<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: October 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________________ to _____________________
Commission File number: 0-028176
Marks Bros. Jewelers, Inc.
(Exact name of registrant as specified in its charter)
Delaware 36-1433610
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
155 No. Wacker, Chicago, IL. 60606
(Address of principal executive offices)
312/782-6800
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal
year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
The number of the Registrant's common stock $.001 par value per share,
outstanding as of December 1, 1997 was 10,185,842 and the number of the
Registrant's Class B common stock $1.00 par value as of such date was 101.298.
<PAGE> 2
MARKS BROS. JEWELERS, INC.
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED OCTOBER 31, 1998
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Operations for the three months and nine months ended
October 31, 1998 and 1997 (unaudited)
Balance Sheets - October 31, 1998, January 31, 1998 and October 31,
1997 (unaudited)
Statements of Cash Flows for the nine months ended October 31, 1998
and 1997 (unaudited)
Notes to Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II - OTHER INFORMATION
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(b) Reports on Form 8-K
2
<PAGE> 3
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
Marks Bros. Jewelers, Inc.
Statements of Operations
for the three months and nine months ended October 31, 1998 and 1997
(unaudited)(in thousands, except for per share data)
<TABLE>
<CAPTION>
Three months ended Nine months ended
October October October October
31, 1998 31, 1997 31, 1998 31, 1997
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Net sales $ 48,483 $ 39,477 $ 136,916 $ 114,706
Cost of sales (including buying and occupancy
expenses) 29,453 23,963 82,985 69,244
-------- --------- --------- ---------
Gross profit 19,030 15,514 53,931 45,462
Selling, general and administrative
expenses 16,837 13,010 46,218 37,281
-------- --------- --------- ---------
Income from operations 2,193 2,504 7,713 8,181
Interest expense 1,202 1,014 2,856 2,920
-------- --------- --------- ---------
Income before income taxes 991 1,490 4,857 5,261
Income tax expense 382 581 1,865 2,052
-------- --------- --------- ---------
Net income $ 609 $ 909 $ 2,992 $ 3,209
======== ========= ========= =========
Basic earnings per share:
Net income $ 0.06 $ 0.09 $ 0.29 $ 0.32
======== ========= ========= =========
Weighted average common share
and common share equivalents 10,189 10,083 10,180 10,074
======== ========= ========= =========
Diluted earnings per share:
Net income $ 0.06 $ 0.09 $ 0.29 $ .31
======== ========= ========= =========
Weighted average common share
and common share equivalents 10,259 10,209 10,356 10,205
======== ========= ========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 4
Marks Bros. Jewelers, Inc.
Balance Sheets
as of October 31, 1998, January 31, 1998 and October 31, 1997
(unaudited, in thousands)
<TABLE>
<CAPTION>
October January October
31, 1998 31, 1998 31, 1997
-------------- -------------- --------------
<S> <C> <C> <C>
ASSETS
Current Assets:
Accounts receivable, net $ 1,817 $ 2,532 $ 1,276
Layaway receivables, net 3,201 2,636 2,607
Merchandise inventories 131,171 85,053 99,954
Other current assets 833 996 482
Prepaid taxes 508 --- 1,126
Deferred income taxes, net 1,257 1,257 1,326
Deferred financing costs 252 240 292
-------------- -------------- --------------
Total current assets 139,039 92,714 107,063
Property and equipment, net 32,760 22,701 22,304
Goodwill 8,148 --- ---
Deferred income tax, net 1,953 1,953 5,947
Deferred financing costs 425 635 929
-------------- -------------- --------------
Total assets $ 182,325 $ 118,003 $ 136,243
============== ============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Outstanding checks, net $ 2,079 $ 9,608 $ 2,508
Revolver loans 43,862 16,841 29,339
Current portion of long-term debt 2,000 1,000 ---
Accounts payable 47,724 16,525 37,837
Accrued payroll 1,873 2,906 2,113
Income taxes --- 1,419 ---
Other accrued expenses 13,736 9,448 11,920
-------------- -------------- --------------
Total current liabilities 111,274 57,747 83,717
Term loan 18,000 10,426 ---
Subordinated debt 640 640 10,520
Other long-term liabilities 1,513 1,387 1,220
-------------- -------------- --------------
Total liabilities 131,427 70,200 95,457
Commitments and contingencies
Stockholders' equity:
Common stock 10 10 10
Class B common stock --- --- ---
Class C common stock --- --- ---
Class D common stock --- --- ---
Additional paid-in capital 60,008 59,905 59,874
Accumulated deficit (9,120) (12,112) (19,098)
-------------- -------------- --------------
Total stockholders' equity 50,898 47,803 40,786
-------------- -------------- --------------
Total liabilities and
stockholders' equity $ 182,325 $ 118,003 $ 136,243
============== ============== ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 5
Marks Bros. Jewelers, Inc.
Statements of Cash Flows
for the nine months ended October 31, 1998 and 1997
(unaudited, in thousands)
<TABLE>
<CAPTION>
Nine months ended
-----------------
October October
31, 1998 31, 1998
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,992 $ 3,209
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation and amortization 3,653 2,870
Loss on disposition of assets 124 276
Changes in assets and liabilities:
Decrease in accounts receivable, net 541 78
Increase in layaway receivables, net (565) (566)
Increase in merchandise inventories, net of gold consignment (43,499) (35,472)
Decrease in other current assets 280 156
Increase in accounts payable 31,199 23,485
Increase in accrued liabilities 1,234 962
------------ ------------
Net cash used in operating activities (4,041) (5,002)
Cash flows from investing activities:
Capital expenditures (11,763) (8,926)
Purchase of assets (22,891) ---
Proceeds from assets sold 4,542 ---
------------ ------------
Net cash used in investing activities (30,112) (8,926)
Cash flows from financing activities:
Borrowing on revolver loan 181,701 336,477
Repayment of revolver loan (154,680) (317,885)
Proceeds from term loan 20,000 ---
Repayment of term loan (11,426) ---
Proceeds from gold consignment 5,984 ---
Proceeds from exercise of stock options 103 70
Decrease in outstanding checks, net (7,529) (4,734)
------------ ------------
Net cash provided by financing activities 34,153 13,928
------------ ------------
Net change in cash and cash equivalents --- ---
Cash and cash equivalents at beginning of period --- ---
------------ ------------
Cash and cash equivalents at end of period $ --- $ ---
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 6
Marks Bros. Jewelers, Inc.
Notes to Financial Statements
1. Description of Operations
The financial statements of Marks Bros. Jewelers, Inc. (the "Company")
include the results of the Company's chain of specialty retail fine jewelry
stores. The Company operates exclusively in one business segment, specialty
retail jewelry. The Company has a national presence with 244 stores as of
October 31, 1998, located in 29 states, operating in regional or super-regional
shopping malls.
2. Acquisition
On September 10, 1998, the Company acquired substantially all of the assets
of 36 jewelry stores operating under the Jewel Box name from Carlyle & Co.
Jewelers and its affiliates, headquartered in Greensboro, North Carolina. The
stores are located in eight states in the Southeastern United States. The
Company purchased all associated inventory, accounts receivable and fixed assets
for approximately $23 million (including fees and other costs) in cash. The
Company financed the acquisition through a term loan and revolving credit
facility under its new Credit Agreement. In a related transaction, the Company
sold all of the acquired Jewel Box customer accounts receivable for cash to
BancOne, N.A.
The acquisition has been accounted for using the purchase method of
accounting, and, accordingly, the purchase price has been allocated to the
assets purchased and the liabilities assumed based upon the fair values at the
date of acquisition. The excess of the purchase price over the fair values of
the net assets acquired was $8.2 million and has been recorded as goodwill,
which is being amortized on a straight-line basis over 25 years. The amount of
goodwill amortization in the third quarter of 1998 was $56,000.
The net purchase price was allocated as follows:
(in thousands)
Inventory $ 9,039
Accounts receivable 3,902
Other current assets 121
Fixed assets 1,861
Other accrued expenses (237)
Goodwill 8,205
- -------------------------------------------------------
Purchase price $ 22,891
=======================================================
6
<PAGE> 7
3. Summary of Significant Accounting Policies
Basis for Presentation
The accompanying Balance Sheet as of January 31, 1998 was derived from the
audited financial statements for the year ended January 31, 1998. The
accompanying unaudited Balance Sheets as of October 31, 1998 and 1997 and the
Statements of Operations for the three months and nine months ended October 31,
1998 and 1997 have been prepared in accordance with generally accepted
accounting principles for interim financial information. The interim financial
statements reflect all adjustments (consisting only of normal recurring
accruals) which are, in the opinion of management, necessary for a fair
statement of the results for the interim periods presented. The interim
financial statements should be read in the context of the Financial Statements
and footnotes thereto included in the Marks Bros. Jewelers, Inc. Annual Report
for the fiscal year ended January 31, 1998. References in the following notes to
years and quarters are references to fiscal years and fiscal quarters.
4. Accounts Receivables, Net
Accounts receivable are shown net of the allowance for doubtful accounts of
$928,000, $693,000 and $783,000 as of October 31, 1998, January 31, 1998 and
October 31, 1997, respectively.
5. Inventory
As of October 31, 1998, January 31, 1998 and October 31, 1997,
merchandising inventories consist of:
October 31, 1998 January 31, 1998 October 31, 1997
(in thousands)
Raw Materials $ 6,278 $ 3,504 $ 6,476
Finished Goods 124,893 81,549 93,478
------------- ------------- ------------
Inventory $ 131,171 $ 85,053 $ 99,954
============= ============= ============
Raw materials primarily consist of diamonds, precious gems, semi-precious
gems and gold. There was no work-in-progress as of October 31, 1998, January 31,
1998, or October 31, 1997. Included within finished goods inventory are
allowances for inventory shrink, scrap, and miscellaneous costs of $4,199,000,
$1,700,000 and $1,199,000 as of October 31, 1998, January 31, 1998 and October
31, 1997, respectively. As of October 31, 1998, January 31, 1998 and October
31, 1997, consignment inventories held by the Company that are not included in
the balance sheets total $37,665,000, $32,530,000, and $23,503,000,
respectively.
In addition, gold consignments of $21,279,000, $15,295,000 and $15,295,000
are not included in the Company's balance sheets as of October 31, 1998, January
31, 1998 and October 31, 1997, respectively.
7
<PAGE> 8
6. Financing Arrangements
Effective September 10, 1998, the Company entered into an Amended and
Restated Revolving Credit, Term Loan and Gold Consignment Agreement (the "Credit
Agreement") with its bank group to provide for a total facility of $110.0
million through September 10, 2003. Beginning with the quarter ending January
31, 1999, interest rates and the commitment fee charged on the unused facility
float in a grid based upon the Company's quarterly financial performance.
Under this agreement, the banks have a security interest in substantially
all of the assets of the Company. The Credit Agreement contains certain
restrictions on capital expenditures, payment of dividends and assumption of
additional debt and requires the Company to maintain specified minimum levels of
certain financial measures, including fixed charge ratio and certain balance
sheet measures.
Revolver Loan
- -------------
The revolving loan facility under the Credit Agreement is available up to a
maximum of $90.0 million, including amounts borrowed under the gold consignment
facility, and is limited by a borrowing base computed based on the value of the
Company's inventory and accounts receivable. Interest rates and commitment fees
on the unused facility float in a grid based on the Company's quarterly
financial performance.
Current interest rates for borrowings under this agreement are, at the
Company's option, Eurodollar rates plus 175 basis points or the banks' prime
rate. Interest is payable monthly for prime borrowings and upon maturity for
Eurodollar borrowings. The interest expense under the current and former
revolver facilities for the nine months ended October 31, 1998 and 1997 was
$1,493,000 and $1,275,000, reflecting a weighted average interest rate of 7.3%
and 7.4%, respectively.
Term Loans
- ----------
The term loan facility under the Credit Agreement is available up to a
maximum of $20.0 million. Current interest rates for these borrowings are, at
the Company's option, Eurodollar rates plus 225 basis points or the banks' prime
rate plus 50 basis points. Interest is payable monthly for prime borrowings and
upon maturity for Eurodollar borrowings. Interest rates and the commitment fee
charged on the unused facility float in a grid based on the Company's quarterly
financial performance. The interest expense for the nine months ended October
31, 1998 for these borrowings was $748,000 reflecting a weighted average
interest rate of 7.8%.
Gold Consignment Facility
- -------------------------
During the second quarter of 1996, the Company sold and simultaneously
consigned a total of 39,000 troy ounces of gold for $15.3 million under a gold
consignment facility. During the second quarter of 1998, the Company sold and
simultaneously consigned an additional 20,000 troy ounces of gold for $6.0
million. The facility provides for the sale of a maximum 115,000 troy ounces or
$40.0 million. Under the agreement, the Company pays consignment fees of 175
basis points over the rate set by the bank based on the London Interbank Bullion
Rates payable monthly. A commitment fee of 50 basis points per annum on the
unused portion of the gold consignment facility is payable monthly. The
consignment fees totaled $366,000 at a weighted average rate of 3.1% and
$325,000 at a weighted average rate of 3.2% for the nine months ended October
31, 1998 and 1997, respectively. On September 10, 2003, the Company is required
to repurchase 59,000 troy ounces of gold under this agreement at the prevailing
gold rate in effect on that date, or the facility will be renewed.
8
<PAGE> 9
Subordinated Notes
- ------------------
Series C Senior Subordinated Notes due 2004 (the "Series C Notes") totaling
$640,000 aggregate principal amount outstanding as of October 31, 1998, bear
interest at 12.15% per annum payable in cash, with interest payments due
quarterly. In January 1998, $9,880,000 of the Series C Notes were redeemed at a
premium of $1,087,000. Interest expense was $58,000 and $959,000 for the nine
months ended October 31, 1998 and 1997, respectively.
7. Dilutive Shares That Were Outstanding During the Period
The following table summarizes the reconciliation of the numerators and
denominators, as required by SFAS No. 128, for the basic and diluted EPS
computations at October 31, 1998 and 1997.
<TABLE>
<CAPTION>
Three months ended Nine months ended
(in thousands, except per share amounts)
October October October October
31, 1998 31, 1997 31, 1998 31, 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net earnings for basic and diluted EPS $ 609 $ 909 $ 2,992 $ 3,209
Weighted average shares for basic EPS 10,189 10,083 10,180 10,074
Incremental shares upon conversions:
Stock options 70 126 176 131
Weighted average shares for diluted EPS 10,259 10,209 10,356 10,205
</TABLE>
9
<PAGE> 10
PART I - FINANCIAL INFORMATION
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations for the Three Months Ended October 31, 1998
- -----------------------------------------------------------------
Net sales for the third quarter of fiscal 1998 increased $9.0 million, or
22.8%, to $48.5 million. New stores opened contributed $5.2 million (excluding
approximately $2.7 million from 36 stores acquired in mid-September) to the
overall sales increase. Increases in layaway balances contributed to a higher
sales increase of $0.7 million compared to the prior period. These sales
increases were partially offset by lost sales of $1.0 million related to store
closings, together with stores closed for remodeling for limited periods. The
total number of merchandise units sold increased by approximately 18.9% in the
third quarter of fiscal 1998, while the average price per merchandise sale
increased to $315 in the third quarter of fiscal 1998 from $309 in the third
quarter of fiscal 1997. Comparable store sales increased 3.6% (including sales
for the month of October from the newly acquired Jewel Box locations which
contributed approximately one percent of the increase) compared to an increase
of 2.1% in the third quarter of fiscal 1997. Certain factors which have had a
negative impact on sales in the third quarter of fiscal 1998 include increased
customer returns resulting from the adoption of a more flexible refund policy
during the second quarter of fiscal 1997, more limited usage of certain credit
promotions, and a more competitive and promotional environment. Certain factors
that had a positive impact on comparable store sales in the third quarter of
fiscal 1998 include the contribution from the acquired jewelry stores, strong
store inventory assortments, and on-going improvements in the Company's
store-based personnel. The Company opened 42 new stores (including the 36
acquired stores) and closed five stores in the third quarter of fiscal 1998
increasing the number of stores opened to 244 as of October 31, 1998 compared to
191 as of October 31, 1997.
Gross profit increased $3.5 million to $19.0 million in the third quarter
of fiscal 1998 compared to the third quarter of fiscal 1997. Gross profit as a
percentage of sales remained constant at 39.3% in both periods. Slightly higher
merchandise margins and a shift in sales mix to higher margin categories were
offset by increased occupancy costs.
Selling, general and administrative expenses increased $3.8 million, or
29.4%, to $16.8 million in the period from $13.0 million in the prior period.
New store openings accounted for $2.9 million of this increase, while expenses
associated with the acquisition and integration of jewelry stores accounted for
approximately $0.3 million. As a percentage of net sales, selling, general and
administrative expenses increased to 34.6% from 33.0% in the prior year quarter.
The dollar increase primarily relates to higher payroll expenses ($2.4 million),
higher other expenses ($0.7 million), and higher advertising expenses ($0.3
million).
Interest expense increased $0.2 million to $1.2 million in the third
quarter of fiscal 1998 from $1.0 million in the third quarter of fiscal 1997.
The impact of lower weighted average interest rates was more than offset by
increased borrowings to fund the acquisition of jewelry stores.
Income tax expense of $0.4 million and $0.6 million in the third quarters
of fiscal 1998 and 1997, respectively, reflected an effective annual tax rate of
38.5% and 39.0% in the third quarters of fiscal 1998 and 1997, respectively.
Net income decreased to $0.6 million in the third quarter of fiscal 1998
from $0.9 million in the third quarter of fiscal 1997 in large part due to
integration costs associated with the acquisition of the 36 stores and as a
result of the other factors discussed above.
10
<PAGE> 11
Results of Operations for the Nine months Ended October 31, 1998
- ----------------------------------------------------------------
Net sales for the nine months ended October 31, 1998 increased $22.2
million, or 19.4%, to $136.9 million. New stores opened contributed $15.6
million (excluding approximately $2.7 million from 36 stores acquired in
mid-September) to the overall sales increase. Increases in layaway balances
contributed to a higher sales increase of $1.5 million compared to the prior
period. These sales increases were partially offset by lost sales of $1.8
million related to store closings, together with stores closed for remodeling
for limited periods. The total number of merchandise units sold increased by
approximately 13.1% for the nine months ended October 31, 1998, while the
average price per merchandise sale increased to $296 in the first nine months of
fiscal 1998 from $283 in the first nine months of fiscal 1997. Comparable store
sales increased 4.0% (including sales for the month of October from the newly
acquired Jewel Box locations which contributed approximately 0.3% of the
increase) compared to an increase of 1.4% in the nine months ended October 31,
1998. Certain factors which had a negative impact on sales in the first nine
months of fiscal 1998 include increased customer returns resulting from the
adoption of a more flexible refund policy during the second quarter of fiscal
1997, more limited use of certain credit promotions, and a more competitive and
promotional environment. Certain factors that had a positive impact on
comparable store sales in the first nine months of fiscal 1998 include the
contribution from the acquired jewelry stores, strong store inventory
assortments, and on-going improvements in the Company's store-based personnel.
The Company opened 61 new stores (including the 36 acquired stores) and closed
eight stores during the nine months ended October 31, 1998 increasing the number
of stores opened to 244 as of October 31, 1998 compared to 191 as of October 31,
1997.
Gross profit increased $8.5 million to $53.9 million for the nine months
ended October 31, 1998 compared to the nine months of fiscal 1997. Gross profit
as a percentage of sales declined to 39.4% for the nine months ended October 31,
1998 from 39.6% for the nine months ended October 31, 1997. Higher margins on
gold and colored stone jewelry categories were offset by lower margins on
diamonds and higher occupancy expenses.
Selling, general and administrative expenses increased $8.9 million, or
24.0%, to $46.2 million in the period from $37.3 million in the prior period.
New store openings accounted for $6.0 million of this increase, while expenses
associated with the acquisition and integration of jewelry stores accounted for
approximately $0.8 million. As a percentage of net sales, selling, general and
administrative expenses increased to 33.8% for the nine months ended October 31,
1998 from 32.5% in the nine months ended October 31, 1997. The dollar increase
primarily relates to higher payroll expenses ($5.5 million), higher other
expenses ($1.3 million), higher advertising expenses ($0.9 million), and higher
credit expenses ($0.8 million).
Interest expense was $2.9 million for the nine months ended October 31,
1998 and October 31, 1997. The impact of lower weighted average interest rates
in 1998 was offset by increased borrowings.
Income tax expense of $1.9 million and $2.1 million for the nine months
ended October 31, 1998 and 1997, respectively, reflected an effective annual tax
rate of 38.4% and 39%, respectively.
Net income declined to $3.0 million for the nine months ended October 31,
1998 from $3.2 million for the nine months ended October 31, 1997 in large part
due to integration costs associated with the acquisition of the 36 stores and as
a result of the other factors discussed above.
11
<PAGE> 12
Liquidity and Capital Resources
- -------------------------------
The Company's cash requirements consist principally of funding increases in
inventory at existing stores, capital expenditures, working capital (primarily
inventory) associated with the Company's new stores and acquisitions of new
stores. The Company's primary sources of liquidity have been cash flow from
operations and bank borrowings under the Company's revolver.
The Company's inventory levels and working capital requirements have
historically been highest in advance of the Christmas season. The Company has
funded these seasonal working capital needs through borrowings under the
Company's revolver and increases in trade payables and accrued expenses.
The Company's cash flow used in operations decreased from $5.0 million in
the nine months ended October 31, 1997 to $4.0 million in the nine months ended
October 31, 1998. Increases in accounts payable ($31.2 million) were more than
offset by lower income from operations and increases in merchandise inventories
($43.5 million). The increase in merchandise inventories primarily resulted
from merchandising new stores and increased inventory levels, in particular,
solitaire diamonds and diamond engagement sets. In the nine months ended
October 31, 1998, the primary sources of the Company's liquidity included a
$27.0 million net increase in the amount outstanding under the Company's
revolver, an $8.6 million increase in the term loan, a $6.0 million increase in
the gold consignment facility less a decrease of $7.5 million in outstanding
checks. The Company utilized cash in the nine months ended October 31, 1998
primarily to acquire 36 jewelry stores and to fund capital expenditures of $11.8
million, primarily related to the opening of 25 new stores during this period.
Year 2000
- ---------
The "Year 2000" problem concerns the inability of information systems to
properly recognize and process date-sensitive information beyond January 1,
2000. Like many companies, "Year 2000" computer hardware and software failures
of internal systems and/or of third party systems could have a significant,
adverse impact on all aspects of the Company's operations. Because of the range
of possible issues and the large number of variables involved, it is impossible
to quantify the potential cost of problems should the Company's remediation
efforts or the efforts of third parties with whom the Company does business not
be successful. The Company recognizes the need to address this problem in order
to minimize the effects of the "Year 2000" issue on its operations and its
relationships with vendors and other third parties. The Company is using both
internal and external resources to complete its "Year 2000" project.
The Company operates exclusively in one business segment, specialty retail
jewelry. All stores are located within the United States. The Company's two
principle mission-critical systems applications are the point-of-sale ("POS")
terminals and software which control store transaction processing and the
centrally maintained information systems infrastructure which controls financial
and administrative systems.
All stores use the same POS software which is leased from a third-party
vendor. In November 1998, a "Year 2000" compliant version of the POS software
was installed at all stores. Testing of the new software is complete. The
Company has replaced approximately two-thirds of its POS desktop terminals with
"Year 2000" compliant terminals. The remaining portion are expected to be
replaced by March 1999.
<PAGE> 13
The Company's financial management, information technology and other
administrative functions operate centrally from the Company's corporate office.
The Company uses a mid-range computing platform which is complemented by various
networks. The operating systems and hardware platforms were upgraded, tested
and are currently "Year 2000" ready. The replacement or upgrading of financial
management and various customized software packages are between 50% and 70%
complete. These systems upgrades, replacements and renovations, and testing
thereof, are scheduled to be completed by the summer of 1999 and such completion
is currently on schedule. With respect to systems that the Company is not
upgrading, the Company is currently renovating those systems to be "Year 2000"
compliant.
The Company's total costs for making its mission-critical systems "Year
2000" compliant are not expected to be material to the Company's financial
condition. The estimated total cost of the "Year 2000" project is expected to
approximate $750,000. To date, the total amount expended on the project is
approximately $250,000.
The Company believes that the systems upgrades, replacements and
renovations will be made on a timely basis and that the "Year 2000" issue with
respect to the Company's internal systems will not pose significant operational
problems or result in costs that have a material adverse impact on the Company's
business, financial condition or results of operations. The Company has focused
its efforts and resources on resolving its internal "Year 2000" issues with the
goal of timely completion rather than preparing a contingency plan in the event
of failure to become "Year 2000" compliant. A failure by the Company to timely
address the "Year 2000" issue, or a failure by the Company to maintain adequate
information systems capacity and infrastructure as it upgrades, replaces and
renovates its information systems, could have a material adverse impact on the
Company's business, financial condition or results of operations.
In addition to the Company's internal systems, certain systems of third
party suppliers and service providers which are not currently "Year 2000"
compliant could adversely impact the Company's operations. The Company has
confirmed with its primary lender that its systems are, or will on a timely
basis be, "Year 2000" compliant. In addition, certain key vendors and service
providers have orally confirmed that they are implementing plans to address the
"Year 2000" issue. The Company will continue communicating with its key
suppliers and key service providers to monitor their plans to address, and
progress in addressing, the "Year 2000" issue and to evaluate any impact on the
Company. However, there can be no assurance that the systems of third parties
with whom the Company does business will be timely converted. A failure by any
such third party to timely address the "Year 2000" issue could have a material
adverse impact on the Company's business, financial condition or results of
operations.
13
<PAGE> 14
PART II - OTHER INFORMATION
Item 5 - Other Information
Forward-Looking Statements
- --------------------------
All statements, trend analysis and other information contained in this
report relative to markets for the Company's products and trends in the
Company's operations or financial results, as well as other statements including
words such as "anticipate," "believe," "plan," "estimate," "expect," "intend"
and other similar expressions, constitute forward-looking statements under the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements are subject to known and unknown risks, uncertainties and other
factors which may cause actual results to be materially different from those
contemplated by the forward-looking statements. Such factors include, among
other things: (1) the extent and results of the Company's store expansion
strategy; (2) the seasonality of the Company's business; (3) economic
conditions, the retail sales environment and the Company's ability to execute
its business strategy and the related effects on comparable store sales and
other results; (4) the success of the Company's marketing and promotional
programs; (5) the extent to which the Company is able to retain and attract key
personnel; (6) competition; (7) the availability and cost of consumer credit;
(8) relationships with suppliers; (9) the Company's leverage; (10) fluctuations
in gem and gold prices; (11) the efficient and successful integration of the
Jewel Box locations and assets into the Company's existing operations (12)
regulation; (13) timely "Year 2000" compliance by the Company and third party
suppliers and service providers; (14) the Company's ability to maintain
adequate information systems capacity and infrastructure; and (15) the risk
factors listed from time to time in the Company's filings with the Securities
and Exchange Commission.
14
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Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 10.1 Asset Purchase Agreement dated as of June 19, 1998 by and
among Marks Bros. Jewelers, Inc., Carlyle & Co. Jewelers,
Carlyle & Co. of Montgomery and J.E. Caldwell Co.
(incorporated by reference to Exhibit 2.2. of the Company's
Current Report on Form 8-K dated September 10, 1998 and filed
with the Securities and Exchange Commission (the
"Commission") on September 22, 1998).
Exhibit 10.2 Amended and Restated Revolving Credit, Term Loan and Gold
Consignment Agreement dated as of September 10, 1998 by and
among Marks Bros. Jewelers, Inc., the Banks (as defined
therein), BankBoston, N.A. as Agents for the Banks, and
LaSalle National Bank and ABN AMRO Bank N.V., as Agents for
the Banks.
Exhibit 27 Financial Data Schedule (SEC/EDGAR only)
(b) Reports on Form 8-K
(1) The Company filed with the Commission on September 22, 1998 a Current
Report on Form 8-K dated September 10, 1998 reporting the completion of
the Company's acquisition from Carlyle & Co. Jewelers, headquartered in
Greensboro, North Carolina, of substantially all of the assets relating
to the operation of 36 jewelry stores for a purchase price of
$22,777,608.49 (the "Acquisition").
(2) The Company filed with the Commission on September 22, 1998 a Current
Report on Form 8-K/A dated September 10, 1998 amending and restating its
Current Report on Form 8-K identified in (1) above under this Item 6 and
reporting that the Company was not required to file financial statements
or pro forma financial information in connection with the Acquisition.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MARKS BROS. JEWELERS, INC.
(Registrant)
Date: December 15, 1998 By: /s/ John R. Desjardins
________________________________
John R. Desjardins
Executive Vice President -
Finance and Administration
(principal financial officer)
15
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- --------------------------------------------------------------------------------
Exhibit 10.2
AMENDED AND RESTATED
REVOLVING CREDIT, TERM LOAN AND
GOLD CONSIGNMENT AGREEMENT
DATED AS OF SEPTEMBER 10, 1998
By and Among
MARKS BROS. JEWELERS, INC.,
THE BANKS
Listed on Schedule 1 Hereto,
----------
BANKBOSTON, N.A.,
as Administrative Agent,
as Collateral Agent,
and as Syndication Agent
for the Agents and the Banks
And
LASALLE NATIONAL BANK AND
ABN AMRO BANK N.V.,
as Syndication Agents
for the Agents and the Banks
- --------------------------------------------------------------------------------
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TABLE OF CONTENTS
-----------------
1. DEFINITIONS AND RULES OF INTERPRETATION. ............................... 1
1.1. Definitions. ................................................. 1
1.2. Rules of Interpretation. .....................................25
2. REVOLVING CREDIT LOANS. ................................................26
2.1. Commitment to Lend. ..........................................26
2.2. Commitment Fee. ..............................................27
2.3. Reduction of Total Revolver Commitment. ......................27
2.4. The Revolving Credit Notes. ..................................27
2.5. Interest on Revolving Credit Loans. ..........................28
2.6. Requests for Revolving Credit Loans; Conversion Options. .....28
2.7. Funds for Revolving Credit Loans. ............................28
2.8. Maturity. ....................................................28
2.9. Mandatory Repayments of Revolving Credit Loans. ..............29
2.10. Optional Repayments of Revolving Credit Loans. ...............29
3. THE TERM LOAN. .........................................................29
3.1. Commitment to Lend. ..........................................29
3.2. The Term Notes. ..............................................29
3.3. Schedule of Installment Payments of Principal of Term Loan. ..29
3.4. Mandatory Repayment of Term Loan. ............................30
3.5. Optional Prepayment of Term Loan. ............................30
3.6. Interest on Term Loan. .......................................30
4. SWING LINE LOANS. ......................................................31
4.1. Discretion to Lend. ..........................................31
4.2. The Swing Line Note. .........................................31
4.3. Interest on Swing Line Loans. ................................32
4.4. Requests for Swing Line Loans. ...............................32
4.5. Maturity. ....................................................32
4.6. Mandatory Repayments of Swing Line Loans. ....................32
4.7. Optional Repayments of Swing Line Loans. .....................32
4.8. Purchase of Swing Line Loans. ................................32
5. LETTERS OF CREDIT. .....................................................32
5.1. Letter of Credit Commitments...................................32
5.1.1. Commitment to Issue Letters of Credit. ...............32
5.1.2. Letter of Credit Applications. .......................33
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5.1.3. Terms of Letters of Credit. ..........................33
5.1.4. Reimbursement Obligations of Banks. ..................34
5.1.5. Participations of Banks. .............................34
5.2. Reimbursement Obligation of the Borrower. ....................34
5.3. Letter of Credit Payments. ...................................35
5.4. Obligations Absolute. ........................................35
5.5. Reliance by Issuer. ..........................................36
5.6. Letter of Credit Fee. ........................................36
6. PURCHASES AND CONSIGNMENTS . ...........................................37
6.1. Commitment To Make Purchases and Consignments; Title To
Consigned Precious Metal. ..................................37
6.2. Consignment Fees. ............................................39
6.3. Requests For Purchases and Consignments. .....................39
6.4. Payment on Account Of Repurchase or Redelivery of
Consigned Precious Metal. ..................................40
6.5. Conversion Options. ..........................................43
6.6. Funds for Purchases and Consignments. ........................44
6.7. Repurchase at Maturity. ......................................45
6.8. True Consignment. ............................................46
6.9. Change in Gold Commitment Percentages. .......................46
7. CERTAIN GENERAL PROVISIONS. ............................................46
7.1. Interest on Loans. ...........................................46
7.2. Borrowing Base and Consignment Limitations. ..................47
7.3. Requests for Loans. ..........................................47
7.4. Conversion Options. ..........................................48
7.4.1. Conversion to Different Type of Loan. ................48
7.4.2. Continuation of Type of Loan. ........................49
7.4.3. Eurodollar Rate Loans. ...............................49
7.5. Funds for Loans. .............................................49
7.5.1. Funding Procedures. ..................................49
7.5.2. Advances by Applicable Agent. ........................50
7.6. Settlements; Failure to Make Funds Available. ................50
7.7. Optional Repayments of Loans. ................................52
7.8. Mandatory Prepayments of Loans and Commitment Reductions. ....53
7.8.1. Asset Disposition Prepayment. ........................53
7.8.2. New Issuance Prepayment. .............................53
7.8.3. Excess Cash Flow Prepayment. .........................53
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7.8.4. Applications of Mandatory Prepayments. ...............54
7.9. Repayments of Loans and Repurchases of Consigned
Precious Metals Prior to Event of Default. .................55
7.10. Repayments of Loans and Repurchases of Consigned
Precious Metals and Distribution of Collateral Proceeds
After Event of Default. ....................................57
7.11. Closing Fee. .................................................58
7.12. Administrative Agent's Fee. ..................................58
7.13. Funds for Payments. ..........................................58
7.13.1. Payments to Administrative Agent. ....................58
7.13.2. No Offset, etc. ......................................58
7.14. Computations. ................................................59
7.15. Inability to Determine Eurodollar Rate or
Consignment Fixed Rate. ....................................59
7.16. Illegality of Eurodollar Rate Loans or Consignment Fixed
Rate Amounts. ..............................................60
7.17. Additional Costs, etc. .......................................61
7.18. Capital Adequacy. ............................................62
7.19. Certificate. .................................................63
7.20. Indemnity. ...................................................63
7.21. Interest After Default. ......................................63
7.22. Performance Adjustments. .....................................64
8. COLLATERAL SECURITY. ...................................................66
9. REPRESENTATIONS AND WARRANTIES. ........................................66
9.1. Corporate Authority. .........................................66
9.1.1. Incorporation; Good Standing. ........................66
9.1.2. Authorization. .......................................66
9.1.3. Enforceability. ......................................67
9.2. Governmental Approvals. ......................................67
9.3. Title to Properties; Leases. .................................67
9.4. Financial Statements and Projections. ........................67
9.4.1. Financial Statements. ................................67
9.4.2. The Acquisition. .....................................68
9.4.3. Projections. .........................................68
9.5. No Material Changes, etc.; Solvency. .........................68
9.5.1. No Material Changes, etc. ............................68
9.5.2. Solvency. ............................................69
9.6. Franchises, Patents, Copyrights, etc. ........................69
9.7. Litigation. ..................................................69
9.8. No Materially Adverse Contracts, etc. ........................69
9.9. Compliance with Other Instruments, Laws, etc. ................70
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9.10. Tax Status. ..................................................70
9.11. No Event of Default. .........................................70
9.12. Holding Company and Investment Company Acts. .................70
9.13. Absence of Financing Statements, etc. ........................70
9.14. Perfection of Security Interest. .............................71
9.15. Certain Transactions. ........................................71
9.16. Employee Benefit Plans. ......................................71
9.16.1. In General. ..........................................71
9.16.2. Terminability of Welfare Plans. ......................71
9.16.3. Guaranteed Pension Plans. ............................72
9.16.4. Multiemployer Plans. .................................72
9.17. Regulations U and X. .........................................72
9.18. Environmental Compliance. ....................................73
9.19. Subsidiaries, etc. ...........................................74
9.20. Bank Accounts. ...............................................75
9.21. Acquisition Documents. .......................................75
9.22. Y2K Plan. ....................................................75
10. AFFIRMATIVE COVENANTS OF THE BORROWER. .................................75
10.1. Punctual Payment. ............................................75
10.2. Maintenance of Office. .......................................76
10.3. Records and Accounts. ........................................76
10.4. Financial Statements, Certificates and Information. ..........76
10.5. Notices. .....................................................80
10.5.1. Defaults. ............................................80
10.5.2. Environmental Events. ...............................80
10.5.3. Notification of Claim against Collateral. ............80
10.5.4. Notice of Litigation and Judgments. ..................80
10.6. Corporate Existence; Maintenance of Properties. ..............81
10.7. Insurance. ...................................................81
10.8. Taxes. .......................................................82
10.9. Inspection of Properties and Books, etc. .....................82
10.9.1. General. .............................................82
10.9.2. Inventory Appraisals. ................................83
10.9.3. Appraisals. ..........................................83
10.9.4. Communications with Accountants. .....................83
10.10. Compliance with Laws, Contracts, Licenses, and Permits. ......84
10.11. Employee Benefit Plans. ......................................84
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10.12. Use of Proceeds. .............................................84
10.13. Additional Mortgaged Property. ...............................85
10.14. Bank Accounts. ...............................................85
10.15. Inventory Restrictions. ......................................86
10.16. Private Label Credit Card Program. ...........................86
10.17. Y2K Plan. ....................................................86
10.18. Further Assurances. ..........................................86
10.19. New Subsidiaries. ............................................87
10.20. Landlord Waivers. ............................................87
11. CERTAIN NEGATIVE COVENANTS OF THE BORROWER. ............................88
11.1. Restrictions on Indebtedness. ................................88
11.2. Restrictions on Liens. .......................................89
11.3. Restrictions on Investments. .................................90
11.4. Distributions. ...............................................92
11.5. Merger, Consolidation; Disposition of Assets; Issuance
of Equity Securities. ......................................92
11.5.1. Mergers and Acquisitions. ............................92
11.5.2. Disposition of Assets. ...............................92
11.6. Sale and Leaseback. ..........................................93
11.7. Compliance with Environmental Laws. ..........................93
11.8. Employee Benefit Plans. ......................................93
11.9. Bank Accounts. ...............................................94
11.10. Consignment Transactions. ....................................94
11.11. Transactions with Affiliates. ................................94
11.12. Subsidiaries. ................................................94
11.13. Issuance of Equity Securities. ...............................95
12. FINANCIAL COVENANTS OF THE BORROWER. ...................................95
12.1. Total Funded Debt to EBITDA. .................................95
12.2. Capital Expenditures. ........................................95
12.3. Debt Service Coverage. .......................................96
12.4. Fixed Charge Coverage Ratio. .................................96
12.5. Consolidated EBITDA. .........................................96
13. CLOSING CONDITIONS. ....................................................97
13.1. Loan Documents, etc. .........................................97
13.2. Certified Copies of Charter Documents. .......................97
13.3. Corporate, Action. ...........................................97
13.4. Incumbency Certificate. ......................................98
13.5. Validity of Liens. ...........................................98
13.6. Perfection Certificate and UCC Search Results. ...............98
13.7. Certificates of Insurance. ...................................98
13.8. BKB Concentration Accounts; Agency Account Agreements. .......99
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13.9. Borrowing Base Report; Consigned Precious Metal Report;
Monthly Inventory Report. .................................99
13.10. Accounts Payable Aging Report. ..............................99
13.11. Opinion of Counsel. .........................................99
13.12. Payment of Fees. ............................................100
13.13. No Letters of Credit. .......................................100
13.14. Terms of Consignment. .......................................100
13.15. Financial Statements. .......................................100
13.16. Closing of Acquisition. .....................................100
13.17. Total Funded Debt to EBITDA. ................................101
13.18. Consents and Approvals. .....................................101
13.19. Capitalization of the Borrower. .............................101
14. CONDITIONS TO ALL BORROWINGS. .........................................101
14.1. Representations True; No Event of Default. ..................101
14.2. No Legal Impediment. ........................................102
14.3. Governmental Regulation. ....................................102
14.4. Proceedings and Documents. ..................................102
14.5. Borrowing Base Report; Consigned Precious Metal Report. .....102
15. EVENTS OF DEFAULT; ACCELERATION; ETC. .................................103
15.1. Events of Default and Acceleration. .........................103
15.2. Termination of Commitments. .................................106
15.3. Remedies. ...................................................107
16. SETOFF. ...............................................................107
17. THE AGENTS. ...........................................................108
17.1. Authorization. ..............................................108
17.2. Employees and Agents. .......................................109
17.3. No Liability. ...............................................109
17.4. No Representations. .........................................109
17.5. Payments. ...................................................110
17.5.1. Payments to Agent. ..................................110
17.5.2. Distribution by Agent. ..............................110
17.5.3. Delinquent Banks. ...................................110
17.5.4. Payments Under Confirmation of Swap Agreement. ......111
17.6. Holders of Notes. ...........................................111
17.7. Indemnity. ..................................................112
17.8. Agents as Banks. ............................................112
17.9. Resignation. ................................................112
17.10. Notification of Defaults and Events of Default. .............112
17.11. Duties in the Case of Enforcement. ..........................113
18. EXPENSES. .............................................................113
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19. INDEMNIFICATION. ......................................................114
20. SURVIVAL OF COVENANTS, ETC. ...........................................115
21. ASSIGNMENT AND PARTICIPATION. .........................................115
21.1. Conditions to Assignment by Banks. ..........................115
21.2. Certain Representations and Warranties;
Limitations; Covenants. ...................................116
21.3. Register. ...................................................117
21.4. New Notes. ..................................................117
21.5. Participations. .............................................118
21.6. Disclosure. .................................................118
21.7. Assignee or Participant Affiliated with the Borrower. .......119
21.8. Miscellaneous Assignment Provisions. ........................119
21.9. Assignment by Borrower. .....................................120
22. NOTICES, ETC. .........................................................120
23. GOVERNING LAW. ........................................................121
24. HEADINGS. .............................................................121
25. COUNTERPARTS. .........................................................121
26. ENTIRE AGREEMENT, ETC. ................................................121
27. WAIVER OF JURY TRIAL. .................................................122
28. CONSENTS, AMENDMENTS, WAIVERS, ETC. ...................................122
29. SEVERABILITY. .........................................................123
30. TRANSITIONAL ARRANGEMENTS. ............................................123
30.1. Original Credit Agreement Superseded ........................123
30.2. Return and Cancellation of Notes. ...........................123
30.3. Interest and Fees Under Original Credit Agreement. ..........123
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AMENDED AND RESTATED
REVOLVING CREDIT, TERM LOAN AND
GOLD CONSIGNMENT AGREEMENT
This AMENDED AND RESTATED REVOLVING CREDIT, TERM LOAN AND GOLD CONSIGNMENT
AGREEMENT is made as of September 10, 1998, by and among (a) MARKS BROS.
JEWELERS, INC. (the "Borrower"), a Delaware corporation having its principal
place of business at 155 North Wacker Drive, Suite 500, Chicago, Illinois 60606;
(b) BANKBOSTON, N.A., a national banking association, LASALLE NATIONAL BANK, a
national banking association, ABN AMRO BANK N.V., a limited liability company
organized under the laws of The Netherlands, and the other lending institutions
listed on Schedule 1; (c) BANKBOSTON, N.A., as administrative agent, as
collateral agent and as syndication agent for the Agents (as hereinafter
defined) and the Banks (as hereinafter defined); and (d) LASALLE NATIONAL BANK
and ABN AMRO BANK N.V., each as syndication agent for the Agents and the Banks.
WHEREAS, pursuant to a Revolving Credit, Term Loan and Gold Consignment
Agreement dated as of May 3, 1996 (as amended from time to time and in effect as
of the date hereof, the "Original Credit Agreement") by and among the Borrower,
certain of the Banks and BankBoston, N.A. as agent, the Banks parties thereto
made loans and other extensions of credit available to the Company for, among
other things, general corporate and working capital purposes; and
WHEREAS, the Borrower has requested, among other things, to amend and
restate the Original Credit Agreement and to provide additional financing, and
the Banks are willing to amend and restate the Original Credit Agreement and to
provide such additional financing on the terms and conditions set forth herein;
NOW THEREFORE, the Borrower, the Banks and the Agents agree that on and as
of the Closing Date (as
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hereinafter defined) the Original Credit Agreement is hereby amended and
restated in its entirety and shall remain in full force and effect only as
expressly set forth herein.
DEFINITIONS AND RULES OF INTERPRETATION. Definitions. The following terms
shall have the meanings set forth in this Section 1 or elsewhere in the
provisions of this Credit Agreement referred to below:
ABN. ABN AMRO Bank N.V., a limited liability company organized under the
laws of The Netherlands, in its individual capacity.
Accounts Receivable. All rights of the Borrower to payment for goods sold,
leased or otherwise marketed in the ordinary course of business and all rights
of the Borrower to payment for services rendered in the ordinary course of
business and all sums of money or other proceeds due thereon pursuant to
transactions with account debtors, except for that portion of the sum of money
or other proceeds due thereon that relate to sales, use or property taxes in
conjunction with such transactions, recorded on books of account in accordance
with generally accepted accounting principles.
Acquisition. The acquisition by the Borrower from C&C Jeweler of certain of
the assets of the Jewel Box division of C&C Jeweler pursuant to the Acquisition
Documents.
Acquisition Documents. (a) The Asset Purchase Agreement dated as of June
19, 1998 between the Borrower and C&C Jeweler and (b) all other agreements and
documents required to be entered into or delivered pursuant to the foregoing
document or in connection with the Acquisition, each in the form delivered to
the Agents on or prior to the Closing Date.
Administrative Agent's Head Office. The Administrative Agent's head office
located at 100 Federal Street, Boston, Massachusetts 02110, or at such other
location as the Administrative Agent may designate from time to time.
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Administrative Agent's Special Counsel. Bingham Dana LLP or such other
counsel as may be approved by the Administrative Agent.
Affiliate. Any Person that would be considered to be an affiliate of the
Borrower under Rule 144(a) of the Rules and Regulations of the Securities and
Exchange Commission, as in effect on the date hereof, if the Borrower were
issuing securities.
Agency Account Agreement. Any Agency Account Agreement in the form of
Exhibit A attached hereto (or a form otherwise approved by the Administrative
Agent in its sole discretion) entered into by the Borrower, the Administrative
Agent and a depository institution satisfactory to the Agents.
Agents. Collectively, the Administrative Agent, the Collateral Agent and
the Syndication Agents.
Approved Credit Programs. Any credit program entered into by the Borrower
with a bank or finance company in order to provide credit to the Borrower's
customers, which program is acceptable to and has been approved by each of the
Agents.
Asset Disposition Prepayment. See Section 7.8.1.
Assignment and Acceptance. See Section 21.1.
Balance Sheet Date. January 31, 1998.
Banks. BKB and the other lending institutions listed on Schedule 1 hereto
and any other Person who becomes an assignee of any rights and obligations of a
Bank pursuant to Section 21.
Base Rate. The higher of (i) the annual rate of interest announced from
time to time by BKB at its head office in Boston, Massachusetts, as its "base
rate" and (ii) one-half of one percent (1/2%) above the Federal Funds Effective
Rate. For the purposes of this definition, "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
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for such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day that is a Business Day, the average of the quotations
for such day on such transactions received by BKB from three funds brokers of
recognized standing selected by BKB.
Base Rate Applicable Margin. At all times from the Closing Date through the
first Performance Adjustment Date, (a) with respect to Revolving Credit Loans or
Swing Line Loans which are Base Rate Loans, zero percent (0%) and (b) with
respect to any portion of the Term Loan which is a Base Rate Loan, one-half of
one percent (1/2%), and, thereafter, the percentage determined by reference to
the provisions of Section 7.22.
Base Rate Loans. Revolving Credit Loans, Swing Line Loans and all or
any portion of the Term Loan bearing interest calculated by reference to the
Base Rate.
BKB. BankBoston, N.A., a national banking association, in its individual
capacity.
BKB Concentration Accounts. See Section 10.14(a).
BKB Hedging Arrangements. Certain arrangements that have been or may be,
from time to time, entered into between the Borrower and BKB providing interest
rate hedging or comparable interest rate protection services or arrangements.
Borrower. As defined in the preamble hereto.
Borrower's Precious Metal. Precious Metal owned by the Borrower and which
qualifies as Eligible Inventory, excluding Consigned Precious Metal and Precious
Metal otherwise held by the Borrower on consignment other than pursuant to the
Gold Facility.
Borrowing Base. At the relevant time of reference thereto, an amount
determined by the Administrative Agent by reference to the most recent Borrowing
Base Report delivered to the Banks and the Agents pursuant to Section 10.4(f),
which is equal to (a) the lesser of (i) sixty-five percent (65%) of the net book
value (determined on an average cost basis at lower of cost or market) of
Eligible Inventory or (ii) the sum of (A) sixty percent (60%) of the net book
value
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(determined on an average cost basis at lower of cost or market) of Eligible
Inventory, minus the Fair Market Value of Precious Metal contained in Eligible
Inventory plus (B) the Consignment Advance Rate Percentage multiplied by the
Fair Market Value of Precious Metal contained in Eligible Inventory; minus (b)
the Inventory Shrink Reserve; plus (c) 75% of Eligible Accounts Receivable;
minus (d) Reserves; plus (e) the Discretionary Amount. The Administrative Agent
may, in its discretion, from time to time, upon five (5) days' prior notice to
the Borrower, (y) reduce the lending formula with respect to Eligible Accounts
Receivable to the extent that the Administrative Agent determines that: (i) the
dilution with respect of the Accounts Receivable for any period has increased in
any material respect or may be reasonably anticipated to increase in any
material respect above historical levels, or (ii) the general creditworthiness
of account debtors or other obligors of the Borrower has declined or (z) reduce
the lending formula(s) with respect to Eligible Inventory to the extent that the
Administrative Agent determines that: (i) the number of days of the turnover of
the inventory of the Borrower for any period has changed in any material adverse
respect, (ii) the liquidation value of the Eligible Inventory, or any category
thereof, has decreased, or (iii) the nature and quality of the inventory of the
Borrower has deteriorated in any material respect or the mix of such inventory
has changed materially. In determining whether to reduce the lending formula(s),
the Administrative Agent may consider events, conditions, contingencies or risks
which are also considered in determining Eligible Accounts Receivable, Eligible
Inventory or in establishing the Reserves. In determining whether and how much
to reduce the lending formula as provided above, the Administrative Agent shall
do so in accordance with its reasonable credit judgment which shall be exercised
in a manner that is not arbitrary or capricious and is consistent with the
standards of eligibility and credit judgment applied by the Administrative Agent
to the other borrowers.
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Borrowing Base Report. A Borrowing Base Report signed by the Vice President
of Finance or principal financial or accounting officer of the Borrower and in
substantially the form of Exhibit B hereto.
Business Day. Any day, other than a Saturday or Sunday, on which banking
institutions in Boston, Massachusetts are open for the transaction of banking
business and, in the case of Eurodollar Rate Loans, also a day which is a
Eurodollar Business Day.
C&C Jeweler. Carlyle & Co. Jeweler.
Capital Assets. Fixed and/or capital assets, both tangible (such as land,
buildings, fixtures, samples, tools and die, software, software development,
machinery and equipment) and intangible (such as software, patents, copyrights,
trademarks, franchises and good will); provided that Capital Assets shall not
include any item customarily charged directly to expense or depreciated over a
useful life of twelve (12) months or less in accordance with generally accepted
accounting principles.
Capital Expenditures. Amounts paid or indebtedness incurred by the Borrower
or any of its Subsidiaries in connection with the purchase or lease by the
Borrower or any of its Subsidiaries of Capital Assets that would be required to
be capitalized and shown on the balance sheet of such Person in accordance with
generally accepted accounting principles.
Capitalized Leases. Leases under which the Borrower or any of its
Subsidiaries is the lessee or obligor, the discounted future rental payment
obligations under which are required to be capitalized on the balance sheet of
the lessee or obligor in accordance with generally accepted accounting
principles.
Cash Collateral Agreement. Any Cash Collateral Agreement to be entered into
between the Borrower and the Collateral Agent pursuant to Section 7.9(c) hereof,
such Cash Collateral Agreement to be in the form of Exhibit M attached hereto.
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CERCLA. See Section 9.18.
Closing Date. The first date on which the conditions set forth in Section
14 have been satisfied and any Revolving Credit Loans are to be made, any Swing
Line Loans are to be made, the Term Loan is to be made, any Purchases and
Consignments are to be made or any Letter of Credit is to be issued hereunder.
Code. The Internal Revenue Code of 1986.
Collateral. All of the property, rights and interests of the Borrower that
are or are intended to be subject to the security interests and mortgages
created by the Security Documents.
Collateral Agent. BKB, in its capacity as collateral agent for the benefit
of Banks and the Agents under and with respect to the Security Documents.
Commitment. With respect to each Bank, the amount set forth on Schedule 1
hereto as the amount of such Bank's commitment to make Revolving Credit Loans
to, and to participate in the making of Purchases and Consignments and Swing
Line Loans to, and the issuance, extension and renewal of Letters of Credit for
the account of, the Borrower, as the same may be reduced from time to time; or
if such commitment is terminated pursuant to the provisions hereof, zero.
Commitment Fee Rate. At all times from the Closing Date through the first
Performance Adjustment Date, one-half of one percent (1/2%), and thereafter, the
percentage determined by reference to the provisions of Section 7.22.
Commitment Percentage. With respect to each Bank, the percentage set forth
on Schedule 1 hereto as such Bank's percentage of the aggregate Commitments of
all of the Banks.
Commitment Reduction Amount. See Section 2.3.1.
Concentration Bank. BKB, Citibank, N.A. or any other depository institution
which receives deposits directly, or indirectly (as a result of interim
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concentration of depository accounts), from in aggregate eight or more retail
stores of the Borrower and its Subsidiaries.
Confirmation of Swap Agreement. The Confirmation of Swap Agreement dated or
to be dated on or prior to the Closing Date, between the Borrower and the
Administrative Agent and in form and substance satisfactory to each of the
Banks, the Agents and the Borrower, pursuant to which the Borrower and the
Administrative Agent have made certain arrangements in order to fix the price of
Consigned Precious Metal following an Event of Default.
Consigned Precious Metal. Precious Metal (a) located at Permitted Inventory
Locations, (b) subject to a Purchase and Consignment and consigned by the Banks
to the Borrower pursuant to the terms of this Credit Agreement and (c) for which
the Gold Fronting Banks have not received payment or which has not been
Redelivered to the Administrative Agent.
Consigned Precious Metal Report. A Consigned Precious Metal Report signed
by the Vice President of Finance or the principal financial or accounting
officer of the Borrower and in substantially the form of Exhibit C hereto.
Consignment Advance Rate Percentage. Ninety percent (90%).
Consignment Base Rate. On any date of determination, a rate equal to the
average of the difference, over the previous sixty (60) Business Days, between
(a) the Eurodollar Rate applicable to Revolving Credit Loans for three month
Interest Periods and (b) the London gold forward rate as displayed on Reuter's
gold loan screen, or, if Reuter's gold loan screen is not available, as set by
the Administrative Agent, for three month Interest Periods.
Consignment Base Rate Amounts. Consigned Precious Metal which is accruing a
Consignment Fee calculated by reference to the Consignment Base Rate.
Consignment Conversion Request. A notice given by the Borrower to the
Administrative Agent of the
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Borrower's election to convert or continue Consigned Precious Metals in
accordance with Section 6.5.
Consignment Dollar Cap. As defined in the definition of Consignment Limit.
Consignment Fees. Consignment fees on Consigned Precious Metal at the rates
set forth in Section 6.2.
Consignment Fixed Rate. With respect to any Interest Period, the amount
equal to (a) the greater of (i) the Eurodollar Rate applicable to Revolving
Credit Loans for such Interest Period minus the average of rates quoted to the
Administrative Agent as the London Interbank Bullion Rates as displayed on
Reuter's gold loan screen or, if Reuter's gold loan screen is not available, as
set by the Administrative Agent, for Precious Metal forwards for such period
(the "Contango Rate"), and (ii) zero (0), plus (b) the Eurodollar Applicable
Margin applicable to Revolving Credit Loans.
Consignment Fixed Rate Amounts. Consigned Precious Metal which is accruing
a Consignment Fee calculated by reference to the Consignment Fixed Rate.
Consignment Limit. Either (a) 115,000 troy ounces of Precious Metal (the
"Consignment Ounce Cap") or (b) Consigned Precious Metal having a Fair Market
Value equal to $40,000,000.00 (the "Consignment Dollar Cap").
Consignment Ounce Cap. As defined in the definition of Consignment Limit.
Consolidated or consolidated. With reference to any term defined
herein, shall mean that term as applied to the accounts of the Borrower and its
Subsidiaries, consolidated in accordance with generally accepted accounting
principles.
Consolidated Adjusted EBITDA. With respect to the Borrower and its
Subsidiaries and any particular fiscal period, Consolidated EBITDA for such
period plus the amount of all extraordinary nonrecurring items of income during
such period, minus the amount of all extraordinary nonrecurring items of expense
during
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such period. Consolidated Adjusted EBITDA shall not, however, include
extraordinary items of income or expense to the extent such items are
duplicative of the calculation of Net Proceeds in connection with asset
dispositions under Section 7.8.1.
Consolidated Cash Interest Expense. With respect to the Borrower and its
Subsidiaries and any particular fiscal period, the amount of Consolidated Total
Interest Expense which is paid or due to be paid in cash during such period.
Consolidated EBITDA. With respect to the Borrower and its Subsidiaries
and any particular fiscal period, the consolidated earnings (or loss) from
operations of the Borrower and its Subsidiaries for such period, after
eliminating therefrom all extraordinary nonrecurring items of income (including
gains on the sale of assets and earnings from the sale of discontinued business
lines), and after all expenses and other proper charges but before payment or
provision for (a) any income taxes, interest expenses or Consignment Fees for
such period, (b) depreciation for such period, (c) amortization for such period,
and (d) all other noncash charges for such period, all determined in accordance
with generally accepted accounting principles.
Consolidated Excess Cash Flow. With respect to the Borrower and its
Subsidiaries and any particular fiscal period, an amount equal to (a)
Consolidated Adjusted EBITDA for such period less (b) the sum (without
duplication) of (i) all taxes (including interest and penalties) paid in cash
during such period (without duplication of any such amounts paid in cash in
prior periods), plus (ii) the amount of Capital Expenditures paid in cash during
such period to the extent permitted by the table appearing in Section 12.2, plus
(iii) any payments or prepayments of the principal of any Indebtedness of the
Borrower (other than Revolving Credit Loans or payments of the Term Loan
pursuant to Section 3.4) made during such period, plus (iv) Consolidated Cash
Interest Expense for such period, plus (v) increases in Consolidated Working
Capital during such period, plus (vi) the difference (not to exceed $1,500,000
during any such period and in no
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case to be less than $0) of (A) Capital Expenditures permitted to be made during
such period pursuant to Section 12.2 minus (B) the amount of Capital
Expenditures actually made during such period, plus (vii) to the extent not
taken into account in the calculation of Consolidated Adjusted EBITDA, (A)
capitalized expenses of the Borrower and (B) one-time or extraordinary charges
relating to the consolidation of the business to form the Borrower or the
business acquired in the Acquisition, in either case, with the Borrower's
existing business, plus (viii) the Net Proceeds from the sale transactions
permitted by Section 11.5.2(f), plus (c) decreases in Consolidated Working
Capital during such period.
Consolidated Minimum Store Rent. With respect to any fiscal period, the
aggregate amount of obligations of the Borrower and its Subsidiaries during such
period to make direct or indirect payment, whether as rent or otherwise, for
fixed or minimum rentals in respect of any leased retail store locations,
calculated in a manner consistent with that reflected in the Borrower's audited
financial statements for the year ended on the Balance Sheet Date.
Consolidated Operating Cash Flow. With respect to the Borrower and its
Subsidiaries and any particular fiscal year, an amount equal to (a) Consolidated
EBITDA for such year less (b) the sum (without duplication) of (i) all taxes
(including interest and penalties) paid in cash during such year (without
duplication of any such amounts paid in prior periods), plus (ii) the amount of
Capital Expenditures paid in cash during such year to the extent permitted by
the table appearing in Section 12.2 (other than, in the case of the Borrower's
fiscal year ended January 31, 1999, up to $2,500,000 of Capital Expenditures
made in cash in such year in respect of any of the assets acquired in the
Acquisition).
Consolidated Tangible Net Worth. The difference of (a) Consolidated Total
Assets minus (b) Consolidated Total Liabilities, and less (c) the sum of:
(i) the total book value of all assets of the Borrower and its
Subsidiaries properly classified
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as intangible assets under generally accepted accounting principles,
including such items as good will, the purchase price of acquired assets in
excess of the fair market value thereof, trademarks, trade names, service
marks, brand names, copyrights, patents and licenses, and rights with
respect to the foregoing, but excluding, whether or not so classified as
intangible assets, up to $12,000,000 in the aggregate of unamortized
transaction costs incurred by the Borrower and its Subsidiaries in
connection with this Credit Agreement and the transactions contemplated
hereby to the extent included in Consolidated Total Assets; plus
(ii) all amounts representing any write-up in the book value of any
assets of the Borrower or its Subsidiaries resulting from a revaluation
thereof subsequent to the Balance Sheet Date; plus
(iii) to the extent otherwise includable in the computation of
Consolidated Tangible Net Worth, any subscriptions receivable.
Consolidated Total Assets. All assets of the Borrower and its Subsidiaries
determined on a consolidated basis in accordance with generally accepted
accounting principles, plus (ii) without duplication, all sold receivables
referred to in clause (vii) of the definition of the term "Indebtedness" to the
extent that such receivables would have been consolidated balance sheet assets
had they not been sold.
Consolidated Total Debt Service. For any period, the sum of (i)
Consolidated Total Interest Expense of the Borrower and its Subsidiaries paid in
cash during such period plus (ii) all scheduled mandatory payments of principal
on Indebtedness of the Borrower and its Subsidiaries made or required to be made
during such period, including payments consisting of principal in respect of
Capitalized Leases. Demand obligations shall be deemed to be due and payable
during any fiscal period during which such obligations are outstanding.
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Consolidated Total Funded Debt. With respect to any fiscal period an amount
equal to the average aggregate principal amount outstanding during such period
in respect of all Indebtedness of the Borrower and its Subsidiaries pursuant to
any agreement or instrument to which the Borrower or any of its Subsidiaries is
a party relating to the borrowing of money or the obtaining of credit
(including, without limitation, Obligations under this Credit Agreement) or in
respect of Capitalized Leases.
Consolidated Total Interest Expense. For any period, the aggregate amount
of interest required to be paid or accrued by the Borrower and its Subsidiaries
during such period on all Indebtedness of the Borrower and its Subsidiaries
outstanding during all or any part of such period, whether such interest was or
is required to be reflected as an item of expense or capitalized, including
payments consisting of interest in respect of Capitalized Leases and including
commitment fees, agency fees, facility fees, Consignment Fees, balance
deficiency fees and similar fees or expenses in connection with the borrowing of
money.
Consolidated Total Liabilities. All liabilities of the Borrower and its
Subsidiaries determined on a consolidated basis in accordance with generally
accepted accounting principles and all Indebtedness of the Borrower and its
Subsidiaries, whether or not so classified.
Consolidated Working Capital. As of any date, the difference of (a) the sum
of (i) both billed and unbilled Accounts Receivable, plus (ii) inventory of the
Borrower and its Subsidiaries (including Consigned Precious Metal); provided,
however, that for purposes of determining inventory of the Borrower and its
Subsidiaries at the end of any period (without limiting the calculation of
inventory of the Borrower and its Subsidiaries at the beginning of any period),
the amount of inventory of the Borrower and its Subsidiaries shall not exceed an
amount equal to 1.15 multiplied by the Borrower's cost of goods sold for the
fiscal year then ended calculated in accordance with generally accepted
accounting principles, plus (iii)
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layaway receivables of the Borrower calculated in a manner consistent with the
financial statements of the Borrower as of the Balance Sheet Date minus (b) the
sum of (i) current accounts payable of the Borrower and its Subsidiaries, plus
(ii) current accruals and accretions (exclusive of interest accruals and
accretions and income taxes currently payable but inclusive of accrued payroll)
of the Borrower and its Subsidiaries.
Contango Rate. As defined in the definition of Consignment Fixed Rate.
Conversion Request. A notice given by the Borrower to the Administrative
Agent of the Borrower's election to convert or continue a Loan in accordance
with Sections 2.6, 3.5 and 7.4.
Credit Agreement. This Amended and Restated Revolving Credit, Term Loan and
Gold Consignment Agreement, including the Schedules and Exhibits hereto.
Default. See Section 15.1.
Discretionary Amount. As at any date of determination, an amount determined
by the Administrative Agent in its sole and absolute discretion which shall not
exceed $5,000,000.
Distribution. The declaration or payment of any dividend on or in respect
of any shares of any class of capital stock of the Borrower, other than
dividends payable solely in shares of common stock of the Borrower; the
purchase, redemption, or other retirement of any shares of any class of capital
stock of the Borrower, directly or indirectly through a Subsidiary of the
Borrower or otherwise; the return of capital by the Borrower to its shareholders
as such; or any other distribution on or in respect of any shares of any class
of capital stock of the Borrower.
Dollars or $. Dollars in lawful currency of the United States of America.
Domestic Lending Office. Initially, the office of each Bank designated as
such in Schedule 1 hereto;
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thereafter, such other office of such Bank, if any, located within the United
States that will be making or maintaining Base Rate Loans.
Drawdown Date. The date on which any Loan is made or is to be made, and the
date on which any Loan is converted or continued in accordance with Sections
2.6, 3.5 or 7.4.
Eligible Assignee. Any of (i) a commercial bank or finance company
organized under the laws of the United States, or any State thereof or the
District of Columbia, and having total assets in excess of $1,000,000,000; (ii)
a savings and loan association or savings bank organized under the laws of the
United States, or any State thereof or the District of Columbia, and having a
net worth of at least $100,000,000, calculated in accordance with generally
accepted accounting principles; (iii) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having total assets in excess of $1,000,000,000, provided that such
bank is acting through a branch or agency located in the country in which it is
organized or another country which is also a member of the OECD; (iv) the
central bank of any country which is a member of the OECD; and (v) if, but only
if, any Event of Default has occurred and is continuing, any other bank,
insurance company, commercial finance company or other financial institution or
other Person approved by the Agents, such approval not to be unreasonably
withheld.
Eligible Accounts Receivable. The aggregate of the unpaid portions of
Accounts Receivable (net of any credits, rebates, offsets, holdbacks or other
adjustments or commissions payable to third parties that are adjustments to such
Accounts Receivable) which are generated in connection with Approved Credit
Programs entered into by the Borrower (i) that the Borrower reasonably and in
good faith determines to be collectible; (ii) that are with account debtors that
(A) are not Affiliates of the Borrower, (B) are not insolvent or involved in any
case or proceeding, whether voluntary or involuntary, under any
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bankruptcy, reorganization, arrangement, insolvency, adjustment of debt,
dissolution, liquidation or similar law of any jurisdiction and (C) are, in the
Agents' reasonable judgment, creditworthy; (iii) that are in payment of
obligations that have been fully performed and are not subject to dispute or any
other similar claims that would reduce the cash amount payable therefor; (iv)
that are not subject to any pledge, security interest or other lien or
encumbrance other than those created by the Loan Documents; (v) in which the
Collateral Agent has a valid and perfected first priority security interest;
(vi) that call for payment not faster than fourteen (14) days past the date that
the account debtor has received the application documents; (vii) that are not
outstanding for more than forty-five (45) days past the date of sale of the
underlying goods; (viii) that are not due from an account debtor located in
Indiana, Minnesota or New Jersey unless the Borrower (A) has received a
certificate of authority to do business and is in good standing in such state or
(B) has filed a notice of business activities report with the appropriate office
or agency of such state for the current year; (ix) that are payable in Dollars;
(x) that are not payable from an office outside of the United States; and (xi)
that are not secured by a letter of credit unless the Collateral Agent has a
prior, perfected security interest in such letter of credit. For the avoidance
of any possible doubt, all accounts or Accounts Receivable acquired in the
Acquisition or generated by the business being acquired in the Acquisition are
not, and shall not constitute, "Eligible Accounts Receivable."
Eligible Inventory. With respect to the Borrower, finished goods, Precious
Metal and precious stone (whether or not placed in findings) inventory owned by
the Borrower or consigned pursuant to this Credit Agreement, including inventory
on layaway for customers up to a maximum amount of layaway inventory not in
excess of ten percent (10%) of the total amount of the net book value
(determined on an average cost basis at lower of cost or market) of the
Borrower's inventory; provided that Eligible Inventory shall not include any
inventory (i) held on consignment (other than inventory consigned pursuant to
the Gold Facility), or not otherwise owned by the Borrower, or
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of a type no longer sold by the Borrower, (ii) which is damaged or not
immediately saleable or subject to any legal encumbrance other than Permitted
Liens, (iii) which is not in the possession of the Borrower unless it is in
transit from one Permitted Inventory Location within the United States of
America to another Permitted Inventory Location within the United States of
America, (iv) as to which appropriate Uniform Commercial Code financing
statements showing the Borrower as debtor and the Collateral Agent as secured
party have not been filed in the proper filing office or offices in order to
perfect the Collateral Agent's security interest therein, (v) which has been
shipped to a customer of the Borrower regardless of whether such shipment is on
a consignment basis, (vi) which is not either (A) located at a Permitted
Inventory Location within the United States of America or (B) in transit from
one Permitted Inventory Location within the United States of America to another
Permitted Inventory Location within the United States of America, or (vii) which
the Agents reasonably deem to be obsolete or not marketable. For the avoidance
of any possible doubt, until such time as a commercial finance exam satisfactory
to the Administrative Agent has been performed with respect thereto, all
inventory acquired in the Acquisition or held by the business being acquired as
part of the Acquisition is not, and shall not constitute, "Eligible Inventory."
Employee Benefit Plan. Any employee benefit plan within the meaning of
Section 3(3) of ERISA maintained of contributed to by the Borrower or any ERISA
Affiliate, other than a Multiemployer Plan.
Environmental Laws. See Section 9.18(a).
ERISA. The Employee Retirement Income Security Act of 1974.
ERISA Affiliate. Any Person which is treated as a single employer with the
Borrower under Section 414 of the Code.
ERISA Reportable Event. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of Section 4043 of ERISA and the regulations
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promulgated thereunder as to which the requirement of notice has not been
waived.
Eurocurrency Reserve Rate. For any day with respect to a Eurodollar Rate
Loan or Consignment Fixed Rate Amount, the maximum rate (expressed as a decimal)
at which any lender subject thereto would be required to maintain reserves under
Regulation D of the Board of Governors of the Federal Reserve System (or any
successor or similar regulations relating to such reserve requirements) against
"Eurocurrency Liabilities" (as that term is used in Regulation D), if such
liabilities were outstanding. The Eurocurrency Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in the Eurocurrency
Reserve Rate.
Eurodollar Applicable Margin. At all times from the Closing Date through
the first Performance Adjustment Date, (a) with respect to Revolving Credit
Loans which are Eurodollar Rate Loans, one and three-quarters of one percent
(1-3/4%) and (b) with respect to any portion of the Term Loan which is a
Eurodollar Rate Loan, two and one-quarter of one percent (2-1/4%), and,
thereafter, the percentage determined by reference to the provisions of Section
7.22.
Eurodollar Business Day. Any day, other than a Saturday or Sunday, on which
commercial banks are open for international business (including dealings in
Dollar deposits) in London or such other eurodollar interbank market as may be
selected by the Administrative Agent, in its sole discretion acting in good
faith.
Eurodollar Lending Office. Initially, the office of each Bank designated as
such in Schedule 1 hereto; thereafter, such other office of such Bank, if any,
that shall be making or maintaining Eurodollar Rate Loans.
Eurodollar Rate. For any Interest Period with respect to a Eurodollar Rate
Loan or for purposes of determining the Consignment Fixed Rate, the rate of
interest equal to (a) the rate of interest for the Administrative Agent (rounded
upwards to the nearest 1/16 of one percent) of the rate at which such
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Administrative Agent's Eurodollar Lending Office is offered Dollar deposits two
Eurodollar Business Days prior to the beginning of such Interest Period in the
interbank eurodollar market where the eurodollar and foreign currency and
exchange operations of such Eurodollar Lending Office are customarily conducted,
for delivery on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of the Eurodollar
Rate Loan or Consignment Fixed Rate Amount of the Administrative Agent to which
such Interest Period applies, divided by (b) a number equal to 1.00 minus the
Eurocurrency Reserve Rate, if applicable.
Eurodollar Rate Loans. Revolving Credit Loans and all or any portion of the
Term Loan bearing interest calculated by reference to the Eurodollar Rate.
Event of Default. See Section 15.1.
Excess Cash Flow Prepayment. See Section 7.8.3.
Extension of Credit. The making of any Loan or Purchase and Consignment or
the issuance, extension or renewal of any Letter of Credit.
Fair Market Value. On any day, with respect to the calculation of the
Dollar value of Precious Metal, the Second London Gold Fixing for such day times
the number of ounces of Precious Metal for which such Dollar value is being
calculated. If no such price is available for a particular day, the Fair Market
Value for such day shall be the price for the immediately preceding day for
which such price is available. In the event that the London Bullion Brokers
shall discontinue or alter its usual practice of quoting a price in Dollars for
gold, the Fair Market Value for such day shall be the Administrative Agent's
Spot Value for that day.
Fee Letter. Collectively, the separate fee letters referred to in
Sections 7.11 and 7.12.
generally accepted accounting principles. (i) When used in Section 12,
whether directly or indirectly through reference to a capitalized term used
therein, means (A) principles that are consistent with the
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principles promulgated or adopted by the Financial Accounting Standards Board
and its predecessors, in effect for the fiscal year ended on the Balance Sheet
Date, and (B) to the extent consistent with such principles, the accounting
practice of the Borrower reflected in its financial statements for the year
ended on the Balance Sheet Date; provided, however, that if any change in such
principles promulgated by the Financial Accounting Standards Board and its
predecessors following the Balance Sheet Date would affect (or would result in a
change in the method of calculation of) any of the covenants set forth in
Section 12 or any definition related thereto, then the Borrower, the Agents and
the Banks will negotiate in good faith to amend all such covenants and
definitions as would be affected by such changes in such principles to the
extent necessary to maintain the economic terms of such covenants as in effect
under this Credit Agreement immediately prior to giving effect to such changes
in such principles, provided further that until the amendment of such covenants
and definitions shall have been agreed upon by the Borrower, the Agents and the
Majority Banks, the covenants and definitions in effect immediately prior to
such amendment shall remain in effect and any determination of compliance with
any covenant set forth in Section 12 shall be construed in accordance with
generally accepted accounting principles as in effect immediately prior to such
amendment and consistently applied, and (ii) when used in general, other than as
provided above, means principles that are (A) consistent with the principles
promulgated or adopted by the Financial Accounting Standards Board and its
predecessors, as in effect from time to time, and (B) consistently applied with
past financial statements of the Borrower adopting the same principles, provided
that in each case referred to in this definition of "generally accepted
accounting principles" a certified public accountant would, insofar as the use
of such accounting principles is pertinent, be in a position to deliver an
unqualified opinion (other than a qualification regarding changes in generally
accepted accounting principles) as to financial statements in which such
principles have been properly applied.
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Gold Commitment Percentage. (i) In the case of the Administrative Agent,
the sum of the Commitment Percentages of the Banks, other than ABN and LaSalle,
as in effect from time to time, such amount being equal to fifty-four and
fifty-five hundredths of one percent (54.55%) as of the Closing Date, and (ii)
in the case of ABN, the sum of the Commitment Percentages of ABN and LaSalle as
in effect from time to time, such amount being equal to forty-five and
forty-five hundredths of one percent (45.45%) as of the Closing Date.
Gold Drawdown Date. The date on which any Purchase and Consignment is made
or is to be made.
Gold Facility. The Gold Fronting Banks' commitment to make Purchases and
Consignments.
Gold Fronting Banks. Collectively, the Administrative Agent, in its
individual capacity, and ABN.
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of Section 3(2) of ERISA maintained or contributed to by the Borrower or
any ERISA Affiliate the benefits of which are guaranteed on termination in full
or in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan.
Hazardous Substances. See Section 9.18(b).
Headquarters Landlord Consent. The Landlord Consent and Waiver, dated or to
be dated on or prior to the Closing Date, given by the lessor with respect to
the Borrower's leased real property located in Chicago, Illinois at which the
Borrower maintains its headquarters and central warehouse, such Headquarters
Landlord Consent being in form and substance satisfactory to the Banks and the
Agents.
Indebtedness As to any Person and whether recourse is secured by or is
otherwise available against all or only a portion of the assets of such Person
and whether or not contingent, but without duplication:
(i) every obligation of such Person for money borrowed,
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(ii) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, including obligations incurred in
connection with the acquisition of property, assets or businesses,
(iii) every reimbursement obligation of such Person with respect to
letters of credit, bankers' acceptances or similar facilities issued for
the account of such Person,
(iv) every obligation of such Person issued or assumed as the
deferred purchase price of property or services (including securities
repurchase agreements but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business which are not
overdue or which are being contested in good faith),
(v) every obligation of such Person under any Capitalized Lease,
(vi) every obligation of such Person under any lease (generally
referred to as being a "synthetic lease") treated as an operating lease
under generally accepted accounting principles and as a loan or financing
for United States income tax purposes and pursuant to which the lessee
retains economic risk with respect to the value of the residual interest in
the leased property,
(vii) all sales by such Person of (A) accounts or general intangibles
for money due or to become due, (B) chattel paper, instruments or documents
creating or evidencing a right to payment of money or (C) other receivables
(collectively "receivables"), whether pursuant to a purchase facility or
otherwise, other than in connection with the disposition of the business
operations of such Person relating thereto or a disposition of defaulted
receivables for collection and not as a financing arrangement, and together
with any obligation of such Person to pay any discount, interest, fees,
indemnities, penalties, recourse,
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expenses or other amounts in connection therewith,
(viii) every obligation of such Person (an "equity related purchase
obligation") to purchase, redeem, retire or otherwise acquire for value any
shares of capital stock of any class issued by such Person, any warrants,
options or other rights to acquire any such shares, or any rights measured
by the value of such shares, warrants, options or other rights,
(ix) every obligation of such Person under any forward contract,
futures contract, swap, option or other financing agreement or arrangement
(including, without limitation, caps, floors, collars and similar
agreements), the value of which is dependent upon interest rates, currency
exchange rates, commodities or other indices,
(x) every obligation in respect of Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to
the extent that such Person is liable therefor as a result of such Person's
ownership interest in or other relationship with such entity, except to the
extent that the terms of such Indebtedness provide that such Person is not
liable therefor and such terms are enforceable under applicable law,
(xi) every obligation, contingent or otherwise, of such Person
guaranteeing, or having the economic effect of guaranteeing or otherwise
acting as surety for, any obligation of a type described in any of clauses
(i) through (x) (the "primary obligation") of another Person (the "primary
obligor"), in any manner, whether directly or indirectly, and including,
without limitation, any obligation of such Person (A) to purchase or pay
(or advance or supply funds for the purchase of) any security for the
payment of such primary obligation, (B) to purchase property, securities or
services for the purpose of assuring the payment of such primary
obligation, or (C) to
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maintain working capital, equity capital or other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such primary obligation.
The "amount" or "principal amount" of any Indebtedness at any time of
determination represented by (w) any Indebtedness, issued at a price that is
less than the principal amount at maturity thereof, shall be the amount of the
liability in respect thereof determined in accordance with generally accepted
accounting principles, (x) any Capitalized Lease shall be the principal
component of the aggregate of the rentals obligation under such Capitalized
Lease payable over the term thereof that is not subject to termination by the
lessee, (y) any sale of receivables shall be the amount of unrecovered capital
or principal investment of the purchaser (other than the Borrower or any of its
wholly-owned Subsidiaries) thereof, excluding amounts representative of yield or
interest earned on such investment, and (z) any equity related purchase
obligation shall be the maximum fixed redemption or purchase price thereof
inclusive of any accrued and unpaid dividends to be comprised in such redemption
or purchase price.
Indentures. The Indentures dated as of April 15, 1996 between the Borrower
and Norwest Bank Minnesota, National Association, as trustee.
Interest Payment Date. (i) As to any Base Rate Loan, the last day of any
calendar quarter which includes the Drawdown Date thereof; and (ii) as to any
Eurodollar Rate Loan in respect of which the Interest Period is (A) 3 months or
less, the last day of such Interest Period and (B) more than 3 months, the date
that is 3 months from the first day of such Interest Period and, in addition,
the last day of such Interest Period.
Interest Period. With respect to each Loan or Consignment Fixed Rate
Amount, (a) initially, the period commencing on the Drawdown Date of such Loan
(or, as the case may be, the Gold Drawdown Date of the Purchases and
Consignments with respect to such Consignment Fixed Rate Amounts) and ending on
the
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last day of one of the periods set forth below, as selected by the Borrower in a
Loan Request (or, as the case may be, Purchase and Consignment Request with
respect to Consignment Fixed Rate Amounts) (i) for any Base Rate Loan, the
calendar month; and (ii) for any Eurodollar Rate Loan or Consignment Fixed Rate
Amount, 1, 2, 3 or 6 months; and (b) thereafter, each period commencing on the
last day of the next preceding Interest Period applicable to such Loan or
Consignment Fixed Rate Amount and ending on the last day of one of the periods
set forth above, as selected by the Borrower in a Conversion Request or
Consignment Conversion Request; provided that all of the foregoing provisions
relating to Interest Periods are subject to the following:
(A) if any Interest Period with respect to a Eurodollar Rate Loan or
Consignment Fixed Rate Amount would otherwise end on a day that is not a
Eurodollar Business Day, that Interest Period shall be extended to the next
succeeding Eurodollar Business Day unless the result of such extension
would be to carry such Interest Period into another calendar month, in
which event such Interest Period shall end on the immediately preceding
Eurodollar Business Day;
(B) if any Interest Period with respect to a Base Rate Loan would end
on a day that is not a Business Day, that Interest Period shall end on the
next succeeding Business Day;
(C) if the Borrower shall fail to give notice as provided in
Sections 2.6, 3.5 or 7.4, the Borrower shall be deemed to have requested a
conversion of the affected Eurodollar Rate Loan or Consignment Fixed Rate
Amount to a Base Rate Loan or Consignment Base Rate Amount, as applicable,
on the last day of the then current Interest Period with respect thereto;
(D) any Interest Period relating to any Eurodollar Rate Loan or
Consignment Fixed Rate Amount that begins on the last Eurodollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day
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in the calendar month at the end of such Interest Period) shall end on the
last Eurodollar Business Day of a calendar month; and
(E) any Interest Period relating to any Eurodollar Rate Loan or
Consignment Fixed Rate Amount that would otherwise extend beyond the
Maturity Date shall end on the Maturity Date.
Inventory Shrink Reserve. As of any date, the product of (a) the amount of
Eligible Inventory as of such date times (b) 1.4%, as such amount may be
adjusted from time to time, on five (5) days' prior written notice given by the
Administrative Agent to the Borrower, as the Administrative Agent, in its
reasonable discretion consistent with its usual business practices and policies,
shall determine.
Investments. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock or Indebtedness of, or
for loans, advances, capital contributions or transfers of property to, or in
respect of any guaranties (or other commitments as described under
Indebtedness), or obligations of, any Person. In determining the aggregate
amount of Investments outstanding at any particular time: (i) the amount of any
Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guaranteed and still outstanding; (ii) there
shall be included as an Investment all interest accrued with respect to
Indebtedness constituting an Investment unless and until such interest is paid;
(iii) there shall be deducted in respect of each such Investment any amount
received as a return of capital (but only by repurchase, redemption, retirement,
repayment, liquidating dividend or liquidating distribution); (iv) there shall
not be deducted in respect of any Investment any amounts received as earnings on
such Investment, whether as dividends, interest or otherwise, except that
accrued interest included as provided in the foregoing clause (ii) may be
deducted when paid; and (v) there shall not be deducted from the aggregate
amount of Investments any decrease in the value thereof.
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Landlord Waiver. A waiver from the lessor or sublessor of property leased
by the Borrower as lessee in substantially the form of Exhibit D hereto.
LaSalle. LaSalle National Bank, a national banking association, in its
individual capacity.
Letter of Credit. See Section 5.1.1.
Letter of Credit Application. See Section 5.1.1.
Letter of Credit Fee. See Section 5.6.
Letter of Credit Participation. See Section 5.1.4.
Loan Documents. This Credit Agreement, the Notes, the Letter of Credit
Applications, the Letters of Credit, the Fee Letter and the Security Documents.
Loan Request. See Section 7.3(a).
Loans. The Revolving Credit Loans, the Swing Line Loans and the Term Loan.
Majority Banks. As of any date, the Banks (other than Delinquent Banks)
whose aggregate portions of the outstanding amount of the Term Loan and whose
aggregate Commitments together constitute at least fifty-one percent (51%) of
the Total Commitment.
Mandatory Prepayments. See Section 7.8.4.
Maturity Date. September 10, 2003.
Maximum Drawing Amount. The maximum aggregate amount that the beneficiaries
may at any time draw under outstanding Letters of Credit, as such aggregate
amount may be reduced from time to time pursuant to the terms of the Letters of
Credit.
Monthly Inventory Report. A Monthly Inventory Report signed by the Vice
President of Finance or principal financial or accounting officer of the
Borrower and in substantially the form of Exhibit N hereto.
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Multiemployer Plan. Any multiemployer plan within the meaning of Section
3(37) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate.
Net Proceeds. With respect to any sale or other disposition of any asset by
any Person or any issuance of Indebtedness or equity securities of such Person,
the excess of (i) the gross cash proceeds received by such Person from such sale
or disposition or, as the case may be, such issuance, plus, as and when
received, all cash payments received subsequent to such sale or disposition or
such issuance representing (A) any deferred purchase price therefor or (B) any
cash proceeds from the sale or other disposition of any cash equivalents (or any
deferred purchase price obligations) received therefor over (ii) the sum of (A)
a reasonable reserve for any liabilities payable incident to such sale or
disposition or such issuance, (B) reasonable direct costs and expenses incurred
by such Person in connection with such sale or disposition or such issuance
(including, without limitation, reasonable brokerage, legal, investment banking,
accounting, consulting, survey, title and recording fees and commissions), (C)
all payments actually made on any Indebtedness (other than the Obligations) or
other obligations which are secured by any assets subject to such sale or
disposition which are required to be repaid out of the proceeds from such
transaction and (D) actual tax payments made or to be made in connection
therewith.
New Issuance Prepayment. See Section 7.8.2.
Notes. The Term Notes, the Revolving Credit Notes and the Swing Line Note.
Obligations. All indebtedness, obligations and liabilities of any of the
Borrower and its Subsidiaries to any of the Banks and the Agents, individually
or collectively, existing on the date of this Credit Agreement or arising
thereafter, direct or indirect, joint or several, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or unsecured, arising
by contract, operation of law or otherwise, arising or incurred (a) under this
Credit Agreement or any of the other Loan Documents or in
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respect of any of the Loans or Purchases and Consignments made or Reimbursement
Obligations incurred or any of the Notes, Letter of Credit Application, Letter
of Credit or other instruments at any time evidencing any thereof or (b) with
respect to BKB, under or in respect of the BKB Hedging Arrangements.
Operating Accounts. See Section 7.3(b).
Original Credit Agreement. As defined in the preamble hereto.
outstanding. With respect to the Loans, the aggregate unpaid principal
thereof as of any date of determination; with respect to Purchases and
Consignments, the aggregate Fair Market Value or number of troy ounces of
Consigned Precious Metal which, as of any date of determination, has not been
paid for by the Borrower or Redelivered.
Outstanding Facility Amounts. The sum of (a) the outstanding amount of the
Revolving Credit Loans (after giving effect to all amounts requested) plus (b)
the outstanding amount of the Swing Line Loans (after giving effect to all
amounts requested) plus (c) the Fair Market Value of Consigned Precious Metal
(after giving effect to all Purchases and Consignments requested) plus (d) the
Maximum Drawing Amount and all Reimbursement Obligations.
PBGC. The Pension Benefit Guaranty Corporation created by Section 4002 of
ERISA and any successor entity or entities having similar responsibilities.
Perfection Certificate. The Perfection Certificate as defined in the
Security Agreement.
Performance Adjustment. See Section 7.22.
Performance Adjustment Date. See Section 7.22.
Permitted Inventory Locations. The retail stores and distribution centers
of the Borrower and its Subsidiaries located in the United States of America and
listed on Schedule 2 hereto, as such Schedule 2
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may be supplemented from time to time in accordance with the provisions of
Section 10.4(i).
Permitted Liens. Liens, security interests and other encumbrances permitted
by Section 11.2.
Person. Any individual, corporation, partnership, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
Precious Metal. Gold measured in troy ounces having a fineness of not less
than .9995, without regard to whether such gold is alloyed or unalloyed, in
bullion form or contained in or processed into other materials which contain
elements other than gold.
Purchase and Consignment. Purchases and consignments of the Borrower's
Precious Metal made or to be made by the Banks pursuant to Section 6.1(a).
Purchase and Consignment Request. See Section 6.3.
Purchase Price. See Section 6.1(b).
Real Estate. All real property at any time owned or leased (as lessee or
sublessee) by the Borrower or any of its Subsidiaries.
Record. The grid attached to a Note, or the continuation of such grid, or
any other similar record, including computer records, maintained by any Bank
with respect to any Loan referred to in such Note.
Redeliver(ed) or Redelivery. The delivery by the Borrower to the
Administrative Agent's Head Office, at the Borrower's sole risk and expense, of
Precious Metal in bullion form of a type and quality which is acceptable to the
Administrative Agent.
Register. See Section 21.3.
Reimbursement Obligation. The Borrower's obligation to reimburse the
Administrative Agent and the Banks on account of any drawing under any Letter
of Credit.
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Reserves. As determined by the Administrative Agent in accordance with its
reasonable credit judgment which credit judgment shall be exercised in a manner
that is not arbitrary or capricious and is consistent with the standards of
eligibility and credit judgment applied by the Administrative Agent to its other
borrowers, such amounts as the Administrative Agent may from time to time
establish and revise (a) to reflect events, conditions, contingencies or risks
of which the officers of the Administrative Agent principally responsible for
this credit did not have actual knowledge as of the Closing Date which do or may
(i) adversely affect either (A) any Collateral, the rights of the Collateral
Agent, any of the other Agents or any of the Banks in any Collateral or its
value or (B) the security interest and other rights of the Collateral Agent, any
of the other Agents or any of the Banks in the Collateral (including the
enforceability, perfection and priority thereof) or (ii) adversely affect in any
material respect the assets (other than any Collateral) or business or financial
condition of the Borrower or any of its Subsidiaries or (b) to reflect the
belief of the Administrative Agent that any Borrowing Base Report or other
collateral report or financial information furnished by or on behalf of the
Borrower to any of the Agents or any of the Banks is or may have been
incomplete, inaccurate or misleading in any material respect.
Revolving Credit Loans. Revolving credit loans made or to be made by the
Banks to the Borrower pursuant to Section 2.
Revolving Credit Note Record. A Record with respect to a Revolving Credit
Note.
Revolving Credit Notes. See Section 2.4.
Security Agreement. The Security Agreement, dated or to be dated on or
prior to the Closing Date, between the Borrower and the Collateral Agent and in
form and substance satisfactory to the Banks, the Collateral Agent and the other
Agents.
Security Documents. The Security Agreement, the Landlord Waivers, the
Headquarters Landlord Consent,
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the Trademark Assignment, the Trademark Security Agreement, the Cash Collateral
Agreement, all Agency Account Agreements, the Confirmation of Swap Agreement,
and the Swap Agreement.
Settlement. The making of, or receiving of payments, in immediately
available funds, by the Banks, to the extent necessary to cause each Bank's
actual share of the outstanding amount of Revolving Credit Loans (after giving
effect to any Loan Request) to be equal to each Bank's Commitment Percentage of
the outstanding amount of such Revolving Credit Loans (after giving effect to
any Loan Request), in any case where, prior to such event or action, the actual
share is not so equal.
Settlement Amount. See Section 7.6(a).
Settlement Date. (a) The Drawdown Date relating to any Loan Request, (b)
Friday of each week, or if Friday is not a Business Day, the Business Day
immediately following such Friday, (c) the Business Day immediately following
any Agent becoming aware of the existence of an Event of Default, (d) any
Business Day on which the amount of Revolving Credit Loans outstanding from any
Bank plus such Bank's Commitment Percentage of the sum of the Fair Market Value
of Consigned Precious Metal plus the outstanding amount of the Swing Line Loans
plus the Maximum Drawing Amount and any Reimbursement Obligations is equal to or
greater than such Bank's Commitment Percentage of the Total Revolver Commitment,
(e) the Business Day immediately following any Business Day on which the amount
of Loans outstanding increases or decreases by more than $5,000,000 as compared
to the previous Settlement Date, (f) any day on which any conversion of a Base
Rate Loan to a Eurodollar Rate Loan occurs, or (g) any Business Day on which (i)
the amount of outstanding Revolving Credit Loans decreases and (ii) the amount
of the Administrative Agent's Loans outstanding equals Zero Dollars ($0).
Settling Bank. See Section 7.6(a).
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Specified Lease. A lease by the Borrower as lessee of Real Estate at which
Eligible Inventory is held and as to which at any time either (a) the Borrower
and the Agents have not received a Landlord Waiver or (b) the Agents have not
received evidence, in form and substance satisfactory to the Agents, that, based
upon then existing law (as determined by the Agents in the exercise of their
reasonable discretion and on the advice of counsel), the landlord of such
property would not have a lien on inventory superior to the security interest
granted under the Security Agreement, securing rent obligations more than thirty
(30) days past due or securing future rent obligations accruing after the
Closing Date.
Spot Value: At any time, with respect to the calculation of the Dollar
value of Precious Metal, (a) in all cases in which the Borrower is purchasing
Precious Metal or in which the value of Consigned Precious Metal for purposes of
the Consignment Limit is being calculated, the Administrative Agent's "ask" spot
quotation for Precious Metal at such time times the number of ounces of such
Precious Metal and (b) in all cases in which Gold Fronting Banks are purchasing
Precious Metal, the Administrative Agent's "bid" spot quotation for Precious
Metal at such time times the number of ounces of such Precious Metal.
Store Accounts. Depository accounts in depository institutions for, or on
behalf of, the Borrower or any of its Subsidiaries and listed on Schedule 9.20
hereto (as such may be amended from time to time in accordance with Section
12.10 hereof).
Subsidiary. Any corporation, association, trust, or other business entity
of which the designated parent shall at any time own directly or indirectly
through a Subsidiary or Subsidiaries at least a majority (by number of votes) of
the outstanding Voting Stock.
Swap Agreement. The ISDA Master Agreement dated or to be dated on or prior
to the Closing Date, between the Borrower and the Administrative Agent and in
form and substance satisfactory to each of the Borrower, the Banks and the
Agents.
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Swing Line Loan. Any loan made by the Administrative Agent pursuant to
Section 4.
Swing Line Note. See Section 4.2.
Swing Line Note Record. A Record with respect to the Swing Line Note.
Syndication Agents. Collectively, LaSalle National Bank, ABN Amro Bank N.V.
and BKB or its Affiliates, each acting as syndication agent for the Agents and
the Banks.
Term Loan. The term loan made or to be made by the Banks to the Borrower on
the Closing Date in the aggregate principal amount of $20,000,000.00 pursuant to
Section 3.1.
Term Notes. See Section 3.2.
Term Note Record. A Record with respect to a Term Note.
Total Commitment. The sum of the Total Revolver Commitment and the
outstanding principal amount of the Term Loan.
Total Revolver Commitment. The sum of the Commitments of the Banks, as in
effect from time to time, such amount being equal to $90,000,000 as of the
Closing Date.
Trademark Assignment. The Trademark Assignment, dated or to be dated on or
prior to the Closing Date, made by the Borrower in favor of the Collateral Agent
and in form and substance satisfactory to the Banks and the Agents.
Trademark Security Agreement. The Trademark Collateral Security and Pledge
Agreement, dated or to be dated on or prior to the Closing Date, between the
Borrower and the Collateral Agent and in form and substance satisfactory to the
Banks and the Agents.
Type. As to any Revolving Credit Loan or all or any portion of the Term
Loan, its nature as a Base Rate Loan or a Eurodollar Rate Loan.
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Uniform Customs. With respect to any Letter of Credit, the Uniform Customs
and Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500 or any successor version thereto adopted by the
Agent in the ordinary course of its business as a letter of credit issuer and in
effect at the time of issuance of such Letter of Credit.
Voting Stock. Stock or similar interests, of any class or classes (however
designated), the holders of which are at the time entitled, as such holders, to
vote for the election of a majority of the directors (or persons performing
similar functions) of the corporation, association, trust or other business
entity involved, whether or not the right so to vote exists by reason of the
happening of a contingency.
Y2K Plan. See Section 9.22.
Year 2000 Compliant and Ready. That (a) the hardware and software systems
of the Borrower and its Subsidiaries with respect to the operation of their
respective businesses and their general business plans will: (i) handle date
information involving any and all dates before, during and/or after January 1,
2000, including accepting input, providing output and performing date
calculations in whole or in part; (ii) operate, accurately without interruption
on and in respect of any and all dates before, during and/or after January 1,
2000 and without any change in performance; (iii) store and provide date input
information without creating any ambiguity as to the century; and (b) the
Borrower has developed alternative plans to ensure business continuity in the
event of the failure of any or all of items (i) through (iii) above. Rules of
Interpretation.
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to
time in accordance with its terms and the terms of this Credit Agreement.
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(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any law includes any amendment or modification to
such law.
(d) A reference to any Person includes its permitted successors and
permitted assigns.
(e) Accounting terms not otherwise defined herein have the meanings
assigned to them by generally accepted accounting principles applied on a
consistent basis by the accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not limiting.
(g) All terms not specifically defined herein or by generally accepted
accounting principles, which terms are defined in the Uniform Commercial
Code as in effect in the Commonwealth of Massachusetts, have the meanings
assigned to them therein, with the term "instrument" being that defined
under Article 9 of the Uniform Commercial Code.
(h) Reference to a particular "Section " refers to that section of
this Credit Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of like import
shall refer to this Credit Agreement as a whole and not to any particular
section or subdivision of this Credit Agreement.
REVOLVING CREDIT LOANS.
Commitment to Lend. Subject to the terms and conditions set forth in this
Credit Agreement, each of the Banks severally agrees to lend to the Borrower and
the Borrower may borrow, repay, and reborrow from time to time between the
Closing Date and the Maturity Date upon notice by the Borrower to the
Administrative Agent given in accordance with Section 7.3, such sums as are
requested by the Borrower up to a maximum aggregate amount outstanding (after
giving effect to all amounts requested) at any one time equal to such Bank's
Commitment minus such Bank's Commitment Percentage
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of the sum of (a) the Fair Market Value of Consigned Precious Metal, (b) the
outstanding amount of the Swing Line Loans and (c) the Maximum Drawing Amount
and all Reimbursement Obligations, provided that the sum of the outstanding
amount of the Revolving Credit Loans (after giving effect to all amounts
requested) plus the outstanding amount of the Swing Line Loans plus the Fair
Market Value of Consigned Precious Metal plus the outstanding amount of the
Swing Line Loans plus the Maximum Drawing Amount and all Reimbursement
Obligations shall not at any time exceed the lesser of (i) the Total Revolver
Commitment and (ii) the Borrowing Base. The Revolving Credit Loans shall be made
pro rata in accordance with each Bank's Commitment Percentage. Each request for
a Revolving Credit Loan hereunder shall constitute a representation and warranty
by the Borrower that the conditions set forth in Section 13 and Section 14, in
the case of the initial Revolving Credit Loans to be made on the Closing Date,
and Section 14, in the case of all other Revolving Credit Loans, have been
satisfied on the date of such request. Commitment Fee. The Borrower agrees to
pay to the Administrative Agent for the accounts of the Banks in accordance with
their respective Commitment Percentages a commitment fee calculated at the
Commitment Fee Rate on the average daily amount during each calendar quarter or
portion thereof from the Closing Date to the Maturity Date by which the Total
Revolver Commitment minus the Fair Market Value of Consigned Precious Metal
minus the outstanding amount of the Swing Line Loans minus the sum of the
Maximum Drawing Amount and all Reimbursement Obligations exceeds the outstanding
amount of Revolving Credit Loans during such calendar quarter. The commitment
fee shall be payable quarterly in arrears on the first day of each calendar
quarter for the immediately preceding calendar quarter commencing on the first
such date following the date hereof, with a final payment on the Maturity Date
or any earlier date on which the Commitments shall terminate. Reduction of Total
Revolver Commitment. The Borrower shall have the right at any time and from time
to time upon five (5) Business Days prior written notice to the Administrative
Agent to reduce by
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$1,000,000.00 or an integral multiple thereof or terminate entirely the Total
Revolver Commitment, whereupon the Commitments of the Banks shall be reduced pro
rata in accordance with their respective Commitment Percentages of the amount
specified in such notice or, as the case may be, terminated. Promptly after
receiving any notice of the Borrower delivered pursuant to this Section 2.3, the
Administrative Agent will notify the Banks of the substance thereof. Upon the
effective date of any such reduction or termination, the Borrower shall pay to
the Administrative Agent for the respective accounts of the Banks the full
amount of any commitment fee then accrued on the amount of the reduction. The
Total Revolver Commitment shall never be reduced pursuant to this Section 2.3.2
to an amount less than the sum of (a) the outstanding amount of the Revolving
Credit Loans, (b) the Fair Market Value of Consigned Precious Metal, (c) the
outstanding amount of Swing Line Loans and (d) the Maximum Drawing Amount and
all Reimbursement Obligations. No reduction or termination of the Commitments
may be reinstated. The Revolving Credit Notes. The Revolving Credit Loans shall
be evidenced by separate promissory notes of the Borrower in substantially the
form of Exhibit E hereto (each a "Revolving Credit Note"), dated as of the
Closing Date and completed with appropriate insertions. One Revolving Credit
Note shall be payable to the order of each Bank in a principal amount equal to
such Bank's Commitment or, if less, the outstanding amount of all Revolving
Credit Loans made by such Bank, plus interest accrued thereon, as set forth
below. The Borrower irrevocably authorizes each Bank to make or cause to be
made, at or about the time of the Drawdown Date of any Revolving Credit Loan or
at the time of receipt of any payment of principal on such Bank's Revolving
Credit Note, an appropriate notation on such Bank's Revolving Credit Note Record
reflecting the making of such Revolving Credit Loan or (as the case may be) the
receipt of such payment. The outstanding amount of the Revolving Credit Loans
set forth on such Bank's Revolving Credit Note Record shall be prima facie
evidence of the principal amount thereof owing and unpaid to such Bank, but the
failure to record, or any error in so recording, any such amount on such Bank's
Revolving
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Credit Note Record shall not limit or otherwise affect the obligations of the
Borrower hereunder or under any Revolving Credit Note to make payments of
principal of or interest on any Revolving Credit Note when due.
Interest on Revolving Credit Loans. Except as otherwise provided in
Section 7.21, the Revolving Credit Loans shall bear interest in accordance with
the provisions of Section 7.1 hereof.
Requests for Revolving Credit Loans; Conversion Options. The Borrower shall
request Revolving Credit Loans by providing to the Administrative Agent Loan
Requests for Revolving Credit Loans in accordance with the requirements of
Section 7.3(a) hereof. The Administrative Agent may, in its sole discretion and
without conferring with the Banks, make Revolving Credit Loans to the Borrower
in accordance with the provisions of Section 7.3(b) hereof. The Borrower shall
be permitted to convert Revolving Credit Loans to Revolving Credit Loans of
different Types in accordance with the provisions of Section 7.4 hereof, and
such provisions of Section 7.4 shall apply mutatis mutandis with respect to the
Revolving Credit Loans so that the Borrower will have the same interest rate
options with respect to the Revolving Credit Loans as it would be entitled to
with respect to and the Term Loan.
Funds for Revolving Credit Loans. The provisions of Section 7.5 and Section
7.6 with respect to the funding procedures and Settlement procedures for the
Loans shall apply to the Revolving Credit Loans
Maturity. The Borrower promises to pay on the Maturity Date, and there
shall become absolutely due and payable on the Maturity Date, all of the
Revolving Credit Loans outstanding on such date, together with any and all
accrued and unpaid interest thereon.
Mandatory Repayments of Revolving Credit Loans. The Borrower shall
immediately repay the outstanding Revolving Credit Loans as required by and in
accordance with the provisions of Sections 7.8 and 7.9(b) hereof.
Optional Repayments of Revolving Credit Loans. The Borrower shall have the
right, at its election, to repay the outstanding Revolving Credit Loans in
accordance with the provisions of Section 7.7 hereof.
THE TERM LOAN.
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Commitment to Lend. Subject to the terms and conditions set forth in this
Credit Agreement, each Bank agrees to lend to the Borrower on the Closing Date
the amount of its Commitment Percentage of the principal amount of
$20,000,000.00.
The Term Notes. The Term Loan shall be evidenced by separate promissory
notes of the Borrower in substantially the form of Exhibit F hereto (each a
"Term Note"), dated the Closing Date and completed with appropriate insertions.
One Term Note shall be payable to the order of each Bank in a principal amount
equal to such Bank's Commitment Percentage of the Term Loan and representing the
obligation of the Borrower to pay to such Bank such principal amount or, if
less, the outstanding amount of such Bank's Commitment Percentage of the Term
Loan, plus interest accrued thereon, as set forth below. The Borrower
irrevocably authorizes each Bank to make or cause to be made a notation on such
Bank's Term Note Record reflecting the original principal amount of such Bank's
Commitment Percentage of the Term Loan and, at or about the time of such Bank's
receipt of any principal payment on such Bank's Term Note, an appropriate
notation on such Bank's Term Note Record reflecting such payment. The aggregate
unpaid amount set forth on such Bank's Term Note Record shall be prima facie
evidence of the principal amount thereof owing and unpaid to such Bank, but the
failure to record, or any error in so recording, any such amount on such Bank's
Term Note Record shall not affect the obligations of the Borrower hereunder or
under any Term Note to make payments of principal of and interest on any Term
Note when due.
Schedule of Installment Payments of Principal of Term Loan. The Borrower
promises to pay to the Administrative Agent for the account of the Banks the
principal amount of the Term Loan in twenty (20) consecutive quarterly
installment payments beginning January 30, 1999, nineteen (19) of which shall be
payable on each fiscal quarter ending date and each in the amount set forth in
the table below opposite the period in such table during which such fiscal
quarter ending date occurs, with a final payment on the Maturity Date in an
amount equal to the unpaid balance of the Term Loan:
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AMOUNT OF
PERIOD: QUARTERLY PAYMENT:
- -------------------------------------------------------------------------------
January 30, 1999 - October 31, 1999 $ 500,000.00
- -------------------------------------------------------------------------------
January 30, 2000 - October 31, 2000 $ 750,000.00
- -------------------------------------------------------------------------------
January 30, 2001 - October 31, 2001 $ 1,000,000.00
- -------------------------------------------------------------------------------
January 30, 2002 - October 31, 2002 $ 1,250,000.00
- -------------------------------------------------------------------------------
January 30, 2003 - September 10, 2003 $ 1,500,000.00
- -------------------------------------------------------------------------------
Mandatory Repayment of Term Loan. The Borrower shall immediately repay the
outstanding Term Loan as required by and in accordance with the provisions of
Section 7.8 hereof.
Optional Prepayment of Term Loan. The Borrower shall have the right at any
time to prepay the Term Loan in accordance with the provisions of Section 7.7.
Any prepayment of principal of the Term Loan shall be applied ratably against
the remaining scheduled installments of principal due on the Term Loan. No
amount repaid with respect to the Term Loan may be reborrowed.
Interest on Term Loan. Except as otherwise provided in Section 7.21, the
outstanding amount of the Term Loan shall bear interest in accordance with the
provisions of Section 7.1. The Borrower shall notify the Administrative Agent,
such notice to be irrevocable, at least two (2) Business Days prior to the
Drawdown Date of the Term Loan if all or any portion of the Term Loan is to bear
interest at the Eurodollar Rate. After the Term Loan has been made, the
provisions of Section 7.4 shall apply mutatis mutandis with respect to all or
any portion of the Term Loan so that the Borrower may have the same interest
rate options with respect to all or any portion of the Term Loan as it would be
entitled to with respect to the Revolving Credit Loans. No Interest Period
relating to the Term Loan or any portion thereof bearing interest at the
Eurodollar Rate shall extend beyond the date on which a regularly
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scheduled installment payment of the principal of the Term Loan is to be made
unless a portion of the Term Loan at least equal to such installment payment has
an Interest Period ending on such date or is then bearing interest at the Base
Rate.
SWING LINE LOANS.
Discretion to Lend. The Borrower may request the Administrative Agent to
make, and the Administrative Agent, in its individual capacity, may, if in its
sole discretion it elects to do so, and without any commitment whatsoever by the
Administrative Agent to do so, make, on the terms and conditions hereinafter set
forth, Swing Line Loans to the Borrower from time to time on any Business Day
during the period from the date hereof until the Maturity Date in an aggregate
amount not to exceed at any time outstanding $5,000,000, provided, however, that
while the outstanding amount of all outstanding Swing Line Loans and outstanding
Revolving Credit Loans made by the Administrative Agent may exceed the
Administrative Agent's Commitment, the aggregate amount of all Swing Line Loans
outstanding plus all Revolving Credit Loans outstanding, plus the Fair Market
Value of Consigned Precious Metals plus the Maximum Drawing Amount and all
Reimbursement Obligations shall not exceed the lesser of (i) the Total Revolver
Commitment and (ii) the Borrowing Base. No Swing Line Loan shall be used for the
purpose of funding the payment of principal of any other Swing Line Loan. Swing
Line Loans must be Base Rate Loans only, and may not be Eurodollar Rate Loans.
Within the limits of the referred to in this Section 4.1 above and elsewhere in
this Credit Agreement, so long as the Administrative Agent, in its sole
discretion, elects to make Swing Line Loans, the Borrower may borrow under this
Section 4.1, repay pursuant to Sections 4.5, 4.6 and 4.7 and reborrow under this
Section 4.1.
The Swing Line Note. The Swing Line Loans shall be evidenced by a
promissory note of the Borrower payable to the order of the Administrative Agent
in its individual capacity in substantially the form of Exhibit G hereto (the
"Swing Line Note"), dated as of the Closing Date and completed with appropriate
insertions. The Swing Line Note shall be payable to the order of the
Administrative Agent in a principal amount equal to $5,000,000 or, if less, the
outstanding
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amount of all Swing Line Loans, plus interest accrued thereon, as set forth
below. The Borrower irrevocably authorizes the Administrative Agent to make or
cause to be made, at or about the time of the Drawdown Date of any Swing Line
Loan or at the time of receipt of any payment of principal on the Swing Line
Note, an appropriate notation on the Swing Line Note Record reflecting the
making of such Swing Line Loan or (as the case may be) the receipt of such
payment. The outstanding amount of the Swing Line Loans set forth on the Swing
Line Note Record shall be prima facie evidence of the principal amount thereof
owing and unpaid to the Administrative Agent, but the failure to record, or any
error in so recording, any such amount on the Swing Line Note Record shall not
limit or otherwise affect the obligations of the Borrower hereunder or under the
Swing Line Note to make payments of principal of or interest on the Swing Line
Note when due.
Interest on Swing Line Loans. Except as otherwise provided in Section 7.21,
the Swing Line Loans shall bear interest in accordance with the provisions of
Section 7.1 hereof.
Requests for Swing Line Loans. The Borrower shall request Swing Line Loans
by providing to the Administrative Agent Loan Requests for Swing Line Loans in
accordance with the requirements of Section 7.3(a) hereof.
Maturity. The Borrower promises to pay to the Administrative Agent for the
account to the Administrative Agent the outstanding principal amount of each
Swing Line Loan on the earlier of the maturity date specified in the applicable
Loan Request relating to such Swing Line Loan (which maturity shall be no later
than the fourteenth (14th) day after the requested date of such borrowing) and
the Maturity Date
Mandatory Repayments of Swing Line Loans. The Borrower shall immediately
repay the outstanding Swing Line Loans as required by and in accordance with the
provisions of Sections 7.8 and 7.9(b) hereof.
Optional Repayments of Swing Line Loans. The Borrower shall have the right,
at its election, to repay the outstanding Swing Line Loans in accordance with
the provisions of Section 7.7 hereof.
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Purchase of Swing Line Loans. Each Bank severally agrees that it shall be
absolutely liable, without regard to the occurrence of any Default or Event of
Default or any other condition precedent whatsoever, on demand, to purchase from
the Administrative Agent such Bank's Commitment Percentage of all or such
portion of the outstanding Swing Line Loans referenced in such demand.
LETTERS OF CREDIT.
Letter of Credit Commitments.
Commitment to Issue Letters of Credit. Subject to the terms and conditions
hereof and the execution and delivery by the Borrower of a letter of
credit application on the Administrative Agent's customary form (a
"Letter of Credit Application"), the Administrative Agent on behalf of
the Banks and in reliance upon the agreement of the Banks set forth in
Section 5.1.4 and upon the representations and warranties of the
Borrower contained herein, agrees, in its individual capacity, to
issue, extend and renew for the account of the Borrower one or more
standby or documentary letters of credit (individually, a "Letter of
Credit"), in such form as may be requested from time to time by the
Borrower and agreed to by the Administrative Agent; provided, however,
that, after giving effect to such request, (a) the sum of the
aggregate Maximum Drawing Amount and all Reimbursement Obligations
shall not exceed $5,000,000.00 at any one time and (b) the sum of (i)
the Maximum Drawing Amount on all Letters of Credit, (ii) all
Reimbursement Obligations, (iii) the amount of all Revolving Credit
Loans outstanding, (iv) the Fair Market Value of Consigned Precious
Metals and (vi) the outstanding amount of the Swing Line Loans shall
not exceed the lesser of (A) the Total Revolver Commitment and (B) the
Borrowing Base. Notwithstanding the foregoing, the Administrative
Agent shall have no obligation to issue any Letter of Credit to
support or secure any Indebtedness of the Borrower or any of its
Subsidiaries to the extent that such Indebtedness was incurred prior
to the proposed issuance date of such Letter of Credit, unless in any
such case the Borrower demonstrates to the satisfaction of the
Administrative Agent that (x) such prior incurred
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Indebtedness were then fully secured by a prior perfected and
unavoidable security interest in collateral provided by the Borrower
or such Subsidiary to the proposed beneficiary of such Letter of
Credit or (y) such prior incurred Indebtedness were then secured or
supported by a letter of credit issued for the account of the Borrower
or such Subsidiary and the reimbursement obligation with respect to
such letter of credit was fully secured by a prior perfected and
unavoidable security interest in collateral provided to the issuer of
such letter of credit by the Borrower or such Subsidiary.
Letter of Credit Applications. Each Letter of Credit Application shall be
completed to the satisfaction of the Administrative Agent. In the
event that any provision of any Letter of Credit Application shall be
inconsistent with any provision of this Credit Agreement, then the
provisions of this Credit Agreement shall, to the extent of any such
inconsistency, govern.
Terms of Letters of Credit. Each Letter of Credit issued, extended or
renewed hereunder shall, among other things, (a) provide for the
payment of sight drafts for honor thereunder when presented in
accordance with the terms thereof and when accompanied by the
documents described therein, and (b) have an expiry date (i) no later
than the date which is fourteen (14) days (or, if the Letter of Credit
is confirmed by a confirmer or otherwise provides for one or more
nominated persons, forty-five (45) days) prior to the Maturity Date,
(ii) no more than one (1) year from the issue date thereof with
respect to standby Letters of Credit, and (iii) no more than one
hundred twenty (120) days from the issue date thereof with respect to
documentary Letters of Credit. Each Letter of Credit so issued,
extended or renewed shall be subject to the Uniform Customs.
Reimbursement Obligations of Banks. Each Bank severally agrees that it
shall be absolutely liable, without regard to the occurrence of any
Default or Event of Default or any other condition precedent
whatsoever, to the extent of such Bank's Commitment Percentage, to
reimburse the Administrative Agent on demand for the amount of
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each draft paid by the Administrative Agent under each Letter of
Credit to the extent that such amount is not reimbursed by the
Borrower pursuant to Section 5.2 (such agreement for a Bank being
called herein the "Letter of Credit Participation" of such Bank).
Participations of Banks. Each such payment made by a Bank shall be
treated as the purchase by such Bank of a participating interest in
the Borrower's Reimbursement Obligation under Section 5.2 in an amount
equal to such payment. Each Bank shall share in accordance with its
participating interest in any interest which accrues pursuant to
Section 5.2.
Reimbursement Obligation of the Borrower. In order to induce the
Administrative Agent to issue, extend and renew each Letter of Credit
and the Banks to participate therein, the Borrower hereby agrees to
reimburse or pay to the Administrative Agent, for the account of the
Administrative Agent or (as the case may be) the Banks, with respect
to each Letter of Credit issued, extended or renewed by the
Administrative Agent hereunder,
(a) except as otherwise expressly provided in Section 5.2(b) and
(c), on each date that any draft presented under such Letter of Credit
is honored by the Administrative Agent, or the Administrative Agent
otherwise makes a payment with respect thereto, (i) the amount paid by
the Administrative Agent under or with respect to such Letter of
Credit, and (ii) the amount of any taxes, fees, charges or other costs
and expenses whatsoever incurred by the Administrative Agent or any
Bank in connection with any payment made by the Administrative Agent
or any Bank under, or with respect to, such Letter of Credit,
(b) upon the reduction (but not termination) of the Total
Revolver Commitment to an amount less than the Maximum Drawing Amount,
an amount equal to such difference, which amount shall be held by the
Administrative Agent for the benefit of the Banks and the
Administrative Agent as cash collateral for all Reimbursement
Obligations, and
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(c) upon the termination of the Total Revolver Commitment, or the
acceleration of the Reimbursement Obligations with respect to all
Letters of Credit in accordance with Section 15, an amount equal to
the Maximum Drawing Amount on all Letters of Credit, which amount
shall be held by Administrative Agent as cash collateral for all
Reimbursement Obligations.
Each such payment shall be made to the Administrative Agent at the
Administrative Agent's Head Office in immediately available funds. Interest on
any and all amounts remaining unpaid by the Borrower under this Section 5.2 at
any time from the date such amounts become due and payable (whether as stated in
this Section 5.2, by acceleration or otherwise) until payment in full (whether
before or after judgment) shall be payable to the Administrative Agent on demand
at the rate specified in Section 7.21 for overdue principal on the Revolving
Credit Loans.
Letter of Credit Payments. If any draft shall be presented or other demand
for payment shall be made under any Letter of Credit, the Administrative Agent
shall notify the Borrower of the date and amount of the draft presented or
demand for payment and of the date and time when it expects to pay such draft or
honor such demand for payment. If the Borrower fails to reimburse the
Administrative Agent as provided in Section 5.2 on or before the date that such
draft is paid or other payment is made by the Administrative Agent, the
Administrative Agent may at any time thereafter notify the Banks of the amount
of any such Reimbursement Obligation. No later than 3:00 p.m. (Boston time) on
the Business Day next following the receipt of such notice, each Bank shall make
available to the Administrative Agent, at its Head Office, in immediately
available funds, such Bank's Commitment Percentage of such Reimbursement
Obligation, together with an amount equal to the product of (i) the average,
computed for the period referred to in clause (iii) below, of the weighted
average interest rate paid by the Administrative Agent for federal funds
acquired by the Administrative Agent during each day included in such period,
times (ii) the amount equal to such Bank's Commitment Percentage of such
Reimbursement Obligation, times (iii) a fraction, the numerator of
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which is the number of days that elapse from and including the date the
Administrative Agent paid the draft presented for honor or otherwise made
payment to the date on which such Bank's Commitment Percentage of such
Reimbursement obligation shall become immediately available to the
Administrative Agent, and the denominator of which is 360. The responsibility of
the Administrative Agent to the Borrower and the Banks shall be only to
determine that the documents (including each draft) delivered under each Letter
of Credit in connection with such presentment shall be in conformity in all
material respects with such Letter of Credit.
Obligations Absolute. The Borrower's obligations under this Section 5 shall
be absolute and unconditional under any and all circumstances and irrespective
of the occurrence of any Default or Event of Default or any condition precedent
whatsoever or any setoff, counterclaim or defense to payment which the Borrower
may have or have had against the Administrative Agent, any Bank or any
beneficiary of a Letter of Credit. The Borrower further agrees with the
Administrative Agent and the Banks that the Administrative Agent and the Banks
shall not be responsible for, and the Borrower's Reimbursement Obligations under
Section 5.2 shall not be affected by, among other things, the validity or
genuineness of documents or of any endorsements thereon, even if such documents
should in fact prove to be in any or all respects invalid, fraudulent or forged,
or any dispute between or among the Borrower, the beneficiary of any Letter of
Credit or any financing institution or other party to which any Letter of Credit
may be transferred or any claims or defenses whatsoever of the Borrower against
the beneficiary of any Letter of Credit or any such transferee. The
Administrative Agent and the Banks shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit. The
Borrower agrees that any action taken or omitted by the Administrative Agent or
any Bank under or in connection with each Letter of Credit and the related
drafts and documents, if done in good faith, shall be binding upon the Borrower
and shall not result in any
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liability on the part of the Administrative Agent or any Bank to the Borrower.
Reliance by Issuer. To the extent not inconsistent with Section 5.4, the
Administrative Agent shall be entitled to rely, and shall be fully protected in
relying upon, any Letter of Credit, draft, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons
and upon advice and statements of legal counsel, independent accountants and
other experts selected by the Administrative Agent. The Administrative Agent
shall be fully justified in failing or refusing to take any action under this
Credit Agreement unless it shall first have received such advice or concurrence
of the Majority Banks as it reasonably deems appropriate or it shall first be
indemnified to its reasonable satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Administrative Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this Credit
Agreement in accordance with a request of the Majority Banks, and such request
and any action taken or failure to act pursuant thereto shall be binding upon
the Banks and all future holders of the Revolving Credit Notes or of a Letter of
Credit Participation.
Letter of Credit Fee. The Borrower shall pay to the Administrative Agent a
fee (in each case, a "Letter of Credit Fee") in respect of Letters of Credit on
the average daily Maximum Drawing Amount at a rate per annum equal to (a) with
respect to each standby Letter of Credit, the Eurodollar Applicable Margin per
annum from time to time applicable to Revolving Credit Loans and (b) with
respect to each documentary Letter of Credit, the Eurodollar Applicable Margin
per annum from time to time applicable to Revolving Credit Loans minus 1/2%,
such Letter of Credit Fees being payable quarterly in arrears on the first day
of each calendar quarter and on the Maturity Date. A portion of such Letter of
Credit Fees equal to 1/4% per annum shall be payable to the Administrative Agent
for its own account and the remainder of such Letter of Credit Fees shall be
payable to the Administrative Agent for
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the ratable accounts of the Banks in accordance with their respective Commitment
Percentages. The Borrower shall also pay to the Administrative Agent, at such
time or times as such charges are customarily made by the Administrative Agent,
the Administrative Agent's customary issuance fees or amendment fees, as the
case may be, and the Administrative Agent's customary time negotiation fees per
document examination or other administrative fees.
PURCHASES AND CONSIGNMENTS.
Commitment To Make Purchases and Consignments; Title To Consigned Precious
Metal.
(a) Subject to the terms and conditions set forth in this Credit
Agreement, each of the Gold Fronting Banks severally agrees, at the
option of the Borrower, to purchase from and consign to the Borrower
(a "Purchase and Consignment") from time to time between the Closing
Date and the Maturity Date upon notice by the Borrower to the
Administrative Agent given in accordance with Section 6.3, such
amounts of the Borrower's Precious Metal as are requested by the
Borrower up to a maximum aggregate amount of Consigned Precious Metal
outstanding (after giving effect to all amounts requested) having a
Fair Market Value equal to (i) in the case of the Administrative
Agent, the sum of the Commitments of the Banks, other than ABN and
LaSalle, or, in the case of ABN, the sum of the Commitments of ABN and
LaSalle minus, (ii) such Gold Funding Bank's Gold Commitment
Percentage of the sum of the outstanding amount of the Revolving
Credit Loans plus the outstanding amount of the Swing Line Loans plus
the Maximum Drawing Amount and all Reimbursement Obligations; provided
that the sum of the outstanding amount of troy ounces or, as the case
may be, Fair Market Value of Consigned Precious Metal which the
Borrower requests that the Gold Fronting Banks purchase, when added to
the amount of troy ounces or, as the case may be, the Fair Market
Value of Consigned Precious Metal outstanding, shall not exceed the
Consignment Ounce Cap, in the case of amounts of troy ounces
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of Consigned Precious Metal, or the Consignment Dollar Cap, in the
case of the Fair Market Value of Consigned Precious Metal. Purchases
and Consignments shall be made by the Gold Fronting Banks pro rata in
accordance with each Gold Fronting Bank's Gold Commitment Percentage.
(b) The purchase price (the "Purchase Price") paid by the
Administrative Agent, on behalf of the Gold Fronting Banks, for
Consigned Precious Metal in respect of each Purchase and Consignment
shall be the Fair Market Value of Precious Metal two (2) Business Days
prior to the Gold Drawdown Date of any Purchase and Consignment. Each
request for a Purchase and Consignment hereunder shall constitute a
representation and warranty by the Borrower that the conditions set
forth in Section 13 and Section 14, in the case of the initial
Purchase and Consignment to be made on the Closing Date, and Section
14, in the case of all other Purchases and Consignments, have been
satisfied on the date of such request.
(c) Upon each Purchase and Consignment, the Administrative Agent
shall take title to such Borrower's Precious Metal for the benefit of
the Gold Fronting Banks in accordance with each Gold Fronting Bank's
Gold Commitment Percentage thereof. Thereafter, title to such Precious
Metal shall remain in the Administrative Agent for the benefit of the
Gold Fronting Banks in accordance with each Gold Fronting Bank's Gold
Commitment Percentage thereof and shall not vest in the Borrower until
the Administrative Agent has received payment for such Consigned
Precious Metal in accordance with the requirements of Section 6.4 or
Section 6.7, as applicable. Following each Purchase and Consignment,
the Borrower shall bear the entire risk of loss, theft, damage or
destruction of the Consigned Precious Metal from any cause whatsoever,
whether or not insured, and the Borrower agrees to hold the Consigned
Precious Metal in trust for the Gold Fronting Banks, and to indemnify
and hold harmless the Gold Fronting Banks against any and all
liabilities, damages, losses, costs, expenses, suits, claims, demands
or
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judgments of any nature (including, without limitation, attorneys'
fees and expenses) arising from or connected with any loss, theft,
damage or destruction of the Consigned Precious Metal.
(d) The Borrower irrevocably authorizes the Administrative Agent
and each of the Gold Fronting Banks, at or about the time of the Gold
Drawdown Date of any Purchase and Consignment or at the time of any
payment or Redelivery with respect to Consigned Precious Metal, to
make an appropriate notation in the records of the Administrative
Agent or such Gold Fronting Bank customarily maintained by the
Administrative Agent or such Gold Fronting Bank reflecting the making
of such Purchase and Consignment or the receipt of such payment or
Redelivery. The outstanding amount of Consigned Precious Metal set
forth in the records of the Administrative Agent or such Gold Fronting
Bank customarily maintained by the Administrative Agent or such Gold
Fronting Bank shall be prima facie evidence of the amount thereof
owing and unpaid or not Redelivered, but the failure to record or any
error in so recording any such amount in the records of the
Administrative Agent or such Gold Fronting Bank shall not limit or
otherwise affect the obligations of the Borrower hereunder to make
payments or Redeliveries in accordance with the terms hereof.
Consignment Fees. Except as otherwise provided in Section 7.21, with
respect to Consigned Precious Metal, the Borrower agrees to pay to the
Administrative Agent, for the accounts of Administrative Agent and the Banks to
be allocated among them as set forth below, a consignment fee (the "Consignment
Fee") equal to:
(a) for each day with respect to Consignment Base Rate Amounts,
the product of the Consignment Base Rate times a fraction, the
numerator of which is one (1) and the denominator of which is three
hundred and sixty (360) times the Fair Market Value (as of such date)
of Consigned Precious Metal outstanding on such day which are
Consignment Base Rate Amounts; and
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(b) for each day during each Interest Period with respect to
Consignment Fixed Rate Amounts, the product of the Consignment Fixed
Rate applicable to such Interest Period times a fraction, the
numerator of which is one (1) and the denominator of which is three
hundred and sixty (360) times the Fair Market Value (as of such date)
of Consigned Precious Metal outstanding for such Interest Period which
are Consignment Fixed Rate Amounts.
The Consignment Fee for each day shall be allocated as follows: (i) for the
account of the Banks in accordance with their respective Commitment Percentages,
that portion of the Consignment Fee for such day equal to the product of (A) the
Eurodollar Rate Applicable Margin applicable to Revolving Credit Loans minus
one-eighth of one percent (1/8%) times a fraction, the numerator of which is one
(1) and the denominator of which is three hundred and sixty (360) times the Fair
Market Value (as of such date) of Consigned Precious Metal outstanding on such
day and (ii) for the account of the Gold Fronting Banks in accordance with each
Gold Fronting Bank's Gold Commitment Percentage thereof, the remainder of the
Consignment Fee for such day. The Consignment Fee with respect to Consignment
Base Rate Amounts shall be payable monthly in arrears on the first Business Day
of each calendar month, commencing on the first such date following the Closing
Date, with a final payment on the Maturity Date or any earlier date on which the
Commitments shall terminate. The Consignment Fee with respect to Consignment
Fixed Rate Amounts shall be payable as to any Consignment Fixed Rate Amounts in
respect of which the applicable Interest Period is (i) 3 months or less, on the
last day of such interest period and (ii) more than 3 months, on the date that
is 3 months from the first day of such Interest Period and, in addition, on the
last day of such Interest Period.
Requests For Purchases and Consignments. The Borrower shall give to the
Administrative Agent written notice in the form of Exhibit H hereto (or
telephonic notice confirmed in a writing in the form of Exhibit H hereto) of
each Purchase and Consignment requested hereunder (a "Purchase and Consignment
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Request") no later than 2:00 p.m. three (3) Business Days prior to the proposed
Gold Drawdown Date of any Consignment Base Rate Amount or Consignment Fixed Rate
Amount. Each such notice shall specify (a) the number of troy ounces of
Borrower's Precious Metal to be purchased and consigned, (b) the proposed Gold
Drawdown Date of such Purchase and Consignment, (c) whether such Purchase and
Consignment is to be a Consignment Fixed Rate Amount or a Consignment Base Rate
Amount, and (d) if such Purchase and Consignment is to be a Consignment Fixed
Rate Amount, the Interest Period applicable to such Purchase and Consignment.
Promptly upon receipt of any such Purchase and Consignment Request, the
Administrative Agent shall notify each of the Banks thereof. Each Purchase and
Consignment Request shall be irrevocable and binding on the Borrower and shall
obligate the Borrower to sell and take on consignment such Borrower's Precious
Metal on the proposed Gold Drawdown Date. Each Purchase and Consignment Request
for Consignment Base Rate Amounts shall be in a minimum aggregate amount of 300
troy ounces or an integral multiple of one hundred (100) in excess thereof, and
each Purchase and Consignment Request for Consignment Fixed Rate Amounts shall
be in a minimum aggregate amount of one thousand (1,000) troy ounces or an
integral multiple of one hundred (100) in excess thereof.
Payment on Account Of Repurchase or Redelivery of Consigned Precious Metal.
(a) Upon the occurrence of an Event of Default (other than an
Event of Default described in Section 15.1(g) or (h), with respect to
which applicable law prohibits the following actions from being taken,
and, then, only as and to the extent expressly prohibited by
applicable law) and upon notice from the Administrative Agent to the
Borrower, unless the Borrower shall, on the date of dispatch of such
notice, immediately Redeliver to the Administrative Agent for the
accounts of the Banks an amount of Borrower's Precious Metal (measured
in troy ounces) equal to all outstanding Consigned Precious Metal, the
Borrower shall be deemed to have purchased from the Administrative
Agent, on the date of dispatch of such notice, all
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outstanding Consigned Precious Metal at the then applicable Spot Value
thereof plus $.75 per troy ounce thereof, and the Administrative
Agent, on behalf of the Banks based on their respective Commitment
Percentages, notwithstanding the borrowing limitations set forth in
Section 2.1, shall simultaneously be deemed to have made Revolving
Credit Loans to the Borrower in amounts equal to the Spot Value of
Consigned Precious Metal plus $.75 per troy ounce thereof, such
Revolving Credit Loans to be made pro rata based upon each Bank's
Commitment Percentage. Such Revolving Credit Loans deemed to have been
made by the Administrative Agent shall be treated as Revolving Credit
Loans made pursuant to Section 7.3(b) hereof for all purposes under
this Credit Agreement (including, without limitation, the provisions
of Section 7.6 hereof relating to Settlements).
(b) If, on any date, either the Fair Market Value of Consigned
Precious Metal shall exceed the Consignment Dollar Cap or, after
giving effect to any repayment in full of the Revolving Credit Loans
and Swing Line Loans pursuant to Sections 2.9 or 4.6, the Fair Market
Value of Consigned Precious Metal exceeds the Borrowing Base minus the
Maximum Drawing Amount and all Reimbursement Obligations, the
Administrative Agent shall calculate the amount of Consigned Precious
Metal (measured in troy ounces and calculated by reference to the Fair
Market Value thereof on the date of determination) of such excess, the
Borrower shall either (i) pay to the Administrative Agent an amount in
Dollars equal to the Fair Market Value (on the Business Day following
the date of determination) of such excess plus seventy-five cents
($0.75) per troy ounce of such excess, and the Administrative Agent
shall be deemed to have sold to the Borrower an amount of Consigned
Precious Metal having a Fair Market Value equal to such excess, or
(ii) Redeliver to the Administrative Agent for the accounts of the
Gold Fronting Banks Consigned Precious Metal in quantities (measured
in troy ounces) having a Fair Market Value equal to such excess. If,
on any date of determination, the number of troy ounces
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of Consigned Precious Metal shall exceed the Consignment Ounce Cap,
the Borrower shall either (i) repurchase from the Administrative Agent
such excess at the Fair Market Value thereof on the Business Day
following the date of determination, plus seventy-five cents ($0.75)
per troy ounce, or (ii) Redeliver to the Administrative Agent
Consigned Precious Metal in quantities (measured in troy ounces) equal
to such excess. If, on any date of determination, the Fair Market
Value of Consigned Precious Metal exceeds the Consignment Advance Rate
Percentage multiplied by the Fair Market Value of the sum of (A)
Consigned Precious Metal plus (B) Borrower's Precious Metal, the
Borrower shall pay to the Administrative Agent an amount in Dollars
equal to the Fair Market Value (on the Business Day following the date
of determination) of such excess plus seventy-five cents ($0.75) per
troy ounce of such excess, and the Administrative Agent shall be
deemed to have sold to the Borrower an amount of Consigned Precious
Metal equal to such excess.
(c) In connection with any sale of Consigned Precious Metal by
the Borrower (other than as part of a Purchase and Consignment
pursuant to the terms hereof), the Borrower shall immediately either
(i) pay to the Administrative Agent for the accounts of the Gold
Fronting Banks an amount in Dollars equal to the Fair Market Value (on
the Business Day following the date of such sale) of such Consigned
Precious Metal plus seventy-five cents ($0.75) per troy ounce of such
sold Consigned Precious Metal, (ii) Redeliver to the Administrative
Agent for the accounts of the Gold Fronting Banks an amount of
Borrower's Precious Metal (measured in troy ounces) equal to such sold
Consigned Precious Metal, or (iii) Redeliver to the Administrative
Agent for the accounts of the Gold Fronting Banks, so long as no Event
of Default has occurred and is continuing, additional Precious Metal
(which Redelivery, if the Borrower shall not have purchased such sold
Consigned Precious Metal pursuant to clause (i) hereof or Redelivered
Borrower's Precious Metal pursuant to
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clause (ii) hereof, shall be automatic upon such sale) which shall
constitute Consigned Precious Metal in quantities equal to any
Consigned Precious Metal sold. At all times following the occurrence
and during the continuance of an Event of Default, upon any sale by
the Borrower of Precious Metal which prior to the Borrower's purchase
thereof pursuant to Section 6.4(a) constituted Consigned Precious
Metal, the Borrower shall hold the proceeds of such sale in trust for
the Administrative Agent, on behalf of the Banks, and shall
immediately deliver to the Administrative Agent the proceeds of such
sale to be applied to the Obligations in accordance with Section 7.10
hereof. Prior to the occurrence of an Event of Default and absent
other instruction by the Borrower, the Administrative Agent shall
apply Dollar amounts received to reduction of Consigned Precious
Metal, for application first to Consignment Base Rate Amounts and then
to Consignment Fixed Rate Amounts and for allocation between the Gold
Fronting Banks in accordance with each Gold Fronting Bank's Gold
Commitment Percentage thereof.
(d) At any time before the Maturity Date, the Borrower may, at
its election, purchase any or all Consigned Precious Metal from the
Administrative Agent in whole or in part, without penalty, provided
that any full or partial repurchase of the outstanding amount of
Consignment Fixed Rate Amounts of Consigned Precious Metal pursuant to
this Section 6.4(d) may be made only on the last day of the Interest
Period relating thereto. The Borrower shall give the Administrative
Agent, no later than 2:00 p.m., Boston time, three (3) Business Days'
prior written notice of any proposed repurchase of Consigned Precious
Metal specifying the amount of Consigned Precious Metal to be so
repurchased and the proposed date of repurchase, which notice shall be
irrevocable and binding on the Borrower and shall obligate the
Borrower to repurchase such Consigned Precious Metal on the proposed
date of repurchase. Each such repurchase of Consignment Base Rate
Amounts shall be in a minimum amount of three hundred (300) troy
ounces or an integral
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multiple of one hundred (100) in excess thereof, with accrued
Consignment Fees on the Consignment Base Rate Amounts so purchased
being due on the earliest to occur of a Default or Event of Default
and the first day of the calendar month following the calendar month
in which such purchase is made, and each such purchase of Consignment
Fixed Rate Amounts shall be in a minimum amount of one thousand
(1,000) troy ounces or an integral multiple of one hundred (100) troy
ounces in excess thereof and shall be accompanied by a payment of all
accrued but unpaid Consignment Fees on the amount so purchased. Each
such repurchase shall be at a price equal to, at the Borrower's
option, (i) the sum of (A) the Fair Market Value of Precious Metal two
Business Days prior to the date of the Borrower's purchase of
Consigned Precious Metal, plus (B) seventy-five cents ($0.75) per troy
ounce of Precious Metal being repurchased, or (ii) the Spot Value on
the date of the Administrative Agent's receipt of the written notice
described above, and, prior to the occurrence of an Event of Default,
shall be applied to effect a reduction of Consigned Precious Metal,
for application first to Consignment Base Rate Amounts and then to
Consignment Fixed Rate Amounts and for allocation between the Gold
Fronting Banks in accordance with each Gold Fronting Bank's Gold
Commitment Percentage thereof; provided, however, that, in lieu of
paying in Dollars the Fair Market Value, or Spot Value, as the case
may be, of such Consigned Precious Metal, the Borrower may, at its
option, Redeliver to the Administrative Agent for the accounts of the
Gold Fronting Banks Borrower's Precious Metal in an amount (measured
in troy ounces) equal to the amount of Consigned Precious Metal being
purchased.
(e) All purchases of Consignment Fixed Rate Amounts prior to the
end of an Interest Period shall obligate the Borrower to pay any
breakage costs associated with such Consignment Fixed Rate Amounts in
accordance with Section 7.20 hereof.
Conversion Options.
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(a) The Borrower may elect from time to time to have the
Consignment Fee applicable to portions of Consigned Precious Metal
outstanding calculated based upon either the Consignment Base Rate or
Consignment Fixed Rate, provided that (i) with respect to any such
conversion of Consigned Precious Metal, the Borrower shall give the
Administrative Agent, no later than 2:00 p.m. (Boston time), at least
three (3) Eurodollar Business Days' prior written notice of such
election; and (ii) with respect to any such conversion of a
Consignment Fixed Rate Amount into a Consignment Base Rate Amount or
another Consignment Fixed Rate Amount, such conversion shall only be
made on the last day of the Interest Period with respect thereto. All
or any part of outstanding Consigned Precious Metal may be converted
into a Consignment Fixed Rate Amount or Consignment Base Rate Amount
as provided herein, provided that any partial conversion of
Consignment Base Rate Amounts shall be for Precious Metal in a minimum
amount at least equal to three hundred (300) troy ounces or an
integral multiple of one hundred (100) in excess thereof and any
partial conversion of Consignment Fixed Rate Amounts shall be for
Precious Metal in an amount equal to one thousand (1,000) troy ounces
or an integral multiple of one hundred (100) in excess thereof. Each
conversion request relating to the conversion of Consigned Precious
Metal to a Consignment Fixed Rate Amount shall be irrevocable by the
Borrower.
(b) Prior to the occurrence of a Default or an Event of Default,
Consigned Precious Metal may be continued as Consignment Fixed Rate
Amounts upon the expiration of an Interest Period with respect thereto
by compliance by the Borrower with the notice provisions contained in
Section 6.5(a). In the event that the Borrower fails to provide any
such notice with respect to the continuation of any Consignment Fixed
Rate Amounts as such, then such Consignment Fixed Rate Amounts shall
be automatically converted to Consignment Base Rate Amounts on the
last day of such Interest Period.
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(c) Any conversion to or from Consignment Fixed Rate Amounts
shall be in such amounts and be made pursuant to such elections so
that, after giving effect thereto, the aggregate principal amount of
all Consignment Fixed Rate Amounts having the same Interest Period
shall not be less than one thousand (1,000) troy ounces or a whole
multiple of one hundred (100) troy ounces in excess thereof.
Funds for Purchases and Consignments.
(a) Not later than 11:00 a.m. (Boston time) on the proposed Gold
Drawdown Date of any Purchase and Consignment, each of the Gold
Fronting Banks will make available to the Administrative Agent, at the
Administrative Agent's Head Office, in immediately available funds, an
amount in Dollars equal to such Gold Fronting Bank's Gold Commitment
Percentage of the Purchase Price for the Precious Metal to be
purchased and consigned pursuant to such Purchase and Consignment.
Upon receipt from each Gold Fronting Bank of such amount, and upon
receipt of the documents required by Sections 13 and 14 and the
satisfaction of the other conditions set forth therein, to the extent
applicable, the Administrative Agent will make available to the
Borrower the Purchase Price for such Purchase and Consignment made
available to the Administrative Agent by the Gold Fronting Banks and,
at such time, the Administrative Agent shall be deemed to have taken
title to such Borrower's Precious Metal. The failure or refusal of
either Gold Fronting Bank to make available to the Administrative
Agent at the aforesaid time and place on any Gold Drawdown Date the
amount of its Gold Commitment Percentage of the Purchase Price for the
requested Purchase and Consignment shall not relieve the other Gold
Fronting Bank from its several obligations hereunder to make available
to the Administrative Agent the amount of such other Gold Fronting
Bank's Gold Commitment Percentage of the Purchase Price for any
requested Purchase and Consignment.
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(b) The Administrative Agent may, unless notified to the contrary
by ABN prior to a Gold Drawdown Date, assume that ABN has made
available to the Administrative Agent on such Gold Drawdown Date the
amount of its Gold Commitment Percentage of the Purchase Price for the
Purchase and Consignment to be made on such Gold Drawdown Date, and
the Administrative Agent may (but it shall not be required to), in
reliance upon such assumption, make available to the Borrower a
corresponding amount. If ABN makes available to the Administrative
Agent such amount on a date after such Gold Drawdown Date, ABN shall
pay to the Administrative Agent on demand an amount equal to the
product of (i) the average computed for the period referred to in
clause (iii) below, of the weighted average of (A) for portions of the
Purchase Price for Consignment Fixed Rate Amounts which have not been
made available, the Consignment Fee owed by the Borrower with respect
to each day included in such period minus the Eurodollar Applicable
Margin applicable to Revolving Credit Loans, and (B) for portions of
the Purchase Price for Consignment Base Rate Amounts which have not
been made available, the Eurodollar Rate for such Consignment Base
Rate Amounts minus the Contango Rate for such Consignment Base Rate
Amounts plus one-half of one percent (1/2%), times (ii) the amount of
ABN's Gold Commitment Percentage of the Purchase Price for such
Purchase and Consignment, times (iii) a fraction, the numerator of
which is the number of days that elapse from and including such Gold
Drawdown Date to the date on which the amount of ABN's Gold Commitment
Percentage of the Purchase Price for such Purchase and Consignment
shall become immediately available to the Administrative Agent, and
the denominator of which is 360. A statement of the Administrative
Agent submitted to ABN with respect to any amounts owing under this
paragraph shall be prima facie evidence of the amount due and owing to
the Administrative Agent by ABN. If the amount of ABN's Gold
Commitment Percentage of the Purchase Price for such Purchase and
Consignment is not made
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available to the Administrative Agent by ABN within three (3) Business
Days following such Gold Drawdown Date, the Administrative Agent shall
be entitled to compel the Borrower to repurchase a portion of such
Purchase and Consignment equal to ABN's Gold Commitment Percentage on
demand, with interest thereon at the rate per annum equal to the
Consignment Base Rate.
Repurchase at Maturity. The Borrower promises to (a) purchase from the
Administrative Agent all Consigned Precious Metal on the Maturity Date, and
there shall become absolutely due and payable on the Maturity Date an amount in
Dollars equal to the Fair Market Value two Business Days prior to the Maturity
Date of the outstanding amount of Consigned Precious Metal (measured in troy
ounces) plus $.75 per troy ounce thereof, together with any and all accrued and
unpaid Consignment Fees and other amounts accrued thereon, or (b) Redeliver to
the Administrative Agent Precious Metal in an amount (measured in troy ounces)
equal to all Consigned Precious Metal outstanding, together with payment of all
other amounts owed under the Gold Facility.
True Consignment. This Credit Agreement is intended to be a true
consignment agreement, where, following a Purchase and Consignment, the
Administrative Agent takes title to the Consigned Precious Metal until sold by
the Borrower. If, notwithstanding the foregoing sentence, it is determined for
any reason that the consignment created hereby is one intended as security or
that the consignment is a sale or return or other sale, the Consigned Precious
Metal shall constitute Collateral under the terms of the Security Agreement, and
the terms of the Security Agreement shall govern the Banks' security interest
therein.
Change in Gold Commitment Percentages. In the event of any change in the
Gold Fronting Banks' respective Gold Commitment Percentages as a result of any
assignment by or to ABN or LaSalle of any interests, rights and obligations
under this Credit Agreement in accordance with Section 21, the Gold Fronting
Bank whose Gold Commitment Percentage has increased as a result of such change
shall purchase from the
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other Gold Fronting Bank that percentage equal to the resulting increase in such
Gold Fronting Bank's Gold Commitment Percentage of all Consigned Precious Metal
multiplied by the Fair Market Value thereof as of the effective date of such
change.
CERTAIN GENERAL PROVISIONS.
Interest on Loans. Except as otherwise provided in Section 7.21,
(a) Each Base Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day
of the Interest Period with respect thereto at a rate per annum equal
to the sum of (i) the Base Rate plus (ii) the Base Rate Applicable
Margin.
(b) Each Eurodollar Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day
of the Interest Period with respect thereto at a rate per annum equal
to the sum of (i) the Eurodollar Rate plus (ii) the Eurodollar
Applicable Margin.
(c) The Borrower promises to pay interest on each Loan in arrears
on each Interest Payment Date with respect thereto.
Borrowing Base and Consignment Limitations.
(a) The Banks shall have no obligation to make any Extension of
Credit if, at any time the Outstanding Facility Amounts, after giving
effect to such Extension of Credit, would exceed the Borrowing Base.
The Borrowing Base shall be determined by the Agents by reference to
the most recent Borrowing Base Report delivered on a timely basis to
the Agents in accordance with Section 10.4(f).
(b) None of the Gold Fronting Banks shall not have any obligation
to make any Purchase and Consignments if, at any time, the Fair Market
Value of Consigned Precious Metal (after giving effect to all amounts
requested) exceeds the Consignment Advance Rate Percentage multiplied
by the Fair Market Value of the sum of (i)
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Consigned Precious Metal plus (ii) Borrower's Precious Metal. The
amounts of Consigned Precious Metal and of Borrower's Precious Metal
shall be determined by the Agents by reference to the most recent
Consigned Precious Metal Report delivered on a timely basis to the
Agents in accordance with Section 10.4(f).
Requests for Loans.
(a) The Borrower shall give to the Administrative Agent written
notice in the form of Exhibit I hereto (or telephonic notice confirmed
in a writing in the form of Exhibit I hereto) of each Loan requested
hereunder (a "Loan Request") no later than (i) 1:00 P.M. Eastern Time
on the proposed Drawdown Date of any Swing Line Loan, (ii) one (1)
Business Day prior to the proposed Drawdown Date of any Base Rate Loan
other than a Swing Line Loan and (iii) two (2) Eurodollar Business
Days prior to the proposed Drawdown Date of any Eurodollar Rate Loan.
Each such notice shall specify (A) the principal amount of the Loan
requested, (B) the proposed Drawdown Date of such Loan, (C) the
Interest Period for such Loan, and (D) the Type of such Loan. Promptly
upon receipt of any such notice, the Administrative Agent shall notify
each of the Banks thereof. Each Loan Request shall be irrevocable and
binding on the Borrower and shall obligate the Borrower to accept the
Loan requested from the Banks on the proposed Drawdown Date. Each Loan
Request for a Base Rate Loan shall be in a minimum aggregate amount of
$250,000.00 or an integral multiple thereof, and each Loan Request for
a Eurodollar Rate Loan shall be in a minimum aggregate amount of
$250,000.00 or an integral multiple of $50,000.00 in excess thereof.
(b) Notwithstanding the notice and minimum amount requirements
set forth in Section 7.3(a) but otherwise in accordance with the terms
and conditions of this Credit Agreement, the Administrative Agent may,
in its sole discretion and without conferring with the Banks, make
Revolving Credit Loans to the Borrower (i) by entry of credits to the
Borrower's operating
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account(s) (No(s). 50318092) (the "Operating Accounts") with the
Administrative Agent to cover checks or other charges which the
Borrower has drawn or made against such account, (ii) in payment of
any other amounts due and payable by the Borrower hereunder,
including, without limitation, any amounts owed in connection with the
purchase of Consigned Precious Metal pursuant to Section 6.4(a) (the
Borrower hereby consenting to the automatic making of such Loans by
the Administrative Agent in payment of any such amounts), or (iii) in
an amount as otherwise requested by the Borrower. The Borrower hereby
requests and authorizes the Administrative Agent to make from time to
time such Revolving Credit Loans by means of appropriate entries of
such credits sufficient to cover checks and other charges then
presented. The Borrower acknowledges and agrees that the making of
such Loans shall, in each case, be subject in all respects to the
provisions of this Credit Agreement as if they were Loans covered by a
Loan Request including, without limitation, the limitations set forth
in Section 2.1 and the requirements that the applicable provisions of
Section 13 (in the case of Loans made on the Closing Date) and Section
14 be satisfied. All actions taken by the Administrative Agent
pursuant to the provisions of this Section 7.3(b) shall be conclusive
and binding on the Borrower absent such Agent's gross negligence or
willful misconduct. Loans made pursuant to this Section 7.3(b) shall
be Base Rate Loans until converted in accordance with the provisions
of the Credit Agreement and, prior to a Settlement, such interest
shall be for the account of the Administrative Agent.
Conversion Options.
Conversion to Different Type of Loan. The Borrower may elect from time to
time to convert any outstanding Loan to a Loan of another Type,
provided that (a) with respect to any such conversion of a Loan to a
Base Rate Loan, the Borrower shall give the Administrative Agent at
least one (1) Business Day's prior written notice of such election;
(b) with respect to any such conversion of a Base Rate Loan to a
Eurodollar
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Rate Loan, the Borrower shall give the Administrative Agent at least
two (2) Eurodollar Business Days' prior written notice of such
election; (c) with respect to any such conversion of a Eurodollar Rate
Loan into a Base Rate Loan, such conversion shall only be made on the
last day of the Interest Period with respect thereto, and (d) no Loan
may be converted into a Eurodollar Rate Loan when any Default or Event
of Default has occurred and is continuing. On the date on which such
conversion is being made each Bank shall take such action, if any, as
is necessary to transfer its Commitment Percentage of such Loans to
its Domestic Lending Office or its Eurodollar Lending Office, as the
case may be. All or any part of outstanding Loans of any Type (other
than Swing Line Loans which shall only be Base Rate Loans) may be
converted into a Loan of another Type as provided herein, provided
that (y) any partial conversion of any Loan to a Base Rate Loan shall
be in an aggregate principal amount of $50,000.00 or an integral
multiple thereof and (z) any partial conversion of any Loan to a
Eurodollar Rate Loan shall be in an aggregate principal amount of
$250,000.00 or a whole multiple of $50,000.00 in excess thereof. Each
Conversion Request relating to the conversion of a Loan to a
Eurodollar Rate Loan shall be irrevocable by the Borrower.
Continuation of Type of Loan. Any Loan of any Type may be continued as
a Loan of the same Type upon the expiration of an Interest Period with
respect thereto by compliance by the Borrower with the notice
provisions contained in Section 7.4.1; provided that no Eurodollar
Rate Loan may be continued as such when any Default or Event of
Default has occurred and is continuing, but shall be automatically
converted to a Base Rate Loan on the last day of the first Interest
Period relating thereto ending during the continuance of any Default
or Event of Default of which officers of the 1dministrative Agent
active upon the Borrower's account have actual knowledge. In the event
that the Borrower fails to provide any such notice with respect to the
continuation of any Eurodollar Rate Loan as such, then such
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Eurodollar Rate Loan shall be automatically converted to a Base Rate
Loan on the last day of the first Interest Period relating thereto.
The Administrative Agent shall notify the Banks promptly when any such
automatic conversion contemplated by this Section 7.4.2 is scheduled
to occur.
Eurodollar Rate Loans. Any conversion to or from Eurodollar Rate Loans shall be
in such amounts and be made pursuant to such elections so that, after
giving effect thereto, the aggregate principal amount of all
Eurodollar Rate Loans having the same Interest Period shall not be
less than $250,000.00 or a whole multiple of $50,000.00 in excess
thereof. At no time shall there be more than ten (10) Eurodollar Rate
Loans outstanding.
Funds for Loans. Funding Procedures. Not later than 11:00 a.m. (Boston time)
on the proposed Drawdown Date of any Loans (other than Swing Line
Loans), each of the Banks will make available to the Administrative
Agent, at its Head Office, in immediately available funds, the amount
of such Bank's Commitment Percentage of the amount of the requested
Loans. Upon receipt from each Bank of such amount, and upon receipt of
the documents required by Sections 13 and 14 and the satisfaction of
the other conditions set forth therein, to the extent applicable, the
Administrative Agent will make available to the Borrower the aggregate
amount of such Loans made available to the Administrative Agent by the
Banks. The failure or refusal of any Bank to make available to the
Administrative Agent at the aforesaid time and place on any Drawdown
Date the amount of its Commitment Percentage of the requested Loans
shall not relieve any other Bank from its several obligation hereunder
to make available to the Administrative Agent the amount of such other
Bank's Commitment Percentage of any requested Loans.
Advances by Applicable Agent. The Administrative Agent may, unless notified to
the contrary by any Bank prior to a Drawdown Date of any Loans (other
than Swing Line Loans), assume that such Bank has made available to
the Administrative Agent on such Drawdown Date the amount of such
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Bank's Commitment Percentage of the Loans to be made on such Drawdown
Date, and the Administrative Agent may (but it shall not be required
to), in reliance upon such assumption, make available to the Borrower
a corresponding amount. If any Bank makes available to the
Administrative Agent such amount on a date after such Drawdown Date,
such Bank shall pay to the Administrative Agent on demand an amount
equal to the product of (i) the average computed for the period
referred to in clause (iii) below, of the weighted average interest
rate paid by the Administrative Agent for federal funds acquired by
the Administrative Agent during each day included in such period,
times (ii) the amount of such Bank's Commitment Percentage of such
Loans, times (iii) a fraction, the numerator of which is the number of
days that elapse from and including such Drawdown Date to the date on
which the amount of such Bank's Commitment Percentage of such Loans
shall become immediately available to the Administrative Agent, and
the denominator of which is 365. A statement of the Administrative
Agent submitted to such Bank with respect to any amounts owing under
this paragraph shall be prima facie evidence of the amount due and
owing to the Administrative Agent by such Bank. If the amount of such
Bank's Commitment Percentage of such Loans is not made available to
the Administrative Agent by such Bank within three (3) Business Days
following such Drawdown Date, the Administrative Agent shall be
entitled to recover such amount from the Borrower on demand, with
interest thereon at the rate per annum applicable to the Loans made on
such Drawdown Date.
Settlements; Failure to Make Funds Available.
(a) On each Settlement Date, the Administrative Agent shall, not
later than 11:00 a.m. (Boston time), give telephonic or facsimile
notice (i) to the Banks and the Borrower of the respective outstanding
amount of Loans made by the Administrative Agent on behalf of the
Banks from the immediately preceding Settlement Date through the close
of business on the prior day and
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the amount of any Eurodollar Rate Loans to be made (following the
giving of notice pursuant to Section 7.3(a)(ii)) on such date pursuant
to a Loan Request and (ii) to the Banks of the amount (a "Settlement
Amount") that each Bank (the "Settling Bank") shall pay to effect a
Settlement of any Loan. A statement of the Administrative Agent
submitted to the Banks and the Borrower or to the Banks with respect
to any amounts owing under this Section 7.6 shall be prima facie
evidence of the amount due and owing. The Settling Bank shall, not
later than 3:00 p.m. (Boston time) on such Settlement Date, effect a
wire transfer of immediately available funds to the Administrative
Agent in the amount of the Settlement Amount. All funds advanced by
any Bank as a Settling Bank pursuant to this Section 7.6 shall for all
purposes be treated as a Loan made by such Settling Bank to the
Borrower and all funds received by any Bank pursuant to this Section
7.6 shall for all purposes be treated as repayment of amounts owed
with respect to Loans made by such Bank. In the event that any
bankruptcy, reorganization, liquidation, receivership or similar cases
or proceedings in which the Borrower is a debtor prevent a Settling
Bank from making any Loan to effect a Settlement as contemplated
hereby, such Settling Bank will make such disposition and arrangements
with the other Banks with respect to such Loans, either by way of
purchase of participations, distribution, pro tanto assignment of
claims, subrogation or otherwise as shall result in each Bank's share
of the outstanding Revolving Credit Loans and Swing Line Loans being
equal, as nearly as may be, to such Bank's Commitment Percentage of
the outstanding amount of the Revolving Credit Loans and Swing Line
Loans.
(b) The Administrative Agent may, unless notified to the contrary
by any Bank prior to a Settlement Date, assume that such Bank has made
or will make available to the Administrative Agent on such Settlement
Date the amount of such Bank's Settlement Amount, and the
Administrative Agent may (but it shall not be required to), in
reliance upon such assumption, make available to the
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Borrower a corresponding amount. If any Bank makes available to the
Administrative Agent such amount on a date after such Settlement Date,
such Bank shall pay to the Administrative Agent on demand an amount
equal to the product of (i) the average computed for the period
referred to in clause (iii) below, of the weighted average interest
rate paid by the Administrative Agent for federal funds acquired by
such Administrative Agent during each day included in such period,
times (ii) the amount of such Settlement Amount, times (iii) a
fraction, the numerator of which is the number of days that elapse
from and including such Settlement Date to the date on which the
amount of such Settlement Amount shall become immediately available to
such Administrative Agent, and the denominator of which is 360. A
statement of the Administrative Agent submitted to such Bank with
respect to any amounts owing under this paragraph shall be prima facie
evidence of the amount due and owing to the Administrative Agent by
such Bank. If such Bank's Settlement Amount is not made available to
the Administrative Agent by such Bank within three (3) Business Days
following such Settlement Date, the Administrative Agent shall be
entitled to recover such amount from the Borrower on demand, with
interest thereon at the rate per annum applicable to the Revolving
Credit Loans as of such Settlement Date.
(c) The failure or refusal of any Bank to make available to the
Administrative Agent at the aforesaid time and place on any Settlement
Date the amount of its Settlement Amount (i) shall not relieve any
other Bank from its several obligations hereunder to make available to
the Administrative Agent the amount of such other Bank's Settlement
Amount and (ii) shall not impose upon such other Bank any liability
with respect to such failure or refusal or otherwise increase the
Commitment of such other Bank.
Optional Repayments of Loans.
(a) The Borrower shall have the right, at its election, to repay the
outstanding amount of any
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Loan, as a whole or in part, at any time without penalty or premium,
provided that any full or partial prepayment of the outstanding amount
of any Eurodollar Rate Loans pursuant to this Section 7.7 may be made
only on the last day of the Interest Period relating thereto. The
Borrower shall give the Administrative Agent, no later than 11:00
a.m., Boston time, at least three (3) Business Days prior written
notice of any proposed prepayment pursuant to this Section 7.7 of Base
Rate Loans, and four (4) Eurodollar Business Days notice of any
proposed prepayment pursuant to this Section 7.7 of Eurodollar Rate
Loans, in each case specifying the proposed date of prepayment of
Loans, the nature of the Loan as a Revolving Credit Loan, the Term
Loan or a Swing Line Loan and the principal amount to be prepaid. Each
such partial prepayment of the Loans shall be in a minimum amount of
$500,000.00 or an integral multiple of $100,000.00 in excess thereof,
shall be accompanied by the payment of accrued interest on the
principal prepaid to the date of prepayment and shall be applied, in
the absence of instruction by the Borrower, first to the principal of
Base Rate Loans and then to the principal of Eurodollar Rate Loans.
Each partial prepayment of Loans (other than Swing Line Loans) shall
be allocated among the Banks, in proportion, as nearly as practicable,
to the respective unpaid principal amount of each Bank's Notes, with
adjustments to the extent practicable to equalize any prior repayments
not exactly in proportion.
(b) Notwithstanding the notice and minimum amount requirements
set forth in Section 7.7(a) but otherwise in accordance with the terms
and conditions of this Credit Agreement, the Administrative Agent may,
in its sole discretion at the Borrower's request, apply amounts held
in the BKB Concentration Accounts in payment of any Loans made to the
Borrower by the Administrative Agent pursuant to Section 7.3(b)
hereof, subject to the procedures for Settlement set forth in Section
7.6.
Mandatory Prepayments of Loans and Commitment Reductions
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Asset Disposition Prepayment. The Borrower shall pay to the Administrative
Agent, for the accounts of the Banks (each, an "Asset Disposition
Prepayment"), within thirty (30) days after the completion by the
Borrower of any asset dispositions pursuant to Section 11.5.2(d), an
amount equal to one hundred percent (100%) of the Net Proceeds
received by the Borrower in connection with such asset disposition
solely to the extent that the aggregate amount of Net Proceeds
received by the Borrower shall exceed, for all such asset dispositions
undertaken pursuant to Section 11.5.2(d) during any fiscal year of the
Borrower, $250,000; provided, however, that no Asset Disposition
Prepayment shall be required with respect to the proceeds from the
sale of: (i) the accounts receivable acquired in the Acquisition and
(ii) approximately ten (10) stores, and inventory therein, acquired in
the Acquisition.
New Issuance Prepayment. The Borrower shall pay to the Agent, for the
accounts of to the Banks (each, a "New Issuance Prepayment"), within
ten (10) days after the completion by the Borrower of any issuance of
(i) Indebtedness permitted pursuant to Section 11.1(i) hereof or (ii)
equity securities of the Borrower or any of its Subsidiaries,
including, without limitation, any issuance of warrants, options or
subscription rights (other than issuances of common stock to employees
of the Borrower), permitted pursuant to Section 11.13 hereof, an
amount equal to fifty percent 50% of the Net Proceeds received by the
Borrower in connection with any such issuance; provided, however,
that no such New Issuance Prepayment shall be required with respect
to any such issuance if the ratio of (a) Consolidated Total Funded
Debt during the period of four consecutive fiscal quarters ending
with the fiscal quarter most recently ended prior to such issuance
for which the Borrower has delivered financial statements in
accordance with Section 9.4.1 or Section 10.4 to (b) Consolidated
EBITDA for such period is less than 2.50:1.00.
Excess Cash Flow Prepayment. The Borrower shall pay to the Administrative Agent,
for the accounts of the Banks (each, an "Excess Cash Flow
Prepayment"), annually in arrears within ninety
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(90) days after the end of each fiscal year of the Borrower (or, if
earlier, upon delivery of the annual financial statements pursuant to
Section 10.4(a) hereof), an amount equal to fifty percent (50%) of the
Consolidated Excess Cash Flow, if any, for such immediately preceding
fiscal year; provided however, that no such Excess Cash Flow
Prepayment shall be required with respect to such fiscal year if the
ratio of (a) Consolidated Total Funded Debt during such fiscal year to
(b) Consolidated EBITDA for such fiscal year is less than 2.50:1.00.
Applications of Mandatory Prepayments. Each Asset Disposition Prepayment,
New Issuance Prepayment or Excess Cash Flow Prepayment (collectively,
"Mandatory Prepayments") received by the Administrative Agent shall be
applied to the Obligations and to reduce the Commitments as follows:
(i) first, to prepay ratably the remaining scheduled
installments of principal due on the Term Loan, plus all
accrued and unpaid interest thereon;
(ii) second, to apply such remainder as follows:
(A) first, to pay all amounts then due and payable under
this Credit Agreement;
(B) second, to prepay the Swing Line Loans, plus all
accrued and unpaid interest thereon;
(C) third, to prepay the Revolving Credit Loans which
are Base Rate Loans, plus all accrued and unpaid
interest thereon;
(D) fourth, to prepay the Revolving Credit Loans which are
Eurodollar Rate Loans, plus all accrued and unpaid
interest thereon;
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(E) fifth, to repurchase Consigned Precious Metal for
application to Consignment Base Rate Amounts, plus
all accrued and unpaid Consignment Fees thereon;
(F) sixth, to repurchase Consigned Precious Metal for
application to Consignment Fixed Rate Amounts, plus
all accrued and unpaid Consignment Fees thereon;
(G) seventh, to cash collateralize all Reimbursement
Obligations; and
(H) eighth, to the Borrower's Operating Accounts.
Repayments of Loans and Repurchases of Consigned Precious Metals Prior
to Event of Default.
(a) Prior to the occurrence of an Event of Default as to which
the account officers of the Agents active upon the Borrower's account
have actual knowledge, (i) all funds and cash proceeds in the form of
money, checks and like items received in the BKB Concentration
Accounts as contemplated by Section 10.14 shall be credited, on the
same Business Day on which the Administrative Agent determines that
good collected funds have been received, and, prior to the receipt of
good collected funds, on a provisional basis until final receipt of
good collected funds, to the Obligations or to the Operating Accounts
as contemplated by Section 7.9(c), (ii) all funds and cash proceeds in
the form of a wire transfer received in the BKB Concentration Accounts
as contemplated by Section 10.14 shall be credited on the same
Business Day as the Administrative Agent's receipt of such amounts (or
on such later date as the Administrative Agent determines that good
collected funds have been received), to the Obligations or to the
Operating Accounts as contemplated by Section 7.9(c), and (iii) all
funds and cash proceeds in the form of an automated clearing house
transfer received in the BKB Concentration Accounts as contemplated by
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Section 10.14 shall be credited on the next Business Day following the
Administrative Agent's receipt of such amounts (or on such later date
as the Administrative Agent determines that good collected funds have
been received), to the Obligations or to the Operating Accounts as
contemplated by Section 7.9(c). For purposes of the foregoing
provisions of this Section 7.9(a), the Administrative Agent shall not
be deemed to have received any such cash proceeds on any day unless
received by the Administrative Agent before 2:30 p.m. (Boston time) on
such day. The Borrower further acknowledges and agrees that any such
provisional credit or credit in respect of wire transfers shall be
subject to reversal if final collection in good funds of the related
item is not received by the Administrative Agent in accordance with
the Administrative Agent's customary procedures and practices for
collecting provisional or wire transfer items.
(b) If at any time (i) the Outstanding Facility Amounts exceed
the Borrowing Base or (ii) the Fair Market Value of Consigned Precious
Metal exceeds the Consignment Advance Rate Percentage multiplied by
the Fair Market Value of the sum of (A) Consigned Precious Metal plus
(B) Borrower's Precious Metal, the Borrower shall immediately pay the
amount of such excess to the Agents for the respective accounts of the
Banks for application prior to the occurrence of an Event of Default
in accordance with Section 7.9(c)(i) and (ii), respectively.
(c) Prior to the occurrence of an Event of Default of which the
account officers of the Agents active on the Borrower's account have
knowledge, (i) all funds transferred to the BKB Concentration Accounts
and any amounts required to be repaid pursuant to Section 7.9(b)(i)
shall be applied to the Obligations as follows:
(A) first, to pay amounts then due and payable under
this Credit Agreement;
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(B) second, to reduce Swing Loans;
(C) third, to reduce Revolving Credit Loans which are
Base Rate Loans;
(D) fourth, to reduce Revolving Credit Loans which are
Eurodollar Rate Loans;
(E) fifth, to repurchase Consigned Precious Metal for
application to Consignment Base Rate Amounts, plus
all accrued and unpaid Consignment Fees thereon;
(F) sixth, to repurchase Consigned Precious Metal for
application to Consignment Fixed Rate Amounts, plus
all accrued and unpaid Consignment Fees thereon;
(G) seventh, but only in the case of a required repayment
pursuant to Section 7.9(b)(i), to cash collateralize
all Reimbursement Obligations; and
(H) eighth, to the Borrower's Operating Accounts; and
(ii) any amounts required to be repaid pursuant to Section 7.9(b)(ii)
shall be applied to the Obligations as follows:
(A) first, to repurchase Consigned Precious Metal for
application to Consignment Base Rate Amounts, plus
all accrued and unpaid Consignment Fees thereon;
(B) second, to repurchase Consigned Precious Metal for
application to Consignment Fixed Rate Amounts, plus
all accrued and unpaid Consignment Fees thereon; and
(C) third, to the Borrower's Operating Accounts.
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All prepayments of Eurodollar Rate Loans or Consignment Fixed Rate
Amounts prior to the end of an Interest Period shall obligate the
Borrower to pay any breakage costs associated with such Eurodollar
Rate Loans or Consignment Fixed Rate Amounts in accordance with
Section 7.20 hereof. Prior to the occurrence of an Event of Default,
the Borrower may elect to avoid such breakage costs by providing to
the Administrative Agent cash in an amount sufficient to cash
collateralize such Eurodollar Rate Loans or Consignment Fixed Rate
Amounts, but in no event shall the Borrower be deemed to have paid
such Eurodollar Rate Loans or Consignment Fixed Rate Amounts until
such cash has been paid to the Administrative Agent for application to
such Eurodollar Rate Loans or Consignment Fixed Rate Amounts. The
Agents may elect to cause such cash collateral to be deposited into
either (A) a cash collateral account pursuant to the terms of a Cash
Collateral Agreement entered into by the Borrower and the Collateral
Agent at the time of such deposit and such other documents or filings
at the time requested by the Collateral Agent in connection with such
deposit or (B) the Borrower's Operating Accounts. All prepayments of
the Loans (other than Swing Line Loans) pursuant to this Section
7.9(c) shall be allocated among the Banks making such Loans, in
proportion, as nearly as practicable, to the respective unpaid
principal amount of such Loans outstanding, with adjustments to the
extent practicable to equalize any prior payments or repayments not
exactly in proportion.
Repayments of Loans and Repurchases of Consigned Precious Metals and
Distribution of Collateral Proceeds After Event of Default. In the event that
following the occurrence and during the continuance of an Event of Default, the
Collateral Agent, any other Agent or any Bank, as the case may be, receives any
monies, whether pursuant to Section 6.4(c), Section 10.14 or Section 15.4 or
otherwise with respect to the realization upon any of the Collateral, such
monies shall be distributed for application as follows (the Borrower hereby
authorizing and consenting to such application):
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(a) First, to the payment of, or (as the case may be) the
reimbursement of the Agents for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or
sustained by the Agents in connection with the collection of such
monies by the Agents, for the exercise, protection or enforcement by
the Collateral Agent of all or any of the rights, remedies, powers and
privileges of the Collateral Agent, for the benefit of the Agents and
the Banks, under this Credit Agreement or any of the other Loan
Documents or in respect of the Collateral or in support of any
provision of adequate indemnity to the Agents against any taxes or
liens which by law shall have, or may have, priority over the rights
of the Agents to such monies;
(b) Second, to all other Obligations in such order or preference
as the Majority Banks may determine; provided, however, that
distributions in respect of (i) such Obligations shall be made pari
passu among Obligations with respect to the Agents' fees payable
pursuant to Section 7.12, Obligations arising out of the BKB Hedging
Arrangements and all other Obligations and (ii) Obligations owing to
the Banks with respect to each type of Obligation such as interest,
principal, fees and expenses, shall be made among the Banks pro rata,
in accordance with their respective Commitment Percentages (increased,
in the case of BKB, to reflect the amount of the BKB Hedging
Arrangements); and provided, further, that the Agents may in their
discretion make proper allowance to take into account any Obligations
not then due and payable;
(c) third, upon payment and satisfaction in full or other
provisions for payment in full satisfactory to each of the Banks and
the Agents of all of the Obligations, to the payment of any
obligations required to be paid pursuant to Section 9-504(1)(c) of the
Uniform Commercial Code of the Commonwealth of Massachusetts; and
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(d) Fourth, the excess, if any, shall be returned to the Borrower
or to such other Persons as are entitled thereto.
Closing Fee. The Borrower agrees to pay to the Administrative Agent a
closing fee according to the terms of a separate fee letter entered into on or
prior to the Closing Date among the Borrower and the Agents.
Administrative Agent's Fee. The Borrower shall pay to the Administrative
Agent, for the Administrative Agent's own account, an Administrative Agent's fee
according to the terms of a separate fee letter entered into on or prior to the
Closing Date between the Borrower and the Administrative Agent.
Funds for Payments.
Payments to Administrative Agent. Each Redelivery and all payments of
principal, interest, Reimbursement Obligations, commitment fees,
Letter of Credit Fees, Consignment Fees and any other amounts due
hereunder or under any of the other Loan Documents shall be made to
the Administrative Agent, for the respective accounts of the Banks and
the Administrative Agent, at the Administrative Agent's Head Office or
at such other location in the Boston, Massachusetts, area that the
Administrative Agent may from time to time designate, in each case in
immediately available funds in Dollars.
No Offset, etc. All payments by the Borrower hereunder and under any o
the other Loan Documents shall be made without setoff or counterclaim
and free and clear of and without deduction for any taxes, levies,
imposts, duties, charges, fees, deductions, withholdings, compulsory
loans, restrictions or conditions of any nature now or hereafter
imposed or levied by any jurisdiction or any political subdivision
thereof or taxing or other authority therein unless the Borrower is
compelled by law to make such deduction or withholding. If any such
obligation is imposed upon the Borrower with respect to any amount
payable by it hereunder or under any of the other Loan Documents, the
Borrower will pay to the Administrative Agent, for the account of the
Banks or (as the case may be) the Agents, on the date on which such
amount is due and payable
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hereunder or under such other Loan Document, such additional amount in
Dollars as shall be necessary to enable the Banks or the Agents to
receive the same net amount which the Banks or the Agents would have
received on such due date had no such obligation been imposed upon the
Borrower. The Borrower will deliver promptly to the Agents
certificates or other valid vouchers for all taxes or other charges
deducted from or paid with respect to payments made by the Borrower
hereunder or under such other Loan Document.
Computations. All computations of interest on the Loans and of commitment
fees, Letter of Credit Fees, Consignment Fees or other fees shall, unless
otherwise expressly provided herein, be based on a 360-day year and paid for the
actual number of days elapsed. Except as otherwise provided in the definition of
the term "Interest Period" with respect to Eurodollar Rate Loans and Consignment
Fixed Rate Amounts, whenever a payment hereunder or under any of the other Loan
Documents becomes due on a day that is not a Business Day, the due date for such
payment shall be extended to the next succeeding Business Day, and interest
shall accrue during such extension. The outstanding amount of the Loans and
Consigned Precious Metal as reflected on the Revolving Credit Note Records, the
Term Note Records, the Swing Line Note Record and the other records maintained
by the Agents and each Bank from time to time shall be considered correct and
binding on the Borrower unless within five (5) Business Days after receipt of
any notice by any of the Agents or the Banks of such outstanding amount, such
Agent or such Bank shall notify the Borrower to the contrary.
Inability to Determine Eurodollar Rate or Consignment Fixed Rate. In the
event, prior to the commencement of any Interest Period relating to any
Eurodollar Rate Loan or Consignment Fixed Rate Amount, the Administrative Agent
shall determine in good faith that adequate and reasonable methods do not exist
for ascertaining (a) the Eurodollar Rate that would otherwise determine the rate
of interest to be applicable to any Eurodollar Rate Loan during any Interest
Period or (b) the Eurodollar Rate or the Contango Rate that would otherwise
determine the rate of interest to be applicable to any Consignment Fixed Rate
Amount during any Interest Period, the
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Administrative Agent shall forthwith give notice of such determination and the
basis therefor (which shall be conclusive and binding on the Borrower and the
Banks) to the Borrower and the Banks. In such event (x) any Loan Request or
Conversion Request with respect to Eurodollar Rate Loans or Purchase and
Consignment Request with respect to Consignment Fixed Rate Amounts shall be
automatically withdrawn and, shall be deemed a request for Base Rate Loans or
Consignment Base Rate Amounts, as applicable, (y) each Eurodollar Rate Loan or
Consignment Fixed Rate Amount, as applicable, will automatically, on the last
day of the then current Interest Period relating thereto, become a Base Rate
Loan or Consignment Base Rate Amount, as applicable and (z) the obligations of
the Banks to make Eurodollar Rate Loans or Consignment Fixed Rate Amounts shall
be suspended until such Administrative Agent determines that the circumstances
giving rise to such suspension no longer exist, whereupon such Administrative
Agent shall so notify the Borrower and the Banks.
Illegality of Eurodollar Rate Loans or Consignment Fixed Rate Amounts.
(a) Notwithstanding any other provisions herein, if any present
or future law, regulation, treaty or directive or in the
interpretation or application thereof shall make it unlawful for any
Bank to make or maintain Eurodollar Rate Loans, such Bank shall
forthwith give notice of such circumstances to the Borrower and the
other Banks and thereupon (i) the commitment of such Bank to make
Eurodollar Rate Loans or convert Loans of another Type to Eurodollar
Rate Loans shall forthwith be suspended and (ii) such Bank's Loans
then outstanding as Eurodollar Rate Loans, if any, shall be converted
automatically to Base Rate Loans on the last day of each Interest
Period applicable to such Eurodollar Rate Loans or within such earlier
period as may be required by law. The Borrower hereby agrees promptly
to pay the Administrative Agent, for the account of such Bank, upon
demand by such Bank, any additional amounts necessary to compensate
such Bank for any reasonable costs incurred by such Bank in making any
conversion in accordance with this
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Section 8.15, including any interest or fees payable by such Bank to
lenders of funds obtained by it in order to make or maintain its
Eurodollar Rate Loans hereunder.
(b) Notwithstanding any other provisions herein, if any present
or future law, regulation, treaty or directive or in the
interpretation or application thereof shall make it unlawful for any
Bank to make or maintain Consignment Fixed Rate Amounts, such Bank
shall forthwith give notice of such circumstances to the Borrower and
the other Banks and thereupon (i) the commitment of such Bank to make
Consignment Fixed Rate Amounts or convert Consigned Precious Metal
into Consignment Fixed Rate Amounts shall forthwith be suspended, and
(ii) such Bank's Consigned Precious Metal then outstanding as
Consignment Fixed Rate Amounts, if any, shall be converted
automatically to Consignment Base Rate Amounts on the last day of each
Interest Period applicable to such Consignment Fixed Rate Amounts or
within such earlier period as may be required by law. The Borrower
hereby agrees promptly to pay the Administrative Agent, for the
account of such Bank, upon demand by such Bank, any additional amounts
necessary to compensate such Bank for any reasonable costs incurred by
such Bank in making any conversion in accordance with this Section
7.16, including any interest or fees payable by such Bank to lenders
of funds obtained by it in order to make or maintain its Consignment
Fixed Rate Amounts hereunder.
Additional Costs, etc. If any present or future applicable law, which
expression, as used herein, includes statutes, rules and regulations thereunder
and interpretations thereof by any competent court or by any governmental or
other regulatory body or official charged with the administration or the
interpretation thereof and requests, directives, instructions and notices at any
time or from time to time hereafter made upon or otherwise issued to any Bank or
Agent by any central bank or other fiscal, monetary or other authority (whether
or not having the force of law), shall:
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(a) subject any Bank or Agent to any tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature with respect to
this Credit Agreement, the other Loan Documents, any Letters of
Credit, such Bank's Commitment, the Purchases and Consignments or the
Loans (other than taxes based upon or measured by the income or
profits of such Bank or Agent), or
(b) materially change the basis of taxation (except for changes
in taxes on income or profits) of payments to any Bank of the
principal of or the interest on any Loans or any other amounts payable
to any Bank or Agent under this Credit Agreement or any of the other
Loan Documents, or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Credit Agreement)
any special deposit, reserve, assessment, liquidity, capital adequacy
or other similar requirements (whether or not having the force of law)
against assets held by, or deposits in or for the account of, or loans
by, or letters of credit issued by, or commitments of an office of any
Bank, or
(d) impose on any Bank or Agent any other conditions or
requirements with respect to this Credit Agreement, the other Loan
Documents, any Letters of Credit, the Loans, the Purchases and
Consignments, such Bank's Commitment, or any class of loans, letters
of credit or commitments of which any of the Loans, Purchases and
Consignments or such Bank's Commitment forms a part, and the result of
any of the foregoing is
(i) to increase the cost to any Bank of making,
funding, issuing, renewing, extending or maintaining any of
the Loans, any Purchase and Consignment or such Bank's
Commitment or any Letter of Credit, or
(ii) to reduce the amount of principal, interest,
Reimbursement Obligation or other amount payable to such Bank
or Agent hereunder on account of such Bank's
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Commitment, any Letter of Credit, any Purchase and
Consignment or any of the Loans, or
(iii) to require such Bank or Agent to make any
payment or to forego any interest or Reimbursement Obligation
or other sum payable hereunder, the amount of which payment
or foregone interest or Reimbursement Obligation or other
sum is calculated by reference to the gross amount of any sum
receivable or deemed received by such Bank or Agent from the
Borrower hereunder,
then, and in each such case, the Borrower will, upon demand made by such Bank or
(as the case may be) such Agent at any time and from time to time and as often
as the occasion therefor may arise, pay to such Bank or such Agent such
additional amounts as will be sufficient to compensate such Bank or such Agent
for such additional cost, reduction, payment or foregone interest or
Reimbursement Obligation or other sum.
Capital Adequacy. If after the date hereof any Bank or Agent determines
that (a) the adoption of or change in any law, governmental rule, regulation,
policy, guideline or directive (whether or not having the force of law)
regarding capital requirements for banks or bank holding companies or any change
in the interpretation or application thereof by a court or governmental
authority with appropriate jurisdiction, or (b) compliance by such Bank or such
Agent or any corporation controlling such Bank or such Agent with any law,
governmental rule, regulation, policy, guideline or directive (whether or not
having the force of law) of any such entity regarding capital adequacy, has the
effect of reducing the return on such Bank's or such Agent's commitment with
respect to any Loans or any Purchases and Consignments to a level below that
which such Bank or such Agent could have achieved but for such adoption, change
or compliance (taking into consideration such Bank's or such Agent's then
existing policies with respect to capital adequacy and assuming full utilization
of such entity's capital) by any amount deemed by such Bank or (as the case may
be) such Agent to be material, then such Bank or such Agent
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may notify the Borrower of such fact. To the extent that the amount of such
reduction in the return on capital is not reflected in the Base Rate or the
amount of Consignment Fees, as applicable, the Borrower agrees to pay such Bank
or (as the case may be) such Agent for the amount of such reduction in the
return on capital as and when such reduction is determined upon presentation by
such Bank or (as the case may be) such Agent of a certificate in accordance with
Section 7.19 hereof. Each Bank shall allocate such cost increases among its
customers in good faith and on an equitable basis.
Certificate. A certificate setting forth any additional amounts payable
pursuant to Sections 7.17 or 7.18 and a brief explanation of such amounts which
are due, submitted by any Bank or Agent to the Borrower, shall be conclusive,
absent manifest error, that such amounts are due and owing.
Indemnity. The Borrower agrees to indemnify each Bank and to hold each Bank
harmless from and against any loss, cost or expense (including loss of
anticipated profits) that such Bank may sustain or incur as a consequence of (i)
default by the Borrower in payment of the principal amount of or any interest on
any Eurodollar Rate Loans as and when due and payable, including any such loss
or expense arising from interest or fees payable by such Bank to lenders of
funds obtained by it in order to maintain its Eurodollar Rate Loans, (ii)
default by the Borrower in making a borrowing or conversion after the Borrower
has given (or is deemed to have given) a Loan Request, notice (in the case of
all or any portion of the Term Loan pursuant to Section 3.5), Conversion Request
relating thereto in accordance with Sections 2.6, 3.6, 7.3 or 7.4, (iii) the
making of any payment of a Eurodollar Rate Loan or the making of any conversion
of any such Loan to a Base Rate Loan on a day that is not the last day of the
applicable Interest Period with respect thereto, including interest or fees
payable by such Bank to lenders of funds obtained by it in order to maintain any
such Loans; (iv) default by the Borrower in making a Purchase and Consignment,
including a Purchase and Consignment as a Consignment Fixed Rate Amount, or a
conversion after the Borrower has given (or is deemed to have given) a Purchase
and Consignment Request or a conversion request relating thereto in accordance
with Section 6.3 or Section 6.5 or (v) the making of any payment of
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a Consignment Fixed Rate Amount or the making of any conversion of any such
Consignment Fixed Rate Amount to a Consignment Base Rate Amount on a day that is
not the last day of the applicable Interest Period with respect thereto,
including interest or fees payable by such Bank to lenders of funds obtained by
it in order to maintain any such Purchases and Consignments.
Interest After Default. During the continuance of a Default or an Event of
Default, (a) the principal of the Loans, whether or not due, the Fair Market
Value of Consigned Precious Metal, whether or not due to be purchased or
Redelivered by the Borrower in accordance with the requirements of Section 6.4,
and (to the extent permitted by applicable law) interest on the Loans and
Consignment Fees shall bear interest, compounded monthly and payable on demand,
at a rate per annum equal to two percent (2%) above the rate of interest or, as
the case may be, Consignment Fee rate otherwise applicable thereto pursuant to
Section 7.1 or, as the case may be, Section 6.2 until such amounts have been
paid in full (after as well as before judgment), and (b) all other amounts
payable hereunder or under any of the other Loan Documents shall bear interest
at a rate per annum equal to two percent (2%) above the Base Rate until such
amounts shall be paid in full (after as well as before judgment). Performance
Adjustments. Based upon, and following receipt by the Banks of (a) beginning
with the Borrower's financial statements as hereafter described for the fiscal
quarter of the Borrower ending January 31, 1999, (i) with respect to the first
three fiscal quarters of each fiscal year, the Borrower's quarterly unaudited
consolidated financial statements pursuant to Section 10.4(b) and (ii) with
respect to the last fiscal quarter of each fiscal year, the Borrowers' annual
audited consolidated financial statements pursuant to Section 10.4(a), and (b) a
certificate of the chief financial officer of the Borrower setting forth
calculations of the financial information set forth below, (the Borrower also
hereby agreeing to provide to the Agents, simultaneously with the delivery of
such certificate, telephonic notice of any Performance Adjustments based upon
such calculations), the Base Rate Applicable Margin, the Eurodollar Applicable
Margin and the Commitment Fee Rate shall be subject to possible adjustment in
accordance with the
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<PAGE> 95
provisions of this paragraph (each such adjustment, a "Performance Adjustment").
Performance Adjustments shall be effective (the date of the effectiveness of any
Performance Adjustment, a "Performance Adjustment Date") with respect to
adjustments to the Base Rate Applicable Margin, the Eurodollar Applicable Margin
and the Commitment Fee Rate, three (3) Business Days following receipt by the
Agents of (y) (i) with respect to the first three fiscal quarters of each fiscal
year, the Borrower's quarterly unaudited consolidated financial statements
pursuant to Section 10.4(b) and (ii) with respect to the last fiscal quarter of
each fiscal year, the Borrower's annual audited consolidated financial
statements pursuant to Section 10.4(a), and (z) a certificate of the chief
financial officer of the Borrower setting forth calculations of the financial
information set forth below (the Borrower also hereby agreeing to provide to the
Agents, simultaneously with the delivery of such certificate, telephonic notice
of any Performance Adjustments based upon such calculations). The Eurodollar
Applicable Margin, the Base Rate Applicable Margin and the Commitment Fee Rate
with respect to any period following any Performance Adjustment Date until the
next succeeding Performance Adjustment Date shall be as set forth in the table
below on the line furthest down in such table with respect to which the
Borrower's ratio of (A) Consolidated Total Funded Debt during the period of four
consecutive fiscal quarters most recently ended prior to such possible
Performance Adjustment Date to (B) Consolidated EBITDA for such period, shall be
less than the ratio set forth on such line in such table:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
BASE RATE
APPLICABLE MARGIN
EURODOLLAR FOR REVOLVING
APPLICABLE MARGIN EURODOLLAR CREDIT LOANS AND BASE RATE
RATIO OF TOTAL FOR REVOLVING APPLICABLE SWING LINE LOANS APPLICABLE
FUNDED DEBT TO CREDIT LOANS MARGIN FOR MARGIN FOR COMMITMENT FEE
EBITDA TERM LOAN TERM LOAN RATE
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
3.25:1.00 or 2.500% 3.000% 0.50% 1.00% 0.500%
greater
- ---------------------------------------------------------------------------------------------------------------
less than 2.250% 2.750% 0.25% 0.75% 0.500%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
-96-
<PAGE> 96
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
3.25:1.00 but
greater than or
equal to 3:00:1.00
- ---------------------------------------------------------------------------------------------------------------
less than 2.000% 2.500% 0.00% 0.50% 0.500%
3.00:1.00 but
greater than or
equal to 2.75:1.00
- ---------------------------------------------------------------------------------------------------------------
less than 1.625% 2.125% 0.00% 0.50% 0.375%
2.75:1.00 but
greater than or
equal to 2.50:1.00
- ---------------------------------------------------------------------------------------------------------------
less than 1.500% 2.000% 0.00% 0.50% 0.375%
2.50:1.00 but
greater than or
equal to 2.25:1.00
- ---------------------------------------------------------------------------------------------------------------
less than 1.375% 1.875% 0.00% 0.50% 0.250%
2.25:1.00 but
greater than or
equal to 2.00:1.00
- ---------------------------------------------------------------------------------------------------------------
less than 1.250% 1.750% 0.00% 0.50% 0.250%
2.00:1.00 but
greater than or
equal to 1.50:1.00
or the Term Loan
remains outstanding
- ---------------------------------------------------------------------------------------------------------------
less than 1.000% N/A 0.00% N/A 0.250%
1.50:1.00 and the
Term Loan paid in
full
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 97
Notwithstanding any provision to the contrary contained in this Credit
Agreement, in the event that the Borrower's ratio of Consolidated Total Funded
Debt during the period of four consecutive fiscal quarters ended October 31,
1998 to Consolidated EBITDA for such period is greater than 2:50:1.00, the
Agents reserve the right, in their sole and absolute discretion, to immediately
or at any time thereafter increase the Base Rate Applicable Margin and the
Eurodollar Applicable Margin; provided, however, that in no event shall such
increase result in the Base Rate Applicable Margin and the Eurodollar Applicable
Margin being greater than their respective levels set forth in the table above
where such ratio is greater than 3.25:1.00.
COLLATERAL SECURITY.
The Obligations shall be secured by a perfected first priority security
interest (subject only to Permitted Liens entitled to priority under applicable
law) in all of the assets of the Borrower, whether now owned or hereafter
acquired, pursuant to the terms of the Security Documents to which the Borrower
is a party.
REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Banks and the Agents as
follows:
Corporate Authority.
Incorporation; Good Standing. Each of the Borrower and its Subsidiaries
(i) is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation, (ii) has all
requisite corporate power to own its property and conduct its business
as now conducted and as presently contemplated, and (iii) is in good
standing as a foreign corporation and is duly authorized to do
business in each jurisdiction where such qualification is necessary
except where a failure to be so qualified would not have a materially
adverse effect on the business, assets or financial condition of the
Borrower or such Subsidiary.
Authorization. The execution, delivery and performance of this Credit
Agreement and the other Loan Documents to which the Borrower or
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<PAGE> 98
any of its Subsidiaries is or is to become a party and the
transactions contemplated hereby and thereby (i) are within the
corporate authority of such Person, (ii) have been duly authorized by
all necessary corporate proceedings, (iii) do not conflict with or
result in any breach or contravention of any provision of law,
statute, rule or regulation to which the Borrower or any of its
Subsidiaries is subject or any judgment, order, writ, injunction,
license or permit applicable to the Borrower or any of its
Subsidiaries and (iv) do not conflict with any provision of the
corporate charter or bylaws of, or any agreement or other instrument
binding upon, the Borrower or any of its Subsidiaries.
Enforceability. The execution and delivery of this Credit Agreement and the
other Loan Documents to which the Borrower or any of its Subsidiaries
is or is to become a party will result in valid and legally binding
obligations of such Person enforceable against it in accordance with
the respective terms and provisions hereof and thereof, except as
enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the
enforcement of creditors' rights and except to the extent that
availability of the remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any
proceeding therefor may be brought. To the actual knowledge of the
Borrower, the execution and delivery of each of the Acquisition
Documents to which the Borrower or any of its Subsidiaries is or is to
become a party will result in valid and legally binding obligations of
such Person enforceable against it in accordance with the respective
terms and provisions thereof, except as enforceability is limited by
bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting generally the enforcement of creditors'
rights and except to the extent that availability of the remedy of
specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding therefor may be brought.
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<PAGE> 99
Governmental Approvals. The execution, delivery and performance by the
Borrower and any of its Subsidiaries of this Credit Agreement and the other Loan
Documents and Acquisition Documents to which the Borrower or any of its
Subsidiaries is or is to become a party and the transactions contemplated hereby
and thereby do not require the approval or consent of, or filing with, any
governmental agency or authority other than those already obtained.
Title to Properties; Leases. Except as indicated on Schedule 9.3 hereto,
the Borrower and its Subsidiaries own all of the assets reflected in the
consolidated balance sheet of the Borrower and its Subsidiaries as at the
Balance Sheet Date or acquired since that date, including, without limitation,
all of the assets acquired pursuant to the Acquisition (except property and
assets sold or otherwise disposed of in the ordinary course of business since
that date), subject to no rights of others, including any mortgages, leases,
conditional sales agreements, title retention agreements, liens or other
encumbrances except Permitted Liens.
Financial Statements and Projections.
Financial Statements. There has been furnished to each of the Banks (a) a
consolidated balance sheet of the Borrower and its Subsidiaries as at
the Balance Sheet Date, and a consolidated statement of income of the
Borrower and its Subsidiaries for the fiscal year then ended,
certified by Coopers & Lybrand LLP, and (b) a pro-forma consolidated
balance sheet of the Borrower and its Subsidiaries as at the Closing
Date. Such balance sheets and statement of income have been prepared
in accordance with generally accepted accounting principles and fairly
present the financial condition of the Borrower as at the close of
business on the date thereof and the results of operations for the
fiscal year then ended. There are no contingent liabilities of the
Borrower or any of its Subsidiaries as of such date involving material
amounts, known to the officers of the Borrower, which were not
disclosed in such balance sheets and the notes related thereto.
The Acquisition. The information provided to the Banks respecting C&C
Jeweler, the Acquisition
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<PAGE> 100
and the business and financial implications of the Acquisition is
accurate and complete in all material respects.
Projections. The projections of the annual operating budgets of the
Borrower and its Subsidiaries on a consolidated basis, balance sheets
and cash flow statements for the 1998 to 2002 fiscal years, copies of
which have been delivered to each Bank, are based on a variety of
assumptions with respect to general economic, financial and market
conditions used in formulating such projections which are believed by
the Borrower to be reasonable as of the date of such projections but
that are inherently subject to significant economic and competitive
uncertainties, all of which are difficult to predict and many of which
are beyond the control of the Borrower. To the knowledge of the
Borrower or any of its Subsidiaries, as of the Closing Date no facts
exist that (individually or in the aggregate) would result in any
material change in any of such projections. The projections have been
prepared on the basis of the assumptions stated therein and reflect
the reasonable estimates of the Borrower and its Subsidiaries of the
results of operations and other information projected therein.
No Material Changes, etc.; Solvency.
No Material Changes, etc. Since the Balance Sheet Date there has occurred
no materially adverse change in the financial condition or business of
the Borrower and its Subsidiaries as shown on or reflected in the
consolidated balance sheet of the Borrower and its Subsidiaries as at
the Balance Sheet Date, or the consolidated statement of income for
the fiscal year then ended, other than changes in the ordinary course
of business that have not had any materially adverse effect either
individually or in the aggregate on the business or financial
condition of the Borrower or any of its Subsidiaries. Since the
Balance Sheet Date, the Borrower has not made any Distribution.
Solvency. Both before and after giving effect to the transactions
contemplated by this Credit Agreement, the other Loan Documents and
the Acquisition Documents, the Borrower and its Subsidiaries on a
consolidated basis are Solvent.
-101-
<PAGE> 101
As used herein, "Solvent" shall mean that the Borrower and its
Subsidiaries (i) have assets having a fair value in excess of their
liabilities, (ii) have assets having a fair value in excess of the
amount required to pay their liabilities on existing debts as such
debts become absolute and matured, and (iii) have, and expect to
continue to have, access to adequate capital for the conduct of their
business and the ability to pay their debts from time to time incurred
in connection with the operation of their business as such debts
mature.
Franchises, Patents, Copyrights, etc. Each of the Borrower and its
Subsidiaries possesses all franchises, patents, copyrights, trademarks, trade
names, licenses and permits, and rights in respect of the foregoing, adequate
for the conduct of its business substantially as now conducted without known
conflict with any rights of others
Litigation. Except as set forth in Schedule 9.7 hereto, there are no
actions, suits, proceedings or investigations of any kind pending or threatened
against the Borrower or any of its Subsidiaries before any court, tribunal or
administrative agency or board that, if adversely determined, might, either in
any case or in the aggregate, reasonably be expected to materially adversely
affect the properties, assets, financial condition or business of the Borrower
and its Subsidiaries or materially impair the right of the Borrower and its
Subsidiaries, considered as a whole, to carry on business substantially as now
conducted by them, or result in any substantial liability not adequately covered
by insurance, or for which adequate reserves are not maintained on the
consolidated balance sheet of the Borrower and its Subsidiaries, or which
question the validity of this Credit Agreement, any of the other Loan Documents,
any of the Acquisition Documents or might impair or prevent any action taken or
to be taken pursuant hereto or thereto.
No Materially Adverse Contracts, etc. Neither the Borrower nor any of its
Subsidiaries is subject to any charter, corporate or other legal restriction, or
any judgment, decree, order, rule or regulation that has or is expected in the
future to have a materially adverse effect on the business, assets or financial
condition of the Borrower or any of its Subsidiaries. Neither the Borrower nor
any of its Subsidiaries is a party to any
-102-
<PAGE> 102
contract or agreement that has or is expected, in the judgment of the Borrower's
officers, to have any materially adverse effect on the business of the Borrower
or any of its Subsidiaries.
Compliance with Other Instruments, Laws, etc. Neither the Borrower nor any
of its Subsidiaries is in violation of any provision of its charter documents,
bylaws, or any agreement or instrument to which it may be subject or by which it
or any of its properties may be bound or any decree, order, judgment, statute,
license, rule or regulation, in any of the foregoing cases in a manner that
could reasonably be expected to result in the imposition of substantial
penalties or materially and adversely affect the financial condition, properties
or business of the Borrower or any of its Subsidiaries.
Tax Status. The Borrower and its Subsidiaries (a) have made or filed all
federal and state income and sales and all other material tax returns, reports
and declarations required by any jurisdiction to which any of them is subject,
(b) have paid all taxes and other governmental assessments and charges shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and by appropriate proceedings and (c) have set
aside on their books provisions reasonably adequate for the payment of all taxes
for periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount claimed to
be due by the taxing authority of any jurisdiction, and the officers of the
Borrower know of no basis for any such claim.
No Event of Default. No Default or Event of Default has occurred and is
continuing.
Holding Company and Investment Company Acts. Neither the Borrower nor any
of its Subsidiaries is a "holding company", or a "subsidiary company" of a
"holding company", or an affiliate" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935; nor is it an
"investment company", or an "affiliated company" or a "principal underwriter" of
an "investment company", as such terms are defined in the Investment Company Act
of 1940.
-103-
<PAGE> 103
Absence of Financing Statements, etc. Except with respect to Permitted
Liens, there is no financing statement, security agreement, chattel mortgage,
real estate mortgage or other document filed or recorded with any filing
records, registry or other public office, that purports to cover, affect or give
notice of any present or possible future lien on, or security interest in, any
assets or property of the Borrower or any of its Subsidiaries or any rights
relating thereto.
Perfection of Security Interest. All filings, assignments, pledges and
deposits of documents or instruments have been made and all other actions have
been taken that are necessary or advisable, under applicable law, to establish
and perfect the Collateral Agent's security interest in the Collateral. The
Collateral and the Collateral Agent's rights with respect to the Collateral are
not subject to any setoff, claims, withholdings or other defenses. The Borrower
is the owner of the Collateral free from any lien, security interest,
encumbrance and any other claim or demand, except for Permitted Liens.
Certain Transactions. Except as set forth on Schedule 9.15 hereto and
except for arm's length transactions pursuant to which the Borrower or any of
its Subsidiaries makes payments in the ordinary course of business upon terms no
less favorable than the Borrower or such Subsidiary could obtain from third
parties, none of the officers, directors, or employees of the Borrower or any of
its Subsidiaries is presently a party to any transaction with the Borrower or
any of its Subsidiaries (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Borrower, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
Employee Benefit Plans.
In General. Each Employee Benefit Plan has been maintained and operated in
compliance in all material respects with the provisions of ERISA
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<PAGE> 104
and, to the extent applicable, the Code, including but not limited to
the provisions thereunder respecting prohibited transactions. The
Borrower has heretofore delivered to the Agents the most recently
completed annual report, Form 5500, with all required attachments, and
actuarial statement required to be submitted under Section 103(d) of
ERISA, with respect to each Guaranteed Pension Plan.
Terminability of Welfare Plans. Under each Employee Benefit Plan which is
an employee welfare benefit plan within the meaning of Section 3(1) or
Section 3(2)(B) of ERISA, no benefits are payable to employees (or
their dependents) after termination of employment (except as required
by Title I, Part 6 of ERISA). The Borrower or an ERISA Affiliate, as
appropriate, may terminate each such Plan at any time (or at any time
subsequent to the expiration of any applicable bargaining agreement)
in the discretion of the Borrower or such ERISA Affiliate without
liability to any Person.
Guaranteed Pension Plans. Each contribution required to be made to a
Guaranteed Pension Plan, whether required to be made to avoid the
incurrence of an accumulated funding deficiency, the notice or lien
provisions of Section 302(f) of ERISA, or otherwise, has been timely
made. No waiver of an accumulated funding deficiency or extension of
amortization periods has been received with respect to any Guaranteed
Pension Plan. No liability to the PBGC (other than required insurance
premiums, all of which have been paid) has been incurred by the
Borrower or any ERISA Affiliate with respect to any Guaranteed Pension
Plan and there has not been any ERISA Reportable Event, or any other
event or condition which presents a material risk of termination of
any Guaranteed Pension Plan by the PBGC. Based on the latest valuation
of each Guaranteed Pension Plan (which in each case occurred within
twelve months of the date of this representation), and on the
actuarial methods and assumptions employed for that valuation, the
aggregate benefit liabilities of all such Guaranteed Pension Plans
within the meaning of Section 4001 of ERISA did not exceed the
aggregate value of the assets of all such Guaranteed Pension Plans,
disregarding for this
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<PAGE> 105
purpose the benefit liabilities and assets of any Guaranteed Pension
Plan with assets in excess of benefit liabilities, by more than
$500,000.00.
Multiemployer Plans. Neither the Borrower nor any ERISA Affiliate has
incurred any material liability (including secondary liability) to any
Multiemployer Plan as a result of a complete or partial withdrawal
from such Multiemployer Plan under Section 4201 of ERISA or as a
result of a sale of assets described in Section 4204 of ERISA. Neither
the Borrower nor any ERISA Affiliate has been notified that any
Multiemployer Plan is in reorganization or insolvent under and within
the meaning of Section 4241 or Section 4245 of ERISA or is at risk of
entering reorganization or becoming insolvent, or that any
Multiemployer Plan intends to terminate or has been terminated under
Section 4041A of ERISA.
Regulations U and X. The proceeds of the Loans and the Purchases and
Consignments shall be used to refinance the existing Indebtedness of the
Borrower under the Original Credit Agreement and to finance the Acquisition and
for working capital and general corporate purposes. The Borrower will obtain
Letters of Credit solely for working capital and general corporate purposes. No
portion of any Loan or proceeds from any Purchase and Consignment is to be used,
and no portion of any Letter of Credit is to be obtained, for the purpose of
purchasing or carrying any "margin security" or "margin stock" as such terms are
used in Regulations U and X of the Board of Governors of the Federal Reserve
System, 12 C.F.R. Parts 221 and 224.
Environmental Compliance. The Borrower has taken all necessary steps to
investigate the past and present condition and usage of the Real Estate and the
operations conducted thereon and, based upon such diligent investigation, has
determined that:
(a) none of the Borrower, its Subsidiaries or any operator of the
Real Estate or any operations thereon is in violation, or alleged
violation, of any judgment, decree, order, law, license, rule or
regulation pertaining to environmental matters, including without
limitation, those arising under the Resource Conservation and Recovery
Act
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<PAGE> 106
("RCRA"), the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 as amended ("CERCLA"), the Superfund Amendments
and Reauthorization Act of 1986 ("SARA"), the Federal Clean Water Act,
the Federal Clean Air Act, the Toxic Substances Control Act, or any
state or local statute, regulation, ordinance, order or decree
relating to health, safety or the environment (hereinafter
"Environmental Laws"), which violation would reasonably be expected to
have a material adverse effect on the environment or the business,
assets or financial condition of the Borrower or any of its
Subsidiaries;
(b) neither the Borrower nor any of its Subsidiaries has received
notice from any third party including, without limitation, any
federal, state or local governmental authority, (i) that any one of
them has been identified by the United States Environmental Protection
Agency ("EPA") as a potentially responsible party under CERCLA with
respect to a site listed on the National Priorities List, 40 C.F.R.
Part 300 Appendix B; (ii) that any hazardous waste, as defined by 42
U.S.C. Section 6903(5), any hazardous substances as defined by 42
U.S.C. Section 9601(14), any pollutant or contaminant as defined by 42
U.S.C. Section 9601(33) and any toxic substances, oil or hazardous
materials or other chemicals or substances regulated by any
Environmental Laws ("Hazardous Substances") which any one of them has
generated, transported or disposed of has been found at any site at
which a federal, state or local agency or other third party has
conducted or has ordered that any Borrower or any of its Subsidiaries
conduct a remedial investigation, removal or other response action
pursuant to any Environmental Law; or (iii) that it is or shall be a
named party to any claim, action, cause of action, complaint, or legal
or administrative proceeding (in each case, contingent or otherwise)
arising out of any third party's incurrence of costs, expenses, losses
or damages of any kind whatsoever in connection with the release of
Hazardous Substances;
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<PAGE> 107
(c) except as set forth on Schedule 9.18 attached hereto: (i) no
portion of the Real Estate has been used for the handling, processing,
storage or disposal of Hazardous Substances except in accordance with
applicable Environmental Laws; and no underground tank or other
underground storage receptacle for Hazardous Substances is located on
any portion of the Real Estate; (ii) in the course of any activities
conducted by the Borrower, its Subsidiaries or operators of its
properties, no Hazardous Substances have been generated or are being
used on the Real Estate except in accordance with applicable
Environmental Laws; (iii) there have been no releases (i.e. any past
or present releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, disposing or dumping) or
threatened releases of Hazardous Substances on, upon, into or from the
properties of the Borrower or its Subsidiaries, which releases would
have a material adverse effect on the value of any of the Real Estate
or adjacent properties or the environment; (iv) to the best of the
Borrower's knowledge, there have been no releases on, upon, from or
into any real property in the vicinity of any of the Real Estate
which, through soil or groundwater contamination, may have come to be
located on, and which would have a material adverse effect on the
value of, the Real Estate; and (v) in addition, any Hazardous
Substances that have been generated on any of the Real Estate have
been transported offsite only by carriers having an identification
number issued by the EPA, treated or disposed of only by treatment or
disposal facilities maintaining valid permits as required under
applicable Environmental Laws, which transporters and facilities have
been and are, to the best of the Borrower's knowledge, operating in
compliance with such permits and applicable Environmental Laws; and
(d) None of the Borrower and its Subsidiaries or any of the Real
Estate is subject to any applicable environmental law requiring the
performance of Hazardous Substances site
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<PAGE> 108
assessments, or the removal or remediation of Hazardous Substances, or
the giving of notice to any governmental agency or the recording or
delivery to other Persons of an environmental disclosure document or
statement by virtue of the transactions set forth herein and
contemplated hereby, or as a condition to the effectiveness of any
other transactions contemplated hereby.
Subsidiaries, etc. Except as set forth on Schedule 9.19 hereto, the
Borrower has no Subsidiaries. Except as set forth on Schedule 9.19 hereto,
neither the Borrower nor any Subsidiary of the Borrower is engaged in any joint
venture or partnership with any other Person.
Bank Accounts. Schedule 9.20 (as such may be amended from time to time in
accordance with Section 11.9 hereof) sets forth the account numbers and location
of all bank accounts of the Borrower or any of its Subsidiaries.
Acquisition Documents. The Borrower has heretofore furnished to the Agents
true, complete and correct copies of the Acquisition Documents (including
schedules, exhibits and annexes thereto). Except as set forth on Schedule 9.21
hereto, the Acquisition Documents have not subsequently been amended,
supplemented, or modified and constitute the complete understanding among the
parties thereto in respect of the matters and transactions covered thereby. The
representations and warranties of the Borrower contained in the Acquisition
Documents were true and correct in all material respects when made or deemed to
be made, and the Agents may rely on such representations and warranties as if
they were incorporated herein on the Closing Date. The requirements of Section
13.16 have been satisfied as of the Closing Date.
Y2K Plan. The Borrower has: (a) developed and delivered to the Agents a
comprehensive plan (the "Y2K Plan") for insuring that the software and hardware
systems of the Borrower and its Subsidiaries which impact or affect in any way
the their respective business operations will be Year 2000 Compliant and Ready;
and (b) met the Y2K Plan milestones such that all hardware and software systems
of the Borrower and its Subsidiaries will be Year 2000 Compliant and Ready
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<PAGE> 109
in accordance with the Y2K Plan; except to the extent that its failure to do so
would not reasonably be expected to have a material adverse effect on the
business, operations, assets or financial condition of the Borrower or any of
its Subsidiaries.
AFFIRMATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan, Reimbursement
Obligation, Letter of Credit, amount of Consigned Precious Metal or Note is
outstanding or any Bank has any obligation to make any Loans, any Gold Fronting
Bank has any obligation to make any Purchases and Consignments or the
Administrative Agent has any obligation to issue, extend or renew any Letters of
Credit:
Punctual Payment. The Borrower will duly and punctually pay, purchase or
Redeliver, or cause to be paid, purchased or Redelivered, the principal and
interest on the Loans, all Consigned Precious Metal, all Reimbursement
Obligations, the Letter of Credit Fees, the commitment fees, the Consignment
Fees, the Agents' fee and all other amounts provided for in this Credit
Agreement and the other Loan Documents to which the Borrower or any of its
Subsidiaries is a party, all in accordance with the terms of this Credit
Agreement and such other Loan Documents.
Maintenance of Office. The Borrower will maintain its chief executive
office in Chicago, Illinois, or at such other place in the United States of
America as the Borrower shall designate upon written notice to the Agents, where
notices, presentations and demands to or upon the Borrower in respect of the
Loan Documents to which the Borrower is a party may be given or made.
Records and Accounts. The Borrower will (a) keep, and cause each of its
Subsidiaries to keep, true and accurate records and books of account in which
full, true and correct entries will be made in accordance with generally
accepted accounting principles and (b) maintain adequate accounts and reserves
for all taxes (including income taxes), depreciation, depletion, obsolescence
and amortization of its properties and the properties of its Subsidiaries,
contingencies, and other reserves in accordance with generally accepted
accounting principles.
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Financial Statements, Certificates and Information. The Borrower will
deliver to each of the Banks:
(a) as soon as practicable, but in any event not later than
ninety (90) days after the end of each fiscal year of the Borrower,
the consolidated balance sheet of the Borrower and its Subsidiaries
and the consolidating balance sheet of the Borrower and its
Subsidiaries, each as at the end of such year, and the related
consolidated statement of income and consolidated statement of cash
flow and consolidating statement of income and consolidating statement
of cash flow for such year, each setting forth in comparative form the
figures for the previous fiscal year and all such consolidated and
consolidating statements to be in reasonable detail, prepared in
accordance with generally accepted accounting principles, and
certified without qualification by Coopers & Lybrand LLP or by another
"big six" certified public accounting firm or by other independent
certified public accountants satisfactory to the Agents, together with
(i) a written statement from such accountants to the effect that they
have read a copy of this Credit Agreement, and that, in making the
examination necessary to said certification, they have obtained no
knowledge of any Default or Event of Default, or, if such accountants
shall have obtained knowledge of any then existing Default or Event of
Default they shall disclose in such statement any such Default or
Event of Default; provided that such accountants shall not be liable
to the Banks for failure to obtain knowledge of any Default or Event
of Default and (ii) a certificate containing a reconciliation of the
amount of Capital Expenditures reflected in the annual financial
statements to the amount paid in cash for Capital Expenditures, as
contemplated by, and used in, clause (b)(ii) of the definition of
"Consolidated Excess Cash Flow";
(b) as soon as practicable, but in any event not later than
forty-five (45) days after the end of each of the fiscal quarters of
the Borrower, copies
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of the unaudited consolidated balance sheet of the Borrower and its
Subsidiaries and the unaudited consolidating balance sheet of the
Borrower and its Subsidiaries, each as at the end of such quarter, and
the related consolidated statement of income and consolidated
statement of cash flow and consolidating statement of income and
consolidating statement of cash flow for the portion of the Borrower's
fiscal year then elapsed, all in reasonable detail and prepared in
accordance with generally accepted accounting principles, together
with a certification by the principal financial or accounting officer
of the Borrower that the information contained in such financial
statements fairly presents the financial position of the Borrower and
its Subsidiaries on the date thereof (subject to year-end
adjustments);
(c) as soon as practicable, but in any event within thirty (30)
days after the end of each month in each fiscal year of the Borrower,
unaudited monthly consolidated financial statements of the Borrower
and its Subsidiaries for such month and unaudited monthly
consolidating financial statements of the Borrower and its
Subsidiaries for such month, each prepared in accordance with
generally accepted accounting principles, together with a
certification by the principal financial or accounting officer, or the
Vice President of Finance, of the Borrower that the information
contained in such financial statements fairly presents the financial
condition of the Borrower and its Subsidiaries on the date thereof
(subject to quarterly and year-end adjustments);
(d) simultaneously with the delivery of the financial statements
referred to in subsections (a) and (b) above, a statement certified by
the principal financial or accounting officer of the Borrower in
substantially the form of Exhibit J hereto, setting forth in
reasonable detail computations evidencing compliance with the
covenants contained in Section 12 and (if applicable) reconciliations
to reflect changes in generally accepted accounting principles since
the Balance Sheet Date and stating that nothing has come to
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such officer's attention to cause such officer to believe that the Y2K
Plan milestones have not been met in a manner such that the hardware
and software systems of the Borrower and its Subsidiaries will not be
Year 2000 Compliant and Ready in accordance with the Y2K Plan;
(e) contemporaneously with the filing or mailing thereof, copies
of all material of a financial nature filed with the Securities and
Exchange Commission or sent to the stockholders of the Borrower;
(f) within ten (10) Business Days after the end of each calendar
month or at such earlier time as the Agents may reasonably request (i)
a Borrowing Base Report setting forth the Borrowing Base as at the end
of such calendar month or other date so requested by the Agents, (ii)
a Consigned Precious Metal Report setting forth (1) the amount of
Consigned Precious Metal and Borrower's Precious Metal as of the end
of such calendar month or other date so requested by the Agents, and
(2) a calculation of the Consignment Advance Rate Percentage
multiplied by the Fair Market Value of the sum of (y) Borrower's
Precious Metal plus (z) Consigned Precious Metal as of the end of such
calendar month or other date so requested by the Agents, and (iii) a
Monthly Inventory Report, in each case together with supporting
schedules and documentation, with each such Borrowing Base Report and
Consigned Precious Metal Report to be accompanied by a certification
by the Vice President of Finance or the principal financial or
accounting officer of the Borrower that the information contained
therein is true and accurate in all respects;
(g) within thirty (30) days after the end of each calendar month,
an accounts payable aging report;
(h) on or prior to April 30 of each calendar year, projections of
the Borrower and its Subsidiaries updating those projections delivered
to the Banks and referred to in Section 10.4.2 or, if
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applicable, updating any later such projections delivered in response
to a request pursuant to this Section 11.4(h);
(i) within thirty (30) days of the end of each fiscal quarter, a
report setting forth in reasonable detail all Capital Expenditures
that each of the Borrower and its Subsidiaries has become legally
obligated to make, including, without limitation, in respect of new
leases, purchase contracts and construction contracts entered into in
connection with new or existing retail stores or distribution centers,
during the next twelve (12)-month period;
(j) prior to the opening by the Borrower of any new retail store
or distribution center at which Eligible Inventory is to be located, a
supplement to Schedule 2 hereto in the form of Exhibit K hereto,
listing any additions or deletions to the list of retail stores and
distribution centers of the Borrower and its Subsidiaries located in
the United States, which supplement, together with Schedule 2 hereto
and any prior supplements, shall be deemed to constitute Schedule 2
for all purposes of this Credit Agreement;
(k) within forty-five (45) days after the completion of each of
the Borrower's semi-annual central warehouse inventory counts (which
inventory counts may be observed by the Agents or by an independent
party acceptable to the Agents) (i) a report with respect to the
results of such inventory count and (ii) a report with respect to the
results of the Borrower's inventory counts with respect to its retail
store locations conducted since the last such report delivered to the
Agents and the Banks, each in form and detail satisfactory to the
Agents and the Banks; and
(l) from time to time such other financial data and information
(including accountants, management letters) as any Agent or any Bank
may reasonably request.
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Notices.
Defaults. The Borrower will promptly notify each of the Agents and each of
the Banks in writing of the occurrence of any Default or Event of
Default. If any Person shall give any notice or take any other action
in respect of a claimed default (whether or not constituting an Event
of Default) under this Credit Agreement or any other note, evidence of
indebtedness, indenture or other obligation to which or with respect
to which the Borrower or any of its Subsidiaries is a party or
obligor, whether as principal, guarantor, surety or otherwise, the
Borrower shall forthwith give written notice thereof to each of the
Agents and each of the Banks, describing the notice or action and the
nature of the claimed default.
Environmental Events. The Borrower will promptly give notice to each of
the Agents and each of the Banks (a) of any violation of any
Environmental Law that the Borrower or any of its Subsidiaries reports
in writing or is reportable by such Person in writing (or for which
any written report supplemental to any oral report is made) to any
federal, state or local environmental agency and (b) upon becoming
aware thereof, of any inquiry, proceeding, investigation, or other
action, including a notice from any agency of potential environmental
liability, of any federal, state or local environmental agency or
board, that has the potential to materially affect the assets,
liabilities, financial conditions or operations of the Borrower or any
of its Subsidiaries, or the Collateral Agent's mortgages, deeds of
trust or security interests pursuant to the Security Documents.
Notification of Claim against Collateral. The Borrower will, immediately
upon becoming aware thereof, notify each of the Agents and each of the
Banks in writing of any setoff, claims (including, with respect to the
Real Estate, environmental claims), withholdings or other defenses to
which any of the Collateral, or the Collateral Agent's rights with
respect to the Collateral, are subject. The Borrower will, immediately
upon becoming aware thereof, notify each of the Agents and each of the
Banks in writing of any proposed sale or
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transfer of any Permitted Inventory Location by the owner thereof.
Notice of Litigation and Judgments. The Borrower will, and will cause each
of its Subsidiaries to, give notice to each of the Agents and each of
the Banks in writing within fifteen (15) days of becoming aware of any
litigation or proceedings threatened in writing or any pending
litigation and proceedings affecting the Borrower or any of its
Subsidiaries or to which the Borrower or any of its Subsidiaries is or
becomes a party involving an uninsured claim against the Borrower or
any of its Subsidiaries that could reasonably be expected to have a
materially adverse effect on the Borrower or any of its Subsidiaries
and stating the nature and status of such litigation or proceedings.
The Borrower will, and will cause each of its Subsidiaries to, give
notice to each of the Agents and each of the Banks, in writing, in
form and detail satisfactory to the Agents, within ten (10) days of
any judgment not covered by insurance, final or otherwise, against the
Borrower or any of its Subsidiaries in an amount in excess of
$500,000.00.
Corporate Existence; Maintenance of Properties.
(a) The Borrower will do or cause to be done all things necessary
to preserve and keep in full force and effect its corporate existence,
rights and franchises and those of its Subsidiaries and will not, and
will not cause or permit any of its Subsidiaries to, convert to a
limited liability company.
(b) The Borrower (i) will cause all of its properties and those
of its Subsidiaries used or useful in the conduct of its business or
the business of its Subsidiaries to be maintained and kept in good
condition, repair and working order and supplied with all necessary
equipment, (ii) will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the
judgment of the Borrower may be necessary so that the business carried
on in connection therewith may
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be properly and advantageously conducted at all times, and (iii) will,
and will cause each of its Subsidiaries to, continue to engage
primarily in the businesses now conducted by them; provided that
nothing in this Section 10.6 shall prevent the Borrower from
discontinuing the operation and maintenance of any of its properties
or any of those of its Subsidiaries if such discontinuance is, in the
judgment of the Borrower, desirable in the conduct of its or their
business and that do not in the aggregate materially adversely affect
the business of the Borrower and its Subsidiaries on a consolidated
basis.
Insurance.
(a) The Borrower will, and will cause each of its Subsidiaries
to, maintain with financially sound and reputable insurers insurance
with respect to its properties and business against such casualties
and contingencies as shall be in accordance with the general practices
of businesses engaged in similar activities in similar geographic
areas and in amounts, containing such terms, in such forms and for
such periods as may be reasonable and prudent and in accordance with
the terms of the Security Agreement.
(b) Contemporaneously with the execution of this Credit
Agreement, and within fifteen (15) days of any date when any
additional or replacement insurance coverage is obtained, the Borrower
shall, and will cause each of its Subsidiaries to, deliver to the
Agents true copies of certificates of insurance with respect to such
additional insurance or replacement policies and, upon request and to
the extent not previously delivered to the Agents, copies of the
original insurance policies evidencing such additional or replacement
insurance, which certificates and policies (i) in the case of property
and casualty policies, shall contain an endorsement or rider naming
the Collateral Agent, for the benefit of the Agents and the Banks, as
a mortgagee, loss payee and additional insured, and (ii) in the case
of liability policies, shall contain an endorsement or rider naming
the Collateral Agent, for the benefit
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of the Agents and the Banks, as an additional insured, with each such
policy providing that such insurance shall not be canceled or amended
without thirty (30) days prior written notice to the Collateral Agent.
Taxes. The Borrower will, and will cause each of its Subsidiaries to, duly
pay and discharge, or cause to be paid and discharged, before the same shall
become overdue, all taxes, assessments and other governmental charges imposed
upon it and its real properties, sales and activities, or any part thereof, or
upon the income or profits therefrom, as well as all claims for labor,
materials, or supplies that if unpaid might by law become a lien or charge upon
any of its property; provided that any such tax, assessment, charge, levy or
claim need not be paid if the validity or amount thereof shall currently be
contested in good faith by appropriate proceedings and if the Borrower or such
Subsidiary shall have set aside on its books adequate reserves with respect
thereto; and provided further that the Borrower and each Subsidiary of the
Borrower will pay all such taxes, assessments, charges, levies or claims
forthwith upon the commencement of proceedings to foreclose any lien that may
have attached as security therefor.
Inspection of Properties and Books, etc.
General. The Borrower shall permit the Banks, through the Agents or any
of the Banks' other designated representatives, to visit and inspect
any of the properties of the Borrower or any of its Subsidiaries, to
examine the books of account of the Borrower and its Subsidiaries (and
to make copies thereof and extracts therefrom), to discuss the
affairs, finances and accounts of the Borrower and its Subsidiaries
with, and to be advised as to the same by, its and their officers, and
to conduct examinations and verifications of the components of the
Borrowing Base, the other assets of the Borrower and its Subsidiaries
and all systems and procedures of the Borrower and its Subsidiaries,
including those relating to cash management and those relating to gold
tracking and valuation, all at such reasonable times and intervals as
either of the Agents or any Bank may reasonably request.
Inventory Appraisals. No more frequently than once each calendar year, or
more frequently as
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determined by the Agents if an Event of Default shall have occurred
and be continuing, upon the request of the Agents, the Borrower will
obtain and deliver to the Agents a report of an independent collateral
auditor or appraiser satisfactory to the Agents (which may be
affiliated with one of the Banks) with respect to the inventory
components included in the Borrowing Base and the amounts of
Borrower's Precious Metal and Consigned Precious Metal held by the
Borrower, which report shall indicate (a) whether or not the
information set forth in the Borrowing Base Report and the Consigned
Precious Metal Report most recently delivered is accurate and complete
in all material respects based upon a review by such auditors of the
inventory (including verification as to the value, location and
respective types) or (b) in the case of an appraisal report by a
collateral appraiser, shall state the then current fair market value,
orderly liquidation and forced liquidation values of all or any
portion of the inventory owned by the Borrower and its Subsidiaries
and of the Borrower's Precious Metal and Consigned Precious Metal.
Appraisals. If an Event of Default shall have occurred and be continuing,
upon the request of the Agents, the Borrower will obtain and deliver
to the Agents appraisal reports in form and substance and from
appraisers satisfactory to the Agents, stating (i) the then current
fair market, orderly liquidation and forced liquidation values of all
or any portion of the equipment or real estate owned by the Borrower
or any of its Subsidiaries and (ii) the then current business value of
each of the Borrower and its Subsidiaries. All such appraisals shall
be conducted and made at the expense of the Borrower.
Communications with Accountants. The Borrower authorizes the Agents and,
if accompanied by the Agents, the Banks to communicate directly with
the Borrower's independent certified public accountants and authorizes
such accountants to disclose to the Agents and the Banks any and all
financial statements and other supporting financial documents and
schedules including copies of any
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management letter with respect to the business, financial condition
and other affairs of the Borrower or any of its Subsidiaries. At the
request of the Agents, the Borrower shall deliver a letter addressed
to such accountants instructing them to comply with the provisions of
this Section 10.9.4
Compliance with Laws, Contracts, Licenses, and Permits. The Borrower will,
and will cause each of its Subsidiaries to, comply with (a) the applicable laws
and regulations wherever its business is conducted, including all Environmental
Laws, except where the failure to so comply would not reasonably be expected to
have a materially adverse effect either individually or in the aggregate upon
the business, assets or financial condition of the Borrower or any of its
Subsidiaries, (b) the provisions of its charter documents and by-laws, (c) all
agreements and instruments by which it or any of its properties may be bound,
except where the failure to so comply would not reasonably be expected to have a
materially adverse effect either individually or in the aggregate upon the
business, assets or financial condition of the Borrower or any of its
Subsidiaries, and (d) all applicable decrees, orders, and judgments. If any
authorization, consent, approval, permit or license from any officer, agency or
instrumentality of any government shall become necessary or required in order
that the Borrower or any of its Subsidiaries may fulfill any of its obligations
hereunder or any of the other Loan Documents or any of the Acquisition Documents
to which the Borrower or such Subsidiary is a party, the Borrower will, or (as
the case may be) will cause such Subsidiary to, immediately take or cause to be
taken all reasonable steps within the power of the Borrower or such Subsidiary
to obtain such authorization, consent, approval, permit or license and furnish
the Agents and the Banks with evidence thereof.
Employee Benefit Plans. The Borrower will (a) promptly upon filing the same
with the Department of Labor or Internal Revenue Service upon request of the
Agents, furnish to each of the Agents a copy of the most recent actuarial
statement required to be submitted under Section 103(d) of ERISA and Annual
Report, Form 5500, with all required attachments, in respect of each Guaranteed
Pension Plan and (b) promptly upon receipt or dispatch, furnish to each of the
Agents any
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notice, report or demand sent or received in respect of a Guaranteed Pension
Plan under Sections 302, 4041, 4042, 4043, 4063, 4066 and 4068 of ERISA, or in
respect of a Multiemployer Plan, under Sections 4041A, 4202, 4219, 4242, or 4245
of ERISA.
Use of Proceeds. The Borrower will use the proceeds of the Loans and the
Purchases and Consignments solely for refinancing the existing Indebtedness of
the Borrower under the Original Credit Agreement, for financing the Acquisition
and for working capital and general corporate purposes. The Borrower will obtain
Letters of Credit solely for working capital and general corporate purposes.
Additional Mortgaged Property. If, after the Closing Date, the Borrower or
any of its Subsidiaries acquires or leases for a term in excess of five (5)
years real estate used as a manufacturing or warehouse facility, the Borrower
shall notify the Agents promptly thereof, and upon the request of the Lenders,
the Borrower shall, or shall cause such Subsidiary to, forthwith deliver to the
Collateral Agent a fully executed mortgage or deed of trust over such real
estate, in form and substance satisfactory to the Agents, together with title
insurance policies, surveys, evidences of insurances with the Collateral Agent
named as loss payee and additional insured, legal opinions and other documents
and certificates with respect to such real estate as shall be reasonably
satisfactory to the Agents. The Borrower further agrees that, following the
taking of such actions with respect to such real estate, the Collateral Agent
shall have for the benefit of the Banks and the Agents a valid and enforceable
first priority mortgage or deed of trust over such real estate, free and clear
of all defects and encumbrances except for Permitted Liens.
Bank Accounts.
(a) On or prior to the Closing Date, the Borrower will, and will
cause each of its Subsidiaries to, (i) establish depository accounts
(the "BKB Concentration Accounts") under the control of the
Administrative Agent for the benefit of the Banks and the Agents, in
the name of the Borrower, (ii) direct all depository institutions with
Store Accounts to cause all funds in excess of $1,000 held in each
such Store Account to be
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transferred no less frequently than twice each week, and in any event
within one Business Day following any day during which the Borrower
has knowledge that the amounts in any such Store Account are in excess
$10,000, to, and only to Concentration Banks, (iii) direct all
Concentration Banks (other than BKB) to cause all funds of the
Borrower and its Subsidiaries held in such Concentration Banks to be
transferred daily to, and only to, the BKB Concentration Account or
such other location as the Administrative Agent shall designate, (iv)
cause all proceeds of Accounts Receivable of the Borrower to be
deposited only into depository accounts with financial institutions
which have entered into Agency Account Agreements, and (v) except for
amounts in any Store Account which are less than $1,000, at all times
ensure that, within five (5) days following the Borrower's or any of
its Subsidiaries' receipt of any cash or cash equivalents or any other
proceeds of Collateral, all such amounts shall have been deposited in
the BKB Concentration Accounts.
(b) The Borrower will, and will cause each of its Subsidiaries
to, use its best efforts to obtain Agency Account Agreements (whereby
such depository institution shall, among other things, waive any right
to set-off, other than for service charges and returns incurred in
connection therewith) from each depository institution at which a
Store Account is located.
(c) The Borrower hereby agrees that all amounts belonging to the
Borrower and received by the Administrative Agent in the BKB
Concentration Account will be the sole and exclusive property of the
Collateral Agent, for the accounts of the Banks and the Agents, to be
applied in accordance with (i) Section 7.9(c) prior to the occurrence
of an Event of Default, and (ii) Section 7.10 after the occurrence and
during the continuance of a Default or an Event of Default.
Inventory Restrictions. The Borrower shall cause, and shall cause each of
its Subsidiaries to cause, Consigned Precious Metal and all Eligible Inventory
to
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be located at all times solely at Permitted Inventory Locations, and to be
sold or otherwise disposed of in the ordinary course of the Borrower's or such
Subsidiary's business, consistent with past practices or as required pursuant to
the terms of this Credit Agreement.
Private Label Credit Card Program. The Borrower will maintain in effect at
all times credit programs provided by Persons other than the Borrower and its
Subsidiaries which (a) are non-recourse to the Borrower and its Subsidiaries and
(b) during any period of four consecutive fiscal quarters of the Borrower, are
used to finance not less than twenty percent (20%) of the Borrower's gross sales
during such period of four consecutive fiscal quarters.
Y2K Plan. The Borrower will, and will cause each of its Subsidiaries to,
meet all Y2K Plan milestones such that all hardware and software systems of the
Borrower and its Subsidiaries will be Year 2000 Compliant and Ready in
accordance with the Y2K Plan; except to the extent that its failure to do so
would not reasonably be expected to have a material adverse effect on the
business, operations, assets or financial condition of the Borrower or any of
its Subsidiaries.
Further Assurances. The Borrower will, and will cause each of its
Subsidiaries to, cooperate with the Banks and the Agents and execute such
further instruments and documents as any of the Banks or the Agents shall
reasonably request to carry out to their satisfaction the transactions
contemplated by this Credit Agreement and the other Loan Documents.
New Subsidiaries. The Borrower shall, immediately upon any Investment in a
new Subsidiary permitted by Section 11.3(f) hereof, pledge to the Collateral
Agent, for the benefit of the Banks and the Agents, the capital stock of each
new Subsidiary in which the Borrower invests pursuant to a stock pledge
agreement in form and substance satisfactory to the Agents and the Banks, and
such new Subsidiary shall grant to the Collateral Agent a perfected first
priority security interest (subject only to Permitted Liens entitled to priority
under applicable law) in all of its personal property assets (with such
exceptions are as acceptable to the Majority Banks) pursuant to an instrument of
adherence to the Security Agreement in form and substance satisfactory
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to the Agents and the Banks. In addition, the Borrower shall immediately upon
such Investment, revise Schedule 9.19 hereto to reflect the acquisition of each
new Subsidiary. Each new Subsidiary in which the Borrower invests shall,
immediately upon such Investment, execute and deliver to the Collateral Agent,
for the benefit of the Banks and the Agents, a guaranty of the payment and
performance of all of the Obligations, in form and substance satisfactory to the
Agents and the Banks, together with acceptable security documents including
without limitation, the aforementioned instrument of adherence to the Security
Agreement, legal opinions, and other documents and instruments necessary to
demonstrate the due authorization, execution and delivery by such new Subsidiary
of such guaranty and such security documents and to perfect the Collateral
Agent's security interest in all of such new Subsidiary's assets, including (a)
the resolutions of the Board of Directors or equivalent body of such new
Subsidiary and the charter and by-laws (or the equivalent thereof) of such new
Subsidiary, certified by an officer of such new Subsidiary, (b) a good standing
certificate of such new Subsidiary in its jurisdiction of incorporation, (c) a
certificate of the Secretary or an Assistant Secretary of such new Subsidiary
certifying the names and true signatures of the officers of such new Subsidiary
authorized to sign such guaranty and such security documents, (d) UCC-1
financing statements, and (e) such other documents as the Collateral Agent may
reasonably request. Upon delivery of the aforementioned documents, such new
Subsidiary shall become a guarantor of the Obligations hereunder and, except as
otherwise agreed to by the Majority Banks, shall comply with and be bound by all
of the terms and conditions of the Loan Documents as a Subsidiary of the
Borrower thereunder, and the Borrower shall cause such new Subsidiary to take
all actions which it would have been required to make or take had it been a
Subsidiary of the Borrower on the Closing Date, including making all
representations and warranties as a guarantor under each of the Loan Documents.
Landlord Waivers. The Borrower shall exercise commercially reasonable
efforts to obtain Landlord Waivers with respect to all Permitted Inventory
Locations that are subject to Specified Leases,
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including, without limitation, in connection with leases extended, renegotiated
or entered into after the Closing Date.
CERTAIN NEGATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan, Reimbursement
Obligation, Letter of Credit, amount of Consigned Precious Metal or Note is
outstanding or any Bank has any obligation to make any Loans, any Gold Fronting
Bank has any obligation to make any Purchases and Consignments or the
Administrative Agent has any obligation to issue, extend or renew any Letters of
Credit:
Restrictions on Indebtedness. The Borrower will not, and will not permit
any of its Subsidiaries to, create, incur, assume, guarantee or be or remain
liable, contingently or otherwise, with respect to any Indebtedness other than:
(a) Indebtedness to the Banks and the Agents arising under any of the
Loan Documents;
(b) current liabilities of the Borrower or such Subsidiary incurred in
the ordinary course of business not incurred through (i) the borrowing of
money, or (ii) the obtaining of credit except for credit on an open account
basis customarily extended and in fact extended in connection with normal
purchases of goods and services;
(c) Indebtedness in respect of taxes, assessments, governmental
charges or levies and claims for labor, materials and supplies to the
extent that payment therefor shall not at the time be required to be made
in accordance with the provisions of Section 10.8;
(d) Indebtedness in respect of judgments or awards that have been in
force for less than the applicable period for taking an appeal so long as
execution is not levied thereunder or in respect of which the Borrower or
such Subsidiary shall at the time in good faith be prosecuting an appeal or
proceedings for review and in respect of which a
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stay of execution shall have been obtained pending such appeal or
review;
(e) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the
ordinary course of business;
(f) Indebtedness existing on the date hereof and listed and
described on Schedule 11.1 hereto;
(g) Indebtedness owed by the Borrower or any of its Subsidiaries
to trade vendors, in the amount of the cost to the Borrower or such
Subsidiary of inventory held on consignment from such trade vendors;
and
(h) Indebtedness of the Borrower and its Subsidiaries other than
that permitted elsewhere in this Section 11.1 in an aggregate
principal amount not to exceed $2,000,000 at any time outstanding;
provided that (i) the Net Proceeds from such Indebtedness are applied
in accordance with Section 7.8 hereof and (ii) no Default or Event of
Default has occurred and is continuing at the time such Indebtedness
is incurred and none would exist after giving effect thereto;
provided, however, the Borrower will not, and will not permit any of its
Subsidiaries to, engage in any form of "off balance sheet" financing, including,
without limitation, the lease of any assets by the Borrower or any of its
Subsidiaries as lessee under any synthetic lease referred to in clause (vi) of
the above definition of the term "Indebtedness "
Restrictions on Liens. The Borrower will not, and will not permit any of
its Subsidiaries to, (i) create or incur or suffer to be created or incurred or
to exist any lien, encumbrance, mortgage, pledge, charge, restriction or other
security interest of any kind upon any of its property or assets of any
character whether now owned or hereafter acquired, or upon the income or profits
therefrom; (ii) transfer any of such property or assets or the income or profits
therefrom for the purpose of subjecting the same to the payment of
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Indebtedness or performance of any other obligation in priority to payment of
its general creditors; (iii) acquire, or agree or have an option to acquire, any
property or assets upon conditional sale or other title retention or purchase
money security agreement, device or arrangement; (iv) suffer to exist for a
period of more than thirty (30) days after the same shall have been incurred any
Indebtedness or claim or demand against it that if unpaid might by law or upon
bankruptcy or insolvency, or otherwise, be given any priority whatsoever over
its general creditors; or (v) sell, assign, pledge or otherwise transfer any
accounts, contract rights, general intangibles, chattel paper or instruments,
with or without recourse; provided that the Borrower and any Subsidiary of the
Borrower may create or incur or suffer to be created or incurred or to exist:
(a) liens in favor of the Borrower on all or part of the assets
of Subsidiaries of the Borrower securing Indebtedness owing by
Subsidiaries of the Borrower to the Borrower;
(b) liens to secure taxes, assessments and other government
charges in respect of obligations not overdue or liens on properties
to secure claims for labor, material or supplies in respect of
obligations not overdue;
(c) deposits or pledges made in connection with, or to secure
payment of, workmen's compensation, unemployment insurance, old age
pensions or other social security obligations;
(d) liens on properties in respect of judgments or awards, the
Indebtedness with respect to which is permitted by Section 11.1(d);
(e) liens of carriers, warehousemen, mechanics and materialmen,
and other like liens on properties, in existence less than 120 days
from the date of creation thereof in respect of obligations not
overdue;
(f) encumbrances on Real Estate consisting of easements, rights
of way, zoning restrictions,
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restrictions on the use of real property and defects and irregularities in
the title thereto, landlord's or lessor's liens under leases to which the
Borrower or a Subsidiary of the Borrower is a party, and other minor liens
or encumbrances none of which in the opinion of the Borrower interferes
materially with the use of the property affected in the ordinary conduct of
the business of the Borrower and its Subsidiaries, which defects do not
individually or in the aggregate have a materially adverse effect on the
business of the Borrower individually or of the Borrower and its
Subsidiaries on a consolidated basis;
(g) liens existing on the date hereof and listed on Schedule 11.2
hereto;
(h) purchase money security interests in or purchase money
mortgages on real or personal property acquired after the date hereof
to secure purchase money Indebtedness in an amount permitted by
Section 11.1(h), incurred in connection with the acquisition of such
property, which security interests or mortgages cover only the real or
personal property so acquired;
(i) liens in favor of the Collateral Agent, for the benefit of
the Banks and the Agents, under the Loan Documents; and
(j) liens on inventory and proceeds thereof (up to the cost
thereof to the Borrower or such Subsidiary) held on consignment from
trade vendors securing obligations to return or pay the purchase price
of such inventory.
Restrictions on Investments. The Borrower will not, and will not permit any
of its Subsidiaries to, make or permit to exist or to remain outstanding any
Investment except Investments in:
(a) marketable direct or guaranteed obligations of the United
States of America that mature within one (1) year from the date of
purchase by the Borrower or such Subsidiary;
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(b) demand deposits, certificates of deposit, bankers acceptances
and time deposits of United States banks having total assets in excess
of $1,000,000,000;
(c) securities commonly known as "commercial paper" issued by a
corporation organized and existing under the laws of the United States
of America or any state thereof that at the time of purchase have been
rated and the ratings for which are not less than "P 1" if rated by
Moody's Investors Services, Inc., and not less than "A 1" if rated by
Standard and Poor's;
(d) Investments existing on the date hereof and listed on
Schedule 11.3 hereto and the Investment being made in effecting the
Acquisition on the Closing Date;
(e) Investments consisting of loans, advances or guaranties to or
for the benefit of employees in the ordinary course of business not to
exceed $250,000.00 in the aggregate at any time outstanding;
(f) Investments by the Borrower in the assets of any other Person
or in all of the stock of any other Person, provided that (i) the
maximum aggregate amount of all such Investments made during any
fiscal year shall not exceed the lesser of (A) $10,000,000, and (B)
10% of Consolidated Tangible Net Worth immediately prior to giving
effect to any such Investment (the Borrower agreeing to deliver to the
Agents a calculation of Consolidated Tangible Net Worth demonstrating
satisfaction with the foregoing limitation prior to making any such
Investment) plus the net cash proceeds received by the Borrower in any
year from public offerings of the Borrower's stock, (ii) after giving
effect to any such proposed Investment, in the case of any stock
acquisition, the Borrower shall own 100% of the issued and outstanding
capital stock of such other Person, (iii) immediately before each such
proposed Investment and after giving effect thereto, there shall be no
Default or Event of Default, (iv) any
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Investment which results in a change in control of the Person in which
the Investment is made shall have been approved by the Board of
Directors of such Person prior to the making of such Investment, and
(v) the Borrower shall have complied in all respects with Section
10.19 hereof;
(g) Investments to the extent permitted under Section 11.4; and
(h) Investments by the Borrower in acquiring Indebtedness arising
under the Indentures in an aggregate principal amount not to exceed
$750,000 for all such purchases;
provided, however, that, with the exception of demand deposits referred to in
Section 11.3(b) and loans and advances referred to in Section 11.3(e), such
Investments will be considered Investments permitted by this Section 11.3 only
if all actions have been taken to the satisfaction of the Agents to provide to
the Collateral Agent, for the benefit of the Banks and the Agents, a first
priority perfected security interest in all of such Investments free of all
encumbrances other than Permitted Liens.
Distributions. The Borrower will not make any Distributions, except for
repurchases of the Borrower's Class B common stock in an aggregate amount not to
exceed $150,000 for all such repurchases and except that, after the payment in
full of the Term Loan, the Borrower may use up to an aggregate of $2,500,000 to
repurchase its own common stock, so long as no Default or Event of Default has
occurred and is continuing.
Merger, Consolidation; Disposition of Assets; Issuance of Equity
Securities.
Mergers and Acquisitions. The Borrower will not, and will not permit any of
its Subsidiaries to, become a party to any merger or consolidation, or
agree to or effect any asset acquisition or stock acquisition (other
than the acquisition of assets in the ordinary course of business
consistent with past practices) except the merger or consolidation of
one or more of the Subsidiaries of the Borrower with and into the
Borrower, or the merger or consolidation of two or more Subsidiaries
of the Borrower. The Borrower will not, and will not
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permit any of its Subsidiaries to, agree to or effect any asset
acquisition or stock acquisition except (a) the acquisition of assets
in the ordinary course of business consistent with past practices or
(b) asset or stock acquisitions to the extent Investments in respect
thereof are permitted under Section 11.3(f) hereof, provided that
concurrently with any such stock acquisition, the Borrower shall also
comply with Section 10.19 hereof.
Disposition of Assets. The Borrower will not, and will not permit any of
its Subsidiaries to, become a party to or agree to or effect any
disposition of assets, other than the disposition of (a) inventory in
the ordinary course of business, consistent with past practices, (b)
inventory, equipment, fixtures and leasehold interests of the Borrower
in connection with the sale by the Borrower in the ordinary course of
business of any retail store locations, (c) obsolete equipment in
connection with the replacement thereof provided that such assets
shall not have an aggregate value in excess of $750,000.00 for all
such sales occurring in any fiscal year, (d) retail installment sales
accounts so long as such sales (i) are without recourse to the
Borrower, (ii) are for cash in an amount equal to not less than 80% of
the amount of such accounts, (iii) are done within one month of the
creation of such accounts, and (iv) are otherwise consistent with past
practices of the Borrower, (e) other assets pursuant to sale
transactions or sale and leaseback transactions provided that (i) the
Borrower receives cash proceeds from such transactions equal to the
fair market value of such assets, (ii) the Net Proceeds from such
transactions are applied in accordance with Section 7.8 hereof and
(iii) no Default or Event of Default has occurred and is continuing at
the time any such transaction is consummated and none would exist
after giving effect thereto, and (f)(i) the accounts receivable and
certain fixtures acquired in the Acquisition and (ii) approximately
ten (10) retail stores, and inventory therein, acquired in the
Acquisition, the aggregate proceeds of which will be approximately
$2,000,000.
Sale and Leaseback. The Borrower will not, and will not permit any of its
Subsidiaries to, enter into
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any arrangement, directly or indirectly, whereby the Borrower or any Subsidiary
of the Borrower shall sell or transfer any property owned by it in order then or
thereafter to lease such property or lease other property that the Borrower or
any Subsidiary of the Borrower intends to use for substantially the same purpose
as the property being sold or transferred except for sale and leaseback
transactions permitted by Section 11.5(d) above.
Compliance with Environmental Laws. The Borrower will not, and will not
permit any of its Subsidiaries to, (a) use any of the Real Estate or any portion
thereof for the handling, processing, storage or disposal of Hazardous
Substances, (b) cause or permit to be located on any of the Real Estate any
underground tank or other underground storage receptacle for Hazardous
Substances, (c) generate any Hazardous Substances on any of the Real Estate, (d)
conduct any activity at any Real Estate or use any Real Estate in any manner so
as to cause a release (i.e. releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, disposing or
dumping) or threatened release of Hazardous Substances on, upon or into the Real
Estate or (e) otherwise conduct any activity at any Real Estate or use any Real
Estate in any manner that would violate any Environmental Law or bring such Real
Estate in violation of any Environmental Law, where, in the case of any such
violation described in this clause (e), such violation could reasonably be
expected to have a materially adverse effect, either individually or in the
aggregate, upon the business, assets or financial condition of the Borrower or
any of its Subsidiaries.
Employee Benefit Plans. Neither the Borrower nor any ERISA Affiliate will
(a) engage in any non-exempt "prohibited transaction" within the
meaning of Section 406 of ERISA or Section 4975 of the Code which
could reasonably be expected to result in a material liability for the
Borrower or any of its Subsidiaries; or
(b) permit any Guaranteed Pension Plan to incur an "accumulated
funding deficiency", as
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such term is defined in Section 302 of ERISA, whether or not such
deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an
extent which, or terminate any Guaranteed Pension Plan in a manner
which, could reasonably be expected to result in the imposition of a
lien or encumbrance on the assets of the Borrower or any of its
Subsidiaries pursuant to Section 302(f) or Section 4068 of ERISA; or
(d) permit or take any action which would result in the aggregate
benefit liabilities (with the meaning of Section 4001 of ERISA) of all
Guaranteed Pension Plans exceeding the value of the aggregate assets
of such Plans, disregarding for this purpose the benefit liabilities
and assets of any such Plan with assets in excess of benefit
liabilities, by more than the amount set forth in Section 10.16.3.
Bank Accounts. The Borrower will not, and will not permit any of its
Subsidiaries to, (a) establish any bank accounts other than those listed on
Schedule 9.20 (as such may be amended from time to time to include those
depository institutions acceptable to the Agents which have executed and
delivered Agent Agency Account Agreements in the form of Exhibit A hereto)
without the Agents' prior written consent, (b) violate directly or indirectly
any bank agency or lock box agreement in favor of the Collateral Agent for the
benefit of the Banks and the Agents with respect to such account.
Consignment Transactions. Except pursuant to this Credit Agreement, the
Borrower will not, nor will the Borrower permit or suffer any of its
Subsidiaries to, enter into any consignment transactions, including consignments
of Precious Metal; provided, that the Borrower or its Subsidiaries may enter
into arrangements for consignments of inventory from vendors in the ordinary
course of business, consistent with past practices.
Transactions with Affiliates. Except for transactions which are described
on Schedule 9.15 hereto, the Borrower will not, nor will the Borrower permit or
suffer any of its Subsidiaries to, conduct any transactions among themselves or
with any Affiliates of the Borrower, other than transactions in the
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ordinary course of the Borrower's or such Subsidiary's business, consistent with
past practices, and upon terms not materially less favorable to such Borrower or
Subsidiary than it could obtain in a comparable arm's-length transaction with a
party other than the Borrower, such Subsidiary or such Affiliate.
Subsidiaries. The Borrower will not create any Subsidiaries.
Issuance of Equity Securities. The Borrower will not, and will not permit
any of its Subsidiaries to, issue any equity securities, including, without
limitation, any issuance of warrants, options or subscription rights, unless (i)
the Borrower receives solely cash proceeds from each such issuance, (ii) the Net
Proceeds from such issuance are applied in accordance with Section 7.8 hereof
and (iii) no Default or Event of Default has occurred and is continuing at the
time any such issuance is consummated and none would exist after giving effect
thereto. FINANCIAL COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan, Reimbursement
Obligation, Letter of Credit, amount of Consigned Precious Metal or Note is
outstanding or any Bank has any obligation to make any Loans, any Gold Fronting
Bank has any obligation to make any Purchases and Consignments or the
Administrative Agent has any obligation to issue, extend or renew any Letters of
Credit:
Total Funded Debt to EBITDA. The Borrower will not permit the ratio of
Consolidated Total Funded Debt during any period of four consecutive fiscal
quarters ending on any date during any period set forth in the table below to
Consolidated EBITDA for such period to exceed the ratio set forth opposite such
date in such table:
---------------------------------------------------
Period Ratio
---------------------------------------------------
1/31/98-10/31/98 3.50:1.0
---------------------------------------------------
1/31/99-10/31/00 3.25:1.0
---------------------------------------------------
1/31/01-10/31/01 2.75:1.0
---------------------------------------------------
1/31/02 and thereafter 2.50:1.0
---------------------------------------------------
Capital Expenditures. The Borrower will not make, or permit any Subsidiary
of the Borrower to make,
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Capital Expenditures during any fiscal year set forth in the table below that
exceed, in the aggregate, the amount set forth opposite such fiscal year in such
table; provided, however, (a) that, if during any such fiscal year set forth
below the amount of Capital Expenditures permitted for that fiscal year is not
so utilized, a portion of such unutilized amount not to exceed $1,500,000 may be
utilized in the next succeeding fiscal year set forth below but not in any
subsequent fiscal year; provided further, that in no event shall the amount
carried forward from any prior fiscal years ever exceed $1,500,000 for any such
fiscal year set forth below and (b) in addition to the amounts set forth below,
the Borrower may make additional Capital Expenditures during any fiscal year
(including the amount of any Investments permitted by Section 11.3 which
constitute Capital Expenditures and which are made with the net cash proceeds of
any public offerings) solely to the extent of (i) the aggregate amount of net
cash proceeds received by the Borrower during such fiscal year in connection
with any public offering of its Common Stock minus (ii) the amount of any such
net cash proceeds from any such public offerings which are used by the Borrower
to make Mandatory Prepayments as required by and in accordance with Section 7.8
and to make Investments not constituting Capital Expenditures as permitted by
Section 11.3.
---------------------------------------------------
Fiscal Year Amount
---------------------------------------------------
2/1/98 - 1/31/99 $19,500,000
---------------------------------------------------
2/1/99 - 1/31/00 $19,000,000
---------------------------------------------------
2/1/00 - 1/31/01 $21,000,000
---------------------------------------------------
2/1/01 - 1/31/02 $22,000,000
---------------------------------------------------
2/1/02 - 1/31/03 $23,000,000
---------------------------------------------------
Debt Service Coverage. The Borrower will not permit the ratio of
Consolidated Operating Cash Flow for any fiscal year set forth in the table
below to Consolidated Total Debt Service for such period to exceed the ratio set
forth opposite such period in such table:
---------------------------------------------------
Fiscal Year Ratio
---------------------------------------------------
2/1/98-1/31/99 1.50:1.00
---------------------------------------------------
2/1/99-1/31/00 1.30:1.00
---------------------------------------------------
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---------------------------------------------------
2/1/00-1/31/01 1.40:1.00
---------------------------------------------------
2/1/01-1/31/02 1.75:1.00
---------------------------------------------------
2/1/02-1/31/03 1.75:1.00
---------------------------------------------------
Fixed Charge Coverage Ratio. The Borrower will not permit, for any period
of four consecutive fiscal quarters, the ratio of (a) the sum of (i)
Consolidated EBITDA for such period plus (ii) Consolidated Minimum Store Rent
for such period to (b) the sum of (i) Consolidated Minimum Store Rent for such
period plus (ii) Consolidated Cash Interest Expense for such period, to be less
than 1.80:1.00.
Consolidated EBITDA. The Borrower will not permit Consolidated EBITDA for
any period of four consecutive fiscal quarters ending during any period or on
any date, as applicable, set forth in the table below to be less than the amount
set forth opposite such period or date as applicable, in such table:
---------------------------------------------------
Period or Date Amount
---------------------------------------------------
1/31/99 $24,500,000
---------------------------------------------------
4/30/99 $25,000,000
---------------------------------------------------
7/31/99 $27,000,000
---------------------------------------------------
10/31/99 $28,000,000
---------------------------------------------------
1/31/00-4/30/00 $31,500,000
---------------------------------------------------
7/31/00 $32,000,000
---------------------------------------------------
10/31/00 $32,500,000
---------------------------------------------------
1/31/01-10/31/01 $36,000,000
---------------------------------------------------
1/31/02-10/31/02 $42,000,000
---------------------------------------------------
1/31/03 and thereafter $48,500,000
---------------------------------------------------
CLOSING CONDITIONS.
The effectiveness of this Credit Agreement and the obligations of the Banks
to make the initial Revolving Credit Loans and the Term Loan, of the Gold
Fronting Banks to make the initial Purchases and Consignments and of the
Administrative Agent to consider making any initial Swing Line Loans and to
issue any initial
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Letters of Credit shall be subject to the satisfaction of the following
conditions precedent on or prior to September 30, 1998:
Loan Documents, etc. Each of the Loan Documents shall have been duly
executed and delivered by the respective parties thereto, shall be in full force
and effect and shall be in form and substance satisfactory to each of the Banks.
Each Bank shall have received a fully executed copy of each such document.
Certified Copies of Charter Documents. Each of the Banks shall have
received from the Borrower and each of its Subsidiaries a copy, certified by a
duly authorized officer of such Person to be true and complete on the Closing
Date, of each of (a) its charter or other incorporation documents as in effect
on such date of certification, and (b) its by-laws as in effect on such date.
Corporate, Action. All corporate action necessary for the valid execution,
delivery and performance by the Borrower and each of its Subsidiaries of this
Credit Agreement and the other Loan Documents to which it is or is to become a
party shall have been duly and effectively taken, and evidence thereof
satisfactory to the Banks shall have been provided to each of the Banks.
Incumbency Certificate. Each of the Banks shall have received from the
Borrower and each of its Subsidiaries an incumbency certificate, dated as of the
Closing Date, signed by a duly authorized officer of the Borrower or such
Subsidiary, and giving the name and bearing a specimen signature of each
individual who shall be authorized: (a) to sign, in the name and on behalf of
each of the Borrower of such Subsidiary, each of the Loan Documents to which the
Borrower or such Subsidiary is or is to become a party; (b) in the case of the
Borrower, to make Loan Requests, Purchase and Consignment Requests, Conversion
Requests and Consignment Conversion Requests and to apply for Letters of Credit;
and (c) to give notices and to take other action on its behalf under the Loan
Documents.
Validity of Liens. The Security Documents shall be effective to create in
favor of the Collateral Agent a legal, valid and enforceable first (except for
Permitted Liens entitled to priority under applicable law) security interest in
and lien upon the Collateral. All
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filings, recordings, deliveries of instruments and other actions necessary or
desirable in the opinion of the Agents to protect and preserve such security
interests shall have been duly effected including, without limitation, all
notices required to be filed under Section 9-114 or Section 9-312(3) of the
Uniform Commercial Code in effect in the Commonwealth of Massachusetts or any
then applicable jurisdiction. The Collateral Agent shall have received evidence
thereof in form and substance satisfactory to the Agents and the Banks.
Perfection Certificate and UCC Search Results. The Collateral Agent shall
have received from the Borrower a completed and fully executed Perfection
Certificate and the results of current UCC searches with respect to the
Collateral, indicating no liens other than Permitted Liens and otherwise in form
and substance satisfactory to the Agents and the Banks. The Agents shall have
received and shall be satisfied with the form and substance of all consignment
financing statements filed or to be filed on behalf of trade vendors as
consignors.
Certificates of Insurance. The Agents shall have received (a) a certificate
of insurance from an independent insurance broker dated as of the Closing Date,
identifying insurers, types of insurance, insurance limits, and policy terms,
and otherwise describing the insurance obtained in accordance with the
provisions of the Security Agreement and (b) certified copies of all policies
evidencing such insurance (or certificates therefore signed by the insurer or an
agent authorized to bind the insurer).
BKB Concentration Accounts; Agency Account Agreements. The Borrower shall
have established the BKB Concentration Accounts, and the Agents shall have
received an Agency Account Agreement, in form and substance satisfactory to the
Agents, from (a) each Concentration Bank (other than BKB) and (b) each other
bank at which the Borrower maintains depository accounts into which proceeds of
Accounts Receivable of the Borrower are deposited, in each case concerning the
Collateral Agent's interest for the benefit of the Banks and the Agents, in the
depository accounts maintained by the Borrower with such Concentration Banks or,
as the case may be, such other banks.
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Borrowing Base Report; Consigned Precious Metal Report; Monthly Inventory
Report. The Agents shall have received from the Borrower the initial Borrowing
Base Report, the initial Consigned Precious Metal Report, and the initial
Monthly Inventory Report, in each case prepared on the basis of the best
available data (taking into account that the Acquisition is being consummated
simultaneously with the closing of the transactions contemplated hereby), each
dated as of the Closing Date.
Accounts Payable Aging Report. The Agents shall have received from the
Borrower the most recent accounts payable aging report of the Borrower dated as
of a date which shall be no more than fifteen (15) days prior to the Closing
Date and the Borrower shall have notified the Agents in writing on the Closing
Date of any material deviation from the accounts payable values reflected in
such accounts payable aging report and shall have provided the Agents with such
supplementary documentation as the Agents may reasonably request.
Opinion of Counsel. Each of the Banks and the Agents shall have received
(a) a favorable legal opinion addressed to the Banks and the Agents, dated as of
the Closing Date, in form and substance satisfactory to the Banks and the
Agents, from Sidley & Austin, counsel to the Borrower and its Subsidiaries and
(b) copies of each of all legal opinions delivered upon the consummation of the
Acquisition by counsel to the respective parties to the Acquisition Documents,
each in form and substance satisfactory to the Agents, and each accompanied by a
reliance letter with respect thereto in favor of, or otherwise made the subject
of proper reliance by, the Banks and the Agents.
Payment of Fees. The Borrower shall have paid to the Banks or the Agents,
as appropriate, the closing fee, the Agents' fee pursuant to Sections 7.11 and
7.12 and all other amounts due and payable under this Agreement.
No Letters of Credit. The Agents shall have received reasonable assurances
from the Borrower that there are no letters of credit open or outstanding,
relating either to the Borrower or the business being acquired in the
Acquisition.
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Terms of Consignment. Each of the Agents and each of the Banks shall be
satisfied with the terms of all consignment, leasing, "lay away" and purchase
and sale arrangements of the Borrower and each of its Subsidiaries.
Financial Statements. The Agents and the Banks shall have received the
financial statements required to be delivered to them by Section 9.4.
Closing of Acquisition. Each of the Acquisition Documents shall have been
duly executed and delivered by the respective parties thereto, shall be in full
force and effect and shall be in form and substance satisfactory to each of the
Agents. The Agents shall have received a fully executed copy of each such
document. The Agents shall have also satisfactorily completed their due
diligence review of the assets of C&C Jeweler and shall have received
satisfactory evidence that there exist no defaults under any material contract
to which C&C Jeweler is a party. The Acquisition shall have been duly
consummated on or prior to the Closing Date in accordance with the terms of the
Acquisition Documents. The Agents shall have received evidence, reasonably
satisfactory to them, of the completion by the parties to the Acquisition
Documents of all actions to be taken prior to or concurrently with the closing
of the transactions contemplated thereby pursuant to the terms thereof,
including without limitation, the satisfaction or, to the extent consented to in
writing by the Agents, waiver, of all conditions to closing set forth in the
Acquisition Documents and the payment by each applicable party thereto of all
amounts required to be paid at closing. The Agents shall have received evidence,
reasonably satisfactory to them, that all consents and approvals necessary to
complete the Acquisition shall have been obtained and such consents and
approvals shall be in form and substance reasonably satisfactory to the Agents.
Without limiting the foregoing, the Agents shall have received evidence,
reasonably satisfactory to them, of the receipt of all necessary governmental or
regulatory approvals, including, without limitation, the satisfaction of all
requirements under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the regulations promulgated thereunder.
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Total Funded Debt to EBITDA. The ratio of Consolidated Total Funded Debt of
the Borrower and (to the extent incurred by, or on behalf or for the benefit of,
the business operated using the assets being acquired in the Acquisition) C&C
Jeweler, on a pro forma basis, during the twelve (12)-month period to and
including August 31, 1998 (but taking into account all transactions occurring on
the Closing Date, including, without limitation, the Acquisition and Extensions
of Credit) to Consolidated EBITDA of the Borrower and (to the extent incurred
by, or on behalf or for the benefit of, the business operated using the assets
being acquired in the Acquisition) C&C Jeweler on a pro forma basis, for such
period shall be less than 2.80:1.00 and evidence of the foregoing, satisfactory
to the Banks, shall have been provided to each of the Banks.
Consents and Approvals. Without in any way limiting the provisions of
Section 13.16, the Agents shall have received evidence that there shall have
been obtained by all of the parties to the transactions contemplated hereby,
including, without limitation, the Acquisition, and shall be in full force and
effect all regulatory, creditor, lessor and other third party consents and
approvals necessary to complete the transactions contemplated hereby.
Capitalization of the Borrower. The Agents shall have reviewed all of the
documents relating to the capitalization of the Borrower, which documents and
capitalization shall be in form and substance satisfactory to each of the
Agents. CONDITIONS TO ALL BORROWINGS.
The obligations of the Banks to make any Loans, including the initial
Revolving Credit Loans and the Term Loan, of the Gold Fronting Banks to make any
Purchases and Consignments, including the initial Purchases and Consignments,
and of the Administrative Agent to consider making any Swing Line Loans and to
issue, extend or renew any Letter of Credit, in each case whether on or after
the Closing Date, shall also be subject to the satisfaction of the following
conditions precedent:
Representations True; No Event of Default. Each of the representations and
warranties of any of the Borrower and its Subsidiaries contained in this Credit
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Agreement, the other Loan Documents or in any document or instrument delivered
pursuant to or in connection with this Credit Agreement shall be true as of the
date as of which they were made and shall also be true at and as of the time of
the making of such Loan or Purchase and Consignment or the issuance, extension
or renewal of such Letter of Credit, with the same effect as if made at and as
of that time (except to the extent of changes resulting from transactions
contemplated or permitted by this Credit Agreement and the other Loan Documents
and changes occurring in the ordinary course of business that singly or in the
aggregate are not materially adverse, and to the extent that such
representations and warranties relate expressly to an earlier date) and no
Default or Event of Default shall have occurred and be continuing.
No Legal Impediment. No change shall have occurred in any law or
regulations thereunder or interpretations thereof that in the reasonable opinion
of any Bank would make it illegal for such Bank to make such Loan or Purchase
and Consignment or to participate in the issuance, extension or renewal of such
Letter of Credit or in the reasonable opinion of the Administrative Agent would
make it illegal for the Administrative Agent to issue, extend or renew such
Letter of Credit.
Governmental Regulation. Each Bank shall have received such statements in
substance and form reasonably satisfactory to such Bank as such Bank shall
require for the purpose of compliance with any applicable regulations of the
Comptroller of the Currency or the Board of Governors of the Federal Reserve
System.
Proceedings and Documents. All proceedings in connection with the
transactions contemplated by this Credit Agreement, the other Loan Documents and
all other documents incident thereto shall be satisfactory in substance and in
form to the Banks and to the Agents and the Administrative Agent's Special
Counsel, and the Banks, the Agents and such counsel shall have received all
information and such counterpart originals or certified or other copies of such
documents as the Agents or such Banks may reasonably request.
Borrowing Base Report; Consigned Precious Metal Report. The Agents and the
Banks shall have
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received the most recent Borrowing Base Report required to be delivered to the
Agents and the Banks in accordance with Section 10.4(f) and the most recent
Consigned Precious Metal Report required to be delivered to the Agents and the
Banks in accordance with Section 10.4(f), and if requested by the Administrative
Agent, a Borrowing Base Report or, as the case may be, a Consigned Precious
Metal Report, dated within five (5) days of the Drawdown Date or, as the case
may be, the Gold Drawdown Date of such Loan or such Purchase and Consignment or
of the date of issuance, extension or renewal of such Letter of Credit.
EVENTS OF DEFAULT; ACCELERATION; ETC.
Events of Default and Acceleration. If any of the following events ("Events of
Default" or, if the giving of notice or the lapse of time or both is required,
then, prior to such notice or lapse of time, "Defaults") shall occur:
(a) the Borrower shall fail to pay any principal of the Loans or
any Reimbursement Obligation or fail to purchase and pay for or
Redeliver Consigned Precious Metal when the same shall become due and
payable or required, whether at the stated date of maturity or any
accelerated date of maturity or at any other date fixed for payment or
Redelivery;
(b) the Borrower or any of its Subsidiaries (i) shall fail to pay
any interest on the Loans or Consignment Fees on Consigned Precious
Metal (A) within one (1) day following the date when the same shall
become due and payable, other than at the stated date of maturity or
any accelerated date of maturity or (B) when the same shall become due
and payable at the stated date of maturity or any accelerated date of
maturity, or (ii) shall fail to pay the commitment fees, any Letter of
Credit Fee, the Agents' fee, or other sums due hereunder or under any
of the other Loan Documents, when the same shall become due and
payable, whether at the stated date of maturity or any accelerated
date of maturity or at any other date fixed for payment;
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(c) the Borrower shall fail to comply with any of its covenants
contained in Section 10 (other than Sections 10.6(b), 10.13 and
10.17), 11 or 12;
(d) the Borrower or any of its Subsidiaries shall fail to perform
any term, covenant or agreement contained herein or in any of the
other Loan Documents (other than those specified elsewhere in this
Section 15.1) for fifteen (15) days after written notice of such
failure has been given to the Borrower by the Agents;
(e) any representation or warranty of the Borrower or any of its
Subsidiaries in this Credit Agreement or any of the other Loan
Documents or in any other document or instrument delivered pursuant to
or in connection with this Credit Agreement shall prove to have been
false in any material respect upon the date when made or deemed to
have been made or repeated;
(f) the Borrower or any of its Subsidiaries shall (i) fail to pay
at maturity, or within any applicable period of grace, any obligation
for borrowed money or credit received or in respect of any Capitalized
Leases, in each case under this clause (B) in excess of $1,000,000.00,
or (ii) fail to observe or perform any material term, covenant or
agreement contained in any agreement by which it is bound, evidencing
or securing borrowed money or credit received or in respect of any
Capitalized Leases, in each case under this clause (B) in excess of
$1,000,000.00, for such period of time as would permit (assuming the
giving of appropriate notice if required) the holder or holders
thereof or of any obligations issued thereunder to accelerate the
maturity thereof;
(g) the Borrower or any of its Subsidiaries shall make an
assignment for the benefit of creditors, or admit in writing its
inability to pay or generally fail to pay its debts as they mature or
become due, or shall petition or apply for the appointment of a
trustee or other custodian, liquidator or receiver of the Borrower or
any of its Subsidiaries or of any substantial part of the
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assets of the Borrower or any of its Subsidiaries or shall commence
any case or other proceeding relating to the Borrower or any of its
Subsidiaries under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or
similar law of any jurisdiction, now or hereafter in effect, or shall
take any action to authorize or in furtherance of any of the
foregoing, or if any such petition or application shall be filed or
any such case or other proceeding shall be commenced against the
Borrower or any of its Subsidiaries and the Borrower or any of its
Subsidiaries shall indicate its approval thereof, consent thereto or
acquiescence therein or such petition or application shall not have
been dismissed within forty-five (45) days following the filing
thereof;
(h) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating the Borrower or any
of its Subsidiaries bankrupt or insolvent, or approving a petition in
any such case or other proceeding, or a decree or order for relief is
entered in respect of the Borrower or any Subsidiary of the Borrower
in an involuntary case under federal bankruptcy laws as now or
hereafter constituted;
(i) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty days, whether or not consecutive, any
final judgment against the Borrower or any of its Subsidiaries that,
with other outstanding final judgments, undischarged, against the
Borrower or any of its Subsidiaries exceeds in the aggregate
$1,500,000.00;
(j) if any of the Loan Documents shall be canceled, terminated,
revoked or rescinded or the Collateral Agent's security interests,
mortgages or liens in a substantial portion of the Collateral shall
cease to be perfected, or shall cease to have the priority
contemplated by the Security Documents, in each case otherwise than in
accordance with the terms thereof or with the express prior written
agreement, consent or
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approval of the Banks, or any action at law, suit or in equity or
other legal proceeding to cancel, revoke or rescind any of the Loan
Documents shall be commenced by or on behalf of the Borrower or any of
its Subsidiaries party thereto or any of their respective
stockholders, or any court or any other governmental or regulatory
authority or agency of competent jurisdiction shall make a
determination that, or issue a judgment, order, decree or ruling to
the effect that, any one or more of the Loan Documents is illegal,
invalid or unenforceable in accordance with the terms thereof;
(k) with respect to any Guaranteed Pension Plan, an ERISA
Reportable Event shall have occurred and the Majority Banks shall have
determined in their reasonable discretion that such event reasonably
could be expected to result in liability of the Borrower or any of its
Subsidiaries to the PBGC or such Guaranteed Pension Plan in an
aggregate amount exceeding $1,500,000.00 and such event in the
circumstances occurring reasonably could constitute grounds for the
termination of such Guaranteed Pension Plan by the PBGC or for the
appointment by the appropriate United States District Court of a
trustee to administer such Guaranteed Pension Plan; or a trustee shall
have been appointed by the United States District Court to administer
such Plan; or the PBGC shall have instituted proceedings to terminate
such Guaranteed Pension Plan;
(l) the Borrower or any of its Subsidiaries shall be enjoined,
restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting any material part
of its business and such order shall continue in effect for more than
thirty (30) days;
(m) there shall occur any material damage to, or loss, theft or
destruction of, any Collateral, whether or not insured, or any strike,
lockout, labor dispute, embargo, condemnation, act of God
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or public enemy, or other casualty, which in any such case causes, for
more than ten (10) consecutive days, the cessation or substantial
curtailment of revenue producing activities at retail locations of the
Borrower or any of its Subsidiaries constituting twenty-five percent
(25%) or more of the Borrower's and its Subsidiaries retail locations
if such event or circumstance is not covered by business interruption
insurance;
(n) there shall occur the loss, suspension or revocation of, or
failure to renew, any license or permit now held or hereafter acquired
by the Borrower or any of its Subsidiaries if such loss, suspension,
revocation or failure to renew would have a material adverse effect on
the business or financial condition of the Borrower or such
Subsidiary;
(o) the Borrower or any of its Subsidiaries shall be indicted for
a state or federal crime, or any civil or criminal action shall
otherwise have been brought against the Borrower or any of its
Subsidiaries, a punishment for which in any such case could include
the forfeiture of any assets of the Borrower or such Subsidiary
included in the Borrowing Base or any assets of the Borrower or such
Subsidiary not included in the Borrowing Base but having a fair market
value in excess of $1,500,000.00; or
(p) any person or group of persons (within the meaning of Section
13 or 14 of the Securities Exchange Act of 1934, as amended) shall
have acquired beneficial ownership (within the meaning of Rule 13d-3
promulgated by the Securities and Exchange Commission under said Act)
of 30% or more of the outstanding shares of common stock of the
Borrower; or, during any period of twelve consecutive calendar months,
individuals who were directors of the Borrower on the first day of
such period shall cease to constitute a majority of the board of
directors of the Borrower;
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then, and in any such event (i) the Borrower shall purchase all Consigned
Precious Metal in accordance with the provisions of Section 6.4 hereof and (ii)
so long as the same may be continuing, the Agents may, and upon the request of
the Majority Banks shall, by notice in writing to the Borrower declare all
amounts owing with respect to this Credit Agreement, the Notes and the other
Loan Documents and all Reimbursement Obligations to be, and they shall thereupon
forthwith become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived by
the Borrower; provided that in the event of any Event of Default specified in
Sections 15.1(g) or 15.1(h), all such amounts shall become immediately due and
payable automatically and without any requirement of notice from the Agents or
any Bank.
Termination of Commitments. If any one or more of the Events of Default
specified in Section 15.1(g) or Section 15.1(h) shall occur, any unused portion
of the credit hereunder shall forthwith terminate and each of the Banks shall be
relieved of all further obligations to make Loans (other than pursuant to
Section 6.4 hereof) to the Borrower, the Gold Fronting Banks shall be relieved
of all further obligations to make Purchases and Consignments to the Borrower
and the Administrative Agent shall be relieved of all further obligations to
issue, extend or renew Letters of Credit. If any other Event of Default shall
have occurred and be continuing, or if on any Drawdown Date, Gold Drawdown Date
or other date for issuing, extending or renewing any Letter of Credit the
conditions precedent to the making of the Loans to be made on such Drawdown
Date, to the making of the Purchases and Consignments to be made on such Gold
Drawdown Date, or (as the case may be) to issuing, extending or renewing such
Letter of Credit on such other date are not satisfied, the Agents may and, upon
the request of the Majority Banks, shall, by notice to the Borrower, terminate
the unused portion of the credit hereunder, and upon such notice being given
such unused portion of the credit hereunder shall terminate immediately and each
of the Banks shall be relieved of all further obligations to make Loans (other
than pursuant to Section 6.4 hereof), the Gold Fronting Banks shall be relieved
of all further obligations to make Purchases and
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Consignments to the Borrower and the Administrative Agent shall be relieved of
all further obligations to issue, extend or renew Letters of Credit. No
termination of the credit hereunder shall relieve the Borrower or any of its
Subsidiaries of any of the Obligations.
Remedies. In case any one or more of the Events of Default shall have
occurred and be continuing, and whether or not the Banks shall have accelerated
the maturity of the Loans pursuant to Section 15.1, each Bank, if owed any
amount with respect to the Loans, Purchases and Consignments or the
Reimbursement Obligations, may, with the consent of the Majority Banks but not
otherwise, proceed to protect and enforce its rights by suit in equity, action
at law or other appropriate proceeding, whether for the specific performance of
any covenant or agreement contained in this Credit Agreement and the other Loan
Documents or any instrument pursuant to which the Obligations to such Bank are
evidenced, including as permitted by applicable law the obtaining of the ex
parte appointment of a receiver, and, if such amount shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of such Bank. No remedy herein conferred upon any Bank
or the Agents or the holder of any Note or of any rights in the Consigned
Precious Metal or the purchaser of any Letter of Credit Participation is
intended to be exclusive of any other remedy and each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute or any other provision
of law. SETOFF.
Regardless of the adequacy of any collateral, during the continuance of
any Event of Default, any deposits or other sums credited by or due from any of
the Banks to the Borrower and any securities or other property of the Borrower
in the possession of such Bank may be applied to or set off by such Bank against
the payment of Obligations and any and all other liabilities, direct, or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, of the Borrower to such Bank. Each of the Banks agrees with
each other Bank that (a) if an
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amount to be set off is to be applied to Indebtedness of the Borrower to such
Bank, other than Indebtedness evidenced by the Notes held by such Bank or
constituting Reimbursement Obligations owed to, or, as the case may be,
constituting obligations in respect of Consigned Precious Metal owed to, such
Bank, such amount shall be applied ratably to such other Indebtedness and to the
Indebtedness evidenced by all such Notes held by such Bank or constituting
Reimbursement Obligations owed to, or, as the case may be, constituting
obligations in respect of Consigned Precious Metal owed to, such Bank, and (b)
if such Bank shall receive from the Borrower, whether by voluntary payment,
exercise of the right of setoff, counterclaim, cross action, enforcement of the
claim evidenced by the Notes held by, or constituting Reimbursement Obligations
owed to, or, as the case may be, constituting obligations in respect of
Consigned Precious Metal owed to, such Bank by proceedings against the Borrower
at law or in equity or by proof thereof in bankruptcy, reorganization,
liquidation, receivership or similar proceedings, or otherwise, and shall retain
and apply to the payment of the Note or Notes held by, or Reimbursement
Obligations owed to, or, as the case may be, constituting obligations in respect
of Consigned Precious Metal owed to, such Bank any amount in excess of its
ratable portion of the payments received by all of the Banks with respect to the
Notes held by, and Reimbursement Obligations owed to, or, as the case may be,
constituting obligations in respect of Consigned Precious Metal owed to, all of
the Banks, such Bank will make such disposition and arrangements with the other
Banks with respect to such excess, either by way of distribution, pro tanto
assignment of claims, subrogation or otherwise as shall result in each Bank
receiving in respect of the Notes held by it or Reimbursement obligations owed
it, or, as the case may be, obligations in respect of Consigned Precious Metal
owed to it, its proportionate payment as contemplated by this Credit Agreement;
provided that if all or any part of such excess payment is thereafter recovered
from such Bank, such disposition and arrangements shall be rescinded and the
amount restored to the extent of such recovery, but without interest.
THE AGENTS.
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Authorization.
(a) Each of the Agents is authorized to take such action on
behalf of each of the Banks and to exercise all such powers as are
hereunder and under any of the other Loan Documents and any related
documents delegated to such Agent, together with such powers as are
reasonably incident thereto, provided that no duties or
responsibilities not expressly assumed herein or therein shall be
implied to have been assumed by the Agents.
(b) The relationship between the Agents and each of the Banks is
that of an independent contractor. The use of the terms "Agent" and
"Collateral Agent" is for convenience only and is used to describe, as
a form of convention, the independent contractual relationship between
the Agents and each of the Banks. Nothing contained in this Credit
Agreement nor the other Loan Documents shall be construed to create an
agency, trust or other fiduciary relationship between the Agents and
any of the Banks.
(c) As independent contractors empowered by the Banks to exercise
certain rights and perform certain duties and responsibilities
hereunder and under the other Loan Documents, each of the Agents is
nevertheless a "representative" of the Banks, as that term is defined
in Article 1 of the Uniform Commercial Code, for purposes of actions
for the benefit of the Banks and the Agents with respect to all
collateral security and guaranties contemplated by the Loan Documents.
Such actions include the designation of the Collateral Agent as
"secured party", "mortgagee" or the like on all financing statements
and other documents and instruments, whether recorded or otherwise,
relating to the attachment, perfection, priority or enforcement of any
security interests, mortgages or deeds of trust in collateral security
intended to secure the payment or performance of any of the
Obligations, all for the benefit of the Banks and the Agents.
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Employees and Agents. The Agents may exercise their powers and execute its
duties by or through employees or agents and shall be entitled to take, and to
rely on, advice of counsel concerning all matters pertaining to its rights and
duties under this Credit Agreement and the other Loan Documents. The Agents may
utilize the services of such Persons as the Agents in their sole discretion may
reasonably determine, and all reasonable fees and expenses of any such Persons
shall be paid by the Borrower.
No Liability. Neither the Agents nor any of their shareholders, directors,
officers or employees nor any other Person assisting them in their duties nor
any agent or employee thereof, shall be liable for any waiver, consent or
approval given or any action taken, or omitted to be taken, in good faith by
them hereunder or under any of the other Loan Documents, or in connection
herewith or therewith, or be responsible for the consequences of any oversight
or error of judgment whatsoever, except that the Agents or such other Person, as
the case may be, may be liable for losses due to its willful misconduct or gross
negligence.
No Representations. The Agents shall not be responsible for the execution
or validity or enforceability of this Credit Agreement, the Notes, the Letters
of Credit, any of the other Loan Documents or any instrument at any time
constituting, or intended to constitute, collateral security for the Notes or
the obligations in respect of Consigned Precious Metal, or for the value of any
such collateral security or for the validity, enforceability or collectability
of any such amounts owing with respect to the Notes or the obligations in
respect of Consigned Precious Metal, or for any recitals or statements,
warranties or representations made herein or in any of the other Loan Documents
or in any certificate or instrument hereafter furnished to it by or on behalf of
the Borrower or any of its Subsidiaries, or be bound to ascertain or inquire as
to the performance or observance of any of the terms, conditions, covenants or
agreements herein or in any instrument at any time constituting, or intended to
constitute, collateral security for the Notes or the obligations in respect of
Consigned Precious Metal or to inspect any of the properties, books or records
of the Borrower or any of its Subsidiaries. The Agents shall not be bound to
ascertain whether any notice,
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consent, waiver or request delivered to it by the Borrower or any holder of any
of the Notes or of any right in respect of Consigned Precious Metal shall have
been duly authorized or is true, accurate and complete. The Agents have not made
nor do they now make any representations or warranties, express or implied, nor
do they assume any liability to the Banks, with respect to the credit worthiness
or financial conditions of the Borrower or any of its Subsidiaries. Each Bank
acknowledges that it has, independently and without reliance upon either of the
Agents or any other Bank, and based upon such information and documents as it
has deemed appropriate, made its own credit analysis and decision to enter into
this Credit Agreement.
Payments.
Payments to Agent. A payment or Redelivery by the Borrower to the
Administrative Agent hereunder or any of the other Loan Documents for
the account of any Bank shall constitute a payment or, as applicable,
Redelivery to such Bank. Each of the Agents agrees promptly to
distribute to each Bank such Bank's pro rata share of payments
received by such Agent for the account of the such Banks except as
otherwise expressly provided herein or in any of the other Loan
Documents.
Distribution by Agent. If in the opinion of either of the Agents the
distribution of any amount received by it in such capacity hereunder,
under the Notes or under any of the other Loan Documents might involve
it in liability, it may refrain from making distribution until its
right to make distribution shall have been adjudicated by a court of
competent jurisdiction. If a court of competent jurisdiction shall
adjudge that any amount received and distributed by either of the
Agents is to be repaid, each Person to whom any such distribution
shall have been made shall either repay to such Agent its
proportionate share of the amount so adjudged to be repaid or shall
pay over the same in such manner and to such Persons as shall be
determined by such court.
Delinquent Banks. Notwithstanding anything to the contrary contained in
this Credit Agreement or any of the other Loan Documents, any Bank
that fails (i) to make available to the Administrative Agent its pro
rata share of any Loan or Purchase and
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Consignment or to purchase any Letter of Credit Participation or (ii)
to comply with the provisions of Section 16 with respect to making
dispositions and arrangements with the other Banks, where such Bank's
share of any payment received, whether by setoff or otherwise, is in
excess of its pro rata share of such payments due and payable to all
of the Banks, in each case as, when and to the full extent required by
the provisions of this Credit Agreement, shall be deemed delinquent (a
"Delinquent Bank") and shall be deemed a Delinquent Bank until such
time as such delinquency is satisfied. A Delinquent Bank shall be
deemed to have assigned any and all payments due to it from the
Borrower, whether on account of outstanding Loans, Consigned Precious
Metal, Reimbursement Obligations, interest, Consignment Fees, other
fees or otherwise, to the remaining nondelinquent Banks or Gold
Fronting Bank, as applicable, for application to, and reduction of,
their respective pro rata shares of all outstanding Loans and
Reimbursement Obligations or, as applicable, Consigned Precious Metal.
The Delinquent Bank hereby authorizes the Administrative Agent to
distribute such payments to the nondelinquent Banks or Gold Fronting
Bank, as applicable, in proportion to their respective pro rata shares
of all outstanding Loans and Reimbursement Obligations or, as
applicable, Consigned Precious Metal. A Delinquent Bank shall be
deemed to have satisfied in full a delinquency when and if, as a
result of application of the assigned payments to all outstanding
Loans and Reimbursement Obligations or, as applicable, Consigned
Precious Metal, of the nondelinquent Banks or Gold Fronting Bank, as
applicable, the Banks' respective pro rata shares of all outstanding
Loans and Reimbursement Obligations or, as applicable, the Gold
Fronting Banks' respective pro rata shares of Consigned Precious Metal
have returned to those in effect immediately prior to such delinquency
and without giving effect to the nonpayment causing such delinquency.
Payments Under Confirmation of Swap Agreement. Each of the Banks agrees to
pay to the
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Administrative Agent an amount equal to its Commitment Percentage of
any amounts owed by the Administrative Agent to the Borrower pursuant
to the terms of the Confirmation of Swap Agreement, and each of the
Banks agrees that the Administrative Agent may deduct any such amounts
from amounts which the Administrative Agent receives from the Borrower
on account of any Obligations owed to such Bank or, to the extent that
the Administrative Agent has offset such amounts against the
Obligations, by offset to the Obligations owed to such Bank.
Holders of Notes. The Agents may deem and treat the payee of any Note or
the purchaser of any Letter of Credit Participation as the absolute owner or
purchaser thereof for all purposes hereof until it shall have been furnished in
writing with a different name by such payee or by a subsequent holder, assignee
or transferee.
Indemnity. The Banks ratably agree hereby to indemnify and hold harmless
each of the Administrative Agents (including, without limitation, the
Administrative Agent acting in its capacity as the Collateral Agent) from and
against any and all claims, actions and suits (whether groundless or otherwise),
losses, damages, costs, expenses (including any expenses for which such Agent
has not been reimbursed by the Borrower as required by Section 18), and
liabilities of every nature and character arising out of or related to this
Credit Agreement, the Notes, or any of the other Loan Documents or the
transactions contemplated or evidenced hereby or thereby, or such Agent's
actions taken hereunder or thereunder, except to the extent that any of the same
shall be directly caused by such Agent's willful misconduct or gross negligence.
Agents as Banks. In their individual capacities, each of the Agents shall
have the same obligations and the same rights, powers and privileges in respect
to its Commitment and the Loans made by it, and as the holder of any of the
Notes or of any obligations in respect of Consigned Precious Metal and as the
purchaser of any Letter of Credit Participations, as it would have were it not
also an Agent.
Resignation. Any of the Agents may resign at any time by giving sixty (60)
days' prior written notice
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thereof to the Banks and the Borrower. Upon any such resignation, the Majority
Banks shall have the right to appoint a successor Agent. Unless a Default or an
Event of Default shall have occurred and be continuing, such successor Agent
shall be reasonably acceptable to the Borrower. If no successor Agent shall have
been so appointed by the Majority Banks and shall have accepted such appointment
within thirty (30) days after the retiring Agent's giving of notice of
resignation, then the retiring Agent may, on behalf of the Banks, appoint a
successor Agent, which shall be a financial institution having a rating of not
less than A or its equivalent by Standard & Poor's, a division of McGraw Hill,
Inc. Upon the acceptance of any appointment as an Agent hereunder by a successor
Agent, such successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations hereunder.
After any retiring Agent's resignation, the provisions of this Credit Agreement
and the other Loan Documents shall continue in effect for its benefit in respect
of any actions taken or omitted to be taken by it while it was acting as Agent.
Notification of Defaults and Events of Default. Each Bank hereby agrees
that, upon learning of the existence of a Default or an Event of Default, it
shall promptly notify the Agents thereof. The Agents hereby agree that upon
receipt of any notice under this Section 17.10 they shall promptly notify the
other Banks of the existence of such Default or Event of Default.
Duties in the Case of Enforcement. In case one of more Events of Default
have occurred and shall be continuing, and whether or not acceleration of the
Obligations shall have occurred, the Collateral Agent shall, if (a) so requested
by the Majority Banks and (b) the Banks have provided to the Collateral Agent
such additional indemnities and assurances against expenses and liabilities as
the Collateral Agent may reasonably request, proceed to enforce the provisions
of the Security Documents authorizing the sale or other disposition of all or
any part of the Collateral and exercise all or any such other legal and
equitable and other rights or remedies as it may have in respect of such
Collateral. The Majority Banks may direct the Collateral Agent in writing as to
the method and the
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extent of any such sale or other disposition, the Banks hereby agreeing to
indemnify and hold the Collateral Agent, harmless from all liabilities incurred
in respect of all actions taken or omitted in accordance with such directions,
provided that the Collateral Agent need not comply with any such direction to
the extent that the Collateral Agent reasonably believes the Collateral Agent's
compliance with such direction to be unlawful or commercially unreasonable in
any applicable jurisdiction.
EXPENSES.
The Borrower agrees to pay (a) the reasonable costs of producing and
reproducing this Credit Agreement, the other Loan Documents and the other
agreements and instruments mentioned herein, (b) any taxes (including taxes
incurred in connection with the purchase, consignment and repurchase of
Consigned Precious Metal and including any interest and penalties in respect
thereto) payable by any of the Agents or any of the Banks (other than taxes
based upon any Agent's or any Bank's net income) on or with respect to the
transactions contemplated by this Credit Agreement (the Borrower hereby agreeing
to indemnify each of the Agents and each Bank with respect thereto), (c) the
reasonable fees, expenses and disbursements of the Administrative Agent's
Special Counsel or any local counsel to the Agents incurred in connection with
the preparation, administration or interpretation of the Loan Documents and
other instruments mentioned herein, each closing hereunder, and amendments,
modifications, approvals, consents or waivers hereto or hereunder, (d) the fees,
expenses and disbursements of each of the Agents incurred by such Agent in
connection with the preparation, administration or interpretation of the Loan
Documents and other instruments mentioned herein, including all title insurance
premiums and surveyor, engineering and appraisal charges, (e) any fees, costs,
expenses and bank charges, including bank charges for returned checks, incurred
by the Agents in establishing, maintaining or handling agency accounts, lock box
accounts and other accounts for the collection of any of the Collateral; (f) all
reasonable out-of pocket expenses incurred by the Agents, or, after the
occurrence and during the continuance of a Default or
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an Event of Default, any Bank, in connection with periodic field examinations,
fixed asset appraisals, environmental review, monitoring of Collateral and other
assets, sale of Precious Metal Redelivered by the Borrower and otherwise in
maintaining and monitoring the transactions contemplated hereby, and in each
case in accordance with the terms of this Credit Agreement; (g) all reasonable
out-of-pocket expenses (including without limitation reasonable attorneys' fees
and costs, which attorneys may be employees of any Bank or any of the Agents,
and reasonable consulting, accounting, appraisal, investment banking and similar
professional fees and charges) incurred by any Bank or any Agent in connection
with (i) the enforcement of or preservation of rights under any of the Loan
Documents against the Borrower or any of its Subsidiaries or the administration
thereof after the occurrence of a Default or Event of Default and (ii) any
litigation, proceeding or dispute whether arising hereunder or otherwise, in any
way related to any Bank's or any Agent's relationship with the Borrower or any
of its Subsidiaries and (h) all reasonable fees, expenses and disbursements of
the Agents incurred in connection with UCC searches, UCC filings or mortgage
recordings. The covenants of this Section 18 shall survive payment or
satisfaction of all other Obligations.
INDEMNIFICATION.
The Borrower agrees to indemnify and hold harmless each of the Agents and
the Banks from and against any and all claims, actions and suits whether
groundless or otherwise, and from and against any and all liabilities, losses,
damages and expenses of every nature and character arising out of this Credit
Agreement or any of the other Loan Documents or the transactions contemplated
hereby including, without limitation, (a) any actual or proposed use by the
Borrower or any of its Subsidiaries of the proceeds of any of the Loans,
Purchases and Consignments or Letters of Credit, (b) the reversal or withdrawal
of any provisional credits granted by the Administrative Agent upon the transfer
of funds to the BKB Concentration Account from bank agency or lock box accounts
or in connection with the provisional honoring of checks or other items, (c) any
actual or alleged infringement of any patent, copyright,
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trademark, service mark or similar right of the Borrower or any of its
Subsidiaries comprised in the Collateral, (d) the Borrower or any of its
Subsidiaries entering into or performing this Credit Agreement or any of the
other Loan Documents, (e) with respect to the Borrower and its Subsidiaries and
their respective properties and assets, the violation of any Environmental Law,
the presence, disposal, escape, seepage, leakage, spillage, discharge, emission,
release or threatened release of any Hazardous Substances or any action, suit,
proceeding or investigation brought or threatened with respect to any Hazardous
Substances (including, but not limited to, claims with respect to wrongful
death, personal injury or damage to property), or (f) any sales, use, transfer,
documentary and stamp taxes (but excluding any taxes based upon or measured by
the income or profits of any Bank or any Agent) and any recording and filing
fees paid by the Agents or the Banks and which arise by reason of the
transactions contemplated hereby, by the Purchases and Consignments or by any of
the Loan Documents, in each case including, without limitation, the reasonable
fees and disbursements of counsel and allocated costs of internal counsel
incurred in connection with any such investigation, litigation or other
proceeding. In litigation, or the preparation therefor, the Banks and the Agents
shall be entitled to select their own counsel and, in addition to the foregoing
indemnity, the Borrower agrees to pay promptly the reasonable fees and expenses
of such counsel. If, and to the extent that the obligations of the Borrower
under this Section 19 are unenforceable for any reason, the Borrower hereby
agrees to make the maximum contribution to the payment in satisfaction of such
obligations which is permissible under applicable law. The covenants contained
in this Section 19 shall survive payment or satisfaction in full of all other
Obligations.
SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties made herein, in
the Notes, in any of the other Loan Documents or in any documents or other
papers delivered by or on behalf of the Borrower or any of its Subsidiaries
pursuant hereto shall be deemed to have been relied upon by the Banks and each
of the Agents, notwithstanding any investigation heretofore
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or hereafter made by any of them, and shall survive the making by the Banks or
the Administrative Agent of any of the Loans or Purchases and Consignments and
the issuance, extension or renewal of any Letters of Credit, as herein
contemplated, and shall continue in full force and effect so long as any Letter
of Credit or any amount due under this Credit Agreement or the Notes or any of
the other Loan Documents remains outstanding or any Bank has any obligation to
make any Loans or the Administrative Agent has any obligation to make any Swing
Line Loans or Purchases and Consignments or issue, extend or renew any Letter of
Credit, and for such further time as may be otherwise expressly specified in
this Credit Agreement. All statements contained in any certificate or other
paper delivered to any Bank or any of the Agents at any time by or on behalf of
the Borrower or any of its Subsidiaries pursuant hereto or in connection with
the transactions contemplated hereby shall constitute representations and
warranties by the Borrower or such Subsidiary hereunder.
ASSIGNMENT AND PARTICIPATION.
Conditions to Assignment by Banks. Except as provided herein, each Bank may
assign to one or more Eligible Assignees all or a portion of its interests,
rights and obligations under this Credit Agreement (including all or a portion
of its Commitment Percentage and Commitment, and the same portion of the Loans
at the time owing to it, the Notes held by it and its participating interest in
the risk relating to any Swing Line Loans, Consigned Precious Metals and Letters
of Credit); provided that (a) each of the Agents and, unless a Default or an
Event of Default shall have occurred and be continuing, the Borrower, shall have
given its prior written consent to such assignment, which consent, in the case
of the Borrower, will not be unreasonably withheld, (b) each such assignment
shall be of a constant, and not a varying, percentage of all the assigning
Bank's rights and obligations hereunder, (c) each assignment shall be in an
amount that is at least equal to $5,000,000, and (d) the parties to such
assignment shall execute and deliver to the Agents, for recording in the
Register (as hereinafter defined), an Assignment and Acceptance, substantially
in the form of Exhibit L hereto (an "Assignment and Acceptance"), together with
any Notes subject to such assignment.
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<PAGE> 160
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least five (5) Business Days after the execution thereof, (i) 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 Bank hereunder,
and (ii) the assigning Bank shall, to the extent provided in such assignment and
upon payment to the Agents of the registration fee referred to in Section 21.3,
be released from its obligations under this Credit Agreement.
Certain Representations and Warranties; Limitations; Covenants. By
executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows:
(a) 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, the assigning Bank makes no
representation or warranty, express or implied, and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement or
the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Credit Agreement, the other Loan
Documents or any other instrument or document furnished pursuant
hereto or the attachment, perfection or priority of any security
interest or mortgage;
(b) the assigning Bank makes no representation or warranty and
assumes no responsibility with respect to the financial condition of
the Borrower and its Subsidiaries or any other Person primarily or
secondarily liable in respect of any of the Obligations, or the
performance or observance by the Borrower and its Subsidiaries or any
other Person primarily or secondarily liable in respect of any of the
Obligations of any of their obligations under this Credit Agreement or
any of the other Loan
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<PAGE> 161
Documents or any other instrument or document furnished pursuant
hereto or thereto;
(c) such assignee confirms that it has received a copy of this
Credit Agreement, together with copies of the most recent financial
statements referred to in Section 9.4 and Section 10.4 and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and
Acceptance;
(d) such assignee will, independently and without reliance upon
the assigning Bank, the Agents or any other Bank 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 Credit Agreement;
(e) such assignee represents and warrants that it is an Eligible
Assignee;
(f) such assignee appoints and authorizes the Agents to take such
action as agents on its behalf and to exercise such powers under this
Credit Agreement and the other Loan Documents as are delegated to the
Agents by the terms hereof or thereof, together with such powers as
are reasonably incidental thereto;
(g) such assignee agrees that it will perform in accordance with
their terms all of the obligations that by the terms of this Credit
Agreement are required to be performed by it as a Bank;
(h) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance; and
(i) if applicable, such assignee acknowledges that it has made
arrangements with the assigning Bank satisfactory to such assignee with
respect to its pro rata share of Letter of Credit Fees in respect of
outstanding Letters of Credit.
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<PAGE> 162
Register. The Agents shall maintain a copy of each Assignment and
Acceptance delivered to them and a register or similar list (the "Register") for
the recordation of the names and addresses of the Banks and as applicable, the
Commitment Percentage or the Commitment Percentage of, and principal amount of
the Loans, owing to, Purchases and Consignments made by, and Letter of Credit
Participations purchased by, the Banks from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Agents and the Banks may treat each Person whose name is recorded
in the Register as a Bank hereunder for all purposes of this Credit Agreement.
The Register shall be available for inspection by the Borrower and the Banks at
any reasonable time and from time to time upon reasonable prior notice. Upon
each such recordation, the assignee Bank agrees to pay to the Administrative
Agent a registration fee in the sum of $3,000.
New Notes. Upon their receipt of an Assignment and Acceptance executed by
the parties to such assignment, together with each Note subject to such
assignment, the Agents shall (a) record the information contained therein in the
Register, and (b) give prompt notice thereof to the Borrower and the Banks
(other than the assigning Bank). Within five (5) Business Days after receipt of
such notice, the Borrower, at its own expense, shall execute and deliver to the
Agents, in exchange for each surrendered Note, a new Note or Notes to the order
of such Eligible Assignee in an amount equal to the amount assumed by such
Eligible Assignee pursuant to such Assignment and Acceptance and, if the
assigning Bank has retained some portion of its obligations hereunder, a new
Note or Notes to the order of the assigning Bank in an amount equal to the
amount retained by it hereunder. Such new Notes shall provide that they are
replacements for the surrendered Notes, shall be in an aggregate principal
amount equal to the aggregate principal amount of the surrendered Notes, shall
be dated the effective date of such Assignment and Acceptance and shall
otherwise be substantially in the form of the assigned Notes. Within five (5)
days of issuance of any new Notes pursuant to this Section 21.4, the Borrower
shall deliver an opinion of counsel, addressed to the Banks and the Agents,
relating to the due authorization, execution
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<PAGE> 163
and delivery of such new Notes and the legality, validity and binding effect
thereof, in form and substance satisfactory to the Banks. The surrendered Notes
shall be canceled and returned to the Borrower.
Participations. Each Bank may sell participations to one or more banks or
other entities in all or a portion of such Bank's rights and obligations under
this Credit Agreement and the other Loan Documents; provided that (a) each such
participation shall be in an amount of not less than $5,000,000.00, (b) any such
sale or participation shall not affect the rights and duties of the selling Bank
hereunder to the Borrower and (c) the only rights granted to the participant
pursuant to such participation arrangements with respect to waivers, amendments
or modifications of the Loan Documents shall be the rights to approve waivers,
amendments or modifications that would reduce the principal of or the interest
rate on any Loans, reduce the Fair Market Value of Consigned Precious Metal or
Consignment Fees, extend the term or increase the amount of the Commitment of
such Bank as it relates to such participant, reduce the amount of any commitment
fees or Letter of Credit Fees to which such participant is entitled or extend
any regularly scheduled payment date for principal or interest or any scheduled
payment or Redelivery date for Consigned Precious Metal or Consignment Fees.
Disclosure. The Borrower agrees that, in addition to disclosures made in
accordance with standard and customary banking practices, any Bank may disclose
information obtained by such Bank pursuant to this Credit Agreement to assignees
or participants and potential assignees or participants hereunder; provided that
such assignees or participants or potential assignees or participants shall
agree (a) to treat in confidence such information unless it otherwise becomes
public knowledge, (b) not to disclose such information to a third party, except
as required by law or legal process, and (c) not to make use of such information
for purposes of transactions unrelated to such contemplated assignment or
participation.
Assignee or Participant Affiliated with the Borrower. If any assignee Bank
is an Affiliate of the Borrower, then any such assignee Bank shall have no right
to vote as a Bank hereunder or under any of the
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<PAGE> 164
other Loan Documents for purposes of granting consents or waivers or for
purposes of agreeing to amendments or other modifications to any of the Loan
Documents or for purposes of making requests to the Agents pursuant to Section
15.1 or Section 15.2, and the determination of the Majority Banks shall for all
purposes of this Credit Agreement and the other Loan Documents be made without
regard to such assignee Bank's interest in any of the Loans. If any Bank sells a
participating interest in any of the Loans, Consigned Precious Metal or
Reimbursement Obligations to a participant, and such participant is the Borrower
or an Affiliate of the Borrower, then such transferor Bank shall promptly notify
the Agents of the sale of such participation. A transferor Bank shall have no
right to vote as a Bank hereunder or under any of the other Loan Documents for
purposes of granting consents or waivers or for purposes of agreeing to
amendments or modifications to any of the Loan Documents or for purposes of
making requests to the Agents pursuant to Section 15.1 or Section 15.2 to the
extent that such participation is beneficially owned by the Borrower or any
Affiliate of the Borrower, and the determination of the Majority Banks shall for
all purposes of this Credit Agreement and the other Loan Documents be made
without regard to the interest of such transferor Bank in the Loans, Consigned
Precious Metal or Reimbursement Obligations to the extent of such participation.
Miscellaneous Assignment Provisions. Any assigning Bank shall retain its
rights to be indemnified pursuant to Section 18 with respect to any claims or
actions arising prior to the date of such assignment. If any assignee Bank is
not incorporated under the laws of the United States of America or any state
thereof, it shall, prior to the date on which any interest or fees are payable
hereunder or under any of the other Loan Documents for its account, deliver to
the Borrower and the Agents certification as to its exemption from deduction or
withholding of any United States federal income taxes. Anything contained in
this Section 21 to the contrary notwithstanding, any Bank may at any time pledge
all or any portion of its interest and rights under this Credit Agreement
(including all or any portion of its Notes) to any of the twelve Federal Reserve
Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section
341. No such pledge or the
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<PAGE> 165
enforcement thereof shall release the pledgor Bank from its obligations
hereunder or under any of the other Loan Documents.
Assignment by Borrower. The Borrower shall not assign or transfer any of
its rights or obligations under any of the Loan Documents without the prior
written consent of each of the Banks.
NOTICES, ETC.
Except as otherwise expressly provided in this Credit Agreement, all
notices and other communications made or required to be given pursuant to this
Credit Agreement or the Notes or any Letter of Credit Applications shall be in
writing and shall be delivered in hand, mailed by United States registered or
certified first class mail, postage prepaid, sent by overnight courier, or sent
by telegraph, telecopy, facsimile or telex and confirmed by delivery via courier
or postal service, addressed as follows:
(a) if to the Borrower, at 155 North Wacker Drive, Suite 500,
Chicago, Illinois 60606-1719, Attention: John R. Desjardins, Executive
Vice President-Finance, or at such other address for notice as the
Borrower shall last have furnished in writing to the Person giving the
notice;
(b) if to the Administrative Agent, the Collateral Agent, BKB in
its capacity as Syndication Agent or BKB, at 100 Federal Street,
Boston, Massachusetts 02110, Attention: Ellen L. Heath, Vice
President, or such other address for notice as the Administrative
Agent, the Collateral Agent, BKB in its capacity as Syndication Agent
or, as the case may be, BKB shall last have furnished in writing to
the Person giving the notice;
(c) if to LaSalle National Bank, individually or in its capacity
as Syndication Agent, at 135 South LaSalle Street, Suite 304, Chicago,
IL 60603, Attention: Vanja L. St. Clair, or such other address for
notice as it shall last have furnished in writing to the Person giving
the notice;
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<PAGE> 166
(d) if to ABN AMRO Bank N.A., individually or in its capacity as
Syndication Agent, at 500 Park Avenue, New York, NY 10022, Attention:
Jeff Sarfaty, or such other address for notice as it shall last have
furnished in writing to the Person giving the notice; and
(e) if to any Bank, at such Bank's address set forth on Schedule
1 hereto, or such other address for notice as such Bank shall have
last furnished in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (i) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile and
(ii) if sent by registered or certified first-class mail, postage prepaid, on
the third Business Day following the mailing thereof.
GOVERNING LAW.
THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF MASSACHUSETTS
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWER
AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT
BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN SECTION 22.
THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE VENUE OF ANY SUCH SUIT OR ANY
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<PAGE> 167
SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
HEADINGS.
The captions in this Credit Agreement are for convenience of reference only
and shall not define or limit the provisions hereof.
COUNTERPARTS.
This Credit Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when
executed and delivered shall be an original, and all of which together shall
constitute one instrument. In proving this Credit Agreement it shall not be
necessary to produce or account for more than one such counterpart signed by the
party against whom enforcement is sought.
ENTIRE AGREEMENT, ETC.
The Loan Documents and any other documents executed in connection herewith
or therewith express the entire understanding of the parties with respect to the
transactions contemplated hereby. Neither this Credit Agreement nor any term
hereof may be changed, waived, discharged or terminated, except as provided in
Section 28.
WAIVER OF JURY TRIAL.
The Borrower hereby waives its right to a jury trial with respect to
any action or claim arising out of any dispute in connection with this Credit
Agreement, the Notes or any of the other Loan Documents, any rights or
obligations hereunder or thereunder or the performance of which rights and
obligations. Except as prohibited by law, the Borrower hereby waives any right
it may have to claim or recover in any litigation referred to in the preceding
sentence any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages. The Borrower (a)
certifies that no representative, agent or attorney of any Bank or either of the
Agents has represented, expressly or otherwise, that such Bank or such Agent
would not, in the event of litigation, seek to enforce the foregoing waivers and
(b) acknowledges that the Agents and the Banks have been induced to
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<PAGE> 168
enter into this Credit Agreement, the other Loan Documents to which it is a
party by, among other things, the waivers and certifications contained herein.
CONSENTS, AMENDMENTS, WAIVERS, ETC.
Any consent or approval required or permitted by this Credit Agreement to
be given by all of the Banks may be given, and any term of this Credit
Agreement, the other Loan Documents or any other instrument related hereto or
mentioned herein may be amended, and the performance or observance by the
Borrower or any of its Subsidiaries of any terms of this Credit Agreement, the
other Loan Documents or such other instrument or the continuance of any Default
or Event of Default may be waived (either generally or in a particular instance
and either retroactively or prospectively) with, but only with, the written
consent of the Borrower and the written consent of the Majority Banks.
Notwithstanding the foregoing (a) without the written consent of the Borrower
and the written consent of each Bank affected thereby, the rate of interest on
the Notes (other than interest accruing pursuant to Section 7.21 following the
effective date of any waiver by the Majority Banks of the Default oR Event of
Default relating thereto) may not be decreased, the definition of Maturity Date
may not be changed, no rates of interest may be decreased, the basis for
calculation of Consignment Fees may not be decreased, the amounts of the
Commitments of the Banks may not be increased, the amounts of the commitment
fees and the Letter of Credit Fees (including those payable for the
Administrative Agent's own account) hereunder may not be decreased, and the
advance rates set forth in the definition of Borrowing Base and the Consignment
Limit and the Consignment Advance Rate Percentage may not be increased; (b) the
definition of Majority Banks may not be amended without the written consent of
all of the Banks; (c) the amount of the Agents' fees and Section 17 may not be
amendeD without the written consent of each of the Agents; (d) Section 7.10 may
not be amended without the written consent oF all of the Banks; (e) all or
substantially all of the Collateral may not be released without the written
consent of all of the Banks and (f) there can be no reduction in the amount, or
extension of the maturity date, of any of the Obligations (other than as a
result of any permitted
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<PAGE> 169
prepayments made hereunder, it being understood than any waiver of the
application of any voluntary prepayment of, or the method of application of any
voluntary prepayment to the amortization of, the Term Loan shall not constitute
any such extension) without the consent of all of the Banks (other than
Delinquent Banks). No waiver shall extend to or affect any obligation not
expressly waived or impair any right consequent thereon. No course of dealing or
delay or omission on the part of either of the Agents or any Bank in exercising
any right shall operate as a waiver thereof or otherwise be prejudicial thereto.
No notice to or demand upon the Borrower shall entitle the Borrower to other or
further notice or demand in similar or other circumstances.
SEVERABILITY.
The provisions of this Credit Agreement are severable and if any one clause
or provision hereof shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction, and shall not
in any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Credit Agreement in any jurisdiction.
TRANSITIONAL ARRANGEMENTS.
Original Credit Agreement Superseded This Credit Agreement shall on the
Closing Date supersede the Original Credit Agreement in its entirety, except as
provided in this Section 30. On the Closing Date, the rights and obligations of
the parties evidenced by the Original Credit Agreement shall be evidenced by
this Credit Agreement and the other Loan Documents, the "Revolving Credit Loans"
as defined in the Original Credit Agreement shall be converted to Revolving
Credit Loans as defined herein, the "Term Loan" as defined in the Original
Credit Agreement shall be converted to a portion of the "Term Loan" as defined
herein and the "Purchases and Consignments" as defined in the Original Credit
Agreement shall be converted to "Purchases and Consignments" as defined herein.
The Banks and the Gold Fronting Banks shall make such payments, if any, as may
be required among them such that their respective interests in the converted
Revolving Credit Loans and the Term Loan hereunder and in the converted
Purchases and Consignments hereunder are in accordance with their
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<PAGE> 170
respective Commitment Percentages and Gold Commitment Percentages, respectively.
Return and Cancellation of Notes. As soon as reasonably practicable after
its receipt of its Notes hereunder on the Closing Date, the Banks will promptly
return to the Borrower, marked "Substituted" or "Canceled," as the case may be,
any promissory notes of the Borrower held by the Banks pursuant to the Original
Credit Agreement.
Interest and Fees Under Original Credit Agreement. All interest and fees
and expenses, if any, owing or accruing under or in respect of the Original
Credit Agreement through the Closing Date shall be calculated as of the Closing
Date (prorated in the case of any fractional periods), and shall be paid on the
Closing Date.
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<PAGE> 171
IN WITNESS WHEREOF, the undersigned have duly executed this Credit
Agreement as a sealed instrument as of the date first set forth above.
MARKS BROS. JEWELERS, INC.
By:
-------------------------------------------
Name:
Title:
BANKBOSTON, N.A., individually and as
Administrative Agent, as Collateral Agent and
as Syndication Agent
By:
-------------------------------------------
Name:
Title:
LASALLE NATIONAL BANK, individually and as
Syndication Agent
By:
-------------------------------------------
Name:
Title:
ABN AMRO BANK N.V., individually and as
Syndication Agent
By:
-------------------------------------------
Name:
Title:
-172-
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<TOTAL-REVENUES> 136,916
<CGS> 82,985
<TOTAL-COSTS> 82,985
<OTHER-EXPENSES> 46,218
<LOSS-PROVISION> 685
<INTEREST-EXPENSE> 2,856
<INCOME-PRETAX> 4,857
<INCOME-TAX> 1,865
<INCOME-CONTINUING> 2,992
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,992
<EPS-PRIMARY> 0.29
<EPS-DILUTED> 0.29
</TABLE>
