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EXHIBIT 10.34
LOAN AND SECURITY AGREEMENT
FLEET RETAIL FINANCE INC.
ADMINISTRATIVE AGENT AND COLLATERAL AGENT
REVOLVING CREDIT LENDERS
NAMED HEREIN
BACK BAY CAPITAL FUNDING LLC
THE TERM LENDER
THE GYMBOREE CORPORATION
THE LEAD BORROWER
FLEETBOSTON ROBERTSON STEPHENS INC.
THE SYNDICATOR
AUGUST 24, 2000
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TABLE OF CONTENTS
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ARTICLE 1: - DEFINITIONS:
ARTICLE 2: - THE REVOLVING CREDIT:
2-1. Establishment of Revolving Credit 30
2-2. Advances in Excess of Borrowing Base (OverLoans). 31
2-3. Risks of Value of Collateral 31
2-4. Commitment to Make Revolving Credit Loans and Support Letters of Credit. 32
2-5. Revolving Credit Loan Requests 32
2-6 Making of Revolving Credit Loans 33
2-7. SwingLine Loans 34
2-8. The Loan Account 35
2-9. The Revolving Credit Notes 36
2-10. Payment of The Loan Account 36
2-11. Interest on Revolving Credit Loans. 37
2-12. Interest on Revolving Credit Loans: The Pricing Grids. 38
2-13. The Administrative Agent's Fee 39
2-14. Unused Line Fee. 39
2-15. Early Termination Fee. 39
2-16. Concerning Fees. 40
2-17. Agents' and Lenders' Discretion 40
2-18. Procedures For Issuance of L/C's 41
2-19. Fees For L/C's 42
2-20. Concerning L/C's 43
2-21. Changed Circumstances 44
2-22. Designation of Lead Borrower as Borrowers' Agent. 45
2-23. New Borrowers 46
2-24. Lenders' Commitments 46
ARTICLE 3: - THE TERM LOAN:
3-1. Commitment To Make Term Loan 47
3-2. The Term Note 48
3-3. Payment of Principal of the Term Loan. 48
3-4 Interest On The Term Loan. 48
3-5. Term Loan Fees 49
3-6. Payments On Account of Term Loan 49
ARTICLE 4: - CONDITIONS PRECEDENT:
4-1. Corporate Due Diligence. 50
4-2.. Opinion. 50
4-3. Additional Documents. 50
4-4. Officers' Certificates. 51
4-5. Representations and Warranties. 51
4-6. Minimum Day One Excess Availability. 51
4-7. All Fees and Expenses Paid. 51
4-8. No Borrower InDefault. 51
4-9. No Adverse Change. 51
4-10. Benefit of Conditions Precedent. 51
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ARTICLE 5: - GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES:
5-1. Payment and Performance of Liabilities. 52
5-2. Due Organization. Authorization. No Conflicts. 52
5-3. Trade Names. 53
5-4. Franchisees. 53
5-5. Infrastructure. 54
5-6. Locations. 54
5-7. Title to Assets. 55
5-8. Indebtedness 55
5-9. Insurance. 56
5-10. Licenses 56
5-11. Leases. 56
5-12. Requirements of Law 57
5-13. Labor Relations 57
5-14. Maintain Properties 58
5-15. Taxes. 58
5-16. No Margin Stock. 59
5-17. ERISA 59
5-18. Hazardous Materials. 60
5-19. Litigation 60
5-20. Dividends. Investments. Corporate Action 60
5-21. Loans 61
5-22. Protection of Assets 61
5-23. Line of Business 61
5-24. Affiliate Transactions 61
5-25. Further Assurances 62
5-26. Adequacy of Disclosure 62
5-27. No Restrictions on Liabilities 63
5-28. Other Covenants 63
ARTICLE 6: FINANCIAL REPORTING AND PERFORMANCE COVENANTS:
6-1. Maintain Records 63
6-2. Access to Records 64
6-3. Immediate Notice to Administrative Agent 64
6-4. Borrowing Base Certificate 65
6-5. Weekly Reports 66
6-6. Monthly Reports 66
6-7. Quarterly Reports 67
6-8. Annual Reports 67
6-9. Officers' Certificates 68
6-10. Inventories, Appraisals, and Audits 69
6-11. Additional Financial Information 69
6-12. Financial Performance Covenants 70
ARTICLE 7: - USE OF COLLATERAL:
7-1. Use of Inventory Collateral 71
7-2. Inventory Quality 71
7-3. Adjustments and Allowances 71
7-4. Validity of Accounts 71
7-5. Notification to Account Debtors 72
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ARTICLE 8: - CASH MANAGEMENT. PAYMENT OF LIABILITIES:
8-1. Depository Accounts 72
8-2. Credit Card Receipts 72
8-3. The Concentration, Blocked, and Operating Accounts 73
8-4. Proceeds and Collections 73
8-5. Payment of Liabilities 74
8-6. The Operating Account 75
ARTICLE 9: - GRANT OF SECURITY INTEREST:
9-1. Grant of Security Interest 75
9-2. Extent and Duration of Security Interest 76
ARTICLE 10: - ADMINISTRATIVE AGENT AS BORROWER'S ATTORNEY-IN-FACT:
10-1. Appointment as Attorney-In-Fact 77
10-2. No Obligation to Act 78
ARTICLE 11: - EVENTS OF DEFAULT:
11-1. Failure to Pay the Revolving Credit or the Term Loan. 78
11-2. Failure To Make Other Payments 78
11-3. Failure to Perform Covenant or Liability (No Grace Period) 78
11-4. Failure to Perform Covenant or Liability (Grace Period) 79
11-5. Misrepresentation 79
11-6. Acceleration of Other Debt. Breach of Lease 79
11-7. Default Under Other Agreements 79
11-8. Uninsured Casualty Loss 79
11-9. Attachment. Judgment. Restraint of Business 79
11-10. Business Failure 80
11-11. Bankruptcy 80
11-12. Default by Guarantor 80
11-13. Indictment - Forfeiture 81
11-14. Foreign Proceeding 81
11-15. Termination of Guaranty 81
11-16. Challenge to Loan Documents 81
11-18. Key Management. 81
11-19. Change in Control. 81
ARTICLE 12: - RIGHTS AND REMEDIES UPON DEFAULT:
12-1 Acceleration 82
12-2. Rights of Enforcement 82
12-3. Sale of Collateral 82
12-4. Occupation of Business Location 83
12-5. Grant of Nonexclusive License. 84
12-6. Assembly of Collateral 84
12-7. Rights and Remedies 84
ARTICLE 13: - REVOLVING CREDIT FUNDINGS AND DISTRIBUTIONS:
13-1. Revolving Credit Funding Procedures. 85
13-2. SwingLine Loans. 85
13-3. Administrative Agent's Covering of Fundings: 86
13-4. Ordinary Course Distributions: Revolving Credit. 88
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13-5. Ordinary Course Distributions : Term Loan 89
ARTICLE 14: - ACCELERATION AND LIQUIDATION:
14-1. Acceleration Notices 89
14-2. Mandatory Acceleration Right of Term Lender: 89
14-3. Acceleration 90
14-4. Initiation of Liquidation 90
14-5. Actions At and Following Initiation of Liquidation 90
14-6. Collateral Agent's Conduct of Liquidation 91
14-7. Distribution of Liquidation Proceeds: 91
14-8. Relative Priorities To Proceeds of Liquidation 92
ARTICLE 15: - THE AGENTS:
15-1. Appointment of The Agent 94
15-2. Responsibilities of Agents 94
15-3. Concerning Distributions By the Agents 95
15-4. Dispute Resolution: 96
15-5. Distributions of Notices and of Documents 96
15-6. Confidential Information 96
15-7. Reliance by Agents 97
15-8. Non-Reliance on Agents and Other Lenders 97
15-9. Indemnification 98
15-10. Resignation of Agent 98
ARTICLE 16: - ACTION BY AGENTS - CONSENTS - AMENDMENTS - WAIVERS:
16-1. Administration of Credit Facilities 99
16-2. Actions Requiring or On Direction of Majority Lenders 99
16-3. Actions Requiring or On Direction of SuperMajority Lenders 99
16-4. Actions Requiring Certain Consent 100
16-5. Actions Requiring or Directed By Unanimous Consent 101
16-6. Actions Requiring SwingLine Lender Consent 102
16-7. Actions Requiring Term Lender Consent 102
16-8. Actions Requiring Agents' Consent 103
16-9. Miscellaneous Actions 103
16-10. Actions Requiring Lead Borrower's Consent 103
16-11. NonConsenting Revolving Credit Lender 103
16-12. The BuyOut: 105
ARTICLE 17: - ASSIGNMENTS BY LENDERS:
17-1. Assignments and Assumptions: 105
17-2. Assignment Procedures. 106
17-3. Effect of Assignment. 107
ARTICLE 18: - NOTICES:
18-1. Notice Addresses 107
18-2. Notice Given 108
ARTICLE 19: - TERM:
19-1. Termination of Revolving Credit 109
19-2. Actions On Termination 109
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ARTICLE 20: - GENERAL:
20-1. Protection of Collateral 110
20-2. Publicity. 110
20-3. Successors and Assigns. 110
20-4. Severability 110
20-5. Amendments. Course of Dealing 110
20-6. Power of Attorney 111
20-7. Application of Proceeds 111
20-8. Increased Costs 111
20-9. Costs and Expenses of the Agents 112
20-10. Copies and Facsimiles 112
20-11. Massachusetts Law 113
20-12. Consent to Jurisdiction 113
20-13. Indemnification 114
20-14. Rules of Construction. 114
20-15. Intent 115
20-16. Participations: 116
20-17. Right of Set-Off 116
20-18. Pledges To Federal Reserve Banks: 116
20-19. Maximum Interest Rate. 116
20-20. Waivers. 117
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EXHIBITS
: SwingLine Note
: Revolving Credit Note
: Revolving Credit Lenders' Commitments
: Term Note
: Corporate Information
: Trade Names
: Franchisees
: Locations, Leases, and Landlords
: Encumbrances
: Indebtedness
: Insurance Policies
: Capital Leases
: Taxes
: Litigation
: Borrowing Base Certificate
: DDA's.
: Credit Card Arrangements
: Assignment / Assumption
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LOAN AND SECURITY AGREEMENT FLEET RETAIL FINANCE INC.
ADMINISTRATIVE AND COLLATERAL AGENT
August 24, 2000
THIS AGREEMENT is made amongst
Fleet Retail Finance Inc. (in such capacity, the "ADMINISTRATIVE
AGENT"), a Delaware corporation with offices at 40 Broad Street, Boston,
Massachusetts 02109, as Administrative Agent for the ratable benefit of (i) the
Collateral Agent, (ii) the "REVOLVING CREDIT LENDERS", who are, at present,
those financial institutions identified on the signature pages of this Agreement
and any Person who becomes a "Revolving Credit Lender" in accordance with the
provisions of Article of this Agreement and (iii) the Term Lender;
and
Fleet Retail Finance Inc. (in such capacity, the "COLLATERAL AGENT", a
Delaware corporation with offices at 40 Broad Street, Boston, Massachusetts
02109, as Collateral Agent for the ratable benefit of the Administrative Agent,
the Revolving Credit Lenders, and the Term Lender;
and
Back Bay Capital Funding LLC (with any successor or assign, the "TERM
LENDER"), a Delaware Limited Liability Company with offices at 40 Broad Street,
Boston, Massachusetts 02109
and
Each of the Revolving Credit Lenders;
and
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The Gymboree Corporation ( in such capacity, the " LEAD BORROWER"), a
Delaware corporation with its principal executive offices at 700 Airport
Boulevard, Burlingame, California 94010, as agent for the following and as agent
for any other Person which becomes a Borrower as provided in Section (each of
the following and such other Persons, a "BORROWER" and collectively, the
"BORROWERS"):
The Gymboree Corporation (a Delaware corporation); and
Gymboree Manufacturing, Inc., Gymboree Operations, Inc., Gymboree Play
Programs, Inc., Gymboree Retail Stores, Inc.,The Gymboree Stores, Inc., and
Gym-Mark, Inc. (each a California corporation with its principal executive
offices at 700 Airport Boulevard, Burlingame, California 94010);
in consideration of the mutual covenants contained herein and benefits to be
derived herefrom,
WITNESSETH:
1: ARTICLE - DEFINITIONS:
As used herein, the following terms have the following meanings or are
defined in the section of this Agreement so indicated:
"ACCELERATION": The making of demand or declaration that any indebtedness, not
otherwise due and payable, is due and payable. Derivations of the word
"Acceleration" (such as "Accelerate") are used with like meaning in this
Agreement.
"ACCELERATION NOTICE": Written notice as follows:
(a) From the Administrative Agent to the Collateral Agent and the
Revolving Credit Lenders, as provided in Section.
(b) From the SuperMajority Lenders to the Administrative Agent, as
provided in Section.
(c) From the Term Lender to the Administrative Agent, as provided in
Section.
"ACCOUNT DEBTOR": Has the meaning given that term in the UCC.
"ACCOUNTS" and "ACCOUNTS RECEIVABLE" include, without limitation, "accounts" as
defined in the UCC, and also all: accounts, accounts receivable, receivables,
and rights to payment (whether or not earned by
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performance) for: property that has been or is to be sold, leased, licensed,
assigned, or otherwise disposed of; services rendered or to be rendered; a
policy of insurance issued or to be issued; a secondary obligation incurred or
to be incurred; energy provided or to be provided; for the use or hire of a
vessel; arising out of the use of a credit or charge card or information
contained on or used with that card; winnings in a lottery or other game of
chance; and also all Inventory which gave rise thereto, and all rights
associated with such Inventory, including the right of stoppage in transit; all
reclaimed, returned, rejected or repossessed Inventory (if any) the sale of
which gave rise to any Account.
"ACH": Automated clearing house.
"ADMINISTRATIVE AGENT": Defined in the Preamble.
" ADMINISTRATIVE AGENT'S COVER": Defined in Section.
" ADMINISTRATIVE AGENT'S FEE": Is defined in Section.
"AFFILIATE": The following:
(a) With respect to any two Persons, a relationship in which (i) one
holds, directly or indirectly, not less than Twenty Five Percent (25%) of the
capital stock or share capital, beneficial interests, partnership interests, or
other equity interests of the other; or (ii) one has, directly or indirectly,
the right, under ordinary circumstances, to vote for the election of a majority
of the directors (or other body or Person who has those powers customarily
vested in a board of directors of a corporation); or (iii) not less than Twenty
Five Percent (25%) of their respective ownership is directly or indirectly held
by the same third Person.
(b) Any Person which: is a parent, brother-sister, subsidiary, or
affiliate, of a Borrower; could have such enterprise's tax returns or financial
statements consolidated with that Borrower's; could be a member of the same
controlled group of corporations (within the meaning of Section 1563(a)(1), (2)
and (3) of the Internal Revenue Code of 1986, as amended from time to time) of
which any Borrower is a member; controls or is controlled by any Borrower.
"AGENT": When not preceded by "Administrative" or "Collateral", the term "Agent"
refers collectively and individually to the Administrative Agent and the
Collateral Agent.
" AGENTS' RIGHTS AND REMEDIES": Is defined in Section.
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"APPLICABLE LAW": As to any Person: (i) All statutes, rules, regulations,
orders, or other requirements having the force of law and (ii) all court orders
and injunctions, arbitrator's decisions, and/or similar rulings, in each
instance ((i) and (ii)) of or by any federal, state, municipal, and other
governmental authority, or court, tribunal, panel, or other body which has or
claims jurisdiction over such Person, or any property of such Person, or of any
other Person for whose conduct such Person would be responsible.
"APPRAISED INVENTORY LIQUIDATION VALUE": The product of (a) the Cost of Eligible
Inventory (net of Inventory Reserves) multiplied by (b) that percentage,
determined from the then most recent appraisal of the Borrowers' Inventory
undertaken at the request of the Administrative Agent, to reflect the
appraiser's estimate of the net recovery on the Borrowers' Inventory in the
event of an in-store liquidation of that Inventory.
"APPRAISED INVENTORY PERCENTAGE": 85%.
"ASSIGNING REVOLVING CREDIT LENDER": Defined in Section.
"ASSIGNMENT AND ACCEPTANCE":Defined in Section.
"AVAILABILITY": The lesser of (a) or (b), where:
(a) is the result of
(i) The Revolving Credit Ceiling
Minus
(ii) The aggregate unpaid balance of the Loan Account
Minus
(iii) The aggregate undrawn Stated Amount of all then outstanding L/C's.
Minus
(iv) The aggregate of the Availability Reserves.
Minus
(v) The BaseLine Covenant Reserve.
(b) is the result of
(i) The Borrowing Base
Minus
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(ii) The aggregate unpaid balance of the Loan Account
Minus
(iv) The aggregate undrawn Stated Amount of all then outstanding L/C's.
Minus
(v) The aggregate of the Availability Reserves.
Minus
(vi) The BaseLine Covenant Reserve.
"AVAILABILITY RESERVES": Such reserves as the Administrative Agent from time to
time determines in the Administrative Agent's discretion as being appropriate to
reflect the impediments to the Collateral Agent's ability to realize upon the
Collateral. Without limiting the generality of the foregoing, Availability
Reserves may include (but are not limited to) reserves based on the following:
(i) Rent (but only if a landlord's waiver, acceptable to the
Administrative Agent, has not been received by the Administrative Agent).
(ii) Customer Credit Liabilities.
(iii) Taxes and other governmental charges, including, ad valorem,
personal property, and other taxes which might have priority over the Collateral
Interests of the Collateral Agent in the Collateral.
(iv) L/C Landing Costs.
(v) Year 2000 compliance.
"BANKRUPTCY CODE": Title 11, U.S.C., as amended from time to time.
"BASE":An interest rate expressed as an annual percentage rate referred to as
the "Base Rate" announced from time to time by Fleet National Bank (or any
successor in interest to Fleet National Bank). In the event that said bank (or
any such successor) ceases to announce such a rate, "Base" shall refer to that
rate or index announced or published from time to time as the Administrative
Agent, in good faith, designates as the functional equivalent to said Base Rate.
Any change in "Base" shall be effective, for purposes of the calculation of
interest due hereunder, when such change is made effective generally by the bank
on whose rate or index "Base" is being set.
"BASE MARGIN":The then applicable Base Margin as determined from the applicable
Pricing Grid.
"BASE MARGIN LOAN": Each Revolving Credit Loan while bearing interest at the
Base Margin Rate.
"BASE MARGIN RATE": The aggregate of Base plus the Base Margin.
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"BASELINE COVENANT BREACH": Inventory Exposure exceeds the aggregate of the
following for three (3) consecutive days:
(a) 92% of the aggregate Appraised Inventory Liquidation Value of
Eligible Inventory, and Eligible In-Transit Inventory, and Eligible
Non-US/Canadian Inventory;
Plus
(b) The lesser of:
(i) 70% of Rolling 12 Month Licensing Revenue;
or
(ii) $1.2 Million.
"BASELINE COVENANT RESERVE":A reserve equal to that amount necessary so that the
Borrower does not breach the BaseLine Covenant.
"BLOCKED ACCOUNT": Any DDA into which the contents of any other DDA is
transferred.
"BLOCKED ACCOUNT AGREEMENT":An Agreement, in form reasonably satisfactory to the
Administrative Agent, which Agreement recognizes the Collateral Agent's
Collateral Interest in the contents of the DDA which is the subject of such
Agreement and agrees that such contents shall be transferred only to the
Concentration Account or as otherwise instructed by the Administrative Agent.
"BORROWER" and "BORROWERS": Is defined in the Preamble.
"BORROWING BASE": The aggregate of the following with respect to the Borrowing
Base Entities:
(a) The lesser of (i) the Cost of Eligible Inventory (net of Inventory Reserves)
multiplied by the Inventory Advance Rate or (ii) the Appraised Inventory
Percentage of the Appraised Inventory Liquidation Value.
Plus
(b) The lesser of (i) the Cost of Eligible In-Transit Inventory
(net of Inventory Reserves) multiplied by the Inventory Advance Rate or (ii) the
Appraised Inventory Percentage of the Appraised Inventory Liquidation Value.
Plus
(c) The lesser of (i) the Cost of Eligible Non-US/Canadian
Inventory (net of Inventory Reserves) multiplied by the Inventory Advance Rate
or (ii) the Appraised Inventory Percentage
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of the Appraised Inventory Liquidation Value.
Plus
(d) 85% of the face amount of Eligible Credit Card Receivables
Plus
(e) 100% of the then current market value of Eligible Investments
"BORROWING BASE CERTIFICATE": Is defined in Section.
"BORROWING BASE ENTITY": Each Borrower and the Canadian Subsidiary.
"BUSINESS DAY": Any day other than (a) a Saturday or Sunday; (b) any day on
which banks in Boston, Massachusetts or in San Francisco, California, generally
are not open to the general public for the purpose of conducting commercial
banking business; or (c) a day on which the principal office of the
Administrative Agent is not open to the general public to conduct business.
"BUSINESS PLAN": The Borrowers' business plan dated on or about July 31, 2000
provided to the Administrative Agent and any revision, amendment, or update of
such business plan to which the Lender has provided its written sign-off.
"BUYOUT": The consummation of a transaction described in Section.
"CANADIAN SUBSIDIARY": Gymboree, Inc., an Ontario corporation with its principal
executive offices at 700 Airport Boulevard, Burlingame, California 94010.
"CAPITAL EXPENDITURES": The expenditure of funds or the incurrence of
liabilities which may be capitalized in accordance with GAAP.
"CAPITAL LEASE": Any lease which may be capitalized in accordance with GAAP.
"CHANGE IN CONTROL": The occurrence of any of the following:
(a) The acquisition, by any group of persons (within the meaning of the
Securities Exchange Act of 1934, as amended) or by any Person, of beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and Exchange
Commission) of 20% or more of the issued and outstanding capital stock of
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the Lead Borrower (or of the issued and outstanding capital stock of any parent
corporation or other entity) having the right, under ordinary circumstances, to
vote for the election of directors of the Lead Borrower.
(b) More than half of the persons who were directors of the Lead
Borrower (or of any parent of the Lead Borrower) on the first day of any period
consisting of Twelve (12) consecutive calendar months (the first of which Twelve
(12) month periods commencing with the first day of the month during which this
Agreement was executed), cease, for any reason other than death or disability,
to be directors of the Lead Borrower (or such parent, as applicable).
(c) Any failure of the Lead Borrower directly or indirectly to own,
beneficially and of record, 100% of the capital stock or share capital of all
other Borrowers.
"CHATTEL PAPER": Has the meaning given that term in the UCC.
"COLLATERAL": Is defined in Section.
"COLLATERAL AGENT": Is defined in the Preamble.
"COLLATERAL INTEREST": Any interest in property to secure an obligation,
including, without limitation, a security interest, charge, mortgage, and deed
of trust.
"CONCENTRATION ACCOUNT": Is defined in Section.
"CONSENT": Actual consent given by the Lender from whom such consent is sought;
or the passage of Seven (7) Business Days from receipt of written notice to a
Revolving Credit Lender from an Agent of a proposed course of action to be
followed by an Agent without such Revolving Credit Lender's giving that Agent
written notice of that Revolving Credit Lender's objection to such course of
action, provided that all Agents may rely on such passage of time as consent by
a Revolving Credit Lender only if such written notice states that consent will
be deemed effective if no objection is received within such time period.
"CONSOLIDATED": When used to modify a financial term, test, statement, or
report, refers to the application or preparation of such term, test, statement
or report (as applicable) based upon the consolidation, in accordance with GAAP,
of the financial condition or operating results of the Borrowers.
"COST":The lower of (a) or (b), where:
(a) is the calculated cost of purchases, based upon the Borrowers'
accounting practices, known to
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the Administrative Agent, which practices are in effect on the date on which
this Agreement was executed as such calculated cost is determined from: invoices
received by the Borrowers; the Borrowers' purchase journal; or the Borrowers'
stock ledger.
(b) is the cost equivalent of the lowest ticketed or promoted price at
which the subject Inventory is offered to the public, after all mark-downs
(whether or not such price is then reflected on the Borrowers' accounting
system), which cost equivalent is determined in accordance with the retail
method of accounting, reflecting the Borrowers' historic business practices.
("Cost" does not include inventory capitalization costs or other
non-purchase price charges (other than landed cost) used in the Borrowers'
calculation of cost of goods sold).
"COSTS OF COLLECTION": Includes, without limitation, all attorneys' reasonable
fees and reasonable out-of-pocket expenses incurred by any Agent's attorneys,
and all reasonable out-of-pocket costs incurred by any Agent in the
administration of the Liabilities and/or the Loan Documents, including, without
limitation, reasonable costs and expenses associated with travel on behalf of
any Agent, where such costs and expenses are directly or indirectly related to
or in respect of any Agent's: administration and management of the Liabilities;
negotiation, documentation, and amendment of any Loan Document; or efforts to
preserve, protect, collect, or enforce the Collateral, the Liabilities, and/or
the Agents' Rights and Remedies and/or any of the rights and remedies of any
Agent against or in respect of any guarantor or other person liable in respect
of the Liabilities (whether or not suit is instituted in connection with such
efforts). "Costs of Collection shall also include the reasonable fees and
expenses of Lenders' Special Counsel. The Costs of Collection are Liabilities,
and at the Administrative Agent's option may bear interest at the then effective
Base Margin Rate.
"CREDIT CARD ADVANCE RATE": 85%
"CURRENT PAY INTEREST": Is defined in Section
"CUSTOMER CREDIT LIABILITY":Gift certificates, merchandise credits, layaway
obligations, frequent shopping programs, and similar liabilities of any Borrower
to its retail customers and prospective customers.
"DDA": Any checking or other demand daily depository account maintained by any
Borrower.
"DELINQUENT REVOLVING CREDIT LENDER": Defined in Section.
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"DEPOSIT ACCOUNT": Has the meaning given that term in the UCC.
"DOCUMENTS": Has the meaning given that term in the UCC.
"DOCUMENTS OF TITLE":Has the meaning given that term in the UCC.
"EBITDA": The Borrowers' Consolidated earnings before interest, taxes,
depreciation, and amortization, each as determined in accordance with GAAP.
"ELIGIBLE ASSIGNEE": A bank, insurance company, or company engaged in the
business of making commercial loans having a combined capital and surplus in
excess of $300 Million or any Affiliate of any Revolving Credit Lender, or any
Person to whom a Revolving Credit Lender assigns its rights and obligations
under this Agreement as part of a programmed assignment and transfer of such
Revolving Credit Lender's rights in and to a material portion of such Revolving
Credit Lender's portfolio of asset based credit facilities.
"ELIGIBLE CREDIT CARD RECEIVABLES": Under 4 business day accounts due on a
non-recourse basis from major credit card processors (which, if due on account
of a private label credit card program, are deemed in the discretion of the
Administrative Agent to be eligible).
"ELIGIBLE IN-TRANSIT INVENTORY": Inventory (without duplication as to Eligible
Inventory) which has then been shipped from a foreign location for receipt,
within 60 days, at a warehouse of any Borrower located in a jurisdiction in the
United States in which the Collateral Agent will have a first and only perfected
security interest in such Inventory, provided that
(a) Such Inventory is of such types, character, qualities and quantities
(net of Inventory Reserves) as the Administrative Agent in its discretion from
time to time determines to be eligible for borrowing; and
(b) The documents which relate to such shipment names the Collateral
Agent as consignee of the subject Inventory and the Collateral Agent has control
over the documents which evidence ownership of the subject Inventory (such as by
the providing to the Collateral Agent of a Customs Brokers Agreement in form
reasonably satisfactory to the Collateral Agent); and
(c) Either
(i) title to such Inventory has passed to a Borrower;
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(ii) the purchase of such Inventory is supported by an L/C which
includes, as condition of such L/C's being honored, the passage of title to such
Inventory to a Borrower.
"ELIGIBLE INVENTORY":Such of the Borrowers' Inventory, (not duplicative of
Eligible In-Transit Inventory) at such locations, and of such types, character,
qualities and quantities, as the Administrative Agent in its discretion from
time to time determines to be acceptable for borrowing, as to which Inventory,
the Collateral Agent has a perfected security interest which is prior and
superior to all security interests, claims, and Encumbrances (other than
Permitted Encumbrances).
"ELIGIBLE INVESTMENTS": Marketable direct or guaranteed obligations of the
United States of America or any state thereof which mature within one (1) year
from the date of purchase by the Borrower; demand deposits, certificates of
deposit, bankers acceptances and time deposits of United States banks having
total assets in excess of $1,000,000,000.00; securities commonly known as
"commercial paper" issued by a corporation organized and existing under the laws
of the United States of America or any state thereof that at the time of
purchase have been rated and the ratings for which are not less than "P 1" if
rated by Moody's Investors Services, Inc., and not less than "A 1" if rated by
Standard and Poor's, which securities, in each instance, are subject to a prior
perfected security interest in favor of the Collateral Agent.
"ELIGIBLE NON-US/CANADIAN INVENTORY": Such of the Borrower's Inventory which
otherwise would constitute "Eligible Inventory" but which is then at one of the
Borrower's locations other than in the United States or Canada, as to which the
Collateral Agent has the functional equivalent of a perfected security interest
which is prior and superior to all other consensual and nonconsensual liens,
claims, and encumbrances.
"EMPLOYEE BENEFIT PLAN": As defined in ERISA.
"ENCUMBRANCE":Each of the following:
(a) A Collateral Interest or agreement to create or grant a Collateral
Interest); the interest of a lessor under a Capital Lease; conditional sale or
other title retention agreement; sale of accounts receivable or chattel paper;
or other arrangement pursuant to which any Person is entitled to any preference
or priority with respect to the property or assets of another Person or the
income or profits of such other Person; each of the foregoing whether consensual
or non-consensual and whether arising by way of agreement, operation of law,
legal process or otherwise.
(b) The filing of any financing statement under the UCC or comparable
law of any jurisdiction.
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"END DATE": The date upon which both (a) all Liabilities have been paid in full
and (b) all obligations of any Lender to make loans and advances and to provide
other financial accommodations to the Borrowers hereunder shall have been
irrevocably terminated.
"ENVIRONMENTAL LAWS":All of the following:
(a) Applicable Law which regulates or relates to, or imposes any
standard of conduct or liability on account of or in respect to environmental
protection matters, including, without limitation, Hazardous Materials, as are
now or hereafter in effect.
(b) The common law relating to damage to Persons or property from
Hazardous Materials.
"EQUIPMENT": Includes, without limitation, "equipment" as defined in the UCC,
and also all furniture, store fixtures, motor vehicles, rolling stock,
machinery, office equipment, plant equipment, tools, dies, molds, and other
goods, property, and assets which are used and/or were purchased for use in the
operation or furtherance of a Borrower's business, and any and all accessions or
additions thereto, and substitutions therefor.
"ERISA": The Employee Retirement Income Security Act of 1974, as amended.
"ERISA AFFILIATE": Any Person which is under common control with a Borrower
within the meaning of Section 4001 of ERISA or is part of a group which includes
any Borrower and which would be treated as a single employer under Section 414
of the Internal Revenue Code of 1986, as amended.
"EURODOLLAR BUSINESS DAY": Any day which is both a Business Day and a day on
which the principal market in Eurodollars in which Fleet National Bank
participates is open for dealings in United States Dollar deposits.
"EURODOLLAR LOAN": Any Revolving Credit Loan which bears interest at a
Eurodollar Rate.
"EURODOLLAR MARGIN": The then applicable Eurodollar Margin as determined from
the applicable Pricing Grid.
"EURODOLLAR OFFER RATE": That rate of interest (rounded upwards, if necessary,
to the next 1/100 of 1%) determined by the Administrative Agent to be the
highest prevailing rate per annum at which deposits
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on U.S. Dollars are offered to Fleet National Bank, by first-class banks in the
Eurodollar market in which Fleet National Bank participates at or about 10:00AM
(Boston Time) Two (2) Eurodollar Business Days before the first day of the
Interest Period for the subject Eurodollar Loan, for a deposit approximately in
the amount of the subject loan for a period of time approximately equal to such
Interest Period.
"EURODOLLAR RATE": That per annum rate which is the aggregate of the Eurodollar
Offer Rate plus the Eurodollar Margin except that, in the event that the
Administrative Agent determines that any Revolving Credit Lender may be subject
to the Reserve Percentage, the "Eurodollar Rate" shall mean, with respect to any
Eurodollar Loans then outstanding (from the date on which that Reserve
Percentage first became applicable to such loans), and with respect to all
Eurodollar Loans thereafter made, an interest rate per annum equal the sum of
(a) plus (b), where:
(a) is the decimal equivalent of the following fraction:
Eurodollar Offer Rate
--------------------------
1 minus Reserve Percentage
(b) is the applicable Eurodollar Margin.
"EVENTS OF DEFAULT": Is defined in Article. An "Event of Default" shall be
deemed to have occurred and to be continuing unless and until that Event of
Default has been duly waived by the requisite Lenders or by the Administrative
Agent as applicable.
"EXCESS AVAILABILITY": The result, on any day, of
(a) Availability
Minus
(b) All then held checks (if any); accounts payable which are beyond
credit terms then accorded the Borrowers; overdrafts; and any amounts (other
than principal or interest) then chargeable to the Loan Account.
"EXCESS AVAILABILITY BREACH": Excess Availability is less than $5 Million on
each of five consecutive days.
"EXEMPTDDA": A depository account maintained by any Borrower, the only contents
of which may be transfers from the Operating Account and actually used solely
(i) for petty cash purposes; or (ii) for payroll.
"FARM PRODUCTS": Has the meaning given that term in the UCC.
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"FEE LETTER": That letter dated on or about July 31, 2000 and styled "Credit
Facility Fee Letter" between the Lead Borrower, the Term Lender, and the Agent,
as such letter may from time to time be amended.
"FISCAL": When followed by "month" or "quarter", the relevant fiscal period
based on the Borrowers' fiscal year and accounting conventions. When followed by
reference to a specific year, the fiscal year which ends in a month of the year
to which reference is being made (e.g. if the Borrowers' fiscal year ends in
January 2001 reference to that year would be to the Borrowers' "Fiscal 2001").
"FIXTURES": Has the meaning given that term in the UCC.
"FRFI": Fleet Retail Finance Inc.
"GAAP": Principles which are consistent with those promulgated or adopted by the
Financial Accounting Standards Board and its predecessors (or successors) in
effect and applicable to that accounting period in respect of which reference to
GAAP is being made, provided, however, in the event of a Material Accounting
Change, then unless otherwise specifically agreed to by the Administrative
Agent, (a) the Borrowers' compliance with the financial performance covenants
imposed pursuant to Section shall be determined as if such Material Accounting
Change had not taken place and (b) the Lead Borrower shall include, with its
monthly, quarterly, and annual financial statements a schedule, certified by the
Lead Borrower's chief financial officer, on which the effect of such Material
Accounting Change on that statement shall be described.
"GENERAL INTANGIBLES": Includes, without limitation, "general intangibles" as
defined in the UCC; and also all: rights to payment for credit extended;
deposits; amounts due to any Borrower; credit memoranda in favor of any
Borrower; warranty claims; tax refunds and abatements; insurance refunds and
premium rebates; all means and vehicles of investment or hedging, including,
without limitation, options, warrants, and futures contracts; records; customer
lists; telephone numbers; goodwill; causes of action; judgments; payments under
any settlement or other agreement; literary rights; rights to performance;
royalties; license and/or franchise fees; rights of admission; licenses;
franchises; license agreements, including all rights of any Borrower to enforce
same; permits, certificates of convenience and necessity, and similar rights
granted by any governmental authority; patents, patent applications, patents
pending, and other intellectual property; internet addresses and domain names;
developmental ideas and concepts; proprietary processes; blueprints, drawings,
designs, diagrams, plans, reports, and charts; catalogs; manuals; technical
data; computer software programs (including the source and object codes
therefor),
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computer records, computer software, rights of access to computer record service
bureaus, service bureau computer contracts, and computer data; tapes, disks,
semi-conductors chips and printouts; trade secrets rights, copyrights, mask work
rights and interests, and derivative works and interests; user, technical
reference, and other manuals and materials; trade names, trademarks, service
marks, and all goodwill relating thereto; applications for registration of the
foregoing; and all other general intangible property of any Borrower in the
nature of intellectual property; proposals; cost estimates, and reproductions on
paper, or otherwise, of any and all concepts or ideas, and any matter related
to, or connected with, the design, development, manufacture, sale, marketing,
leasing, or use of any or all property produced, sold, or leased, by any or
credit extended or services performed, by any Borrower, whether intended for an
individual customer or the general business of any Borrower, or used or useful
in connection with research by any Borrower.
"GOODS": Has the meaning given that term in the UCC, and also includes all
things movable when a security interest therein attaches and also all computer
programs embedded in goods and any supporting information provided in connection
with a transaction relating to the program if (i) the program is associated with
the goods in such manner that it customarily is considered part of the goods or
(ii) by becoming the owner of the goods, a Person acquires a right to use the
program in connection with the goods.
"HAZARDOUS MATERIALS": Any (a) substance which is defined or regulated as a
hazardous material in or under any Environmental Law and (b) petroleum in any
physical state.
"INDEBTEDNESS": All indebtedness and obligations of or assumed by any Person on
account of or in respect to any of the following:
(a) In respect of money borrowed (including any indebtedness which is
non-recourse to the credit of such Person but which is secured by an Encumbrance
on any asset of such Person) whether or not evidenced by a promissory note,
bond, debenture or other written obligation to pay money.
(b) In connection with any letter of credit or acceptance transaction
(including, without limitation, the face amount of all letters of credit and
acceptances issued for the account of such Person or reimbursement on account of
which such Person would be obligated).
(c) In connection with the sale or discount of accounts receivable or
chattel paper of such Person.
(d) On account of advances.
(e) As lessee under Capital Leases.
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(f) In connection with any sale and leaseback transaction.
"Indebtedness" also includes:
(x) Indebtedness of others secured by an Encumbrance on any asset of
such Person, whether or not such Indebtedness is assumed by such Person.
(y) Any guaranty, endorsement, suretyship or other undertaking pursuant
to which that Person may be liable on account of any obligation of any third
party.
(z) The Indebtedness of a partnership or joint venture for which such
Person is liable as a general partner or joint venturer.
"INDEFAULT": Any occurrence, circumstance, or state of facts with respect to a
Borrower which (a) is an Event of Default; or (b) would become an Event of
Default if any requisite notice were given and/or any requisite period of time
were to run and such occurrence, circumstance, or state of facts were not
absolutely cured within any applicable grace period.
"INDEMNIFIED PERSON": Is defined in Section.
"INSTRUMENTS": Has the meaning given that term in the UCC.
"INTEREST PAYMENT DATE": With reference to:
Each Eurodollar Loan: The last day of the Interest Period relating
thereto (and on the last day of month three for any such loan which has a six
month Interest Period); the Termination Date; and the End Date.
Each Base Margin Loan: The first day of each month; the Termination
Date; and the End Date.
"INTEREST PERIOD": The following:
(a) With respect to each Eurodollar Loan: Subject to Subsection (c),
below, the period commencing on the date of the making or continuation of, or
conversion to, the subject Eurodollar Loan and ending one, two, three, or six
months thereafter, as the Lead Borrower may elect by notice (pursuant to
Section) to the Administrative Agent.
(b) With respect to each Base Margin Loan: Subject to Subsection (c),
below, the period commencing on the date of the making or continuation of or
conversion to such Base Margin Loan and ending on that date (i) as of which the
subject Base Margin Loan is converted to a Eurodollar Loan, as the Lead Borrower
may elect by notice (pursuant to Section ) to the Administrative Agent, or (ii)
on which the subject Base Margin Loan is paid by the Borrowers.
(c) The setting of Interest Periods is in all instances subject to the
following:
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(i) Any Interest Period for a Base Margin Loan which would otherwise end
on a day which is not a Business Day shall be extended to the next succeeding
Business Day.
(ii) Any Interest Period for a Eurodollar Loan which would otherwise end
on a day that is not a Business Day shall be extended to the next succeeding
Business Day, unless that succeeding Business Day is in the next calendar month,
in which event such Interest Period shall end on the last Business Day of the
month during which the Interest Period ends.
(iii) Subject to Subsection (iv), below, any Interest Period applicable
to a Eurodollar Loan, which Interest Period begins on a day for which there is
no numerically corresponding day in the calendar month during which such
Interest Period ends, shall end on the last Business Day of the month during
which that Interest Period ends.
(iv) Any Interest Period which would otherwise end after the Termination
Date shall end on the Termination Date.
(v) The number of Interest Periods in effect at any one time is subject
to Section hereof.
"INVENTORY": Includes, without limitation, "inventory" as defined in the UCC and
also all: (a) Goods which are leased by a Person as lessor; are held by a Person
for sale or lease or to be furnished under a contract of service; are furnished
by a Person under a contract of service; or consist of raw materials, work in
process, or materials used or consumed in a business; (b) Goods of said
description in transit; (c) Goods of said description which all returned,
repossessed and rejected; (d) packaging, advertising, and shipping materials
related to any of the foregoing; (e) all names, marks, and General Intangibles
affixed or to be affixed or associated thereto; and (f) Documents and Documents
of Title which represent any of the foregoing.
"INVENTORY ADVANCE RATE": The following percentage during the period indicated:
<TABLE>
<CAPTION>
----------------------- ------------------------ ------------------------------
FROM TO ADVANCE RATE
----------------------- ------------------------ ------------------------------
<S> <C> <C>
December 15 August 15 75%
----------------------- ------------------------ ------------------------------
August 16 December 14 78%
----------------------- ------------------------ ------------------------------
</TABLE>
"INVENTORY EXPOSURE": The result of the following:
(a) The unpaid principal balance of the Revolving Credit Facility.
Plus
(b) The unpaid principal balance of the Term Loan.
Plus
(c) Accrued and unpaid PIK Interest as to which the pay option provided in
Section
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had been exercised.
Plus
(d) The aggregate of Availability Reserves
Plus
(e) The aggregate stated amount of all L/C's.
Minus
(f) The aggregate of all components of "Availability" other than those
determined by reference to Eligible Inventory, Eligible In-Transit Inventory,
and Eligible Non-US/Canadian Inventory.
"INVENTORY RESERVES": Such Reserves as may be established from time to time by
the Administrative Agent in the Administrative Agent's discretion with respect
to the determination of the saleability, at retail, of the Eligible Inventory or
which reflect such other factors as affect the market value of the Eligible
Inventory. Without limiting the generality of the foregoing, Inventory Reserves
may include (but are not limited to) reserves based on the following:
(i) Obsolescence (based upon Inventory on hand beyond a given
number of days).
(ii) Seasonality.
(iii) Shrinkage.
(iv) Imbalance.
(v) Change in Inventory character.
(vi) Change in Inventory composition.
(vii) Change in Inventory mix.
(viii) Markdowns (both permanent and point of sale).
(ix) Retail markons and markups inconsistent with prior period
practice and performance; industry standards; current
business plans; or advertising calendar and planned
advertising events.
"INVESTMENT PROPERTY": Has the meaning given that term in the UCC.
"ISSUER": The issuer of any L/C.
"L/C": Any letter of credit, the issuance of which is procured by the
Administrative Agent for the account of any Borrower and any acceptance made on
account of such letter of credit.
"L/C LANDING COSTS": To the extent not included in the Stated Amount of an L/C,
customs, duty, freight,
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and other out-of-pocket costs and expenses which will be expended to "land" the
Inventory, the purchase of which is supported by such L/C.
"LEASE": Any lease or other agreement, no matter how styled or structured,
pursuant to which a Borrower is entitled to the use or occupancy of any space.
"LEASEHOLD INTEREST": Any interest of a Borrower as lessee under any Lease.
"LENDER": Collectively and each individually, each Revolving Credit Lender and
the Term Lender.
"LENDERS' SPECIAL COUNSEL": A single counsel, selected by the Majority Lenders
following the occurrence of an Event of Default, to represent the interests of
the Lenders in connection with the enforcement, attempted enforcement, or
preservation of any rights and remedies under this, or any other Loan Document,
as well as in connection with any "workout", forbearance, or restructuring of
the credit facility contemplated hereby.
"LETTER-OF-CREDIT RIGHT": Has the meaning given that term in UCC 9'99 and also
refers to any right to payment or performance under an L/C, whether or not the
beneficiary has demanded or is at the time entitled to demand payment or
performance.
"LIABILITIES": Includes, without limitation, the following:
(a) All and each of the following, whether now existing or hereafter
arising under this Agreement or under any of the other Loan Documents:
(i) Any and all direct and indirect liabilities, debts, and
obligations of each Borrower to any Agent or any Lender, each of every
kind, nature, and description.
(ii) Each obligation to repay any loan, advance, indebtedness,
note, obligation, overdraft, or amount now or hereafter owing by any
Borrower to any Agent or any Lender (including all future advances
whether or not made pursuant to a commitment by any Agent or any
Lender), whether or not any of such are liquidated, unliquidated,
primary, secondary, secured, unsecured, direct, indirect, absolute,
contingent, or of any other type, nature, or description, or by reason
of any cause of action which any Agent or any Lender may hold against
any Borrower.
(iii) All notes and other obligations of each Borrower now or
hereafter assigned to or held by any Agent or any Lender, each of every
kind, nature, and description.
(iv) All interest, fees, and charges and other amounts which may
be charged by any Agent or
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any Lender to any Borrower and/or which may be due from any Borrower to any
Agent or any Lender from time to time.
(v) All costs and expenses incurred or paid by any Agent or any Lender
in respect of any agreement between any Borrower and any Agent or any Lender or
instrument furnished by any Borrower to any Agent or any Lender (including,
without limitation, Costs of Collection, attorneys' reasonable fees, and all
court and litigation costs and expenses).
(vi) Any and all covenants of each Borrower to or with any Agent or any
Lender and any and all obligations of each Borrower to act or to refrain from
acting in accordance with any agreement between that Borrower and any Agent or
any Lender or instrument furnished by that Borrower to any Agent or any Lender.
(vii) Each of the foregoing as if each reference to the "any Agent or
any Lender" were to each Affiliate of the Administrative Agent.
(b) Any and all direct or indirect liabilities, debts, and obligations
of each Borrower to any Agent or any Affiliate of any Agent, each of every kind,
nature, and description owing on account of any service or accommodation
provided to, or for the account of any Borrower pursuant to this or any other
Loan Document, including cash management services and the issuances of L/C's.
"LICENSING BORROWERS": Gymboree Play Programs, Inc.
"LIQUIDATION": The exercise, by the Collateral Agent, of those rights accorded
to the Collateral Agent under the Loan Documents as a creditor of the Borrowers
following and on account of the occurrence of an Event of Default looking
towards the realization on the Collateral. Derivations of the word "Liquidation"
(such as "Liquidate") are used with like meaning in this Agreement.
"LOAN ACCOUNT": Is defined in Section.
"LOAN COMMITMENT": With respect to each Revolving Credit Lender, that respective
Revolving Credit Lender's Revolving Credit Dollar Commitment. With respect to
the Term Lender, the then unpaid principal balance of the Term Loan.
"LOAN DOCUMENTS": This Agreement, each instrument and document executed and/or
delivered as contemplated by Article , below, and each other instrument or
document from time to time executed and/or delivered in connection with the
arrangements or transactions contemplated hereby, including, without limitation,
any transaction which arises out of any cash management, depository, investment,
letter of
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credit, interest rate protection, or equipment leasing services provided by the
Administrative Agent or the Collateral Agent or any Affiliate of the
Administrative Agent or the Collateral Agent, as each may be amended from time
to time.
"MAJORITY LENDERS": Lenders (other than Delinquent Revolving Credit Lenders)
holding 51% or more of the Loan Commitments (other than any Loan Commitments
held by Delinquent Revolving Credit Lenders).
"MATERIAL ACCOUNTING CHANGE": Any change in GAAP applicable to accounting
periods subsequent to the Borrowers' fiscal year most recently completed prior
to the execution of this Agreement, which change has a material effect on the
Borrowers' Consolidated financial condition or operating results, as reflected
on financial statements and reports prepared by or for the Borrowers, when
compared with such condition or results as if such change had not taken place or
where preparation of the Borrowers' statements and reports in compliance with
such change results in the breach of a financial performance covenant imposed
pursuant to Section where such a breach would not have occurred if such change
had not taken place or visa versa.
"MATURITY DATE": September 30, 2003.
"NOMINEE": A business entity (such as a corporation or limited partnership)
formed by the Collateral Agent to own or manage any Post Foreclosure Asset.
"OPERATING ACCOUNT": Is defined in Section.
"OVERLOAN": A loan, advance, or providing of credit support (such as the
issuance of any L/C) to the extent that, immediately after its having been made,
Availability is less than zero.
"PARTICIPANT":Is defined in Section , hereof.
"PAYMENT INTANGIBLE": Has the meaning given that term in UCC 9'99 and also
refers to any general intangible under which the Account Debtor's primary
obligation is a monetary obligation.
"PERMISSIBLE OVERLOANS": Revolving Credit Loans which are OverLoans, but as to
which each of the following conditions is satisfied: (a) the Revolving Credit
Ceiling is not exceeded; and (b) when
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aggregated with all other Permissible OverLoans, such Revolving Credit Loans do
not aggregate more than 10% of the aggregate of the Borrowing Base.
"PERMITTED ENCUMBRANCES": The following:
(a) Encumbrances in favor of the Collateral Agent.
(b) Encumbrances listed on EXHIBIT , annexed hereto.
(c) Liens securing the payment of taxes, either not yet overdue or the
validity of which are being contested in good faith by appropriate proceedings
and provided that no lien has been filed in respect thereof.
(d) Non-consensual statutory liens (other than liens securing the
payment of taxes) arising in the ordinary course of a Borrowers' business to the
extent: such liens secure obligations which are not overdue or such liens secure
obligations relating to claims or liabilities which are fully insured (subject
to commercially reasonable deductibles) and being defended at the sole cost and
expense and at the sole risk of the insurer or are being contested in good faith
by appropriate proceedings diligently pursued and available to a Borrower, in
each instance prior to the commencement of foreclosure or other similar
proceedings and with respect to which adequate reserves have been set aside on
the Borrowers' books.
(e) Carriers', warehousemen's, mechanics, repairmen's or similar liens
incurred in the ordinary course of business.
(f) Purchase money security interests in equipment securing not in
excess of $10 Million unpaid principal balance outstanding at any one time on
account of the purchase of new equipment.
(g) Zoning restrictions, easements, licenses, covenants and other
restrictions affecting the use of real property.
(h) Deposits under workmen's compensation, unemployment insurance and
social security laws, or to secure the performance of bids, tenders, contracts
(other than for the repayment of borrowed money) or leases, or to secure
statutory obligations or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds arising in the ordinary course of business.
(i) Landlord's liens by operation of law where waivers thereof have not
been obtained.
(j) Interests of lessors under Capital Leases.
(k) Liens consisting of security deposits made by a Borrower.
The inclusion of any of the foregoing as a "Permitted Encumbrance" does not
affect its relative priority vis a vis any Collateral Interest created by a
Borrower in favor of the Collateral Agent.
"PERMITTED INDEBTEDNESS": Indebtedness consisting of any of the following:
(a) Indebtedness subordinated to the Liabilities in a manner reasonably
satisfactory to the
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Administrative Agent.
(b) Indebtedness on account of the acquisition of Equipment (provided
however, the Borrowers may not create purchase money security interests in
equipment securing in excess of $10 Million unpaid principal balance outstanding
at any one time on account of the purchase of new equipment).
(c) Indebtedness under Capital Leases not otherwise prohibited by this
Agreement.
"PERSON": Any natural person, and any corporation, limited liability company,
trust, partnership, joint venture, or other enterprise or entity.
"PIK INTEREST": Defined in Section.
"POST FORECLOSURE ASSET": All or any part of the Collateral, ownership of which
is acquired by the Collateral Agent or a Nominee on account of the "bidding in"
at a disposition as part of a Liquidation or by reason of a "deed in lieu" type
of transaction.
"PRICING GRIDS" Set out in Sections.
"PROCEEDS": Includes, without limitation, "Proceeds" as defined in the UCC and
each type of property described in Section hereof.
"PROTECTIVE ADVANCES": The aggregate of Revolving Credit Loans and expenditures
and incurrences of obligations by the Agents respectively which are made or
undertaken in the Agents' reasonable discretion to: protect or preserve the
Collateral Interests which secure the Liabilities and the Agents' rights upon
default or otherwise or which the Agents determine in their reasonable
discretion, are appropriate to facilitate a Liquidation, provided, however,
"Protective Advances" shall not exceed $3.5 Million in the aggregate at any one
time outstanding.
"RECEIPTS": All cash, cash equivalents, money, checks, credit card slips,
receipts and other Proceeds from any sale of the Collateral.
"RECEIVABLES COLLATERAL": That portion of the Collateral which consists of
Accounts, Accounts Receivable, General Intangibles, Chattel Paper, Instruments,
Documents of Title, Documents, Investment Property, Payment Intangibles,
Letter-of-Credit Rights, bankers' acceptances, and all other rights to
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payment.
"REGISTER": Is defined in Section.
"REQUIREMENTS OF LAW": As to any Person:
(a) Applicable Law.
(b) That Person's organizational documents.
(c) That Person's by-laws and/or other instruments which deal with
corporate or similar governance, as applicable.
"RESERVE PERCENTAGE": The decimal equivalent of that rate applicable to the
Lender under regulations issued from time to time by the Board of Governors of
the Federal Reserve System for determining the maximum reserve requirement of
Lender with respect to "Eurocurrency liabilities" as defined in such
regulations. The Reserve Percentage applicable to a particular Eurodollar Loan
shall be based upon that in effect during the subject Interest Period, with
changes in the Reserve Percentage which take effect during such Interest Period
to take effect (and to consequently change any interest rate determined with
reference to the Reserve Percentage) if and when such change is applicable to
such loans.
"RESERVES": The following: Availability Reserves, Inventory Reserves, and the
BaseLine Covenant Reserve.
"RETAIL": The lower of
(a) The Cost of Inventory divided by the Cost Factor (except that, for
purposes of the determination of "Availability", the Cost of Inventory shall be
the Cost of Eligible Inventory); or
(b) the lowest ticketed or promoted price at which the subject inventory
is offered to the public, after all mark-downs (whether or not such price is
then reflected on the Borrowers' accounting system).
"REVOLVING CREDIT": Is defined in Section.
"REVOLVING CREDIT CEILING": $75,000,000.00, subject to a one time reduction as
provided in Section.
"REVOLVING CREDIT DEBT": At any time, the lesser of (a) or (b), where
(a) is $100,000,000.00.
(b) is Indebtedness of the Borrowers on account of loans and advances
under the Revolving
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<PAGE> 32
Credit which Indebtedness, when incurred or when Acceleration takes place, is
within amounts available to be borrowed under the Revolving Credit or
constitutes Permissible OverLoans, as reflected on the Borrowing Base
Certificate (if any) in reliance on which the subject loan or advance was made,
it being understood that, (i) in the absence of manifest computational error by
the Lead Borrower, the Administrative Agent may rely on, and Term Lender shall
be bound by, the determination of such availability as reflected on such
Borrowing Base Certificate, and (ii) the status of indebtedness as "Revolving
Credit Debt" is determined without regard to any subsequent declination in the
appraised value of the Inventory or other assets on which such availability had
been so determined, and (iii) the occurrence of a BaseLine Covenant Breach, in
and of itself, shall not affect the status of indebtedness as "Revolving Credit
Debt". (For purposes of the determination of whether a loan or advance to cover
the honoring of a L/C constitutes "Revolving Credit Debt", the date of issuance
of the subject L/C shall constitute the date on which the subject indebtedness
was incurred).
"REVOLVING CREDIT DOLLAR COMMITMENT": As set forth on EXHIBIT , annexed hereto
(as such amounts may change in accordance with the provisions of this
Agreement).
"REVOLVING CREDIT EARLY TERMINATION FEE": Is defined in Section.
"REVOLVING CREDIT FEES": The Unused Line Fee, Revolving Credit Early Termination
Fee, fees for L/C's which are specifically for the account of the Revolving
Credit Lenders and all other fees (such as a fee (if any) on account of the
execution of an amendment of a Loan Document) payable by any Borrower in respect
of the Revolving Credit other than any amount payable to an Agent as
reimbursement for any cost or expense incurred by that Agent on account of the
discharge of that Agent's duties under the Loan Documents.
"REVOLVING CREDIT LENDERS": Each Revolving Credit Lender to which reference is
made in the Preamble of this Agreement and any other Person who becomes a
"Revolving Credit Lender" in accordance with the provisions of to this
Agreement.
"REVOLVING CREDIT LOANS": Loans made under the Revolving Credit, except that
where the term "Revolving Credit Loan" is used with reference to available
interest rates applicable to the loans under the Revolving Credit, it refers to
so much of the unpaid principal balance of the Loan Account as bears the same
rate of interest for the same Interest Period. (See Section ).
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<PAGE> 33
"REVOLVING CREDIT NOTE": Is defined in Section.
"REVOLVING CREDIT OBLIGATIONS": The aggregate of the Borrowers' liabilities,
obligations, and indebtedness of any character on account of or in respect to
the Revolving Credit.
"REVOLVING CREDIT PERCENTAGE COMMITMENT": As set forth on EXHIBIT , annexed
hereto (as such amounts may change in accordance with the provisions of this
Agreement).
"ROLLING 12 MONTH LICENSING REVENUE": The aggregate of licensing revenues
actually received and collected by any Licensing Borrower during the 12 month
period ending with the most recent month for which the Administrative Agent has
received the Borrowers' monthly financial reports required to be provided
pursuant to Section , net of the aggregate of such revenues which any Licensing
Borrower has refunded or disgorged or otherwise returned to any third party.
"SEC": The Securities and Exchange Commission.
"STANDSTILL PERIOD": A period consisting of the following number of days, which
period is initiated by written notice by the Term Lender to the Administrative
Agent in accordance with Section :
<TABLE>
<CAPTION>
--------------------------------- ----------------------------------------------
<S> <C>
Period Initiated In Respect of Standstill Period
--------------------------------- ----------------------------------------------
BaseLine Covenant Breach 15 Days
--------------------------------- ----------------------------------------------
Term Loan Payment Breach 15 Days
--------------------------------- ----------------------------------------------
Excess Availability Breach 45 Days
--------------------------------- ----------------------------------------------
</TABLE>
"STATED AMOUNT": The maximum amount for which an L/C may be honored.
"STORE": A place at which a Borrower offers its Inventory for sale to the
public.
"SUBSIDIARY": Any entity, 100% of the capital stock or share capital of which is
directly or indirectly owned, beneficially and of record, by the Lead Borrower.
"SUPERMAJORITY LENDERS": Lenders (other than Delinquent Revolving Credit
Lenders) holding 66-2/3% or more the Loan Commitments (other than Loan
Commitments held by a Delinquent Revolving
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<PAGE> 34
Credit Lender).
"SUPPORTING OBLIGATION": Has the meaning given that term in UCC 9'98 and also
refers to a Letter-of-Credit Right or secondary obligation which supports the
payment or performance of an Account, Chattel Paper, a Document, a General
Intangible, an Instrument, or Investment Property.
"SWINGLINE": The facility pursuant to which the SwingLine Lender may advance
Revolving Credit Loans aggregating up to the SwingLine Loan Ceiling.
"SWINGLINE LENDER": FRFI.
"SWINGLINE LOAN CEILING": $20,000,000.00 (subject to increase as provided in
Section ).
"SWINGLINE LOANS": Defined in Section.
"TERM LOAN INTEREST PAYMENT DATE": Defined in Section.
"TERM LOAN INTEREST RATE": Defined in Section.
"TERM LENDER":Defined in the Preamble.
"TERM LOAN": Defined in Section.
"TERM LOAN ACTION EVENT": The occurrence of a BaseLine Covenant Breach, Excess
Availability Breach, or Term Loan Payment Breach.
"TERM LOAN COMMITMENT FEE": Described in Section.
"TERM LOAN DEBT PAYMENT": Any payment of principal, interest (whether payable in
cash or otherwise), fees, premium, or otherwise on account of Term Loan Debt.
"TERM LOAN FEES": Any fee payable to the Term Lender as provided in the Fee
Letter and all other fees (such as a fee (if any) on account of the execution of
an amendment of any Loan Document) payable by any Borrower in respect of the
Term Loan other than any amount payable to an Agent as
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<PAGE> 35
reimbursement for any cost or expense incurred by that Agent on account of the
discharge of that Agent's duties under the Loan Documents.
"TERM LOAN OBLIGATIONS": The aggregate of the Borrowers' liabilities,
obligations, and indebtedness of any character to Term Lender under the Loan
Documents.
"TERM LOAN PAYMENT BREACH": The failure by the Borrowers to have made any
payment on account of the Term Loan Debt or Term Loan Fees prior to expiry of
any grace period applicable to such payment.
"TERM LOAN PRIORITY COLLATERAL": Collateral consisting of Equipment; trademarks;
and all assets (other than any Inventory) and capital stock of each Licensing
Borrower.
"TERM NOTE": Defined in Section.
"TERMINATION DATE": The earliest of (a) the Maturity Date; or (b) the occurrence
of any event described in Section , below; or (c) the Administrative Agent's
notice to the Lead Borrower setting the Termination Date on account of the
occurrence of any Event of Default other than as described in Section , below;
or (d) that date, ninety (90) days irrevocable written notice of which is
provided by the Lead Borrower to the Administrative Agent.
"TRANSFER": Wire transfer pursuant to the wire transfer system maintained by the
Board of Governors of the Federal Reserve Board, or as otherwise may be agreed
to from time to time by the Administrative Agent making such Transfer and the
subject Revolving Credit Lender. Wire instructions may be changed in the same
manner that Notice Addresses may be changed (Section ), except that no change of
the wire instructions for Transfers to any Revolving Credit Lender shall be
effective without the consent of the Administrative Agent.
"UCC": The Uniform Commercial Code as in effect from time to time in
Massachusetts.
"UCC9'99": The Uniform Commercial Code, Article 9, 1999 Official Text, except
that following the effectiveness, in Massachusetts, of the revision of Article 9
of the Uniform Commercial Code contemplated by UCC9'99 (with such nonuniform
variations as may be adopted as part of the enactment of that revision), each
reference to "UCC9'99" shall be to the UCC.
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<PAGE> 36
"UNANIMOUS CONSENT": Consent of Lenders (other than Delinquent Revolving Credit
Lenders) holding 100% or more the Loan Commitments (other than Loan Commitments
held by a Delinquent Revolving Credit Lender).
"UNUSED LINE FEE": Is defined in Section.
"YEAR 2000 COMPLIANT": Computer applications, imbedded microchips, and other
systems and subsystems which properly recognize and perform their intended
function without any adverse effect on account of their respective inability to
recognize certain dates prior to, on, and after December 31, 1999 or on account
of their treating any date prior to, on, or after December 31, 1999 other than
as the specific date in question.
1: ARTICLE - THE REVOLVING CREDIT:
2:1 ESTABLISHMENT OF REVOLVING CREDIT
(a) The Revolving Credit Lenders hereby establish a revolving line of credit
(the "REVOLVING CREDIT") in the Borrowers' favor pursuant to which each
Revolving Credit Lender, subject to, and in accordance with, this Agreement,
acting through the Administrative Agent, shall make loans and advances and
otherwise provide financial accommodations to and for the account of the
Borrowers as provided herein.
(b) Loans, advances, and financial accommodations under the Revolving Credit
shall be made with reference to the Borrowing Base and shall be subject to
Availability. The Borrowing Base and Availability shall be determined by the
Administrative Agent by reference to Borrowing Base Certificates furnished as
provided in Section , below, and shall be subject to the following:
(i) Such determination shall take into account those Reserves as the
Administrative Agent reasonably may determine as being applicable
thereto.
(ii) The Cost of Eligible Inventory will be determined in a manner
consistent with current tracking practices, based on the Borrowers'
stock ledger inventory.
(c) The commitment of each Revolving Credit Lender to provide such loans,
advances, and financial accommodations is subject to Section.
(d) The proceeds of borrowings under the Revolving Credit shall be used solely
to retire the Borrower's working capital facility in effect at the execution of
this Agreement and thereafter in accordance with the Business Plan for the
Borrowers' working capital and capital expenditures needs and the issuance
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<PAGE> 37
of L/C's for the account of the Borrowers, all solely to the extent permitted by
this Agreement. No proceeds of a borrowing under the Revolving Credit may be
used, nor shall any be requested, with a view towards the accumulation of any
general fund or funded reserve of the Borrowers other than in the ordinary
course of the Borrowers' business and consistent with the provisions of this
Agreement.
2:2 ADVANCES IN EXCESS OF BORROWING BASE (OVERLOANS).
(a) No Revolving Credit Lender has any obligation to make any loan or advance,
or otherwise to provide any credit to or for the benefit of the Borrowers where
the result of such loan, advance, or credit is an OverLoan.
(b) The Revolving Credit Lenders' obligations, among themselves, are subject to
Section (which relates to each Revolving Credit Lender's making amounts
available to the Administrative Agent) and to Section (which relates to
Permissible OverLoans).
(c) The Revolving Credit Lenders' providing of an OverLoan on any one occasion
does not affect the obligations of each Borrower hereunder (including each
Borrower's obligation to immediately repay any amount which otherwise
constitutes an OverLoan) nor obligate the Revolving Credit Lenders to do so on
any other occasion.
2:3 RISKS OF VALUE OF COLLATERAL. The Administrative Agent's reference to a
given asset in connection with the making of loans, credits, and advances and
the providing of financial accommodations under the Revolving Credit and/or the
monitoring of compliance with the provisions hereof shall not be deemed a
determination by the Administrative Agent or any Revolving Credit Lender
relative to the actual value of the asset in question. All risks concerning the
value of the Collateral are and remain upon the Borrowers. All Collateral
secures the prompt, punctual, and faithful performance of the Liabilities
whether or not relied upon by the Administrative Agent in connection with the
making of loans, credits, and advances and the providing of financial
accommodations under the Revolving Credit.
2:4 COMMITMENT TO MAKE REVOLVING CREDIT LOANS AND SUPPORT LETTERS OF CREDIT.
Subject to the provisions of this Agreement, the Lenders shall make a loan or
advance under the Revolving Credit and the Administrative Agent shall cause an
L/C issued for the account of the Lead Borrower, in each instance if duly and
timely requested by the Lead Borrower as provided herein provided that:
(a) Borrowing Base will not be exceeded.
(b) The amount of the loan or advance or L/C so requested does not exceed
Availability.
(c) No Borrower is then InDefault.
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<PAGE> 38
2:5 REVOLVING CREDIT LOAN REQUESTS.
(a) Requests for loans and advances under the Revolving Credit or for the
continuance or conversion of an interest rate applicable to a Revolving Credit
Loan may be requested by the Lead Borrower in such manner as may from time to
time be acceptable to the Administrative Agent.
(b) Subject to the provisions of this Agreement, the Lead Borrower may request a
Revolving Credit Loan and elect an interest rate and Interest Period to be
applicable to that Revolving Credit Loan by giving notice to the Administrative
Agent by no later than the following:
(i) If such Revolving Credit Loan is to be or is to be converted to a
Base Margin Loan: By 2:30PM on the Business Day on which the subject
Revolving Credit Loan is to be made or is to be so converted. Base
Margin Loans requested by the Lead Borrower, other than those resulting
from the conversion of a Eurodollar Loan, shall not be less than
$10,000.00.
(ii) If such Revolving Credit Loan is to be, or is to be continued as,
or converted to, a Eurodollar Loan: By 1:00PM Three (3) Eurodollar
Business Days before the commencement of any new Interest Period or the
end of the then applicable Interest Period. Eurodollar Loans and
conversions to Eurodollar Loans shall each be not less than
$1,000,000.00 and in increments of $250,000.00 in excess of such
minimum.
(iii) Any Eurodollar Loan which matures while any Borrower is InDefault
shall be converted, at the option of the Administrative Agent, to a Base
Margin Loan notwithstanding any notice from the Lead Borrower that such
Loan is to be continued as a Eurodollar Loan.
(c) Any request for a Revolving Credit Loan or for the continuance or conversion
of an interest rate applicable to a Revolving Credit Loan which is made after
the applicable deadline therefor, as set forth above, shall be deemed to have
been made at the opening of business on the then next Business Day or Eurodollar
Business Day, as applicable.
(d) The Lead Borrower may request that the Administrative Agent cause the
issuance by the Issuer of L/C's for the account of the Borrowers as provided in
Section.
(e) The Administrative Agent may rely on any request for a loan or advance, or
other financial accommodation under the Revolving Credit which the
Administrative Agent, in good faith, believes to have been made by a Person duly
authorized to act on behalf of the Lead Borrower and may decline to make any
such requested loan or advance, or issuance, or to provide any such financial
accommodation pending the Administrative Agent's being furnished with such
documentation concerning that Person's authority to act as may be satisfactory
to the Administrative Agent.
(f) A request by the Lead Borrower for a loan or advance, or other financial
accommodation under the Revolving Credit shall be irrevocable and shall
constitute certification by each Borrower that as
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<PAGE> 39
of the date of such request, each of the following is true and correct:
(i) There has been no material adverse change in the Borrowers'
financial condition from the most recent financial information furnished
Administrative Agent or any Lender pursuant to this Agreement.
(ii) All or a portion of any loan or advance so requested will be set
aside by the Borrowers to cover the Borrowers' obligations for sales tax
on account of sales since the then most recent borrowing pursuant to the
Revolving Credit.
(iii) Each representation which is made herein or in any of the Loan
Documents is then true and complete as of and as if made on the date of
such request.
(iv) No Borrower is, or by reason of the making of the requested loan or
advance will be, InDefault.
(g) If, at any time or from time to time, any Borrower is InDefault:
(i) The Administrative Agent may suspend the Revolving Credit
immediately.
(ii) Neither the Administrative Agent nor any Revolving Credit Lender
shall be obligated, during such suspension, to make any loans or
advance, or to provide any financial accommodation hereunder or to seek
the issuance of any L/C.
(iii) The Administrative Agent may suspend the right of the Lead
Borrower to request any Eurodollar Loan or to convert any Base Margin
Loan to a Eurodollar Loan.
1:1 MAKING OF REVOLVING CREDIT LOANS.
(a) A loan or advance under the Revolving Credit shall be made by the transfer
of the proceeds of such loan or advance to the Operating Account or as otherwise
instructed by the Lead Borrower.
(b) A loan or advance shall be deemed to have been made under the Revolving
Credit (and the Borrowers shall be indebted to the Administrative Agent and the
Revolving Credit Lenders for the amount thereof immediately) at the following:
(i) The Administrative Agent's initiation of the transfer of the
proceeds of such loan or advance in accordance with the Lead Borrower's
instructions (if such loan or advance is of funds requested by the Lead
Borrower).
(ii) The charging of the amount of such loan to the Loan Account (in all
other circumstances).
(c) There shall not be any recourse to or liability of the Administrative Agent,
on account of any of the following which is beyond the reasonable control of the
Administrative Agent:
(i) Any delay in the making of any loan or advance requested under the
Revolving Credit.
(ii) Any delay by any bank or other depository institution in treating
the proceeds of any such
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loan or advance as collected funds.
(iii) Any delay in the receipt, and/or any loss, of funds which
constitute a loan or advance under the Revolving Credit, the wire
transfer of which was properly initiated by the Administrative Agent in
accordance with wire instructions provided to the Administrative Agent
by the Lead Borrower.
1:1 SWINGLINE LOANS.
(a) For ease of administration, Base Margin Loans may be made by the SwingLine
Lender (in the aggregate, the "SWINGLINE LOANS") in accordance with the
procedures set forth in this Agreement for the making of loans and advances
under the Revolving Credit. The unpaid principal balance of the SwingLine Loans
shall not at any one time be in excess of the SwingLine Loan Ceiling.
(b) The aggregate unpaid principal balance of SwingLine Loans shall bear
interest at the rate applicable to Base Margin Loans and shall be repayable as a
loan under the Revolving Credit.
(c) The Borrowers' obligation to repay SwingLine Loans shall be evidenced by a
Note in the form of EXHIBIT , annexed hereto, executed by the Borrowers, and
payable to the SwingLine Lender. Neither the original nor a copy of that Note
shall be required, however, to establish or prove any Liability. The Borrowers
shall execute a replacement of any SwingLine Note which has been lost,
mutilated, or destroyed thereof and deliver such replacement to the SwingLine
Lender.
(d) For all purposes of this Loan Agreement, the SwingLine Loans and the
Borrowers' obligations to the SwingLine Lender constitute Revolving Credit Loans
and are secured as "Liabilities".
(e) SwingLine Loans may be subject to periodic settlement with the Revolving
Credit Lenders as provided in this Agreement.
1:2 THE LOAN ACCOUNT.
(a) An account ("LOAN ACCOUNT") shall be opened on the books of the
Administrative Agent in which a record shall be kept of all loans and advances
made under the Revolving Credit.
(b) The Administrative Agent shall also keep a record (either in the Loan
Account or elsewhere, as the Administrative Agent may from time to time elect)
of all interest, fees, service charges, costs, expenses, and other debits owed
to the Administrative Agent and each Revolving Credit Lender on account of the
Liabilities and of all credits against such amounts so owed.
(c) All credits against the Liabilities shall be conditional upon final payment
to the Administrative Agent for the account of each Lender of the items giving
rise to such credits. The amount of any item credited against the Liabilities
which is charged back against the Administrative Agent or any Revolving Credit
Lender for any reason or is not so paid shall be a Liability and shall be added
to the Loan
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<PAGE> 41
Account, whether or not the item so charged back or not so paid is returned.
(d) Except as otherwise provided herein, all fees, service charges, costs, and
expenses for which any Borrower is obligated hereunder are payable on demand. In
the determination of Availability, the Administrative Agent may deem fees,
service charges, accrued interest, and other payments which will be due and
payable between the date of such determination and the first day of the then
next succeeding month as having been advanced under the Revolving Credit whether
or not such amounts are then due and payable.
(e) The Administrative Agent, without the request of the Lead Borrower, may
advance under the Revolving Credit any interest, fee, service charge, or other
payment to which any Agent or any Revolving Credit Lender is entitled from any
Borrower pursuant hereto and may charge the same to the Loan Account
notwithstanding that such amount so advanced may result in Availability's being
exceeded. Such action on the part of the Administrative Agent shall not
constitute a waiver of the Administrative Agent's rights and each Borrower's
obligations under Section. Any amount which is added to the principal balance
of the Loan Account as provided in this Section shall bear interest at the
interest rate then and thereafter applicable to Base Margin Loans.
(f) Any statement rendered by the Administrative Agent or any Revolving Credit
Lender to the Lead Borrower concerning the Liabilities shall be considered
correct and accepted by each Borrower and shall be conclusively binding upon
each Borrower unless the Lead Borrower provides the Administrative Agent with
written objection thereto within twenty (20) days from the mailing of such
statement, which written objection shall indicate, with particularity, the
reason for such objection. The Loan Account and the Administrative Agent's books
and records concerning the loan arrangement contemplated herein and the
Liabilities shall be prima facie evidence and proof of the items described
therein.
1:3 THE REVOLVING CREDIT NOTES. The Borrowers' obligation to repay loans and
advances under the Revolving Credit, with interest as provided herein, shall be
evidenced by Notes (each, a "REVOLVING CREDIT NOTE") in the form of EXHIBIT ,
annexed hereto, executed by each Borrower, one payable to each Revolving Credit
Lender. Each of the Borrowers shall be bound by, and obligated on account of any
increase in the amount of any Revolving Credit Lender's Revolving Credit Dollar
Commitment notwithstanding that such increase may not reflected be on the
Revolving Credit Note held by that Revolving Credit Lender. Neither the original
nor a copy of any Revolving Credit Note shall be required, however, to establish
or prove any Liability. In the event that any Revolving Credit Note is ever
lost, mutilated, or destroyed, each Borrower shall execute a replacement thereof
and deliver such replacement to the Administrative Agent.
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1:4 PAYMENT OF THE LOAN ACCOUNT.
(a) The Borrowers may
(i) Repay all or any portion of the principal balance of the Loan
Account from time to time until the Termination Date; and
(ii) Cause the reduction of the Revolving Credit Ceiling by not less
than $10,000,000.00 at the instance of the Lead Borrower on not less
thirty (30) days irrevocable prior written notice by the Lead Borrower
to the Collateral Agent, it being understood that the Lead Borrower's
option to so reduce the Revolving Credit Ceiling may be exercised once,
only.
(b) The Borrowers, without notice or demand from the Administrative Agent or any
Revolving Credit Lender, shall pay the Administrative Agent that amount, from
time to time, which is necessary so that there is no OverLoan outstanding.
(c) The Borrowers shall repay the then entire unpaid balance of the Loan Account
and all other Liabilities on the Termination Date.
(d) The Administrative Agent shall endeavor to cause the application of payments
(if any), pursuant to Sections and against Eurodollar Loans then outstanding in
such manner as results in the least cost to the Borrowers, but shall not have
any affirmative obligation to do so nor liability on account of the
Administrative Agent's failure to have done so. In no event shall action or
inaction taken by the Administrative Agent excuse any Borrower from any
indemnification obligation under Section.
(e) The Borrowers shall indemnify the Administrative Agent and each Revolving
Credit Lender and hold the Administrative Agent and each Revolving Credit Lender
harmless from and against any loss, cost or expense (including loss of
anticipated profits and amounts payable by the Administrative Agent or such
Revolving Credit Lender on account of "breakage fees" (so-called)) which the
Administrative Agent or such Revolving Credit Lender may sustain or incur
(including, without limitation, by virtue of acceleration after the occurrence
of any Event of Default) as a consequence of the following:
(i) Default by any Borrower in payment of the principal amount of or any
interest on any Eurodollar Loan as and when due and payable, including
any such loss or expense arising from interest or fees payable by such
Revolving Credit Lender the Lender in order to maintain its Eurodollar
Loans.
(ii) Default by any Borrower in making a borrowing or conversion after
the Lead Borrower has given (or is deemed to have given) a request for a
Revolving Credit Loan or a request to convert a Revolving Credit Loan
from one applicable interest rate to another.
(iii) The making of any payment on a Eurodollar Loan or the making of
any conversion of any such Loan to a Base Margin Loan on a day that is
not the last day of the applicable Interest Period with respect thereto.
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<PAGE> 43
1:1 INTEREST ON REVOLVING CREDIT LOANS.
(a) Each Revolving Credit Loan shall bear interest at the Base Margin Rate
unless timely notice is given (as provided in Section ) that the subject
Revolving Credit Loan (or a portion thereof) is, or is to be converted to, a
Eurodollar Loan.
(b) Each Revolving Credit Loan which consists of a Eurodollar Loan shall bear
interest at the applicable Eurodollar Rate.
(c) Subject to, and in accordance with, the provisions of this Agreement, the
Lead Borrower may cause all or a part of the unpaid principal balance of the
Loan Account to bear interest at the Base Margin Rate or the Eurodollar Rate as
specified from time to time by the Lead Borrower.
(d) The Lead Borrower shall not select, renew, or convert any interest rate for
a Revolving Credit Loan such that, in addition to interest at the Base Margin
Rate, there are more than Seven (7) Eurodollar Rates applicable to the Revolving
Credit Loans at any one time.
(e) The Borrowers shall pay accrued and unpaid interest on each Revolving Credit
Loan in arrears as follows:
(i) On the applicable Interest Payment Date for that Revolving Credit
Loan.
(ii) On the Termination Date and on the End Date.
(iii) Following the occurrence of any Event of Default, with such
frequency as may be determined by the Administrative Agent.
(f) Following the occurrence of any Event of Default (and whether or not the
Administrative Agent exercises the Administrative Agent's rights on account
thereof), all Revolving Credit Loans shall bear interest, at the option of the
Administrative Agent or at the instruction of the SuperMajority Lenders at rate
which is the aggregate of the rate applicable to Base Margin Loans plus Two
Percent (2%) per annum.
1:2 INTEREST ON REVOLVING CREDIT LOANS: THE PRICING GRIDS. The Eurodollar Margin
and the Base Margin shall be determined from the following Pricing Grids:
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<PAGE> 44
(a) Pricing Grid A is applicable through the earlier of the application of
Pricing Grid B or September 1, 2001 and is as follows:
<TABLE>
<CAPTION>
PRICING GRID A
-------------- ------------------------------------------- ------------------- ----------------
TIER PARAMETER EURODOLLAR MARGIN BASE MARGIN
-------------- ------------------------------------------- ------------------- ----------------
<S> <C> <C> <C>
II The Eurodollar Margin and the Base Margin 225 Basis Points Zero
shall be fixed at Tier II unless
Availability is less than $10MM
for 30 consecutive business days.
-------------- ------------------------------------------- ------------------- ----------------
III Commencing on day after Availability is 250 Basis Points 0.25%
less than $10MM for 30 consecutive business
days and continuing until end of then
current Fiscal quarter, the Eurodollar Margin
and the Base Margin shall be fixed at Tier
III. Thereafter, the applicable Tier will
be set by application of the Parameters
provided in Pricing Grid B through September
1, 2001.
-------------- ------------------------------------------- ------------------- ----------------
</TABLE>
(a) If the Eurodollar Margin and the Base Margin are fixed at Tier III of
Pricing Grid A, then the Eurodollar Margin and the Base Margin
(i) shall be set thereafter as provided in Pricing Grid B (which
follows) commencing on the first day of the Fiscal quarter following
that during which the Eurodollar Margin and the Base Margin were so
fixed at Tier III of Pricing Grid A; and
(ii) until September 1, 2001, shall be reset quarterly thereafter, as of
the first day of each Fiscal quarter:
<TABLE>
<CAPTION>
PRICING GRID B
-------------- ------------------------------------------- ------------------- ----------------
<S> <C> <C> <C>
TIER AVERAGE AVAILABILITY FOR MOST RECENTLY EURODOLLAR MARGIN BASE MARGIN
COMPLETED FISCAL QUARTER
-------------- ------------------------------------------- ------------------- ----------------
II Equal to or greater than $10MM 225 Basis Points Zero
-------------- ------------------------------------------- ------------------- ----------------
III Less than $10 MM 250 Basis Points 0.25%
-------------- ------------------------------------------- ------------------- ----------------
</TABLE>
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(a) Commencing on September 1, 2001, the Eurodollar Margin and the Base Margin
shall be set, quarterly, as of the first day of each Fiscal quarter, as provided
in the following Pricing Grid C:
<TABLE>
<CAPTION>
PRICING GRID C
-------------- ------------------------------------------- ------------------- ----------------
<S> <C> <C> <C>
TIER AVERAGE AVAILABILITY FOR MOST RECENTLY EURODOLLAR MARGIN BASE MARGIN
COMPLETED FISCAL QUARTER
-------------- ------------------------------------------- ------------------- ----------------
I Equal to or greater than $20 MM 200 Basis Points Zero
-------------- ------------------------------------------- ------------------- ----------------
II Equal to or greater than $10MM and less 225 Basis Points Zero
than $20MM
-------------- ------------------------------------------- ------------------- ----------------
III Less than $10 MM 250 Basis Points 0.25%
-------------- ------------------------------------------- ------------------- ----------------
</TABLE>
1:1 THE ADMINISTRATIVE AGENT'S FEE. In consideration of the commitment to make
loans and advances to the Borrowers under the Revolving Credit, and to maintain
sufficient funds available for such purpose, there has been earned and the
Borrowers shall pay the Agent those fees described as "Fees Earned by Agent"
(collectively, the "ADMINISTRATIVE AGENT'S FEE") in the amounts and payable at
the times provided in the Fee Letter.
1:2 UNUSED LINE FEE. In addition to any other fee to be paid by the Borrowers on
account of the Revolving Credit, the Borrowers shall pay the Administrative
Agent the "UNUSED LINE FEE" (so referred to herein) of 0.375% per annum of the
average difference, during the quarter just ended (or relevant period with
respect to the payment being made on the Termination Date) between the Revolving
Credit Ceiling and the aggregate of the unpaid principal balance of the Loan
Account and the undrawn Stated Amount of L/C's outstanding during the relevant
period. The Unused Line Fee shall be paid in arrears, on the first day of each
quarter after the execution of this Agreement and on the Termination Date.
1:3 EARLY TERMINATION FEE. In the event that the Termination Date occurs, for
any reason, prior to the Maturity Date, the Borrowers shall pay to the
Administrative Agent , for the benefit of the Revolving Credit Lenders, the
"REVOLVING CREDIT EARLY TERMINATION FEE" (so referred to herein) determined as
the following percentage of the Revolving Credit Ceiling as of the later of (x)
the date on which the first advance is made under the Revolving Credit or (y)
180 days prior to the Termination Date:
(a) Termination Date on or prior to September 1, 2001: 1.0%
(b) Termination Date after September 1, 2001 and
on or prior to September 1, 2002 : 0.5%
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1:1 CONCERNING FEES.
(a) In addition to any other right to which the Administrative Agent is then
entitled on account thereof, the Administrative Agent may assess an additional
fee payable by the Borrowers on account of the accommodation, from time to time,
by the Administrative Agent of the Lead Borrower's request that the
Administrative Agent depart or dispense with one or more of the administrative
provisions of this Agreement and/or any Borrower's failure to comply with any of
such provisions.
(i) By way of non-exclusive example, the Administrative Agent may assess
a fee on account of any of the following:
(A) The Borrowers' failure to pay that amount which is necessary
so that no OverLoan is outstanding (as required under Section
hereof).
(B) The providing of a loan or advance under the Revolving
Credit or charging of the Loan Account such that an OverLoan is
made.
(C) The foreshortening of any of the time frames with respect to
the making of Revolving Credit Loans as set forth in Section.
(D) The Lead Borrower's failure to provide a financial statement
or report within the applicable time frame provided for such
report under Article hereof.
(ii) The inclusion of the foregoing right on the part of the
Administrative Agent to assess a fee does not constitute an obligation,
on the part of the Administrative Agent, to waive any provision of this
Agreement under any circumstances. The assessment of any such fee in any
particular circumstance shall not constitute the Administrative Agent's
waiver of any breach of this Agreement on account of which such fee was
assessed nor a course of action on which any Borrower may rely.
(b) The Borrowers shall not be entitled to any credit, rebate or repayment of
any fee earned by any Agent or any Revolving Credit Lender pursuant to this
Agreement or any Loan Document notwithstanding any termination of this Agreement
or suspension or termination of the Administrative Agent's or any Revolving
Lenders' respective obligation to make loans and advances hereunder.
1:2 AGENTS' AND LENDERS' DISCRETION.
(a) Each reference in the Loan Documents to the exercise of discretion or the
like by any Agent or any Lender shall be to such Person's exercise of its
judgment, in good faith (which shall be presumed), based upon such Person's
consideration of any such factors as that Agent or that Lender, taking into
account information of which that Person then has actual knowledge, believes:
(i) Will or reasonably could be expected to affect the value of the
Collateral, the enforceability of the Collateral Agent's Collateral
Interests therein, or the amount which the Collateral Agent would likely
realize therefrom (taking into account delays which may possibly be
encountered in the
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Collateral Agent's realizing upon the Collateral and likely Costs
of Collection).
(ii) Indicates that any report or financial information delivered to any
Agent or any Lender by or on behalf of any Borrower is incomplete,
inaccurate, or misleading in any material manner or was not prepared in
accordance with the requirements of this Agreement.
(iii) Suggests an increase in the likelihood that any Borrower will
become the subject of a bankruptcy or insolvency proceeding.
(iv) Suggests that any Borrower is InDefault.
(b) In the exercise of such judgement, each Agent or each Lender also may take
into account any of the following factors:
(i) Those included in, or tested by, the definitions of "Eligible
Inventory" and "Cost".
(ii) The current financial and business climate of the industry in which
each Borrower competes (having regard for that Borrower's position in
that industry).
(iii) General macroeconomic conditions which have a material effect on
the Borrowers' cost structure.
(iv) Material changes in or to the mix of the Borrowers' Inventory.
(v) Seasonality with respect to the Borrowers' Inventory and patterns of
retail sales.
(vi) Such other factors as each Agent and each Lender determines as
having a material bearing on credit risks associated with the providing
of loans and financial accommodations to the Borrowers.
(c) The burden of establishing the failure of any Agent or any Revolving Credit
Lender to have acted in a reasonable manner in such Person's exercise of such
discretion shall be the Borrowers' and may be made only by clear and convincing
evidence.
1:3 PROCEDURES FOR ISSUANCE OF L/C'S.
(a) The Lead Borrower may request that the Administrative Agent cause the
issuance by the Issuer of L/C's for the account of any Borrower. Each such
request shall be in such manner as may from time to time be acceptable to the
Administrative Agent.
(b) The Administrative Agent will cause the issuance of any L/C so requested by
the Lead Borrower, provided that, at the time that the request is made, the
Revolving Credit has not been suspended as provided in Section and if so issued:
(i) The aggregate Stated Amount of all L/C's then outstanding, does not
exceed Seventy-five Million Dollars and No Cents ($75,000,000.00).
(ii) The expiry of the L/C is not later than the earlier of Thirty (30)
days prior to the Maturity Date or the following:
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(A) Standby's: One (1) year from initial issuance.
(B) Documentary's: Sixty (60) days from issuance.
(iii) An OverLoan will not result from the issuance of the subject L/C.
(c) Each Borrower shall execute such documentation to apply for and support the
issuance of an L/C as may be required by the Issuer.
(d) There shall not be any recourse to, nor liability of, any Agent or any
Revolving Credit Lender on account of any of the following which is beyond the
reasonable control of the Administrative Agent:
(i) Any delay or refusal by an Issuer to issue an L/C;
(ii) Any action or inaction of an Issuer on account of or in respect to,
any L/C.
(e) The Borrowers shall reimburse the Issuer for the amount of any honoring of a
drawing under an L/C on the same day on which such honoring takes place. The
Administrative Agent, without the request of any Borrower, may advance under the
Revolving Credit (and charge to the Loan Account) the amount of any honoring of
any L/C and other amount for which any Borrower, the Issuer, or the Revolving
Credit Lenders become obligated on account of, or in respect to, any L/C. Such
advance shall be made whether or not any Borrower is InDefault or such advance
would result in an OverLoan. Such action shall not constitute a waiver of the
Administrative Agent's rights under Section hereof.
1:4 FEES FOR L/C'S.
(a) The Borrowers shall pay to the Administrative Agent a fee, on account of
L/C's, the issuance of which had been procured by the Administrative Agent,
monthly in arrears, and on the Termination Date and on the End Date, equal to
the following percentage per annum of the weighted average Stated Amount of the
applicable L/C's outstanding during the period in respect of which such fee is
being paid except that, following the occurrence of any Event of Default, such
fee shall be increased by two percent (2%) per annum:
(i) Standby L/C's: The then applicable Eurodollar Margin.
(ii) Documentary L/C's: The then applicable Eurodollar Margin minus 50
basis points.
(b) In addition to the fee to be paid as provided in Subsection , above, the
Borrowers shall pay to the Administrative Agent (or to the Issuer, if so
requested by Administrative Agent),the following:
(i) A fronting fee, quarterly in arrears, and on the Termination Date
and on the End Date, equal to 0.125% per annum of the weighted average
Stated Amount of the applicable L/C's outstanding during the period in
respect of which such fee is being paid.
(ii) On demand, all issuance, processing, negotiation, amendment, and
administrative fees
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and other amounts charged by the Issuer on account of, or in respect to,
any L/C.
(c) If any change in Applicable Law shall either:
(i) impose, modify or deem applicable any reserve, special deposit or
similar requirements against letters of credit heretofore or hereafter
issued by any Issuer or with respect to which any Revolving Credit
Lender or any Issuer has an obligation to lend to fund drawings under
any L/C; or
(ii) impose on any Issuer any other condition or requirements relating
to any such letters of credit;
and the result of any event referred to in Section or , above, shall be to
increase the cost to any Revolving Credit Lender or to any Issuer of issuing or
maintaining any L/C (which increase in cost shall be the result of such Issuer's
reasonable allocation among that Revolving Credit Lender's or Issuer's letter of
credit customers of the aggregate of such cost increases resulting from such
events), then, upon demand by the Administrative Agent and delivery by the
Administrative Agent to the Lead Borrower of a certificate of an officer of the
subject Revolving Credit Lender or the subject Issuer describing such change in
law, executive order, regulation, directive, or interpretation thereof, its
effect on such Revolving Credit Lender or such Issuer, and the basis for
determining such increased costs and their allocation, the Borrowers shall
immediately pay to the Administrative Agent, from time to time as specified by
the Administrative Agent, such amounts as shall be sufficient to compensate the
subject Revolving Credit Lender or the subject Issuer for such increased cost.
Any Revolving Credit Lender's or any Issuer's determination of costs incurred
under Section or , above, and the allocation, if any, of such costs among the
Borrowers and other letter of credit customers of such Revolving Credit Lender
or such Issuer, if done in good faith and made on an equitable basis and in
accordance with such officer's certificate, shall be conclusive and binding on
the Borrowers.
1:1 CONCERNING L/C'S.
(a) None of the Issuer, the Issuer's correspondents, any Revolving Credit
Lender, any Agent, or any advising, negotiating, or paying bank with respect to
any L/C shall be responsible in any way for:
(i) The performance by any beneficiary under any L/C of that
beneficiary's obligations to any Borrower.
(ii) The form, sufficiency, correctness, genuineness, authority of any
person signing; falsification; or the legal effect of; any documents
called for under any L/C if (with respect to the foregoing) such
documents on their face appear to be in order.
(b) The Issuer may honor, as complying with the terms of any L/C and of any
drawing thereunder, any drafts or other documents otherwise in order, but signed
or issued by an administrator, executor, conservator, trustee in bankruptcy,
debtor in possession, assignee for the benefit of creditors,
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liquidator, receiver, or other legal representative of the party authorized
under such L/C to draw or issue such drafts or other documents.
(c) Unless otherwise agreed to, in the particular instance, each Borrower hereby
authorizes any Issuer to:
(i) Select an advising bank, if any.
(ii) Select a paying bank, if any.
(iii) Select a negotiating bank.
(d) All directions, correspondence, and funds transfers relating to any L/C are
at the risk of the Borrowers. The Issuer shall have discharged the Issuer's
obligations under any L/C which, or the drawing under which, includes payment
instructions, by the initiation of the method of payment called for in, and in
accordance with, such instructions (or by any other commercially reasonable and
comparable method). No Agent, any Revolving Credit Lender, or the Issuer shall
have any responsibility for any inaccuracy, interruption, error, or delay in
transmission or delivery by post, telegraph or cable, or for any inaccuracy of
translation which is beyond the reasonable control of the Administrative Agent.
(e) Each Agent's, each Revolving Credit Lender's Lender's and the Issuer's
rights, powers, privileges and immunities specified in or arising under this
Agreement are in addition to any heretofore or at any time hereafter otherwise
created or arising, whether by statute or rule of law or contract.
(f) Except to the extent otherwise expressly provided hereunder or agreed to in
writing by the Issuer and the Lead Borrower, documentary L/C's will be governed
by the Uniform Customs and Practice for Documentary Credits, International
Chamber of Commerce, Publication No. 500, and standby L/C's will be governed by
International Standby Practices ISP98 (adopted by the International Chamber of
Commerce on April 6, 1998) and any respective subsequent revisions thereof.
(g) The obligations of the Borrowers under this Agreement with respect to L/C's
are absolute, unconditional, and irrevocable and shall be performed strictly in
accordance with the terms hereof under all circumstances, whatsoever including,
without limitation, the following:
(i) Any lack of validity or enforceability or restriction, restraint, or
stay in the enforcement of this Agreement, any L/C, or any other
agreement or instrument relating thereto.
(ii) Any Borrower's consent to any amendment or waiver of, or consent to
the departure from, any L/C.
(iii) The existence of any claim, set-off, defense, or other right which
any Borrower may have at any time against the beneficiary of any L/C.
(iv) Any good faith honoring of a drawing under any L/C, which drawing
possibly could have been dishonored based upon a strict construction of
the terms of the L/C.
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1:1 CHANGED CIRCUMSTANCES.
(a) The Administrative Agent may advise the Lead Borrower that the
Administrative Agent has made the good faith determination (which determination
shall be final and conclusive) of any of the following:
(i) Adequate and fair means do not exist for ascertaining the rate for
Eurodollar Loans.
(ii) The continuation of or conversion of any Revolving Credit Loan to a
Eurodollar Loan has been made impracticable or unlawful by the
occurrence of a contingency that materially and adversely affects the
applicable market or the compliance by the Administrative Agent or any
Revolving Credit Lender in good faith with any Applicable Law.
(iii) The indices on which the interest rates for Eurodollar Loans are
based shall no longer represent the effective cost to the Agent or any
Revolving Credit Lender for U.S. dollar deposits in the interbank market
for deposits in which it regularly participates.
(b) In the event that the Administrative Agent advises the Lead Borrower of an
occurrence described in Section , then, until the Administrative Agent notifies
the Lead Borrower that the circumstances giving rise to such notice no longer
apply:
(i) The obligation of the Agent or each Revolving Credit Lender to make
loans of the type affected by such changed circumstances or to permit
the Lead Borrower to select the affected interest rate as otherwise
applicable to any Revolving Credit Loans shall be suspended.
(ii) Any notice which the Lead Borrower had given the Administrative
Agent with respect to any Eurodollar Loan, the time for action with
respect to which has not occurred prior to the Administrative Agent's
having given notice pursuant to Section , shall be deemed at the option
of the Administrative Agent to not having been given.
1:1 DESIGNATION OF LEAD BORROWER AS BORROWERS' AGENT.
(a) Each Borrower hereby irrevocably designates and appoints the Lead Borrower
as that Borrower's agent to obtain loans and advances under the Revolving
Credit, the proceeds of which shall be available to each Borrower for those uses
as those set forth in Section. As the disclosed principal for its agent, each
Borrower shall be obligated to the Agent and each Revolving Credit Lender on
account of loans and advances so made under the Revolving Credit as if made
directly by the Revolving Credit Lenders to that Borrower, notwithstanding the
manner by which such loans and advances are recorded on the books and records of
the Lead Borrower and of any Borrower.
(b) Each Borrower recognizes that credit available to it under the Revolving
Credit is in excess of and on better terms than it otherwise could obtain on and
for its own account and that one of the reasons therefor is its joining in the
credit facility contemplated herein with all other Borrowers.
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Consequently, each Borrower hereby assumes and agrees to discharge all
Liabilities of all other Borrowers as if the Borrower so assuming were each
other Borrower.
(c) The Lead Borrower shall act as a conduit for each Borrower (including
itself, as a "Borrower") on whose behalf the Lead Borrower has requested a
Revolving Credit Loan.
(d) The proceeds of each loan and advance provided under the Revolving Credit
which is requested by the Lead Borrower shall be deposited into the Operating
Account or as otherwise indicated by the Lead Borrower. The Lead Borrower shall
cause the transfer of the proceeds thereof to the (those) Borrower(s) on whose
behalf such loan and advance was obtained. Neither the Agent nor any Revolving
Credit Lender shall have any obligation to see to the application of such
proceeds.
1:2 NEW BORROWERS Any Subsidiary of the Lead Borrower may become a "Borrower"
within the meaning of this Agreement by written agreement with the
Administrative Agent, which agreement, the Administrative Agent may condition
upon the execution, by such Subsidiary of, and its furnishing to the
Administrative Agent of, such documents as the Agent reasonably may require.
1:3 LENDERS' COMMITMENTS
(a) Subject to Section (which provides for assignments and assumptions of
commitments), each Revolving Credit Lender's "REVOLVING CREDIT PERCENTAGE
COMMITMENT", and "REVOLVING CREDIT DOLLAR COMMITMENT" (respectively so referred
to herein) is set forth on EXHIBIT , annexed hereto.
(b) The obligations of each Revolving Credit Lender are several and not joint.
No Revolving Credit Lender shall have any obligation to make any loan or advance
under the Revolving Credit in excess of the lesser of the following:
(i) That Revolving Credit Lender's Revolving Credit Commitment
Percentage of the subject loan or advance or of Availability.
(ii) That Revolving Credit Lender's Revolving Credit Dollar Commitment.
(c) No Revolving Credit Lender shall have any liability to the Borrowers on
account of the failure of any other Revolving Credit Lender to provide any loan
or advance under the Revolving Credit nor any obligation to make up any
shortfall which may be created by such failure.
(d) In the event of the Lead Borrower's exercise of its right to reduce the
Revolving Credit Ceiling, the effect of such reduction shall be distributed, pro
rata, amongst the Revolving Credit Lenders based on their then respective
Revolving Credit Dollar Commitments.
(e) The Revolving Credit Dollar Commitments, Revolving Credit Commitment
Percentages, and identities of the Revolving Credit Lenders may be changed, from
time to time by the reallocation or
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assignment of Revolving Credit Dollar Commitments and Revolving Credit
Commitment Percentages amongst the Revolving Credit Lenders or with other
Persons who determine to become "Revolving Credit Lenders", provided, however
unless an Event of Default has occurred (in which event, no consent of any
Borrower is required) any assignment to a Person not then a Revolving Credit
Lender shall be subject to the prior consent of the Lead Borrower (not to be
unreasonably withheld), which consent will be deemed given unless the Lead
Borrower provides the Administrative Agent with written objection, not more than
Five (5) Business Days after the Administrative Agent shall have given the Lead
Borrower written notice of a proposed assignment).
(f) Upon written notice given the Lead Borrower from time to time by the
Administrative Agent, of any assignment or allocation referenced in Section :
(i) Each Borrower shall execute one or more replacement Revolving Credit
Notes to reflect such changed Revolving Credit Dollar Commitments,
Revolving Credit Commitment Percentages, and identities and shall
deliver such replacement Revolving Credit Notes to the Administrative
Agent (which promptly thereafter shall deliver to the Lead Borrower the
Revolving Credit Notes so replaced) provided however, in the event that
a Revolving Credit Note is to be exchanged following its acceleration or
the entry of an order for relief under the Bankruptcy Code with respect
to any Borrower, the Administrative Agent, in lieu of causing the
Borrowers to execute one or more new Revolving Credit Notes, may issue
the Administrative Agent's Certificate confirming the resulting
Revolving Credit Dollar Commitments and Revolving Credit Percentage
Commitments.
(ii) Such change shall be effective from the effective date specified in
such written notice and any Person added as a Revolving Credit Lender
shall have all rights and privileges of a Revolving Credit Lender
hereunder thereafter as if such Person had been a signatory to this
Agreement and any other Loan Document to which a Revolving Credit Lender
is a signatory and any Person removed as a Revolving Credit Lender shall
be relieved of any obligations or responsibilities of a Revolving Credit
Lender hereunder thereafter.
2: ARTICLE - THE TERM LOAN:
2:1 COMMITMENT TO MAKE TERM LOAN.
(a) Subject to satisfaction of the Conditions Precedent (Article) by on or prior
to the date of this Agreement, the Borrowers shall borrow from the Term Lender
and the Term Lender shall lend to the Borrowers the sum of $7,000,000.00 (the
"TERM LOAN"), repayable with interest as provided herein.
(b) The proceeds of the Term Loan shall be used solely for the following: the
retirement of the Borrowers' current working capital facility and to provide
on-going working capital requirements of the Borrowers.
(c) No proceeds of the Term Loan may be used, nor shall any be requested, with a
view
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towards the accumulation of any general fund or funded reserve of the Borrowers
other than in the ordinary course of the Borrowers' business and consistent with
the provisions of this Agreement
2:2 THE TERM NOTE. The obligation to repay the Term Loan, with interest as
provided herein, shall be evidenced by a Note (the "TERM NOTE") in the form of
EXHIBIT , annexed hereto, executed by the Borrowers. Neither the original nor a
copy of the Term shall be required, however, to establish or prove any
Liability. In the event that the Term Note is ever lost, mutilated, or
destroyed, the Borrowers shall execute a replacement thereof and deliver such
replacement to the Administrative Agent.
2:3 PAYMENT OF PRINCIPAL OF THE TERM LOAN.
(a) Except as provided in Section , the Borrowers may not repay all or any
portion of the principal balance of the Term Loan prior to the repayment in full
of all Liabilities under the Revolving Credit and the termination of any
obligation, under the Revolving Credit, of the Administrative Agent and of any
Revolving Credit Lender to make any loans or to provide any financial
accommodations pursuant to this Agreement.
(b) At any time after January 1, 2001, the Borrowers may repay all or a part of
the unpaid principal balance of the Term Note provided that each of the
following conditions is satisfied:
(i) Such prepayment is not less than $1 Million.
(ii) All accrued and unpaid interest (other than PIK Interest which has
been capitalized as provided in Section ) shall be paid with such
prepayment.
(iii) On each of the 30 days prior to the date of such prepayment,
Excess Availability was not less than the following:
(A) Days between (and including) December 15 and January 31 $30
Million.
(B) All other days: $20 Million
(iv) The Borrower shall have provided the Agent with a forecast for the
12 months next following such prepayment, prepared using a methodology
which is consistent with that used in the preparation of forecasts
provided to FRFI and Term Lender prior to July 31, 2000, which reflects
Availability of not less than $20 Million at all times during the then
next following 12 months.
(v) No Event of Default shall have occurred.
1:1 INTEREST ON THE TERM LOAN.
(a) Subject to Sections and , the unpaid principal balance of the Term Loan
shall bear interest, until repaid, fixed at 16% per annum (the "TERM LOAN
INTEREST RATE"), payable as follows:
(i) Accrued interest on the unpaid principal balance of the Term Loan
equal to 13%
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per annum ("CURRENT PAY INTEREST") shall be payable monthly in arrears,
on the first Business Day of each month (the "TERM LOAN INTEREST PAYMENT
Date"), and on the Maturity Date.
(ii) Subject to Section , accrued interest on the unpaid principal
balance of the Term Loan in excess of Current Pay Interest (which excess
is referred to herein as "PIK INTEREST") shall be payable as follows:
(A) The Borrowers shall have the option, exercisable by
irrevocable written notice by the Lead Borrower to the
Administrative Agent made at least three (3) Business Days prior
to relevant Term Loan Interest Payment Date, to pay all or any
part of such PIK Interest on that Term Loan Interest Payment
Date.
(B) PIK Interest as to which the option provided in Section is
not exercised shall be added to the principal balance of the
Term Note as of the Term Loan Interest Payment Date in respect
of which such option is not so exercised.
(C) At the direction of the Term Lender, following the
occurrence of any Event of Default (and whether or not
Acceleration has taken place), the option provided in Section
shall terminate and accrued interest to which such option
otherwise could have been exercised shall be paid on each Term
Loan Interest Payment Date.
(b) In the event of the amendment of any interest rate which is or which may be
applicable to the unpaid principal balance of the Revolving Credit, the Term
Loan Interest Rate shall be increased by a like amount (e.g. if the Base Margin
Rate is increased by one-quarter of one percent per annum or the Eurodollar
Margin is increased by 25 basis points, the Term Loan Interest Rate shall
likewise be increased by one-quarter of one percent per annum).
(c) Following the occurrence of any Event of Default (and whether or not
Acceleration has taken place), at the direction of the Term Lender, interest
shall accrue and shall be payable on the unpaid principal balance of the Term
Loan at the aggregate of the Term Loan Interest Rate plus two percent per annum.
1:2 TERM LOAN FEES. As compensation for the Term Lender's having committed to
make the Term Loan, the Term Lender has earned those fees payable to it in the
amounts and at the times provided in the Fee Letter.
1:3
1:4 PAYMENTS ON ACCOUNT OF TERM LOAN. The Borrowers authorizes the
Administrative Agent to determine and to pay over directly to the Term Loan
Lender any and all amounts due and payable from time to time under or on account
of the Term Loan as advances under the Revolving Credit it being understood,
however, that the authorization of the Administrative Agent provided in this
Section shall not
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excuse the Borrowers from fulfilling their obligations to the Term Lender on
account of the Term Loan nor place any obligation on the Administrative Agent to
do so. The Administrative Agent shall provide prompt advice to the Lead Borrower
of any amount which is so paid over by the Administrative Agent to the Term
Lender pursuant to this Section.
1: ARTICLE - CONDITIONS PRECEDENT:
As a condition to the effectiveness of this Agreement, the establishment of the
Revolving Credit, and the making of the first loan under the Revolving Credit,
and the making of the Term Loan, each of the documents respectively described in
Sections through and including , (each in form and substance satisfactory to the
Administrative Agent) shall have been delivered to the Administrative Agent, and
the conditions respectively described in Sections through and including , shall
have been satisfied:
1:1 CORPORATE DUE DILIGENCE.
(a) Certificates of corporate good standing for each Borrower, respectively
issued by the Secretary of State for the state in which that Borrower is
incorporated.
(b) Certificates of each Borrower's Secretary of the due adoption, continued
effectiveness, and setting forth the texts of, each corporate resolution adopted
in connection with the establishment of the loan arrangement contemplated by the
Loan Documents and attesting to the true signatures of each Person authorized as
a signatory to any of the Loan Documents.
1:2 OPINION. An opinion of counsel to the Borrowers in form and substance
satisfactory to the Administrative Agent.
1:3 ADDITIONAL DOCUMENTS. Such additional instruments and documents as the
Administrative Agent or its counsel reasonably may require or request including,
without limitation, the following (each of which shall constitute a "Loan
Document"):
(a) Collateral Assignment of Trademarks
(b) Stock Pledge Agreement
(c) The following (or their functional equivalent under applicable local law) by
or with respect to the Canadian, Irish, and United Kingdom Subsidiaries:
(i) Guaranty
(ii) General Security Agreement
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(iii) Confirmation of filing of financing statements
(iv) Confirmation of Insurance
(v) Customary due diligence items
(vi) Opinion of counsel
1:5 OFFICERS' CERTIFICATES. Certificates executed by the President and the Chief
Financial Officer of the Lead Borrower and stating that the representations and
warranties made by the Borrowers to the Agents and the Lenders in the Loan
Documents are true and complete as of the date of such Certificate, and that no
event has occurred which is or which, solely with the giving of notice or
passage of time (or both) would be an Event of Default.
1:6 REPRESENTATIONS AND WARRANTIES. Each of the representations made by or on
behalf of each Borrower in this Agreement or in any of the other Loan Documents
or in any other report, statement, document, or paper provided by or on behalf
of each Borrower shall be true and complete as of the date as of which such
representation or warranty was made.
1:7 MINIMUM DAY ONE EXCESS AVAILABILITY. After giving effect to the first
funding under the Revolving Credit, the result of (a) Excess Availability minus
(b) the Stated Amount of all L/C's to be issued at, or immediately subsequent
to, such establishment, shall not be less than $10,000,000.00.
1:8 ALL FEES AND EXPENSES PAID. All fees due at or immediately after the first
funding under the Revolving Credit and all costs and expenses incurred by the
Administrative Agent, the Collateral Agent, and the Term Lender in connection
with the establishment of the credit facility contemplated hereby (including the
fees and expenses of counsel to the Administrative Agent, the Collateral Agent,
and the Term Lender) shall have been paid in full.
1:9 NO BORROWER INDEFAULT. No Borrower is InDefault.
1:10 NO ADVERSE CHANGE. No event shall have occurred or failed to occur, which
occurrence or failure is or could have a materially adverse effect upon any
Borrower's financial condition when compared with such financial condition at
July 31, 2000.
1:11 BENEFIT OF CONDITIONS PRECEDENT. The conditions set forth in this Article
are for the sole benefit of the Agents and the Lenders and may be waived by the
Administrative Agent in whole or in part without prejudice to the Agents or any
Lender.
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1:12 No document shall be deemed delivered to the Administrative Agent, the
Collateral Agent, the Term Lender or any Revolving Credit Lender until received
and accepted by the Administrative Agent at its offices in Boston,
Massachusetts. Under no circumstances shall this Agreement take effect until
executed and accepted by the Administrative Agent at said offices.
1: ARTICLE - GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES:
To induce each Lender to establish the credit facility contemplated herein and
to induce the Revolving Credit Lenders to provide loans and advances under the
Revolving Credit (each of which loans shall be deemed to have been made in
reliance thereupon) and to induce the Term Lender to make the Term Loan, the
Borrowers, in addition to all other representations, warranties, and covenants
made by any Borrower in any other Loan Document, make those representations,
warranties, and covenants included in this Agreement.
4:1 PAYMENT AND PERFORMANCE OF LIABILITIES. The Borrowers shall pay each
payment Liability when due (or when demanded, if payable on demand) and shall
promptly, punctually, and faithfully perform each other Liability.
4:2 DUE ORGANIZATION. AUTHORIZATION. NO CONFLICTS.
(a) Each Borrower presently is and hereafter shall remain in good standing as a
corporation under the laws of the State in which it is organized, as set forth
in the Preamble to this Agreement and is and shall hereafter remain duly
qualified and in good standing in every other State in which, by reason of the
nature or location of each Borrower's assets or operation of each Borrower's
business, such qualification may be necessary, except where the failure to so
qualify would have no more than a de minimis adverse effect on the business or a
assets of any Borrower.
(b) On or before September 29, 2000, the Lead Borrower shall provide the
Administrative Agent with certificates of due qualification, in good standing,
issued by the Secretary(ies) of State of each State in which the nature a
Borrower's business conducted or assets owned could require such qualification.
(c) Each Borrower's respective organizational identification number assigned to
it by the State of its incorporation and its respective federal employer
identification number is listed on EXHIBIT ,
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annexed hereto.
(d) No Borrower shall change its State of organization; any organizational
identification number assigned to that Borrower by that State; or that
Borrower's federal taxpayer identification number.
(e) Each Affiliate is listed on EXHIBIT. The Lead Borrower shall provide the
Administrative Agent with prior written notice of any entity's becoming or
ceasing to be an Affiliate.
(f) The Lead Borrower shall cause the Canadian Subsidiary to promptly,
punctually, and faithfully perform and discharge all obligations of the Canadian
Subsidiary under those of the Loan Documents to which the Canadian Subsidiary is
a party or by which it is bound.
(g) Each Borrower has all requisite power and authority to execute and deliver
all Loan Documents to which that Borrower is a party and has and will hereafter
retain all requisite power to perform all Liabilities.
(h) The execution and delivery by each Borrower of each Loan Document to which
it is a party; each Borrower's consummation of the transactions contemplated by
such Loan Documents (including, without limitation, the creation of Collateral
Interests by that Borrower to secure the Liabilities); each Borrower's
performance under those of the Loan Documents to which it is a party; the
borrowings hereunder; and the use of the proceeds thereof:
(i) Have been duly authorized by all necessary action.
(ii) Do not, and will not, contravene in any material respect any
provision of any Requirement of Law or obligation of that Borrower.
(iii) Will not result in the creation or imposition of, or the
obligation to create or impose, any Encumbrance upon any assets of that
Borrower pursuant to any Requirement of Law or obligation, except
pursuant to the Loan Documents.
(i) The Loan Documents have been duly executed and delivered by each Borrower
and are the legal, valid and binding obligations of each Borrower, enforceable
against each Borrower in accordance with their respective terms except as such
enforceability may be subject to limitations on the rights and remedies of
secured creditors generally imposed under bankruptcy or insolvency law and that
the availability of equitable relief is subject to the discretion of the court
from which such relief is sought.
4:3 TRADE NAMES.
(a) EXHIBIT , annexed hereto, is a listing of:
(i) All names under which any Borrower ever conducted its business.
(ii) All Persons with whom any Borrower ever consolidated or merged, or
from whom any Borrower ever acquired in a single transaction or in a
series of related transactions substantially all of such Person's
assets.
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(b) The Lead Borrower will provide the Administrative Agent with not less than
twenty-one (21) days prior written notice (with reasonable particularity) of any
change to any Borrower's name from that under which that Borrower is conducting
its business at the execution of this Agreement and will not effect such change
unless each Borrower is then in compliance with all provisions of this
Agreement.
4:4 FRANCHISEES. EXHIBIT , annexed hereto, is a schedule of all franchisees of
any Borrower.
4:5 INFRASTRUCTURE.
(a) Each Borrower has and will maintain a sufficient infrastructure to conduct
its business as presently conducted and as contemplated to be conducted
following its execution of this Agreement and is and will remain Year 2000
Compliant.
(b) Each Borrower owns and possesses, or has the right to use (and will
hereafter own, possess, or have such right to use) all patents, industrial
designs, trademarks, trade names, trade styles, brand names, service marks,
logos, copyrights, trade secrets, know-how, confidential information, and other
intellectual or proprietary property of any third Person necessary for that
Borrower's conduct of that Borrower's business, except where the failure to so
own, possess or have such right to use could not reasonably be expected to have
more than a de minimis adverse effect on any Borrower.
(c) The conduct by each Borrower of that Borrower's business does not presently
infringe (nor will any Borrower conduct its business in the future so as to
infringe) the patents, industrial designs, trademarks, trade names, trade
styles, brand names, service marks, logos, copyrights, trade secrets, know-how,
confidential information, or other intellectual or proprietary property of any
third Person except where such infringement could not reasonably be expected to
have more than a de minimis adverse effect on any Borrower.
4:6 LOCATIONS.
(a) The Collateral, and the books, records, and papers of Borrowers' pertaining
thereto, are kept and maintained solely at the following locations:
(i) The Lead Borrower's chief executive offices which are at 700 Airport
Boulevard, Burlingame, California 94010.
(ii) Those locations which are listed on EXHIBIT , annexed hereto, which
EXHIBIT includes, with respect to each such location, the name and
address of the landlord on the Lease which covers such location (or an
indication that a Borrower owns the subject location) and of all service
bureaus with which any such records are maintained and the names and
addresses of each of then Borrowers' landlords.
(b) No Borrower shall remove any of the Collateral from said chief executive
office or those locations listed on EXHIBIT except for the following purposes:
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(i) To accomplish sales of Inventory in the ordinary course of business.
(ii) To move Inventory from one such location to another such location.
(iii) To utilize such of the Collateral as is removed from such
locations in the ordinary course of business (such as motor vehicles).
(c) No Borrower will execute any Lease other than where each of the following
conditions is satisfied:
(i) Such execution is in the ordinary course of business.
(ii) Neither such execution nor any Borrower's acting under such Lease
results in any Borrower's becoming InDefault.
(iii) Not less than fifteen (15) days prior written notice (with
reasonable particularity) is given to the Administrative Agent of the
execution of the subject Lease.
(iv) Such execution will not result in the Borrowers' opening of one or
more Stores, the opening of which is otherwise prohibited by this
Agreement.
(d) Each Borrower may alter, modify, or amend any Lease in the ordinary course
of its business; provided that such alteration, modification or amendment does
not cause any Borrower to become InDefault.
(e) During any 12 month period during which this Agreement is in effect:
(i) The Borrowers may open and/or relocate up an aggregate of 30 Stores.
(ii) The Borrowers may permanently close up to an aggregate of 20 Stores
("permanently close" meaning a Store's going dark for more than 30
consecutive days other than on account of an event or circumstance which
constitutes force majeures).
(f) Except as otherwise disclosed pursuant to, or permitted by, this Section ,
no tangible personal property of any Borrower is in the care or custody of any
third party or stored or entrusted with a bailee or other third party and none
shall hereafter be placed under such care, custody, storage, or entrustment.
4:7 TITLE TO ASSETS.
(a) The Borrowers are, and shall hereafter remain, the owners of the Collateral
free and clear of all Encumbrances with the exception of any Permitted
Encumbrances.
(b) No Borrower has, and none shall have, possession of any property on
consignment to that Borrower.
(c) No Borrower shall acquire or obtain the right to use any Equipment, the
acquisition or right to use of which Equipment is otherwise permitted by this
Agreement, in which Equipment any third party has an interest, except for:
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(i) Equipment which is merely incidental to the conduct of that
Borrower's business.
(ii) Equipment, the acquisition or right to use of which has been
consented to by the Administrative Agent, which consent may be
conditioned upon the Administrative Agent's receipt of such agreement
with the third party which has an interest in such Equipment as is
satisfactory to the Administrative Agent.
1:1 INDEBTEDNESS. The Borrowers do not and shall not hereafter have any
Indebtedness with the exceptions of:
(a) Any Indebtedness on account of the Revolving Credit.
(b) Any Indebtedness on account of the Term Loan.
(c) The Indebtedness (if any) listed on EXHIBIT , annexed hereto.
(d) Permitted Indebtedness.
1:2 INSURANCE.
(a) EXHIBIT , annexed hereto, is a schedule of all insurance policies owned by
the Borrowers or under which any Borrower is the named insured. Each of such
policies is in full force and effect. Neither the issuer of any such policy nor
any Borrower is in default or violation of any such policy.
(b) The Borrowers shall have and maintain at all times insurance covering such
risks, in such amounts, containing such terms, in such form, for such periods,
and written by such companies as reasonably may be satisfactory to the
Administrative Agent.
(c) All insurance carried by the Borrowers shall provide for a minimum of thirty
(30) days' written notice of cancellation to the Administrative Agent and all
such insurance which covers the Collateral shall include an endorsement in favor
of the Administrative Agent, which endorsement shall provide that the insurance,
to the extent of the Administrative Agent's interest therein, shall not be
impaired or invalidated, in whole or in part, by reason of any act or neglect of
any Borrower or by the failure of any Borrower to comply with any warranty or
condition of the policy.
(d) The coverage reflected on EXHIBIT presently satisfies the foregoing
requirements, it being recognized by each Borrower, however, that such
requirements may change hereafter to reflect changing circumstances.
(e) The Lead Borrower shall furnish the Administrative Agent from time to time
with certificates or other evidence satisfactory to the Administrative Agent
regarding compliance by the Borrowers with the foregoing requirements.
(f) In the event of the failure by the Borrowers to maintain insurance as
required herein, the Administrative Agent, at its option, may obtain such
insurance, provided, however, the Administrative
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Agent's obtaining of such insurance shall not constitute a cure or waiver of any
Event of Default occasioned by the Borrowers' failure to have maintained such
insurance.
1:3 LICENSES. Each license, distributorship, franchise, and similar agreement
issued to, or to which any Borrower is a party is in full force and effect. No
party to any such license or agreement is in default or violation thereof. No
Borrower has received any notice or threat of cancellation of any such license
or agreement.
1:4 LEASES. EXHIBIT , annexed hereto, is a schedule of all presently effective
Capital Leases. (Exhibit includes a list of all other presently effective
Leases). Each of such Leases and Capital Leases is in full force and effect. No
party to any such Lease or Capital Lease is in default or violation of any such
Lease or Capital Lease. No Borrower has received any notice or threat of
cancellation of any such Lease or Capital Lease. Each Borrower hereby authorizes
the Administrative Agent at any time and from time to time to contact any of the
Borrowers' respective landlords in order to confirm the Borrowers' continued
compliance with the terms and conditions of the Lease(s) between the subject
Borrower and that landlord and to discuss such issues, concerning the subject
Borrower's occupancy under such Lease(s), as the Administrative Agent may
determine.
1:5 REQUIREMENTS OF LAW. Each Borrower is in compliance with, and shall
hereafter comply with and use its assets in compliance with, all Requirements of
Law except where the failure of such compliance will not have more than a de
minimis adverse effect on the Borrowers' business or assets. No Borrower has
received any notice of any violation of any Requirement of Law (other than of a
violation which has no more than a de minimis adverse effect on the Borrowers'
business or assets), which violation has not been cured or otherwise remedied.
1:6 LABOR RELATIONS.
(a) No Borrower has been, and none is presently a party to any collective
bargaining or other labor contract.
(b) There is not presently pending and, to any Borrower's knowledge, there is
not threatened any of the following:
(i) Any strike, slowdown, picketing, work stoppage, or employee
grievance process.
(ii) Any proceeding against or affecting any Borrower relating to the
alleged violation of any Applicable Law pertaining to labor relations or
before National Labor Relations Board, the Equal Employment Opportunity
Commission, or any comparable governmental body, organizational
activity, or
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other labor or employment dispute against or affecting any Borrower,
which, if determined adversely to that Borrower could have more than a
de minimis adverse effect on that Borrower.
(iii) Any lockout of any employees by any Borrower (and no such action
is contemplated by any Borrower).
(iv) Any application for the certification of a collective bargaining
agent.
(c) No event has occurred or circumstance exists which could provide the basis
for any work stoppage or other labor dispute.
(d) Each Borrower:
(i) Has complied in all material respects with all Applicable Law
relating to employment, equal employment opportunity, nondiscrimination,
immigration, wages, hours, benefits, collective bargaining, the payment
of social security and similar taxes, occupational safety and health,
and plant closing.
(ii) Is not liable for the payment of more than a de minimius amount of
compensation, damages, taxes, fines, penalties, or other amounts,
however designated, for that Borrower's failure to comply with any
Applicable Law referenced in Section.
1:1 MAINTAIN PROPERTIES. The Borrowers shall:
(a) Keep the Collateral in good order and repair (ordinary reasonable wear and
tear and insured casualty excepted).
(b) Not suffer or cause the waste or destruction of any material part of the
Collateral.
(c) Not use any of the Collateral in violation of any policy of insurance
thereon.
(d) Not sell, lease, or otherwise dispose of any of the Collateral, other than
the following:
(i) The sale of Inventory in compliance with this Agreement.
(ii) The disposal of Equipment which is obsolete, worn out, or damaged
beyond repair, which Equipment is replaced to the extent necessary to
preserve or improve the operating efficiency of any Borrower.
(iii) The sale of Equipment in sale and leaseback transactions which
otherwise are in compliance with this Agreement.
(iv) The turning over to the Administrative Agent of all Receipts as
provided herein.
(e) Not liquidate, reorganize, wind down, or take any similar action with
respect to, any Affiliate, except that the Borrowers may liquidate, reorganize,
wind down, or take similar action with respect to their Hong Kong and their
Japanese Affiliates.
1:2 TAXES.
(a) With respect to the Borrowers' federal, state, and local tax liability and
obligations:
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(i) The Lead Borrower, in compliance with all Applicable Law, has
properly filed all returns due to be filed up to the date of this
Agreement.
(ii) Except as described on EXHIBIT :
(A) At no time has any Borrower received from any taxing
authority any request to perform any examination of or with
respect to any Borrower nor any other written or verbal notice in
any way relating to any claimed failure by any Borrower to comply
with all Applicable Law concerning payment of any taxes or other
amounts in the nature of taxes.
(B) No agreement is extant which waives or extends any statute of
limitations applicable to the right of any taxing authority to
assert a deficiency or make any other claim for or in respect to
federal income taxes.
(C) No issue has been raised in any tax examination of any
Borrower which, by application of similar principles, reasonably
could be expected to result in the assertion of a deficiency for
any fiscal year open for examination, assessment, or claim by any
taxing authority.
(b) The Borrowers have, and hereafter shall: pay, as they become due and
payable, all taxes and unemployment contributions and other charges of any kind
or nature levied, assessed or claimed against any Borrower or the Collateral by
any person or entity whose claim could result in an Encumbrance upon any asset
of any Borrower or by any governmental authority; properly exercise any trust
responsibilities imposed upon any Borrower by reason of withholding from
employees' pay or by reason of any Borrower's receipt of sales tax or other
funds for the account of any third party; timely make all contributions and
other payments as may be required pursuant to any Employee Benefit Plan now or
hereafter established by any Borrower; and timely file all tax and other returns
and other reports with each governmental authority to whom any Borrower is
obligated to so file, provided, however, subject to Section , the Lead Borrower,
after establishing proper reserves, may in good faith and by appropriate
proceedings contest any tax, assessment, or other governmental charge.
(c) No Borrower shall suffer or permit any tax lien to be filed against it.
1:3 NO MARGIN STOCK. No Borrower is engaged in the business of extending credit
for the purpose of purchasing or carrying any margin stock (within the meaning
of Regulations U, T, and X of the Board of Governors of the Federal Reserve
System of the United States). No part of the proceeds of any borrowing hereunder
will be used at any time to purchase or carry any such margin stock or to extend
credit to others for the purpose of purchasing or carrying any such margin
stock.
1:4 ERISA.
(a) Neither any Borrower nor any ERISA Affiliate has ever:
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(i) Violated or failed to be in full compliance with any Borrower's
Employee Benefit Plan.
(ii) Failed timely to file all reports and filings required by ERISA to
be filed by any Borrower.
(iii) Engaged in any nonexempt "prohibited transactions" or "reportable
events" (respectively as described in ERISA).
(iv) Engaged in, or committed, any act such that a tax or penalty
reasonably could be imposed upon any Borrower on account thereof
pursuant to ERISA.
(v) Accumulate any material cumulative funding deficiency within the
meaning of ERISA.
(vi) Terminated any Employee Benefit Plan such that a lien could be
asserted against any assets of any Borrower on account thereof pursuant
to ERISA.
(vii) Been a member of, contributed to, or have any obligation under any
Employee Benefit Plan which is a multiemployer plan within the meaning
of Section 4001(a) of ERISA.
(b) Neither any Borrower nor any ERISA Affiliate shall ever engage in any action
of the type described in Section.
1:5 HAZARDOUS MATERIALS.
(a) No Borrower has ever: (i) been legally responsible for any release or threat
of release of any Hazardous Material or (ii) received notification of the
incurrence of any expense in connection with the assessment, containment, or
removal of any Hazardous Material for which that Borrower would be responsible.
(b) Each Borrower shall: (i) dispose of any Hazardous Material only in
compliance with all Environmental Laws and (ii) have possession of any Hazardous
Material only in the ordinary course of that Borrower's business and in
compliance with all Environmental Laws.
1:6 LITIGATION. Except as described in EXHIBIT , annexed hereto, there is not
presently pending or threatened by or against any Borrower any suit, action,
proceeding, or investigation which, if determined adversely to any Borrower,
would have more than a de minimis adverse effect upon a Borrower's financial
condition or ability to conduct its business as such business is presently
conducted or is contemplated to be conducted in the foreseeable future.
1:7. DIVIDENDS. INVESTMENTS. CORPORATE ACTION. No Borrower shall:
(a) Pay any cash dividend or make any other cash distribution in respect of any
class of that Borrower's capital stock or share capital.
(b) Own, redeem, retire, purchase, or acquire any of any Borrower's capital
stock.
(c) Invest in or purchase any stock or securities or rights to purchase any such
stock or
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securities, of any Person.
(d) Merge or consolidate or be merged or consolidated with or into any other
corporation or other entity.
(e) Consolidate any of that Borrower's operations with those of any other Person
other than of another Borrower.
(f) Organize or create any Affiliate other than the organization of one or more
Subsidiaries with the prior written consent of the Administrative Agent, not to
be unreasonably withheld, but which consent may be conditioned on the execution
by such Subsidiary of, and its furnishing to the Administrative Agent of, such
documents as the Agent reasonably may require in order to assure that all assets
of such Subsidiary secure the Liabilities with first and only Collateral
Interests (subject only to Permitted Encumbrances).
(g) Subordinate any debts or obligations owed to that Borrower by any third
party to any other debts owed by such third party to any other Person.
(h) Acquire any assets other than in the ordinary course and conduct of that
Borrower's business as conducted at the execution of this Agreement.
1:8 LOANS. No Borrower shall make any loans or advances to, nor acquire the
Indebtedness of, any Person, provided, however, the foregoing does not prohibit
any of the following:
(a) Advance payments made to that Borrower's suppliers in the ordinary course.
(b) Advances to that Borrower's officers, employees, and salespersons with
respect to reasonable expenses to be incurred by such officers, employees, and
salespersons for the benefit of that Borrower, which expenses are properly
substantiated by the person seeking such advance and properly reimbursable by
that Borrower.
1:9 PROTECTION OF ASSETS. The Administrative Agent, in the Administrative
Agent's discretion, and from time to time, may discharge any tax or Encumbrance
on any of the Collateral, or take any other action which the Administrative
Agent may deem necessary or desirable to repair, insure, maintain, preserve,
collect, or realize upon any of the Collateral. The Administrative Agent shall
not have any obligation to undertake any of the foregoing and shall have no
liability on account of any action so undertaken except where there is a
specific finding in a judicial proceeding (in which the Administrative Agent has
had an opportunity to be heard), from which finding no further appeal is
available, that the Administrative Agent had acted in actual bad faith or in a
grossly negligent manner. The Borrowers shall pay to the Administrative Agent,
on demand, or the Administrative Agent, in its discretion, may add to the Loan
Account, all amounts paid or incurred by the Administrative Agent pursuant to
this section.
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1:10 LINE OF BUSINESS. No Borrower shall engage in any business other than the
business in which it is currently engaged or a business reasonably related
thereto (the conduct of which reasonably related business is reflected in the
Business Plan).
1:11 AFFILIATE TRANSACTIONS. No Borrower shall make any payment, nor give any
value to any Affiliate except for goods and services actually purchased by that
Borrower from, or sold by that Borrower to, such Affiliate for a price and on
terms which shall
(a) be competitive and fully deductible as an "ordinary and necessary business
expense" and/or fully depreciable under the Internal Revenue Code of 1986 and
the Treasury Regulations, each as amended; and
(b) be no less favorable to that Borrower than those which would have been
charged and imposed in an arms length transaction.
1:12 FURTHER ASSURANCES.
(a) No Borrower is the owner of, nor has it any interest in, any property or
asset which, immediately upon the satisfaction of the conditions precedent to
the effectiveness of the credit facility contemplated hereby (Article ) will not
be subject to a perfected Collateral Interest in favor of the Collateral Agent
(subject only to Permitted Encumbrances) to secure the Liabilities.
(b) No Borrower will hereafter acquire any asset or any interest in property
which is not, immediately upon such acquisition, subject to such a perfected
Collateral Interest in favor of the Collateral Agent to secure the Liabilities
(subject only to Permitted Encumbrances).
(c) Each Borrower shall execute and deliver to the Administrative Agent such
instruments, documents, and papers, and shall do all such things from time to
time hereafter as the Administrative Agent may request to carry into effect the
provisions and intent of this Agreement; to protect and perfect the Collateral
Agent's Collateral Interests in the Collateral; and to comply with all
applicable statutes and laws, and facilitate the collection of the Receivables
Collateral. Each Borrower shall execute all such instruments as may be required
by the Administrative Agent with respect to the recordation and/or perfection of
the Collateral Interests created or contemplated herein.
(d) Each Borrower hereby designates the Collateral Agent as and for that
Borrower's true and lawful attorney, with full power of substitution, to sign
and file any financing statements in order to perfect or protect the Collateral
Agent's Collateral Interests in the Collateral.
(e) Each Borrower hereby authorizes the Collateral Agent to file such financing
statements as the Collateral Agent determines as appropriate to perfect or
protect the Collateral Agent's Collateral
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Interests in the Collateral.
(f) A carbon, photographic, or other reproduction of this Agreement or of any
financing statement or other instrument executed pursuant to this Section shall
be sufficient for filing to perfect the security interests granted herein.
1:13 ADEQUACY OF DISCLOSURE.
(a) All financial statements furnished to each Agent and each Lender by each
Borrower have been prepared in accordance with GAAP consistently applied and
present fairly the condition of the Borrowers at the date(s) thereof and the
results of operations and cash flows for the period(s) covered (provided
however, that unaudited financial statements are subject to normal year end
adjustments and to the absence of footnotes). There has been no change in the
Consolidated financial condition, results of operations, or cash flows of the
Borrowers since the date(s) of such financial statements, other than changes in
the ordinary course of business, which changes have not been materially adverse,
either singularly or in the aggregate.
(b) No Borrower has any contingent obligations or obligation under any Lease or
Capital Lease which is not noted in the Borrowers' Consolidated financial
statements furnished to each Agent and each Lender prior to the execution of
this Agreement.
(c) No document, instrument, agreement, or paper now or hereafter given each
Agent and each Lender by or on behalf of each Borrower or any guarantor of the
Liabilities in connection with the execution of this Agreement by each Agent and
each Lender contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary in order to make the
statements therein not misleading. There is no fact known to any Borrower which
has, or which, in the foreseeable future could have, a material adverse effect
on the financial condition of any Borrower or any such guarantor which has not
been disclosed in writing to each Agent and each Lender.
1:14 NO RESTRICTIONS ON LIABILITIES. No Borrower shall enter into or directly or
indirectly become subject to any agreement which prohibits or restricts, in any
manner, any Borrower's:
(a) Creation of, and granting of Collateral Interests in favor of the Collateral
Agent.
(b) Incurrence of Liabilities.
1:15 OTHER COVENANTS. No Borrower shall indirectly do or cause to be done any
act which, if done directly by that Borrower, would breach any covenant
contained in this Agreement.
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1: ARTICLE FINANCIAL REPORTING AND PERFORMANCE COVENANTS:
1:1 MAINTAIN RECORDS. The Borrowers shall:
(a) At all times, keep proper books of account, in which full, true, and
accurate entries shall be made of all of the Borrowers' financial transactions,
all in accordance with GAAP applied consistently with prior periods to fairly
reflect the Consolidated financial condition of the Borrowers at the close of,
and its results of operations for, the periods in question.
(b) Timely provide the Administrative Agent with those financial reports,
statements, and schedules required by this Article or otherwise, each of which
reports, statements and schedules shall be prepared, to the extent applicable,
in accordance with GAAP applied consistently with prior periods to fairly
reflect the Consolidated financial condition of the Borrowers at the close of,
and the results of operations for, the period(s) covered therein.
(c) At all times, keep accurate current records of the Collateral including,
without limitation, accurate current stock, cost, and sales records of its
Inventory, accurately and sufficiently itemizing and describing the kinds,
types, and quantities of Inventory and the cost and selling prices thereof.
(d) At all times, retain independent certified public accountants who are
reasonably satisfactory to the Administrative Agent and instruct such
accountants to fully cooperate with, and be available to, the Administrative
Agent to discuss the Borrowers' financial performance, financial condition,
operating results, controls, and such other matters, within the scope of the
retention of such accountants, as may be raised by the Administrative Agent.
(e) Not change any Borrower's fiscal year.
1:2 ACCESS TO RECORDS.
(a) Each Borrower shall accord the Administrative Agent with access from time to
time as the Administrative Agent may require to all properties owned by or over
which any Borrower has control. The Administrative Agent shall have the right,
and each Borrower will permit the Administrative Agent from time to time as
Administrative Agent may request, to examine, inspect, copy, and make extracts
from any and all of the Borrowers' books, records, electronically stored data,
papers, and files. Each Borrower shall make all of that Borrower's copying
facilities available to the Administrative Agent.
(b) Each Borrower hereby authorizes the Administrative Agent to:
(i) Inspect, copy, duplicate, review, cause to be reduced to hard copy,
run off, draw off, and otherwise use any and all computer or
electronically stored information or data which relates to any Borrower,
or any service bureau, contractor, accountant, or other person, and
directs any such service
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bureau, contractor, accountant, or other person fully to cooperate with
the Administrative Agent with respect thereto.
(ii) Verify at any time the Collateral or any portion thereof, including
verification with Account Debtors, and/or with each Borrower's computer
billing companies, collection agencies, and accountants and to sign the
name of each Borrower on any notice to each Borrower's Account Debtors
or verification of the Collateral.
(c) The Administrative Agent from time to time may designate one or more
representatives to exercise the Administrative Agent's rights under this Section
as fully as if the Administrative Agent were doing so.
1:3 IMMEDIATE NOTICE TO ADMINISTRATIVE AGENT.
(a) The Lead Borrower shall provide the Administrative Agent with written notice
promptly upon the occurrence of any of the following events, which written
notice shall be with reasonable particularity as to the facts and circumstances
in respect of which such notice is being given:
(i) Any change in any Borrower's President, chief executive officer,
chief operating officer, and chief financial officer (without regard to
the title(s) actually given to the Persons discharging the duties
customarily discharged by officers with those titles).
(ii) Any ceasing of any Borrower's making of payment, in the ordinary
course, to any of its creditors (other than its ceasing of making of
such payments on account of a de minimis dispute).
(iii) Any failure by any Borrower to pay rent at any of that Borrower's
locations, which failure continues for more than Three (3) days
following the last day on which such rent was payable without more than
a de minimis adverse effect to that Borrower.
(iv) Any material adverse change in the business, operations, or
financial affairs of any Borrower.
(v) Any Borrower's becoming InDefault.
(vi) Any intention on the part of any Borrower to discharge that
Borrower's present independent accountants or any withdrawal or
resignation by such independent accountants from their acting in such
capacity (as to which, see Subsection ).
(vii) Any litigation which, if determined adversely to any Borrower,
might have a material adverse effect on the financial condition of that
Borrower.
(viii) Any failure by any Borrower's operations to be Year 2000
Compliant, except where such failure has no more than a de minimis
adverse effect on the Borrowers' operations.
(b) The Lead Borrower shall:
(i) Provide the Administrative Agent, when so distributed, with copies
of any materials
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distributed to the shareholders of the Lead Borrower (qua such
shareholders).
(ii) Provide the Administrative Agent:
(A) When filed, copies of all filings with the SEC.
(B) When received, copies of all correspondence from the SEC,
other than routine non-substantive general communications from
the SEC.
(iii) Add the Administrative Agent as an addressee on all mailing lists
maintained by or for each Borrower.
(iv) At the request of the Administrative Agent, from time to time,
provide the Administrative Agent with copies of all advertising
(including copies of all print advertising and duplicate tapes of all
video and radio advertising).
(v) Provide the Administrative Agent, when received by any Borrower,
with a copy of any management letter or similar communications from any
accountant of any Borrower.
1:4 BORROWING BASE CERTIFICATE. The Lead Borrower shall provide the
Administrative Agent by 1:00p.m., daily with a "BORROWING BASE CERTIFICATE" (so
referred to herein) in the form of EXHIBIT annexed hereto, as such form may be
revised from time to time by the Administrative Agent. Inventory, as reported on
the Borrowing Base Certificate, may be rolled forward on a weekly basis (or more
frequently if the Borrower so determines). Such Certificate may be sent to the
Administrative Agent by facsimile transmission, provided that the original
thereof is forwarded to the Administrative Agent on the date of such
transmission.
1:5 WEEKLY REPORTS. Weekly, on Tuesday of each week (as of the then immediately
preceding Saturday) the Lead Borrower shall provide the Administrative Agent
with a sales audit report and a flash collateral report (each in such form as
may be specified from time to time by the Administrative Agent). Such report may
be sent to the Administrative Agent by facsimile transmission, provided that the
original thereof is forwarded to the Administrative Agent on the date of such
transmission.
1:6 MONTHLY REPORTS.
(a) Monthly, the Lead Borrower shall provide the Administrative Agent with
original counterparts of the following (each in such form as the Administrative
Agent from time to time may specify):
(i) Within Fifteen (15) days of the end of the previous month:
(A) A "Stock Ledger Inventory Report" and a Certificate (signed
by the Lead Borrower's President or Chief Financial Officer)
concerning the Borrowers' Inventory.
(B) An aging of the Borrowers' Inventory.
(ii) Within Thirty (30) days of the end of the previous month:
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(A) Reconciliation of the above described Report and Inventory
Certificate (Section ) to Availability and to the general ledger
as of the end of the subject month.
(B) A Gross Margin Reconciliation.
(C) An aging of the Borrowers' accounts payable.
(D) A Store Activity Report (which shall consist of a listing of
store openings a closings since the then most recent such Report
provided to the Administrative Agent).
(E) An update of EXHIBIT (Franchisees), both in hard copy and as
a spreadsheet in Microsoft Excel97 or such other software as may
be mutually agreeable amongst the Lead Borrower and the Lender.
(F) The officer's compliance certificate described in Section.
(G) An internally prepared financial "stand alone" statement of
the financial condition of each Licensing Borrower and the
results of its operations for, the period ending with the end of
the subject month, which financial statement shall include, at a
minimum, a balance sheet, income statement, cash flow and
comparison of results for the corresponding month of the then
immediately previous year, as well as to the Business Plan.
(H) An internally prepared financial statement of the Borrowers'
Consolidated financial condition and the results of its
operations for, the period ending with the end of the subject
month, which financial statement shall include, at a minimum, a
balance sheet, income statement (on a store specific and on a
"consolidated" basis), cash flow and comparison of same store
sales for the corresponding month of the then immediately
previous year, as well as to the Business Plan.
(b) For purposes of Sections , above, and , above, the first "previous month" in
respect of which the items respectively required by those Sections shall be
July, 2000.
1:7 QUARTERLY REPORTS. Quarterly, within Forty Five (45) days following the
end of each of the Borrowers' fiscal quarters, the Lead Borrower shall provide
the Administrative Agent with the following:
(a) An original counterpart of a management prepared financial statement of the
Borrowers for the period from the beginning of the Borrowers' then current
fiscal year through the end of the subject quarter, with comparative information
for the same period of the previous fiscal year, which statement shall include,
at a minimum, a balance sheet, income statement (on a store specific and on a
"consolidated" basis), statement of changes in shareholders' equity, and cash
flows and comparisons for the corresponding quarter of the then immediately
previous year, as well as to the Business Plan.
(b) The officer's compliance certificate described in Section
1:8. ANNUAL REPORTS.
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(a) Annually, within ninety (90) days following the end of the Borrowers' fiscal
year, the Lead Borrower shall furnish the Administrative Agent with the
following:
(i) An original signed counterpart of the Borrowers' Consolidated annual
financial statement, which statement shall have been prepared by, and
bear the unqualified opinion of, the Lead Borrower's independent
certified public accountants (i.e. said statement shall be "certified"
by such accountants) and shall include, at a minimum (with comparative
information for the then prior fiscal year) a balance sheet, income
statement, statement of changes in shareholders' equity, cash flows, and
schedules of consolidation.
(ii) The officer's compliance certificate described in Section.
(b) No later than the earlier of Fifteen (15) days prior to the end of each of
the Borrowers' fiscal years or the date on which such accountants commence their
work on the preparation of the Borrowers' annual financial statement, the Lead
Borrower shall give written notice to such accountants (with a copy of such
notice, when sent, to the Administrative Agent) that:
(i) Such annual financial statement will be delivered by the Lead
Borrower to the Administrative Agent (for subsequent distribution
to each Lender).
(ii) It is the primary intention of the Borrowers, in its
engagement of such accountants, to satisfy the financial
reporting requirements set forth in this Article.
(iii) The Lead Borrower has been advised that the Administrative
Agent and each Lender).
will rely thereon with respect to the administration of, and transactions under,
the credit facility contemplated by this Agreement.
(a) Each annual statement shall be accompanied by such accountant's Certificate
indicating that, in conducting the audit for such annual statement, nothing came
to the attention of such accountants to believe that the Borrower is not
InDefault (or that if the Borrower is in Default, the facts and circumstances
thereof).
1:2. OFFICERS' CERTIFICATES. The Lead Borrower shall cause either the Lead
Borrower's President or its Chief Financial Officer, in each instance, to
provide such Person's Certificate with those monthly statements required
pursuant to Section , quarterly, and annual statements to be furnished pursuant
to this Agreement, which Certificate shall:
(a) Indicate that the subject statement was prepared in accordance with GAAP
consistently applied and presents fairly the Consolidated financial condition of
the Borrowers at the close of, and the results of the Borrowers' operations and
cash flows for, the period(s) covered, subject, however to the following:
(i) Usual year end adjustments (this exception shall not be included in
the Certificate which
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accompanies such annual statement).
(ii) Material Accounting Changes (in which event, such Certificate shall
include a schedule (in reasonable detail) of the effect of each such
Material Accounting Change) not previously specifically taken into
account in the determination of the financial performance covenant
imposed pursuant to Section.
(b) Indicate either that (i) no Borrower is InDefault, or (ii) if such an event
has occurred, its nature (in reasonable detail) and the steps (if any) being
taken or contemplated by the Borrowers to be taken on account thereof.
(c) Include calculations concerning the Borrowers' compliance (or failure to
comply) at the date of the subject statement with each of the financial
performance covenants included in Section hereof.
1:3. INVENTORIES, APPRAISALS, AND AUDITS.
(a) The Administrative Agent, at the expense of the Borrowers, may participate
in and/or observe each physical count and/or inventory of so much of the
Collateral as consists of Inventory which is undertaken on behalf of any
Borrower.
(b) The Borrowers, at their own expense, shall cause not less than one (1)
physical inventories to be undertaken in each twelve (12) month period during
which this Agreement is in effect (the spacing of the scheduling of which
inventories shall be subject to the Administrative Agent's discretion) conducted
by such inventory takers as are satisfactory to the Administrative Agent and
following such methodology as may be satisfactory to the Administrative Agent.
(i) The Lead Borrower shall provide the Administrative Agent with a copy
of the preliminary results of each such inventory (as well as of any
other physical inventory undertaken by any Borrower) within ten (10)
days following the completion of such inventory.
(ii) The Lead Borrower, within thirty (30) days following the completion
of such inventory, shall provide the Administrative Agent with a
reconciliation of the results of each such inventory (as well as of any
other physical inventory undertaken by any Borrower) and shall post such
results to the Borrowers' stock ledger and, as applicable to the
Borrowers' other financial books and records.
(iii) The Administrative Agent, in its discretion, if any Borrower is
InDefault, may cause such additional inventories to be taken as the
Administrative Agent determines (each, at the expense of the Borrowers).
(c) The Administrative Agent may obtain appraisals of the Collateral, from time
to time (in all events, at the Borrowers' expense) conducted by such appraisers
as are satisfactory to the Administrative Agent.
(d) The Administrative Agent contemplates conducting Four (4) commercial finance
field examinations (in each event, at the Borrowers' expense) of the Borrowers'
books and records during any
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Twelve (12) month period during which this Agreement is in effect, but in its
discretion, may undertake additional such audits during such period.
(e) The Administrative Agent from time to time (in all events, at the Borrowers'
expense) may undertake "mystery shopping" (so-called) visits to all or any of
the Borrowers' business premises.
1:4. ADDITIONAL FINANCIAL INFORMATION.
(a) In addition to all other information required to be provided pursuant to
this Article , the Lead Borrower promptly shall provide the Administrative Agent
(and any guarantor of the Liabilities), with such other and additional
information concerning the Borrowers, the Collateral, the operation of the
Borrowers' business, and the Borrowers' financial condition, including original
counterparts of financial reports and statements, as the Administrative Agent
may from time to time request from the Lead Borrower.
(b) The Lead Borrower may provide the Administrative Agent, from time to time
hereafter, with updated forecasts of the Borrowers' anticipated performance and
operating results.
(c) In all events, the Lead Borrower, no sooner than Ninety (90) nor later than
Sixty (60) days prior to the end of each of the Borrowers' fiscal years, shall
provide the Administrative Agent with an updated and extended forecast which
shall go out at least through the end of the then next fiscal year and shall
include an income statement, balance sheet, and statement of cash flow, by
month, each Consolidated (with consolidating schedules) and each prepared in
conformity with GAAP and consistent with the Borrowers' then current practices.
(d) The Administrative Agent, following the receipt of any of such forecast,
may, but shall not be under any obligation to, provide its written sign-off on
such forecast (in which event, such forecast shall become the Business Plan) and
if it provides such written sign-off, may by written notice to the Lead
Borrower, extend or revise the financial performance covenants included in
Section.
(e) Each Borrower recognizes that all appraisals, inventories, analysis,
financial information, and other materials which the Administrative Agent may
obtain, develop, or receive with respect to the Borrowers are confidential to
the Administrative Agent and that, except as otherwise provided herein, no
Borrower is entitled to receipt of any of such appraisals, inventories,
analysis, financial information, and other materials, nor copies or extracts
thereof or therefrom.
1:5. FINANCIAL PERFORMANCE COVENANTS. The Borrowers shall observe and comply
with the following financial performance covenants, compliance with which the
Administrative Agent may determine based upon financial reports and statements
provided by the Lead Borrower to the Administrative Agent (whether or not such
financial reports and statements are required to be furnished pursuant to this
Agreement) as well as by reference to interim financial information and
appraisals of Collateral provided to,
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or developed by, the Administrative Agent:
(a) The Borrowers shall at all times maintain Excess Availability of not less
than $5 Million.
(b) The Borrowers shall not permit their Consolidated Capital Expenditures to
exceed the following:
(i) Third and Fourth quarters of the Borrowers' Fiscal 2001: $10 Million
(ii) Any Fiscal Year after Fiscal Year 2001: $15 Million.
(iii) Any consecutive 6 months: $10 Million
1: ARTICLE - USE OF COLLATERAL:
1:1. USE OF INVENTORY COLLATERAL.
(a) No Borrower shall engage
(i) In any sale or disposition of the Inventory other than
(A) For fair consideration in the conduct of the Borrowers'
business in the ordinary course; or
(B) The disposition of nonsaleable and obsolete Inventory in
accordance with the Borrowers' practices in effect on or prior
to August 15, 2000.
(ii) Sales or other dispositions to creditors.
(iii) Sales or other dispositions in bulk.
(iv) Sales of any Collateral in breach of any provision of this
Agreement.
(b) No sale of Inventory shall be on consignment, approval, or under any other
circumstances such that, with the exception of the Borrowers' customary return
policy applicable to the return of inventory purchased by the Borrowers' retail
customers in the ordinary course, such Inventory may be returned to a Borrower
without the consent of the Administrative Agent.
1:2. INVENTORY QUALITY. All Inventory now owned or hereafter acquired by each
Borrower is and will be of good and merchantable quality and free from defects
(other than defects within customary trade tolerances).
1:3. ADJUSTMENTS AND ALLOWANCES. Each Borrower may grant such allowances or
other adjustments to that Borrower's Account Debtors (exclusive of extending the
time for payment of any Account or Account Receivable, which shall not be done
without first obtaining the Administrative Agent's prior written consent in each
instance) as that Borrower may reasonably deem to accord with sound business
practice, provided, however, the authority granted the Borrowers pursuant to
this Section may be
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limited or terminated by the Administrative Agent at any time in the
Administrative Agent's discretion.
1:5 VALIDITY OF ACCOUNTS.
(a) The amount of each Account shown on the books, records, and invoices of the
Borrowers represented as owing by each Account Debtor is and will be the correct
amount actually owing by such Account Debtor and shall have been fully earned by
performance by the Borrowers.
(b) No Borrower has any knowledge of any impairment of the validity or
collectibility of any of the Accounts. The Lead Borrower shall notify the
Administrative Agent of any such impairment immediately after any Borrower
becomes aware of any such impairment.
(c) No Borrower shall post any bond to secure any Borrower's performance under
any agreement to which any Borrower is a party nor cause any surety, guarantor,
or other third party obligee to become liable to perform any obligation of any
Borrower (other than to the Administrative Agent) in the event of any Borrower's
failure so to perform.
1:6. NOTIFICATION TO ACCOUNT DEBTORS. The Administrative Agent shall have the
right (whether or not an Event of Default has occurred) to notify any of the
Borrowers' Account Debtors to make payment directly to the Administrative Agent
and to collect all amounts due on account of the Collateral.
1: ARTICLE - CASH MANAGEMENT. PAYMENT OF LIABILITIES:
2:1 DEPOSITORY ACCOUNTS.
(a) Annexed hereto as EXHIBIT is a Schedule of all present DDA's, which Schedule
includes, with respect to each depository (i) the name and address of that
depository; (ii) the account number(s) of the account(s) maintained with such
depository; and (iii) a contact person at such depository.
(b) The Lead Borrower shall deliver the following to the Administrative Agent,
as a condition to the effectiveness of this Agreement, notification, executed on
behalf of each Borrower, to each depository institution with which any DDA is
maintained (other than any Exempt DDA and the Blocked Account), in form
satisfactory to the Administrative Agent of the Collateral Agent's interest in
such DDA.
(c) No Borrower will establish any DDA hereafter (other than an Exempt DDA)
unless, contemporaneous with such establishment, the Lead Borrower delivers the
following to the Administrative Agent notification to the depository at which
such DDA is established if the same would have been required pursuant to Section
if the subject DDA were open at the execution of this Agreement.
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2:2 CREDIT CARD RECEIPTS.
(a) Annexed hereto as EXHIBIT , is a Schedule which describes all arrangements
to which any Borrower is a party with respect to the payment to that Borrower of
the proceeds of credit card charges for sales by that Borrower.
(b) The Lead Borrower shall deliver to the Administrative Agent, as a condition
to the effectiveness of this Agreement, notification, executed on behalf of each
Borrower, to each of each Borrower's credit card clearinghouses and processors
of notice (in form satisfactory to the Administrative Agent), which notice
provides that payment of all credit card charges submitted by that Borrower to
that clearinghouse or other processor and any other amount payable to that
Borrower by such clearinghouse or other processor shall be directed to the
Concentration Account or as otherwise designated from time to time by the
Administrative Agent. No Borrower shall change such direction or designation
except upon and with the prior written consent of the Administrative Agent.
2:3 THE CONCENTRATION, BLOCKED, AND OPERATING ACCOUNTS.
(a) The following checking accounts have been or will be established (and are so
referred to herein):
(i) The "CONCENTRATION ACCOUNT" (so referred to herein): Established by
the Administrative Agent with Fleet National Bank.
(ii) The "BLOCKED ACCOUNT" (so referred to herein): To be established by
the Lead Borrower with Fleet National Bank, as provided in Section.
(iii) The "OPERATING ACCOUNT" (so referred to herein): Established by
the Lead Borrower with Bank of America (but see Section ).
(b) The contents of each DDA (other than the Operating Account) and of the
Blocked Account constitutes Collateral and Proceeds of Collateral. The contents
of the Concentration Account constitutes the Administrative Agent's property.
(c) The Lead Borrower shall cause the following to take place:
(i) On or before October 13, 2000, the Borrower shall cause the direct
concentration to a dedicated account at Fleet National Bank (which shall
be the "Blocked Account") of cash and other proceeds of sales from each
Store and of all Receipts of Gymboree Play Programs, Inc. (or in the
alternative, on or before that date, shall cause such direct
concentration to the Concentration Account).
(ii) On or before December 1, 2000, the Lead Borrower shall cause the
Operating Account with Bank of America to be replaced by a DDA with
Fleet National Bank (which DDA with Fleet National Bank shall become the
"Operating Account" the Operating Account with Bank of America is so
replaced) and shall close such account with Bank of America.
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(d) The Borrowers shall pay all fees and charges of, and maintain such impressed
balances as may be required by the depository in which any account is opened as
required hereby (even if such account is opened by and/or is the property of the
Administrative Agent).
2:4 PROCEEDS AND COLLECTIONS.
(a) All Receipts and all cash proceeds of any sale or other disposition of any
of each Borrower's assets:
(i) Constitute Collateral and proceeds of Collateral.
(ii) Shall be held in trust by the Borrowers for the Administrative
Agent.
(iii) Shall not be commingled with any of any Borrower's other funds.
(iv) Shall be deposited and/or transferred only to the Blocked Account
or the Concentration Account.
(b) The Lead Borrower shall cause the ACH or wire transfer to the Blocked or the
Concentration Account, no less frequently than daily (and whether or not there
is then an outstanding balance in the Loan Account) of the following:
(i) The then contents of each DDA (other than any Exempt DDA), each such
transfer to be net of any minimum balance, not to exceed $750, as may be
required to be maintained in the subject DDA by the bank at which such
DDA is maintained).
(ii) The proceeds of all credit card charges not otherwise provided for
pursuant hereto.
Telephone advice (confirmed by written notice) shall be provided to the
Administrative Agent on each Business Day on which any such transfer is made.
(a) Whether or not any Liabilities are then outstanding, the Lead Borrower shall
cause the ACH or wire transfer to the Concentration Account, no less frequently
than daily, of then entire ledger balance of the Blocked Account, net of such
minimum balance, not to exceed $25,000.00., as may be required to be maintained
in the Blocked Account by the depository which the Blocked Account is
maintained.
(b) In the event that, notwithstanding the provisions of this Section , any
Borrower receives or otherwise has dominion and control of any Receipts, or any
proceeds or collections of any Collateral, such Receipts, proceeds, and
collections shall be held in trust by that Borrower for the Administrative Agent
and shall not be commingled with any of that Borrower's other funds or deposited
in any account of any Borrower other than as instructed by the Administrative
Agent.
1:2 PAYMENT OF LIABILITIES.
(a) On each Business Day, the Administrative Agent shall apply the then
collected balance of
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the Concentration Account (net of fees charged, and of such impressed balances
as may be required by the bank at which the Concentration Account is maintained)
First, towards the SwingLine Loans and Second, towards the unpaid balance of the
Loan Account and all other Liabilities other than under the Term Loan, provided,
however, for purposes of the calculation of interest on the unpaid principal
balance of the Loan Account, such payment shall be deemed to have been made One
(1) Business Day after such transfer.
(b) The following rules shall apply to deposits and payments under and pursuant
to this Agreement:
(i) Funds shall be deemed to have been deposited to the
Concentration Account on the Business Day on which deposited,
provided that notice of such deposit is available to the
Administrative Agent by 2:00PM on that Business Day.
(ii) Funds paid to the Administrative Agent, other than by
deposit to the Concentration Account, shall be deemed to have
been received on the Business Day when they are good and
collected funds, provided that notice of such payment is
available to the Administrative Agent by 2:00PM on that Business
Day.
(iii) If notice of a deposit to the Concentration Account
(Section ) or payment (Section ) is not available to the
Administrative Agent until after 2:00PM on a Business Day, such
deposit or payment shall be deemed to have been made at 9:00AM on
the then next Business Day.
(iv) All deposits to the Concentration Account and other payments
to the Administrative Agent are subject to clearance and
collection.
(c) The Administrative Agent shall transfer to the Operating Account any surplus
in the Concentration Account remaining after the application towards the
Liabilities referred to in Section , above (less those amount which are to be
netted out, as provided therein) provided, however, in the event that
(i) any Borrower is InDefault; and
(ii) either
(A) one or more L/C's are then outstanding; or
(B) there is any amount unpaid on account of the Term Loan,
then the Administrative Agent may establish a funded reserve of up to 110% of
the aggregate of (x) the Stated Amounts of such L/C's plus (y) amounts unpaid on
account of the Term Loan. Such funded reserve shall either be (i) returned to
the Lead Borrower provided that no Borrower is InDefault or (ii) applied towards
the Liabilities following Acceleration.
1:1. THE OPERATING ACCOUNT. Except as otherwise specifically provided in, or
permitted by, this Agreement, all checks shall be drawn by the Lead Borrower
upon, and other disbursements shall be made by the Lead Borrower solely from,
the Operating Account.
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2: ARTICLE - GRANT OF SECURITY INTEREST:
3:1. GRANT OF SECURITY INTEREST. To secure the Borrowers' prompt, punctual,
and faithful performance of all and each of the Liabilities, each Borrower
hereby grants to the Collateral Agent, for the ratable benefit of the Lenders, a
continuing security interest in and to, and assigns to the Collateral Agent, for
the ratable benefit of the Lenders, the following, and each item thereof,
whether now owned or now due, or in which that Borrower has an interest, or
hereafter acquired, arising, or to become due, or in which that Borrower obtains
an interest, and all products, Proceeds, substitutions, and accessions of or to
any of the following (all of which, together with any other property in which
the Collateral Agent may in the future be granted a security interest, is
referred to herein as the "COLLATERAL"):
(a) All Accounts and accounts receivable.
(b) All Inventory.
(c) All General Intangibles.
(d) All Equipment.
(e) All Goods.
(f) All Farm Products.
(g) All Fixtures.
(h) All Chattel Paper.
(i) All Letter-of-Credit Rights.
(j) All Payment Intangibles.
(k) All Supporting Obligations.
(l) All books, records, and information relating to the
Collateral and/or to the operation of each Borrower's
business, and all rights of access to such books, records,
and information, and all property in which such books,
records, and information are stored, recorded, and
maintained.
(m) All Leasehold Interests.
(n) All Investment Property, Instruments, Documents, Deposit
Accounts, money, policies and certificates of insurance,
deposits, impressed accounts, compensating balances, cash,
or other property.
(o) All insurance proceeds, refunds, and premium rebates,
including, without limitation, proceeds of fire and credit
insurance, whether any of such proceeds, refunds, and
premium rebates arise out of any of the foregoing. (
through ) or otherwise.
(p) All liens, guaranties, rights, remedies, and privileges
pertaining to any of the foregoing ( through ), including
the right of stoppage in transit.
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1:1 EXTENT AND DURATION OF SECURITY INTEREST.
(a) The security interest created and granted herein is in addition to, and
supplemental of, any security interest previously granted by any Borrower to the
Collateral Agent and shall continue in full force and effect applicable to all
Liabilities until both (a) all Liabilities have been paid and/or satisfied in
full and (b) the security interest created herein is specifically terminated in
writing by a duly authorized officer of the Collateral Agent.
(b) It is intended that the Collateral Interests created herein extend to and
cover all assets of each Borrower.
(c) It is further intended that, with respect to any term used herein to
describe Collateral, which term is defined in either (or both) the UCC as in
effect on the date when this Agreement was executed by the Borrowers or in
UCC9'99, the meaning given that term shall be the more encompassing of the two
definitions.
1: ARTICLE - ADMINISTRATIVE AGENT AS BORROWER'S ATTORNEY-IN-FACT:
1:1. APPOINTMENT AS ATTORNEY-IN-FACT. Each Borrower hereby irrevocably
constitutes and appoints the Collateral Agent (acting through any of its
officers) as that Borrower's true and lawful attorney, with full power of
substitution, following the occurrence of an Event of Default, to convert the
Collateral into cash at the sole risk, cost, and expense of that Borrower, but
for the sole benefit of the Agents and the Lenders. The rights and powers
granted the Collateral Agent by this appointment include but are not limited to
the right and power to:
(a) Prosecute, defend, compromise, or release any action relating to the
Collateral.
(b) Sign change of address forms to change the address to which each Borrower's
mail is to be sent to such address as the Collateral Agent shall designate;
receive and open each Borrower's mail; remove any Receivables Collateral and
Proceeds of Collateral therefrom and turn over the balance of such mail either
to the Lead Borrower or to any trustee in bankruptcy or receiver of the Lead
Borrower, or other legal representative of a Borrower whom the Collateral Agent
determines to be the appropriate person to whom to so turn over such mail.
(c) Endorse the name of the relevant Borrower in favor of the Collateral Agent
upon any and all checks, drafts, notes, acceptances, or other items or
instruments; sign and endorse the name of the relevant Borrower on, and receive
as secured party, any of the Collateral, any invoices, schedules of Collateral,
freight or express receipts, or bills of lading, storage receipts, warehouse
receipts, or other documents of title respectively relating to the Collateral.
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(d) Sign the name of the relevant Borrower on any notice to that Borrower's
Account Debtors or verification of the Receivables Collateral; sign the relevant
Borrower's name on any Proof of Claim in Bankruptcy against Account Debtors, and
on notices of lien, claims of mechanic's liens, or assignments or releases of
mechanic's liens securing the Accounts.
(e) Take all such action as may be necessary to obtain the payment of any letter
of credit and/or banker's acceptance of which any Borrower is a beneficiary.
(f) Repair, manufacture, assemble, complete, package, deliver, alter or supply
goods, if any, necessary to fulfill in whole or in part the purchase order of
any customer of each Borrower.
(g) Use, license or transfer any or all General Intangibles of each Borrower.
1:2. NO OBLIGATION TO ACT. The Collateral Agent shall not be obligated to do
any of the acts or to exercise any of the powers authorized by Section herein,
but if the Collateral Agent elects to do any such act or to exercise any of such
powers, it shall not be accountable for more than it actually receives as a
result of such exercise of power, and shall not be responsible to any Borrower
for any act or omission to act except for any act or omission to act as to which
there is a final determination made in a judicial proceeding (in which
proceeding the Collateral Agent has had an opportunity to be heard) which
determination includes a specific finding that the subject act or omission to
act had been grossly negligent or in actual bad faith.
2: ARTICLE - EVENTS OF DEFAULT:
The occurrence of any event described in this Article respectively shall
constitute an "EVENT OF DEFAULT" herein. Upon the occurrence of any Event of
Default described in Section , any and all Liabilities shall become due and
payable without any further act on the part of the Administrative Agent. Upon
the occurrence of any other Event of Default, the Administrative Agent may, and
on the instruction of the SuperMajority Lenders as provided in Section , or as
provided in Section shall, declare any and all Liabilities shall become
immediately due and payable. The occurrence of any Event of Default shall also
constitute, without notice or demand, a default under all other agreements
between any Agent and any Lender and any Borrower and instruments and papers
heretofore, now, or hereafter given any Agent and any Lender by any Borrower.
1:1 FAILURE TO PAY THE REVOLVING CREDIT OR THE TERM LOAN. The failure by any
Borrower to pay when due any principal of, interest on, or fees in respect of,
the Revolving Credit or the Term Loan.
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1:2. FAILURE TO MAKE OTHER PAYMENTS. The failure by any Borrower to pay when
due (or upon demand, if payable on demand) any payment Liability other than any
payment liability on account of the principal of, or interest on, or fees in
respect of, the Revolving Credit or the Term Loan.
1:3. FAILURE TO PERFORM COVENANT OR LIABILITY (NO GRACE PERIOD). The failure
by any Borrower to promptly, punctually, faithfully and timely perform,
discharge, or comply with any covenant or Liability included in any of the
following provisions hereof:
Section Relates to :
------- ------------
Indebtedness
Pay taxes
Dividends. Investments. Other Corporate Actions
Affiliate Transactions
Article Reporting Requirements and Financial Performance Covenants
Article Cash Management
1:1. FAILURE TO PERFORM COVENANT OR LIABILITY (GRACE PERIOD). The failure by
any, Borrower. within fifteen (15) days following the earlier of any Borrower's
knowledge of a breach of any covenant or Liability not described in any of
Sections , , or or of its receipt of written notice from the Administrative
Agent of the breach of any of any of such covenants or Liabilities.
1:2. MISREPRESENTATION. The determination by the Administrative Agent that any
representation or warranty at any time made by any Borrower to any Agent or any
Lender was not true or complete in all material respects when given.
1:4. ACCELERATION OF OTHER DEBT. BREACH OF LEASE. The occurrence of any event
such that any Indebtedness in excess of $2.5 Million of any Borrower to any
creditor other than any Agent or any Lender could be accelerated or, without the
consent of any Borrower, any Lease could be terminated (whether or not the
subject creditor or lessor takes any action on account of such occurrence).
1:5 DEFAULT UNDER OTHER AGREEMENTS.
(a) The occurrence of any breach of any covenant or Liability imposed by, or of
any default under, any agreement (including any Loan Document) between any Agent
or any Lender and any Borrower or instrument given by any Borrower to any Agent
or any Lender and the expiry, without cure, of any applicable grace period
(notwithstanding that subject Agent or Lender may not have exercised all or any
of its rights on account of such breach or default).
(b) The occurrence of any breach or default under any Loan Document executed by
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the Canadian Subsidiary or by which the Canadian Subsidiary is bound.
1:6. UNINSURED CASUALTY LOSS. The occurrence of any uninsured loss, theft,
damage, or destruction of or to any material portion of the Collateral.
1:7. ATTACHMENT. JUDGMENT. RESTRAINT OF BUSINESS.
(a) The service of process upon any Agent or any Lender or any Participant
seeking to attach, by trustee, mesne, or other process,, in an action against a
Borrower, any funds of any Borrower on deposit with, or assets of any Borrower
in the possession of, that Agent or that Lender or such Participant.
(b) The entry of any judgment against any Borrower, which judgment is not
satisfied (if a money judgment) or appealed from (with execution or similar
process stayed) within thirty (30) days of its entry.
(c) The entry of any order or the imposition of any other process having the
force of law, the effect of which is to restrain in any material way the conduct
by any Borrower of its business in the ordinary course.
1:8. BUSINESS FAILURE. Any act by, against, or relating to any Borrower, or
its property or assets, which act constitutes the determination, by any
Borrower, to initiate a program of partial or total self-liquidation;
application for, consent to, or sufferance of the appointment of a receiver,
trustee, or other person, pursuant to court action or otherwise, over all, or
any part of any Borrower's property; the granting of any trust mortgage or
execution of an assignment for the benefit of the creditors of any Borrower, or
the occurrence of any other voluntary or involuntary liquidation or extension of
debt agreement for any Borrower; the offering by or entering into by any
Borrower of any composition, extension, or any other arrangement seeking relief
from or extension of the debts of any Borrower; or the initiation of any
judicial or non-judicial proceeding or agreement by, against, or including any
Borrower which seeks or intends to accomplish a reorganization or arrangement
with creditors; and/or the initiation by or on behalf of any Borrower of the
liquidation or winding up of all or any part of any Borrower's business or
operations.
1:9. BANKRUPTCY. The failure by any Borrower to generally pay the debts of
that Borrower as they mature; adjudication of bankruptcy or insolvency relative
to any Borrower; the entry of an order for relief or similar order with respect
to any Borrower in any proceeding pursuant to the Bankruptcy Code or any other
federal bankruptcy law; the filing of any complaint, application, or petition by
any Borrower initiating any matter in which any Borrower is or may be granted
any relief from the debts of that Borrower
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pursuant to the Bankruptcy Code or any other insolvency statute or procedure;
the filing of any complaint, application, or petition against any Borrower
initiating any matter in which that Borrower is or may be granted any relief
from the debts of that Borrower pursuant to the Bankruptcy Code or any other
insolvency statute or procedure, which complaint, application, or petition is
not timely contested in good faith by that Borrower by appropriate proceedings
or, if so contested, is not dismissed within thirty (30) days of when filed.
1:10. DEFAULT BY GUARANTOR. The occurrence of any of the foregoing Events of
Default with respect to any guarantor or endorser of the Liabilities, or the
occurrence of any of the foregoing Events of Default with respect to any parent,
subsidiary, or Affiliate of any Borrower, as if such guarantor, endorser,
parent, or Affiliate were a "Borrower" described therein.
1:11. INDICTMENT - FORFEITURE. The indictment of, or institution of any legal
process or proceeding against, any Borrower, under any Applicable Law where the
relief, penalties, or remedies sought or available include the forfeiture of any
property of any Borrower and/or the imposition of any stay or other order, the
effect of which could be to restrain in any material way the conduct by any
Borrower of its business in the ordinary course.
1:12. FOREIGN PROCEEDING. There occurs in relation to a Borrower, the Canadian
Subsidiary, or any guarantor of the Liabilities in any country or territory in
which it carries on business or, to the jurisdiction of whose courts any of its
assets is subject, any event which, in the reasonable opinion of the
Administrative Agent appears to correspond to or to have an effect equivalent or
substantially similar to any of those referenced in Sections through and
including or any Borrower, the Canadian Subsidiary, or any guarantor of the
Liabilities becomes subject (other than as a creditor or claimant) in any such
country or territory to the operation of any law relating to bankruptcy,
insolvency, or liquidation.
1:13. TERMINATION OF GUARANTY. The termination or attempted termination of any
guaranty by any guarantor of the Liabilities.
1:14 CHALLENGE TO LOAN DOCUMENTS.
(a) Any challenge by or on behalf of any Borrower or any guarantor of the
Liabilities to the validity of any Loan Document or the applicability or
enforceability of any Loan Document strictly in accordance with the subject Loan
Document's terms or which seeks to void, avoid, limit, or otherwise adversely
affect any security interest created by or in any Loan Document or any payment
made pursuant thereto.
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1:15. Any determination by any court or any other judicial or government
authority that any Loan Document is not enforceable strictly in accordance with
the subject Loan Document's terms or which voids, avoids, limits, or otherwise
adversely affects any security interest created by any Loan Document or any
payment made pursuant thereto.
1:16. KEY MANAGEMENT. The death, disability, or failure of that person who
performs the duties of General Merchandise Manager (without regard of the title,
if any, of such person) or the Chief Financial Officer of the Lead Borrower
unless such person is replaced, within 45 days, with a person approved by the
affirmative vote of the Lead Borrower's Directors.
1:17 CHANGE IN CONTROL. Any Change in Control.
1: ARTICLE - RIGHTS AND REMEDIES UPON DEFAULT:
1:1 ACCELERATION.Upon the occurrence of any Event of Default as described in
Section , all Indebtedness of the Borrower to the Lenders shall be immediately
due and payable. Upon the occurrence of any Event of Default other than as
described in Section , the Administrative Agent may (and on the issuance of
Acceleration Notice(s) requisite to the causing of Acceleration, the
Administrative Agent shall) declare all Indebtedness of the Borrower to the
Lenders to be immediately due and payable and may exercise all of the
Administrative Agent's Rights and Remedies (and the Collateral Agent may
likewise exercise all of its rights and remedies upon default) as the
Administrative Agent from time to time thereafter determines as appropriate.
1:1. RIGHTS OF ENFORCEMENT. The Collateral Agent shall have all of the rights
and remedies of a secured party upon default under the UCC, in addition to which
the Collateral Agent shall have all and each of the following rights and
remedies:
(a) To give notice to any bank at which any DDA or Blocked Account is maintained
and in which Proceeds of Collateral are deposited, to turn over such Proceeds
directly to the Collateral Agent.
(b) To give notice to any customs broker of any of the Borrowers to follow the
instructions of the Collateral Agent as provided in any written agreement or
undertaking of such broker in favor of the Collateral Agent.
(c) To collect the Receivables Collateral with or without the taking of
possession of any of the Collateral.
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(d) To take possession of all or any portion of the Collateral.
(e) To sell, lease, or otherwise dispose of any or all of the Collateral, in its
then condition or following such preparation or processing as the Collateral
Agent deems advisable and with or without the taking of possession of any of the
Collateral.
(f) To conduct one or more going out of business sales which include the sale or
other disposition of the Collateral.
(g) To apply the Receivables Collateral or the Proceeds of the Collateral
towards (but not necessarily in complete satisfaction of) the Liabilities.
(h) To exercise all or any of the rights, remedies, powers, privileges, and
discretions under all or any of the Loan Documents.
1:2 SALE OF COLLATERAL.
(a) Any sale or other disposition of the Collateral may be at public or private
sale upon such terms and in such manner as the Collateral Agent deems advisable,
having due regard to compliance with any statute or regulation which might
affect, limit, or apply to the Collateral Agent's disposition of the Collateral.
(b) The Collateral Agent, in the exercise of the Collateral Agent's rights and
remedies upon default, may conduct one or more going out of business sales, in
the Collateral Agent's own right or by one or more agents and contractors. Such
sale(s) may be conducted upon any premises owned, leased, or occupied by any
Borrower. The Collateral Agent and any such agent or contractor, in conjunction
with any such sale, may augment the Inventory with other goods (all of which
other goods shall remain the sole property of the Collateral Agent or such agent
or contractor). Any amounts realized from the sale of such goods which
constitute augmentations to the Inventory (net of an allocable share of the
costs and expenses incurred in their disposition) shall be the sole property of
the Collateral Agent or such agent or contractor and neither any Borrower nor
any Person claiming under or in right of any Borrower shall have any interest
therein.
(c) Unless the Collateral is perishable or threatens to decline speedily in
value, or is of a type customarily sold on a recognized market (in which event
the Collateral Agent shall provide the Lead Borrower such notice as may be
practicable under the circumstances), the Collateral Agent shall give the Lead
Borrower at least ten (10) days prior written notice of the date, time, and
place of any proposed public sale, and of the date after which any private sale
or other disposition of the Collateral may be made. Each Borrower agrees that
such written notice shall satisfy all requirements for notice to that Borrower
which are imposed under the UCC or other applicable law with respect to the
exercise of the Collateral Agent's rights and remedies upon default.
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(d) The Collateral Agent, the Administrative Agent, and any Lender may purchase
the Collateral, or any portion of it at any sale held under this Article.
(e) If any of the Collateral is sold, leased, or otherwise disposed of by the
Collateral Agent on credit, the Liabilities shall not be deemed to have been
reduced as a result thereof unless and until payment is finally received thereon
by the Collateral Agent.
(f) The Collateral Agent shall turn over to the Administrative Agent the
proceeds of the exercise by the Collateral Agent of its rights and remedies
under this Article. The Administrative Agent shall apply the proceeds of the
Collateral Agent's exercise of its rights and remedies upon default pursuant to
this Article in accordance with Sections and.
1:3. OCCUPATION OF BUSINESS LOCATION. In connection with the Collateral
Agent's exercise of the Collateral Agent's rights under this Article , the
Collateral Agent may enter upon, occupy, and use any premises owned or occupied
by each Borrower, and may exclude each Borrower from such premises or portion
thereof as may have been so entered upon, occupied, or used by the Collateral
Agent. The Collateral Agent shall not be required to remove any of the
Collateral from any such premises upon the Collateral Agent's taking possession
thereof, and may render any Collateral unusable to the Borrowers. In no event
shall the Collateral Agent be liable to any Borrower for use or occupancy by the
Collateral Agent of any premises pursuant to this Article , nor for any charge
(such as wages for any Borrower's employees and utilities) incurred in
connection with the Collateral Agent's exercise of the Collateral Agent's Rights
and Remedies.
1:4. GRANT OF NONEXCLUSIVE LICENSE. Each Borrower hereby grants to the
Collateral Agent a royalty free nonexclusive irrevocable license (and the Term
Lender, to the extent that any of the following constitutes "Term Loan Priority
Collateral" joins in the granting of such license) to use, apply, and affix any
trademark, trade name, logo, or the like in which any Borrower now or hereafter
has rights, such license being with respect to the Collateral Agent's exercise
of the rights hereunder including, without limitation, in connection with any
completion of the manufacture of Inventory or sale or other disposition of
Inventory.
1:5. ASSEMBLY OF COLLATERAL. The Collateral Agent may require any Borrower to
assemble the Collateral and make it available to the Collateral Agent at the
Borrowers' sole risk and expense at a place or places which are reasonably
convenient to both the Collateral Agent and the Lead Borrower.
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1:6. RIGHTS AND REMEDIES. The rights, remedies, powers, privileges, and
discretions of the Administrative Agent hereunder (herein, the AGENTS' RIGHTS
AND REMEDIES") shall be cumulative and not exclusive of any rights or remedies
which it would otherwise have. No delay or omission by an Agent in exercising or
enforcing any of the Agents' Rights and Remedies shall operate as, or
constitute, a waiver thereof. No waiver by an Agent of any Event of Default or
of any default under any other agreement shall operate as a waiver of any other
default hereunder or under any other agreement. No single or partial exercise of
any of the Agents' Rights or Remedies, and no express or implied agreement or
transaction of whatever nature entered into between any Agent and any person, at
any time, shall preclude the other or further exercise of the Agents' Rights and
Remedies. No waiver by any Agent of any of the Agents' Rights and Remedies on
any one occasion shall be deemed a waiver on any subsequent occasion, nor shall
it be deemed a continuing waiver. The Agents' Rights and Remedies may be
exercised at such time or times and in such order of preference as the Agents
may determine. The Agents' Rights and Remedies may be exercised without resort
or regard to any other source of satisfaction of the Liabilities.
3: ARTICLE - REVOLVING CREDIT FUNDINGS AND DISTRIBUTIONS:
3:1. REVOLVING CREDIT FUNDING PROCEDURES. Subject to Section :
(a) The Agent shall advise each Revolving Credit Lender, no later than 2:00PM on
a date on which any Revolving Credit Loan (other than a SwingLine Loan) is to be
made on that date. Such advice, in each instance, may be by telephone or
facsimile transmission, provided that if such advice is by telephone, it shall
be confirmed in writing. Advice of a Revolving Credit Loan shall include the
amount of and interest rate applicable to the subject Revolving Credit Loan.
(b) Subject to that Revolving Credit Lender's Revolving Credit Dollar
Commitment, each Revolving Credit Lender, by no later than the end of business
on the day on which the subject Revolving Credit Loan is to be made, shall
Transfer that Revolving Credit Lender's Revolving Credit Percentage Commitment
of the subject Revolving Credit Loan to the Administrative Agent.
3:2. SWINGLINE LOANS.
(a) In the event that, when a Revolving Credit Loan is requested, the aggregate
unpaid balance of the SwingLine Loan is less than the SwingLine Loan Ceiling,
then the SwingLine Lender may advise the Administrative Agent that the SwingLine
Lender has determined to include up to the amount of the requested Revolving
Credit Loan as part of the SwingLine Loan. In such event, the SwingLine Lender
shall Transfer the amount of the requested Revolving Credit Loan to the
Administrative Agent.
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(b) The SwingLine Loan shall be converted to a Revolving Credit Loan in which
all Revolving Credit Lenders participate as follows:
(i) At any time and from time to time, the SwingLine Lender may advise
the Administrative Agent that all, or any part of the SwingLine Loan is
to be converted to a Revolving Credit Loan in which all Revolving Credit
Lenders participate.
(ii) At the initiation of a Liquidation, the then entire unpaid
principal balance of the SwingLine Loan shall be converted to a
Revolving Credit Loan in which all Revolving Credit Lenders participate.
In either such event, the Administrative Agent shall advise each Revolving
Credit Lender of such conversion as if, and with the same effect as if such
conversion were the making of a Revolving Credit Loan as provided in Section .
(a) The SwingLine Lender, in separate capacities, may also be one or more
Agents, a Revolving Credit Lender, and the Term Lender.
(b) The SwingLine Lender, in its capacity as SwingLine Lender, is not a
"Revolving Credit Lender" for any of the following purposes:
(i) Except as otherwise specifically provided in the relevant Section,
any distribution pursuant to Section .
(ii) Determination of whether the requisite Loan Commitments have
Consented to action requiring such Consent.
1:1. ADMINISTRATIVE AGENT'S COVERING OF FUNDINGS:
(a) Each Revolving Credit Lender shall make available to the Administrative
Agent, as provided herein, that Revolving Credit Lender's Revolving Credit
Percentage Commitment of the following:
(i) Each Revolving Credit Loan, up to the maximum amount of that
Revolving Credit Lender's Revolving Credit Dollar Commitment of the
Revolving Credit Loans.
(ii) Up to the maximum amount of that Revolving Credit Lender's
Revolving Credit Dollar Commitment of each L/C Drawing (to the extent
that such L/C Drawing is not "covered" by a Revolving Credit Loan as
provided herein).
(b) In all circumstances, the Administrative Agent may:
(i) Assume that each Revolving Credit Lender, subject to Section ,
timely shall make available to the Administrative Agent that Revolving
Credit Lender's Revolving Credit Percentage Commitment of each Revolving
Credit Loan, notice of which is provided pursuant to Section .
(ii) In reliance upon such assumption, make available the corresponding
amount to the Borrowers.
(iii) Assume that each Revolving Credit Lender timely shall pay, and
shall make available, to
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the Administrative Agent all other amounts which that Revolving Credit
Lender is obligated to so pay and/or make available hereunder or under
any of the Loan Documents.
(c) In the event that, in reliance upon any of such assumptions, the
Administrative Agent makes available, a Revolving Credit Lender's Revolving
Credit Percentage Commitment of one or more Revolving Credit Loans, or any other
amount to be made available hereunder or under any of the Loan Documents, which
amount a Revolving Credit Lender (a "DELINQUENT REVOLVING CREDIT LENDER") fails
to provide to the Administrative Agent within One (1) Business Day of written
notice of such failure, then:
(i) The amount which had been made available by the Administrative Agent
is an " ADMINISTRATIVE AGENT'S COVER" (and is so referred to herein).
(ii) All interest paid by the Borrowers on account of the Revolving
Credit Loan or coverage of the subject L/C Drawing which consist of the
Administrative Agent's Cover shall be retained by the Administrative
Agent until the Administrative Agent's Cover, with interest, has been
paid.
(iii) The Delinquent Revolving Credit Lender shall pay to the
Administrative Agent, on demand, interest at a rate equal to the
prevailing federal funds rate on any Administrative Agent's Cover in
respect of that Delinquent Revolving Credit Lender.
(iv) The Administrative Agent shall have succeeded to all rights to
payment to which the Delinquent Revolving Credit Lender otherwise would
have been entitled hereunder in respect of those amounts paid by or in
respect of the Borrowers on account of the Administrative Agent's Cover
together with interest until it is repaid. Such payments shall be deemed
made first towards the amounts in respect of which the Administrative
Agent's Cover was provided and only then towards amounts in which the
Delinquent Revolving Credit Lender is then participating. For purposes
of distributions to be made pursuant to Section (which relates to
ordinary course distributions) or Section (which relates to
distributions of proceeds of a Liquidation) below, amounts shall be
deemed distributable to a Delinquent Revolving Credit Lender (and
consequently, to the Administrative Agent to the extent to which the
Administrative Agent is then entitled) at the highest level of
distribution (if applicable) at which the Delinquent Revolving Credit
Lender would otherwise have been entitled to a distribution.
(v) Subject to Subsection , the Delinquent Revolving Credit Lender
shall be entitled to receive any payments from the Borrowers to which
the Delinquent Revolving Credit Lender is then entitled, provided
however there shall be deducted from such amount and retained by the
Administrative Agent any interest to which the Administrative Agent is
then entitled on account of Section , above.
(d) A Delinquent Revolving Credit Lender shall not be relieved of any obligation
of such Delinquent Revolving Credit
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Lender hereunder (all and each of which shall constitute continuing obligations
on the part of any Delinquent Revolving Credit Lender).
(e) A Delinquent Revolving Credit Lender may cure its status as a Delinquent
Revolving Credit Lender by paying the Administrative Agent the aggregate of the
following:
(i) The Administrative Agent's Cover (to the extent not previously
repaid by the Borrowers and retained by the Administrative Agent in
accordance with Subsection , above) with respect to that Delinquent
Revolving Credit Lender.
Plus
(ii) The aggregate of the amount payable under Subsection , above
(which relates to interest to be paid by that Delinquent Revolving
Credit Lender).
Plus
(iii) All such costs and expenses as may be incurred by the
Administrative Agent in the enforcement of the Administrative Agent's
rights against such Delinquent Revolving Credit Lender.
1:1. ORDINARY COURSE DISTRIBUTIONS: REVOLVING CREDIT. (This Section applies
unless the provisions of Section (which relates to distributions in the event
of a Liquidation) becomes operative).
(a) Weekly, on such day as may be set from time to time by the Administrative
Agent (or more frequently at the Administrative Agent's option) the
Administrative Agent and each Revolving Credit Lender shall settle up on amounts
advanced under the Revolving Credit and collected funds received in the
Concentration Account.
(b) The Administrative Agent shall distribute to the SwingLine Lender and to
each Revolving Credit Lender, such Person's respective Pro-Rata share of
interest payments on the Revolving Credit Loans when actually received and
collected by the Administrative Agent (excluding the 1 Business Days for
settlement provided for in Section , which shall be for the account of the
Administrative Agent only). For purposes of calculating interest due to a
Revolving Credit Lender, that Revolving Credit Lender shall be entitled to
receive interest on the actual amount contributed by that Revolving Credit
Lender towards the principal balance of the Revolving Credit Loans outstanding
during the applicable period covered by the interest payment made by the
Borrowers. Any net principal reductions to the Revolving Credit Loans received
by the Administrative Agent in accordance with the Loan Documents during such
period shall not reduce such actual amount so contributed, for purposes of
calculation of interest due to that Revolving Credit Lender, until the
Administrative Agent has distributed to that Revolving Credit Lender its
pro-rata share thereof.
(c) The Administrative Agent shall distribute the fees for L/C's provided for in
Section pro rata to the Revolving Credit Lenders.
(d) No Lender shall have any interest in, or right to receive any part of any
interest which reflects "float" as described in the proviso included in
Section . Any such float shall be for the account of the Administrative Agent
only.
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(e) No Revolving Credit Lender shall have any interest in, or right to receive
any part of, the Administrative Agent's Fee to be paid by the Borrowers to the
Administrative Agent pursuant to this Agreement or in any Term Loan Fees.
(f) Any amount received by the Administrative Agent or the Collateral Agent as
reimbursement for any cost or expense (including without limitation, attorneys'
reasonable fees) shall be distributed by the Administrative Agent to that Person
which is entitled to such reimbursement as provided in this Agreement (and if
such Person(s) is (are) the Revolving Credit Lenders, pro-rata based upon their
respective Revolving Credit Commitment Percentages at the date on which the
expense, in respect of which such reimbursement is being made, was incurred).
(g) Each distribution pursuant to this Section is subject to Section , above.
1:2. ORDINARY COURSE DISTRIBUTIONS : TERM LOAN (This Section applies unless the
provisions of Section (which relates to distributions in the event of a
Liquidation) becomes operative.) The Administrative Agent shall distribute to
the Term Lender payments on account of principal of, and interest on, the Term
Loan and Term Loan Fees as received and collected by the Administrative Agent
from the Borrowers in accordance with the provisions of this Agreement or as
made available by the Administrative Agent as the proceeds of advances under the
Revolving Credit.
1: ARTICLE - ACCELERATION AND LIQUIDATION:
1:1. ACCELERATION NOTICES
(a) The Administrative Agent may give the Collateral Agent and Revolving Credit
Lenders an Acceleration Notice at any time following the occurrence of an Event
of Default.
(b) The SuperMajority Lenders may give the Administrative Agent an Acceleration
Notice at any time following the occurrence of an Event of Default. Such notice
may be by multiple counterparts, provided that counterparts executed by the
requisite Revolving Credit Lenders are received by the Administrative Agent
within a period of five (5) consecutive Business Days.
(c) The Term Lender may give the Administrative Agent an Acceleration Notice as
follows:
(i) At any time following the occurrence of an Event of Default which
occurs after a BuyOut.
(ii) At any time following the occurrence of an Event of Default
described in Section.
(iii) At any time following the occurrence of an Event of Default which
occurs after the Revolving Credit Loan Debt has been paid in full, all
L/C's have been cash collateralized, and there is no
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obligation on the Revolving Credit Lenders to make any further loans or
to provide any further financial accommodation under the Revolving
Credit.
(iv) At any time as permitted pursuant to Section.
1:2. MANDATORY ACCELERATION RIGHT OF TERM LENDER:
(a) The Term Lender may initiate a Standstill Period by written notice to the
Administrative Agent at any time after the occurrence of any Term Loan Action
Event.
(b) Upon the expiry of the relevant Standstill Period, the Term Lender may give
the Administrative Agent and the Collateral Agent an Acceleration Notice unless
either
(i) Acceleration has been stayed by judicial or statutory process; or
(ii) Any of the following is operative:
(A) If the relevant Term Loan Action Event had been a BaseLine
Covenant Breach: no BaseLine Covenant Breach occurs at any time
during the relevant Standstill Period; or
(B) If the relevant Term Loan Action Event had been an Excess
Availability Breach, the Borrowers were in compliance with
Section (minimum Excess Availability) for not less than five
consecutive days during the relevant Standstill Period; or
(C) If the relevant Term Loan Action Event is a Term Loan Payment
Breach: all then due Term Loan Payments (other than those which
would be due only if the Term Loan were accelerated) are paid
prior to the expiry of the relevant Standstill Period.
1:3. ACCELERATION Unless stayed by judicial or statutory process, the
Administrative Agent shall Accelerate the Revolving Credit Obligations and the
Term Loan Debt within a commercially reasonable time following:
(a) The Administrative Agent's giving of an Acceleration Notice to the
Collateral Agent and the Revolving Credit Lenders as provided in Section.
(b) The Administrative Agent's receipt of an Acceleration Notice from the
SuperMajority Lenders, in compliance with Section.
(c) The Administrative Agent's receipt of an Acceleration Notice from the Term
Lender, in compliance with Section.
1:2. INITIATION OF LIQUIDATION Unless stayed by judicial or statutory process,
a Liquidation shall be initiated by the Collateral Agent within a commercially
reasonable time following Acceleration of the Revolving Credit Obligations and
the Term Loan Debt.
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1:4. ACTIONS AT AND FOLLOWING INITIATION OF LIQUIDATION
(a) At the initiation of a Liquidation:
(i) The unpaid principal balance of the SwingLine Loan (if any) shall be
converted, pursuant to Section , to a Revolving Credit Loan in which
all Revolving Credit Lenders participate.
(ii) The Administrative Agent and the Revolving Credit Lenders shall
"net out" each Revolving Credit Lender's respective contributions
towards the Revolving Credit Loans, so that each Revolving Credit Lender
holds that Revolving Credit Lender's Revolving Credit Percentage
Commitment of the Revolving Credit Loans and advances.
(b) Following the initiation of a Liquidation, each Revolving Credit Lender
shall contribute, towards any L/C thereafter honored and not immediately
reimbursed by the Borrowers, that Revolving Credit Lender's Revolving Credit
Percentage Commitment of such honoring.
1:5. COLLATERAL AGENT'S CONDUCT OF LIQUIDATION
(a) Any Liquidation shall be conducted by the Collateral Agent, with the advice
and assistance of the Administrative Agent and the Lenders.
(b) The Collateral Agent may establish one or more Nominees to "bid in" or
otherwise acquire ownership to any Post Foreclosure Asset.
(c) The Collateral Agent shall manage the Nominee and manage and dispose of any
Post Foreclosure Assets with a view towards the realization of the economic
benefits of the ownership of the Post Foreclosure Assets and in such regard, the
Collateral Agent and/or the Nominee may operate, repair, manage, maintain,
develop, and dispose of any Post Foreclosure Asset in such manner as the
Collateral Agent determines as appropriate under the circumstances.
(d) Each Agent may decline to undertake or to continue taking a course of action
or to execute an action plan (whether proposed by an Agent or a Lender) unless
indemnified to that Agent's satisfaction by the Lenders against any and all
liability and expense which may be incurred by that Agent by reason of taking or
continuing to take that course of action or action plan.
(e) The Administrative Agent and each Lender shall execute all such instruments
and documents not inconsistent with the provisions of this Agreement as the
Administrative Agent and/or the Nominee reasonably may request with respect to
the creation and governance of any Nominee, the conduct of the Liquidation, and
the management and disposition of any Post Foreclosure Asset.
1:6. DISTRIBUTION OF LIQUIDATION PROCEEDS:
(a) The Collateral Agent may establish one or more reasonably funded reserve
accounts into which proceeds of the conduct of any Liquidation may be deposited
in anticipation of future expenses which
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may be incurred by any Agent in the exercise of rights as a secured creditor of
the Borrowers and prior claims which the Agents anticipate may need to be paid.
(b) The Collateral Agent shall distribute the proceeds of any Liquidation to the
Administrative Agent.
(c) The Administrative Agent shall distribute the net proceeds of Liquidation,
as distributed to the Administrative Agent by the Collateral Agent pursuant to
Section , in accordance with the relative priorities set forth in Section .
(d) Each Revolving Credit Lender, on the written request of the Administrative
Agent and/or any Nominee, not more frequently than once each month, shall
reimburse the Agents and/or any Nominee, Pro-Rata, for any cost or expense
reasonably incurred by the Agents and/or the Nominee in the conduct of a
Liquidation, which amount is not covered out of current proceeds of the
Liquidation, which reimbursement shall be paid over to and distributed by the
Administrative Agent.
1:7. RELATIVE PRIORITIES TO PROCEEDS OF LIQUIDATION
(a) The relative priorities to the proceeds of the Liquidation of all
Collateral, other than Term Loan Priority Collateral are as follows:
(i) Subject to Section , to the Agents as reimbursement for all
reasonable third party costs and expenses incurred by the Agents
and to Lenders' Special Counsel and to any funded reserve
established pursuant to Section ; and then
(ii) To the SwingLine Lender, on account of any SwingLine loans not
converted to Revolving Credit Loans pursuant to Section ; and
then
(iii) To the Revolving Credit Lenders (other than any Delinquent
Revolving Credit Lender), pro-rata, to the unpaid principal
balance of Revolving Credit Debt; and then
(iv) To the Revolving Credit Lenders (other than any Delinquent
Revolving Credit Lender), pro-rata, to accrued and unpaid
interest which constitutes Revolving Credit Debt; and then
(v) To the Revolving Credit Lenders (other than any Delinquent
Revolving Credit Lender), pro-rata, to Revolving Credit Fees,
other than the Revolving Credit Early Termination Fee; and then
(vi) To the Term Lender, to the principal balance of the Term Loan
Obligations; and then
(vii) To the Term Lender, to accrued and unpaid interest which
constitutes Term Loan Obligations; and then
(viii) To the Administrative Agent, all then remaining Administrative
Agent's Fees; and then
(ix) To any Delinquent Revolving Credit Lenders, pro-rata to amounts
to which such Revolving Credit Lenders otherwise would have been
entitled pursuant to the following Sections: , , ; and then
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(x) To the Revolving Credit Lenders, pro-rata, to the extent of the
Revolving Credit Early Termination Fee; and then
(xi) To the Term Lender, to any remaining Term Loan Obligations; and
then
(xii) To any other Liabilities.
(b) The relative priorities to the proceeds of the Liquidation of the Term Loan
Priority Collateral are as follows:
(i) Subject to Section , to the Agents as reimbursement for all
reasonable third party costs and expenses incurred by the Agents
and to Lenders' Special Counsel and to any funded reserve
established pursuant to Section ; and then
(ii) To the Term Lender, to the principal balance of the Term Loan
Obligations; and then
(iii) To the Term Lender, to accrued and unpaid interest which
constitutes Term Loan Obligations; and then
(iv) To the SwingLine Lender, on account of any SwingLine loans not
converted to Revolving Credit Loans pursuant to Section ; and
then
(v) To the Revolving Credit Lenders (other than any Delinquent
Revolving Credit Lender), pro-rata, to the unpaid principal
balance of Revolving Credit Debt; and then
(vi) To the Revolving Credit Lenders (other than any Delinquent
Revolving Credit Lender), pro-rata, to accrued and unpaid
interest which constitutes Revolving Credit Debt; and then
(vii) To the Term Lender, to any remaining Term Loan Obligations; and
then
(viii) To the Revolving Credit Lenders (other than any Delinquent
Revolving Credit Lender), pro-rata, to Revolving Credit Fees,
other than the Revolving Credit Early Termination Fee; and then
(ix) To the Administrative Agent, all then remaining Administrative
Agent's Fees; and then
(x) To any Delinquent Revolving Credit Lenders, pro-rata to amounts
to which such Revolving Credit Lenders otherwise would have been
entitled pursuant to the following Sections: , , ; and then
(xi) To the Revolving Credit Lenders, pro-rata, to the extent of the
Revolving Credit Early Termination Fee; and then
(xii) To any other Liabilities.
(c) The Administrative Agent may make a commercially reasonable allocation with
respect to the payment of those items to be covered by Sections and between the
proceeds of the Liquidation of all Collateral other than Term Loan Priority
Collateral and the proceeds of the Liquidation of Term Loan Priority Collateral.
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1: ARTICLE - THE AGENTS:
1:1. APPOINTMENT OF THE AGENT
(a) Each Lender appoints and designates Fleet Retail Finance Inc. as the
"Administrative Agent" hereunder and under the Loan Documents.
(b) Each Lender appoints and designates Fleet Retail Finance Inc. as the
"Collateral Agent" hereunder and under the Loan Documents.
(c) Each Lender authorizes each Agent:
(i) To execute those of the Loan Documents and all other instruments
relating thereto to which that Agent is a party.
(ii) To take such action on behalf of the Lenders and to exercise all
such powers as are expressly delegated to that Agent hereunder and in
the Loan Documents and all related documents, together with such other
powers as are reasonably incident thereto.
1:2. RESPONSIBILITIES OF AGENTS
(a) The Administrative Agent shall have principal responsibilities for and
primary authority for the administration of the credit facility contemplated by
the Loan Agreement and for all matters for which the Collateral Agent is not
responsible. In all instances where the allocation of responsibility and
authority, as between the Collateral Agent and the Administrative Agent is in
doubt, the Administrative Agent shall be vested with such responsibility and
authority.
(b) The Collateral Agent shall have principal responsibilities for and primary
authority for the conduct of the Liquidation and the distribution of the
proceeds of such Liquidation.
(c) Neither Agent shall have any duties or responsibilities to, or any fiduciary
relationship with, any Lender except for those expressly set forth in this
Agreement.
(d) Neither Agent nor any of its Affiliates shall be responsible to any Lender
for any of the following:
(i) Any recitals, statements, representations or warranties made by any
Borrower or any other Person.
(ii) Any appraisals or other assessments of the assets of any Borrower
or of any other Person responsible for or on account of the Liabilities.
(iii) The value, validity, effectiveness, genuineness, enforceability,
or sufficiency of the Loan Agreement, the Loan Documents or any other
document referred to or provided for therein.
(iv) Any failure by any Borrower or any other Person (other than the
subject Agent) to perform its obligations under the Loan Documents.
(e) Each Agent may employ attorneys, accountants, and other professionals and
agents and
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attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such attorneys, accountants, and other professionals or agents
or attorneys-in-fact selected by the subject Agent with reasonable care. No such
attorney, accountant, other professional, agent, or attorney-in-fact shall be
responsible for any action taken or omitted to be taken by any other such
Person.
(f) Neither Agent, nor any of its directors, officers, or employees shall be
responsible for any action taken or omitted to be taken or omitted to be taken
by any other of them in connection herewith in reliance upon advice of their
respective counsel nor, in any other event except for any action taken or
omitted to be taken as to which a final judicial determination has been or is
made (in a proceeding in which such Person has had an opportunity to be heard)
that such Person had acted in a grossly negligent manner, in actual bad faith,
or in willful misconduct.
(g) Neither Agent shall have any responsibility in any event for more funds than
that Agent actually receives and collects.
(h) The Agents, in their separate capacities as Lenders, shall have the same
rights and powers hereunder as any other Lender.
1:3. CONCERNING DISTRIBUTIONS BY THE AGENTS
(a) Each Agent, in that Agent's reasonable discretion based upon that Agent's
determination of the likelihood that additional payments will be received,
expenses incurred, and/or claims made by third parties to all or a portion of
such proceeds, may delay the distribution of any payment received on account of
the Liabilities.
(b) Each Agent may disburse funds prior to determining that the sums which that
Agent expects to receive have been finally and unconditionally paid to that
Agent. If and to the extent that Agent does disburse funds and it later becomes
apparent that the Agent did not then receive a payment in an amount equal to the
sum paid out, then any Lender to whom the Agent made the funds available, on
demand from the Agent, shall refund to the Administrative Agent the sum paid to
that person.
(c) If, in the opinion of an Agent, the distribution of any amount received by
that Agent might involve that Agent in liability, or might be prohibited hereby,
or might be questioned by any Person, then that Agent may refrain from making
distribution until that Agent's right to make distribution has been adjudicated
by a court of competent jurisdiction.
(d) The proceeds of any Lender's exercise of any right of, or in the nature of,
set-off shall be deemed, First, to the extent that a Lender is entitled to any
distribution hereunder, to constitute such distribution and Second, shall be
shared with the other Lenders as if distributed pursuant to (and shall be deemed
as distributions under) Section.
(e) Each Lender recognizes that the crediting of the Borrowers with the
"proceeds" of any
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transaction in which a Post Foreclosure Asset is acquired is a non-cash
transaction and that, in consequence, no distribution of such "proceeds" will be
made by the Administrative Agent to any Lender.
(f) In the event that (x) a court of competent jurisdiction shall adjudge that
any amount received and distributed by the Administrative Agent is to be repaid
or disgorged or (y) the SuperMajority Lenders determine to effect such repayment
or disgorgement, then each Lender to which any such distribution shall have been
made shall repay, to the Agent which had made such distribution, that Lender's
Pro-Rata share of the amount so adjudged or determined to be repaid or
disgorged.
1:4. DISPUTE RESOLUTION: Any dispute among the Lenders and/or any Agent
concerning the interpretation, administration, or enforcement of the financing
arrangements contemplated by this or any other Loan Document or the
interpretation or administration of this or any other Loan Document which cannot
be resolved amicably shall be resolved in the United States District Court for
the District of Massachusetts, sitting in Boston or in the Superior Court of
Suffolk County, Massachusetts, to the jurisdiction of which courts each Lender
hereto hereby submits.
1:5. DISTRIBUTIONS OF NOTICES AND OF DOCUMENTS The Administrative Agent will
forward to each Lender, promptly after the Administrative Agent's receipt
thereof, a copy of each notice or other document furnished to the Administrative
Agent pursuant to this Agreement, including monthly, quarterly, and annual
financial statements received from the Lead Borrower pursuant to Article of this
Agreement, other than any of the following:
(a) Routine communications associated with requests for Revolving Credit Loans
and/or the issuance of L/C's.
(b) Routine or nonmaterial communications.
(c) Any notice or document required by any of the Loan Documents to be furnished
to the Lenders by the Lead Borrower.
(d) Any notice or document of which the Administrative Agent has knowledge that
such notice or document had been forwarded to the Lenders other than by the
Administrative Agent.
1:6. CONFIDENTIAL INFORMATION
(a) Each Lender will maintain, as confidential, all of the following:
(i) Proprietary approaches, techniques, and methods of analysis which
are applied by the Administrative Agent in the administration of the
credit facility contemplated by this Agreement.
(ii) Proprietary forms and formats utilized by the Administrative Agent
in providing reports to the Lenders pursuant hereto, which forms or
formats are not of general currency.
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(b) Nothing included herein shall prohibit the disclosure of any such
information as may be required to be provided by judicial process or by
regulatory authorities having jurisdiction over any party to this Agreement.
1:1. RELIANCE BY AGENTS Each Agent shall be entitled to rely upon any
certificate, notice or other document (including any cable, telegram, telex, or
facsimile) reasonably believed by that Agent 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 attorneys, accountants and other experts selected
by that Agent. As to any matters not expressly provided for in this Agreement,
any Loan Document, or in any other document referred to therein, that Agent
shall in all events be fully protected in acting, or in refraining from acting,
in accordance with the applicable Consent required by this Agreement.
Instructions given with the requisite Consent shall be binding on all Lenders.
1:1. NON-RELIANCE ON AGENTS AND OTHER LENDERS
(a) Each Lender represents to all other Lenders and to the Agents that such
Lender:
(i) Independently and without reliance on any representation or act by
any Agent or by any other Lender, and based on such documents and
information as that Lender has deemed appropriate, has made such
Lender's own appraisal of the financial condition and affairs of the
Borrowers and decision to enter into this Agreement.
(ii) Has relied upon that Lender's review of the Loan Documents by that
Lender and by counsel to that Lender as that Lender deemed appropriate
under the circumstances.
(b) Each Lender agrees that such Lender, independently and without reliance upon
any Agent or any other Lender, and based upon such documents and information as
such Lender shall deem appropriate at the time, will continue to make such
Lender's own appraisals of the financial condition and affairs of the Borrowers
when determining whether to take or not to take any discretionary action under
this Agreement.
(c) Neither Agent in the discharge of that Agent's duties hereunder, shall be
required to make inquiry of, or to inspect the properties or books of, any
Person.
(d) Except for notices, reports, and other documents and information expressly
required to be furnished to the Lenders by the Administrative Agent hereunder
(as to which, see Section ), the Agents shall not have any affirmative duty or
responsibility to provide any Lender with any credit or other information
concerning any Person, which information may come into the possession of Agents
or any Affiliate of an Agent.
(e) Each Lender, at such Lender's request, shall have reasonable access to all
nonprivileged
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documents in the possession of the Agents, which documents relate to the Agents'
performance of their duties hereunder.
1:2. INDEMNIFICATION Without limiting the liabilities of the Borrowers under
any this or any of the other Loan Documents, each Lender shall indemnify each
Agent, Pro-Rata, for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever (including attorneys' reasonable fees and expenses and
other out-of-pocket expenditures) which may at any time be imposed on, incurred
by, or asserted against that Agent and in any way relating to or arising out of
this Agreement or any other Loan Document or any documents contemplated by or
referred to therein or the transactions contemplated thereby or the enforcement
of any of terms hereof or thereof or of any such other documents, provided,
however, no Lender shall be liable for any of the foregoing to the extent that
any of the foregoing arises from any action taken or omitted to be taken by the
subject Agent as to which a final judicial determination has been or is made (in
a proceeding in which the subject Agent has had an opportunity to be heard) that
the subject Agent had acted in a grossly negligent manner, in actual bad faith,
or in willful misconduct.
1:1. RESIGNATION OF AGENT
(a) An Agent may resign at any time by giving 60 days prior written notice
thereof to the Lenders, the other Agent, and the Lead Borrower. Upon receipt of
any such notice of resignation, the SuperMajority Lenders shall have the right
to appoint a successor to such Agent (and if no Event of Default has occurred,
with the consent of the Lead Borrower, not to be unreasonably withheld and, in
any event, deemed given by the Lead Borrower if no written objection is provided
by the Lead Borrower to the (resigning) Agent within seven (7) Business Days
notice of such proposed appointment). If a successor Agent shall not have been
so appointed and accepted such appointment within 30 days after the giving of
notice by the resigning Agent, then the resigning Agent may appoint a successor
Agent, which shall be a financial institution having a combined capital and
surplus in excess of $1 Billion. The consent of the Lead Borrower otherwise
required by this Section shall not be required if an Event of Default has
occurred.
(b) Upon the acceptance of any appointment as an Agent hereunder by a successor
Agent, such successor shall thereupon succeed to, and become vested with, all
the rights, powers, privileges, and duties of the (resigning) Agent so replaced,
and the (resigning) Agent shall be discharged from the (resigning) Agent's
duties and obligations hereunder, other than on account of any responsibility
for any action taken or omitted to be taken by the (resigning) Agent as to which
a final judicial determination has been or is made (in a proceeding in which the
(resigning) Person has had an opportunity to be heard) that such Person had
acted in a grossly negligent manner or in bad faith.
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(c) After any retiring Agent's resignation, the provisions of this Agreement and
of all other Loan Documents shall continue in effect for the retiring Person's
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as an Agent.
2: ARTICLE - ACTION BY AGENTS - CONSENTS - AMENDMENTS - WAIVERS:
2:1. ADMINISTRATION OF CREDIT FACILITIES
(a) Except as otherwise specifically provided in this Agreement, each Agent may
take any action with respect to the credit facility contemplated by the Loan
Documents as that Agent determines to be appropriate within their respective
areas of responsibility and authority, as set forth in Sections and , provided,
however, neither Agent is under any affirmative obligation to take any action
which it is not required by this Agreement or the Loan Documents specifically to
so take.
(b) Except as specifically provided in the following Sections of this Agreement,
whenever a Loan Document or this Agreement provides that action may be taken or
omitted to be taken in an Agents' discretion, that Agent shall have the sole
right to take, or refrain from taking, such action without, and notwithstanding,
any vote of the Lender:
Actions Described in Section Type of Consent Required
---------------------------- ------------------------
Majority Lenders
SuperMajority Lenders
Certain Consent
Unanimous Consent
Consent of SwingLine Lender
Consent of Term Lender
Consent of the Agents
(a) The rights granted to the Lenders in those sections referenced in Section
shall not otherwise limit or impair any Agent's exercise of its discretion under
the Loan Documents.
1:2. ACTIONS REQUIRING OR ON DIRECTION OF MAJORITY LENDERS Except as otherwise
provided in this Agreement, the Consent or direction of the Majority Lenders is
required for any amendment, waiver, or modification of any Loan Document.
1:3. ACTIONS REQUIRING OR ON DIRECTION OF SUPERMAJORITY LENDERS The Consent or
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direction of the SuperMajority Lenders is required as follows:
(a) The Revolving Credit Lenders agree that any loan or advance under the
Revolving Credit which results in a Permissible OverLoan may be made by the
Administrative Agent in its discretion without the Consent of the Revolving
Credit Lenders and that each Revolving Credit Lender shall be bound thereby,
provided, however, the Consent or direction of the SuperMajority Lenders is
required to permit a Permissible OverLoan (other than any Permissible OverLoan
to the extent that it is also a Protective Advance as to which no such Consent
or direction is so required) to be outstanding for more than 45 consecutive
Business Days or more than twice in any twelve month period.
(b) If any Borrower is then InDefault, the SuperMajority Lenders may direct the
Administrative Agent to suspend the Revolving Credit (including the making of
any Permissible OverLoans), whereupon, as long as a Borrower is InDefault, the
only Revolving Credit Loans which may be made are either
(i) Protective Advances.; or
(ii) Revolving Credit Loans made with Consent of the SuperMajority
Lenders.
(c) If an Event of Default has occurred and not been duly waived, the
SuperMajority Lenders may:
(i) Give the Administrative Agent an Acceleration Notice in accordance
with Section.
(ii) Direct the Administrative Agent to increase the rate of interest to
the default rate of interest as provided in, and to the extent permitted
by, this Agreement.
1:1. ACTIONS REQUIRING CERTAIN CONSENT
(a) The Consent of the Revolving Credit Lender whose Revolving Credit Lender's
Revolving Credit Dollar Commitment or Revolving Credit Percentage Commitment is
to be so increased is required for any increase in any Revolving Credit Lender's
Revolving Credit Dollar Commitment or Revolving Credit Percentage Commitment
(other than by reason of the application of Section (which deals with
NonConsenting Revolving Credit Lenders) or Section (which deals with assignments
and participations).
(b) The Consent of Revolving Credit Lenders (other than Delinquent Revolving
Credit Lenders) holding 66-2/3% or more of the Loan Commitments to make
Revolving Credit Loans (other than Loan Commitments held by a Delinquent
Revolving Credit Lender) and of the Term Lender shall be required for any change
to the dates on which any payment of principal of the Term Loan shall be due and
payable or the amount of any such payment.
(c) The Consent of Revolving Credit Lenders (other than Delinquent Revolving
Credit Lenders) holding 51% or more of the Loan Commitments to make Revolving
Credit Loans (other than Loan Commitments held by a Delinquent Revolving Credit
Lender) and of the Term Lender shall be required to amend or waive compliance
with any financial performance covenant included in Section .
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(d) The consent of the SwingLine Lender and Revolving Credit Lenders (other than
Delinquent Revolving Credit Lenders) holding 51% or more of the Loan Commitments
of the Revolving Credit Lenders (other than any Loan Commitments held by
Delinquent Revolving Credit Lenders) shall be required to increase the SwingLine
Loan Ceiling.
1:2. ACTIONS REQUIRING OR DIRECTED BY UNANIMOUS CONSENT None of the following
may take place except with Unanimous Consent:
(a) Any decrease in any interest rate or fee payable to the Revolving Credit
Lenders on account of the Revolving Credit Loans.
(b) Any extension of the Maturity Date.
(c) Any forgiveness of all or any portion of any payment Liability.
(d) Any decrease in any interest rate or fee payable under any of the Loan
Documents (other than any Administrative Agent's Fee (for which the consent of
the Agents shall also be required)) and of any fee provided for by the Fee
Letter (which may be amended by written agreement between the Lead Borrower on
the one hand, and the Administrative Agent and the Term Lender on the other).
(e) Any release of a material portion of the Collateral not otherwise required
or provided for in the Loan Documents or to facilitate a Liquidation.
(f) Any amendment of the definition of the terms "Borrowing Base" or
"Availability" or of any Definition of any component thereof, such that more
credit would be available to the Borrowers, based on the same assets, as would
have been available to the Borrowers immediately prior to such amendment , it
being understood, however, that:
(i) The foregoing shall not limit the adjustment by the Administrative
Agent of any Reserve in the Administrative Agent's administration of the
Revolving Credit as otherwise permitted by this Agreement.
(ii) The foregoing shall not prevent the Administrative Agent, in its
administration of the Revolving Credit, from restoring any component of
Borrowing Base which had been lowered by the Administrative Agent back
to the value of such component, as stated in this Agreement or to an
intermediate value.
(g) Any release of any Person obligated on account of the Liabilities.
(h) The making of any Revolving Credit Loan which, when made, exceeds
Availability and is not either a Permissible OverLoan, provided, however,
(i) no Consent shall be required in connection with the making of any
Revolving Credit Loan to "cover" any honoring of a drawing under any
L/C; and
(ii) each Lender recognizes that subsequent to the making of a Revolving
Credit Loan which does not constitute a Permissible OverLoan, the unpaid
principal balance of the Loan Account may exceed
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Borrowing Base on account of changed circumstances beyond the control of
the Administrative Agent (such as a drop in collateral value).
(i) The waiver of the obligation of the Borrowers to reduce the unpaid principal
balance of loans under the Revolving Credit to an amount which does not exceed a
Permissible OverLoan or, subject to the time limits included in Section (which
places time and frequency limits on Permissible OverLoans), to eliminate an
OverLoan.
(j) Any amendment of Article (Entitled "Acceleration and Liquidation") or of any
Definition which would affect the operation of that Article.
(k) Any amendment of this Article.
(l) Amendment of any of the following Definitions:
(m) "Appraised Inventory Liquidation Value"
(n) "Appraised Inventory Percentage"
(o) "BaseLine Covenant Breach"
(p) "Majority Lender"
(q) "Permissible OverLoan"
(r) "Protective Advances"
(s) "SuperMajority Lenders
(t) "Unanimous Consent"
1:3. ACTIONS REQUIRING SWINGLINE LENDER CONSENT No action, amendment, or waiver
of compliance with, any provision of the Loan Documents or of this Agreement
which affects the SwingLine Lender may be undertaken without the Consent of the
SwingLine Lender.
1:4. ACTIONS REQUIRING TERM LENDER CONSENT None of the following may be made
without the Consent of the Term Lender:
(a) Any amendment, modification, or waiver of any provision of Article (entitled
"The Term Loan").
(b) Any amendment, modification, or waiver of any of the following provisions of
this Agreement:
Section Relates To:
: Minimum Excess Availability
: The BuyOut
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(c) Any amendment to this Agreement which increases any interest rate which is
or which may be applicable to the unpaid principal balance of the Revolving
Credit such that that interest rate is more than one percent per annum or 150
basis points higher than that rate as provided in this Agreement as originally
executed.
(d) Any release of any Term Loan Priority Collateral.
1:5. ACTIONS REQUIRING AGENTS' CONSENT
(a) No action, amendment, or waiver of compliance with, any provision of the
Loan Documents or of this Agreement which affects an Agent in its capacity as an
Agent may be undertaken without the written consent of the Agents.
(b) No action referenced herein which affects the rights, duties, obligations,
or liabilities of an Agent shall be effective without the written consent of the
Agents.
1:6. MISCELLANEOUS ACTIONS
(a) Notwithstanding any other provision of this Agreement, no single Lender
independently may exercise any right of action or enforcement against or with
respect to any Borrower.
(b) Each Agent shall be fully justified in failing or refusing to take action
under this Agreement or any Loan Document on behalf of any Lender unless that
Agent shall first
(i) receive such clear, unambiguous, written instructions as that Agent
deems appropriate; and
(ii) be indemnified to that Agent's satisfaction by the Lenders against
any and all liability and expense which may be incurred by that Agent by
reason of taking or continuing to take any such action, unless such
action had been grossly negligent, in willful misconduct, or in bad
faith.
(c) Each Agent may establish reasonable procedures for the providing of
direction and instructions from the Lenders to that Agent, including its
reliance on multiple counterparts, facsimile transmissions, and time limits
within which such direction and instructions must be received in order to be
included in a determination of whether the requisite Loan Commitments has
provided its direction, Consent, or instructions.
1:7. ACTIONS REQUIRING LEAD BORROWER'S CONSENT The Lead Borrower's consent is
required for any amendment of this Agreement, except that each of the following
Articles of this Agreement may be amended without the consent of the Lead
Borrower:
Article Title of Article
Revolving Credit Fundings and Distributions
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The Agents
1:1. NONCONSENTING REVOLVING CREDIT LENDER
(a) In the event that a Revolving Credit Lender (in this Section , a
"NONCONSENTING REVOLVING CREDIT LENDER") does not provide its Consent to a
proposal by the Administrative Agent to take action which requires consent under
this Article , then one or more Revolving Credit Lenders who provided Consent to
such action may require the assignment, without recourse and in accordance with
the procedures outlined in Section , below, of the NonConsenting Revolving
Credit Lender's commitment hereunder on fifteen (15) days written notice to the
Administrative Agent and to the NonConsenting Revolving Credit Lender.
(b) At the end of such fifteen (15) days, and provided that the NonConsenting
Revolving Credit Lender delivers the Revolving Credit Note held by the
NonConsenting Revolving Credit Lender to the Administrative Agent, the Revolving
Credit Lenders who have given such written notice shall Transfer the following
to the NonConsenting Revolving Credit Lender:
(i) Such NonConsenting Revolving Credit Lender's Pro-Rata share of the
principal and interest of the Revolving Credit Loans to the date of such
assignment.
(ii) All fees distributable hereunder to the NonConsenting Revolving
Credit Lender to the date of such assignment.
(iii) Any out-of-pocket costs and expenses for which the NonConsenting
Revolving Credit Lender is entitled to reimbursement from the Borrowers.
(c) In the event that the NonConsenting Revolving Credit Lender fails to deliver
to the Administrative Agent the Revolving Credit Note held by the NonConsenting
Revolving Credit Lender as provided in Section , then:
(i) The amount otherwise to be Transferred to the NonConsenting
Revolving Credit Lender shall be Transferred to the Administrative Agent
and held by the Administrative Agent, without interest, to be turned
over to the NonConsenting Revolving Credit Lender upon delivery of the
Revolving Credit Note held by that NonConsenting Revolving Credit
Lender.
(ii) The Revolving Credit Note held by the NonConsenting Revolving
Credit Lender shall have no force or effect whatsoever.
(iii) The NonConsenting Revolving Credit Lender shall cease to be a
"Revolving Credit Lender".
(iv) The Revolving Credit Lender(s) which have Transferred the amount to
the Administrative Agent as described above shall have succeeded to all
rights and become subject to all of the obligations of the NonConsenting
Revolving Credit Lender as "Revolving Credit Lender".
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(d) In the event that more than One (1) Revolving Credit Lender wishes to
require such assignment, the NonConsenting Revolving Credit Lender's commitment
hereunder shall be divided among such Revolving Credit Lenders, pro-rata based
upon their respective Revolving Credit Percentage Commitments, with the
Administrative Agent coordinating such transaction.
(e) The Administrative Agent shall coordinate the retirement of the Revolving
Credit Note held by the NonConsenting Revolving Credit Lender and the issuance
of Revolving Credit Notes to those Revolving Credit Lenders which "take-out"
such NonConsenting Revolving Credit Lender, provided, however, no processing fee
otherwise to be paid as provided in Section shall be due under such
circumstances.
1:2. THE BUYOUT:
(a) The Term Lender may (but shall not be obligated to) cause the assignment to
the Term Lender or the Term Lender's designee, by the Revolving Credit Lenders,
of all right, title and interest in, to, arising under, or in respect of the
Revolving Credit Obligations upon five (5) Business Days prior written notice
given at any time either of the following conditions is satisfied:
(i) The Term Lender has the right, under Section , to give an
Acceleration Notice.
(ii) The Administrative Agent has declined to implement or adjust any
Availability Reserve or Inventory Reserve requested by the Term Lender,
which request by the Term Lender is with a view towards maintaining and
preserving the Lenders' security and other collateral interests with
respect to the potential impairment of valuation or priority.
(b) Such assignments shall be effected on the Business Day next following the
expiry of such five (5) Business Days by the execution, by the Revolving Credit
Lenders, of an Assignment and Assumption (in the form of EXHIBIT , annexed
hereto) in exchange for the payment, in immediately available funds, of the
amount of Revolving Credit Obligations (other than the Revolving Credit Early
Termination Fee) as of the date on which such assignment is made.
(c) In the event that, following the consummation of a BuyOut, the Term Lender
actually receives any Revolving Credit Early Termination Fee which had been
provided for in the Loan Agreement (which receipt, if in connection with a
Liquidation, shall be determined on a last dollar out basis), then the Term
Lender shall pay over such Revolving Credit Early Termination Fee to the
Administrative Agent for distribution to those Persons who were Revolving Credit
Lenders immediately prior to such BuyOut, it being understood that the Term
Lender, in its sole discretion, may waive the entitlement to, or the amount of,
such fee; shall not be under any obligation to prosecute the recovery of such
fee; and may condition its payment over to the Administrative Agent on the
Administrative Agent's providing of such indemnification as is reasonably mutual
satisfactory of the Administrative Agent and the Term Lender.
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2: ARTICLE - ASSIGNMENTS BY LENDERS:
3:1. ASSIGNMENTS AND ASSUMPTIONS:
(a) Except as provided herein, each Revolving Credit Lender (in this Section ,
an "ASSIGNING REVOLVING CREDIT LENDER") may assign to one or more Eligible
Assignees (in this Section , each an "ASSIGNEE REVOLVING CREDIT LENDER") all or
a portion of that Revolving Credit Lender's interests, rights and obligations
under this Agreement and the Loan Documents (including all or a portion of its
Commitment) and the same portion of the Revolving Credit Loans at the time owing
to it, and of the Revolving Credit Note held by the Assigning Revolving Credit
Lender, provided that:
(i) The Administrative Agent shall have given its prior written consent
to such assignment, which consent shall not be unreasonably withheld,
but need not be given if the proposed assignment would result in any
resulting Revolving Credit Lender's having a Dollar Commitment of less
than the "minimum hold" amount specified in Section or if there would be
more than 6 Revolving Credit Lenders.
(ii) Each such assignment shall be of a constant, and not a varying,
percentage of all the Assigning Revolving Credit Lender's rights and
obligations under this Agreement.
(iii) Following the effectiveness of such assignment, the Assigning
Revolving Credit Lender's Dollar Commitment (if not an assignment of all
of the Assigning Revolving Credit Lender's Commitment) shall not be less
than $15,000,000.00.
(b) The Term Lender may assign all of its rights as Term Lender herein, subject
to the obligations of the Term Lender herein, pursuant to such procedures as are
reasonably satisfactory to the Administrative Agent and which procedures are
analogous to those described in Section and with effect, vis a vis the Term
Lender's assignee, analogous to that set forth in Section with respect to an
Assignee Revolving Credit Lender.
3:2. ASSIGNMENT PROCEDURES. (This Section describes the procedures to be
followed in connection with an assignment effected pursuant to this Article and
permitted by Section ).
(a) The parties to such an assignment shall execute and deliver to the
Administrative Agent, for recording in the Register, an "ASSIGNMENT AND
ACCEPTANCE" (so referred to herein) substantially in the form of EXHIBIT ,
annexed hereto.
(b) The Assigning Revolving Credit Lender shall deliver to the Administrative
Agent, with such Assignment and Acceptance, the Revolving Credit Note held by
the subject Assigning Revolving Credit Lender and the Administrative Agent's
processing fee of $3,500.00, provided, however, no such processing
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fee shall be due where the Assigning Revolving Credit Lender is one of the
Revolving Credit Lenders at the initial execution of this Agreement.
(c) The Administrative Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register or similar list (the "REGISTER") for
the recordation of the names and addresses of the Revolving Credit Lenders and
of the Revolving Credit Percentage Commitment and Revolving Credit Percentage
Commitment of each Revolving Credit Lender. The Register shall be available for
inspection by the Revolving Credit Lenders at any reasonable time and from time
to time upon reasonable prior notice. In the absence of manifest error, the
entries in the Register shall be conclusive and binding on all Lenders. The
Administrative Agent and the Revolving Credit Lenders may treat each Person
whose name is recorded in the Register as a "Revolving Credit Lender" hereunder
for all purposes of this Agreement.
(d) The Assigning Revolving Credit Lender and Assignee Revolving Credit Lender,
directly between themselves, shall make all appropriate adjustments in payments
for periods prior to the effective date of an Assignment and Assumption.
3:3. EFFECT OF ASSIGNMENT.
(a) From and after the effective date specified in an Assignment and Acceptance
which has been executed, delivered, and recorded (which effective date the
Administrative Agent may delay by up to Five (5) Business Days after the
delivery of such Assignment and Acceptance):
(i) The Assignee Revolving Credit Lender:
(A) Shall be a party to this Agreement and the Loan Documents
(and to any amendments thereof) as fully as if the Assignee
Revolving Credit Lender had executed each.
(B) Shall have the rights of a Revolving Credit Lender hereunder
to the extent of the Revolving Credit Percentage Commitment and
Revolving Credit Percentage Commitment assigned by such
Assignment and Acceptance.
(ii) The Assigning Revolving Credit Lender shall be released from the
Assigning Revolving Credit Lender's obligations under this Agreement and
the Loan Documents to the extent of the Commitment assigned by such
Assignment and Acceptance.
(iii) The Administrative Agent shall undertake to obtain and distribute
replacement Revolving Credit Notes to the subject Assigning Revolving
Credit Lender and Assignee Revolving Credit Lender.
(b) By executing and delivering an Assignment and Acceptance, the parties
thereto confirm to and agree with each other and with all parties to this
Agreement as to those matters which are set forth in the subject Assignment and
Acceptance.
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4: ARTICLE - NOTICES:
4:1. NOTICE ADDRESSES. All notices, demands, and other communications made in
respect of any Loan Document (other than a request for a loan or advance or
other financial accommodation under the Revolving Credit) shall be made to the
following addresses, each of which may be changed upon seven (7) days written
notice to all others given by certified mail, return receipt requested:
If to either Agent:
Fleet Retail Finance Inc.
40 Broad Street
Boston, Massachusetts 02109
Attention : Daniel Williams
Assistant Vice President
Fax : 617 434 4339
With a copy to:
Riemer & Braunstein LLP
Three Center Plaza
Boston, Massachusetts 02108
Attention : Richard B. Jacobs, Esquire
Fax : 617 880 3456
If to the Lead Borrower
And All Borrowers:
The Gymboree Corporation
700 Airport Boulevard
Burlingame, California 94010
Attention : Lawrence H. Meyer
Fax : 650 696 7502
With a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Attention : Selim Day, Esquire
Fax: : 650 493 6811
1:1. NOTICE GIVEN.
(a) Except as otherwise specifically provided herein, notices shall be deemed
made and correspondence received, as follows (all times being local to the place
of delivery or receipt):
(i) By mail: the sooner of when actually received or Three (3) days
following deposit in the United States mail, postage prepaid.
(ii) By recognized overnight express delivery: the Business Day
following the day when sent.
(iii) By Hand: If delivered on a Business Day after 9:00 AM and no later
than Three (3) hours prior to the close of customary business hours of
the recipient, when delivered. Otherwise, at the opening
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of the then next Business Day.
(iv) By Facsimile transmission (which must include a header on which the
party sending such transmission is indicated): If sent on a Business Day
after 9:00 AM and no later than Three (3) hours prior to the close of
customary business hours of the recipient, one (1) hour after being
sent. Otherwise, at the opening of the then next Business Day.
(b) Rejection or refusal to accept delivery and inability to deliver because of
a changed address or Facsimile Number for which no due notice was given shall
each be deemed receipt of the notice sent.
2: ARTICLE - TERM:
3:1. TERMINATION OF REVOLVING CREDIT. The Revolving Credit shall remain in
effect (subject to suspension as provided in Section hereof) until the
Termination Date.
1:1. ACTIONS ON TERMINATION.
(a) On the Termination Date, the Borrowers shall pay the Administrative Agent
(whether or not then due), in immediately available funds, all then Liabilities
including, without limitation: the following:
(i) The entire balance of the Loan Account (including the unpaid
principal balance of the Revolving Credit Loans, and the SwingLine Loan,
and the Term Loan ).
(ii) Any then remaining installments of the Administrative Agent's Fee.
(iii) Any payments due on account of the indemnification obligations
included in Section.
(iv) Any accrued and unpaid Unused Line Fee.
(v) Any fees due on account of any L/C's, including those provided for in
Sections and.
(vi) All accrued and unpaid interest (including all accrued and unpaid
Current Pay Interest and all accrued and unpaid PIK Interest) on the
Term Loan.
(vii) Any then remaining installments of the Term Loan Commitment Fee.
(viii) All unreimbursed costs and expenses of each Agent and of Lenders'
Special Counsel for which each Borrower is responsible.
(b) On the Termination Date, the Borrowers shall also shall make such
arrangements concerning any L/C's then outstanding as are reasonably
satisfactory to the Administrative Agent.
(c) Until such payment (Section ) and arrangements concerning L/C's (Section ),
all provisions of this Agreement, other than those included in Article which
place any obligation on the Administrative Agent or any Revolving Credit Lender
to make any loans or advances or to provide any financial
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accommodations to any Borrower and those included in Article which place any
obligation on the Term Lender to make any loan or advance or to provide any
financial accommodation to any Borrower shall remain in full force and effect
until all Liabilities shall have been paid in full.
(d) The release by the Collateral Agent of the Collateral Interests granted the
Collateral Agent by the Borrowers hereunder may be upon such conditions and
indemnifications as the Administrative Agent may require.
1: ARTICLE - GENERAL:
2:1. PROTECTION OF COLLATERAL. No Agent has any duty as to the collection or
protection of the Collateral beyond the safe custody of such of the Collateral
as may come into the possession of that Agent.
1:1. PUBLICITY. The Agents (or either of them) and the Term Lender,
respectively may issue a "tombstone" notice of the establishment of the credit
facility contemplated by this Agreement and may make reference to each Borrower
(and may utilize any logo or other distinctive symbol associated with each
Borrower) in connection with any advertising, promotion, or marketing undertaken
by the Agents (or either of them) or the Term Lender.
1:2. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the Borrowers
and their respective representatives, successors, and assigns and shall enure to
the benefit of each Agent and each Lender and their respective successors and
assigns, provided, however, no trustee or other fiduciary appointed with respect
to any Borrower shall have any rights hereunder. In the event that any Agent or
any Lender assigns or transfers its rights under this Agreement, the assignee
shall thereupon succeed to and become vested with all rights, powers,
privileges, and duties of such assignor hereunder and such assignor shall
thereupon be discharged and relieved from its duties and obligations hereunder.
1:3. SEVERABILITY. Any determination that any provision of this Agreement or
any application thereof is invalid, illegal, or unenforceable in any respect in
any instance shall not affect the validity, legality, or enforceability of such
provision in any other instance, or the validity, legality, or enforceability of
any other provision of this Agreement.
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1:4. AMENDMENTS. COURSE OF DEALING.
(a) This Agreement and the other Loan Documents incorporate all discussions and
negotiations between each Borrower and each Agent and each Lender, either
express or implied, concerning the matters included herein and in such other
instruments, any custom, usage, or course of dealings to the contrary
notwithstanding. No such discussions, negotiations, custom, usage, or course of
dealings shall limit, modify, or otherwise affect the provisions thereof. No
failure by any Agent or any Lender to give notice to the Lead Borrower of any
Borrower's having failed to observe and comply with any warranty or covenant
included in any Loan Document shall constitute a waiver of such warranty or
covenant or the amendment of the subject Loan Document. No change made by the
Administrative Agent to the manner by which Borrowing Base is determined shall
obligate the Administrative Agent to continue to determine Borrowing Base in
that manner.
(b) Each Borrower may undertake any action otherwise prohibited hereby, and may
omit to take any action otherwise required hereby, upon and with the express
prior written consent of the Administrative Agent. Subject to Article , no
consent, modification, amendment, or waiver of any provision of any Loan
Document shall be effective unless executed in writing by or on behalf of the
party to be charged with such modification, amendment, or waiver (and if such
party is the Administrative Agent then by a duly authorized officer thereof).
Any modification, amendment, or waiver provided by the Administrative Agent
shall be in reliance upon all representations and warranties theretofore made to
the Administrative Agent by or on behalf of the Borrowers (and any guarantor,
endorser, or surety of the Liabilities) and consequently may be rescinded in the
event that any of such representations or warranties was not true and complete
in all material respects when given.
1:5. POWER OF ATTORNEY. In connection with all powers of attorney included in
this Agreement, each Borrower hereby grants unto the Administrative Agent
(acting through any of its officers) full power to do any and all things
necessary or appropriate in connection with the exercise of such powers as fully
and effectually as that Borrower might or could do, hereby ratifying all that
said attorney shall do or cause to be done by virtue of this Agreement. No power
of attorney set forth in this Agreement shall be affected by any disability or
incapacity suffered by any Borrower and each shall survive the same. All powers
conferred upon the Administrative Agent or the Collateral Agent by this
Agreement, being coupled with an interest, shall be irrevocable until this
Agreement is terminated by a written instrument executed by a duly authorized
officer of the Administrative Agent.
1:6. APPLICATION OF PROCEEDS. The proceeds of any collection, sale, or
disposition of the Collateral, or of any other payments received hereunder,
shall be applied towards the Liabilities in such
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order and manner as the Administrative Agent determines in its sole discretion,
consistent, however, with Sections and and any other applicable provisions of
this Agreement. The Borrowers shall remain liable for any deficiency remaining
following such application.
1:7. INCREASED COSTS. If, as a result of any Requirement of Law, or of the
interpretation or application thereof by any court or by any governmental or
other authority or entity charged with the administration thereof, whether or
not having the force of law, which:
(a) subjects any Lender to any taxes or changes the basis of taxation,
or increases any existing taxes, on payments of principal, interest or
other amounts payable by any Borrower to the Administrative Agent or any
Lender under this Agreement (except for taxes on the Administrative
Agent or any Lender based on net income or capital imposed by the
jurisdiction in which the principal or lending offices of the
Administrative Agent or that Lender are located);
(b) imposes, modifies or deems applicable any reserve, cash margin,
special deposit or similar requirements against assets held by, or
deposits in or for the account of or loans by or any other acquisition
of funds by the relevant funding office of any Lender;
(c) imposes on any Lender any other condition with respect to any Loan
Document; or
(d) imposes on any Lender a requirement to maintain or allocate capital
in relation to the Liabilities;
and the result of any of the foregoing, in such Lender's reasonable opinion, is
to increase the cost to that Lender of making or maintaining any loan, advance
or financial accommodation or to reduce the income receivable by that Lender in
respect of any loan, advance or financial accommodation by an amount which that
Lender deems to be material, then upon written notice from the Administrative
Agent, from time to time, to the Lead Borrower (such notice to set out in
reasonable detail the facts giving rise to and a summary calculation of such
increased cost or reduced income), the Borrowers shall forthwith pay to the
Administrative Agent, for the benefit of the subject Revolving Credit Lender,
upon receipt of such notice, that amount which shall compensate the subject
Lender for such additional cost or reduction in income.
1:1. COSTS AND EXPENSES OF THE AGENTS .
(a) The Borrowers shall pay from time to time on demand all Costs of Collection
and all reasonable costs, expenses, and disbursements (including attorneys'
reasonable fees and expenses) which are incurred by each Agent in connection
with the preparation, negotiation, execution, and delivery of this Agreement and
of any other Loan Documents, and all other reasonable costs, expenses, and
disbursements which may be incurred connection with or in respect to the credit
facility contemplated hereby or which otherwise are incurred with respect to the
Liabilities.
(b) The Borrowers shall pay from time to time on demand all reasonable costs and
expenses
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(including attorneys' reasonable fees and expenses) incurred, following the
occurrence of any Event of Default, by the Lenders to Lenders' Special Counsel.
(c) Each Borrower authorizes the Administrative Agent to pay all such fees and
expenses and in the Administrative Agent's discretion, to add such fees and
expenses to the Loan Account.
(d) The undertaking on the part of each Borrower in this Section shall survive
payment of the Liabilities and/or any termination, release, or discharge
executed by any Agent in favor of any Borrower, other than a termination,
release, or discharge which makes specific reference to this Section.
1:2. COPIES AND FACSIMILES. Each Loan Document and all documents and papers
which relates thereto which have been or may be hereinafter furnished any Agent
or any Lender may be reproduced by any Lender or by any Agent by any
photographic, microfilm, xerographic, digital imaging, or other process, and
such Person making such reproduction may destroy any document so reproduced. 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 in the regular course of
business). Any facsimile which bears proof of transmission shall be binding on
the party which or on whose behalf such transmission was initiated and likewise
shall be so admissible in evidence as if the original of such facsimile had been
delivered to the party which or on whose behalf such transmission was received.
1:3. MASSACHUSETTS LAW. This Agreement and all rights and obligations
hereunder, including matters of construction, validity, and performance, shall
be governed by the law of The Commonwealth of Massachusetts.
1:4. CONSENT TO JURISDICTION.
(a) Each Borrower agrees that any legal action, proceeding, case, or controversy
against any Borrower with respect to any Loan Document may be brought in the
Superior Court of Suffolk County Massachusetts or in the United States District
Court, District of Massachusetts, sitting in Boston, Massachusetts, as the
Administrative Agent may elect in the Administrative Agent's sole discretion. By
execution and delivery of this Agreement, each Borrower, for itself and in
respect of its property, accepts, submits, and consents generally and
unconditionally, to the jurisdiction of the aforesaid courts.
(b) Each Borrower WAIVES personal service of any and all process upon it, and
irrevocably consents to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
certified mail, postage prepaid, to the Lead Borrower at the Lead Borrower's
address for notices as specified herein, such service to become effective five
(5) Business
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Days after such mailing.
(c) Each Borrower WAIVES any objection based on forum non conveniens and any
objection to venue of any action or proceeding instituted under any of the Loan
Documents and consents to the granting of such legal or equitable remedy as is
deemed appropriate by the Court.
(d) Nothing herein shall affect the right of the Administrative Agent to bring
legal actions or proceedings in any other competent jurisdiction.
(e) Each Borrower agrees that any action commenced by any Borrower asserting any
claim arising under or in connection with this Agreement or any other Loan
Document shall be brought solely in the Superior Court of Suffolk County
Massachusetts or in the United States District Court, District of Massachusetts,
sitting in Boston, Massachusetts, and that such Courts shall have exclusive
jurisdiction with respect to any such action.
1:5. INDEMNIFICATION. Each Borrower shall indemnify, defend, and hold each Agent
and each Lender and any Participant and any of their respective employees,
officers, or agents (each, an "INDEMNIFIED PERSON") harmless of and from any
claim brought or threatened against any Indemnified Person by any Borrower, any
guarantor or endorser of the Liabilities, or any other Person (as well as from
attorneys' reasonable fees, expenses, and disbursements in connection therewith)
on account of the relationship of the Borrowers or of any other guarantor or
endorser of the Liabilities (each of claims which may be defended, compromised,
settled, or pursued by the Indemnified Person with counsel of the Lender's
selection, but at the expense of the Borrowers) other than any claim as to which
a final determination is made in a judicial proceeding (in which the
Administrative Agent and any other Indemnified Person has had an opportunity to
be heard), which determination includes a specific finding that the Indemnified
Person seeking indemnification had acted in a grossly negligent manner or in
actual bad faith. This indemnification shall survive payment of the Liabilities
and/or any termination, release, or discharge executed by the Administrative
Agent in favor of the Borrowers, other than a termination, release, or discharge
duly executed on behalf of the Administrative Agent which makes specific
reference to this Section.
1:6. RULES OF CONSTRUCTION. The following rules of construction shall be applied
in the interpretation, construction, and enforcement of this Agreement and of
the other Loan Documents:
(a) Unless otherwise specifically provided for herein, interest and any fee or
charge which is stated as a per annum percentage shall be calculated based on a
360 day year and actual days elapsed.
(b) Any term used herein to describe Collateral or a Person, which term is
defined in either (or both) the UCC as in effect on the date when this Agreement
was executed by the Borrowers or in UCC9'99,
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shall be given the meaning which is the more encompassing of the two
definitions.
(c) Words in the singular include the plural and words in the plural include the
singular.
(d) Cross references to Sections in this Agreement begin with the Article in
which that Section appears, followed by a colon, and then the Section to which
reference is made. (For example, a reference to "Section 5:5-6" is to Section
5-6, which appears in Article 5 of this Agreement).
(e) Titles, headings (indicated by being underlined or shown in SMALL CAPITALS)
and any Table of Contents are solely for convenience of reference; do not
constitute a part of the instrument in which included; and do not affect such
instrument's meaning, construction, or effect.
(f) The words "includes" and "including" are not limiting.
(g) Text which follows the words "including, without limitation" (or similar
words) is illustrative and not limitational.
(h) Text which is shown in italics (except for italicized text which is also in
parenthesis), shown in BOLD, shown IN ALL CAPITAL LETTERS, or in any combination
of the foregoing, shall be deemed to be conspicuous.
(i) The words "may not" are prohibitive and not permissive.
(j) Any reference to a Person's "knowledge" (or words of similar import) are to
such Person's knowledge assuming that such Person has undertaken reasonable and
diligent investigation with respect to the subject of such "knowledge" (whether
or not such investigation has actually been undertaken).
(k) Terms which are defined in one section of any Loan Document are used with
such definition throughout the instrument in which so defined.
(l) The symbol "$" refers to United States Dollars.
(m) Unless limited by reference to a particular Section or provision, any
reference to "herein", "hereof", or "within" is to the entire Loan Document in
which such reference is made.
(n) References to "this Agreement" or to any other Loan Document is to the
subject instrument as amended to the date on which application of such reference
is being made.
(o) Except as otherwise specifically provided, all references to time are to
Boston time.
(p) In the determination of any notice, grace, or other period of time
prescribed or allowed hereunder:
(i) Unless otherwise provided (I) the day of the act, event, or default
from which the designated period of time begins to run shall not be
included and the last day of the period so computed shall be included
unless such last day is not a Business Day, in which event the last day
of the relevant period shall be the then next Business Day and (II) the
period so computed shall end at 5:00 PM on the relevant Business Day.
(ii) The word "from" means "from and including".
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(iii) The words "to" and "until" each mean "to, but excluding".
(iv) The word "through" means "to and including".
(q) The Loan Documents shall be construed and interpreted in a harmonious manner
and in keeping with the intentions set forth in Section hereof, provided,
however, in the event of any inconsistency between the provisions of this
Agreement and any other Loan Document, the provisions of this Agreement shall
govern and control.
1:7. INTENT. It is intended that:
(a) This Agreement take effect as a sealed instrument.
(b) The scope of all Collateral Interests created by any Borrower to secure the
Liabilities be broadly construed in favor of the Administrative Agent and that
they cover all assets of each Borrower.
(c) All Collateral Interests created in favor of the Collateral Agent at any
time and from time to time by any any secure all Liabilities, whether now
existing or contemplated or hereafter arising.
(d) All reasonable costs, expenses, and disbursements incurred by any Agent and,
to the extent provide in Section each Lender, in connection with such Person's
relationship(s) with any Borrower shall be borne by the Borrowers.
(e) Unless otherwise explicitly provided herein, the Administrative Agent's
consent to any action of any Borrower which is prohibited unless such consent is
given may be given or refused by the Administrative Agent in its sole discretion
and without reference to Section hereof.
1:8. PARTICIPATIONS: Each Lender may sell participations to one or more
financial institutions (each, a "PARTICIPANT") in that Lender's interests herein
provided that no such participation shall include any provision which accords
that Participant with any rights, vis a vis any Agent, with respect to any
requirement herein for approval by a requisite number or proportion of the
Lenders. No such sale of a participation shall relieve a Lender from that
Lender's obligations hereunder nor obligate any Agent to any Person other than a
Lender.
1:9. RIGHT OF SET-OFF. Any and all deposits or other sums at any time
credited by or due to any Borrower from any Agent or any Lender or any
Participant or from any Affiliate of any of the foregoing, and any cash,
securities, instruments or other property of any Borrower in the possession of
any of the foregoing, whether for safekeeping or otherwise (regardless of the
reason such Person had received the same) shall at all times constitute security
for all Liabilities and for any and all obligations of each Borrower to each
Agent and such Lender or any Participant or such Affiliate and may be applied or
set off against the Liabilities and against such obligations at any time,
whether or not such are then due and
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whether or not other collateral is then available to any Agent or that Lender.
1:10. PLEDGES TO FEDERAL RESERVE BANKS: Nothing included in this Agreement
shall prevent or limit any Lender, to the extent that such Lender is subject to
any of the twelve Federal Reserve Banks organized under Section 4 of the Federal
Reserve Act (12 U.S.C. Section 341) from pledging all or any portion of that
Lender's interest and rights under this Agreement, provided, however, neither
such pledge nor the enforcement thereof shall release the pledging Lender from
any of its obligations hereunder or under any of the Loan Documents.
1:11. MAXIMUM INTEREST RATE. Regardless of any provision of any Loan Document,
neither any Agent nor any Lender shall be entitled to contract for, charge,
receive, collect, or apply as interest on any Liability, any amount in excess of
the maximum rate imposed by Applicable Law. Any payment which is made which, if
treated as interest on a Liability would result in such interest's exceeding
such maximum rate shall be held, to the extent of such excess, as additional
collateral for the Liabilities as if such excess were "Collateral."
1:12. WAIVERS.
(a) Each Borrower (and all guarantors, endorsers, and sureties of the
Liabilities) make each of the waivers included in Section , below, knowingly,
voluntarily, and intentionally, and understands that each Agent and each Lender,
in establishing the facilities contemplated hereby and in providing loans and
other financial accommodations to or for the account of the Borrowers as
provided herein, whether not or in the future, is relying on such waivers.
(b) EACH BORROWER, AND EACH SUCH GUARANTOR, ENDORSER, AND SURETY RESPECTIVELY
WAIVES THE FOLLOWING:
(i) Except as otherwise specifically required hereby, notice of
non-payment, demand, presentment, protest and all forms of demand and
notice, both with respect to the Liabilities and the Collateral.
(ii) Except as otherwise specifically required hereby, the right to
notice and/or hearing prior to an Agent's exercising of that Agent's
rights upon default.
(iii) THE RIGHT TO A JURY IN ANY TRIAL OF ANY CASE OR CONTROVERSY IN
WHICH ANY AGENT OR ANY LENDER IS OR BECOMES A PARTY (WHETHER SUCH CASE
OR CONTROVERSY IS INITIATED BY OR AGAINST ANY AGENT OR ANY LENDER OR IN
WHICH ANY AGENT OR ANY LENDER IS JOINED AS A PARTY LITIGANT), WHICH CASE
OR CONTROVERSY ARISES OUT OF OR IS IN RESPECT OF, ANY RELATIONSHIP
AMONGST OR BETWEEN ANY
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BORROWER OR ANY OTHER PERSON AND THE AGENT OR EACH LENDER LIKEWISE
WAIVES THE RIGHT TO A JURY IN ANY TRIAL OF ANY SUCH CASE OR
CONTROVERSY).
(iv) The benefits or availability of any stay, limitation, hindrance,
delay, or restriction (including, without limitation, any automatic stay
which otherwise might be imposed pursuant to Section 362 of the
Bankruptcy Code) with respect to any action which any Agent may or may
become entitled to take hereunder.
(v) Any defense, counterclaim, set-off, recoupment, or other basis on
which the amount of any Liability, as stated on the books and records of
the Administrative Agent, could be reduced or claimed to be paid
otherwise than in accordance with the tenor of and written terms of such
Liability.
(vi) Any claim to consequential, special, or punitive damages and the
Agents and each Lender likewise waives any such claim.
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THE GYMBOREE CORPORATION
("LEAD BORROWER")
By
---------------------------------
Print Name:
--------------------------------
Title:
--------------------------------
"BORROWERS":
GYMBOREE MANUFACTURING, INC.
By
---------------------------------
Print Name:
--------------------------------
Title:
--------------------------------
GYMBOREE OPERATIONS, INC.
By
---------------------------------
Print Name:
--------------------------------
Title:
--------------------------------
GYMBOREE PLAY PROGRAMS, INC.
By
---------------------------------
Print Name:
--------------------------------
Title:
--------------------------------
GYMBOREE RETAIL STORES, INC.
By
---------------------------------
Print Name:
--------------------------------
Title:
--------------------------------
Signature Page 1
<PAGE> 126
THE GYMBOREE STORES, INC.
By
---------------------------------
Print Name:
--------------------------------
Title:
--------------------------------
GYM-MARK, INC.
By
---------------------------------
Print Name:
--------------------------------
Title:
--------------------------------
FLEET RETAIL FINANCE INC.
("ADMINISTRATIVE AGENT")
By
---------------------------------
Print Name:
--------------------------------
Title:
--------------------------------
FLEET RETAIL FINANCE INC.
("COLLATERAL AGENT")
By
---------------------------------
Print Name:
--------------------------------
Title:
--------------------------------
BACK BAY CAPITAL FUNDING LLC
("TERM LENDER")
By
---------------------------------
Signature Page 2
<PAGE> 127
Print Name:
--------------------------------
Title:
--------------------------------
"REVOLVING CREDIT LENDERS":
FLEET RETAIL FINANCE INC.
By
---------------------------------
Print Name:
--------------------------------
Title:
--------------------------------
FOOTHILL CAPITAL CORPORATION
By
---------------------------------
Print Name:
--------------------------------
Title:
--------------------------------
Signature Page 3
