in substantially the form of Exhibit A (as amended, amended
and restated, supplemented or otherwise modified from time to time, the
"Security and Pledge Agreement").
(g) Financing Statements. The Agent shall have received copies of
executed UCC-1 financing statements that will be filed by Congress Financial.
(h) Vehicles. To the extent not previously provided, the Agent shall
have received original certificates of title for Vehicles pledged to the
Agent for its benefit and the benefit of the other Secured Parties with the
Lien of the Agent noted thereon or accompanied by documentation required to
effect the same.
(i) Opinion of Counsel to the Borrower. The Secured Parties shall have
received the favorable written opinion of counsel to the Borrower reasonably
acceptable to the Agent, dated the Effective Date, substantially in the form of
Exhibit D.
(j) Payment of Other Amounts. The Borrower shall have paid all
accrued and unpaid interest, fees and other amounts owing pursuant to or in
connection with the Existing Credit Agreement and in connection with the
execution of this Agreement including, but not limited to, all out-of-pocket
expenses incurred by the Agent and the Lenders, including (without limitation)
the
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reasonable fees and disbursements of Morgan, Lewis & Bockius LLP ("ML&B"),
counsel for the Agent and E&Y Restructuring LLC, financial advisors to ML&B.
(k) Corporate and Judicial Proceedings. All corporate and judicial
proceedings and all instruments and agreements in connection with the
transactions among the Borrower, the Agent and the Lenders contemplated by
this Agreement shall be reasonably satisfactory in form and substance to
the Agent, and the Agent shall have received all information and copies of
all documents and papers, including records of corporate and judicial
proceedings, which the Agent may have reasonably requested in connection
therewith, such documents and papers where appropriate to be certified by
proper corporate, governmental or judicial authorities.
(l) Compliance with Laws. The Borrower shall have granted the Agent
access to and the right to inspect all reports, audits and other internal
information of the Borrower relating to environmental matters, an any third
party verification of certain matters relating to compliance with Environmental
Laws requested by the Agent, and the Agent shall be reasonably satisfied that
the Borrower and its Subsidiaries are in compliance in all material respects
with all applicable Environmental Laws and be satisfied with the costs of
maintaining such compliance.
(m) No Material Adverse Change. There shall not have occurred since
August 30, 1999, a material adverse change, or development or event involving a
prospective change, which, in the reasonable judgment of the Existing Majority
Term Lenders have a Material Adverse Effect or could materially adversely affect
the rights and remedies of the Agent or any of the other Secured Parties under
the Loan Documents, and none of the Agent or any of the other Secured Parties
shall have become aware of any theretofore previously undisclosed materially
adverse information with respect to the matters described in this clause (m).
(n) Absence of Litigation. There shall be no actions, suits or
proceedings by any Governmental Authority or other Person or investigation
by any Governmental Authority or other Person pending or known by the Borrower
to be threatened with respect to the Borrower or any of its Subsidiaries or
(relating to the transactions contemplated hereunder) the Agent or any of the
other Secured Parties which could reasonably be expected to have a Material
Adverse Effect; there shall be no judgment, order, injunction or other restraint
prohibiting any of the transactions contemplated by any of the Loan Documents.
(o) Information. The Agent shall have received such information
(financial or otherwise) as may be reasonably requested by the Agent.
(p) No Event of Default. No Default or Event of Default (each as
defined in the Existing Credit Agreement) which has not properly been waived
in writing shall have occurred and then be continuing.
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(q) Representations and Warranties. All representations and warranties
contained in this Agreement and the other Loan Documents or otherwise made in
writing in connection herewith or therewith shall be true and correct in all
material respects.
(r) Consents. The Borrower shall have obtained all consents and waivers from
any Governmental Authority or other Person necessary for the execution, delivery
and performance of this Agreement and any other document or transaction
contemplated by this Agreement.
(s) Closing Documents. The Agent shall have received all documents required
by this Agreement reasonably satisfactory in form and substance to the Agent and
its counsel.
SECTION 5. AFFIRMATIVE COVENANTS
From the date hereof and for so long as any Obligation of the Borrower
shall remain outstanding or unpaid under this Agreement, the Borrower will, and
it will cause each Subsidiary to:
Section 5.1. Financial Statements, Reports, etc. Deliver to the Agent and each
of the Lenders:
(a) as soon as available and in any event within 90 days after the end of
each fiscal year, the consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of the end of such fiscal year and related
consolidated statements of income and cash flows for such fiscal year, setting
forth in each case in comparative form the figures for the previous year
(unless, in accordance with GAAP, such comparative financial statements are not
prepared), the consolidated statement of the Borrower and its Consolidated
Subsidiaries to be audited for the Borrower by independent public accountants of
recognized national standing acceptable to the Majority Lenders an accompanied
by an opinion of such accountants (which shall not be qualified in any material
respect);
(b)as soon as available and in any event within 45 days after the end of each
of the first three fiscal quarters and within 90 days after the end of the
fourth fiscal quarter of each fiscal year of the Borrower, the consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of
such quarter and related consolidated statements of income and cash flows for
such fiscal quarter, setting forth in each case in comparative form the figures
for the corresponding quarter and the corresponding portion of the previous
fiscal year, together with a comparison of such results to the relevant portion
of the Annual Budget, each certified by a Financial Officer as fairly presenting
the financial condition and results of operations of the Borrower and its
Consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments;
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(c)concurrently with any delivery of financial statements under clauses(a) or
(b) above, (i) a certificate of a Financial Officer, substantially in the form
of Exhibit G hereto, certifying such statements stating that no Default or Event
of Default has occurred, or, if such Default or Event of Default has occurred,
specifying the nature, the period of existence and extent thereof and any
corrective action taken or proposed to be taken with respect thereto and (ii) a
certificate of such accountants accompanying the audited consolidated financial
statements delivered under (a) above certifying that, in the course of the
regular audit of the business of the Borrower, such accountants have obtained no
knowledge that an Event of Default has occurred and is continuing, or if, in the
opinion of such accountants, an Event of Default has occurred and is continuing,
specifying the nature thereof and all relevant facts with respect thereto;
(d)within 15 Business Days of the end of each fiscal month(or, in the case of
the last fiscal month of the Borrower in each fiscal year, within 45 days),
commencing with the fiscal month in which the Effective Date has occurred, a
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries,
related statement of income and cash flows showing the financial condition of
the Borrower and its Consolidated Subsidiaries and the results of operations as
of the close of such fiscal month and the then elapsed portion of the fiscal
year, setting forth in each case in comparative form the figures for the
corresponding month and the corresponding portion of the Borrower's previous
fiscal year, together with a comparison of such results to the relevant portion
of the Annual Budget;
(e) as soon as practicable, and in any event within 45 days of the Effective
Date, a pro forma statement of the Borrower's financial condition as of the
Effective Date in form, scope and detail reasonably satisfactory to the Agent;
(f) within 45 days after the commencement of each fiscal year, a forecast of
the financial condition and results of operations of the Borrower and its
Consolidated Subsidiaries, by month, for the twelve fiscal months commencing
with the first month of such fiscal year (the "Annual Budget"), and not later
than 45 days after the end of each of the first three quarters of each fiscal
year of the Borrower, a narrative discussion by management of the Borrower of
the financial condition and results of operations of the Borrower and its
Consolidated Subsidiaries for such period, together with a reforecast for the
balance of such fiscal year and quarterly balance sheet, income statement and
cash flow projections for such period, in all instances in form, scope and
detail satisfactory to the Agent;
(g) promptly upon request therefor by the Agent, copies of all reports
submitted by independent public accountants to the Borrower in connection with
each annual, interim or special audit of the financial statements of the
Borrower and its Consolidated Subsidiaries, including, without limitation,
any comment letters submitted by such accountants to management in connection
with their annual audit;
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(h) forthwith upon becoming aware of (i) any litigation or other proceeding
which could reasonably be expected to have a Material Adverse Effect or (ii) any
default with respect to any obligation of the Borrower under any agreement,
instrument, or other undertaking to which the Borrower or any of its
Subsidiaries is a party or by which it or any of its properties is bound or any
event or condition which could reasonably be expected to have such a material
adverse effect, notice thereof;
(i) promptly upon becoming aware of any Material Adverse Effect since the
Effective Date, notice thereof;
(j) (i) promptly and in any event within fifteen (15) days after the Borrower
knows or has reason to know that any ERISA Event has occurred, a statement of
the chief financial officer of the Borrower describing such ERISA Event and the
action, if any, which the Borrower, any Subsidiary or any ERISA Affiliate of
either of them proposes to take with respect thereto;
(ii) promptly and in any event within ten (10) Business Days after receipt
thereof by the Borrower or any Subsidiary or any ERISA Affiliate of either of
them,copies of each notice from the PBGC stating its intention to terminate any
Plan or to have a trustee appointed to administer any Plan; and
(iii) promptly and in any event within ten (10) Business Days after
receipt thereof by the Borrower or any Subsidiary or any ERISA Affiliate of
either of them from the sponsor of a Multiemployer Plan, a copy of each
notice concerning (1) the imposition of Withdrawal Liability by a
Multiemployer Plan, (2) the reorganization or termination, within the meaning of
Title IV of ERISA, of any Multiemployer Plan or (3) the amount of liability
incurred, or which may be incurred, by the Borrower or any Subsidiary or any
ERISA Affiliate of either of them in connection with any event described in
clause (1) or (2) above; (11) promptly upon the formation of any Subsidiary,
notice thereof;
(k) promptly upon the formation of any Subsidiary, notice thereof;
(l) promptly upon the release of any Liens or the satisfaction or discharge of
all or a portion of the Liens securing the Fortress Real Estate Financing or
Liens granted to any other lenders, notice thereof;
(m) promptly upon the merger of any Subsidiary into the Borrower, notice
thereof;
(n) promptly upon the opening of any store or other retail location, notice
thereof; and, to the extent any Equipment or Vehicles which constitute CIBC
Collateral and any replacement of, or substitution for, any of the foregoing is
moved or transferred to a location or jurisdiction in which a UCC-1 Financing
Statement or Vehicle title certificate with respect to such CIBC Collateral has
not been delivered to the Agent, notice thereof and promptly deliver (i)
executed UCC-1 Financing Statements on forms then provided by the Agent to the
Borrower and/or (ii) new Vehicle
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certificates of title reflecting the Lien of the Agent for its benefit and
the benefit of the other Secured Parties noted thereon accompanied by
documentation required to effect the same.
(o) within five (5) Business Days after any amendment, modification, supplement
to or waiver of any provisions of the Congress Facility Documents, the Fortress
Loan Documents, the Household Program Documents, or any other material credit
arrangements, notice thereof, together with a copy of each such fully executed
amendment, modification, supplement or waiver;
(p) without limiting any of the Borrower's other obligations to give notice
under the Loan Documents, within fifteen (15) days of the end of each fiscal
quarter, furnish to the Agent lists of (i) all Vehicles acquired by the Borrower
or any Subsidiary during such quarter, (ii) all Equipment and Vehicles which
replaced any Equipment or Vehicles which constituted CIBC Collateral or which
was purchased with the sale proceeds (or insurance proceeds) of such Equipment
or Vehicles and (iii) all property which became Available Property during such
quarter, setting forth in each case the date of acquisition thereof, all
certified by a Financial Officer of the Borrower;
(q) promptly, upon the mailing thereof to the shareholders of the Borrower
generally, copies of all financial statements, reports and proxy statements so
mailed;
(r) without limiting any of the Borrower's other obligations to give notice
under the Loan Documents, within fifteen (15) days of the end of each fiscal
quarter, furnish to the Agent a schedule (i) setting forth all Net Cash Proceeds
received during such fiscal quarter with respect to CIBC Collateral and (ii)
confirming the existence of the credit card and receivables program required to
be maintained by the Borrower pursuant to Section 5.8, certified by a Financial
Officer of the Borrower;
(s) promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of the Borrower or its
Subsidiaries, or compliance with the terms of any material loan or financing
agreements as the Agent or any Lender may reasonably request;
(t) promptly (and in no event more than five (5) Business Days after the
Borrower or any of its Subsidiaries becomes aware or is otherwise informed of
any of the following events), written notice and copies of any related material
written communications or notices, of the following:
(i) the Borrower, any of its Subsidiaries or any tenant, occupant
or operator of any Property receives written or oral notice of
any claim, complaint, charge or notice of violation or potential
violation of or liability under any Environmental Law or request
to conduct any investigation, remediation, cleanup or monitoring
of any Hazardous Substance at any Property, in each case which
could reasonably be expected to result in a Material Adverse
Effect;
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(ii) a Release or threatened Release of a Hazardous Substance at,
to, on, under, or about any Property in amounts that may be
required to be reported, remediated, investigated, cleaned up,
monitored or responded to under applicable Environmental Law,
which could reasonably be expected to result in a Material
Adverse Effect;
(iii) the Borrower or any of its Subsidiaries may be liable for
any costs of investigating, remediating, cleaning up, monitoring
or responding to a Release or threatened Release of a Hazardous
Substance which could reasonably be expected to result in a
Material Adverse Effect; or
(iv) any Property or portion of any Property may be subject to a
Lien under any Environmental Law.
Section 5.2. Conduct of Business; Maintenance of Existence. Continue to engage
in business of the same general type as now conducted by the Borrower and its
Subsidiaries, and will preserve, renew and keep in full force and effect, and,
except as permitted by Section 6.3(e), will cause each Subsidiary to preserve,
renew and keep in full force and effect, its respective corporate existence in
its respective jurisdiction of incorporation as of the Effective Date and its
respective rights, privileges and franchises except for such rights, privileges
and franchises when the failure of which to preserve, renew and keep in full
force and effect could not reasonably be expected to have a Material Adverse
Effect.
Section 5.3. Maintenance of Property; Insurance.
(a) Keep all material property useful and necessary in its business in good
working order and condition, ordinary wear and tear excepted.
(b) Keep its material properties (including, without limitation, all Property)
insured at all times with financially sound and reputable insurance companies,
against such risks as is customary for companies of the same or similar size in
the same or similar businesses; provided, that such insurance shall (i) insure
the property (including without limitation all Property which is CIBC
Collateral) of the Borrower and its Subsidiaries (other than motor vehicles)
against all risk of loss or damage including, without limitation, loss by fire,
explosion, theft and such other casualties as may be reasonably satisfactory to
the Agent, but in no event in an amount less than the replacement cost value
thereof, and (ii) insure the Borrower and its Subsidiaries, and the Agent and
the other Secured Parties against comprehensive general and automobile liability
in an amount not less than $1,000,000 per occurrence under primary insurance
policies, with not less than $45,000,000 per occurrence coverage under umbrella
insurance policies for personal injury, bodily injury and property damage
relating to the property and operations of the Borrower and its Subsidiaries,
such policies to be in such form and amounts and having such coverage as may be
reasonably satisfactory to the Agent. All such insurance with respect to CIBC
Collateral shall, within 20 days after
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the Effective Date (i) contain a breach of warranty clause in favor of the Agent
and the other Secured Parties in all loss or damage insurance policies and have
a severability of interest clause in all liability insurance policies, (ii)
provide that no cancellation, material reduction in amount or material change in
coverage thereof shall be effective until at least 30 days after written notice
to the Agent thereof, (iii) name the Agent for the benefit of the Secured
Parties as loss payee for physical damage insurance with respect to property
which is CIBC Collateral as to which a Lien has been granted to the Agent, with
the right to adjust the same (provided, that with respect to property to which a
Lien permitted hereunder has been granted to another creditor, such other
creditor may also be named as loss payee, with payment to be made as their
interests may appear and name the Agent and the other Secured Parties as
additional insureds for liability insurance, with the Agent having the right to
adjust the same), (iv) state that neither the Agent nor any of the other Secured
Parties shall be responsible for premiums, commissions, club calls, assessments
or advances, (v) contain a waiver of all rights of set-off, counterclaim,
deduction or subrogation against the Agent and the other Secured Parties and
(vi) be reasonably satisfactory in all other respects (including deductibles) to
the Agent.
(c) Furnish to the Agent, on or prior to the Effective Date, a schedule, a copy
of which is annexed as Schedule 5.3, describing all insurance maintained by the
Borrower which is required under this Section 5.3, which schedule shall set
forth, for each insurance policy, the policy number, the scope of coverage, the
policy limits and deductibles, the insurer (and reinsurers, if applicable) and
the expiration date.
(d) Furnish to the Agent, to the extent not previously delivered, original
certificates of insurance complying with the requirements of this Section set
forth above and containing signatures of duly authorized representatives of the
insurer, at all times prior to policy termination, cessation or cancellation.
(e) Maintain such other insurance or self insurance as may be required by law
or as the Agent may reasonably request.
Section 5.4. Compliance with Laws. Comply in all material respects with all
applicable laws, ordinances, rules, regulations, and requirements of
Governmental Authorities (including, without limitation, ERISA) except where the
necessity of compliance therewith is contested in good faith by appropriate
proceedings, and the Borrower or such Subsidiary have set aside on its books
adequate reserves (determined in accordance with GAAP) with respect thereto or
where the failure to comply therewith could not reasonably be expected to have a
Material Adverse Effect.
Section 5.5. Obligations and Taxes. Pay all its material obligations promptly
and in accordance with their terms and pay and discharge promptly all material
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or profits or in respect of its property before the same shall become
in default, as well as all material lawful claims for labor, materials and
supplies or otherwise which, if unpaid, might become a Lien or charge upon such
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properties or any part thereof; provided, that the Borrower and its Subsidiaries
shall not be required to pay and discharge or to cause to be paid and discharged
any such tax, assessment, charge, levy or claim so long as the validity or
amount thereof shall be contested in good faith by appropriate proceedings (if
the Borrower or such Subsidiary shall have established on its books adequate
reserves therefor).
Section 5.6. Notice of Event of Default, etc. Promptly give to the Agent notice
in writing of any Default or Event of Default hereunder or under any of the
other Loan Documents.
Section 5.7. Access to Books and Records. Maintain or cause to be maintained at
all times true and complete books and records of the financial operations of the
Borrower and its Subsidiaries; and provide the Agent and its representatives
access to all such books and records during regular business hours, in order
that the Agent may examine and make abstracts from such books, accounts, records
and other papers for the purpose of verifying the accuracy of the various
reports delivered by the Borrower to the Agent or the Lenders pursuant to this
Agreement or for otherwise ascertaining compliance with this Agreement; and at
any reasonable time and from time to time during regular business hours, upon
reasonable notice, permit the Agent and any agents or representatives
(including, without limitation, appraisers) thereof to visit the properties of
the Borrower and its Subsidiaries and to conduct examinations of and to monitor
the CIBC Collateral.
Section 5.8. Customer Charge Sales. Continue to maintain a "Project Card" and
commercial credit receivables sales and administration program with the Credit
Card Lender pursuant to the Household Credit Program Documents or a similar
program (it being understood that a program shall not be deemed to be dissimilar
solely by virtue of the fact that the Borrower shall act as the administrator or
"servicer" of the receivables thereunder) with another Person; provided,
however, that the Borrower shall promptly give notice to the Agent in writing of
any notice of cancellation, default or any other similar notice from Household
or any other such provider of a commercial credit receivables sales and
administrative program.
Section 5.9. Lender Meetings. From time to time as requested by the Agent or the
Majority Lenders, participate, and cause the chief financial officer to be
available for and to participate in, a meeting of the Agent and the Lenders to
be held, at reasonable intervals, at locations and at times requested by the
Agent (and if applicable, the Majority Lenders), and reasonably satisfactory to
the Borrower.
Section 5.10. Available Properties. If any real property, buildings, fixtures,
equipment or improvements owned or leased by the Borrower or any Subsidiary
become Available Property, promptly, but in any event within 30 days, provide
written notice thereof to the Agent, setting forth with specificity a
description of such property or interest acquired, the location of the property
interest, any structures or improvements thereon and an appraisal or its good
faith estimate of the current fair market value of such property or interest. If
the Agent so requests, the Borrower or the relevant Subsidiary shall promptly
execute and deliver to the Agent a mortgage or deed of trust,
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substantially in the form of Exhibits D-3 and D-4 to the Existing Credit
Agreement, respectively (with such changes as may be deemed appropriate by the
Agent's local real estate counsel for the state in question), together with such
other documents or instruments as the Agent shall reasonably require, including
(without limitation) a Title Policy, a Survey, a Phase I environmental report,
UCC Financing Statements and an opinion of the Agent's local real estate
counsel. The Borrower shall pay all reasonable fees and expenses, including
attorneys' fees and expenses or the allocated charges and premiums, in
connection with its obligation under this Section. If at any time after the
Existing Effective Date, any existing Lien or sale-leaseback arrangement which
had prevented the further mortgaging of any real property of the Borrower or any
Subsidiary, shall for any reason no longer prevent such further mortgaging, then
such property shall also be deemed an Available Property for purposes of this
Section.
Section 5.11. Subsidiaries. Use its best efforts to conduct all of its business,
to the extent feasible, through a single corporate entity (i.e., the Borrower)
and to avoid the formation or acquisition of Subsidiaries. Notwithstanding the
foregoing, in the event that the Borrower determines that it is in its best
interest to form or acquire a Subsidiary and the Borrower transfers, conveys or
assigns any CIBC Collateral to such Subsidiary, the Borrower will cause such
Subsidiary to be wholly-owned, to have aggregate net payables owing to the
Borrower of less than $10,000,000 at all times and to execute and deliver to the
Agent for the benefit of the Secured Parties a guarantee, substantially in the
form of Exhibit B hereto, a security agreement granting collateral security for
the guaranteed obligations, substantially in the form of Exhibit C hereto, and
such other documents and opinions in connection therewith as the Agent shall
reasonably request, all in form and substance satisfactory to the Agent. Such
guarantee, security agreement and such other documents shall be delivered to the
Agent no later than 30 days after the date on which such Subsidiary has been
formed or otherwise acquired by the Borrower.
Section 5.12. Further Assurances. At the Borrower's cost and expense, upon
request of the Agent, duly execute and deliver, or cause to be duly executed and
delivered, such further instruments and do and cause to be done such further
acts as may be necessary or desirable in the opinion of the Agent or its counsel
to give effect to the provisions and purposes of this Agreement and the other
Loan Documents.
Section 5.13. Environmental Undertaking. (a) In the event the Agent determines
that any representation hereunder may be incorrect or that the Borrower or any
Subsidiary has failed to comply with any covenant contained in Section 6.12 in
any material respect, promptly undertake such investigations, studies, samplings
and testings relative to any Hazardous Substance at the Property in question as
the Agent may request.
(b) At the Borrower's cost and expense, promptly deliver
copies of all environmental investigations, studies, audits, tests, reviews or
analyses conducted by, on behalf of, or which are in possession of the Borrower
or any of its Subsidiaries with respect to any Property, as the Agent may
request in writing.
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Section 5.14. Post-Closing Matters. To the extent that the Borrower shall not
have delivered as of the Effective Date all of the original certificates of
title for vehicles pledged to the Agent for its benefit and the benefit of the
other Secured Parties as required pursuant to Section 4.1(h) of this Agreement,
deliver the same within sixty (60) days of the Effective Date, or such longer
period to which the Agent may consent.
SECTION 6. NEGATIVE COVENANTS
From the date hereof and for so long as any Obligation of the Borrower
shall remain outstanding or unpaid under this Agreement, the Borrower will not,
and will not permit any Subsidiary to:
Section 6.1. Liens. Incur, create, assume or suffer to exist any Lien on any
CIBC Collateral or Available Property, other than (i) Permitted Liens; (ii)
Liens granted pursuant to the Existing Security Documents and the Security
Documents; and (iii) Liens granted pursuant to the Fortress Loan Documents.
Section 6.2. Debt. Contract, create, incur, assume or suffer to exist any Debt,
except for (i) the Loans hereunder, (ii) Debt outstanding under the Congress
Facility Documents as in effect on the Effective Date and any Permitted
Refinancing Debt in respect thereof, but not the increase or refinancing of such
Debt in whole or in part except to the extent same constitutes Permitted
Refinancing Debt, (iii) Debt of the type described in clause (viii) of the
definition of "Debt," to the extent that the aggregate notional or face amount
of all such Debt, when taken together with all obligations of the Borrower in
respect of interest rate protection agreements or other hedging arrangements,
does not exceed $36,000,000, (iv) Debt outstanding under the Fortress Loan
Documents as in effect on the Effective Date, and any Permitted Refinancing Debt
in respect thereof, but not the increase or refunding of such Debt in whole or
in part, except to the extent the same constitutes Permitted Refinancing Debt,
(v) Debt of the Borrower and its Subsidiaries outstanding under Capitalized
Leases as in effect on the Effective Date, (vi) Debt not in excess of
$10,000,000 secured by Permitted Liens, (vii) Debt arising from Investments that
are permitted hereunder, and (viii) Debt incurred under the Household Program
Documents and any other agreements permitted under Section 5.8.
Section 6.3. Consolidations, Mergers and Sales of Assets. (i) Consolidate or
merge with or into any other Person, (ii) enter into a partnership or joint
venture with another Person (other than by the acquisition of Minority
Investments to the extent permitted by Section 6.7), or (iii) sell, lease,
assign or otherwise transfer (whether voluntarily or involuntarily) all or any
part of CIBC Collateral except:
(a) sales or transfers of CIBC Collateral (not permitted by any other provision
of this Section); provided, that (1) the sale price of each such asset shall not
be less than the fair market value of such asset at the time of sale thereof
(and, if the sale price thereof is equal to or
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greater than $5,000,000, then the fair market value of such asset shall be
determined in good faith and approved by the Board of Directors of the
Borrower), (2) prior to or concurrently with each such sale for which the sale
price is equal to or greater than $5,000,000, the Borrower shall deliver
evidence to the Agent satisfactory to it of the fair market value at the time of
sale of the asset being sold as determined by the Board of Directors of the
Borrower, (3) not less than 90% of the sale price for each asset sold pursuant
to this clause (a) shall be payable in cash on the date of such sale, (4) the
non-cash portion of the sale price therefor, if any, shall be evidenced by one
or more promissory notes maturing no later than three years after the date of
such sale which shall be pledged to the Agent as provided in Section 6.7(iv),
and by no other form of consideration, (5) if such sale is to an Affiliate, it
is made in compliance with Section 6.6;
(b) the replacement in the ordinary course of business of rolling stock and
Equipment of the Borrower and its Subsidiaries subject to the Lien of the Agent;
provided, however, that the replacement Equipment and rolling stock also shall
be CIBC Collateral;
(c) the sale or other disposition, subject to the Lien of the Agent, by the
Borrower to any of its Subsidiaries in the ordinary course of business of real
estate and related assets, including fixtures, machinery and equipment of the
Borrower no longer necessary for the proper conduct of the Borrower's business
having a value, together with the value of all other property of the Borrower so
sold or disposed of in the same fiscal year of the Borrower, of not greater than
$5,000,000 and the sale or other disposition, subject to the Lien of the Agent,
by the Subsidiaries to the Borrower in the ordinary course of business of real
estate and related assets, including fixtures, machinery and equipment of such
Subsidiaries no longer necessary for the proper conduct of such Subsidiaries'
respective businesses having a value, together with the value of all other
property of such Subsidiaries so sold or disposed of in the same fiscal year of
the Borrower, of not greater than $5,000,000;
(d) the lease by the Borrower, as lessor, of those stores and real estate
described on Schedule 6.3 and other real property of the Borrower not necessary
for the operations of the Borrower or any of its Subsidiaries, in each instance
under this clause (d) having a fair market value of not greater than $5,000,000
individually, or $10,000,000 in the aggregate at any one time for all real
property leased under this clause (d); provided, that such leases shall be
entered into with a Person who is not an Affiliate of the Borrower on an arms'
length basis for fair consideration and such leases shall not be capital leases;
(e) the merger of any wholly owned Subsidiary into the Borrower or the
consolidation of any wholly owned Subsidiary with the Borrower in which the
Borrower shall be the surviving corporation; and
(f) sales of assets securing the Fortress Real Estate Financing for fair market
value; provided, that the Net Cash Proceeds thereof are applied to the repayment
or prepayment of the Fortress Real Estate Financing.
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The Borrower shall deliver to the Agent, no less than three (3)
Business Days prior to the date of any expected sale or other disposition
permitted under clause (a) or clause (c) of this Section 6.3, written notice of
the expected date of the closing of such sale or other disposition and the
expected date of receipt by the Borrower of the Net Cash Proceeds with respect
thereto; provided, that with respect to any expected sale or other disposition
of any Property subject to Liens in favor of the Agent, the Borrower shall
deliver to the Agent, no less than thirty (30) Business Days prior to the
closing thereof, (x) written notice of the identity of the purchaser or
transferee, the expected date of the closing of such sale or other disposition
and the principal terms of the sale or other disposition and (y) the form of the
purchase agreement to be delivered at the closing thereof.
Section 6.4. Termination of Plans. Take any action to terminate any of its
Plans which could result in a material liability of the Borrower or any
Subsidiary to any Person.
Section 6.5. Restricted Payments. Declare or make, any Restricted Payment,
except:
(i) (x) regular, scheduled or mandatory payments or mandatory
prepayments of principal and interest on Debt for Borrowed Money
and (y) optional prepayments of principal and interest on the
Fortress Real Estate Financing (but only to the extent of the net
proceeds of any Permitted Refinancing Debt incurred for such
purpose or the Net Cash Proceeds of the sale of any Property or
other assets subject to the Fortress Real Estate Financing);
(ii) payments in an amount not to exceed $1,000,000 in the
aggregate in connection with limited stock buy-back or reverse
stock split transactions with respect to the Borrower's capital
stock;
(iii) transactions with Affiliates as expressly permitted under
Section 6.6; and
(iv) payments to the Borrower by a Subsidiary.
Section 6.6. Transactions with Affiliates. Sell or transfer any Property or
other assets to, or otherwise engage in any other transactions with, any of its
Affiliates other than in the ordinary course of business at prices and on terms
and conditions not less favorable to the Borrower, or the affected Subsidiary,
than could be obtained on an arm's-length basis from unrelated third parties.
Section 6.7. Investments, Loans and Advances. Purchase, hold or acquire any
capital stock, evidences of Debt or other securities of, make or permit to exist
any loans or advances to, or make or permit to exist any investment in, any
other Person by the Borrower or any Subsidiary (all of the foregoing,
"Investments"), except, in the case of the Borrower, for (i) the ownership by
the Borrower of capital stock of any Subsidiary existing on the date hereof,
(ii) Temporary Cash Investments; provided, however, that while any Loans are
outstanding such Investments shall not exceed $15,000,000 in the aggregate at
any one time outstanding and shall be maintained at all times
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in an investment account located in the United States, (iii) existing
Investments set forth on Schedule 6.7, but not any increase in the amount
thereof, and the Borrower causes each such Subsidiary to comply with the
requirements of Section 5.11 (it being agreed that an Investment in a Subsidiary
will no longer be deemed to be outstanding if such Subsidiary is merged into the
Borrower); and provided further, that all such Subsidiaries are incorporated in
a jurisdiction in the United States and substantially all of their assets are at
all times located in the United States, (iv) Investments in promissory notes
representing the non-cash purchase price for the sales of assets permitted under
Section 6.3(a); provided, that such Investments do not exceed $5,000,000 in the
aggregate at any one time; provided further, that such promissory notes are
pledged by the Borrower to the Agent for the benefit of the Secured Parties
pursuant to a Supplement, substantially in the form of Annex A to the Security
and Pledge Agreement; (v) Minority Investments, in addition to those permitted
under any other clause of this Section, in Persons organized or incorporated in
a jurisdiction in the United States, substantially all of whose assets are
located in the United States; provided, that the aggregate amount of all such
Minority Investments shall not exceed $2,000,000; and (vi) Investments (not
permitted by any of clauses (i) through (v) of this Section) in an amount not
exceeding $1,000,000 in the aggregate outstanding at any one time.
Section 6.8. Business Segments. (i) Suspend the operation of a segment material
to the operation of its business as presently conducted, which suspension could
materially impair the operations of the Borrower and its Subsidiaries taken as a
whole; or (ii) engage at any time in any business or business activity other
than the business currently conducted by it and business activities reasonably
incidental thereto.
Section 6.9. Accounting Changes. Make any significant change in its accounting
treatment or financial reporting practices except as required by GAAP or change
its fiscal year or the method of determining its fiscal quarter ends.
Section 6.10. Amendment and Modification of Certain Documents.
(a) Directly or indirectly, amend, modify, supplement, waive compliance with, or
assent to noncompliance with any term, provision or condition of the Certificate
of Incorporation of the Borrower as in effect on the Effective Date which the
Agent or the Majority Lenders deem material.
(b) Directly or indirectly, amend, modify, supplement, waive compliance with, or
assent to noncompliance with, any term, provision or condition of the Fortress
Loan Agreement or any of the other Fortress Loan Documents as in effect on the
Effective Date (A) which the Agent or the Majority Lenders deem material
(including, without limitation, terms, provisions or conditions relating to
events of default, acceleration rights or other remedies, tenor, interest rates,
substitution of collateral, the non-recourse nature of such financing, covenants
and prohibitions against amending any of the Loan Documents) or (B) which the
Agent reasonably determines would place any further material restrictions on the
Borrower or its Subsidiaries or materially increase the obligations of the
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Borrower or any of its Subsidiaries thereunder or confer on the holders thereof
any material additional rights.
(c) Directly or indirectly, amend, modify, supplement, waive compliance with, or
assent to noncompliance with, any term, provision or condition of the Congress
Facility Agreement or any of the other Congress Facility Documents which would
have the effect of restricting the ability of the Borrower to refinance the
indebtedness under this Agreement or the indebtedness under the Fortress Loan
Agreement.
Section 6.11. Sale/Leasebacks. Enter into any arrangements, directly or
indirectly, with any Person, whereby the Borrower or any such Subsidiary shall
sell or transfer any property, whether now owned or hereafter acquired, used or
useful in its business, in connection with the rental or lease of the property
so sold or transferred.
Section 6.12. Environmental Matters.
(a) Use, generate, manufacture, produce, store, Release, discharge or dispose of
on, under or about any Property or transport or arrange for the transportation,
treatment, storage or disposal to or from the Property, any Hazardous Substance,
or (to the extent within the Borrower's or any such Subsidiary's control) permit
any other Person to do so, where such could reasonably be expected to have a
Material Adverse Effect.
(b) Fail to keep and maintain the Property in compliance with any Environmental
Law where the failure to do so could reasonably be expected to have a Material
Adverse Effect.
(c) In the event that any investigation, site monitoring, containment, cleanup,
removal, restoration or other remedial work of any kind or nature (the "Remedial
Work") with respect to any portion of the Property is required to be performed
by the Borrower or any of its Subsidiaries under any applicable Environmental
Law, or by any Governmental Authority or any other Person because of, or in
connection with, any current or future presence, suspected presence, Release or
suspected Release of a Hazardous Substance in or into the air, soil, groundwater
or surface water at, on, under, to, from or within the Property (or any portion
thereof), which could reasonably be expected to have a Material Adverse Effect
(i) fail to promptly notify the Agent in writing, (ii) fail to commence, as soon
as practicable, and thereafter diligently prosecute to completion, all such
Remedial Work or (iii) fail to promptly provide the Agent with the results of
such investigations, studies and samplings.
(d) As used herein, (i) "Environmental Clean-up Site" means any location which
is listed or proposed for listing on the National Priorities List, the
Comprehensive Environmental Response, Compensation and Liability Information
System, or on any similar state list of sites requiring investigation or
cleanup; (ii) "Environmental Law" means any and all current or future federal,
state, local, provincial and foreign, civil and criminal laws, statutes,
ordinances, orders,
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common law, codes, rules, regulations, Environmental Permits, policies, guidance
documents, judgments, decrees, injunctions, or agreements with any Governmental
Authority, relating to the protection of health and the Environment, worker
health and safety, and/or governing the handling, use, generation, treatment,
storage, transportation, disposal, manufacture, distribution, formulation,
packaging, labeling, or Release of Hazardous Substances, whether now existing or
subsequently amended or enacted, including but not limited to: the Clean Air
Act, 42 U.S.C. ss. 7401 et seq.; the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. ss. 9601 et seq.; the Federal
Water Pollution Control Act, 33 U.S.C. ss. 1251 et seq.; the Hazardous Material
Transportation Act 49 U.S.C. ss. 1801 et seq.; the Federal Insecticide,
Fungicide and Rodenticide Act 7 U.S.C. ss. 136 et seq.; the Resource
Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. ss. 6901 et seq.; the
Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq.; the Occupational
Safety & Health Act of 1970, 29 U.S.C. ss. 651 et seq.; the Oil Pollution Act of
1990, 33 U.S.C. ss. 2701 et seq.; and the state analogies thereto, all as
amended or superseded from time to time; and any common law doctrine, including
but not limited to, negligence, nuisance, trespass, personal injury, or property
damage related to or arising out of the presence, Release, or exposure to a
Hazardous Substance; (iii) "Environmental Permit" means any federal, state,
local, provincial, or foreign permits, licenses, approvals, consents or
authorizations required by any Governmental Authority under or in connection
with any Environmental Law and includes any and all orders, consent orders or
binding agreements issued or entered into by a Governmental Authority under any
applicable Environmental Law; (iv) "Hazardous Substance" means petroleum,
petroleum hydrocarbons or petroleum products, petroleum by-products, radioactive
materials, asbestos or asbestos-containing materials, gasoline, diesel fuel,
pesticides, radon, urea formaldehyde, lead or lead-containing materials,
polychlorinated biphenyls; and any other chemicals, materials, substances or
wastes in any amount or concentration which are now or hereafter become defined
as or included in the definition of "hazardous substances," "hazardous
materials," "hazardous wastes," "extremely hazardous wastes," "restricted
hazardous wastes," "toxic substances," "toxic pollutants," "pollutants,"
"regulated substances," "solid wastes," or "contaminants" or words of similar
import, under any Environmental Law; (v) "Property" means any real property
currently or formerly owned, leased or operated by the Borrower or its
Subsidiaries, including but not limited to, the buildings, fixtures,
groundwater, soil, and surface water thereat; (vi) "Release" means any
discharging, disposing, emitting, leaking, pumping, pouring, emptying,
injecting, escaping, leaching, dumping or spilling of any Hazardous Substance
into the environment.
SECTION 7. EVENTS OF DEFAULT
Section 7.1. Events of Default. In the case of the happening of any of the
following events and the continuance thereof beyond the applicable period of
grace, if any (each, an "Event of Default"):
(a) any material representation or warranty made by the Borrower in this
Agreement or in any other Loan Document or in connection with this Agreement or
any other Loan Document or in connection with the execution and delivery of this
Agreement or any of the other
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Loan Documents or the credit extensions hereunder or any material statement or
representation made in any report, financial statement, certificate or other
document furnished by the Borrower to the Agent or the Lenders under or in
connection with this Agreement or any of the other Loan Documents, shall prove
to have been false or misleading in any material respect when made or delivered;
or
(b) default shall be made in the payment of any principal of or interest on the
Loans or any other amounts payable by the Borrower hereunder, when and as the
same shall become due and payable, whether at the due date thereof (including,
without limitation, the Maturity Date) or at a date fixed for prepayment thereof
or by acceleration thereof or otherwise; or
(c) default shall be made by the Borrower in the due observance or performance
of any covenant, condition or agreement contained in Section 6 (and such default
shall continue unremedied after notice to the Borrower in the case of Section
6.6) or in Section 5.10; or
(d) default shall be made by the Borrower or any Subsidiary in the due
observance or performance of any other covenant, condition or agreement to be
observed or performed pursuant to the terms of this Agreement or any of the
other Loan Documents and such default shall continue unremedied (w) in the case
of Section 5 (other than Sections 5.1(a) and (b), 5.3(a), 5.5, 5.9 and 5.14),
after notice to the Borrower, (x) in the case of Section 5.1(a) and (b), for
more than five (5) days after notice to the Borrower, (y) in the case of
Sections 5.2 and 5.5, for more than thirty (30) days after notice to the
Borrower and (z) in all other cases, for more than ten (10) days after notice to
the Borrower; or
(e) the Borrower or any Subsidiary shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for the
benefit of creditors, or shall become unable, admit in writing its inability or
fail generally to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing; or
(f) an involuntary case or other proceeding shall be commenced against the
Borrower or any Subsidiary seeking liquidation, reorganization or other relief
with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 60 days; or an order for
relief shall be entered against the Borrower or any Subsidiary under the federal
bankruptcy laws as now or hereafter in effect; or
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(g) a Change of Control shall have occurred; or
(h) any material provision of any Loan Document shall, for any reason, cease to
be valid and binding on the Borrower or any Subsidiary, or the Borrower or such
Subsidiary shall so assert in any pleading filed in any court; or
(i) any judgment or order as to a liability or Debt for the payment of money in
excess of $5,000,000 shall be rendered against the Borrower or any Subsidiary
and the enforcement thereof shall not be subject to any applicable stay; or
(j) any non-monetary judgment or order shall be rendered against the Borrower
or any Subsidiary which does or would reasonably be expected to (i) cause a
Material Adverse Effect, or (ii) have a material adverse effect on the rights
and remedies of the Agent or any Lender under any Loan Document, and there shall
be any period of 10 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
(k) (i) any Event of Default occurs under the Fortress Loan Documents, (ii) any
Event of Default occurs under the Congress Facility Documents or (iii) the
Borrower or any Subsidiary shall fail to make any payment in respect of any
other Debt aggregating $3,000,000 or more, in each case when due or within any
applicable grace period or any event or condition shall occur which (x) results
in the acceleration of the maturity of such other Debt or the termination of any
commitment to lend any such other Debt or (y) enables (or, with the giving of
notice or lapse of time or both, would enable) the holder of such other Debt or
any Person acting on such holder's behalf to accelerate the maturity thereof or
terminate any commitment to lend such other Debt; or
(l) any ERISA Event shall have occurred with respect to a Plan and, 30 days
after notice of such occurrence shall have been given to the Borrower by the
Agent (i) such ERISA Event shall still exist and (ii) the sum (determined as of
the date of occurrence of such ERISA Event) of the Insufficiency of such Plan
and the Insufficiency of any and all other Plans with respect to which an ERISA
Event shall have occurred and then exist (or, in the case of a Plan with respect
to which an ERISA Event described in clauses (b), (c), (e) and (f) of the
definition of ERISA Event shall have occurred and then exist, the liability
related thereto) is equal to or greater than $3,000,000; or
(m) the Borrower, any Subsidiary or any ERISA Affiliate of any of them shall
have been notified by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan in an amount which, when
aggregated with all other amounts required to be paid to Multiemployer Plans by
the Borrower, any Subsidiary or any ERISA Affiliate of any of them as Withdrawal
Liability (determined as of the date of such notification), exceeds $5,000,000
or requires payments exceeding $2,000,000 per annum; or
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(n) the Borrower, any Subsidiary or any ERISA Affiliate of any of them shall
have been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being terminated within the
meaning of Title IV of ERISA if, as a result of such reorganization or
termination, the aggregate annual contributions of the Borrower, the
Subsidiaries and their ERISA Affiliates to all Multiemployer Plans which are
then in reorganization or being terminated have been or will be increased over
the aggregate amounts contributed to such Multiemployer Plans for the respective
plan year of each such Multiemployer Plan immediately preceding the plan year in
which the reorganization or termination occurs by an amount exceeding
$2,000,000; or
(o) it shall be determined (whether by the Bankruptcy Court or by any other
judicial or administrative proceeding, forum or settlement) that the Borrower or
any Subsidiary is liable for the payment of claims arising under Environmental
Laws, the payment of which will have a Material Adverse Effect;
then, and in every such event and at any time thereafter during the continuance
of such event, the Agent may, and at the request of the Majority Lenders (as the
case may be) shall, by notice to the Borrower, take one or more of the following
actions, at the same or different times: (i) declare the Loans then outstanding
to be forthwith due and payable, whereupon the principal of the Loans, together
with accrued interest thereon and all other liabilities of the Borrower accrued
hereunder and under any other Loan Document, shall become forthwith due and
payable, without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived by the Borrower, anything contained
herein or in any other Loan Document to the contrary notwithstanding; and (ii)
exercise and enforce any and all remedies under the Loan Documents and under
applicable law available to the Agent and the Lenders; provided, that without
any notice to the Borrower or any other act by the Agent or the Lenders, in the
case of the occurrence of (x) any of the Events of Default specified in clauses
(e) or (f) above with respect to the Borrower or any Subsidiary (y) any of the
Events of Default specified in clause (k) above with respect to the Fortress
Real Estate Financing as to which Fortress either accelerates the maturity of
any of the Debt owing by the Borrower or any of its Subsidiaries to Fortress
with respect thereto or otherwise exercises any of its rights or remedies to
liquidate, realize or foreclose upon any collateral securing such Debt, or (z)
any of the Events of Default specified in clause (k) above with respect to the
Congress Facility as to which Congress Financial either accelerates the maturity
of any the Debt owing by the Borrower or any of its Subsidiaries to Congress
Financial with respect thereto or otherwise exercises any of the rights or
remedies to liquidate, realize or foreclose upon any collateral securing such
Debt, all amounts due hereunder (together with accrued interest thereon) and all
other Secured Obligations and liabilities of the Borrower hereunder and under
the other Loan Documents shall become immediately due and payable.
Section 7.2. Application of Proceeds. If a Default or an Event of Default shall
have occurred and be continuing, all proceeds of the CIBC Collateral and all
other payments received under this Agreement or the other Loan Documents
(including as a result of or in connection with
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a proceeding under the Bankruptcy Code or any other similar state law proceeding
involving the Borrower) which constitute identifiable proceeds of CIBC
Collateral shall be applied by the Agent to payment of the Secured Obligations
in the following order:
(i) FIRST, to payment of all unreimbursed costs and expenses of
the Agent which are payable by the Borrower pursuant to any of
the Loan Documents and all unreimbursed costs and expenses of the
Lenders which are payable pursuant to Section 9.5;
(ii) SECOND, to payment first of the accrued and unpaid interest
on, next the principal of and then all other amounts due to the
Existing Cash Management Bank with respect to the Cash Management
Obligations, if any, remaining unpaid after the exercise of any
set-off rights available to the Existing Cash Management Bank
pursuant to Section 2.13;
(iii) THIRD, to payment first of the accrued and unpaid interest
on, next the principal of and then all other amounts due under
the Loan Documents in respect of the Term Loans, ratably amongst
the Term Lenders in accordance with the proportion which the
aggregate principal amount of the outstanding Obligations owing
to the Term Lenders at the time bears to the aggregate principal
amount of such Obligations until the interest on and principal of
the Obligations shall be paid or provided for in full;
(iv) FOURTH, to the payment of any remaining unpaid Secured
Obligations ratably amongst the Secured Parties in accordance
with the proportion which the amount of such other Secured
Obligations owing to each such Secured Party bears to the
aggregate principal amount of such other Secured Obligations
owing to all of the Secured Parties until such other Secured
Obligations shall be paid in full; and
(v) FIFTH, the balance, if any, after all of the Secured
Obligations have been satisfied, shall be returned to the
Borrower or paid over to such other Person as may be required by
law.
The Borrower acknowledges and agrees that it shall remain liable to the
extent of any deficiency between (x) the amount of the proceeds of the CIBC
Collateral and all other payments received under this Agreement and applied
pursuant to this Section to the sums referred to in the FIRST through FOURTH
clauses above and (y) the aggregate amount of the sums referred to in the FIRST
through FOURTH clauses above.
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SECTION 8. THE AGENT; THE ADMINISTRATIVE AGENT
Section 8.1. Appointment and Authorization. Each Secured Party irrevocably
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers, under this Agreement and the other Loan Documents as
are delegated to the Agent, as the case may be, by the terms hereof or thereof,
together with all such powers as are reasonably incidental thereto.
Section 8.2. Agent and Affiliates. The Agent shall have the same rights and
powers under this Agreement as any other Lender and may exercise or refrain from
exercising the same, as though it were not the Agent, and the Agent and its
Affiliates may accept deposits from, lend money to, and generally engage in any
kind of business with the Borrower or any Subsidiary or Affiliate of the
Borrower as if it were not the Agent.
Section 8.3. Action by Agent. The obligations of the Agent hereunder and under
the other Loan Documents are only those expressly set forth herein and therein.
Without limiting the generality of the foregoing, Agent shall not be required to
take any action with respect to any Default, except as expressly provided in
Section 7 and in the Security Documents and except that the Agent shall take
such action with respect to such Default as shall be reasonably directed by the
Majority Lenders; provided, that unless and until the Agent shall have received
such directions, the Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default as it shall
deem advisable.
Section 8.4. Consultation with Experts. The Agent may consult with legal counsel
(who may be counsel for the Borrower), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken by it in good faith in accordance with the advice of such counsel,
accountants or experts.
Section 8.5. Liability of Agent. Notwithstanding any other provision, express or
implied, to the contrary in this Agreement or any other Loan Document, neither
the Agent nor any of its directors, officers, agents, employees,
attorneys-in-fact or Affiliates shall be liable for any action taken or not
taken by them in connection herewith or in connection with any other Loan
Document (i) with the consent or at the request of the applicable Lenders, or
(ii) in the absence of their own gross negligence or willful misconduct, as
determined by a final order or judgment of a court of competent jurisdiction.
Neither the Agent nor any of its directors, officers, agents, employees,
attorneys-in-fact or Affiliates shall be responsible for or have any duty to
ascertain, inquire into or verify (i) any statement, warranty or representation
made in connection with this Agreement, any other Loan Document or any Borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of the Borrower; (iii) the satisfaction of any condition specified in
Section 4 (except where the satisfaction of the Agent is specifically required);
or (iv) the validity, effectiveness or genuineness of this Agreement, any other
Loan Document or any other instrument or writing furnished in connection
herewith or therewith. The Agent shall not incur any liability by acting in
reliance upon any notice, consent, certificate, statement, or other writing
(which may be
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a bank wire or similar writing) believed by it in good faith to be genuine or to
be signed by the proper party or parties.
Section 8.6. Reimbursement and Indemnification; Set-Off.
(a) Each Lender agrees (i) to reimburse (x) the Agent, on
demand, in such Lender's Percentage, for any expenses and fees incurred by the
Agent for the benefit of the Lenders under or in connection with this Agreement,
and any of the Loan Documents including, without limitation, counsel fees and
compensation of agents and employees paid for services rendered on behalf of the
Lenders, and any other expense incurred in connection with the operations or
enforcement hereof or thereof not required to be reimbursed by the Borrower and
(y) the Agent in such Lender's Percentage for any expenses, costs, fees or
disbursements of the Agent incurred for the benefit of the Lenders that the
Borrower has agreed to reimburse pursuant to Section 9.5 and has failed so to
reimburse and (ii) to indemnify and hold harmless the Agent and any of their
respective directors, officers, employees, agents, advisors, consultants,
attorneys-in-fact, experts, other professional persons and representatives and
Affiliates, on demand, in such Lender's Percentage from and against any and all
penalties, fines, expenses, losses, settlements, costs, claims, causes of
action, debts, dues, sums of money, accounts, accountings, reckonings, acts,
omissions, demands, liabilities, obligations, damages, actions, judgments,
suits, proceedings, or disbursements of any kind or nature whatsoever, known or
unknown, contingent or otherwise, which may be imposed on, incurred by, or
asserted against any of them in any way relating to or arising out of this
Agreement, or any of the other Loan Documents or any action taken or omitted by
it or any of them under this Agreement, or any of the other Loan Documents to
the extent not reimbursed by the Borrower (except such as shall result from
their respective gross negligence or willful misconduct as determined by a final
order or judgment of a court of competent jurisdiction). Without limiting the
foregoing, the agreements contained in Section 10.6 of the Pre-Petition Credit
Agreement and Section 8.6(a) of the Existing Credit Agreement shall continue in
full force and effect as to the matters covered thereby.
(b) The Agent is hereby authorized at any time and from time
to time, to the fullest extent permitted by law, to set off and apply any and
all amounts received by the Agent for the account of a Defaulting Lender to the
satisfaction of the unpaid obligations owing by such Defaulting Lender to the
Agent and the rights of such Defaulting Lender with respect to all such amounts
shall be subject and subordinate to the rights of the Agent to be paid the
amounts owing to it by such Defaulting Lender.
Section 8.7. Credit Decision. Each Secured Party expressly acknowledges that
neither the Agent nor any of its directors, officers, employees, agents,
advisors, attorneys-in-fact or Affiliates has made any representations or
warranties to it and that no act by the Agent hereinafter taken, including any
review of the affairs of the Borrower, shall be deemed to constitute any
representation or warranty by the Agent to any Secured Party. Each Secured Party
acknowledges that it has independently and without reliance upon the Agent or
any other Secured Party, and based
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on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Secured Party
also acknowledges that it will independently and without reliance upon the Agent
or any other Secured Party, 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 any action under this Agreement. Except for notices,
reports and other documents expressly required to be furnished to the Secured
Parties by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Secured Party with any credit or other information
concerning the business,operations, property, condition(financial or otherwise),
prospects or creditworthiness of the Borrower or any Subsidiary which may come
into the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates.
Section 8.8. Notice of Transfer. The Agent may deem and treat a Lender party to
this Agreement as the owner of such Lender's portion of the Loans for all
purposes, unless and until a written notice of the assignment or transfer
thereof executed by such Lender and its assignee in accordance with Section 9.3
shall have been accepted by the Agent.
Section 8.9. Relations Among Lenders. Each Lender in its capacity as a Lender
agrees that it will not take any legal action, nor institute any actions or
proceedings, against the Borrower hereunder or with respect to any CIBC
Collateral, it being understood and agreed that all such actions are to be taken
by the Agent on behalf of the Lenders. Without limiting the generality of the
foregoing, no Lender may unilaterally accelerate or otherwise enforce or seek to
enforce its portion of the Secured Obligations, except in accordance with
Section 7.1.
Section 8.10. Successor Agent. The Agent may resign at any time by giving
written notice thereof to the other Secured Parties and the Borrower. Upon any
such resignation, the Majority Lenders, acting together shall have the right to
appoint a successor Agent, which shall be reasonably satisfactory to the
Borrower. If no successor Agent shall have been so appointed and shall have
accepted such appointment, within 30 days after the retiring Agent's giving of
notice of resignation, the retiring Agent may, on behalf of the Lenders, appoint
a successor Agent, which shall be a commercial bank organized under the laws of
the United States of America or of any State thereof and having a combined
capital and surplus of a least $100,000,000, which shall be reasonably
satisfactory to the Borrower. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Section shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was Agent under this
Agreement.
Section 8.11. Concerning the Administrative Agent. Notwithstanding any other
provision of this Agreement, it is understood and agreed that the Administrative
Agent shall have no obligations or duties under this Agreement and the other
Loan Documents except such as are expressly set forth in this Agreement or the
other Loan Documents.
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SECTION 9. MISCELLANEOUS
Section 9.1. Notices. Notices and other communications provided for herein shall
be in writing (including telegraphic, telex, facsimile or cable communication)
and shall be mailed, telegraphed, telexed, transmitted, cabled or delivered to
the Borrower at its offices at 800 N.W. Chipman Road, Suite 5900, Lee's Summit,
MO 64063 or its mailing address at P.O. Box 648001, Lee's Summit, MO 64064-8001,
Attention: Chief Financial Officer, and to any Lender or the Agent at its
address set forth on the signature pages of this Agreement, or such other
address as such party may from time to time designate by giving written notice
to the other parties hereunder. All notices and other communications given to
any party hereto in accordance with the provisions of this Agreement shall be
deemed to have been given on the fifth Business Day after the date when sent by
registered or certified mail, postage prepaid, return receipt requested, if by
mail; or when delivered to the telegraph company, charges prepaid, if by
telegram; or when receipt is acknowledged, if by any telegraphic communications
or facsimile equipment of the sender; in each case addressed to such party as
provided in this Section or in accordance with the latest unrevoked written
direction from such party; provided, that in the case of notices to the Agent,
notices pursuant to the preceding sentence and pursuant to Section 2 shall be
effective only when received by the Agent.
Section 9.2. Survival of Agreement, Representations and Warranties, etc. All
warranties, representations and covenants made by the Borrower herein or in any
certificate or other instrument delivered by it or on its behalf in connection
with this Agreement shall be considered to have been relied upon by the Secured
Parties and shall survive the making of the Loans herein contemplated,
regardless of any investigation made by any Lender or on its behalf and shall
continue in full force and effect so long as any amount due or to become due
hereunder is outstanding and unpaid.
Section 9.3. Successors and Assigns.
(a) (i) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Agent, the Lenders and the other Secured Parties and their
respective successors and assigns. The Borrower may not assign or transfer any
of its rights or obligations hereunder without the prior written consent of all
of the Lenders.
(ii) Each Lender may sell participations to any Person in all or part of
its Loan, in which event, without limiting the foregoing, the provisions of
Sections 2.9, 2.10 and 2.12 shall inure to the benefit of each purchaser of a
participation (provided, that such participant shall look solely to the seller
of such participation for such benefits, and the Borrower's liability, if
any, under Sections 2.9, 2.10 and 2.12 shall not be increased as a result of the
sale of any such participation) and the pro rata treatment of payments, a
described in Section 2.11, shall be determined as if such Lender had not sold
such participation. In the event any Lender shall sell any participation, such
Lender shall retain the sole right and responsibility to enforce the obligations
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of the Borrower relating to the Loans including,without limitation, the right to
approve any amendment, modification or waiver of any provision of this Agreement
(provided, that such Lender may grant its participant the right to consent
to such Lender's execution of amendments, modifications or waivers which (i)
reduce the amount of any scheduled principal payment on any Loan or reduce
the principal amount of any Loan or the rate of interest payable hereunder or
(ii) extend the maturity of the Borrower's obligations hereunder). The sale of
any such participation shall not alter the rights and obligations of the Lender
selling such participation hereunder with respect to the Borrower.
(b) (i) Each Lender may assign to one or more Lenders or Eligible Assignees all
or a portion of its interests, rights and obligations under this Agreement;
provided, that (w) other than in the case of an assignment to a Person at least
50% owned by the assignor Lender, or by a common parent of both, or to another
Lender, the Agent must give its prior written consent, which consent will not be
unreasonably withheld, (x) the aggregate amount of the Term Loans of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered to the
Agent) shall, unless otherwise agreed to in writing by the Borrower and the
Agent, in no event be less than $5,000,000 (or $1,000,000 in the case of an
assignment between Lenders; provided, however, that the assigning Lender shall
have been a Lender for a period of at least 120 days) unless the Term Loans so
assigned constitute 100% of such Term Loans of the assigning Lender and (y) each
assignment shall be of a constant, not a varying, percentage of all of the
assigning Lender's rights and obligations under this Agreement in respect of its
Term Loans.
(ii) The parties to each such assignment entered into pursuant to paragraph
(b)(i) above shall execute and deliver to the Agent, for its acceptance and
recording in the Register (as defined below), an Assignment and Acceptance
with blanks appropriately completed, together with a processing and recordation
fee of $3,500 (for which the Borrower shall have no liability). Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, which effective date shall be
within ten Business Days after the execution thereof (unless otherwise agreed
to in writing by the Agent in its sole discretion), (A) the assignee thereunder
shall be a party hereto and, to the extent provided in such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and (B) the
Lender thereunder shall, to the extent provided in such Assignment and
Acceptance, 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).
(c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than the representation
and warranty that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim, such assigning Lender
makes no representation or warranty and assumes no responsibility with respect
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to any statements, warranties or representations made in or in connection with
this Agreement or any of the other Loan Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any of the other Loan Documents; (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or the performance or observance by the
Borrower of any of its obligations under this Agreement or any of the other Loan
Documents or any other instrument or document furnished pursuant hereto; (iii)
such assignee confirms that it has received a copy of this Agreement and the
other Loan Documents, together with copies of the financial statements referred
to in Section 3.4 and such other 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 the Agent, 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, any of the other Loan Documents and any other instrument or
document furnished pursuant thereto; (v) such assignee appoints and authorizes
the Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement, any of the other Loan Documents and any other instrument
or document furnished pursuant thereto, as are delegated to the Agent by the
terms hereof or thereof, together with such powers as are reasonably incidental
thereto; and (vi) such assignee agrees that it will perform in accordance with
their terms all obligations that by the terms of this Agreement are required to
be performed by it as a Lender.
(d) The Agent shall maintain at its office a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and
addresses of the Lenders, and principal amount of the Loans owing to, each
Lender from time to time (the "Register"). The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrower, the Agent and
the Lenders shall treat each Person the name of which is recorded in the
Register as a Lender hereunder for all purposes of this Agreement. The Register
shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an assigning
Lender and the assignee thereunder, together with the fee payable in respect
thereof, the Agent shall, if such Assignment and Acceptance has been completed
with blanks appropriately filled and, if required, consented to by the Agent:
(i) accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt written notice thereof to the
Borrower (together with a copy thereof). No assignment shall be effective for
purposes of this Agreement unless it has been recorded in the Register as
provided in this paragraph.
(f) Any Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section, disclose to the
assignee or participant or proposed assignee or participant, any information
relating to the Borrower furnished to such Lender by or on behalf of the
Borrower; provided, that prior to any such disclosure, each such
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assignee or participant or proposed assignee or participant shall agree in
writing to be bound by the provisions of Section 9.4.
Section 9.4. Confidentiality. The Agent and each Lender agree to keep any
information delivered or made available by the Borrower to it confidential from
anyone other than persons employed or retained by the Agent or such Lender who
are or are expected to become engaged in evaluating, approving, structuring or
administering the Loans; provided, that nothing herein shall prevent the Agent
or any Lender from disclosing such information (i) to any other Lender, (ii) to
any other person if reasonably incidental to the administration of the Loans,
(iii) upon the order of any court or administrative agency, (iv) upon the
request or demand of any regulatory agency or authority, (v) which has been
publicly disclosed other than as a result of a disclosure by the Agent or any
Lender which is not permitted by this Agreement, (vi) in connection with any
litigation to which the Agent, any Lender, or their respective Affiliates may be
a party to the extent reasonably required, (vii) to the extent reasonably
required in connection with the exercise of any remedy hereunder, (viii) to the
Agent's and such Lender's legal counsel, financial advisors and independent
auditors, and (ix) to any actual or proposed participant or assignee of all or
part of its rights hereunder subject to the proviso in Section 9.3(f).
Section 9.5. Expenses. Whether or not the transactions hereby contemplated shall
be consummated, the Borrower agrees to pay all reasonable out-of-pocket expenses
incurred by the Agent (including, but not limited to, the reasonable fees and
disbursements of ML&B, Shook Hardy & Bacon L.L.P., special local and special
real estate counsel for the Agent, any other counsel that the Agent shall retain
and any third-party consultants, accountants and auditors advising the Agent or
ML&B, including (without limitation) E&Y Restructuring LLC, financial advisors
to ML&B), and any Lender in connection with the preparation, execution, delivery
and administration of this Agreement, and the other Loan Documents, the making
of the Term Loans, the maintenance or perfection of the Liens contemplated
hereby, any consent or waiver hereunder or thereunder, and any amendment or
modification hereof or thereof, the reasonable and customary costs, fees and
expenses of the Agent in connection with its monthly and other periodic field
audits and monitoring of assets and, following the occurrence of an Event of
Default, all reasonable out-of-pocket expenses incurred by the Lenders and the
Agent in the enforcement or protection of the rights of any one or more of the
Lenders or the Agent in connection with this Agreement or the other Loan
Documents including, but not limited to, the reasonable fees and disbursements
of any counsel for the Lenders or the Agent (including, without limitation, the
allocated costs of in-house counsel). Such payments shall be made on demand upon
delivery of a statement setting forth such costs and expenses. The obligations
of the Borrower under this Section shall survive the termination of this
Agreement and/or the payment and performance of the Secured Obligations.
Section 9.6. Indemnities.
(a) The Borrower agrees to defend, indemnify and hold harmless the Agent, the
Lenders and the other Secured Parties and their respective directors, officers,
employees, agents,
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advisors, consultants, attorneys-in-fact, experts, other professional persons
and representatives and Affiliates (each, an "Indemnified Party"), on demand,
from and against any and all penalties, fines, expenses, losses, settlements,
costs, claims, causes of action, debts, dues, sums of money, accounts,
accountings, reckonings, acts, omissions, demands, liabilities, obligations,
damages, actions, judgments, suits, proceedings or disbursements incurred by
such Indemnified Party, of any kind or nature whatsoever, known or unknown,
contingent or otherwise, arising out of claims made by any Person in any way
relating to the transactions contemplated hereby, including, without limitation,
attorneys' and consultants' fees, investigation and laboratory fees, response
costs, court costs and litigation expenses, except to the extent that any of the
foregoing arise solely out of or result from the gross negligence or willful
misconduct of such Indemnified Party, as determined by a final order or judgment
of a court of competent jurisdiction.
(b) Without limiting the foregoing, the Borrower agrees to defend, indemnify and
hold harmless each Indemnified Party, on demand, from and against any and all
penalties, fines, expenses, losses, settlements, costs, claims, causes of
action, demands, liabilities, obligations, damages, actions, judgments, suits or
disbursements incurred by such Indemnified Party, of any kind or nature
whatsoever, known or unknown, contingent or otherwise, arising out of, or in any
way relating to the violation of, noncompliance with or liability under any
Environmental Law applicable to the operations or activities of the Borrower or
any Subsidiary or the Property, or any orders, requirements or demands of
Governmental Authorities or any other Person related thereto, including, without
limitation, attorneys' and consultants' fees, investigation and laboratory fees,
response costs, court costs and litigation expenses, except to the extent that
any of the foregoing arise solely out of or result from the gross negligence or
willful misconduct of such Indemnified Party, as determined by a final order or
judgment of a court of competent jurisdiction.
(c) The indemnities set forth in this Section shall continue in full force and
effect regardless of the termination of this Agreement and the payment and
performance of the Secured Obligations.
Section 9.7. CHOICE OF LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES AND BY FEDERAL LAW TO THE EXTENT
APPLICABLE; PROVIDED, HOWEVER, THAT WITH RESPECT TO ANY MORTGAGE FILED IN
JURISDICTIONS OUTSIDE OF THE STATE OF NEW YORK, THE LAWS OF SUCH JURISDICTION
WHERE SUCH MORTGAGE WAS FILED SHALL APPLY.
Section 9.8. No Waiver. No failure on the part of the Agent or any of the other
Secured Parties to exercise, and no delay in exercising, any right, power or
remedy hereunder or any of the other Loan Documents shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
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other right, power or remedy. All remedies hereunder are cumulative and are not
exclusive of any other remedies provided by law.
Section 9.9. Extension of Maturity. Should any payment of principal of or
interest on any amount due hereunder become due and payable on a day other than
a Business Day, the maturity thereof shall be extended to the next succeeding
Business Day and, in the case of principal, interest shall be payable thereon at
the rate herein specified during such extension.
Section 9.10. Amendments, etc. Unless otherwise specifically provided herein or
in any other Loan Document, no amendment, modification or waiver of any
provision of this Agreement, the Security and Pledge Agreement or the other Loan
Documents, and no consent to any departure by the Borrower therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Majority Lenders, and any such amendment, waiver or consent shall be effective
only in the specific instance and for the purpose for which given; provided,
that no such amendment, modification or waiver shall (i) without the written
consent of all of the Lenders, (a) amend, modify or waive any provision of this
proviso or the definition of Majority Lenders, (b) amend, modify or waive any
provision of this Agreement which provides for the unanimous consent or approval
of the Lenders or (c) substitute, discharge, surrender or release all or
substantially all of the CIBC Collateral except as permitted by the Loan
Documents and (ii) without the written consent of each Lender directly affected
thereby, (a) reduce the principal amount of any Term Loan or the rate of
interest payable thereon or (b) postpone the date for any scheduled payment or
any mandatory prepayment of principal or interest in respect of any Term Loans.
No such amendment, modification or waiver may adversely affect the rights and
obligations of the Agent hereunder without its prior written consent. No notice
to or demand on the Borrower shall entitle the Borrower to any other or further
notice or demand in the same, similar or other circumstances. Each Lender shall
be bound by any amendment, modification, waiver or consent authorized as
provided herein, and any consent by a Lender, or any other holder of any Secured
Obligation, shall bind any Person acquiring such other Secured Obligations. No
amendment to this Agreement shall be effective against the Borrower unless
signed by the Borrower. Notwithstanding any of the foregoing provisions of this
Section 9.10 or anything to the contrary contained in this Agreement, any Lender
which has requested that it not receive material, non-public information
concerning the Borrower and which is therefore unable or unwilling to vote with
respect to an issue arising under this Agreement will agree to vote and will be
deemed to have voted its Loans under this Agreement pro rata in accordance with
the percentages of Loans in favor of and the percentages of Loans against any
such issue under this Agreement.
Section 9.11. Invalidity; Severability. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under all applicable laws and regulations. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
73
<PAGE>74
Section 9.12. Headings. Section headings used herein are for convenience
only and are not to affect the construction of or be taken into consideration
in interpreting this Agreement.
Section 9.13. Execution in Counterparts; Effectiveness. This Agreement may be
executed in any number of counterparts, each of which shall constitute an
original, but all of which taken together shall constitute one and the same
instrument. This Agreement shall become effective when the Agent shall have
received counterparts hereof signed by all of the parties hereto and when the
conditions contained or referred to in Section 4.1 shall have been satisfied or
waived. Delivery of an executed counterpart of a signature page of this
Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.
Section 9.14. Prior Agreements.
(a) Subject to the provisions of Section 9.14(b), this
Agreement and the other Loan Documents represent the entire agreement of the
parties with regard to the subject matter hereof and the terms of any letters
and other documentation entered into between the Borrower and any Lender or the
Agent prior to the execution of this Agreement which relate to Loans to be made
hereunder shall be replaced by the terms of this Agreement.
(b) The obligations of the Borrower under Sections 8.6, 9.6,
9.14, and 9.17 of the Existing Credit Agreement, Sections 2.13, 2.14, 2.17,
5.11, 6.14, 9.5 and 9.6 of the DIP Credit Agreement and Sections 5.3, 5.4, 5.5,
5.9, 7.13, 8.28. 11.3 and 11.10 of the Pre-Petition Credit Agreement shall
remain in full force and effect.
Section 9.15. 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 be otherwise within the limitations of, another covenant shall not avoid
the occurrence of a Default or Event of Default if such action is taken or
condition exists.
Section 9.16. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION. EACH OF THE
BORROWER, THE AGENT, THE LENDERS AND EACH OTHER SECURED PARTY HEREBY WAIVES, TO
THE EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY LITIGATION IN ANY
COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THE LOAN DOCUMENTS
OR THE COLLATERAL, OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR
ENFORCEMENT HEREOF OR THEREOF, OR ANY OTHER CLAIM OR DISPUTE HOWSOEVER ARISING
BETWEEN THE BORROWER, ON THE ONE HAND, AND THE AGENT, AND/OR ANY ONE OR MORE OF
THE LENDERS OR OTHER SECURED PARTIES, ON THE OTHER HAND. THE BORROWER HEREBY
IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, OF ANY FEDERAL
COURT, IN EACH CASE LOCATED IN NEW YORK COUNTY AND ANY APPELLATE COURT
THEREFROM, IN CONNECTION
74
<PAGE>75
WITH ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY ONE OR MORE
OF THE LOAN DOCUMENTS OR ANY DOCUMENT OR INSTRUMENT DELIVERED PURSUANT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE CIBC COLLATERAL AND EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW
YORK STATE COURT, OR TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH
OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS
AGREEMENT SHALL AFFECT ANY RIGHT THAT THE AGENT, ANY LENDER OR ANY OTHER SECURED
PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE CIBC COLLATERAL AGAINST THE
BORROWER, ANY SUBSIDIARY OR THEIR PROPERTIES OR ASSETS IN THE COURTS OF ANY
JURISDICTION. THE BORROWER HEREBY WAIVES THE DEFENSES OF FORUM NON CONVENIENS
AND IMPROPER VENUE.
Section 9.17. Effect of Amendment and Restatement of the Pre-Petition Credit
Agreement, the DIP Credit Agreement and the Existing Credit Agreement;
Confirmation of Security Documents. The Borrower acknowledges and agrees that
the Liens on the CIBC Collateral securing payment of the Pre-Petition
Obligations, the DIP Obligations and the Existing Obligations are in all
respects continuing and in full force and effect and secure the payment of the
Secured Obligations hereunder and under the other Loan Documents and that the
Existing Obligations are replaced by the Borrower's Obligations to the Lenders
as set forth herein and in the other Loan Documents.
Section 9.18. Marshaling; Recapture. Neither the Agent nor any Lender shall be
under any obligation to marshal any assets in favor of the Borrower or any other
party or against or in payment of any or all of the Secured Obligations. To the
extent any Lender receives any payment by or on behalf of the Borrower, which
payment or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to the Borrower
or its estate, trustee, receiver, custodian or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then to the
extent of such payment or repayment, the Secured Obligations or part thereof
which has been paid, reduced or satisfied by the amount so repaid shall be
reinstated by the amount so repaid and shall be included within the liabilities
of the Borrower to such Lender as of the date such initial payment, reduction or
satisfaction occurred.
Section 9.19. Reproduction of Documents. This Agreement, all documents
constituting Annexes, Schedules or Exhibits hereto, and all documents relating
hereto received by a party hereto, including, without limitation: (a) consents,
waivers and modifications that may hereafter be executed; (b) the Security
Documents and the other Loan Documents; and (c) financial statements,
certificates, and other information previously or hereafter furnished to the
Agent, any Lender or any
75
<PAGE>76
other Secured Party may be reproduced by the party receiving the same by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. Each of the parties hereto agrees and stipulates that, to
the extent permitted by law, any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by such party in the regular course of business) and that,
to the extent permitted by law, any enlargement, facsimile, or further
reproduction of such reproduction shall likewise be admissible in evidence.
Section 9.20. Termination of Revolving Commitments Under Existing Credit
Agreement. The Borrower hereby acknowledges and confirms, for the express
benefit of the Existing Revolving Lenders under the Existing Credit Agreement,
that any and all (i) Commitments of such Existing Revolving Lenders to extend
credit under the Existing Credit Agreement and (ii) obligations of such Existing
Revolving Lenders to issue Letters of Credit under the Existing Credit Agreement
or to participate in drawings under the Existing Letters of Credit have been
terminated. The Borrower hereby acknowledges and confirms, for the express
benefit of the Existing Cash Management Bank, that, notwithstanding any
agreement by the Existing Cash Management Bank to provide transitional cash
management services to or for the benefit of the Borrower or Congress Financial
from and after the Effective Date (after which date the Existing Cash Management
Bank shall be indemnified or provided with such other assurances as it may
request by a third party acceptable to the Existing Cash Management Bank), any
and all obligations of the Existing Cash Management Bank to provide cash
management services under the Existing Credit Agreement have been terminated.
[Signature Pages Follow.]
76
<PAGE>77
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and the year first written.
PAYLESS CASHWAYS, INC.
By:/s/ Timothy Mertz
-------------------------------
Title: Vice President -- Treasury
800 N.W. Chipman Road
Suite 5900
Lee's Summit, MO 64063
Telephone: (816) 347-6000
Fax: (816) 347-6077
<PAGE>78
CANADIAN IMPERIAL BANK OF COMMERCE,
as Coordinating and Collateral Agent
and as issuer of the Existing
Standby Letters of Credit
By:/s/ Robert N. Greer
-------------------------------
Robert N. Greer
Assistant General Manager
425 Lexington Avenue
New York, New York 10017
Attention: Agency Services
Telephone: (212) 856-3711
Fax: (212) 856-3763
<PAGE>79
CIBC INC., as a Lender
By:/s/ Robert N. Greer
-------------------------------
Robert N. Greer, as Agent
425 Lexington Avenue
New York, New York 10017
Attention: Robert N. Greer
Telephone: (212) 856-3881
Fax: (212) 856-4135
<PAGE>80
BANK OF AMERICA, N.A.
(f/k/a NATIONSBANK, N.A.,NATIONSBANK
OF TEXAS, N.A. and BANK OF AMERICA
NATIONAL TRUST AND SAVINGS
ASSOCIATION), as the Existing Cash
Management Bank and as a Lender
By:/s/ Jay T. Wampler
-------------------------------
Title: Managing Director
Domestic and Eurodollar Lending
Offices:
Bank of America
Linda P. Dunlap
Officer
CS Single Bank-CLT-Team II
Mail Code: NC1-001-15-03
One Independence Center
101 N. Tryon Street
Charlotte, NC 28255-0001
Telephone: (704) 388-1114
Fax: (704) 409-0065
2nd Telephone: (800) 395-9884
E-mail Name: Linda Dunlap
OfficeVision (PROFS):MAIL (AA000557)
Internet:
[email protected]
Hierarchy Code: GCSAAABCAM
Company/Cost Center: 001 0627700
ID Nbr. EYKMMD
All other notices:
Attention: Jay T. Wampler
Senior Vice President
Telephone: (214) 209-3711
Fax: (214) 209-3533
<PAGE>81
BANC OF AMERICA SECURITIES LLC,
as agent for Bank of America, N.A.
(f/k/a NationsBank Montgomery
Securities, Inc.)
By:/s/ Francis Griffin
-------------------------------
Title: Principal
101 North Tryon Street
NC1-001-15-01
Charlotte, North Carolina 28255
Attention: Chris Barton
Telephone: 704-388-5432
Fax: 704-409-0150
<PAGE>82
LEHMAN COMMERCIAL PAPER INC., as a
Lender
By:/s/ James P. Seery, Jr.
-------------------------------
Title: Authorized Signatory
3 World Financial Center, 10th Floor
New York, New York 10285
Attention: James P. Seery, Jr.
Telephone: (212) 526-0825
Fax: (212) 528-0819
(Loan Servicing)
Lehman Commercial Paper Inc.
c/o Bankers Trust Co.
Loan Services Bureau
130 Liberty Street, 9th Floor
New York, NY 10006
Attn: Jason Yoo
<PAGE>83
GOLDMAN SACHS CREDIT PARTNERS L.P.,
as a Lender
By:/s/ R. Douglas Henderson
-------------------------------
Title: Authorized Signatory
Domestic and Eurodollar Lending
Offices:
85 Broad Street, 6th Floor
New York, New York 10004
Attention: Alexa Komar
Telephone: (212) 357-2625
Fax: (212) 357-4597
and
85 Broad Street, 28th Floor
New York, New York 10004
Attention: Jonathan Kolatch
Telephone: (212) 902-8469
Fax: (212) 357-0922
<PAGE>84
VAN KAMPEN PRIME RATE INCOME
TRUST, as a Lender
By:/s/ Douglas Smith
-------------------------------
Title: Vice President
One Parkview Plaza, 5th Floor
Oak Brook Terrace, Illinois 60181
Attention: Douglas Smith
Telephone: (630) 684-6052
Fax: (630) 684-6741
Credit Contact:
State Street Bank & Trust
Corporate Trust Department
2 International Place
Boston, MA 02110
and
Van Kampen Prime Rate Income Trust
One Parkview Plaza, 5th Floor
Oak Brook Terrace, Illinois 60181
Attn: Douglas Smith
Telephone: (630) 684-6052
Fax: (630) 684-6741
<PAGE>85
U.S. BANK NATIONAL ASSOCIATION, as a
Lender and as Issuer of the Existing
Documentary Letters of Credit
By:/s/ Jack L. Quitmeyer
-------------------------------
Title: Vice President
Domestic and Eurodollar Lending
Offices:
U.S. Bank National Association
U.S. Bank Place
MPFP2516
601 Second Avenue South
Minneapolis, Minnesota 55402-4302
Attention: Jocelyn Kirkpatrick
Telephone: (612) 973-2127
Fax: (612) 973-2148
All other notices:
U.S. Bank Place, MPFP2516
601 Second Avenue South
Minneapolis, Minnesota 55402-4302
Attention: Jack L. Quitmeyer
Fax: (612) 973-2148
with a copy to:
Joeseph Andersen, Esq.
U.S. Bancorp
U.S. Bank Place, MPFP2518
601 Second Avenue South
Minneapolis, Minnesota 55402-4302
Fax: (612) 973-1000
<PAGE>86
ABN AMRO BANK N.V., as a Lender
By:/s/ William J. Teresky, Jr.
-------------------------------
Title: Vice President
By: /s/ Steven C. Wimpenny
-------------------------------
Title: Group Senior Vice President
Domestic and Eurodollar Lending
Offices:
North America Special Credits
10 East 53rd Street, 37th Floor
New York, New York l0022
Attention: Carol Martin
Telephone: (212) 891-0642
Fax: (212) 891-0652
All other notices:
10 East 53rd Street, 37th Floor
New York, New York l0022
Attention: Steven C. Wimpenny
Telephone: (212) 891-0626
Fax: (212) 891-0650
<PAGE>87
THE BANK OF NOVA SCOTIA, as a Lender
By:/s/ Alex T. Clarke
-------------------------------
Title: Senior Manager
Domestic and Eurodollar Lending
Offices:
Suite 2700
600 Peachtree Street, N.E.
Atlanta, Georgia 30308
Attention: Nadine Bell
Telephone: (404) 877-1567
Fax: (404) 888-8998
All other notices:
l Liberty Plaza, 25th Floor
New York, New York 10006
Attention: Daniel A. Costigan
Telephone: (212) 225-5016
Fax: (212) 225-5205
<PAGE>88
BEAR, STEARNS & CO. INC., as a
Lender
By:/s/ Gregory A. Hanley
-------------------------------
Title: Senior Managing Director
Administrative Notices and Other
Funding Information:
245 Park Avenue
New York, New York 10167
Attention: Jennifer Herskowitz
Telephone: (212) 272-6161
Fax: (212) 272-8079
All other notices:
245 Park Avenue
New York, New York 10167
Attention: Alan J. Mintz
Telephone: (212) 272-9499
Fax: (212) 272-8102
and
Attention: Laura L. Torrado, Esq.
Telephone: (212) 272-7811
Fax: (212) 272-8629
<PAGE>89
MORGENS WATERFALL DOMESTIC
PARTNERS II, L.L.C., as a Lender
By:/s/ Neil A. Augustine
-------------------------------
Title: Authorized Agent
10 East 50th Street, 26th Floor
New York, New York 10022
Attention: Neil A. Augustine
Telephone: (212) 705-0500
Fax: (212) 838-5540
<PAGE>90
OAKTREE CAPITAL MANAGEMENT, LLC, as
agent for certain funds and
accounts, as a Lender
By:/s/ Kenneth Liang
-------------------------------
Title: Managing Director & General
Counsel
By:/s/ Matthew S. Barrett
-------------------------------
Title: Managing Director
333 S. Grand Avenue, 28th Floor
Los Angeles, California 90071
Attention: Kenneth Liang
Telephone: (213) 830-6422
Fax: (213) 830-8522
<PAGE>91
CONTRARIAN CAPITAL ADVISORS L.L.C.,
as agent for certain entities, as a
Lender
By:/s/ Janice M. Stanton
-------------------------------
Title: Member
441 West Putnam Avenue
Suite 225
Greenwich, Connecticut 06830
Attention: Jon Bauer, Partner
Tel: 203-862-8201
Fax: 203-629-1977
EXHIBIT 4.2
LOAN AND SECURITY AGREEMENT
by and among
CONGRESS FINANCIAL CORPORATION (CENTRAL)
as Lender and Agent for Lenders
and
PAYLESS CASHWAYS, INC.
as Borrower
Dated: November 17, 1999
<PAGE>(i)
TABLE OF CONTENTS
Page
SECTION .............................................................1
SECTION 2. CREDIT FACILITIES...........................................10
2.1 Revolving Loans.............................................10
2.2 Letter of Credit Accommodations.............................11
2.3 Availability Reserves.......................................12
2.4 Commitments.................................................13
SECTION 3. INTEREST AND FEES...........................................13
3.1 Interest....................................................13
3.2 Closing Fee.................................................14
3.3 Servicing Fee...............................................14
3.4 Unused Line Fee.............................................14
3.5 Syndication Fee.............................................14
3.6 Changes in Laws and Increased Costs of Loans................14
SECTION 4. CONDITIONS PRECEDENT........................................15
4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations............................................15
4.2 Conditions Precedent to All Loans and Letter of Credit
Accommodations............................................17
SECTION 5. SECURITY INTEREST...........................................17
SECTION 6. COLLECTION AND ADMINISTRATION...............................18
6.1 Borrower's Loan Account.....................................18
6.2 Statements..................................................18
6.3 Collection of Accounts......................................19
6.4 Payments....................................................20
6.5 Authorization to Make Loans.................................20
6.6 Use of Proceeds.............................................20
6.7 Sharing of Payments, Etc....................................21
6.8 Settlement Procedures.......................................22
6.9 Mandatory Prepayments from the Sale of the Real Property
Collateral................................................23
SECTION 7. COLLATERAL REPORTING AND COVENANTS..........................23
7.1 Collateral Reporting........................................23
7.2 Accounts Covenants..........................................24
7.3 Inventory Covenants.........................................24
7.4 Power of Attorney...........................................25
7.5 Right to Cure...............................................25
7.6 Access to Premises..........................................25
SECTION 8. REPRESENTATIONS AND WARRANTIES..............................26
8.1 Corporate Existence, Power and Authority; Subsidiaries......26
(i)
<PAGE>(ii)
8.2 Financial Statements; No Material Adverse Change............26
8.3 Chief Executive Office; Collateral Locations................26
8.4 Priority of Liens; Title to Properties......................26
8.5 Tax Returns.................................................27
8.6 Litigation..................................................27
8.7 Compliance with Other Agreements and Applicable Laws........27
8.8 Environmental Compliance....................................28
8.9 Merchant Agreements.........................................28
8.10 Employee Benefits...........................................29
8.11 Bank Accounts...............................................29
8.12 Accuracy and Completeness of Information....................29
8.13 Survival of Warranties; Cumulative..........................29
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS..........................30
9.1 Maintenance of Existence....................................30
9.2 New Collateral Locations....................................30
9.3 Compliance with Laws, Regulations, Etc......................30
9.4 Payment of Taxes and Claims.................................31
9.5 Insurance...................................................31
9.6 Financial Statements and Other Information..................32
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc.....33
9.8 Encumbrances................................................33
9.9 Indebtedness................................................34
9.10 Loans, Investments, Guarantees, Etc.........................34
9.11 Dividends and Redemptions...................................35
9.12 Transactions with Affiliates................................35
9.13 Merchant Agreements.........................................35
9.14 Adjusted Net Worth..........................................35
9.15 Compliance with ERISA.......................................36
9.16 Additional Bank Accounts....................................36
9.17 Costs and Expenses. .......................................36
9.18 Year 2000 Compliance........................................37
9.19 Further Assurances..........................................37
SECTION 10. EVENTS OF DEFAULT AND REMEDIES..............................37
10.1 Events of Default...........................................37
10.2 Remedies....................................................39
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW...............................40
11.1 Governing Law; Choice of Forum; Service of Process;
Jury Trial Waiver.........................................40
11.2 Waiver of Notices...........................................41
11.3 Amendments and Waivers......................................41
11.4 Waiver of Counterclaims.....................................41
11.5 Indemnification.............................................41
SECTION 12. THE AGENT...................................................42
12.1 Appointment, Powers and Immunities..........................42
12.2 Reliance by Agent...........................................42
(ii)
<PAGE>(iii)
12.3 Events of Default...........................................42
12.4 Rights as a Lender..........................................43
12.5 Indemnification.............................................43
12.6 Non-Reliance on Agent and Other Lenders.....................43
12.7 Failure to Act..............................................44
12.8 Resignation of .............................................44
12.9 Consents and Releases of Collateral under
Financing Agreements......................................44
12.10 Collateral Matters..........................................44
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS............................45
13.1 Term........................................................45
13.2 Notices.....................................................46
13.3 Partial Invalidity..........................................46
13.4 Successors..................................................46
13.5 Assignments and Participations..............................47
13.6 Modification of Agreement...................................48
13.7 Entire Agreement............................................48
(iii)
<PAGE>(iv)
INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A.................Information Certificate
Schedule 1.54.............Real Property Collateral
Schedule 6.3..............Bank Accounts
Schedule 6.9..............Minimum Sales Price For Real Property Collateral
Schedule 8.4..............Existing Liens
Schedule 8.7..............Permits
Schedule 8.8..............Environmental Matters
Schedule 8.9..............Merchant Agreements
Schedule 9.9..............Existing Indebtedness
Schedule 9.10.............Loans, Investments, Guarantees
(iv)
<PAGE>1
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement ("Agreement") dated November 17, 1999
is entered into by and among Congress Financial Corporation (Central), an
Illinois corporation ("Congress"; and together with any other signatory hereto
designated as a "Lender" or any assignee of any Lender, each individually, a
"Lender" and, collectively, "Lenders"), Congress, as agent for Lenders (in such
capacity "Agent") and PAYLESS CASHWAYS, INC., a Delaware corporation
("Borrower").
W I T N E S S E T H:
WHEREAS, Borrower has requested that Lenders enter into certain
financing arrangements with Borrower pursuant to which Lenders may make loans
and provide other financial accommodations to Borrower; and
WHEREAS, each Lender is willing to agree (severally and not jointly) to
make such loans and provide such financial accommodations to Borrower on a pro
rata basis according to its Commitment (as defined below) on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS
All terms used herein which are defined in Article 1 or Article 9 of
the Uniform Commercial Code shall have the meanings given therein unless
otherwise defined in this Agreement. All references to the plural herein shall
also mean the singular and to the singular shall also mean the plural unless the
context otherwise requires. All references to Borrower, Agent and Lenders
pursuant to the definitions set forth in the recitals hereto, or to any other
person herein, shall include their respective successors and assigns. The words
"hereof", "herein", "hereunder", "this Agreement" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not any
particular provision of this Agreement and as this Agreement now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced. The word "including" when used in this Agreement shall mean
"including, without limitation". The words "ratable" or ratably" or words of
similar import when used in this Agreement shall refer to a sharing or
allocation based on the respective Pro Rata Shares (as defined below) of
Lenders. An Event of Default shall exist or continue or be continuing until such
Event of Default is waived in accordance with Section 11.3 or cured in a manner
satisfactory to Agent, if such Event of Default is capable of being cured as
determined by Agent. Any accounting term used herein unless otherwise defined in
this Agreement shall have the meanings customarily given to such term in
accordance with GAAP. For purposes of this Agreement, the following terms shall
have the respective meanings given to them below:
1.1 "Accounts" shall mean all present and future rights of Borrower to
payment for goods sold or leased or for services rendered, whether or not
evidenced by instruments or chattel paper, and whether or not earned by
performance, and including, without limitation Private Label Card Receivables,
Commercial Receivables and other Credit Card Receivables.
<PAGE>2
1.2 "Adjusted Eurodollar Rate" shall mean, with respect to each
Interest Period for any Eurodollar Rate Loan, the rate per annum (rounded
upwards, if necessary, to the next one-sixteenth (1/16) of one (1%) percent)
determined by dividing (a) the Eurodollar Rate for such Interest Period by (b) a
percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes
hereof, "Reserve Percentage" shall mean the reserve percentage, expressed as a
decimal, prescribed by any United States or foreign banking authority for
determining the reserve requirement which is or would be applicable to deposits
of United States dollars in a non-United States or an international banking
office of Reference Bank used to fund a Eurodollar Rate Loan or any Eurodollar
Rate Loan made with the proceeds of such deposit, whether or not Reference Bank
actually holds or has made any such deposits or loans. The Adjusted Eurodollar
Rate shall be adjusted on and as of the effective day of any change in the
Reserve Percentage.
1.3 "Adjusted Net Worth" shall mean as to any Person, at any time, in
accordance with GAAP (except as otherwise specifically set forth below), on a
consolidated basis for such Person and its subsidiaries (if any), the amount
equal to the difference between: (a) the aggregate net book value of all assets
of such Person and its subsidiaries, calculating the book value of inventory for
this purpose principally on a first-in-first-out basis, after deducting from
such book values all appropriate reserves in accordance with GAAP (including all
reserves for doubtful receivables, obsolescence, depreciation and amortization)
and (b) the aggregate amount of the indebtedness and other liabilities of such
Person and its subsidiaries (including tax and other proper accruals) provided
that in calculating the Adjusted Net Worth of Borrower, any extraordinary or
unusual or non-recurring gains or non-cash losses or charges, in each case after
the date hereof, shall be excluded from such calculation.
1.4 "Agent" shall mean Congress in its capacity as agent on behalf of
Lenders pursuant to the terms hereof and any replacement or successor agent
hereunder.
1.5 "Availability Reserves" shall mean, as of any date of
determination, such amounts as Agent may from time to time establish and revise
in good faith reducing the amount of Loans and Letter of Credit Accommodations
that would otherwise be available to Borrower under the lending formula(s)
provided for herein: (a) to reflect events, conditions, contingencies or risks
that, as determined by Agent in good faith, do or may affect either (i) the
Collateral or any other property which is security for the Obligations or its
value, (ii) the assets of Borrower or any Obligor; or (iii) the security
interests and other rights of Agent held for the ratable benefit of Lenders
(including the enforceability, perfection and priority thereof) or (b) to
reflect Agent's good faith belief that any collateral report or financial
information furnished by or on behalf of Borrower or any Obligor to Agent is or
may have been incomplete, inaccurate or misleading in any material respect or
(c) in respect of any state of facts which Agent determines in good faith
constitutes an Event of Default or may, with notice or passage of time or both,
constitute an Event of Default, or (d) to reflect outstanding Letter of Credit
Accommodations as provided in Section 2.2 hereof or (e) as otherwise provided in
Section 2.3 hereof or Section 6.9 hereof.
1.6 "Blocked Accounts" shall have the meaning set forth in Section 6.3
hereof.
1.7 "Business Day" shall mean any day other than a Saturday, Sunday, or
other day on which commercial banks are authorized or required to close under
the laws of the State of Illinois, and a day on which Reference Bank and Agent
are open for the transaction of business, except that if a determination of a
Business Day shall relate to any Eurodollar Rate Loans, the term Business Day
shall also exclude any day on which banks are closed for dealings in dollar
deposits in the London interbank market or other applicable Eurodollar Rate
market.
1.8 "Capital Stock" shall mean, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
such Person's capital stock, partnership interests or limited liability company
interests at any time outstanding, and any and all rights, warrants or options
exchangeable for or convertible into such capital stock or other interests (but
excluding any debt security that is exchangeable for or convertible into such
capital stock).
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1.9 "Change of Control" shall mean (a) the transfer (in one transaction
or a series of transactions) of all or substantially all of the assets of
Borrower to any Person or group (as such term is used in Section 13(d)(3) of the
Exchange Act); (b) the liquidation or dissolution of Borrower or the adoption of
a plan by the stockholders of Borrower relating to the dissolution or
liquidation of Borrower; and (c) the acquisition by any Person or group (as such
term is used in Section 13(d)(3) of the Exchange Act) of beneficial ownership,
directly or indirectly, of fifty (50%) percent or more of the voting power of
the total outstanding Voting Stock of Borrower or the Board of Directors of
Borrower.
1.10 "CIBC" shall mean Canadian Imperial Bank of Commerce, as
Coordinating and Collateral Agent pursuant to the CIBC Credit Agreement, and its
successors and assigns.
1.11 "CIBC Credit Agreement" shall mean the Second Amended and Restated
Credit Agreement dated as of November 17, 1999 among Borrower, each of the
financial institutions from time to time parties thereto as lenders and CIBC.
1.12 "CIBC Access Agreement" shall mean the Access Agreement dated of
even date herewith between CIBC and Agent.
1.13 "Code" shall mean the Internal Revenue Code of 1986, as the same
now exists or may from time to time hereafter be amended, modified, recodified
or supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.14 "Collateral" shall have the meaning set forth in Section 5 hereof.
1.15 "Collateral Access Agreement" shall mean an agreement in writing,
in form and substance satisfactory to Agent, from any owner and lessor of
premises to Borrower, or any other person to whom any Collateral is consigned or
who has custody, control or possession of any such Collateral or is otherwise
the owner or operator of any premises on which any of such Collateral is
located, pursuant to which such lessor, consignee or other person, inter alia,
acknowledges the first priority security interest of Agent in such Collateral,
agrees to waive any and all claims such lessor, consignee or other person may,
at any time, have against such Collateral, and agrees to permit Agent access to,
and the right to remain on, the premises of such lessor, consignee or other
person so as to exercise Agent's rights and remedies and otherwise deal with
such Collateral.
1.16 "Commercial Account Acknowledgment" shall have the meaning set
forth in Section 4.1(g) hereof.
1.17 "Commercial Account Agreement" shall mean the Amended and Restated
Merchant Agreement (Commercial), dated as of October 25, 1999, by and between
Borrower and the Commercial Account Purchaser and all schedules and addenda
thereto, as the same now exists or may hereafter be further amended, modified,
supplemented, extended, renewed, restated or replaced.
1.18 "Commercial Account Purchaser" shall mean Household Bank,f.s.b.and
its successors and assigns.
1.19 "Commercial Receivables" shall mean all present and future rights
of Borrower to payment from the Commercial Account Purchaser under the
Commercial Account Agreement.
1.20 "Commitment" shall have the meaning set forth in Section 2.4
hereof.
1.21 "Commitment Percentage" shall mean, as to each Lender, the
percentage of the Maximum Credit provided for hereunder represented by such
Lender's Commitment. The Commitment Percentage of each Lender signing this
Agreement is set forth on the signature pages hereto below each Lender's
respective signature.
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1.22 "Cost" shall mean, as to the Inventory as of any date, the cost of
such Inventory as of such date, determined principally on a first-in-first-out
basis in accordance with GAAP.
1.23 "Credit Card Acknowledgments" shall mean, individually and
collectively, the agreements by Credit Card Issuers (including the Private Label
Card Issuer) or Credit Card Processors who are parties to Credit Card Agreements
in favor of Lenders and Agent acknowledging the first priority security interest
of Agent, for the ratable benefit of Lenders, in the monies due and to become
due to Borrower (including, without limitation, credits and reserves) under the
Credit Card Agreements, and agreeing to transfer all such amounts to the Blocked
Accounts, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.24 "Credit Card Agreements" shall mean all agreements now or
hereafter entered into by Borrower with any Credit Card Issuer or any Credit
Card Processor, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, including, but not
limited to, the agreements set forth on Schedule 8.9 hereto, and the Private
Label Card Agreement.
1.25 "Credit Card Issuer" shall mean any person (other than Borrower)
who issues or whose members issue credit cards, including, without limitation,
MasterCard or VISA bank credit or debit cards or other bank credit or debit
cards issued through MasterCard International, Inc., Visa, U.S.A., Inc. or Visa
International and American Express, Discover, Diners Club, Carte Blanche and
other non-bank credit or debit cards, including, without limitation, credit or
debit cards issued by or through American Express Travel Related Services
Company, Inc., Novus Services, Inc. and the Private Label Card Issuer.
1.26 "Credit Card Processor" shall mean any servicing or processing
agent or any factor or financial intermediary who facilitates, services,
processes or manages the credit authorization, billing transfer and/or payment
procedures with respect to any of Borrower's sales transactions involving credit
card or debit card purchases by customers using credit cards or debit cards
issued by any Credit Card Issuer.
1.27 "Credit Card Receivables" shall mean collectively, (a) all present
and future rights of Borrower to payment from any Credit Card Issuer, Credit
Card Processor or other third party arising from sales of goods or rendition of
services to customers who have purchased such goods or services using a credit
or debit card (including Private Label Card Receivables and (b) all present and
future rights of Borrower to payment from any Credit Card Issuer, Credit Card
Processor or other third party in connection with the sale or transfer of
Accounts arising pursuant to the sale of goods or rendition of services to
customers who have purchased such goods or services using a credit card or a
debit card, including, but not limited to, all amounts at any time due or to
become due from any Credit Card Issuer or Credit Card Processor under the Credit
Card Agreements or otherwise.
1.28 [Intentionally Omitted]
1.29 "Eligible Inventory" shall mean Inventory consisting of finished
goods held for resale in the ordinary course of the business of Borrower that
are acceptable to Agent based on the criteria set forth below. In general,
Eligible Inventory shall not include (a) packaging and shipping materials; (b)
supplies used or consumed in Borrower's business; (c) Inventory at premises
other than those owned and controlled by Borrower, except for Inventory at
retail store or distribution center locations of Borrower which are leased by it
if either (i) Agent shall have received a Collateral Access Agreement duly
authorized, executed and delivered by the owner and lessor of such premises or
(ii) if Agent has not received such Collateral Access Agreement, then Agent
shall have established an Availability Reserve in respect of amounts due or
to become due to the owner and lessor of such retail store location (without
limiting any other rights and remedies of Agent under this Agreement or under
the other Financing Agreements with respect to the establishment of Availability
Reserves or otherwise); d) Inventory subject to a security interest or lien in
favor of any person other than Lenders except those permitted in this Agreement;
(e) bill and hold goods;
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(f) Inventory which is not subject to the first priority, valid and perfected
security interest of Lender;(g) with respect to each category of Inventory, slow
moving Inventory above historical levels, (h) prepaid Inventory which Agent is
unable to verify as being located at any of the Borrower's retail stores or
distribution centers; (i) damaged and/or defective Inventory (j) returned
Inventory that is not held for resale; (k) Inventory to be returned to vendors;
(l) Inventory subject to deposits made by customers for sales of Inventory that
has not been delivered; (m) Inventory held after the applicable expiration
date thereof; (n) samples and (o) Inventory purchased or sold on consignment.
Genera criteria for Eligible Inventory may be established and revised from
time to time by Agent in good faith. Any Inventory which is not Eligible
Inventory shall nevertheless be part of the Collateral.
1.30 "Environmental Laws" shall mean all Federal, State and local laws,
legislation, rules, codes, licenses, permits (including any conditions imposed
therein), authorizations, judicial or administrative decisions, injunctions or
agreements between Borrower and any governmental authority, (a) relating to
pollution and the protection, preservation or restoration of the environment
(including air, water vapor, surface water, ground water, drinking water,
drinking water supply, surface land, subsurface land, plant and animal life or
any other natural resource), or to human health or safety, (b) relating to the
exposure to, or the use, storage, recycling, treatment, generation, manufacture,
processing, distribution, transportation, handling, labeling, production,
release or disposal, or threatened release, of Hazardous Materials, or (c)
relating to all laws with regard to recordkeeping, notification, disclosure and
reporting requirements respecting Hazardous Materials. The term "Environmental
Laws" includes (i) the Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Federal Superfund Amendments and
Reauthorization Act, the Federal Water Pollution Control Act of 1972, the
Federal Clean Water Act, the Federal Clean Air Act, the Federal Resource
Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste
Amendments thereto), the Federal Solid Waste Disposal and the Federal Toxic
Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide Act,
and the Federal Safe Drinking Water Act of 1974, (ii) applicable state
counterparts to such laws, and (iii) any other law or regulation that may impose
liability or obligations for injuries or damages due to, or threatened as a
result of, the presence of or exposure to any Hazardous Materials.
1.31 "Equipment" shall mean all of Borrower's now owned and hereafter
acquired equipment, machinery, computers and computer hardware and software
(whether owned or licensed), vehicles, tools, furniture, fixtures, all
attachments, accessions and property now or hereafter affixed thereto or used in
connection therewith, and substitutions and replacements thereof, wherever
located.
1.32 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as the same now exists or may hereafter from time to time be amended,
modified, recodified or supplemented, together with all rules, regulations and
interpretations thereunder or related thereto.
1.33 "ERISA Affiliate" shall mean any person required to be aggregated
with Borrower or any of its subsidiaries under Sections 414(b), 414(c), 414(m)
or 414(o) of the Code.
1.34 "Eurodollar Rate" shall mean with respect to the Interest Period
for a Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary, to
the next one-sixteenth (1/16) of one (1%) percent) at which Reference Bank is
offered deposits of United States dollars in the London interbank market (or
other Eurodollar Rate market selected by Borrower and approved by Agent) on or
about 9:00 a.m. (Chicago, Illinois time) two (2) Business Days prior to the
commencement of such Interest Period in amounts substantially equal to the
principal amount of the Eurodollar Rate Loans requested by and available to
Borrower in accordance with this Agreement, with a maturity of comparable
duration to the Interest Period selected by Borrower.
1.35 "Eurodollar Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Adjusted Eurodollar Rate in accordance
with the terms hereof.
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1.36 "Event of Default" shall mean the occurrence or existence of any
event or condition described in Section 10.1 hereof.
1.37 "Excess Availability" shall mean the amount, as determined by
Agent, calculated at any time, equal to: (a) the amount of the Loans which would
be available to Borrower as of such time based on the applicable lending
formulas multiplied by the Value of Eligible Inventory, as determined by Agent,
and subject to the applicable sublimits and Availability Reserves at such time
established by Agent hereunder minus (b) the sum of: (i) the amount of all then
outstanding and unpaid Loans and Letter of Credit Accommodations, plus (ii) the
aggregate amount of all trade payables and other obligations of Borrower which
are more than thirty (30) days past due as of such time, plus (iii) the amount
of checks issued by Borrower to pay trade payables which are more than thirty
(30) days past due as of such time, but not yet sent.
1.38 "Exchange Act" shall mean the Securities and Exchange Act of 1934,
as the same now exists or may hereafter from time to time be amended, modified,
recodified or supplemented, together with all rules, regulations and
interpretations thereunder or related thereto.
1.39 "Financing Agreements" shall mean, collectively, this Agreement
and all notes, guarantees, security agreements and other agreements, documents
and instruments now or at any time hereafter executed and/or delivered by
Borrower or any Obligor in connection with this Agreement, as the same now exist
or may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced.
1.40 "Fortress" shall mean Fortress Investment Group, LLC, as successor
to UBS Mortgage Finance, Inc., and its successors and assigns.
1.41 "Fortress Access Agreement" shall mean an Access Agreement between
Fortress and Agent.
1.42 "Fortress Credit Agreement" shall mean the UBS Loan Agreement as
assigned by UBS to Fortress.
1.43 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Boards which are applicable to the
circumstances as of the date of determination consistently applied, except that,
for purposes of Section 9.14 hereof, GAAP shall be determined on the basis of
such principles in effect on the date hereof and consistent with those used in
the preparation of the audited financial statements delivered to Agent prior to
the date hereof.
1.44 "Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including hydrocarbons (including naturally
occurring or man-made petroleum and hydrocarbons), flammable explosives,
asbestos, urea formaldehyde insulation, radioactive materials, biological
substances, polychlorinated biphenyls, pesticides, herbicides and any other kind
and/or type of pollutants or contaminants (including materials which include
hazardous constituents), sewage, sludge, industrial slag, solvents and/or any
other similar substances, materials, or wastes and including any other
substances, materials or wastes that are or become regulated under any
Environmental Law (including any that are or become classified as hazardous or
toxic under any Environmental Law).
1.45 "Information Certificate" shall mean the Information Certificate
of Borrower constituting Exhibit A hereto containing material information with
respect to Borrower, its business and assets provided by or on behalf of
Borrower to Agent in connection with the preparation of this Agreement and the
other Financing Agreements and the financing arrangements provided for herein.
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1.46 "Interest Period" shall mean for any Eurodollar Rate Loan, a
period of approximately one (1), two (2), or three (3) months duration as
Borrower may elect, the exact duration to be determined in accordance with the
customary practice in the applicable Eurodollar Rate market; provided, that,
Borrower may not elect an Interest Period which will end after the last day of
the then-current term of this Agreement.
1.47 "Interest Rate" shall mean, as to Prime Rate Loans, a rate of
three-quarters of one (3/4%) percent per annum in excess of the Prime Rate and,
as to Eurodollar Rate Loans, a rate of two and three-quarters (2 3/4%) percent
per annum in excess of the Adjusted Eurodollar Rate (based on the Eurodollar
Rate applicable for the Interest Period selected by Borrower as in effect two
(2) Business Days after the date of receipt by Agent of the request of Borrower
for such Eurodollar Rate Loans in accordance with the terms hereof, whether such
rate is higher or lower than any rate previously quoted to Borrower); provided,
that, for the first Fiscal Year ending after the date hereof for which Borrower
has pre-tax income (exclusive of one-time or extraordinary gains), as reflected
in Borrower's annual audited financial statements delivered to Agent pursuant to
Section 9.6(a)(ii) hereof, of not less than One Million ($1,000,000) Dollars
and, so long as no Event of Default then exists and is continuing, effective as
of the first (1st) day of the month immediately following the receipt by Agent
of such financial statements, the Interest Rate shall as a one-time adjustment
be reduced to the rate of one-half of one (1/2%) percent per annum in excess of
the Prime Rate as to Prime Rate Loans and the rate of two and one-half (2 1/2%)
percent in excess of the Adjusted Eurodollar Rate as to Eurodollar Rate Loans.
If, however, following an interest rate reduction as provided immediately above,
Borrower has for any Fiscal Year pre-tax income (exclusive of one-time or
extraordinary gains) as reflected in Borrower's annual audited financial
statements delivered to Agent pursuant to Section 9.6(a)(ii) hereof, of less
than One Million ($1,000,000) Dollars effective as of the first (1st) day of the
month immediately following the receipt by Agent of such financial statements,
the Interest Rate shall be increased to the rate of three-quarters of one (3/4%)
percent per annum in excess of the Prime Rate as to Prime Rate Loans and the
rate of two and three-quarters (2 3/4%) percent per annum in excess of the
Adjusted Eurodollar Rate as to Eurodollar Rate Loans. Notwithstanding anything
to the contrary contained in this Agreement or in any of the other Financing
Agreements, the Interest Rate, as to Prime Rate Loans and Eurodollar Rate Loans,
shall mean the rate two (2%) percent per annum more than the otherwise
applicable Interest Rate, at Agent's option or at the written direction of the
Required Lenders,, without notice, (a) for the period on and after (i) the date
of termination or non-renewal hereof and until such time as all Obligations are
indefeasibly paid in full (notwithstanding entry of any judgment against
Borrower), or (ii) the date of the occurrence of any Event of Default, and for
so long as such Event of Default is continuing as determined by Agent and (b) on
the Loans at any time outstanding in excess of the amounts available to Borrower
under Section 2 (whether or not such excess(es), arise or are made with or
without Agent's knowledge or consent and whether made before or after an Event
of Default).
1.48 "Inventory" shall mean all of Borrower's now owned and hereafter
existing or acquired raw materials, work in process, finished goods and all
other inventory of whatsoever kind or nature, wherever located.
1.49 "Letter of Credit Accommodations" shall mean the letters of
credit, merchandise purchase or other guaranties which are from time to time
either (a) issued or opened by Agent for the account of Borrower or any Obligor
or (b) with respect to which Agent has agreed to indemnify the issuer or
guaranteed to the issuer the performance by Borrower of its obligations to such
issuer.
1.50 "Loans" shall mean the Revolving Loans.
1.51 "Maximum Credit" shall mean $260,000,000.
1.52 "Material Adverse Effect" shall mean a material adverse change in,
or a material adverse effect upon (a) the condition (financial or otherwise),
operations, business or affairs of Borrower or any Obligor, (b) the ability of
Borrower or any Obligor to repay any Obligations under any of the Financing
Agreements, or (c) Agent's or
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Lenders' rights or interests in its Collateral or of Agent's or Lenders' ability
to enforce the Obligations or realize upon its Collateral.
1.53 "Merchant Agreements" shall mean, collectively, the Commercial
Account Agreement and all Credit Card Agreements.
1.54 "Mortgage" or "Mortgages" shall mean (as the same may now exist or
may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced) the mortgages, deeds of trust and security agreements executed by
Borrower in favor of Agent with respect to the Real Property and assets related
to such Real Property of Borrower located at each of the premises listed on the
attached Schedule 1.54.
1.55 "Net Recovery Cost Percentage" shall mean the fraction, expressed
as a percentage, (a) the numerator of which is the amount equal to the recovery
on the aggregate amount of the Inventory at such time on a "going out of
business sale" basis as set forth in the most recent acceptable appraisal of
Inventory received by Agent in accordance with Section 7.3, net of operating
expenses, liquidation expenses and commissions, and (b) the denominator of which
is the original Cost of the aggregate amount of the Inventory subject to
appraisal.
1.56 "Obligations" shall mean any and all Loans, Letter of Credit
Accommodations and all other obligations, liabilities and indebtedness of every
kind, nature and description owing by Borrower to Agent and any Lender and/or
any of their affiliates, including principal, interest, charges, fees, costs and
expenses, however evidenced, whether as principal, surety, endorser, guarantor
or otherwise, arising under or related to this Agreement or any of the
transactions arising hereunder or related hereto, whether now existing or
hereafter arising, whether arising before, during or after the initial or any
renewal term of this Agreement or after the commencement of any case with
respect to Borrower under the United States Bankruptcy Code or any similar
statute (including, without limitation, the payment of interest and other
amounts which would accrue and become due but for the commencement of such case,
whether or not such amounts are allowed or allowable in whole or in part in such
case), whether direct or indirect, absolute or contingent, joint or several, due
or not due, primary or secondary, liquidated or unliquidated, secured or
unsecured, and however acquired by Agent or any Lender.
1.57 "Obligor" shall mean any guarantor, endorser, acceptor, surety or
other person liable on or with respect to the Obligations or who is the owner of
any property which is security for the Obligations, other than Borrower.
1.58 "Payment Account" shall have the meaning set forth in Section 6.3
hereof.
1.59 [Intentionally Omitted]
1.60 "Permits" shall have the meaning set forth in Section 8.7 hereof.
1.61 "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including, without limitation, any
corporation which elects subchapter S status under the Code), limited liability
company, limited liability partnership, business trust, unincorporated
association, joint stock corporation, trust, joint venture or other entity or
any government or any agency or instrumentality or political subdivision
thereof.
1.62 "Prime Rate" shall mean the rate from time to time publicly
announced by First Union National Bank, or its successors, as its prime rate,
whether or not such announced rate is the best rate available at such bank.
1.63 "Prime Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Prime Rate in accordance with the terms
hereof.
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1.64 "Private Label Card" shall mean the private label credit card
issued by the Private Label Card Issuer bearing the name and design developed by
Borrower and approved by the Private Label Card Issuer, which is subject to the
arrangements of Borrower with the Private Label Card Issuer set forth in the
Private Label Card Agreement.
1.65 "Private Label Card Agreement" shall mean the First Amendment to
Amended and Restated Monogram Credit Card Bank of Georgia Program Agreement
dated as of August 1, 1998, by and between Borrower and the Private Label Card
Issuer and all schedules and addenda thereto, as the same now exists or may
hereafter be further amended, modified, supplemented, extended, renewed,
restated or replaced.
1.66 "Private Label Card Issuer" shall mean Monogram Credit Card Bank
of Georgia, a Georgia banking corporation, and its successors and assigns.
1.67 "Private Label Card Receivables" shall mean Credit Card
Receivables arising pursuant to the purchase by a retail customer of Inventory
from Borrower in the ordinary course of business using a Private Label Card.
1.68 "Pro Rata Share" shall mean, with respect to each Lender, its
proportionate share of the Loans and the risk under the Letter of Credit
Accommodations, based on its Commitment Percentage.
1.69 "Real Property" shall mean all now owned and hereafter acquired
real property of Borrower, including leasehold interests, together with all
buildings, structures, and other improvements located thereon and all licenses,
easements and appurtenances relating thereto, wherever located.
1.70 "Real Property Collateral" shall mean all existing and future Real
Property upon which Borrower has executed and delivered a Mortgage in favor of
Agent.
1.71 "Records" shall have the meaning set forth in Section 5.8 hereof.
1.72 "Reference Bank" shall mean First Union National Bank, or such
other bank as Agent may designate from time to time.
1.73 "Renewal Date" shall have the meaning set forth in Section 13.1
hereof.
1.74 "Required Lenders" shall mean, as of any date of determination
thereof, Lenders holding more than sixty-six and two-thirds (66 2/3%) percent of
the aggregate outstanding principal amount of Revolving Loans and outstanding
Letter of Credit Accommodations, or, if there are no Revolving Loans or Letter
of Credit Accommodations outstanding, then such term shall mean Lenders having
aggregate Commitment Percentages of more than sixty-six and two-thirds (66 2/3%)
percent.
1.75 "Revolving Loan Limit" shall mean $260,000,000.
1.76 "Revolving Loans" shall mean the loans now or hereafter made by
Lenders to or for the benefit of Borrower on a revolving basis (involving
advances, repayments and readvances) as set forth in Section 2.1 hereof.
1.77 "Settlement Period" shall have the meaning set forth in Section
6.8(b).
1.78 "UBS" shall mean UBS Mortgage Finance, Inc. and its successors
and assigns.
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1.79 "UBS Loan Agreement" shall mean (a) that certain Amended and
Restated Loan Agreement dated as of December 2, 1997 between Borrower and UBS,
as heretofore amended, and (b) that certain Loan Agreement dated as of December
2, 1997, among Borrower, the banks and financial institutions party thereto (the
"Synthetic Lease Banks") and BA Leasing and Capital Corporation as agent for the
Synthetic Lease Banks.
1.80 "Value" shall mean, as determined by Agent in good faith, with
respect to Inventory, the lower of (a) Cost or (b) market value.
1.81 "Voting Stock" shall mean with respect to any Person, (a) one (1)
or more classes of Capital Stock of such Person having general voting powers to
elect at least a majority of the board of directors, managers or trustees of
such Person, irrespective of whether at the time Capital Stock of any other
class or classes have or might have voting power by reason of the happening of
any contingency, and (b) any Capital Stock of such Person convertible or
exchangeable without restriction at the option of the holder hereof into Capital
Stock of such Person described in clause (a) of this definition.
SECTION 2. CREDIT FACILITIES
2.1 Revolving Loans.
(a) Subject to, and upon the terms and conditions contained
herein, each of the Lenders severally (and not jointly) agrees to fund its Pro
Rata Share of Loans to Borrower from time to time in amounts requested by
Borrower up to the aggregate amount equal to: (i) the lesser of: (A) the lesser
of (1) sixty-five (65%) percent multiplied by the Value of the Eligible
Inventory and (2) eighty-six (86%) percent of the product of the Value of the
Eligible Inventory multiplied by the Net Recovery Cost Percentage; and (B) the
Maximum Credit minus (ii) any Availability Reserves.
(b) Agent may, in its discretion, from time to time, upon not
less than five (5) days prior notice to Borrower, reduce the lending formula
with respect to Eligible Inventory to the extent that Agent for the ratable
benefit of Lenders, determines, in good faith, that: (i) the number of days of
the turnover of the Inventory for any period has materially increased or (ii)
the nature, quality or mix of the Inventory has deteriorated or (iii) there is a
decrease in the Net Recovery Cost Percentage after the date hereof. In
determining whether to reduce the lending formula(s), Agent may consider events,
conditions, contingencies or risks which are also considered in determining
Eligible Inventory or in establishing Availability Reserves.
(c) The aggregate principal amount of the Loans and the Letter
of Credit Accommodations outstanding at any time shall not exceed the Maximum
Credit. In the event that the outstanding amount of the Loans, or the aggregate
amount of the outstanding Loans and Letter of Credit Accommodations, exceed the
amounts available under the lending formulas, the sublimits for Letter of Credit
Accommodations set forth in Section 2.2(d) or the Maximum Credit, as applicable,
such event shall not limit, waive or otherwise affect any rights of Agent, for
the ratable benefit of Lenders, in that circumstance or on any future occasions
and Borrower shall, upon demand by Agent, which may be made at any time or from
time to time, immediately repay to Agent, for the ratable benefit of Lenders,
the entire amount of any such excess(es) for which payment is demanded.
To the extent Agent shall have established an Availability
Reserve which is sufficient to address any event, condition or matter in a
manner satisfactory to Agent in good faith, Agent shall not exercise its rights
under Section 2.1(b) to reduce the lending formulas to address such event,
condition or matter. The amount of any reduction in the lending formula by Agent
pursuant to Section 2.1(b) or the establishment of any Availability Reserve
shall have
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a reasonable relationship to the matter which is the basis for such a
reduction or such Availability Reserve, as the case may be.
2.2 Letter of Credit Accommodations.
(a) Subject to, and upon the terms and conditions contained
herein, at the request of Borrower, Agent agrees, for the ratable risk of each
Lender according to its Pro Rata Share, to provide or arrange for Letter of
Credit Accommodations for the account of Borrower containing terms and
conditions acceptable to Agent and the issuer thereof. Any payments made by
Agent, for the ratable benefit of each Lender according to its Pro Rata Share,
to any issuer thereof and/or related parties in connection with the Letter of
Credit Accommodations shall constitute additional Loans to Borrower.
(b) In addition to any charges, fees or expenses charged by
any bank or issuer in connection with the Letter of Credit Accommodations,
Borrower shall pay to Agent, for the ratable benefit of Lenders, a letter of
credit fee at a rate equal to two (2%) percent per annum on the daily
outstanding balance of the Letter of Credit Accommodations for the immediately
preceding month (or part thereof), payable in arrears as of the first day of
each succeeding month, except that Borrower shall pay to Agent, for the ratable
benefit of Lenders, such letter of credit fee, at Agent's option, without
notice, at a rate equal to four (4%) percent per annum for (i) the period from
and after the date of termination or non-renewal hereof until Agent, for the
ratable benefit of Lenders, has received full and final payment of all
Obligations (notwithstanding entry of a judgment against Borrower) and (ii) the
period from and after the date of the occurrence of an Event of Default and for
so long as such Event of Default is continuing. Such letter of credit fee shall
be calculated on the basis of a three hundred sixty (360) day year and actual
days elapsed and the obligation of Borrower to pay such fee shall survive the
termination or non-renewal of this Agreement.
(c) No Letter of Credit Accommodations shall be available
unless on the date of the proposed issuance of any Letter of Credit
Accommodations, the Loans available to Borrower (subject to the Revolving Loan
Limit and any Availability Reserves) are equal to or greater than (i) if the
proposed Letter of Credit Accommodation is for the purpose of purchasing
Eligible Inventory, the sum of (A) the percentage equal to one hundred (100%)
percent minus the then applicable percentage set forth in Section 2.1(a) above
multiplied by the Value of such Eligible Inventory, plus (B) freight, taxes,
duty and other amounts that Agent estimates must be paid in connection with such
Inventory upon arrival and for delivery to one of Borrower's locations for
Eligible Inventory; and (ii) if the proposed Letter of Credit Accommodation is
for any other purpose an amount equal to one hundred (100%) percent of the face
amount thereof and all other commitments and obligations made or incurred by
Agent or any Lender with respect thereto. Effective on the issuance of each
Letter of Credit Accommodations, an Availability Reserve shall be established in
the applicable amount set forth in Section 2.2(c)(i) or Section 2.2(c)(ii).
(d) Except in Agent's discretion, the amount of all
outstanding Letter of Credit Accommodations and all other commitments and
obligations made or incurred by Agent or any Lender in connection therewith,
shall not at any time exceed $35,000,000. At any time an Event of Default exists
or has occurred and is continuing, upon Agent's request, Borrower will either
furnish cash collateral to secure the reimbursement obligations to the issuer in
connection with any Letter of Credit Accommodations or furnish cash collateral
to Agent, for the ratable benefit of Lenders, for the Letter of Credit
Accommodations, and in either case, the Loans otherwise available to Borrower
shall not be reduced as provided in Section to 2.2(c) the extent of such cash
collateral.
(e) Borrower shall indemnify and hold Agent and Lenders
harmless from and against any and all losses, claims, damages, liabilities,
costs and expenses which Agent or any Lender may suffer or incur in connection
with any Letter of Credit Accommodations and any documents, drafts or
acceptances relating thereto, including, but not limited to, any losses, claims,
damages, liabilities, costs and expenses due to any action taken by any issuer
or correspondent with respect to any Letter of Credit Accommodation. Borrower
assumes all risks with respect to the
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acts or omissions of the drawer under or beneficiary of any Letter of Credit
Accommodation and for such purposes the drawer or beneficiary shall be deemed
Borrower's agent.Borrower assumes all risks for, and agrees to pay, all foreign,
Federal, State and local taxes, duties and levies relating to any goods subject
to any Letter of Credit Accommodations or any documents, drafts or acceptances
thereunder. Borrower hereby releases and holds Agent and Lenders harmless from
and against any acts, waivers, errors, delays or omissions, whether caused by
Borrower, by any issuer or correspondent or otherwise with respect to or
relating to any Letter of Credit Accommodation. The provisions of this Section
2.2 (e) shall survive the payment of Obligations and the termination or non-
renewal of this Agreement.
(f) Nothing contained herein shall be deemed or construed to
grant Borrower any right or authority to pledge the credit of Agent or Lenders
in any manner. Agent and Lenders shall have no liability of any kind with
respect to any Letter of Credit Accommodation provided by an issuer other than
Agent or Lenders unless Agent has duly executed and delivered to such issuer the
application or a guarantee or indemnification in writing with respect to such
Letter of Credit Accommodation. Borrower shall be bound by any interpretation
made in good faith by Agent, or any other issuer or correspondent under or in
connection with any Letter of Credit Accommodation or any documents, drafts or
acceptances thereunder, notwithstanding that such interpretation may be
inconsistent with any instructions of Borrower. Agent shall have the sole and
exclusive right and authority to, and Borrower shall not: (i) at any time an
Event of Default exists or has occurred and is continuing, (A) approve or
resolve any questions of non-compliance of documents, (B) give any instructions
as to acceptance or rejection of any documents or goods or (C0 execute any and
all applications for steamship or airway guaranties, indemnities or delivery
orders, and (ii) at all times, prior to the occurrence of an Event of Default,
with the consent of Borrower, and, after the occurrence of an Event of Default,
without the consent of Borrower, (A) grant any extensions of the maturity of,
time of payment for, or time of presentation of, any drafts, acceptances, or
documents and (B) agree to any amendments, renewals, extensions, modifications,
changes or cancellations of any of the terms or conditions of any of the
applications, Letter of Credit Accommodations, or documents, drafts or
acceptances thereunder or any letters of credit included in the Collateral.
Agent may take such actions either in its own name, Lenders' name, or in
Borrower's name.
(g) Any rights, remedies, duties or obligations granted or
undertaken by Borrower to any issuer or correspondent in any application for any
Letter of Credit Accommodation, or any other agreement in favor of any issuer or
correspondent relating to any Letter of Credit Accommodation, shall be deemed to
have been granted or undertaken by Borrower to Agent, for the ratable benefit of
Lenders. Any duties or obligations undertaken by Agent to any issuer or
correspondent in any application for any Letter of Credit Accommodation, or any
other agreement by Agent in favor of any issuer or correspondent relating to any
Letter of Credit Accommodation, shall be deemed to have been undertaken by
Borrower to Agent, for the ratable benefit of Lenders, and to apply in all
respects to Borrower.
2.3 Availability Reserves. (a) All Loans otherwise available to
Borrower pursuant to the lending formulas and subject to the Revolving Loan
Limit shall be subject to Agent's continuing right to establish and revise
Availability Reserves. Without limiting any other rights or remedies of Agent
and Lenders under this Agreement or any of the other Financing Agreements with
respect to the establishment of Availability Reserves or otherwise, Agent may
establish and revise Availability Reserves to reflect: (i) inventory shrinkage;
(ii) the aggregate amount of deposits, if any, received by Borrower from its
customers in respect of unfilled orders for merchandise; (iii) amounts due in
respect of sales, use and/or withholding taxes; and (iv) any rental payments,
service charges or other amounts due to lessors of real or personal property to
the extent Inventory or Records are located in or on such property or such
Records are needed to monitor or otherwise deal with the Collateral.
(b) In addition to and not in limitation of the foregoing, Borrower
hereby consents to the establishment of an availability reserve in the amount of
$3,000,000 (the "Fortress Access Agreement Reserve"). The Fortress Access
Agreement Reserve shall be established on the date hereof and shall continue
until such time as the Agent has received a Fortress Access Agreement in form
and substance satisfactory to Agent.
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2.4 Commitments. The aggregate amount of each Lender's share of the
Loans and Letter of Credit Accommodations shall not exceed the amount set forth
below such Lender's signature on the signature pages hereto, as the same may
from time to time be amended with the written acknowledgment of Agent. Such
amount for each Lender is referred to herein as such Lender's "Commitment".
SECTION 3. INTEREST AND FEES
3.1 Interest.
(a) Borrower shall pay to Agent, for the ratable benefit of
Lenders interest on the outstanding principal amount of the non-contingent
Obligations at the Interest Rate. All interest accruing hereunder on and after
the date of any Event of Default or termination or non-renewal hereof shall be
payable on demand.
(b) Borrower may from time to time request that Prime Rate
Loans be converted to Eurodollar Rate Loans or that any existing Eurodollar Rate
Loans continue for an additional Interest Period. Such request from Borrower
shall specify the amount of the Prime Rate Loans which will constitute
Eurodollar Rate Loans (subject to the limits set forth below) and the Interest
Period to be applicable to such Eurodollar Rate Loans. Subject to the terms and
conditions contained herein, two (2) Business Days after receipt by Agent of
such a request from Borrower, such Prime Rate Loans shall be converted to
Eurodollar Rate Loans or such Eurodollar Rate Loans shall continue, as the case
may be, provided, that, as of such date each of the following conditions is
satisfied as determined by Lender: (i no Event of Default, or act, condition or
event which with notice or passage of time or both would constitute an Event of
Default shall exist or have occurred and be continuing, (ii) no party hereto
shall have sent any notice of termination or non-renewal of this Agreement,
(iii) Borrower shall have complied with such customary procedures as are
established by Agent and specified by Agent to Borrower from time to time for
requests by Borrower for Eurodollar Rate Loans, (iv) no more than five (5)
Interest Periods may be in effect at any one time, (v) the aggregate amount of
the Eurodollar Rate Loans must be in an amount not less than $2,000,000 or an
integral multiple of $1,000,000 in excess thereof, and (vi) Agent shall have
determined that the Interest Period or Adjusted Eurodollar Rate is available to
Agent through Reference Bank and can be readily determined as of the date of the
request for such Eurodollar Rate Loan by Borrower. Any request by Borrower to
convert Prime Rate Loans to Eurodollar Rate Loans or to continue any existing
Eurodollar Rate Loans shall be irrevocable. Notwithstanding anything to the
contrary contained herein, Agent, Lenders and Reference Bank shall not be
required to purchase United States Dollar deposits in the London interbank
market or other applicable Eurodollar Rate market to fund any Eurodollar Rate
Loans, but the provisions hereof shall be deemed to apply as if Agent, Lenders
and Reference Bank had purchased such deposits to fund the Eurodollar Rate
Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to
Prime Rate Loans upon the last day of the applicable Interest Period, unless
Agent has received and approved a request to continue such Eurodollar Rate Loan
at least two (2) Business Days prior to such last day in accordance with the
terms hereof. Any Eurodollar Rate Loans shall, at Agent's option, upon notice by
Agent to Borrower, convert to Prime Rate Loans in the event that (i) an Event of
Default or act, condition or event which with the notice or passage of time or
both would constitute an Event of Default, shall exist or have occurred, (ii)
this Agreement shall terminate or not be renewed, or (iii) the aggregate
principal amount of the Prime Rate Loans which have previously been converted to
Eurodollar Rate Loans or existing Eurodollar Rate Loans continued, as the case
may be, at the beginning of an Interest Period shall at any time during such
Interest Period exceed either (A) the aggregate principal amount of the Loans
then outstanding, or (B) the Loans then available to Borrower under Section 2
hereof. Borrower shall pay to Agent, for the ratable benefit of Lenders, upon
demand by Agent (or Agent may, at its option, charge any loan account of
Borrower) any amounts required to compensate Agent, Lenders, Reference Bank or
any participant with Lenders for any loss (including loss
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of anticipated profits), cost or expense incurred by such person, as a result
of the conversion of Eurodollar Rate Loans to Prime Rate Loans pursuant to any
of the foregoing.
(d) Interest shall be payable by Borrower to Agent, for the
ratable benefit of Lenders, monthly in arrears not later than the first day of
each calendar month and shall be calculated on the basis of a three hundred
sixty (360) day year and actual days elapsed. The interest rate on
non-contingent Obligations (other than Eurodollar Rate Loans) shall increase or
decrease by an amount equal to each increase or decrease in the Prime Rate
effective on the first day of the month after any change in such Prime Rate is
announced based on the Prime Rate in effect on the last day of the month in
which any such change occurs. In no event shall charges constituting interest
payable by Borrower to Agent exceed the maximum amount or the rate permitted
under any applicable law or regulation, and if any such part or provision of
this Agreement is in contravention of any such law or regulation, such part or
provision shall be deemed amended to conform thereto.
3.2 Closing Fee. Borrower shall pay to Agent, for the ratable benefit
of Lenders, as a closing fee the amount of $2,600,000 which shall be fully
earned as of and payable on the date hereof.
3.3 Servicing Fee. Borrower shall pay to Agent, Agent's own account,
monthly a servicing fee in an amount equal to $5,000 for each month (or part
thereof) while this Agreement is in effect and for so long thereafter as any of
the Obligations are outstanding, which fee shall be fully earned as of and
payable in advance on the date hereof and on the first day of each month
hereafter.
3.4 Unused Line Fee. Borrower shall pay to Agent, for the ratable
benefit of Lenders, monthly an unused line fee at a rate equal to three-eighths
of one (3/8%) percent per annum calculated upon the amount by which the
Revolving Loan Limit exceeds the average daily principal balance of the
outstanding Revolving Loans and Letter of Credit Accommodations during the
immediately preceding month (or part thereof) while this Agreement is in effect
and for so long thereafter as any of the Obligations are outstanding, which fee
shall be payable on the first day of each month in arrears.
3.5 Syndication Fee. Borrower shall pay to Agent, for Agent's own
account, as a syndication fee the amount of $650,000 which shall be fully earned
as of and payable on the date hereof.
3.6 Changes in Laws and Increased Costs of Loans.
(a) Notwithstanding anything to the contrary contained herein,
all Eurodollar Rate Loans shall, upon notice by Agent to Borrower, convert to
Prime Rate Loans in the event that (i) any change in applicable law or
regulation (or the interpretation or administration thereof) shall either (A)
make it unlawful for Agent, any Lender, any Participant of Congress or Reference
Bank to make or maintain Eurodollar Rate Loans or to comply with the terms
hereof in connection with the Eurodollar Rate Loans, or (B) shall result in the
increase in the costs to Agent, Lenders, any Participant of Congress or
Reference Bank of making or maintaining any Eurodollar Rate Loans or by an
amount deemed by Agent to be material, or (C) reduce the amounts received or
receivable by Agent for the ratable benefit of Lenders in respect thereof, by an
amount deemed by Agent to be material or (ii) the cost to Agent, Lenders, any
Participant of Congress or Reference Bank of making or maintaining any
Eurodollar Rate Loans shall otherwise increase by an amount deemed by Agent to
be material. Borrower shall pay to Agent, for the ratable benefit of Lenders,
upon demand by Agent (or Agent may, at its option, charge any loan account of
Borrower) any amounts required to compensate Agent, Lenders, any Participant of
Congress or Reference Bank for any loss (including loss of anticipated profits),
cost or expense incurred by such person as a result of the foregoing, including,
without limitation, any such loss, cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such person
to make or maintain the Eurodollar Rate Loans or any portion thereof. A
certificate
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of Agent setting forth the basis for the determination of such amount necessary
to compensate Agent as aforesaid shall be delivered to Borrower and shall be
conclusive, absent manifest error.
(b)If any payments or prepayments in respect of the Eurodollar
Rate Loans are received by Agent other than on the last day of the applicable
Interest Period (whether pursuant to acceleration, upon maturity or otherwise),
including any payments pursuant to the application of collections under Section
6.3 or any other payments made with the proceeds of Collateral, Borrower shall
pay to Agent upon demand by Agent (or Agent may, at its option, charge any loan
account of Borrower) any amounts required to compensate Agent, Lenders, any
Participant of Congress or Reference Bank for any additional loss (including
loss of anticipated profits), cost or expense incurred by such person as a
result of such prepayment or payment, including, without limitation, any loss,
cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such person to make or maintain such
Eurodollar Rate Loans or any portion thereof. Agent shall provide Borrower with
a written statement setting forth the amount of any such additional loss.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations. Each of the following is a condition precedent to Lenders (or
Agent on behalf of Lenders) making the initial Loans and providing the initial
Letter of Credit Accommodations hereunder:
(a) Agent shall have received, in form and substance
satisfactory to Agent, all releases, terminations and such other documents as
Agent may request to evidence and effectuate the release and/or termination of
any interest in and to any assets and properties of Borrower and each Obligor,
other than liens and security interests permitted under Section 9.8 hereof, duly
authorized, executed and delivered, including, but not limited to, UCC
termination statements;
(b) Agent shall have received evidence, in form and substance
satisfactory to Agent, that Agent has valid perfected first priority security
interests in and liens upon the Collateral and any other property which is
intended to be security for the Obligations or the liability of any Obligor in
respect thereof, subject only to the security interests and liens permitted
herein or in the other Financing Agreements;
(c) Agent shall have received the CIBC Access Agreement
executed and delivered by CIBC;
(d) all requisite corporate action and proceedings in
connection with this Agreement and the other Financing Agreements shall be
satisfactory in form and substance to Agent, and Agent shall have received all
information and copies of all documents, including, without limitation, records
of requisite corporate action and proceedings which Agent may have requested in
connection therewith, such documents where requested by Agent or its counsel to
be certified by appropriate corporate officers or governmental authorities;
(e) no material adverse change shall have occurred in the
assets, business or prospects of Borrower since the date of Agent's latest field
examination and no change or event shall have occurred which would impair the
ability of Borrower or any Obligor to perform its obligations hereunder or under
any of the other Financing Agreements to which it is a party or of Agent to
enforce the Obligations or realize upon the Collateral;
(f) Agent shall have completed a field review of the Records
and such other information with respect to the Collateral as Agent may require
to determine the amount of Loans available to Borrower (including, without
limitation, current perpetual inventory records and/or roll-forwards of Accounts
and Inventory through the date of closing and test counts of the Inventory in a
manner satisfactory to Lender, together with such supporting
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documentation as may be necessary or appropriate, and other documents and
information that will enable Agent to accurately identify and verify the
Collateral), the results of which, in each case, shall be satisfactory
to Agent, not more than three (3) Business Days prior to the date hereof;
(g) Agent shall have received an agreement in favor of Lenders
and Agent from Commercial Account Purchaser acknowledging the first priority
security interest of Agent, for the ratable benefit of Lenders, in monies due
and to become due to Borrower (including, without limitation, credits and
reserves) under the Commercial Account Agreement as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced, and agreeing to transfer all such amounts to the Blocked Accounts (the
"Commercial Account Acknowledgement");
(h) Agent shall have received, in form and substance
satisfactory to Agent, all consents, waivers, acknowledgments and other
agreements from third persons which Agent may deem necessary or desirable in
order to permit, protect and perfect its security interests in and liens upon
the Collateral or to effectuate the provisions or purposes of this Agreement and
the other Financing Agreements, including, without limitation, acknowledgments
by lessors, mortgagees and warehousemen of Agent's security interests in the
Collateral, waivers by such persons of any security interests, liens or other
claims by such persons to the Collateral and agreements permitting Agent's
access to, and the right to remain on, the premises to exercise its rights and
remedies and otherwise deal with the Collateral;
(i) Borrower shall have established the Blocked Accounts and
Agent shall have received, in form and substance satisfactory to Agent, all
agreements with the depository banks and Borrower with respect to such Blocked
Accounts as Agent may require pursuant to Section 6.3 hereof, duly authorized,
executed and delivered by such depository banks and Borrower;
(j) Agent shall have received evidence, in form and substance
satisfactory to Agent, that all local banks used by Borrower for collections
from retail store locations have been irrevocably authorized and directed in
writing to remit such amounts to the Blocked Accounts;
(k) Agent shall have received Credit Card Acknowledgments in
each case, duly authorized, executed and delivered by the Credit Card Issuers
and Credit Card Processors;
(l) Agent shall have received a duly executed Private Label
Card Agreement and Commercial Account Agreement, the terms and provisions of
which shall be satisfactory to Agent;
(m) Agent shall have received, in form and substance
satisfactory to Agent, a valid and effective title insurance policy issued by a
company and agent acceptable to Agent (i) insuring the priority, amount and
sufficiency of the Mortgages, (ii) insuring against matters that would be
disclosed by surveys and (iii) containing any legally available endorsements,
assurances or affirmative coverage requested by Agent for protection of Lenders'
interests;
(n) the Excess Availability as determined by Agent, as of the
date hereof, shall not be less than $20,000,000 after giving effect to the
initial Loans made or to be made and Letter of Credit Accommodations issued or
to be issued in connection with the initial transactions hereunder;
(o) Agent shall have received evidence of insurance and loss
payee endorsements required hereunder and under the other Financing Agreements,
in form and substance satisfactory to Agent, and certificates of insurance
policies and/or endorsements naming Agent and each Lender as loss payee with
respect to the Collateral;
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(p) Agent shall have received Commitments from Lenders
(including Congress) or Assignees of Congress in an aggregate amount equal to
the Maximum Credit;
(q) Agent shall have received, in form and substance
satisfactory to Agent, the opinion letter of counsel(s) to Borrower with respect
to the Financing Agreements and the security interests and liens of Agent with
respect to the Collateral and such other matters as Agent may request; and
(r) the other Financing Agreements and all instruments and
documents hereunder and thereunder shall have been duly executed and delivered
to Agent, in form and substance satisfactory to Agent.
4.2 Conditions Precedent to All Loans and Letter of Credit
Accommodations. Each of the following is an additional condition precedent to
Lenders (or Agent on behalf of Lenders) making Loans and/or providing Letter of
Credit Accommodations to Borrower, including the initial Loans and Letter of
Credit Accommodations and any future Loans and Letter of Credit Accommodations:
(a) all representations and warranties contained herein and in
the other Financing Agreements shall be true and correct in all material
respects with the same effect as though such representations and warranties had
been made on and as of the date of the making of each such Loan or providing
each such Letter of Credit Accommodation and after giving effect thereto, except
to the extent that such representation or warranty expressly relates to an
earlier date and except for changes therein expressly permitted or expressly
contemplated by this Agreement; and
(b) no Event of Default and no event or condition which, with
notice or passage of time or both, would constitute an Event of Default, shall
exist or have occurred and be continuing on and as of the date of the making of
such Loan or providing each such Letter of Credit Accommodation and after giving
effect thereto.
SECTION 5. SECURITY INTEREST
To secure payment and performance of all Obligations, Borrower hereby
grants to Agent, for the ratable benefit of Lenders, a continuing security
interest in, a lien upon, and a right of set off against, and hereby assigns to
Agent, for the ratable benefit of Lenders, as security, the following property
and interests in property of Borrower, whether now owned or hereafter acquired
or existing, and wherever located (collectively, the "Collateral"):
5.1 Accounts;
5.2 Inventory;
5.3 Real Property Collateral;
5.4 all present and future tax and duty refunds (the "Refunds");
5.5 all present and future registered and unregistered patents,
trademarks, service marks, copyrights, trade names, applications for the
foregoing, trade secrets, goodwill, processes, drawings, blueprints, and
customer lists (the "Intellectual Property");
5.6 all present and future contract rights relating to the Accounts,
Inventory, Real Property, Intellectual Property and Refunds; licenses, whether
as licensor or licensee, choses in action and other claims and general
intangibles (including, without limitation, all present and future amounts due
Borrower from any credit card issuer in
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connection with the purchase by such credit card issuer or any purchaser of
any accounts) relating to the Accounts, Inventory, Real Property, Intellectual
Property and Refunds; chattel paper, documents and instruments relating to the
Accounts, Inventory, Real Property, Intellectual Property and Refunds; bills
of lading, cargo receipts and other documents of title with respect to any
Inventory of Borrower; letters of credit, bankers' acceptances and guaranties
relating to the Accounts, Inventory, Real Property, Intellectual Property and
Refunds;
5.7 all present and future monies, securities and other investment
property, credit balances, deposits, deposit accounts and other property of
Borrower now or hereafter held or received by or in transit to Secured Party or
its affiliates or at any other depository or other institution from or for the
account of Borrower, whether for safekeeping, pledge, custody, transmission,
collection or otherwise which relate to the Accounts, Inventory, Real Property,
Intellectual Property and Refunds, and all present and future liens, security
interests, rights, remedies, title and interest in, to and in respect of the
Accounts, Inventory, Real Property, Intellectual Property and Refunds,
including, without limitation, (i) rights and remedies under or relating to
guaranties, contracts of suretyship, letters of credit and credit and other
insurance relating to the Accounts, Inventory, Real Property, Intellectual
Property and Refunds, (ii) rights of stoppage in transit, replevin,
repossession, reclamation and other rights and remedies of an unpaid vendor,
lienor or secured party relating to the Accounts, Inventory, Real Property,
Intellectual Property and Refunds, (iii) goods described in invoices, documents,
contracts or instruments with respect to, or otherwise representing or
evidencing, the Accounts, Inventory, Real Property, Intellectual Property and
Refunds including, without limitation, returned, repossessed and reclaimed
goods, and (iv) deposits by and property of account debtor or other persons
securing the obligations of account debtors relating to the Accounts, Inventory,
Real Property, Intellectual Property and Refunds;
5.8 all of Borrower's present and future books of account of every kind
or nature, purchase and sale agreements, invoices, ledger cards, bills of lading
and other shipping evidence, statements, correspondence, memoranda, credit files
and other data relating to any of the Accounts, Inventory, Real Property,
Intellectual Property and Refunds, together with the tapes, disks, diskettes and
other data and software storage media and devices, file cabinets or containers
in or on which any of the foregoing are stored, including any rights of Borrower
with respect to the foregoing maintained with or by any other person
("Records"); and
5.9 all products and proceeds of the foregoing, in any form, including,
without limitation, insurance proceeds and all claims against third parties for
loss or damage to or destruction of any or all of the foregoing.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrower's Loan Account. Agent shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all payments
made by or on behalf of Borrower and (c) all other appropriate debits and
credits as provided in this Agreement, including, without limitation, fees,
charges, costs, expenses and interest. All entries in the loan account(s) shall
be made in accordance with Agent's customary practices as in effect from time to
time.
6.2 Statements. Agent shall render to Borrower each month a statement
setting forth the balance in the Borrower's loan account(s) maintained by Agent
for Borrower pursuant to the provisions of this Agreement, including principal,
interest, fees, costs and expenses. Each such statement shall be subject to
subsequent adjustment by Agent but shall, absent manifest errors or omissions,
be considered correct and deemed accepted by Borrower and conclusively binding
upon Borrower as an account stated except to the extent that Agent receives a
written notice from Borrower of any specific exceptions of Borrower thereto
within thirty (30) days after the date such statement has been mailed by Agent.
Until such time as Agent shall have rendered to Borrower a written statement as
provided above, the balance in Borrower's loan account(s) shall be presumptive
evidence of the amounts due and owing to Agent by Borrower.
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6.3 Collection of Accounts.
(a)Agent shall establish and maintain, at its expense, deposit
account arrangements and merchant payment arrangements with the banks set forth
on Schedule 6.3 hereto and after prior written notice to Agent, subject to
Section 9.16, such other banks as Borrower may hereafter select as are
acceptable to Agent. The banks set forth on Schedule 6.3 constitute all of the
banks with whom Borrower has deposit account arrangements and merchant payment
arrangements as of the date hereof and identifies each of the deposit accounts
at such banks to a retail store location of Borrower or otherwise describes the
nature of the use of such deposit account by Borrower.
(i) Borrower shall deposit all proceeds from sales
of Inventory in every form, including, without limitation, cash, checks, credit
card sales drafts, credit card sales or charge slips or receipts and other forms
of daily store receipts, from each retail store location of Borrower on each
Business Day into the deposit accounts of Borrower used solely for such purpose
and identified to each retail store location as set forth on Schedule 6.3. All
such funds deposited into the separate deposit accounts shall be sent by wire
transfer on a daily basis and all other proceeds of Collateral shall be sent by
wire transfer, to the Blocked Accounts as provided in Section 6.3(a)(ii) below.
Borrower shall irrevocably authorize and direct in writing,in form and substance
satisfactory to Agent, each of the banks into which proceeds from sales of
Inventory from each retail store location of Borrower are at any time deposited
as provided above to send all funds deposited in such account by wire transfer
on a daily basis to the Blocked Accounts. Such authorization and direction
shall not be rescinded, revoked or modified without the prior written consent of
Agent.
(ii) Borrower shall establish and maintain, at its
expense, deposit accounts with such banks as are acceptable to Agent (the
"Blocked Accounts") into which Borrower shall promptly either cause all amounts
on deposit in its deposit accounts used by each retail store location to be
sent as provided in Section 6.3(a)(i) above or shall itself deposit or cause to
be deposited all proceeds from sales of Inventory, all amounts payable to
Borrower from Credit Card Issuers, Credit Card Processors and the Commercial
Account Purchaser and all other proceeds of Collateral. The banks at which
the Blocked Accounts are established shall enter into an agreement, in form and
substance satisfactory to Agent, providing that all items received or deposited
in the Blocked Accounts are the property of Agent, for the ratable benefit
of Lenders, that the depository bank has no lien upon, or right of setoff
against, the Blocked Accounts, the items received for deposit therein, or the
funds from time to time on deposit therein and that the depository bank
will wire, or otherwise transfer, in immediately available funds, on a daily
basis, all funds received or deposited into the Blocked Accounts to such bank
account of Agent, as Agent may from time to time designate for such purpose
("Payment Account"). Borrower agrees that all amounts deposited in such
Blocked Accounts or other funds received and collected by Agent, whether
as proceeds of inventory or other Collateral or otherwise shall be the property
of Agent, for the ratable benefit of Lenders.
(b) For purposes of calculating the amount of the Loans
available to Borrower such payments will be applied (conditional upon final
collection) to the Obligations on the Business Day of receipt by Agent of
immediately available funds in the Payment Account provided such payments and
notice thereof are received in accordance with Agent's usual and customary
practices as in effect from time to time and within sufficient time to credit
Borrower's loan account on such day, and if not, then on the next Business Day.
For purposes of calculating interest on the Obligations, such payments or other
funds received will be applied (conditional upon final collection) to the
Obligations one (1) Business Day following the date of receipt of immediately
available funds by Agent in the Payment Account (the "Collection Period")
provided such payments or other funds and notice thereof are received in
accordance with Agent's usual and customary practices as in effect from time to
time and within sufficient time to credit Borrower's loan account on such day,
and if not, then on the next Business Day. The economic benefit of the
Collection Period shall be for Agent's sole account.
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(c) Borrower and all of its affiliates, subsidiaries,
directors, employees or agents shall, acting as trustee for Agent, receive, as
the property of Agent, for the ratable benefit of Lenders, any cash, checks,
credit card sales drafts, credit card sales or charge slips or receipts, notes,
drafts, all forms of store receipts or any other payment relating to and/or
proceeds of Accounts or other Collateral which come into their possession or
under their control and immediately upon receipt thereof, shall deposit or cause
the same to be deposited in the Blocked Accounts, or remit the same or cause the
same to be remitted, in kind, to Agent, for the ratable benefit of Lenders,
provided, that, if at any time the Excess Availability shall be less than
$1,000,000, Borrower shall promptly upon Agent's request cause the portion
thereof representing sales and/or use taxes payable in connection with such
sales or otherwise to be deposited into a separate bank account or accounts
established for such purpose. In no event shall and such cash, checks, credit
card sales drafts, credit card sales or charge slips or receipts, notes, drafts
or other payments be commingled with Borrower's own funds. Borrower agrees to
reimburse Agent on demand for any amounts owed or paid to any bank at which a
Blocked Account is established or any other bank or person involved in the
transfer of funds to or from the Blocked Accounts arising out of Agent's
payments to or indemnification of such bank or person. The obligation of
Borrower to reimburse Agent, for the ratable benefit of Lenders, for such
amounts pursuant to this Section 6.3 shall survive the termination or
non-renewal of this Agreement.
6.4 Payments. All Obligations shall be payable to the Payment Account
as provided in Section 6.3 or such other place as Agent may designate from time
to time. Agent may apply payments received or collected from Borrower or for the
account of Borrower (including, without limitation, the monetary proceeds of
collections or of realization upon any Collateral) to such of the Obligations,
whether or not then due, in such order and manner as Agent determines, provided
that, all such payments shall be applied to Prime Rate Loans before being
applied to Eurodollar Rate Loans. At Agent's option, all principal, interest,
fees, costs, expenses and other charges provided for in this Agreement or the
other Financing Agreements may be charged directly to the loan account(s) of
Borrower. Borrower shall make all payments to Agent, for the ratable benefit of
Lenders, on the Obligations free and clear of, and without deduction or
withholding for or on account of, any setoff, counterclaim, defense, duties,
taxes, levies, imposts, fees, deductions, withholding, restrictions or
conditions of any kind. If after receipt of any payment of, or proceeds of
Collateral applied to the payment of, any of the Obligations, Agent is required
to surrender or return such payment or proceeds to any Person for any reason,
then the Obligations intended to be satisfied by such payment or proceeds shall
be reinstated and continue and this Agreement shall continue in full force and
effect as if such payment or proceeds had not been received by Agent. Borrower
shall be liable to pay to Agent, for the ratable benefit of Lenders, and does
hereby indemnify and hold Agent and Lenders harmless for the amount of any
payments or proceeds surrendered or returned. This Section 6.4 shall remain
effective notwithstanding any contrary action which may be taken by Agent in
reliance upon such payment or proceeds. This Section 6.4 shall survive the
payment of the Obligations and the termination or non-renewal of this Agreement.
6.5 Authorization to Make Loans. Agent, for the ratable benefit of
Lenders, is authorized to make the Loans and provide the Letter of Credit
Accommodations, for the account and risk of Lenders, based upon telephonic or
other instructions received from anyone purporting to be an officer of Borrower
or other authorized person or, at the discretion of Agent, if such Loans are
necessary to satisfy any Obligations. All requests for Loans or Letter of Credit
Accommodations hereunder shall specify the date on which the requested advance
is to be made or Letter of Credit Accommodations established (which day shall be
a Business Day) and the amount of the requested Loan. Requests received after
11:30 a.m. Chicago, Illinois time on any day shall be deemed to have been made
as of the opening of business on the immediately following Business Day. All
Loans and Letter of Credit Accommodations under this Agreement shall be
conclusively presumed to have been made to, and at the request of and for the
benefit of, Borrower when deposited to the credit of Borrower or otherwise
disbursed or established in accordance with the instructions of Borrower or in
accordance with the terms and conditions of this Agreement.
6.6 Use of Proceeds. Borrower shall use the initial proceeds of the
Loans provided by Agent, for the account and risk of Lenders, to Borrower
hereunder only for: (a) payments to each of the persons listed in the
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disbursement direction letter furnished by Borrower to Agent on or about the
date hereof and (b) costs, expenses and fees in connection with the preparation,
negotiation, execution and delivery of this Agreement and the other Financing
Agreements or related to the transactions contemplated. All other Loans made or
Letter of Credit Accommodations provided by Agent to Borrower pursuant to the
provisions hereof shall be used by Borrower only for general operating, working
capital and other proper corporate purposes of Borrower not otherwise prohibited
by the terms hereof. None of the proceeds will be used, directly or indirectly,
for the purpose of purchasing or carrying any margin security or for the
purposes of reducing or retiring any indebtedness which was originally incurred
to purchase or carry any margin security or for any other purpose which might
cause any of the Loans to be considered a "purpose credit" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System, as
amended.
6.7 Sharing of Payments, Etc.
(a) Borrower agrees that, in addition to (and without
limitation of) any right of setoff, banker's lien or counterclaim Agent or a
Lender may otherwise have, each Lender shall be entitled, at its option (but
subject, as among Agent and Lenders, to the provisions of Section 12.3(b)
hereof), to offset balances held by it for the account of Borrower at any of its
offices, in dollars or in any other currency, against any principal of or
interest on any unpaid Loans owed to such Lender or any other unpaid amount
payable to such Lender hereunder (regardless of whether such balances are then
due to Borrower), in which case it shall promptly notify Borrower and Agent
thereof; provided, that, such Lender's failure to give such notice shall not
affect the validity thereof.
(b) If any Lender (including Agent) shall obtain from Borrower
payment of any principal of or interest on any Loan owing to it or payment of
any other amount under this Agreement or any other Financing Agreement through
the exercise of any right of setoff, banker's lien or counterclaim or similar
right or otherwise (other than from Agent as provided herein), and, as a result
of such payment, such Lender shall have received more of its Pro Rata Share of
the principal of or interest on the Loans or such other amounts then due
hereunder or thereunder by Borrower to such Lender than the percentage thereof
received by any other Lender, it shall promptly pay to Agent, for the benefit of
Lenders, the amount of such excess and simultaneously purchase from such other
Lenders a participation in the Loans or such other amounts, respectively, owing
to such other Lenders (or such interest due thereon, as the case may be) in such
amounts, and make such other adjustments from time to time as shall be
equitable, to the end that all Lenders shall share the benefit of such excess
payment (net of any expenses that may be incurred by such Lender in obtaining or
preserving such excess payment) in accordance with their respective Pro Rata
Shares. Amounts received by Agent under this Section 6.7(b) hereof shall be
treated as a payment received from Borrower. To such end all Lenders shall make
appropriate adjustments among themselves (by the resale of participation sold or
otherwise) if such payment is rescinded or must otherwise be restored.
(c) Borrower agrees that any Lender so purchasing such a
participation (or direct interest) may exercise, in a manner consistent with
this Section 6.7, all rights of setoff, banker's lien, counterclaim or similar
rights with respect to such participation as fully as if such Lender were a
direct holder of Loans or other amounts (as the case may be) owing to such
Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to
exercise any such right or shall affect the right of any Lender to exercise, and
retain the benefits of exercising, any such right with respect to any other
indebtedness or obligation of Borrower. If, under any applicable bankruptcy,
insolvency or other similar law, any Lender receives a secured claim in lieu of
a setoff to which this Section 6.7 applies, such Lender shall, to the extent
practicable, assign such rights to Agent for the benefit of Lenders and, in any
event, exercise its rights in respect of such secured claim in a manner
consistent with the rights of Lenders entitled under this Section 6.7 to share
in the benefits of any recovery on such secured claim.
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6.8 Settlement Procedures.
(a) In order to administer the Credit Facility in an efficient
manner and to minimize the transfer of funds between Agent and Lenders, Agent
shall, subject to the terms of this Section 6.8, make available, on behalf of
Lenders, the full amount of the Loans requested or charged to Borrower's loan
account(s) or otherwise to be advanced by Lenders pursuant to the terms hereof,
without any requirement of prior notice to Lenders of the proposed Loans.
(b) With respect to all Loans made by Agent on behalf of
Lenders as provided in this Section 6.8, the amount of each Lender's Pro Rata
Share of the outstanding Loans shall be computed weekly, and shall be adjusted
upward or downward on the basis of the amount of the outstanding Loans as of
5:00 P.M. (Chicago, Illinois time) on the Business Day immediately preceding the
date of each settlement computation; provided, that, Agent retains the absolute
right at any time or from time to time to make the above described adjustments
at intervals more frequent than weekly. Agent shall deliver to each of the
Lenders after the end of each week, or at such lesser period or periods as Agent
shall determine, a summary statement of the amount of outstanding Loans for such
period (such week or lesser period or periods being hereinafter referred to as a
"Settlement Period"). If the summary statement is prior to 12:00 Noon (Chicago,
Illinois time) then such Lender shall make the settlement transfer described in
this Section by no later than 2:00 P.M. (Chicago, Illinois time) on the day such
summary statement was sent, and if such summary statement after 12:00 Noon
(Chicago, Illinois time) such Lender shall make such settlement transfer by no
later than 2:00 P.M. (Chicago, Illinois time) on the next Business Day following
the date of receipt. If, as of the end of any Settlement Period, the amount of a
Lender's Pro Rata Share of the outstanding Loans is more than such Lender's Pro
Rata Share of the outstanding Loans as of the end of the previous Settlement
Period, then such Lender shall forthwith (but in no event later than the time
set forth in the preceding sentence) transfer to Agent by wire transfer in
immediately available funds the amount of the increase; alternatively, if the
amount of a Lender's Pro Rata Share of the outstanding Loans in any Settlement
Period is less than the amount of such Lender's Pro Rata Share of the
outstanding Loans for the previous Settlement Period, Agent shall forthwith
transfer to such Lender by wire transfer in immediately available funds the
amount of the decrease. The obligation of each of the Lenders to transfer such
funds and effect such settlement shall be irrevocable and unconditional and
without recourse to or warranty by Agent. Each of Agent and Lenders agrees to
mark its books and records at the end of each Settlement Period to show at all
times the dollar amount of its Pro Rata Share of the outstanding Loans and
Letter of Credit Accommodations.
(c) To the extent that Agent has made any such amounts
available and the settlement described above shall not yet have occurred, upon
repayment of any Loans by Borrower, Agent may apply such amounts repaid directly
to any amounts made available by Agent pursuant to this Section 6.8. In lieu of
weekly or more frequent settlements, Agent may at any time require each Lender
to provide Agent with immediately available funds representing its Pro Rata
Share of each Loan, prior to Agent's disbursement of such Loan to Borrower.
(d) Because Agent, on behalf of Lenders, may be advancing or
may be repaid Loans prior to the time when Lenders will actually advance or be
repaid Loans, interest and fees with respect to the outstanding Loans shall be
allocated by Agent to each Lender (including Agent), and the amount of each
Lender's Pro Rata Share shall be computed daily, in accordance with the amount
of the outstanding Loans actually advanced by and repaid to each Lender on each
day during each Settlement Period and shall accrue from and including the date
such Loans are advanced by Agent to but excluding the date such Loans are repaid
by Borrower in accordance with the terms of this Agreement or actually settled
by the applicable Lender as described in this Section 6.8. Provided that such
Lender has made all payments required to be made by it under this Agreement and
the other Financing Agreements, Agent will pay to such Lender, by wire transfer
to such Lender not later than 12:00 noon (Chicago, Illinois time) on or about
the tenth (10th) day of each month, such Lender's Pro Rata Share of interest and
fees actually received and collected from Borrower for the benefit of Lenders.
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(e) Nothing in this Section 6.8 or elsewhere in this Agreement
or the other Financing Agreements shall be deemed to require Agent to advance
funds on behalf of any Lender or to relieve any Lender from its obligation to
fulfill its Commitment hereunder or to prejudice any rights that Borrower may
have against any Lender as a result of any default by any Lender hereunder in
fulfilling its Commitment.
6.9 Mandatory Prepayments from the Sale of the Real Property
Collateral. Notwithstanding anything to the contrary contained herein, so long
as no Event of Default exists and is continuing, Borrower shall be permitted to
sell any Real Property Collateral provided that, in each instance, Borrower
receives net proceeds from the sale of each such Real Property Collateral of not
less than the amount set forth on Schedule 6.9 hereof next to each respective
parcel of Real Property Collateral (the "Minimum Sales Price"). The net proceeds
from each such sale shall be remitted to Agent, for the ratable benefit of
Lenders, for application to the Loan in accordance with Section 6.4 hereof. In
addition to and not in limitation of Agent's right to establish Availability
Reserves hereunder, Borrower hereby expressly consents, each time that any Real
Estate Collateral is sold, to the establishment of a reserve in an amount equal
to the Minimum Sales Price for such Real Estate Collateral.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 Collateral Reporting. Borrower shall provide Agent with the
following documents in a form satisfactory to Agent:
(a) on a weekly basis or more frequently as Agent may request,
(i) inventory reports by categories and location (including (A) indicating the
amounts of Inventory at distribution centers and stores and (B) scheduling all
of Borrower's prepaid Inventory), (ii) reports of sales of Inventory, indicating
gross sales, returns, allowances and net sales, and (iii) reports of aggregate
Inventory purchases (including all costs related thereto, such as freight, duty
and taxes);
(b)on a monthly basis or more frequently as Agent may request,
(i) perpetual Inventory reports by category and location, (ii) a schedule of all
consigned Inventory, (iii) a slow moving Inventory report, and (iv) a schedule
of accounts payable;
(c) upon Agent's request, (i) copies of deposit slips and bank
statements, (ii) copies of purchase orders, invoices and delivery documents for
Inventory acquired by Borrower, (iii) reports on sales and use tax collections,
deposits and payments, including monthly sales and use tax accruals, and (iv)
reports by retail store location of sales and operating profits for each such
retail store location;
(d) as soon as available, but in any event not later than five
(5) Business Days after receipt by Borrower, the monthly statements received by
Borrower from any Credit Card Issuers or Credit Card Processors, together with
such additional information with respect thereto as shall be sufficient to
enable Agent to monitor the transactions pursuant to the Credit Card Agreements;
and
(e) such other reports as to the Collateral as Agent shall
request from time to time.
If any of Borrower's records or reports of the Collateral are prepared or
maintained by an accounting service, contractor, shipper or other agent,
Borrower hereby irrevocably authorizes such service, contractor, shipper or
agent to deliver such records, reports, and related documents to Agent and to
follow Agent's instructions with respect to further services at any time that an
Event of Default exists or has occurred and is continuing.
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7.2 Accounts Covenants.
(a) Borrower shall notify Agent promptly of: (i) any notice of
a material default by Borrower under any of the Merchant Agreements or of any
default which might result in the Credit Card Issuer, Commercial Account
Purchaser or Credit Card Processor ceasing to make payments or suspending
payments to Borrower, (ii) any notice from any Credit Card Issuer, Commercial
Account Purchaser or Credit Card Processor that such person is ceasing or
suspending, or will cease or suspend, any present or future payments due or to
become due to Borrower from such person, or that such person is terminating or
will terminate any of the Merchant Agreements, and (iii) the failure of Borrower
to comply with any material terms of the Credit Card Agreements or any terms
thereof which might result in the Credit Card Issuer, Commercial Account
Purchaser or Credit Card Processor ceasing or suspending payments to Borrower.
(b) Agent may, at any time or times that an Event of Default
exists or has occurred, (i) notify any or all account debtors, Commercial
Account Purchaser, Credit Card Issuers and Credit Card Processors that the
Accounts have been assigned to Agent and that Agent has a security interest
therein and Agent may direct any or all account debtors, Commercial Account
Purchaser, Credit Card Issuers and Credit Card Processors to make payments of
Accounts directly to Agent, (ii) extend the time of payment of, compromise,
settle or adjust for cash, credit, return of merchandise or otherwise, and upon
any terms or conditions, any and all Accounts or other obligations included in
the Collateral and thereby discharge or release the account debtor or any other
party or parties in any way liable for payment thereof without affecting any of
the Obligations, (iii) demand, collect or enforce payment of any Accounts or
such other obligations, but without any duty to do so, and Agent shall not be
liable for its failure to collect or enforce the payment thereof nor for the
negligence of its agents or attorneys with respect thereto and (iv) take
whatever other action Agent may deem necessary or desirable for the protection
of its interests.
7.3 Inventory Covenants. With respect to the Inventory: (a) Borrower
shall at all times maintain inventory records reasonably satisfactory to Agent,
keeping correct and accurate records itemizing and describing the kind, type,
quality and quantity of Inventory, Borrower's cost therefor and daily
withdrawals therefrom and additions thereto; (b) Borrower shall conduct a
physical count of the Inventory at least once each year, but at any time or
times as Agent may request on or after an Event of Default, and promptly
following such physical inventory shall supply Agent with a report in the form
and with such specificity as may be reasonably satisfactory to Agent concerning
such physical count; (c) Borrower shall not remove any Inventory from the
locations set forth or permitted herein, without the prior written consent of
Agent, except for sales of Inventory in the ordinary course of Borrower's
business and except to move Inventory directly from one location set forth or
permitted herein to another such location; (d) upon Agent's request, Borrower
shall, at its expense, no more than three (3) times in any twelve (12) month
period; but at any time or times as Agent may request at Agent's expense, or at
any time or times as Agent may request at Borrower's expense on or after an
Event of Default, deliver or cause to be delivered to Agent written reports or
appraisals as to the Inventory in form, scope and methodology acceptable to
Agent and by an appraiser acceptable to Agent, addressed to Agent or upon which
Agent is expressly permitted to rely; (e) upon Agent's request, Borrower shall,
at its expense, conduct through RGIS Inventory Specialists, Inc. or another
inventory counting service acceptable to Agent, a physical count of the
Inventory in form, scope and methodology acceptable to Agent no more than once
in any twelve (12) month period, but at any time or times as Agent may request
on or after an Event of Default, or at any time or times as Agent may request in
the event of test count variances in excess of the shrinkage reserve established
by Borrower, the results of which shall be reported directly by such inventory
counting service to Agent and Borrower shall promptly deliver confirmation in a
form satisfactory to Agent that appropriate adjustments have been made to the
inventory records of Borrower to reconcile the inventory count to Borrower's
inventory records; (f) Borrower shall produce, use, store and maintain the
Inventory, with all reasonable care and caution and in accordance with
applicable standards of any insurance and in conformity with applicable laws
(including, but not limited to, the requirements of the Federal Fair Labor
Standards Act of 1938, as amended and all rules, regulations and orders related
thereto); (g) Borrower assumes all responsibility and liability arising from or
relating to the production, use, sale or other disposition of the
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Inventory; (h) Borrower shall not sell Inventory to any customer on approval,
or any other basis which entitles the customer to return or may obligate
Borrower to repurchase such Inventory except for the right of return given
to retail customers of Borrower in the ordinary course of the business of
Borrower in accordance with the then current return policy of Borrower; (i)
Borrower shall keep the Inventory in good and marketable condition; and (j)
Borrower shall not acquire or accept any Inventory on consignment or approval,
except to the extent such Inventory is reported to Agent in accordance with the
terms hereof.
7.4 Power of Attorney. Borrower hereby irrevocably designates and
appoints Agent (and all persons designated by Agent) as Borrower's true and
lawful attorney-in-fact, and authorizes Agent, in Borrower's or Agent's name,
to: (a) at any time an Event of Default or event which with notice or passage of
time or both would constitute an Event of Default exists or has occurred and is
continuing (i) demand payment on Accounts or other proceeds of Inventory or
other Collateral, (ii) enforce payment of Accounts by legal proceedings or
otherwise, (iii) exercise all of Borrower's rights and remedies to collect any
Account or other Collateral, (iv) sell or assign any Account upon such terms,
for such amount and at such time or times as the Agent deems advisable, (v)
settle, adjust, compromise, extend or renew an Account, (vi) discharge and
release any Account, (vii) prepare, file and sign Borrower's name on any proof
of claim in bankruptcy or other similar document against an account debtor,
(viii) notify the post office authorities to change the address for delivery of
Borrower's mail to an address designated by Agent, and open and dispose of all
mail addressed to Borrower, (ix) sign Borrower's name on any verification of
Accounts and notices thereof to account debtors, (x) endorse Borrower's name
upon any chattel paper, document, instrument, invoice, or similar document or
agreement relating to any Account or any goods pertaining thereto or any other
Collateral, and (xi) do all acts and things which are necessary, in Agent's
determination, to fulfill Borrower's obligations under this Agreement and the
other Financing Agreements; and (b) at any time to (i) take control in any
manner of any item of payment on or respecting Collateral or proceeds thereof to
the extent it has not been timely deposited into the Blocked Account in
accordance with the provisions of this Agreement, (ii) have access to any
lockbox or postal box into which any proceeds of Collateral is deposited, (iii)
endorse Borrower's name upon any items of payment on or respecting Collateral or
proceeds of Collateral and deposit the same in the Agent's account for
application to the Obligations, and (iv) execute in Borrower's name and file any
UCC financing statements or amendments thereto. Borrower hereby releases Agent
and its officers, employees and designees from any liabilities arising from any
act or acts under this power of attorney and in furtherance thereof, whether of
omission or commission, except as a result of Agent's own gross negligence or
wilful misconduct as determined pursuant to a final non-appealable order of a
court of competent jurisdiction.
7.5 Right to Cure. Agent may, at its option, (a) cure any default by
Borrower under any agreement with a third party or pay or bond on appeal any
judgment entered against Borrower, (b) discharge taxes, liens, security
interests or other encumbrances at any time levied on or existing with respect
to the Collateral and (c) pay any amount, incur any expense or perform any act
which, in Agent's judgment, is necessary or appropriate to preserve, protect,
insure or maintain the Collateral and the rights of Agent and Lenders with
respect thereto. Agent may add any amounts so expended to the Obligations and
charge Borrower's account therefor, such amounts to be repayable by Borrower on
demand. Agent shall be under no obligation to effect such cure, payment or
bonding and shall not, by doing so, be deemed to have assumed any obligation or
liability of Borrower. Any payment made or other action taken by Agent under
this Section shall be without prejudice to any right to assert an Event of
Default hereunder and to proceed accordingly.
7.6 Access to Premises. From time to time as requested by Agent, at the
cost and expense of Borrower, (a) Agent or its designee shall have complete
access to all of Borrower's premises during normal business hours and after
notice to Borrower, or at any time and without notice to Borrower if an Event of
Default exists or has occurred and is continuing, for the purposes of
inspecting, verifying and auditing the Collateral and all of Borrower's books
and records, including, without limitation, the Records, and (b) Borrower shall
promptly furnish to Agent such copies of such books and records or extracts
therefrom as Agent may request, and (c) Agent or its designee may use during
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normal business hours such of Borrower's personnel, equipment, supplies and
premises as may be reasonably necessary for the foregoing and if an Event of
Default exists or has occurred and is continuing for the collection of Accounts
and realization of other Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Agent and Lenders the
following (which shall survive the execution and delivery of this Agreement),
the truth and accuracy of which are a continuing condition of the making of
Loans and providing Letter of Credit Accommodations by Lenders to Borrower:
8.1 Corporate Existence, Power and Authority; Subsidiaries. Borrower is
a corporation duly organized and in good standing under the laws of its state of
incorporation and is duly qualified as a foreign corporation and in good
standing in all states or other jurisdictions where the nature and extent of the
business transacted by it or the ownership of assets makes such qualification
necessary, except for those jurisdictions in which the failure to so qualify
would not have a material adverse effect on Borrower's financial condition,
results of operation or business or the rights of Agent or any Lender in or to
any of the Collateral. The execution, delivery and performance of this
Agreement, the other Financing Agreements and the transactions contemplated
hereunder and thereunder are all within Borrower's corporate powers, have been
duly authorized and are not in contravention of law or the terms of Borrower's
certificate of incorporation, by-laws, or other organizational documentation, or
any indenture, agreement or undertaking to which Borrower is a party or by which
Borrower or its property are bound. This Agreement and the other Financing
Agreements constitute legal, valid and binding obligations of Borrower
enforceable in accordance with their respective terms. Borrower does not have
any subsidiaries except Lumber Jack, Inc..
8.2 Financial Statements; No Material Adverse Change. All financial
statements relating to Borrower which have been or may hereafter be delivered by
Borrower to Agent or Lenders have been prepared in accordance with GAAP and
fairly present the financial condition and the results of operation of Borrower
as at the dates and for the periods set forth therein. Except as disclosed in
any interim financial statements furnished by Borrower to Agent or Lenders prior
to the date of this Agreement, there has been no material adverse change in the
assets, liabilities, properties and condition, financial or otherwise, of
Borrower, since the date of the most recent audited financial statements
furnished by Borrower to Agent or Lenders prior to the date of this Agreement.
8.3 Chief Executive Office; Collateral Locations. The chief executive
office of Borrower and Borrower's Records concerning Accounts and Inventory are
located only at the address set forth below and its only other places of
business and the only other locations of Collateral, if any, are the addresses
set forth in the Information Certificate, subject to the right of Borrower to
establish new locations in accordance with Section 9.2 below. The Information
Certificate correctly identifies any of such locations which are not owned by
Borrower and sets forth the owners and/or operators thereof and to the best of
Borrower's knowledge, the holders of any mortgages on such locations.
8.4 Priority of Liens; Title to Properties. The security interests and
liens granted to Agent, for the ratable benefit of Lenders, under this Agreement
and the other Financing Agreements constitute valid and perfected first priority
liens and security interests in and upon the Collateral subject only to the
liens indicated on Schedule 8.4 hereto and the other liens permitted under
Section 9.8 hereof. Borrower has good and marketable title to all of its
properties and assets subject to no liens, mortgages, pledges, security
interests, encumbrances or charges of any kind, except those granted to Agent,
for the ratable benefit of Lenders, and such others as are specifically listed
on Schedule 8.4 hereto or permitted under Section 9.8 hereof.
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8.5 Tax Returns. Borrower has filed, or caused to be filed, in a timely
manner all tax returns, reports and declarations which are required to be filed
by it (without requests for extension except as previously disclosed in writing
to Agent). All information in such tax returns, reports and declarations is
complete and accurate in all material respects. Borrower has paid or caused to
be paid all taxes due and payable or claimed due and payable in any assessment
received by it, and has collected, deposited and remitted in accordance with all
applicable laws all sales and/or use taxes applicable to the conduct of its
business, except taxes the validity of which are being contested in good faith
by appropriate proceedings diligently pursued and available to Borrower and with
respect to which adequate reserves have been set aside on its books. Adequate
provision has been made for the payment of all accrued and unpaid Federal,
State, county, local, foreign and other taxes whether or not yet due and payable
and whether or not disputed. Borrower has collected and deposited in a separate
bank account or remitted to the appropriate tax authority all sales and/or use
taxes applicable to its business required to be collected under the laws of the
United States and each possession or territory thereof, and each State or
political subdivision thereof, including any State in which Borrower owns any
Inventory or owns or leases any other property.
8.6 Litigation. Except as set forth on the Information Certificate,
there is no present investigation by any governmental agency pending, or to the
best of Borrower's knowledge threatened, against or affecting Borrower, its
assets or business and there is no action, suit, proceeding or claim by any
Person pending, or to the best of Borrower's knowledge threatened, against
Borrower or its assets or goodwill, or against or affecting any transactions
contemplated by this Agreement, which is reasonably likely to result in any
material adverse change in the assets, business or prospects of Borrower or
would impair the ability of Borrower to perform its obligations hereunder or
under any of the other Financing Agreements to which it is a party or of Agent
to enforce any Obligations or realize upon any Collateral.
8.7 Compliance with Other Agreements and Applicable Laws.
(a) Borrower is not in default in any respect under, or in
violation in any respect of any of the terms of, any material agreement,
contract, instrument, lease or other commitment to which it is a party or by
which it or any of its assets are bound. Borrower is in compliance in all
material respects with the requirements of all applicable laws, rules,
regulations and orders of any governmental authority relating to its business,
including, without limitation, those set forth in or promulgated pursuant to the
Occupational Safety and Health Act of 1970, as amended, the Fair Labor Standards
Act of 1938, as amended, ERISA, the Code, as amended, and the rules and
regulations thereunder, all Federal, State and local statutes, regulations,
rules and orders relating to consumer credit (including, without limitation, as
each has been amended, the Truth-in-Lending Act, the Fair Credit Billing Act,
the Equal Credit Opportunity Act and the Fair Credit Reporting Act, and
regulations, rules and orders promulgated thereunder), all Federal, State and
local states, regulations, rules and orders pertaining to sales of consumer
goods (including, without limitation, the Consumer Products Safety Act of 1972,
as amended, and the Federal Trade Commission Act of 1914, as amended, and all
regulations, rules and orders promulgated thereunder), except any such defaults,
violations or non-compliance that, individually or in the aggregate, have not
resulted in, and could not reasonably be expected to result in, a Material
Adverse Effect.
(b) Borrower has obtained all material permits, licenses,
approvals, consents, certificates, orders or authorizations of any governmental
agency required for the lawful conduct of its business (the "Permits"). The
Permits constitute all permits, licenses, approvals, consents, certificates,
orders or authorizations necessary for Borrower to own and operate its business
as presently conducted or proposed to be conducted where the failure to have
such Permits would have a material adverse effect on the business, performance,
operations or properties of Borrower or the legality, validity or enforceability
of this Agreement or the other Financing Agreements or the ability of Borrower
to perform its obligations under the Agreement or any of the other Financing
Agreements or the rights and remedies of Agent and Lenders under this Agreement
or any of the other Financing Agreements. All of the Permits are valid and
subsisting and in full force and effect. There are no actions, claims or
proceedings pending or, to the best
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of Borrower's knowledge, after due investigation, threatened that seek the
revocation, cancellation, suspension or modification of any of the Permits.
8.8 Environmental Compliance.
(a) Except as set forth on Schedule 8.8 hereto, to Borrower's
knowledge, Borrower has not generated, used, stored, treated, transported,
manufactured, handled, produced or disposed of any Hazardous Materials, on or
off its premises (whether or not owned by it) in any manner which at any time
violates any applicable Environmental Law in any material respect or any
license, permit, certificate, approval or similar authorization issued to
Borrower thereunder and the operations of Borrower comply in all material
respects with all applicable Environmental Laws and all licenses, permits,
certificates, approvals and similar authorizations thereunder.
(b) There is no investigation, proceeding, complaint, order,
directive, claim, citation or notice by any governmental authority or any other
person pending or threatened with respect to any non-compliance with or
violation of the requirements of any applicable Environmental Law by Borrower
nor has there been any release, spill or discharge, overtly threatened or
actual, of any Hazardous Material on any properties of Borrower, releases,
spills or discharges from any properties at which Borrower has transported,
stored or disposed of any Hazardous Materials, or the generation, use, storage,
treatment, transportation, manufacture, handling, production or disposal of any
Hazardous Materials or any other environmental matter which affects Borrower or
its business, operations or assets in any material respect.
(c) Borrower has no material liability (contingent or
otherwise) in connection with a release, spill or discharge, threatened or
actual, of any Hazardous Materials or the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any Hazardous
Materials.
(d) Borrower has all licenses, permits, certificates,
approvals or similar authorizations required to be obtained or filed in
connection with the operations of Borrower under any Environmental Law and all
of such licenses, permits, certificates, approvals or similar authorizations are
valid and in full force and effect in each case where the failure to obtain or
maintain such licenses, permits, certificates, approvals or similar
authorizations would have a material adverse effect on the assets or business of
Borrower or would impair the ability of Borrower to perform its obligations
hereunder or under any of the other Financing Agreements to which it is a party
or of Agent or any Lender to enforce any Obligations or realize upon any
Collateral.
8.9 Merchant Agreements. Set forth in Schedule 8.9 hereto is a correct
and complete list of (a) all of the Merchant Agreements and all other
agreements, documents and instruments existing as of the date hereof between or
among Borrower, any of its affiliates, the Commercial Account Purchaser, the
Credit Card Issuers, the Credit Card Processors and any of their affiliates, (b)
the percentage of each sale payable to the Commercial Account Purchaser, the
Credit Card Issuer or Credit Card Processor under the terms of the Merchant
Agreements, (c) all other fees and charges payable by Borrower under or in
connection with the Merchant Agreements, and (d) the term of such Merchant
Agreements. The Merchant Agreements constitute all of such agreements necessary
for Borrower to operate its business as presently conducted with respect to
credit cards and debit cards and no Accounts of Borrower arise from purchases by
customers of Inventory with credit cards or debit cards, other than those
Accounts purchased by the Commercial Account Purchaser and other than those
which are issued by Credit Card Issuers with whom Borrower has entered into one
of the Credit Card Agreements set forth on Schedule 8.9 hereto or with whom
Borrower has entered into a Credit Card Agreement in accordance with Section
9.13 hereof. Each of the Merchant Agreements constitutes the legal, valid and
binding obligations of Borrower and to the best of Borrower's knowledge, the
other parties thereto, enforceable in accordance with their respective terms and
are in full force and effect. No default or event of default, or act, condition
or event which after notice or passage of time or both, would constitute a
default or an event of default under any of the Merchant Agreements exists or
has occurred. Borrower and the other parties
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thereto have complied with all of the terms and conditions of the Merchant
Agreements to the extent necessary for Borrower to be entitled to receive all
payments thereunder. Borrower has delivered, or caused to be delivered to
Agent or Lenders, true, correct and complete copies of all of the Merchant
Agreements.
8.10 Employee Benefits.
(a) Borrower has not engaged in any transaction in connection
with which Borrower or any of its ERISA Affiliates could be subject to either a
civil penalty assessed pursuant to ERISA or a tax imposed the Code, including
any accumulated funding deficiency described in Section 8.10(c) hereof and any
deficiency with respect to vested accrued benefits described in Section 8.10(d)
hereof.
(b) No liability to the Pension Benefit Guaranty Corporation
has been or is expected by Borrower to be incurred with respect to any employee
benefit plan of Borrower or any of its ERISA Affiliates, other than for premiums
in the ordinary course under Section 4007 of ERISA. There has been no reportable
event (within the meaning of ERISA) or any other event or condition with respect
to any employee benefit plan of Borrower or any of its ERISA Affiliates which
presents a risk of termination of any such plan by the Pension Benefit Guaranty
Corporation.
(c) Full payment has been made of all amounts which Borrower
or any of its ERISA Affiliates is required under ERISA and the Code to have paid
under the terms of each employee benefit plan as contributions to such plan as
of the last day of the most recent fiscal year of such plan ended prior to the
date hereof, and no accumulated funding deficiency (as defined in ERISA and the
Code), whether or not waived, exists with respect to any employee pension
benefit plan, including any penalty or tax described in Section 8.10(a) hereof
and any deficiency with respect to vested accrued benefits described in Section
8.10(d) hereof.
(d) As of the last day of the most recent plan year, the
current value of all vested accrued benefits under all employee pension benefit
plans maintained by Borrower that are subject to Title IV of ERISA does not
exceed the current value of the assets of such plans allocable to such vested
accrued benefits, including any penalty or tax described in Section 8.10(a)
hereof and any accumulated funding deficiency described in Section 8.10(d)
hereof. The terms "current value" and "accrued benefit" have the meanings
specified in ERISA.
(e) Neither Borrower nor any of its ERISA Affiliates is or has
within the last ten years, ever been obligated to contribute to any
"multiemployer plan" (as such term is defined in ERISA) that is subject to Title
IV of ERISA.
8.11 Bank Accounts. All of the deposit accounts, investment accounts or
other accounts in the name of or used by Borrower maintained at any bank or
other financial institution are set forth on Schedule 6.3 hereto, subject to the
right of Borrower to establish new accounts in accordance with Section 9.13
below.
8.12 Accuracy and Completeness of Information. All information
furnished by or on behalf of Borrower in writing to Agent or Lenders in
connection with this Agreement or any of the other Financing Agreements or any
transaction contemplated hereby or thereby, including, without limitation, all
information on the Information Certificate is true and correct in all material
respects on the date as of which such information is dated or certified and does
not omit any material fact necessary in order to make such information not
misleading. No event or circumstance has occurred which has had or could
reasonably be expected to have a material adverse affect on the business, assets
or prospects of Borrower, which has not been fully and accurately disclosed to
Agent or Lenders in writing.
8.13 Survival of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be
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deemed to have been made again to Agent and Lenders on the date of each
additional borrowing or other credit accommodation hereunder and shall be
conclusively presumed to have been relied on by Agent and Lenders regardless
of any investigation made or information possessed by Agent and Lenders.
The representations and warranties set forth herein shall be cumulative and
in addition to any other representations or warranties which Borrower shall now
or hereafter give, or cause to be given, to Agent and Lenders.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence. Borrower shall at all times preserve,
renew and keep in full, force and effect its corporate existence and rights and
franchises with respect thereto and maintain in full force and effect all
permits, licenses, trademarks, tradenames, approvals, authorizations, leases and
contracts necessary to carry on the business as presently or proposed to be
conducted. Borrower shall give Agent thirty (30) days prior written notice of
any proposed change in its corporate name, which notice shall set forth the new
name and Borrower shall deliver to Agent a copy of the amendment to the
Certificate of Incorporation of Borrower providing for the name change certified
by the Secretary of State of the jurisdiction of incorporation of Borrower as
soon as it is available.
9.2 New Collateral Locations. Borrower may open any new location within
the continental United States provided Borrower (a) gives Agent twenty (20) days
prior written notice of the intended opening of any such new location and (b)
executes and delivers, or causes to be executed and delivered, to Agent such
agreements, documents, and instruments as Agent may deem reasonably necessary or
desirable to protect its interests in the Collateral at such location, including
UCC financing statements.
9.3 Compliance with Laws, Regulations, Etc.
(a) Borrower shall at all times comply in all material
respects with all applicable provisions of laws, rules, regulations, licenses,
permits, approvals and orders and duly observe all material requirements, of any
foreign, Federal, State or local governmental authority, including the
Occupational Safety and Health Act of 1970, as amended, the Code, the Fair Labor
Standards Act of 1938, as amended, and the rules and regulations thereunder, all
Federal, State and local statutes, regulations, rules and orders relating to
consumer credit (including, without limitation, as each has been amended, the
Truth-in-Lending Act, the Fair Credit Billing Act, the Equal Credit Opportunity
Act and the Fair Credit Reporting Act, and regulations, rules and orders
promulgated thereunder), all Federal, State and local statutes, regulations,
rules and orders pertaining to sales of consumer goods (including, without
limitation, the Consumer Products Safety Act of 1972, as amended, and the
Federal Trade Commission Act of 1914, as amended, and all regulations, rules and
orders promulgated thereunder) and all statutes, rules, regulations, orders,
permits and stipulations relating to environmental pollution and employee health
and safety, including all Environmental Laws, ,except where the failure to so
comply does not, individually or in the aggregate, and could not reasonably be
expected to, result in a Material Adverse Effect. .
(b) Borrower shall establish and maintain, at its expense, a
system to assure and monitor its continued compliance with all Environmental
Laws in all of its operations, which system shall include periodic assessment of
such compliance by employees or agents of Borrower who are familiar with the
requirements of the Environmental Laws. Copies of all environmental surveys,
audits, assessments, feasibility studies and results of remedial investigations
shall be promptly furnished, or caused to be furnished, by Borrower to Agent
upon Agent's written request. Borrower shall take prompt and appropriate action
to respond to any non-compliance with any of the Environmental Laws and shall
regularly report to Agent on such response.
(c) Borrower shall give written notice to Agent immediately
upon Borrower's receipt of any notice of, or Borrower's otherwise obtaining
knowledge of, (i) the occurrence of any event involving the release, spill
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or discharge, threatened or actual, of any Hazardous Material in violation of
any Environmental Law or (ii) any investigation, proceeding, complaint, order,
directive, claims, citation or notice with respect to: (A) any non-compliance
with or violation of any Environmental Law by Borrower or (B) the release, spill
or discharge, threatened or actual, of any Hazardous Material or (C) the
generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials or (D) any other
environmental, health or safety matter, which has a Material Adverse Effect on
Borrower or its business, operations or assets or any properties at which
Borrower transported, stored or disposed of any Hazardous Materials.
(d) Without limiting the generality of the foregoing, whenever
Agent reasonably determines that there is non-compliance, or any condition which
requires any action by or on behalf of Borrower in order to avoid any material
non-compliance, with any Environmental Law, Borrower shall, at Agent's request
and Borrower's expense: (i) cause an independent environmental engineer
acceptable to Agent to conduct such tests of the site where Borrower's
non-compliance or alleged non-compliance with such Environmental Laws has
occurred as to such non-compliance and prepare and deliver to Agent a report as
to such non-compliance setting forth the results of such tests, a proposed plan
for responding to any environmental problems described therein, and an estimate
of the costs thereof and (ii) provide to Agent a supplemental report of such
engineer whenever the scope of such non-compliance, or Borrower's response
thereto or the estimated costs thereof, shall change in any material respect.
(e) Borrower shall indemnify and hold harmless Agent and
Lender, their respective directors, officers, employees, agents, invitees,
representatives, successors and assigns, from and against any and all losses,
claims, damages, liabilities, costs, and expenses (including attorneys' fees and
legal expenses) directly or indirectly arising out of or attributable to the
use, generation, manufacture, reproduction, storage, release, threatened
release, spill, discharge, disposal or presence of a Hazardous Material,
including the costs of any required or necessary repair, cleanup or other
remedial work with respect to any property of Borrower and the preparation and
implementation of any closure, remedial or other required plans. All
representations, warranties, covenants and indemnifications in this Section 9.3
shall survive the payment of the Obligations and the termination or non-renewal
of this Agreement.
9.4 Payment of Taxes and Claims. Borrower shall duly pay and discharge
all taxes, assessments, contributions and governmental charges upon or against
it or its properties or assets, except for taxes the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to Borrower and with respect to which adequate reserves have been set
aside on its books. Borrower shall be liable for any tax or penalties imposed on
Agent or any Lender as a result of the financing arrangements provided for
herein and Borrower agrees to indemnify and hold Agent and each Lender harmless
with respect to the foregoing, and to repay to Agent and each Lender on demand
the amount thereof, and until paid by Borrower such amount shall be added and
deemed part of the Loans, provided, that, nothing contained herein shall be
construed to require Borrower to pay any income or franchise taxes attributable
to the income of Agent or any Lender from any amounts charged or paid hereunder
to Agent or any Lender. The foregoing indemnity shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.
9.5 Insurance. Borrower shall, at all times, maintain with financially
sound and reputable insurers insurance with respect to the Collateral against
loss or damage and all other insurance of the kinds and in the amounts
customarily insured against or carried by corporations of established reputation
engaged in the same or similar businesses and similarly situated. Said policies
of insurance shall be satisfactory to Agent as to form, amount and insurer.
Borrower shall furnish certificates, policies or endorsements to Agent as Agent
shall require as proof of such insurance, and, if Borrower fails to do so, Agent
is authorized, but not required, to obtain such insurance at the expense of
Borrower. All policies shall provide for at least thirty (30) days prior written
notice to Agent of any cancellation or reduction of coverage and that Agent may
act as attorney for Borrower in obtaining, and at any time an Event of Default
exists or has occurred and is continuing, adjusting, settling, amending and
canceling such insurance. Borrower shall cause Agent and each Lender to be named
as a loss payee and an additional insured (but
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without any liability for any premiums) under such insurance policies and
Borrower shall obtain non-contributory lender's loss payable endorsements to
all insurance policies in form and substance satisfactory to Agent. Such
lender's loss payable endorsements shall specify that the proceeds of such
insurance shall be payable to Agent, for the ratable benefit of Lenders, as its
interests may appear and further specify that Agent shall be paid regardless of
any act or omission by Borrower or any of its affiliates. At its option, Agent
may apply any insurance proceeds received by Agent at any time to the cost of
repairs or replacement of Collateral and/or to payment of the Obligations,
whether or not then due, in any order and in such manner as Agent may determine
or hold such proceeds as cash collateral for the Obligations.
9.6 Financial Statements and Other Information.
(a) Borrower shall keep proper books and records in which true
and complete entries shall be made of all dealings or transactions of or in
relation to the Collateral and the business of Borrower and its subsidiaries (if
any) in accordance with GAAP and Borrower shall furnish or cause to be furnished
to Agent: (i) within thirty (30) days after the end of each fiscal month,
monthly unaudited consolidated financial statements, and, if Borrower has any
subsidiaries, unaudited consolidating financial statements (including in each
case balance sheets, statements of income and loss, statements of cash flow and
statements of shareholders' equity), all in reasonable detail, fairly presenting
the financial position and the results of the operations of Borrower and its
subsidiaries as of the end of and through such fiscal month and (ii) within
ninety (90) days after the end of each fiscal year, audited consolidated
financial statements and, if Borrower has any subsidiaries, audited
consolidating financial statements of Borrower and its subsidiaries (including
in each case balance sheets, statements of income and loss, statements of cash
flow and statements of shareholders' equity), and the accompanying notes
thereto, all in reasonable detail, fairly presenting the financial position and
the results of the operations of Borrower and its subsidiaries as of the end of
and for such fiscal year, together with the unqualified opinion of independent
certified public accountants, which accountants shall be an independent
accounting firm selected by Borrower and reasonably acceptable to Agent, that
such financial statements have been prepared in accordance with GAAP, and
present fairly the results of operations and financial condition of Borrower and
its subsidiaries as of the end of and for the fiscal year then ended.
(b) Borrower shall promptly notify Agent in writing of the
details of (i) any loss, damage, investigation, action, suit, proceeding or
claim relating to the Collateral or any other property which is security for the
Obligations or which would result in any material adverse change in Borrower's
business, properties, assets, goodwill or condition, financial or otherwise and
(ii) the occurrence of any Event of Default or act, condition or event which,
with the passage of time or giving of notice or both, would constitute an Event
of Default.
(c) Borrower shall promptly after the sending or filing
thereof furnish or cause to be furnished to Agent copies of all reports which
Borrower sends to its stockholders generally and copies of all reports and
registration statements which Borrower files with the Securities and Exchange
Commission, any national securities exchange or the National Association of
Securities Dealers, Inc.
(d) Without limiting the rights of Agent under any other
provision of this Agreement, as soon as available, but in any event not later
than three (3) days after the end of each calendar month, Borrower shall deliver
to Agent, in form and substance satisfactory to Agent, in each case certified by
the Chief Financial Officer of Borrower as true and correct, a statement
confirming the payment of rent and other amounts due to owners and lessors of
real property used by Borrower in the immediately preceding month. Borrower
shall also deliver to Agent, immediately upon receipt, copies of any default
notice received by Borrower from any owner or lessor of any Real Property.
(e) Borrower shall furnish or cause to be furnished to Agent
such budgets, forecasts, projections and other information respecting the
Collateral and the business of Borrower, as Agent may, from time to time,
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reasonably request. Agent and Lenders are hereby authorized to deliver a copy of
any financial statement or any other information relating to the business of
Borrower to any court or other government agency or to any participant or
assignee or prospective participant or assignee. Borrower hereby irrevocably
authorizes and directs all accountants or auditors to deliver to Agent, at
Borrower's expense, copies of the financial statements of Borrower and any
reports or management letters prepared by such accountants or auditors on behalf
of Borrower and to disclose to Agent such information as they may have regarding
the business of Borrower. Any documents, schedules, invoices or other papers
delivered to Agent may be destroyed or otherwise disposed of by Agent one (1)
year after the same are delivered to Agent, except as otherwise designated by
Borrower to Agent in writing.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc.
Borrower shall not, directly or indirectly:
(a) merge into or with or consolidate with any other Person or
permit any other Person to merge into or with or consolidate with it, or
(b) sell, assign, lease, transfer, abandon or otherwise
dispose of any stock or indebtedness to any other Person or any of its real or
personal property to any other Person, except for (i) sales of Inventory in the
ordinary course of business, (ii) sales of the Real Property Collateral in
accordance with Section 6.9 hereof, (iii) (A) sales of equipment and other real
property which Borrower has determined are no longer necessary in the conduct of
its business or (B) sales of any real or personal property which is subject to
the lien or security interest of CIBC and/or Fortress provided that , in each
instance, the sale of such equipment, real property or other assets will not
have a Material Adverse Effect upon the Borrower's assets or business, taken as
a whole; and (iv) provided no Default exists and is continuing, (A) sales of any
other assets provided that the aggregate amount of such assets shall not exceed
$2,000,000 per annum, or (B) sales by Borrower of any of Borrower's Capital
Stock, provided that, in each instance, the proceeds from such sale (other than
from the sale of any real or personal property which is subject to the lien or
security interest of CIBC and/or Fortress) are remitted to Agent for application
against the Loans then outstanding; or
(c) form or acquire any subsidiaries, or
(d) wind up, liquidate or dissolve, or
(e) agree to do any of the foregoing.
9.8 Encumbrances. Borrower shall not create, incur, assume or suffer to
exist any security interest, mortgage, pledge, lien, charge or other encumbrance
of any nature whatsoever on any of its assets or properties, including the
Collateral, except: (a) liens and security interests of Agent, for the ratable
benefit of Lenders; (b) liens securing the payment of taxes, either not yet
overdue or the validity of which are being contested in good faith by
appropriate proceedings diligently pursued and available to Borrower and with
respect to which adequate reserves have been set aside on its books; (c)
non-consensual statutory liens (other than liens securing the payment of taxes)
arising in the ordinary course of Borrower's business to the extent: (i) such
liens secure indebtedness which is not overdue or (ii) such liens secure
indebtedness relating to claims or liabilities which are fully insured and being
defended at the sole cost and expense and at the sole risk of the insurer or
being contested in good faith by appropriate proceedings diligently pursued and
available to Borrower, in each case prior to the commencement of foreclosure or
other similar proceedings and with respect to which adequate reserves have been
set aside on its books; (d) zoning restrictions, easements, licenses, covenants
and other restrictions affecting the use of Real Property which do not interfere
in any material respect with the use of such Real Property or ordinary conduct
of the business of Borrower as presently conducted thereon or materially impair
the value of the Real Property which may be subject thereto; (e) purchase money
security interests in Equipment (including capital leases) and purchase money
mortgages on real estate not to exceed $10,000,000 in the aggregate at any time
outstanding so long as such security interests and
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mortgages do not apply to any property of Borrower other than the Equipment or
real estate so acquired, and the indebtedness secured thereby does not exceed
the cost of the Equipment or real estate so acquired, as the case may be; (f)
liens or rights of setoff or credit balances of Borrower with Credit Card
Issuers but not liens on or rights of setoff against any other property or
assets of Borrower pursuant to the Credit Card Agreements (as in effect on
the date hereof) to secure the obligations of Borrower to the Credit Card
Issuers as a result of fees and chargebacks; and (g) liens or rights of setoff
or credit balances of Borrower with Commercial Account Purchaser but not liens
on or right of setoff against any other property of assets of Borrower, all as
more particularly set forth in the Commercial Acknowledgment; and (h) the liens
and security interests set forth on Schedule 8.4 hereto.
9.9 Indebtedness. Borrower shall not incur, create, assume, become or
be liable in any manner with respect to, or permit to exist, any obligations or
indebtedness, except:
(a) the Obligations;
(b) trade obligations and normal accruals in the ordinary
course of business not yet due and payable, or with respect to which Borrower is
contesting in good faith the amount or validity thereof by appropriate
proceedings diligently pursued and available to Borrower and with respect to
which adequate reserves have been set aside on its books;
(c) purchase money indebtedness (including capital leases) to
the extent not incurred or secured by liens (including capital leases) in
violation of any other provision of this Agreement;
(d) obligations or indebtedness existing as of the date hereof
set forth on Schedule 9.9 hereto ("Schedule 9.9 Indebtedness"), provided, that,
(i) notwithstanding anything to the contrary contained herein, Borrower may
refinance the Borrower's obligations to Fortress and/or CIBC, provided that in
connection therewith any such replacement lender executes and delivers an access
agreement substantially on the same terms as the Fortress Access Agreement or
CIBC Access Agreement, as the case may be, (ii) Borrower may only make regularly
scheduled payments of principal and interest in respect of the Schedule 9.9
Indebtedness in accordance with the terms of the agreement or instrument
evidencing or giving rise to the Schedule 9.9 Indebtedness as in effect on the
date hereof or make mandatory prepayments required to be made under the
agreements or instruments referred to on Schedule 9.9 hereto, (iii) Borrower
shall not, directly or indirectly, (A) amend, modify, alter or change in any
material respect the repayment terms of the Schedule 9.9 Indebtedness or the
repayment terms of any agreement, document or instrument related thereto as in
effect on the date hereof, or (B) redeem, retire, defease, purchase or otherwise
acquire the Schedule 9.9 Indebtedness (other than pursuant to clause (d)(i)
above) , or set aside or otherwise deposit or invest any sums for such purpose,
and (iv) Borrower shall furnish to Agent all notices or demands in connection
with such indebtedness either received by Borrower or on its behalf, promptly
after the receipt thereof, or sent by Borrower or on its behalf, concurrently
with the sending thereof, as the case may be.
9.10 Loans, Investments, Guarantees, Etc. Borrower shall not, directly
or indirectly, make any loans or advance money or property to any person, or
invest in (by capital contribution, dividend or otherwise) or purchase or
repurchase the Capital Stock or indebtedness or all or a substantial part of the
assets or property of any person, or guarantee, assume, endorse, or otherwise
become responsible for (directly or indirectly) the indebtedness, performance,
obligations or dividends of any Person or agree to do any of the foregoing,
except: (a) the endorsement of instruments for collection or deposit in the
ordinary course of business; and (b) the existing loans, advances and guarantees
by Borrower outstanding as of the date hereof as set forth on Schedule 9.10
hereto; provided, that, as to such loans, advances and guarantees, (i) Borrower
shall not, directly or indirectly, (A) amend, modify, alter or change the terms
of such loans, advances or guarantees or any agreement, document or instrument
related thereto, or (B) as to such guarantees, redeem, retire, defease, purchase
or otherwise acquire such guarantee or set aside or otherwise deposit or invest
any sums for such purpose and (ii) Borrower shall furnish to Agent all notices,
demands or other
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materials in connection with such loans, advances or guarantees either received
by Borrower or on its behalf, promptly after the receipt thereof, or sent
by Borrower or on its behalf, concurrently with the sending thereof, as the
case may be; and (c) investments in a maximum aggregate amount of $2,000,000;
provided, that, as to any of the foregoing, unless waived in writing by Agent,
Borrower shall take such actions as are deemed necessary by Agent to perfect
the security interest of Agent in such investments.
9.11 Dividends and Redemptions. Borrower shall not, directly or
indirectly, declare or pay any dividends on account of any shares of class of
Capital Stock of Borrower now or hereafter outstanding, or set aside or
otherwise deposit or invest any sums for such purpose, or redeem, retire,
defease, purchase or otherwise acquire any shares of any class of Capital Stock
(or set aside or otherwise deposit or invest any sums for such purpose) for any
consideration other than common stock or apply or set apart any sum, or make any
other distribution (by reduction of capital or otherwise) in respect of any such
shares or agree to do any of the foregoing; except that so long as no Event of
Default exists or is continuing, Borrower may make payments in connection with a
reverse stock split or with respect to the exercise of any options relating to
any class of Capital Stock provided that the aggregate amount of all such
payments shall not exceed $1,000,000.
9.12 Transactions with Affiliates. Borrower shall not directly or
indirectly, (a) purchase, acquire or lease any property from, or sell, transfer
or lease any property to, any officer, employee, shareholder, director, agent or
any other person affiliated with Borrower, except in the ordinary course of and
pursuant to the reasonable requirements of Borrower's business and upon fair and
reasonable terms no less favorable to the Borrower than Borrower would obtain in
a comparable arm's length transaction with an unaffiliated person or (b) make
any payments of management, consulting or other fees for management or similar
services, or of any indebtedness owing to any officer, employee, shareholder,
director or other person affiliated with Borrower except reasonable compensation
to officers, employees and directors for services rendered to Borrower in the
ordinary course of business. Any payments made under the CIBC Credit Agreement
shall not be deemed to be transactions with shareholders prohibited hereunder.
9.13 Merchant Agreements. Borrower shall (a) observe and perform all
material terms, covenants, conditions and provisions of the Merchant Agreements
to be observed and performed by it at the times set forth therein; (b) not do,
permit, suffer or refrain from doing anything, as a result of which there could
be a default under or breach of any of the terms of any of the Merchant
Agreements, (c) at all times maintain in full force and effect the Merchant
Agreements and not terminate, cancel, surrender, modify, amend, waive or release
any of the Merchant Agreements, or consent to or permit to occur any of the
foregoing; except, that, Borrower may terminate or cancel any of the Credit Card
Agreements in the ordinary course of the business of Borrower; provided, that,
Borrower shall give Agent not less than fifteen (15) days prior written notice
of its intention to so terminate or cancel any of the Credit Card Agreements;
(d) not enter into any new Credit Card Agreements with any new Credit Card
Issuer unless (i) Agent shall have received not less than thirty (30) days prior
written notice of the intention of Borrower to enter into such agreement
(together with such other information with respect thereto as Agent may request)
and (ii) Borrower delivers, or causes to be delivered to Agent, a Credit Card
Acknowledgment in favor of Agent, for the ratable benefit of Lenders; (e) give
Agent immediate written notice of any Credit Card Agreement entered into by
Borrower after the date hereof, together with a true, correct and complete copy
thereof and such other information with respect thereto as Agent may request;
and (f) furnish to Agent, promptly upon the request of Agent, such information
and evidence as Agent may require from time to time concerning the observance,
performance and compliance by Borrower or the other party or parties thereto
with the terms, covenants or provisions of the Merchant Agreements.
9.14 Adjusted Net Worth. Borrower shall, at all times, maintain
Adjusted Net Worth of not less than $135,000,000.
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9.15 Compliance with ERISA.
(a) Borrower shall not with respect to any "employee benefit
plans" maintained by Borrower or any of its ERISA Affiliates: (i) terminate any
of such employee pension plans so as to incur any liability to the Pension
Benefit Guaranty Corporation established pursuant to ERISA, (ii) allow or suffer
to exist any prohibited transaction involving any of such employee benefit plans
or any trust created thereunder which would subject Borrower or such ERISA
Affiliate to a tax or penalty or other liability on prohibited transactions
imposed under the Code or ERISA, (iii) fail to pay to any such employee benefit
plan any contribution which it is obligated to pay under ERISA, the Code or the
terms of such plan, (iv) allow or suffer to exist any accumulated funding
deficiency, whether or not waived, with respect to any such employee benefit
plan, (v) allow or suffer to exist any occurrence of a reportable event or any
other event or condition which presents a material risk of termination by the
Pension Benefit Guaranty Corporation of any such employee benefit plan that is a
single employer plan, which termination could result in any liability to the
Pension Benefit Guaranty Corporation or (vi) incur any withdrawal liability with
respect to any multiemployer pension plan.
(b) As used in this Section 9.15, the term "employee pension
benefit plans," "employee benefit plans", "accumulated funding deficiency" and
"reportable event" shall have the respective meanings assigned to them in ERISA,
and the term "prohibited transaction" shall have the meaning assigned to it in
the Code and ERISA.
9.16 Additional Bank Accounts. Borrower shall not, directly or
indirectly, open, establish or maintain any deposit account, investment account
or any other account with any bank or other financial institution, other than
the Blocked Accounts and the accounts set forth in Schedule 6.3 hereto, except:
(a) as to any new or additional Blocked Accounts and other such new or
additional accounts which contain any Collateral or proceeds thereof, with the
prior written consent of Agent and subject to such conditions thereto as Agent
may establish and (b) as to any accounts used by Borrower to make payments of
payroll, taxes or other obligations to third parties, after prior written notice
to Agent.
9.17 Costs and Expenses. Borrower shall pay to Agent, for the ratable
benefit of Lenders, on demand all costs, expenses, filing fees and taxes paid or
payable in connection with the preparation, negotiation, execution, delivery,
recording, administration, collection, liquidation, enforcement and defense of
the Obligations, the rights of Agent, for the ratable benefit of Lenders, in the
Collateral, this Agreement, the other Financing Agreements and all other
documents related hereto or thereto, including any amendments, supplements or
consents which may hereafter be contemplated (whether or not executed) or
entered into in respect hereof and thereof, including: (a) all costs and
expenses of filing or recording (including Uniform Commercial Code financing
statement filing taxes and fees, documentary taxes, intangibles taxes and
mortgage recording taxes and fees, if applicable); (b) cost and expenses for
insurance premiums, appraisal fees and search fees; (c) costs and expenses of
remitting loan proceeds, collecting checks and other items of payment, and
establishing and maintaining the Blocked Accounts, together with Agent's
customary charges and fees with respect thereto; (d) charges, fees or expenses
charged by any bank or issuer in connection with the Letter of Credit
Accommodations; (e) costs and expenses of preserving and protecting the
Collateral; (f) costs and expenses paid or incurred in connection with obtaining
payment of the Obligations, enforcing the security interests and liens of Agent,
for the ratable benefit of Lenders, selling or otherwise realizing upon the
Collateral, and otherwise enforcing the provisions of this Agreement and the
other Financing Agreements or defending any claims made or threatened against
Agent and/or Lenders arising out of the transactions contemplated hereby and
thereby (including preparations for and consultations concerning any such
matters); (g) all out-of-pocket expenses and costs heretofore and from time to
time hereafter incurred by Agent during the course of periodic field
examinations of the Collateral and Borrower's operations, plus a per diem charge
at the rate of $650 per person per day for Agent's examiners in the field and
office; and (h) the fees and disbursements of counsel (including legal
assistants) to Agent and Lenders in connection with any of the foregoing.
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9.18 Year 2000 Compliance. Borrower shall take all action which may be
required so that its computer-based information systems, including, without
limitation, all of its proprietary computer hardware and software and all
computer hardware and software leased or licensed from third parties (and
whether supplied by others or with which Borrower's systems interface) are able
to operate effectively and correctly process data using dates on or after
January 1, 2000. Compliance with the foregoing shall mean that the systems will
operate and correctly process data without human intervention such that (a)
there is correct century recognition, (b) calculations properly accommodate same
century and multi-century formulas and date values, (c) all leap years shall be
calculated corrected and (d) the information systems shall otherwise comply with
applicable industry standards and regulatory guidelines regarding the change of
the century and year 2000 compliance. Borrower shall, by no later than November
30, 1999, certify to Agent in writing that its information systems have been
modified, updated and reprogrammed as required by this Section. On and after
November 30, 1999, the computer-based information systems of Borrower shall be,
and with ordinary course upgrading and maintenance, will continue to be,
sufficient to permit Borrower to conduct its business without any adverse effect
as a result of the year 2000.
9.19 Further Assurances. At the request of Agent or any Lender at any
time and from time to time, Borrower shall, at its expense, duly execute and
deliver, or cause to be duly executed and delivered, such further agreements,
documents and instruments, and do or cause to be done such further acts as may
be necessary or proper to evidence, perfect, maintain and enforce the security
interests and the priority thereof in the Collateral and to otherwise effectuate
the provisions or purposes of this Agreement or any of the other Financing
Agreements. Agent may at any time and from time to time request a certificate
from an officer of Borrower representing that all conditions precedent to the
making of Loans and providing Letter of Credit Accommodations contained herein
are satisfied. In the event of such request by Agent, Agent may, at its option,
cease to make any further Loans or provide any further Letter of Credit
Accommodations until Agent has received such certificate and, in addition, Agent
has determined that such conditions are satisfied. Where permitted by law,
Borrower hereby authorizes Agent and Lenders to execute and file one or more UCC
financing statements signed only by Agents and Lenders.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. The occurrence or existence of any one or more
of the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
(a) (i) Borrowers fail to pay any of the Obligations within
three (3) days after the same becomes due and payable; or (ii) any Borrower or
any Obligor fails to perform any of the covenants contained in this Agreement or
any of the other Financing Agreements other than as described in Section
10.1(a)(i) and such failure shall continue for twenty (20) days; provided, that,
such twenty (20) day period shall not apply in the case of (A) any failure to
observe any such covenant which is not capable of being cured at all or within
such twenty (20) day period or which has been the subject of a prior failure
within a six (6) month period or (B) an intentional breach of any Borrower or
any Obligor of any such covenant or (C) the failure to observe or perform any of
the covenants or provisions contained in Section 9.2, 9.7, 9.8, 9.9, 9.10, 9.11,
9.12, 9.13, 9.14, 9.16, 9.17 or 9.18 of this Agreement or any covenants or
agreements covering substantially the same matter as such sections in any of the
other Financing Agreements or (iii) any Borrower fails to perform any of the
terms, covenants, conditions or provisions contained in this Agreement or any of
the other Financing Agreements other than those described in Sections 10.1(a)(i)
and 10.1(a)(ii) above;
(b) any Obligor revokes, terminates or fails to perform any of
the terms, covenants, conditions or provisions of any guarantee, endorsement or
other agreement of such party in favor of Agent, for the ratable benefit of
Lenders;
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(c) any judgment for the payment of money is rendered against
Borrower or any Obligor in excess of $1,000,000 in any one case or in excess of
$5,000,000 in the aggregate and shall remain undischarged or unvacated for a
period in excess of thirty (30) days or execution shall at any time not be
effectively stayed, or any judgment other than for the payment of money, or
injunction, attachment, garnishment or execution is rendered against Borrower or
any Obligor or any of their assets;
(d) any Obligor (being a natural person or a general partner
of an Obligor which is a partnership) dies or Borrower or any Obligor, which is
a partnership, limited liability company, limited liability partnership or a
corporation, dissolves or suspends or discontinues doing business;
(e) Borrower or any Obligor becomes insolvent (however defined
or evidenced), makes an assignment for the benefit of creditors, makes or sends
notice of a bulk transfer or calls a meeting of its creditors or principal
creditors;
(f) a case or proceeding under the bankruptcy laws of the
United States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law or
in equity) is filed against Borrower or any Obligor or all or any part of its
properties and such petition or application is not dismissed within forty-five
(45) days after the date of its filing or Borrower or any Obligor shall file any
answer admitting or not contesting such petition or application or indicates its
consent to, acquiescence in or approval of, any such action or proceeding or the
relief requested is granted sooner;
(g) a case or proceeding under the bankruptcy laws of the
United States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at a law
or equity) is filed by Borrower or any Obligor or for all or any part of its
property; or
(h) any default by Borrower or any Obligor under any
agreement, document or instrument relating to any indebtedness for borrowed
money owing to any person other than Agent or any Lender including, without
limitation, the CIBC Credit Agreement or the Fortress Credit Agreement, or any
capitalized lease obligations, contingent indebtedness in connection with any
guarantee, letter of credit, indemnity or similar type of instrument in favor of
any person other than Agent or any Lender, in any case in an amount in excess of
$5,000,000, which default continues for more than the applicable cure period, if
any, with respect thereto, or any default by Borrower or any Obligor under any
material contract (including, without limitation, any of the Merchant
Agreements), lease, license or other obligation to any person other than Agent
or any Lender, which default continues for more than the applicable cure period,
if any, with respect thereto;
(i) any Change of Control;
(j) (i) Commercial Account Purchaser shall send notice to
Borrower that it is ceasing to make or suspending payments to Borrower of
amounts due or to become due to Borrower or shall cease or suspend such
payments, or (ii) Commercial Account Purchaser shall send notice to Borrower
that it is terminating its arrangements with Borrower or Borrower notifies Agent
and Commercial Account Purchaser that Borrower is terminating its arrangements
with Commercial Account Purchaser unless thirty (30) days prior to any intended
termination, Borrower has entered into replacement financing with respect to the
Commercial Receivables, the terms and provisions of which shall be satisfactory
to Agent; or (iii) the termination of any financing arrangements with respect to
the Commercial Receivables as a result of any event of default under such
arrangements, which continues for more than the applicable cure period, if any,
with respect thereto;
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(k) the indictment of Borrower or any Obligor under any
criminal statute, or commencement of criminal or civil proceedings against
Borrower or any Obligor, pursuant to which statute or proceedings the penalties
or remedies sought or available include forfeiture of any of the property of
Borrower or such Obligor;
(l) there shall be a material adverse change in the business
or assets of Borrower or any Obligor after the date hereof; or
(m) there shall be an event of default under any of the other
Financing Agreements.
10.2 Remedies.
(a) At any time an Event of Default exists or has occurred and
is continuing, Agent, for the ratable benefit of Lenders, shall have all rights
and remedies provided in this Agreement, the other Financing Agreements, the
Uniform Commercial Code and other applicable law, all of which rights and
remedies may be exercised without notice to or consent by Borrower or any
Obligor, except as such notice or consent is expressly provided for hereunder or
required by applicable law. All rights, remedies and powers granted to Agent,
for the ratable benefit of Lenders, hereunder, under any of the other Financing
Agreements, the Uniform Commercial Code or other applicable law, are cumulative,
not exclusive and enforceable, in Agent's discretion, alternatively,
successively, or concurrently on any one or more occasions, and shall include,
without limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by Borrower of this Agreement or any of
the other Financing Agreements. Agent, for the ratable benefit of Lenders, may,
at any time or times, proceed directly against Borrower or any Obligor to
collect the Obligations without prior recourse to the Collateral.
(b) Without limiting the foregoing, at any time an Event of
Default exists or has occurred and is continuing, Agent, for the ratable benefit
of Lender, may, in its discretion and without limitation, (i) accelerate the
payment of all Obligations and demand immediate payment thereof to Agent, for
the ratable benefit of Lenders, (provided, that, upon the occurrence of any
Event of Default described in Sections 10.1(f) and 10.1(g), all Obligations
shall automatically become immediately due and payable), (ii) with or without
judicial process or the aid or assistance of others, enter upon any premises on
or in which any of the Collateral may be located and take possession of the
Collateral or complete processing, manufacturing and repair of all or any
portion of the Collateral, (iii) require Borrower, at Borrower's expense, to
assemble and make available to Agent any part or all of the Collateral at any
place and time designated by Agent, (iv) collect, foreclose, receive,
appropriate, setoff and realize upon any and all Collateral, (v) remove any or
all of the Collateral from any premises on or in which the same may be located
for the purpose of effecting the sale, foreclosure or other disposition thereof
or for any other purpose, (vi) sell, lease, transfer, assign, deliver or
otherwise dispose of any and all Collateral (including, without limitation,
entering into contracts with respect thereto, public or private sales at any
exchange, broker's board, at any office of Agent or elsewhere) at such prices or
terms as Agent may deem reasonable, for cash, upon credit or for future
delivery, with Agent or any Lender having the right to purchase the whole or any
part of the Collateral at any such public sale, all of the foregoing being free
from any right or equity of redemption of Borrower, which right or equity of
redemption is hereby expressly waived and released by Borrower and/or (vii)
terminate this Agreement. If any of the Collateral is sold or leased by Agent
upon credit terms or for future delivery, the Obligations shall not be reduced
as a result thereof until payment therefor is finally collected by Agent, for
the ratable benefit of Lenders. If notice of disposition of Collateral is
required by law, five (5) days prior notice by Agent to Borrower designating the
time and place of any public sale or the time after which any private sale or
other intended disposition of Collateral is to be made, shall be deemed to be
reasonable notice thereof and Borrower waives any other notice. In the event
Agent institutes an action to recover any Collateral or seeks recovery of any
Collateral by way of prejudgment remedy, Borrower waives the posting of any bond
which might otherwise be required.
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(c) Agent may apply the cash proceeds of Collateral actually
received by Agent, for the ratable benefit of Lenders, from any sale, lease,
foreclosure or other disposition of the Collateral to payment of the
Obligations, in whole or in part and in such order as Agent may elect, whether
or not then due. Borrower shall remain liable to Agent and Lenders for the
payment of any deficiency with interest at the highest rate provided for herein
and all costs and expenses of collection or enforcement, including attorneys'
fees and legal expenses.
(d) Without limiting the foregoing, upon the occurrence of an
Event of Default or an event which with notice or passage of time or both would
constitute an Event of Default, Agent and Lenders may, at their option, without
notice, (i) cease making Loans or arranging for Letter of Credit Accommodations
or reduce the lending formulas or amounts of Loans and Letter of Credit
Accommodations available to Borrower and/or (ii) terminate any provision of this
Agreement providing for any future Loans or Letter of Credit Accommodations to
be made by Agent, on behalf of Lenders, to Borrower.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements and any dispute arising out of the
relationship between the parties hereto, whether in contract, tort, equity or
otherwise, shall be governed by the internal laws of the State of New York
(without giving effect to principles of conflicts of law).
(b) Borrower, Agent and Lenders irrevocably consent and submit
to the non-exclusive jurisdiction of the New York State Supreme Court, New York
County, and the United States District Court for the Southern District of New
York and waive any objection based on venue or forum non conveniens with respect
to any action instituted therein arising under this Agreement or any of the
other Financing Agreements or in any way connected with or related or incidental
to the dealings of the parties hereto in respect of this Agreement or any of the
other Financing Agreements or the transactions related hereto or thereto, in
each case whether now existing or hereafter arising, and whether in contract,
tort, equity or otherwise, and agree that any dispute with respect to any such
matters shall be heard only in the courts described above (except that Agent or
any Lender shall have the right to bring any action or proceeding against
Borrower or its property in the courts of any other jurisdiction which Agent
deems necessary or appropriate in order to realize on the Collateral or to
otherwise enforce its rights against Borrower or its property).
(c) Borrower hereby waives personal service of any and all
process upon it and consents that all such service of process may be made by
certified mail (return receipt requested) directed to its address set forth on
the signature pages hereof and service so made shall be deemed to be completed
five (5) days after the same shall have been so deposited in the U.S. mails, or,
at Agent or any Lenders' option, by service upon Borrower in any other manner
provided under the rules of any such courts. Within thirty (30) days after such
service, Borrower shall appear in answer to such process, failing which Borrower
shall be deemed in default and judgment may be entered by Agent or any Lender
against Borrower for the amount of the claim and other relief requested.
(d) BORROWER, AGENT AND LENDERS EACH HEREBY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING
UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN
RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE
TRANSACTIONS
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RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWER, AGENT AND
LENDERS EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT
BORROWER, AGENT OR LENDERS MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS
AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Neither Agent nor any Lender shall have any liability to
Borrower (whether in tort, contract, equity or otherwise) for losses suffered by
Borrower in connection with, arising out of, or in any way related to the
transactions or relationships contemplated by this Agreement, or any act,
omission or event occurring in connection herewith, unless it is determined by a
final and non-appealable judgment or court order binding on Agent and Lenders,
that the losses were the result of acts or omissions constituting gross
negligence or willful misconduct. In any such litigation, Agent and Lenders
shall be entitled to the benefit of the rebuttable presumption that it acted in
good faith and with the exercise of ordinary care in the performance by it of
the terms of this Agreement.
11.2 Waiver of Notices. Borrower hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and commercial paper, included in or evidencing any
of the Obligations or the Collateral, and any and all other demands and notices
of any kind or nature whatsoever with respect to the Obligations, the Collateral
and this Agreement, except such as are expressly provided for herein. No notice
to or demand on Borrower which Agent may elect to give shall entitle Borrower to
any other or further notice or demand in the same, similar or other
circumstances.
11.3 Amendments and Waivers. Neither this Agreement nor any provision
hereof shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement signed by an authorized officer of
Agent, and as to amendments, as also signed by an authorized officer of
Borrower. Agent shall not, by any act, delay, omission or otherwise be deemed to
have expressly or impliedly waived any of its rights, powers and/or remedies
unless such waiver shall be in writing and signed by an authorized officer of
Agent. Any such waiver shall be enforceable only to the extent specifically set
forth therein. A waiver by Agent of any right, power and/or remedy on any one
occasion shall not be construed as a bar to or waiver of any such right, power
and/or remedy which Agent or any Lender would otherwise have on any future
occasion, whether similar in kind or otherwise.
11.4 Waiver of Counterclaims. Borrower waives all rights to interpose
any claims, deductions, setoffs or counterclaims of any nature (other then
compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.
11.5 Indemnification. Borrower shall indemnify and hold Agent, Lenders
and their directors, agents, employees and counsel, harmless from and against
any and all losses, claims, damages, liabilities, costs or expenses imposed on,
incurred by or asserted against any of them in connection with any litigation,
investigation, claim or proceeding commenced or threatened related to the
negotiation, preparation, execution, delivery, enforcement, performance or
administration of this Agreement, any other Financing Agreements, or any
undertaking or proceeding related to any of the transactions contemplated hereby
or any act, omission, event or transaction related or attendant thereto,
including, without limitation, amounts paid in settlement, court costs, and the
fees and expenses of counsel, except for any losses, claims, damages,
liabilities, costs or expenses which result from the gross negligence or willful
misconduct of Lender or Agent as determined pursuant to a final non-appealable
order of a court of competent jurisdiction . To the extent that the undertaking
to indemnify, pay and hold harmless set forth in this Section may be
unenforceable because it violates any law or public policy, Borrower shall pay
the maximum portion which it is permitted to pay under applicable law to Agent
and/or the affected Lenders in satisfaction of indemnified matters
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under this Section. The foregoing indemnity shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.
SECTION 12. THE AGENT
12.1 Appointment, Powers and Immunities. Each Lender hereby irrevocably
appoints and authorizes Agent to act as its agent hereunder and under the other
Financing Agreements with such powers as are specifically delegated to Agent by
the terms of this Agreement and of the other Financing Agreements, together with
such other powers as are reasonably incidental thereto. Agent (a) shall have no
duties or responsibilities except those expressly set forth in this Agreement
and in the other Financing Agreements, and shall not by reason of this Agreement
or any other Financing Agreement be a trustee or fiduciary for any Lender; (b)
shall not be responsible to Lenders for any recitals, statements,
representations or warranties contained in this Agreement or in any other
Financing Agreement, or in any certificate or other document referred to or
provided for in, or received by any of them under, this Agreement or any other
Financing Agreement, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Financing Agreement
or any other document referred to or provided for herein or therein or for any
failure by Borrower or any Obligor or any other Person to perform any of its
obligations hereunder or thereunder; and (c) shall not be responsible to Lenders
for any action taken or omitted to be taken by it hereunder or under any other
Financing Agreement or under any other document or instrument referred to or
provided for herein or therein or in connection herewith or therewith, except
for its own gross negligence or willful misconduct as determined by a final
non-appealable judgment of a court of competent jurisdiction. Agent may employ
agents and attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it in good faith.
Agent may deem and treat the payee of any note as the holder thereof for all
purposes hereof unless and until the assignment thereof pursuant to an agreement
(if and to the extent permitted herein) in form and substance satisfactory to
Agent shall have been delivered to and acknowledged by Agent.
12.2 Reliance by Agent. Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telecopy, telex, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by Agent. As to any matters not expressly
provided for by this Agreement or any other Financing Agreement, Agent shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
or thereunder in accordance with instructions given by Required Lenders or all
of Lenders as is required in such circumstance, and such instructions of such
Lenders and any action taken or failure to act pursuant thereto shall be binding
on all Lenders.
12.3 Events of Default.
(a) Agent shall not be deemed to have knowledge or notice of
the occurrence of an Event of Default or other failure of a condition precedent
to the Loans and Letter of Credit Accommodations hereunder, unless and until
Agent has received written notice from a Lender or Borrower specifying such
Event of Default or any unfulfilled condition precedent, and stating that such
notice is a "Notice of Default or Failure of Condition". In the event that Agent
receives such a Notice of Default or Failure of Condition, Agent shall give
prompt notice thereof to Lenders. Agent shall (subject to Section 12.7) take
such action with respect to any such Event of Default or failure of condition
precedent as shall be directed by Required Lenders; provided that, unless and
until Agent shall have received such directions, Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to or by reason of such Event of Default or failure of condition precedent, as
it shall deem advisable in the best interest of Lenders. Without limiting the
foregoing, and notwithstanding the existence or occurrence and continuance of an
Event of Default or any other failure to satisfy any of the conditions precedent
set forth in Section 4 of this Agreement to the contrary, the Agent may, but
shall have no obligation to, continue to make
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Loans and issue or cause to be issued Letter of Credit Accommodations for the
ratable account and risk of Lenders from time to time if Agent believes making
such Loans or issuing or causing to be issued such Letter of Credit
Accommodations is in the best interests of Lenders.
(b) Except with the prior written consent of Agent, no Lender
may assert or exercise any enforcement right or remedy in respect of the Loans,
Letter of Credit Accommodations or other Obligations, as against Borrower or any
Obligor or any of the Collateral or other property of Borrower or any Obligor.
12.4 Rights as a Lender. With respect to its Commitment and the Loans
made and Letter of Credit Accommodations issued or caused to be issued by it
(and any successor acting as Agent), so long as the Agent shall be a Lender
hereunder, it shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not acting as Agent, and the
term "Lender" or "Lenders" shall, unless the context otherwise indicates,
include Agent in its individual capacity as Lender hereunder. Congress (and any
successor acting as Agent) and its Affiliates may (without having to account
therefor to any Lender) lend money to, make investments in and generally engage
in any kind of business with Borrower and Obligors (and any of their
Subsidiaries or Affiliates) as if it were not acting as Agent, and Congress and
its Affiliates may accept fees and other consideration from Borrower and
Obligors for services in connection with this Agreement or otherwise without
having to account for the same to Lenders.
12.5 Indemnification. Lenders agree to indemnify Agent (to the extent
not reimbursed by Borrower hereunder and without limiting the Obligations of
Borrower hereunder) ratably, in accordance with their Pro Rata Shares, for any
and all claims of any kind and nature whatsoever that may be imposed on,
incurred by or asserted against Agent (including by any Lender) arising out of
or by reason of any investigation in or in any way relating to or arising out of
this Agreement or any other Financing Agreement or any other documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including the costs and expenses that Agent is
obligated to pay hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents, provided, that, no Lender shall be
liable for any of the foregoing to the extent it arises from the gross
negligence or willful misconduct of the party to be indemnified as determined by
a final non-appealable judgment of a court of competent jurisdiction.
12.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees that
it has, independently and without reliance on Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of Borrower and any Obligors and has made its own decision
to enter into this Agreement and that it will, independently and without
reliance upon Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under this Agreement or
any of the other Financing Agreements. Agent shall not be required to keep
itself informed as to the performance or observance by Borrower or any Obligor
of any term or provision of this Agreement or any of the other Financing
Agreements or any other document referred to or provided for herein or therein
or to inspect the properties or books of Borrower or any Obligor. Agent will use
reasonable efforts to provide Lenders with any information received by Agent
from Borrower which is required to be provided to Lenders hereunder, with a copy
of any Notice of Default or Failure of Condition received by Agent from Borrower
or any Lender and with a copy of any notice of an Event of Default delivered by
Agent to Borrower; provided, that, Agent shall not be liable to any Lender for
any failure to do so, except to the extent that such failure is attributable to
Agent's own gross negligence or willful misconduct as determined by a final
non-appealable judgment of a court of competent jurisdiction. Except for
notices, reports and other documents expressly required to be furnished to
Lenders by Agent hereunder, Agent shall not have any duty or responsibility to
provide any Lender with any other credit or other information concerning the
affairs, financial condition or business of Borrower or any of its Subsidiaries
(or any of their affiliates) that may come into the possession of Agent or any
of its Affiliates.
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12.7 Failure to Act. Except for action expressly required of Agent
hereunder and under the other Financing Agreements, Agent shall in all cases be
fully justified in failing or refusing to act hereunder and thereunder unless it
shall receive further assurances to its satisfaction from Lenders of their
indemnification obligations under Section 12.5 hereof against any and all
liability and expense that may be incurred by Agent by reason of taking or
continuing to take any such action.
12.8 Resignation of Agent. Subject to the appointment and acceptance of
a successor Agent as provided below, Agent may resign at any time by giving
notice thereof to Lenders and Borrower. Upon any such resignation, Lenders shall
have the right to appoint a successor Agent. If no successor Agent shall have
been so appointed by Lenders, and the appointment accepted by such successor
Agent within thirty (30) days after the retiring Agent's giving of notice of
resignation, then the retiring Agent may, on behalf of Lenders, appoint (without
the consent of Borrower) a successor Agent that shall be a bank, commercial
finance company or other financial institution. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent in accordance with the terms
hereof, such successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations hereunder.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Section 12 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as Agent.
12.9 Consents and Releases of Collateral under Financing Agreements.
Except as otherwise provided in Section 13.6 hereof with respect to certain
amendments or modifications to this Agreement, without the prior consent of each
Lender, Agent shall not release any Collateral or otherwise terminate any
security interest in or lien upon any of the Collateral under any of the
Financing Agreements, except that no such consent shall be required, and Agent
is hereby authorized (i) to release any security interest in or lien upon any of
the Collateral which is the subject of a disposition permitted hereunder or
under the other Financing Agreements, or (ii) to release, in any fiscal year of
Borrower, any security interest in or lien upon any of the Collateral the value
of which does not exceed $5,000,000
12.10 Collateral Matters.
(a) Except as otherwise expressly provided for in this
Agreement, Agent shall have no obligation whatsoever to any Lender or any other
Person to investigate, confirm or assure that the Collateral exists or is owned
by Borrower or any Obligor or is cared for, protected or insured or has been
encumbered, or that any particular items of Collateral meet the eligibility
criteria applicable in respect of the Loans or Letter of Credit Accommodations
hereunder, or whether any particular Availability Reserves are appropriate, or
that the liens and security interests granted to Agent herein or pursuant hereto
or otherwise have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to exercise
at all or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and powers
granted or available to Agent in this Agreement or in any of the other Financing
Agreements, it being understood and agreed that in respect of the Collateral, or
any act, omission or event related thereto, Agent may act in any manner it may
deem appropriate, in its discretion, given Agent's own interest in the
Collateral as a Lender and that Agent shall have no duty or liability whatsoever
to any other Lender, other than liability for its own gross negligence or
willful misconduct as determined by a final non-appealable judgment of a court
of competent jurisdiction.
(b) Each Lender hereby appoints each other as agent for the
purpose of perfecting the security interest of Agent in assets which, in
accordance with Article 9 of the Uniform Commercial Code can be perfected only
by possession. Should any Lender (other than Agent) obtain possession of any
such Collateral, such Lender shall notify Agent thereof and, promptly upon
Agent's request therefor, shall deliver such Collateral to Agent or in
accordance with Agent's instructions.
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SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS
13.1 Term.
(a) This Agreement and the other Financing Agreements shall
become effective as of the date set forth on the first page hereof and shall
continue in full force and effect for a term ending on the date three (3) years
from the date hereof (the "Renewal Date"), and from year to year thereafter,
unless sooner terminated pursuant to the terms hereof. Agent or Borrower may
terminate this Agreement and the other Financing Agreements effective on the
Renewal Date or on the anniversary of the Renewal Date in any year by giving to
the other party at least sixty (60) days prior written notice; provided, that,
this Agreement and all other Financing Agreements must be terminated
simultaneously. Upon the effective date of termination or non-renewal of the
Financing Agreements, Borrower shall pay to Agent, for the ratable benefit of
Lenders, in full, all outstanding and unpaid Obligations and shall furnish cash
collateral to Agent, for the ratable benefit of Lenders, in such amounts as
Agent determines are reasonably necessary to secure Agent and Lenders from loss,
cost, damage or expense, including attorneys' fees and legal expenses, in
connection with any contingent Obligations, including issued and outstanding
Letter of Credit Accommodations and checks or other payments provisionally
credited to the Obligations and/or as to which Agent and Lenders have not yet
received final and indefeasible payment. Such payments in respect of the
Obligations and cash collateral shall be remitted by wire transfer in Federal
funds to such bank account of Agent, as Agent may, in its discretion, designate
in writing to Borrower for such purpose. Interest shall be due until and
including the next business day, if the amounts so paid by Borrower to the bank
account designated by Agent are received in such bank account later than 12:00
noon, Chicago, Illinois time.
(b) No termination of this Agreement or the other Financing
Agreements shall relieve or discharge Borrower of its respective duties,
obligations and covenants under this Agreement or the other Financing Agreements
until all Obligations have been fully and finally discharged and paid, and the
continuing security interest of Agent, for the ratable benefit of Lenders, in
the Collateral and the rights and remedies of Agent and Lenders hereunder, under
the other Financing Agreements and applicable law, shall remain in effect until
all such Obligations have been fully and finally discharged and paid.
(c) If for any reason this Agreement is terminated prior to
the end of the then current term or renewal term of this Agreement, in view of
the impracticality and extreme difficulty of ascertaining actual damages and by
mutual agreement of the parties as to a reasonable calculation of Lenders' lost
profits as a result thereof, Borrower agrees to pay to Agent, for the ratable
benefit of Lenders, upon the effective date of such termination, an early
termination fee in the amount set forth below if such termination is effective
in the period indicated:
Amount Period
------ ------
(i) 3% of Maximum Credit From the date hereof to and including
November 17, 2000.
(ii) 2% of Maximum Credit From November 18, 2000 to and including
November 17, 2001.
(iii) 1% of Maximum Credit From November 18, 2001 to and including
November17, 2002.
Such early termination fee shall be presumed to be the amount of damages
sustained by Lenders as a result of such early termination and Borrower agrees
that it is reasonable under the circumstances currently existing. In addition,
Agent, for the ratable benefit of Lenders shall be entitled to such early
termination fee upon the occurrence of any
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Event of Default described in Sections 10.1(g) and 10.1(h) hereof, even if
Agent does not exercise its right to terminate this Agreement, but elects,
at its option, to provide financing to Borrower or permit the use of cash
collateral under the United States Bankruptcy Code. The early termination
fee provided for in this Section 13.1 shall be deemed included in the
Obligations.
(d) Notwithstanding anything to the contrary contained in
Section 13.1(c), in the event of the termination of this Agreement by Borrower
prior to the end of the then current term and the full and final repayment of
all of the Obligations and the receipt by Agent of cash collateral all as
provided in Section 13.1(a), Borrower shall not be required to pay the early
termination fee provided for above if each of the following conditions is
satisfied: (i) no Event of Default or act, condition or event which with notice
or passage of time or both would constitute an Event of Default shall exist or
have occurred and be continuing, (ii) Agent shall have received not less than
thirty (30) days prior written notice of the intention of Borrower to so
terminate this Agreement, and (iii) the final payment in full of all of the
Obligations is received simultaneously with (A) the refinancing of the Credit
Facility with proceeds of loans made by First Union National Bank or its
affiliates to Borrower; (B) the consummation of a public equity offering by
Borrower through Wheat First Securities, which equity offering shall be
registered under the Securities Act of 1933, as amended; (C) the consummation by
Borrower of a high-yield debenture or note offering; (D) in the event that
Bowles Hollowell Conner, as the investment advisor to the Borrower, is
successful in consummating a sale of substantially all of the assets of Borrower
or the merger of Borrower with and into an acquiring corporation; (E) the
refinancing of the Credit Facility with proceeds of loans made by First Union
National Bank, Congress or their respective affiliates in connection with the
consummation by the Borrower of a sale of substantially all of the assets of
Borrower or the merger of Borrower with and into an acquiring corporation, or
(F) any combination of the items (A) through (E).
13.2 Notices. All notices, requests and demands hereunder shall be in
writing and (a) made to Agent and Lenders at their addresses set forth below and
to Borrower at its chief executive office set forth below, or to such other
address as either party may designate by written notice to the other in
accordance with this provision, and (b) deemed to have been given or made: if
delivered in person, immediately upon delivery; if by telex, telegram or
facsimile transmission, immediately upon sending and upon confirmation of
receipt; if by nationally recognized overnight courier service with instructions
to deliver the next Business Day, one (1) Business Day after sending; and if by
certified mail, return receipt requested, five (5) days after mailing.
13.3 Partial Invalidity. If any provision of this Agreement is held to
be invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
13.4 Successors. This Agreement, the other Financing Agreements and any
other document referred to herein or therein shall be binding upon and inure to
the benefit of and be enforceable by Lenders, Agent and Borrower and their
respective successors and assigns, except that Borrower may not assign its
rights under this Agreement, the other Financing Agreements and any other
document referred to herein or therein without the prior written consent of
Agent and Lenders. No Lender may assign its rights and obligations under this
Agreement (or any part thereof) without the prior written consent of all Lenders
and Agent, except as permitted under Section 13.5(b) hereof. Any purported
assignment by a Lender without such prior express consent or compliance with
Section 13.5(b) where applicable, shall be void. The terms and provisions of
this Agreement and the other Financing Agreements are for the purpose of
defining the relative rights and obligations of Borrower, Agent and Lenders with
respect to the transactions contemplated hereby and there shall be no third
party beneficiaries of any of the terms and provisions of this Agreement or any
of the other Financing Agreements.
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13.5 Assignments and Participations.
(a) Congress may, in the ordinary course of its commercial
banking or finance business and in accordance with applicable law, at any time
sell to one or more banks, commercial finance companies or other financial
institutions ("Participants"), participating interests in all or a portion of
its rights and obligations under this Agreement and the other Financing
Agreements (including all or a part of its interest in the Obligations). In the
event of any such sale by Congress of a participating interest to a Participant,
Congress' obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, Congress shall remain solely responsible for
the performance thereof, Congress shall remain the holder of any such
obligations for all purposes under this Agreement and the other Financing
Agreements, and Borrower and Agent shall continue to deal solely and directly
with Congress in connection with Congress' rights and obligations under this
Agreement and the other Financing Agreements. Borrower agrees that if amounts
outstanding under this Agreement are due or unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall, to the maximum extent permitted by applicable law, be
deemed to have the right of setoff in respect of its participating interest in
amounts owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement; provided that, in purchasing such participating interest, such
Participant shall be deemed to have agreed to share with Congress the proceeds
thereof as provided in Section 6.7 hereof.
(b) Any Lender may, in accordance with applicable law, at any
time and from time to time assign to any Lender or any of its Affiliates, or may
assign, in connection with the sale of its business or all or substantially all
of its loan portfolio, with the written consent of Agent, to a bank, commercial
finance company or other financial institution (an "Assignee") all (or, with the
consent of Agent, less than all), of its Commitment, rights and obligations
under this Agreement and the other Financing Agreements, pursuant to an
assignment agreement, in form and substance satisfactory to Agent, executed by
such Assignee and such assigning Lender and delivered to Agent for its
acceptance and recording in its records. Upon such execution, delivery,
acceptance and recording, from and after the effective date determined pursuant
to such assignment agreement, the Assignee thereunder shall be a party hereto
and, to the extent provided in such assignment agreement, (i) have the rights
and obligations of a Lender hereunder with a Commitment and Commitment
Percentage as set forth therein, and (ii) the assigning Lender thereunder shall,
to the extent provided in such assignment agreement, be released from its
obligations under this Agreement (and, in the case of an assignment agreement
covering all or the remaining portion of an assigning Lender's rights and
obligations under this Agreement, such assigning Lender shall cease to be a
party hereto).
(c) Agent, on behalf of the Borrower, shall maintain at the
address of Agent referred to on the signature page of this Agreement, a copy of
each such assignment agreement delivered to it and a record of the names and
addresses of the Lenders and the Commitments of each Lender from time to time.
Such records maintained by Agent shall be conclusive, in the absence of manifest
error, and Borrower, Agent and Lenders may treat each Person whose name appears
in such records as the owner of a Loan or other Obligations hereunder as the
owner thereof for all purposes of this Agreement and the other Financing
Agreements, notwithstanding any notice to the contrary. The Agent's records
under this Section 13.5 shall be available for inspection by Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
(d) Upon its receipt of an assignment agreement executed by an
assigning Lender and an Assignee, Agent shall (i) promptly accept such
assignment agreement and (ii) on the effective date determined pursuant thereto
record the information contained therein in Agent's records and give notice of
such acceptance and recordation to Lenders and Borrower. On or prior to such
effective date, Borrower, at its own expense, shall execute and deliver to Agent
(in exchange for notes of the assigning Lender) new notes to the order of such
Assignee corresponding to the Commitment assumed by it pursuant to such
assignment agreement and, if the assigning Lender has retained a Commitment
hereunder, a new note to the order of the assigning Lender in an amount equal to
the
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Commitment retained by it hereunder. Such new notes shall be dated the date
hereof and shall otherwise be in the form of the notes replaced thereby. The
notes surrendered to Agent shall be returned by Agent to Borrower marked
"cancelled".
(e) Except as otherwise provided in this Section 13.5, no
Lender shall, as between Borrower and that Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of participation in, all or any part of the
Obligations owed to such Lender. Any Lender permitted to sell assignments and
participations under this Section 13.5 may furnish any information concerning
Borrower and its Subsidiaries and Affiliates in the possession of that Lender
from time to time to Assignees and Participants (including, prospective
Assignees and Participants).
(f) Borrower shall provide such assistance to Agent, as Agent
shall reasonably request, in connection with any assistance which Agent is
providing to any Lender permitted to sell assignments or participations under
this Section 13.5 in whatever manner reasonably necessary in order to enable or
effect any such assignment or participation, including (but not limited to) the
execution and delivery of any and all agreements, notes and other documents and
instruments as shall be reasonably requested and the delivery of informational
materials, appraisals or other documents for, and the participation of relevant
management in meetings and conference calls with, potential Assignees or
Participants. Borrower shall certify the correctness, completeness and accuracy
of all descriptions of Borrower and its affairs provided, prepared or reviewed
by Borrower that are contained in any selling materials and all other
information provided by it and included in such materials.
13.6 Modification of Agreement. Neither this Agreement nor any other
Financing Agreement nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by Agent and the Required Lenders; except, that, any change,
waiver, discharge or termination with respect to the following shall require the
consent of all Lenders: (a) the extension of the scheduled final maturity of the
Revolving Loans, or any portion thereof, or reduction in the rate or extension
of the time of payment of interest thereon or fees (other than as a result of
waiving or not requiring the applicability of any post-default increase in
interest rates or fees for outstanding Letter of Credit Accommodations or
increased interest rates on Revolving Loans in excess of the amounts then
available to Borrower), or reduction in the principal amount thereof, or
increase in the Commitment of any Lender over the amount thereof then in effect
or provided hereunder (it being understood that a waiver of any Event of Default
shall not constitute a change in the terms of any Commitment of any Lender); (b)
the release or subordination of a material amount of the Collateral (except as
expressly required by the Financing Agreements and except as permitted under
Section 12.9 hereof), (c) the amendment, modification or waiver of any provision
of this Section 13.6; (d) the reduction of any percentage specified in the
definition of Required Lenders; (e) the consent to the assignment or transfer by
Borrower of any of its rights and obligations under this Agreement; or (f) the
increase in the stated advance percentage under the lending formulas contained
in Section 2 hereof. Any Lender who does not consent to a proposed amendment,
consent or waiver requiring the approval of each Lender as contemplated by
clauses (a) through (f) above, agrees that, if such amendment, waiver or consent
has been approved by the Required Lenders, then, with the consent of the Agent,
any other Lender or Lenders shall have the right to purchase, in accordance with
the terms otherwise applicable to permitted assignment under Section 13.5, all
of such non-consenting Lender's Commitment and interests in the Revolving Loans
(and in the Collateral and the Financing Agreements) at their par value. No
provision of Section 12 may be amended without the prior written consent of
Agent.
13.7 Entire Agreement. This Agreement, the other Financing Agreements,
any supplements hereto or thereto, and any instruments or documents delivered or
to be delivered in connection herewith or therewith represents the entire
agreement and understanding concerning the subject matter hereof and thereof
between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written. In the
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event of any inconsistency between the terms of this Agreement and any
schedule or exhibit hereto, the terms of this Agreement shall govern.
IN WITNESS WHEREOF, Agent, Lenders and Borrower have caused these
presents to be duly executed as of the day and year first above written.
PAYLESS CASHWAYS, INC.
By:/s/Timothy R. Mertz
------------------------------------
Title: Vice President -- Treasury
Chief Executive Office:
800 N.W. Chipman Road
Suite 5900
Lee's Summit, Missouri 64063
CONGRESS FINANCIAL CORPORATION (CENTRAL),
in its individual capacity and as Agent
By:/s/ Kenneth M. Sands
------------------------------------
Title: Senior Vice President
Address: 150 South Wacker Drive
Chicago, Illinois 60606-4401
Commitment: $260,000,000
Commitment
Percentage: 100%
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