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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
May 15, 1998
The Caldor Corporation
(Exact Name of Registrant as specified in its charter)
Delaware 1-10745 06-1282044
(State or other jurisdiction of (Commission File No.) (I.R.S. Employer
incorporation) Identification No.)
20 Glover Avenue, Norwalk, Connecticut 06856-5620
(Address of principal executive offices) (Zip Code)
(203) 846-1641
(Registrant's telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets.
Revolving Credit and Guaranty Agreement.
On May 15, 1998, the Registrant entered into and closed on a $450
milliion secured debtor-in-possession financing pursuant to a revolving credit
and guaranty agreement (the "New DIP Facility") with BankBoston, N.A. ("BBNA").
In addition, Registrant has received a commitment (the "Commitment") from BBNA
to provide the Company with separate exit financing (the "Exit Facility", and
together with the New DIP Facility, the "New Facilities"). A portion of the
proceeds of the New DIP Facility was used to repay in full the Company's
outstanding obligations under the post-petition revolving credit and letter of
credit facility with a bank group led by The Chase Manhattan Bank. In addition,
the New DIP Facility will be used for the working capital and corporate purposes
of the Company. The Exit Facility will be used to provide for the working
capital and corporate purposes of the reorganized Company beyond the effective
date of a plan of reorganization (the "Effective Date") as well as to repay in
full the New DIP Facility. BBNA intends to syndicate part of the New Facilities
to other financial institutions acceptable to the Company.
The New DIP Facility will be replaced by the Exit Facility on the
Effective Date provided that the plan of reorganization is not inconsistent with
the Commitment and is otherwise reasonably satisfactory to BBNA and that all
conditions precedent to confirmation of the plan have been met. Among other
things, the plan must provide for repayment in full of the New DIP Facility, the
Company must have a 12-month rolling EBITDAR on the closing date of the Exit
Facility of not less than $60 million (EBITDAR for the 1997 fiscal year was
$53.7 million), and the Company's borrowing availability under the Exit Facility
on the closing date thereof must exceed certain specified minimum levels.
The New DIP Facility will terminate on the earlier of (i) the Effective
Date or (ii) 18 months after the closing date for the New DIP Facility. The Exit
Facility will terminate on May 15, 2002.
The Company's maximum borrowing under the New DIP Facility may not exceed
the lesser of (a) the sum of (i) 72% of the cost value of the Company's Eligible
Inventory and, without duplication, Eligible Letter of Credit Inventory and
Eligible In Transit Inventory (ii) 72% of (a) the then cost value of Eligible
FOB Inventory multiplied by (b) 80%; (iii) 80% of the Company's Eligible
Accounts Receivable; (iv) the Overadvance Amount, if applicable (as such terms
are defined in the New DIP Facility) and (v) the lesser of (A) $45 million and
(B) under certain circumstances, 70% of the agreed upon value of the Company's
leasehold interests in real estate and (b) $450 million. The Company's maximum
borrowing under the Exit Facility
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may not exceed the lesser of (a) the sum of (i) 75% (73% for the fiscal months
of January and February of each year) of the cost value of the Company's
Eligible Inventory, and, without duplication, Eligible Letter of Credit
Inventory, Eligible In Transit Inventory and Eligible FOB Inventory minus
applicable Reserves, (ii) 80% of the Company's Eligible Accounts Receivable
minus applicable Reserves (as such terms are defined in the New DIP Facility)
and (iii) the lesser of (A) $40 million and (B) under certain circumstances, 60%
of the agreed upon value of the Company's leasehold interests in real estate and
(b) $450 million.
The New Facilities have a sublimit of $150 million for the issuance of
letters of credit. The New Facilities also contain restrictive covenants,
including, among other things, limitations on the creation of additional liens
and indebtedness, capital leases and annual rents, the sale of assets, and the
maintenance of minimum EBITDAR the maintenance of ratio of accounts
payable to inventory levels, and a prohibition on the payment of dividends.
Advances under the New Facilities will bear interest, at the Company's
option, at BBNA's Alternate Base Rate per annum or the Eurodollar Applicable
Margin (i.e., the fully reserved adjusted Eurodollar Rate plus 2.25% or 2.75%
during any period that the Company is utilizing the Overadvance Rate) for
periods of one, two and three months. The Eurodollar Applicable Margin is
subject to reduction by up to 0.50% if the Company achieves certain specified
EBITDAR levels.
Under the New Facilities, the Company will pay an unused line fee of 0.25%
per annum on the unused portion thereof, a letter of credit fee equal to 1.50%
per annum of average outstanding letters of credit and certain other fees. In
connection with the receipt of the Commitment and the closing of the New DIP
Facility, the Company paid fees to BBNA of approximately $5.6 million. The
Company will also pay BBNA an annual agency fee of $150,000.
Obligations of the Company under the New DIP Facility have been granted
(i) superpriority administrative claim status pursuant to section 364 (c) (1) of
the Bankruptcy Code, subject only to an exclusion for certain administrative and
professional fees and (ii) secured perfected first priority security interests
in and liens upon all assets of the Company. Obligations of the Company under
the Exit Facility will be granted secured perfected first priority security
interests in and liens upon all assets of the Company.
This summary does not purport to be complete and is qualified in its entirety by
reference to the New DIP Facility, a copy of which is attached hereto as Exhibit
99.1.
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Item 7: Financial Statements, Pro Forma
Financial Information and Exhibits
(c) Exhibits:
Exhibit Number Description
-------------- -----------
99.1 Revolving Credit and Guaranty Agreement dated as of May
15, 1998 among The Caldor Corporation ("Caldor"), as
borrower, certain of its subsidiaries, as guarantors,
the lenders party thereto (the "Lenders"), BankBoston,
N.A. ("BBNA"), as Administrative Agent and as Issuing
Bank, and BankBoston Retail Finance, Inc. ("BB Retail
Finance"), as Managing Agent and as Collateral Agent.
99.2 Security Agreement dated as of May 15, 1998 among
Caldor and certain of its subsidiaries, as grantors,
and BB Retail Finance, for itself and as collateral
agent for BBNA, as Administrative Agent and Issuing
Bank, the Managing Agent and the Lenders.
99.3 Trademark Security Agreement dated as of May 15, 1998
between Caldor and BB Retail Finance, as collateral
agent and as managing agent for BBNA, individually and
as Administrative Agent and Issuing Bank, and the
Lenders.
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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 thereunto duly authorized.
The Caldor Corporation
(Registrant)
Date: May 28, 1998 By: /s/ Bennett S. Gross
----------------------
Bennett S. Gross
Senior Vice President-
General Counsel
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EXHIBIT INDEX
Exhibit Number Description
- -------------- -----------
99.1 Revolving Credit and Guaranty Agreement dated as of May
15, 1998 among The Caldor Corporation ("Caldor"), as
borrower, certain of its subsidiaries, as guarantors,
the lenders party thereto (the "Lenders"), BankBoston,
N.A. ("BBNA"), as Administrative Agent and as Issuing
Bank, and BankBoston Retail Finance, Inc. ("BB Retail
Finance"), as Managing Agent and as Collateral Agent.
99.2 Security Agreement dated as of May 15, 1998 among
Caldor and certain of its subsidiaries, as grantors,
and BB Retail Finance, for itself and as collateral
agent for BBNA, as Administrative Agent and Issuing
Bank, the Managing Agent and the Lenders.
99.3 Trademark Security Agreement dated as of May 15, 1998
between Caldor and BB Retail Finance, as collateral
agent and as managing agent for BBNA, individually and
as Administrative Agent and Issuing Bank, and the
Lenders.
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EXECUTION COPY
REVOLVING CREDIT AND GUARANTY AGREEMENT
Among
THE CALDOR CORPORATION,
a Debtor and Debtor-in-Possession,
as Borrower,
CALDOR, INC. - CT
and
CALDOR, INC. - NY
each a Debtor and Debtor-in-Possession,
as Retail Guarantors,
and
EACH OF THE SUBSIDIARIES OF
THE BORROWER NAMED HEREIN,
each a Debtor and Debtor-in-Possession,
as Guarantors,
and
THE LENDERS PARTY HERETO,
BANKBOSTON, N.A.,
as Administrative Agent and as Issuing Bank,
and
BANKBOSTON RETAIL FINANCE, INC.,
as Managing Agent and as Collateral Agent
Dated as of May 15, 1998
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TABLE OF CONTENTS
PAGE
INTRODUCTORY STATEMENT....................................................... 1
I. DEFINITIONS.............................................................. 3
SECTION 1.01. Defined Terms........................................ 3
SECTION 1.02. Terms Generally...................................... 18
II. AMOUNT AND TERMS OF CREDIT.............................................. 18
SECTION 2.01. Commitment of the Lenders............................ 18
SECTION 2.02. Letters of Credit.................................... 19
SECTION 2.03. Making of Loans...................................... 21
SECTION 2.04. Notes; Repayment of Loans............................ 23
SECTION 2.05. Interest on Loans.................................... 23
SECTION 2.06. Default Interest..................................... 24
SECTION 2.07. Optional Termination or Reduction of Commitments..... 24
SECTION 2.08. Alternate Rate of Interest........................... 24
SECTION 2.09. Refinancing of Loans................................. 24
SECTION 2.10. Mandatory Prepayment; Commitment Termination; Cash
Collateral................................................. 25
SECTION 2.11. Optional Prepayment of Loans; Reimbursement of
Lenders.................................................... 26
SECTION 2.12. Maintenance of Loan Account; Statements of Account... 27
SECTION 2.13. Cash Receipts........................................ 27
SECTION 2.14. Application of Payments.............................. 29
SECTION 2.15. Increased Costs...................................... 30
SECTION 2.16. Change in Legality................................... 31
SECTION 2.17. Payments; No Setoff.................................. 32
SECTION 2.18. Taxes................................................ 32
SECTION 2.19. Certain Fees......................................... 34
SECTION 2.20. Unused Line Fee...................................... 34
SECTION 2.21. L/C Fees............................................. 34
SECTION 2.22. Nature of Fees....................................... 35
SECTION 2.23. Priority and Liens................................... 35
SECTION 2.24. Right of Set-Off..................................... 37
SECTION 2.25. Security Interest in Cash Collateral Account......... 37
SECTION 2.26. Payment of Obligations............................... 38
SECTION 2.27. No Discharge; Survival of Claims..................... 38
III. REPRESENTATIONS AND WARRANTIES......................................... 38
SECTION 3.01. Organization and Authority........................... 38
SECTION 3.02. Due Execution........................................ 38
SECTION 3.03. Statements Made...................................... 39
SECTION 3.04. Ownership............................................ 39
SECTION 3.05. Financial Statements................................. 39
SECTION 3.06. Liens................................................ 40
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PAGE
SECTION 3.07. Compliance with Law.................................. 40
SECTION 3.08. Insurance............................................ 41
SECTION 3.09. The Order............................................ 41
SECTION 3.10. Use of Proceeds...................................... 41
SECTION 3.11. Store Locations; Bank Accounts; Inventory............ 41
SECTION 3.12. Litigation........................................... 42
SECTION 3.13. Material Adverse Change.............................. 42
SECTION 3.14. Payment of Taxes and Post-Petition Obligations....... 42
SECTION 3.15. Taxes and Tax Returns................................ 42
SECTION 3.16. Franchises, Licenses, Permits, Leases, Patents,
Copyrights, Trademarks, and Trade Names.................... 42
SECTION 3.17. Labor Matters........................................ 43
SECTION 3.18. ERISA................................................ 43
SECTION 3.19. Accounts Receivable Financing........................ 44
SECTION 3.20. American East Insurance Corporation.................. 44
SECTION 3.21. New England Claims Office, Inc....................... 44
IV. CONDITIONS OF LENDING................................................... 44
SECTION 4.01. Conditions Precedent to Initial Loans and Initial
Letters of Credit.......................................... 44
SECTION 4.02. Conditions Precedent to Each Loan and Each Letter
of Credit.................................................. 48
V. AFFIRMATIVE COVENANTS.................................................... 49
SECTION 5.01. Financial Statements, Reports, etc................... 49
SECTION 5.02. Corporate Existence.................................. 51
SECTION 5.03. Insurance............................................ 51
SECTION 5.04. Obligations and Taxes................................ 51
SECTION 5.05. Notice of Event of Default, etc...................... 51
SECTION 5.06. Borrowing Base Certificate........................... 51
SECTION 5.07. Access to Books and Records; Inspections............. 52
SECTION 5.08. Fees................................................. 52
SECTION 5.09. Business Plan; Projections........................... 52
SECTION 5.10. ERISA................................................ 52
SECTION 5.11. Environmental and Other Matters...................... 53
SECTION 5.12. Cash Concentration System............................ 53
SECTION 5.13. Lien Status.......................................... 53
VI. NEGATIVE COVENANTS...................................................... 53
SECTION 6.01. Liens and Pre-Petition Claim Payments................ 53
SECTION 6.02. Merger, etc.......................................... 54
SECTION 6.03. Indebtedness......................................... 54
SECTION 6.04. Capital Expenditures................................. 54
SECTION 6.05. EBITDA............................................... 54
SECTION 6.06. Accounts Payable to Inventory Ratio.................. 55
SECTION 6.07. Guarantees and Other Liabilities..................... 55
SECTION 6.08. Chapter 11 Claims.................................... 55
SECTION 6.09. Dividends; Capital Stock............................. 55
ii
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PAGE
SECTION 6.10. Transactions with Affiliates......................... 56
SECTION 6.11. Investments, Loans and Advances...................... 56
SECTION 6.12. Disposition of Assets................................ 56
SECTION 6.13. Nature of Business................................... 56
SECTION 6.14. Conflicting Agreements, Orders or Actions............ 57
SECTION 6.15. Amendments to Stipulations and Orders................ 57
SECTION 6.16. Payment Direction Notices............................ 57
VII. EVENTS OF DEFAULT...................................................... 57
SECTION 7.01. Events of Default.................................... 57
SECTION 7.02. When Continuing...................................... 60
VIII. THE AGENTS............................................................ 60
SECTION 8.01. Administration by Administrative Agent............... 60
SECTION 8.02. Advances and Payments................................ 61
SECTION 8.03. Sharing of Excess Payments........................... 61
SECTION 8.04. Agreement of Required Lenders........................ 61
SECTION 8.05. Liability of Administrative Agent, the Managing
Agent and the Collateral Agent............................. 62
SECTION 8.06. Reimbursement and Indemnification.................... 62
SECTION 8.07. Rights of Administrative Agent, the Managing Agent
and the Collateral Agent................................... 63
SECTION 8.08. Independent Lenders and Issuing Bank................. 63
SECTION 8.09. Notice of Transfer................................... 63
SECTION 8.10. Successor Administrative Agent or Managing Agent..... 63
SECTION 8.11. Reports and Financial Statements..................... 64
SECTION 8.12. The Collateral Agent................................. 64
IX. GUARANTY................................................................ 64
SECTION 9.01. Guaranty............................................. 64
SECTION 9.02. No Impairment of Guaranty............................ 65
SECTION 9.03. Subrogation.......................................... 65
SECTION 9.04. Credit Agreement..................................... 65
X. MISCELLANEOUS............................................................ 65
SECTION 10.01. Notices............................................. 65
SECTION 10.02. Survival of Agreement, Representations and
Warranties, etc............................................ 66
SECTION 10.03. Successors and Assigns.............................. 66
SECTION 10.04. Confidentiality..................................... 68
SECTION 10.05. Expenses; Documentary Taxes......................... 69
SECTION 10.06. Indemnity........................................... 69
SECTION 10.07. CHOICE OF LAW....................................... 70
SECTION 10.08. No Waiver........................................... 70
SECTION 10.09. Extension of Maturity............................... 70
SECTION 10.10. Amendments, etc..................................... 70
SECTION 10.11. Exit Financing...................................... 71
iii
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PAGE
SECTION 10.12. Severability........................................ 71
SECTION 10.13. Headings............................................ 71
SECTION 10.14. Execution in Counterparts........................... 71
SECTION 10.15. Prior Agreements.................................... 72
SECTION 10.16. Further Assurances.................................. 72
SECTION 10.17 The Collateral Agent................................ 72
SECTION 10.18. WAIVER OF JURY TRIAL................................ 72
iv
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ANNEXES
Annex A Lenders and Commitment Amounts
EXHIBITS
Exhibit A Form of Borrowing Base Certificate
Exhibit B-1 Form of Note
Exhibit B-2 Form of Agent Advance Note
Exhibit C Form of Order
Exhibit D Form of Security Agreement
Exhibit E Forms of Opinions of Counsel to the Borrower
Exhibit F Commitment Letter
Exhibit G Brockton Stipulation and Order
Exhibit H Fleet Post-Petition Order
Exhibit I ADR Order
Exhibit J Form of Trademark Security Agreement
Exhibit K Form of Payment Direction Notice
Exhibit L Form of Collateral Access Agreement
SCHEDULES
Schedule 2.13(a) Cash Deposit Procedures
Schedule 2.13(b) Check Cashing Accounts
Schedule 2.23 Existing Agreements
Schedule 3.01 Jurisdictions of Qualification
Schedule 3.04 Subsidiaries
Schedule 3.06(a) Existing Liens
Schedule 3.06(b) Purchase Money Liens
Schedule 3.11(a) Location of Stores, Warehouses and
Distribution Centers
(Inventory Locations)
Schedule 3.11(b) Bank Accounts
Schedule 3.12 Litigation
Schedule 3.14 Post-Petition Obligations
Schedule 3.15 Taxes and Tax Returns
Schedule 3.18 ERISA Plans
Schedule 4.01(s) Closing Documents List
Schedule 5.01(e) Required Reports
Schedule 6.12 Closing Stores
v
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REVOLVING CREDIT AND GUARANTY AGREEMENT
REVOLVING CREDIT AND GUARANTY AGREEMENT (as amended, supplemented or
otherwise modified from time to time, this "Agreement"), dated as of May 15,
1998, among THE CALDOR CORPORATION, a Delaware corporation, as debtor and
debtor-in-possession (the "Borrower"), in a case pending under Chapter 11 of the
Bankruptcy Code, CALDOR, INC.-CT, a Connecticut corporation, and CALDOR,
INC.-NY, a New York corporation (each, a "Retail Guarantor" and collectively,
the "Retail Guarantors"), and each of the other guarantors listed in Schedule
3.04 (each, along with each Retail Guarantor, a "Guarantor" and collectively,
the "Guarantors"), each of which Guarantors is a debtor and debtor-in-possession
in a case pending under Chapter 11 of the Bankruptcy Code (the cases of the
Borrower and the Guarantors, each a "Case" and collectively, the "Cases"), the
Lenders named on Annex A and each other Person from time to time party hereto as
a Lender, BANKBOSTON, N.A., a national banking association ("BBNA"), as the
issuer of Letters of Credit (in such capacity, together with any successor
issuer of Letters of Credit hereunder, the "Issuing Bank") and as administrative
agent for the Issuing Bank, the Collateral Agent, the Managing Agent and the
Lenders (in such capacity, the "Administrative Agent"), and BANKBOSTON RETAIL
FINANCE, INC., a subsidiary of BBNA ("BBRF"), as collateral agent (in such
capacity, the "Collateral Agent") and as managing agent (in such capacity, the
"Managing Agent").
INTRODUCTORY STATEMENT
On September 18, 1995, the Borrower and the Guarantors filed voluntary
petitions with the Bankruptcy Court initiating the Cases and have continued in
the possession of their assets and in the management of their businesses
pursuant to Sections 1107 and 1108 of the Bankruptcy Code. The Borrower and
Guarantors currently are parties to a $450,000,000 debtor-in-possession Amended
and Restated Revolving Credit and Guaranty Agreement, dated as of October 17,
1995, as amended (the "Chase Credit Facility"), with The Chase Manhattan Bank
("Chase"), as successor to Chemical Bank.
The Borrower has applied to the Lenders and the Issuing Bank for a
credit facility in an aggregate principal amount not to exceed $450,000,000, all
of the Borrower's obligations under which are to be guaranteed by the Guarantors
and secured by the Collateral described herein and in the Security Agreement.
The extensions of credit hereunder will be used, first, to repay in
full all amounts outstanding under the Chase Credit Facility (or, with respect
to letters of credit, banker's acceptances and airbill guarantees issued
thereunder, to secure the Borrower's reimbursement obligations in connection
therewith by issuing Letters of Credit hereunder) and thereafter to provide
working capital for, and to finance Inventory purchases by, the Borrower and the
Retail Guarantors (as set forth in the Order) and otherwise for general
corporate purposes.
To provide guarantees and security for the repayment of the Loans, the
reimbursement of any draft drawn under a Letter of Credit and the payment of the
other obligations of the Borrower and the Guarantors hereunder and under the
other Loan Documents, the Borrower and the Guarantors will provide to the
Administrative Agent, the Managing Agent, the Issuing Bank, the Collateral
Agent, and the Lenders the following (each as more fully described herein):
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(a) a guaranty from each of the Guarantors of the due and
punctual payment and performance of the obligations of the Borrower
hereunder and under the other Loan Documents;
(b) with respect to the obligations of the Borrower and the
Guarantors hereunder, an allowed administrative expense claim in each
of the Cases pursuant to Section 364(c)(1) of the Bankruptcy Code
having priority over all administrative expenses of the kind specified
in Bankruptcy Code Sections 503(b), 507(b), 364(c), and any future
chapter 7 case, or otherwise;
(c) a perfected first priority Lien, pursuant to Section
364(c)(2) of the Bankruptcy Code, upon all cash, cash equivalents and
Permitted Investments in the Loan Account, the Cash Collateral Account,
the BBNA Disbursement Accounts, the BBNA Cash Concentration Account,
the Chase Concentration Account, the Chase Disbursement Accounts, all
Blocked Accounts and all other deposit accounts (other than the GE
Account) of the Borrower and the Guarantors; and
(d) (i) a superpriority claim status under Section 364(c)(1)
of the Bankruptcy Code and priority over any and all administrative
expenses specified in Bankruptcy Code Sections 503(b), 507(b), 364(c)
and any subsequent Chapter 7 case, subject only to a Carve-Out for
allowed professional fees and expenses incurred by the Borrower's
professionals and those of any statutory committees appointed in the
Case, (ii) under Section 364(c)(2) of the Bankruptcy Code, a
first-priority perfected security interest in and lien upon all assets
of the Borrower and the Guarantors not subject to (1) valid and
perfected Liens in existence on the Filing Date and set forth on
Schedule 3.06(a) (other than property which is subject to existing
liens and security interests that presently secure the obligations of
the Borrower and the Guarantors under the Existing Agreements which is
covered by clause (iv) below), (2) valid and perfected purchase money
Liens created and perfected after the Filing Date and before the
Closing Date securing amounts not in excess of $750,000 and set forth
on Schedule 3.06(b), and (3) Liens securing the Fleet Post-Petition
Loan Agreement pursuant to the Fleet Post-Petition Order, (iii) under
Section 364(c)(3) of the Bankruptcy Code, a perfected second-priority
security interest in and lien upon all property, rights and assets of
the Borrower and the Guarantors subject to (A) valid and perfected
Liens in existence on the Filing Date and set forth on Schedule 3.06(a)
(other than property which is subject to existing liens and security
interests that presently secure the obligations of the Borrower and the
Guarantors under the Existing Agreements which is covered by clause
(iv) below), (B) valid and perfected purchase money Liens created and
perfected after the Filing Date and before the Closing Date securing
amounts not in excess of $750,000 and set forth on Schedule 3.06(b) and
(C) Liens securing the Fleet Post-Petition Loan Agreement pursuant to
the Fleet Post-Petition Order, and (iv) under Section 364(d)(1) of the
Bankruptcy Code, a first-priority perfected priming security interest
in and lien upon all of the property of the Borrower and the Guarantors
that is subject to existing liens and security interests that presently
secure the Borrower's and the Guarantors' obligations under the
Existing Agreements and any liens and security interests granted after
the Filing Date to provide adequate protection in respect of the
Existing Agreements. Notwithstanding the foregoing, (i) the obligations
of the Borrower and the Guarantors hereunder must be secured by an
unshared first-priority perfected security interest in and lien upon
any and all of the Borrower's and the Guarantors' Inventory,
Receivables and leasehold security interests in real estate included in
the calculation of the Borrowing Base and (ii) the GE Account shall be
excluded from the Liens granted hereunder and under the Security
Agreement and pursuant to the Order.
2
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All of the claims and the Liens granted hereunder in the Cases to the
Administrative Agent, the Managing Agent, the Issuing Bank, the Collateral Agent
and the Lenders will be subject to the Carve-Out, to the extent provided in
Section 2.23.
Accordingly, the parties hereto hereby agree as follows:
I. DEFINITIONS
SECTION 1.01. DEFINED TERMS.
As used in this Agreement, the following terms shall have the meanings
specified below:
"ABR Loan" shall mean any Loan bearing interest at a rate determined by
reference to the Alternate Base Rate in accordance with the provisions of
Article II.
"Accounts Payable" shall mean amounts owing by the Borrower to
creditors for purchases of inventory determined on a consolidated basis pursuant
to GAAP (as reported on the Borrower's most recent balance sheet delivered to
the Administrative Agent).
"Adjusted Eurodollar Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the quotient of (a) the
Eurodollar Rate in effect for such Interest Period divided by (b) a percentage
(expressed as a decimal) equal to 100% minus Statutory Reserves.
"ADR Order" shall have the meaning set forth in Section 6.01(b).
"Affiliate" shall mean, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with such Person. For purposes of this definition, a Person (a
"Controlled Person") shall be deemed to be "controlled by" another Person (a
"Controlling Person") if the Controlling Person possesses, directly or
indirectly, power to direct or cause the direction of the management and
policies of the Controlled Person whether by contract or otherwise.
"Agent Advance" shall mean a Loan made by the Administrative Agent to
the Borrower pursuant to Section 2.03(c).
"Agents" shall mean, collectively, the Administrative Agent, the
Collateral Agent and the Managing Agent.
"Agreement" shall mean this Revolving Credit and Guaranty Agreement, as
the same may from time to time be amended, modified or supplemented.
"Alternate Base Rate" shall mean, for any day, the higher of (a) the
annual rate of interest then most recently announced by BBNA at its head office
in Boston, Massachusetts as its "Base Rate" and (b) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1% (0.50%) per annum. If for any reason
the Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Federal
Funds Effective Rate for any reason, including the inability or failure of the
Administrative Agent to obtain sufficient quotations thereof in accordance with
the terms hereof, the Alternate Base Rate shall be determined without regard to
clause
3
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(b) of the first sentence of this definition, until the circumstances giving
rise to such inability no longer exist. Any change in the Alternate Base Rate
due to a change in BBNA's Base Rate or the Federal Funds Effective Rate shall be
effective on the effective date of such change in BBNA's Base Rate or the
Federal Funds Effective Rate, respectively.
"Amounts" shall have the meaning set forth in Section 2.18(a).
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an Eligible Assignee, and accepted by the
Administrative Agent, in a form supplied by the Administrative Agent.
"Bankruptcy Code" shall mean The Bankruptcy Reform Act of 1978,
codified as 11 U.S.C. Section 101 et seq., as heretofore and hereafter amended
from time to time, and any successor act or statute.
"Bankruptcy Court" shall mean the United States Bankruptcy Court for
the Southern District of New York, or any other court having jurisdiction over
the Cases.
"BBNA Cash Concentration Account" shall have the meaning set forth in
Section 2.13(a).
"BBNA Disbursement Accounts" shall have the meaning set forth in
Section 2.13(c).
"Blocked Account Agreements" shall have the meaning set forth in
Section 2.13(a).
"Blocked Account Banks" shall mean the banks with whom the Borrower has
entered into Blocked Account Agreements.
"Blocked Accounts" shall have the meaning set forth in Section 2.13(a).
"Board" shall mean the Board of Governors of the Federal Reserve System
of the United States.
"Borrowing" shall mean the incurrence of Loans of a single Type made
from all the Lenders on a single date and having, in the case of Eurodollar
Loans, a single Interest Period (with any ABR Loan made pursuant to Section 2.16
being considered a part of the related Borrowing of Eurodollar Loans).
"Borrowing Base" shall mean, on any day, an amount equal to the lesser
of (a) the sum of (i) seventy-two percent (72%) of the then Loan Value of
Eligible Inventory and, without duplication, Eligible Letter of Credit Inventory
and Eligible In-Transit Inventory, (ii) seventy-two percent (72%) of (a) the
then Loan Value of Eligible FOB Inventory multiplied by (b) eighty percent
(80%), (iii) eighty percent (80%) of the then Loan Value of Eligible
Receivables, (iv) the Overadvance Amount (if applicable) and (v) the lesser of
(A) $45,000,000 and (B) seventy percent (70%) of the "low liquidation value" of
the Borrower's and the Guarantors' leasehold interests (as determined by an
appraiser acceptable to the Administrative Agent) in open and operating retail
locations which the Borrower has not announced that it is closing, in each case
to the extent that the Collateral Agent has an enforceable security interest in
such Inventory, Receivables and leasehold interests in accordance with, and with
the priority described in, Section 2.23, minus the then amount of all Borrowing
Base Reserves and (b) $450,000,000.
"Borrowing Base Certificate" shall mean a certificate substantially in
the form of Exhibit A, with such changes therein as may be required by the
Administrative Agent to reflect the components of, and reserves
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against, the Borrowing Base as provided for hereunder from time to time executed
and certified by a Financial Officer of the Borrower, which shall include
appropriate exhibits and schedules as referred to therein.
"Borrowing Base Reserves" shall mean such reserves (including, without
limitation, from and after the Closing Date, a "Professional Fee Carve-Out
Reserve" equal to the then-current amount of the Carve-Out) against the
Borrowing Base as the Administrative Agent from time to time may elect, in its
reasonable discretion and on seven (7) Business Days' notice to the Borrower, to
apply for purposes of determining the Borrowing Base on account of any matter,
contingency or risk which the Administrative Agent may in good faith deem
potentially material to the prospect of payment of the Credit Extensions
(including adjustments referred to in Section 5.07(e)).
"Breakage Costs" shall have the meaning set forth in Section 2.11(b).
"Brockton Stipulation and Order" shall mean, collectively, (i) that
certain order of the Bankruptcy Court entered on February 29, 1996 entitled,
"Order Approving Stipulation Between The Caldor Corporation and Fleet Bank, N.A.
Authorizing The Caldor Corporation to Make Adequate Protection Payments to Fleet
Bank, N.A." and (ii) that certain stipulation and order authorizing The Caldor
Corporation to make adequate protection payments to Fleet Bank, N.A., dated
February 1, 1996, each as attached hereto as Exhibit G.
"BSI" shall mean BancBoston Securities Inc.
"Business Day" shall mean any day other than a Saturday, Sunday or
other day on which banks in the States of New York or Massachusetts are required
or permitted to close (and, for a Letter of Credit, other than a day on which
the bank issuing such Letter of Credit is closed); provided, however, that when
used in connection with a Eurodollar Loan, the term "Business Day" shall also
exclude any day on which banks are not open for dealings in dollar deposits on
the London interbank market.
"Business Plan" shall mean the "Fiscal 1998 Business Plan" prepared by
the Borrower, dated March 31, 1998, as previously delivered to the
Administrative Agent, setting forth the business objectives for the Borrower and
the Guarantors for the 1998 fiscal year, which plan includes, among other
things: a monthly (i) balance sheet, (ii) income statement, and (iii) statement
of cash flows, and related business assumptions.
"Capital Expenditures" shall mean, for any period, the aggregate of all
expenditures (whether paid in cash or accrued as liabilities during such period
and including that portion of Capitalized Leases which is capitalized on the
consolidated balance sheet of the Borrower and the Guarantors) net of cash
amounts received by the Borrower and the Guarantors from other Persons during
such period in reimbursement of Capital Expenditures made by the Borrower and
the Guarantors, excluding interest capitalized during construction, by the
Borrower and the Guarantors during such period that, in conformity with GAAP,
are required to be included in or reflected by the property, plant, equipment or
intangibles or similar fixed asset accounts reflected in the consolidated
balance sheet of the Borrower and the Guarantors (including equipment which is
purchased simultaneously with the trade-in of existing equipment owned by the
Borrower or any of the Guarantors to the extent of the gross amount of such
purchase price less the book value of the equipment being traded in at such
time), but excluding expenditures made in connection with the replacement or
restoration of assets to the extent reimbursed or financed from insurance
proceeds paid on account of the loss of or the damage to the assets being
replaced or restored, or from awards of compensation arising from the taking by
condemnation or eminent domain of such assets being replaced.
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<PAGE> 12
"Capitalized Lease" shall mean, as applied to any Person, any lease of
property by such Person as lessee which would be capitalized on a balance sheet
of such Person prepared in accordance with GAAP.
"Carve-Out" shall have the meaning set forth in Section 2.23.
"Cases" shall mean the Chapter 11 Cases of the Borrower and each of the
Guarantors pending in the Bankruptcy Court.
"Cash Collateral Account" shall mean an interest-bearing account
established by the Borrower with the Administrative Agent at BBNA under the sole
and exclusive dominion and control of the Administrative Agent at the office of
BBNA at 100 Federal Street, Boston, Massachusetts 02110 designated as "The
Caldor Corporation Cash Collateral Account" that shall be used for the purposes
set forth herein.
"Cash Receipts" shall have the meaning set forth in Section 2.13(a).
"Chase" shall have the meaning set forth in the Introductory Statement.
"Chase Credit Facility" shall have the meaning set forth in the
Introductory Statement.
"Chase Concentration Account" shall have the meaning set forth in
Section 2.13(a).
"Chase Disbursement Accounts" shall have the meaning set forth in
Section 2.13(c).
"Check Cashing Accounts" shall have the meaning set forth in Section
2.13(e).
"Closing Date" shall mean the date on which this Agreement has been
executed and the conditions precedent to the making of the initial Loans set
forth in Sections 4.01 and 4.02 have been satisfied or waived in writing by the
Administrative Agent, the Managing Agent, the Issuing Bank and the Collateral
Agent, as applicable, which date shall occur promptly after the entry of the
Order.
"Closing Documents List" shall mean the list of required closing
documents attached hereto as Schedule 4.01(s).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral" shall mean "Collateral" as defined in the Security
Agreement and all other property and assets of the Borrower and the Guarantors
pledged as security for the Obligations hereunder and under the other Loan
Documents.
"Collateral Access Agreements" shall mean any landlord waiver,
mortgagee waivers, bailee letters or any similar acknowledgment agreements with
respect to any Inventory warehouse of the Borrower or any Guarantor,
substantially in the form of Exhibit L.
"Commitment" shall mean, with respect to each Lender, the aggregate
commitment of such Lender hereunder in the amount set forth opposite its name on
Annex A hereto or as may subsequently be set forth in the Register from time to
time, as the same may be reduced from time to time pursuant to Section 2.07.
"Commitment Letter" shall have the meaning set forth in the definition
of "Exit Facility."
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"Commitment Percentage" shall mean at any time, with respect to each
Lender, the percentage obtained by dividing its Commitment at such time by the
Total Commitment at such time.
"Common Carrier Agreement" shall mean a letter agreement among the
Collateral Agent, the Borrower and a common carrier transporting Inventory of
the Borrower or a Retail Guarantor, in form and substance reasonably
satisfactory to the Collateral Agent.
"Credit Card Obligor" shall mean any of American Express Travel Related
Services Company, Inc., Citicorp Credit Services, Inc., Discover Card Services,
Inc., and Fleet Bank, and any other Person acceptable to the Administrative
Agent in its sole discretion, provided that on the Closing Date the Borrower has
notified each of the above entities and each such other Person in writing of the
Collateral Agent's security interest in the Receivables due to the Borrower from
such Person and has directed that such Person remit all payments with respect to
such Receivables directly to the BBNA Cash Concentration Account, such notice
and direction to be substantially in the form attached hereto as Exhibit K (each
a "Payment Direction Notice").
"Credit Extensions" shall be equal, as of any day, to the sum of (a)
the principal balance of all Loans then outstanding, and (b) the then amount of
the Letter of Credit Outstandings.
"Customs Broker Agreement" shall mean a letter agreement among the
Collateral Agent, the Borrower and a customs broker handling the Borrower's or a
Retail Guarantor's Inventory regarding the Collateral Agent's security interest
in such Inventory, in form and substance reasonably satisfactory to the
Collateral Agent.
"Default" shall mean any event which, upon the giving of any notice or
the lapse of any period of time expressly set forth in Section 7.01, or both,
would constitute an Event of Default.
"Default Notice" shall have the meaning set forth in Section 7.01.
"Dollars" and "$" shall mean lawful money of the United States of
America.
"EBITDA" shall mean, for any period, all as determined in accordance
with GAAP, the consolidated net income (or net loss) of the Borrower and the
Guarantors for such period, plus (to the extent taken into account in
determining such net income or net loss) (a) the sum of (i) depreciation
expense, (ii) amortization expense, (iii) other non-cash expense, (iv) provision
for LIFO adjustment for Inventory valuation, (v) net total Federal, state and
local income tax expense, (vi) gross interest expense for such period less gross
interest income for such period, (vii) extraordinary losses, (viii) the non-cash
portion, if any, of a non-recurring charge or a restructuring charge, (ix) the
cumulative effect of any change in accounting principles, and (x) "Chapter 11
expenses" (or "administrative costs" reflecting Chapter 11 expenses) as shown on
the Borrower's consolidated statement of income for such period, minus (b)
extraordinary gains.
"Eligible Assignee" shall mean (a) a commercial bank having total
assets in excess of $500,000,000, (b) a finance company, insurance company or
other financial institution (in each case with total assets in excess of
$200,000,000) reasonably acceptable to the Administrative Agent which in the
ordinary course of business extends credit and whose becoming an assignee would
not constitute a prohibited transaction under Section 4975 of ERISA, (c) any
other financial institution reasonably satisfactory to the Administrative Agent
and, (d) during the continuance of an Event of Default, (i) a fund (with total
assets in excess of $75,000,000) reasonably satisfactory to the Administrative
Agent which in the ordinary course of business extends credit
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<PAGE> 14
or purchases debt of the type evidenced by the Notes and whose becoming an
assignee would not constitute a prohibited transaction under Section 4975 of
ERISA and (ii) any other Person reasonably satisfactory to the Administrative
Agent (other than a fund with total assets of $75,000,000 or less).
"Eligible FOB Inventory" shall mean, as of any date of determination,
Inventory which would otherwise be Eligible Inventory if received in the
Borrower's or a Retail Guarantor's warehouse or retail locations listed on
Schedule 3.11(a) and recorded in the Borrower's or Retail Guarantor's stock
ledger report, but which (i) has not yet been so received, (ii) has been sold to
the Borrower "FOB shipping point" and (iii) is subject to an invoice which is
not dated earlier than thirty (30) days prior to the date of the then-current
Borrowing Base Certificate provided to the Collateral Agent; provided that,
beginning thirty (30) days after the Closing Date, with respect to any Eligible
FOB Inventory not subject to a Common Carrier Agreement, the Administrative
Agent may, in its sole discretion, establish a Borrowing Base Reserve with
respect to any amounts payable to the common carrier transporting such
Inventory. The amount of Eligible FOB Inventory to be included in the Borrowing
Base at any time shall be determined by the Administrative Agent in its sole
discretion.
"Eligible In-Transit Inventory" shall mean, as of any date of
determination, Inventory which would otherwise be Eligible Inventory, in an
aggregate amount not to exceed $65,000,000 at any time, (i) for which a
documentary Letter of Credit has been issued and paid, but such Inventory has
not yet been received in the Borrower's or a Retail Guarantor's warehouse;
provided that, if such Inventory is in the possession of any of the Borrower's
or a Retail Guarantor's customs brokers, beginning thirty (30) days after the
Closing Date, with respect to any such Inventory not subject to a Customs Broker
Agreement, the Administrative Agent may, in its sole discretion, establish a
Borrowing Base Reserve with respect to any amounts payable to the customs broker
in possession of such Inventory, and (ii) that has been received in the
Borrower's or a Retail Guarantor's warehouse, but has not yet been recorded in
the Borrower's or such Retail Guarantor's stock ledger report.
"Eligible Inventory" shall mean, as of the date of determination,
Inventory of the Borrower and the Retail Guarantors that are finished goods,
merchantable and readily saleable to the public in the ordinary course of
business, in each case deemed by the Administrative Agent in the exercise of its
Permitted Discretion to be eligible for inclusion in the calculation of the
Borrowing Base. Without limiting the foregoing, unless otherwise approved in
writing by the Administrative Agent, none of the following shall be deemed to be
Eligible Inventory:
(a) Inventory not subject to a perfected first-priority Lien
in accordance with Section 2.23;
(b) Inventory that is not owned solely by the Borrower or a
Retail Guarantor or with respect to which the Borrower or such Retail Guarantor
does not have good, valid and marketable title, free and clear of any Lien
(other than as set forth in Section 2.23 (it being understood that only the
Collateral Agent, for the benefit of itself, the Administrative Agent, the
Issuing Bank, the Managing Agent and the Lenders, shall have a first-priority
Lien on such Inventory));
(c) Inventory that is not located on property leased or owned
by the Borrower or a Retail Guarantor or in a contract warehouse or other third
party location in each case, located in the United States and segregated or
otherwise separately identifiable from goods of others, if any, stored on the
premises;
(d) Inventory that is not reflected in the Borrower's stock
ledger report.
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<PAGE> 15
(e) Inventory that has been returned or rejected by any of the
Borrower's customers and which is damaged or defective or to be returned to
vendor;
(f) Inventory not held for resale in the ordinary course,
including samples, publicity, display or demonstration Inventory, and piece
goods;
(g) consigned and leased Inventory;
(h) special order Inventory;
(i) supplies and packing or shipping materials; and
(j) Inventory that, if located in a warehouse (as opposed to
one of the Borrower's or the Retail Guarantors' retail locations listed on
Schedule 3.11(a)) is not subject to a Collateral Access Agreement.
"Eligible Letter of Credit Inventory" shall mean, as of the date of
determination thereof, documentary Letters of Credit (i) that have been issued
with an expiration date within 75 days of such date of determination, (ii) that
have been issued for the acquisition by the Borrower or the Retail Guarantors of
Inventory which would otherwise be Eligible Inventory if owned by the Borrower
or a Retail Guarantor, and (iii) that may include letters of credit issued as
described in the third paragraph of the Introductory Statement above, so long as
such letter of credit would otherwise satisfy the requirements hereof.
"Eligible Receivables" shall mean, as of the date of determination
thereof, Receivables of the Borrower payable in Dollars and deemed by the
Administrative Agent in the exercise of its Permitted Discretion to be eligible
for inclusion in the calculation of the Borrowing Base. Without limiting the
foregoing, unless otherwise approved in writing by the Administrative Agent,
none of the following shall be deemed to be Eligible Receivables:
(a) Receivables that have been outstanding for more than 5
Business Days from the date of sale;
(b) Receivables not owned solely by the Borrower or with
respect to which the Borrower does not have good, valid and marketable title
thereto;
(c) Receivables which the Administrative Agent determines in
its sole discretion to be uncertain of collection; and
(d) Receivables not subject to a perfected first-priority
security interest in accordance with Section 2.23.
"Environmental Lien" shall mean a Lien in favor of any Governmental
Authority for (i) any liability under federal or state environmental laws or
regulations, or (ii) damages arising from or costs incurred by such Governmental
Authority in response to a release or threatened release of a hazardous or toxic
waste, substance or constituent, or other substance into the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
thereunder.
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"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) which is a member of a group of which the Borrower is a member and
which is under common control within the meaning of Section 414(b) or (c) of the
Code and the regulations promulgated and rulings issued thereunder.
"Eurocurrency Liabilities" shall have the meaning assigned thereto in
Regulation D issued by the Board, as in effect from time to time.
"Eurodollar Applicable Margin" shall mean 2.25% per annum, provided,
that commencing with the first fiscal quarter of the Borrower beginning after
receipt by the Administrative Agent of the Borrower's audited financial
statements for fiscal year 1998, the Eurodollar Applicable Margin will be
reduced by (i) 0.25% for any fiscal quarter for which the EBITDA of the Borrower
for the 12-month period preceding the beginning of such quarter is greater than
or equal to $75,000,000, but less than $100,000,000 or (ii) without duplication,
0.50% for any fiscal quarter for which the EBITDA of the Borrower for the 12-
month period preceding the beginning of such quarter is greater than or equal to
$100,000,000.
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
Loans.
"Eurodollar Loan" shall mean any Loan bearing interest at a rate
determined by reference to Adjusted Eurodollar Rate in accordance with the
provisions of Article II.
"Eurodollar Rate" shall mean, for any Interest Period for any
Eurodollar Borrowing, the rate (rounded upwards, if necessary, to the next 1/16
of 1%) at which dollar deposits approximately equal in principal amount to such
Eurodollar Borrowing and for a maturity comparable to such Interest Period are
offered to the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.
"Event of Default" shall have the meaning set forth in Section 7.01.
"Existing Agreements" shall mean the agreements (including, without
limitation, the Existing Credit Agreement and the Existing Real Estate Credit
Agreement) listed on Schedule 2.23 hereto, the notes delivered pursuant thereto,
and all of the agreements granting security interests on and liens in property
and assets of the Borrower and the Guarantors, including, without limitation,
the security agreements, mortgages and leasehold mortgages listed on Schedule
2.23 hereto, each of which was executed and delivered by the Borrower and (as
applicable) the Guarantors prior to the Filing Date, as each may have been
amended or modified from time to time.
"Existing Credit Agreement" shall mean that certain credit agreement
(as amended) dated as of October 21, 1993, among the Borrower, the Retail
Guarantors, Chemical Bank, as administrative agent and fronting bank, and the
Lenders thereunder.
"Existing Real Estate Credit Agreement" shall mean that certain credit
agreement (as amended), dated as of August 8, 1995, among the Borrower, the
Retail Guarantors and Chemical Bank, individually and as administrative agent
and collateral agent.
"Exit Facility" shall mean that certain Revolving Credit and Guaranty
Agreement contemplated to be entered into (subject in full to the satisfaction
(or waiver by the Administrative Agent and/or the Lenders as provided therein)
of all of the conditions to effectiveness contained therein), among the
Borrower, the
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Guarantors, the Administrative Agent, the Managing Agent, the Issuing Bank, the
Collateral Agent and the Lenders pursuant to that certain Commitment Letter
dated April 24, 1998 from the Lenders to the Borrower attached hereto as Exhibit
F (as amended from time to time, the "Commitment Letter").
"Federal Funds Effective Rate" shall mean, for any day, the rate per
annum equal to the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York or,
if such rate is not published for any day that is a Business Day, the average of
the quotations for such day on such transactions received by the Administrative
Agent from three funds brokers of recognized standing selected by the
Administrative Agent.
"Fee Letter" shall mean that certain fee letter, dated April 24, 1998,
between the Borrower and BBNA.
"Fees" shall collectively mean the Unused Line Fee, the L/C Fees, the
fees and charges described in Section 2.02(c) and the fees referred to in
Section 2.19.
"Filing Date" shall mean September 18, 1995.
"Financial Officer" shall mean the Chief Executive Officer, the Chief
Financial Officer, the Vice President - Controller or the Treasurer of the
Borrower.
"Fleet-Brockton Loan Agreement" shall mean the Loan Agreement dated as
of September 21, 1994, by and between Fleet Bank, N.A., as lender, and the
Borrower, as borrower.
"Fleet Post-Petition Loan Agreement" shall mean that certain Amended
and Restated Loan Agreement dated as of March 13, 1996, by and among the
Borrower, Caldor-Silver Spring, L.L.C. and Fleet Bank, N.A., entered into in
connection with the financing of the construction of the Borrower's store
located in Silver Spring, Maryland, which agreement was approved by the entry of
an order of the Bankruptcy Court on March 13, 1996, as attached as Exhibit H
(the "Fleet Post-Petition Order").
"Fleet Post-Petition Order" shall have the meaning set forth in the
definition of "Fleet Post-Petition Loan Agreement."
"GAAP" shall mean generally accepted accounting principles applied on a
basis consistent with those used in preparing the financial statements referred
to in Section 3.03.
"GE Account" shall have the meaning set forth in Section 2.13(d).
"GE Stipulation and Order" shall mean that certain Stipulation and
Order Resolving Motion for Adequate Protection, between the Borrower and General
Electric Company - GE Lighting, as "so ordered" by the Bankruptcy Court on June
11, 1997, and entered on June 13, 1997.
"Governmental Authority" shall mean any Federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality or any court, in each case whether of the United States or any
foreign jurisdiction.
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"Indebtedness" shall mean, at any time and with respect to any Person,
(i) all indebtedness of such Person for borrowed money, (ii) all indebtedness of
such Person for the deferred purchase price of property or services (other than
property, including Inventory, and services purchased, and expense accruals and
deferred compensation items arising, in the ordinary course of business), (iii)
all obligations of such Person evidenced by notes, bonds, debentures or other
similar instruments (other than performance, surety and appeal bonds arising in
the ordinary course of business), (iv) all indebtedness of such Person created
or arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of default are limited
to repossession or sale of such property), (v) all obligations of such Person
under leases which have been or should be, in accordance with GAAP, recorded as
capital leases, to the extent required to be so recorded, (vi) all
reimbursement, payment or similar obligations of such Person, contingent or
otherwise, under acceptance, letter of credit or similar facilities, (vii) all
Indebtedness referred to in clauses (i) through (vi) above guaranteed directly
or indirectly by such Person, or in effect guaranteed directly or indirectly by
such Person through an agreement (A) to pay or purchase such Indebtedness or to
advance or supply funds for the payment or purchase of such Indebtedness, (B) to
purchase, sell or lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to make payment of
such Indebtedness or to assure the holder of such Indebtedness against loss in
respect of such Indebtedness, (C) to supply funds to or in any other manner
invest in the debtor (including any agreement to pay for property or services
irrespective of whether such property is received or such services are rendered)
or (D) otherwise to assure a creditor against loss in respect of such
Indebtedness, and (viii) all Indebtedness referred to in clauses (i) through
(vii) 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
any property owned by such Person, even though such Person has not assumed or
become liable for the payment of such Indebtedness.
"Insufficiency" shall mean, with respect to any Plan, the amount, if
any, of its unfunded benefit liabilities within the meaning of Section
4001(a)(18) of ERISA.
"Interest Payment Date" shall mean (i) as to any Eurodollar Loan having
an Interest Period of 1, 2 or 3 months, the last day of such Interest Period and
(ii) as to all ABR Loans outstanding at any time during any month, the first
Business Day of the next succeeding month.
"Interest Period" shall mean, as to any Borrowing of Eurodollar Loans,
the period commencing on and including the date of such Borrowing (including as
a result of a refinancing of ABR Loans) or on the last day of the preceding
Interest Period applicable to such Borrowing and ending on and excluding the
numerically corresponding day (or if there is no corresponding day, the last
day) in the calendar month that is 1, 2 or 3 months thereafter, as the Borrower
may elect in the related notice delivered pursuant to Sections 2.03(b) or 2.09;
provided, however, that (i) if any Interest Period would end on a day which
shall not be a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless such next succeeding Business Day would fall in
the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day, and (ii) no Interest Period shall end later than
the Termination Date.
"Inventory" shall mean all stock ledger goods, wares and merchandise
owned and held for sale by the Borrower or a Retail Guarantor.
"Investments" shall have the meaning set forth in Section 6.11.
"L/C Fee" shall have the meaning set forth in Section 2.21.
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"Lenders" shall mean the Persons identified on Annex A hereto and each
assignee that becomes a party to this Agreement as set forth in Section
10.03(b).
"Letter of Credit" shall mean a letter of credit that is (i) issued for
account of the Borrower, (ii) a standby or documentary letter of credit, (iii)
issued in connection with the purchase of Inventory by the Borrower or a Retail
Guarantor and for other purposes for which the Borrower or such Retail Guarantor
has previously obtained letters of credit, or for any other purpose which
complies with Section 3.10 (including, without limitation, the Letters of Credit
issued as described in the third paragraph of the Introductory Statement above),
and (iv) in form and substance reasonably satisfactory to the Issuing Bank.
"Letter of Credit Outstandings" shall mean, at any time, the sum of (a)
with respect to Letters of Credit outstanding at such time, the aggregate
maximum amount that then is or at any time thereafter may become available for
drawing or payment thereunder plus (b) all amounts theretofore drawn or paid
under Letters of Credit for which the Issuing Bank has not then been reimbursed.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind whatsoever (including any conditional sale or other
title retention agreement or any lease in the nature thereof).
"Loan Account" shall have the meaning set forth in Section 2.12(a).
"Loan Documents" shall mean this Agreement, the Notes, the Letters of
Credit, the Fee Letter, the Security Agreement, the Trademark Security
Agreement, all Borrowing Base Certificates, the Blocked Account Agreements, the
Collateral Access Agreements, the Customs Broker Agreements, the Common Carrier
Agreements and any other instrument or agreement executed and delivered in
connection herewith.
"Loan Value" shall mean the amount determined by the Administrative
Agent from time to time, in the exercise of its Permitted Discretion and
consistent with the Administrative Agent's usual business practices and policies
for similar borrowers similarly situated, as the value of (A) Eligible
Receivables, (B) Eligible Letter of Credit Inventory (which shall not exceed the
amount that may be drawn under such Letters of Credit), and (C) Eligible
Inventory, Eligible In-Transit Inventory and Eligible FOB Inventory (which
determination, with respect to this clause (C), shall take into account the
following factors, among others: (i) the cost thereof, (a) as determined under
the retail method of accounting as reflected in the Borrower's and the Retail
Guarantors' stock ledger (the cost value of the Inventory in the stock ledger
will be adjusted based upon the lowest ticketed retail price at which such
Inventory is offered to the public, after all permanent mark-downs (whether or
not such price is then reflected on the Borrower's accounting system)) or, (b)
with respect to warehouse and in-transit inventory, determined under the cost
method of accounting, (ii) the first-in, first-out accounting valuation method,
(iii) the Borrower's accounting practices, known to the Administrative Agent and
in effect on the date hereof, and (iv) excluding any capitalization costs or
other non-purchase price charges (other than freight consistent with historical
methodologies) used in the Borrower's calculation of cost of goods sold.
"Loans" shall mean all loans (including, without limitation, Agent
Advances) at any time made to the Borrower or for account of the Borrower
pursuant to this Agreement.
"Maturity Date" shall mean November 15, 1999.
"Minority Lenders" shall have the meaning set forth in Section
10.10(b).
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"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is
making or accruing an obligation to make contributions, or has within any of the
preceding five plan years made or accrued an obligation to make contributions.
"Multiple Employer Plan" shall mean a Single Employer Plan, which (i)
is maintained for employees of the Borrower or an ERISA Affiliate and at least
one Person other than the Borrower and its ERISA Affiliates or (ii) was so
maintained and in respect of which the Borrower or an ERISA Affiliate could have
liability under Section 4064 or 4069 of ERISA in the event such Plan has been or
were to be terminated.
"Non-U.S. Lender" shall have the meaning set forth in Section 2.18(f).
"Notes" shall mean the promissory notes of the Borrower (i)
substantially in the form of Exhibit B-1, each payable to the order of a Lender,
evidencing the Loans and (ii) substantially in the form of Exhibit B-2, payable
to the Administrative Agent, evidencing the Agent Advances.
"Obligations" shall mean (a) the due and punctual payment of principal
of and interest on the Loans and the Notes and the reimbursement of all amounts
drawn under Letters of Credit, and (b) the due and punctual payment of the Fees
and all other present and future, fixed or contingent, monetary obligations of
the Borrower and the Guarantors to the Lenders, the Issuing Bank, the Collateral
Agent, the Managing Agent and the Administrative Agent under the Loan Documents.
"Order" shall mean the Order of the Bankruptcy Court described in
Section 4.01(c).
"Other Taxes" shall have the meaning set forth in Section 2.18(b).
"Overadvance Amount" shall mean on any day from and including March 1
through and including December 31 of any year, the lesser of (x) 5% of the then
Loan Value of Eligible Inventory and, without duplication, Eligible Letter of
Credit Inventory, Eligible In-Transit Inventory and Eligible FOB Inventory (in
each case, to the extent that the Collateral Agent has an enforceable security
interest in such Inventory in accordance with, and with the priority described
in, Section 2.23) and (y) $30,000,000.
"Overadvance Margin" shall mean (i) 0.50% per annum for any month in
which the Borrower has any Loans outstanding which utilize any portion of the
Overadvance Amount under the Borrowing Base, or (ii) at all other times, zero.
"Payment Direction Notice" shall have the meaning set forth in the
definition of "Credit Card Obligor."
"Payoff Amount" shall have the meaning set forth in Section 4.01(n).
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor agency or entity performing substantially the same functions.
"Pension Plan" shall mean a defined benefit pension or retirement plan
which meets and is subject to the requirements of Section 401(a) of the Code.
"Permitted Discretion" shall mean the exercise of the Administrative
Agent's reasonable judgment in consideration of any factor which (i) could
adversely affect the value of any Collateral, the enforceability
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or priority of the Liens thereon or the amount that the Collateral Agent and the
Lenders would be likely to receive (after giving consideration to delays in
payment and costs of enforcement) in the liquidation thereof or (ii) materially
increases the likelihood that the Lenders would not receive payment for all of
the Obligations. The burden of demonstrating that the Administrative Agent has
not acted reasonably shall rest with the Borrower.
"Permitted Investments" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed by
the full faith and credit of the United States of America), in each case payable
in Dollars and maturing within twelve months from the date of acquisition
thereof;
(b) investments in certificates of deposit, banker's
acceptances and time deposits (including Eurodollar time deposits) payable in
Dollars and maturing within six months from the date of acquisition thereof
issued or guaranteed by or placed with (i) any domestic office of the
Administrative Agent or (ii) any domestic office of any other commercial bank of
recognized standing organized under the laws of the United States of America or
any State thereof that has a combined capital and surplus and undivided profits
of not less than $250,000,000 and is the principal banking Subsidiary of a bank
holding company having a long-term unsecured debt rating of at least "A" or the
equivalent thereof from Standard & Poor's Corporation or at least "A2" or the
equivalent thereof from Moody's Investors Service, Inc.;
(c) investments in commercial paper payable in Dollars and
maturing within six months from the date of acquisition thereof and issued by
(i) the holding company of the Administrative Agent or (ii) the holding company
of any other commercial bank of recognized standing organized under the laws of
the United States of America or any State thereof that has (A) a combined
capital and surplus in excess of $250,000,000 and (B) commercial paper rated at
least "A" or the equivalent thereof from Standard & Poor's Corporation or of at
least "A2" or the equivalent thereof from Moody's Investors Service, Inc.;
(d) investments in repurchase obligations payable in Dollars
with a term of not more than seven days for underlying securities of the types
described in clause (a) above entered into with any office of a bank or trust
company meeting the qualifications specified in clause (b) above;
(e) investments in money market funds substantially all the
assets of which are comprised of securities of the types described in clauses
(a) through (d) above; and
(f) investments in the capital stock of any direct or indirect
Subsidiary of the Borrower in existence on the Filing Date.
"Permitted Liens" shall mean (i) Liens imposed by law (other than
Environmental Liens and any Lien imposed under ERISA) for taxes, assessments or
charges of any Governmental Authority for claims not yet due or which are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves or other appropriate provisions are being maintained in
accordance with GAAP; (ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens (other than Environmental
Liens and any Lien imposed under ERISA) imposed by law created in the ordinary
course of business for amounts not yet due or which are being contested in good
faith by appropriate proceedings and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with GAAP; (iii)
Liens (other than any Lien imposed under ERISA) incurred or deposits made in the
ordinary
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course of business (including, without limitation, surety bonds and appeal
bonds) in connection with workers' compensation, unemployment insurance and
other types of social security benefits or to secure the performance of tenders,
bids, leases, contracts (other than for the repayment of Indebtedness),
statutory obligations and other similar obligations or arising as a result of
progress payments under government contracts; (iv) easements (including, without
limitation, reciprocal easement agreements and utility agreements),
rights-of-way, covenants, consents, reservations, encroachments, variations and
zoning and other restrictions, charges or encumbrances (whether or not
recorded), which do not interfere materially with the ordinary conduct of the
business of the Borrower or any Guarantor, as the case may be, and which do not
materially detract from the value of the property to which they attach or
materially impair the use thereof to the Borrower or any Guarantor, as the case
may be; (v) purchase money Liens securing amounts not in excess of $750,000 in
the aggregate (a) existing on the Closing Date (and listed on Schedule 3.06(b))
upon or in any property (other than Inventory) acquired or held in the ordinary
course of business to secure the purchase price of such property or (b) to
secure Indebtedness created after the Closing Date permitted by Section
6.03(iii) and solely for the purpose of financing the acquisition of such
property; and (vi) extensions, renewals or replacements of any Lien referred to
in paragraphs (i) through (v) above; provided that the principal amount of the
obligation secured thereby is not increased and that any such extension, renewal
or replacement is limited to the property originally encumbered thereby.
"Person" shall mean any natural person, corporation, partnership,
limited liability company, trust, joint venture, association, company, estate,
unincorporated organization or government or any agency or political subdivision
thereof.
"Plan" shall mean a Single Employer Plan or a Multiemployer Plan.
"Pre-Petition Claim Payment" shall mean a payment or transfer of
property on account of any claim that was outstanding against the Borrower or
any Guarantor on the Filing Date, including (without limitation) payments or
transfers that are (a) cash interest or principal payments, (b) merchandise
returns credited to any pre-petition claim, (c) adequate protection payments on
secured claims, (d) payments made to cure pre-petition defaults on an unexpired
lease or executory contract, (e) returns of goods based on reclamation rights,
or the grant or payment of any administrative priority claim in lieu of any such
return of goods, and (f) trade payables arising from the purchase of Inventory
not otherwise permitted to be acquired under this Agreement.
"Real Estate Lender" shall have the meaning set forth in the Order.
"Receivables" shall mean, with respect to any Credit Card Obligor, the
amount owed by such Credit Card Obligor to the Borrower or a Retail Guarantor
under a charge account agreement arising from a sale of merchandise or services
by the Borrower or such Retail Guarantor.
"Register" shall have the meaning set forth in Section 10.03(d).
"Reorganization Plan" shall mean a plan of reorganization in any of the
Cases.
"Required Lenders" shall mean, at any time, Lenders having Loans
outstanding representing at least 51% of the total Loans outstanding; provided,
however, that if no Loans are outstanding, Required Lenders shall be those
Lenders having Commitments representing at least 51% of the Total Commitment
(without giving effect to any termination of all of the Commitments pursuant to
Section 7.01).
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"Retail Guarantors" shall mean Caldor, Inc. - CT, a Connecticut
corporation, and Caldor, Inc. - NY, a New York corporation.
"Security Agreement" shall mean the Security Agreement executed by the
Borrower and each Guarantor and delivered to the Collateral Agent, substantially
in the form of Exhibit D.
"Settlement Date" shall have the meaning set forth in Section 2.03(d).
"Single Employer Plan" shall mean a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the
Borrower or an ERISA Affiliate or (ii) was so maintained and in respect of which
the Borrower could have liability under Section 4069 of ERISA in the event such
Plan has been or were to be terminated.
"Statutory Reserves" shall mean, on any date, the percentage (expressed
as a decimal) established by the Board and any other banking authority which is
the then stated maximum rate for all reserves (including but not limited to any
emergency, supplemental or other marginal reserve requirements) applicable to
any member bank of the Federal Reserve System in respect of Eurocurrency
Liabilities (or any successor category of liabilities under Regulation D issued
by the Board, as in effect from time to time). Such reserve percentages shall
include, without limitation, those imposed pursuant to said Regulation. The
Statutory Reserves shall be adjusted automatically on and as of the effective
date of any change in such percentage.
"Subsidiary" shall mean, with respect to any Person (herein referred to
as the "parent"), any corporation, association or other business entity (whether
now existing or hereafter organized) of which at least a majority of the
securities or other ownership interests having ordinary voting power for the
election of directors is, at the time as of which any determination is being
made, owned or controlled by the parent or one or more subsidiaries of the
parent or by the parent and one or more subsidiaries of the parent.
"Superpriority Claim" shall mean a claim against the Borrower and any
Guarantor in any of the Cases which is an administrative expense claim having
priority over any or all administrative expenses of the kind specified in
Sections 503(b), 507(b) and 364(c) of the Bankruptcy Code.
"Taxes" shall have the meaning set forth in Section 2.18(a).
"Term Lenders" shall have the meaning set forth in the Order.
"Termination Date" shall mean the earliest to occur of (i) the
effective date of any plan of reorganization that is confirmed in any of the
Cases pursuant to an order entered by the Bankruptcy Court, (ii) the Maturity
Date, and (iii) the date on which the maturity of the Loans is accelerated and
the commitments of the Lenders are terminated in accordance with Section 7.01.
"Termination Event" shall mean (i) a "reportable event", as such term
is described in Section 4043 of ERISA and the regulations issued thereunder
(other than a "reportable event" not subject to the provision for 30-day notice
to the PBGC under Section 4043 of ERISA or such regulations) or an event
described in Section 4068 of ERISA excluding events described in Section
4043(c)(9) of ERISA or 29 CFR 2615.21 or 2615.23, or (ii) the withdrawal of the
Borrower or any ERISA Affiliate from a Multiple Employer Plan during a plan year
in which it was a "substantial employer", as such term is defined in Section
4001(c) of ERISA, or the incurrence of liability by the Borrower or any ERISA
Affiliate under Section 4064 of ERISA upon the termination of a Multiple
Employer Plan, or (iii) providing notice of intent to terminate a Plan
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pursuant to Section 4041(c) of ERISA or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA, or (iv) the institution of proceedings
to terminate a Plan by the PBGC under Section 4042 of ERISA, or (v) any other
event or condition (other than the commencement of the Cases and the failure to
have made any contribution accrued as of the Filing Date but not paid) which
would reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of or the appointment of a trustee to administer, any Plan,
or the imposition of any liability under Title IV of ERISA (other than for the
payment of premiums to the PBGC).
"Total Commitment" shall mean, at any time, the sum of the Commitments
at such time.
"Trademark Security Agreement" shall mean the Security Agreement and
Mortgage - Trademarks executed by the Borrower and delivered to the Collateral
Agent, substantially in the form of Exhibit J.
"Transferee" shall have the meaning set forth in Section 2.18(a).
"Type" when used in respect of any Loan or Borrowing shall refer to the
rate of interest by reference to which interest on such Loan or on the Loans
comprising such Borrowing is determined.
"Unused Commitment" shall mean, on any day, (a) the then aggregate
amount of the Commitments minus (b) the sum of (i) the principal amount of Loans
then outstanding and (ii) the then Letter of Credit Outstandings.
"Unused Line Fee" shall have the meaning set forth in Section 2.20.
"Withdrawal Liability" shall have the meaning set forth under Part I of
Subtitle E of Title IV of ERISA.
SECTION 1.02. TERMS GENERALLY. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. All references herein to Articles,
Sections, Exhibits and Schedules shall be deemed references to Articles and
Sections of, and Exhibits and Schedules to, this Agreement unless the context
shall otherwise require. Except as otherwise expressly provided herein, all
terms of an accounting or financial nature shall be construed in accordance with
GAAP, as in effect from time to time; provided, however, that for purposes of
determining compliance with any covenant set forth in Article VI, such terms
shall be construed in accordance with GAAP as in effect on the date of this
Agreement applied on a basis consistent with the application used in the
Borrower's audited financial statements for the fiscal year ended on January 31,
1998.
II. AMOUNT AND TERMS OF CREDIT
SECTION 2.01. COMMITMENT OF THE LENDERS.
(a) Each Lender severally and not jointly with any other
Lender agrees, upon the terms and subject to the conditions herein set forth, to
extend credit to the Borrower on a revolving basis, in the form of Credit
Extensions and in an amount equal to such Lender's Commitment Percentage
thereof, subject to the following limitations:
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(1) The aggregate outstanding amount of the Credit Extensions
shall not at any time exceed the lowest of (i) $450,000,000 or any
lesser amount to which the Commitments have then been reduced by the
Borrower pursuant to Sections 2.07 or 2.10, (ii) the then amount of the
Borrowing Base, plus the cash held in the Cash Collateral Account
pursuant to Sections 2.10(a) and 2.14(a) (item "fourth"), and (iii) the
amount of credit which the Borrower is then authorized to incur, and
which each Guarantor is then authorized to guarantee, under the Order
or any other order of the Bankruptcy Court or any other court of
competent jurisdiction.
(2) No Lender shall be obligated to issue any Letter of
Credit, and Letters of Credit shall be available from the Issuing Bank,
subject to the ratable participation of all Lenders, as set forth in
Section 2.02. The Borrower will not at any time permit the aggregate
Letter of Credit Outstandings to exceed $150,000,000.
(3) Subject to all of the other provisions of this Agreement,
Loans that are repaid may be reborrowed prior to the Termination Date.
No new Credit Extension, however, shall be made to the Borrower after
the Termination Date.
(b) Each Borrowing of Loans (other than Agent Advances) shall
be made by the Lenders pro rata in accordance with their respective Commitments.
The failure of any Lender to make any such Loan shall neither relieve any other
Lender of its obligation to fund its Loan in accordance with the provisions of
this Agreement nor increase the obligation of any such other Lender.
(c) Notwithstanding anything contained herein to the contrary,
the Administrative Agent may, in the exercise of its sole discretion and with no
obligation to the Borrower to do so, provide Loan overadvances (above the
then-current Borrowing Base (but in no event above the Total Commitment)) to the
Borrower of up to $15,000,000 for no more than 60 days at a time up to three
times per year during the term of this Agreement. Any Loans under this
subsection (c) shall bear interest at the rate set forth in Section 2.06.
SECTION 2.02. LETTERS OF CREDIT.
(a) Upon the terms and subject to the conditions herein set
forth, the Borrower may request the Issuing Bank, at any time and from time to
time after the date hereof and prior to the Termination Date, to issue, and
subject to the terms and conditions contained herein, the Issuing Bank shall
issue, for the account of the Borrower one or more Letters of Credit; provided
that no Letter of Credit shall be issued if after giving effect to such issuance
(i) the aggregate Letter of Credit Outstandings shall exceed $150,000,000, or
(ii) the aggregate Credit Extensions would exceed the limitation set forth in
Section 2.01(a)(1); and provided further that no Letter of Credit shall be
issued if the Issuing Bank shall have received notice from the Administrative
Agent or the Required Lenders that the conditions to such issuance have not been
met.
(b) No Letter of Credit shall have an expiration date later
than, (a) for standby Letters of Credit, one (1) year from the date of issuance
(with customary renewal provisions as agreed upon by the Borrower and Issuing
Bank) and, (b) for documentary Letters of Credit, 180 days from the date of
issuance; provided, however, that no Letter of Credit shall have an expiration
date later than the 90th day after the Termination Date. In the case of each
Letter of Credit issued with an expiration date later than the Termination Date,
the Borrower shall, on or prior to the Termination Date, comply with the
provisions of Section 2.10(b).
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(c) The Borrower shall pay to the Administrative Agent, for
the account of the Issuing Bank and in addition to all L/C Fees provided for in
Section 2.21, an issuance fee equal to 0.125% per annum of the average daily
balance of the maximum amount that at any time is available for drawing or
payment under each Letter of Credit, payable quarterly in arrears, as well as
such fees and charges in connection with the issuance, negotiation, settlement,
amendment and processing of each Letter of Credit issued by the Issuing Bank as
are customarily imposed by the Issuing Bank from time to time in connection with
letter of credit transactions.
(d) Drafts drawn under each Letter of Credit shall be
reimbursed by the Borrower in Dollars not later than the first Business Day
following the date of draw and shall bear interest from the date of draw until
the first Business Day following the date of draw at a rate per annum equal to
the Alternate Base Rate and thereafter until reimbursed in full at a rate per
annum equal to the Alternate Base Rate plus 2.00% per annum (computed on the
basis of the actual number of days elapsed over any year of 360 days). The
Borrower shall effect such reimbursement (x) if such draw occurs prior to the
Termination Date (or the earlier date of termination of the Total Commitment),
through a Borrowing of Loans without the satisfaction of the conditions
precedent set forth in Section 4.02, or (y) if such draw occurs on or after the
Termination Date (or the earlier date of termination of the Total Commitment),
in cash. Each Lender agrees to fund its Commitment Percentage of the Loans
described in clause (x) of the preceding sentence notwithstanding a failure to
satisfy the applicable lending conditions thereto or the provisions of Sections
2.01 and 2.02 or the occurrence of the Termination Date.
(e) Immediately upon the issuance of any Letter of Credit by
the Issuing Bank, the Issuing Bank shall be deemed to have sold to each Lender
and each such Lender shall be deemed unconditionally and irrevocably to have
purchased from the Issuing Bank, without recourse or warranty, an undivided
interest and participation, to the extent of such Lender's Commitment
Percentage, in such Letter of Credit, each drawing thereunder and the
obligations of the Borrower and the Guarantors under this Agreement with respect
thereto. Upon any change in the Commitments pursuant to Section 10.03, it is
hereby agreed that with respect to all Letter of Credit Outstandings, there
shall be an automatic adjustment to the participations hereby created to reflect
the new Commitment Percentages of the assigning and assignee Lenders. Any action
taken or omitted by the Issuing Bank under or in connection with a Letter of
Credit, if taken or omitted in the absence of gross negligence or wilful
misconduct, shall not create for the Issuing Bank any resulting liability to any
Lender.
(f) In the event that the Issuing Bank makes any payment under
any Letter of Credit and the Borrower shall not have reimbursed such amount in
full to the Issuing Bank pursuant to this Section 2.02, the Issuing Bank shall
promptly notify the Administrative Agent, which shall promptly notify each
Lender of such failure, and each Lender shall promptly and unconditionally pay
to the Administrative Agent for the account of the Issuing Bank the amount of
such Lender's Commitment Percentage of such unreimbursed payment in Dollars and
in same day funds. If the Issuing Bank so notifies the Administrative Agent, and
the Administrative Agent so notifies the Lenders prior to 11:00 a.m., Boston
time, on any Business Day, each such Lender shall make available to the Issuing
Bank such Lender's Commitment Percentage of the amount of such payment on such
Business Day in same day funds. If and to the extent such Lender shall not have
so made its Commitment Percentage of the amount of such payment available to the
Issuing Bank, such Lender agrees to pay to the Issuing Bank, forthwith on demand
such amount, together with interest thereon, for each day from such date until
the date such amount is paid to the Administrative Agent for the account of the
Issuing Bank at the Federal Funds Effective Rate. The failure of any Lender to
make available to the Issuing Bank its Commitment Percentage of any payment
under any Letter of Credit shall neither relieve any Lender of its obligation
hereunder to make available to the Issuing Bank its Commitment Percentage of any
payment under any Letter of Credit on the date required, as specified above, nor
increase the obligation of
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such other Lender. Whenever any Lender has made payments to the Issuing Bank in
respect of any reimbursement obligation for any Letter of Credit, such Lender
shall be entitled to share ratably, based on its Commitment Percentage, in all
payments and collections thereafter received on account of such reimbursement
obligation.
(g) Whenever the Borrower desires that the Issuing Bank issue
a Letter of Credit, it shall give to the Issuing Bank at least two Business
Days' prior written (including telegraphic, telex, facsimile or cable
communication) notice (or such shorter period as may be agreed upon in writing
by the Issuing Bank and the Borrower) specifying the date on which the proposed
Letter of Credit is to be issued (which shall be a Business Day), the stated
amount of the Letter of Credit so requested, the expiration date of such Letter
of Credit, the name and address of the beneficiary thereof, and the conditions
to be satisfied at presentment thereof.
(h) The obligations of the Borrower to reimburse the Issuing
Bank for drawings made under any Letter of Credit shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, including, without limitation (it being
understood that any such payment by the Borrower shall be without prejudice to,
and shall not constitute a waiver of, any rights the Borrower might have or
might acquire as a result of the payment by the Issuing Bank of any draft or the
reimbursement by the Borrower thereof): (i) any lack of validity or
enforceability of any Letter of Credit; (ii) the existence of any claim, setoff,
defense or other right which the Borrower or any Guarantor may have at any time
against a beneficiary of any Letter of Credit or against any of the Lenders,
whether in connection with this Agreement, the transactions contemplated herein
or any unrelated transaction; (iii) any draft, demand, certificate or other
document presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; (iv) payment by the Issuing Bank of any Letter of
Credit against presentation of a demand, draft or certificate or other document
which does not comply with the terms of such Letter of Credit; (v) any other
circumstance or happening whatsoever, whether or not similar to any of the
foregoing; or (vi) the fact that any Event of Default shall have occurred and be
continuing.
(i) In addition to Letters of Credit permitted hereunder, the
Borrower may also request that the Issuing Bank issue for the account of the
Borrower banker's acceptances in an aggregate face amount outstanding at any
time not to exceed $500,000, subject to (A) the Borrower's and the Issuing
Bank's customary past practices and (B) the payment of L/C Fees with respect to
such banker's acceptances (as if such banker's acceptances were Letters of
Credit) and any other non-duplicative customary charges for similarly situated
companies agreed upon by the Borrower and the Issuing Bank, and otherwise in
form and substance satisfactory to the Issuing Bank; provided that the aggregate
face amount of such banker's acceptances, when added to the then Letter of
Credit Outstandings, does not exceed $150,000,000. The reimbursement obligations
of the Borrower and the Lenders with respect to Letters of Credit set forth in
this Section 2.02 will apply with equal force to such banker's acceptances,
mutatis, mutandis; such reimbursement obligations of the Borrower with respect
to such banker's acceptances will constitute "Obligations" hereunder; and such
banker's acceptances will be deemed to be "Letters of Credit" for all other
purposes under this Agreement and the other Loan Documents.
SECTION 2.03. MAKING OF LOANS.
(a) Except as set forth in Section 2.09, Loans by the Lenders
shall be either ABR Loans or (so long as no Event of Default has occurred and is
continuing and the making of Eurodollar Loans by any Lender is not illegal or
impractical) Eurodollar Loans as the Borrower may request subject to and in
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accordance with this Section 2.03. All Loans made pursuant to the same Borrowing
shall, unless otherwise specifically provided herein, be Loans of the same Type.
Each Lender may fulfill its Commitment with respect to any Loan by causing any
lending office of such Lender to make such Loan; but any such use of a lending
office shall not affect the obligation of the Borrower to repay such Loan in
accordance with the terms of the applicable Note. Each Lender shall, subject to
its overall policy considerations, use reasonable efforts (but shall not be
obligated) to select a lending office which will not result in the payment of
increased costs by the Borrower pursuant to Section 2.15. Subject to the other
provisions of this Section 2.03 and the provisions of Section 2.16, Borrowings
of Loans of more than one Type may be incurred at the same time, but no more
than seven (7) Borrowings of Eurodollar Loans may be outstanding at any time.
(b) The Borrower shall give the Administrative Agent two
Business Days' prior notice of each Borrowing of Eurodollar Loans and same-day
notice of each Borrowing of ABR Loans, so long as notice is given prior to 1:00
p.m., Boston time. Such notice shall be irrevocable and shall specify the amount
of the proposed Borrowing (which shall not be less than $1,000,000, or larger
integral multiples thereof, in the case of Eurodollar Loans) and the date
thereof (which shall be a Business Day) and shall contain disbursement
instructions. Such notice, to be effective, must be received by the
Administrative Agent not later than 1:00 p.m., Boston time, on the second
Business Day in the case of Eurodollar Loans and not later than 3:00 p.m.,
Boston time, on the same day in the case of ABR Loans, on which such Borrowing
is to be made. Such notice shall specify whether the Borrowing then being
requested is to be a Borrowing of ABR Loans or Eurodollar Loans and, if
Eurodollar Loans, the Interest Period with respect thereto. If no election of
Interest Period is specified in any such notice for a Borrowing of Eurodollar
Loans, such notice shall be deemed a request for an Interest Period of one
month. If no election is made as to the Type of Loan, such notice shall be
deemed a request for Borrowing of ABR Loans (subject to Section 2.03(a)). The
Administrative Agent shall promptly notify each Lender of its proportionate
share of such Borrowing, the date of such Borrowing, the Type of Borrowing being
requested and the Interest Period or Interest Periods applicable thereto, as
appropriate. On the borrowing date specified in such notice, each Lender shall
make its share of the Borrowing available at the office of the Administrative
Agent at 100 Federal Street, Boston, Massachusetts 02110, no later than 3:00
p.m., Boston time, in immediately available funds. Upon receipt of the funds
made available by the Lenders to fund any borrowing hereunder, the
Administrative Agent shall disburse such funds in the manner specified in the
notice of borrowing delivered by the Borrower and shall use reasonable efforts
to make the funds so received from the Lenders available to the Borrower no
later than 5:00 p.m., Boston time.
(c) The Administrative Agent is authorized by the Lenders, but
is not obligated, to make in the exercise of its sole discretion Agent Advances
of up to $30,000,000 in the aggregate outstanding at any time. Agent Advances
shall consist only of ABR Loans and shall be made available upon a notice of
Borrowing received by the Administrative Agent (which notice, at the
Administrative Agent's discretion, may be submitted prior to 3:00 p.m., Boston
time, on the same day for which such Agent Advance is requested). Agent Advances
(together with all other Credit Extensions) may not at any time cause the
Borrower to be in violation of the provisions of Section 2.10(a) hereof. Agent
Advances shall be subject to periodic settlement with the Lenders under
subsection (d) below.
(d) (i) The amount of each Lender's Commitment Percentage of
outstanding Loans (including Agent Advances) shall be computed weekly (or more
frequently in the Administrative Agent's discretion) and shall be adjusted
upward or downward based on all Loans (including Agent Advances) and repayments
of Loans (including Agent Advances) received by the Administrative Agent as of
3:00 p.m., Boston time, on the first Business Day following the end of the
period specified by the Administrative Agent (such date, the "Settlement Date").
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(ii) The Administrative Agent shall deliver to each
of the Lenders promptly after the Settlement Date a summary statement of the
amount of outstanding Loans (including Agent Advances) for the period and the
amount of repayments received for the period. As reflected on the summary
statement: (x) the Administrative Agent shall transfer to each Lender its
Commitment Percentage of repayments (after accounting for unreimbursed Agent
Advances) and (y) each Lender shall transfer to the Administrative Agent (as
provided below), such amounts as are necessary to insure that, after giving
effect to all such transfers, the amount of Loans made by each Lender with
respect to Loans (including Agent Advances) shall be equal to such Lender's
Commitment Percentage of Loans outstanding as of such Settlement Date. If the
summary statement requires transfers to be made to the Administrative Agent by
the Lenders and is received prior to 12:00 Noon, Boston time, on a Business Day,
such transfers shall be made in immediately available funds no later than 3:00
p.m., Boston time, that day; and, if received after 12:00 Noon, Boston time,
then no later than 3:00 p.m., Boston time, on the next Business Day. The
obligation of each Lender to transfer such funds is irrevocable, unconditional
and without recourse to or warranty by the Administrative Agent and,
notwithstanding the foregoing, on the day that the Administrative Agent makes an
Agent Advance hereunder, each Lender shall be deemed to have made its Commitment
Percentage of such Agent Advance on such day. If and to the extent any Lender
shall not have so made its transfer to the Administrative Agent, such Lender
agrees to pay to the Administrative Agent, forthwith on demand such amount,
together with interest thereon, for each day from such date until the date such
amount is paid to the Administrative Agent at the Federal Funds Effective Rate.
SECTION 2.04. NOTES; REPAYMENT OF LOANS.
(a) The Loans outstanding to each Lender (and to the
Administrative Agent, with respect to Agent Advances) shall be evidenced by a
Note duly executed on behalf of the Borrower, dated the Closing Date, in
substantially the form attached hereto as Exhibit B-1 or B-2, as applicable,
payable to the order of such Lender (or the Administrative Agent, as applicable)
in an aggregate principal amount equal to such Lender's Commitment (or, in the
case of the Note evidencing the Agent Advances, $30,000,000).
(b) The outstanding principal balance of all Loans, as
evidenced by such Notes, shall be payable on the Termination Date (subject to
earlier repayment as provided below). Each Note shall bear interest from the
date thereof on the outstanding principal balance thereof as set forth in this
Article II. Each Lender is hereby authorized by the Borrower to endorse on a
schedule attached to each Note delivered to such Lender (or on a continuation of
such schedule attached to such Note and made a part thereof), or otherwise to
record in such Lender's internal records, an appropriate notation evidencing the
date and amount of each Loan from such Lender, each payment and prepayment of
principal of any such Loan, each payment of interest on any such Loan and the
other information provided for on such schedule; provided, however, that the
failure of any Lender to make such a notation or any error therein shall not
affect the obligation of the Borrower to repay the Loans made by such Lender in
accordance with the terms of this Agreement and the applicable Notes.
SECTION 2.05. INTEREST ON LOANS.
(a) Subject to Section 2.06, each ABR Loan shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 360
days) at a rate per annum that shall be equal to the then Alternate Base Rate,
plus the Overadvance Margin.
(b) Subject to Section 2.06, each Eurodollar Loan shall bear
interest (computed on the basis of the actual number of days elapsed over a year
of 360 days) at a rate per annum equal, during each
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Interest Period applicable thereto, to the Adjusted Eurodollar Rate for such
Interest Period, plus (i) the Eurodollar Applicable Margin and (ii) the
Overadvance Margin.
(c) Accrued interest on all Loans shall be payable in arrears
on each Interest Payment Date applicable thereto, at maturity (whether by
acceleration or otherwise), after such maturity on demand and (with respect to
Eurodollar Loans) upon any repayment or prepayment thereof (on the amount
prepaid).
(d) All outstanding Loans that on any day are not, in
accordance with the provisions of this Agreement, Eurodollar Loans shall, for
such day, constitute ABR Loans and, subject to Section 2.06, shall bear interest
with reference to the Alternate Base Rate as set forth in Section 2.05(a).
SECTION 2.06. DEFAULT INTEREST. Effective upon the occurrence of any
Event of Default and at all times thereafter while such Event of Default is
continuing, interest shall accrue on all outstanding Loans (after as well as
before judgment) at a rate per annum (computed on the basis of the actual number
of days elapsed over a year of 360 days) equal to the interest rate then in
effect plus 2.00% per annum, and such interest shall be payable on demand.
SECTION 2.07. OPTIONAL TERMINATION OR REDUCTION OF COMMITMENTS. Upon at
least two Business Days' prior written notice to the Administrative Agent, the
Borrower may at any time in whole permanently terminate, or from time to time in
part permanently reduce, the Commitments. Each such reduction shall be in the
principal amount of $5,000,000 or any integral multiple thereof. Such reduction
or termination shall be applied ratably to the Commitment of each Lender and
shall be irrevocable when given. At the effective time of each such reduction or
termination, the Borrower shall pay to the Administrative Agent (i) all Unused
Lines Fees accrued on the amount of the Commitments so terminated or reduced
through the date thereof, (ii) any amount by which the Credit Extensions
outstanding on such date exceed the amount to which the Commitments, as the case
may be, are to be reduced effective on such date and (iii) all earned and unpaid
Fees with respect to such Credit Extensions, in each case pro rata based on the
amount prepaid.
SECTION 2.08. ALTERNATE RATE OF INTEREST. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Loan the Administrative Agent shall have
determined (which determination shall be conclusive and binding upon the
Borrower absent manifest error) that reasonable means do not exist for
ascertaining the applicable Adjusted Eurodollar Rate, the Administrative Agent
shall, as soon as practicable thereafter, give written or telegraphic notice of
such determination to the Borrower and the Lenders. After such notice shall have
been given and until the circumstances giving rise to such notice no longer
exist, any request by the Borrower for any funding as, continuation of or
conversion into a Eurodollar Borrowing shall be deemed a request for a Borrowing
of ABR Loans.
SECTION 2.09. REFINANCING OF LOANS. The Borrower shall have the right
at any time, on two Business Days' prior irrevocable notice to the
Administrative Agent (which notice, to be effective, must be received by the
Administrative Agent not later than 1:00 p.m., Boston time, on the second
Business Day preceding the date of any refinancing), (x) to refinance any
outstanding Borrowing or Borrowings of Loans of one Type (or a portion thereof)
with a Borrowing of Loans of the other Type or (y) to continue an outstanding
Borrowing of Eurodollar Loans for an additional Interest Period, subject to the
following:
(a) no Borrowing or Loans may be refinanced into, or continued
as, Eurodollar Loans at any time when an Event of Default has occurred and is
continuing;
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(b) if less than a full Borrowing of Loans is refinanced, such
refinancing shall be made pro rata among the Lenders, as applicable, in
accordance with the respective principal amounts of the Loans comprising such
Borrowing held by such Lenders immediately prior to such refinancing;
(c) the aggregate principal amount of Loans being refinanced
into or continued as Eurodollar Loans shall be at least $5,000,000;
(d) each Lender shall effect each refinancing by applying the
proceeds of its new Eurodollar Loan or ABR Loan, as the case may be, to its Loan
being refinanced;
(e) the Interest Period with respect to a Borrowing of
Eurodollar Loans effected by a refinancing or in respect to the Borrowing of
Eurodollar Loans being continued as Eurodollar Loans shall commence on the date
of refinancing or the expiration of the current Interest Period applicable to
such continuing Borrowing, as the case may be;
(f) a Borrowing of Eurodollar Loans may be refinanced only on
the last day of an Interest Period applicable thereto;
(g) each request for a refinancing with a Borrowing of
Eurodollar Loans which fails to state an applicable Interest Period shall be
deemed to be a request for an Interest Period of one month; and
(h) no more than seven (7) Borrowings of Eurodollar Loans may
be outstanding at any time.
If the Borrower does not give notice to refinance any Borrowing of Eurodollar
Loans, or does not give notice to continue, or does not have the right to
continue, any Borrowing as Eurodollar Loans, in each case as provided above,
such Borrowing shall automatically be refinanced with a Borrowing of ABR Loans
at the expiration of the then-current Interest Period. The Administrative Agent
shall, after it receives notice from the Borrower, promptly give each Lender
notice of any refinancing, in whole or part, of any Loan made by such Lender.
SECTION 2.10. MANDATORY PREPAYMENT; COMMITMENT TERMINATION; CASH
COLLATERAL. The outstanding Obligations shall be subject to mandatory prepayment
as follows:
(a) If at any time the amount of the Credit Extensions exceeds
the lowest of (i) the then amount of the Commitments, (ii) the then amount of
the Borrowing Base, plus the cash held in the Cash Collateral Account pursuant
to Section 2.14(a), and (iii) the amount of credit which the Borrower is then
authorized to incur, and which each Guarantor is then authorized to guarantee,
under the Order or any other order of the Bankruptcy Court or any other court of
competent jurisdiction, the Borrower will immediately (x) prepay the Loans in an
amount necessary to eliminate such excess and (y) if, after giving effect to the
prepayment in full of all outstanding Loans such excess has not been eliminated,
deposit cash to the Cash Collateral Account in an amount equal to 105% of the
remaining amount of such excess.
(b) Upon the Termination Date, the credit facility provided
hereunder shall be terminated in full and the Borrower shall pay, in full and in
cash, all outstanding Loans and all other outstanding Obligations, except that
if any Letter of Credit then remains outstanding, the Borrower shall with
respect to outstanding Letters of Credit, (i) deposit into the Cash Collateral
Account an amount in cash sufficient to cause the funds on deposit in the Cash
Collateral Account to be equal to 105% of the sum of then Letter of
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Credit Outstandings, any such cash remaining to be remitted to the Borrower upon
the expiration, cancellation, satisfaction or other termination of such
reimbursement obligations or (ii) secure its reimbursement obligations
thereunder with a letter of credit in form and substance and from an issuer
satisfactory to the Issuing Bank in its sole discretion.
SECTION 2.11. OPTIONAL PREPAYMENT OF LOANS; REIMBURSEMENT OF LENDERS.
(a) The Borrower shall have the right at any time and from
time to time to prepay outstanding Loans in whole or in part, (x) with respect
to Eurodollar Loans, upon at least two Business Days' prior written, telex or
facsimile notice to the Administrative Agent prior to 1:00 p.m., Boston time,
and (y) with respect to ABR Loans, on the same Business Day if written, telex or
facsimile notice is received by the Administrative Agent prior to 3:00 p.m.,
Boston time, subject to the following limitations:
(1) All prepayments shall be paid to the
Administrative Agent for application, first, to the prepayment
of outstanding Agent Advances, second, to the prepayment of
outstanding Loans ratably in accordance with each Lender's
Commitment Percentage, and third, to the extent otherwise
required hereunder, to the funding of a cash collateral
deposit in the Cash Collateral Account in an amount equal to
105% of all Letter of Credit Outstandings.
(2) Subject to the foregoing, outstanding ABR Loans
shall be prepaid before outstanding Eurodollar Loans are
prepaid. Each partial prepayment of Eurodollar Loans shall be
in an integral multiple of $1,000,000. No prepayment of
Eurodollar Loans shall be permitted pursuant to this Section
2.11(a) other than on the last day of an Interest Period
applicable thereto, unless the Borrower simultaneously
reimburses the Lenders for all "Breakage Costs" (as defined
below) associated therewith. No partial prepayment of a
Borrowing of Eurodollar Loans shall result in the aggregate
principal amount of the Eurodollar Loans remaining outstanding
pursuant to such Borrowing being less than $5,000,000.
(3) Each notice of prepayment shall specify the
prepayment date, the principal amount and Type of the Loans to
be prepaid and, in the case of Eurodollar Loans, the Borrowing
or Borrowings pursuant to which such Loans were made. Each
notice of prepayment shall be irrevocable and shall commit the
Borrower to prepay such Loan by the amount and on the date
stated therein. The Administrative Agent shall, promptly after
receiving notice from the Borrower hereunder, notify each
Lender of the principal amount and Type of the Loans held by
such Lender which are to be prepaid, the prepayment date and
the manner of application of the prepayment.
(b) The Borrower shall reimburse each Lender on demand for any
loss incurred or to be incurred by it in the reemployment of the funds released
(i) resulting from any prepayment (for any reason whatsoever, including, without
limitation, refinancing with ABR Loans) of any Eurodollar Loan required or
permitted under this Agreement, if such Loan is prepaid other than on the last
day of the Interest Period for such Loan or (ii) in the event that after the
Borrower delivers a notice of borrowing under Section 2.03 in respect of
Eurodollar Loans, such Loans are not made on the first day of the Interest
Period specified in such notice of borrowing for any reason other than a breach
by such Lender of its obligations hereunder. Such loss shall be the amount as
reasonably determined by such Lender as the excess, if any, of (A) the amount of
interest which would have accrued to such Lender on the amount so paid or not
borrowed at a rate of interest equal to the Adjusted Eurodollar Rate for such
Loan, for the period from the date of such payment or failure to borrow to the
last day (x) in the case of a payment or refinancing with ABR Loans other than
on the last day of the Interest Period for such Loan, of the then current
Interest Period for such Loan or (y) in
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the case of such failure to borrow, of the Interest Period for such Loan which
would have commenced on the date of such failure to borrow, over (B) the amount
of interest which would have accrued to such Lender on such amount by placing
such amount on deposit for a comparable period with leading banks in the London
interbank market (collectively, "Breakage Costs"). Any Lender demanding
reimbursement for such loss shall deliver to the Borrower from time to time one
or more certificates setting forth the amount of such loss (and the calculations
thereof) as determined by such Lender.
(c) In the event the Borrower fails to prepay any Loan on the
date specified in any prepayment notice delivered pursuant to Section 2.11(a),
the Borrower on demand by any Lender shall pay to the Administrative Agent for
the account of such Lender any amounts required to compensate such Lender for
any loss incurred by such Lender as a result of such failure to prepay,
including, without limitation, any loss, cost or expenses incurred by reason of
the acquisition of deposits or other funds by such Lender to fulfill deposit
obligations incurred in anticipation of such prepayment. Any Lender demanding
such payment shall deliver to the Borrower from time to time one or more
certificates setting forth the amount of such loss (and the calculations
thereof) as determined by such Lender.
(d) Whenever any partial prepayment of Loans are to be applied
to Eurodollar Loans, such Eurodollar Loans shall be prepaid in the chronological
order of their Interest Payment Dates.
SECTION 2.12. MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF ACCOUNT.
(a) The Administrative Agent shall maintain an account on its
books in the name of the Borrower (the "Loan Account") in which the Borrower
will be charged with (i) all Agent Advances and all loans and advances made by
the Lenders to the Borrower or for the Borrower's account, including the Loans,
(ii) all Letter of Credit reimbursement obligations, Fees and interest that have
become payable as herein set forth, and (iii) if an Event of Default has
occurred and is continuing, any and all other Obligations that have become
payable. The charging of any Obligations to the Loan Account shall not excuse
the Borrower from paying such Obligations in cash when due and shall not cure or
waive any Default or Event of Default that may have resulted from non-payment
thereof or any right or remedy consequent thereon.
(b) The Loan Account will be credited with all amounts
received by the Administrative Agent from the Borrower or from others for the
Borrower's account, including all amounts received in the BBNA Cash
Concentration Account from the Blocked Account Banks, and the amounts so
credited shall be applied as set forth in Sections 2.14(a) and (b). In no event
shall prior recourse to any deposit or other accounts, or any other assets, be a
prerequisite to the Administrative Agent's right to demand payment of any
Obligation upon its maturity. Further, the Administrative Agent shall have no
obligation whatsoever to perform in any respect any of the Borrower's contracts
or obligations relating to any of such accounts. After the end of each month,
the Administrative Agent shall send to the Borrower a statement accounting for
the charges, loans, advances and other transactions occurring among and between
the Administrative Agent, the Lenders and the Borrower during that month. The
monthly statements shall, absent manifest error, be an account stated, which is
final, conclusive and binding on the Borrower.
SECTION 2.13. CASH RECEIPTS.
(a) The Borrower and the Administrative Agent shall upon the
Closing Date enter into an agency agreement with Chase, with respect to its
concentration account at Chase contemplated by the Chase Credit Facility (the
"Chase Concentration Account"), and with the banks maintaining the deposit
accounts identified on Schedule 3.11(b) (collectively with the Chase
Concentration Account, the "Blocked
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Accounts"), which agreements (the "Blocked Account Agreements") shall be in form
and substance reasonably satisfactory to the Administrative Agent and shall
require the sweep on each Business Day (or the next Business Day in the case of
inadvertent failure of the electronic funds transfer system to properly transfer
such cash) of all available cash receipts from the sale of Inventory and other
assets, all collections of Receivables and other accounts, and all other cash
payments received by the Borrower or any Guarantor from any Person or from any
source or on account of any sale or other transaction or event (including,
without limitation, all proceeds from insurance), except only the proceeds of
the Loans (all such non-excluded cash receipts and collections, "Cash
Receipts"), from Blocked Accounts in excess of the amount in each such account
set forth on Schedule 3.11(b) (except upon the occurrence and during the
continuance of an Event of Default, when all such amounts in such accounts will
be swept) to a concentration account maintained by the Collateral Agent at BBNA
(the "BBNA Cash Concentration Account") (or to the Chase Concentration Account,
provided that Chase has agreed in writing with the Administrative Agent to
promptly forward all such funds to the BBNA Cash Concentration Account) (it
being understood that an Event of Default shall exist if any available cash
receipts in any Blocked Account or Chase Disbursement Account required to be
transferred to the BBNA Cash Concentration Account are not so transferred within
one (1) Business Day after such cash becomes available for transfer from such
Blocked Account). All Cash Receipts shall be deposited into a Blocked Account or
the BBNA Cash Concentration Account. Within forty-five (45) days after the
Closing Date the Borrower will close the Chase Concentration Account and
redirect all funds previously directed to the Chase Concentration Account to the
BBNA Cash Concentration Account. The Borrower shall accurately report to the
Administrative Agent all amounts deposited in the Blocked Accounts to ensure the
proper transfer of funds as set forth above. If at any time other than the times
set forth above any cash or cash equivalents owned by the Borrower or any
Guarantor are deposited to any account, or held or invested in any manner,
otherwise than in a Blocked Account that is subject to a Blocked Account
Agreement, the Administrative Agent may require the Borrower to close such
account and have all funds therein transferred to an account maintained by the
Collateral Agent at BBNA and all future deposits made to a Blocked Account which
is subject to a Blocked Account Agreement. Unless otherwise agreed by the
Administrative Agent, the Borrower and the Guarantors may not maintain any bank
accounts other than the ones expressly contemplated herein.
(b) The Borrower may request that the Administrative Agent
close Blocked Accounts and/or open new Blocked Accounts (or, in either case,
permit the Borrower to do so), subject to the execution and delivery to the
Administrative Agent of appropriate Blocked Account Agreements (unless expressly
waived by the Administrative Agent) consistent with the provisions of this
Section 2.13 and otherwise satisfactory to the Administrative Agent.
(c) Notwithstanding the foregoing, for the first sixty (60)
days following the Closing Date, the Borrower may maintain with Chase or other
financial institutions one or more disbursement accounts with balances at any
time not in excess of the amounts set forth on Schedule 2.13(a) (collectively,
the "Chase Disbursement Accounts"). Such accounts shall be used by the Borrower
for disbursements and payments (including payroll) in the ordinary course of
business or as otherwise permitted hereunder; provided that, upon the occurrence
and during the continuance of an Event of Default, all amounts in such accounts
shall be swept by the Administrative Agent into the BBNA Cash Concentration
Account for application in accordance with Sections 2.14(a) and (b); provided,
further, that the Borrower, the Administrative Agent and Chase have on or before
the Closing Date entered into an agency agreement providing for the
implementation of the foregoing requirements with respect to the Chase
Disbursement Accounts maintained with Chase and otherwise in form and substance
satisfactory to the Administrative Agent. No later than sixty (60) days after
the Closing Date, the Borrower shall close all of the Chase Disbursement
Accounts and, in lieu thereof, establish with the Collateral Agent at BBNA one
or more disbursement accounts with a balance at any time
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not in excess of the amounts set forth on an amended Schedule 2.13(a) to be
prepared by the Borrower and the Administrative Agent (collectively with the
Check Cashing Accounts described in Section 2.13(e) below, the "BBNA
Disbursement Accounts") to be used by the Borrower for disbursements and
payments (including payroll) in the ordinary course of business or as otherwise
permitted hereunder; provided that, upon the occurrence and during the
continuance of an Event of Default, all amounts in such accounts may be swept by
the Administrative Agent into the BBNA Cash Concentration Account for
application in accordance with Sections 2.14(a) and (b).
(d) The Borrower may also maintain a segregated
interest-bearing account containing up to $1,000,000 (plus interest), as
required by the terms of the GE Stipulation and Order (the "GE Account").
Amounts contained in the GE Account shall be released only as provided in the GE
Stipulation and Order, it being agreed that any portion of such amount not
required by the Bankruptcy Court to be paid to General Electric Company - GE
Lighting shall be paid to the Administrative Agent (on behalf of the Borrower)
for application as provided in Section 2.14. For the first thirty (30) days
following the Closing Date, the GE Account may be maintained at Chase and,
thereafter, it shall be maintained at BBNA.
(e) The Borrower may also maintain the check cashing accounts
listed on Schedule 2.13(b) (collectively with any additional check cashing
accounts created with prior notice to the Administrative Agent, the "Check
Cashing Accounts") with balances at any time not in excess of the amounts set
forth on Schedule 2.13(b). Such accounts may be used for the cashing of payroll
checks by employees of the Borrower and the Guarantors; provided that, upon the
occurrence and during the continuance of an Event of Default, all amounts in
such accounts shall be swept by the Administrative Agent into the BBNA Cash
Concentration Account for application in accordance with Sections 2.14(a) and
(b).
SECTION 2.14. APPLICATION OF PAYMENTS.
(a) All amounts received in the BBNA Cash Concentration
Account from any source, including, without limitation, from the Blocked Account
Banks and all proceeds from insurance shall be credited to the Loan Account
(effective as of the first Business Day after the Business Day on which the
Administrative Agent determines in good faith that it has received, prior to
2:00 p.m., Boston time, immediately available funds therefor) and such credits
shall be applied in the following order: first, to pay amounts, including
interest, due and payable on Credit Extensions (other than principal of ABR
Loans and Eurodollar Loans) and to pay Fees and expense reimbursements (after
notice reasonable under the circumstances) and indemnification then due and
payable to the Administrative Agent, BSI, the Issuing Bank, the Collateral
Agent, the Managing Agent and the Lenders; second, to repay outstanding Agent
Advances; third, to repay outstanding Loans that are ABR Loans and all
outstanding reimbursement obligations for Letters of Credit; fourth, to repay
outstanding Eurodollar Loans and all Breakage Costs due in respect of such
repayment pursuant to Section 2.11(b) or, at the Borrower's option (if no
Default or Event of Default has occurred and is then continuing), to fund a cash
collateral deposit to the Cash Collateral Account sufficient to pay, and with
direction to pay, all such outstanding Eurodollar Loans on the last day of the
then-pending Interest Period therefor; fifth, if any Default or Event of Default
has occurred and is continuing, to fund a cash collateral deposit in the Cash
Collateral Account in an amount equal to 105% of the aggregate maximum amount
that then is or at any time may become available for drawing or payment under
all outstanding Letters of Credit; provided, however, that if such Default or
Event of Default shall be cured, corrected or waived pursuant to the terms
hereof, such cash collateral shall be released and applied pursuant to clause
sixth below or pursuant to Section 2.14(b), as the case may be; and sixth, to
pay all other Obligations that are then outstanding and payable.
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(b) Any amounts received in the BBNA Cash Concentration
Account at any time when all of the applications set forth in Section 2.14(a)
have been and remain fully funded shall be remitted to the Borrower, if and as
the Borrower may request.
(c) Amounts received in the BBNA Cash Concentration Account
shall be applied or released in accordance with this Section 2.14 as of the
Business Day immediately following the day on which such funds are received in
the BBNA Cash Concentration Account. If any item deposited to the BBNA Cash
Concentration Account and credited to the Loan Account is dishonored or returned
unpaid for any reason, whether or not such return is rightful or timely, the
Administrative Agent shall have the right to reverse such credit and charge the
amount of such item to the Loan Account and the Borrower shall indemnify the
Administrative Agent, the Collateral Agent, the Issuing Bank, the Managing Agent
and the Lenders against all claims and losses resulting from such dishonor or
return.
SECTION 2.15. INCREASED COSTS.
(a) Notwithstanding any other provision herein, if after the
date of this Agreement any change in applicable law or regulation or in the
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof (whether or not having the
force of law) shall change the basis of taxation of payments to any Lender of
the principal of or interest on any Eurodollar Loan or ABR Loan made by such
Lender or any fees or other amounts payable hereunder (other than changes in
respect of Taxes, Other Taxes and taxes imposed on, or measured by, the net
income or overall gross receipts or franchise taxes of such Lender by the
jurisdiction in which such Lender has its principal office or by any political
subdivision or taxing authority therein) or shall impose, modify or deem
applicable any reserve, special deposit or similar requirement against assets
of, deposits with or for the account of or credit extended by such Lender
(except any such reserve requirement which is reflected in the Adjusted
Eurodollar Rate) or shall impose on such Lender or the London interbank market
any other condition affecting this Agreement or the Eurodollar Loans made by
such Lender, and the result of any of the foregoing shall be to increase the
cost to such Lender of making or maintaining any Eurodollar Loan or to reduce
the amount of any sum received or receivable by such Lender hereunder or under
the Notes (whether of principal, interest or otherwise) by an amount deemed by
such Lender to be material, then the Borrower will pay to such Lender in
accordance with paragraph (c) below such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction suffered.
(b) If any Lender shall have determined that the applicability
of any law, rule, regulation or guideline adopted pursuant to or arising out of
the July 1988 report of the Basle Committee on Banking Regulations and
Supervisory Practices entitled "International Convergence of Capital Measurement
and Capital Standards," or the adoption or effectiveness after the date hereof
of any law, rule, regulation or guideline regarding capital adequacy, or any
change in any of the foregoing or in the interpretation or administration of any
of the foregoing by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender (or any Lending office of such Lender) or any Lender's holding
company with any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on such
Lender's capital or on the capital of such Lender's holding company, if any, as
a consequence of this Agreement, the Loans made by such Lender pursuant hereto,
such Lender's Commitment hereunder or the issuance of, or participation in, any
Letter of Credit by such Lender to a level below that which such Lender or such
Lender's holding company could have achieved but for such adoption, change or
compliance (taking into account such Lender's policies and the policies of such
Lender's holding company with respect to capital adequacy) by an amount deemed
by such
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Lender to be material, then from time to time the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender or such
Lender's holding company of any such reduction suffered.
(c) A certificate of each Lender setting forth such amount or
amounts (and the calculations thereof) as shall be necessary to compensate such
Lender or its holding company as specified in paragraph (a) or (b) above, as the
case may be, shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay each Lender the amount shown as due on
any such certificate delivered to it within 10 days after its receipt of the
same. Any Lender receiving any such payment shall promptly make a refund thereof
to the Borrower if the law, regulation, guideline or change in circumstances
giving rise to such payment is subsequently deemed or held to be invalid or
inapplicable.
(d) Failure on the part of any Lender to demand compensation
for any increased costs or reduction in amounts received or receivable or
reduction in return on capital with respect to any period shall not constitute a
waiver of such Lender's right to demand compensation with respect to such period
or any other period. The protection of this Section 2.15 shall be available to
each Lender regardless of any possible contention of the invalidity or
inapplicability of the law, rule, regulation, guideline or other change or
condition which shall have occurred or been imposed.
(e) Notwithstanding the foregoing, a Lender shall not charge
the Borrower for any amounts under this Section 2.15 unless the Lender would
customarily charge such amounts to other similarly-situated Borrowers in similar
circumstances.
SECTION 2.16. CHANGE IN LEGALITY.
(a) Notwithstanding anything to the contrary contained
elsewhere in this Agreement, if (x) any change in any law or regulation or in
the interpretation thereof by any governmental authority charged with the
administration thereof shall make it unlawful for a Lender to make or maintain a
Eurodollar Loan or to give effect to its obligations as contemplated hereby with
respect to a Eurodollar Loan or (y) at any time any Lender determines that the
making or continuance of any of its Eurodollar Loans has become impracticable as
a result of a contingency occurring after the date hereof which adversely
affects the London interbank market or the position of such Lender in the London
interbank market, then, by written notice to the Borrower, such Lender may (i)
declare that Eurodollar Loans will not thereafter be made by such Lender
hereunder, whereupon any request by the Borrower for a Eurodollar Borrowing
shall, as to such Lender only, be deemed a request for an ABR Loan unless such
declaration shall be subsequently withdrawn; and (ii) require that all
outstanding Eurodollar Loans made by it be converted to ABR Loans, in which
event all such Eurodollar Loans shall be automatically converted to ABR Loans as
of the effective date of such notice as provided in paragraph (b) below. In the
event any Lender shall exercise its rights under clause (i) or (ii) of this
paragraph (a), all payments and prepayments of principal which would otherwise
have been applied to repay the Eurodollar Loans that would have been made by
such Lender or the converted Eurodollar Loans of such Lender shall instead be
applied to repay the ABR Loans made by such Lender in lieu of, or resulting from
the conversion of, such Eurodollar Loans.
(b) For purposes of this Section 2.16, a notice to the
Borrower by any Lender pursuant to paragraph (a) above shall be effective, if
lawful, and if any Eurodollar Loans shall then be outstanding, on the last day
of the then-current Interest Period; and otherwise such notice shall be
effective on the date of receipt by the Borrower.
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SECTION 2.17. PAYMENTS; NO SETOFF. (a) All payments received by the
Administrative Agent, the Managing Agent, the Issuing Bank, the Collateral
Agent, any Lender for application to or on account of any of the Obligations,
whether received as a deposit to the BBNA Cash Concentration Account or as a
payment made by the Borrower or any Guarantor or from the enforcement of the
claims and Liens in the Cases or against any property of the Borrower or any
Guarantor shall be applied in the order of priority set forth in Section 2.14(a)
and shall be applied ratably to the payment of all outstanding Obligations. All
payments by the Borrower or any Guarantor under this Agreement and under the
Notes shall be (i) net of any tax applicable to the Borrower or Guarantor and
(ii) made in Dollars in immediately available funds at the office of the
Administrative Agent by 2:00 p.m., Boston time, on the date on which such
payment shall be due. Interest in respect of any Loan hereunder shall accrue
from and including the date of such Loan to but excluding the date on which such
Loan is paid in full or converted to a Loan of a different Type.
(b) All payments by the Borrower hereunder to or for the
benefit of any Lender, the Issuing Bank, the Collateral Agent, the Managing
Agent or the Administrative Agent shall be made without setoff, counterclaim or
other defense.
SECTION 2.18. TAXES.
(a) Any and all payments by the Borrower or any Guarantor
hereunder and under the Notes shall be made free and clear of and without
deduction or withholding for any and all current or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding (i) taxes imposed on or measured by the net income or overall
gross receipts (if the overall gross receipts are used in lieu of net income) of
the Administrative Agent, the Collateral Agent, the Managing Agent or any Lender
(or any transferee or assignee thereof, including a participation holder (any
such entity being called a "Transferee")) and franchise taxes imposed on the
Administrative Agent, the Collateral Agent, the Managing Agent or any Lender (or
Transferee), in each instance if and to the extent imposed by the jurisdiction
under the laws of which the Administrative Agent, the Collateral Agent, the
Managing Agent or any such Lender (or Transferee) is organized or any political
subdivision thereof or by any other jurisdiction or by any political subdivision
or taxing authority therein other than a jurisdiction in which the
Administrative Agent, the Collateral Agent, the Managing Agent or such Lender
would not be subject to tax but for the execution and performance of this
Agreement and (ii) taxes, levies, imposts, deductions, charges or withholdings
("Amounts") with respect to payments hereunder or under the Notes to a Lender
(or Transferee) in accordance with laws in effect on the later of the date of
this Agreement and the date such Lender (or Transferee) becomes a Lender (or
Transferee, as the case may be), but not excluding, with respect to such Lender
(or Transferee), any increase in such Amounts solely as a result of any change
in such laws occurring after such later date or any Amounts that would not have
been imposed but for actions (other than actions contemplated by this Agreement
or the Notes) taken by the Borrower after such later date (all such nonexcluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower or any Guarantor shall be
required by law to deduct or withhold any Taxes from or in respect of any sum
payable hereunder to the Lenders (or any Transferee), the Collateral Agent, the
Managing Agent or the Administrative Agent, (i) the sum payable shall be
increased by the amount necessary so that after making all required deductions
or withholding (including deductions or withholding applicable to additional
sums payable under this Section 2.18) such Lender (or Transferee), the
Collateral Agent, the Managing Agent or the Administrative Agent (as the case
may be) shall receive an amount equal to the sum it would have received had no
such deductions or withholding been made, (ii) the Borrower shall make such
deductions or withholding and (iii) the Borrower shall pay the full amount
deducted or withheld to the relevant taxing authority or other Governmental
Authority in accordance with applicable law.
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(b) In addition, the Borrower agrees to pay to the relevant
Governmental Authority in accordance with applicable laws any current or future
stamp or documentary taxes or any other excise or property taxes, charges,
assessments or similar levies that arise from any payment made hereunder or from
the execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document (hereinafter referred to as "Other Taxes").
(c) The Borrower will indemnify each Lender (or Transferee),
the Collateral Agent, the Managing Agent and the Administrative Agent for the
full amount of Taxes and Other Taxes paid by such Lender (or Transferee), the
Collateral Agent, the Managing Agent or the Administrative Agent, as the case
may be, and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted by the relevant taxing authority or other
Governmental Authority. A certificate as to the amount of such payment or
liability prepared by a Lender (or Transferee), the Collateral Agent, the
Managing Agent or the Administrative Agent, as applicable (which shall include
calculations for determining such payment or liability), absent manifest error,
shall be final, conclusive and binding for all purposes. Such indemnification
shall be made within 30 days after the date any Lender (or Transferee), the
Agent or the Administrative Agent, as the case may be, makes written demand
therefor. If any Lender (or Transferee), the Collateral Agent, the Managing
Agent or the Administrative Agent receives a refund in respect of any Taxes or
Other Taxes as to which it has been indemnified by the Borrower pursuant to this
Section 2.18, it shall within 30 days after receipt of such refund, repay such
refund to the Borrower (to the extent of amounts that have been paid by the
Borrower under this Section 2.18 with respect to the Taxes or Other Taxes that
give rise to such refund, net of all out-of-pocket expenses of such Lender (or
Transferee), the Collateral Agent or the Administrative Agent and with any
interest thereon that is received by the Lender (or Transferee), the Collateral
Agent, the Managing Agent or the Administrative Agent as part of the refund but
without additional interest thereon; provided that the Borrower, upon the
request of such Lender (or Transferee), the Collateral Agent, the Managing Agent
or the Administrative Agent agrees to return such refund (plus penalties,
interest or other charges) to such Lender (or Transferee), the Collateral Agent,
the Managing Agent or the Administrative Agent in the event such Lender (or
Transferee), the Collateral Agent, the Managing Agent or the Administrative
Agent is required to repay such refund and such additions thereto to the
relevant Governmental Authority. Nothing contained in this Section 2.18 shall
require any Lender (or Transferee), the Collateral Agent, the Managing Agent or
the Administrative Agent to make available any of its tax returns (or any other
information relating to its taxes that it deems to be confidential).
(d) Within 30 days after the date of any payment of Taxes or
Other Taxes by the Borrower to the relevant Governmental Authority, the Borrower
will furnish to the Administrative Agent, at its address referred to on the
signature pages hereof, the original or a certified copy of a receipt issued by
the Governmental Authority evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section 2.18
shall survive the payment in full of the principal of and interest on all Loans
made hereunder.
(f) Each Lender (or Transferee) that is organized under the
laws of a jurisdiction other than the United States, any State thereof or the
District of Columbia (a "Non-U.S. Lender") shall, if legally able to do so,
deliver to the Borrower such certificates, documents or other evidence, as
required by the Code or Treasury Regulations issued pursuant thereto, including
without limitation (A) in the case of a Non-U.S. Lender claiming exemption from
United States Federal withholding tax under Code Section 871(h) or 881(c) with
respect to payments of "portfolio interest", a Form W-8, or any subsequent
versions thereof or
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successors thereto, together with a certificate representing that such Non-U.S.
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 Borrower and is not a controlled foreign corporation related to the
Borrower (within the meaning of Section 864(d)(4) of the Code) or (B) Internal
Revenue Service Form 4224 or any subsequent version thereof or successor
thereto, establishing that such payment is not subject to United States Federal
withholding tax under the Code because such payment is effectively connected
with the conduct by such Lender (or Transferee) of a trade or business in the
United States or (C) Internal Revenue Service Form 1001 or any subsequent
version thereof or successor thereto, establishing that such payment is totally
exempt from United States Federal withholding tax or subject to a reduced rate
of such tax under a provision of an applicable tax treaty. Unless the Borrower
and the Administrative Agent have received forms or other documents satisfactory
to them indicating that such payments hereunder or under the Notes are not
subject to United States Federal withholding tax or are subject to such tax at a
rate reduced by an applicable tax treaty, the Borrower or the Administrative
Agent shall withhold taxes from such payments at the applicable statutory rate.
Such forms and certifications shall be delivered by each Non-U.S. Lender
claiming an exemption from or reduction in applicable United States Federal
withholding tax (i) on or before the date it becomes a party to this Agreement
or, in the case of a Transferee, on or before the date it becomes a Transferee,
and (ii) promptly upon the obsolescence or invalidity of any form so delivered
by such Non-U.S. Lender.
(g) The Borrower shall not be required to pay any additional
amounts to any Lender (or Transferee) in respect of United States Federal
withholding tax pursuant to Section 2.18(a) if the obligation to pay such
additional amounts would not have arisen but for a failure by such Lender (or
Transferee) to comply with the provisions of Section 2.18(f).
(h) Any Lender (or Transferee) claiming any additional amounts
payable pursuant to this Section 2.18 shall use reasonable efforts (consistent
with legal and regulatory restrictions) to file any certificate or document
requested by the Borrower or to change the jurisdiction of its applicable
lending office if the making of such a filing or change would avoid the need for
or reduce the amount of any such additional amounts that may thereafter accrue
and would not, in the sole reasonable determination of such Lender or
Transferee, be otherwise materially disadvantageous to such Lender (or
Transferee).
SECTION 2.19. CERTAIN FEES. The Borrower shall pay to the
Administrative Agent, for the account of the Administrative Agent, the fees set
forth in the Fee Letter and the Commitment Letter (to the extent not otherwise
provided for herein) as and when payment of such fees is due as therein set
forth.
SECTION 2.20. UNUSED LINE FEE. The Borrower shall pay to the
Administrative Agent for the account of the Lenders, based upon their pro rata
share of the Credit Extensions, an unused line fee (the "Unused Line Fee")
computed by applying 0.25% per annum (on the basis of actual days elapsed in a
year of 360 days) to the average daily balance of the Unused Commitment for each
day commencing on and including the Closing Date and ending on but excluding the
Termination Date. Except as otherwise provided in Section 2.07, the Unused Line
Fee so accrued in any calendar month shall be payable on the first Business Day
of the immediately succeeding calendar month, except that all Unused Line Fees
so accrued as of the Termination Date shall be payable on the Termination Date.
SECTION 2.21. L/C FEES. The Borrower shall pay to the Administrative
Agent for the account of the Lenders a letter of credit fee (the "L/C Fee")
computed by applying 1.50% per annum (on the basis of actual days elapsed in a
year of 360 days) to the average daily balance of the maximum amount that at any
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time is available for drawing or payment under any and all outstanding Letters
of Credit. The L/C Fee so accrued in any calendar quarter shall be payable on
the first Business Day of the immediately succeeding calendar quarter, except
that all L/C Fees so accrued as of the Termination Date shall be payable on the
Termination Date.
SECTION 2.22. NATURE OF FEES. All Fees shall be paid on the dates due,
in immediately available funds, to the Administrative Agent for the respective
accounts of the Administrative Agent, the Managing Agent, the Issuing Bank, the
Collateral Agent and the Lenders, as provided herein and in the Fee Letter. Once
paid, all fees shall be fully-earned and shall not be refundable under any
circumstances.
SECTION 2.23. PRIORITY AND LIENS. The Borrower and each of the
Guarantors hereby covenants, represents and warrants that, upon entry of the
Order:
(a) Pursuant to Section 364(c)(1) of the Bankruptcy Code, the
Obligations of the Borrower and the Guarantors hereunder and under the other
Loan Documents shall at all times constitute allowed administrative expense
claims having priority over all administrative expenses of the kind specified in
Sections 503(b), 507(b), 364(c) of the Bankruptcy Code in the Case and in any
future Chapter 7 Case;
(b) Pursuant to Section 364(c)(2) of the Bankruptcy Code, the
Obligations of the Borrower and the Guarantors hereunder and under the other
Loan Documents shall at all times be secured by a first priority Lien on all
property (including, but not limited to, all Inventory, Receivables, equipment,
leasehold interests in real property, intellectual property, ownership interests
in any Subsidiaries of the Borrower and general intangibles) of the Borrower and
the Guarantors not subject to (i) valid and perfected Liens in existence on the
Filing Date and set forth on Schedule 3.06(a) (other than property which is
subject to existing Liens that presently secure the obligations of the Borrower
and the Guarantors under the Existing Agreements, as to which the Lien in favor
of the Collateral Agent on behalf of the Lenders, the Administrative Agent, the
Issuing Bank and the Managing Agent is described in subsection (d) below), (ii)
valid and perfected purchase money Liens created and perfected after the Filing
Date and before the Closing Date securing amounts not in excess of $750,000 in
the aggregate and set forth on Schedule 3.06(b) and (iii) Liens securing the
Fleet Post-Petition Loan Agreement pursuant to the Fleet Post-Petition Order,
and on all cash and cash equivalents maintained in the Loan Account, the Cash
Collateral Account, the BBNA Disbursement Accounts, the BBNA Cash Concentration
Account, the Chase Concentration Account, the Chase Disbursement Accounts, all
Blocked Accounts and all other deposit accounts (other than the GE Account) of
the Borrower and the Guarantors and any direct investments of the funds
contained therein (including, without limitation, Permitted Investments);
(c) Pursuant to Section 364(c)(3) of the Bankruptcy Code, the
Obligations of the Borrower and the Guarantors hereunder and under the other
Loan Documents shall at all times be secured by a perfected Lien upon all
property of the Borrower and the Guarantors, real and personal, whether now
owned or hereafter acquired (other than property which is subject to existing
Liens that presently secure the obligations of the Borrower and the Guarantors
under the Existing Agreements, as to which the Lien in favor of the Collateral
Agent on behalf of the Lenders, the Administrative Agent, the Issuing Bank and
the Managing Agent is described in subsection (d) below) (i) subject and junior
only to (A) valid and perfected Liens in existence on the Filing Date and set
forth in Schedule 3.06(a), (B) valid and perfected purchase money Liens created
and perfected after the Filing Date and before the Closing Date securing amounts
not in excess of $750,000 in the aggregate and set forth on Schedule 3.06(b) and
(C) Liens securing the Fleet Post-Petition Loan Agreement pursuant to the Fleet
Post-Petition Order, (ii) senior to any such valid and perfected Lien in
existence on the Filing Date that is anytime set aside or avoided, even if
preserved for the
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benefit of any creditor or estate, (iii) free from all other Liens except
Permitted Liens and (iv) senior to any and all Permitted Liens that were not
valid and perfected on the Filing Date; and
(d) Pursuant to Section 364(d)(1) of the Bankruptcy Code, the
Obligations of the Borrower and the Guarantors hereunder and under the other
Loan Documents shall at all times be secured by a first-priority perfected
senior priming lien upon all the property of the Borrower and the Guarantors,
real and personal, whether now owned or hereafter acquired (including, without
limitation, all Inventory, Receivables, general intangibles, equipment,
intellectual property, ownership interests in any Subsidiaries of the Borrower
and leasehold interests in real property) that is subject to existing Liens that
presently secure the Borrower's and the Guarantors' pre-petition Indebtedness
under the Existing Agreements and any Liens granted after the Filing Date to
provide adequate protection in respect of the Existing Agreements;
subject to the payment of (i) allowed administrative expenses incurred pursuant
to 28 U.S.C. Section 1930(a)(6) and (ii) allowed accrued and unpaid and future
fees and expenses incurred by the Borrower's professionals and any statutory
committee of professionals appointed in the Case pursuant to Sections 327 and
1103 of the Bankruptcy Code, which shall not exceed $6,000,000 in the aggregate
subsequent to the occurrence of an Event of Default (the "Carve-out"); provided
that following the Termination Date, the cash and cash equivalents in the Cash
Collateral Account and any direct investments of the funds contained therein
shall not be subject to the Carve-Out.
(e) As to all real property the title to which is held by the
Borrower or any Guarantor, or the possession of which is held by the Borrower or
any Guarantor pursuant to a leasehold interest, each of the Borrower and the
Guarantors hereby assigns and conveys as security, grants a security interest
in, hypothecates, mortgages, pledges and sets over unto the Collateral Agent on
behalf of itself, the Administrative Agent, the Managing Agent, the Issuing Bank
and the Lenders all of the right, title and interest of the Borrower and such
Guarantor in all of such owned real property and in all such leasehold
interests, together in each case with all of the right, title and interest of
the Borrower and each Guarantor in and to all buildings, improvements, and
fixtures related thereto, any lease or sublease thereof, all general intangibles
relating thereto and all proceeds thereof. As provided in the Order, the parties
hereto agree that the Liens in favor of the Collateral Agent on behalf of
itself, the Administrative Agent, the Managing Agent, the Issuing Bank and the
Lenders in all of such real property and leasehold interests shall be perfected
without the recordation of any instruments of mortgage or assignment. Each of
the Borrower and the Guarantors further agrees that the Collateral Agent on
behalf of itself, the Administrative Agent, the Managing Agent, the Issuing Bank
and the Lenders shall have rights and remedies in respect of such real property
and leasehold interests substantially as set forth in the Mortgages and
Leasehold Mortgages described in Schedule 2.23.
For the avoidance of doubt, the Obligations of the Borrower
and the Guarantors hereunder and under the other Loan Documents must be secured
by an unshared first-priority perfected Lien on any and all of the Borrower's
and the Guarantors' Inventory, Receivables and leasehold interests in real
estate included in the Borrowing Base (in each case, with all of the rights
granted hereunder, under the other Loan Documents and pursuant to the Order (as
such Order is in effect on the Closing Date)).
Notwithstanding the foregoing, so long as a Default or Event
of Default shall not have occurred and be continuing, (i) the Borrower and the
Guarantors shall be permitted to pay compensation and reimbursement of expenses
allowed and payable under Sections 330 and 331 of the Bankruptcy Code, as the
same may be due and payable, and (ii) such payments shall not be applied against
the Carve-Out. The foregoing shall not be construed as a consent to the
allowance of any fees and expenses and shall not affect the rights of the
Lenders to object to the allowance and payment of any such amounts.
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No Loans, including the Carve-Out, shall apply to or be
available for any fees or expenses incurred by the Borrower or the Guarantors in
connection with the initiation or prosecution of any claims, causes of action,
adversary proceedings or other litigation against the Lenders, the Issuing Bank,
the Collateral Agent, the Managing Agent or the Administrative Agent for the
purpose of challenging the amount, validity, priority or enforceability of, or
asserting any defense, counterclaim or offset to, the Obligations or the
security interests and liens of the Lenders, the Issuing Bank, the Collateral
Agent, the Managing Agent or the Administrative Agent.
Notwithstanding the foregoing, the GE Account shall be
excluded from the Liens granted hereunder and under the Security Agreement and
pursuant to the Order.
All Liens granted in accordance with this Section 2.23 shall
be granted to the Collateral Agent for the benefit of itself, the Issuing Bank,
the Lenders, the Managing Agent and the Administrative Agent.
SECTION 2.24. RIGHT OF SET-OFF.
(a) Subject to the provisions of Section 7.01 and regardless
of the adequacy of collateral, upon the occurrence and during the continuance of
any Event of Default, the Administrative Agent, the Issuing Bank, the Collateral
Agent, the Managing Agent and each Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law and without further
order of or application to the Bankruptcy Court, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held (whether in the Loan Account, the Cash Collateral Account, the BBNA
Cash Concentration Account, the BBNA Disbursement Accounts, any Blocked Account
or otherwise (other than in the GE Account)) and other indebtedness at any time
owing by the Administrative Agent, the Managing Agent, the Issuing Bank, the
Collateral Agent, and each such Lender to or for the credit or the account of
the Borrower or any Guarantor against any and all of the obligations of such
Borrower or Guarantor now or hereafter existing under the Loan Documents,
irrespective of whether or not the Administrative Agent, the Managing Agent, the
Issuing Bank, the Collateral Agent or such Lender shall have made any demand
under any Loan Document and although such obligations may be unmatured. Subject
to the provisions of Section 7.01, the rights of each Lender, the Issuing Bank,
the Collateral Agent, the Managing Agent and the Administrative Agent under this
section are in addition to other rights and remedies which such Lender, the
Issuing Bank, the Collateral Agent, the Managing Agent and the Administrative
Agent may have upon the occurrence and during the continuance of any Event of
Default.
(b) The provisions of Section 2.24(a) shall not qualify or
limit the provisions of Sections 2.13 and 2.14.
SECTION 2.25. SECURITY INTEREST IN CASH COLLATERAL ACCOUNT. Pursuant to
Section 364(c)(2) of the Bankruptcy Code, the Borrower and the Guarantors hereby
assign and pledge to the Collateral Agent, for its benefit and for the benefit
of the Issuing Bank, the Administrative Agent, the Managing Agent and the
Lenders, and hereby grant to the Collateral Agent, for its benefit and for the
benefit of the Issuing Bank, the Administrative Agent, the Managing Agent and
the Lenders, a first-priority security interest, senior to all other Liens, if
any, in all of the Borrower's and the Guarantors' right, title and interest in
and to the Cash Collateral Account, the Loan Account, the BBNA Disbursement
Accounts, the BBNA Cash Concentration Account, the Chase Concentration Account,
the Chase Disbursement Accounts, all Blocked Accounts and all of their other
deposit accounts (other than the GE Account) and the Permitted Investments and
other cash equivalents of every type and description and any direct investment
of the funds contained in any such accounts. The Collateral Agent (or the
Administrative Agent, as agent for the Collateral Agent (as provided
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below)) shall have sole dominion and control (to the exclusion of the Borrower
and the Guarantors) over the Cash Collateral Account, the Loan Account, the BBNA
Disbursement Accounts, the BBNA Cash Concentration Account, the Chase
Concentration Account, the Chase Disbursement Accounts, all Blocked Accounts and
all such other deposit accounts. With respect to the Cash Collateral Account,
the Loan Account, the BBNA Disbursement Accounts, the BBNA Cash Concentration
Account and all such other deposit accounts maintained at BBNA, the Collateral
Agent hereby appoints the Administrative Agent as its agent with respect thereto
and the Administrative Agent agrees to hold such accounts on behalf of the
Collateral Agent and for the benefit of the Collateral Agent, the Administrative
Agent, the Issuing Bank, the Managing Agent and the Lenders.
SECTION 2.26. PAYMENT OF OBLIGATIONS. Upon the maturity (whether by
acceleration or otherwise) of any Loans, Letter of Credit reimbursement
obligations or any other Obligations, the Lenders shall be entitled to immediate
payment of such Loans, reimbursement obligations, liabilities and other
Obligations, without further application to or order of the Bankruptcy Court.
SECTION 2.27. NO DISCHARGE; SURVIVAL OF CLAIMS. Each of the Borrower
and the Guarantors agrees that (i) its obligations under this Agreement and
under the Notes, including its liability for the Obligations, shall not be
discharged by the entry of an order confirming a Reorganization Plan (and each
of the Borrower and the Guarantors pursuant to Section 1141(d)(4) of the
Bankruptcy Code hereby waives any such discharge) and (ii) the Superpriority
Claim granted to the Administrative Agent, the Managing Agent, the Issuing Bank,
the Collateral Agent and the Lenders pursuant to the Order and described in
Section 2.23 and the Lien granted to the Administrative Agent, the Managing
Agent, the Issuing Bank, the Collateral Agent and the Lenders pursuant to the
Order and described in Section 2.23 shall not be affected in any manner by the
entry of an order confirming a Reorganization Plan.
III. REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to make Loans and participate in Letters
of Credit and the Issuing Bank to issue Letters of Credit, the Borrower and each
of the Guarantors jointly and severally represent and warrant as follows:
SECTION 3.01. ORGANIZATION AND AUTHORITY. Each of the Borrower and the
Guarantors (i) is a corporation duly organized and validly existing under the
laws of the State of its incorporation and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which the failure to
so qualify would reasonably be expected to have a material adverse effect on the
financial condition, operations, business, properties or assets of the Borrower
and the Guarantors taken as a whole; (ii) has the requisite corporate power and
authority to effect the transactions contemplated hereby, and by the other Loan
Documents, and (iii) has all requisite corporate power and authority and the
legal right to own, pledge, mortgage and operate its properties, and to conduct
its business as now or currently proposed to be conducted. Schedule 3.01 lists
all jurisdictions in which the Borrower and the Guarantors are qualified to do
business as of the Closing Date.
SECTION 3.02. DUE EXECUTION. The execution, delivery and performance by
each of the Borrower and the Guarantors of each of the Loan Documents to which
it is a party (i) are within the respective corporate powers of each of the
Borrower and the Guarantors, have been duly authorized by all necessary
corporate action, including the consent of shareholders where required, and do
not (A) contravene the charter or by-laws of any of the Borrower or the
Guarantors, (B) violate any law (including, without
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limitation, the Securities Exchange Act of 1934) or regulation (including,
without limitation, Regulations G, T, U or X of the Board of Governors of the
Federal Reserve System), or any order or decree of any court or governmental
instrumentality, (C) conflict with or result in a breach of, or constitute a
default under, any material indenture, mortgage or deed of trust entered into
after the Filing Date or any material lease (other than by virtue of the grant
of a security interest in the Borrower's and the Guarantor's leasehold interests
in real property pursuant to the Order), agreement or other instrument entered
into after the Filing Date binding on the Borrower or the Guarantors or any of
their properties, or (D) result in or require the creation or imposition of any
Lien upon any of the property of any of the Borrower or the Guarantors, other
than the Liens granted pursuant to this Agreement; and (ii) do not require the
consent, authorization by or approval of or notice to or filing or registration
with any Governmental Authority other than the entry of the Order. This
Agreement has been duly executed and delivered by each of the Borrower and the
Guarantors. This Agreement is, and each of the other Loan Documents to which the
Borrower and each of the Guarantors is or will be a party, when delivered
hereunder or thereunder, will be, a legal, valid and binding obligation of the
Borrower and each Guarantor, as the case may be, enforceable against the
Borrower and the Guarantors, as the case may be, in accordance with its terms.
SECTION 3.03. STATEMENTS MADE. The statements, written or oral, which
have been made by the Borrower or any of the Guarantors to the Administrative
Agent or to the Bankruptcy Court in connection with any Loan Document, and any
financial statement delivered pursuant hereto or thereto (other than to the
extent that any such statements constitute projections), taken as a whole and in
light of the circumstances in which made, contain no untrue statement of a
material fact and do not omit to state a material fact necessary to make such
statements not misleading; and, to the extent that any such written statements
constitute projections, such projections were prepared in good faith on the
basis of assumptions, methods, data, tests and information believed by the
Borrower or such Guarantor to be valid and accurate at the time such projections
were furnished to the Lenders.
SECTION 3.04. OWNERSHIP. Each of the Guarantors listed on Schedule 3.04
is a direct or indirect wholly-owned Subsidiary of the Borrower, and the
Borrower owns no other Subsidiaries, whether directly or indirectly, other than
the Guarantors and American East Insurance Corporation and New England Claims
Office, Inc. (each of which is a wholly-owned Subsidiary of the Borrower). No
Subsidiary of the Borrower exists (other than American East Insurance
Corporation and New England Claims Office, Inc.) which (i) has not commenced a
Case and (ii) is not a Guarantor. The estate in the Cases commenced by the
Borrower and each Guarantor owns good title to all property of the Borrower or
such Guarantor that is identified as owned by it on financial statements most
recently delivered by it to the Administrative Agent.
SECTION 3.05. FINANCIAL STATEMENTS. The Borrower has furnished the
Administrative Agent, the Managing Agent, the Issuing Bank, the Collateral Agent
and the Lenders with copies of the audited consolidated financial statement and
schedules of the Borrower for the fiscal year ended January 31, 1998. Such
financial statements present fairly the financial condition and results of
operations of the Borrower and the Guarantors on a consolidated basis as of such
dates and for such periods; such balance sheets and the notes thereto disclose
all liabilities, direct or contingent, of the Borrower and the Guarantors as of
the dates thereof required to be disclosed by GAAP and such financial statements
were prepared in a manner consistent with GAAP, subject (in the case of such
fiscal quarter statement) to normal year end adjustments. No material adverse
change in the financial condition, operations, business, properties or assets of
the Borrower and the Guarantors, taken as a whole, has occurred from that set
forth in the Borrower's consolidated financial statements for the fiscal year
ended January 31, 1998.
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SECTION 3.06. LIENS. There are no Liens of any nature whatsoever on any
assets of the Borrower or any of the Guarantors other than: (i) Liens granted
pursuant to the Order, (ii) Liens existing on the Filing Date as reflected on
Schedule 3.06(a); (iii) Permitted Liens and, without duplication, the Liens
listed on Schedule 3.06(b); and (iv) Liens securing the Fleet Post-Petition Loan
Agreement pursuant to the Fleet Post-Petition Order. Neither the Borrower nor
the Guarantors are parties to any contract, agreement, lease or instrument the
performance of which, either unconditionally or upon the happening of an event,
will result in or require the creation of a Lien on any property of the Borrower
or any Guarantor or any property of the estates in any of the Cases or otherwise
result in a violation of this Agreement other than the Liens granted to the
Administrative Agent, the Managing Agent, the Issuing Bank, the Collateral
Agent, and the Lenders as provided for in this Agreement.
SECTION 3.07. COMPLIANCE WITH LAW.
(a) The operations of the Borrower and each of the Guarantors
are not in violation of any applicable federal, state or local environmental,
health or safety statutes (including, without limitation, the Occupational
Health and Safety Act), regulations, directions, ordinances, criteria or
guidelines, which violation could reasonably be expected to have a material
adverse effect on the financial condition, operations, business, properties or
assets of the Borrower and the Guarantors taken as a whole.
(b) Neither the Borrower nor any of the Guarantors has
received notice that any of the operations of the Borrower or any of the
Guarantors is the subject of any judicial or administrative proceeding alleging
the violation of any federal, state or local environmental, health or safety
statute, regulation, direction, ordinance, criteria or guideline, which
proceeding (or the results thereof) could reasonably be expected to have a
material adverse effect on the financial condition, operations, business,
properties or assets of the Borrower and the Guarantors taken as a whole.
(c) None of the operations of the Borrower or any of the
Guarantors is the subject of any federal, state or local investigation involving
allegations or potential allegations that the Borrower or any of the Guarantors
disposed of any hazardous or toxic waste, substance or constituent or other
pollutant, contaminant or substance (including, without limitation, petroleum)
at any site that may require remedial action, or any federal, state or local
investigation evaluating whether any remedial action is needed to respond to a
release or threatened release of any hazardous or toxic waste, substance or
constituent, or other pollutant, contaminant or substance (including, without
limitation, petroleum) into the environment, which investigation (or the results
thereof) could reasonably be expected to have a material adverse effect on the
financial condition, operations, business, properties or assets of the Borrower
and the Guarantors taken as a whole.
(d) Neither the Borrower nor any of the Guarantors has filed
any notice under any federal, state or local law indicating past or present
treatment, storage or disposal of a hazardous waste or reporting a spill or
release or threatened release of a hazardous or toxic waste, substance or
constituent, or other pollutant, contaminant or substance (including, without
limitation, petroleum) into the environment, which treatment, storage, disposal,
spill, release or threatened release could reasonably be expected to have a
material adverse effect on the financial condition, operations, business,
properties or assets of the Borrower and the Guarantors taken as a whole.
(e) Neither the Borrower nor any of the Guarantors has any
contingent liability of which any of them has knowledge or reasonably should
have knowledge in connection with any release or threatened release of any
hazardous or toxic waste, substance or constituent, or other pollutant,
contaminant or substance (including, without limitation, petroleum) into the
environment, nor has the Borrower or any of the
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Guarantors received any notice, letter or other indication of potential
liability arising from the disposal of any hazardous or toxic waste, substance
or constituent or other pollutant, contaminant or substance (including, without
limitation, petroleum) into the environment which could reasonably be expected
to have a material adverse effect on the financial condition, operations,
business, properties or assets of the Borrower and the Guarantors taken as a
whole.
SECTION 3.08. INSURANCE. All policies of insurance of any kind or
nature owned by or issued to the Borrower and the Guarantors, including, without
limitation, policies of life, fire, theft, product liability, public liability,
property damage, other casualty, employee fidelity, workers' compensation,
employee health and welfare, title, property and liability insurance, are in
full force and effect and are of a nature and provide such coverage as is
sufficient and as is customarily carried by companies of the size and character
of the Borrower and the Guarantors. The Collateral Agent is named as sole "loss
payee" with respect to casualty insurance policies covering the Collateral, and
the Administrative Agent, the Collateral Agent, the Managing Agent, the Issuing
Bank, BSI and the Lenders are listed as "additional insureds" on all liability
insurance policies of the Borrower and the Guarantors.
SECTION 3.09. THE ORDER. On the date of the making of the initial Loans
or the issuance of the initial Letters of Credit hereunder, whichever first
occurs, the Order will have been entered and will not have been stayed, amended,
vacated, reversed or rescinded. On the date of the making of any Loan or the
issuance of any Letter of Credit, the Order will have been entered and will not
have been amended, stayed, vacated, reversed or rescinded. Upon the maturity
(whether by the acceleration or otherwise) of any of the Obligations of the
Borrower and the Guarantors hereunder and under the other Loan Documents, the
Lenders shall, subject to the provisions of Section 7.01, be entitled to
immediate payment of such obligations, and to enforce the remedies provided for
hereunder, without further application to or order by the Bankruptcy Court.
SECTION 3.10. USE OF PROCEEDS. The proceeds of the Loans shall be used,
first, to repay in full all loans, letter of credit liabilities and other
obligations outstanding under or in respect of the Chase Credit Facility and
thereafter may be used to provide working capital for, and to finance Inventory
purchases by, the Borrower and the Retail Guarantors (as set forth herein and in
the Order) and otherwise for general corporate purposes (and to make immaterial
(individually and in the aggregate) transfers to the other Guarantors for
miscellaneous ordinary-course operating expenses). The Borrower will not use the
proceeds of any Loans or any other property of the Borrower to make any
intercompany or Affiliate advances other than (i) transfers of Inventory to the
Retail Guarantors and (ii) payments to American East Insurance Corporation, with
respect to insurance premiums and claims (and nominal related administrative
expenses), consistent with past practices.
SECTION 3.11. STORE LOCATIONS; BANK ACCOUNTS; INVENTORY.
(a) Set forth on Schedule 3.11(a) is a complete and accurate
list of the names and addresses of all the retail stores, warehouses and
distribution centers operated by the Borrower and all Guarantors (including the
owner and operator thereof) on the Closing Date, which are all of the locations
where any Inventory is maintained.
(b) Set forth on Schedule 3.11(b) is a complete and accurate
list of all bank accounts, money market accounts and other deposit or investment
accounts for cash, cash equivalents or investments maintained by the Borrower or
any Guarantor or in which the Borrower or any Guarantor has any interest.
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(c) The assets of the Borrower and the Guarantors (including,
without limitation, the Inventory and the Receivables) are in the amounts,
locations and of the quality previously represented to the Administrative Agent
in the most recent Borrowing Base Certificate delivered to the Administrative
Agent.
(d) No Subsidiary of the Borrower other than the Retail
Guarantors owns any Inventory.
SECTION 3.12. LITIGATION. Except as set forth on Schedule 3.12, there
are no actions, suits or proceedings pending and unstayed or, to the knowledge
of the Borrower or the Guarantors, threatened against or affecting the Borrower
or any of its Subsidiaries or any of their respective properties, including,
without limitation, the Inventory, before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, which
is reasonably likely to be determined adversely to the Borrower or its
Subsidiaries and, if so determined adversely to the Borrower or its Subsidiaries
would reasonably be expected to have a material adverse effect on the financial
condition, business, properties, operations or assets of the Borrower and its
Subsidiaries, taken as a whole.
SECTION 3.13. MATERIAL ADVERSE CHANGE. No event or series of events
have occurred since January 31, 1998 that has or have materially and adversely
affected (i) the business, properties, assets, liabilities, business, operations
or condition (financial or otherwise) of the Borrower and any of its
Subsidiaries, taken as a whole, or (ii) the enforceability of the Superpriority
Claims, Liens, rights and remedies of the Administrative Agent, the Managing
Agent, the Issuing Bank, the Collateral Agent, and the Lenders under the Loan
Documents, (iii) the ability of the Borrower or the Guarantors to pay the
Obligations when due and to perform their covenants and agreements under the
Loan Documents, or (iv) the value of the assets of the Borrower and the
Guarantors.
SECTION 3.14. PAYMENT OF TAXES AND POST-PETITION OBLIGATIONS. Except as
set forth on Schedule 3.14, the Borrower and each of its Subsidiaries have paid
when due all material liabilities for taxes accruing at any time after the
Filing Date, all material rents reserved or accruing at any time after the
Filing Date (except rents accruing after the effective date approved by the
Bankruptcy Court for rejection of an unexpired lease) under any unexpired lease
to which the Borrower or any of its Subsidiaries is party as lessee, all
material liabilities arising after the Filing Date under any executory contract
to which the Borrower or any of its Subsidiaries is a party, all professional
fees and expenses relating to the Cases, and all other material liabilities
incurred by the Borrower or any Guarantor or the estate in any of the Cases at
any time after the Filing Date.
SECTION 3.15. TAXES AND TAX RETURNS. Except as set forth on Schedule
3.15, the Borrower and each of its Subsidiaries have filed or caused to be filed
all material tax returns which are required to be filed and has paid all
post-Filing Date taxes shown to be due and payable on said returns or on any
assessments made against it or any of its property and all other material taxes,
fees or other charges imposed on it or any of its property by any Governmental
Authority (other than any the amount or validity of which are currently being
contested in good faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided on the books of the Borrower
or the Subsidiary, as the case may be).
SECTION 3.16. FRANCHISES, LICENSES, PERMITS, LEASES, PATENTS,
COPYRIGHTS, TRADEMARKS, AND TRADE NAMES. The Borrower and each of the Guarantors
have obtained and hold in full force and effect, all material franchises,
licenses, leases, permits, certificates, authorizations, qualifications,
easements, rights of way and other rights and approvals which are necessary for
the operation of its businesses as presently conducted and as proposed to be
conducted. Neither the Borrower nor any of the Guarantors is in violation
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of the terms of any such franchise, license, lease, permit, certificate,
authorization, qualification, easement, right of way, right or approval, other
than by virtue of the commencement of the Cases or the failure to make any
pre-Filing Date payments with respect thereto. The Borrower and each Guarantor
possesses or has the legal right to use such assets, licenses, patents, patent
applications, copyrights, service marks, trademarks and trade names as are
necessary or advisable to continue to conduct its present and proposed business
activities and such assets, licenses, patents, patent applications, copyrights,
service marks, trademarks and trade names are valid and in full force and
effect.
SECTION 3.17. LABOR MATTERS.
(a) There are no controversies pending or, to the best of the
Borrower's knowledge after diligent inquiry, threatened between the Borrower or
any of the Guarantors, on the one hand, and any of their respective employees,
on the other hand, which could reasonably be expected to have a material adverse
effect on the financial condition, operations, business, properties or assets of
the Borrower and the Guarantors taken as a whole.
(b) Neither the Borrower nor any of the Guarantors is
knowingly engaged in any unfair labor practice. There is (i) no unfair labor
practice complaint pending against the Borrower or any of the Guarantors or, to
the best knowledge of the Borrower, threatened against any of them, before the
National Labor Relations Board, and no grievance or significant arbitration
proceeding arising out of or under collective bargaining agreements is so
pending against the Borrower or any of the Guarantors or, to the best knowledge
of the Borrower, threatened against any of them, (ii) no strike, labor dispute,
slowdown or stoppage pending against either of the Borrower or any of the
Guarantors or, to the best knowledge of the Borrower, threatened against any of
them and (iii) no union representation question with respect to the employees of
the Borrower or any Guarantors and no union organizing activities, which, in the
case of (i), (ii) or (iii), could reasonably be expected to have a material
adverse effect on the financial condition, operations, business, properties or
assets of the Borrower and the Guarantors taken as a whole.
SECTION 3.18. ERISA. None of the Borrower, any Guarantor or any ERISA
Affiliate maintains or contributes to any Plan other than those listed on
Schedule 3.18. Each Plan has been and is being maintained and funded in
accordance with its terms and in compliance with all provisions of ERISA and the
Code applicable thereto. The Borrower, each of the Guarantors and each ERISA
Affiliate have fulfilled all obligations related to the minimum funding
standards of ERISA and the Code for each Plan, are in compliance with the
currently applicable provisions of ERISA and of the Code and have not incurred
any liability (other than routine liability for premiums) under Title IV of
ERISA, except for amounts due, owing and unpaid on the Filing Date. No
Termination Event has occurred nor has any other event occurred that may result
in a Termination Event. No event or events have occurred in connection with
which the Borrower, any of the Subsidiaries, any ERISA Affiliate, any fiduciary
of a Plan or any Plan, directly or indirectly, could be subject to any
liability, individually or in the aggregate, under ERISA, the Code or any other
requirement of law or under any agreement, instrument, statute, rule of law or
regulation pursuant to or under which any such entity has agreed to indemnify or
is required to indemnify any person against liability incurred under, or for a
violation or failure to satisfy the requirements of, any such statute,
regulation or order. The Borrower has delivered or caused to be delivered to the
Administrative Agent: (i) a copy of each Plan (or, where any such plan is not in
writing, a complete description thereof) (and, if applicable, related trust
agreements or other funding instruments) and all amendments thereto, all written
interpretations thereof and written descriptions thereof that have been
distributed to employees or former employees of the Borrower or the Guarantors;
(ii) the most recent determination letter issued by the Internal Revenue Service
with respect to each Plan; (iii) for the three most recent plan years, Annual
Reports on Form 5500 Series
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required to be filed with any governmental agency for each Plan; (iv) all
actuarial reports prepared for the last three plan years for each Plan; (v) a
listing of all Multiemployer Plans, with the aggregate amount of the most recent
annual contributions required to be made by the Borrower or any ERISA Affiliate
to each such plan and copies of the collective bargaining agreements requiring
such contributions; (vi) any information that has been provided to the Borrower
or any ERISA Affiliate regarding withdrawal liability under any Multiemployer
Plan; and (vii) the aggregate amount of the most recent annual payments made to
former employees of the Borrower or any ERISA Affiliate under any retiree health
Plan.
SECTION 3.19. ACCOUNTS RECEIVABLE FINANCING. Neither the Borrower nor
any of the Guarantors is party to any accounts receivable financing arrangements
whereby the Borrower or such Guarantor extends credit directly to its customers
through the use of an in-store credit card or through the use of a credit card
offered by a third party lender.
SECTION 3.20. AMERICAN EAST INSURANCE CORPORATION American East
Insurance Corporation conducts no business other than managing the procurement
and maintenance of liability, casualty and employee benefit related insurance
for the Borrower and its Subsidiaries.
SECTION 3.21. NEW ENGLAND CLAIMS OFFICE, INC. New England Claims
Office, Inc. conducts no business other than adjusting insurance claims for the
Borrower and its Subsidiaries.
IV. CONDITIONS OF LENDING
SECTION 4.01. CONDITIONS PRECEDENT TO INITIAL LOANS AND INITIAL LETTERS
OF CREDIT. The obligation of the Lenders to make the initial Loans or the
Issuing Bank to issue the initial Letter of Credit, whichever may occur first,
is subject to the following conditions precedent:
(a) Supporting Documents. The Administrative Agent shall have
received for each of the Borrower and the Guarantors:
(i) a copy of such entity's certificate of
incorporation, as amended, certified as of a recent date by
the Secretary of State of the state of its incorporation or a
senior officer of such entity;
(ii) a certificate of such Secretary of State, dated
as of a recent date, as to the good standing of that entity
and as to the charter documents on file in the office of such
Secretary of State; and
(iii) a certificate of the Secretary or an Assistant
Secretary of that entity dated the date of the initial Loans
or the initial Letter of Credit hereunder, whichever first
occurs, and certifying (A) that attached thereto is a true and
complete copy of the by-laws of that entity as in effect on
the date of such certification, (B) that attached thereto is a
true and complete copy of resolutions adopted by the Board of
Directors of that entity authorizing the Borrowings and Letter
of Credit extensions hereunder, the execution, delivery and
performance in accordance with their respective terms of this
Agreement, the Notes to be executed by it, the Loan Documents
and any other documents required or contemplated hereunder or
thereunder and the granting of the security interest in the
Cash Collateral Account contemplated hereby, (C) that the
certificate of incorporation of that entity has not
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been amended since the date of the last amendment thereto
indicated on the certificate of the Secretary of State
furnished pursuant to clause (i) above and (D) as to the
incumbency and specimen signature of each officer of that
entity executing this Agreement, the Notes to be executed by
it and the Loan Documents or any other document delivered by
it in connection herewith or therewith (such certificate to
contain a certification by another officer of that entity as
to the incumbency and signature of the officer signing the
certificate referred to in this clause (iii)).
(b) Notes. On or before the date of the initial Loans or the
issuance of the initial Letter of Credit hereunder, whichever first occurs, the
Administrative Agent shall have received Notes executed on behalf of the
Borrower, dated the Closing Date, payable to the order of each of the Lenders,
in the form of Exhibit B-1, in an amount equal to such Lender's Commitment, and
in the form of Exhibit B-2 in an amount equal to $30,000,000 to be delivered to
the Administrative Agent for the Agent Advances.
(c) The Order. At the time of the making of the initial Loans
or at the time of the issuance of the initial Letter of Credit, whichever first
occurs, the Administrative Agent shall have received a certified copy of an
order of the Bankruptcy Court in the form attached hereto as Exhibit C (the
"Order") approving the Loan Documents, the transactions contemplated hereby and
thereby, the payment and performance by the Borrower and the Guarantors of all
their obligations under the Loan Documents, and granting the Superpriority Claim
status and Liens described in Section 2.23 (including, without limitation, the
unshared first-priority perfected Lien on the Borrower's and the Guarantors'
Inventory, Receivables and leasehold interests in real property) which (i) shall
have been entered upon an application of the Borrower satisfactory in form and
substance to the Administrative Agent, on no less than fifteen (15) days' prior
notice to those parties directed by the Bankruptcy Court, (ii) shall be in full
force and effect, and (iii) shall not have been stayed, reversed, rescinded,
modified or amended in any respect unless otherwise agreed to in writing by the
Administrative Agent and, if the Order is the subject of a pending appeal in any
respect, neither the making of such Loans nor the issuance of such Letters of
Credit nor the performance by the Borrower or any of the Guarantors of any of
their respective obligations hereunder or under the Loan Documents or under any
other instrument or agreement referred to herein shall be the subject of a
presently effective stay pending appeal. The Order shall have authorized Credit
Extensions in the full amount contemplated under this Agreement or otherwise in
an amount satisfactory to the Lenders and shall contain such other provisions
required by the Administrative Agent in its sole discretion.
(d) Business Plan. The Borrower shall have delivered to the
Administrative Agent the Business Plan in form and substance satisfactory to the
Administrative Agent.
(e) Opinions of Counsel to the Borrower. The Administrative
Agent shall have received, for itself and for the Issuing Bank, the Collateral
Agent, the Managing Agent and the Lenders the favorable written opinion of
Parker Chapin Flattau & Klimpl, LLP, counsel to the Borrower and the Guarantors,
and, if required by the Administrative Agent, such other counsel as is
acceptable to the Administrative Agent, in each case dated the date of the
initial Loans or the issuance of the initial Letter of Credit, whichever first
occurs, substantially in the forms attached as Exhibit E.
(f) Payment of Fees. Concurrent with the initial Borrowing,
the Borrower shall have paid to the Administrative Agent, the Managing Agent,
the Issuing Bank, the Collateral Agent and the Lenders the then unpaid balance
of all accrued and unpaid Fees owed under and pursuant to this Agreement, the
Commitment Letter (to the extent not otherwise provided for herein) and the Fee
Letter referred to in Section 2.19.
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(g) Assets; Inventory. The Collateral Agent shall be
reasonably satisfied that the assets of the Borrower and the Guarantors are in
the amounts and of the quality previously represented by the Borrower to the
Collateral Agent and the Collateral Agent shall have received such valuations,
credit and background checks and other reports, material and information
concerning such assets as shall reasonably satisfy the Collateral Agent. In
addition, the Collateral Agent shall be reasonably satisfied that the Inventory
is located at such places and is in the amounts and of the quality and value
previously represented by the Borrower to the Collateral Agent, and that no
Inventory is owned by Guarantors other than the Retail Guarantors, and the
Collateral Agent shall have received such reports, material and other
information concerning the Inventory and the Borrower's suppliers, as shall
satisfy the Collateral Agent in its sole discretion.
(h) Corporate and Judicial Proceedings. All corporate and
judicial proceedings and all instruments and agreements in connection with the
transactions among the Borrower, the Guarantors, the Administrative Agent, the
Managing Agent, the Issuing Bank, the Collateral Agent, and the Lenders
contemplated by this Agreement shall be reasonably satisfactory in form and
substance to the Administrative Agent, and the Administrative Agent shall have
received all information and copies of all documents and papers, including
records of corporate and judicial proceedings, which the Administrative Agent
may have reasonably requested in connection therewith, such documents and papers
where appropriate to be certified by proper corporate, governmental or judicial
authorities.
(i) Information; Satisfactory Diligence. In addition to the
foregoing, the Administrative Agent shall have (a) received such other
information (financial or otherwise) as may be reasonably requested by the
Administrative Agent, and (b) completed its diligence to its satisfaction, as
determined by the Administrative Agent in its sole and absolute discretion,
including satisfactory results of an inventory analysis conducted by an
inventory liquidation analysis firm and a follow-up review of the Borrower's
books and records conducted by a commercial finance audit firm.
(j) Lien Searches. On or before the date of the entry of the
Order, the Collateral Agent shall have received the results of UCC-1 and other
Lien searches (in each case dated as of a date reasonably satisfactory to the
Collateral Agent) conducted in State and county levels in jurisdictions in which
the Borrower and the Guarantors conduct business and in the United States Patent
and Trademark Office, which indicate the absence of Liens on the assets
(including Inventory and Receivables) of the Borrower and the Guarantors, other
than Liens permitted pursuant to the Loan Documents, or for which termination
statements and releases reasonably satisfactory to the Collateral Agent have
been tendered prior to or concurrently with the initial Credit Extension.
(k) Environmental Compliance. The Borrower and the Guarantors
shall have granted the Administrative Agent access to and the right to inspect
all reports, audits and other internal information of the Borrower and the
Guarantors relating to environmental matters, and any third party verification
of certain matters relating to compliance with environmental laws and
regulations requested by the Administrative Agent, and the Administrative Agent
shall be satisfied that the Borrower and the Guarantors are in compliance in all
material respects with all applicable environmental laws and regulations and be
satisfied with the costs of maintaining such compliance.
(l) Accounts Receivable Financing. Neither the Borrower nor
any of the Guarantors shall be a party to any accounts receivable financing
arrangements whereby the Borrower or such Guarantor extends credit directly to
its customers through the use of an in-store credit card or through the use of a
credit card offered by a third party lender.
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(m) Cash Management System. The cash concentration system
required to be established as of the date hereof pursuant to Sections 2.13 and
2.14 shall be implemented in all material respects, as determined by the
Collateral Agent in its sole discretion.
(n) Payout of Chase Credit Facility. The Administrative Agent
shall have received (i) a letter from Chase in form and substance satisfactory
to the Administrative Agent, duly completed so as to set forth the amount (the
"Payoff Amount") which, if paid to Chase on the Closing Date, shall discharge
all claims against the Borrower and Guarantors and all Liens securing any
Indebtedness or other obligations outstanding under the Chase Credit Facility
(other than letters of credit issued under the Chase Credit Facility that have
been fully collateralized or backed by Letters of Credit hereunder and except
that Chase may reserve claims for unliquidated and contingent indemnification
obligations if such claims are unsecured and expressly subordinated by Chase, in
right of payment, to the prior payment in full of all of the Obligations), (ii)
the Borrower's request for a Borrowing in an amount which both (x) is permitted
under Section 2.01(a), and (y) is at least equal to the Payoff Amount, and (iii)
the Borrower's and Guarantors' express instructions to remit to Chase, from the
proceeds of such Borrowing, the Payoff Amount.
(o) Consents and Approvals. The Administrative Agent shall be
satisfied in its sole discretion that all insurance, Blocked Account Agreements,
Payment Direction Notices, Customs Broker Agreements, Common Carrier Agreements,
Collateral Access Agreements and other consents and approvals required or
necessary hereunder have been either delivered to the applicable third parties,
or if required hereunder, executed by such third parties and such notices have
not been withdrawn and such executed agreements are in full force and effect.
(p) Opening Availability. After giving effect to the repayment
and discharge of the Chase Credit Facility, both the Borrowing Base (excluding
Eligible FOB Inventory) and the aggregate amount of the Commitments shall each
be at least $60,000,000 greater than the aggregate Credit Extensions that would
be outstanding after giving effect to all Loans and Letters of Credit that are
then being made, issued or entered into or that have then been requested by the
Borrower.
(q) No Material Adverse Change. No event or series of events
shall have occurred or become known to the Administrative Agent at any time
after January 1, 1998, that would constitute a material adverse change in (i)
the assets, liabilities, business, operations or condition (financial or
otherwise) of the Borrower or any Guarantor, or (ii) the enforceability of the
Superpriority Claims, Liens, rights and remedies of the Administrative Agent,
the Managing Agent, the Issuing Bank, the Collateral Agent, and the Lenders
under the Loan Documents, (iii) the ability of the Borrower or the Guarantors to
pay the Obligations when due and to perform their covenants and agreements under
the Loan Documents, or (iv) the value of the assets of the Borrower and the
Guarantors.
(r) Financing Statements. The Collateral Agent shall have
filed all financing statements and given all such notices as may be necessary
(without giving effect to the Order) for the Collateral Agent to perfect its
security interest in the Collateral for itself and for the benefit of the
Lenders, the Issuing Bank, the Managing Agent and the Administrative Agent and
to assure its first-and second-priority status therein in accordance with
Section 2.23.
(s) Closing Documents. The Administrative Agent shall have
received executed Loan Documents and all other documents, certificates and
instruments required to be delivered to it pursuant to this Agreement and on the
Closing Documents List (including, without limitation, stock certificates and
stock
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<PAGE> 54
powers with respect to the Subsidiaries of the Borrower) and such documents
shall be satisfactory in form and substance to the Administrative Agent.
(t) Closing Date. The initial Credit Extension hereunder shall
have occurred on or prior to June 15, 1998.
(u) Insurance Arrangements. The Collateral Agent shall be
reasonably satisfied with the insurance arrangements of the Borrower and
Guarantors, taken as a whole, and shall have received all documentation
requested in connection with such insurance including documentation naming the
Collateral Agent as "loss payee" under each casualty policy covering the
Collateral and the Collateral Agent, the Administrative Agent, the Managing
Agent, the Issuing Bank, BSI and each Lender as an "additional insured" under
each liability policy.
SECTION 4.02. CONDITIONS PRECEDENT TO EACH LOAN AND EACH LETTER OF
CREDIT. The obligation of the Lenders to make each Loan and of the Issuing Bank
to issue each Letter of Credit, including the initial Loan and the initial
Letter of Credit, is subject to the following conditions precedent:
(a) Notice. The Administrative Agent shall have received a
notice with respect to such borrowing or issuance, as the case may be, as
required by Article II.
(b) Representations and Warranties. All representations and
warranties contained in this Agreement and the other Loan Documents or otherwise
made in writing in connection herewith or therewith shall be true and correct in
all material respects on and as of the date of each Borrowing or the issuance of
each Letter of Credit hereunder with the same effect as if made on and as of
such date, other than representations and warranties that relate solely to an
earlier date.
(c) No Default. On the date of each Borrowing hereunder and
the issuance of each Letter of Credit (after giving effect to such Borrowing or
issuance), the Borrower and Guarantors shall be in compliance with all of the
terms and provisions set forth herein to be observed or performed and no Default
or Event of Default shall have occurred and be continuing.
(d) Order. The Order shall be in full force and effect and
shall not have been stayed, reversed, rescinded, modified or amended in any
respect.
(e) Borrowing Base Certificate. The Administrative Agent shall
have received the most recent Borrowing Base Certificate required to be
delivered hereunder within three (3) Business Days following the end of the
immediately preceding week (ending on the Saturday of such week).
(f) Payment of Fees. The Borrower shall have paid to the
Administrative Agent the then unpaid balance of all accrued and unpaid Fees then
payable under and pursuant to this Agreement and the Fee Letter.
The request by the Borrower for, and the acceptance by the Borrower of, each
extension of credit hereunder shall be deemed to be a representation and
warranty by the Borrower that the conditions specified in this Section 4.02 have
been satisfied at that time and that after giving effect to such extension of
credit the Borrower shall continue to be in compliance with the Borrowing Base.
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V. AFFIRMATIVE COVENANTS
From the date hereof and for so long as any Commitment shall
be in effect or any Loan, Letter of Credit or other Obligation shall remain
outstanding (unless such Letter of Credit is fully collateralized to the
satisfaction of the Administrative Agent), the Borrower and each of the
Guarantors agree that the Borrower and each Guarantor will:
SECTION 5.01. FINANCIAL STATEMENTS, REPORTS, ETC. In the case of the
Borrower and the Guarantors, (i) deliver to the Administrative Agent, the
Managing Agent, the Issuing Bank, the Collateral Agent and each of the Lenders:
(a) Within 90 days after the end of each fiscal year of the
Borrower, the Borrower's consolidated balance sheet and related statement of
income and cash flows, showing the financial condition of the Borrower and the
Guarantors on a consolidated basis as of the close of such fiscal year and the
results of their respective operations during such year, to be audited by
Deloitte & Touche, LLP or other independent public accountants of recognized
national standing reasonably acceptable to the Administrative Agent and
accompanied by an opinion of such accountants (which shall not be qualified in
any material respect other than with respect to the Cases) and to be certified
by a Financial Officer of the Borrower to the effect that such consolidated
financial statements fairly present the financial condition and results of
operations of the Borrower and the Guarantors on a consolidated basis in
accordance with GAAP consistently applied;
(b) Within 45 days after the end of the first three fiscal
quarters of the Borrower (commencing with the fiscal quarter ending on or about
April 30, 1998), the Borrower's consolidated balance sheets and related
statements of income and cash flows, showing the financial condition of the
Borrower and the Guarantors on a consolidated basis as of the close of such
fiscal quarter and the results of their respective operations during such fiscal
quarter and the then elapsed portion of the fiscal year, each certified by a
Financial Officer as fairly presenting the financial condition and results of
operations of the Borrower and the Guarantors on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end audit
adjustments;
(c) Concurrently with any delivery of financial statements
under (a) or (b) above, a certificate of a Financial Officer (i) stating that no
Default or Event of Default has occurred, or, if such a Default or Event of
Default has occurred, specifying the nature and extent thereof and any
corrective action taken or proposed to be taken with respect thereto and (ii)
setting forth computations in reasonable detail satisfactory to the
Administrative Agent demonstrating compliance with the provisions of Sections
6.04, 6.05 and 6.06 hereof;
(d) Commencing with the fiscal month ending on or about May
31, 1998, within 30 days of the end of each fiscal month of the Borrower (or 45
days if such fiscal month end is also the end of any of the first three fiscal
quarters, or 60 days if such fiscal month end is also the end of the fiscal
year), the unaudited monthly income statement, balance sheet and cash flow
report of the Borrower and the Guarantors on a consolidated basis as of the
close of such fiscal month and the results of their respective operations during
such fiscal period and the then elapsed portion of the fiscal year (and such
other cash flow reports and operating statements as the Administrative Agent may
reasonably request), all certified by a Financial Officer as fairly presenting
the results of operations of the Borrower and the Guarantors on a consolidated
basis subject to normal year-end audit adjustments;
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(e) To the extent not otherwise required under this Section
5.01, those additional BBRF Collateral reporting requirements listed on Schedule
5.01(e) hereto;
(f) Promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other materials filed by
it with the Securities and Exchange Commission, or any governmental authority
succeeding to any of or all the functions of said commission, or with any
national securities exchange, as the case may be;
(g) As soon as available and in any event (A) within 30 days
after the Borrower or any of its ERISA Affiliates knows or has reason to know
that any Termination Event described in clause (i) of the definition of
Termination Event with respect to any Single Employer Plan of the Borrower or
such ERISA Affiliate has occurred and (B) within 10 days after the Borrower or
any of its ERISA Affiliates knows or has reason to know that any other
Termination Event with respect to any such Plan has occurred, a statement of a
Financial Officer describing such Termination Event and the action, if any,
which the Borrower or such ERISA Affiliate proposes to take with respect
thereto;
(h) Promptly and in any event within 10 days after receipt
thereof by the Borrower or any of its ERISA Affiliates from the PBGC copies of
each notice received by the Borrower or any such ERISA Affiliate of the PBGC's
intention to terminate any Single Employer Plan of the Borrower or such ERISA
Affiliate or to have a trustee appointed to administer any such Plan;
(i) Promptly and in any event within 30 days after the filing
thereof with the Internal Revenue Service, copies of each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) with respect to each Single
Employer Plan of the Borrower or any of its ERISA Affiliates;
(j) Within 10 days after notice is given or required to be
given to the PBGC under Section 302(f)(4)(A) of ERISA of the failure of the
Borrower or any of its ERISA Affiliates to make timely payments to a Plan, a
copy of any such notice filed and a statement of a Financial Officer of the
Borrower setting forth (A) sufficient information necessary to determine the
amount of the lien under Section 302(f)(3), (B) the reason for the failure to
make the required payments and (C) the action, if any, which the Borrower or any
of its ERISA Affiliates proposed to take with respect thereto;
(k) Promptly and in any event within 10 days after receipt
thereof by the Borrower or any ERISA Affiliate from a Multiemployer Plan
sponsor, a copy of each notice received by the Borrower or any ERISA Affiliate
concerning (A) the imposition of Withdrawal Liability by a Multiemployer Plan,
(B) the determination that a Multiemployer Plan is, or is expected to be, in
reorganization within the meaning of Title IV of ERISA, (C) the termination of a
Multiemployer Plan within the meaning of Title IV of ERISA, or (D) the amount of
liability incurred, or which may be incurred, by the Borrower or any ERISA
Affiliate in connection with any event described in clause (A), (B) or (C)
above; and
(l) Promptly, from time to time, such other information
regarding the operations, business affairs and financial condition of the
Borrower or any Guarantor, or compliance with the terms of any material loan or
financing agreements as the Administrative Agent may reasonably request.
(ii) Furnish to the Administrative Agent and its counsel promptly after
the same is available, copies of all pleadings, motions, applications, judicial
information, financial information and other documents filed by or on behalf of
the Borrower or any of the Guarantors with the Bankruptcy Court in the Cases or
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distributed by or on behalf of the Borrower or any of the Guarantors to any
official committee appointed in the Cases or served upon the Borrower or any
Guarantor in any of the Cases.
SECTION 5.02. CORPORATE EXISTENCE. Do or cause to be done all things
necessary to preserve, renew and keep in full force and effect their respective
corporate existence, material rights, licenses, permits and franchises and
comply in all material respects with all laws and regulations applicable to it.
SECTION 5.03. INSURANCE.
(a) Keep or cause to be kept its insurable properties insured
at all times, against such risks, including fire and other risks insured against
by extended coverage, consistent with current practice or as is customary with
companies of the same or similar size in the same or similar businesses, with
financially sound and responsible insurance companies, in amounts and coverages
reasonably satisfactory to the Collateral Agent.
(b) Maintain in full force and effect public liability
insurance against claims for personal injury or death or property damage
occurring upon, in, about or in connection with the use of any properties owned,
occupied or controlled by the Borrower or any Subsidiary, as the case may be, in
such amounts and with such deductibles as are customary with companies of the
same or similar size in the same or similar businesses and in the same
geographic area in amounts and coverages reasonably satisfactory to the
Collateral Agent.
(c) Maintain such other insurance as may be required by law.
(d) Maintain the Collateral Agent as "loss payee" under each
casualty policy covering the Collateral, and the Administrative Agent, the
Managing Agent, the Issuing Bank, the Collateral Agent, BSI and the Lenders as
"additional insureds" on all liability policies of the Borrower and the
Guarantors.
SECTION 5.04. OBLIGATIONS AND TAXES. With respect to the Borrower and
each Guarantor, pay all its material obligations arising after the Filing Date
promptly and in accordance with their terms and pay and discharge promptly all
material taxes, assessments and governmental charges or levies imposed upon it
or upon its income or profits or in respect of its property arising after the
Filing Date, before the same shall become in default, as well as all material
lawful claims for labor, materials and supplies or otherwise arising after the
Filing Date which, if unpaid, might become a Lien or charge upon such properties
or any part thereof; provided, however, that the Borrower and each Guarantor
shall not be required to pay and discharge or to cause to be paid and discharged
any such tax, assessment, charge, levy or claim so long as the validity or
amount thereof shall be contested in good faith by appropriate proceedings (if
the Borrower and the Guarantors shall have set aside on their books adequate
reserves therefor).
SECTION 5.05. NOTICE OF EVENT OF DEFAULT, ETC. Promptly give to the
Administrative Agent notice in writing of any Default or Event of Default and of
any litigation that could reasonably be expected to have a material adverse
effect on the Borrower and the Guarantors, taken as a whole, if adversely
determined.
SECTION 5.06. BORROWING BASE CERTIFICATE. Furnish to the Administrative
Agent as soon as available and in any event on or before Thursday of each week a
Borrowing Base Certificate for the week ending on the immediately preceding
Saturday, substantially in the form of Exhibit A.
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SECTION 5.07. ACCESS TO BOOKS AND RECORDS; INSPECTIONS.
(a) Maintain or cause to be maintained at all times true and
complete books and records of the financial operations of the Borrower and the
Guarantors.
(b) Provide the Administrative Agent, the Managing Agent, the
Issuing Bank, the Collateral Agent and their representatives access to all such
books and records during regular business hours, in order that they may examine
and make abstracts or copies from such books, accounts, records and other papers
(including, but not limited to, pertaining to Inventory and Receivables included
in the Borrowing Base) for the purpose of verifying the accuracy of any
information delivered by the Borrower or the Guarantors to the Administrative
Agent, the Managing Agent, the Issuing Bank, the Collateral Agent or the Lenders
pursuant to this Agreement or for any other purpose reasonably related to this
Agreement.
(c) At any reasonable time and from time to time during
regular business hours, permit the Administrative Agent, the Managing Agent, the
Issuing Bank, the Collateral Agent or any representative thereof (including,
without limitation, examiners, appraisers and consultants) thereof to visit
and/or inspect the properties and assets (whether owned, leased or rented),
systems and procedures (including those relating to cash management) of the
Borrower and the Guarantors, to conduct Collateral examinations and verify and
appraise the components of the Borrowing Base (including appraisals of leases)
and to discuss the assets, liabilities, business, operations, systems,
procedures, conditions or prospects of the Borrower or any Guarantor with its
directors, officers, employees, advisors and consultants.
(d) Permit the Administrative Agent, the Managing Agent, the
Issuing Bank, the Collateral Agent or any representatives thereof to discuss
directly with the Borrower's and the Guarantors' independent certified public
accountants the business, financial condition and other affairs of the Borrower
and the Guarantors.
(e) Permit the Collateral Agent to obtain periodic inventory
liquidation analyses and leasehold liquidation appraisals performed by Gordon
Brothers Companies, Inc. or another liquidation analysis firm chosen by the
Collateral Agent in its reasonable discretion, and follow-up reviews of the
Borrower's book and records to be conducted by a commercial finance audit firm
chosen by the Collateral Agent. The Administrative Agent shall be entitled to
make reasonable adjustments to the Borrowing Base Reserves on the basis of the
results of such analysis and review.
SECTION 5.08. FEES. In addition to the other Fees and expenses due
hereunder, pay on demand all reasonable fees and expenses of any consultants,
appraisers and advisors retained by the Administrative Agent in connection
herewith or any other Loan Document (subject to Section 10.05).
SECTION 5.09. BUSINESS PLAN; PROJECTIONS. As soon as practicable, but
in no event later than 30 days after the end of each fiscal year, furnish to the
Administrative Agent the Borrower's business plan and financial projections for
the 12-month fiscal period ending on or about January 31 of such year, in each
case in form and substance reasonably satisfactory to the Administrative Agent,
and make a Financial Officer available to meet and discuss the same with the
Administrative Agent, the Managing Agent, the Issuing Bank, the Collateral
Agent, and the Lenders.
SECTION 5.10. ERISA. Establish, maintain and operate all Plans to
comply in all material respects with the provisions of ERISA, the Code, and all
other requirements of Law, other than to the extent that the
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Borrower is in good faith contesting by appropriate proceedings and with
adequate reserves the validity or application of any such provision, law, rule,
regulation or interpretation.
SECTION 5.11. ENVIRONMENTAL AND OTHER MATTERS. Conduct their respective
businesses so as to comply in all material respects with all applicable federal,
state and local laws, regulations, directions, ordinances, criteria and
guidelines, including, without limitation, environmental, land use, occupational
safety and health laws, regulations, directions, ordinances, criteria,
guidelines, requirements and permits in all jurisdictions in which any of them
is or may at any time be doing business, except to the extent that the Borrower
or any of the Guarantors are contesting, in good faith by appropriate legal
proceedings, any such law, regulation, direction, ordinance, criteria, guideline
or interpretation thereof or application thereof; provided, further, that the
Borrower and each of the Guarantors shall comply with the order of any court or
other Governmental Authority relating to such laws unless the Borrower or the
Guarantors shall currently be prosecuting an appeal or proceedings for review
and shall have secured a stay of enforcement or execution postponing enforcement
or execution pending such appeal or proceedings for review. The Borrower shall
promptly take all actions necessary to prevent the imposition of any Liens on
any of its properties arising out of or related to any environmental matters or
otherwise. At the request of the Administrative Agent, and at the sole cost and
expense of the Borrower, the Borrower shall provide the Administrative Agent
with any additional information or reports relating to environmental matters and
any potential related liability resulting therefrom as the Administrative Agent
may reasonably request. In addition, the Borrower shall provide the
Administrative Agent, at the Borrower's sole cost and expense, with copies of
any environmental audits, surveys or reports conducted in connection with the
purchase or sale by the Borrower of any real property.
SECTION 5.12. CASH CONCENTRATION SYSTEM. Maintain the BBNA Cash
Concentration Account with BBNA pursuant to Sections 2.13 and 2.14.
SECTION 5.13. LIEN STATUS. Maintain procedures satisfactory to the
Collateral Agent for assuring and maintaining the Collateral Agent's first and
second-priority perfected security interest in the Collateral for the benefit of
itself, the Administrative Agent, the Managing Agent, the Issuing Bank and the
Lenders in accordance with Section 2.23.
VI. NEGATIVE COVENANTS
From the date hereof and for so long as any Commitment shall be in
effect or any Loan, Letter of Credit, or other Obligation shall remain
outstanding unless such Letter of Credit is fully collateralized to the
satisfaction of the Administrative Agent, the Borrower and each of the
Guarantors agree that the Borrower and each of the Guarantors will not (and will
not apply to the Bankruptcy Court for authority to):
SECTION 6.01. LIENS AND PRE-PETITION CLAIM PAYMENTS.
(a) Incur, create, assume or suffer to exist any Lien on any
asset or capital stock of the Borrower or the Guarantors or the estate in any of
the Cases whether now owned or hereafter acquired by the Borrower, other than
(i) Permitted Liens and, without duplication, the Liens listed on Schedule
3.06(b), (ii) Liens granted pursuant to the Order, (iii) valid and perfected
Liens existing on the Filing Date and reflected on Schedule 3.06(a) and (iv)
Liens securing the Fleet Post-Petition Loan Agreement pursuant to the Fleet
Post-Petition Order, in each case, which do not conflict with the provisions of
Section 2.23.
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(b) Make any Pre-Petition Claim Payments in excess of
$5,000,000 in the aggregate during the term of this Agreement other than (i)
payments of pre-petition liability claims in connection with the Borrower's "ADR
program" conducted pursuant to an Order of the Bankruptcy Court dated February
11, 1998, as attached as Exhibit I (the "ADR Order"), (ii) adequate protection
payments pursuant to the Brockton Stipulation and Order and (iii) adequate
protection payments to the Term Lenders and the Real Estate Lender pursuant to
the terms of the Order.
SECTION 6.02. MERGER, ETC. Consolidate or merge with or into another
Person (other than mergers between Guarantors or mergers between the Borrower
and any Guarantor, so long as the Borrower is the surviving entity).
SECTION 6.03. INDEBTEDNESS. Contract, create, incur, assume or suffer
to exist any Indebtedness, except for (i) Indebtedness under this Agreement;
(ii) Indebtedness incurred prior to the Filing Date to be discharged pursuant to
a plan of reorganization on the effective date thereof; (iii) Indebtedness
incurred subsequent to the Filing Date secured by purchase money Liens and
Capitalized Leases in an aggregate amount not to exceed $10,000,000, and (iv)
Indebtedness incurred pursuant to the Fleet Post-Petition Loan Agreement in an
outstanding principal amount not in excess of $9,900,000 in the aggregate.
SECTION 6.04. CAPITAL EXPENDITURES. Make Capital Expenditures in any
fiscal year in excess of $40,000,000 in the aggregate; provided that up to
$10,000,000 of any amount not so expended in such fiscal year may be carried
over for expenditure in the immediately following fiscal year.
SECTION 6.05. EBITDA. Permit EBITDA for the 12-month period ending on
the last day of each fiscal quarter of the Borrower to be less than:
<TABLE>
<CAPTION>
Fiscal Quarter Ending
Ending On or About Required EBITDA
<S> <C>
July 31, 1998 $40,000,000
October 31, 1998 $40,000,000
January 31, 1999 $50,000,000
April 30, 1999 $60,000,000
July 31, 1999 $60,000,000
October 31, 1999 $65,000,000
</TABLE>
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SECTION 6.06. ACCOUNTS PAYABLE TO INVENTORY RATIO. Permit the ratio
(expressed as a percentage) of the amount of Accounts Payable to the value of
Inventory of the Borrower and the Guarantors valued on a last in - first out
basis at the lower of cost or market calculated on the retail method in
accordance with GAAP and shown on the Borrower's consolidated financial
statements at the end of each month set forth below to be less than the
percentage specified opposite such month:
<TABLE>
<CAPTION>
Month Minimum Percentage
<S> <C>
May 1998 26%
June 1998 23%
July 1998 28%
August 1998 29%
September 1998 30%
October 1998 30%
November 1998 33%
December 1998 34%
January 1999 28%
February 1999 33%
March 1999 30%
April 1999 29%
May 1999 27%
June 1999 23%
July 1999 29%
August 1999 29%
September 1999 30%
October 1999 30%
November 1999 34%
</TABLE>
SECTION 6.07. GUARANTEES AND OTHER LIABILITIES. Purchase or repurchase
(or agree, contingently or otherwise, so to do) the Indebtedness of, or assume,
guarantee (directly or indirectly or by an instrument having the effect of
assuring another's payment or performance of any obligation or capability of so
doing, or otherwise), endorse or otherwise become liable, directly or
indirectly, in connection with the obligations, stock or dividends of any
Person, or permit any Subsidiary so to do, except (i) for any guaranty of
Indebtedness or other obligations of the Borrower or a Guarantor if the
guarantor could have incurred such Indebtedness or other obligations under this
Agreement and (ii) the guaranty by the Guarantors hereunder.
SECTION 6.08. CHAPTER 11 CLAIMS. Incur, create, assume, suffer to exist
or permit any other superpriority claim or other claim which is pari passu with
or senior to the claims of the Administrative Agent, the Managing Agent, the
Issuing Bank, the Collateral Agent and the Lenders against the Borrower or the
Guarantors hereunder, except for the Carve-Out.
SECTION 6.09. DIVIDENDS; CAPITAL STOCK. Declare or pay, directly or
indirectly, any dividends or make any other distribution or payment, whether in
cash, property, securities or a combination thereof, with respect to (whether by
reduction of capital or otherwise) any shares of capital stock (or any options,
warrants, rights or other equity securities or agreements relating to any
capital stock), or set apart any sum for the aforesaid purposes; provided that
any subsidiary of the Borrower may pay dividends to the Borrower.
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SECTION 6.10. TRANSACTIONS WITH AFFILIATES. Sell or transfer any
property or assets to, or otherwise engage in any other transactions with, any
of its shareholders or Affiliates, except that the Borrower or any Guarantor may
engage in any of the foregoing transactions in the ordinary course of business
at prices and on terms and conditions not less favorable to the Borrower or such
Guarantor than could be obtained on an arm's-length basis from unrelated third
parties and which are consistent with past practices. Notwithstanding the
foregoing, the Borrower may not transfer any assets to any Guarantor except for
proceeds of the loans to the extent provided in Section 3.10 and transfers of
Inventory to the Retail Guarantors.
SECTION 6.11. INVESTMENTS, LOANS AND ADVANCES. Purchase, hold or
acquire any capital stock, evidences of indebtedness or other securities of,
make or permit to exist any loans or advances to, or make or permit to exist any
investment or any other interest in, any other Person (all of the foregoing,
"Investments"), except for (i) ownership by the Borrower of the capital stock of
each of the Subsidiaries listed on Schedule 3.04, (ii) Permitted Investments of
funds in the Cash Collateral Account (provided that the Collateral Agent has a
first-priority perfected security interest therein) and (iii) loans or advances
by the Borrower to employees, including for relocation of employees, in the
ordinary course of business not to exceed $3,000,000 in aggregate principal
amount at any time outstanding.
SECTION 6.12. DISPOSITION OF ASSETS. Sell or otherwise dispose of any
assets (including, without limitation, the capital stock of any Subsidiary),
except for (a) sales of Inventory in arm's-length transactions in the ordinary
course of business, (b) so long as no Event of Default has occurred and is
continuing or would occur after giving effect to such sale or disposition, (A)
sales of assets having a fair market value not exceeding $10,000,000 in the
aggregate, and (B) sales of obsolete fixtures and equipment no longer used or
useful in the Borrower's or the Guarantors' business, (c) sales permitted
pursuant to Section 6.13(c), (d) the sale of the Borrower's store (and
associated fixtures) located in Silver Spring, Maryland, (e) sales of leaseholds
and fixtures with respect to the retail locations of the Borrower and the Retail
Guarantors listed on Schedule 6.12, all of which locations the Borrower has
closed and (f) a sale or sale/leaseback of the Borrower's store (and associated
fixtures) located in Brockton, Massachusetts; provided that, in each of the
above cases, the proceeds from such sales (other than proceeds from the sale
described in clause (d) above used to repay Indebtedness under the Fleet
Post-Petition Loan Agreement and proceeds from the sale described in clause (f)
above used to repay Indebtedness under the Fleet-Brockton Loan Agreement) shall
be promptly remitted to the BBNA Cash Concentration Account for application as
provided in Section 2.14.
SECTION 6.13. NATURE OF BUSINESS.
(a) Modify or alter in any material manner the nature and type
of its business as conducted at or prior to the Filing Date or the manner in
which such business is conducted, unless approved by the Administrative Agent in
writing.
(b) Change, in any material respect, any of its inventory or
sales accounting, invoicing or billing practices or management information or
reporting systems, unless approved in writing by the Administrative Agent in the
exercise of its reasonable discretion.
(c) Close more than ten (10) retail stores after the Closing
Date (provided that such 10 stores shall only be closed in conjunction with an
Inventory "G.O.B." sale conducted by professional liquidators or, if approved by
the Administrative Agent, the Borrower, at a purchase price for such Inventory
in excess of 72% of the Loan Value of such Inventory (net of sale expenses
including, without limitation, occupancy, payroll and liquidation costs). The
leaseholds and fixtures relating to such closed stores may also
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be sold by the Borrower, provided that the proceeds from such sales shall be
promptly remitted to the BBNA Cash Concentration Account for application as
provided in Section 2.14.
(d) Move Inventory from other than the locations listed on
Schedule 3.11(a).
SECTION 6.14. CONFLICTING AGREEMENTS, ORDERS OR ACTIONS. Enter into any
stipulation or agreement, request or permit or suffer itself to become subject
to any order entered in any of the Cases, or take or permit any other Person to
take any other action which does or could conflict or materially interfere with
any of the rights, privileges, benefits or remedies of the Administrative Agent,
the Managing Agent, the Issuing Bank, the Collateral Agent, or any of the
Lenders under any of the Loan Documents, or materially diminish or impair the
practical realization of any such right, privilege, benefit or remedy,
including, without limitation, permit an order dismissing the Case unless the
Obligations have been repaid in full in cash or fully collateralized pursuant to
a first priority, perfected security interest in assets of the Borrower, to the
satisfaction of the Administrative Agent in its sole and absolute discretion.
SECTION 6.15. AMENDMENTS TO STIPULATIONS AND ORDERS. Amend or modify,
or permit the amendment or modification of, any of the Brockton Stipulation and
Order, the Fleet Post-Petition Order, the ADR Order or the GE Stipulation and
Order in any respect which could have an effect on the Loans, the Collateral or
any rights of the Agents, the Issuing Bank or the Lenders hereunder or under the
other Loan Documents without the prior written consent of the Administrative
Agent, such consent not to be unreasonably withheld.
SECTION 6.16. PAYMENT DIRECTION NOTICES. Direct any Credit Card Obligor
to remit payment of Receivables to any Person or account other than the BBNA
Cash Concentration Account, except as agreed to by the Collateral Agent in the
exercise of its sole discretion.
VII. EVENTS OF DEFAULT
SECTION 7.01. EVENTS OF DEFAULT. If any of the following events (each,
an "Event of Default") occurs:
(a) any material representation or warranty made by the
Borrower or any Guarantor in this Agreement or in any Loan Document or in
connection with this Agreement or with the execution and delivery of the Notes
or the credit extensions hereunder or any material written statement or
representation made in any report, financial statement, certificate or other
document furnished by the Borrower or any Guarantors to the Administrative
Agent, the Managing Agent, the Issuing Bank, the Collateral Agent or any of the
Lenders under or in connection with this Agreement or any other Loan Document,
shall prove to have been false or misleading in any material respect when made
or delivered; or
(b) default shall be made in the payment of any (i) Fees or
interest on the Loans when due, and such default shall continue unremedied for
more than three (3) Business Days or (ii) principal of the Loans or other
amounts payable by the Borrower hereunder (including, without limitation,
reimbursement obligations or cash collateralization in respect of Letters of
Credit), when and as the same shall become due and payable, whether at the due
date thereof or at a date fixed for prepayment thereof or by acceleration
thereof or otherwise; or
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(c) default shall be made by the Borrower or any Guarantor in
the due observance or performance of any covenant, condition or agreement
contained in Article VI hereof; or
(d) default shall be made by the Borrower or any Guarantor in
the due observance or performance of any other covenant, condition or agreement
to be observed or performed pursuant to the terms of this Agreement or any of
the other Loan Documents and, with respect to Sections 5.01, 5.07 or 5.09, such
default shall continue unremedied for more than ten (10) Business Days; or
(e) the Borrower's or any Guarantor's Case shall be dismissed
or converted to a case under Chapter 7 of the Bankruptcy Code; a trustee under
Chapter 7 or Chapter 11 of the Bankruptcy Code (or any Person having powers
similar to a trustee) shall be appointed in any of the Cases and the order
appointing such trustee shall not be reversed or vacated within 30 days after
the entry thereof; or an application shall be filed by the Borrower or any
Guarantor for the approval of any other superpriority claim (other than the
Carve-Out) in any of the Cases which is pari passu with or senior to the claims
of the Administrative Agent, the Managing Agent, the Issuing Bank, the
Collateral Agent and the Lenders against the Borrower or the Guarantors
hereunder or there shall arise any such pari passu or senior superpriority claim
or other claim.
(f) the Bankruptcy Court shall enter an order or orders
granting relief from the automatic stay applicable under Section 362 of the
Bankruptcy Code (i) to the holder or holders of any security interest to permit
foreclosure (or the granting of a deed in lieu of foreclosure or the like) in
any assets of the Borrower or any of the Guarantors (other than with respect to
security interests created by this Agreement or the Security Agreement) or (ii)
to holders of pre-petition Indebtedness which have a value in excess of
$5,000,000 in the aggregate; or
(g) any material provision of any Loan Document shall, for any
reason, cease to be valid and binding on the Borrower or any of the Guarantors,
or the Borrower or any of the Guarantors shall so assert in any pleading filed
in any court; or
(h) an order of the Bankruptcy Court shall be entered in any
of the Cases appointing an examiner with enlarged powers relating to the
operation of the business (powers beyond those set forth in Section 1106(a)(3)
and 1106(a)(4) of the Bankruptcy Code) under Section 1106(b) of the Bankruptcy
Code and such order shall not be reversed or vacated within 30 days after the
entry thereof; or
(i) the Borrower or any Guarantor shall be enjoined from
conducting business, which causes a disruption of a material portion of its
business for more than ten (10) days; or
(j) the reversal, rescission, vacatur, stay, amendment or
modification of the Order; or
(k) any one or more judgments or orders as to a post-petition
liability or debt for the payment of money in excess of $5,000,000 in the
aggregate shall be rendered against the Borrower or any of the Guarantors and
either (i) enforcement proceedings shall have been commenced and shall be
continuing by any creditor upon such judgment or order or (ii) 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, payment or otherwise, shall
not be in effect; or
(l) any non-monetary judgment or order with respect to a
post-petition event shall be rendered against the Borrower or any of the
Guarantors which does or would reasonably be expected to (i)
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cause a material adverse change in the financial condition, business, operations
or assets of the Borrower and the Guarantors taken as a whole on a consolidated
basis, (ii) have a material adverse effect on the ability of the Borrower or any
of the Guarantors to perform their respective obligations under any Loan
Document, or (iii) have a material adverse effect on the Collateral or on the
rights and remedies of the Administrative Agent, the Managing Agent, the Issuing
Bank, the Collateral Agent, or any Lender under any Loan Document, and there
shall be any period of 10 consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise, shall not be
in effect; or
(m) any Termination Event described in clauses (iii) or (iv)
of the definition of such term shall have occurred and shall continue unremedied
for more than 10 days and the sum (determined as of the date of occurrence of
such Termination Event) of the Insufficiency of the Plan in respect of which
such Termination Event shall have occurred and be continuing and the
Insufficiency of any and all other Plans with respect to which such a
Termination Event (described in such clauses (iii) or (iv)) shall have occurred
and then exist is equal to or greater than $5,000,000; or
(n) (i) the Borrower or any ERISA Affiliate thereof shall have
been notified by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan, (ii) the Borrower or such ERISA
Affiliate does not have reasonable grounds to contest such Withdrawal Liability
and is not in fact contesting such Withdrawal Liability in a timely and
appropriate manner, and (iii) the amount of such Withdrawal Liability specified
in such notice, when aggregated with all other amounts required to be paid to
Multiemployer Plans in connection with Withdrawal Liabilities (determined as of
the date of such notification), exceeds $5,000,000 allocable to post-petition
obligations or requires payments exceeding $500,000 per annum, in excess of the
annual payments made with respect to such MultiEmployer Plans by the Borrower or
such ERISA Affiliate for the plan year immediately preceding the plan year in
which such notification is received; or
(o) the Borrower or any ERISA Affiliate thereof shall have
been notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or is being terminated, within the meaning of Title IV
of ERISA, if as a result of such reorganization or termination the aggregate
annual contributions of the Borrower and its ERISA Affiliates to all
Multiemployer Plans that are then in reorganization or being terminated have
been or will be increased over the amounts contributed to such Multiemployer
Plans for the plan years that include the date hereof by an amount exceeding
$5,000,000; or
(p) the Borrower or any ERISA Affiliate shall have committed a
failure described in Section 302(f) (1) of ERISA (other than the failure to make
any contribution accrued and unpaid as of the Filing Date) and the amount
determined under Section 302 (f) (3) of ERISA is equal to or greater than
$5,000,000; or
(q) it shall be determined (whether by the Bankruptcy Court or
by any other judicial or administrative forum) that the Borrower is liable for
the payment of claims arising out of any failure to comply (or to have complied)
with applicable environmental laws or regulations the payment of which will have
a material adverse effect on the financial condition, business, properties,
operations or assets of the Borrower or the Borrower and/or the Guarantors,
taken as a whole;
then, and in every such event and at any time thereafter during the continuance
of such event, and without further order of or application to the Bankruptcy
Court, the Administrative Agent or the Collateral Agent may, and at the request
of the Required Lenders shall, by notice (a "Default Notice") to the Borrower
(with copies to the United States Trustee for the Southern District of New York
and to respective counsel for the
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Official Creditors' Committee appointed in the Cases, the Real Estate Lender and
the agent for the Term Lenders) take one or more of the following actions, at
the same or different times: (i) terminate forthwith all obligations of the
Lenders and the Issuing Bank to extend credit under this Agreement, including
any and all obligations to make Loans or to issue Letters of Credit; (ii)
declare the Loans then outstanding to be forthwith due and payable, whereupon
the principal of all outstanding Loans together with accrued interest thereon
and any unpaid accrued Fees and all other liabilities of the Borrower accrued
hereunder and under any other Loan Document shall become forthwith due and
payable, without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived by the Borrower and the Guarantors,
anything contained herein or in any other Loan Document to the contrary
notwithstanding; (iii) require the Borrower and the Guarantors to deposit in the
Cash Collateral Account, no later than the first Business Day after such Default
Notice is given, cash in an amount equal to the sum of 105% of the aggregate
amounts that then are or thereafter may become available for drawing or payment
under all outstanding Letters of Credit and (without limiting or restricting any
application permitted under Sections 2.13 and 2.14) to the extent the Borrower
and the Guarantors shall fail to furnish such funds as demanded by the
Administrative Agent, the Administrative Agent shall be authorized to debit the
accounts of the Borrower and the Guarantors maintained with the Administrative
Agent in such amount; provided, however, that if such Event of Default shall be
cured, corrected or waived pursuant to the terms hereof, such cash collateral
shall be released and applied pursuant to Section 2.14; (iv) set-off amounts in
the Cash Collateral Account or any other accounts maintained by the
Administrative Agent, the Collateral Agent, the Managing Agent, the Lenders or
their agents and apply such amounts to the obligations of the Borrower and the
Guarantors hereunder and in the other Loan Documents (but this clause (iv) shall
not limit or restrict any application permitted under Sections 2.13 and 2.14);
and (v) exercise any and all remedies under the Loan Documents (including,
without limitation, the Security Agreement) and applicable law available to the
Administrative Agent, the Managing Agent, the Issuing Bank, the Collateral
Agent, and the Lenders; provided that with respect to clause (iv) and the
enforcement of Liens or other remedies with respect to the Collateral under
clause (v), the Administrative Agent shall provide the Borrower with the Default
Notice at least five (5) Business Days prior to taking the action contemplated
thereby and provided, further, that upon receipt of the Default Notice with
respect to the accounts (other than the Cash Collateral Account) referred to in
clause (iv), the Borrower may continue to make ordinary course disbursements
from such accounts during such 5 Business Day period but may not withdraw or
disburse any other amounts from such accounts.
SECTION 7.02. WHEN CONTINUING. For all purposes under this Agreement,
each Event of Default that has occurred shall be deemed to be continuing at all
times thereafter unless it either (a) is cured or corrected to the reasonable
written satisfaction of the Required Lenders (or all Lenders, to the extent
required by Section 10.10) or (b) is waived in writing by the Required Lenders
(or all Lenders, to the extent required by Section 10.10).
VIII. THE AGENTS
SECTION 8.01. ADMINISTRATION BY ADMINISTRATIVE AGENT. The general
administration of the Loan Documents shall be by the Administrative Agent. The
Lenders, the Collateral Agent, the Managing Agent and the Issuing Bank each
hereby irrevocably authorizes the Administrative Agent, at its discretion, to
take or refrain from taking such actions as agent on its behalf and to exercise
or refrain from exercising such powers under the Loan Documents and the Notes as
are delegated by the terms hereof or thereof, as appropriate, together with all
powers reasonably incidental thereto. The Administrative Agent shall have no
duties or responsibilities except as set forth in this Agreement and the other
Loan Documents.
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SECTION 8.02. ADVANCES AND PAYMENTS.
(a) On the date of each Loan, the Administrative Agent shall
be authorized (but not obligated) to advance, for the account of each of the
Lenders, the amount of the Loan to be made by it in accordance with its
Commitment hereunder. Should the Administrative Agent do so, each of the Lenders
agrees forthwith to reimburse the Administrative Agent in immediately available
funds for the amount so advanced on its behalf by the Administrative Agent,
together with interest at the Federal Funds Effective Rate if not so reimbursed
on the date due from and including such date but not including the date of
reimbursement.
(b) Any amounts received by the Administrative Agent in
connection with this Agreement or the other Loan Documents (other than amounts
to which the Administrative Agent is entitled pursuant to Sections 2.19, 5.08,
8.06, 10.05 and 10.06), the application of which is not otherwise provided for
in this Agreement, shall be applied in the order of priority set forth in
Sections 2.14(a) and (b). All amounts to be paid to a Lender, the Collateral
Agent, the Managing Agent or the Issuing Bank by the Administrative Agent shall
be credited to that Lender, the Collateral Agent, the Managing Agent or the
Issuing Bank, as applicable, after collection by the Administrative Agent, in
immediately available funds either by wire transfer or deposit in the
correspondent account of that Lender, the Collateral Agent, or the Issuing Bank
with the Administrative Agent, as such Lender, the Collateral Agent, the
Managing Agent or the Issuing Bank and the Administrative Agent shall from time
to time agree.
SECTION 8.03. SHARING OF EXCESS PAYMENTS. Each of the Lenders, the
Collateral Agent, the Managing Agent and the Issuing Bank agrees that if it
shall, through the exercise of a right of banker's lien, setoff or counterclaim
against the Borrower or any Guarantor, including, but not limited to, a secured
claim under Section 506 of the Bankruptcy Code or other security or interest
arising from, or in lieu of, such secured claim and received by such Lender, the
Collateral Agent, the Managing Agent or the Issuing Bank under any applicable
bankruptcy, insolvency or other similar law, or otherwise, obtain payment in
respect of its Obligations owed it (an "excess payment") as a result of which
such Lender, the Collateral Agent, the Managing Agent or the Issuing Bank has
received payment of any Loans or other Obligations outstanding to it in excess
of the amount that it would have received if all payments at any time applied to
the Loans and other Obligations had been applied in the order of priority set
forth in Section 2.14, then such Lender, the Collateral Agent, the Managing
Agent or the Issuing Bank shall promptly purchase at par (and shall be deemed to
have thereupon purchased) from the other Lenders, the Collateral Agent, the
Managing Agent and the Issuing Bank, as applicable, a participation in the Loans
and Obligations outstanding to such other Persons, in an amount determined by
the Administrative Agent in good faith as the amount necessary to ensure that
the economic benefit of such excess payment is reallocated in such manner as to
cause such excess payment and all other payments at any time applied to the
Loans and other Obligations to be effectively applied in the order of priority
set forth in Section 2.14; provided, that if any such excess payment is
thereafter recovered or otherwise set aside such purchase of participations
shall be correspondingly rescinded (without interest). The Borrower expressly
consents to the foregoing arrangements and agrees that any Lender, the
Collateral Agent, or the Issuing Bank holding (or deemed to be holding) a
participation in any Loan or other Obligation may exercise any and all rights of
banker's lien, setoff or counterclaim with respect to any and all moneys owing
by the Borrower to such Lender, the Collateral Agent, the Managing Agent or the
Issuing Bank as fully as if such Lender, the Collateral Agent, the Managing
Agent or the Issuing Bank held a Note and was the original obligee thereon, in
the amount of such participation.
SECTION 8.04. AGREEMENT OF REQUIRED LENDERS. Upon any occasion
requiring or permitting an approval, consent, waiver, election or other action
on the part of the Required Lenders, action shall be taken
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by the Administrative Agent, the Managing Agent or the Collateral Agent for and
on behalf or for the benefit of all Lenders upon the direction of the Required
Lenders, and any such action shall be binding on all Lenders. No amendment,
modification, consent, or waiver shall be effective except in accordance with
the provisions of Section 10.10.
SECTION 8.05. LIABILITY OF ADMINISTRATIVE AGENT, THE MANAGING AGENT AND
THE COLLATERAL AGENT.
(a) The Administrative Agent, the Managing Agent and the
Collateral Agent, when acting on behalf of the Lenders and the Issuing Bank, may
execute any of their respective duties under this Agreement by or through any of
their respective officers, agents and employees, and neither the Administrative
Agent, the Managing Agent, the Collateral Agent, nor their respective directors,
officers, agents or employees shall be liable to the Lenders, or the Issuing
Bank or any of them for any action taken or omitted to be taken in good faith,
or be responsible to the Lenders,or the Issuing Bank or to any of them for the
consequences of any oversight or error of judgment, or for any loss, except to
the extent of any liability imposed by law by reason of the Administrative
Agent's, the Managing Agent's or the Collateral Agent's own gross negligence or
willful misconduct. The Administrative Agent, the Managing Agent, the Collateral
Agent and their respective directors, officers, agents and employees shall in no
event be liable to the Lenders,or the Issuing Bank or to any of them for any
action taken or omitted to be taken by them pursuant to instructions received by
them from the Required Lenders or in reliance upon the advice of counsel
selected by them. Without limiting the foregoing, neither the Administrative
Agent, the Managing Agent or the Collateral Agent, nor any of their respective
directors, officers, employees, or agents shall be responsible to any Lender,or
the Issuing Bank for the due execution, validity, genuineness, effectiveness,
sufficiency, or enforceability of, or for any statement, warranty or
representation in, this Agreement, any Loan Document or any related agreement,
document or order, or shall be required to ascertain or to make any inquiry
concerning the performance or observance by the Borrower or any Guarantor of any
of the terms, conditions, covenants, or agreements of this Agreement or any of
the Loan Documents.
(b) Neither the Administrative Agent, the Managing Agent or
the Collateral Agent, nor any of their respective directors, officers,
employees, or agents shall have any responsibility to the Borrower or the
Guarantors on account of the failure or delay in performance or breach by any
Lender, or the Issuing Bank or by the Borrower or the Guarantors of any of their
respective obligations under this Agreement or the Notes or any of the Loan
Documents or in connection herewith or therewith.
(c) The Administrative Agent, the Managing Agent and the
Collateral Agent, in such capacities hereunder, shall be entitled to rely on any
communication, instrument, or document reasonably believed by such person to be
genuine or correct and to have been signed or sent by a person or persons
believed by such person to be the proper person or persons, and, such person
shall be entitled to rely on advice of legal counsel, independent public
accountants, and other professional advisers and experts selected by such
person.
SECTION 8.06. REIMBURSEMENT AND INDEMNIFICATION. Each Lender agrees (i)
to reimburse (x) the Administrative Agent, the Managing Agent, and the
Collateral Agent for such Lender's Commitment Percentage of any expenses and
fees incurred for the benefit of the Lenders or the Issuing Bank under this
Agreement, the Notes and any of the Loan Documents, including, without
limitation, counsel fees and compensation of agents and employees paid for
services rendered on behalf of the Lenders, or the Issuing Bank, and any other
expense incurred in connection with the operations or enforcement thereof not
reimbursed by the Borrower or the Guarantors and (y) the Administrative Agent,
the Managing Agent and
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the Collateral Agent for such Lender's Commitment Percentage of any expenses of
the Administrative Agent, the Managing Agent and the Collateral Agent incurred
for the benefit of the Lenders,or the Issuing Bank that the Borrower has agreed
to reimburse pursuant to Section 10.05 and has failed to so reimburse and (ii)
to indemnify and hold harmless the Administrative Agent, the Managing Agent, the
Collateral Agent and any of their directors, officers, employees, or agents, on
demand, in the amount of such Lender's Commitment Percentage, from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses, or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against it or any
of them in any way relating to or arising out of this Agreement, the Notes or
any of the Loan Documents or any action taken or omitted by them or any of them
under this Agreement, the Notes or any of the Loan Documents to the extent not
reimbursed by the Borrower or the Guarantors (except such as shall result from
their respective gross negligence or willful misconduct).
SECTION 8.07. RIGHTS OF ADMINISTRATIVE AGENT, THE MANAGING AGENT AND
THE COLLATERAL AGENT. It is understood and agreed that each of BBNA and BBRF
shall have the same rights and powers hereunder (including the right to give
such instructions) as the other Lenders and may exercise such rights and powers,
as well as its rights and powers under other agreements and instruments to which
it is or may be party, and engage in other transactions with the Borrower or any
Guarantor, as though it were not the Administrative Agent, the Managing Agent or
the Collateral Agent, respectively, of the Lenders under this Agreement.
SECTION 8.08. INDEPENDENT LENDERS AND ISSUING BANK. Each Lender and the
Issuing Bank acknowledges that it has decided to enter into this Agreement and
to make the Loans or issue the Letters of Credit hereunder based on its own
analysis of the transactions contemplated hereby and of the creditworthiness of
the Borrower and the Guarantors and agrees that the Administrative Agent, the
Managing Agent and the Collateral Agent shall bear no responsibility therefor.
SECTION 8.09. NOTICE OF TRANSFER. The Administrative Agent, the
Managing Agent and the Collateral Agent may deem and treat a Lender party to
this Agreement as the owner of such Lender's portion of the Loans for all
purposes, unless and until, and except to the extent, an Assignment and
Acceptance shall have become effective as set forth in Section 10.03(b).
SECTION 8.10. SUCCESSOR ADMINISTRATIVE AGENT OR MANAGING AGENT.
(a) The Administrative Agent may resign at any time by giving
five (5) Business Days' written notice thereof to the Lenders, the Issuing Bank,
the other Agents, and the Borrower. Upon any such resignation, the Required
Lenders shall have the right to appoint a successor Administrative Agent which
shall be reasonably satisfactory to the Borrower. If no successor Administrative
Agent shall have been so appointed by the Required Lenders and shall have
accepted such appointment, within 30 days after the retiring Administrative
Agent's giving of notice of resignation, the retiring Administrative Agent may,
on behalf of the Lenders, the other Agents and the Issuing Bank, appoint a
successor Administrative Agent which shall be a commercial bank organized under
the laws of the United States of America or of any State thereof and having a
combined capital and surplus of a least $100,000,000, which, so long as there is
no Default or Event of Default, shall be reasonably satisfactory to the
Borrower. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges, duties and obligations of the retiring Administrative Agent, and the
retiring Administrative Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Administrative Agent's
resignation hereunder as such, the provisions of this Article VIII shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
such Administrative Agent under this Agreement.
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(b) The Managing Agent may resign at any time by giving five
(5) Business Days' written notice thereof to the Administrative Agent and the
Borrower.
SECTION 8.11. REPORTS AND FINANCIAL STATEMENTS. Promptly after receipt
thereof from the Borrower, the Administrative Agent shall remit to each Lender,
the other Agents and the Issuing Bank copies of all financial statements and
reports required to be delivered by the Borrower hereunder.
SECTION 8.12. THE COLLATERAL AGENT. With respect to the Collateral
Agent, to the extent any provisions of this Article VIII conflict with any of
the provisions of the Security Agreement, the provisions of the Security
Agreement shall govern.
IX. GUARANTY
SECTION 9.01. GUARANTY.
(a) Each of the Guarantors unconditionally and irrevocably
guarantees the due and punctual payment and performance by the Borrower of the
Obligations. Each of the Guarantors further agrees that the Obligations may be
extended or renewed, in whole or in part, without notice to or further assent
from it, and it will remain bound upon this guaranty notwithstanding any
extension or renewal of any of the Obligations. The Obligations of the
Guarantors shall be joint and several.
(b) Each of the Guarantors waives presentation to, demand for
payment from and protest to the Borrower or any other Guarantor, and also waives
notice of protest for nonpayment. The obligations of the Guarantors hereunder
shall not be affected by (i) the failure of the Administrative Agent, the
Collateral Agent, the Managing Agent, the Issuing Bank, or a Lender to assert
any claim or demand or to enforce any right or remedy against the Borrower or
any other Guarantor under the provisions of this Agreement or any other Loan
Document or otherwise; (ii) any extension or renewal of any provision hereof or
thereof; (iii) any rescission, waiver, compromise, acceleration, amendment or
modification of any of the terms or provisions of any of the Loan Documents;
(iv) the release, exchange, waiver or foreclosure of any security held by the
Administrative Agent for the Obligations or any of them; (v) the failure of the
Administrative Agent, the Collateral Agent, the Managing Agent, the Issuing
Bank, or a Lender to exercise any right or remedy against any other Guarantor;
or (vi) the release or substitution of any Guarantor or any other Guarantor.
(c) Each of the Guarantors further agrees that this guaranty
constitutes a guaranty of performance and of payment when due and not just of
collection, and waives any right to require that any resort be had by the
Administrative Agent, the Collateral Agent, the Managing Agent, the Issuing
Bank, or a Lender to any security held for payment of the Obligations or to any
balance of any deposit, account or credit on the books of the Administrative
Agent, the Collateral Agent, the Managing Agent, the Issuing Bank, or a Lender
in favor of the Borrower or any other Guarantor, or to any other Person.
(d) Each of the Guarantors hereby waives any defense that it
might have based on a failure to remain informed of the financial condition of
the Borrower and of any other Guarantor and any circumstances affecting the
ability of the Borrower to perform under this Agreement.
(e) Each Guarantor's guaranty shall not be affected by the
genuineness, validity, regularity or enforceability of the obligations, the
Notes or any other instrument evidencing any Obligations, or by the existence,
validity, enforceability, perfection, or extent of any collateral therefor or by
any other
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circumstance relating to the obligations which might otherwise constitute a
defense to this Guaranty. None of the Administrative Agent, the Managing Agent,
the Issuing Bank, the Collateral Agent, or any of the Lenders makes any
representation or warranty in respect to any such circumstances or shall have
any duty or responsibility whatsoever to any Guarantor in respect of the
management and maintenance of the obligations.
(f) Subject to the provisions of Section 7.01, upon the
Obligations becoming due and payable (by acceleration or otherwise), the
Lenders, the Issuing Bank, the Collateral Agent, the Managing Agent and the
Administrative Agent shall be entitled to immediate payment of such Obligations
by the Guarantors upon written demand by the Administrative Agent, without
further application to or order of the Bankruptcy Court.
SECTION 9.02. NO IMPAIRMENT OF GUARANTY. The obligations of the
Guarantors hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason, including, without limitation, any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense or set-off, counterclaim, recoupment, or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
obligations. Without limiting the generality of the foregoing, Obligations of
the Guarantors hereunder shall not be discharged or impaired or otherwise
affected by the failure of the Administrative Agent, the Managing Agent, the
Issuing Bank, the Collateral Agent, or a Lender to assert any claim or demand or
to enforce any remedy under this Agreement or any other agreement, by any waiver
or modification of any provision thereof, by any default, failure or delay,
willful or otherwise, in the performance of the Obligations, or by any other act
or thing or omission or delay to do any other act or thing which may or might in
any manner or to any extent vary the risk of the Guarantors or would otherwise
operate as a discharge of the Guarantors as a matter of law, unless and until
the obligations are paid in full.
SECTION 9.03. SUBROGATION. Upon payment by any Guarantor of any sums to
the Administrative Agent, the Managing Agent, the Issuing Bank, the Collateral
Agent, or a Lender hereunder, all rights of such Guarantor against the Borrower
arising as a result thereof by way of right of subrogation or otherwise, shall
in all respects be subordinate and junior in right of payment to the prior final
and indefeasible payment in full of all the Obligations. If any amount shall be
paid to such Guarantor for the account of the Borrower, such amount shall be
held in trust for the benefit of the Administrative Agent, the Managing Agent,
the Issuing Bank, the Collateral Agent, and the Lenders and shall forthwith be
paid to the Administrative Agent, the Managing Agent, the Issuing Bank, the
Collateral Agent and the Lenders to be credited and applied to the Obligations,
whether matured or unmatured.
SECTION 9.04. CREDIT AGREEMENT. Each of the Guarantors acknowledges
that it has read the Loan Documents and agrees to perform and observe all the of
the terms and provisions herein and therein applicable thereto.
X. MISCELLANEOUS
SECTION 10.01. NOTICES. Notices and other communications provided for
herein shall be in writing (including telegraphic, telex, facsimile or cable
communication) and shall be mailed, telegraphed, telexed, telecopied,
transmitted, cabled or delivered to the Borrower or any Guarantor at The Caldor
Corporation, 20 Glover Avenue, Norwalk, Connecticut 06856-5620, Attention: Chief
Financial Officer (telecopy number: (203) 849-2386), and to a Lender, the
Issuing Bank, the Collateral Agent, the Managing
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Agent, or the Administrative Agent to it at its address set forth on the
signature pages of this Agreement, or such other address as such party may from
time to time designate by giving written notice to the other parties hereunder.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
fifth Business Day after the date when sent by registered or certified mail,
postage prepaid, return receipt requested, if by mail; or when delivered to the
telegraph company, charges prepaid, if by telegram; or when receipt is
acknowledged, if by any telegraphic communications or facsimile equipment of the
sender; in each case addressed to such party as provided in this Section 10.01
or in accordance with the latest unrevoked written direction from such party;
provided, however, that in the case of notices to the Administrative Agent,
notices pursuant to the preceding sentence and pursuant to Article II shall be
effective only when received by the Administrative Agent.
SECTION 10.02. SURVIVAL OF AGREEMENT, REPRESENTATIONS AND WARRANTIES,
ETC. All warranties, representations and covenants made by the Borrower or any
Guarantor herein or in any certificate or other instrument delivered by it or on
its behalf in connection with this Agreement shall be considered to have been
relied upon by the Lenders, the Issuing Bank, the Collateral Agent, the Managing
Agent, and the Administrative Agent and shall survive the making of the Loans
and the issuance of Letters of Credit herein contemplated and the issuance and
delivery of the Notes and the Letters of Credit, regardless of any investigation
made by any Lender, the Issuing Bank, the Collateral Agent, the Managing Agent,
and the Administrative Agent or on its behalf and shall continue in full force
and effect so long as any amount due or to become due hereunder is outstanding
and unpaid and so long as the Commitments have not been terminated. All
statements in any such certificate or other instrument shall constitute
representations and warranties by the Borrower and the Guarantors hereunder with
respect to the Borrower.
SECTION 10.03. SUCCESSORS AND ASSIGNS.
(a) This Agreement shall be binding upon and inure to the
benefit of the Borrower, the Administrative Agent, the Managing Agent, the
Issuing Bank, the Collateral Agent, and the Lenders and their respective
successors and assigns. Neither the Borrower nor any of the Guarantors may
assign or transfer any of their rights or obligations hereunder without the
prior written consent of all of the Lenders, the Issuing Bank, the Collateral
Agent, and the Administrative Agent. Each Lender may sell participations to any
Eligible Assignee in all or part of any Loan, or all or part of its Note or
Commitment (in each case in minimum amounts of not less than $5,000,000 (except
during an Event of Default)), in which event, without limiting the foregoing,
the provisions of Section 2.15 and 2.18 shall inure to the benefit of each
purchaser of a participation (provided that such participant shall look solely
to the seller of such participation for such benefits and the Borrower's and the
Guarantors' liability, if any, under Sections 2.15 and 2.18 shall not be
increased as a result of the sale of any such participation) and the treatment
of payments pursuant to Section 2.17 shall be determined as if such Lender had
not sold such participation. In the event any Lender shall sell any
participation, such Lender shall retain the right to vote as a Lender and be
counted in any computation requiring a Required Lenders or unanimous Lenders
vote and shall retain (as between itself and its participant) the sole right and
responsibility to enforce the obligations of the Borrower and each of the
Guarantors relating to the Loans, including, without limitation, the right to
approve any amendment, modification or waiver of any provision of this
Agreement; provided, however, that such Lender may grant to any participant the
right to direct such Lender to vote for or against amendments, modifications or
waivers which (i) reduce any Fees payable hereunder to the Lenders, (ii) reduce
the amount of any scheduled principal payment on any Loan or reduce the
principal amount of any Loan or the rate of interest payable hereunder, (iii)
extend the maturity of the Borrower's obligations hereunder or (iv) release a
material portion of the Collateral (other than as provided in Sections 6.12 or
6.13(c)). The sale of any such participation, shall not
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alter the rights and obligations of the Lender selling such participation
hereunder with respect to the Borrower.
(b) Each Lender may assign to one or more Lenders or Eligible
Assignees all or a portion of its interests, rights and obligations under this
Agreement; provided, however, that (i) other than in the case of an assignment
to Person at least 50% owned by the assignor Lender, or by a common parent of
both, or to another Lender, the Administrative Agent and the Issuing Bank and,
so long as there is no Event of Default, the Borrower shall be entitled to give
(or withhold) their prior written consent, which consent will not be
unreasonably withheld, (ii) the aggregate amount of the Commitment and/or Loans
held by each of the assigning and assignee Lenders subject to each such
assignment (determined as of the date the Assignment and Acceptance with respect
to such assignment is delivered to the Administrative Agent and after giving
effect to such assignment) shall, unless otherwise agreed to in writing by the
Borrower (so long as there is no Event of Default) and the Administrative Agent,
in no event be less than $10,000,000 (unless the assigning Lender assigns its
entire remaining Commitment, in which case such assigning Lender's Commitment
shall be $0), and (iii) the parties to each such assignment shall execute and
deliver to the Administrative Agent, for its acceptance and recording in the
Register (as defined below), an Assignment and Acceptance with blanks
appropriately completed, together with any Note subject to such assignment and a
processing and recordation fee of $3,000. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified in each
Assignment and Acceptance, which effective date shall be within ten Business
Days after the execution thereof (unless otherwise agreed to in writing by the
Administrative Agent), (A) the assignee thereunder shall be a party hereto and,
to the extent provided in such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder and (B) the Lender thereunder shall, to the
extent provided in such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto). The Borrower shall have no liability for the $3,000 processing and
recordation fee, but shall be responsible for its own expenses and the legal
expenses of the Administrative Agent.
(c) By executing and delivering an Assignment and Acceptance,
the Lender assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim, such Lender
assignor makes no representation or warranty and assumes no responsibility with
respect to any statements warranties or representations made in or in connection
with this Agreement or any of the other Loan Documents or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or any of the other Loan Documents; (ii) such Lender assignor makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or any Guarantor or the performance or
observance by the Borrower or any Guarantor of any of its obligations under this
Agreement or any of the other Loan Documents or any other instrument or document
furnished pursuant hereto; (iii) such assignee confirms that it has received a
copy of this Agreement and the other Loan Documents, together with copies of the
financial statements referred to in Section 3.04 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Administrative Agent, such Lender
assignor or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) such assignee appoints and
authorizes the Administrative Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement as are delegated to the
Administrative Agent by the terms thereto, together with such powers as are
reasonably incidental thereto; and (vi) such assignee agrees that it will
perform in accordance
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with their terms all obligations that by the terms of this Agreement are
required to be performed by it as a Lender.
(d) The Administrative Agent shall maintain at its office a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders and the Commitments of,
and principal amount of the Loans owing to, each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, the Guarantors, the Administrative Agent, the
Managing Agent, the Issuing Bank, the Collateral Agent, and the Lenders shall
treat each Person the name of which is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Borrower or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and the assignee thereunder together with any Note
subject to such assignment and the fee payable in respect thereto, the
Administrative Agent shall, if such Assignment and Acceptance has been completed
with blanks appropriately filled, (i) accept such Assignment and Acceptance,
(ii) record the information contained therein in the Register and (iii) give
prompt written notice thereof to the Borrower (together with a copy thereof).
Within five Business Days after receipt of notice, the Borrower, at its own
expense, shall execute and deliver to the Administrative Agent in exchange for
the surrendered Note a new Note to the order of such assignee in an amount equal
to the Commitment and/or Loans assumed by it pursuant to such Assignment and
Acceptance and, if the assigning Lender has retained Commitments and/or Loans
hereunder, a new Note to the order of the assigning Lender in an amount equal to
the Commitment and/or Loans retained by it hereunder. Such new Notes shall be in
an aggregate principal amount equal to the aggregate principal amount of such
surrendered Note, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of the surrendered
Note. Thereafter, such surrendered Note shall be marked canceled and returned to
the Borrower.
(f) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
10.03, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower or any of the Guarantors
furnished to such Lender by or on behalf of the Borrower or any of the
Guarantors; provided that prior to any such disclosure, each such assignee or
participant or proposed assignee or participant shall agree in writing to be
bound by the provisions of Section 10.04.
(g) The Borrower hereby agrees to actively assist and
cooperate with the Administrative Agent in the Administrative Agent's efforts to
sell participations herein (as set forth in Section 10.03(a)) and assign to one
or more Lenders or Eligible Assignees a portion of its interests, rights and
obligations as a Lender under this Agreement (as set forth in Section 10.03(b)).
(h) Notwithstanding the provisions of this Section 10.03, each
Lender may at any time pledge or assign its interest in any Loans or other
Obligations to any Reserve Bank in the Federal Reserve System.
SECTION 10.04. CONFIDENTIALITY. Each Lender agrees to keep, and to
cause its agents, attorneys and financial advisors to keep, any information
delivered or made available by the Borrower or any of the Guarantors (either
directly or through the Administrative Agent) to it (or any other non-public
information concerning the Borrower or any Guarantor) confidential from anyone
other than persons employed or retained by such Lender who are or are expected
to become engaged in evaluating, approving, structuring or
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administering the Loans; provided that nothing herein shall prevent any Lender
from disclosing such information (i) to any other Lender, (ii) to any other
person if reasonably incidental to the administration of the Loans, (iii) upon
the order of any court or administrative agency, (iv) upon the request or demand
of any regulatory agency or authority, (v) which has been publicly disclosed
other than as a result of a disclosure by the Administrative Agent or any Lender
which is not permitted by this Agreement, (vi) in connection with any litigation
to which the Administrative Agent, the Collateral Agent, the Managing Agent, any
Lender, the Issuing Bank, or their respective Affiliates may be a party, (vii)
to the extent reasonably required in connection with the exercise of any remedy
hereunder, (viii) to such Lender's legal counsel and independent auditors, (ix)
to any actual or proposed participant or assignee of all or part of its rights
hereunder subject to the proviso in Section 10.03(f) and (x) to the extent
required by law.
SECTION 10.05. EXPENSES; DOCUMENTARY TAXES. Whether or not the
transactions hereby contemplated shall be consummated, the Borrower and the
Guarantors jointly and severally agree to pay all reasonable out-of-pocket costs
and expenses incurred by the Administrative Agent and the Collateral Agent,
their business and legal advisors (including but not limited to the reasonable
fees and disbursements of legal counsel) in connection with the preparation,
negotiation, execution, delivery and administration of this Agreement, the Notes
and the other Loan Documents, the making of the Loans and the issuance of the
Letters of Credit, the syndication of the transactions contemplated hereby, the
reasonable costs, fees and expenses of the Administrative Agent, the Managing
Agent and the Collateral Agent (including but not limited to the reasonable fees
and disbursements of internal and third-party consultants and auditors) in
connection with (i)(a) their periodic field examinations, (b) audits and (c)
collateral (including lease) appraisals, provided, that, with respect to any
such field examinations, audits and appraisals conducted after the Closing Date,
the Borrower shall not be required to reimburse the Administrative Agent or the
Collateral Agent for more than three (3) field examinations and audits, three
(3) inventory appraisals and three (3) lease appraisals in any year (subject at
all times after the Closing Date to an aggregate yearly cap of $180,000),
provided, further, that during the existence of an Event of Default, the
Borrower and the Guarantors shall pay for all field examinations and audits,
inventory appraisals and lease appraisals conducted by the Administrative Agent,
the Managing Agent or the Collateral Agent, without cost limitation; (ii)
monitoring and valuation of collateral (including, without limitation, Inventory
and Receivables) and (iii) reasonable syndication expenses of the Administrative
Agent, and all reasonable out-of-pocket expenses incurred by the Lenders, the
Issuing Bank, the Collateral Agent, the Managing Agent and the Administrative
Agent in the enforcement or protection of the rights of any one or more of the
Lenders, the Issuing Bank, the Collateral Agent, the Managing Agent, or the
Administrative Agent in connection with this Agreement, the Notes or the other
Loan Documents, including but not limited to the reasonable fees and
disbursements of any counsel for the Lenders, the Issuing Bank, the Collateral
Agent, the Managing Agent, or the Administrative Agent. Such payments shall be
made on the date of entry of the Order and thereafter on demand. The obligations
of the Borrower and the Guarantors under this Section 10.05 shall survive the
termination of this Agreement and/or the payment of the Loans and/or the
reimbursement of the Letters of Credit. The fees and expenses payable hereunder
are in addition to those payable to the Collateral Agent under the Security
Agreement and by the Borrower or the Guarantors under any other Loan Documents
(including, without limitation, the Fee Letter).
SECTION 10.06. INDEMNITY. The Borrower and each of the Guarantors
jointly and severally agree to defend, indemnify and hold harmless the
Administrative Agent, the Managing Agent, the Issuing Bank, the Collateral
Agent, BSI, BBNA, BBRF, and each Lender and their respective Affiliates and each
of their respective directors, officers, employees, attorneys, partners,
beneficiaries, trustees and agents (each an "Indemnified Party") from and
against any and all losses, claims, damages, liabilities, costs and expenses
(whether or not suit is brought) incurred by such Indemnified Party arising out
of, or in connection with, claims made by any Person in any way relating to the
transactions contemplated hereby or by the other Loan
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Documents or any litigation, investigation or proceeding related hereto or
thereto, whether or not any such Indemnified Party is a party thereto, but
excluding therefrom, in the case of an Indemnified Party, all losses, claims,
damages, liabilities, costs and expenses arising out of or resulting from
conduct to the extent determined by final non-appealable order of a court of
competent jurisdiction to have resulted from the bad faith, gross negligence or
willful misconduct of such Indemnified Party. The Borrower and each of the
Guarantors jointly and severally agree to reimburse each Indemnified Party from
time to time upon their demand for any reasonable legal or other expenses
incurred in connection with investigating or defending any of the foregoing,
whether or not the transactions contemplated hereby or by the Loan Documents are
consummated.
SECTION 10.07. CHOICE OF LAW. THIS AGREEMENT, THE NOTES AND THE OTHER
LOAN DOCUMENTS SHALL IN ALL RESPECTS BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
TO BE PERFORMED WHOLLY WITHIN SUCH STATE.
SECTION 10.08. NO WAIVER. No failure on the part of the Administrative
Agent, the Managing Agent, the Issuing Bank, the Collateral Agent, or any of the
Lenders to exercise, and no delay in exercising, any right, power or remedy
hereunder or under the Notes or any of the other Loan Documents shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. All remedies hereunder are cumulative and
are not exclusive of any other remedies provided by law.
SECTION 10.09. EXTENSION OF MATURITY. Except as otherwise set forth in
the definition of "Interest Period," if any payment of principal of or interest
on the Notes or any other amount due hereunder becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and, in the case of principal, interest shall be payable
thereon at the rate herein specified during such extension.
SECTION 10.10. AMENDMENTS, ETC.
(a) No modification, amendment or waiver of any provision of
this Agreement, and no consent to any departure by the Borrower or any Guarantor
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Required Lenders, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given;
provided, however, that:
(1) No such modification, amendment or waiver shall
without the written consent of all of the Lenders (i) amend or
modify any provision of this Agreement which provides for the
unanimous consent or approval of the Lenders, (ii) amend this
Section 10.10 or the definition of Required Lenders, (iii)
amend or modify the Superpriority Claim or other secured
interest status of the Lenders contemplated by Section 2.23 or
otherwise modify or amend Section 6.08 or waive any Event of
Default relating thereto, (iv) amend Section 6.01 so as to
permit any Lien on any assets of the Borrower or the
Guarantors not otherwise permitted on the Closing Date, (v)
increase the Commitment of a Lender (it being understood that
a waiver of an Event of Default shall not constitute an
increase in the Commitment of a Lender), (vi) reduce the
principal amount of any Loan or the rate of interest payable
thereon, (vii) extend any date for the payment of principal or
interest hereunder, (viii) reduce any Fees payable hereunder,
(ix) extend the Maturity Date, (x) increase advance rates
above the level in effect on the Closing Date (subject to
Section 2.01(c)), or (xi) release Collateral (other than as
contemplated by Sections 6.12 or 6.13(c)) with an aggregate
value over the term of
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this Agreement in excess of $15,000,000 (or waive any Event of
Default relating thereto) or release any Guarantor.
(2) No such amendment, modification or waiver may
adversely affect the rights and obligations of the
Administrative Agent, the Collateral Agent, the Managing Agent
or the Issuing Bank hereunder without its prior written
consent.
(3) No notice to or demand on the Borrower or any
Guarantor shall entitle the Borrower or any Guarantor to any
other or further notice or demand in the same, similar or
other circumstances. Each holder of a Note shall be bound by
any amendment, modification, waiver or consent authorized as
provided herein, whether or not a Note shall have been marked
to indicate such amendment, modification, waiver or consent
and any consent by a Lender, or any holder of a Note, shall
bind any Person subsequently acquiring a Note, whether or not
a Note is so marked. No amendment to this Agreement shall be
effective against the Borrower or any Guarantor unless signed
by the Borrower or such Guarantor, as the case may be.
(b) Notwithstanding anything to the contrary contained in
Section 10.10(a), in the event that the Borrower requests that this Agreement be
modified, amended or waived in a manner which would require the unanimous
consent of all of the Lenders and such modification, waiver or amendment is
approved by the Required Lenders, but not unanimously by the Lenders, the
Borrower and the Required Lenders shall be permitted to modify, amend or waive a
provision of this Agreement without the consent of the Lender or Lenders which
did not agree to the waiver, modification or amendment requested by the Borrower
(such Lender or Lenders, collectively the "Minority Lenders") to provide for (w)
the termination of the Commitment of each of the Minority Lenders, (x) the
addition to this Agreement of one or more other financial institutions (each of
which shall be an Eligible Assignee), or an increase in the Commitment of one or
more of the Required Lenders, so that the Total Commitment after giving effect
to such amendment shall be in the same amount as the Total Commitment
immediately before giving effect to such amendment, (y) if any Loans are
outstanding at the time of such amendment, the making of such additional Loans
by such new or increasing Lender or Lenders, as the case may be, as may be
necessary to repay in full the outstanding Loans of the Minority Lenders
immediately before giving effect to such amendment and (z) such other
modifications to this Agreement as may be appropriate.
SECTION 10.11. EXIT FINANCING. For the avoidance of doubt, the Borrower
and the Guarantors hereby agree that their obligations to repay all Obligations
owing hereunder are absolute and unconditional and not subject to or conditioned
upon the closing of the Exit Facility or the making of any loans thereunder.
SECTION 10.12. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 10.13. HEADINGS. Section headings used herein are for
convenience only and are not to affect the construction of or be taken into
consideration in interpreting this Agreement.
SECTION 10.14. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts, each of which shall constitute an
original, but all of which taken together shall constitute one and the same
instrument.
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SECTION 10.15. PRIOR AGREEMENTS. This Agreement and the other Loan
Documents represent the entire agreement of the parties with regard to the
subject matter hereof and thereof and the terms of any letters and other
documentation entered into between the Borrower or a Guarantor and any Lender,
the Issuing Bank, the Collateral Agent, the Managing Agent or the Administrative
Agent prior to the execution of this Agreement which relate to Loans or Letters
of Credit to be made or issued hereunder shall be replaced by the terms of this
Agreement. Notwithstanding the foregoing, the provisions of the Commitment
Letter as they relate to the Exit Facility and to the "Commitment Fee" and
"Documentation Deposit" referred to therein shall survive and remain enforceable
in accordance with the terms and conditions set forth therein.
SECTION 10.16. FURTHER ASSURANCES. Whenever and so often as reasonably
requested by the Administrative Agent, the Borrower and the Guarantors will
promptly execute and deliver or cause to be executed and delivered all such
other and further instruments, documents or assurances, and promptly do or cause
to be done all such other and further things as may be necessary and reasonably
required in order to further and more fully vest in the Administrative Agent,
the Managing Agent, the Issuing Bank, the Collateral Agent, and the Lenders, as
applicable, all rights, Superpriority Claims, Liens, interests, powers,
benefits, privileges and advantages conferred or intended to be conferred by
this Agreement and the other Loan Documents.
SECTION 10.17 THE COLLATERAL AGENT. Each Lender hereby designates BBRF
as Collateral Agent to act as specified herein and in the Security Agreement.
Each Lender hereby irrevocably authorizes the Collateral Agent to take such
action on its behalf under the provisions hereof and of the Security Agreement
and any other instruments and agreements referred to herein and therein and to
exercise such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of the Collateral Agent by the terms
hereof and thereof and such other powers as are reasonably incidental thereto.
The Collateral Agent shall hold all Collateral and proceeds from the Collateral
for the benefit of itself, the other Agents, the Issuing Bank and the Lenders to
be distributed as provided herein and therein. The Collateral Agent may perform
any of its duties hereunder by or through its agents or employees. By becoming a
party to this Agreement, each Lender agrees to be bound by the provisions of the
Security Agreement.
SECTION 10.18. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
GUARANTORS, THE ADMINISTRATIVE AGENT, THE MANAGING AGENT, THE ISSUING BANK, THE
COLLATERAL AGENT, AND EACH LENDER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
[SIGNATURE PAGES FOLLOW]
72
<PAGE> 79
IN WITNESS WHEREOF, the parties hereto have caused this Revolving
Credit and Guaranty Agreement to be duly executed as of the day and the year
first, written.
THE CALDOR CORPORATION,
as debtor and as debtor-in-possession
By: ______________________________
Name:
Title:
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE> 80
GUARANTORS:
CALDOR, INC. - CT
CALDOR, INC. - NY
CAL LEASING, INC.
LACDOR REALTY CORP.
CALFAX, INC.
TRI-STATE ADVERTISING AGENCY, INC.
PREMIER SERVICE PROGRAMS, INC.
each as debtor and debtor-in-possession,
and as Guarantor
By: ______________________________
Name:
Title:
CALDOR-SILVER SPRING, L.L.C.,
BY CAL SILVER SPRING, INC., ITS
MANAGING MEMBER
CAL SILVER SPRING, INC.
each as debtor and debtor-in-possession,
and as Guarantor
By: ______________________________
Name:
Title:
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE> 81
BANKBOSTON, N.A.,
as Administrative Agent, as Issuing Bank
and as a Lender
By: ______________________________
Name: Elizabeth A. Ratto
Title: Vice President
Address: 100 Federal Street, 9th Floor
Boston, MA 02110
Telephone: (617) 434-4113
Telecopy: (617) 434-4339
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE> 82
BANKBOSTON RETAIL FINANCE, INC.,
as Collateral Agent and Managing Agent
By: ______________________________
Name: Elizabeth A. Ratto
Title: Vice President
Address: 40 Broad Street, 10th Floor
Boston, MA 02109
Telephone: (617) 434-4113
Telecopy: (617) 434-4339
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE> 83
ANNEX A TO
REVOLVING CREDIT AND
GUARANTY AGREEMENT
ANNEX A
to
REVOLVING CREDIT AND GUARANTY AGREEMENT
Dated as of May 15, 1998
<TABLE>
<CAPTION>
Name of Commitment Commitment
Lender Amount Percentage
<S> <C> <C>
BankBoston, N.A. $450,000,000 100%
Total $450,000,000
</TABLE>
<PAGE> 1
SECURITY AGREEMENT
SECURITY AGREEMENT (the "Agreement"), dated as of May __, 1998, among
THE CALDOR CORPORATION, a Delaware corporation (the "Borrower"), CALDOR,
INC.-NY, a New York corporation ("Caldor NY"), CALDOR, INC.-CT., a Connecticut
corporation, ("Caldor CT" and, together with Caldor NY, the "Retail Guarantors")
and each of the subsidiaries of the Borrower and the Retail Guarantors party
hereto (together with the Borrower and the Retail Guarantors, collectively, the
"Grantors"), each a debtor and debtor-in-possession under Chapter 11 of the
Bankruptcy Code, and BANKBOSTON RETAIL FINANCE, INC., for itself and as
collateral agent (in such capacity, the "Collateral Agent") for BANKBOSTON, N.A.
("BBNA"), as Administrative Agent and Issuing Bank (each as defined in the
Credit Agreement referred to below), the Managing Agent (as defined in the
Credit Agreement) and the other financial institutions (including BBNA, the
"Lenders") party to the Credit Agreement:
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the Administrative Agent, the Managing Agent, the Collateral Agent
(the Administrative Agent, the Collateral Agent and the Managing Agent are
sometimes referred to collectively as the "Agents"), the Issuing Bank, the
Lenders and the Grantors are entering into a Revolving Credit and Guaranty
Agreement dated as of the date hereof (as amended, modified or supplemented from
time to time, the "Credit Agreement"); and
WHEREAS, unless otherwise defined herein, terms defined in the Credit
Agreement are used herein as therein defined; and
WHEREAS, it is a condition precedent to the making of Loans and the
issuance of Letters of Credit that the Grantors shall have granted a security
interest, pledge and lien on substantially all of the Grantors' assets and
properties and the proceeds thereof pursuant to Sections 364(c) and 364(d) of
the Bankruptcy Code; and
WHEREAS, the grant of such security interest, pledge and lien has been
authorized pursuant to Section 364(c)(2), 364(c)(3) and 364(d)(1) of the
Bankruptcy Code by the Order; and
WHEREAS, to supplement the Order without in any way diminishing or
limiting the effect of the Order or the security interest, pledge and lien
granted thereunder, the parties hereto desire to more fully set forth their
respective rights in connection with such security interest, pledge and lien;
and
WHEREAS, this Agreement has been approved by the Order;
NOW, THEREFORE, in consideration of the premises and in order to induce
the Lenders to make Loans and issue Letters of Credit, the Grantors hereby agree
with the Collateral Agent as follows:
<PAGE> 2
SECTION 1. GRANT OF SECURITY AND PLEDGE. Each of the Grantors hereby
transfers, grants, bargains, sells, conveys, hypothecates, assigns, pledges and
sets over to the Collateral Agent for its benefit and the ratable benefit of the
other Agents and the Issuing Bank and the Lenders and hereby grants to the
Collateral Agent for its benefit and the ratable benefit of the other Agents,
the Issuing Bank and the Lenders, a perfected first priority security interest,
senior to any and all other liens (other than as provided in Section 2.23 of the
Credit Agreement), in all of the Grantors' right, title and interest in and to
the following (the "Collateral"):
(a) all present and future accounts, accounts receivable and
other rights of each of the Grantors to payment for goods sold or leased or for
services rendered (except those evidenced by instruments or chattel paper),
whether now existing or hereafter arising and wherever arising, and whether or
not they have been earned by performance (all of the foregoing property and
similar property included as Collateral under Section 1(o) below being
hereinafter referred to as "Accounts");
(b) all goods now owned or hereafter acquired by each of the
Grantors (wherever located, whether in the possession of a Grantor or of a
bailee or other person for sale, storage, transit, processing, use or otherwise
consisting of whole goods, components, supplies, materials, or consigned,
returned or repossessed goods) which are held for sale or lease or to be
furnished (or have been furnished) under any contract of service or which are
raw materials, work in process or materials used or consumed in such Grantor's
business (all of the foregoing property and similar property included as
Collateral under Section 1(o) below being hereinafter referred to as
"Inventory");
(c) all machinery, all manufacturing, distribution, selling,
data processing and office equipment, all furniture, furnishings, appliances,
fixtures and trade fixtures, tools, tooling, molds, dies, vehicles, vessels,
aircraft and all other goods of every type and description (other than
Inventory), in each instance whether now owned or hereafter acquired by each of
the Grantors and wherever located (all of the foregoing property and similar
property included as Collateral under Section 1(o) below being hereinafter
referred to as "Equipment");
(d) all works of art now owned or hereafter acquired by each
of the Grantors, including, without limitation, paintings, sketches, drawings,
prints, sculptures, crafts, tapestries, porcelain, carvings, artifacts,
renderings and designs;
(e) all rights, interests, choses in action, causes of action,
claims and all other intangible property of each of the Grantors of every kind
and nature (other than Accounts, Trademarks, Patents and Copyrights), in each
instance whether now owned or hereafter acquired by such Grantor, including,
without limitation, all general intangibles; all corporate and other business
records; all loans, royalties, and other obligations receivable; all inventions,
designs, trade secrets, computer programs, software, printouts and other
computer materials, goodwill, registrations, copyrights, licenses, franchises,
customer lists, credit files, correspondence, and advertising materials; all
customer and supplier contracts, firm sale orders, rights under license and
franchise agreements, and other contracts and contract rights; all interests in
partnerships and joint ventures; all tax refunds and tax refund claims; all
right, title and interest under leases,
2
<PAGE> 3
subleases, licenses and concessions and other agreements relating to real or
personal property; all payments due or made to each of the Grantors in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of any property by any person or governmental authority; all deposit
accounts (general or special) with any bank or other financial institution; all
credits with and other claims against carriers and shippers; all rights to
indemnification; all reversionary interests in pension and profit sharing plans
and reversionary, beneficial and residual interests in trusts; all proceeds of
insurance of which each of the Grantors is beneficiary; and all letters of
credit, guaranties, liens, security interests and other security held by or
granted to each of the Grantors; and all other intangible property, whether or
not similar to the foregoing; in each instance, however and wherever arising
(all of the foregoing property and similar property included as Collateral under
Section 1(o) below being hereinafter referred to as "General Intangibles");
(f) all chattel paper, all instruments, all notes and debt
instruments and all payments thereunder and instruments and other property from
time to time delivered in respect thereof or in exchange therefor, and all bills
of lading, warehouse receipts and other documents of title and documents, in
each instance whether now owned or hereafter acquired by each of the Grantors;
(g) all property or interests in property now or hereafter
acquired by each of the Grantors which may be owned or hereafter may come into
the possession, custody or control of the Collateral Agent or any agent or
affiliate of the Collateral Agent (including, without limitation, the
Administrative Agent) in any way or for any purpose (whether for safekeeping,
deposit, custody, pledge, transmission, collection or otherwise), and all rights
and interests of each of the Grantors, now existing or hereafter arising and
however and wherever arising, in respect of any and all (i) notes, drafts,
letters of credits, stocks, bonds, and debt and equity securities, whether or
not certificated, and warrants, options, puts and calls and other rights to
acquire or otherwise relating to the same (including, without limitation, all
notes and debt instruments and all payments thereunder and instruments and other
property from time to time delivered in respect thereof or in exchange
therefor); (ii) money (including all cash and cash equivalents held in the Loan
Account, the Cash Collateral Account, the BBNA Disbursement Accounts, the BBNA
Cash Concentration Account, the Chase Concentration Account, the Chase
Disbursement Accounts, all Blocked Accounts and all other bank accounts of any
of the Grantors other than the GE Account); (iii) proceeds of loans, including,
without limitation, loans made under the Credit Agreement; and (iv) insurance
proceeds and books and records relating to any of the property covered by this
Agreement; together, in each instance, with all accessions and additions
thereto, substitutions therefor, and replacements, proceeds and products
thereof;
(h) all trademarks, trade names, trade styles, service marks,
prints and labels on which said trademarks, trade names, trade styles and
service marks have appeared or appear, designs and general intangibles of like
nature, now existing or hereafter adopted or acquired, and all registrations and
recordings thereof, including, without limitation, applications, registrations
and recordings in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof, or any other
country or political subdivision thereof, all whether now owned or hereafter
acquired by each of the Grantors, including, but not limited to, those described
in Schedule 1(h) annexed hereto and made a part hereof, and all
3
<PAGE> 4
reissues, extensions or renewals thereof and all licenses thereof (all of the
foregoing being herein referred to as the "Trademarks");
(i) (A) all letters patent of the United States or any other
country, and all registrations and recordings thereof, including, without
limitation, applications, registrations and recordings in the United States
Patent and Trademark office or in any similar office or agency of the United
States, any State thereof or any other country or any political subdivision
thereof, all whether now owned or hereafter acquired by each of the Grantors,
including, but not limited to, those described in Schedule 1(i) annexed hereto
and made a part hereof, and (B) all reissues, continuations,
continuations-in-part or extensions thereof and all licenses thereof (all of the
foregoing being herein referred to as the "Patents");
(j) all copyrights of the United States or any other country,
and all registrations and recordings thereof, including, without limitation,
applications, registrations and recordings in the United States Copyright Office
or in any similar office or agency of the United States, any State thereof, or
any other country or political subdivision thereof, all whether now owned or
hereafter acquired by each of the Grantors, including, but not limited to, those
described in Schedule 1(j) hereto and all renewals and extensions thereof and
all licenses thereof (all of the foregoing being herein referred to as the
"Copyrights");
(k) all books, records, ledger cards and other property at any
time evidencing or relating to the Accounts, Equipment, Inventory, General
Intangibles, Trademarks, Patents or Copyrights;
(l) (i) all the shares of capital stock owned by each Grantor,
as applicable, listed on Schedule 1(l) hereto of the issuers listed thereon
(individually, an "Issuer", and collectively, the "Issuers") and all shares of
capital stock of any Subsidiary obtained in the future by such Grantor and the
certificates representing or evidencing all such shares (the "Pledged Shares");
(ii) all other property which may be delivered to and held by the Collateral
Agent in respect of the Pledged Shares pursuant to the terms hereof; (iii)
subject to Section 9 below, all dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed, in respect of,
in exchange for or upon the conversion or sale of the securities in which a
security interest is granted in clauses (i) and (ii) above; and (iv) subject to
Section 9 below, all rights and privileges of each Grantor, as applicable, with
respect to the securities and other property referred to in clauses (i), (ii)
and (iii) (the items referred to in clauses (i) through (iv) being collectively
called the "Pledged Collateral");
(m) all other personal property of each of the Grantors,
whether tangible or intangible, and whether now owned or hereafter acquired;
(n) all real property of each of the Grantors, whether owned
or leased; and
(o) all proceeds and products of any of the foregoing, in any
form, including, without limitation, any claims against third parties for loss
or damage to or destruction of any or all of the foregoing.
4
<PAGE> 5
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement and the Collateral
secure the payment of all obligations of each of the Grantors, now or hereafter
existing, under the Credit Agreement, the Notes and the other Loan Documents,
whether for principal, interest, fees, expenses or otherwise, and all
obligations of each of the Grantors now or hereafter existing under or in
respect of this Agreement (all such obligations of the Grantors being herein
called the "Obligations").
SECTION 3. DELIVERY OF PLEDGED COLLATERAL; OTHER ACTION. On the Closing
Date (and without further order of the Bankruptcy Court), all certificates or
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by the Collateral Agent pursuant hereto and shall be accompanied by
duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Collateral Agent. Upon the occurrence and during
the continuance of any Event of Default, the Collateral Agent shall have the
right (for the ratable benefit of itself, the other Agents, the Issuing Bank and
the Lenders), at any time in its discretion and without notice to the Grantors,
to transfer to or to register in the name of the Collateral Agent or any of its
nominees any or all of the Pledged Collateral.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Each Grantor, jointly and
severally, represents and warrants as follows:
(a) All of the Equipment is located at the places specified in
Schedule 4A and at no other places. All of the Inventory is located at or in
transit to the places specified in Schedule 4B and at no other places. The chief
places of business and chief executive offices of each of the Grantors and the
offices where each Grantor keeps its records concerning any Accounts and all
originals of all chattel paper which evidence any Account are located at the
places specified in Schedule 4C.
(b) The Grantors have no places of business other than those
listed on Schedules 4A, 4B and 4C.
(c) Each of the Grantors owns the Collateral free and clear of
any lien, security interest, charge or encumbrance except for the security
interest created by this Agreement and except as permitted under Section 6.01 of
the Credit Agreement. No effective financing statement or other instrument
similar in effect covering all or any part of the Collateral is on file in any
recording office, except (x) such as may have been filed in favor of the
Collateral Agent relating to this Agreement and (y) in favor of any holder of a
Lien permitted under 6.01 of the Credit Agreement.
(d) Except as permitted in the Credit Agreement, no material
portion of the Collateral is subject to contractual obligations that may
restrict or inhibit the Collateral Agent's rights or abilities to sell or
dispose of the Collateral or any part thereof after the occurrence of an Event
of Default.
(e) As of the Closing Date, no Grantor owns any material
Trademarks, Patents or Copyrights or has any material Trademarks, Patents or
Copyrights registered in, or the subject of pending applications in, the United
States Patent and Trademark Office or any similar
5
<PAGE> 6
office or agency in any other country or any political subdivision thereof,
other than those described in Schedules 1(h), (j) and (i), respectively. The
registrations for the Collateral disclosed on such Schedules are valid and
subsisting and in full force and effect, except as could not reasonably be
expected to have a material adverse effect on the value of the Collateral, taken
as a whole, or on the financial condition, operations, business, properties or
assets of the Borrower and the Guarantors, taken as a whole. None of the
material Trademarks, Patents or Copyrights have been abandoned or dedicated.
(f) The Pledged Shares have been duly authorized and validly
issued and are fully paid and non-assessable.
(g) Each Grantor, as the case may be, is the legal and
beneficial owner of the Pledged Shares described on Schedule 1(l) free and clear
of any lien, security interest, option or other charge or encumbrance, except
for the security interest created by this Agreement or the Order.
(h) The Pledged Shares constitute all of the issued and
outstanding shares of stock of each of the Issuers and no Issuer is under any
contractual obligation to issue any additional shares of stock or any other
securities, rights or indebtedness.
(i) Except for the Order, no authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required either (A) for the grant and pledge by each of the
Grantors of the security interests granted hereby or for the execution, delivery
or performance of this Agreement by each of the Grantors or (B) for the
perfection of the security interests or the exercise by the Collateral Agent of
its rights and remedies hereunder, except, with respect to Trademarks, Patents
and Copyrights, for authorizations, approvals and other actions by, and notices
to or filings with, any governmental authority or regulatory body outside the
United States.
SECTION 5. FURTHER ASSURANCES.
(a) Each of the Grantors agrees that from time to time, at the
expense of such Grantor, it will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable in the reasonable opinion of the Collateral Agent, or that the
Collateral Agent may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable the
Collateral Agent to exercise and enforce any of its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of the
foregoing, and without further order of the Bankruptcy Court, each of the
Grantors will execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be necessary
or desirable in the reasonable opinion of the Collateral Agent, or as the
Collateral Agent may otherwise reasonably request, in order to perfect and
preserve the security interests granted or purported to be granted hereby.
(b) Each Grantor hereby authorizes the Collateral Agent to
file one or more financing or continuation statements, and amendments thereto,
relative to all or any part of the
6
<PAGE> 7
Collateral without the signature of such Grantor where permitted by law (with
copies to follow to the applicable Grantor).
(c) Each Grantor will furnish to the Collateral Agent from
time to time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as the
Collateral Agent may reasonably request, all in reasonable detail.
SECTION 6. AS TO EQUIPMENT AND INVENTORY. Each Grantor shall:
(a) Keep the Equipment and Inventory only at or in transit to
or between the places specified therefor in Schedules 4A and 4B, respectively,
or, upon 30 days' prior written notice to the Collateral Agent, at other places
in jurisdictions where all action required by Section 5 shall have been taken to
assure the continuation of the perfection of the security interest of the
Collateral Agent (for its benefit and the ratable benefit of the other Agents,
the Issuing Bank and the Lenders) with respect to the Equipment and Inventory.
(b) Maintain or cause to be maintained in good repair, working
order and condition, excepting ordinary wear and tear and damage due to
casualty, all of the Equipment, and make or cause to be made all appropriate
repairs, renewals and replacements thereof, to the extent not obsolete and
consistent with past practice of such Grantor, as quickly as practicable after
the occurrence of any loss or damage thereto which are necessary or desirable to
such end.
(c) Until satisfaction in full of the Obligations, at any time
when an Event of Default has occurred and is continuing: (i) each Grantor will
perform any and all reasonable actions requested by the Collateral Agent to
enforce the Collateral Agent's security interest in the Inventory and all of the
Agent's rights hereunder, such as leasing warehouses to the Collateral Agent or
its designee, placing and maintaining signs, appointing custodians, transferring
Inventory to warehouses, and delivering to the Collateral Agent warehouse
receipts and documents of title in the Collateral Agent's name; (ii) if any
Inventory is in the possession or control of any of the Grantors' agents,
contractors or processors or any other third party, each such Grantor will
notify the Collateral Agent thereof and will notify such agents, contractors or
processors or third party (to the extent not previously done so) of the
Collateral Agent's security interest therein and, upon request, instruct them to
hold all such Inventory for the Collateral Agent and such Grantor's account, as
their interests may appear, and subject to the Collateral Agent's instructions;
(iii) the Collateral Agent shall have the right to take possession of and hold
all Inventory subject to the security interest granted hereunder; and (iv) the
Collateral Agent shall have the right to take possession of the Inventory or any
part thereof and to maintain such possession on such Grantor's premises or to
remove any or all of the Inventory to such other place or places as the
Collateral Agent desires in its sole discretion. If the Collateral Agent
exercises its right to take possession of the Inventory, such Grantor, upon the
Collateral Agent's demand, will assemble the Inventory and make it available to
the Collateral Agent at such Grantor's premises at which it is located.
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<PAGE> 8
SECTION 7. AS TO ACCOUNTS.
(a) Each Grantor shall keep its chief place of business and
chief executive office and the office where it keeps its records concerning the
Accounts, and the offices where it keeps all originals of all chattel paper
which evidence Accounts, at the location therefor specified in Schedule 4C or,
upon 30 days' prior written notice to the Collateral Agent, at such other
locations in a jurisdiction where all actions required by Section 5 shall have
been taken with respect to the Accounts. Each Grantor will hold and preserve
such records and chattel paper and will permit representatives of the Collateral
Agent, at any time during normal business hours, to inspect and make abstracts
from such records and chattel paper in accordance with Section 5.07 of the
Credit Agreement.
(b) Except as otherwise provided in this subsection (b) or in
the Credit Agreement, each Grantor shall continue to collect in accordance with
its customary practice, at its own expense, all amounts due or to become due to
such Grantor under the Accounts and, prior to the occurrence of an Event of
Default, such Grantor shall have the right to adjust, settle or compromise the
amount or payment of any Account, or release wholly or partly any account debtor
or obligor thereof, or allow any credit or discount thereon, all in accordance
with its customary practices. In connection with such collections, the Grantors
may, upon the occurrence and during the continuation of an Event of Default,
take (and at the direction of the Collateral Agent shall take) such action as
the Grantors or the Collateral Agent may reasonably deem necessary or advisable
to enforce collection of the Accounts; provided, that upon prior written notice
by the Collateral Agent to any Grantor, following the occurrence and during the
continuance of an Event of Default, of its intention so to do, the Collateral
Agent shall have the right to notify the account debtors or obligors under any
Accounts of the assignment of such Accounts to the Collateral Agent and to
direct such account debtors or obligors to make payment of all amounts due or to
become due to such Grantor thereunder directly to the Collateral Agent and, upon
such notification and at the expense of such Grantor, to enforce collection of
any such Accounts, and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as such Grantor might have
done. After receipt by such Grantor of the notice referred to in the proviso to
the preceding sentence, (i) all amounts and proceeds (including instruments)
received by such Grantor in respect of the Accounts shall be received in trust
for the benefit of the Collateral Agent (for the benefit of the Issuing Bank and
the ratable benefit of the Lenders) hereunder, shall be segregated from other
funds of the Grantors and shall be forthwith paid over to the Collateral Agent
(or at the written direction of the Collateral Agent, the Administrative Agent)
in the same form as so received (with any necessary endorsement) to be held as
cash collateral and either (A) released to the Grantors if such Event of Default
shall have been cured or waived or (B) if such Event of Default shall be
continuing, applied as provided by Section 20, and (ii) the Grantors shall not
adjust, settle or compromise the amount or payment of any Account, or release
wholly or partly any account debtor or obligor thereof, or allow any credit or
discount thereon.
SECTION 8. AS TO TRADEMARKS, PATENTS AND COPYRIGHTS.
(a) Each Grantor shall, either itself or through licensees,
continue to use the Trademarks on each and every trademark class of goods
applicable to its current line as reflected
8
<PAGE> 9
in its current catalogs, brochures and price lists in order to maintain the
Trademarks in full force free from any claim of abandonment for nonuse and each
such Grantor will not (and will not permit any licensee thereof to) do any act
or knowingly omit to do any act whereby any Trademark may become invalidated,
unless such failure to use a Trademark is not reasonably likely to have a
material adverse effect on the condition (financial or otherwise), operation or
properties of the Grantors taken as a whole.
(b) No Grantor will do any act, or omit to do any act, whereby
the Patents or Copyrights may become abandoned or dedicated and each such
Grantor shall notify the Collateral Agent immediately if it knows of any reason
or has reason to know that any application or registration may become abandoned
or dedicated, unless such abandonment or dedication is not reasonably likely to
have a material adverse effect on the condition (financial or otherwise),
operations or properties of the Grantors taken as a whole.
(c) No Grantor will, either itself or through any agent,
employee, licensee or designee, (i) file an application for the registration of
any Patent or Trademark with the United States Patent and Trademark Office or
any similar office or agency in any other country or any political subdivision
thereof or (ii) file any assignment of any patent or trademark, which such
Grantor may acquire from a third party, with the United States Patent and
Trademark Office or any similar office or agency in any other country or any
political subdivision thereof, unless such Grantor shall, on or prior to the
date of such filing, notify the Collateral Agent thereof, and, upon request of
the Collateral Agent, execute and deliver any and all assignments, agreements,
instruments, documents and papers as the Collateral Agent may reasonably request
to evidence the Collateral Agent's interest in such Patent or Trademark and the
goodwill and general intangibles of such Grantor relating thereto or represented
thereby, and such Grantor hereby appoints the Collateral Agent its
attorney-in-fact to execute and file all such writings for the foregoing
purposes, all lawful acts of such attorney being hereby ratified and confirmed;
such power being coupled with an interest is irrevocable until the Obligations
are paid in full.
(d) Each Grantor will take all necessary steps in any
proceeding before the United States Patent and Trademark Office, the United
States Copyright Office or any similar office or agency in any other country or
any political subdivision thereof, to maintain each application and registration
of all Trademarks, Patents and Copyrights, including, without limitation, filing
of renewals, affidavits of use, affidavits of incontestability and opposition,
interference and cancellation proceedings, except as could not reasonably be
expected to have a material adverse effect on the value of the Collateral, taken
as a whole, or on the financial condition, operations, business, properties or
assets of the Borrower and the Guarantors, taken as a whole.
(e) Each Grantor will, without further order of the Bankruptcy
Court, perform all acts and execute and deliver all further instruments and
documents, including, without limitation, assignments for security in form
suitable for filing with the United States Patent and Trademark Office, and the
United States Copyright Office, respectively, reasonably requested by the
Collateral Agent at any time to evidence, perfect, maintain, record and enforce
the Collateral Agent's interest in all Trademarks, Patents and Copyrights or
otherwise in furtherance of the provisions of this Agreement, and each Grantor
hereby authorizes the Collateral Agent
9
<PAGE> 10
to execute and file one or more accurate financing statements (and similar
documents) or copies thereof or of this Security Agreement with respect to the
Patents, Trademarks and Copyrights signed only by the Collateral Agent.
(f) Each Grantor will, upon acquiring knowledge of any use by
any person of any term or design likely to cause confusion with any Trademark,
promptly notify the Collateral Agent of such use, and if requested by the
Collateral Agent, shall join with the Collateral Agent, at such Grantor's
expense, in such action as the Collateral Agent, in its reasonable discretion,
may deem advisable for the protection of the Collateral Agent's interest in and
to the Trademarks, except as could not reasonably be expected to have a material
adverse effect on the value of the Collateral, taken as a whole, or on the
financial condition, operations, business, properties or assets of the Borrower
and the Guarantors, taken as a whole.
SECTION 9. AS TO THE PLEDGED COLLATERAL; VOTING RIGHTS; DIVIDENDS; ETC.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) the Grantors (as applicable) shall be entitled to
exercise any and all voting and other consensual rights pertaining to
the Pledged Collateral or any part thereof for any purpose not
inconsistent with the terms of this Agreement provided, that such
Grantors shall not exercise or shall refrain from exercising any such
right if, in the Collateral Agent's reasonable judgment, such action
would have a material adverse effect on the value of the Pledged
Collateral or any part thereof;
(ii) notwithstanding the provisions of Section 1
hereof, such Grantors shall be entitled to receive and retain any and
all dividends paid in respect of the Pledged Collateral; provided, that
any and all
(A) dividends paid or payable other than in
cash in respect of, and instruments and other property
received, receivable or otherwise distributed in respect of,
or in exchange for, any Pledged Collateral, and
(B) dividends and other distributions paid
or payable in cash in respect of any Pledged Collateral in
connection with a partial or total liquidation or dissolution
or in connection with a reduction of capital, capital surplus
or paid-in-surplus,
shall be, and shall be forthwith delivered to the Collateral Agent to
hold as, Pledged Collateral and shall, if received by any of the
Grantors, be received in trust for the benefit of the Collateral Agent,
be segregated from the other property or funds of such Grantor, and be
forthwith delivered to the Collateral Agent as Pledged Collateral in
the same form as so received (with any necessary endorsement); and
(iii) the Collateral Agent shall execute and deliver
(or cause to be executed and delivered) to the Grantors (as applicable)
all such proxies and other instruments as the Grantors (as applicable)
may reasonably request for the purpose of
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enabling such Grantor to exercise the voting and other rights which it
is entitled to exercise pursuant to paragraph (i) above and to receive
the dividends which it is authorized to receive and retain pursuant to
paragraph (ii) above;
(b) Upon the occurrence and during the continuance of an Event
of Default:
(i) upon written notice from the Collateral Agent to
the Grantors (as applicable) to such effect, all rights of such
Grantors (as applicable) to exercise the voting and other consensual
rights which it would otherwise be entitled to exercise pursuant to
Section 9(a)(i) and to receive the dividends which it would otherwise
be authorized to receive and retain pursuant to Section 9(a)(ii) shall
cease, and all such rights shall thereupon become vested in the
Collateral Agent, who shall thereupon have the sole right to exercise
such voting and other consensual rights and to receive and hold as
Pledged Collateral any such dividends; and
(ii) all dividends which are received by such
Grantors contrary to the provisions of paragraph (i) of this Section
9(b) shall be received in trust for the benefit of the Collateral
Agent, shall be segregated from other funds of the Grantors and shall
be forthwith paid over to the Collateral Agent as Pledged Collateral in
the same form as so received (with any necessary endorsement).
SECTION 10. INSURANCE. Each Grantor shall, at its own expense, maintain
insurance with respect to the Equipment and the Inventory in such amounts,
against such risks, in such form and with such insurers, as is provided for in
Section 5.03 of the Credit Agreement. Following an Event of Default and during
its continuance, each Grantor shall, at the request of the Collateral Agent,
duly execute and deliver instruments of assignment of such insurance policies
and cause the respective insurers to acknowledge notice of such assignment.
Upon the occurrence and during the continuance of any Event of Default,
all insurance payments in respect of such Equipment and the Inventory shall be
held, applied and paid to the Collateral Agent as specified in Section 20
hereof.
SECTION 11. TRANSFERS TO OTHERS; LIENS; ADDITIONAL SHARES. Each Grantor
shall not:
(a) Sell, assign (by operation of law or otherwise) or
otherwise dispose of any of the Collateral, except for (i) dispositions of
Inventory in the ordinary course of business and (ii) dispositions otherwise
permitted by the Credit Agreement.
(b) Create or suffer to exist any lien, security interest or
other charge or encumbrance upon or with respect to any of the Collateral to
secure any obligation of any person or entity, except for the security interest
created by this Agreement and the Order, or except as otherwise permitted by the
Credit Agreement.
(c) Each of the Grantors (as applicable) agrees that it will
(i) cause each of the Issuers not to issue any stock or other securities in
addition to or substitution for the Pledged
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<PAGE> 12
Shares issued by such Issuer, except to the respective Grantor and (ii) pledge
hereunder, immediately upon its acquisition (directly or indirectly) thereof,
any and all such additional shares of stock or other securities of each Issuer
of the Pledged Shares.
SECTION 12. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. Each Grantor
hereby irrevocably appoints the Collateral Agent such Grantor's attorney-in-fact
(which appointment shall be irrevocable and deemed coupled with an interest),
with full authority in the place and stead of such Grantor and in the name of
such Grantor or otherwise, from time to time in the Collateral Agent's
discretion, to take any action and to execute any instrument which the
Collateral Agent may deem necessary or advisable to accomplish the purposes of
this Agreement, including, without limitation:
(i) to obtain and adjust insurance required to be
paid to the Collateral Agent pursuant to Section 10 hereof and Section
5.03 of the Credit Agreement,
(ii) following the occurrence and during the
continuance of an Event of Default, to ask, demand, collect, sue for,
recover, compound, receive and give acquittance and receipts for moneys
due and to become due under or in respect of any of the Collateral,
(iii) to receive, endorse, and collect any drafts or
other instruments, documents and chattel paper, in connection with
clause (i) or (ii) above,
(iv) following the occurrence and during the
continuance of an Event of Default, to receive, endorse and collect all
instruments made payable to the Grantors representing any dividend or
other distribution in respect of the Pledged Collateral or any part
thereof and to give full discharge for the same,
(v) to exercise the rights granted under Section 9
hereof, and
(vi) following the occurrence and during the
continuance of an Event of Default, to file any claims or take any
action or institute any proceedings which the Collateral Agent may deem
necessary or desirable for the collection of any of the Collateral or
otherwise to enforce the rights of the Collateral Agent with respect to
any of the Collateral.
SECTION 13. COLLATERAL AGENT MAY PERFORM. If any Grantor fails to
perform any agreement contained herein or in the Credit Agreement, the
Collateral Agent may itself perform, or cause performance of, such agreement,
and the expenses of the Collateral Agent incurred in connection therewith shall
be payable by the Grantors under Section 21(b).
SECTION 14. THE COLLATERAL AGENT'S DUTIES. The powers conferred on the
Collateral Agent hereunder are solely to protect its interest and the interests
of the Lenders in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the safe custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Collateral Agent shall have no duty as to any Collateral or as to the taking of
any
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necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral, including, without limitation, ascertaining or
taking action with respect to calls, conversions, exchanges, maturities, tenders
or other matters relative to any Pledged Collateral, whether or not the
Collateral Agent has or is deemed to have knowledge of such matters.
SECTION 15. OTHER PROVISIONS RELATING TO THE COLLATERAL AGENT.
(a) The Collateral Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement. Neither the
Collateral Agent nor any of its officers, directors, employees or agents shall
be liable to the Lenders for any action taken or omitted by it as such hereunder
or in connection herewith, unless caused by its or their gross negligence or
willful misconduct. The duties of the Collateral Agent shall be mechanical and
administrative in nature, and the Collateral Agent shall not have by reason of
this Agreement a fiduciary relationship in respect of any Lender.
(b) The Collateral Agent shall not be required to make any
inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement, the Credit Agreement, the Notes or
any of the other Loan Documents or the existence or possible existence of any
Event of Default, unless any Lender specifically requests the Collateral Agent
to do so in writing.
(c) The Collateral Agent shall have the right to request
instructions from the Required Lenders at any time. If the Collateral Agent
shall request instructions from the Required Lenders with respect to any act or
action (including the failure to act) in connection with this Agreement, the
Collateral Agent shall be entitled to refrain from such act or taking such
action unless and until the Collateral Agent shall have received instructions
from the Required Lenders, and the Collateral Agent shall not incur liability to
any Person by reason of so refraining. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against the Collateral Agent as a
result of the Collateral Agent acting or refraining from acting hereunder in
accordance with the instructions of the Required Lenders (unless such action
expressly requires the consent of more than the Required Lenders).
(d) The Collateral Agent shall be entitled to rely, and shall
be fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other documentary, teletransmission or telephone message
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person. The Collateral Agent may consult with legal counsel
(including counsel for the Borrower with respect to matters concerning the
Borrower), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or experts.
(e) To the extent the Collateral Agent is not reimbursed and
indemnified by the Borrower, each Lender will reimburse and indemnify the
Collateral Agent for such Lender's Commitment Percentage for and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including reasonable counsel fees and
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disbursements) or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against the Collateral Agent in performing
its duties hereunder, in any way relating to or arising out of this Agreement;
provided that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Collateral Agent's gross negligence
or willful misconduct.
SECTION 16. SUCCESSOR COLLATERAL AGENT.
(a) The Collateral Agent may, upon five (5) Business Days'
notice to the Lenders and the Borrower, resign at any time (effective upon the
appointment of a successor collateral agent pursuant to the provisions of this
Section 16). Upon any such resignation, the Required Lenders shall have the
right, upon five (5) days' notice and approval by the Borrower (which approval
shall not be unreasonably withheld), to appoint a successor collateral agent. If
no successor collateral agent (i) shall have been so appointed by the Required
Lenders, and (ii) shall have accepted such appointment, within thirty (30) days
after the Collateral Agent's giving of notice of resignation, then, upon five
(5) days' notice, the Collateral Agent may, on behalf of the Lenders, appoint a
successor collateral agent.
(b) Upon the acceptance of any appointment as collateral agent
hereunder by a successor collateral agent, such successor collateral agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the Collateral Agent, all references in this Agreement to
"Collateral Agent" shall refer to such successor collateral agent and the
Collateral Agent shall be discharged from its duties and obligations under this
Agreement. After the Collateral Agent's resignation hereunder as collateral
agent, the provisions of Sections 15(e) and 21 hereof shall continue to inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Collateral Agent under this Agreement.
SECTION 17. ADDITIONAL COLLATERAL MATTERS.
(a) The Collateral Agent is hereby authorized on behalf of all
of the Lenders, without the necessity of any notice to or further consent from
any Lender, from time to time prior to an Event of Default, to take any action
with respect to any Collateral which may be necessary to perfect and maintain
perfected the security interest in and Liens upon the Collateral.
(b) The Lenders hereby authorize the Collateral Agent to, and
the Collateral Agent shall, release any Lien granted to or held by the
Collateral Agent upon any Collateral (i) upon the payment and satisfaction of
all of the Obligations, (ii) constituting property being sold or disposed of in
conformance with the requirements of the Credit Agreement and this Agreement
(provided that the proceeds of such sale are applied or pledged as required
therein and herein) or (iii) if approved, authorized or ratified in writing by
the Required Lenders (or with respect to a release of Collateral with a value in
excess of $15,000,000, all the Lenders). Upon request by the Collateral Agent at
any time, the Lenders will confirm in writing the Collateral Agent's authority
to release particular types or items of Collateral pursuant to this Section 17.
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(c) Upon any sale and transfer of Collateral pursuant to the
terms of the Credit Agreement or this Agreement, and upon at least five (5)
Business Days' prior written request by the Borrower, the Collateral Agent shall
(and is hereby irrevocably authorized by the Lenders to) execute such documents
as may be necessary to evidence the release of the Liens granted to the
Collateral Agent for its benefit and the benefit of the Lenders herein or
pursuant hereto upon the Collateral that was sold or transferred; provided that
(i) the Collateral Agent shall not be required to execute any such document on
terms which, in the Collateral Agent's opinion, would expose the Collateral
Agent, the other Agents, the Issuing Bank or the Lenders to liability or create
any obligation or entail any consequence other than the release of such Liens
without recourse or warranty and (ii) such release shall not in any manner
discharge, affect or impair the Obligations or any Liens upon all interests
retained by the Borrower, including (without limitation) the proceeds of the
sale, all of which shall continue to constitute part of the Collateral. In the
event of any sale or transfer of Collateral, or any foreclosure with respect to
any of the Collateral, the Collateral Agent shall be authorized to deduct all of
the expenses reasonably incurred by the Collateral Agent from the proceeds of
any such sale, transfer or foreclosure.
(d) The Collateral Agent shall have no obligation whatsoever
to the other Agents, the Issuing Bank or the Lenders or to any other Person to
assure that the Collateral exists or is owned by the Borrower or is cared for,
protected or insured or that the Liens granted to the Collateral Agent herein or
pursuant hereto have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or
to exercise or to continue exercising at all or in any manner or under any duty
of care, disclosure or fidelity any of the rights, authorities and powers
granted or available to the Collateral Agent in this Agreement, it being
understood and agreed that in respect of the Collateral, or any act, omission or
event related thereto, the Collateral Agent may act in any manner it may deem
appropriate, in its sole discretion, given the Collateral Agent's own interest
in the Collateral and that the Collateral Agent shall have no duty or liability
whatsoever to the Lenders, except for its gross negligence or willful
misconduct.
SECTION 18. ACTIONS WITH RESPECT TO EVENTS OF DEFAULT. The Collateral
Agent shall take such action with respect to an Event of Default as shall be
directed by the Required Lenders or all of the Lenders, as specified in the
Credit Agreement; provided that until the Collateral Agent shall have received
such directions, the Collateral Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Event of
Default as it shall deem advisable and in the best interests of the Lenders.
Any amendment or waiver of any provision of this Agreement and
any consent to any departure by the Borrower from any provision of this Security
Agreement shall be effected by the Collateral Agent pursuant to Section 23
hereof and only upon the written authorization of the Required Lenders or all of
the Lenders, as specified in the Credit Agreement.
SECTION 19. DELIVERY OF INFORMATION. The Collateral Agent shall not be
required to deliver to any Lender originals or copies of any documents,
instruments, notices, communications or other information received by the
Collateral Agent from the Borrower, the
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Required Lenders, any Lender or any other Person under or in connection with
this Agreement except (i) as specifically provided in this Agreement and (ii) as
specifically requested from time to time in writing by any Lender with respect
to a specific document, instrument, notice or other written communication
received by and in the possession of the Collateral Agent at the time of receipt
of such request and then only in accordance with such specific request.
SECTION 20. REMEDIES. If the Obligations have become due and payable
(whether by acceleration or otherwise) and have not been paid, subject to the
provisions of Article VII of the Credit Agreement:
(a) The Collateral Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, and without application to or order of the Bankruptcy
Court, all the rights and remedies of a secured party on default under the
applicable Uniform Commercial Code and also may (i) require each Grantor to, and
each Grantor hereby agrees that it will at its expense and upon request of the
Collateral Agent forthwith, assemble all or part of the Collateral as directed
by the Collateral Agent and make it available to the Collateral Agent at a place
to be designated by the Collateral Agent which is reasonably convenient to both
parties and (ii) without notice except as specified below, sell the Collateral
or any part thereof in one or more parcels at public or private sale, at any of
the Collateral Agent's offices or elsewhere, for cash, on credit or for future
delivery, and at such price or prices and upon such other terms as the
Collateral Agent may deem commercially reasonable. Each Grantor agrees that, to
the extent notice of such sale shall be required by law, at least ten days'
notice to the Grantors of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. The Collateral Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Collateral Agent
may adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.
(b) The Collateral Agent may instruct the Grantors not to make
any further use of the Patents, Copyrights or Trademarks or any mark similar
thereto for any purpose.
(c) The Collateral Agent may license, whether general, special
or otherwise, and whether on an exclusive or nonexclusive basis, any of the
Trademarks, Patents or Copyrights throughout the world for such term or terms,
on such conditions, and in such manner, as the Collateral Agent shall in its
sole discretion determine.
(d) The Collateral Agent may (without assuming any obligations
or liability thereunder), at any time, enforce (and shall have the exclusive
right to enforce) against any licensee or sublicensee all rights and remedies of
the Grantors in, to and under any one or more license agreements with respect to
the Collateral, and take or refrain from taking any action under any thereof,
and each of the Grantors hereby releases the Collateral Agent from, and agrees
to hold the Collateral Agent free and harmless from and against any claims
arising out of, any action taken or omitted to be taken with respect to any such
license agreement.
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(e) In the event of any such license, assignment, sale or
other disposition of the Collateral, or any of it, each Grantor shall supply its
know-how and expertise relating to the manufacture and sale of the products
bearing or in connection with the Trademarks, Patents or Copyrights, and its
customer lists and other records relating to the Trademarks, Patents or
Copyrights and to the distribution of said products, to the Collateral Agent or
its designee.
(f) In order to implement the assignment, sale or other
disposal of any of the Trademarks, Patents or Copyrights, the Collateral Agent
may, at any time, pursuant to the authority granted in Section 12 hereof,
execute and deliver on behalf of the Grantors, one or more instruments of
assignment of the Trademarks, Patents or Copyrights (or any application of
registration thereof), in form suitable for filing, recording or registration in
any country.
(g) Subject to Section 2.14(a) of the Credit Agreement, all
cash proceeds received by the Collateral Agent in respect of any sale of,
collection from, or other realization upon all or any part of the Collateral
may, in the discretion of the Collateral Agent, be held by the Collateral Agent
as collateral for, and then or at any time thereafter applied (after payment of
any amounts payable to the Collateral Agent pursuant to Section 21) in whole or
in part against, all or any part of the Obligations in such order as the
Collateral Agent shall elect. Any surplus of such cash or cash proceeds held by
the Collateral Agent and remaining after payment in full of all the Obligations
shall be paid over to the Grantors or to whomsoever may be lawfully entitled to
receive such surplus.
(h) If at any time when the Collateral Agent shall determine
to exercise its right to sell all or any part of the Pledged Collateral pursuant
to this Section 20, such Pledged Collateral or the part thereof to be sold shall
not be effectively registered under the Securities Act of 1933, as amended, and
as from time to time in effect, and the rules and regulations thereunder (the
"Securities Act"), the Collateral Agent is hereby expressly authorized to sell
such Pledged Collateral or such part thereof by private sale in such manner and
under such circumstances as the Collateral Agent may deem necessary or advisable
in order that such sale may legally be effected without such registration.
Without limiting the generality of the foregoing, in any such event the
Collateral Agent, in compliance with applicable securities laws, (a) may proceed
to make such private sale notwithstanding that a registration statement for the
purpose of registering such Pledged Collateral or such part thereof shall have
been filed under such Securities Act, (b) may approach and negotiate with a
restricted number of potential purchasers to effect such sale and (c) may
restrict such sale to purchasers as to their number, nature of business and
investment intention including without limitation to purchasers each of whom
will represent and agree to the satisfaction of the Collateral Agent that such
purchaser is purchasing for its own account, for investment, and not with a view
to the distribution or sale of such Pledged Collateral, or part thereof, it
being understood that the Collateral Agent may cause or require each Grantor,
and each Grantor hereby agrees upon the written request of the Collateral Agent,
to cause (i) a legend or legends to be placed on the certificates to be
delivered to such purchasers to the effect that the Pledged Collateral
represented thereby has not been registered under the Securities Act and setting
forth or referring to restrictions on the transferability of such securities;
and (ii) the issuance of stop transfer instructions to such Issuer's transfer
agent, if any, with respect to the Pledged Collateral, or, if such Issuer
transfers its own securities, a notation in the appropriate records of such
Issuer. In the event of any such
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sale, each Grantor does hereby consent and agree that the Collateral Agent shall
incur no responsibility or liability for selling all or any part of the Pledged
Collateral at a price which the Collateral Agent may deem reasonable under the
circumstances, notwithstanding the possibility that a substantially higher price
might be realized if the sale were public and deferred until after registration
as aforesaid.
SECTION 21. INDEMNITY AND EXPENSES.
(a) Each Grantor, jointly and severally, agrees to indemnify
the Collateral Agent from and against any and all claims, losses and liabilities
growing out of or resulting from this Agreement (including, without limitation,
enforcement of this Agreement), except claims, losses or liabilities directly
arising from the Collateral Agent's own gross negligence or willful misconduct.
(b) The Grantors will upon demand pay to the Collateral Agent
the amount of any and all reasonable expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents, which the Collateral
Agent may incur in connection with (i) the administration of this Agreement,
(ii) the custody, preservation, use or operation of, or the sale of, collection
from, or other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of the Collateral Agent hereunder or (iv) the
failure by any of the Grantors to perform or observe any of the provisions
hereof.
(c) The Grantors assume all responsibility and liability
arising from the use of the Trademarks, Patents and Copyrights, and the Grantors
hereby, jointly and severally, indemnify and hold the Collateral Agent harmless
from and against any claim, suit, loss, damage or expense (including reasonable
attorneys' fees) arising out of any alleged defect in any product manufactured,
promoted or sold by any of the Grantors in connection with any Trademark or out
of the manufacture, promotion, labelling, sale or advertisement of any such
product by any of the Grantors except as the same may have resulted from the
gross negligence, willful misconduct or bad faith of the Collateral Agent.
(d) Each of the Grantors agree that the Collateral Agent does
not assume, and shall have no responsibility for, the payment of any sums due or
to become due under any agreement or contract included in the Collateral or the
performance of any obligations to be performed under or with respect to any such
agreement or contract by any of the Grantors, and except as the same may have
resulted from the gross negligence or willful misconduct of the Collateral
Agent, each of the Grantors hereby jointly and severally agree to indemnify and
hold the Collateral Agent harmless with respect to any and all claims by any
person relating thereto.
SECTION 22. SECURITY INTEREST ABSOLUTE. All rights of the Collateral
Agent and security interests hereunder, and all obligations of each of the
Grantors hereunder, shall be absolute and unconditional, irrespective of any
circumstance which might constitute a defense available to, or a discharge of,
any guarantor or other obligor in respect of the Obligations.
SECTION 23. AMENDMENTS; ETC. No amendment or waiver of any provision of
this Agreement, nor any consent to any departure by any of the Grantors
herefrom, shall in any
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event be effective unless the same shall be in writing and signed by the party
against whom enforcement is sought, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
SECTION 24. ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be in writing and shall be given in accordance with
the applicable provisions of the Credit Agreement.
SECTION 25. CONTINUING SECURITY INTEREST. This Agreement shall create a
continuing security interest in the Collateral and shall (i) remain in full
force and effect until payment in full of the Obligations, (ii) be binding upon
each of the Grantors, their successors and assigns and (iii) inure, together
with the rights and remedies of the Collateral Agent hereunder, to the benefit
of the Collateral Agent and each of the Lenders and their respective successors,
transferees and assigns. Upon the payment in full of the Obligations, the
security interest granted hereby shall terminate and all rights to the
Collateral shall revert to the Grantors subject to any existing liens, security
interests or encumbrances on such Collateral. Upon any such termination, the
Collateral Agent will, at the Grantor's expense, execute and deliver to the
Grantors such documents as the Grantors shall reasonably request to evidence
such termination.
SECTION 26. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, except as
required by mandatory provisions of law and except to the extent that the
validity or perfection of the security interest hereunder, or remedies
hereunder, in respect of any particular Collateral are governed by the laws of a
jurisdiction other than the State of New York and by Federal law (including,
without limitation, the Bankruptcy Code) to the extent the same has preempted
the law of the State of New York or such other jurisdiction.
SECTION 27. HEADINGS. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
SECTION 28. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which shall constitute an original, but
all of which taken together shall constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each of the Grantors and the Collateral Agent have
caused this Security Agreement to be duly executed and delivered by their
respective officers thereunto duly authorized as of the date first above
written.
GRANTORS:
THE CALDOR CORPORATION
CALDOR, INC. - CT
CALDOR, INC. - NY
CAL LEASING, INC.
LACDOR REALTY CORP.
CALFAX, INC.
TRI-STATE ADVERTISING AGENCY, INC.
PREMIER SERVICE PROGRAMS, INC.
each a debtor and debtor-in-possession
----------------------------------------
Title:
CALDOR-SILVER SPRING, L.L.C.
BY CAL SILVER SPRING, INC.,
ITS MANAGING MEMBER
CAL SILVER SPRING, INC.,
each a debtor and debtor-in-possession
----------------------------------------
Title:
Collateral Agent:
BANKBOSTON RETAIL FINANCE, INC.,
as Collateral Agent
By:
-------------------------------------
Title:
<PAGE> 1
SECURITY AGREEMENT AND MORTGAGE - TRADEMARKS
Agreement made as of this ___ day of May, 1998, between THE CALDOR
CORPORATION, a Delaware corporation having a principal business address at 20
Glover Street, Norwalk, Connecticut, 06856 (the "Company"), and BANKBOSTON
RETAIL FINANCE, INC. as collateral agent (in such capacity, the "Collateral
Agent") and as managing agent for BankBoston, N.A., individually and as
Administrative Agent and Issuing Bank (each as defined in the Credit Agreement
referred to below) and the other financial institutions (collectively, the
"Lenders") party to the Credit Agreement.
RECITALS
A. The Company has adopted and is the owner of the trademarks and
service marks described in Schedule A annexed hereto and made a part hereof;
B. As a condition to the Lenders making the loans or advances to the
Company pursuant to the Revolving Credit and Guaranty Agreement dated as of the
date hereof (as amended, supplemented or restated from time to time, the "Credit
Agreement") among the Company and the Lenders, among others, the Lenders have
required the execution and delivery hereof by the Company;
NOW, THEREFORE, IT IS AGREED that, for and in consideration of the
loans and advances to be made under the Credit Agreement and other good and
valuable consideration, the receipt of which is hereby acknowledged, and as
collateral security for the full and prompt payment and performance of all
Obligations (as defined below), the Company does hereby mortgage and pledge to
the Collateral Agent, for its benefit and the benefit of the other Agents, the
Issuing Bank and the Lenders, and grant the Collateral Agent, for its benefit
and the benefit of the other Agents, the Issuing Bank and the Lenders, a
security interest in, all of its right, title and interest in and to each of the
Trademarks (as defined below) described in Schedule A (collectively, the
"Collateral").
1. Definitions: Terms defined in the Credit Agreement and not otherwise
defined herein shall have the meanings set forth in the Credit Agreement. As
used in this Agreement, unless the context otherwise requires "Trademarks" shall
mean (i) all trademarks, trade names, trade styles, service marks, prints and
labels on which said trademarks, trade names, trade styles and service marks
have appeared or appear, designs and general intangibles of like nature, now
existing or hereafter adopted or acquired, all right, title and interest therein
and thereto, and all registration and recordings thereof, including, without
limitation, applications, registrations and recordings in the United States
Patent and Trademark Office or in any similar office or agency of the United
States, any State thereof, or any other country or any political subdivision
thereof, all whether now owned or hereafter acquired by the Company, including,
but not limited to, those described in Schedule A annexed hereto and made a part
hereof, and (ii) all reissues, extensions or renewals thereof and all licenses
thereof.
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2. Representations and Covenants: The Company hereby represents,
warrants, covenants and agrees as follows:
(a) The Company has the sole, full and clear title to the Trademarks in
the United States for the goods and services covered by the registration thereof
and such registrations are valid and subsisting and in full force and effect,
except as could not reasonably be expected to have a material adverse effect on
the value of the Collateral, taken as a whole, or on the financial condition,
operations, business, properties or assets of the Borrower and the Guarantors,
taken as a whole.
(b) The Company will perform all acts and execute all documents,
including, without limitation, assignments for security in form suitable for
filing with the United States Patent and Trademark Office, requested by the
Collateral Agent at any time to evidence, perfect, maintain, record and enforce
the Lenders' interest in the Collateral or otherwise in furtherance of the
provisions of this Agreement, and the Company hereby authorizes the Collateral
Agent to execute and file one or more financing statements (and similar
documents) or copies thereof or of this Agreement with respect to the Collateral
signed only by the Collateral Agent.
(c) The Company has the right and power to make the assignment and to
grant the security interest herein granted; and the Collateral is not now, and
at all times hereafter will not be, subject to any liens, mortgages, the
assignments, security interests or encumbrances of any nature whatsoever, except
in favor of the Collateral Agent, and to the best knowledge of the Company none
of the Collateral is subject to any claim.
(d) Except to the extent that the Collateral Agent, upon prior written
notice from the Company, shall consent in writing, the Company will not assign,
sell, mortgage, lease, transfer, pledge, hypothecate, grant a security interest
in or lien upon, grant an exclusive or non-exclusive license, or otherwise
dispose of any of the Collateral, and nothing in this Agreement shall be deemed
a consent by the Collateral Agent to any such action except as expressly
permitted herein.
3. Events of Default and Remedies: Upon the occurrence and during the
continuance of an Event of Default (as defined in the Credit Agreement), the
Collateral Agent and the Lenders shall have the rights set forth in the Credit
Agreement and the Security Agreement, also dated as of the date hereof, with
respect to all collateral pledged by the Company (the "General Security
Agreement").
4. Miscellaneous:
(a) No provision hereof shall be modified, altered or limited
except by a written instrument expressly referring to this Agreement and
executed by the party to be charged.
(b) In the event that any provision hereof shall be deemed to
be invalid by any Court, such invalidity shall not affect the remainder of this
Agreement.
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<PAGE> 3
(c) Any failure or delay by the Collateral Agent or the
Lenders to require strict performance by the Company of any of the provisions,
warranties, terms, and conditions contained herein or in any other agreement,
document, or instrument, shall not affect the Collateral Agent's or the Lenders'
right to demand strict compliance and performance therewith, and any waiver of
any default shall not waive or affect any other default, whether prior or
subsequent thereto, and whether of the same or of a different type. None of the
warranties, conditions, provisions, and terms contained herein or in any other
agreement, document, or instrument shall be deemed to have been waived by any
act or knowledge of Agents, the Issuing Bank, the Lenders, or any of their
respective agents, officers, or employees, but only by an instrument in writing,
signed by an officer of the Collateral Agent and directed to the Company,
specifying such waiver.
(d) In the event of any conflict between the terms of this
Agreement and the terms of either the Credit Agreement or the General Security
Agreement, the terms of the Credit Agreement or the General Security Agreement,
as the case may be, shall govern.
(e) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, except as required by
mandatory provisions of law and except to the extent that the validity or
perfection of the security interest hereunder, or remedies hereunder, in respect
of any particular Collateral are governed by the laws of a jurisdiction other
than the State of New York and by Federal law (including, without limitation,
the Bankruptcy Code) to the extent the same has preempted the law of the State
of New York or such other jurisdiction.
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 4
IN WITNESS WHEREOF, the Company and the Collateral Agent have caused
this Agreement to be executed by their respective officers thereunto duly
authorized as of the day and year first above written.
THE CALDOR CORPORATION
BY:
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TITLE:
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BANKBOSTON RETAIL FINANCE, INC.,
as Collateral Agent
BY:
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TITLE:
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