2
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 29, 2000 Commission File No. 1-
10892
OR
[ ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
HAROLD'S STORES, INC.
(Exact name of registrant as specified in its charter)
Oklahoma 73-1308796
(State or other (IRS Employer
jurisdiction of Identification No.)
incorporation or
organization)
765 Asp Norman, Oklahoma (405) 329-4045
73069 (Registrant's telephone
(Address of principal number,
executive offices) including area code)
(Zip Code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
As of August 31, 2000, the registrant had 6,075,067 shares of Common
Stock outstanding.
Harold's Stores, Inc. & Subsidiaries
Index to
Quarterly Report on Form 10-Q
For the Period Ended July 29, 2000
Part I - FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Balance Sheets - July 29, 2000 (unaudited) and 3
January 29, 2000
Consolidated Statements of Operations -
Thirteen Weeks and Twenty-Six Weeks ended July 29, 2000 5
(unaudited) and July 31, 1999 (unaudited)
Consolidated Statements of Cash Flows -
Twenty-Six Weeks ended July 29, 2000 (unaudited) and July 6
31, 1999 (unaudited)
Notes to Interim Consolidated Financial Statements 7
Report of Independent Public Accountants 9
Item 2. Management's Discussion and Analysis of Financial Condition and 10
Results of Operations
Part II - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 15
HAROLD'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(In Thousands)
July 29, January 29,
2000 2000
(Unaudited)
Current assets:
Cash and cash equivalents $ 659 $ 721
Trade accounts receivable, less
allowance for doubtful accounts
of $200 in July and January 5,997 6,413
Note and other receivables 155 2,247
Merchandise inventories 31,504 37,357
Prepaid expenses 2,848 2,514
Prepaid income tax 1,594 1,368
Deferred income taxes 1,582 1,582
Total current assets 44,339 52,202
Property and equipment, at cost 35,014 33,983
Less accumulated depreciation
and amortization (14,120) (12,665)
Net property and equipment 20,894 21,318
Deferred income taxes, non-
current 232 232
Goodwill (net) 3,477 -
Other assets 117 127
Total assets $69,059 $73,879
HAROLD'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(In Thousands Except Share Data)
July 29, January 29,
2000 2000
(Unaudited)
Current liabilities:
Accounts payable $ 4,124 $ 6,329
Redeemable gift certificates 577 966
Accrued bonuses and payroll
expenses 1,054 1,294
Accrued rent expense 756 529
Current maturities of long-term
debt 1,665 630
Total current liabilities 8,176 9,748
Long-term debt, net of current
maturities 25,120 27,063
Stockholders' equity:
Preferred stock of $.01 par value
Authorized 1,000,000 shares;
none issued - -
Common stock of $.01 par value
Authorized 25,000,000 shares;
issued and outstanding
6,075,067 in July and
6,075,182 in January 61 61
Additional paid-in capital 34,170 34,170
Retained earnings 1,534 2,838
35,765 37,069
Less: Treasury stock of
205 shares in July and 90
shares in January recorded
at cost 2 1
Total stockholders' equity 35,763 37,068
Total liabilities and
stockholders' equity $69,059 $73,879
HAROLD'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands Except Per Share Data)
13 Weeks Ended 26 Weeks Ended
July 29, July 31, July 29, July 31,
2000 1999 2000 1999
(Unaudited)
Sales $28,600 $29,828 $62,923 $65,128
Costs and expenses:
Costs of goods sold (including
occupancy and central buying
expenses, exclusive of items
shown separately below) 21,251 19,310 44,594 42,530
Selling, general and
administrative expenses 8,051 9,113 17,417 18,943
Depreciation and amortization 1,120 1,084 2,229 2,233
Interest expense 425 182 857 398
30,847 29,689 65,097 64,104
Earnings (loss) before income
taxes (2,247) 139 (2,174) 1,024
Provision (benefit) for
income taxes (899) 45 (870) 399
Net earnings (loss) (1,348) 94 (1,304) 625
Net earnings (loss) per common
share:
Basic and diluted $(.22) $.02 $(.21) $.10
Weighted average number of
common shares - basic 6,075 6,075 6,075 6,074
HAROLD'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
26 Weeks Ended
July 29, July 31,
2000 1999
(Unaudited)
Cash flows from operating
activities:
Net earnings (loss) $(1,304) $ 625
Adjustments to reconcile net
earnings (loss) to net cash
provided by (used in) operating
activities:
Depreciation and amortization 2,229 2,233
Gain on sale of assets (255) (4)
Shares issued under employee
incentive plan - 9
Changes in assets and
liabilities:
Decrease (increase) in trade and
other accounts receivable 1,088 (795)
Decrease (increase) in
merchandise inventories 5,853 (3,971)
Increase in prepaid expenses (236) (730)
Increase in prepaid income tax (226) -
Decrease in other assets 10 195
Decrease in accounts payable (2,205) (728)
Decrease in accrued expenses (402) (725)
Decrease in income taxes payable - (460)
Net cash provided by (used in)
operating activities 4,552 (4,351)
Cash flows from investing
activities:
Acquisition of property and
equipment (1,998) (1,642)
Proceeds from disposal of
property and equipment 839 7
Payments received for notes
receivable 35 583
Net cash used in investing
activities (1,124) (1,052)
Cash flows from financing
activities:
Payments on long-term debt (844) (680)
Advances on revolving line of
credit 21,448 27,367
Payments on revolving line of
credit (24,094) (21,252)
Net cash provided by (used in)
financing activities (3,490) 5,435
(Decrease) increase in cash (62) 32
Cash and cash equivalents at
beginning of period 721 450
Cash and cash equivalents at end
of period $ 659 $ 482
Non-cash investing and financing
activities
Debt issued to purchase stock of
CMT 2,545 -
Capital lease obligation assumed
in acquisition of CMT 37 -
HAROLD'S STORES, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
July 29, 2000 and July 31, 1999
(Unaudited)
1. Unaudited Interim Periods
In the opinion of the Company's management, all adjustments (all of
which are normal and recurring) have been made which are necessary to
fairly state the financial position of the Company as of July 29, 2000
and the results of its operations and cash flows for the thirteen-week
periods and twenty-six-week periods ended July 29, 2000 and July 31,
1999. The results of operations for the thirteen-week periods and twenty-
six-week periods ended July 29, 2000 and July 31, 1999 are not
necessarily indicative of the results of operations that may be achieved
for the entire fiscal year.
2. Definition of Fiscal Year
The Company has a 52-53 week fiscal year which ends on the Saturday
closest to January 31. The period from January 30, 2000 through February
3, 2001, has been designated as fiscal 2001.
3. Derivatives
From time to time the Company utilizes forward exchange contracts to
secure firm pricing related to purchase commitments to be denominated in
foreign currencies. The Company's objective in managing its exposure to
foreign currency exchange rate fluctuations is to reduce the impact of
adverse fluctuations in earnings and cash flows associated with foreign
currency exchange rate changes. The Company regularly monitors its
foreign exchange exposures to ensure the overall effectiveness of its
foreign currency hedge positions. Unrealized gains or losses related to
hedges of firm commitments are deferred and included in the basis of the
transaction when completed.
4. Acquisition
On February 18, 2000, the Company entered into a stock purchase
agreement pursuant to which the Company purchased all of the issued and
outstanding shares of CMT Enterprises, Inc. ("CMT"), a New York
corporation. CMT is a company exclusively devoted to product design,
development and sourcing of the Company's clothing. The Company issued a
promissory note to Franklin I. Bober, the sole shareholder of CMT, in the
amount of $2.54 million, payable with interest at a monthly rate of .466%
in thirty (30) monthly installments, and assumed long-term debt of CMT,
payable to the Company, in the amount of $1.385 million. The net book
value of CMT assets received by the Company was approximately $400,000.
The purchase price was allocated based on the fair value of assets
acquired. The excess of the purchase price over the fair value of the
net assets acquired, approximately $3,576,000, was recorded as goodwill.
The goodwill will be amortized over a 15-year period.
The Company also entered into a consulting agreement with PrimaTech
Corporation, an entity wholly owned by Franklin I. Bober, which will
provide consulting services to the Company for two years at a fee of
$405,000 per year, plus potential incentive payments.
5. Pro forma Financial Information
The following unaudited pro forma financial information presents
total sales, net earnings (loss) and net earnings (loss) per common share
of the Company after giving effect to the acquisition of CMT Enterprises,
Inc. The unaudited pro forma financial information for the twenty-six
weeks ended July 29, 2000 gives effect to the acquisition as if it had
occurred at January 30, 2000. The unaudited pro forma financial
information for the twenty-six weeks ended July 31, 1999 gives effect to
the acquisition as if it had occurred at January 31, 1999.
The following unaudited pro forma information has been prepared
from, and should be read in conjunction with, the historical consolidated
financial statements and related notes thereto of the Company and CMT
Enterprises, Inc. The following information is not necessarily
indicative of the financial position or operating results that would have
occurred had the transaction been consummated on the date, or at the
beginning of the periods, for which the transaction is being given effect
nor is it necessarily indicative of future operating results or financial
position.
HAROLD'S STORES, INC.
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
13 Weeks Ended 26 Weeks Ended
July 29, July 31, July 29, July 31,
2000 1999 2000 1999
Sales $28,600 $29,827 $62,923 $65,181
Net earnings (loss) (1,348) 214 (1,304) 1,028
Net earnings (loss)
per common share:
Basic and diluted ($0.22) $0.04 ($0.21) $0.17
6. Related Party Transaction
On July 28, 2000, the Company entered into a real estate transaction
with a limited partnership whose partners are stockholders and directors
of the Company. Under this sale agreement, some land and some buildings
owned by the Company were sold, at appraised value, to this limited
partnership for a total sales price of $746,000. Total proceeds to the
Company were approximately $735,000 after selling expenses and the total
gain recognized by the Company was approximately $286,000. The limited
partnership obtained its own financing for the purchase price. Also, all
surveys, inspections and appraisals related to this transaction were
performed by independent professionals with no affiliation to the
Company.
7. Long-term Debt
Effective for the second quarter ended July 29, 2000, the Company
entered into an amended credit agreement with its primary lender which
expires June 30, 2002. The Company and the lender have agreed to
restructure the original loan into two separate credit facilities
consisting of a secured term facility in the maximum principal amount of
$9,231,248 payable quarterly and amortized over five years and a secured
revolving credit facility (with a letter of credit subfacility) in the
maximum aggregate principal amount of $20,000,000. The principal amounts
are secured by the Company's unsecured assets which consist primarily of
inventory and accounts receivable. Other changes under the new agreement
include revisions of covenants which have enabled the Company to be in
compliance at July 29, 2000 with the covenants set forth in the agreement.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Harold's Stores, Inc.:
We have reviewed the accompanying consolidated balance sheet of Harold's
Stores, Inc. (an Oklahoma corporation) and its subsidiaries as of July
29, 2000, and the related consolidated statements of operations and cash
flows for the thirteen week and twenty-six week periods then ended.
These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical
procedures to financial data and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope
than an audit conducted in accordance with auditing standards generally
accepted in the United States, the objective of which is the expression
of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the financial statements referred to above for them to
be in conformity with accounting principles generally accepted in the
United States.
ARTHUR ANDERSEN LLP
Oklahoma City, Oklahoma
September 12, 2000
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
From time to time, the Company may publish forward-looking
statements relating to certain matters including anticipated financial
performance, business prospects, the future opening of stores, inventory
levels, anticipated capital expenditures, and other matters. All
statements other than statements of historical fact contained in this
Form 10-Q or in any other report of the Company are forward-looking
statements. The Private Securities Litigation Reform Act of 1995
provides a safe harbor for forward-looking statements. In order to
comply with the terms of that safe harbor, the Company notes that a
variety of factors, individually or in the aggregate, could cause the
Company's actual results and experience to differ materially from the
anticipated results or other expectations expressed in the Company's
forward-looking statements including, without limitation, the following:
consumer spending trends and habits; competition in the retail clothing
segment; weather conditions in the Company's operating regions; laws and
government regulations; general business and economic conditions;
availability of capital; success of operating initiatives and marketing
and promotional efforts; and changes in accounting policies. In
addition, the Company disclaims any intent or obligation to update those
forward-looking statements.
Results of Operations
The following table sets forth for the periods indicated, the
percentage of net sales represented by items in the Company's statement
of operations.
13 Weeks Ended 26 Weeks Ended
July 29, July 31, July 29, July 31,
2000 1999 2000 1999
Sales 100.0% 100.0% 100.0% 100.0%
Costs of goods sold (74.3) (64.7) (70.9) (65.3)
Selling, general and
administrative expenses (28.1) (30.6) (27.7) (29.1)
Depreciation and amortization (3.9) (3.6) (3.5) (3.4)
Interest expense (1.5) (0.6) (1.4) (0.6)
Earnings (loss) before income
taxes (7.8) 0.5 (3.5) 1.6
(Provision) benefit for
income taxes 3.1 (0.2) 1.4 (0.6)
Net earnings (loss) (4.7)% 0.3% (2.1)% 1.0%
The following table reflects the sources of the changes in Company
sales for the periods indicated.
13 Weeks Ended 26 Weeks Ended
July 29, July 31, July 29, July 31,
2000 1999 2000 1999
Sales (000's) 28,600 29,828 62,923 65,128
Total sales growth (4.1)% 7.5% (3.4)% 6.3%
Change in comparable store
sales
(52 week basis) (10.3)% 1.3% (10.0)% 1.9%
Store locations:
Existing stores 52 46 51 44
Stores closed 0 - 0 (1)
New stores opened 1 2 2 5
Total stores at end of period 53 48 53 48
The Company opened one new location in San Marcos, Texas and
relocated a store in Atlanta, Georgia to the Perimeter Center during the
thirteen weeks ended July 29, 2000 compared to the opening of two new
locations in the comparable period of the prior year. The decline in
total sales growth and comparable store sales growth is primarily
attributable to disappointing spring and summer ladies' business. The
Company's ladies' merchandise assortment strayed from its classically
inspired roots and did not meet the needs of the more conservative and
professional guests. The Company was somewhat encouraged by sales on
certain ladies' apparel items reflecting interpretations of current
trends, however. The Company has recently completed a brand audit with
The Richards Group, fortifying its commitment to manufacture classically
inspired apparel that is appropriately current. The Company's management
attributes a departure from this focus as the primary reason behind poor
sales figures.
The Company's gross margin was 25.7% for the second quarter of
fiscal 2001, as compared to 35.3% in the same period of last year. The
decline is primarily attributable to increased markdowns on the spring
and summer merchandise during second quarter in order to clear inventory
and introduce the fall collection that has a decidedly more conservative
look. In addition, the occupancy costs did not leverage as planned due
to the sales shortfall during the period.
Selling, general and administrative expenses (including advertising
and catalog production costs) as a percent of sales decreased 2.5
percentage points from the second quarter of fiscal 2000 to the second
quarter of fiscal 2001. The decrease can generally be attributed to an
emphasis on expense controls, combined with reductions of advertising and
catalog expenditures.
The average balance of total outstanding debt was $29,033,000 for
the quarter ended July 29, 2000 compared to $18,368,000 for the second
quarter of fiscal 2000. This increase in average balances resulted
principally from borrowing associated with capital expenditures and
inventories related to new store openings as well as the acquisition of
CMT Enterprises, Inc. on February 18, 2000. Also, average interest rates
on the Company's line of credit were slightly higher for the quarter
ended July 29, 2000 compared to second quarter of the prior fiscal year.
Capital Expenditures, Capital Resources and Liquidity
Cash Flows From Operating Activities. For the twenty-six weeks
ended July 29, 2000, net cash provided by operating activities was
$4,552,000 as compared to net cash used in operating activities of
$4,351,000 for the same period of fiscal 2000. The increase can be
primarily attributed to a decrease of $5,853,000 in the Company's
inventories for the twenty-six weeks ended July 29, 2000 as compared to
an increase of $3,971,000 for the same period of fiscal 2000. The
significant decrease in inventory levels for the quarter ended July 29,
2000 is attributable to a focused effort to edit assortments and reduce
inventory. The increase for the prior year is primarily due to the
opening of two new stores in the second quarter of fiscal 2000. Also,
period to period differences in timing of inventory purchases and
deliveries will affect comparability of cash flows from operating
activities.
Cash Flows From Investing Activities. For the twenty-six weeks ended
July 29, 2000, net cash used in investing activities totaled $1,124,000
compared to net cash used in investing activities of $1,052,000 for the
same period in fiscal 2000. Capital expenditures were invested in new
stores, and remodeling and equipment expenditures in existing operations.
Capital expenditures were the primary reason for the increase in cash
used in investing activities, however, this increase was partially offset
by the proceeds received from a real estate sale the Company entered into
during the quarter ended July 29, 2000.
Cash Flows From Financing Activities. During the twenty-six weeks
ended July 29, 2000, the Company made periodic borrowings under its
revolving long-term line of credit to finance its inventory purchases,
product development and private label programs, store expansion,
remodeling and equipment purchases. For the twenty-six weeks ended July
29, 2000, net cash used in financing activities totaled $3,490,000
compared to net cash provided by financing activities of $5,435,000 for
the same period in fiscal 2000. The increase in cash used in financing
activities is mainly attributable to decreased store expansion which
enabled the Company to pay down more of its revolving line of credit than
it utilized during the quarter. Another notable use of cash during the
quarter was the Company's installment payments related to the CMT
acquisition.
The Company has available a long-term line of credit with its bank.
This line had an average balance of $22,821,000 and $14,507,000 for the
twenty-six weeks ended July 29, 2000 and July 31, 1999, respectively.
During the twenty-six weeks ended July 29, 2000, this line of credit had
a high balance of $23,155,000 compared to a high balance of $18,984,000
for the twenty-six weeks ended July 31, 1999. The balance outstanding on
July 29, 2000 was $20,749,000 compared to $18,984,000 on July 31, 1999.
Liquidity. The Company considers the following as measures of
liquidity and capital resources as of the dates indicated:
July 29, January 29, July 31,
2000 2000 1999
Working capital (000's) $36,163 $42,454 $40,483
Current ratio 5.42:1 5.36:1 7.67:1
Ratio of working capital
to total assets .52:1 .57:1 .59:1
Ratio of total debt to
stockholders' equity .75:1 .75:1 .56:1
The Company's primary needs for liquidity are to finance its
inventories and revolving charge accounts and to invest in new stores,
remodeling, fixtures and equipment. Cash flow from operations and
proceeds from credit facilities represent the Company's principal sources
of liquidity. Management anticipates these sources of liquidity to be
sufficient in the foreseeable future.
As the Company's growth continues, cash flow may require additional
borrowed funds that may cause an increase in interest expense. In
addition, rising interest rates could have a similar impact on interest
expense. However, the Company is committed to reducing its average debt
levels in the coming fiscal year through a number of initiatives
including the reduction of inventory levels through improved editing of
assortments and better flow of goods; lowering of capital expenditures
due to slower expansion; and improving the Company's profitability.
Seasonality
The Company's business is subject to seasonal influences, with the
major portion of sales realized during the fall season (third and fourth
quarters) of each fiscal year, which includes the back-to-school and
Holiday selling seasons. In light of this pattern, selling, general and
administrative expenses are typically higher as a percentage of sales
during the spring season (first and second quarters) of each fiscal year.
Inflation
Inflation affects the costs incurred by the Company in its purchase
of merchandise and in certain components of its selling, general and
administrative expenses. The Company attempts to offset the effects of
inflation through price increases and control of expenses, although the
Company's ability to increase prices is limited by competitive factors in
its markets. Inflation has had no meaningful effect on the Company's
operations.
Impact of Year 2000
The year 2000 problem concerns the inability of information systems
to recognize properly and process date-sensitive information beyond
December 31, 1999. At the time of this filing, the Company had not
experienced any year 2000 problems with any of its financial or operating
systems or with any of its suppliers. The Company will continue to
monitor these systems, but it does not anticipate any problems or
significant expenditures in the future.
PART II
ITEM 1. LEGAL PROCEEDINGS
The Company is from time to time involved in routine litigation
incidental to the conduct of its business. As of this date, the Company
is not a party to, nor is any of its property subject to, any material
pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The 2000 Annual Meeting of Shareholders of the Company was held on
June 22, 2000. The following matters were submitted to a vote of the
Company's shareholders:
1. The election of ten directors (constituting the entire board of
directors) for the ensuing year and until their successors are duly
elected and qualified. The results of the election for each director
were as follows:
Votes
Director Votes For Withheld
Harold G. Powell 4,463,815 935,640
Rebecca Powell
Casey 4,192,259 1,207,196
H. Rainey Powell 4,192,901 1,206,554
Robert L. Anderson 4,462,606 936,849
Michael T. Casey 4,192,207 1,207,248
Robert B. Cullum,
Jr. 4,463,662 935,793
Margaret A.
Gilliam 4,462,657 936,798
W. Howard Lester 4,463,506 935,949
Leonard M. Snyder 4,462,657 936,798
William F.
Weitzel, Ph.D. 4,463,814 935,641
2. The proposal to amend the 1993 Performance and Equity Incentive Plan
of the Company as described in the Proxy Statement of the Company dated
May 12, 2000, was approved as follows:
Votes Votes
For Against Abstentions
3,084,925 1,242,424 6,673
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: The following exhibits are filed as part of this Form 10-
Q:
No. Description
10.1 Fourth Amended and Restated Credit Agreement dated
September 12, 2000 between Registrant and Bank of
America, N.A.
27.1 Financial Data Schedule
(b) Reports on Form 8-K: There were no reports on Form 8-K filed
by the Company during the fiscal quarter ended July 29, 2000.
INDEX TO EXHIBITS
No. Description
10.1 Fourth Amended and Restated Credit Agreement dated
September 12, 2000 between Registrant and Bank of
America, N.A.
27.1 Financial Data Schedule
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned, hereunto duly authorized.
HAROLD'S STORES, INC.
By: /s/ H. Rainey Powell
H. Rainey Powell
President, Chief Operating Officer
By: /s/ Jodi L. Taylor
Jodi L. Taylor
Chief Financial Officer
Date: September 12, 2000
Exhibit 10.1
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of September 12, 2000
among
HAROLD'S STORES, INC.
BANK OF AMERICA, N.A.
as Administrative Agent, Collateral Agent, Lead Arranger, Book Manager,
Swing Line Lender, Fronting Agent and Lender
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
THIS FOURTH AMENDED AND RESTATED CREDIT AGREEMENT is made effective
as of the 12th day of September, 2000, HAROLD'S STORES, INC., an
Oklahoma corporation (the "Company"), the several financial institutions
from time to time party to this Agreement (collectively, the "Lenders"
and individually, a "Lender"), and BANK OF AMERICA, N.A., a national
banking association formerly NationsBank, N.A., as Swing Line Lender,
Lead Arranger, Book Manager and as agent for the Lenders ("BofA").
WHEREAS, the Company and BofA have previously entered into a certain
Third Amended and Restated Credit Agreement dated November 10, 1997, as
amended by a First Amendment to Third Amended and Restated Credit
Agreement dated effective June 30, 1998, as amended by a Second Amendment
to Third Amended and Restated Credit Agreement dated effective August 31,
1998, as amended by a Third Amendment to Third Amended and Restated
Credit Agreement dated effective June 30, 1999, as amended by a Fourth
Amendment to Third Amended and Restated Credit Agreement dated effective
November 24, 1999, as amended by a Fifth Amendment to Third Amended and
Restated Credit Agreement dated effective February 18, 2000
(collectively, the "Original Credit Agreement"), which agreement covers a
certain extension of credit in the form of a revolving line of credit
from BofA to the Company in the maximum principal amount of
$30,000,000.00 (the "Original Loan"); and
WHEREAS, the Company and BofA have agreed to restructure the
Original Loan into two (2) separate credit facilities consisting of a
secured term facility in the maximum principal amount of $9,231,248.00
and a secured revolving credit facility (with a letter of credit
subfacility and a swing line subfacility) in the maximum aggregate
principal amount of $20,000,000.00, and in connection therewith, the
Company and BofA desire to amend and restate the Original Credit
Agreement in its entirety as hereafter described.
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. The following terms have the following
meanings:
"Account Debtor" shall mean the party who is obligated on or
under an Account.
"Accounts" shall mean all present and future rights of the
Company or any Subsidiary to payment for goods sold or leased or for
services rendered, which are not evidenced by instruments or chattel
paper, and whether or not they have been earned by performance.
"Acquisition" shall mean any transaction or series of related
transactions for the purpose of or resulting, directly or
indirectly, in (a) the acquisition of all or substantially all of
the assets of a Person, or of any business or division of a Person,
(b) the acquisition of in excess of 50% of the capital stock,
partnership interests, membership interests or equity of any Person,
or otherwise causing any Person to become a Subsidiary, or (c) a
merger or consolidation or any other combination with another Person
(other than a Person that is a Subsidiary) provided that the Company
or the Subsidiary is the surviving entity.
"Affiliate" shall mean, as to any Person, any other Person
which, directly or indirectly, is in control of, is controlled by,
or is under common control with, such Person. A Person shall be
deemed to control another Person if the controlling Person
possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of the other Person,
whether through the ownership of voting securities, membership
interests, by contract, or otherwise.
"Agent" shall mean BofA in its capacity as agent for the
Lenders hereunder, and any successor agent arising under Section
10.09.
"Agent-Related Persons" shall mean BofA and any successor agent
arising under Section 10.09 and any successor letter of credit
issuing bank hereunder, together with their respective Affiliates,
and the officers, directors, employees, agents and attorneys-in-fact
of such Persons and Affiliates.
"Agent's Payment Office" shall mean the address for payments
set forth on Schedule 11.02 or such other address as the Agent may
from time to time specify.
"Aggregate Commitment" shall mean the sum of (a) the Aggregate
Revolving Loan Commitment and (b) the Aggregate Term Loan
Commitment.
"Aggregate Revolving Loan Commitment" shall mean the aggregate
Revolving Loan Commitments of the Lenders, equal to Twenty Million
Dollars ($20,000,000.00).
"Aggregate Term Loan Commitment" shall mean the aggregate Term
Loan Commitments of the Lenders, equal to Nine Million Two Hundred
Thirty-one Thousand Two Hundred Forty-eight Dollars ($9,231,248.00).
"Agreement" shall mean this Fourth Amended and Restated Credit
Agreement.
"Applicable Base Rate Margin" shall mean, subject to the last
sentence of this definition, for any period, the applicable of the
following percentages in effect with respect to such period as the
Leverage Ratio of the Company shall fall within the indicated
ranges:
Applicable Base Rate
Level Leverage Ratio Margin
(in basis points)
Greater
Less Than Than or Revolving Term Loan
Equal to Loan
I 2.00:1.00 100 100
II 1.99:1.00 1.50:1.00 50 50
III 1.49:1.00 0 0
The Leverage Ratio shall be calculated by the Company as of the end
of each fiscal quarter, commencing with the fiscal quarter ending
February 3, 2001, and shall be reported to the Agent pursuant to a
Compliance Certificate executed by a Responsible Officer of the
Company and delivered pursuant to subsection 7.02(b) hereof. The
Applicable Base Rate Margin shall be adjusted, if necessary, on the
third Business Day after the delivery of such certificate; provided,
that if such certificate, together with the financial statements to
which such certificate relates, is not delivered to the Agent by the
fifth Business Day after the date on which the related financial
statements are due to be delivered to the Agent pursuant to
subsection 7.01(a) or (b), then, from such fifth Business Day until
the third Business Day after delivery of such certificate, the
Applicable Base Rate Margin shall be equal to 100 basis points for
Revolving Loans and Term Loans. From the Closing Date until
adjusted as described above, the Applicable Base Rate Margin shall
be equal to 100 basis points for Revolving Loans and Term Loans.
"Applicable Commitment Fee Percentage" shall mean, subject to
the last sentence of this definition, for any period, the applicable
of the following percentages in effect with respect to such period
as the Leverage Ratio of the Company shall fall within the indicated
ranges:
Applicable Commitment
Level Leverage Ratio Fee Percentage (in
basis points)
Greater Than
Less Than or Equal To
I 2.00:1.00 50
II 1.99:1.00 1.50:1.00 50
III 1.49:1.00 25
The Leverage Ratio shall be calculated by the Company as of the end
of each fiscal quarter, commencing with the fiscal quarter ending
February 3, 2001, and shall be reported to the Agent pursuant to a
Compliance Certificate executed by a Responsible Officer of the
Company and delivered pursuant to subsection 7.02(b) hereof. The
Applicable Commitment Fee Percentage shall be adjusted, if
necessary, on the third Business Day after the delivery of such
certificate; provided, that if such certificate, together with the
financial statements to which such certificate relates, is not
delivered to the Agent by the fifth Business Day after the date on
which the related financial statements are due to be delivered to
the Agent pursuant to subsection 7.01(a) or (b), then, from such
fifth Business Day until the third Business Day after delivery of
such certificate, the Applicable Commitment Fee Percentage shall be
equal to 50 basis points. From the Closing Date until adjusted as
described above, the Applicable Commitment Fee Percentage shall be
equal to 50 basis points.
"Applicable LIBOR Rate Margin" shall mean, subject to the last
sentence of this definition, for any period, the applicable of the
following percentages in effect with respect to such period as the
Leverage Ratio of the Company shall fall within the indicated
ranges:
Applicable LIBOR Rate
Level Leverage Ratio Margin
(in basis points)
Greater
Less Than Than or Revolving Term Loan
Equal to Loan
I 2.00:1.00 250 250
II 1.99:1.00 1.50:1.00 200 200
III 1.49:1.00 100 100
The Leverage Ratio shall be calculated by the Company as of the end
of each fiscal quarter, commencing with the fiscal quarter ending
February 3, 2001, and shall be reported to the Agent pursuant to a
Compliance Certificate executed by a Responsible Officer of the
Company and delivered pursuant to subsection 7.02(b) hereof. The
Applicable LIBOR Rate Margin shall be adjusted, if necessary, on the
third Business Day after the delivery of such certificate, with such
adjustment to apply to all Interest Periods then outstanding and
beginning thereafter until the next adjustment date; provided, that
if such certificate, together with the financial statements to which
such certificate relates, is not delivered to the Agent by the fifth
Business Day after the date on which the related financial
statements are due to be delivered to the Agent pursuant to
subsection 7.01(a) or (b), then, from such fifth Business Day until
the third Business Day after delivery of such certificate, the
Applicable Offshore Rate Margin shall be equal to 250 Basis Points
for Revolving Loans and Term Loans. From the Closing Date until
adjusted as described above, the Applicable Offshore Rate Margin
shall be equal to 250 Basis Points for Revolving Loans and Term
Loans.
"Approved Fund" shall mean, with respect to any Lender that is
a fund that invests in bank loans, any other fund that invests in
bank loans and is advised or managed by the same investment advisor
as such Lender or by an Affiliate of such investment advisor.
"Asset Disposition" shall have the meaning specified in Section
8.02.
"Assignee" shall have the meaning specified in subsection
11.08(a).
"Attorney Costs" shall mean and includes all reasonable fees
and disbursements of any law firm or other external counsel.
"Bankruptcy Code" shall mean the Federal Bankruptcy Reform Act
of 1978 (11 U.S.C. 101, et seq.).
"Base Rate" shall mean, for any day, the higher of: (a) 0.50%
per annum above the latest Federal Funds Rate; and (b) the rate of
interest in effect for such day as publicly announced from time to
time by BofA in San Francisco, California, as its "prime rate." (The
"prime rate" is a rate set by BofA based upon various factors
including BofA's costs and desired return, general economic
conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above, or below such
announced rate.) Any change in the reference rate announced by BofA
shall take effect at the opening of business on the day specified in
the public announcement of such change.
"Base Rate Loan" shall mean a Loan that bears interest based on
the Base Rate.
"Basis Point" shall mean one one-hundredth of one percent.
"BofA" shall mean Bank of America, N.A., a national banking
association formerly NationsBank, N.A.
"Borrowing" shall mean a borrowing hereunder consisting of
Revolving Loans or Term Loans of the same Type made to the Company
on the same day by the Lenders under Article II, and, in the case of
LIBOR Rate Loans, having the same Interest Period. The making of a
Swing Line Loan shall not constitute a Borrowing.
"Borrowing Base" shall mean at any time an amount equal to the
sum at such time of (i) Receivables Availability, (ii) Inventory
Availability and (iii) Seasonal Availability.
"Borrowing Date" shall mean any date on which a Borrowing
occurs under Section 2.03.
"Business Day" shall mean any day other than a Saturday, Sunday
or other day on which commercial banks in New York City, Chicago,
St. Louis or San Francisco are authorized or required by law to
close and, if the applicable Business Day relates to any LIBOR Rate
Loan, means such a day on which dealings are carried on in the
applicable offshore dollar interbank market.
"Capital Adequacy Regulation" shall mean any guideline or
directive of any central bank or other Governmental Authority, or
any other law, rule or regulation, whether or not having the force
of law, in each case, regarding capital adequacy of any bank or of
any corporation controlling a bank.
"Capital Expenditures" shall mean, for any period and with
respect to any Person, the aggregate of all expenditures by such
Person and its Subsidiaries for the acquisition or leasing of fixed
or capital assets or additions to equipment (including replacements,
capitalized repairs and improvements during such period) which
should be capitalized under GAAP on a consolidated balance sheet of
such Person and its Subsidiaries.
"Capital Stock" shall mean (a) in the case of a corporation,
corporate stock, (b) in the case of an association or business
entity, any and all shares, interests, participations, rights or
other equivalents (however designated) of corporate stock, (c) in
the case of a partnership or limited liability company, partnership
or membership interests (whether general or limited) and (d) any
other interest or participation that confers on a Person the right
to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Collateralize" shall mean to pledge and deposit with or
deliver to the Agent, for the benefit of the Agent, the Issuers and
the Lenders, as additional collateral for the L/C Obligations, cash
or deposit account balances pursuant to documentation in form and
substance reasonably satisfactory to the Agent and the Issuers
(which documents are hereby consented to by the Lenders).
Derivatives of such term shall have corresponding meanings. The
Company hereby grants the Agent, for the benefit of the Agent, the
Issuers and the Lenders, a security interest in all such cash and
deposit account balances. Cash collateral shall be maintained in
blocked, non-interest bearing deposit accounts at BofA.
"CERCLA" shall have the meaning specified in the definition of
"Environmental Laws."
"Change of Control" shall mean the occurrence of any of the
following: (a) the sale, lease, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one
or a series of related transactions, of all or substantially all of
the assets of the Company and its Subsidiaries taken as a whole to
any "person" (as such term is used in Section 13(d)(3) of the
Exchange Act); (b) the adoption of a plan relating to the
liquidation or dissolution of the Company; (c) the consummation of
any transaction (including, without limitation, any merger or
consolidation) the result of which is that any "person" (as defined
above) becomes the "beneficial owner" (as such term is defined in
Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that a
person shall be deemed to have "beneficial ownership" of all
securities that such person has the right to acquire, whether such
right is currently exercisable or is exercisable only upon the
occurrence of a subsequent condition), directly or indirectly of
more than 25% of the Voting Stock of the Company (measured by voting
power rather than number of shares); (d) the Company consolidates
with, or merges with or into, any Person, or any Person consolidates
with, or merges with or into, the Company in any such event pursuant
to a transaction in which any of the outstanding Voting Stock of the
Company is converted into or exchanged for cash, securities or other
property, other than any such transaction where the Voting Stock of
the Company outstanding immediately prior to such transaction is
converted into or exchanged for Voting Stock of the surviving or
transferee Person constituting a majority of the outstanding shares
of such Voting Stock of such surviving or transferee Person
(immediately after giving effect to such issuance); or (e) during
any period of 25 consecutive calendar months, commencing on the date
of this Agreement, the ceasing of those individuals (the "Continuing
Directors") who (i) were directors of the Company on the first day
of each such period or (ii) subsequently became directors of the
Company and whose actual election or initial nomination for election
subsequent to that date was approved by a majority of the Continuing
Directors then on the board of directors of the Company, to
constitute a majority of the board of directors of the Company.
"Closing Date" shall mean the date on which all conditions
precedent set forth in Section 5.01 are satisfied or waived by all
Lenders (or, in the case of subsection 5.01(e), waived by the Person
entitled to receive such payment).
"Code" shall mean the Internal Revenue Code of 1986, and
regulations promulgated thereunder.
"Collateral" shall mean all property and interests in property
and proceeds thereof now owned or hereafter acquired by the Company
and its Subsidiaries in or upon which a Lien now or hereafter
exists in favor of the Lenders, or the Agent on behalf of the
Lenders, whether under this Agreement, under the Collateral
Documents or under any other documents executed by any such Person
and delivered to the Agent or the Lenders.
"Collateral Documents" shall mean, collectively, (a) the
Security Agreement, the Subsidiary Security Agreement, the
Subsidiary Pledge, the Subsidiary Guaranty, the L/C Application(s),
and all other security agreements, mortgages, deeds of trust, patent
and trademark assignments, lease assignments, guarantees and other
similar agreements between the Company or any Subsidiary or any
Guarantor and the Lenders or the Agent for the benefit of the
Lenders now or hereafter delivered to the Lenders or the Agent
pursuant to or in connection with the transactions contemplated
hereby, and all financing statements (or comparable documents now or
hereafter filed in accordance with the Uniform Commercial Code or
comparable law) against the Company or any Subsidiary or any
Guarantor as debtor in favor of the Lenders or the Agent for the
benefit of the Lenders as secured party, and (b) any amendments,
supplements, modifications, renewals, replacements, consolidations,
substitutions and extensions of any of the foregoing.
"Commitment", as to each Lender, shall mean (a) such Lender's
Term Loan Commitment, plus (b) such Lender's Revolving Loan
Commitment.
"Company" shall have the meaning specified in the introductory
clause hereto.
"Compliance Certificate" shall mean a certificate substantially
in the form of Exhibit C.
"Contingent Obligation" shall mean, as to any Person, any
direct or indirect liability of that Person, whether or not
contingent, with or without recourse, (a) with respect to any
Indebtedness, lease, dividend, letter of credit or other obligation
(the "primary obligations") of another Person (the "primary
obligor"), including any obligation of that Person (i) to purchase,
repurchase or otherwise acquire such primary obligations or any
security therefor, (ii) to advance or provide funds for the payment
or discharge of any such primary obligation, or to maintain working
capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet item, level
of income or financial condition of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose
of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation,
or (iv) otherwise to assure or hold harmless the holder of any such
primary obligation against loss in respect thereof (each, a
"Guaranty Obligation"); (b) with respect to any Surety Instrument
issued for the account of another Person or as to which that Person
is otherwise liable for reimbursement of drawings or payments; (c)
to purchase any materials, supplies or other property from, or to
obtain the services of, another Person if the relevant contract or
other related document or obligation requires that payment for such
materials, supplies or other property, or for such services, shall
be made regardless of whether delivery of such materials, supplies
or other property is ever made or tendered, or such services are
ever performed or tendered; or (d) in respect of any Swap Contract.
The amount of any Contingent Obligation, (v) in the case of Guaranty
Obligations, shall be deemed equal to the lesser of (i) the stated
or determinable amount of the primary obligation in respect of which
such Guaranty Obligation is made or, if not stated or if
indeterminable, the maximum reasonably anticipated liability in
respect thereof, and (ii) the stated amount of the guaranty, (w) in
the case of Contingent Obligations in respect of Swap Contracts,
shall be deemed equal to the aggregate Swap Termination Value of
such Swap Contracts, (x) in the case of Contingent Obligations in
respect of Surety Instruments other than Non-Surety L/C's, shall be
deemed equal to the probable amount of the expected liability
thereunder,(y) in the case of Contingent Obligations in respect of
Non-Surety L/C's, shall be deemed equal to (i) the face amount of
outstanding Non-Surety L/C's which are not Letters of Credit and
(ii) the outstanding amount of L/C Obligations in respect of Non-
Surety L/C's which are Letters of Credit, and (z) the stated amount
of all Contingent Obligations described in clause (c) above.
"Contractual Obligation" shall mean, as to any Person, any
provision of any security issued by such Person or of any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other
instrument, document or agreement to which such Person is a party or
by which it or any of its property is bound.
"Conversion/Continuation Date" shall mean any date on which,
under Section 2.04, the Company (a) converts Loans of one Type to
another Type, or (b) continues as Loans of the same Type, but with a
new Interest Period, Loans having Interest Periods expiring on such
date.
"Credit Extension" shall mean and includes (a) the making of
any Loans hereunder, and (b) the Issuance of any Letters of Credit
hereunder.
"Current Assets" shall mean all assets of the Company, on a
consolidated basis, which should, in accordance with GAAP, be
classified as current assets.
"Current Liabilities" shall mean all liabilities of the
Company, on a consolidated basis, which should, in accordance with
GAAP, be classified as current liabilities, other than current
maturities in respect of the Loans.
"Default" shall mean any event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not cured or
otherwise remedied during such time) constitute an Event of Default.
"Dollars", "dollars" and "$" shall each mean lawful money of
the United States.
"EBITDA" shall mean, for any period, for the Company and its
Subsidiaries on a consolidated basis, determined in accordance with
GAAP, the sum of (a) the net income (or net loss) for such period,
plus (b) all amounts treated as expenses for depreciation and
interest and the amortization of intangibles of any kind to the
extent included in the determination of such net income (or loss),
plus (c) all accrued taxes on or measured by income to the extent
included in the determination of such net income (or net loss);
provided, however, that net income (or net loss) shall be computed
without giving effect to extraordinary losses or extraordinary gains
or gains or losses arising from the sale of discontinued operations.
"Effective Amount" shall mean (a) with respect to any Revolving
Loans, Swing Line Loans and Term Loans on any date, the aggregate
outstanding principal amount thereof after giving effect to any
Borrowings and prepayments or repayments of Revolving Loans, Swing
Line Loans and Term Loans occurring on such date; and (b) with
respect to any outstanding L/C Obligations on any date, the amount
of such L/C Obligations on such date after giving effect to any
Issuances of Letters of Credit occurring on such date and any other
changes in the aggregate amount of the L/C Obligations as of such
date, including as a result of any reimbursements of outstanding
unpaid drawings under any Letters of Credit or any reductions in the
maximum amount available for drawing under Letters of Credit taking
effect on such date. For purposes of subsection 2.07(a) the
Effective Amount shall be determined without giving effect to any
mandatory prepayments to be made under subsection 2.07(b).
"Eligible Accounts" shall mean all Accounts of the Company and
its Subsidiaries, provided that the following Accounts are not
Eligible Accounts: (i) Accounts which remain unpaid ninety (90) days
after the original date of the applicable invoice; (ii) all Accounts
owing by a single Account Debtor, including a currently scheduled
Account, if twenty-five percent (25%) or more of the balance owing
by such Account Debtor to the Company or any Subsidiary remains
unpaid ninety (90) days after the original date of the applicable
invoice or invoices; (iii) Accounts due by a single Account Debtor
which represent an amount exceeding fifteen (15%) percent of all
Accounts; provided, however, that with the written consent of Agent,
such limitation may be raised to twenty-five (25%) percent or such
other percentage as Agent may allow; (iv) Accounts with respect to
which the Account Debtor is a director, officer, employee,
Subsidiary or Affiliate of the Company or any Subsidiary (except
proprietary credit card accounts); (v) Accounts with respect to
which the Account Debtor is the United States of America or any
department, agency or instrumentality thereof unless such Account
has been assigned to the Agent in accordance with the terms and
conditions of the Assignment of Claims Act and the Collateral
Documents, but only to the extent that a notice of assignment with
respect to such Account has been executed by each government officer
and other Person required under the Assignment of Claims Act and
such a copy of notice of assignment has been delivered to Agent
provided, however, that no Account existing on or created within the
30 days following the Closing Date shall be deemed ineligible
pursuant to this subsection (iv) unless the provisions of this
subsection (vi) have not been met with respect to such Account on or
before the 90th day following the Closing Date; (vii) Accounts with
respect to which the Account Debtor is not a resident of the United
States or Canada, unless the Account Debtor has supplied the Company
or applicable Subsidiary with an irrevocable letter of credit,
issued by a financial institution satisfactory to Agent, sufficient
to cover such Account in form and substance satisfactory to Agent;
(viii) Accounts to the extent to which the Account Debtor has
asserted a counterclaim or a right of setoff; (ix) Accounts for
which the prospect of payment or performance by the Account Debtor
is or will be impaired as determined by Agent in the exercise of its
reasonable discretion and in accordance with Agent's customary
business practices; (x) Accounts with respect to which Agent does
not have a first and valid fully perfected security interest; (xi)
Accounts with respect to which the Account Debtor is the subject of
bankruptcy or a similar insolvency proceeding or has made an
assignment for the benefit of creditors or whose assets have been
conveyed to a receiver or trustee; (xii) Accounts with respect to
which the Account Debtor's obligation to pay the Account is
conditional upon the Account Debtor's approval or is otherwise
subject to any repurchase obligation or return right, as with sales
made on a bill-and-hold, guaranteed sale, sale-and-return, sale on
approval (except with respect to Accounts in connection with which
Account Debtors are entitled to return Inventory on the basis of the
quality of such Inventory) or consignment basis; (xiii) Accounts to
the extent that the Account Debtor's indebtedness to the Company or
applicable Subsidiary exceeds a credit limit determined by Agent in
the exercise of reasonable discretion and in accordance with Agent's
customary business practices; and (xiv) Accounts with respect to
which the Account Debtor is located in any State requiring
qualification to do business or the filing of a Notice of Business
Activities Report or similar report in order to permit the Company
or applicable Subsidiary to seek judicial enforcement in such State
of payment of any such Account, unless the Company or applicable
Subsidiary has duly qualified to do business as a foreign
corporation in such State or filed a Notice of Business Activities
Report with the appropriate office in such State for the then
current year.
"Eligible Assignee" shall mean (a) a commercial bank organized
under the laws of the United States, or any state thereof, and
having a combined capital and surplus of at least $100,000,000; (b)
a commercial bank organized under the laws of any other country
which is a member of the Organization for Economic Cooperation and
Development (the "OECD"), or a political subdivision of any such
country, and having a combined capital and surplus of at least
$100,000,000, provided that such bank is acting through a branch or
agency located in the United States; (c) a Person that is primarily
engaged in the business of commercial banking and that is (i) a
Subsidiary of a Lender, (ii) a Subsidiary of a Person of which a
Lender is a Subsidiary, or (iii) a Person of which a Lender is a
Subsidiary; (d) as to the Term Loans, (i) an "accredited investor",
as such term is defined in Rule 501(a) of Regulation D under the
Securities Act of 1933, as amended (other than the Company or an
Affiliate of the Company) or (ii) a finance company, insurance
company or other financial institution or fund (whether a
corporation, partnership, trust or other entity) that is primarily
engaged in the business of making, purchasing or otherwise investing
in commercial loans; and (e) any other entity approved by the
Company and the Agent.
"Eligible Inventory" shall mean Inventory of the Company and
its Subsidiaries held for sale in the ordinary course of business
(but not including packaging or shipping materials or maintenance
supplies) which is deemed by the Agent in the exercise of its
reasonable discretion to be eligible for inclusion in the
calculation of the Borrowing Base, provided that the following
Inventory is not Eligible Inventory: (i) Inventory which is
obsolete, not in good condition, or not currently usable or
currently salable in the ordinary course of the Company's or a
Subsidiary's business; (ii) Inventory consisting of supplies; (iii)
Inventory which is not located in the United States or Canada; (iv)
after ninety (90) days from the date of this Agreement, Inventory
located on premises leased by the Company or any Subsidiary to the
extent that (a) the lessor of such premises has not executed a
landlord waiver and consent in form and substance satisfactory to
Agent, (b) the Agent has reasonably determined that the lessor of
such premises has lien rights in the Inventory granted by the lease
which have not been waived, or (c) Agent has not otherwise consented
to the inclusion of such Inventory due to the refusal of lessors to
execute and deliver a landlord waiver and consent, which consent by
the Agent for inclusion will not be unreasonably withheld; and (v)
Inventory with respect to which Agent does not have a first
priority, valid and perfected security interest. Any Inventory not
disqualified under any of clauses (i) through (v) is Eligible
Inventory unless the Company is notified to the contrary by Agent.
"Environmental Claims" shall mean all claims, however asserted,
by any Governmental Authority or other Person alleging potential
liability or responsibility for violation of any Environmental Law,
or for release or injury to the environment or threat to public
health, personal injury (including sickness, disease or death),
property damage, natural resources damage, or otherwise alleging
liability or responsibility for damages (punitive or otherwise),
investigation, cleanup, removal, remedial or response costs,
restitution, civil or criminal penalties, injunctive relief, or
other type of relief, resulting from or based upon the presence,
placements, discharge, emission or release (including intentional
and unintentional, negligent and non-negligent, sudden or
non-sudden, accidental or non-accidental, placements, spills, leaks,
discharges, emissions or releases) of any Hazardous Material at, in,
or from any property, whether or not owned by the Company or any
Subsidiary or taken as collateral, or in connection with any
operations of the Company.
"Environmental Laws" shall mean all federal, state or local
laws, statutes, common law duties, rules, regulations, ordinances
and codes, together with all administrative orders, directed duties,
requests, licenses, authorizations and permits of, and agreements
with, any Governmental Authorities, in each case relating to
environmental, health, safety and land use matters, including
without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), the Clean Air
Act, the Federal Water Pollution Control Act of 1972, the Solid
Waste Disposal Act, the Federal Resource Conservation and Recovery
Act, the Toxic Substances Control Act, and the Emergency Planning
and Community Right-to-Know Act.
"Environmental Permits" shall have the meaning specified in
subsection 6.12(b).
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, and regulations promulgated thereunder.
"ERISA Affiliate" shall mean any trade or business (whether or
not incorporated) under common control with the Company within the
meaning of Section 414(b) or (c) of the Code (and Sections 414(m)
and (o) of the Code for purposes of provisions relating to Section
412 of the Code).
"ERISA Event" shall mean (a) a Reportable Event with respect to
a Pension Plan; (b) a withdrawal by the Company or any ERISA
Affiliate from a Pension Plan subject to Section 4063 of ERISA
during a plan year in which it was a substantial employer (as
defined in Section 4001(a)(2) of ERISA) or a cessation of operations
which is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Company or any
ERISA Affiliate from a Multiemployer Plan or notification that a
Multiemployer Plan is in reorganization; (d) the filing of a notice
of intent to terminate, the treatment of a Plan amendment as a
termination under Section 4041 or 4041A of ERISA, or the
commencement of proceedings by the PBGC to terminate a Pension Plan
or Multiemployer Plan; (e) an event or condition which might
reasonably be expected to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon
the Company or any ERISA Affiliate.
"Eurodollar Reserve Percentage" shall have the meaning
specified in the definition of "Offshore Rate".
"Event of Default" shall mean any of the events or
circumstances specified in Section 9.01.
"Event of Loss" shall mean, with respect to any property, any
of the following: (a) any loss, destruction or damage of such
property; (b) any institution of any proceedings for the
condemnation or seizure of such property or for the exercise of any
right of eminent domain; or (c) any actual condemnation, seizure or
taking, by exercise of the power of eminent domain or otherwise, of
such property, or confiscation of such property or the requisition
of the use of such property.
"Exchange Act" shall mean the Securities Exchange Act of 1934
and the regulations promulgated thereunder.
"FDIC" shall mean the Federal Deposit Insurance Corporation,
and any Governmental Authority succeeding to any of its principal
functions.
"Federal Funds Rate" shall mean, for any day, the rate set
forth in the weekly statistical release designated as H.15(519), or
any successor publication, published by the Federal Reserve Bank of
New York (including any such successor, "H.15(519)") on the
preceding Business Day opposite the caption "Federal Funds
(Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day
will be the arithmetic mean as determined by the Agent of the rates
for the last transaction in overnight Federal funds arranged prior
to 9:00 a.m. (Central time) on that day by each of three leading
brokers of Federal funds transactions in Chicago selected by the
Agent.
"Fixed Charge Coverage Ratio" shall mean, as of any date of
determination, the ratio of (a) EBITDA plus Rents minus Capital
Expenditures for the period of four fiscal quarters ending on such
date to (b) Fixed Charges for the period of four fiscal quarters
ending on such date.
"Fixed Charges" shall mean, with respect to the Company and its
Subsidiaries on a consolidated basis, as of any date of
determination, (a) interest expenses paid or accrued on outstanding
Indebtedness for the period of four fiscal quarters ending on the
date of determination, plus (b) principal payments on Indebtedness
required to be made in such period, (c) Rents due on leasehold
interests of the Company for such period, (d) cash dividends paid by
the Company during such period, if any, and (e) all the income taxes
paid by the Company with cash during such period.
"FRB" shall mean the Board of Governors of the Federal Reserve
System, and any Governmental Authority succeeding to any of its
principal functions.
"Funded Indebtedness" of any Person shall mean, without
duplication, (a) all Indebtedness of such Person other than
Indebtedness of the types referred to in clauses (c),(h) and (i) of
the definition of "Indebtedness", (b) all Contingent Obligations of
such Person with respect to Indebtedness of the type referred to in
clause (a) above of another Person and (c) Indebtedness of the type
referred to in clause (a) above of any partnership or unincorporated
joint venture for which such Person is legally obligated or has a
reasonable expectation of being liable.
"Further Taxes" shall mean any and all present or future taxes,
levies, assessments, imposts, duties, deductions, fees, withholdings
or similar charges (including, without limitation, net income taxes
and franchise taxes), and all liabilities with respect thereto,
imposed by any jurisdiction on account of amounts payable or paid
pursuant to Section 4.01.
"GAAP" shall mean generally accepted accounting principles set
forth from time to time in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified
Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board (or agencies with similar
functions of comparable stature and authority within the U.S.
accounting profession), which are applicable to the circumstances as
of the date of determination.
"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof, any central bank
(or similar monetary or regulatory authority) thereof, any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Government Contract" shall mean a contract with any United
States Governmental Authority and pursuant to which the Company or
any of its Subsidiaries will be supplying services or goods which
are included in Inventory or Accounts of the Company or any of its
Subsidiaries.
"Government Subcontract" shall mean each contract of the
Company or any of its Subsidiaries with a Person (other than the
Company or any of its Subsidiaries) for the supply of goods or
services to such Person pursuant to a Government Contract between
such Person and a United States Governmental Authority.
"Guarantors" shall mean each of the Subsidiaries of the Company
from time to time party to the Subsidiary Guaranty.
"Guaranty Obligation" shall have the meaning specified in the
definition of "Contingent Obligation."
"Hazardous Materials" shall mean all those substances that are
regulated by, or which may form the basis of liability or a standard
of conduct under, any Environmental Law, including any substance
identified under any Environmental Law as a pollutant, contaminant,
hazardous waste, hazardous constituent, special waste, hazardous
substance, hazardous material, or toxic substance, or petroleum or
petroleum-derived substance or waste.
"Honor Date" shall have the meaning specified in subsection
3.03(b).
"Indebtedness" of any Person shall mean, without duplication,
(a) all indebtedness for borrowed money; (b) all obligations issued,
undertaken or assumed as the deferred purchase price of property or
services (other than trade payables entered into in the ordinary
course of business on ordinary terms); (c) all Contingent
Obligations with respect to Surety Instruments; (d) all obligations
evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the
acquisition of property, assets or businesses; (e) all indebtedness
created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with
respect to property acquired by the Person (even though the rights
and remedies of the seller or bank under such agreement in the event
of default are limited to repossession or sale of such property);
(f) all obligations with respect to capital leases; (g) all
indebtedness referred to in clauses (a) through (f) above secured by
(or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in
property (including accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for
the payment of such Indebtedness; (h) all preferred Capital Stock
issued by such Person and required by the terms thereof to be
redeemed, or for which mandatory sinking fund payments are due, by a
fixed date; and (i) all Guaranty Obligations in respect of
indebtedness or obligations of others of the kinds referred to in
clauses (a) through (h) above. For all purposes of this Agreement,
the Indebtedness of any Person shall include all recourse
Indebtedness of any partnership or joint venture in which such
Person is a general partner or a joint venturer.
"Indemnified Liabilities" shall have the meaning specified in
Section 11.05.
"Indemnified Person" shall have the meaning specified in
Section 11.05.
"Independent Auditor" shall have the meaning specified in
subsection 7.01(a).
"Insolvency Proceeding" shall mean, with respect to any Person,
(a) any case, action or proceeding with respect to such Person
before any court or other Governmental Authority relating to
bankruptcy, reorganization, insolvency, liquidation, receivership,
dissolution, winding-up or relief of debtors, or (b) any general
assignment for the benefit of creditors, composition, marshalling of
assets for creditors, or other, similar arrangement in respect of
its creditors generally or any substantial portion of its creditors;
in each case, undertaken under U.S. Federal, state or foreign law,
including the Bankruptcy Code.
"Interest Payment Date" shall mean, as to any LIBOR Rate Loan,
the last day of each Interest Period applicable to such Loan and, as
to any Base Rate Loan, the last Business Day of each fiscal quarter;
provided, however, that if any Interest Period for a LIBOR Rate Loan
exceeds three months, the date that falls three months after the
beginning of such Interest Period and after each Interest Payment
Date thereafter is also an Interest Payment Date.
"Interest Period" shall mean, as to any LIBOR Rate Loan, the
period commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or
continued as a LIBOR Rate Loan, and ending on the date one, two,
three or six months thereafter as selected by the Company in its
Notice of Borrowing or Notice of Conversion/Continuation; provided
that:
(a) if any Interest Period would otherwise end on a day that is not
a Business Day, that Interest Period shall be extended to the following
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month, in which event such Interest
Period shall end on the preceding Business Day;
(b) any Interest Period that begins on the last Business
Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Business Day of
the calendar month at the end of such Interest Period;
(c) no Interest Period for a Term Loan shall extend beyond the
maturity date of the Term Loan and no Interest Period for any Revolving
Loan shall extend beyond the date set forth in clause (a) of the
definition of Revolving Loan Termination Date; and
(d) no Interest Period applicable to a Term Loan or portion thereof
shall extend beyond any date upon which is due any scheduled principal
payment in respect of the Term Loans unless the aggregate principal
amount ofTerm Loans represented by Base Rate Loans, or by LIBOR Rate
Loans having Interest Periods that will expire on or before such date,
equals or exceeds the amount of such principal payment.
"Inventory Availability" shall mean, at any time as hereafter
described, an amount equal to: (i) sixty percent (60%) of the
Company's and each Subsidiary's Eligible Inventory for the period
commencing on the date hereof and continuing through January 31,
2001; and (ii) fifty percent (50%) of the Company's and each
Subsidiary's Eligible Inventory for the period commencing on
February 1, 2001, and continuing thereafter. All Eligible Inventory
shall be valued at the lower of the Company's standard cost
(calculated in accordance with GAAP) or market value, less such
reserves as Agent in its sole but reasonable discretion and in
accordance with its customary business practices elects to
establish. Agent will notify Company in writing of any reserves it
elects to establish from time to time.
"Investments" shall have the meaning specified in Section 8.04.
"IRS" shall mean the Internal Revenue Service, and any
Governmental Authority succeeding to any of its principal functions
under the Code.
"Issuance Date" shall have the meaning specified in subsection
3.01(a).
"Issue" shall mean, with respect to any Letter of Credit, to
issue or to extend the expiry of, or to renew or increase the amount
of, such Letter of Credit; and the terms "Issued", "Issuing" and
"Issuance" have corresponding meanings.
"Issuer" shall mean, in respect of each Letter of Credit, BofA,
which has agreed to act as issuer of such Letter of Credit
hereunder.
"Issuing Lender" shall mean, in respect of each Letter of
Credit, Bank of America, N.A. or any other Lender a permitted under
Section 3.01(b)(i) hereof.
"Joint Venture" shall mean a single-purpose corporation,
partnership, limited liability company, joint venture or other
similar legal arrangement (whether created by contract or conducted
through a separate legal entity) now or hereafter formed by the
Company or any of its Subsidiaries with another Person in order to
conduct a common venture or enterprise with such Person.
"L/C Advance" shall mean each Revolving Lender's participation
in any L/C Borrowing in accordance with its Pro Rata Share.
"L/C Amendment Application" shall mean an application form for
amendment of outstanding standby or commercial documentary letters
of credit as shall at any time be in use at the applicable Issuer,
as such Issuer shall request.
"L/C Application" shall mean an application form for issuances
of standby or commercial documentary letters of credit as shall at
any time be in use at the applicable Issuer, as such Issuer shall
request.
"L/C Borrowing" shall mean an extension of credit resulting
from a drawing under any Letter of Credit which shall not have been
reimbursed on the date when made nor converted into a Borrowing of
Revolving Loans under subsection 3.03(b).
"L/C Commitment" shall mean the commitment of the Issuers to
Issue, and the commitment of the Revolving Lenders severally to
participate in, Letters of Credit from time to time Issued or
outstanding under Article III, in an aggregate amount not to exceed
on any date the amount of $5,000,000.00, as the same may be reduced
as a result of a reduction in the L/C Commitment pursuant to
Section 2.07; provided that the L/C Commitment is a part of the
Aggregate Revolving Loan Commitment, rather than a separate,
independent commitment.
"L/C Obligations" shall mean at any time the sum of (a) the
aggregate undrawn amount of all Letters of Credit then outstanding,
plus (b) the amount of all unreimbursed drawings under all Letters
of Credit, including all outstanding L/C Borrowings.
"L/C-Related Documents" shall mean the Letters of Credit, the
L/C Applications, the L/C Amendment Applications and any other
document relating to any Letter of Credit, including any standard
form documents used by any Issuer for letter of credit issuances.
"Lender" shall have the meaning specified in the introductory
clause hereto. References to the "Lenders" shall include BofA,
including in its capacity as an Issuer and as Swing Line Lender; for
purposes of clarification only, to the extent that BofA may have any
rights or obligations in addition to those of the Lenders due to its
status as an Issuer or as Swing Line Lender, its status as such will
be specifically referenced.
"Lending Office" shall mean, as to any Lender, the office or
offices of such Lender specified as its "Lending Office" or
"Domestic Lending Office", as the case may be, on Schedule 11.02, or
such other office or offices as such Lender may from time to time
notify the Company and the Agent.
"Letters of Credit" shall mean any letters of credit (whether
standby letters of credit or commercial documentary letters of
credit) issued by the Issuers pursuant to Article III, including
without limitation the existing letters of credit set forth on
Schedule 1.01 hereto.
"Leverage Ratio" shall mean, as of any date of determination,
the ratio of (a) all Funded Indebtedness of the Company and its
Subsidiaries determined on a consolidated basis as of such date, to
(b) EBITDA for the period of four fiscal quarters ending on such
date.
"LIBOR Rate" shall mean, for any Interest Period, with respect
to LIBOR Rate Loans comprising part of the same Borrowing, the rate
of interest per annum (rounded upward to the next 1/16th of 1%)
determined by the Agent as follows:
Offshore Rate = LIBOR
________
1.00 - Eurodollar Reserve
Percentage
Where,
"Eurodollar Reserve Percentage" shall mean for any day for
any Interest Period the maximum reserve percentage (expressed
as a decimal, rounded upward to the next 1/100th of 1%) in
effect on such day (whether or not applicable to any Lender)
under regulations issued from time to time by the FRB for
determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement)
with respect to Eurocurrency funding (currently referred to as
"Eurocurrency liabilities"); and
"LIBOR" shall mean the rate of interest per annum
determined by the Agent to be the rate of interest at which
dollar deposits in the approximate amount of the amount of the
Loan to be made or continued as, or converted into, a LIBOR
Rate Loan by BofA and having a maturity comparable to such
Interest Period are offered based on information presented to
the Telerate Screen as of 11:00 a.m. (London time) two (2)
Business Days prior to the commencement of such Interest
Period; provided that if at least two such offered rates appear
on the Telerate Screen (page 3750 or any successor screen) in
respect of such Interest Period, the arithmetic mean of all
such rates (as determined by the Agent) will be the rate used;
provided further, that if the Telerate System ceases to provide
LIBOR quotations, such rate shall be as the rate at which
dollar deposits in the approximate amount of the requested
LIBOR Rate Loan for such Interest Period would be offered by
BofA to major banks in the London interbank market at their
request at approximately 11:00 a.m. (London time) two Business
Days prior to the commencement of such Interest Period.
The LIBOR Rate shall be adjusted automatically as to all LIBOR
Rate Loans then outstanding as of the effective date of any
change in the Eurodollar Reserve Percentage.
"LIBOR Rate Loan" shall mean a Loan that bears interest based
on the LIBOR Rate.
"Lien" shall mean any security interest, mortgage, deed of
trust, pledge, hypothecation, assignment, charge or deposit
arrangement, encumbrance, lien (statutory or other) or similar
interest of any kind or nature whatsoever in respect of any property
(including those created by, arising under or evidenced by any
conditional sale or other title retention agreement, the interest of
a lessor under a capital lease, any financing lease having
substantially the same economic effect as any of the foregoing, or
the filing of any financing statement naming the owner of the asset
to which such lien relates as debtor, under the Uniform Commercial
Code or any comparable law) and any contingent or other agreement to
provide any of the foregoing, but not including the interest of a
lessor under an operating lease.
"Loan" shall mean an extension of credit by a Lender to the
Company under Article II or Article III in the form of a Revolving
Loan, Term Loan, Swing Line Loan or L/C Advance.
"Loan Documents" shall mean this Agreement, any Notes, the L/C-
Related Documents, the Collateral Documents, the Rate Swap Documents
and all other documents delivered to the Agent or any Lender in
connection herewith.
"Margin Stock" shall mean "margin stock" as such term is
defined in Regulation T, U or X of the FRB.
"Material Adverse Effect" shall mean (a) a material adverse
change in, or a material adverse effect upon, the operations,
business, properties, condition (financial or otherwise) or
prospects of the Company or the Company and its Subsidiaries taken
as a whole; (b) a material impairment of the ability of the Company
or any Subsidiary to perform under any Loan Document and to avoid
any Event of Default; or (c) a material adverse effect upon the
legality, validity, binding effect or enforceability against the
Company or any Subsidiary of any Loan Document.
"Multiemployer Plan" shall mean a "multiemployer plan", within
the meaning of Section 4001(a)(3) of ERISA, to which the Company or
any ERISA Affiliate makes, is making, or is obligated to make
contributions or, during the preceding three calendar years, has
made, or been obligated to make, contributions.
"Net Borrowing Availability" shall mean (a) the lesser of (i)
the Aggregate Revolving Loan Commitment or (ii) the Borrowing Base
less (b) the outstanding principal amount of all Revolving Loans
plus Swing Line Loans outstanding plus the Effective Amount of all
L/C Obligations.
"Net Proceeds" shall mean (a) with respect to any Asset
Disposition, the sum of cash or readily marketable cash equivalents
received (including by way of a cash generating sale or discounting
of a note or receivable, but excluding any other consideration
received in the form of assumption by the acquiring Person of debt
or other obligations relating to the properties or assets so
disposed of or received in any other non-cash form) therefrom,
whether at the time of such disposition or subsequent thereto, and,
in the case of an Asset Disposition, net of all payments made by the
Company or any of its Subsidiaries on any Indebtedness which is
secured by such assets pursuant to a Permitted Lien upon or with
respect to such assets or which must by the terms of such Lien, or
in order to obtain a necessary consent to such Asset Disposition, or
by applicable law be repaid out of the proceeds from such Asset
Disposition and net of all costs and expenses in readying for sale
the disposal of assets or properties or (b) with respect to any sale
or issuance of any debt or equity securities of the Company or any
Subsidiary, cash or readily marketable cash equivalents received
(but excluding any other non-cash form) therefrom, whether at the
time of such disposition, sale or issuance or subsequent thereto,
net, in either case, of all legal, title and recording tax expenses,
commissions and other fees and all costs and expenses incurred and
all federal, state, local and other taxes required to be paid or
accrued as a liability as a consequence of such transactions .
"Net Worth" shall mean the shareholders' equity or net worth of
the Company and its Subsidiaries as determined in accordance with
GAAP.
"Non-Surety L/C's" shall mean letters of credit which are not
Surety L/C's.
"Note" or "Notes" shall mean the Revolving Notes and Term
Notes.
"Notice of Borrowing" shall mean a notice in substantially the
form of Exhibit A.
"Notice of Conversion/Continuation" shall mean a notice in
substantially the form of Exhibit B.
"Obligations" shall mean all advances, debts, liabilities,
obligations, covenants and duties arising under any Loan Document
owing by the Company to any Lender, the Agent, or any Indemnified
Person, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now
existing or hereafter arising.
"Organization Documents" shall mean, for any corporation, the
certificate or articles of incorporation, the bylaws, any
certificate of determination or instrument relating to the rights of
preferred shareholders of such corporation, any shareholder rights
agreement, and all applicable resolutions of the board of directors
(or any committee thereof) of such corporation.
"Other Taxes" shall mean any present or future stamp, court or
documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from
the execution, delivery, performance, enforcement or registration
of, or otherwise with respect to, this Agreement or any other Loan
Documents.
"Participant" shall have the meaning specified in subsection
11.08(e).
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or
any Governmental Authority succeeding to any of its principal
functions under ERISA.
"Pension Plan" shall mean a pension plan (as defined in Section
3(2) of ERISA) subject to Title IV of ERISA which the Company or any
ERISA Affiliate sponsors, maintains, or to which it makes, is
making, or is obligated to make contributions, or otherwise has any
liability, or in the case of a multiple employer plan (as described
in Section 4064(a) of ERISA) has made contributions at any time
during the immediately preceding five (5) plan years.
"Permitted Liens" shall have the meaning specified in Section
8.01.
"Permitted Swap Obligations" shall mean all obligations
(contingent or otherwise) of the Company or any Subsidiary existing
or arising under Swap Contracts, provided that each of the following
criteria is satisfied: (a) such obligations are (or were) entered
into by such Person in the ordinary course of business for the
purpose of directly mitigating risks associated with liabilities,
commitments or assets held or reasonably anticipated by such Person,
or changes in the value of securities issued by such Person in
conjunction with a securities repurchase program not otherwise
prohibited hereunder, and not for purposes of speculation or taking
a "market view"; and (b) such Swap Contracts do not contain any
provision ("walk-away" provision) exonerating the non-defaulting
party from its obligation to make payments on outstanding
transactions to the defaulting party.
"Person" shall mean an individual, partnership, corporation,
limited liability company, business trust, joint stock company,
trust, unincorporated association, joint venture or Governmental
Authority.
"Plan" shall mean an employee benefit plan (as defined in
Section 3(3) of ERISA) which the Company or any ERISA Affiliate
sponsors or maintains or to which the Company or any ERISA Affiliate
makes, is making, or is obligated to make contributions or otherwise
has any liability and includes any Pension Plan.
"Pledged Collateral" shall have the meaning specified in the
Subsidiary Pledge Agreement.
"Pro Rata Revolving Share" shall mean, as to any Revolving
Lender, (a) at any time at which the Aggregate Revolving Loan
Commitment remains outstanding, the percentage equivalent (expressed
as a decimal rounded to the ninth decimal place) at such time of
such Lender's Revolving Loan Commitment divided by the Aggregate
Revolving Loan Commitment, and (b) after the termination of the
Aggregate Revolving Loan Commitment, the percentage equivalent
(expressed as a decimal, rounded to the ninth decimal place) at such
time of the principal amount of such Lender's outstanding Revolving
Loans (other than Swing Line Loans) divided by the aggregate
principal amount of the outstanding Revolving Loans (other than
Swing Line Loans) of all the Lenders.
"Pro Rata Share" shall mean, as to any Lender, (a) in respect
of a particular Loan and/or Commitment, (i) at any time at which the
Commitments in respect of such Loan remain outstanding, the
percentage equivalent (expressed as a decimal, rounded to the ninth
decimal place) at such time of such Lender's Commitment in respect
of such Loan divided by the combined Commitments in respect of such
Loan, and (ii) after the termination of the Commitments in respect
of such Loan, the percentage equivalent (expressed as a decimal,
rounded to the ninth decimal place) at such time of the principal
amount outstanding of such Loans held by such Lender divided by the
aggregate principal amount outstanding of such Loans held by all
Lenders, and (b) in respect of all Loans and/or Commitments, (i) at
any time at which the Aggregate Commitment (or any portion thereof)
remains outstanding, the percentage equivalent (expressed as a
decimal, rounded to the ninth decimal place) at such time of such
Lender's Commitments in respect of all Loans (and if any Term Loans
are outstanding, with the Term Loan Commitment deemed to be
outstanding to the extent of the principal amount of the related
Term Loan which is then outstanding) divided by the Aggregate
Commitment, and (b) after the termination of the Aggregate
Commitment, the percentage equivalent (expressed as a decimal,
rounded to the ninth decimal place) at such time of the principal
amount of such Lender's outstanding Loans (including such Lender's
ratable share of outstanding Swing Line Loans and L/C Obligations)
divided by the aggregate principal amount of the outstanding Loans
and L/C Obligations of all of the Lenders.
"Rate Swap Documents" shall mean, collectively, all Swap
Contracts entered into between the Company and any Lender or any
Affiliate thereof in respect of any portion of the Obligations.
"Receivables Availability" shall mean at any time an amount
equal to eighty percent (80%) of the face amount (less maximum
discounts, credits and allowances which may be taken by or granted
to Account Debtors in connection therewith) outstanding at such time
under existing Eligible Accounts, less such reserves as Agent in its
reasonable discretion and in accordance with its customary business
practices elects to establish less applied progress payments
received from the U.S. Government with respect to such Eligible
Accounts for goods sold to the U.S. Government. Agent shall notify
the Company in writing of any reserves it chooses to establish from
time to time.
"Reportable Event" shall mean, any of the events set forth in
Section 4043(c) of ERISA or the regulations thereunder, other than
any such event for which the 30-day notice requirement under ERISA
has been waived in regulations issued by the PBGC.
"Required Lenders" shall mean at any time Lenders then holding
at least 66-2/3% of the sum of (a) the then aggregate unpaid
principal amount of the Term Loans, plus (b) the amount of the
Aggregate Revolving Loan Commitment (or if the Revolving Loan
Commitment has been terminated, then the aggregate principal amount
outstanding of Revolving Loans and Swing Line Loans, plus the
outstanding amount of L/C Obligations); provided, that, if no
principal amount of any Loan is then outstanding, then "Required
Lenders" shall mean Lenders then having at least of the 66-2/3%
Aggregate Revolving Loan Commitment.
"Required Revolving Lenders" shall mean at any time Revolving
Lenders then holding at least 66-2/3% of the then aggregate unpaid
principal amount of the Revolving Loans (other than Swing Line
Loans), or, if no such principal amount is then outstanding,
Revolving Lenders then having at least 66-2/3% of the Aggregate
Revolving Loan Commitment.
"Requirement of Law" shall mean, as to any Person, any law
(statutory or common), treaty, rule or regulation or determination
of an arbitrator or of a Governmental Authority, in each case
applicable to or binding upon the Person or any of its property or
to which the Person or any of its property is subject.
"Responsible Officer" shall mean the chief executive officer,
the president, the chief financial officer or the treasurer of the
Company, or any other officer having substantially the same
authority and responsibility.
"Revolving Lender" shall mean any Lender having a Revolving
Loan Commitment.
"Revolving Loan" shall have the meaning specified in
subsection 2.01(b).
"Revolving Loan Commitment", as to each Revolving Lender, shall
have the meaning specified in subsection 2.01(b).
"Revolving Note" shall mean a promissory note executed by the
Company in favor of a Lender pursuant to subsection 2.02(b), in
substantially the form of Exhibit E-1.
"Revolving Loan Termination Date" shall mean the earlier to
occur of:
(a) June 30, 2002; and
(b) the date on which the Aggregate Revolving Loan Commitment
terminates in accordance with the provisions of this Agreement.
"Same Day Funds" shall mean(a) with respect to disbursements
and payments in Dollars, immediately available funds, and (b) with
respect to disbursements and payments in an offshore currency, same
day or other funds as may be determined by the Agent to be customary
in the place of disbursement or payment for the settlement of
international banking transactions in the relevant offshore
currency.
"Seasonal Availability" shall mean the principal amount of
$1,500,000.00 during only the calendar months of July, August,
September and October of each year. Agent will notify Company in
writing of any reserves it elects to establish from time to time.
"Seasonal Loan Commitment Fee" shall mean the amount(s) of
$10,000.00 each which shall be payable in accordance with Section
2.12 (c).
"SEC" shall mean the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
"Security Agreement" shall mean that certain Security Agreement
dated as of the date hereof between the Company and the Agent.
"Solvent" shall mean, as to any Person at any time, that
(a) the fair value of the property of such Person is greater than
the amount of such Person's liabilities (including disputed,
contingent and unliquidated liabilities) as such value is
established and liabilities evaluated for purposes of Section
101(31) of the Bankruptcy Code; (b) the present fair saleable value
of the property of such Person is not less than the amount that will
be required to pay the probable liability of such Person on its
debts as they become absolute and matured; (c) such Person is able
to realize upon its property and pay its debts and other liabilities
(including disputed, contingent and unliquidated liabilities, but
applying the reasonably anticipated liability, after giving effect
to payments under insurance policies and indemnity agreements which
such Person reasonably expects to receive) as they mature in the
normal course of business; (d) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond
such Person's ability to pay as such debts and liabilities mature;
and (e) such Person is not engaged in business or a transaction, and
is not about to engage in business or a transaction, for which such
Person's property would constitute unreasonably small capital.
"Stated Amount" shall mean the stated or face amount of a
Letter of Credit to the extent available at the time for drawing
(subject to presentment of all requested documents), as the same may
be increased or decreased from time to time in accordance with the
terms of such Letter of Credit.
"Subsidiary" shall mean a Subsidiary organized under the laws
of the United States or any political subdivision or any agency,
department or instrumentality thereof. For purpose hereof,
Subsidiary of a Person shall mean any corporation, association,
partnership, limited liability company, joint venture or other
business entity of which more than 50% of the voting stock,
membership interests or other equity interests (in the case of
Persons other than corporations), is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the
Person, or a combination thereof. Unless the context otherwise
clearly requires, references herein to a "Subsidiary" refer to a
Subsidiary of the Company.
"Subsidiary Guaranty" shall mean that certain Subsidiary
Guaranty dated as of the date hereof by certain of the Subsidiaries
in favor of the Agent and the Lenders.
"Subsidiary Pledge Agreement" shall mean that certain Security
and Stock Pledge Agreement executed by the Company in favor of Agent
creating a pledge of 100% of the capital stock, units, membership
interests, partnership interests or other equity interests of all of
the Company's Subsidiaries.
"Subsidiary Security Agreement" shall mean that certain
Security Agreement to be executed by any Subsidiary as specified in
Section 7.14.
"Surety Bonds" shall mean all bonds issued for the account of
the Company or any Subsidiary to assure the performance thereby (or
to the extent issued in the ordinary course of business, any other
Person) under any contract entered into in the ordinary course of
business.
"Surety Instruments" shall mean all letters of credit
(including standby and commercial), banker's acceptances, bank
guaranties, shipside bonds, performance bonds, Surety Bonds and
similar instruments.
"Surety L/C's" shall mean letters of credit which are issued
for the account of the Company or any Subsidiary to provide credit
support, in the ordinary course of business, for (a) a contract bid
by any such Person, (b) the performance by any such Person under any
contract, (c) any warranty extended by any such Person and (d) the
repayment of advance payments made to any such Person.
"Swap Contract" shall mean any agreement, whether or not in
writing, relating to any transaction that is a rate swap, basis
swap, forward rate transaction, commodity swap, commodity option,
equity or equity index swap or option, bond, note or bill option,
interest rate option, forward foreign exchange transaction, cap,
collar or floor transaction, currency swap, cross-currency rate
swap, swaption, currency option or any other, similar transaction
(including any option to enter into any of the foregoing) or any
combination of the foregoing, and, unless the context otherwise
clearly requires, any master agreement relating to or governing any
or all of the foregoing.
"Swap Termination Value' shall mean, in respect of any one or
more Swap Contracts, after taking into account the effect of any
legally enforceable netting agreement relating to such Swap
Contracts, (a) for any date on or after the date such Swap Contracts
have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a) the amount(s)
determined as the mark-to-market value(s) for such Swap Contracts,
as determined by the Company based upon one or more mid-market or
other readily available quotations provided by any recognized dealer
in such Swap Contracts (which may include any Lender).
"Swing Line Commitment" shall mean at any time, the obligation
of the Swing Line Lender to make Swing Line Loans pursuant to
Section 2.05.
"Swing Line Lender" shall mean BofA, in its capacity as
provider of the Swing Line Loans.
"Swing Line Loan" shall mean a Loan made by the Swing Line
Lender hereunder that is not a Revolving Loan or a Term Loan.
"Swing Line Note" shall mean a promissory note in substantially
the form of Exhibit F.
"Swing Line Rate" shall mean, at any time, for each Swing Line
Loan, (a) the Base Rate in effect as of the Business Day of the
making of a Swing Line Loan plus (b) the Applicable Base Rate Margin
in respect of Revolving Loans then in effect.
"Taxes" shall mean any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or
similar charges, and all liabilities with respect thereto,
excluding, in the case of each Lender and the Agent, respectively,
taxes imposed on or measured by its net income by the jurisdiction
(or any political subdivision thereof) under the laws of which such
Lender or the Agent, as the case may be, is organized or maintains a
lending office.
"Term Loan" shall have the meaning specified in subsection
2.01(a).
"Term Loan Commitment" shall mean, as to each Lender, such
Lender's Term Loan Commitment, as specified on Schedule 2.01.
"Term Loan Termination Date" means the earlier to occur of:
(a) June 30, 2002; and
(b) the date on which the Term Loan Commitment terminates in
accordance with this Agreement.
"Term Note" shall mean a promissory note executed by the
Company in favor of a Lender pursuant to subsection 2.02(b), in
substantially the form of Exhibit E-2.
"Type" of Loan shall mean its status as either a Base Rate Loan
or a LIBOR Rate Loan.
"UCC" shall mean the Uniform Commercial Code as in effect in
the State of Oklahoma.
"Unfunded Pension Liability" shall mean the excess of a Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the
current value of that Plan's assets, determined in accordance with
the assumptions used for funding the Pension Plan pursuant to
Section 412 of the Code for the applicable plan year.
"United States" and "U.S." shall each mean the United States of
America.
"Voting Stock" of any Person as of any date shall mean the
Capital Stock of such Person that is entitled to vote in the
election of the board of directors (or other governing body) of such
Person.
"Wholly-Owned Subsidiary" shall mean any corporation in which
(other than directors' qualifying shares required by law) 100% of
the capital stock of each class having ordinary voting power, and
100% of the capital stock of every other class, in each case (or, in
the case of Persons other than corporations, membership interests or
other equity interests), at the time as of which any determination
is being made, is owned, beneficially and of record, by the Company,
or by one or more of the other Wholly-Owned Subsidiaries, or both.
"Working Capital" shall mean (a) Current Assets, less (b)
Current Liabilities.
1.02 Other Interpretive Provisions.
(a) The meanings of defined terms are equally applicable to
the singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words
refer to this Agreement as a whole and not to any particular provision
of this Agreement; and subsection, Section, Schedule and Exhibit
references are to this Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all
instruments, documents, agreements, certificates, indentures,
notices and other writings, however evidenced.
(ii) The term "including" is not limiting and shall mean
"including without limitation."
(iii) In the computation of periods of time from a
specified date to a later specified date, the word "from" shall
mean "from and including"; the words "to" and "until" each
shall mean "to but excluding", and the word "through" shall
mean "to and including."
(iv) The term "property" includes any kind of property or
asset, real, personal or mixed, tangible or intangible.
(d) Unless otherwise expressly provided herein, (i) references
to agreements (including this Agreement) and other contractual
instruments shall be deemed to include all subsequent amendments and
other modifications thereto, but only to the extent such amendments
and other modifications are not prohibited by the terms of any Loan
Document, and (ii) references to any statute or regulation are to be
construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting
the statute or regulation.
(e) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the
interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are
cumulative and shall each be performed in accordance with their
terms.
(g) Unless otherwise expressly provided, any reference to any
action of the Agent or the Lenders by way of consent, approval or
waiver shall be deemed modified by the phrase "in its/their sole
discretion."
(h) This Agreement and the other Loan Documents are the result
of negotiations among and have been reviewed by counsel to the
Agent, the Company and the other parties, and are the products of
all parties. Accordingly, they shall not be construed against the
Lenders or the Agent merely because of the Agent's or Lenders'
involvement in their preparation.
1.03 Accounting Principles.
(a) Unless the context otherwise clearly requires, all
accounting terms not expressly defined herein shall be construed,
and all financial computations required under this Agreement shall
be made, in accordance with GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter"
refer to such fiscal periods of the Company.
(c) In the event that any changes in GAAP occur after the date of
this Agreement and such changes result in a material variation in the
method of calculation of financial covenants or other terms of this
Agreement, then the Company, the Agent and the Lenders agree to amend
such provisions of this Agreement so as to equitably reflect such
changes so that the criteria for evaluating the Company's financial
condition will be the same after such changes as if such changes had
not occurred.
ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Commitments.
(a) Term Loan. Each Lender severally agrees, on the terms and
conditions set forth herein, to make a single loan to the Company
(each such loan, a "Term Loan") on the Closing Date in an amount not
to exceed such Lender's Term Loan Commitment as set forth on
Schedule 2.01. Amounts borrowed as a Term Loan which are repaid or
prepaid by the Company may not be reborrowed.
(b) The Revolving Credit. Each Revolving Lender severally
agrees, on the terms and conditions set forth herein, to make loans
to the Company (each such loan, a "Revolving Loan") from time to
time on any Business Day during the period from the Closing Date to
the Revolving Loan Termination Date, in an aggregate amount not to
exceed at any time outstanding the amount set forth on Schedule 2.01
(such amount, as the same may be reduced under Section 2.07 or as a
result of one or more assignments under Section 11.08, the Revolving
Lender's "Revolving Loan Commitment"); provided, however, that,
after giving effect to any Borrowing of Revolving Loans, the
Effective Amount of all outstanding Revolving Loans, together with
Swing Line Loans outstanding at such time and the Effective Amount
of all L/C Obligations, shall not at any time exceed the lesser of
(i) the Aggregate Revolving Loan Commitment or (ii) the Borrowing
Base; and provided further, that the Effective Amount of the
Revolving Loans of any Revolving Lender plus the participation of
such Revolving Lender in the Effective Amount of all L/C Obligations
plus such Revolving Lender's Pro Rata Revolving Share of any
outstanding Swing Line Loans shall not at any time exceed such
Revolving Lender's Revolving Loan Commitment. Within the limits of
each Revolving Lender's Commitment, and subject to the other terms
and conditions hereof, the Company may borrow under this subsection
2.01(b), prepay under Section 2.08 and reborrow under this
subsection 2.01(b).
2.02 Loan Accounts.
(a) The Loans made by each Lender and the Letters of Credit
Issued by the Issuer shall be evidenced by one or more accounts or
records maintained by such Lender or Issuer, as the case may be,
in the ordinary course of business. The accounts or records
maintained by the Agent, the Issuer and each Lender shall be
conclusive absent manifest error of the amount of the Loans made
by the Lenders to the Company and the Letters of Credit Issued for
the account of the Company, and the interest and payments thereon.
Any failure so to record or any error in doing so shall not,
however, limit or otherwise affect the obligation of the Company
hereunder to pay any amount owing with respect to the Loans or any
Letter of Credit.
(b) The Company shall issue to each Lender notes in the form
of Exhibit E-1 in the case of Revolving Loans and/or Exhibit E-2 in
the case of Term Loans (each, a "Note" and collectively, the
"Notes") to evidence such Lender's Loans (or, in the case of Swing
Line Loans, in the form of Exhibit F). Each Lender may, instead of
or in addition to maintaining a loan account, endorse on the
schedule annexed to its Note(s) the date, amount and maturity of
each Loan made by it and the amount of each payment of principal
made by the Company with respect thereto. Each such Lender is
irrevocably authorized by the Company to endorse its Note(s) or
Swing Line Note, as applicable, and each Lender's record shall be
conclusive absent manifest error; provided, however, that the
failure of a Lender to make, or an error in making, a notation
thereon with respect to any Loan shall not limit or otherwise affect
the obligations of the Company hereunder or under any such Note or
Swing Line Note to such Lender.
2.03 Procedure for Borrowing.
(a) Each Borrowing shall be made upon the Company's irrevocable
notice delivered to the Agent in the form of a Notice of Borrowing
(which notice must be received by the Agent prior to 11:00 a.m.
(Central time) (i) three Business Days prior to the requested Borrowing
Date, in the case of LIBOR Rate Loans; and (ii) one Business Day prior
to the requested Borrowing Date (or in the case of the initial Credit
Extension, at the option of the Agent, on the requested Borrowing
Date), in the case of Base Rate Loans, specifying:
(A) the amount of the Borrowing, which shall be for LIBOR Rate
Loans in an aggregate minimum of $500,000 or any multiple of $100,000 in
excess thereof and for Base Rate Loans in an aggregate minimum of
$100,000 or any multiple of $50,000 in excess thereof;
(B) the requested Borrowing Date, which shall be a
Business Day;
(C) theType of Loans comprising the Borrowing; and
(D) with respect to LIBOR Rate Loans, the duration of the
Interest Period for one (1), two (2), three (3) or six (6)
months that is to be applicable to such Loans included in such
notice. If the Notice of Borrowing fails to specify the
duration of the Interest Period for anyBorrowing comprised of
LIBOR Rate Loans, such Interest Period shall be three months;
provided, however, that with respect to the Borrowing to be
made on the Closing Date, such Borrowing will consist of Base
Rate Loans only.
(b) The Agent will promptly notify each applicable Lender of
its receipt of any Notice of Borrowing and, in respect of Borrowings
of Revolving Loans, of the amount of such Revolving Lender's Pro
Rata Revolving Share of that Borrowing.
(c) Each Lender will make the amount of its Pro Rata Share of
each Borrowing available to the Agent for the account of the Company
at the Agent's Payment Office by 1:00 p.m. (Central time) on the
Borrowing Date requested by the Company in funds immediately
available to the Agent. The proceeds of all such Loans will then be
made available to the Company by the Agent at such office by
crediting the account of the Company on the books of BofA with the
aggregate of the amounts made available to the Agent by the Lenders
and in like funds as received by the Agent.
(d) After giving effect to any Borrowing, unless the Agent
shall otherwise consent, there may not be more than three (3)
different Interest Periods in effect.
(e) The Company hereby authorizes the Lenders and the Agent to
accept Notices of Borrowing based on telephonic notices made by any
person or persons the Agent or any Lender in good faith believes to
be acting on behalf of the Company. The Company agrees to deliver
promptly to the Agent a written confirmation of each telephonic
notice, signed by a Responsible Officer or an authorized designee.
If the written confirmation differs in any material respect from the
telephonic notice, the records of the Agent and the Lenders shall
govern absent manifest error.
2.04 Conversion and Continuation Elections.
(a) The Company may, upon irrevocable notice to the Agent in
accordance with subsection 2.04(b):
(i) elect, as of any Business Day, in the case of Base
Rate Loans, or as of the last day of the applicable Interest
Period, in the case of any other Type of Revolving Loans or
Term Loans, to convert any such Loans (or any part thereof in
an amount not less than $500,000 or that is in an integral
multiple of $100,000 in excess thereof for LIBOR Rate Loans and
not less than $100,000 or that is in an integral multiple of
$50,000 in excess thereof for Base Rate Loans) into Loans of
any other Type; or
(ii) elect as of the last day of the applicable Interest
Period, to continue any Revolving Loans or Term Loans having
Interest Periods expiring on such day (or any part thereof in
an amount not less than $500,000 or that is in an integral
multiple of $100,000 in excess thereof for Offshore Rate
Loans); provided, that if at any time the aggregate amount of
LIBOR Rate Loans in respect of any Borrowing is reduced, by
payment, prepayment, or conversion of part thereof to be less
than $500,000 such LIBOR Rate Loans shall automatically convert
into Base Rate Loans, and on and after such date the right of
the Company to continue such Loans as, and convert such Loans
into, LIBOR Rate Loans shall terminate.
(b) The Company shall deliver a Notice of
Conversion/Continuation to be received by the Agent not later than
11:00 a.m. (Central time) at least (i) three Business Days in
advance of the Conversion/Continuation Date, if the Loans are to be
converted into or continued as LIBOR Rate Loans; and (ii) at least
one Business Day in advance of the Conversion/Continuation Date, if
the Loans are to be converted into Base Rate Loans, specifying:
(i) the proposed Conversion/Continuation Date;
(ii) the aggregate amount of Loans to be converted or
continued;
(iii) the Type of Loans resulting from the proposed
conversion or continuation; and
(iv) other than in the case of conversions into Base Rate
Loans, the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable
to LIBOR Rate Loans, the Company has failed to select timely a new
Interest Period to be applicable to such LIBOR Rate Loans, as the
case may be, or if any Default or Event of Default then exists, the
Company shall be deemed to have elected to convert such LIBOR Rate
Loans into Base Rate Loans effective as of the expiration date of
such Interest Period.
(d) The Agent will promptly notify each applicable Lender of
its receipt of a Notice of Conversion/Continuation, or, if no timely
notice is provided by the Company, the Agent will promptly notify
each applicable Lender of the details of any automatic conversion.
All conversions and continuations shall be made ratably according to
the respective outstanding principal amounts of the Loans with
respect to which the notice was given held by each Lender.
(e) Unless the Required Lenders otherwise consent, during the
existence of a Default or Event of Default, the Company may not
elect to have a Loan converted into or continued as an LIBOR Rate
Loan.
(f) After giving effect to any conversion or continuation of
Loans, unless the Agent shall otherwise consent, there may not be
more than six (6) different Interest Periods in effect.
(g) The Company hereby authorizes the Lenders and the Agent to
accept Notices of Conversion/Continuation based on telephonic
notices made by any person or persons the Agent or any Lender in
good faith believes to be acting on behalf of the Company. The
Company agrees to deliver promptly to the Agent a written
confirmation of each telephonic notice, signed by a Responsible
Officer. If the written confirmation differs in any material
respect from the telephonic notice, the records of the Agent and the
Lenders shall govern absent manifest error.
2.05 The Swing Line Loans. Subject to the terms and conditions hereof,
the Swing Line Lender agrees to make Swing Line Loans to the Company from
time to time prior to the Revolving Loan Termination Date in an aggregate
principal amount at any one time outstanding not to exceed $2,000,000.00;
provided, that after giving effect to any such Swing Line Loan, the
Effective Amount of all Revolving Loans, Swing Line Loans and L/C
Obligations at such time would not exceed the lesser of (i) the Aggregate
Revolving Loan Commitment or (ii) the Borrowing Base at such time. Prior
to the Revolving Loan Termination Date, the Company may use the Swing
Line Commitment by borrowing, prepaying the Swing Line Loans in whole or
in part, and reborrowing, all in accordance with the terms and conditions
hereof. All Swing Line Loans shall bear interest at the Swing Line Rate
and shall not be entitled to be converted into Loans that bear interest
at any other rate.
2.06 Procedure for Swing Line Loans.
(a) The Company may borrow under the Swing Line Commitment on
any Business Day until the Revolving Loan Termination Date;
provided, that the Company shall give the Swing Line Lender
irrevocable written notice signed by a Responsible Officer or an
authorized designee (which notice must be received by the Swing Line
Lender prior to 11:00 a.m. (Central time)) with a copy to the Agent
specifying the amount of the requested Swing Line Loan, which shall
be in a minimum amount of $100,000 or a whole multiple of $50,000 in
excess thereof. The proceeds of the Swing Line Loan will be made
available by the Swing Line Lender to the Company in immediately
available funds at the office of the Swing Line Lender by 1:00 p.m.
(Central time) on the date of such notice. The Company may at any
time and from time to time, prepay the Swing Line Loans, in whole or
in part, without premium or penalty, by notifying the Swing Line
Lender prior to 11:00 a.m. (Central time) on any Business Day of the
date and amount of prepayment with a copy to the Agent. If any such
notice is given, the amount specified in such notice shall be due
and payable on the date specified therein. Partial prepayments
shall be in an aggregate principal amount of $100,000 or a whole
multiple of $50,000 in excess thereof.
(b) The Swing Line Lender may in its sole discretion (or will
at the direction of the Company) on any Business Day, on behalf of
the Company (which hereby irrevocably directs the Swing Line Lender
to act on its behalf) request the Agent to notify each Revolving
Lender to make a Base Rate Loan in an amount equal to such Revolving
Lender's Pro Rata Revolving Share of the aggregate principal amount
of the Swing Line Loans outstanding on the date such notice is
given. Unless any of the events described in subsection 9.01(f) or
(g) shall have occurred with respect to the Company (in which event
the procedures of paragraph (d) of this Section 2.06 shall apply)
each Revolving Lender shall make the proceeds of its Revolving Loan
available to the Agent for the account of the Swing Line Lender at
the Agent's Payment Office in funds immediately available prior to
1:00 p.m. (Central time) on the Business Day next succeeding the
date such notice is given. The proceeds of such Revolving Loans
shall be immediately applied to repay the outstanding Swing Line
Loans. Effective on the day such Revolving Loans are made, the
portion of the Swing Line Loans so paid shall no longer be
outstanding as Swing Line Loans and shall no longer be due under the
Swing Line Note. The Company shall pay to the Swing Line Lender,
promptly following the Swing Line Lender's demand, the amount of its
outstanding Swing Line Loans to the extent amounts received from the
Revolving Lenders are not sufficient to repay in full such
outstanding Swing Line Loans.
(c) Notwithstanding anything herein to the contrary, the Swing
Line Lender (i) shall not be obligated to make any Swing Line Loan
if the conditions set forth in Article V have not been satisfied and
(ii) shall not make any requested Swing Line Loan if, prior to 11:00
a.m. (Central time) on the date of such requested Swing Line Loan,
it has received a written notice from the Agent or any Revolving
Lender directing it not to make further Swing Line Loans because one
or more of the conditions specified in Article V are not then
satisfied.
(d) If prior to the making of a Revolving Loan required to be
made by subsection 2.06(b) an Event of Default described in
subsection 9.01(f) or 9.01(g) shall have occurred and be continuing
with respect to the Company, each Revolving Lender will, on the date
such Revolving Loan was to have been made pursuant to the notice
described in subsection 2.06(b), purchase an undivided participating
interest in the outstanding Swing Line Loans in an amount equal to
its Pro Rata Revolving Share of the aggregate principal amount of
Swing Line Loans then outstanding. Each Revolving Lender will
immediately transfer to the Agent for the benefit of the Swing Line
Lender, in immediately available funds, the amount of its
participation.
(e) Whenever, at any time after a Revolving Lender has
purchased a participating interest in a Swing Line Loan, the Swing
Line Lender receives any payment on account thereof, the Swing Line
Lender will distribute to the Agent for delivery to each Revolving
Lender its participating interest in such amount (appropriately
adjusted, in the case of interest payments, to reflect the period of
time during which such Revolving Lender's participating interest was
outstanding and funded); provided, however, that in the event that
such payment received by the Swing Line Lender is required to be
returned, such Revolving Lender will return to the Agent for
delivery to the Swing Line Lender any portion thereof previously
distributed by the Swing Line Lender to it.
(f) Each Lender's obligation to make the Revolving Loans
referred to in subsection 2.06(b) and to purchase participating
interests pursuant to subsection 2.06(d) shall be absolute and
unconditional and shall not be affected by any circumstance,
including, without limitation, (i) any set-off, counterclaim,
recoupment, defense or other right which such Revolving Lender or
the Company may have against the Swing Line Lender, the Company or
any other Person for any reason whatsoever, (ii) the occurrence or
continuance of a Default or an Event of Default, (iii) any adverse
change in the condition (financial or otherwise) of the Company,
(iv) any breach of this Agreement or any other Loan Document by the
Company, any Subsidiary or any other Lender, or (v) any other
circumstance, happening or event whatsoever, whether or not similar
to any of the foregoing.
(g) The Company shall repay any Swing Line Loan in full no
later than seven (7) days after such loan is made either by
converting the Loan to a Revolving Loan or repaying the Swing Line
Loan by other means not prohibited by this Agreement.
2.07 Voluntary Termination or Reduction of Revolving Loan Commitments.
(a) The Company may, upon not less than five Business Days'
prior notice to the Agent, terminate the Revolving Loan Commitments,
or permanently reduce the Revolving Loan Commitments by an amount of
$1,000,000 or any multiple of $1,000,000 in excess thereof; unless,
after giving effect thereto and to any prepayments of Loans made on
the effective date thereof,
(i) the Effective Amount of all Revolving Loans, Swing
Line Loans and L/C Obligations together would exceed the amount
of the Aggregate Revolving Loan Commitment then in effect, or
(ii) the Effective Amount of all L/C Obligations then
outstanding would exceed the L/C Commitment. Once reduced in
accordance with this Section, the Revolving Loan Commitments
may not be increased. Any reduction of the Revolving Loan
Commitments shall be applied to each Revolving Lender according
to its Pro Rata Revolving Share. If and to the extent
specified by the Company in the notice to the Agent, some or
all of the reduction in the Revolving Loan Commitments shall be
applied to reduce the L/C Commitment. All accrued commitment
and letter of credit fees to, but not including, the effective
date of any reduction or termination of Revolving Loan
Commitments, shall be paid on the effective date of such
reduction or termination.
(b) At no time shall the Swing Line Commitment exceed the
Aggregate Revolving Loan Commitment, and any reduction of the
Aggregate Revolving Loan Commitment which reduces the Aggregate
Revolving Loan Commitment below the then-current amount of the Swing
Line Commitment shall result in an automatic corresponding reduction
of the Swing Line Commitment to the amount of the Aggregate
Revolving Loan Commitment, as so reduced, without any action on the
part of the Swing Line Lender. At no time shall the Swing Line
Commitment exceed the Revolving Loan Commitment of the Swing Line
Lender, and any reduction of the Aggregate Revolving Loan Commitment
which reduces the Revolving Loan Commitment of the Swing Line Lender
below the then-current amount of the Swing Line Commitment shall
result in an automatic corresponding reduction of the Swing Line
Commitment to the amount of the Revolving Loan Commitment of the
Swing Line Lender, as so reduced, without any action on the part of
the Swing Line Lender.
2.08 Optional Prepayments. Subject to Section 4.04, the Company may, at
any time or from time to time,upon not less than two (2) Business Days'
irrevocable notice to the Agent, in respect of Offshore Rate Loans, and
in respect of Base Rate Loans, by not later than 11:00 a.m. (Central
time) on the prepayment date, prepay Loans in whole or in part, in
minimum amounts of$500,000 or any multiple of $100,000 in excess thereof
for LIBOR Rate Loans and in minimum amounts of $100,000 or any multiple
of $50,000 in excess thereof for Base Rate Loans. Such notice of
prepayment shall specify the date and amount of such prepayment, which
Loans areto be prepaid and the Type(s) of such Loans to be prepaid. The
Agent will promptly notify each Lender of its receipt of any such notice,
and of such Lender's Pro Rata Share of such prepayment. If such notice
is given by the Company, the Company shall make such prepayment and the
payment amount specified in such notice shall be due and payable on the
date specified therein, together, in the case of LIBOR Rate Loans, with
accrued interest to each such date on the amount prepaid and any amounts
required pursuant to Section 4.04. Optional prepayments shall be applied
to Term Loans in the inverse order of maturity. Optional Prepayments
shall be applied to each Lender according to its Pro Rata Share.
2.09 Mandatory Prepayments of Loans.
(a) If on any date the Effective Amount of L/C Obligations
exceeds the L/C Commitment, the Company shall Cash Collateralize on
such date the outstanding Letters of Credit in an amount equal to
the excess of the maximum amount then available to be drawn under
the Letters of Credit over the Aggregate L/C Commitment. Subject to
Section 4.04, if on any date after giving effect to any Cash
Collateralization made on such date pursuant to the preceding
sentence, the Effective Amount of all Revolving Loans, Swing Line
Loans and Term Loans then outstanding plus the Effective Amount of
all L/C Obligations exceeds the Aggregate Commitment, the Company
shall immediately, and without notice or demand, prepay the
outstanding principal amount of the Revolving Loans and L/C Advances
by an amount equal to the applicable excess.
(b) Within five (5) Business Days after the end of each fiscal
quarter, the Company shall prepay the Loans in an amount equal to
100% of the sum of(a) the Net Proceeds realized upon all Asset
Dispositions made by the Company or any Subsidiary in such fiscal
quarter, the insurance proceeds received by the Company or any
Subsidiary in such fiscal quarter following a casualty involving
such Person's property, and the payments received by the Company or
any Subsidiary in such fiscal quarter from a condemnation of such
Person's property, aggregating in excess of $500,000, to the extent
any of the foregoing Net Proceeds are not applied (or committed to
be applied) within 180 days after the consummation or receipt
thereof, as applicable, to the purchase of similar assets that are
not classified as current assets under GAAP and are used or useful
in the business of the Company and its Subsidiaries or to the repair
or restoration of such Person's property. The amount of such
prepayment shall be applied first to the then outstanding principal
balance of the Term Loans in inverse order of maturity and then to
the then outstanding Revolving Loans. The Revolving Loan Commitment
of each Lender shall automatically be reduced by an amount equal to
such Lender's Pro Rata Revolving Share of the amount of the
prepayment pursuant to this subsection 2.09(b), if any, applied to
the Revolving Loans. All accrued commitment fees to, but not
including the effective date of any reduction or termination of the
Revolving Loan Commitments, shall be paid on the effective date of
such reduction or termination.
(c) If the Company or any Subsidiary shall incur any
Indebtedness (other than Indebtedness permitted to be incurred by
subsection 8.05), the Company shall promptly notify the Agent of the
estimated Net Proceeds of such issuance to be received by the
Company or such Subsidiary in respect thereof. Promptly upon, and
in no event later than three (3) days after, receipt by the Company
or such Subsidiary of Net Proceeds of such incurrence, the Company
shall prepay the Obligations in an amount equal to 100% of such Net
Proceeds.
(d) If the Company or any Subsidiary shall issue new common or
preferred equity, the Company shall promptly notify the Agent of the
estimated Net Proceeds of such issuance to be received by the
Company or such Subsidiary in respect thereof. Promptly upon, and
in no event later than three (3) days after, receipt by the Company
or such Subsidiary of Net Proceeds of such issuance, the Company
shall prepay the Obligations in an amount equal to 50% of such Net
Proceeds. (e) Any prepayments pursuant to subsections 2.09(c)-(d)
shall be applied first to the outstanding principal balance of the
Term Loans in inverse order of maturity, and then to the outstanding
principal balance of the Revolving Loans (without any reduction in
the Revolving Loan Commitment of any Lender). The Company shall
pay, together with each prepayment under this Section 2.09, accrued
interest on the amount prepaid and any amounts required pursuant to
Section 4.03 to reimburse Agent for any breakage or redeployment
costs incurred by Lenders relating to prepayments of any LIBOR Rate
Loans.
2.10 Repayment.
(a) Term Loans. The Company shall repay the Term Loans on
each date set forth below as follows (each a "Principal Payment
Date"):
Date Term Loan
Payment
1/31/01 $ 461,156.25
4/30/01 461,156.25
7/31/01 461,156.25
10/31/01 461,156.25
1/31/02 461,156.25
4/30/02 461,156.25
6/30/02 $6,464,310.50
Total $9,231,248.00
(b) The Revolving Credit. The Company shall repay to the
Lenders on the Revolving Loan Termination Date the aggregate
principal amount of Revolving Loans outstanding on such date.
2.11 Interest.
(a) Each Revolving Loan and Term Loan shall bear interest on
the outstanding principal amount thereof from the applicable
Borrowing Date at a rate per annum equal to the LIBOR Rate or the
Base Rate, as the case may be(and subject to the Company's right to
convert to other Types of Loans underSection 2.04), plus the
Applicable LIBOR Rate Margin or the Applicable Base Rate Margin, as
applicable.
(b) Interest on each Revolving Loan and Term Loan shall be
paid in arrears on each Interest Payment Date. Interest on Base
Rate Loans shall also be paid on the date of any payment (including
prepayment) in full thereof. Interest on LIBOR Rate Loans shall
also be paid on the date of any prepayment of Loans under Section
2.08 or 2.09 for the portion of the Loans so prepaid and upon
payment (including prepayment) in full thereof. During the
existence of any Event of Default, interest on all Loans shall be
paid on demand of the Agent at the request or with the consent of
the Required Lenders.
(c) Notwithstanding subsection (a) of this Section, if any
amount of principal of or interest on any Loan, or any other amount
payable hereunder or under any other Loan Document is not paid in
full when due (whether at stated maturity, by acceleration, demand
or otherwise), the Company agrees to pay interest on such unpaid
principal or other amount, from the date such amount becomes due
until the date such amount is paid in full, and after as well as
before any entry of judgment thereon to the extent permitted by law,
payable on demand, at a fluctuating rate per annum equal to the Base
Rate, plus the Applicable Base Rate Margin, plus two percent (2.0%).
(d) Anything herein to the contrary notwithstanding, the
obligations of the Company to any Lender hereunder shall be subject
to the limitation that payments of interest shall not be required
for any period for which interest is computed hereunder, to the
extent (but only to the extent) that contracting for or receiving
such payment by such Lender would be contrary to the provisions of
any law applicable to such Lender limiting the highest rate of
interest that may be lawfully contracted for, charged or received by
such Lender, and in such event the Company shall pay such Lender
interest at the highest rate permitted by applicable law.
2.12 Fees. In addition to certain fees described in Section 3.08:
(a) Arrangement Fees. The Company shall pay an arrangement
fee to the Agent in an amount equal to fifty (50) basis points times
the Aggregate Commitment.
(b) Commitment Fees. The Company shall pay to the Agent for
the account of each Revolving Lender a commitment fee on the average
daily unused portion of such Revolving Lender's Revolving Loan
Commitment, computed on a quarterly basis in arrears on the last
Business Day of each fiscal quarter based upon the daily utilization
for that quarter as calculated by the Agent, equal to the Applicable
Commitment Fee Percentage. For purposes of calculating utilization
under this subsection, the Revolving Loan Commitments shall be
deemed used to the extent of the Effective Amount of Revolving Loans
then outstanding (excluding any outstanding Swing Line Loans), plus
the Effective Amount of L/C Obligations then outstanding. Such
commitment fee shall accrue from the date hereof to the Revolving
Loan Termination Date and shall be due and payable quarterly in
arrears on the last Business Day of each fiscal quarter commencing
on October 31, 2000, through the Revolving Loan Termination Date,
with the final payment to be made on the Revolving Loan Termination
Date; provided that, in connection with any reduction or termination
of Revolving Loan Commitments under Section 2.07, the accrued
commitment fee calculated for the period ending on such date shall
also be paid on the date of such reduction or termination, with the
following quarterly payment being calculated on the basis of the
period from such reduction or termination date to such quarterly
payment date. The commitment fees provided in this subsection shall
accrue at all times after the above-mentioned commencement date,
including at any time during which one or more conditions in Article
V are not met.
(c) Seasonal Loan commitment Fee. In the event the Company
obtains any advance for Seasonal Availability during the months of
July, August, September and October of any year, the Company shall
pay to the Agent a Seasonal Loan Commitment Fee for such year
concurrently with the advance for such Seasonal Availability.
2.13 Computation of Fees and Interest.
(a) All computations of interest for Base Rate Loans when the
Base Rate is determined by BofA's "prime rate" shall be made on the
basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed. All other computations of fees and interest shall be made on
the basis of a 360-day year and actual days elapsed (which results in
more interest being paid than if computed on the basis of a 365-day
year). Interest and fees shall accrue during each period during which
interest or such fees are computed from the first day thereof to the
last day thereof.
(b) Each determination of an interest rate by the Agent shall
be conclusive and binding on the Company and the Lenders in the
absence of manifest error.
2.14 Payments by the Company.
(a) All payments to be made by the Company shall be made without
set-off, recoupment or counterclaim. Except as otherwise expressly
provided herein, all payments by the Company shall be made to the Agent
for the account of the Lenders at the Agent's Payment Office, and shall
be made in dollars and in immediately available funds, no later than
11:00 a.m. (Central time) on the date specified herein. The Agent will
promptly distribute to each Lender its applicable share of such payment
in like funds as received which, except as otherwise expressly provided
herein, shall be based upon such Lender's Pro Rata Share of the Loans
in respect of which such payment has been made. Any payment received
by the Agent later than 1:00 p.m. (Central time) shall be deemed to
have been received on the following Business Day and any applicable
interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other
than a Business Day, such payment shall be made on the following
Business Day, and such extension of time shall in such case be
included in the computation of interest or fees, as the case may be.
(c) Unless the Agent receives notice from the Company prior to
the date on which any payment is due to the Lenders that the Company
will not make such payment in full as and when required, the Agent
may assume that the Company has made such payment in full to the
Agent on such date in immediately available funds and the Agent may
(but shall not be so required), in reliance upon such assumption,
distribute to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent the Company has
not made such payment in full to the Agent, each Lender shall repay
to the Agent on demand such amount distributed to such Lender,
together with interest thereon at the Federal Funds Rate for each
day from the date such amount is distributed to such Lender until
the date repaid.
2.15 Payments by the Lenders to the Agent.
(a) Unless the Agent receives notice from a Lender on or prior
to the Closing Date or, with respect to any Borrowing after the
Closing Date, at least one Business Day prior to the date of such
Borrowing, that such Lender will not make available as and when
required hereunder to the Agent for the account of the Company the
amount of that Lender's Pro Rata Share of the Borrowing, the Agent
may assume that each Lender has made such amount available to the
Agent in immediately available funds on the Borrowing Date and the
Agent may (but shall not be so required), in reliance upon such
assumption, make available to the Company on such date a
corresponding amount. If and to the extent any Lender shall not
have made its full amount available to the Agent in immediately
available funds and the Agent in such circumstances has made
available to the Company such amount, that Lender shall on the
Business Day following such Borrowing Date make such amount
available to the Agent, together with interest at the Federal Funds
Rate for each day during such period. A notice of the Agent
submitted to any Lender with respect to amounts owing under this
subsection (a) shall be conclusive, absent manifest error. If such
amount is so made available, such payment to the Agent shall
constitute such Lender's Loan on the date of Borrowing for all
purposes of this Agreement. If such amount is not made available to
the Agent on the Business Day following the Borrowing Date, the
Agent will notify the Company of such failure to fund and, upon
demand by the Agent, the Company shall pay such amount to the Agent
for the Agent's account, together with interest thereon for each day
elapsed since the date of such Borrowing, at a rate per annum equal
to the interest rate applicable at the time to the Loans comprising
such Borrowing. The Company may, subject to the provisions of
Section 2.05 and 2.06, utilize the proceeds of a Swing Line Loan to
make such payment to the Agent.
(b) The failure of any Lender to make any Loan on any
Borrowing Date shall not relieve any other Lender of any obligation
hereunder to make a Loan on such Borrowing Date, but no Lender shall
be responsible for the failure of any other Lender to make the Loan
to be made by such other Lender on any Borrowing Date.
2.16 Sharing of Payments, Etc. If, other than as expressly provided
elsewhere herein, any Lender shall obtain on account of the Loans made by
it any payment (whether voluntary, involuntary, through the exercise of
any right of set-off, or otherwise) in excess of its ratable share (or
other share contemplated hereunder), such Lender shall immediately (a)
notify the Agent of such fact, and (b) purchase from the other Lenders
such participations in the Loans made by them as shall be necessary to
cause such purchasing Lender to share the excess payment pro rata with
each of them; provided, however, that if all or any portion of such
excess payment is thereafter recovered from the purchasing Lender, such
purchase shall to that extent be rescinded and each other Lender shall
repay to the purchasing Lender the purchase price paid therefor, together
with an amount equal to such paying Lender's ratable share (according to
the proportion of (i) the amount of such paying Lender's required
repayment to (ii) the total amount so recovered from the purchasing
Lender) of any interest or other amount paid or payable by the purchasing
Lender in respect of the total amount so recovered. The Company agrees
that any Lender so purchasing a participation from another Lender may, to
the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off, but subject to Section 11.10) with
respect to such participation as fully as if such Lender were the direct
creditor of the Company in the amount of such participation. The Agent
will keep records (which shall be conclusive and binding in the absence
of manifest error) of participations purchased under this Section and
will in each case notify the Lenders following any such purchases or
repayments.
2.17 Security Guaranties.
(a) All obligations of the Company and the Guarantors under this
Agreement, the Notes and all other Loan Documents shall be secured in
accordance with the Collateral Documents.
(b) All obligations of the Company under this Agreement, each of
the Notes and all other Loan Documents shall be unconditionally
guaranteed by the Guarantors pursuant to the Subsidiary Guaranty.
ARTICLE III
THE LETTERS OF CREDIT
3.01 The Letter of Credit Subfacility.
(a) On the terms and conditions set forth herein (i) the
Issuer agrees, (A) from time to time on any Business Day, during the
period from the Closing Date to the day which is five days prior to
the Revolving Loan Termination Date, to issue Letters of Credit for
the account of the Company in an aggregate Stated Amount at any one
time that, together with the aggregate Stated Amount of all other
outstanding Letters of Credit issued pursuant hereto, does not
exceed the L/C Commitment, and to amend or renew Letters of Credit
previously issued by it, in accordance with subsections 3.02(c) and
3.02(d), and (B) to honor drafts under the Letters of Credit; and
(ii) the Lenders severally agree to participate in Letters of Credit
Issued for the account of the Company; provided, that the Issuer
shall not be obligated to Issue, and no Revolving Lender shall be
obligated to participate in, any Letter of Credit if as of the date
of Issuance of such Letter of Credit (the "Issuance Date") (1) the
Effective Amount of all L/C Obligations plus the Effective Amount of
all Revolving Loans and of all Swing Line Loans exceeds the lesser
of (i) Aggregate Revolving Loan Commitment and (ii) the Borrowing
Base at such time, (2) the participation of any Lender in the
Effective Amount of all L/C Obligations plus the Effective Amount of
the Revolving Loans of such Lender and such Revolving Lender's Pro
Rata Revolving Share of any outstanding Swing Line Loans exceeds
such Lender's Commitment, or (3) the Effective Amount of L/C
Obligations exceeds the L/C Commitment. Within the foregoing
limits, and subject to the other terms and conditions hereof, the
Company's ability to obtain Letters of Credit shall be fully
revolving, and, accordingly, the Company may, during the foregoing
period, obtain Letters of Credit to replace Letters of Credit which
have expired or which have been drawn upon and reimbursed.
(b) The Issuer is under no obligation to, and shall not, Issue
any Letter of Credit if:
(i) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or
restrain the Issuer from Issuing such Letter of Credit, or any
Requirement of Law applicable to the Issuer or any request or
directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over the Issuer shall
prohibit, or request that the Issuer refrain from, the Issuance
of letters of credit generally or such Letter of Credit in
particular or shall impose upon the Issuer with respect to such
Letter of Credit any restriction, reserve or capital
requirement (for which the Issuer is not otherwise compensated
hereunder) not in effect on the Closing Date, or shall impose
upon the Issuer any unreimbursed loss, cost or expense which
was not applicable on the Closing Date and which the Issuer in
good faith deems material to it; provided, however, that in
such event any of the other Lenders may, in their sole
discretion, with the consent of the Company, become an Issuer
hereunder;
(ii) the Issuer has received written notice from any
Revolving Lender, the Agent or the Company, on or prior to the
Business Day prior to the requested date of Issuance of such
Letter of Credit, that one or more of the applicable conditions
contained in Article V is not then satisfied;
(iii) the expiry date of any requested Letter of
Credit is (A) more than 365 days after the date of Issuance,
unless the Required Revolving Lenders have approved such expiry
date in writing, or (B) after the date which is five days prior
to the Revolving Loan Termination Date, unless all of the
Revolving Lenders have approved such expiry date in writing;
(iv) the expiry date of any requested Letter of Credit is
prior to the maturity date of any financial obligation to be
supported by the requested Letter of Credit;
(v) any requested Letter of Credit does not provide for
drafts, or is not otherwise in form and substance acceptable to
the Issuer; or
(vi) such Letter of Credit is to be denominated in a
currency other than Dollars.
3.02 Issuance, Amendment and Renewal of Letters of Credit.
(a) Each Letter of Credit shall be issued upon the irrevocable
written request of the Company received by the Issuer (with a copy sent
by the Company to the Agent) at least four days (or such shorter time
as the Issuer may agree in a particular instance in its sole
discretion) prior to the proposed date of issuance. Each such request
for issuance of a Letter of Credit shall be by facsimile, confirmed
immediately in an original writing, in the form of an L/C Application
(or such other form as shall be acceptable to the Issuer), and shall
specify in form and detail satisfactory to the Issuer: (i) the proposed
date of issuance of the Letter of Credit (which shall be a Business
Day); (ii) the face amount of the Letter of Credit; (iii) the expiry
date of the Letter of Credit; (iv) the name and address of the
beneficiary thereof; (v) the documents to be presented by the
beneficiary of the Letter of Credit in case of any drawing thereunder;
(vi) the full text of any certificate to be presented by the
beneficiary in case of any drawing thereunder; and (vii) such other
matters as the Issuer may require.
(b) At least two Business Days prior to the Issuance of any
Letter of Credit (or such shorter time as the Agent may agree in a
particular instance in its sole discretion), the Issuer will confirm
with the Agent (by telephone or in writing) that the Agent has
received a copy of the L/C Application or L/C Amendment Application
from the Company and, if not, the Issuer will provide the Agent with
a copy thereof. Unless the Issuer has received notice on or before
the Business Day immediately preceding the date the Issuer is to
issue a requested Letter of Credit from the Agent (A) directing the
Issuer not to issue such Letter of Credit because such issuance is
not then permitted under subsection 3.01(a) as a result of the
limitations set forth in clauses (1) through (3) thereof or
subsection 3.01(b)(ii); or (B) that one or more conditions specified
in Article V are not then satisfied; then, subject to the terms and
conditions hereof, the Issuer shall, on the requested date, issue a
Letter of Credit for the account of the Company in accordance with
the Issuer's usual and customary business practices.
(c) From time to time while a Letter of Credit is outstanding
and prior to the Revolving Loan Termination Date, the Issuer will,
upon the written request of the Company received by the Issuer (with
a copy sent by the Company to the Agent) at least three days (or
such shorter time as the Issuer may agree in a particular instance
in its sole discretion) prior to the proposed date of amendment,
amend any Letter of Credit issued by it. Each such request for
amendment of a Letter of Credit shall be made by facsimile,
confirmed immediately in an original writing, made in the form of an
L/C Amendment Application and shall specify in form and detail
satisfactory to the Issuer: (i) the Letter of Credit to be amended;
(ii) the proposed date of amendment of the Letter of Credit (which
shall be a Business Day); (iii) the nature of the proposed
amendment; and (iv) such other matters as the Issuer may require.
The Issuer shall be under no obligation to amend any Letter of
Credit if: (A) the Issuer would have no obligation at such time to
issue such Letter of Credit in its amended form under the terms of
this Agreement; or (B) the beneficiary of any such letter of Credit
does not accept the proposed amendment to the Letter of Credit. The
Agent will promptly notify the Revolving Lenders of the receipt by
it of any L/C Application or L/C Amendment Application.
(d) The Issuer and the Lenders agree that, while a Letter of
Credit is outstanding and prior to the Revolving Loan Termination
Date, at the option of the Company and upon the written request of
the Company received by the Issuer (with a copy sent by the Company
to the Agent) at least five days (or such shorter time as the Issuer
may agree in a particular instance in its sole discretion) prior to
the proposed date of notification of renewal, the Issuer shall be
entitled to authorize the automatic renewal of any Letter of Credit
issued by it. Each such request for renewal of a Letter of Credit
shall be made by facsimile, confirmed immediately in an original
writing, in the form of an L/C Amendment Application, and shall
specify in form and detail satisfactory to the Issuer: (i) the
Letter of Credit to be renewed; (ii) the proposed date of
notification of renewal of the Letter of Credit (which shall be a
Business Day); (iii) the revised expiry date of the Letter of
Credit; and (iv) such other matters as the Issuer may require. The
Issuer shall be under no obligation so to renew any Letter of Credit
if: (A) the Issuer would have no obligation at such time to issue or
amend such Letter of Credit in its renewed form under the terms of
this Agreement; or (B) the beneficiary of any such Letter of Credit
does not accept the proposed renewal of the Letter of Credit. If
any outstanding Letter of Credit shall provide that it shall be
automatically renewed unless the beneficiary thereof receives notice
from the Issuer that such Letter of Credit shall not be renewed, and
if at the time of renewal the Issuer would be entitled to authorize
the automatic renewal of such Letter of Credit in accordance with
this subsection 3.02(d) upon the request of the Company but the
Issuer shall not have received any L/C Amendment Application from
the Company with respect to such renewal or other written direction
by the Company with respect thereto, the Issuer shall nonetheless be
permitted to allow such Letter of Credit to renew, and the Company
and the Lenders hereby authorize such renewal, and, accordingly, the
Issuer shall be deemed to have received an L/C Amendment Application
from the Company requesting such renewal.
(e) The Issuer may, at its election (or as required by the
Agent at the direction of the Required Revolving Lenders) and upon
reasonable prior written notice to the Company and subject to the
terms of the applicable Letter of Credit, deliver any notices of
termination or other communications to any Letter of Credit
beneficiary or transferee, and take any other action as necessary or
appropriate, at any time and from time to time, in order to cause
the expiry date of such Letter of Credit to be a date not later than
the date which is five days prior to the Revolving Loan Termination
Date.
(f) This Agreement shall control in the event of any conflict
with any L/C-Related Document (other than any Letter of Credit).
(g) The Issuer will also deliver to the Agent, concurrently or
promptly following its delivery of a Letter of Credit, or amendment
to or renewal of a Letter of Credit, to an advising bank or a
beneficiary, a true and complete copy of each such Letter of Credit
or amendment to or renewal of a Letter of Credit.
3.03 Risk Participations, Drawings and Reimbursements.
(a) Immediately upon the Issuance of each Letter of Credit,
each Revolving Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the Issuer a participation
in such Letter of Credit and each drawing thereunder in an amount
equal to the product of (i) the Pro Rata Revolving Share of such
Revolving Lender, times (ii) the maximum amount available to be
drawn under such Letter of Credit and the amount of such drawing,
respectively. For purposes of subsection 2.01(b), each Issuance of
a Letter of Credit shall be deemed to utilize the Revolving Loan
Commitment of each Revolving Lender by an amount equal to the amount
of such participation.
(b) In the event of any request for a drawing under a Letter
of Credit by the beneficiary or transferee thereof, the Issuer will
promptly notify the Company. The Company shall reimburse the Issuer
prior to 11:00 a.m. (Central time), on each date that any amount is
paid by the Issuer under any Letter of Credit (each such date, an
"Honor Date"), in an amount in Dollars equal to the amount so paid
by the Issuer. In the event the Company fails to reimburse the
Issuer the full amount of any drawing under any Letter of Credit by
11:00 a.m. (Central time) on the Honor Date, the Issuer will
promptly notify the Agent and the Agent will promptly notify each
Lender thereof, and the Company shall be deemed to have requested
that Base Rate Loans in an amount equal to such unreimbursed amount
be made by the Revolving Lenders to be disbursed on the Honor Date
under such Letter of Credit, subject to the amount of the unutilized
portion of the Aggregate Revolving Loan Commitment and subject to
the conditions set forth in Section 5.02. Any notice given by the
Issuer or the Agent pursuant to this subsection 3.03(b) may be oral
if immediately confirmed in writing (including by facsimile);
provided that the lack of such an immediate confirmation shall not
affect the conclusiveness or binding effect of such notice.
(c) Each Revolving Lender shall upon any notice pursuant to
subsection 3.03(b) make available to the Agent for the account of
the relevant Issuer an amount in Dollars and in immediately
available funds equal to its Pro Rata Revolving Share of the Dollar
Equivalent of the amount of the drawing, whereupon the participating
Revolving Lenders shall (subject to subsection 3.03(d)) each be
deemed to have made a Revolving Loan consisting of a Base Rate Loan
to the Company in that amount. If any Revolving Lender so notified
fails to make available to the Agent for the account of the Issuer
the amount of such Revolving Lender's Pro Rata Share of the Dollar
Equivalent of the amount of the drawing by no later than 1:00 p.m.
(Central time) on the Honor Date, then interest shall accrue on such
Revolving Lender's obligation to make such payment, from the Honor
Date to the date such Revolving Lender makes such payment, at a rate
per annum equal to the Federal Funds Rate in effect from time to
time during such period. The Agent will promptly give notice of the
occurrence of the Honor Date, but failure of the Agent to give any
such notice on the Honor Date or in sufficient time to enable any
Revolving Lender to effect such payment on such date shall not
relieve such Revolving Lender from its obligations under this
Section 3.03.
(d) With respect to any unreimbursed drawing that is not
converted into Revolving Loans consisting of Base Rate Loans to the
Company in whole or in part, because of the Company's failure to
satisfy the conditions set forth in Section 5.02 or for any other
reason, the Company shall be deemed to have incurred from the Issuer
an L/C Borrowing in the Dollar Equivalent of the amount of such
drawing, which L/C Borrowing shall be due and payable on demand
(together with interest) and shall bear interest at a rate per annum
equal to the Base Rate, plus the Applicable Base Rate Margin, plus
2.0% per annum, and each Revolving Lender's payment to the Issuer
pursuant to subsection 3.03(c) shall be deemed payment in respect of
its participation in such L/C Borrowing and shall constitute an L/C
Advance from such Revolving Lender in satisfaction of its
participation obligation under this Section 3.03.
(e) Each Revolving Lender's obligation in accordance with this
Agreement to make the Revolving Loans or L/C Advances, as
contemplated by this Section 3.03, as a result of a drawing under a
Letter of Credit, shall be absolute and unconditional and without
recourse to the Issuer and shall not be affected by any
circumstance, including (i) any set-off, counterclaim, recoupment,
defense or other right which such Revolving Lender may have against
the Issuer, the Company or any other Person for any reason
whatsoever; (ii) the occurrence or continuance of a Default, an
Event of Default or a Material Adverse Effect; or (iii) any other
circumstance, happening or event whatsoever, whether or not similar
to any of the foregoing; provided, however, that each Revolving
Lender's obligation to make Revolving Loans under this Section 3.03
is subject to the conditions set forth in Section 5.02.
3.04 Repayment of Participations.
(a) Upon (and only upon) receipt by the Agent for the account
of the Issuer of immediately available funds in Dollars from the
Company (i) in reimbursement of any payment made by the Issuer under
the Letter of Credit with respect to which any Revolving Lender has
paid the Agent for the account of the Issuer for such Revolving
Lender's participation in the Letter of Credit pursuant to Section
3.03 or (ii) in payment of interest thereon, the Agent will promptly
pay to each Revolving Lender, in the same funds as those received by
the Agent for the account of the Issuer, the amount of such
Revolving Lender's Pro Rata Revolving Share of such funds, and the
Issuer shall receive the amount of the Pro Rata Revolving Share of
such funds of any Revolving Lender that did not so pay the Agent for
the account of the Issuer.
(b) If the Agent or the Issuer is required at any time to
return to the Company, or to a trustee, receiver, liquidator,
custodian, or any official in any Insolvency Proceeding, any portion
of the payments made by the Company to the Agent for the account of
the Issuer pursuant to subsection 3.04(a) in reimbursement of a
payment made under the Letter of Credit or interest or fee thereon,
each Revolving Lender shall, on demand of the Agent, forthwith
return to the Agent or the Issuer the amount of its Pro Rata
Revolving Share of any amounts so returned by the Agent or the
Issuer plus interest thereon from the date such demand is made to
the date such amounts are returned by such Revolving Lender to the
Agent or the Issuer, at a rate per annum equal to the Federal Funds
Rate in effect from time to time.
3.05 Role of the Issuer.
(a) Each Lender and the Company agree that, in paying any drawing
under a Letter of Credit, the Issuer shall not have any responsibility
to obtain any document (other than any sight draft and certificates
expressly required by the Letter of Credit) or to ascertain or inquire
as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document.
(b) No Agent-Related Person nor any of the respective
correspondents, participants or assignees of the Issuer shall be
liable to any Lender for: (i) any action taken or omitted in
connection herewith at the request or with the approval of the
Lenders (including the Required Lenders or Required Revolving
Lenders, as applicable); (ii) any action taken or omitted in the
absence of gross negligence or willful misconduct; or (iii) the due
execution, effectiveness, validity or enforceability of any L/C-
Related Document.
(c) The Company hereby assumes all risks of the acts or
omissions of any beneficiary or transferee with respect to its use
of any Letter of Credit; provided, however, that this assumption is
not intended to, and shall not, preclude the Company's pursuing such
rights and remedies as it may have against the beneficiary or
transferee at law or under any other agreement. No Agent-Related
Person, nor any of the respective correspondents, participants or
assignees of the Issuer, shall be liable or responsible for any of
the matters described in clauses (i) through (vii) of Section 3.06;
provided, however, anything in such clauses to the contrary
notwithstanding, that the Company may have a claim against the
Issuer, and the Issuer may be liable to the Company, to the extent,
but only to the extent, of any direct, as opposed to consequential
or exemplary, damages suffered by the Company which the Company
proves were caused by the Issuer's willful misconduct or gross
negligence or the Issuer's willful failure to pay under any Letter
of Credit after the presentation to it by the beneficiary of a sight
draft and certificate(s) strictly complying with the terms and
conditions of a Letter of Credit. In furtherance and not in
limitation of the foregoing: (i) the Issuer may accept documents
that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to
the contrary; and (ii) the Issuer shall not be responsible for the
validity or sufficiency of any instrument transferring or assigning
or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason.
3.06 Obligations Absolute. The obligations of the Company under this
Agreement and any L/C-Related Document to reimburse the Issuer for a
drawing under a Letter of Credit, and to repay any L/C Borrowing and any
drawing under a Letter of Credit converted into Revolving Loans, shall be
unconditional and irrevocable, and shall be paid strictly in accordance
with the terms of this Agreement and each such other L/C-Related Document
under all circumstances, including the following:
(i) any lack of validity or enforceability of this Agreement
or any L/C-Related Document;
(ii) any material change in the time, manner or place of
payment of, or in any other material term of, all or any of the
obligations of the Company in respect of any Letter of Credit or any
other material amendment or waiver of or any consent to material
departure from all or any of the L/C-Related Documents;
(iii) the existence of any claim, set-off, defense or other
right that the Company may have at any time against any beneficiary
or any transferee of any Letter of Credit (or any Person for whom
any such beneficiary or any such transferee may be acting), the
Issuer or any other Person, whether in connection with this
Agreement, the transactions contemplated hereby or by the L/C-
Related Documents or any unrelated transaction;
(iv) any draft, demand, certificate or other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue
or inaccurate in any respect; or any loss or delay in the
transmission or otherwise of any document required in order to make
a drawing under any Letter of Credit;
(v) any payment by the Issuer under any Letter of Credit
against presentation of a draft or certificate that does not
strictly comply with the terms of any Letter of Credit without the
written consent of the Company; or any payment made by the Issuer
under any Letter of Credit to any Person purporting to be a trustee
in bankruptcy, debtor-in-possession, assignee for the benefit of
creditors, liquidator, receiver or other representative of or
successor to any beneficiary or any transferee of any Letter of
Credit, including any arising in connection with any Insolvency
Proceeding;
(vi) any exchange, release or non-perfection of any collateral,
or any release or amendment or waiver of or consent to departure
from any other guarantee, for all or any of the obligations of the
Company in respect of any Letter of Credit; or
(vii) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing, including any other
circumstance that might otherwise constitute a defense available to,
or a discharge of, the Company or a guarantor.
3.07 Cash Collateral Pledge. Upon (i) the request of the Agent, (A) if
the Issuer has honored any full or partial drawing request on any Letter
of Credit and such drawing has resulted in an L/C Borrowing hereunder, or
(B) if, as of the Revolving Loan Termination Date, any Letters of Credit
may for any reason remain outstanding and partially or wholly undrawn,
(ii) the occurrence of the circumstances described in subsection 2.09(a)
requiring the Company to Cash Collateralize Letters of Credit, or (iii)
the termination of the Aggregate Commitment, then, the Company shall
immediately Cash Collateralize the L/C Obligations in an amount equal to
the L/C Obligations.
3.08 Letter of Credit Fees.
(a) The Company shall pay to the Agent for the account of each of
the Revolving Lenders a stand-by letter of credit fee with respect to
the Letters of Credit equal to the Applicable LIBOR Rate Margin for
Revolving Loans times the average daily maximum amount available to be
drawn of the outstanding stand-by Letters of Credit, computed on a
quarterly basis in arrears on the last Business Day of each calendar
quarter based upon stand-by Letters of Credit outstanding for that
quarter as calculated by the Agent. Such stand-by letter of credit
fees shall be due and payable quarterly in arrears on the last Business
Day of each calendar quarter during which stand-by Letters of Credit
are outstanding, commencing on the first such quarterly date to occur
after the Closing Date, through the Revolving Loan Termination Date (or
such later date upon which the outstanding stand-by Letters of Credit
shall expire), with the final payment to be made on the Revolving Loan
Termination Date (or such later expiration date).
(b) The Company shall pay to the Agent for the account of each
of the Revolving Lenders a Letter of Credit fee with respect to the
commercial documentary Letters of Credit equal to 0.25% times the
negotiated amount, payable at the time of each negotiation, as
calculated by the Agent.
(c) The Company shall pay to the Issuer a letter of credit
fronting fee for each Letter of Credit in an amount equal to the
greater of 0.25% of the amount of each Letter of Credit. Such
Letter of Credit fronting fee shall be due and payable on each date
of Issuance of a Letter of Credit.
(d) The Company shall pay to the applicable Issuer from time
to time on demand the normal issuance, presentation, amendment and
other processing fees, and other standard costs and charges, of such
Issuer relating to letters of credit as from time to time in effect.
3.09 Uniform Customs and Practice. The Uniform Customs and Practice for
Documentary Credits as published by the International Chamber of Commerce
most recently at the time of issuance of any Letter of Credit shall
(unless otherwise expressly provided in the Letters of Credit) apply to
the Letters of Credit.
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
4.01 Taxes.
(a) Any and all payments by the Company to each Lender or the
Agent under this Agreement and any other Loan Document shall be made
free and clear of, and without deduction or withholding for, any Taxes.
In addition, the Company shall pay all Other Taxes.
(b) If the Company shall be required by law to deduct or
withhold any Taxes, Other Taxes or Further Taxes from or in respect
of any sum payable hereunder to any Lender or the Agent, then:
(i) the sum payable shall be increased as necessary so
that, after making all required deductions and withholdings
(including deductions and withholdings applicable to additional
sums payable under this Section), such Lender or the Agent, as
the case may be, receives and retains an amount equal to the
sum it would have received and retained had no such deductions
or withholdings been made;
(ii) the Company shall make such deductions and
withholdings;
(iii) the Company shall pay the full amount deducted
or withheld to the relevant taxing authority or other authority
in accordance with applicable law; and
(iv) the Company shall also pay to each Lender or the
Agent for the account of such Lender, at the time interest is
paid, Further Taxes in the amount that the respective Lender
specifies as necessary to preserve the after-tax yield the
Lender would have received if such Taxes, Other Taxes or
Further Taxes had not been imposed.
(c) The Company agrees to indemnify and hold harmless each
Lender and the Agent for the full amount of (i) Taxes, (ii) Other
Taxes, and (iii) Further Taxes in the amount that the respective
Lender reasonably specifies as necessary to preserve the after-tax
yield the Lender would have received if such Taxes, Other Taxes or
Further Taxes had not been imposed, and any liability (including
penalties, interest, additions to tax and expenses) arising
therefrom or with respect thereto, whether or not such Taxes, Other
Taxes or Further Taxes were correctly or legally asserted; provided,
however, that Agent shall, to the extent possible, notify the
Company of the imposition of such Taxes and allow the Company the
right to contest such Taxes, as long as the Company pays all
expenses and costs associated therewith and the Taxes are, in the
Agent's sole discretion, subject to being reasonably contested.
Payment under this indemnification shall be made within 30 days
after the date the Lender or the Agent makes written demand
therefor.
(d) Within 30 days after the date of any payment by the
Company of Taxes, Other Taxes or Further Taxes, the Company shall
furnish to each Lender or the Agent the original or a certified copy
of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to such Lender or the Agent.
(e) If the Company is required to pay any amount to any Lender
or the Agent pursuant to subsection (b) or (c) of this Section, then
such Lender shall use reasonable efforts (consistent with legal and
regulatory restrictions) to change the jurisdiction of its Lending
Office so as to eliminate any such additional payment by the Company
which may thereafter accrue, if such change in the sole judgment of
such Lender is not otherwise disadvantageous to such Lender.
4.02 Illegality.
(a) If any Lender determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has
asserted that it is unlawful, for any Lender or its applicable Lending
Office to make LIBOR Rate Loans, then, on notice thereof by the Lender
to the Company through the Agent, any obligation of that Lender to make
LIBOR Rate Loans shall be suspended until the Lender notifies the Agent
and the Company that the circumstances giving rise to such
determination no longer exist.
(b) If a Lender determines that it is unlawful to maintain any
LIBOR Rate Loan, the Company shall, upon its receipt of notice of
such fact and demand from such Lender (with a copy to the Agent),
prepay in full such LIBOR Rate Loans of that Lender then
outstanding, together with interest accrued thereon and amounts
required under Section 4.04, either on the last day of the Interest
Period thereof, if the Lender may lawfully continue to maintain such
LIBOR Rate Loans to such day, or immediately, if the Lender may not
lawfully continue to maintain such LIBOR Rate Loan. If the Company
is required to so prepay any LIBOR Rate Loan, then concurrently with
such prepayment, the Company shall borrow from the affected Lender,
in the amount of such repayment, a Base Rate Loan.
(c) If the obligation of any Lender to make or maintain LIBOR
Rate Loans has been so terminated or suspended, the Company may
elect, by giving notice to the Lender through the Agent that all
Loans which would otherwise be made by the Lender as LIBOR Rate
Loans shall be instead Base Rate Loans.
(d) Before giving any notice to the Agent under this Section,
the affected Lender shall designate a different Lending Office with
respect to its LIBOR Rate Loans if such designation will avoid the
need for giving such notice or making such demand and will not, in
the judgment of the Lender, be illegal.
4.03 Increased Costs and Reduction of Return.
(a) If any Lender determines that, due to either (i) the
introduction of or any change (other than any change by way of
imposition of or increase in reserve requirements included in the
calculation of the LIBOR Rate) in or in the interpretation of any
law or regulation or (ii) the compliance by that Lender with any
guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), there shall be
any increase in the cost to such Lender of agreeing to make or
making, funding or maintaining any LIBOR Rate Loans or
participating in Letters of Credit, or, in the case of the Issuer,
any increase in the cost to the Issuer of agreeing to issue,
issuing or maintaining any Letter of Credit or of agreeing to make
or making, funding or maintaining any unpaid drawing under any
Letter of Credit, then the Company shall be liable for, and shall
from time to time, upon demand (with a copy of such demand to be
sent to the Agent), pay to the Agent for the account of such
Lender, additional amounts as are reasonably sufficient to
compensate such Lender for such increased costs.
(b) If any Lender shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in
any Capital Adequacy Regulation, or (iii) any change in the
interpretation or administration of any Capital Adequacy Regulation
by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by the
Lender (or its Lending Office) or any corporation controlling the
Lender with any Capital Adequacy Regulation, affects or would affect
the amount of capital required or expected to be maintained by the
Lender or any corporation controlling the Lender and (taking into
consideration such Lender's or such corporation's policies with
respect to capital adequacy and such Lender's desired return on
capital) determines that the amount of such capital is materially
increased as a consequence of its Commitment, loans, credits or
obligations under this Agreement, then, upon demand of such Lender
to the Company through the Agent, the Company shall pay to the
Lender, from time to time as reasonably specified by the Lender,
additional amounts reasonably sufficient to compensate the Lender
for such increase.
4.04 Funding Losses. The Company shall reimburse each Lender and hold
each Lender harmless from any loss or expense which the Lender may
sustain or incur as a consequence of:
(a) the failure of the Company to make on a timely basis any
payment of principal of any LIBOR Rate Loan;
(b) the failure of the Company to continue or convert a Loan
after the Company has given (or is deemed to have given) a Notice of
Borrowing or a Notice of Conversion/ Continuation;
(c) the failure of the Company to make any prepayment in
accordance with any notice delivered under Section 2.08;
(d) the prepayment (including pursuant to Section 2.09) or
other payment (including after acceleration thereof) of a LIBOR Rate
Loan on a day that is not the last day of the relevant Interest
Period other than any prepayment required pursuant to Section 4.02;
or
(e) the automatic conversion under Section 2.04 of any LIBOR
Rate Loan to a Base Rate Loan on a day that is not the last day of
the relevant Interest Period; including any such loss or expense
arising from the liquidation or reemployment of funds obtained by it
to maintain its LIBOR Rate Loans or from fees payable to terminate
the deposits from which such funds were obtained. For purposes of
calculating amounts payable by the Company to the Lenders under this
Section and under subsection 4.03(a), each LIBOR Rate Loan made by a
Lender (and each related reserve, special deposit or similar
requirement) shall be conclusively deemed to have been funded at the
LIBOR used in determining the LIBOR Rate for such LIBOR Rate Loan by
a matching deposit or other borrowing in the interbank eurodollar
market for a comparable amount and for a comparable period, whether
or not such LIBOR Rate Loan is in fact so funded.
4.05 Inability to Determine Rates. If the Agent reasonably determines
that for any reason adequate and reasonable means do not exist for
determining the LIBOR Rate for any requested Interest Period with respect
to a proposed LIBOR Rate Loan, or that the LIBOR Rate applicable pursuant
to subsection 2.11(a) for any requested Interest Period with respect to a
proposed LIBOR Rate Loan does not adequately and fairly reflect the cost
to the Lenders of funding such Loan, the Agent will promptly so notify
the Company and each Lender. Thereafter, the obligation of the Lenders
to make or maintain LIBOR Rate Loans hereunder shall be suspended until
the Agent revokes such notice in writing. Upon receipt of such notice,
the Company may revoke without cost or penalty any Notice of Borrowing or
Notice of Conversion/Continuation then submitted by it. If the Company
does not revoke such Notice, the Lenders shall make, convert or continue
the Loans, as proposed by the Company, in the amount specified in the
applicable notice submitted by the Company, but such Loans shall be made,
converted or continued as Base Rate Loans instead of LIBOR Rate Loans, as
the case may be.
4.06 Certificates of Lenders. Any Lender claiming reimbursement or
compensation under this Article IV shall deliver to the Company (with a
copy to the Agent) a certificate setting forth in reasonable detail the
amount payable to the Lender hereunder.
4.07 Substitution of Banks. Upon the receipt by the Company from any
Lender (an "Affected Lender") of a claim for compensation under Section
4.03,of notice that it cannot make LIBOR Rate Loans under Section 4.02,
or of a claim for Taxes or Further Taxes under Section 4.01, then the
Agent, at the Company's direction, shall: (i) request the Affected Lender
to use good faith efforts to obtain a replacement bank or financial
institution satisfactory to the Company to acquire and assume all or a
ratable part of all of such Affected Lender's Loans and Commitments at
the face amount thereof (a "Replacement Lender"); (ii) request one more
of the other Lenders to acquire and assume all or part of such Affected
Lender's Loans and Commitments; or (iii) designate a Replacement Lender.
Any such designation of a Replacement Lender under clause (i) or (iii)
shall be subject to the prior written consent of the Agent (which consent
shall not be unreasonably withheld).
4.08 Survival. The agreements and obligations of the Company in this
Article IV shall survive the payment of all other Obligations.
ARTICLE V
INITIAL COVENANTS
5.01 Initial Covenants. Within ninety (90) days of the date of this
Agreement, unless otherwise waived in writing by the Agent, the Company
and its Subsidiaries agree to provide to the Agent all of the following,
in form and substance satisfactory to the Agent and each Lender, and in
sufficient copies for each Lender and to the fulfillment of each of the
following conditions, all of which shall be conditions to the
continuation of the Credit Extensions described herein:
(a) Credit Agreement and Notes. This Agreement, the Notes,
the Swing Line Note and all other Loan Documents executed by each
party thereto;
(b) Resolutions; Incumbency.
(i) Copies of the resolutions of the board of directors
of the Company and each Subsidiary party to a Loan Document
authorizing the transactions contemplated hereby, certified as
of the Closing Date by the Secretary or an Assistant Secretary
of such Person; and
(ii) A certificate of the Secretary or Assistant Secretary
of the Company and each Subsidiary party to a Loan Document
certifying the names and true signatures of the officers of the
Company or such Subsidiary authorized to execute, deliver and
perform, as applicable, this Agreement, and all other Loan
Documents to be delivered by it hereunder;
(c) Organization Documents; Good Standing. Each of the
following documents:
(i) the articles or certificate of incorporation and the
bylaws of the Company and each Subsidiary party to any Loan
Document as in effect on the Closing Date, certified by the
Secretary or Assistant Secretary of the Company or such
Subsidiary as of the Closing Date; and
(ii) a good standing certificate or certificate of status
for the Company and each Subsidiary party to any Loan Document
from the Secretary of State (or similar, applicable
Governmental Authority) of its state of incorporation and such
other states as shall be reasonably requested by Agent;
(d) Schedules. All Schedules to this Agreement shall have
been prepared, delivered and attached.(e) Payment of Fees.
Evidence of payment by the Company of all accrued and unpaid fees,
costs and expenses to the extent then due and payable on the Closing
Date, together with Attorney Costs of BofA to the extent invoiced
prior to or on the Closing Date, plus such additional amounts of
Attorney Costs as shall constitute BofA's reasonable estimate of
Attorney Costs incurred or to be incurred by it through the closing
proceedings (provided that such estimate shall not thereafter
preclude final settling of accounts between the Company and BofA);
including any such costs, fees and expenses arising under or
referenced in Sections 2.12 and 11.04;
(f) Certificate. A certificate signed by a Responsible
Officer, dated as of the Closing Date, stating that:
(i) the representations and warranties contained in
Article VI are true and correct on and as of such date, as
though made on and as of such date;
(ii) no Default or Event of Default exists or would result
from the Credit Extension; and
(iii) there has occurred since July 31, 2000, no event
or circumstance that has resulted or could reasonably be
expected to result in a Material Adverse Effect;
(g) Approvals and Consents. All requisite or necessary
approvals and consents from Governmental Authorities and third
parties of a material nature shall have been received and remain in
effect, there shall be no governmental or judicial action, actual or
threatened, that has a reasonable likelihood of restraining,
preventing or imposing burdensome conditions against the Company,
and no law or regulation shall be applicable which in the judgment
of the Agent could have such effect;
(i) Collateral Documents. The Collateral Documents, executed
by the Company and the Subsidiaries, in appropriate form for
recording, where necessary, together with:
(i) copies of all UCC-l financing statements to be filed,
registered or recorded to perfect the security interests of the
Agent for the benefit of the Lenders, and other filings,
registrations and recordings necessary and advisable to perfect
the Liens of the Agent for the benefit of the Lenders in
accordance with applicable law;
(ii) written advice relating to such Lien and judgment
searches as the Agent shall have requested, and such
termination statements or other documents as may be necessary
to confirm that the Collateral is subject to no other Liens in
favor of any Persons (other than Permitted Liens);
(iii) all certificates and instruments representing
the Pledged Collateral and stock and note transfer powers
executed in blank with signatures guaranteed as the Agent may
specify;
(iv) to the extent requested by the Agent, funds
sufficient to pay any filing or recording tax or fee in
connection with any and all UCC-1 financing statements;
(v) evidence that the Agent has been named as loss payee
under all policies of casualty insurance, and as additional
insured under all policies of liability insurance, required by
this Agreement (or arrangements therefor satisfactory to the
Agent);
(vi) flood insurance and earthquake insurance, to the
extent applicable, on terms reasonably satisfactory to the
Agent (or arrangements therefor satisfactory to the Agent);
(vii) such consents, estoppels, subordination
agreements, waivers and other documents and instruments
executed by landlords, tenants, bailees, warehousemen and other
Persons party to material contracts relating to any Collateral
as to which the Agent shall be granted a Lien for the benefit
of the Lenders, as requested by the Agent, or satisfactory
evidence that any landlords, tenants, bailees, warehousemen and
other Persons do not have prior or superior rights or interests
in the Collateral over the security interests of the Agent;
(viii) evidence that all other actions necessary or, in
the opinion of the Agent, desirable to perfect and protect the
first priority Lien created by the Collateral Documents, and to
enhance the Agent's ability to preserve and protect its
interests in and access to the Collateral, have been taken (or
arrangements therefor satisfactory to the Agent have been
made).
(j) Insurance Policies. Standard lenders' payable
endorsements with respect to the insurance policies or other
instruments or documents evidencing insurance coverage on the
properties of the Company in accordance with Section 6.18 (or
arrangements therefor satisfactory to the Agent);
(k) Corporate Proceedings.
(i) All corporate and legal proceedings and all
instruments and agreements to be executed by the Company and
each of its Subsidiaries in connection with the transactions
contemplated by this Agreement and the Loan Documents shall be
reasonably satisfactory in form and substance to the Agent, and
the Agent shall have received all information and copies of all
certificates, documents and papers, including good standing
certificates, bring-down certificates and any other records of
corporate proceedings and governmental approvals, if any, which
the Agent reasonably may have requested in connection
therewith, such documents and papers, where appropriate, to be
certified by proper corporate or governmental authorities;
(ii) The ownership and capital structure (including
without limitation, the terms of any capital stock, options,
warrants or other securities issued by the Company or any of
its Subsidiaries) of the Company and the Company's Subsidiaries
shall be in form and substance reasonably satisfactory to the
Agent and the Lenders.
(l) Tax and Accounting Aspects of Transactions.
(i) The Company shall have delivered to the Agent and
each Lender the financial statements as provided in subsection
6.11(a) and (b) in form and substance satisfactory to the Agent
and the Required Lenders; and
(ii) an initial Notice of Borrowing and Borrowing Base
Certificate.
(m) Solvency. The Agent shall have received a solvency
certificate from a Responsible Officer addressed to the Agent and
each of the Lenders and dated the Closing Date and supporting the
conclusions, that, after giving effect to the incurrence of all
financing contemplated herein, the Company is not insolvent and will
not be rendered insolvent by the indebtedness incurred in connection
herewith, will not be left with unreasonably small capital with
which to engage in its respective businesses and will not have
incurred debts beyond its ability to pay such debts in the ordinary
course as they mature and become due.
(n) Litigation. There shall be no litigation or
administrative proceedings or other legal or regulatory
developments, actual or threatened, that, in the judgment of the
Agent, could reasonably be expected to have a Material Adverse
Effect on the business, assets, liabilities, operations, properties,
prospects or condition (financial or otherwise) of or relating to
(i) the Company and its Subsidiaries, (ii) the ability of the
Company or any of its Subsidiaries to perform their obligations
under the Loan Documents, or (iii) the validity or enforceability of
any of the Loan Documents or the rights, remedies and benefits
available to the Agent and the Lenders under the Loan Documents, and
no injunction or other restraining order shall have been issued or a
hearing therefor be pending or noticed with respect to the Company
or any of its Subsidiaries concerning the the Loan Documents or the
transactions contemplated hereby or thereby.
(q) No Material Adverse Change. There shall not have occurred
or become known to the Company any material adverse condition
affecting, or material adverse change with respect to, (i) the
results of operations, condition (financial or otherwise), or
prospects of the Company and its Subsidiaries, taken as a whole,
since July 31, 2000.
(r) Borrowing Availability. Evidence satisfactory to the Agent
that, as of the Closing Date, the amount of the Aggregate Commitment
is sufficient to meet the ongoing financing needs of the Company and
its Subsidiaries during the term of this financing.
(s) Other Documents. Such other approvals, opinions,
documents or materials as the Agent or any Lender may reasonably
request.
(t) No Adverse Change. The absence of any material disruption
of or a material adverse change in conditions in the financial,
banking or capital markets which Agent, in its sole discretion,
deems material in connection with the Loans.
5.02 Conditions to All Credit Extensions. The obligation of each
Revolving Lender to make any Revolving Loan to be made by it (including
its initial Revolving Loan) and the obligation of the Issuer to Issue any
Letter of Credit (including the initial Letter of Credit) is subject to
the satisfaction of the following conditions precedent on the relevant
Borrowing Date or Issuance Date:
(a) Notice, Application. The Agent shall have received a
Notice of Borrowing or in the case of any Issuance of any Letter of
Credit, the Issuer and the Agent shall have received an L/C
Application or L/C Amendment Application, as required under Section
3.02;
(b) Continuation of Representations and Warranties. The
representations and warranties in Article VI shall be true and
correct in all material respects on and as of such Borrowing Date or
Issuance Date with the same effect as if made on and as of such
Borrowing Date or Issuance Date (except to the extent such
representations and warranties expressly refer to an earlier date,
in which case they shall be true and correct as of such earlier
date); and
(c) No Existing Default. No Default or Event of Default shall
exist or shall result from such Borrowing or Issuance.
Each Notice of Borrowing and L/C Application or L/C Amendment
Application submitted by the Company hereunder shall constitute a
representation and warranty by the Company hereunder, as of the date
of each such notice and as of each Borrowing Date or Issuance Date,
as applicable, that the conditions in this Section 5.02 are
satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Agent and each Lender
that both before and after giving effect to the consummation of the
transactions contemplated by this Agreement and the Loan Documents:
6.01 Corporate Existence and Power. The Company and each of its
Subsidiaries:
(a) is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its
incorporation;
(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, to carry
on its business and to execute, deliver, and perform its obligations
under the Loan Documents to which it is a party;
(c) is duly qualified as a foreign corporation and is licensed
and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its
business requires such qualification or license; and
(d) is in compliance with all Requirements of Law; except, in
each case referred to in clause (c) or clause (d), to the extent
that the failure to do so could not reasonably be expected to have a
Material Adverse Effect.
6.02 Corporate Authorization; No Contravention. The execution, delivery
and performance by the Company and its Subsidiaries of this Agreement and
each of the Loan Document to which such Person is party, have been duly
authorized by all necessary corporate action, and do not and will not:
(a) contravene the terms of any of that Person's Organization
Documents;
(b) conflict with or result in any breach or contravention of,
or the creation of any Lien under, any document evidencing any
Contractual Obligation to which such Person is a party other than
the Loan Documents or any order, injunction, writ or decree of any
Governmental Authority to which such Person or its property is
subject; or
(c) violate any Requirement of Law.
6.03 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority (except those that have been obtained and remain
in effect and for recordings or filings in connection with the Liens
granted to the Agent under the Collateral Documents) is necessary or
required in connection with the execution, delivery or performance by, or
enforcement against, the Company or any of its Subsidiaries of the
Agreement or any other Loan Document, except to the extent the failure to
obtain such could not reasonably be expected to have a Material Adverse
Effect.
6.04 Binding Effect. This Agreement and each other Loan Document to
which the Company or any of its Subsidiaries is a party constitute the
legal, valid and binding obligations of the Company and any of its
Subsidiaries to the extent it is a party thereto, enforceable against
such Person in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws affecting the enforcement of creditors' rights generally or
by equitable principles relating to enforceability.
6.05 Litigation. There are no actions, suits, proceedings, claims or
disputes pending, or to the best knowledge of the Company, threatened or
contemplated, at law, in equity, in arbitration or before any
Governmental Authority, against the Company, or its Subsidiaries or any
of their respective properties:
(a) which purport to affect or pertain to this Agreement or
any other Loan Document, or any of the transactions contemplated
hereby or thereby; or
(b) except as disclosed on Schedule 6.05, as to which there
exists a substantial likelihood of an adverse determination, which
determination could reasonably be expected to have a Material
Adverse Effect. No injunction, writ, temporary restraining order or
any order of any nature has been issued by any court or other
Governmental Authority purporting to enjoin or restrain the
execution, delivery or performance of this Agreement or any other
Loan Document, or directing that the transactions provided for
herein or therein not be consummated as herein or therein provided.
6.06 No Default. No Default or Event of Default exists or would result
from the incurring of any Obligations by the Company or from the grant or
perfection of the Liens of the Agent and the Lenders on the Collateral.
As of the Closing Date, neither the Company nor any Subsidiary is in
default under or with respect to any Contractual Obligation in any
respect which, individually or together with all such defaults, could
reasonably be expected to have a Material Adverse Effect, or that would,
if such default had occurred after the Closing Date, create an Event of
Default under Section 9.01.
6.07 ERISA Compliance. Except as specifically disclosed in Schedule
6.07:
(a) Each Plan is in compliance in all material respects with
the applicable provisions of ERISA, the Code and other federal or
state law. Each Plan which is intended to qualify under Section
401(a) of the Code has received a favorable determination letter
from the IRS and to the best knowledge of the Company, nothing has
occurred which would cause the loss of such qualification. The
Company and each ERISA Affiliate has made all required contributions
to any Plan subject to Section 412 of the Code, and no application
for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to
any Plan.
(b) There are no pending or, to the best knowledge of Company,
threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan which has resulted
or could reasonably be expected to result in a Material Adverse
Effect. There has been no prohibited transaction or violation of
the fiduciary responsibility rules with respect to any Plan which
has resulted or could reasonably be expected to result in a Material
Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected
to occur; (ii) no Pension Plan has any Unfunded Pension Liability;
(iii) neither the Company nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability under Title IV of ERISA
with respect to any Pension Plan (other than premiums due and not
delinquent under Section 4007 of ERISA); (iv) neither the Company
nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such
liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) neither the Company nor any ERISA
Affiliate has engaged in a transaction that could be subject to
Section 4069 or 4212(c) of ERISA.
6.08 Use of Proceeds; Margin Regulations. The proceeds of the Loans are
to be used solely for the purposes set forth in and permitted by Section
7.12 and Section 8.07. Neither the Company nor any Subsidiary is
generally engaged in the business of purchasing or selling Margin Stock
or extending credit for the purpose of purchasing or carrying Margin
Stock.
6.09 Title to Properties. The Company and its Subsidiaries have good
record and marketable title in fee simple to, or valid leasehold
interests in, all real property necessary or used in the ordinary conduct
of their respective businesses, except for such defects in title as could
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. As of the Closing Date, the property of the
Company and its Subsidiaries is subject to no Liens, other than Permitted
Liens.
6.10 Taxes. The Company and its Subsidiaries have filed all Federal and
other material tax returns and reports required to be filed, and have
paid all Federal and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties,
income or assets otherwise due and payable, except those which are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been provided in accordance with GAAP. There is no proposed
tax assessment against the Company or any Subsidiary that would, if made,
have a Material Adverse Effect.
6.11 Financial Condition.
(a) To the best of the Company's knowledge the consolidated
financial statements of the Company and its Subsidiaries dated for
fiscal year ended January 29, 2000, and the related consolidated
statements of income or operations, shareholders' equity and cash
flows for the fiscal years ended on such dates and the unaudited
consolidated financial statements of the Company and its
Subsidiaries dated July 31, 2000, and the related consolidated
statements of income or operations, shareholders' equity and cash
flows for the six months ended on that date:
(i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except for the
absence of footnotes and as otherwise expressly noted therein,
subject, in the case of such unaudited financial statements, to
ordinary, good faith year end adjustments;
(ii) fairly present the financial condition of the Company
and its Subsidiaries, as applicable, as of the date thereof and
results of operations for the period covered thereby; and
(iii) except as specifically disclosed in Schedule
6.11 or Schedule 8.08 show all material indebtedness and other
liabilities of the Company and its Subsidiaries, as applicable,
as of the date thereof.
(b) The unaudited Pro Forma Financial Statements are attached
hereto as Schedule 6.11. As of the date of the Agreement, the Pro
Forma Financial Statements (other than the projections contained
therein) fairly represent the Company and its Subsidiaries' assets,
liabilities, financial condition and results of operations on a
consolidated basis in accordance with GAAP (except for the absence
of footnotes and statements of cash flow and recognizing such Pro
Forma Financial Statements involve estimated purchase price
accounting adjustments), consistently applied. The projections
contained in the Pro Forma Financial Statements represent good faith
estimates of the future financial performance of the Company and its
Subsidiaries.
(c) Since January 29, 2000, there has been no Material Adverse
Effect.
6.12 Environmental Matters.
(a) Except as specifically disclosed in Schedule 6.12, the on-
going operations of the Company and each of its Subsidiaries comply
in all respects with all Environmental Laws, except such
non-compliance which would not (if enforced in accordance with
applicable law) result in liability in excess of $500,000 in the
aggregate (exclusive of amounts payable under insurance policies and
indemnity agreements which the Company or such Subsidiary reasonably
expects to receive).
(b) Except as specifically disclosed in Schedule 6.12, the
Company and each of its Subsidiaries have obtained all licenses,
permits, authorizations and registrations required under any
Environmental Law ("Environmental Permits") and necessary for their
respective ordinary course operations, except where the failure
could not reasonably be expected to have a Material Adverse Effect,
all such Environmental Permits are in good standing, and the Company
and each of its Subsidiaries are in compliance with all material
terms and conditions of such Environmental Permits.
(c) Except as specifically disclosed in Schedule 6.12, none of
the Company, any of its Subsidiaries or any of their respective
present property or operations, is subject to any outstanding
written order from or agreement with any Governmental Authority, nor
subject to (i) any judicial or docketed administrative proceeding,
respecting any Environmental Law, Environmental Claim or Hazardous
Material or (ii) to the extent that it could reasonably be expected
to have a Material Adverse Effect, any claim, proceeding or written
notice from any Person regarding any Environmental Law,
Environmental Claim or Hazardous Material.
(d) Except as specifically disclosed in Schedule 6.12, there
are no Hazardous Materials or other conditions or circumstances
existing with respect to any property of the Company or any
Subsidiary, or arising from operations prior to the Closing Date, of
the Company or any of its Subsidiaries that would reasonably be
expected to give rise to Environmental Claims with a potential
liability of the Company and its Subsidiaries in excess of $500,000
in the aggregate for all such conditions, circumstances and
properties (exclusive of amounts payable under insurance policies
and indemnity agreements which the Company or such Subsidiary
reasonably expects to receive). Except as disclosed in Schedule
6.12, (i) neither the Company nor any Subsidiary has any underground
storage tanks (x) that are not properly registered or permitted
under applicable Environmental Laws, or (y) that are leaking or
disposing of Hazardous Materials off-site, which in any such case
could reasonably be expected to have a Material Adverse Effect, and
(ii) the Company and its Subsidiaries have met all material
notification requirements under applicable Environmental Laws.
6.13 Collateral Documents.
(a) The provisions of each of the Collateral Documents are
effective to create in favor of the Agent for the benefit of the
Lenders, a legal, valid and enforceable first priority security
interest in all right, title and interest of the Company and its
Subsidiaries in the collateral described therein, subject only to
any Permitted Liens.
(b) All representations and warranties of the Company and any
of its Subsidiaries party thereto contained in the Collateral
Documents are true and correct.
6.14 Restricted Entities. None of the Company, any Person controlling
the Company, or any Subsidiary, is an "Investment Company" within the
meaning of the Investment Company Act of 1940. The Company is not
subject to regulation under the Public Utility Holding Company Act of
1935, the Federal Power Act, the Interstate Commerce Act, any state
public utilities code, or any other Federal or state statute or
regulation limiting its ability to incur Indebtedness.
6.15 No Burdensome Restrictions. Neither the Company nor any Subsidiary
is a party to or bound by any Contractual Obligation, or subject to any
restriction in any Organization Document, or any Requirement of Law,
which could reasonably be expected to have a Material Adverse Effect.
6.16 Copyrights, Patents, Trademarks and Licenses, etc. The Company and
its Subsidiaries own or are licensed or otherwise have the right to use
all of the patents, trademarks, service marks, trade names, copyrights,
contractual franchises, authorizations and other rights that are
reasonably necessary for the operation of their respective businesses,
without conflict with the rights of any other Person, except where the
failure could not reasonably be expected to have a Material Adverse
Effect. To the best knowledge of the Company, no slogan or other
advertising device, product, process, method, substance, part or other
material now employed, or now contemplated to be employed, by the Company
or any Subsidiary infringes upon any rights held by any other Person.
Except as specifically disclosed in Schedule 6.16, no claim or litigation
regarding any of the foregoing is pending or, to the knowledge of the
Company, threatened, and no patent, invention, device, application,
principle or any statute, law, rule, regulation, standard or code
applicable to copyrights, patents, trademarks and licenses is pending or,
to the knowledge of the Company, proposed, which, in either case, could
reasonably be expected to have a Material Adverse Effect.
6.17 Capitalization; Subsidiaries. As of the Closing Date, the Company
has no Subsidiaries other than those specifically disclosed in part (a)
of Schedule 6.17 hereto and has no equity investments in any other
corporation or entity other than those specifically disclosed in part (b)
of Schedule 6.17. The capitalization of the Company and its Subsidiaries
as of the Closing Date is as set forth on part (a) of Schedule 6.17.
6.18 Insurance. Except as specifically disclosed in Schedule 6.18, the
properties of the Company and its Subsidiaries are insured with
financially sound and reputable insurance companies not Affiliates of the
Company, in such amounts, with such deductibles and covering such risks
as are customarily carried by companies engaged in similar businesses and
are similarly situated.
6.19 Swap Obligations. Neither the Company nor any of its Subsidiaries
has incurred any outstanding obligations under any Swap Contracts, other
than Permitted Swap Obligations. The Company has undertaken its own
independent assessment of its consolidated assets, liabilities and
commitments and has considered appropriate means of mitigating and
managing risks associated with such matters and has not relied on any
swap counterparty or any Affiliate of any swap counterparty in
determining whether to enter into any Swap Contract.
6.20 Solvency. The Company and its Subsidiaries on a consolidated basis
are Solvent.
6.21 Full Disclosure. None of the representations or warranties made by
the Company or any Subsidiary in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate
furnished by or on behalf of the Company or any Subsidiary in connection
with the Loan Documents (including the offering and disclosure materials
delivered by or on behalf of the Company to the Lenders prior to the
Closing Date), contains any untrue statement of a material fact or omits
any material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they
are made, not misleading as of the time when made or delivered.
ARTICLE VII
AFFIRMATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, or any
Loan or other Obligation shall remain unpaid or unsatisfied, or any
Letter of Credit shall remain outstanding, unless the Required Lenders
waive compliance in writing:
7.01 Financial Statements. The Company shall deliver to the Agent, in
form and detail satisfactory to the Agent and the Required Lenders, with
sufficient copies for each Lender:
(a) as soon as available, but not later than 90 days after the
end of each fiscal year (commencing with the fiscal year ending
February 3, 2001), a copy of the audited consolidated balance sheet
of the Company and its Subsidiaries as at the end of such year and
the related consolidated statements of income, shareholders' equity
and cash flows for such year, setting forth in each case in
comparative form the figures for the previous fiscal year, and
accompanied by the opinion of a nationally-recognized independent
public accounting firm ("Independent Auditor") reasonably acceptable
to Agent which report shall state that such consolidated financial
statements present fairly the financial position for the periods
indicated in conformity with GAAP applied on a basis consistent with
prior years. Such opinion shall not be qualified or limited because
of a restricted or limited examination by the Independent Auditor of
any material portion of the Company's or any Subsidiary's records;
(b) as soon as available, but not later than 45 days after the
end of each of the first three fiscal quarters of each fiscal year
(commencing with the fiscal quarter ending July 31, 2000), a copy of
the unaudited consolidated balance sheet of the Company and its
Subsidiaries as of the end of such fiscal quarter and the related
consolidated statements of income, shareholders' equity and cash
flows for the period commencing on the first day and ending on the
last day of such fiscal quarter, together with a consolidating
income statement for such period, and certified by a Responsible
Officer as fairly presenting, in accordance with GAAP (subject to
ordinary, good faith year-end audit adjustments and the absence of
footnotes), the financial position and the results of operations of
the Company and the Subsidiaries; and
(c) as soon as available, but not later than 20 days after the
end of each month (commencing with the month ending October 31,
2000), a Borrowing Base Certificate as of the end of the immediately
preceding month, substantially in the form of Exhibit G and
certified by a Responsible Officer to be true and correct as of the
date thereof. In the event of a material change in the size or
scope of the Eligible Inventory and Eligible Accounts of the Company
and its Subsidiaries, or in the event of a circumstance having a
Material Adverse Effect upon the Collateral or the operations of the
Company, the Agent may in its discretion require the submission of a
Borrowing Base Certificate at intervals more frequent than monthly.
7.02 Certificates; Other Information. The Company shall furnish to the
Agent, with sufficient copies for each Lender:
(a) beginning with the period ending October 31, 2000, and
thereafter concurrently with the delivery of the financial
statements referred to in subsections 7.01(a) and (b), a Compliance
Certificate executed by a Responsible Officer;
(b) concurrently with the delivery of the financial statements
referred to in subsection 7.01(a), (i) a consolidating balance sheet
and income statement for such year (which need not be audited) and,
in the case of such income statement, setting forth in comparative
form the figures for the previous fiscal year, and (ii) a budget for
the next succeeding four fiscal quarters; and
(c) promptly, such additional information regarding the
business, financial or corporate affairs of the Company or any
Subsidiary as the Agent, at the request of any Lender, may from time
to time reasonably request.
7.03 Notices. The Company shall promptly notify the Agent:
(a) of the occurrence of any Default or Event of Default, and
of the occurrence or existence of any event or circumstance that
foreseeably will become a Default or Event of Default;
(b) of any matter that has resulted or may reasonably be
expected to result in a Material Adverse Effect, including (i) any
breach or non-performance of, or any default under, a Contractual
Obligation of the Company or any Subsidiary; (ii) any dispute,
litigation, investigation, proceeding or suspension between the
Company or any Subsidiary and any Governmental Authority; or (iii)
the commencement of, or any material development in, any litigation
or proceeding affecting the Company or any Subsidiary; including
pursuant to any applicable Environmental Laws;
(c) of the occurrence of any of the following events affecting
the Company or any ERISA Affiliate (but in no event more than 10
days after such event becomes known to an officer of the Company or
any Subsidiary), and deliver to the Agent a copy of any notice with
respect to such event that is filed with a Governmental Authority
and any notice delivered by a Governmental Authority to the Company
or any ERISA Affiliate with respect to such event:
(i) an ERISA Event;
(ii) a material increase in the Unfunded Pension Liability
of any Pension Plan;
(iii) the adoption of, or the commencement of
contributions to, any Plan subject to Section 412 of the Code
by the Company or any ERISA Affiliate resulting in a material
contribution obligation; or
(iv) the adoption of any amendment to a Plan subject to
Section 412 of the Code, if such amendment results in a
material increase in contributions or Unfunded Pension
Liability;
(d) of any material change in accounting policies or financial
reporting practices by the Company or its Subsidiaries; and
(e) upon, but in no event later than 15 days after, any
officer of the Company or any Subsidiary becoming aware of (i) any
and all enforcement, investigation, cleanup, removal or other
governmental or regulatory actions instituted, completed or
threatened against the Company or any Subsidiary or any of their
respective properties pursuant to any applicable Environmental Laws
which could reasonably be expected to have a Material Adverse
Effect, (ii) all other material Environmental Claims, and (iii) any
environmental or similar condition on any real property adjoining or
in the vicinity of the property of the Company or any Subsidiary
that could reasonably be anticipated to cause such property of the
Company or such Subsidiary or any part thereof to be subject to any
restrictions on the ownership, occupancy, transferability or use of
such property under any Environmental Laws that could reasonably be
expected to have a Material Adverse Effect.
Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer setting forth details of the
occurrence referred to therein, and stating what action the Company
or any affected Subsidiary proposes to take with respect thereto and
at what time.
7.04 Preservation of Corporate Existence, Etc. The Company shall, and
shall cause each Subsidiary to:
(a) preserve and maintain in full force and effect its
corporate existence and good standing under the laws of its state or
jurisdiction of incorporation, except to the extent otherwise
expressly permitted herein;
(b) preserve and maintain in full force and effect all
governmental rights, privileges, qualifications, permits, licenses
and franchises necessary or desirable in the normal conduct of its
business except in connection with transactions permitted by Section
8.03 and sales of assets permitted by Section 8.02;
(c) use reasonable efforts, in the ordinary course of
business, to preserve its business organization and goodwill; and
(d) preserve or renew all of its registered patents,
trademarks, trade names and service marks, the non-preservation of
which could reasonably be expected to have a Material Adverse
Effect.
The Company shall cause each Subsidiary which is a Wholly-Owned
Subsidiary as of the date hereof to continue to exist as a Wholly-
Owned Subsidiary so long as it shall be a Subsidiary.
7.05 Maintenance of Property. The Company shall maintain, and shall
cause each Subsidiary to maintain, and preserve all its property which is
used or useful in its business in reasonably good working order and
condition, ordinary wear and tear excepted, and make all necessary
repairs thereto and renewals and replacements thereof except where the
failure to do so could not reasonably be expected to have a Material
Adverse Effect.
7.06 Insurance. In addition to insurance requirements set forth in the
Collateral Documents, the Company shall maintain, and shall cause each
Subsidiary to maintain, with financially sound and reputable independent
insurers, insurance with respect to its properties and business against
loss or damage of the kinds customarily insured against by Persons
engaged in the same or similar business, of such types and in such
amounts as are customarily carried under similar circumstances by such
other Persons; including workers' compensation insurance, public
liability and property and casualty insurance which amount shall not be
materially reduced by the Company in the absence of 30 days' prior
written notice to the Agent. All casualty insurance maintained by the
Company shall name the Agent as loss payee and all liability insurance
shall name the Agent as additional insured for the benefit of the
Lenders, as their interests may appear. Upon request of the Agent or any
Lender, the Company shall furnish the Agent, with sufficient copies for
each Lender, at reasonable intervals (but not more than once per calendar
year) a certificate of a Responsible Officer of the Company (and, if
requested by the Agent, any insurance broker of the Company) setting
forth the nature and extent of all insurance maintained by the Company
and its Subsidiaries in accordance with this Section or any Collateral
Documents (and which, in the case of a certificate of a broker, were
placed through such broker).
7.07 Payment of Obligations. The Company shall, and shall cause each
Subsidiary to, pay and discharge as the same shall become due and
payable, all their respective obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental charges
or levies upon it or its properties or assets, unless the same are
being contested in good faith by appropriate proceedings and
adequate reserves in accordance with GAAP are being maintained by
the Company or such Subsidiary; and
(b) all lawful claims which, if unpaid, would by law become a
Lien upon its property.
7.08 Compliance with Laws. The Company shall comply, and shall cause
each Subsidiary to comply, in all material respects with all Requirements
of Law of any Governmental Authority having jurisdiction over it or its
business (including the Federal Fair Labor Standards Act), except such as
may be contested in good faith or as to which a bona fide dispute may
exist.
7.09 Compliance with ERISA. The Company shall, and shall cause each of
its ERISA Affiliates to: (a) maintain each Plan in compliance in all
material respects with the applicable provisions of ERISA, the Code and
other federal or state law; (b) cause each Plan which is qualified under
Section 401(a) of the Code to maintain such qualification; and (c) make
all required contributions to any Plan subject to Section 412 of the
Code.
7.10 Inspection of Property and Books and Records. The Company shall
maintain and shall cause each Subsidiary to maintain proper books of
record and account, in which full, true and correct entries in conformity
with GAAP consistently applied shall be made of all financial
transactions and matters involving the assets and business of the Company
and such Subsidiary. The Company shall permit, and shall cause each
Subsidiary to permit, representatives and independent contractors of the
Agent or any Lender to visit and inspect any of their respective
properties, to examine their respective corporate, financial and
operating records, and make copies thereof or abstracts therefrom, to
perform collateral audits, and to discuss their respective affairs,
finances and accounts with their respective directors, officers, and
independent public accountants, all at such reasonable times during
normal business hours and as often as may be reasonably desired, upon
reasonable advance notice to the Company. With respect to any inspection
performed after February 3, 2001, the Company shall pay or reimburse the
expenses of the Agent incurred in connection with such inspection not to
exceed $20,000 in any fiscal year; provided, however, the Company shall
have no obligation to pay or reimburse the expenses of any Lender
incurred in connection with the foregoing; provided, further, when an
Event of Default exists the Agent or any Lender may do any of the
foregoing at the expense of the Company at any time during normal
business hours and without advance notice.
7.11 Environmental Laws.
(a) The Company shall, and shall cause each Subsidiary to,
conduct its operations and keep and maintain its property in
compliance with all Environmental Laws, the violation of which could
reasonably be expected to result in liability to the Company and its
Subsidiaries in excess of $500,000 in the aggregate (net of any
payments under insurance policies or indemnity agreements which the
Company or such Subsidiary reasonably expects to receive).
(b) Upon the written request of the Agent or any Lender, the
Company shall submit and cause each of its Subsidiaries to submit,
to the Agent with sufficient copies for each Lender, at the
Company's sole cost and expense, at reasonable intervals, a report
providing an update of the status of any environmental, health or
safety compliance, hazard or liability issue identified in any
notice or report required pursuant to subsection 7.03(e), that
could, individually or in the aggregate, result in liability in
excess of $500,000 (net of any payments under insurance policies or
indemnity agreements which the Company or such Subsidiary reasonably
expects to receive).
7.12 Use of Proceeds. The Company shall use the proceeds of the Loans
(a) to pay certain fees and expenses related to the transaction
contemplated hereby; (b) to refinance existing Indebtedness; (c) for
working capital and other general corporate purposes of the Company and
its Subsidiaries; and (d) to finance Capital Expenditures.
7.13 Further Assurances.
(a) The Company shall ensure that all written information,
exhibits and reports furnished to the Agent or the Lenders do not
and will not contain any untrue statement of a material fact and do
not and will not omit to state any material fact or any fact
necessary to make the statements contained therein not misleading in
light of the circumstances in which made, and will promptly disclose
to the Agent and the Lenders and correct any defect or error that
may be discovered therein or in any Loan Document or in the
execution, acknowledgment or recordation thereof.
(b) Promptly upon request by the Agent or the Required
Lenders, the Company shall (and shall cause any of its Subsidiaries
to) do, execute, acknowledge, deliver, record, re-record, file,
re-file, register and re-register, any and all such further acts,
deeds, conveyances, security agreements, assignments, estoppel
certificates, financing statements and continuations thereof,
termination statements, notices of assignment, transfers,
certificates, assurances and other instruments the Agent or such
Lenders, as the case may be, may reasonably require from time to
time in order (i) to carry out more effectively the purposes of this
Agreement or any other Loan Document, (ii) to subject to the Liens
created by any of the Collateral Documents any of the properties,
rights or interests covered by any of the Collateral Documents,
(iii) to perfect and maintain the validity, effectiveness and
priority of any of the Collateral Documents and the Liens intended
to be created thereby, and (iv) to better assure, convey, grant,
assign, transfer, preserve, protect and confirm to the Agent and
Lenders the rights granted or now or hereafter intended to be
granted to the Lenders under any Loan Document or under any other
document executed in connection therewith.
7.14 Additional Guaranties and Personal Property Pledge. Effective upon
any Person becoming a Subsidiary, such Person shall: (i) join as a
guarantor under the Subsidiary Guaranty, as a debtor under the Subsidiary
Security Agreement pursuant to amendments or other instruments thereto in
form and substance acceptable to the Agent and (ii) provide an
intercompany note to the extent such exists to the Company which shall be
pledged to the Agent pursuant to the Security Agreement; provided, that
if all Subsidiaries which are not a party to the Subsidiary Guaranty and
the Subsidiary Security Agreement hold 10% or more of the total assets of
the Company and its Subsidiaries, then such Subsidiary shall promptly
execute the Subsidiary Guaranty and the Subsidiary Security Agreement so
that, upon such execution, such 10% threshold is no longer exceeded. The
Company shall promptly notify the Agent at any time at which, in
accordance with this Section 7.14, any Subsidiary shall be required to
join as a guarantor under the Subsidiary Guaranty.
7.15 Additional Pledge and Security Interests. Effective upon any Person
becoming a Subsidiary, the shareholder or shareholders thereof, shall
pledge the stock or other equity interests thereof to the Agent pursuant
to documentation reasonably acceptable to the Agent; and shall grant
Liens on all of its other Collateral consistent with the Subsidiary
Security Agreement.
7.16 Government Contracts. The Company shall (i) deliver or cause to be
delivered to the Agent a list in the form of Schedule 7.18 of each
Government Contract and Government Subcontract which has a remaining
contract value in excess of $500,000, and any amendments thereto, to
which the Company or any of its Subsidiaries is a party and (ii) notify
the Agent of (A) the name and address of any surety with respect to any
such Government Contract or Subcontract to which the Company or any of
its Subsidiaries is a party and (B) the cancellation or early termination
of any of such Government Contracts or, Subcontracts.
ARTICLE VIII
NEGATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, or any
Loan or other Obligation shall remain unpaid or unsatisfied, or any
Letter of Credit shall remain outstanding, unless the Required Lenders
waive compliance in writing:
8.01 Limitation on Liens. The Company shall not, and shall not suffer or
permit any Subsidiary to, directly or indirectly, make, create, incur,
assume or suffer to exist any Lien upon or with respect to any part of
its property, whether now owned or hereafter acquired, other than the
following ("Permitted Liens"):
(a) any Lien existing on property of the Company or any
Subsidiary on the Closing Date and set forth in Schedule 8.01
securing or reflecting Indebtedness outstanding on such date and any
Liens hereafter incurred securing all renewals and extensions of
such Indebtedness;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental
charges which are not delinquent or remain payable without penalty,
or to the extent that non-payment thereof is permitted by Section
7.07, provided that no notice of lien has been filed or recorded
under the Code;
(d) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the
ordinary course of business which are not delinquent or remain
payable without penalty or which are being contested in good faith
and by appropriate proceedings, which proceedings have the effect of
preventing the forfeiture or sale of the property subject thereto;
(e) Liens (other than any Lien imposed by ERISA) consisting of
pledges or deposits required in the ordinary course of business in
connection with workers' compensation, unemployment insurance and
other social security legislation;
(f) Liens on the property of the Company or its Subsidiaries
securing (i) the non-delinquent performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, (ii)
Contingent Obligations in connection with performance bonds, Surety
Bonds and appeal bonds, and (iii) other non-delinquent obligations
of a like nature, in each case, incurred in the ordinary course of
business; provided that all such Liens in the aggregate could not
reasonably be expected to cause a Material Adverse Effect;
(g) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in
the aggregate, are not substantial in amount, and which do not in
any case materially detract from the value of the property subject
thereto or materially interfere with the ordinary conduct of the
businesses of the Company and its Subsidiaries;
(h) Liens securing obligations in respect of capital leases on
assets subject to such leases, provided that such capital leases are
otherwise permitted hereunder;
(i) Liens arising solely by virtue of any statutory or common
law provision relating to banker's liens, rights of set-off or
similar rights and remedies as to deposit accounts or other funds
maintained with a creditor depository institution; provided that (i)
such deposit account is not a dedicated cash collateral account and
is not subject to restrictions against access by the Company or any
Subsidiary in excess of those set forth by regulations promulgated
by the FRB, and (ii) such deposit account is not intended by the
Company or any Subsidiary to provide collateral to the depository
institution; and
(j) Liens in favor of customs and revenue authorities arising
as a matter of law to secure payment of customs duties in connection
with the importation of goods
8.02 Disposition of Assets. The Company shall not, and shall not suffer
or permit any Subsidiary to, directly or indirectly, (x) issue any equity
interests of any Subsidiary to any Person which is not the Company or a
Subsidiary or (y) sell, assign, lease, convey, transfer or otherwise
dispose of (whether in one or a series of transactions) any property,
including accounts and notes receivable, with or without recourse (each,
an "Asset Disposition"), or enter into any agreement to do any of the
foregoing, except:
(a) dispositions of inventory, or used, worn-out or surplus
equipment, all in the ordinary course of business;
(b) the sale of equipment to the extent that such equipment is
exchanged for credit against the purchase price of similar
replacement equipment, or the proceeds of such sale are reasonably
promptly applied to the purchase price of such replacement
equipment;
(c) Asset Dispositions by any Subsidiary to any Wholly-Owned
Subsidiary that is party to the Subsidiary Guaranty; and
(d) Asset Disposition of Cafe Plaid.
8.03 Consolidations and Mergers. The Company shall not, and shall not
suffer or permit any Subsidiary to, merge, consolidate with or into, or
convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of
its assets (whether now owned or hereafter acquired) to or in favor of
any Person, except:
(a) any Subsidiary may merge with the Company, provided that
(i) the Company shall be the continuing or surviving corporation, or
with any one or more Subsidiaries, and (ii) if any transaction shall
be between a Subsidiary and a Wholly-Owned Subsidiary, the
Wholly-Owned Subsidiary shall be the continuing or surviving
corporation;
(b) another Person organized under the laws of any state of
the United States may merge with or consolidate into the Company or
any Subsidiary so long as (i) no Default or Event of Default shall
have occurred and be continuing either before or after giving effect
to such transaction (determined in respect of Sections 8.16, 8.17
and 8.18 on a pro forma basis as of the last day of the prior fiscal
quarter), (ii) the Company or such Subsidiary is the surviving
Person, and (iii) all applicable legal requirements have been
satisfied; and
(c) any Subsidiary may sell all or substantially all of its
assets (upon voluntary liquidation or otherwise), to the Company or
another Wholly-Owned Subsidiary.
8.04 Loans and Investments. The Company shall not purchase or acquire,
or suffer or permit any Subsidiary to purchase or acquire, or make any
commitment therefor, any capital stock, equity interest, or any
obligations or other securities of, or any interest in, any Person, or
make or commit to make any Acquisitions, or make or commit to make any
advance, loan, extension of credit or capital contribution to or any
other investment in, any Person including any Affiliate of the Company
(together, "Investments"), except for:
(a) Investments held by the Company or any Subsidiary in the
form of cash equivalents or short term marketable securities;
(b) extensions of credit in the nature of accounts receivable
or notes receivable arising from the sale or lease of goods or
services in the ordinary course of business;
(c) Investments by the Company or any Subsidiary in
Wholly-Owned Subsidiaries party to the Subsidiary Guaranty or
unsecured loans made by any Subsidiary to the Company;
(d) Investments constituting Permitted Swap Obligations or
payments or advances under Swap Contracts relating to Permitted Swap
Obligations;
(e) advances to vendors and customers of the Company and its
Subsidiaries, or suppliers to such vendors, to enable such vendors,
customers and suppliers to purchase goods or parts to be processed
and sold to the Company and its Subsidiaries in the ordinary course
of business and consistent with past practices;
(f) Investments (including debt obligations) received in
connection with the bankruptcy or reorganization of suppliers and
customers and in settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising in the ordinary
course of business;
(g) Investments of a nature not contemplated by the foregoing
clauses hereof that are outstanding as of the Closing Date and set
forth in Schedule 8.04 hereto; and
(h) other Investments not exceeding $500,000.00 in the
aggregate after the Closing Date.
8.05 Limitation on Indebtedness. The Company shall not, and shall not
suffer or permit any Subsidiary to, create, incur, assume, suffer to
exist, or otherwise become or remain directly or indirectly liable with
respect to, any Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement;
(b) Indebtedness consisting of Contingent Obligations
permitted pursuant to Section 8.08;
(c) Indebtedness existing on the Closing Date and set forth in
Schedule 8.05, and all renewals and extensions of such Indebtedness;
(d) Indebtedness incurred in connection with leases permitted
pursuant to Section 8.09;
(e) (i) unsecured Indebtedness owed to the Company by any
Subsidiary so long as it is (A) evidenced by a note pledged to the
Agent and (B) incurred in accordance with Section 8.04 and (ii)
unsecured Indebtedness owed by the Company or any Subsidiary to a
Subsidiary so long as it is incurred in accordance with Section
8.04; and
(f) other Indebtedness with an aggregate principal amount not
to exceed $500,000.00 at any time outstanding.
8.06 Transactions with Affiliates. The Company shall not, and shall not
suffer or permit any Subsidiary to, enter into any transaction (including
purchasing property or services from or selling property or services to
any Affiliate of the Company that is not a subsidiary, unless such
transaction is not otherwise prohibited by this Agreement, is entered
into upon fair and reasonable arm's length terms and conditions (or terms
and conditions more favorable to the Company) which are fully disclosed
to the Agent, and is in accordance with all applicable laws.
8.07 Use of Proceeds. The Company shall not, and shall not suffer or
permit any Subsidiary to, use any portion of the proceeds of any Loan or
any Letter of Credit, directly or indirectly, (i) to purchase or carry
Margin Stock, (ii) to repay or otherwise refinance indebtedness of the
Company or others incurred to purchase or carry Margin Stock, (iii) to
extend credit for the purpose of purchasing or carrying any Margin Stock,
or (iv) to acquire any security in any transaction that is subject to
Section 13 or 14 of the Exchange Act.
8.08 Contingent Obligations. The Company shall not, and shall not suffer
or permit any Subsidiary to, create, incur, assume or suffer to exist any
Contingent Obligations except:
(a) endorsements for collection or deposit in the ordinary
course of business;
(b) Permitted Swap Obligations;
(c) Contingent Obligations of the Company and its Subsidiaries
existing as of the Closing Date and listed in Schedule 8.08;
(d) Contingent Obligations with respect to Indebtedness of the
Company's Wholly-Owned Subsidiaries permitted pursuant to Section
8.05;
(e) Contingent Obligations with respect to Surety Instruments
incurred by the Company and its Subsidiaries (including on behalf of
third parties) in the ordinary course of business; and
(f) other Contingent Obligations not exceeding at any time
$500,000.00 in the aggregate in respect of the Company and its
Subsidiaries together.
8.09 Lease Obligations. The Company shall not, and shall not suffer or
permit any Subsidiary to, create or suffer to exist any obligations for
the payment of rent for any property under lease or agreement to lease,
except for:
(a) leases of the Company and of Subsidiaries in existence on
the Closing Date and any renewal, extension or refinancing thereof;
(b) operating leases for real or personal property entered
into by the Company or any Subsidiary after the Closing Date in the
ordinary course of business; and
(c) capital leases other than those permitted under clause (a)
of this Section, entered into by the Company or any Subsidiary after
the Closing Date to finance the acquisition of equipment; provided
that the annual rental payments for all such capital leases shall
not exceed in any fiscal year $500,000.00.
8.10 Restricted Payments. The Company shall not, and shall not suffer or
permit any Subsidiary to, declare or make any dividend payment or other
distribution of assets, properties, cash, rights, obligations or
securities on account of any shares of any class of its capital stock, or
purchase, redeem or otherwise acquire for value any shares of its capital
stock or any warrants, rights or options to acquire such shares, now or
hereafter outstanding (collectively, "Restricted Equity Payments");
except that any Subsidiary may declare and make dividend payments and
other distributions to its shareholders on a pro rata basis and the
Company may:
(a) declare and make dividend payments or other distributions
payable solely in its common stock;
(b) declare and make dividend payments or other distributions
necessary to make tax payments actually made to the U.S. as a result
of the Company's income; and
(c) purchase, redeem or otherwise acquire shares of its common
stock or warrants or options to acquire any such shares with the
proceeds received from the substantially concurrent issue of new
shares of its common stock.
8.11 ERISA. The Company shall not, and shall not suffer or permit any of
its ERISA Affiliates to: (a) engage in a prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan
which has resulted or could reasonably expected to result in liability of
the Company in an aggregate amount in excess of $1,000,000; or (b) engage
in a transaction that could be subject to Section 4069 or 4212(c) of
ERISA.
8.12 Change in Business. The Company shall not, and shall not suffer or
permit any Subsidiary to, engage in any material line of business
substantially different from those lines of business carried on by the
Company and its Subsidiaries on the date hereof.
8.13 Accounting Changes. The Company shall not, and shall not suffer or
permit any Subsidiary to, (a) make any significant change in accounting
treatment or reporting practices, except (i) as required by GAAP, (ii) a
change in the depreciation method employed thereby to straight line
depreciation, (iii) a change in a Subsidiary's accounting treatment or
reporting practices to conform the accounting practices or reporting
practices of newly acquired Subsidiaries to the methods used by the
Company, and (iv) any other change which does not affect the calculations
required to determine compliance with Section 8.16, 8.17 or 8.18, or (b)
change the fiscal year of the Company or of any Subsidiary.
8.14 Amendments to Charter and Agreements. The Company will not, nor
will it permit any Subsidiary to,(a) directly or indirectly prepay,
defease or in substance defease, purchase, redeem, retire or otherwise
acquire, any such Indebtedness,(b) make any amendment or modification to
any terms or provisions of its Certificate or Articles of Incorporation
or bylaws which is materially adverse to the Agent or the Lenders without
the prior written consent of the Agent or (c) issue any preferred stock.
8.15 Net Worth. Effective as of the fiscal quarter ending July 31, 2000,
and for each fiscal quarter thereafter, the Company shall not permit its
consolidated Net Worth as determined on the last day of each such fiscal
quarter to be less than the sum of (a) $34,000,000.00, plus (b) fifty
percent (50%) of the positive consolidated net income of the Company for
each such fiscal quarter.
8.16 Leverage Ratio. Effective as of the first fiscal quarter of 2002,
and continuing through the third fiscal quarter of 2002, the Company
shall not permit its Leverage Ratio as determined as of the last day of
each such fiscal quarter to be greater than 3.25:1.00 for any such
period, and effective as of the fourth fiscal quarter of 2002, and
continuing thereafter, the Company shall not permit its Leverage Ratio as
determined as of the last day of each such fiscal quarter to be greater
than 2.00:1.00 for any such period.
8.17 Fixed Charge Coverage Ratio. Effective as of the first fiscal
quarter of 2002, and continuing through the third fiscal quarter of 2002,
the Company shall not permit its Fixed Charge Coverage Ratio determined
as of the last day of each fiscal quarter to be less than 1.00:1.00 for
any such period, and effective as of the fourth fiscal quarter of 2002,
and continuing thereafter, the Company shall not permit its Fixed Charge
Coverage Ratio determined as of the last day of each fiscal quarter to be
less than 1.10:1.00 for any such period.
8.18 Capital Expenditures.
(a) The Company will not, and will not permit any of its
Subsidiaries to, make any Capital Expenditures, except that (i)
during the fiscal year ending February 3, 2001, the Company and its
Subsidiaries may make Capital Expenditures so long as the aggregate
amount so made by the Company and its Subsidiaries (on a
consolidated basis) during such fiscal year does not exceed
$2,500,000.00 for such fiscal year, and (ii) during the fiscal year
of 2001, the Company and its Subsidiaries may make Capital
Expenditures so long as the aggregate amount so made by the Company
and its Subsidiaries (on a consolidated basis) during such fiscal
year does not exceed $2,500,000.00 for such fiscal year.
8.19 Minimum EBITDA. The Company shall not allow its EBITDA to be less
than $(500,000.00) for the second fiscal quarter of 2001, and less than
$2,200,000.00 for the third fiscal quarter of 2001 and thereafter on a
fiscal quarter basis. If the Compliance Certificate for the fourth
fiscal quarter of 2001, certifies compliance with the minimum EBITDA of
$2,200,000.00 for such fiscal quarter, the Company shall no longer be
obligated to comply with this Section 8.19.
8.20 Restrictive Agreements. The Company shall not, nor shall it permit
any of its Subsidiaries to, enter into any indenture, agreement,
instrument or other arrangement which directly or indirectly prohibits or
restrains, or has the effect of prohibiting or restraining, or imposes
materially adverse conditions upon, the ability of any Subsidiary to (a)
pay dividends or make other distributions (i) on its Capital Stock or
(ii) with respect to any other interest or participation in, or measured
by, its profits, (b) make loans or advances to the Company or any
Subsidiary, (c) repay loans or advances from the Company or any
Subsidiary or (d) transfer any of its properties or assets to the Company
or any Subsidiary.
ARTICLE IX
EVENTS OF DEFAULT
9.01 Event of Default. Any of the following shall constitute an "Event
of Default":
(a) Non-Payment. The Company fails to pay, (i) when and as
required to be paid herein, any amount of principal of any Loan or
of any L/C Obligation, or (ii) within five (5) days after the same
becomes due, any interest, fee or any other amount payable hereunder
or under any other Loan Document; or
(b) Representation or Warranty. Any representation or
warranty by the Company or any Subsidiary made or deemed made herein
or in any other Loan Document, or contained in any certificate,
document or financial or other statement by the Company, any
Subsidiary, or any Responsible Officer, furnished at any time under
this Agreement, or in or under any other Loan Document, is incorrect
in any material respect on or as of the date made or deemed made; or
(c) Specific Defaults. The Company fails to perform or
observe any term, covenant or agreement contained in any of Section
7.01, 7.02, 7.03 or 7.09 or in Article VIII; or
(d) Other Defaults. The Company or any Subsidiary party
thereto fails to perform or observe any other term or covenant
contained in this Agreement or any other Loan Document, and such
default shall continue unremedied for a period of thirty (30) days
after the date upon which written notice thereof is given to the
Company by the Agent or any Lender; or
(e) Cross-Default. (i) The Company or any Subsidiary
(A) fails to make any payment in respect of any Indebtedness or
Contingent Obligation (other than in respect of Swap Contracts),
having an aggregate principal amount (including undrawn committed or
available amounts and including amounts owing to all creditors under
any combined or syndicated credit arrangement) of more than
$500,000.00 when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) and such failure
continues after the applicable grace or notice period, if any,
specified in the relevant document on the date of such failure; or
(B) fails to perform or observe any other condition or covenant, or
any other event shall occur or condition exist, under any agreement
or instrument relating to any such Indebtedness or Contingent
Obligation, and such failure continues after the applicable grace or
notice period, if any, specified in the relevant document on the
date of such failure if the effect of such failure, event or
condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Indebtedness
(or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause such Indebtedness to be
declared to be due and payable, or to be required to be repurchased,
prior to its stated maturity, or such Contingent Obligation to
become payable or cash collateral in respect thereof to be demanded;
(ii) there occurs under any Swap Contract an Early Termination Date
(as defined in such Swap Contract) resulting from (1) any event of
default under such Swap Contract as to which the Company or any
Subsidiary is the Defaulting Party (as defined in such Swap
Contract) or (2) any Termination Event (as so defined) as to which
the Company or any Subsidiary is an Affected Party (as so defined)
and, in either event, the Swap Termination Value owed by the Company
or such Subsidiary as a result thereof is greater than $500,000.00
or (iii) the Company or any Subsidiary fails to perform or observe
any condition or covenant under any contract providing for the
issuance of, or reimbursement of amounts in respect of, Surety
Instruments (other than Non-Surety L/C's), which in such event
requires the making of payments in excess of $500,000.00 in the
aggregate, net of the proceeds of insurance policies and indemnity
agreements in favor of the Company or any Subsidiary and received or
reasonably expected to be received thereby; or
(f) Insolvency; Voluntary Proceedings. The Company or any
Subsidiary (i) ceases or fails to be solvent, or generally fails to
pay, or admits in writing its inability to pay, its debts as they
become due, subject to applicable grace periods, if any, whether at
stated maturity or otherwise; (ii) voluntarily ceases to conduct its
business in the ordinary course; (iii) commences any Insolvency
Proceeding with respect to itself; or (iv) takes any action to
effectuate or authorize any of the foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Company or any
Subsidiary, or any writ, judgment, warrant of attachment, execution
or similar process, is issued or levied against a substantial part
of the Company's or any Subsidiary's properties, and any such
proceeding or petition shall not be dismissed, or such writ,
judgment, warrant of attachment, execution or similar process shall
not be released, vacated or fully bonded within 60 days after
commencement, filing or levy; (ii) the Company or any Subsidiary
admits the material allegations of a petition against it in any
Insolvency Proceeding, or an order for relief (or similar order
under non-U.S. law) is ordered in any Insolvency Proceeding; or
(iii) the Company or any Subsidiary acquiesces in the appointment of
a receiver, trustee, custodian, conservator, liquidator, mortgagee
in possession (or agent therefor), or other similar Person for
itself or a substantial portion of its property or business; or
(h) ERISA. (i) An ERISA Event shall occur with respect to a
Pension Plan or Multiemployer Plan which has resulted or could
reasonably be expected to result in liability of the Company or any
ERISA Affiliate under Title IV of ERISA to such Pension Plan or
Multiemployer Plan or to the PBGC in an aggregate amount for all
such Pension Plans and Multiemployer Plans in excess of $1,000,000;
(ii) the aggregate amount of Unfunded Pension Liability among all
Pension Plans and Multiemployer Plans at any time exceeds $5,000,000
(determined, in respect of Multiemployer Plans, by reference to the
Unfunded Pension Liability for which the Company or any ERISA
Affiliate may be liable) and could reasonably be expected to have a
Material Adverse Effect; or (iii) the Company or any ERISA Affiliate
shall fail to pay when due, after the expiration of any applicable
grace period, any installment payment with respect to its withdrawal
liability under Section 4201 of ERISA under a Multiemployer Plan in
an aggregate amount in excess of $1,000,000; or
(i) Monetary Judgments. One or more non-interlocutory
judgments, non-interlocutory orders, decrees or arbitration awards
is entered against the Company or any Subsidiary involving in the
aggregate a liability (to the extent not covered by independent
third-party insurance as to which the insurer does not dispute
coverage) as to any single or related series of transactions,
incidents or conditions, of $500,000.00 or more, and the same shall
remain unsatisfied, unvacated and unstayed pending appeal for a
period of 30 days after the entry thereof; or
(j) Non-Monetary Judgments. Any non-monetary judgment, order
or decree is entered against the Company or any Subsidiary which
does or would reasonably be expected to have a Material Adverse
Effect, and there shall be any period of 30 consecutive days during
which a stay of enforcement of such judgment or order, by reason of
a pending appeal or otherwise, shall not be in effect; or
(k) Change of Control. There occurs any Change of Control; or
(l) Loss of Licenses. Any Governmental Authority revokes or
fails to renew any license, permit or franchise of the Company or
any Subsidiary, or the Company or any Subsidiary for any reason
loses any license, permit or franchise, or the Company or any
Subsidiary suffers the imposition of any restraining order, escrow,
suspension or impound of funds in connection with any proceeding
(judicial or administrative) with respect to any license, permit or
franchise and any of the foregoing has or could reasonably be
expected to have a Material Adverse Effect; or
(m) Guarantor Defaults. Any Guarantor fails in any material
respect to perform or observe any term, covenant or agreement in the
Subsidiary Guaranty; or the Subsidiary Guaranty is for any reason
partially (including with respect to future advances) or wholly
revoked or invalidated, or otherwise ceases to be in full force and
effect, or any Guarantor or any other Person contests in any manner
the validity or enforceability thereof or denies that it has any
further liability or obligation thereunder; or any event described
at subsections (f) or (g) of this Section occurs with respect to any
Guarantor; or
(n) Collateral.
(i) any material provision of any Collateral Document
shall for any reason cease to be valid and binding on or
enforceable against the Company or any Subsidiary party thereto
or the Company or any Subsidiary shall so state in writing or
bring an action to limit its obligations or liabilities
thereunder; or
(ii) any Collateral Document shall for any reason (other
than pursuant to the terms thereof) cease to create a valid
security interest in a material part of the Collateral
purported to be covered thereby or such security interest shall
for any reason cease to be a perfected and first priority
security interest subject only to Permitted Liens.
9.02 Remedies. If any Event of Default occurs, the Agent shall, at the
request of, or may, with the consent of, the Required Lenders,
(a) declare the Commitment of each Lender to make Loans and
any obligation of the Issuer to Issue Letters of Credit to be
terminated, whereupon such Commitments and obligation shall be
terminated;
(b) declare an amount equal to the maximum aggregate amount
that is or at any time thereafter may become available for drawing
under any outstanding Letters of Credit (whether or not any
beneficiary shall have presented, or shall be entitled at such time
to present, the drafts or other documents required to draw under
such Letters of Credit) to be immediately due and payable, and
declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or
payable hereunder or under any other Loan Document to be immediately
due and payable, without presentment, demand, protest or other
notice of any kind (except as otherwise expressly provided herein),
all of which are hereby expressly waived by the Company; and
(c) exercise on behalf of itself and the Lenders all rights
and remedies available to it and the Lenders under the Loan
Documents or applicable law; provided, however, that upon the
occurrence of any event specified in subsection (f) or (g) of
Section 9.01 (in the case of clause (i) of subsection (g) upon the
expiration of the 60-day period mentioned therein), the obligation
of each Lender to make Loans and any obligation of the Issuer to
Issue Letters of Credit shall automatically terminate and the unpaid
principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable
without further act of the Agent, the Issuer or any Lender.
9.03 Rights Not Exclusive. The rights provided for in this Agreement and
the other Loan Documents are cumulative and are not exclusive of any
other rights, powers, privileges or remedies provided by law or in
equity, or under any other instrument, document or agreement now existing
or hereafter arising.
ARTICLE X
THE AGENT
10.01 Appointment and Authorization; "Agent".
(a) Each Lender hereby irrevocably (subject to Section 10.09)
appoints, designates and authorizes the Agent to take such action on
its behalf under the provisions of this Agreement and each other
Loan Document and to exercise such powers and perform such duties as
are expressly delegated to it by the terms of this Agreement or any
other Loan Document, together with such powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document,
the Agent shall not have any duties or responsibilities, except
those expressly set forth herein, nor shall the Agent have or be
deemed to have any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations
or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Agent. Without limiting the
generality of the foregoing sentence, the use of the term "agent" in
this Agreement with reference to the Agent is not intended to
connote any fiduciary or other implied (or express) obligations
arising under agency doctrine of any applicable law. Instead, such
term is used merely as a matter of market custom, and is intended to
create or reflect only an administrative relationship between
independent contracting parties.
(b) Each Issuer shall act on behalf of the Lenders with
respect to any Letters of Credit Issued by it and the documents
associated therewith until such time and except for so long as the
Agent may agree at the request of the Required Lenders to act for
such Issuer with respect thereto; provided, however, that such
Issuer shall have all of the benefits and immunities (i) provided to
the Agent in this Article X with respect to any acts taken or
omissions suffered by the Issuer in connection with Letters of
Credit Issued by it or proposed to be Issued by it and the
application and agreements for letters of credit pertaining to the
Letters of Credit as fully as if the term "Agent", as used in this
Article X, included such Issuer with respect to such acts or
omissions, and (ii) as additionally provided in this Agreement with
respect to such Issuer.
10.02 Delegation of Duties. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.
10.03 Liability of Agent. None of the Agent-Related Persons shall
(a) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or
the transactions contemplated hereby (except for its own gross negligence
or willful misconduct), or (b) be responsible in any manner to any of the
Lenders for any recital, statement, representation or warranty made by
the Company or any Subsidiary or Affiliate of the Company, or any officer
thereof, contained in this Agreement or in any other Loan Document, or in
any certificate, report, statement or other document referred to or
provided for in, or received by the Agent under or in connection with,
this Agreement or any other Loan Document, or for the value of or title
to any Collateral, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of the Company or any other party to any
Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other
Loan Document, or to inspect the properties, books or records of the
Company or any of the Company's Subsidiaries or Affiliates.
10.04 Reliance by Agent.
(a) The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, statement or other document or conversation
believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to the Company),
independent accountants and other experts selected by the Agent.
The Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any other Loan Document unless it
shall first receive such advice or concurrence of the Required
Lenders as it deems appropriate and, if it so requests, it shall
first be indemnified to its satisfaction by the Lenders against any
and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in
all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in
accordance with a request or consent of the Required Lenders and
such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Lenders.
(b) For purposes of determining compliance with the conditions
specified in Section 5.01, each Lender that has executed this
Agreement shall be deemed to have consented to, approved or accepted
or to be satisfied with, each document or other matter either sent
by the Agent to such Lender for consent, approval, acceptance or
satisfaction, or required thereunder to be consented to or approved
by or acceptable or satisfactory to such Lender.
10.05 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest and
fees required to be paid to the Agent for the account of the Lenders,
unless the Agent shall have received written notice from a Lender or the
Company referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". The Agent
will notify the Lenders of its receipt of any such notice. The Agent
shall take such action with respect to such Default or Event of Default
as may be requested by the Required Lenders in accordance with Article
IX; provided, however, that unless and until the Agent has received any
such request, the Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default
or Event of Default as it shall deem advisable or in the best interest of
the Lenders.
10.06 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and
that no act by the Agent hereinafter taken, including any review of the
affairs of the Company and its Subsidiaries, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to
any Lender. Each Lender represents to the Agent that it has,
independently and without reliance upon any Agent-Related Person and
based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness
of the Company and its Subsidiaries, the value of and title to any
Collateral, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to the Company hereunder. Each
Lender also represents that it will, independently and without reliance
upon any Agent-Related Person and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Company. Except for notices, reports and other
documents expressly herein required to be furnished to the Lenders by the
Agent, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
creditworthiness of the Company which may come into the possession of any
of the Agent-Related Persons.
10.07 Indemnification of Agent. Whether or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify upon
demand the Agent-Related Persons (to the extent not reimbursed by or on
behalf of the Company and without limiting the obligation of the Company
to do so), in accordance with such Lender's Pro Rata Share of all Loans
and Commitments, from and against any and all Indemnified Liabilities;
provided, however, that no Lender shall be liable for the payment to the
Agent-Related Persons of any portion of such Indemnified Liabilities
resulting from such Person's gross negligence or willful misconduct.
Without limitation of the foregoing, each Lender shall reimburse the
Agent upon demand for its ratable share of any costs or out-of-pocket
expenses (including Attorney Costs) incurred by the Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings
or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any
document contemplated by or referred to herein, to the extent that the
Agent is not reimbursed for such expenses by or on behalf of the Company.
The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of the Agent.
10.08 Agent in Individual Capacity. BofA and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with
the Company and its Subsidiaries and Affiliates as though BofA were not
the Agent or an Issuer hereunder and without notice to or consent of the
Lenders. The Lenders acknowledge that, pursuant to such activities, BofA
or its Affiliates may receive information regarding the Company or its
Affiliates (including information that may be subject to confidentiality
obligations in favor of the Company or such Subsidiary) and acknowledge
that the Agent shall be under no obligation to provide such information
to them. With respect to its Loans, BofA shall have the same rights and
powers under this Agreement as any other Lender and may exercise the same
as though it were not the Agent or an Issuer.
10.09 Successor Agent. The Agent may, and at the request of the
Required Lenders shall, resign as Agent upon 30 days' notice to the
Lenders. If the Agent resigns under this Agreement, the Required Lenders
shall appoint from among the Lenders a successor agent for the Lenders
subject, so long as no Event of Default has occurred and is then
continuing, to the consent of the Company, which shall not be
unreasonably withheld or delayed. If no successor agent is appointed
prior to the effective date of the resignation of the Agent, the Agent
may appoint, after consulting with the Lenders and the Company, a
successor agent from among the Lenders. Upon the acceptance of its
appointment as successor agent hereunder, such successor agent shall
succeed to all the rights, powers and duties of the retiring Agent and
the term "Agent" shall mean such successor agent and the retiring Agent's
appointment, powers and duties as Agent shall be terminated. After any
retiring Agent's resignation hereunder as Agent, the provisions of this
Article X and Sections 11.04 and 11.05 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Agent under
this Agreement. If no successor agent has accepted appointment as Agent
by the date which is 30 days following a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the
duties of the Agent hereunder until such time, if any, as the Required
Lenders appoint a successor agent as provided for above. Notwithstanding
the foregoing, however, BofA may not be removed as the Agent at the
request of the Required Lenders unless BofA shall also simultaneously be
replaced as an "Issuer" (if any letters of credit Issued by BofA are then
outstanding) hereunder pursuant to documentation in form and substance
reasonably satisfactory to BofA.
10.10 Withholding Tax.
(a) (i) If any Lender is a "foreign corporation, partnership
or trust" within the meaning of the Code and such Lender claims
exemption from, or a reduction of U.S. withholding tax under
Sections 1441 or 1442 of the Code, such Lender agrees with and in
favor of the Agent and the Company, to deliver to the Agent and the
Company:
(A) if such Lender claims an exemption from, or a
reduction of, withholding tax under a United States tax treaty,
two properly completed and executed copies of IRS Form 1001
before the payment of any interest in the first calendar year
and before the payment of any interest in each third succeeding
calendar year during which interest may be paid under this
Agreement;
(B) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because
it is effectively connected with a United States trade or
business of such Lender, two properly completed and executed
copies of IRS Form 4224 before the payment of any interest is
due in the first taxable year of such Lender and in each
succeeding taxable year of such Lender during which interest
may be paid under this Agreement; and
(C) such other form or forms as may be required under the
Code or other laws of the United States as a condition to
exemption from, or reduction of, United States withholding tax.
Such Lender agrees to promptly notify the Agent and the Company of
any change in circumstances which would modify or render invalid any
claimed exemption or reduction.
(ii) if any foreign Lender claims exemption from U.S.
federal withholding tax under Section 871(h) or 881(c) of the
Code with respect to payments of "portfolio interest", such
Lender agrees with and in favor of the Agent and the Company to
deliver to the Agent and the Company a Form W-8, or any
subsequent versions thereof or successors thereto (and, if such
Lender delivers a Form W-8, a certificate representing that
such Lender is not a "bank" for purposes of Section 881(c) of
the Code, is not a 10 percent shareholder (within the meaning
of Section 871(h)(3)(B) of the Code) of the Company and is not
a controlled foreign corporation related to the Company (within
the meaning of Section 864(d)(4) of the Code)).
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS
Form 1001 and such Lender sells, assigns, grants a participation in,
or otherwise transfers all or part of the Obligations of the Company
to such Lender, such Lender agrees to notify the Agent of the
percentage amount in which it is no longer the beneficial owner of
Obligations of the Company to such Lender. To the extent of such
percentage amount, the Agent will treat such Lender's IRS Form 1001
as no longer valid.
(c) If any Lender claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Agent sells,
assigns, grants a participation in, or otherwise transfers all or
part of the Obligations of the Company to such Lender, such Lender
agrees to undertake sole responsibility for complying with the
withholding tax requirements imposed by Sections 1441 and 1442 of
the Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to
such Lender an amount equivalent to the applicable withholding tax
after taking into account such reduction. However, if the forms or
other documentation required by subsection (a) of this Section are
not delivered to the Agent, then the Agent may withhold from any
interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax
imposed by Sections 1441 and 1442 of the Code, without reduction.
(e) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that the Agent
did not properly withhold tax from amounts paid to or for the
account of any Lender (because the appropriate form was not
delivered or was not properly executed, or because such Lender
failed to notify the Agent of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax
ineffective, or for any other reason) such Lender shall indemnify
the Agent fully for all amounts paid, directly or indirectly, by the
Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts
payable to the Agent under this Section, together with all costs and
expenses (including Attorney Costs). The obligation of the Lenders
under this subsection shall survive the payment of all Obligations
and the resignation or replacement of the Agent.
10.11 Collateral Matters.
(a) The Agent is authorized on behalf of all the Lenders,
without the necessity of any notice to or further consent from the
Lenders, from time to time to take any action with respect to any
Collateral or the Collateral Documents which may be necessary to
perfect and maintain perfected the security interest in and Liens
upon the Collateral granted pursuant to the Collateral Documents.
(b) The Lenders irrevocably authorize the Agent, at its option
and in its discretion, to release any Lien granted to or held by the
Agent upon any Collateral (i) upon termination of the Commitments
and payment in full of all Loans and all other Obligations known to
the Agent and payable under this Agreement or any other Loan
Document; (ii) constituting property sold or to be sold or disposed
of as part of or in connection with any disposition permitted
hereunder; (iii) constituting property in which the Company or any
Subsidiary owned no interest at the time the Lien was granted or at
any time thereafter; (iv) constituting property leased to the
Company or any Subsidiary under a lease which has expired or been
terminated in a transaction permitted under this Agreement or is
about to expire and which has not been, and is not intended by the
Company or such Subsidiary to be, renewed or extended;
(v) consisting of an instrument evidencing Indebtedness or other
debt instrument, if the indebtedness evidenced thereby has been paid
in full; or (vi) if approved, authorized or ratified in writing by
the Required Lenders or all the Lenders, as the case may be, as
provided in subsection 11.01(f). Upon request by the Agent at any
time, the Lenders will confirm in writing the Agent's authority to
release particular types or items of Collateral pursuant to this
subsection 10.11(b), provided that the absence of any such
confirmation for whatever reason shall not affect the Agent's rights
under this Section 10.11.
(c) Each Lender agrees with and in favor of each other (which
agreement shall not be for the benefit of the Company or any
Subsidiary) that the Company's obligation to such Lender under this
Agreement and the other Loan Documents is not and shall not be
secured by any real property collateral now or hereafter acquired by
such Lender.
ARTICLE XI
MISCELLANEOUS
11.01 Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent
with respect to any departure by the Company or any applicable Subsidiary
therefrom, shall be effective unless the same shall be in writing and
signed by the Required Lenders (or by the Agent at the written request of
the Required Lenders) and the Company and acknowledged by the Agent, and
then any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however,
that no such waiver, amendment, or consent shall, unless in writing and
signed by all the Lenders and the Company and acknowledged by the Agent,
do any of the following:
(a) increase or extend the Commitment of any Lender (or
reinstate any Commitment terminated pursuant to Section 9.02);
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees or
other amounts due to the Lenders (or any of them) hereunder or under
any other Loan Document including without limitation any mandatory
prepayment required pursuant to subsection 2.09(b);
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or (subject to clause (iii) below) any fees or
other amounts payable hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required for
the Lenders or any of them to take any action hereunder or reduce
the percentage specified in the definition of "Required Lenders" or,
without the consent of each Revolving Lender, "Required Revolving
Lenders"; or
(e) amend this Section, or Section 2.16, or any provision
herein providing for consent or other action by all Lenders; or
(f) release all or substantially all of the Collateral except
as otherwise may be provided in the Collateral Documents or except
where the consent of the Required Lenders only is specifically
provided for; or
(g) release any or all of the Guarantors;
and, provided further, that (i) no amendment, waiver or consent
shall, unless in writing and signed by the Issuer in addition to the
Required Lenders or all the Lenders, as the case may be, affect the
rights or duties of the Issuer under this Agreement or any L/C-
Related Document relating to any Letter of Credit Issued or to be
Issued by it, (ii) no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Required Lenders
or all the Lenders, as the case may be, affect the rights or duties
of the Agent under this Agreement or any other Loan Document, and
(iii) no amendment, waiver or consent shall, unless in writing and
signed by the Swing Line Lender in addition to the Required Lenders
or all the Lenders, as the case may be, affect the rights or duties
of the Swing Line Lender under this Agreement or any other Loan
Document , and (iv) the Fee Letter may be amended, or rights or
privileges thereunder waived, in a writing executed by the parties
thereto.
11.02 Notices.
(a) All notices, requests, consents, approvals, waivers and
other communications shall be in writing (including, unless the
context expressly otherwise provides, by facsimile transmission,
provided that any matter transmitted by the Company by facsimile (i)
shall be immediately confirmed by a telephone call to the recipient
at the number specified on Schedule 11.02, and (ii) shall be
followed promptly by delivery of a hard copy original thereof) and
mailed, faxed or delivered, to the address or facsimile number
specified for notices on Schedule 11.02; or, as directed to the
Company or the Agent, to such other address as shall be designated
by such party in a written notice to the other parties, and as
directed to any other party, at such other address as shall be
designated by such party in a written notice to the Company and the
Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when
delivered for overnight (next-day) delivery, or transmitted in
legible form by facsimile machine, respectively, or if mailed or
delivered, upon delivery; except that notices pursuant to Article
II, III or X to the Agent shall not be effective until actually
received by the Agent, and notices pursuant to Article III to any
Issuer shall not be effective until actually received by such Issuer
at the address specified on Schedule 11.02.
(c) Any agreement of the Agent and the Lenders herein to
receive certain notices by telephone or facsimile is solely for the
convenience and at the request of the Company. The Agent and the
Lenders shall be entitled to rely on the authority of any Person
purporting to be, a Person authorized by the Company to give such
notice and the Agent and the Lenders shall not have any liability to
the Company or other Person on account of any action taken or not
taken by the Agent or the Lenders in reliance upon such telephonic
or facsimile notice. The obligation of the Company to repay the
Loans and L/C Obligations shall not be affected in any way or to any
extent by any failure by the Agent and the Lenders to receive
written confirmation of any telephonic or facsimile notice or the
receipt by the Agent and the Lenders of a confirmation which is at
variance with the terms understood by the Agent and the Lenders to
be contained in the telephonic or facsimile notice.
11.03 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any Lender, any right,
remedy, power or privilege hereunder, shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.
11.04 Costs and Expenses. The Company shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse BofA (including in its capacity as
Agent and an Issuer) within five Business Days after demand (subject
to subsection 5.01(e)) for all reasonable costs and expenses
incurred by BofA (including in its capacity as Agent and Issuer) in
connection with the development, preparation, delivery,
administration, syndication and execution of, and any amendment,
supplement, waiver or modification to (in each case, whether or not
consummated), this Agreement, any Loan Document and any other
documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby,
including reasonable Attorney Costs incurred by BofA (including in
its capacity as Agent and an Issuer) with respect thereto, except to
the extent the Loan Documents specifically provide that fees or
expenses are to be paid by the Agent;
(b) pay or reimburse the Agent and each Lender within five
Business Days after demand (subject to subsection 5.01(e)) for all
reasonable costs and expenses (including Attorney Costs) incurred by
them in connection with the enforcement, attempted enforcement, or
preservation of any rights or remedies under this Agreement or any
other Loan Document during the existence of an Event of Default or
after acceleration of the Loans (including in connection with any
"workout" or restructuring regarding the Loans, and including in any
Insolvency Proceeding or appellate proceeding); and
(c) pay or reimburse BofA (including in its capacity as Agent)
within five Business Days after demand (subject to subsection
5.01(e)) for all reasonable appraisal, audit (including collateral
audits), environmental inspection and review (including the
allocated cost of such internal services), search and filing costs,
fees and expenses, incurred or sustained by BofA (including in its
capacity as Agent) in connection with the matters referred to under
subsections (a) and (b) of this Section.
11.05 Company Indemnification.
(a) The Company shall indemnify, defend and hold the Agent-
Related Persons, and each Lender and each of its respective
officers, directors, employees, counsel, agents and
attorneys-in-fact (each, an "Indemnified Person") harmless from and
against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses and
disbursements (including Attorney Costs) of any kind or nature
whatsoever which may at any time (including at any time following
repayment of the Loans, the termination of the Letters of Credit and
the termination, resignation or replacement of the Agent or
replacement of any Lender or assignment by any Lender of its Loans
or Commitments) be imposed on, incurred by or asserted against any
Indemnified Person in any way relating to or arising out of this
Agreement or any document contemplated by or referred to herein, or
the transactions contemplated hereby, or any action taken or omitted
by any such Person under or in connection with any of the foregoing,
including with respect to any investigation, litigation or
proceeding (including any Insolvency Proceeding or appellate
proceeding) related to or arising out of this Agreement or the Loans
or Letters of Credit or the use of the proceeds thereof or related
to any Offshore Currency transactions entered into in connection
herewith, whether or not any Indemnified Person is a party thereto
(all the foregoing, collectively, the "Indemnified Liabilities");
provided, that the Company shall have no obligation hereunder to any
Indemnified Person with respect to Indemnified Liabilities resulting
from the gross negligence or willful misconduct of such Indemnified
Person. The agreements in this Section shall survive payment of all
other Obligations.
(b) (i) The Company shall indemnify, defend and hold harmless
each Indemnified Person, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, charges, expenses or disbursements (including Attorney Costs
and the allocated cost of internal environmental audit or review
services), which may be incurred by or asserted against such
Indemnified Person in connection with or arising out of any pending
or threatened investigation, litigation or proceeding, or any action
reasonably taken by any Person, with respect to any Environmental
Claim arising out of or related to any property, whether or not
subject to a mortgage in favor of the Agent or any Lender, or
arising out of or related to any operations of the Company or any
Subsidiary. No action taken by legal counsel chosen by the Agent or
any Lender in defending against any such investigation, litigation
or proceeding or requested remedial, removal or response action
shall vitiate or in any way impair the Company's obligation and duty
hereunder to indemnify and hold harmless the Agent and each Lender.
(ii) In no event shall any site visit, observation, or
testing by the Agent or any Lender (or any contractee of the
Agent or any Lender) be deemed a representation or warranty
that Hazardous Materials are or are not present in, on, or
under, the site, or that there has been or shall be compliance
with any Environmental Law. Neither the Company nor any other
Person is entitled to rely on any site visit, observation, or
testing by the Agent or any Lender. Neither the Agent nor any
Lender owes any duty of care to protect the Company or any
other Person against, or to inform the Company or any other
party of, any Hazardous Materials or any other adverse
condition affecting any site or property. The Agent or any
Lender may, at its discretion, disclose to the Company or any
other Person any report or findings made as a result of, or in
connection with, any site visit, observation, or testing by the
Agent or any Lender. The Company understands and agrees that
the Agent and the Lenders make no warranty or representation to
the Company or any other Person regarding the truth, accuracy
or completeness of any such report or findings that may be
disclosed. The Company also understands that, depending upon
the results of any site visit, observation or testing by the
Agent or any Lender and disclosed to the Company, the Company
may have a legal obligation to notify one or more environmental
agencies of the results and that such reporting requirements
are site-specific and are to be evaluated by the Company
without advice or assistance from the Agent or any Lender.
(c) Survival; Defense. The obligations in this Section shall
survive payment of all other Obligations. At the election of any
Indemnified Person, the Company shall defend such Indemnified Person
using legal counsel reasonably satisfactory to such Indemnified
Person in such Person's sole discretion, at the sole cost and
expense of the Company. All amounts owing under this Section shall
be paid within 30 days after demand.
11.06 Marshalling; Payments Set Aside. Neither the Agent nor the
Lenders shall be under any obligation to marshall any assets in favor of
the Company or any other Person or against or in payment of any or all of
the Obligations. To the extent that the Company makes a payment to the
Agent or the Lenders, or the Agent or the Lenders exercise their right of
set-off, and such payment or the proceeds of such set-off or any part
thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any settlement
entered into by the Agent or such Lender in its discretion) to be repaid
to a trustee, receiver or any other party, in connection with any
Insolvency Proceeding or otherwise, then (a) to the extent of such
recovery the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such set-off had not occurred, and (b)
each Lender severally agrees to pay to the Agent upon demand its pro rata
share of any amount so recovered from or repaid by the Agent.
11.07 Successors and Assigns. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Company may not assign
or transfer any of its rights or obligations under this Agreement without
the prior written consent of the Agent and each Lender.
11.08 Assignments, Participations, etc.
(a) Any Lender may, with the written consent of the Company at
all times other than during the existence of an Event of Default and
the Agent, the Swing Line Lender and, in respect of assignments of
Revolving Loans or a Revolving Loan Commitment, each Issuer with an
outstanding Letter of Credit, which consents shall not be
unreasonably withheld or delayed, at any time assign and delegate to
one or more Eligible Assignees (each an "Assignee") all, or any part
of all, of the Loans, the Commitments, the L/C Obligations and the
other rights and obligations of such Lender hereunder, in a minimum
amount $5,000,000.00, the total amount of such Lender's outstanding
Loans and/or Commitments (provided that (x) no written consent of
the Company, the Agent, the Swing Line Lender or any Issuer shall be
required in connection with any assignment and delegation by a
Lender to an Eligible Assignee that is an Affiliate of such Lender
or any Approved Fund, (y) no consent of the Swing Line Lender or any
Issuer shall be required in respect of any assignment and delegation
consisting solely of Term Loans and (z) assignments must be made
ratably as between the Revolving Loans and the Term Loans);
provided, however, that the Company and the Agent may continue to
deal solely and directly with such Lender in connection with the
interest so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses and
related information with respect to the Assignee, shall have been
given to the Company and the Agent by such Lender and the Assignee;
(ii) such Lender and its Assignee shall have delivered to the
Company and the Agent an Assignment and Acceptance in the form of
Exhibit D ("Assignment and Acceptance") together with any Note or
Notes subject to such assignment and (iii) the assignor Lender or
Assignee has paid to the Agent a processing fee in the amount of
$3,500.00; provided, that in the case of contemporaneous assignments
by a Lender to more than one fund managed by the same investment
advisor, only a single fee of $3,500.00 shall be payable for all
such contemporaneous assignments.
(b) From and after the date that the Agent notifies the
assignor Lender that it has received (and, if required, provided its
consent with respect to) an executed Assignment and Acceptance and
payment of the above-referenced processing fee, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights
and obligations hereunder (including without limitation any
obligations under Section 10.11) have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and
obligations of a Lender under the Loan Documents, and (ii) the
assignor Lender shall, to the extent that rights and obligations
hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under the Loan Documents.
(c) Within five Business Days after its receipt of notice by
the Agent that it has received an executed Assignment and Acceptance
and payment of the processing fee, (and, if required, provided that
it consents to such assignment in accordance with subsection
11.08(a)), the Company shall execute and deliver to the Agent new
Notes evidencing such Assignee's assigned Loans and Commitment and,
if the assignor Lender has retained a portion of its Loans and its
Commitment, replacement Notes in the principal amount of the Loans
retained by the assignor Lender (such Notes to be in exchange for,
but not in payment of, the Notes held by such Lender). Immediately
upon each Assignee's making its processing fee payment under the
Assignment and Acceptance, this Agreement shall be deemed to be
amended to the extent, but only to the extent, necessary to reflect
the addition of the Assignee and the resulting adjustment of the
Commitments arising therefrom. The Commitment allocated to each
Assignee shall reduce such Commitments of the assigning Lender pro
tanto.
(d) The Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the
names and addresses of the Lenders and the Commitments of, and
principal amount of the Loans owing to, each Lender from time to
time. The entries in such register shall be conclusive, in the
absence of manifest error, and the Company, the Agent and the
Lenders shall treat each person whose name is recorded in such
register as the owner of the Commitments and the Loans recorded
therein for all purposes of this Agreement. The register shall be
available for inspection by the Company, any Lender and their
representatives, at any reasonable time and from time to time upon
reasonable prior notice.
(e) Any Lender may at any time sell to one or more commercial
banks or other Persons not Affiliates of the Company (a
"Participant") participating interests in any Loans, the Commitment
of that Lender and the other interests of that Lender (the
"Originating Lender") hereunder and under the other Loan Documents;
provided, however, that (i) the originating Lender's obligations
under this Agreement shall remain unchanged, (ii) the originating
Lender shall remain solely responsible for the performance of such
obligations, (iii) the Company, each Issuer and the Agent shall
continue to deal solely and directly with the originating Lender in
connection with the originating Lender's rights and obligations
under this Agreement and the other Loan Documents, and (iv) no
Lender shall transfer or grant any participating interest under
which the Participant has rights to approve any amendment to, or any
consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment, consent or waiver
would require unanimous consent of the Lenders as described in
clause (a) (but only in respect of any increase of any Commitment of
any Originating Lender), (b) or (c) of the first proviso to Section
11.01. In the case of any such participation, the Participant shall
be entitled to the benefit of Sections 4.01, 4.03 and 11.05 as
though it were also a Lender hereunder, and if amounts outstanding
under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event
of Default, each Participant shall be deemed to have the right of
set-off in respect of its participating interest in amounts owing
under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under
this Agreement.
(f) Notwithstanding any other provision in this Agreement, (i)
any Lender may at any time create a security interest in, or pledge,
all or any portion of its rights under and interest in this
Agreement and the Notes held by it in favor of any Federal Reserve
Bank in accordance with Regulation A of the FRB or U.S. Treasury
Regulation 31 CFR 203.14, and such Federal Reserve Bank may enforce
such pledge or security interest in any manner permitted under
applicable law and (ii) any Lender that is a fund that invests in
bank loans may, without the consent of the Agent or the Company,
pledge all or any portion of its rights under and interest in this
Agreement to any trustee or to any other representative of holders
of obligations owed or securities issued by such fund as security
for such obligations or securities; provided, that any transfer to
any Person upon the enforcement of such pledge or security interest
may only be made subject to Section 11.08.
11.09 Confidentiality. Each Lender agrees to take and to cause its
Affiliates to take normal and reasonable precautions and exercise due
care to maintain the confidentiality of all information provided to it by
the Company or any Subsidiary, or by the Agent on the Company's or such
Subsidiary's behalf, under this Agreement or any other Loan Document, and
neither it nor any of its Affiliates shall use any such information other
than in connection with or in enforcement of this Agreement and the other
Loan Documents or in connection with other business now or hereafter
existing or contemplated with the Company or any Subsidiary; except to
the extent such information (i) was or becomes generally available to the
public other than as a result of disclosure by the Lender or its
Affiliates, or (ii) was or becomes available on a non-confidential basis
from a source other than the Company, provided that such source is not
bound by a confidentiality agreement with the Company known to the
Lender; provided, however, that any Lender may disclose such information
(A) at the request or pursuant to any requirement of any Governmental
Authority to which the Lender is subject or in connection with an
examination of such Lender by any such authority; (B) pursuant to
subpoena or other court process; (C) when required to do so in accordance
with the provisions of any applicable Requirement of Law; (D) to the
extent reasonably required in connection with any litigation or
proceeding to which the Agent, any Lender or their respective Affiliates
may be party; (E) to the extent reasonably required in connection with
the exercise of any remedy hereunder or under any other Loan Document;
(F) to such Lender's independent auditors and other professional
advisors; (G) to any Participant or Assignee, actual or potential,
provided that such Person agrees in writing to keep such information
confidential to the same extent required of the Lenders hereunder; (H) as
to any Lender or its Affiliate, as expressly permitted under the terms of
any other document or agreement regarding confidentiality to which the
Company or any Subsidiary is party or is deemed party with such Lender or
such Affiliate; (I) to its Affiliates; and (J) to the National
Association of Insurance Commissioners or any similar organization or any
nationally recognized rating agency that requires access to information
about such Lender's investment portfolio in connection with ratings
issued with respect to such Lender.
11.10 Set-off. In addition to any rights and remedies of the Lenders
provided by law, if an Event of Default exists or the Loans have been
accelerated, each Lender is authorized at any time and from time to time,
without prior notice to the Company, any such notice being waived by the
Company to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or
final) at any time held by, and other indebtedness at any time owing by,
such Lender to or for the credit or the account of the Company against
any and all Obligations owing to such Lender, now or hereafter existing,
irrespective of whether or not the Agent or such Lender shall have made
demand under this Agreement or any Loan Document and although such
Obligations may be contingent or unmatured. Each Lender agrees promptly
to notify the Company and the Agent after any such set-off and
application made by such Lender; provided, however, that the failure to
give such notice shall not affect the validity of such set-off and
application.
11.11 Automatic Debits of Fees. With respect to any commitment fee,
arrangement fee, letter of credit fee or other fee, or any other cost or
expense (including Attorney Costs) due and payable to the Agent, any
Issuer, BofA or under the Loan Documents, the Company hereby irrevocably
authorizes BofA to debit any deposit account of the Company with BofA in
an amount such that the aggregate amount debited from all such deposit
accounts does not exceed such fee or other cost or expense; provided,
that so long as no Event of Default has occurred and is continuing, BofA
has given notice to the Company thereof not later than 9:00 a.m. (Central
time) on the date of such debit. If there are insufficient funds in such
deposit accounts to cover the amount of the fee or other cost or expense
then due, such debits will be reversed so as not to create an overdraft
(in whole or in part, in BofA's sole discretion) and such amount not
debited shall be deemed to be unpaid. No such debit under this Section
shall be deemed a set-off.
11.12 Notification of Addresses, Lending Offices, Etc. Each Lender
shall notify the Agent in writing of any changes in the address to which
notices to the Lender should be directed, of addresses of any Lending
Office, of payment instructions in respect of all payments to be made to
it hereunder and of such other administrative information as the Agent
shall reasonably request.
11.13 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed
an original, and all of said counterparts taken together shall be deemed
to constitute but one and the same instrument.
11.14 Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required
hereunder shall not in any way affect or impair the legality or
enforceability of the remaining provisions of this Agreement or any
instrument or agreement required hereunder.
11.15 No Third Parties Benefited. This Agreement is made and entered
into for the sole protection and legal benefit of the Company, the
Lenders, the Agent and the Agent-Related Persons, and their permitted
successors and assigns, and no other Person shall be a direct or indirect
legal beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any of the other Loan
Documents.
11.16 Governing Law and Arbitration.
(a) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF OKLAHOMA
(WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW OF THAT STATE);
PROVIDED HOWEVER ANY ISSUE OR ISSUES RELATING TO THE AMOUNT OR RATE
OF INTEREST THAT MAY BE LAWFULLY CONTRACTED FOR, CHARGED, TAKEN,
RESERVED, OR RECEIVED HEREUNDER OR UNDER ANY OF THE OTHER LOAN
DOCUMENTS SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF OKLAHOMA; PROVIDED FURTHER THAT THE
ADMINISTRATIVE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING
UNDER FEDERAL LAW.
(b) ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG
THE PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF
OR RELATING TO THIS AGREEMENT, OR ANY RELATED AGREEMENT OR
INSTRUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED
TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH
THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE
STATE LAW), THE RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION
OF COMMERCIAL DISPUTES OF J.A.M.S./ENDISPUTE OR ANY SUCCESSOR
THEREOF ("J.A.M.S.") AND THE "SPECIAL RULES" SET FORTH BELOW. IN
THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL.
JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT
HAVING JURISDICTION. ANY PARTY TO THIS AGREEMENT MAY BRING AN
ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL
ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT
APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.
SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE
COUNTY OF OKLAHOMA, OKLAHOMA AND ADMINISTERED BY J.A.M.S WHO WILL
APPOINT AN ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED
FROM ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION
ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE COMMENCED
WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER THE ARBITRATOR
SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTENT THE
COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60 DAYS.
RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION
SHALL BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE
APPLICABLE STATUTES OF LIMITATIONS OR REPOSE AND ANY WAIVERS
CONTAINED IN THIS INSTRUMENT, AGREEMENT OR DOCUMENT; OR (II) BE A
WAIVER BY ANY LENDER OR THE AGENT, OF THE PROTECTION AFFORDED TO
THEM BY 12 U.S.C. SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW;
OR (III) LIMIT THE RIGHT OF ANY LENDER OR THE AGENT HERETO (A) TO
EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF OR
(B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTIES COLLATERAL,
OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH
AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE
APPOINTMENT OF A RECEIVER, THE AGENT MAY EXERCISE SUCH SELF HELP
RIGHTS, FORECLOSE UPON SUCH PROPERTY OR OBTAIN SUCH PROVISIONAL OR
ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY
ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS INSTRUMENT,
AGREEMENT OR DOCUMENT. NEITHER THIS EXERCISE OF SELF HELP REMEDIES
NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR
PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE
RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO
ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT
TO SUCH REMEDIES.
IN THE EVENT THAT THE FOREGOING ARBITRATION PROVISION IS NOT
UPHELD FOR ANY REASON AND THE PARTIES RESORT TO A COURT OF LAW TO
SETTLE THEIR DISPUTE, EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND OR CAUSE OF
ACTION ARISING UNDER THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS, OR
IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS
OF THE PARTIES HERETO WITH RESPECT TO THIS AGREEMENT OR THE LOAN
DOCUMENTS, OR THE TRANSACTIONS RELATED HERETO OR THERETO, WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT
OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT
ANY SUCH CLAIM, DEMAND OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY MAY FILE AN ORIGINAL
COUNTERPART OR COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
11.17 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the
Company, the Lenders and the Agent, and supersedes all prior or
contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered in Oklahoma City, Oklahoma by their proper
and duly authorized officers as of the day and year first above written.
HAROLD'S STORES, INC.,
an Oklahoma corporation
By:
Name:
Title:
BANK OF AMERICA, N.A.,
a national banking association formerly
NationsBank, N.A. as Agent
By:
Name:
Title:
BANK OF AMERICA, N.A.,
a national banking association formerly
NationsBank, N.A., as a Lender and as Swing
Line Lender
By:
Name:
Title:
Schedule 2.01
Term Loan Commitment
Bank of America, N.A. $
$
$
Revolving Loan Commitment
Bank of America, N.A. $
$
$
