SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 27, 1999
Filene's Basement Corp.
(Exact name of registrant as specified in its charter)
Massachusetts 0-19149 04-3016733
(State or other juris- (Commission (IRS Employer
diction of incorporation) File No.) Identification No.)
40 Walnut Street
Wellesley, Massachusetts 02481
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 348-7000
Not Applicable
(Former name or former address, if changed since last report)
Item 5. Other Events.
Filene's Basement Corp. (NASDAQ:BSMT) announced today that the
Company has closed on a new $125 million revolving credit facility
with GE Capital and Paragon Capital LLC. The Company intends to
use the proceeds of the financing to facilitate the expansion of
its new Aisle 3 stores and continue repositioning its core Filene's
Basement division business.
"Expanding our credit facility with GE Capital and Paragon Capital
is a major step for Filene's Basement and reflects the progress we
are making in repositioning the Company. GE Capital's retail
financing expertise and institutional strength combined with
Paragon's merchant and retail perspective, have provided us an
opportunity which will allow the Basement to aggressively execute
its business strategy," said Sam Gerson, Chairman and CEO of
Filene's Basement.
In addition to providing added liquidity, the financing will allow
Filene's Basement to move ahead more quickly with the expansion of
its recently introduced Aisle 3 weekend only stores. The credit
facility will also be used as part of ongoing efforts to increase
efficiencies and raise productivity in the core Filene's Basement
division business.
With assets of over $300 billion, GE Capital is a global,
diversified financial services company with 27 specialized
businesses. A wholly-owned subsidiary of General Electric company,
GE Capital, based in Stamford, CT., provides equipment management,
mid-market and specialized financing, specialty insurance and a
variety of consumer services, such as car leasing, home mortgages
and credit cards, to businesses and individuals around the world.
GE is a diversified manufacturing, technology and services company
with operations worldwide.
Paragon Capital, based in Needham, Mass., is an asset-based lender
to retailers throughout North America. Paragon is a partnership
between one of America's premier "boutique" asset valuation firms,
the Ozer Group LLC of Needham, Mass., and a leader in the asset-
based lending industry, Foothill Capital Corporation of Los
Angeles. Foothill is a subsidiary of Wells Fargo & Company, a $200
billion financial services company.
Filene's Basement corp. operates stores 51 traditional Filene's
basement stores and four Aisle 3 weekend warehouse stores,
primarily in the Northeast and Midwest. Filene's Basement operates
stores that offer a focused, quality, branded assortment of men's
and women's apparel at prices generally 20-60% below department and
specialty store regular prices.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit No. Exhibit
4.1 Credit agreement, dated July 26, 1999, among
Filene's Basement, Inc. as borrower, the other
credit parties signatory hereto, as credit parties,
the lenders signatory hereto from time to time,
as lenders, Paragon Capital LLC, as oversight
agent, and General Electric Capital Corporation,
as agent.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
Date: August 10, 1999 Filene's Basement Corp.
By:__/s/ Steven R. Siegel___________
Name: Steven R. Siegel
Title: Executive Vice President
CREDIT AGREEMENT, dated as of July 26, 1999 among
FILENE'S BASEMENT, INC., a Massachusetts corporation
("Borrower"); the other Credit Parties signatory hereto; GENERAL
ELECTRIC CAPITAL CORPORATION, a New York corporation (in its
individual capacity, "GE Capital"), for itself, as Lender, and as
Agent for Lenders, PARAGON CAPITAL LLC, a Delaware limited
liability company, as Oversight Agent and as Lender, and the
other Lenders signatory hereto from time to time.
RECITALS
WHEREAS, Borrower desires that Lenders extend revolving
credit facilities to Borrower of up to One Hundred Twenty Five
Million Dollars ($125,000,000) in the aggregate for the purpose
of refinancing certain indebtedness of Borrower and to provide
(a) working capital financing for Borrower, and (b) funds for
other general corporate purposes of Borrower; and for these
purposes, Lenders are willing to make certain loans and other
extensions of credit to Borrower of up to such amount upon the
terms and conditions set forth herein; and
WHEREAS, Borrower desires to secure all of its
obligations under the Loan Documents by granting to Agent, for
the benefit of Agent and Lenders, a security interest in and lien
upon substantially all of its existing and after-acquired
personal and real property; and
WHEREAS, Filene's Basement Corp., a Massachusetts
corporation ("Holdings") is willing to guaranty all of the
obligations of Borrower to Lenders under the Loan Documents and
to pledge to Agent, for the benefit of Agent and Lenders, all of
the capital stock of Borrower to secure such guaranty; and
WHEREAS, capitalized terms used in this Agreement shall
have the meanings ascribed to them in Annex A. All Annexes,
Disclosure Schedules, Exhibits and other attachments
(collectively, "Appendices") hereto, or expressly identified to
this Agreement, are incorporated herein by reference, and taken
together, shall constitute but a single agreement. These
Recitals shall be construed as part of the Agreement.
NOW, THEREFORE, in consideration of the premises and
the mutual covenants hereinafter contained, and for other good
and valuable consideration, the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1. Credit Facilities.
(a) Tranche A and Tranche B Revolving Credit Facilities.
(i) Subject to the terms and conditions hereof,
each Tranche A Revolving Lender agrees to make available
from time to time until the Commitment Termination Date its
Pro Rata Share of advances (each, a "Tranche A Revolving
Credit Advance"). The Pro Rata Share of the Tranche A
Revolving Loan of any Tranche A Revolving Lender shall not
at any time exceed its separate Tranche A Revolving Loan
Commitment. The obligations of each Tranche A Revolving
Lender hereunder shall be several and not joint. The
aggregate amount of Tranche A Revolving Credit Advances
outstanding shall not exceed at any time the lesser of (A)
the Maximum Tranche A Amount and (B) the Tranche A Borrowing
Base, in each case less the sum of the Letter of Credit
Obligations and the Swing Line Loan outstanding at such time
("Tranche A Borrowing Availability").
(ii) Subject to the terms and conditions of this
Agreement, at any time that no Tranche A Borrowing
Availability exists (except for the Initial Tranche B
Advance), each Tranche B Revolving Lender agrees to make
available from time to time until the Commitment Termination
Date its Pro Rata Share of advances including the Initial
Tranche B Advance (each, a "Tranche B Revolving Credit
Advance"). The Pro Rata Share of the Tranche B Revolving
Loan of any Tranche B Revolving Lender shall not at any time
exceed its separate Tranche B Revolving Loan Commitment.
The obligations of each Tranche B Revolving Lender hereunder
shall be several and not joint. The aggregate amount of
Tranche B Revolving Credit Advances outstanding shall not
exceed at any time the lesser of (A) the Maximum Tranche B
Amount and (B) the Tranche B Borrowing Base ("Tranche B
Borrowing Availability"). Notwithstanding the foregoing, at
no time shall the aggregate of those portions of the Tranche
A Revolving Advances and Tranche B Revolving Advances which
are based upon Eligible Inventory exceed one hundred (100%)
per cent of the Net Retail Liquidation Value of Eligible
Inventory. Additionally, Tranche A Revolving Lenders shall
not make Inventory Overadvances, but in the event that
Tranche A Revolving Lenders make any Inventory Overadvances,
such Inventory Overadvances shall be subordinate to the same
extent that Tranche B Revolving Credit Advances are
subordinate to the Senior Obligations under Section 1.11(b)
hereof. At no time, including any time during which the
Initial Tranche B Advance remains outstanding, shall the
Tranche A Revolving Lenders be required to make Tranche A
Revolving Loans or Swing Line Loans if the making of such
Tranche A Revolving Loans or Swing Line Loans would (i)
constitute Inventory Overadvances, or (ii) result in
Inventory Loans exceeding the Tranche B Inventory Loan
Limit.
(iii) Until the Commitment Termination Date,
Borrower may from time to time borrow, repay and reborrow
under this Section 1.1(a). Each Revolving Credit Advance
shall be made on notice by Borrower to the representatives
of Agents identified on Schedule 1.1 at the address
specified thereon. Those notices must be given no later
than (1) 11:00 a.m. (New York time) on the Business Day of
the proposed Tranche A Revolving Credit Advance, in the case
of an Index Rate Tranche A Revolving Loan, (2) 11:00 a.m.
(New York time) on the Business Day immediately preceding
the proposed Tranche B Revolving Credit Advance, in the case
of an Index Rate Tranche B Revolving Loan, or (3) 11:00 a.m.
(New York time) on the date which is three (3) Business Days
prior to the proposed Tranche A Revolving Credit Advance, in
the case of a LIBOR Tranche A Revolving Loan. Each such
notice (a "Notice of Revolving Credit Advance") must be
given in writing (by telecopy or overnight courier)
substantially in the form of Exhibit 1.1(a)(i), and shall
include the information required in such Exhibit and such
other information as may be required by Agents. If Borrower
desires to have the Revolving Credit Advances bear interest
by reference to a LIBOR Rate, it must comply with Section
1.5(e). Subject to Agent's receipt of wire transfers from
the Tranche A Revolving Lenders and the Tranche B Revolving
Lenders in accordance with Section 9.9 hereof, and provided
timely notices are given by Borrower in accordance with this
Section 1.1(a) (iii), Agent shall: (1) in the case of
Tranche A Revolving Index Rate Loans, make requested Tranche
A Revolving Credit Advances on the same Business Day of the
requested funding; (2) in the case of Tranche B Revolving
Index Rate Loans, make requested Tranche B Revolving Credit
Advances the first Business Day after the requested funding;
and (3) in the case of Tranche A Revolving LIBOR Loans, make
requested Tranche A Revolving Credit Advances within three
(3) Business Days after the requested funding.
(iv) Borrower shall execute and deliver to each
Tranche A Revolving Lender a note to evidence the Tranche A
Revolving Loan Commitment of that Tranche A Revolving
Lender. Each note shall be in the principal amount of the
Tranche A Revolving Loan Commitment of the applicable
Tranche A Revolving Lender, dated the Closing Date and
substantially in the form of Exhibit 1.1(a)(iv) (each a
"Tranche A Revolving Note" and, collectively, the "Tranche A
Revolving Notes"). Each Tranche A Revolving Note shall
represent the obligation of Borrower to pay the amount of
each Tranche A Revolving Lender's Revolving Loan Commitment
or, if less, the applicable Tranche A Revolving Lender's Pro
Rata Share of the aggregate unpaid principal amount of all
Tranche A Revolving Credit Advances to Borrower together
with interest thereon as prescribed in Section 1.5. The
entire unpaid balance of the Tranche A Revolving Loan and
all other non-contingent Obligations shall be immediately
due and payable in full in immediately available funds on
the Commitment Termination Date.
(v) Borrower shall execute and deliver to each
Tranche B Revolving Lender a note to evidence the Tranche B
Revolving Loan Commitment of that Tranche B Revolving
Lender. Each note shall be in the principal amount of the
Tranche B Revolving Loan Commitment of the applicable
Tranche B Revolving Lender, dated the Closing Date and
substantially in the form of Exhibit 1.1(a)(v) (each a
"Tranche B Revolving Note" and, collectively, the "Tranche B
Revolving Notes"). Each Tranche B Revolving Note shall
represent the obligation of Borrower to pay the amount of
each Tranche B Revolving Lender's Revolving Loan Commitment
or, if less, the applicable Tranche B Revolving Lender's Pro
Rata Share of the aggregate unpaid principal amount of all
Tranche B Revolving Credit Advances to Borrower together
with interest thereon as prescribed in Section 1.5. The
entire unpaid balance of the Tranche B Revolving Loan and
all other non-contingent Obligations shall be immediately
due and payable in full in immediately available funds on
the Commitment Termination Date.
(b) Swing Line Facility.
(i) Agent shall notify the Swing Line Lender upon
Agent's receipt of any Notice of Revolving Credit Advance.
Subject to the terms and conditions hereof, the Swing Line
Lender shall make available from time to time until the
Commitment Termination Date advances consisting only of
Tranche A Revolving Loans (each, a "Swing Line Advance") in
accordance with any such notice. The aggregate amount of
Swing Line Advances outstanding shall not exceed the lesser
of (A) the Swing Line Commitment and (B) the lesser of the
Tranche A Maximum Amount and the Tranche A Borrowing Base,
in each case, less the outstanding balance of the Tranche A
Revolving Loan at such time and Letter of Credit Obligations
outstanding at such time ("Swing Line Availability"). Until
the Commitment Termination Date, Borrower may from time to
time borrow, repay and reborrow under this Section 1.1(b).
Each Swing Line Advance shall be made pursuant to a Notice
of Revolving Credit Advance delivered by Borrower to Agents
in accordance with Section 1.1(a). Those notices must be
given no later than 11:00 a.m. (New York time) on the
Business Day of the proposed Swing Line Advance.
Notwithstanding any other provision of this Agreement or the
other Loan Documents, the Swing Line Loan shall constitute a
Tranche A Index Rate Loan and shall be funded as a Tranche A
Index Rate Loan in accordance with the last sentence of
Section 1.1(a)(iii).
(ii) Borrower shall execute and deliver to the
Swing Line Lender a promissory note to evidence the Swing
Line Commitment. Such note shall be in the principal amount
of the Swing Line Commitment of the Swing Line Lender, dated
the Closing Date and substantially in the form of Exhibit
1.1(b)(ii) (the "Swing Line Note"). The Swing Line Note
shall represent the obligation of Borrower to pay the amount
of the Swing Line Commitment or, if less, the aggregate
unpaid principal amount of all Swing Line Advances made to
Borrower together with interest thereon as prescribed in
Section 1.5. The entire unpaid balance of the Swing Line
Loan and all other non-contingent Obligations shall be
immediately due and payable in full in immediately available
funds on the Commitment Termination Date if not sooner paid
in full.
(iii) Refunding of Swing Line Loans. The
Swing Line Lender, at any time and from time to time in its
sole and absolute discretion, but no less frequently than
weekly, shall on behalf of Borrower (and Borrower hereby
irrevocably authorizes the Swing Line Lender to so act on
its behalf) request each Tranche A Revolving Lender
(including the Swing Line Lender) to make a Tranche A
Revolving Credit Advance to Borrower (which shall be a
Tranche A Index Rate Loan) in an amount equal to such
Tranche A Revolving Lender's Pro Rata Share of the principal
amount of the Swing Line Loan (the "Refunded Swing Line
Loan") outstanding on the date such notice is given. Unless
any of the events described in Sections 8.1(h) or 8.1(i)
shall have occurred (in which event the procedures of
Section 1.1(b)(iv) shall apply) and regardless of whether
the conditions precedent set forth in this Agreement to the
making of a Tranche A Revolving Credit Advance are then
satisfied, each Tranche A Revolving Lender shall disburse
directly to Agent, its Pro Rata Share of a Tranche A
Revolving Credit Advance on behalf of the Swing Line Lender,
prior to 3:00 p.m. (New York time), in immediately available
funds on the Business Day next succeeding the date such
notice is given. The proceeds of such Tranche A Revolving
Credit Advances shall be immediately paid to the Swing Line
Lender and applied to repay the Refunded Swing Line Loan.
(iv) Participation in Swing Line Loans. If, prior
to refunding a Swing Line Loan with a Tranche A Revolving
Credit Advance pursuant to Section 1.1(b)(iii), one of the
events described in Sections 8.1(h) or 8.1(i) shall have
occurred, then, subject to the provisions of Section
1.1(b)(v) below, each Tranche A Revolving Lender will, on
the date such Tranche A Revolving Credit Advance was to have
been made for the benefit of Borrower, purchase from the
Swing Line Lender an undivided participation interest in the
Swing Line Loan in an amount equal to its Pro Rata Share of
such Swing Line Loan. Upon request, each Tranche A
Revolving Lender will promptly transfer to the Swing Line
Lender, in immediately available funds, the amount of its
participation.
(v) Tranche A Revolving Lenders' Obligations
Unconditional. Each Tranche A Revolving Lender's obligation
to make Tranche A Revolving Credit Advances in accordance
with Section 1.1(b)(iii) and to purchase participating
interests in accordance with Section 1.1(b)(iv) shall be
absolute and unconditional and shall not be affected by any
circumstance, including (A) any setoff, counterclaim,
recoupment, defense or other right which such Tranche A
Revolving Lender may have against the Swing Line Lender,
Borrower or any other Person for any reason whatsoever; (B)
the occurrence or continuance of any Default or Event of
Default; (C) any inability of Borrower to satisfy the
conditions precedent to borrowing set forth in this
Agreement on the date upon which such participating interest
is to be purchased or (D) any other circumstance, happening
or event whatsoever, whether or not similar to any of the
foregoing. If any Tranche A Revolving Lender does not make
available to Agent or the Swing Line Lender, as applicable,
the amount required pursuant to Section 1.1(b)(iii) or
1.1(b)(iv), as the case may be, the Swing Line Lender shall
be entitled to recover such amount on demand from such
Tranche A Revolving Lender, together with interest thereon
for each day from the date of non-payment until such amount
is paid in full at the Federal Funds Rate for the first two
Business Days and at the Index Rate thereafter.
(c) Reliance on Notices. Agent shall be entitled to
rely upon, and shall be fully protected in relying upon, any
Notice of Revolving Credit Advance, Notice of
Conversion/Continuation or similar notice as being duly
authorized provided that such notice is signed by a Person
identified on Disclosure Schedule (1.1(c)). Agent may assume
that the signature of each Person identified on Disclosure
Schedule (1.1(c)) executing and delivering such a notice is
genuine. Borrower may amend, modify or supplement Disclosure
Schedule (1.1(c)) upon ten (10) Business Days' written notice to
Agent.
(d) Agent Advances.
(i) Agent hereby is authorized by Borrower and
Lenders, from time to time in Agents' discretion, (1) after the
occurrence of a Default or an Event of Default (but without
constituting a waiver of such Default or Event of Default), or
(2) at any time that any of the other applicable conditions
precedent set forth in Section 2.1 or 2.2 have not been
satisfied, to make Advances to Borrower on behalf of Lenders
which Agents, in their reasonable business judgment, deem
necessary or desirable, whether under clause (1) or (2) above,
(A) to preserve or protect the Collateral, or any portion
thereof, (B) to enhance the likelihood of, or maximize the amount
of, repayment of the Obligations, or (C) to pay any other amount
chargeable to Borrower pursuant to the terms of this Agreement,
including costs, fees, and expenses described in Section 11.3
(any of the Advances described in this Section 1.1(d) being
hereinafter referred to as "Agent Advances"); provided, that
Agent shall not make any Agent Advances to Borrower without the
consent of the Requisite Tranche A Revolving Lenders and the
Requisite Tranche B Revolving Lenders if the amount thereof would
exceed $4,000,000 in the aggregate at any one time. Any Advances
made pursuant to this Section 1.1(d) shall be allocated on a pro
rata basis to the Tranche A Revolving Lenders and the Tranche B
Revolving Lenders.
(ii) Agent Advances shall be repayable on demand
and secured by the Collateral, shall constitute Tranche A
Revolving Credit Advances and Tranche B Revolving Credit
Advances, and shall bear interest at the rate applicable to
Tranche A Revolving Index Rate Loans and Tranche B Revolving
Loans, as the case may be, plus the Default Rate pursuant to
Section 1.5. Under no circumstances shall any Agent Advances be
deemed to constitute Inventory Overadvances.
(e) Initial Tranche B Advance. On the Closing Date,
the Tranche B Revolving Lenders shall make a $10,000,000 Tranche
B Revolving Credit Advance which notwithstanding anything to the
contrary herein, shall be held equally by the Tranche B Revolving
Lenders existing on the Closing Date (the "Initial Tranche B
Advance"). The Initial Tranche B Advance shall bear interest at
the Index Rate plus 6.25% per annum which interest shall be
payable in arrears on each applicable Interest Payment Date. The
Initial Tranche B Advance shall remain outstanding until the one
year anniversary of the Closing Date unless a Default or Event of
Default shall have occurred and be continuing. Upon the
occurrence of a Default or Event of Default, the Initial Tranche
B Advance shall thereafter be treated as all other Tranche B
Revolving Credit Advances, provided that the Initial Tranche B
Advance shall continue to bear interest at the rate set forth in
this Section 1.1(e) until the earlier of one year from the
Closing Date or the date repaid in full. For so long as no
Default or Event of Default has occurred or is continuing,
Borrower, at its election at any time and from time to time
(including the period prior to the first anniversary of the
Closing Date) may use Tranche A Borrowing Availability to repay
the Initial Tranche B Advance, provided that no such repayment
shall be permitted if after giving effect to such repayment (i)
any Default or Event of Default would result , (ii) Net Borrowing
Availability, as determined by Agents, does not exceed
$3,000,000, or (iii) the Tranche A Inventory Loan Limit would be
exceeded.
1.2. Letters of Credit. Subject to and in accordance
with the terms and conditions contained herein and in Annex B,
Borrower shall have the right to request, and Tranche A Revolving
Lenders agree to incur, or purchase participations in, Letter of
Credit Obligations in respect of Borrower.
1.3. Prepayments.
(a) Voluntary Prepayments. Borrower may at any time
on at least ten (10) days' prior written notice to Agent (i)
voluntarily prepay all or part of the Revolving Loan and/or
permanently reduce but not terminate the Revolving Loan
Commitment; provided that (A) any such prepayments or reductions
shall be in a minimum amount of $10,000,000 and integral
multiples of $1,000,000 in excess of such amount, (B) the Tranche
A Revolving Loan Commitment shall not be reduced to an amount
less than $100,000,000, and (C) the Tranche B Revolving Loan
shall not be reduced to an amount less than $20,000,000.
Borrower may at any time and from time to time on at least (10)
days' prior written notice to Agent terminate the Revolving Loan
Commitment; provided that upon such termination, all Loans and
other Obligations shall be immediately due and payable in full.
Any such voluntary prepayment and any such reduction or
termination of the Revolving Loan Commitment must be accompanied
by the payment of the compensation required by Section 1.9(c), if
any, plus the payment of any LIBOR funding breakage costs in
accordance with Section 1.13(b). In the event GE Capital acts as
the lead agent in providing a refinancing of the Loans under this
Agreement, (other than in connection with a debtor-in-possession
financing), GE Capital shall waive the payment of any
compensation otherwise required to be paid to GE Capital under
Section 1.9(c). Upon any such prepayment and reduction or
termination of the Revolving Loan Commitment, Borrower's right to
request Revolving Credit Advances, or request that Letter of
Credit Obligations be incurred on its behalf, or request Swing
Line Advances, shall simultaneously be permanently reduced or
terminated, as the case may be; provided that a permanent
reduction of the Tranche A Revolving Loan Commitment shall not
require corresponding pro rata reduction in the Swing Line
Commitment and/or the L/C Sublimit (as defined in Annex B). Each
notice of partial prepayment shall designate the Loan or other
Obligations to which such prepayment is to be applied, provided
that notwithstanding the foregoing in the case of a Default or an
Event of Default, all prepayments shall be applied to the Tranche
A Revolving Loan.
(b) Mandatory Prepayments.
(i) If at any time the outstanding balance of the
Tranche A Revolving Loan exceeds the lesser of (A) the
Tranche A Maximum Amount and (B) the Tranche A Borrowing
Base, less, in each case, the outstanding Swing Line Loan at
such time less the Letter of Credit Obligations outstanding,
Borrower shall immediately repay the aggregate outstanding
Tranche A Revolving Credit Advances to the extent required
to eliminate such excess. If any such excess remains after
repayment in full of the aggregate outstanding Tranche A
Revolving Credit Advances, Borrower shall provide cash
collateral for the Letter of Credit Obligations in the
manner set forth in Annex B to the extent required to
eliminate such excess.
(ii) If at any time the outstanding balance of the
Tranche B Revolving Loan exceeds the lesser of (A) the
Tranche B Maximum Amount and (B) the Tranche B Borrowing
Base, Borrower shall immediately repay the aggregate
outstanding Tranche B Revolving Credit Advances to the
extent required to eliminate such excess. Notwithstanding
the foregoing, any prepayment pursuant to this Section
1.3(b)(ii) shall be paid only after any and all mandatory
prepayments required by Section 1.3(b)(i) have been paid.
(iii) Immediately upon receipt by any Credit
Party of proceeds of any asset disposition (including
condemnation proceeds, but excluding proceeds of asset
dispositions permitted by Section 6.8(a)) or any sale of
Stock of any Subsidiary of any Credit Party, Borrower shall
prepay the Loans in an amount equal to all such proceeds,
net of (A) commissions and other reasonable and customary
transaction costs, fees and expenses properly attributable
to such transaction and payable by Borrower in connection
therewith (in each case, paid to non-Affiliates), (B)
transfer taxes, (C) amounts payable to holders of senior
Liens (to the extent such Liens constitute Permitted
Encumbrances hereunder), if any, and (D) an appropriate
reserve for income taxes in accordance with GAAP in
connection therewith. Any such prepayment shall be applied
in accordance with clause (c) below.
(iv) If Holdings or Borrower issues Stock no later
than the Business Day following the date of receipt of the
proceeds thereof, Borrower shall prepay the Loans in an
amount equal to all such proceeds, net of underwriting
discounts and commissions and other reasonable transaction
costs, fees and expenses paid to non-Affiliates in
connection therewith. Any such prepayment shall be applied
in accordance with clause (c) below.
(c) Application of Certain Mandatory Prepayments. So
long as no Default or Event of Default shall have occurred and be
continuing, any prepayments made by Borrower pursuant to clauses
(b)(iii) or (b)(iv) above shall be applied as follows: first, to
Fees and reimbursable expenses of Agents then due and payable
pursuant to any of the Loan Documents; second, to interest then
due and payable on the Swing Line Loan; third, to the principal
balance of the Swing Line Loan until the same shall have been
repaid in full; fourth, ratably to interest then due and payable
on the Tranche A Revolving Loan and the Tranche B Revolving Loan;
and fifth, ratably to the outstanding principal balance of the
Tranche A Revolving Loan and the Tranche B Revolving Loan until
the same shall have been paid in full. So long as a Default or
Event of Default shall have occurred and be continuing, any
prepayment made by Borrower pursuant to clauses (b)(iii) or
(b)(iv) above shall be applied as follows: first, to fees and
reimbursable expenses of Agents then due and payable pursuant to
any of the Loan Documents; second, to interest then due and
payable on the Swing Line Loan; third, to the principal balance
of the Swing Line Loan until the same shall have been repaid in
full; fourth, to interest then due and payable on the Tranche A
Revolving Loan; fifth, to the outstanding principal balance of
Tranche A Revolving Loan until the same shall have been paid in
full; sixth, to interest then due and payable on the Tranche B
Revolving Loan; and last to the principal balance of the Tranche
B Revolving Loan. Neither the Revolving Loan Commitment nor the
Swing Line Loan Commitment shall be permanently reduced by the
amount of any prepayments made pursuant to this Section 1.3(c).
(d) Application of Prepayments from Insurance
Proceeds. Prepayments from insurance proceeds in accordance with
Section 5.4(c) shall be applied as follows: insurance proceeds
from casualties or losses shall be applied first, to the Swing
Line Loans, second, to the Tranche A Revolving Credit Advances;
and last to the Tranche B Revolving Credit Advances. Neither
the Revolving Loan Commitment nor the Swing Line Loan Commitment
shall be permanently reduced by the amount of any such
prepayments.
(e) Nothing in this Section 1.3 shall be construed to
constitute Agent's or any Lender's consent to any transaction
referred to in clauses (b)(iii) and (b)(iv) above which is not
permitted by other provisions of this Agreement or the other Loan
Documents.
1.4. Use of Proceeds. Borrower shall utilize the
proceeds of the Revolving Loan and the Swing Line Loan solely for
the Refinancing (and to pay any related transaction expenses),
and for the financing of Borrower's ordinary working capital and
general corporate needs (but excluding in any event the making of
any Restricted Payment not specifically permitted by Section
6.14). Disclosure Schedule (1.4) contains a description of
Borrower's sources and uses of funds as of the Closing Date,
including Loans and Letter of Credit Obligations to be made or
incurred on that date, and a funds flow memorandum detailing how
funds from each source are to be transferred to particular uses.
1.5. Interest and Applicable Margins.
(a) Borrower shall pay interest to Agent, for the
ratable benefit of Lenders in accordance with the various Loans
being made by each Lender, in arrears on each applicable Interest
Payment Date, at the following rates: (i) with respect to the
Tranche A Revolving Credit Advances, the Index Rate plus the
Applicable Tranche A Revolver Index Margin per annum or, at the
election of Borrower, the applicable LIBOR Rate plus the
Applicable Tranche A Revolver LIBOR Margin per annum, based on
the aggregate Tranche A Revolving Credit Advances outstanding
from time to time; (ii) with respect to the Tranche B Revolving
Credit Advances (other than the Initial Tranche B Advance), the
Index Rate plus the Applicable Tranche B Revolver Loan Index
Margin per annum; and (iii) with respect to the Swing Line Loan,
the Index Rate plus the Applicable Tranche A Revolver Index
Margin per annum.
The Applicable Margins will be, as set forth below, on
a per annum basis as of the Closing Date and until adjusted as
described below.
Applicable Tranche A Revolver LIBOR Margin 2.25%
Applicable Tranche A Revolver Index Margin 0.75%
Applicable Tranche B Revolver Index Margin 4.25%
Applicable L/C Margin 1.75%
Applicable Unused Facility Margin 0.375%
The Applicable Margins will be adjusted (up or down)
prospectively on a quarterly basis as determined by Borrower's
consolidated financial performance during the four (4) quarter
period preceding such Fiscal Quarter, commencing with the first
day of the Fiscal Quarter ending July 31, 2000, which adjustments
to the Applicable Margins will be effective on the first calendar
month that occurs more than five (5) days after delivery of
Borrower's quarterly Financial Statements to Agents for such
Fiscal Quarter. Adjustments in Applicable Margins will be
determined by reference to the following grids:
If Rolling 12-month
EBITDA to Interest Level of Applicable
Expense is: Margins:
>2.0 Level I
>1.0, but < 2.0 Level II
>(1.0), but < 1.0 Level III
< (1.0) Level IV
Applicable Margins
Level I Level II Level III Level IV
Applicable Tranche A .25% .50% .75% 1.0%
Revolver Index Margin
Applicable Tranche A 1.75% 2.0% 2.25% 2.50%
Revolver LIBOR Margin
Applicable Tranche B 4.25% 4.25% 4.25% 4.25%
Revolver Index Margin
Applicable L/C Margin 1.75% 1.75% 1.75% 1.75%
Applicable Unused Line .375% .375% .375% .375%
Margin
If there is a disparity between the financial tests described
above, the test resulting in the greater level of Applicable
Margins will prevail.
All adjustments in the Applicable Margins after July
31, 2000 will be implemented quarterly on a prospective basis,
for each calendar month commencing at least five (5) days after
the date of delivery to Agents of the quarterly unaudited or
annual audited (as applicable) Financial Statements of Borrower
evidencing the need for an adjustment. Concurrently with the
delivery of those Financial Statements, Borrower shall deliver to
Agents a certificate, signed by its chief financial officer,
setting forth in reasonable detail the basis for the continuance
of, or any change in, the Applicable Margins. Failure to timely
deliver such Financial Statements within two (2) Business Days
following either Agent's or Oversight Agent's written notice of
non-receipt of the same shall, in addition to any other remedy
provided for in this Agreement, result in an increase in the
Applicable Margins to the highest level set forth in the
foregoing grid, until the first day of the first calendar month
following the delivery of those Financial Statements
demonstrating that such an increase is not required. If an Event
of Default shall have occurred or be continuing at the time any
reduction in the Applicable Margins is to be implemented, that
reduction shall be deferred until the first day of the first
calendar month following the date on which such Event of Default
is waived or cured.
(b) If any payment on any Loan becomes due and payable
on a day other than a Business Day, the maturity thereof will be
extended to the next succeeding Business Day (except as set forth
in the definition of LIBOR Period) and, with respect to payments
of principal, interest thereon shall be payable at the then
applicable rate during such extension.
(c) All computations of Fees calculated on a per annum
basis and interest shall be made by Agent on the basis of a three
hundred and sixty (360) day year, in each case for the actual
number of days occurring in the period for which such interest
and Fees are payable. The Index Rate shall be determined each
day based upon the Index Rate as in effect each day. Each
determination by Agent of an interest rate and Fees hereunder
shall be conclusive, absent manifest error.
(d) So long as an Event of Default shall have occurred
and be continuing, the interest rates applicable to the Loans and
the Letter of Credit Fees shall be increased automatically by two
percent (2%) per annum above the rates of interest or the rate of
such Fees otherwise applicable hereunder ("Default Rate"), and
all outstanding Obligations shall bear interest at the Default
Rate applicable to such Obligations. Interest and Letter of
Credit Fees at the Default Rate shall accrue from the initial
date of such Event of Default until that Event of Default is
cured or waived and shall be payable upon demand.
(e) So long as no Default or Event of Default shall
have occurred and be continuing, and subject to the additional
conditions precedent set forth in Section 2.2, Borrower shall
have the option to (i) request that any Tranche A Revolving
Credit Advances be made as a LIBOR Loan, (ii) convert at any time
all or any part of outstanding Tranche A Revolving Loans (other
than the Swing Line Loan) from Index Rate Loans to LIBOR Loans,
(iii) convert any LIBOR Loan to an Index Rate Loan, subject to
payment of LIBOR breakage costs in accordance with Section
1.13(b) if such conversion is made prior to the expiration of the
LIBOR Period applicable thereto, or (iv) continue all or any
portion of any Tranche A Revolving Loan (other than the Swing
Line Loan) as a LIBOR Loan upon the expiration of the applicable
LIBOR Period and the succeeding LIBOR Period of that continued
Loan shall commence on the day after the last day of the LIBOR
Period of the Loan to be continued. Under no circumstances shall
the Tranche B Revolving Loan or Swing Line Loan be a LIBOR Loan.
Any Loan to be made or continued as, or converted into, a LIBOR
Loan must be in a minimum amount of $3,000,000 and integral
multiples of $500,000 in excess of such amount. Any such
election must be made by 11:00 a.m. (New York time) on the third
(3rd) Business Day prior to (1) the date of any proposed Advance
which is to bear interest at the LIBOR Rate, (2) the end of each
LIBOR Period with respect to any LIBOR Loans to be continued as
such, or (3) the date on which Borrower wishes to convert any
Index Rate Loan to a LIBOR Loan for a LIBOR Period designated by
Borrower in such election. If no election is received with
respect to a LIBOR Loan by 11:00 a.m. (New York time) on the
third (3rd) Business Day prior to the end of the LIBOR Period
with respect thereto (or if a Default or an Event of Default
shall have occurred and be continuing or the additional
conditions precedent set forth in Section 2.2 shall not have been
satisfied), that LIBOR Loan shall be converted to an Index Rate
Loan at the end of its LIBOR Period. Borrower must make such
election by notice to Agent in writing, by telecopy or overnight
courier. In the case of any conversion or continuation, such
election must be made pursuant to a written notice (a "Notice of
Conversion/Continuation") in the form of Exhibit 1.5(e). No Loan
may be made as or converted into a LIBOR Loan until the earlier
of (i) forty-five (45) days after the Closing Date, and (ii)
Agents' completion of a syndication of the Loans, satisfactory to
Agents in their reasonable discretion.
(f) Notwithstanding anything to the contrary set forth
in this Section 1.5, if a court of competent jurisdiction
determines in a final order that the rate of interest payable
hereunder exceeds the highest rate of interest permissible under
law (the "Maximum Lawful Rate"), then so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable
hereunder shall be equal to the Maximum Lawful Rate; provided,
however, that if at any time thereafter the rate of interest
payable hereunder is less than the Maximum Lawful Rate, Borrower
shall continue to pay interest hereunder at the Maximum Lawful
Rate until such time as the total interest received by Agent, on
behalf of Lenders, is equal to the total interest which would
have been received had the interest rate payable hereunder been
(but for the operation of this paragraph) the interest rate
payable since the Closing Date as otherwise provided in this
Agreement. Thereafter, interest hereunder shall be paid at the
rate(s) of interest and in the manner provided in Sections 1.5(a)
through (e) above, unless and until the rate of interest again
exceeds the Maximum Lawful Rate, and at that time this paragraph
shall again apply. In no event shall the total interest received
by any Lender pursuant to the terms hereof exceed the amount
which such Lender could lawfully have received had the interest
due hereunder been calculated for the full term hereof at the
Maximum Lawful Rate. If the Maximum Lawful Rate is calculated
pursuant to this paragraph, such interest shall be calculated at
a daily rate equal to the Maximum Lawful Rate divided by the
number of days in the year in which such calculation is made.
If, notwithstanding the provisions of this Section 1.5(f), a
court of competent jurisdiction shall finally determine that a
Lender has received interest hereunder in excess of the Maximum
Lawful Rate, Agent shall, to the extent permitted by applicable
law, promptly apply such excess in the order specified in Section
1.11 and thereafter shall refund any excess to Borrower or as a
court of competent jurisdiction may otherwise order.
1.6. Eligible Accounts. "Eligible Accounts" shall be
the aggregate of the unpaid portions of Accounts (net of any
credits, rebates, offsets, holdbacks or other adjustments or
commissions payable to third parties that are adjustments to such
Accounts) (a) that Borrower reasonably and in good faith
determines to be collectible; (b) that are with account debtors
that (i) are not Affiliates of Borrower; (ii) are Credit Card
Providers who have agreed in writing to direct all payments be
made to the Collection Account, (iii) are not insolvent or
involved in any case or proceeding, whether voluntary or
involuntary, under any bankruptcy, reorganization, arrangement,
insolvency, adjustment of debt, dissolution, liquidation or
similar law of any jurisdiction and (iv) are, in the Agents'
reasonable judgment, creditworthy; (c) 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; (d) that are not subject to any pledge,
restriction, security interest or other lien or encumbrance other
than those created by the Loan Documents and Permitted Liens
which are subordinate to the liens of the Agent; (e) in which the
Agent has a valid and perfected first priority security interest;
(f) that are not outstanding for more than five (5) Business Days
past the date the applicable Credit Card Provider is required to
make payment and that are not outstanding for more than ten (10)
Business Days past the date of sale of the underlying goods to a
retail customer in the ordinary course of business; (g) that are
not due from an account debtor located in Indiana, Minnesota or
New Jersey unless 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;
(h) that are not due from any single account debtor if more than
fifteen percent (15%) of the aggregate amount of all Accounts
owing from such account debtor would otherwise not be Eligible
Accounts; (i) that are payable in Dollars; (j) that are not
secured by a letter of credit unless the Agent has a prior
perfected security interest in such letters of credit; and (k)
that are not payable from an office outside of the United States.
General criteria for Eligible Accounts may be established and
revised by the Agents from time to time with respect to Accounts
owing under arrangements which were not in effect on or have been
materially altered since the Closing Date. Agents may, in their
Permitted Discretion, from time to time, upon three (3) days'
prior notice to Borrower, establish Reserves with respect to
Eligible Accounts to the extent that the arrangements under which
such Eligible Accounts arise were not in effect on the Closing
Date and Agents reasonably determine that: (i) the dilution with
respect of the Accounts (excluding Accounts owing from Credit
Card Providers existing as of the Closing Date) 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 Borrower has declined. In determining
whether to establish Reserves with respect to Eligible Accounts,
Agents may consider events, conditions, contingencies or risks
which are also considered in determining Eligible Accounts.
1.7. Eligible Inventory. "Eligible Inventory" shall be
Inventory owned by Borrower; provided that Eligible Inventory
shall not include any inventory (a) held on consignment, or not
otherwise owned by Borrower, (b) which is damaged or is subject
to any legal encumbrance other than Permitted Encumbrances, (c)
which is not in the possession of Borrower unless (i) Agents have
received a waiver from the party in possession (including,
without limitation, with respect to all consolidator locations)
of such inventory in form and substance reasonably satisfactory
to Agents or (ii) such inventory is in transit from one Permitted
Inventory Location to another Permitted Inventory Location, and
the total duration of such transit time is not more than three
(3) Business Days, (d) which is subject to any lien, encumbrance
or security interest which is prior to the liens granted to Agent
(other than landlord's or lessor's liens under leases to which
Borrower is a party provided no amount secured by such lien has
become due and payable and not been paid), (e) as to which
appropriate Uniform Commercial Code financing statements showing
Borrower as debtor and Agent as secured party have not been filed
in the proper filing office or offices in order to perfect
Agent's security interest therein, (f) which has been shipped to
a customer of Borrower regardless of whether such shipment is on
a consignment basis, (g) which is not located at a Permitted
Inventory Location unless such Inventory is in transit from one
Permitted Inventory Location to another Permitted Inventory
Location, and the total duration of such transit time is not more
than three (3) Business Days, (h) which consists of display items
or packing or shipping materials, manufacturing supplies, work-in
process Inventory or replacement parts, (i) which is not of a
type for sale in the ordinary course of Borrower's business, (j)
which consists of Hazardous Materials or goods that can only be
transported or sold with licenses that are not readily available,
or (k) which is not covered by casualty insurance acceptable to
Agents. General criteria for Eligible Inventory may be
established and revised by Agents from time to time if Agents
reasonably determine that there has been a substantive change in
the shrinkage, character, composition or mix, markdowns or retail
markons and markups inconsistent with prior period practice,
industry standards or current business plans. Agents may in
their Permitted Discretion from time to time, upon three (3)
days' prior notice to Borrower establish Reserves with respect to
Eligible Inventory to the extent that Agents reasonably determine
that (A) the liquidation value of the Eligible Inventory, or any
category thereof, has decreased , or (B) the nature of the
inventory has changed. In determining whether to establish
Reserves with respect to Eligible Inventory, Agents may consider
events, conditions, contingencies or risks which are also
considered in determining Eligible Inventory.
1.8. Cash Management Systems. On or prior to the
Closing Date, Borrower will establish and will maintain until the
Termination Date, the cash management systems described on Annex
C (the "Cash Management Systems").
1.9. Fees and Other Compensation. (a) Borrower shall
pay (i) to GE Capital, individually, the Fees specified in that
certain fee letter of even date herewith between Borrower and GE
Capital (the "GE Capital Fee Letter"), at the times specified for
payment therein, and (ii) to Paragon, individually, the Fees
specified in that certain fee letter of even date hereof between
Borrower and Paragon (the "Paragon Fee Letter") at the times
specified for payment therein.
(b) As additional compensation for the Revolving
Lenders, Borrower agrees to pay to Agent, for the ratable benefit
of such Lenders based on the amount of such Lender's unused
Commitment, in arrears, on the first Business Day of each month
prior to the Commitment Termination Date and on the Commitment
Termination Date, compensation for Borrower's non-use of
available funds in an amount equal to the Applicable Unused Line
Margin per annum (calculated on the basis of a 360 day year for
actual days elapsed) of the difference between (x) the Maximum
Amount (as it may be reduced from time to time) and (y) the
average for the period of the daily closing balances of the
Revolving Loan and the Swing Line Loan outstanding during the
period for which the such compensation is due.
(c) If Borrower prepays the Revolving Loan and
terminates the Revolving Loan Commitment, whether voluntarily or
involuntarily and whether before or after acceleration of the
Obligations, Borrower shall pay to Agent, for the benefit of
Lenders as liquidated damages and compensation for the costs of
being prepared to make funds available hereunder an amount
determined by multiplying the Applicable Percentage (as defined
below) by (i) the amount of the Revolving Loan Commitment. As
used herein, the term "Applicable Percentage" shall mean (x) one
and one-half percent (1 1/2%), in the case of a prepayment on or
prior to the first anniversary of the Closing Date, (y) one
percent (1%), in the case of a prepayment after the first
anniversary of the Closing Date but on or prior to the second
anniversary, and (z) one-half percent (1/2%), in the case of a
prepayment after the second anniversary of the Closing Date but
on or prior to the date which is thirty (30) days prior to the
third anniversary. Notwithstanding the foregoing, no prepayment
fee shall be payable by Borrower upon a mandatory prepayment made
pursuant to Sections 1.3(b) or 1.16(c); provided that in the case
of prepayments made pursuant to Section 1.3(b)(iii) or (b)(iv),
the transaction giving rise to the applicable prepayment is
expressly permitted under Section 6.
1.10. Receipt of Payments. Borrower shall make
each payment under this Agreement not later than 2:00 p.m. (New
York time) on the day when due in immediately available funds in
Dollars to the Collection Account. For purposes of computing
interest and Fees and determining Borrowing Availability or Net
Borrowing Availability as of any date, all payments shall be
deemed received on the day of receipt of immediately available
funds therefor in the Collection Account prior to 2:00 p.m. New
York time. Payments received after 2:00 p.m. New York time on
any Business Day shall be deemed to have been received on the
following Business Day.
1.11. Application and Allocation of Payments;
Subordination.
(a) So long as no Default or Event of Default shall
have occurred and be continuing, (i) payments consisting of
proceeds of Accounts received in the ordinary course of business
shall be applied to first, the Swing Line Loan, second, ratably
to interest on the Tranche A Revolving Loan and the Tranche B
Revolving Loan and last, ratably to principal on the Tranche A
Revolving Loan and the Tranche B Revolving Loan; (ii) voluntary
prepayments shall be applied as determined by Borrower, subject
to the provisions of Section 1.3(a); and (iii) mandatory
prepayments shall be applied as set forth in Sections 1.3(c) and
1.3(d). All payments and prepayments applied to a particular
Loan shall be applied ratably to the portion thereof held by each
Lender as determined by its Pro Rata Share. As to each other
payment, and as to all payments made when a Default or Event or
Default shall have occurred and be continuing or following the
Commitment Termination Date, Borrower hereby irrevocably waives
the right to direct the application of any and all payments
received from or on behalf of Borrower, and Borrower hereby
irrevocably agrees that Agent shall have the continuing exclusive
right to apply any and all such payments against the Obligations
as Agent may deem advisable notwithstanding any previous entry by
Agent in the Loan Account or any other books and records. In the
absence of a specific determination by Agent with respect
thereto, payments shall be applied to amounts then due and
payable in the following order: (1) to Fees and Agents' expenses
reimbursable hereunder; (2) to interest on the Swing Line Loan;
(3) to principal payments on the Swing Line Loan; (4) ratably to
interest on the Tranche A Revolving Loan and the Tranche B
Revolving Loan; (5) ratably to principal payments on the Tranche
A Revolving Loan and the Tranche B Revolving Loan and to provide
cash collateral for Letter of Credit Obligations in the manner
described in Annex B, ratably to the aggregate, combined
principal balance of such Loans and outstanding Letter of Credit
Obligations; and (6) to all other Obligations including expenses
of Lenders to the extent reimbursable under Section 11.3.
(b) Each holder of the Tranche B Revolving Loan by
acceptance thereof acknowledges and agrees that the Tranche B
Revolving Loan is and shall be expressly subordinate and junior
in right of payment to all of the Senior Obligations in the
manner and to the extent provided herein. In the event of any
Default or Event of Default and for so long (and only so long) as
such Default or Event of Default has not been cured or waived, or
insolvency, bankruptcy, receivership, liquidation, reorganization
or other similar proceedings relative to Holdings, Borrower or to
their property, or in the event of any proceedings for voluntary
liquidation, dissolution or other winding up of Holdings,
Borrower or their property, whether or not involving insolvency
or bankruptcy, so long as any Senior Obligations are outstanding,
the holders of Senior Obligations shall be entitled to receive
payment in full in cash of all Senior Obligations before the
holders of the Tranche B Revolving Loan are entitled to receive
any direct or indirect payment or distribution of any kind or
character, whether in cash, other property or by set-off or
otherwise, on or in respect of principal of, interest on, or
other amounts owing in respect of, the Tranche B Revolving Loan
("payment or distribution"), and to that end, so long as any
Senior Obligations remain outstanding, any payment or
distribution to which the holders of the Tranche B Revolving Loan
would be entitled but for the provisions hereof (except
distributions of securities which are subordinate and junior in
right of payment to the Senior Obligations at least to the same
extent as provided herein) shall be delivered to the holders of
Senior Obligations to the extent necessary to make payment in
full of all Senior Obligations, after giving effect to any
concurrent payment or distribution to or for the holders of
Senior Obligations in respect thereof. Upon the exercise of any
rights and remedies by the Agent under the Loan Documents with
respect to the Collateral, all Proceeds of the Collateral shall
first be applied by Agent to the Senior Obligations until such
Obligations have been paid in full in cash and all Letter of
Credit Obligations have been cash collateralized, canceled or
backed by stand-by letters of credit in accordance with Annex B
and then to the Obligations in respect of the Tranche B Revolving
Loan. In the event that any holder of the Tranche B Revolving
Loan shall receive any payment or distribution in respect of the
Tranche B Revolving Loan which the holders thereof are not
permitted to receive and retain pursuant to this Agreement, such
payment or distribution shall be held in trust for the benefit
of, and shall be paid over promptly on demand to, the Agent for
the benefit of the holders of the Senior Obligations, for
application to the payment of the Senior Obligations until the
same shall have been paid in full in cash, after giving effect to
any concurrent payment or distribution to the holders of the
Senior Obligations.
(c) Notwithstanding the provisions of Section 1.11(b)
and Section 1.3(c) and regardless of whether a Default or Event
of Default has occurred or is continuing. Tranche B Revolving
Lenders shall be entitled to recover first from any proceeds
received by Borrower as a result of the sale of any Real Estate
but only up to the amount of $12,000,000. Tranche B Revolving
Lenders agree that proceeds of any Real Estate received after
their receipt of such $12,000,000 shall be applied: (i) in
accordance with Section 1.3(c) so long as no Default or Event of
Default has occurred and is continuing, and (ii) in accordance
with Section 1.11(b) so long as a Default or Event of Default has
occurred and is continuing.
(d) Agent is authorized to, and at its sole election
may, charge to the Revolving Loan balance on behalf of Borrower
and cause to be paid all Fees, expenses, Charges, costs
(including insurance premiums in accordance with Section 5.4(a))
and interest and principal, other than principal of the Revolving
Loan, owing by Borrower under this Agreement or any of the other
Loan Documents if and to the extent Borrower fails to promptly
pay any such amounts as and when due, even if such charges would
cause the aggregate balance of the Revolving Loan and the Swing
Line Loan to exceed Borrowing Availability. At Agent's option
and to the extent permitted by law, any charges so made shall
constitute part of the Revolving Loan hereunder. Agent shall
provide Borrower with same day written notice of any charges made
to the Revolving Loan balance pursuant to this Section 1.11(c),
provided however, the failure to deliver such notice shall not in
any manner affect Agent's right to charge the Revolving Loan.
1.12. Loan Account and Accounting. Agent shall
maintain a loan account (the "Loan Account") on its books to
record: all Advances, all payments made by Borrower, and all
other debits and credits as provided in this Agreement with
respect to the Loans or any other Obligations. All entries in
the Loan Account shall be made in accordance with Agent's
customary accounting practices as in effect from time to time.
The balance in the Loan Account, as recorded on Agent's most
recent printout or other written statement, shall, absent
manifest error, be presumptive evidence of the amounts due and
owing to Agent and Lenders by Borrower; provided that any failure
to so record or any error in so recording shall not limit or
otherwise affect Borrower's duty to pay the Obligations. Agent
shall render to Borrower a monthly accounting of transactions
with respect to the Loans setting forth the balance of the Loan
Account. Unless Borrower notifies Agent in writing of any
objection to any such accounting (specifically describing the
basis for such objection), within thirty (30) days after the date
thereof, each and every such accounting shall, absent manifest
error, be deemed final, binding and conclusive upon Borrower in
all respects as to all matters reflected therein. Only those
items expressly objected to in such notice shall be deemed to be
disputed by Borrower. Notwithstanding any provision herein
contained to the contrary, any Lender may elect (which election
may be revoked) to dispense with the issuance of Notes to that
Lender and may rely on the Loan Account as evidence of the amount
of Obligations from time to time owing to it.
1.13. Indemnity.
(a) Each Credit Party that is a signatory hereto shall
jointly and severally indemnify and hold harmless each of Agents,
Lenders and their respective Affiliates, and each such Person's
respective officers, directors, partners, members, employees,
attorneys, advisors, agents and representatives (each, an
"Indemnified Person"), from and against any and all suits,
actions, proceedings, claims, damages, losses, liabilities and
reasonable expenses (including reasonable attorneys' fees and
disbursements and other costs of investigation or defense,
including those incurred upon any appeal) which may be instituted
or asserted against or incurred by any such Indemnified Person as
the result of credit having been extended, suspended or
terminated under this Agreement and the other Loan Documents and
the administration of such credit, and in connection with or
arising out of the transactions contemplated hereunder and
thereunder and any actions or failures to act in connection
therewith, including any and all Environmental Liabilities and
legal costs and expenses arising out of or incurred in connection
with disputes between or among any parties to any of the Loan
Documents unless such dispute is among any of the parties hereto
other than the Credit Parties (collectively, "Indemnified
Liabilities"); provided, that no such Credit Party shall be
liable for any indemnification to an Indemnified Person to the
extent that any such suit, action, proceeding, claim, damage,
loss, liability or expense that is determined by a court of
competent jurisdiction by final and nonappealable judgment to
have resulted directly from that Indemnified Person's gross
negligence, willful misconduct or breach of the terms of this
Agreement. Agents and Lenders agree not to settle or compromise
any Indemnified Liabilities other than in a commercially
reasonable manner. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR
LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR,
ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER
PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR
INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY
BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED
OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER
TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
(b) To induce Lenders to provide the LIBOR Rate option
on the terms provided herein, if (i) any LIBOR Loans are repaid
in whole or in part prior to the last day of any applicable LIBOR
Period (whether that repayment is made pursuant to any provision
of this Agreement or any other Loan Document or is the result of
acceleration, by operation of law or otherwise); (ii) Borrower
shall default in payment when due of the principal amount of or
interest on any LIBOR Loan; (iii) Borrower shall default in
making any borrowing of, conversion into or continuation of LIBOR
Loans after Borrower has given notice requesting the same in
accordance herewith; or (iv) Borrower shall fail to make any
prepayment of a LIBOR Loan after Borrower has given a notice
thereof in accordance herewith, Borrower shall indemnify and hold
harmless each Lender from and against all losses, costs and
expenses resulting from or arising from any of the foregoing.
Such indemnification shall include any loss (including loss of
margin) or expense arising from the reemployment of funds
obtained by it or from fees payable to terminate deposits from
which such funds were obtained. For the purpose of calculating
amounts payable to a Lender under this subsection, each Lender
shall be deemed to have actually funded its relevant LIBOR Loan
through the purchase of a deposit bearing interest at the LIBOR
Rate in an amount equal to the amount of that LIBOR Loan and
having a maturity comparable to the relevant LIBOR Period;
provided, however, that each Lender may fund each of its LIBOR
Loans in any manner it sees fit, and the foregoing assumption
shall be utilized only for the calculation of amounts payable
under this subsection. This covenant shall survive the
termination of this Agreement and the payment of the Notes and
all other amounts payable hereunder. As promptly as practicable
under the circumstances, each Lender shall provide Borrower with
its written calculation of all amounts payable pursuant to this
Section 1.13(b), and such calculation shall be binding on the
parties hereto unless Borrower shall object in writing within ten
(10) Business Days of receipt thereof, specifying the basis for
such objection in reasonable detail.
1.14. Access; Appraisals; Mystery Shopping.
(a) Each Credit Party which is a party hereto shall,
during normal business hours, from time to time, upon reasonable
advance notice, three times each calendar year, or more
frequently as determined by Agents in their reasonable good faith
judgment as being necessary in light of any factor which could
adversely affect the ability of Lenders to receive payment in
full of the Obligations: (a) provide Agents and any of their
officers, employees and agents access to its properties,
facilities, advisors and employees (including officers) of each
Credit Party and to the Collateral, (b) permit Agents, and any of
their officers, employees and agents, to inspect, audit and make
extracts from any Credit Party's books and records, and (c)
permit Agents, and their officers, employees and agents, to
inspect, review, evaluate and make test verifications and counts
of the Accounts, Inventory and other Collateral of any Credit
Party. If a Default or Event of Default shall have occurred and
be continuing or if access is necessary to preserve or protect
the Collateral as reasonably determined by the Agents in good
faith, each such Credit Party shall provide such access to Agents
and to each Lender at all times and without advance notice.
Furthermore, so long as any Event of Default shall have occurred
and be continuing, Borrower shall provide Agents and each Lender
with access to its suppliers and customers. Subject to the
foregoing, Each Credit Party shall make available to Agents and
their counsel, as quickly as is possible under the circumstances,
originals or copies of all books and records which Agents may
request. Each Credit Party shall deliver any document or
instrument necessary for Agents, as they may from time to time
request, to obtain records from any service bureau or other
Person which maintains records for such Credit Party, and shall
maintain duplicate records or supporting documentation on media,
including computer tapes and discs owned by such Credit Party to
the extent necessary as determined by such Credit Party's
reasonable business judgment. Agents will give Lenders at least
fifteen (15) days' prior written notice of regularly scheduled
audits. Representatives of other Lenders may accompany Agents'
representatives on regularly scheduled audits at no charge to
Borrower.
(b) Agents, three times each calendar year, or more
frequently as determined by Agents in their reasonable good faith
judgment as being necessary in light of any factor which could
adversely affect the ability of Lenders to receive payment in
full of the Obligations, may obtain appraisal reports in form and
substance satisfactory to Agents stating (i) the then current
fair market, orderly liquidation and forced liquidation value of
all or any part of the Collateral, and (ii) the then current
value of each of Holdings, Borrower and their Subsidiaries.
(c) Agent or Oversight Agent may from time to time
conduct "mystery shopping" visits to any or all of Borrower's or
any of its Subsidiaries' business premises. A copy of any
written report of the results of such "mystery shopping" prepared
by Agent, Oversight Agent or any third party "mystery shopper"
engaged under this Section 1.14(c) shall be provided to Borrower.
(d) All reasonable expenses incurred by Agents in
connection with this Section 1.14 shall be reimbursed by Borrower
pursuant to Section 11.3 hereof, provided that so long as no
Event of Default shall have occurred and be continuing, Borrower
shall not be required to reimburse expenses incurred under this
Section 1.14 which exceed $60,000 in the aggregate, plus
reasonable out-of-pocket expenses, per annum.
1.15. Taxes.
(a) Any and all payments by Borrower hereunder or
under the Notes shall be made, in accordance with this Section
1.15, free and clear of and without deduction for any and all
present or future Taxes. If Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder
or under the Notes, (i) the sum payable shall be increased as
much as shall be necessary so that after making all required
deductions (including deductions applicable to additional sums
payable under this Section 1.15) Agent or Lenders, as applicable,
receive an amount equal to the sum they would have received had
no such deductions been made, (ii) Borrower shall make such
deductions, and (iii) Borrower shall pay the full amount deducted
to the relevant taxing or other authority in accordance with
applicable law. Upon Agent's reasonable request, Borrower shall
furnish to Agent evidence of the payment thereof in a form
reasonably acceptable to Agent.
(b) Each Credit Party that is a signatory hereto shall
indemnify and, within ten (10) days of demand therefor, pay Agent
and each Lender for the full amount of Taxes (including any Taxes
imposed by any jurisdiction on amounts payable under this Section
1.15) paid by Agent or such Lender, as appropriate, and any
liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes were
correctly or legally asserted.
(c) Each Lender organized under the laws of a
jurisdiction outside the United States (a "Foreign Lender") as to
which payments to be made under this Agreement or under the Notes
are exempt from United States withholding tax under an applicable
statute or tax treaty shall provide to Borrower and Agent a
properly completed and executed IRS Form 4224 or Form 1001 or
other applicable form, certificate or document prescribed by the
IRS or the United States certifying as to such Foreign Lender's
entitlement to such exemption (a "Certificate of Exemption").
Any foreign Person that seeks to become a Lender under this
Agreement shall provide a Certificate of Exemption to Borrower
and Agent prior to becoming a Lender hereunder. No foreign
Person may become a Lender hereunder if such Person is unable to
deliver a Certificate of Exemption.
1.16. Capital Adequacy; Increased Costs;
Illegality.
(a) If any Lender shall have determined that any law,
treaty, governmental (or quasi-governmental) rule, regulation,
guideline or order regarding capital adequacy, reserve
requirements or similar requirements or compliance by any Lender
with any request or directive regarding capital adequacy, reserve
requirements or similar requirements (whether or not having the
force of law), in each case, adopted after the Closing Date, from
any central bank or other Governmental Authority increases or
would have the effect of increasing the amount of capital,
reserves or other funds required to be maintained by such Lender
and thereby reducing the rate of return on such Lender's capital
as a consequence of its obligations hereunder, then Borrower
shall from time to time upon ten (10) days' written demand by
such Lender (with a copy of such demand to Agent) pay to Agent,
for the account of such Lender, additional amounts sufficient to
compensate such Lender for such reduction. A certificate as to
the amount of that reduction and showing the basis of the
computation thereof submitted by such Lender to Borrower and to
Agent shall, absent manifest error, be final, conclusive and
binding for all purposes. Each Lender shall allocate the effect
of such reduction among its customers in good faith.
(b) If, due to either (i) the enactment of or any
change in any law or regulation (or any change in the
interpretation thereof) or (ii) the compliance with any guideline
or request from any central bank or other Governmental Authority
(whether or not having the force of law), in each case adopted
after the Closing Date, there shall be any increase in the cost
to any Lender of agreeing to make or making, funding or
maintaining any Loan, then Borrower shall from time to time,
upon ten (10) days' written demand by such Lender (with a copy of
such demand to Agent), pay to Agent for the account of such
Lender additional amounts sufficient to compensate such Lender
for such increased cost. A certificate as to the amount of such
increased cost, submitted to Borrower and to Agent by such
Lender, shall be conclusive and binding on Borrower for all
purposes, absent error. Each Lender agrees that, as promptly as
practicable after it becomes aware of any circumstances referred
to above which would result in any such increased cost, the
affected Lender shall, to the extent not inconsistent with such
Lender's internal policies of general application, use reasonable
commercial efforts to minimize costs and expenses incurred by it
and payable to it by Borrower pursuant to this Section 1.16(b).
Each Lender shall allocate such increased costs among its
customers in good faith.
(c) Notwithstanding anything to the contrary contained
herein, if the introduction of or any change in any law or
regulation (or any change in the interpretation thereof) shall
make it unlawful, or any central bank or other Governmental
Authority shall assert that it is unlawful, for any Lender to
agree to make or to make or to continue to fund or maintain any
LIBOR Loan, then, unless that Lender is able to make or to
continue to fund or to maintain such LIBOR Loan at another branch
or office of that Lender without, in that Lender's opinion,
adversely affecting it or its Loans or the income obtained
therefrom, on notice thereof and demand therefor by such Lender
to Borrower through Agent, (i) the obligation of such Lender to
agree to make or to make or to continue to fund or maintain LIBOR
Loans shall terminate and (ii) Borrower shall forthwith prepay in
full all outstanding LIBOR Loans owing to such Lender, together
with interest accrued thereon, unless Borrower, within five (5)
Business Days after the delivery of such notice and demand,
converts all such Loans into a Loan bearing interest based on the
Index Rate.
(d) Replacement of Lender in Respect of Increased
Costs. Within fifteen (15) days after receipt by Borrower of
written notice and demand from any Lender (an "Affected Lender")
for payment of additional amounts or increased costs as provided
in Section 1.15(a), 1.16(a) or 1.16(b), Borrower may, at its
option, notify Agent and such Affected Lender of its intention to
replace the Affected Lender. So long as no Default or Event of
Default shall have occurred and be continuing, Borrower, with the
consent of Agent, may obtain, at Borrower's expense, a
replacement Lender ("Replacement Lender") for the Affected
Lender, which Replacement Lender must be an Eligible Assignee in
the case of a Tranche A Revolving Lender being replaced. If
Borrower obtains a Replacement Lender following notice of its
intention to do so, the Affected Lender must sell and assign its
Loans and Commitments to such Replacement Lender for an amount
equal to the principal balance of all Loans held by the Affected
Lender and all accrued interest and Fees with respect thereto
through the date of such sale, provided that Borrower shall have
reimbursed such Affected Lender for the additional amounts or
increased costs that it is entitled to receive under this
Agreement through the date of such sale and assignment.
Notwithstanding the foregoing, Borrower shall not have the right
to obtain a Replacement Lender if the Affected Lender rescinds
its demand for increased costs or additional amounts within
fifteen (15) days following its receipt of Borrower's notice of
intention to replace such Affected Lender. Furthermore, if
Borrower gives a notice of intention to replace and does not so
replace such Affected Lender, Borrower's rights under this
Section 1.16(d) shall terminate and Borrower shall promptly pay
all increased costs or additional amounts demanded by such
Affected Lender pursuant to Sections 1.15(a), 1.16(a) and
1.16(b).
1.17. Single Loan. All Loans to Borrower and all
of the other Obligations of Borrower arising under this Agreement
and the other Loan Documents shall constitute one general
obligation of Borrower secured, until the Termination Date, by
all of its Collateral.
20 CONDITIONS PRECEDENT
2.1. Conditions to the Initial Loans. No Lender shall
be obligated to make any Loan or incur any Letter of Credit
Obligations on the Closing Date, or to take, fulfill, or perform
any other action hereunder, until the following conditions have
been satisfied or provided for in a manner reasonably
satisfactory to Agent and Lenders, or waived in writing by Agent
and Lenders:
(a) Credit Agreement; Loan Documents. This Agreement
or counterparts hereof shall have been duly executed by, and
delivered to, Borrower, Agents and Lenders; and Agents shall have
received such documents, instruments, agreements and legal
opinions as Agents shall reasonably request in connection with
the transactions contemplated by this Agreement and the other
Loan Documents, including all those listed in the Closing
Checklist attached hereto as Annex D, each in form and substance
reasonably satisfactory to Agents provided that if Agents shall
not have received such documents on the Closing Date as
reasonably requested by them and the delivery of such documents
is not governed by a post-closing side letter, Borrower's failure
to have delivered the same on the Closing Date shall not be
deemed a Default provided (i) Borrower's failure to deliver such
documents is not a breach of any other provision of this
Agreement, and (ii) Borrower and Agents shall act reasonably in
agreeing upon a reasonable period of time within which Borrower
shall deliver such documents to Agents.
(b) Repayment of Prior Lender Obligations;
Satisfaction of Outstanding L/Cs. (i) Agent shall have received
a fully executed original of a pay-off letter satisfactory to
Agent confirming that all of the Prior Lender Obligations will be
repaid in full from the proceeds of the initial Revolving Credit
Advance and all Liens upon any of the property of Borrower or any
of its Subsidiaries in favor of Prior Lender shall be terminated
by Prior Lender immediately upon such payment; and (ii) all
letters of credit issued or guaranteed by Prior Lender shall have
been cash collateralized, supported by a guaranty of Agent or
supported by a Letter of Credit issued pursuant to Annex B, as
mutually agreed upon by Agent, Borrower and Prior Lender.
(c) Approvals. Agent shall have received (i)
satisfactory evidence that the Credit Parties have obtained all
required consents and approvals of all Persons including all
requisite Governmental Authorities, to the execution, delivery
and performance of this Agreement and the other Loan Documents
and the consummation of the Related Transactions or (ii) an
officer's certificate in form and substance satisfactory to Agent
affirming that no such consents or approvals are required.
(d) Opening Availability. The Eligible Accounts and
Eligible Inventory of Borrower supporting the initial Revolving
Credit Advance and the initial Letter of Credit Obligations
incurred and the amount of the Reserves to be established on the
Closing Date shall be sufficient in value, as determined by
Agents, to provide Borrower with Net Borrowing Availability,
after giving effect to the initial Revolving Credit Advance, the
incurrence of any initial Letter of Credit Obligations and the
consummation of the Related Transactions (on a pro forma basis
and expenses and liabilities being paid in the ordinary course of
business and without acceleration of sales) of at least
$10,000,000.
(e) Payment of Fees. Borrower shall have paid the Fees
required to be paid on the Closing Date in the respective amounts
specified in Section 1.9 (including the Fees specified in the GE
Capital Fee Letter and the Paragon Fee Letter), and shall have
reimbursed Agents for all reasonable fees, costs and expenses of
closing presented as of the Closing Date.
(f) Capital Structure: Other Indebtedness. The
capital structure of each Credit Party and the terms and
conditions of all Indebtedness of each Credit Party shall be
acceptable to Agent in its reasonable discretion.
2.2. Further Conditions to Each Loan. Except as
otherwise expressly provided herein, no Lender shall be obligated
to fund any Loan, convert or continue any Loan as a LIBOR Loan or
incur any Letter of Credit Obligation, if, as of the date
thereof:
(a) Any representation or warranty by any Credit Party
contained herein or in any of the other Loan Documents shall be
untrue or incorrect as of such date, except to the extent that
such representation or warranty expressly relates to an earlier
date and except for changes therein expressly permitted or
expressly contemplated by this Agreement; or
(b) Any event or circumstance having a Material
Adverse Effect shall have occurred since the date hereof as
reasonably determined by Agents or the Requisite Lenders; or
(c) (i) Any Event of Default shall have occurred and
be continuing or would result after giving effect to any Loan (or
the incurrence of any Letter of Credit Obligations), or (ii) a
Default shall have occurred and be continuing or would result
after giving effect to any Loan, and (A) Agent or Requisite
Lenders, or (B) in the event of a Default which would under
Section 8.2(a)(ii) provide the Tranche B Revolving Lenders with
the right to suspend their obligation to make Tranche B Revolving
Credit Advances, Requisite Tranche B Lenders, shall have
determined not to make any Loan or incur any Letter of Credit
Obligation so long as that Default is continuing; or
(d) After giving effect to any Advance (or the
incurrence of any Letter of Credit Obligations), the outstanding
principal amount of the Tranche A Revolving Loan would exceed the
lesser of (i) the Tranche A Borrowing Base and the Maximum
Tranche A Amount, less, in each case, the then outstanding
principal amount of the Swing Line Loan, less the sum of Letter
of Credit Obligations or (ii) the outstanding principal amount of
the Tranche B Revolving Loan would exceed the lesser of the
Tranche B Borrowing Base and the Maximum Tranche B Amount; or
(e) After giving effect to any Swing Line Advance, the
outstanding principal amount of the Swing Line Loan would exceed
Swing Line Availability. The request and acceptance by Borrower
of the proceeds of any Loan, the incurrence of any Letter of
Credit Obligations or the conversion or continuation of any Loan
into, or as, a LIBOR Loan, as the case may be, shall be deemed to
constitute, as of the date of such request or acceptance, (i) a
representation and warranty by Borrower that the conditions in
this Section 2.2 have been satisfied and (ii) a reaffirmation by
Borrower of the granting and continuance of Agent's Liens, on
behalf of itself and Lenders, pursuant to the Collateral
Documents.
30 REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Loans and to incur Letter
of Credit Obligations, the Credit Parties executing this
Agreement, jointly and severally, make the following
representations and warranties to Agent and each Lender with
respect to all Credit Parties, each and all of which shall
survive the execution and delivery of this Agreement.
3.1. Corporate Existence; Compliance with Law. Each
Credit Party (a) is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction
of incorporation; (b) is duly qualified to conduct business and
is in good standing in each other jurisdiction where its
ownership or lease of property or the conduct of its business
requires such qualification, except where the failure to be so
qualified would not result in exposure to losses, damages or
liabilities in excess of $50,000; (c) has the requisite corporate
power and authority and the legal right to own, pledge, mortgage
or otherwise encumber and operate its properties, to lease the
property it operates under lease and to conduct its business as
now, heretofore and proposed to be conducted; (d) subject to
specific representations regarding Environmental Laws, has all
material licenses, permits, consents or approvals from or by, and
has made all filings with, and has given all notices to, all
Governmental Authorities having jurisdiction, to the extent
required for such ownership, operation and conduct; (e) is in
compliance with its charter and by-laws; and (f) subject to
specific representations set forth herein regarding ERISA,
Environmental Laws, tax and other laws, is in compliance with all
applicable provisions of law, except where the failure to comply,
individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
3.2. Executive Offices; FEIN. As of the Closing Date,
the current location of each Credit Party's chief executive
office and principal place of business, as well as the location
of Borrower's Stores, warehouses and corporate books and records,
is set forth in Disclosure Schedule (3.2). In addition,
Disclosure Schedule (3.2) lists the federal employer
identification number of each Credit Party.
3.3. Corporate Power, Authorization, Enforceable
Obligations. The execution, delivery and performance by each
Credit Party of the Loan Documents to which it is a party and the
creation of all Liens provided for therein: (a) are within such
Person's corporate power; (b) have been duly authorized by all
necessary or proper corporate and shareholder action; (c) do not
contravene any provision of such Person's charter or bylaws; (d)
do not violate any law or regulation, or any order or decree of
any court or Governmental Authority; (e) do not conflict with or
result in the breach or termination of, constitute a default
under or accelerate or permit the acceleration of any performance
required by, any indenture, mortgage, deed of trust, lease,
agreement or other instrument to which such Person is a party or
by which such Person or any of its property is bound; (f) do not
result in the creation or imposition of any Lien upon any of the
property of such Person other than those in favor of Agent, on
behalf of itself and Lenders, pursuant to the Loan Documents; and
(g) do not require the consent or approval of any Governmental
Authority or any other Person, except those referred to in
Section 2.1(c), all of which will have been duly obtained, made
or complied with prior to the Closing Date. On or prior to the
Closing Date, each of the Loan Documents shall have been duly
executed and delivered by each Credit Party thereto and each such
Loan Document shall constitute a legal, valid and binding
obligation of such Credit Party enforceable against it in
accordance with its terms, except as enforceability is limited by
bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting generally the enforcement of creditor's
rights and except to the extent that the 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.
3.4. Financial Statements and Projections. Except for
the Projections, all Financial Statements concerning Holdings and
its Subsidiaries which are referenced below have been prepared in
accordance with GAAP consistently applied throughout the periods
covered (except as disclosed therein and except, with respect to
unaudited Financial Statements, for the absence of footnotes and
normal year-end audit adjustments) and present fairly in all
material respects the financial position of the Persons covered
thereby as at the dates thereof and the results of their
operations and cash flows for the periods then ended.
(a) The following Financial Statements attached hereto
as Disclosure Schedule (3.4(A)) have been delivered on the date
hereof:
(i) The audited consolidated balance sheets at
January 30, 1999 and the related statements of income and
cash flows of Holdings and its Subsidiaries for the Fiscal
Years then ended, certified by Arthur Andersen LLP.
(ii) The unaudited balance sheet(s) at May 29,
1999 and the related statement(s) of income and cash flows
of Holdings and its Subsidiaries for the four (4) Fiscal
Months then ended.
(b) Projections. The Projections delivered on the
date hereof and attached hereto as Disclosure Schedule (3.4(B))
have been prepared by Borrower in light of the past operations of
its businesses based on Borrower's most recent unaudited
consolidated balance sheets, but including future payments of
known contingent liabilities, and reflect projections dated July
8, 1999 for the three-year period beginning on January 31, 1999
on a month by month basis for the first year and on a year by
year basis thereafter. The Projections are based upon estimates
and assumptions stated therein, all of which Borrower believes to
be reasonable and fair in light of current conditions and current
facts known to Borrower and, as of the Closing Date, reflect
Borrower's good faith and reasonable estimates of the future
financial performance of Borrower and of the other information
projected therein for the period set forth therein.
3.5. Material Adverse Effect. Since January 30, 1999,
(a) no Credit Party has incurred any obligations, contingent or
non-contingent liabilities, liabilities for Charges, long-term
leases or unusual forward or long-term commitments which are not
reflected in the Projections, alone or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, (b) no
contract, lease or other agreement or instrument has been entered
into by any Credit Party or has become binding upon any Credit
Party's assets and no law or regulation applicable to any Credit
Party has been adopted which has had or could reasonably be
expected to have a Material Adverse Effect, and (c) no Credit
Party is in default and to the best of Borrower's knowledge no
third party is in default under any material contract, lease or
other agreement or instrument, which alone or in the aggregate
could reasonably be expected to have a Material Adverse Effect.
Except as described in Disclosure Schedule (3.5), between January
30, 1999 and the Closing Date no event has occurred, which alone
or together with other events, could reasonably be expected to
have a Material Adverse Effect.
3.6. Ownership of Property; Liens. As of the Closing
Date, the real estate ("Real Estate") listed on Disclosure
Schedule (3.6(a)) constitutes all of the real property owned,
leased, subleased, or used by any Credit Party. Each Credit
Party owns good and marketable fee simple title to all of its
owned real estate, and valid and marketable leasehold interests
in all of its leased Real Estate, all as described on Disclosure
Schedule (3.6(a)), and copies of all leases for Stores located in
Virginia, Pennsylvania, Florida, New Jersey and Washington and
copies of all other leases requested by Agents have been
delivered to Agents. Except as described in Disclosure Schedule
(3.6(b)), none of Holdings, Borrower or their Subsidiaries are in
default or violation beyond any applicable notice or cure period,
or have received any notice or threat of cancellation, in respect
of any leases to which such Person is a party. Borrower and
Holdings hereby authorize Agents at any time and from time to
time to contact any of their landlords in order to confirm the
continued compliance of Holdings, Borrower or their Subsidiaries
with the terms and conditions of the relevant leases. Disclosure
Schedule (3.6(c)) further describes any Real Estate with respect
to which any Credit Party is a lessor, sublessor or assignor as
of the Closing Date. Each Credit Party also has good and
marketable title to, or valid leasehold interests in, all of its
personal properties and assets. None of the properties and
assets of any Credit Party are subject to any Liens other than
Permitted Encumbrances, and there are no facts, circumstances or
conditions known to any Credit Party that may result in any
Liens (including Liens arising under Environmental Laws) other
than Permitted Encumbrances and mechanic liens in the approximate
amount of $200,000 filed against the Borrower's property located
in the National Press Building in Washington D.C. Agents
acknowledge that there is located in Borrower's Stores and
warehouses (x) certain Inventory and other assets owned by
various third-party licensees operating leased departments in
Borrower's Stores pursuant to the license agreements described on
Disclosure Schedule (3.6(d)) and (y) certain Equipment which has
been leased to Borrower by third parties. Except as described in
Disclosure Schedule (3.6(b)), Borrower has not granted, or been
granted, any purchase options, rights of first refusal or other
similar contractual rights pertaining to any Real Estate. No
portion of any Credit Party's Real Estate has suffered any
material damage by fire or other casualty loss which has not
heretofore been repaired and restored in all material respects to
its original condition or otherwise remedied. As of the Closing
Date, all material permits required to have been issued or
appropriate to enable the Real Estate to be lawfully occupied and
used for all of the purposes for which they are currently
occupied and used have been lawfully issued and are in full force
and effect.
3.7. Labor Matters. As of the Closing Date (a) no
strikes or other material labor disputes against any Credit Party
are pending or, to any Credit Party's knowledge, threatened; (b)
hours worked by and payment made to employees of each Credit
Party comply with the Fair Labor Standards Act and each other
federal, state, local or foreign law applicable to such matter;
(c) all payments due from any Credit Party for employee health
and welfare insurance have been paid or accrued as a liability on
the books of such Credit Party; (d) except as set forth in
Disclosure Schedule (3.7), no Credit Party is a party to or bound
by any collective bargaining agreement, management agreement,
consulting agreement or any employment agreement (and true and
complete copies of any agreements described on Disclosure
Schedule (3.7) have been delivered to Agent); (e) except as
described in Disclosure Schedule 3.7, there is no organizing
activity involving any Credit Party pending or, to any Credit
Party's knowledge, threatened by any labor union or group of
employees; (f) there are no representation proceedings pending
or, to any Credit Party's knowledge, threatened with the National
Labor Relations Board, and no labor organization or group of
employees of any Credit Party has made a pending demand for
recognition; and (g) except as set forth in Disclosure Schedule
(3.7), there are no complaints or charges against any Credit
Party pending or, to the knowledge of any Credit Party,
threatened to be filed with any Governmental Authority or
arbitrator based on, arising out of, in connection with, or
otherwise relating to the employment or termination of employment
by any Credit Party of any individual.
3.8. Ventures, Subsidiaries and Affiliates; Outstanding
Stock and Indebtedness. Except as set forth in Disclosure
Schedule (3.8), no Credit Party has any Subsidiaries, is engaged
in any joint venture or partnership with any other Person, or is
an Affiliate of any other Person. The stockholders having
beneficial ownership (within the meaning of Rule 13d-3
promulgated by the Securities Exchange Commission under the
Securities Exchange Act of 1934, as amended) of 5% or more of the
issued and outstanding Stock of each Credit Party as of May 5,
1999, together with the amount of such ownership as of such date,
are set forth in Disclosure Schedule (3.8). No Credit Party has
been notified since May 5, 1999 of any change to the information
set forth in Disclosure Schedule (3.8). Except as described on
Disclosure Schedule (3.8), there are no outstanding rights to
purchase, options, warrants or similar rights or agreements
pursuant to which any Credit Party may be required to issue,
sell, repurchase or redeem any of its Stock or other equity
securities or any Stock or other equity securities of its
Subsidiaries. All outstanding Indebtedness of each Credit Party
as of the Closing Date is described in Section 6.3 (including
Disclosure Schedule (6.3)). None of the Credit Parties other
than Borrower has any material assets (except Stock of their
Subsidiaries) or any Indebtedness or Guaranteed Indebtedness
(except the Obligations and in the case of Holdings, consisting
of numerous guarantees by Holdings of the obligations of Borrower
under real estate and personal property leases and other
contracts.
3.9. Government Regulation. No Credit Party is an
"investment company" or an "affiliated person" of, or "promoter"
or "principal underwriter" for, an "investment company," as such
terms are defined in the Investment Company Act of 1940 as
amended. No Credit Party is subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power
Act, or any other federal or state statute that restricts or
limits its ability to incur Indebtedness or to perform its
obligations hereunder. The making of the Loans by Lenders to
Borrower, the incurrence of the Letter of Credit Obligations on
behalf of Borrower, the application of the proceeds thereof and
repayment thereof and the consummation of the Related
Transactions will not violate any provision of any such statute
or any rule, regulation or order issued by the Securities and
Exchange Commission.
3.10. Margin Regulations. No Credit Party is
engaged, nor will it engage, principally or as one of its
important activities, in the business of extending credit for the
purpose of "purchasing" or "carrying" any "margin security" as
such terms are defined in Regulation U or G of the Federal
Reserve Board as now and from time to time hereafter in effect
(such securities being referred to herein as "Margin Stock"). No
Credit Party owns any Margin Stock, and none of the proceeds of
the Loans or other extensions of credit under this Agreement will
be used, directly or indirectly, for the purpose of purchasing or
carrying any Margin Stock, for the purpose of reducing or
retiring any Indebtedness which was originally incurred to
purchase or carry any Margin Stock or for any other purpose which
might cause any of the Loans or other extensions of credit under
this Agreement to be considered a "purpose credit" within the
meaning of Regulation G, T, U or X of the Federal Reserve Board.
No Credit Party will take or permit to be taken any action which
might cause any Loan Document to violate any regulation of the
Federal Reserve Board.
3.11. Taxes. All tax returns, reports and
statements, including information returns, required by any
Governmental Authority to be filed by any Credit Party have been
filed with the appropriate Governmental Authority and all Charges
have been paid prior to the date on which any fine, penalty,
interest or late charge may be added thereto for nonpayment
thereof (or any such fine, penalty, interest, late charge or loss
has been paid), excluding Charges or other amounts being
contested in accordance with Section 5.2(b). Proper and accurate
amounts have been withheld by each Credit Party from its
respective employees for all periods in full and complete
compliance with all applicable federal, state, local and foreign
law and such withholdings have been timely paid to the respective
Governmental Authorities. Disclosure Schedule (3.11) sets forth
as of the Closing Date those taxable years for which any Credit
Party's tax returns are currently being audited by the IRS or any
other applicable Governmental Authority and any assessments or
threatened assessments in connection with such audit, or
otherwise currently outstanding. Except as described on
Disclosure Schedule (3.11), no Credit Party has executed or filed
with the IRS or any other Governmental Authority any agreement or
other document extending, or having the effect of extending, the
period for assessment or collection of any Charges. None of the
Credit Parties and their respective predecessors are liable for
any Charges: (a) under any agreement (including any tax sharing
agreements) or (b) to each Credit Party's knowledge, as a
transferee. As of the Closing Date, no Credit Party has agreed
or been requested to make any adjustment under IRC Section
481(a), by reason of a change in accounting method or otherwise,
which would have a Material Adverse Effect.
3.12. ERISA.
(a Disclosure Schedule (3.12) lists and separately
identifies all Title IV Plans, Multiemployer Plans, ESOPs and
Retiree Welfare Plans. Copies of all such listed Plans, together
with a copy of the latest form 5500 for each such Plan, have been
delivered to Agent. Except with respect to Multiemployee Plans,
each Qualified Plan has been determined by the IRS to qualify
under Section 401 of the IRC, and the trusts created thereunder
have been determined to be exempt from tax under the provisions
of Section 501 of the IRC, and nothing has occurred which would
cause the loss of such qualification or tax-exempt status. Each
Plan is in compliance with the applicable provisions of ERISA and
the IRC, including the filing of reports required under the IRC
or ERISA. No Credit Party or ERISA Affiliate has failed to make
any contribution or pay any amount due as required by either
Section 412 of the IRC or Section 302 of ERISA or the terms of
any such Plan. No Credit Party or ERISA Affiliate has engaged in
a prohibited transaction, as defined in Section 4975 of the IRC,
in connection with any Plan, which would subject any Credit Party
to a material tax on prohibited transactions imposed by Section
4975 of the IRC.
(b Except as set forth in Disclosure Schedule (3.12):
(i) no Title IV Plan has any Unfunded Pension Liability; (ii) no
ERISA Event or event described in Section 4062(e) of ERISA with
respect to any Title IV Plan has occurred or is reasonably
expected to occur; (iii) there are no pending, or to the
knowledge of any Credit Party, threatened claims (other than
claims for benefits in the normal course), sanctions, actions or
lawsuits, asserted or instituted against any Plan or any Person
as fiduciary or sponsor of any Plan; (iv) no Credit Party or
ERISA Affiliate has incurred or reasonably expects to incur any
liability as a result of a complete or partial withdrawal from a
Multiemployer Plan; (v) within the last five years no Title IV
Plan with Unfunded Pension Liabilities has been transferred
outside of the "controlled group" (within the meaning of Section
4001(a)(14) of ERISA) of any Credit Party or ERISA Affiliate; and
(vi) no liability under any Title IV Plan has been satisfied with
the purchase of a contract from an insurance company that is not
rated AAA by the Standard & Poor's Corporation or the equivalent
by another nationally recognized rating agency.
3.13. No Litigation. No action, claim, lawsuit,
demand, investigation or proceeding is now pending or, to the
knowledge of any Credit Party, threatened against any Credit
Party, before any Governmental Authority or before any arbitrator
or panel of arbitrators (collectively, "Litigation"), (a) which
challenges any Credit Party's right or power to enter into or
perform any of its obligations under the Loan Documents to which
it is a party, or the validity or enforceability of any Loan
Document or any action taken thereunder, or (b) which has a
reasonable risk of being determined adversely to any Credit Party
and which, if so determined, could have a Material Adverse
Effect. Except as set forth on Disclosure Schedule (3.13), as of
the Closing Date there is no Litigation pending or threatened
which seeks damages in excess of $250,000 or injunctive relief or
alleges criminal misconduct of any Credit Party.
3.14. Brokers. No broker or finder acting on
behalf of any Credit Party brought about the obtaining, making or
closing of the Loans or the Related Transactions, and no Credit
Party has any obligation to any Person in respect of any finder's
or brokerage fees in connection therewith.
3.15. Intellectual Property. As of the Closing
Date, each Credit Party owns or has rights to use all
Intellectual Property necessary to continue to conduct its
business as now or heretofore conducted by it or proposed to be
conducted by it, and each Patent, Trademark, Copyright and
License is listed, together with application or registration
numbers, as applicable, in Disclosure Schedule (3.15) hereto.
Each Credit Party conducts its business and affairs without
infringement of or interference with any Intellectual Property of
any other Person.
3.16. Full Disclosure. No information contained in
this Agreement, any of the other Loan Documents, any Projections,
Financial Statements or Collateral Reports or other reports from
time to time delivered hereunder or any written statement
furnished by or on behalf of any Credit Party to Agents or any
Lender pursuant to the terms of this Agreement contains or will
contain any untrue statement of a material fact or omits or will
omit to state a material fact necessary to make the statements
contained herein or therein not misleading in light of the
circumstances under which they were made. The Liens granted to
Agent, on behalf of itself and Lenders, pursuant to the
Collateral Documents will at all times (other than at times
Inventory is in transit from one Permitted Inventory Location to
another Permitted Inventory Location or in transit outside the
jurisdiction of the United States) be fully perfected first
priority Liens in and to the Collateral described therein,
subject, as to priority, only to Permitted Encumbrances with
respect to the Collateral other than Accounts.
3.17. Environmental Matters.
(a To the best of each Credit Party's knowledge,
except as set forth in Disclosure Schedule (3.17), as of the
Closing Date: (i) the Real Estate is free of contamination from
any Hazardous Material except for such contamination that would
not adversely impact the value or marketability of such Real
Estate and which would not result in Environmental Liabilities
which could reasonably be expected to exceed $250,000; (ii) no
Credit Party has caused or suffered to occur any Release of
Hazardous Materials on, at, in, under, above, to, from or about
any of its Real Estate; (iii) the Credit Parties are and have
been in compliance with all Environmental Laws, except for such
noncompliance which would not result in Environmental Liabilities
which could reasonably be expected to exceed $250,000; (iv) the
Credit Parties have obtained, and are in compliance with, all
Environmental Permits required by Environmental Laws for the
operations of their respective businesses as presently conducted
or as proposed to be conducted, except where the failure to so
obtain or comply with such Environmental Permits would not result
in Environmental Liabilities which could reasonably be expected
to exceed $250,000, and all such Environmental Permits are valid,
uncontested and in good standing; (v) no Credit Party is involved
in operations or knows of any facts, circumstances or conditions,
including any Releases of Hazardous Materials, that are likely to
result in any Environmental Liabilities of such Credit Party
which could reasonably be expected to exceed $250,000, and no
Credit Party has permitted any current or former tenant or
occupant of the Real Estate to engage in any such operations;
(vi) there is no Litigation arising under or related to any
Environmental Laws, Environmental Permits or Hazardous Material
which seeks damages, penalties, fines, costs or expenses in
excess of $100,000 or injunctive relief, or which alleges
criminal misconduct by any Credit Party; (vii) no notice has been
received by any Credit Party identifying it as a "potentially
responsible party" or requesting information under CERCLA or
analogous state statutes, and to the knowledge of the Credit
Parties, there are no facts, circumstances or conditions that may
result in any Credit Party being identified as a "potentially
responsible party" under CERCLA or analogous state statutes; and
(viii) the Credit Parties have provided to Agent copies of all
existing environmental reports, reviews and audits and all
written information pertaining to actual or potential
Environmental Liabilities, in each case relating to any Credit
Party.
(b Each Credit Party hereby acknowledges and agrees
that Agent (i) is not now, and has not ever been, in control of
any of the Real Estate or any Credit Party's affairs, and (ii)
does not have the capacity through the provisions of the Loan
Documents or otherwise to influence any Credit Party's conduct
with respect to the ownership, operation or management of any of
its Real Estate or compliance with Environmental Laws or
Environmental Permits.
3.18. Insurance. Disclosure Schedule (3.18) lists
all insurance policies of any nature maintained, as of the
Closing Date, for current occurrences by each Credit Party, as
well as a summary of the terms of each such policy.
3.19. Deposit and Disbursement Accounts.
Disclosure Schedule (3.19) lists all banks and other financial
institutions at which any Credit Party maintains deposits and/or
other accounts as of the Closing Date, including any Disbursement
Accounts, and such Schedule correctly identifies the name,
address and telephone number of each depository, the name in
which the account is held, a description of the purpose of the
account, and the complete account number.
3.20. Government Contracts. Except as set forth in
Disclosure Schedule (3.20), as of the Closing Date, no Credit
Party is a party to any contract or agreement with any
Governmental Authority and no Credit Party's Accounts are subject
to the Federal Assignment of Claims Act, as amended (31 U.S.C.
Section 3727) or any similar state or local law.
3.21. Intentionally omitted.
3.22. Agreements and Other Documents. As of the
Closing Date, each Credit Party has provided to Agent or its
counsel, on behalf of Lenders, accurate and complete copies (or
summaries) of all of the following agreements or documents to
which it is subject and each of which are listed on Disclosure
Schedule (3.22): supply agreements and purchase agreements not
terminable by such Credit Party within sixty (60) days following
written notice issued by such Credit Party and involving
transactions in excess of $1,000,000 per annum (other than
inventory purchase orders entered into by Borrower in the
ordinary course of its business on an order by order basis); the
lease covering the POS System; any inventory consolidator lease;
any department license agreement or any lease of displays or cash
registers having a remaining term of one year or longer and
requiring aggregate rental and other payments in excess of
$500,000 per annum; licenses and permits held by the Credit
Parties, the absence of which could be reasonably likely to have
a Material Adverse Effect; instruments or documents evidencing
Indebtedness in excess of $500,000 of such Credit Party and any
security interest granted by such Credit Party with respect
thereto; and instruments and agreements evidencing the issuance
of any equity securities, warrants, rights or options to purchase
equity securities of such Credit Party.
3.23. Solvency. Both before and after giving
effect to (a) the Loans and Letter of Credit Obligations to be
made or extended on the Closing Date or such other date as Loans
and Letter of Credit Obligations requested hereunder are made or
extended, (b) the disbursement of the proceeds of such Loans
pursuant to the instructions of Borrower, (c) the Refinancing and
the consummation of the other Related Transactions and (d) the
payment and accrual of all transaction costs in connection with
the foregoing, each Credit Party is Solvent.
3.24. Year 2000 Representations.
Each Credit Party has completed a Year 2000
Assessment and a Year 2000 Corrective Plan, copies of which have
been delivered to Agent, and each Credit Party shall complete all
Year 2000 Corrective Actions by October 31, 1999.
3.25. Status of Holdings. Prior to the Closing
Date, Holdings will not have engaged in any business or incurred
any Indebtedness or any other liabilities (except in connection
with its corporate formation, the Related Transactions Documents,
this Agreement and except as set forth in Section 3.8 and
Disclosure Schedule (6.3)).
3.26. Credit Card Providers. Disclosure Schedule
(3.26) lists all Credit Card Providers engaged by Borrower to
process its credit card receipts.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1. Reports and Notices.
(a Each Credit Party executing this Agreement hereby
agrees that from and after the Closing Date and until the
Termination Date, it shall deliver to Agents, as required, the
Financial Statements, notices, Projections and other information
at the times, to the Persons and in the manner set forth in Annex
E.
(b Each Credit Party executing this Agreement hereby
agrees that from and after the Closing Date and until the
Termination Date, it shall deliver to Agents, as required, the
various Collateral Reports (including Borrowing Base Certificates
in the form of Exhibit 4.1(b)) at the times, to the Persons and
in the manner set forth in Annex F.
4.2. Communication with Accountants. Each Credit Party
executing this Agreement authorizes Agents and, so long as a
Default or Event of Default shall have occurred and be
continuing, each Lender, to communicate directly with its
independent certified public accountants including Arthur
Andersen LLP, and authorizes and shall instruct those accountants
and advisors to disclose and make available to Agents any and all
Financial Statements and other supporting financial documents,
schedules and information relating to any Credit Party (including
copies of any issued management letters) with respect to the
business, financial condition and other affairs of any Credit
Party.
5. AFFIRMATIVE COVENANTS
Each Credit Party executing this Agreement jointly and
severally agrees as to all Credit Parties that from and after the
date hereof and until the Termination Date:
5.1. Maintenance of Existence and Conduct of Business.
Each Credit Party shall: do or cause to be done all things
necessary to preserve and keep in full force and effect its
corporate existence and its rights and franchises; continue to
conduct its business substantially as now conducted or as
otherwise permitted hereunder; at all times maintain, preserve
and protect all of its assets and properties used or to the
extent necessary to the conduct of its business, and keep the
same in good repair, working order and condition in all material
respects (taking into consideration ordinary wear and tear) and
from time to time make, or cause to be made, all necessary or
appropriate repairs, replacements and improvements thereto
consistent with industry practices; and transact business only
in such corporate and trade names as are set forth in Disclosure
Schedule (5.1). To the extent permitted under Section 6.1
hereof, nothing contained herein shall prohibit Borrower or any
Subsidiary of Borrower from engaging in retail internet sales.
5.2. Payment of Obligations.
(a With the exception of mechanic's liens filed
against the National Press Building located in Washington, D.C.
as referenced in Section 3.6 and subject to Section 5.2(b), each
Credit Party shall pay and discharge or cause to be paid and
discharged promptly all Charges payable by it, including (A)
Charges imposed upon it, its income and profits, or any of its
property (real, personal or mixed) and all Charges with respect
to tax, social security and unemployment withholding with respect
to its employees, and (B) lawful claims for which a mechanic's
lien may be filed for labor, materials, supplies and services or
otherwise, before any thereof shall become past due.
(b Each Credit Party may in good faith contest, by
appropriate proceedings, the validity or amount of any Charges or
claims described in Section 5.2(a); provided, that (i) adequate
reserves with respect to such contest are maintained on the books
of such Credit Party, in accordance with GAAP, (ii) no Lien shall
be imposed to secure payment of such Charges that is superior to
any of the Liens securing payment of the Obligations and such
contest is maintained and prosecuted continuously and with
diligence and operates to suspend collection or enforcement of
such Charges, (iii) none of the Collateral becomes subject to
forfeiture or loss as a result of such contest, (iv) such Credit
Party shall promptly pay or discharge such contested Charges or
claims and all additional charges, interest, penalties and
expenses, if any, and shall deliver to Agent evidence acceptable
to Agent of such compliance, payment or discharge, if such
contest is terminated or discontinued adversely to such Credit
Party or the conditions set forth in this Section 5.2(b) are no
longer met, and (v) Agent has not advised Borrower in writing
that Agent reasonably believes that nonpayment or nondischarge
thereof could have or result in a Material Adverse Effect.
5.3. Books and Records. Each Credit Party shall keep
adequate books and records with respect to its business
activities in which proper entries, reflecting all financial
transactions, are made in accordance with GAAP and on a basis
consistent with the Financial Statements attached as Disclosure
Schedule (3.4(A)).
5.4. Insurance; Damage to or Destruction of Collateral.
(a The Credit Parties shall, at their sole cost and
expense, maintain the policies of insurance described on
Disclosure Schedule (3.18) as in effect on the date hereof or
otherwise in form and amounts and with insurers reasonably
acceptable to Agent. If any Credit Party at any time or times
hereafter shall fail to obtain or maintain any of the policies of
insurance required above or to pay all premiums relating thereto,
Agent may at any time or times thereafter obtain and maintain
such policies of insurance and pay such premiums and take any
other action with respect thereto which Agent reasonably deems
advisable. Agent shall have no obligation to obtain insurance
for any Credit Party or pay any premiums therefor. By doing so,
Agent shall not be deemed to have waived any Default or Event of
Default arising from any Credit Party's failure to maintain such
insurance or pay any premiums therefor. All sums so disbursed,
including reasonable attorneys' fees, court costs and other
reasonable charges related thereto, shall be payable on demand by
Borrower to Agent and shall be additional Obligations hereunder
secured by the Collateral.
(b Agent reserves the right at any time upon any
change in any Credit Party's risk profile (including any change
in the product mix maintained by any Credit Party or any laws
affecting the potential liability of such Credit Party) to
require additional forms and limits of insurance to, in Agent's
reasonable opinion, adequately protect both Agent's and Lender's
interests in all or any portion of the Collateral and to ensure
that each Credit Party is protected by insurance in amounts and
with coverage customary for its industry. If requested by Agent,
each Credit Party shall deliver to Agent from time to time a
report of a reputable insurance broker, reasonably satisfactory
to Agent, with respect to its insurance policies. Agent agrees
that Borrower's present insurance broker (the McCarthy Companies)
is satisfactory to Agent.
(c Each Credit Party shall deliver to Agent, in form
and substance satisfactory to Agent, endorsements to (i) all "All
Risk" and business interruption insurance naming Agent, on behalf
of itself and Lenders, as loss payee, and (ii) all general
liability and other liability policies naming Agent, on behalf of
itself and Lenders, as additional insured. Each Credit Party
irrevocably makes, constitutes and appoints Agent (and all
officers, employees or agents designated by Agent), so long as
any Default or Event of Default shall have occurred and be
continuing or the anticipated insurance proceeds exceed $500,000,
as each Credit Party's true and lawful agent and attorney-in-fact
for the purpose of making, settling and adjusting claims under
such "All Risk" policies of insurance, endorsing the name of each
Credit Party on any check or other item of payment for the
proceeds of such "All Risk" policies of insurance and for making
all determinations and decisions with respect to such "All Risk"
policies of insurance. Agent shall have no duty to exercise any
rights or powers granted to it pursuant to the foregoing power-of-
attorney. Borrower shall promptly notify Agent of any loss,
damage, or destruction to the Collateral in the amount of
$500,000 or more, whether or not covered by insurance. After
deducting from such proceeds the expenses, if any, incurred by
Agent in the collection or handling thereof, Agent may, at its
option, apply such proceeds to the reduction of the Obligations
in accordance with Section 1.3(d), provided that in the case of
insurance proceeds pertaining to any Credit Party, such insurance
proceeds shall be applied to the Loans owing by Borrower, or
permit or require each Credit Party to use such money, or any
part thereof, to replace, repair, restore or rebuild the
Collateral in a diligent and expeditious manner with materials
and workmanship of substantially the same quality as existed
before the loss, damage or destruction. Notwithstanding the
foregoing, if the casualty giving rise to such insurance proceeds
would not reasonably be expected to have a Material Adverse
Effect and such insurance proceeds do not exceed $500,000 in the
aggregate, Agent shall permit the applicable Credit Party to
replace, restore, repair or rebuild the property; provided that
if such Credit Party has not completed or entered into binding
agreements to complete such replacement, restoration, repair or
rebuilding within 120 days of such casualty, Agent may apply such
insurance proceeds to the Obligations in accordance with Section
1.3(d). All insurance proceeds which are to be made available to
Borrower to replace, repair, restore or rebuild the Collateral
shall be applied by Agent to reduce the outstanding principal
balance of the Tranche A Revolving Loan (which application shall
not result in a permanent reduction of the Tranche A Revolving
Loan Commitment) and upon such application, Agent shall establish
a Reserve against the Tranche A Borrowing Base in an amount equal
to the amount of such proceeds so applied. All insurance
proceeds made available to any Credit Party that is not a
Borrower to replace, repair, restore or rebuild Collateral shall
be deposited in a cash collateral account. Thereafter, such
funds shall be made available to Borrower to provide funds to
replace, repair, restore or rebuild the Collateral as follows:
(i) Borrower shall request a Tranche A Revolving Credit Advance
or release from the cash collateral account be made to Borrower
in the amount requested to be released; (ii) so long as the
conditions set forth in Section 2.2 have been met, Tranche A
Revolving Lenders shall make such Tranche A Revolving Credit
Advance or Agent shall release funds from the cash collateral
account; and (iii) in the case of insurance proceeds applied
against the Tranche A Revolving Loan, the Reserve established
with respect to such insurance proceeds shall be reduced by the
amount of such Tranche A Revolving Credit Advance. To the extent
not used to replace, repair, restore or rebuild the Collateral,
such insurance proceeds shall be applied in accordance with
Section 1.3(d); provided that in the case of insurance proceeds
pertaining to any Credit Party other than Borrower, such
insurance proceeds shall be applied to the Loans owing by
Borrower.
5.5. Compliance with Laws. Each Credit Party shall
comply with all federal, state, local and foreign laws and
regulations applicable to it, including those relating to ERISA
and labor matters and Environmental Laws and Environmental
Permits, except to the extent that the failure to comply,
individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
5.6. Supplemental Disclosure. From time to time as may
be requested by Agents (which request will not be made more
frequently than once each year absent the occurrence and
continuance of an Event of Default), the Credit Parties shall
supplement each Disclosure Schedule hereto, or any representation
herein or in any other Loan Document, with respect to any matter
hereafter arising which, if existing or occurring at the date of
this Agreement, would have been required to be set forth or
described in such Disclosure Schedule or as an exception to such
representation or which is necessary to correct any information
in such Disclosure Schedule or representation which has been
rendered inaccurate thereby (and, in the case of any supplements
to any Disclosure Schedule, such Disclosure Schedule shall be
appropriately marked to show the changes made therein); provided
that (a) no such supplement to any such Disclosure Schedule or
representation shall be or be deemed a waiver of any Default or
Event of Default resulting from the matters disclosed therein,
except as consented to by Agents and Requisite Lenders in
writing; and (b) no supplement shall be required as to
representations and warranties that relate solely to the Closing
Date.
5.7. Intellectual Property. Each Credit Party will
conduct its business and affairs without infringement of or
interference with any Intellectual Property of any other Person
in any material respect.
5.8. Environmental Matters. Each Credit Party shall
and shall cause each Person within its control to: (a) conduct
its operations and keep and maintain its Real Estate in
compliance with all Environmental Laws and Environmental Permits
other than noncompliance which could not reasonably be expected
to have a Material Adverse Effect; (b) implement any and all
investigation, remediation, removal and response actions which
are appropriate or necessary to maintain the value and
marketability of the Real Estate or to otherwise comply with
Environmental Laws and Environmental Permits pertaining to the
presence, generation, treatment, storage, use, disposal,
transportation or Release of any Hazardous Material on, at, in,
under, above, to, from or about any of its Real Estate; (c)
notify Agent promptly after such Credit Party becomes aware of
any violation of Environmental Laws or Environmental Permits or
any Release on, at, in, under, above, to, from or about any Real
Estate which is reasonably likely to result in Environmental
Liabilities in excess of $100,000 and (d) promptly forward to
Agent a copy of any order, notice, request for information or any
communication or report received by such Credit Party in
connection with any such violation or Release or any other matter
relating to any Environmental Laws or Environmental Permits that
could reasonably be expected to result in Environmental
Liabilities in excess of $100,000 in each case whether or not the
Environmental Protection Agency or any Governmental Authority has
taken or threatened any action in connection with any such
violation, Release or other matter. If Agent at any time has a
reasonable basis to believe that there may be a violation of any
Environmental Laws or Environmental Permits by any Credit Party
or any Environmental Liability arising thereunder, or a Release
of Hazardous Materials on, at, in, under, above, to, from or
about any of its Real Estate, which, in each case, could
reasonably be expected to have a Material Adverse Effect, then
each Credit Party shall, upon Agent's written request (i) in the
case of leased Real Estate, subject to the terms of Borrower's
applicable lease, cause the performance of such environmental
audits including subsurface sampling of soil and groundwater, and
preparation of such environmental reports, at Borrower's expense,
as Agent may from time to time reasonably request, which shall be
conducted by reputable environmental consulting firms reasonably
acceptable to Agent and shall be in form and substance acceptable
to Agent, and (ii) permit Agent or its representatives to have
access to all Real Estate (in the case of leased Real Estate,
subject to the terms of Borrower's applicable Lease) for the
purpose of conducting such environmental audits and testing as
Agent reasonably deems appropriate, including subsurface sampling
of soil and groundwater. Borrower shall reimburse Agent for the
reasonable costs of such audits and tests and the same will
constitute a part of the Obligations secured hereunder.
5.9. Landlords' Agreements, Mortgagee Agreements and
Bailee Letters. Each Credit Party shall obtain a landlord's
agreement, mortgagee agreement or bailee letter, as applicable,
from the lessor of each leased property located in Florida,
Virginia, Pennsylvania, New Jersey and Washington state
(collectively, the "Landlord Waiver States") or mortgagee of
owned property or with respect to any warehouse, processor or
converter facility or other location where Collateral is located,
which agreement or letter shall contain a waiver or subordination
of all Liens or claims that the landlord, mortgagee or bailee may
assert against the Inventory or Collateral at that location, and
shall otherwise be reasonably satisfactory in form and substance
to Agents. With respect to such locations or warehouse space
leased in the Landlord Waiver States or owned as of the Closing
Date and thereafter, if Agent has not received a landlord or
mortgagee agreement or bailee letter as of the Closing Date (or,
if later, as of the date such location is acquired or leased),
Borrower's Eligible Inventory at that location shall, in Agents'
discretion, be excluded from the Borrowing Base or be subject to
such Reserves as may be established by Agents in their reasonable
credit judgment. After the Closing Date, if any Inventory is
shipped to real property or warehouse space leased or acquired by
any Credit Party in the Landlord Waiver States, or to a
processor, consolidator or converter under arrangements
established after the Closing Date, Agents may exclude from the
Borrowing Base of Eligible Inventory such Inventory at that
location unless and until a satisfactory landlord or mortgagee
agreement or bailee letter, as appropriate, shall first have been
obtained with respect to such location or Agents shall have
established Reserves acceptable to Agents. Each Credit Party
shall timely and fully pay and perform (within any applicable
grace periods provided such non-performance does not provide the
applicable landlord with any right of eviction or termination)
its obligations under all leases and other agreements with
respect to each leased location or public warehouse where any
Collateral is or may be located. For purposes of this Section
5.9, a landlord waiver in substantially the form annexed hereto
as Exhibit 5.9(a) shall be deemed satisfactory to Agents,
provided that in the event Borrower is unable to obtain a
landlord waiver in such form after using good faith and
reasonable efforts, a landlord waiver in substantially the form
annexed hereto as Exhibit 5.9(b) shall be deemed satisfactory to
Agents.
5.10. Further Assurances. Each Credit Party
executing this Agreement agrees that it shall and shall cause
each other Credit Party to, at such Credit Party's expense and
upon request of Agents, duly execute and deliver, or cause to be
duly executed and delivered, to Agents such further instruments
and do and cause to be done such further acts as may be necessary
or proper in the reasonable opinion of Agents to carry out more
effectively the provisions and purposes of this Agreement or any
other Loan Document.
5.11. Year 2000 Problems.
On or before September 30, 1999, each Credit Party
shall complete Year 2000 Implementation Testing. On or before
October 31, 1999, each Credit Party shall eliminate all Year 2000
Problems, except where the failure to correct the same could not
reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate.
5.12. Credit Card Notices. After the Closing Date,
each Credit Party shall execute Credit Card Notices in favor of
Agent to any Credit Card Provider with which it establishes a
credit card processing arrangement, substantially in the form
annexed hereto as Exhibit 5.12.
5.13. Point of Sale System. Borrower shall
establish and maintain a point-of-sale cash register computer
system ("POS System") on terms and conditions reasonably
acceptable to Agents in a minimum amount of $5,000,000. Such POS
System shall be 75% completed on or before August 31, 1999, and
Borrower shall have provided Agent with satisfactory evidence of
such implementation as Agent may reasonably request from time to
time.
5.14. Leasehold Mortgages. Upon request of Agents,
Borrower shall grant leasehold mortgages on any leasehold which
may be mortgaged by Borrower without the consent of any third
party.
6. NEGATIVE COVENANTS
Each Credit Party executing this Agreement jointly and
severally agrees as to all Credit Parties that, without the prior
written consent of Agent and the Requisite Lenders (except as
otherwise provided in Section 11.2), from and after the date
hereof until the Termination Date:
6.1. Mergers, Subsidiaries, Etc.
No Credit Party shall directly or indirectly, by
operation of law or otherwise, (a) form or acquire any
Subsidiary, or (b) merge with, consolidate with, acquire all or
substantially all of the assets or capital stock of, or otherwise
combine with or acquire, any Person except (i) the merger or
consolidation of one or more of Subsidiaries of Borrower with and
into Borrower, (ii) subject to the other requirements of this
Agreement, the opening of new Filene's Basement or Aisle 3 Stores
by Borrower provided that: (A) Borrower opens no more than 6
such Stores for the remainder of Borrower's Fiscal Year ending
January 2000; 17 such Stores in Borrower's Fiscal Year ending
January 2001; and 20 such Stores in Borrower's Fiscal Year ending
January 2002, (B) the opening of such Stores is consistent with
Borrower's business plan as of the Closing Date as set forth in
the Projections attached hereto as Disclosure Schedule 3.4(B),
and (C) other than with respect to the 6 Stores to be opened
during the remainder of Fiscal Year ending January 2000, Borrower
shall have maintained Net Borrowing Availability, as determined
by Agents, on September 1, 1999 of $7,000,000, on October 1, 1999
of $10,000,000, and on November 1, 1999 of $10,000,000 or (iii)
the formation of a subsidiary for the purpose of conducting
internet retail stores provided that: (X) such Subsidiary shall
be wholly-owned by Borrower, (Y) such Subsidiary will become a
Credit Party and Agent will be granted a first priority Lien
(subject to Permitted Encumbrances) in all of the assets of such
Subsidiary and receive a pledge of the capital stock of such
Subsidiary, and (Z) Borrower shall not invest in such Subsidiary,
an amount (exclusive of Inventory which is Eligible Inventory)
which when combined with Indebtedness permitted by Section
6.3(a)(ix) and investments permitted by Section 6.2(d), exceeds
$1,250,000 in the aggregate at any time.
6.2. Investments; Loans and Advances. Except as
otherwise expressly permitted by this Section 6, no Credit Party
shall make or permit to exist any investment in, or make, accrue
or permit to exist loans or advances of money to, any Person,
through the direct or indirect lending of money, holding of
securities or otherwise, except that (a) each Credit Party may
maintain its existing investments in its Subsidiaries as of the
Closing Date; (b) so long as no Loans are outstanding, Borrower
may make investments, subject to a perfected security interest in
favor of Agent for the benefit of Lenders, in (i) marketable
direct obligations issued or unconditionally guaranteed by the
United States of America or any agency thereof maturing within
one year from the date of acquisition thereof, (ii) commercial
paper maturing no more than one year from the date of creation
thereof and currently having the highest rating obtainable from
either Standard & Poor's Ratings Group or Moody's Investors
Service, Inc., (iii) certificates of deposit, maturing no more
than one year from the date of creation thereof, issued by
commercial banks incorporated under the laws of the United States
of America, each having combined capital, surplus and undivided
profits of not less than $300,000,000 and having a senior
unsecured rating of "A" or better by a nationally recognized
rating agency (an "A Rated Bank"), (iv) time deposits, maturing
no more than 30 days from the date of creation thereof with A
Rated Banks and (v) mutual funds that invest solely in one or
more of the investments described in clauses (i) through (iv)
above, (c) investments on the date hereof and listed on Schedule
6.2 hereof, and (d) other investments of strategic importance to
the business plan of Borrower previously delivered to Agent and
Lenders, an amount (exclusive of Inventory which is deemed by
Agents to be Eligible Inventory) of which when combined with
investments permitted by Section 6.1(b)(iii)(Z) and Indebtedness
permitted by Section 6.3(a)(ix), shall not exceed $1,250,000 in
the aggregate at any outstanding time.
6.3. Indebtedness.
(a No Credit Party shall create, incur, assume or
permit to exist any Indebtedness, except (without duplication)
(i) Indebtedness secured by purchase money security interests and
Capitalized Leases permitted in clause (c) of Section 6.7, (ii)
the Loans and the other Obligations, (iii) unfunded pension fund
and other employee benefit plan obligations and liabilities to
the extent they are permitted to remain unfunded under applicable
law, (iv) existing Indebtedness described in Disclosure Schedule
(6.3) and refinancings thereof or amendments or modifications
thereof which do not have the effect of increasing the principal
amount thereof or changing the amortization thereof (other than
to extend the same) and which are otherwise on terms and
conditions no less favorable to any Credit Party, Agent or any
Lender than the terms of the Indebtedness being refinanced,
amended or modified, (v) current liabilities of Holdings,
Borrower or any Subsidiary incurred in the ordinary course of
business not incurred through (A) the borrowing of money, or (B)
the obtaining of credit except for credit on an open account
basis customarily extended and in fact extended in connection
with the normal purchase of goods and services; (vi) Indebtedness
in an aggregate outstanding amount not to exceed $1,000,000 at
any time, to any federal or state chartered bank which is a
Relationship Bank (other than any of the Lenders) in respect of
overdrafts on demand deposit accounts maintained with such bank;
(vii) Indebtedness with respect to the Supplemental Executive
Retirement Plan not to exceed $4,000,000 at any time, (viii)
Indebtedness (including any guaranties of Borrower) with respect
to the Monogram Agreement; (ix) Indebtedness of Borrower or
Holdings (including guaranties by Borrower or Holdings) with
respect to the obligations of any Person, the business of which
Person is of strategic importance in the business plan of
Borrower previously delivered to Agent and Lenders, so long as
the maximum contingent or actual liability of Borrower and
Holdings in respect of all such Indebtedness, together with
investments described in Section 6.1(b)(iii)(Z) and Section
6.2(d) hereof, does not exceed $1,250,000 in the aggregate at any
time and (x) Indebtedness consisting of intercompany loans and
advances made by Borrower to any other Credit Party that is a
Guarantor or by any such Guarantor to Borrower; provided that (A)
Borrower shall have executed and delivered to each such
Guarantor, and each such Guarantor shall have executed and
delivered to Borrower a demand note (collectively, the
"Intercompany Notes") to evidence any such intercompany
Indebtedness owing at any time by Borrower to such Guarantor or
by such Guarantor to Borrower, which Intercompany Notes shall be
in form and substance satisfactory to Agent and shall be pledged
and delivered to Agent pursuant to the applicable Pledge
Agreement or Security Agreement as additional collateral security
for the Obligations; (B) Borrower shall record all intercompany
transactions on its books and records in a manner reasonably
satisfactory to Agent; (C) the obligations of Borrower under any
such Intercompany Notes shall be subordinated to the Obligations
of Borrower hereunder in a manner reasonably satisfactory to
Agent; (D) at the time any such intercompany loan or advance is
made by Borrower and after giving effect thereto, Borrower shall
be Solvent; (E) no Default or Event of Default would occur and be
continuing after giving effect to any such proposed intercompany
loan; (F) the aggregate amount of such intercompany loans owing
by Borrower to all such Guarantors shall not exceed $500,000 at
any one time outstanding; (G) the aggregate balance of all such
intercompany loans owing to Borrower shall not exceed $500,000 at
any time; and (H) the recipient of any such intercompany loans
shall be creditworthy as reasonably determined by Agent.
(b No Credit Party shall, directly or indirectly,
voluntarily purchase, redeem, defease or prepay any principal of,
premium, if any, interest or other amount payable in respect of
any Indebtedness, other than (i) the Obligations, and (ii)
Indebtedness secured by a Permitted Encumbrance if the asset
securing such Indebtedness has been sold or otherwise disposed of
in accordance with Sections 6.8(b), (c), (d) or (e).
6.4. Employee Loans and Affiliate Transactions.
(a Except as otherwise expressly permitted in this
Section 6 with respect to Affiliates, no Credit Party shall enter
into or be a party to any transaction with any other Credit Party
or any Affiliate thereof except in the ordinary course of and
pursuant to the reasonable requirements of such Credit Party's
business and upon fair and reasonable terms that are no less
favorable to such Credit Party than would be obtained in a
comparable arm's length transaction with a Person not an
Affiliate of such Credit Party. In addition, if any such
transaction or series of related transactions involves payments
in excess of $500,000 in the aggregate, the terms of such
transactions must be disclosed in advance to Agent and Lenders.
All such transactions existing as of the date hereof are
described on Disclosure Schedule (6.4(a)).
(b No Credit Party shall enter into any lending or
borrowing transaction with any employees of any Credit Party,
except (i) loans existing as of the date hereof as described on
Disclosure Schedule (6.4(b)) and (ii) loans to their respective
employees on an arm's-length basis in the ordinary course of
business consistent with past practices for travel expenses,
relocation costs and similar purposes up to a maximum of $50,000
to any employee and up to a maximum of $250,000 in the aggregate
at any one time outstanding. Notwithstanding anything to the
contrary herein, Borrower shall be permitted to amend the
Carothers Notes provided such amendment does not increase the
principal balance of such notes (other than as a result of the
capitalization of any interest thereon).
6.5. Capital Structure and Business. No Credit Party
shall (a) make any changes in any of its business objectives,
purposes or operations which could in any way adversely affect
the repayment of the Loans or any of the other Obligations or
could reasonably be expected to have or result in a Material
Adverse Effect, (b) make any change in its capital structure as
described on Disclosure Schedule (3.8), including the issuance of
any shares of Stock, warrants or other securities convertible
into Stock or any revision of the terms of its outstanding Stock,
except that (i) Holdings may issue shares of its common Stock (A)
for cash consideration at fair market value so long as the
proceeds thereof are applied in prepayment of the Obligations as
required by Section 1.3(b)(iv), and no Change of Control occurs
after giving effect thereto, and (B) upon exercise of the options
outstanding on the Closing Date and listed on Disclosure Schedule
3.8 as long as no Change of Control occurs after giving effect
thereto and (ii) Holdings may issue shares of its capital stock,
warrants or options provided no Change of Control occurs after
giving effect thereto and such issuance is authorized by its
shareholders, Articles of Incorporation or Holdings' Board of
Directors, or (c) amend its charter or bylaws in a manner which
would adversely affect Agent or Lenders or such Credit Party's
duty or ability to repay the Obligations. No Credit Party shall
engage in any business other than the businesses currently
engaged in by it or businesses reasonably related thereto, such
business reasonably related thereto including without limitation,
retail internet sales.
6.6. Guaranteed Indebtedness. No Credit Party shall
create, incur, assume or permit to exist any Guaranteed
Indebtedness except (a) by endorsement of instruments or items of
payment for deposit to the general account of any Credit Party,
and (b) for Guaranteed Indebtedness incurred for the benefit of
any other Credit Party if the primary obligation is expressly
permitted by this Agreement.
6.7. Liens. No Credit Party shall create, incur,
assume or permit to exist any Lien on or with respect to its
Accounts or any of its other properties or assets including, but
not limited to any Real Estate, (whether now owned or hereafter
acquired) except for (a) Permitted Encumbrances; (b) Liens in
existence on the date hereof and summarized on Disclosure
Schedule (6.7a) and (c) Liens created after the date hereof by
conditional sale or other title retention agreements (including
Capital Leases) or in connection with purchase money Indebtedness
with respect to Equipment and Fixtures acquired by any Credit
Party in the ordinary course of business, involving the
incurrence of an aggregate amount of (i) purchase money
Indebtedness of not more than $3,000,000 at any one time and (ii)
Capital Lease Obligations of not more than $10,000,000 less the
amount of obligations under Capital Leases set forth on
Disclosure Schedule 6.7(b) outstanding at any one time, (provided
that such Liens attach only to the assets subject to such
purchase money debt and such Indebtedness is incurred within
twenty (20) days following such purchase and does not exceed 100%
of the purchase price of the subject assets); and (d) Liens in
favor of Monogram Credit Card Bank of Georgia (or any successor
thereto on terms acceptable to Agents) created by the Monogram
Agreement. In addition, no Credit Party shall become a party to
any agreement, note, indenture or instrument, or take any other
action, which would prohibit the creation of a Lien on any of its
properties or other assets in favor of Agent, on behalf of itself
and Lenders, as additional collateral for the Obligations, except
operating leases, Capital Leases or Licenses which prohibit Liens
upon the assets that are subject thereto.
6.8. Sale of Stock and Assets. Excepted as otherwise
expressly permitted in this Section 6, no Credit Party shall
sell, transfer, convey, assign or otherwise dispose of any of its
properties or other assets, including the capital Stock of any of
its Subsidiaries (whether in a public or a private offering or
otherwise) or any of their Accounts, other than (a) the sale of
Inventory in the ordinary course of business; (b) the sale,
transfer, conveyance or other disposition by a Credit Party of
Equipment, Fixtures or Real Estate that are obsolete or no longer
used or useful in such Credit Party's business and having a value
not exceeding $500,000 in any single transaction or $1,500,000 in
the aggregate in any Fiscal Year; (c) the sale or other
disposition of assets described on Disclosure Schedule 6.8; (d)
the licensing in the ordinary course of business of intangible
assets, including trade names, trademarks, service marks and
copyrights of Borrower, provided that such licenses do not
individually or in the aggregate materially impair the usefulness
and value of any of such intangible asset(s) used or to be used
in the business or operations of Borrower as now conducted or as
proposed to be conducted; (e) the disposition of assets
constituting Inventory in connection with the discontinuation or
partial discontinuation of a product line, provided such
Inventory is disposed of in the ordinary course of Borrower's
business operations and provided further that such disposition
shall not exceed five percent (5%) of the consolidated Inventory
of Borrower, Holdings and their Subsidiaries; (f) the closing of
those Stores and the disposition of other assets identified in
the Projections attached hereto as Disclosure Schedule (3.4(B)),
provided that in advance of each such closing, Borrower and
Agents agree to a liquidation strategy, reasonably acceptable to
Agents; (g) the closing of additional Stores upon twenty (20)
Business Days' notice to Agents, provided that (i) in advance of
each closing Borrower has delivered to Agents a liquidation plan
(including acceptable fee arrangements) reasonably acceptable to
Agents, and (ii) the results of each such liquidation sale are
delivered to Agents contemporaneously with the delivery of such
information to Borrower, but in any event, no less than weekly;
(h) in connection with Store closings permitted under this
Section 6.8, the sale, transfer, conveyance or other disposition
of leases (and with respect to leases subject to a leasehold
mortgage in favor of Agent only in the event such lease is sold
at a price at least equal to seventy percent (70%) of the NLV of
such lease); and (i) settlements by Borrower of amounts due or to
become due under any lease covering a Store being closed pursuant
to this Section 6.8, provided that if any such settlement
proposes to pay a landlord an amount greater than one year's rent
under such lease, Borrower shall obtain Agents' consent, which
consent shall not be unreasonably withheld. With respect to any
disposition of assets and/or leases permitted above other than
any disposition pursuant to clause (a), (A) no such disposition
shall be permitted if any Default or Event of Default shall have
occurred and be continuing, or would result after giving effect
to such disposition; (B) all proceeds of any such dispositions
shall be applied by Agent in accordance with Section 1.3(c) and
Section 1.11 hereof. With respect to any disposition of assets
or other properties permitted pursuant to clauses (b) (c) (d) (e)
(f) and (g) above, Agent agrees on reasonable prior written
notice to release its Lien on such assets or other properties in
order to permit the applicable Credit Party to effect such
disposition and shall execute and deliver to Borrower, at
Borrower's expense, appropriate UCC-3 termination statements and
other releases as reasonably requested by Borrower.
6.9. ERISA. No Credit Party shall, or shall cause or
permit any ERISA Affiliate to, cause or permit to occur an event
which could result in the imposition of a Lien under Section 412
of the IRC or Section 302 or 4068 of ERISA or cause or permit to
occur an ERISA Event to the extent such ERISA Event could
reasonably be expected to have a Material Adverse Effect.
6.10. Financial Covenants. Borrower shall not
breach or fail to comply with any of the Financial Covenants (the
"Financial Covenants") set forth in Annex G.
6.11. Hazardous Materials. No Credit Party shall
cause a Release of any Hazardous Material on, at, in, under,
above, to, from or about any of the Real Estate where such
Release would (a) violate in any respect, or form the basis for
any Environmental Liabilities under, any Environmental Laws or
Environmental Permits or (b) otherwise adversely impact the value
or marketability of any of the Real Estate or any of the
Collateral, other than such violations or Environmental
Liabilities which could not reasonably be expected to have a
Material Adverse Effect.
6.12. Sale-Leasebacks. No Credit Party shall
engage in any sale-leaseback, synthetic lease or similar
transaction involving any of its assets.
6.13. Cancellation of Indebtedness. No Credit
Party shall cancel any claim or debt owing to it, except for
reasonable consideration negotiated on an arm's-length basis and
in the ordinary course of its business consistent with past
practices. Notwithstanding the foregoing, Borrower may cancel
all or any portion of the Carothers Notes for so long as W. Jay
Carothers continues to be a senior executive of Borrower.
6.14. Restricted Payments. No Credit Party shall
make any Restricted Payment, except (a) intercompany loans and
advances between Borrower and Guarantors to the extent permitted
by Section 6.3 above, (b) dividends and distributions by
Subsidiaries of Borrower paid to Borrower, (c) employee loans
permitted under Section 6.4(b) above.
6.15. Change of Corporate Name or Location; Change
of Fiscal Year. No Credit Party shall (a) change its corporate
name, or (b) change its chief executive office, principal place
of business, corporate offices or warehouses or locations at
which Collateral is held or stored, or the location of its
records concerning the Collateral, in any case without at least
thirty (30) days prior written notice to Agent and after Agent's
written acknowledgment that any reasonable action requested by
Agent in connection therewith, including to continue the
perfection of any Liens in favor of Agent, on behalf of Lenders,
in any Collateral, has been completed or taken, and provided that
any such new location shall be in the continental United States.
Without limiting the foregoing, no Credit Party shall change its
name, identity or corporate structure in any manner which might
make any financing or continuation statement filed in connection
herewith seriously misleading within the meaning of Section 9-
402(7) of the Code or any other then applicable provision of the
Code except upon prior written notice to Agent and Lenders and
after Agent's written acknowledgment that any reasonable action
requested by Agent in connection therewith, including to continue
the perfection of any Liens in favor of Agent, on behalf of
Lenders, in any Collateral, has been completed or taken. No
Credit Party shall change its Fiscal Year. Notwithstanding the
foregoing, each Credit Party shall be permitted to (A) transport
Inventory from one Permitted Inventory Location to another
Permitted Inventory Location, provided such Inventory remains in
transit for not more than three (3) Business Days and (B)
consolidate its Inventory located in Northborough, Massachusetts
to its warehouse located in Auburn, Massachusetts upon twenty
(20) Business Days' notice to Agents.
6.16. No Impairment of Intercompany Transfers. No
Credit Party shall directly or indirectly enter into or become
bound by any agreement, instrument, indenture or other obligation
(other than this Agreement and the other Loan Documents) which
could directly or indirectly restrict, prohibit or require the
consent of any Person with respect to the payment of dividends or
distributions or the making or repayment of intercompany loans by
a Subsidiary of Borrower to Borrower.
6.17. No Speculative Transactions. No Credit Party
shall engage in any transaction involving commodity options,
futures contracts or similar transactions, except solely to hedge
against fluctuations in the prices of commodities owned or
purchased by it and the values of foreign currencies receivable
or payable by it and interest swaps, caps or collars.
6.18. Credit Parties Other than Borrower. None of
the Credit Parties other than Borrower (or a Subsidiary of
Borrower formed as permitted under Section 6.1 hereof) shall
engage in any trade or business, or own any assets (other than
Stock of their Subsidiaries) or incur any Indebtedness or
Guaranteed Indebtedness (other than the Obligations and in the
case of Holdings, guarantees of the present and future
liabilities, obligations and indebtedness of Borrower or any
other Subsidiary of Borrower permitted to be formed under this
Agreement.
6.19. Amendments to Material Agreements. Borrower
shall not amend any of the Material Agreements described on
Disclosure Schedule 6.19 unless such amendment (a) will not cause
a Material Adverse Effect on the Collateral; and (b) will not in
any other manner have a Material Adverse Effect.
6.20. Credit Card Notices. Borrower shall not
deliver to the Credit Card Providers any instructions which
modify or amend the Credit Card Notices or in any manner attempt
to change the delivery of Borrower's credit card receipts to
Agent.
7. TERM
7.1. Termination. The financing arrangements
contemplated hereby shall be in effect until the Commitment
Termination Date, and the Loans and all other Obligations shall
be automatically due and payable in full on such date.
7.2. Survival of Obligations Upon Termination of
Financing Arrangements. Except as otherwise expressly provided
for in the Loan Documents, no termination or cancellation
(regardless of cause or procedure) of any financing arrangement
under this Agreement shall in any way affect or impair the
obligations, duties and liabilities of the Credit Parties or the
rights of Agent and Lenders relating to any unpaid portion of the
Loans or any other Obligations, due or not due, liquidated,
contingent or unliquidated or any transaction or event occurring
prior to such termination, or any transaction or event, the
performance of which is required after the Commitment Termination
Date. Except as otherwise expressly provided herein or in any
other Loan Document, all undertakings, agreements, covenants,
warranties and representations of or binding upon the Credit
Parties, and all rights of Agent and each Lender, all as
contained in the Loan Documents, shall not terminate or expire,
but rather shall survive any such termination or cancellation and
shall continue in full force and effect until the Termination
Date; provided however, that in all events the provisions of
Section 11, the payment obligations under Sections 1.15 and 1.16,
and the indemnities contained in the Loan Documents shall survive
the Termination Date.
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES
8.1. Events of Default. The occurrence of any one or
more of the following events (regardless of the reason therefor)
shall constitute an "Event of Default" hereunder:
(a) Borrower (i) fails to make any payment of
principal of, or interest on, or Fees owing in respect of, the
Loans or any of the other Obligations when due and payable,
provided that such failure is not the result of the Concentration
Account Bank's failure to forward amounts received in the
Concentration Account to the Collection Account and such failure
was in no manner caused by Borrower, or (ii) fails to pay or
reimburse Agents or Lenders for any expense reimbursable
hereunder or under any other Loan Document within ten (10) days
following Agents' written demand for such reimbursement or
payment of expenses.
(b) Any Credit Party shall fail or neglect to perform,
keep or observe any of the provisions of Sections 1.4, 1.8, 5.4
or 6, or any of the provisions set forth in Annexes C or G,
respectively, provided that with respect to any failure to comply
with the provisions set forth in Annex C, such failure is not the
result of non-performance by any of the Relationship Banks or the
Concentration Account Bank, and such non-performance was in no
manner caused by Borrower.
(c) Borrower shall fail or neglect to perform, keep or
observe any of the provisions of Section 4 or any provisions set
forth in Annexes E or F, respectively, and the same shall remain
unremedied for three (3) Business Days or more following Agent's
written notice of such failure or neglect.
(d) Any Credit Party shall fail or neglect to perform,
keep or observe any other provision of this Agreement or of any
of the other Loan Documents (other than any provision embodied in
or covered by any other clause of this Section 8.1) and the same
shall remain unremedied for forty-five (45) days or more upon the
earlier of (i) written notice from Agent, or (ii) Borrower's
actual knowledge of such Default unless Borrower's lack of actual
knowledge results from negligence, then in such event, Borrower
shall be deemed to have had actual knowledge from the date
Borrower should have been, through the exercise of reasonable
business practices, aware of the Default.
(e) A default or breach shall occur under any other
agreement, document or instrument to which any Credit Party is a
party which is not cured within any applicable grace period, and
such default or breach (i) involves the failure to make any
payment when due in respect of any Indebtedness (other than the
Obligations) of any Credit Party in excess of $500,000 in the
aggregate excluding any matters which any Credit Party is
disputing in good faith, or (ii) causes, or permits any holder of
such Indebtedness or a trustee to cause, Indebtedness or a
portion thereof in excess of $500,000 in the aggregate to become
due prior to its stated maturity or prior to its regularly
scheduled dates of payment, regardless of whether such default is
waived, or such right is exercised, by such holder or trustee.
(f) Any information contained in any Borrowing Base
Certificate is untrue or incorrect in any respect, or any
representation or warranty herein or in any Loan Document or in
any written statement, report, financial statement or certificate
(other than a Borrowing Base Certificate) made or delivered to
Agent, Oversight Agent or any Lender by any Credit Party is
untrue or incorrect in any material respect as of the date when
made or deemed made.
(g) Assets of any Credit Party with a fair market
value of $250,000 or more shall be attached, seized, levied upon
or subjected to a writ or distress warrant, or come within the
possession of any receiver, trustee, custodian or assignee for
the benefit of creditors of any Credit Party and such condition
continues for sixty (60) days or more without being discharged or
bonded over.
(h) A case or proceeding shall have been commenced
against any Credit Party seeking a decree or order in respect of
any Credit Party (i) under Title 11 of the United States Code, as
now constituted or hereafter amended or any other applicable
federal, state or foreign bankruptcy or other similar law, (ii)
appointing a custodian, receiver, liquidator, assignee, trustee
or sequestrator (or similar official) for any Credit Party or of
any substantial part of any such Person's assets, or (iii)
ordering the winding-up or liquidation of the affairs of any
Credit Party, and such case or proceeding shall remain
undismissed or unstayed for ninety (90) days or more or such
court shall enter a decree or order granting the relief sought in
such case or proceeding.
(i) Any Credit Party (i) shall file a petition seeking
relief under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other applicable
federal, state or foreign bankruptcy or other similar law, (ii)
shall fail to contest in a timely and appropriate manner or shall
consent to the institution of proceedings thereunder or to the
filing of any such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or similar official) of any Credit Party
or of any substantial part of any such Person's assets, (iii)
shall make an assignment for the benefit of creditors, or (iv)
shall take any corporate action in furtherance of any of the
foregoing, or (v) shall admit in writing its inability to
generally, or shall be generally unable to, pay its debts as such
debts become due.
(j) A final judgment or judgments for the payment of
money in excess of $500,000 (net of insurance proceeds available
to pay such judgment provided Borrower has submitted a claim
under its applicable insurance policy and reasonably believes in
good faith that the insurer is required to pay) in the aggregate
at any time outstanding shall be rendered against any Credit
Party and the same shall not, within sixty (60) days after the
entry thereof, have been discharged or execution thereof stayed
or bonded pending appeal, or shall not have been discharged prior
to the expiration of any such stay.
(k) Any material provision of any Loan Document shall
for any reason cease to be valid, binding and enforceable in
accordance with its terms (or any Credit Party shall challenge
the enforceability of any Loan Document or shall assert in
writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Loan Documents has
ceased to be or otherwise is not valid, binding and enforceable
in accordance with its terms), or any security interest created
under any Loan Document shall cease to be a valid and perfected
first priority security interest or Lien (except as otherwise
permitted herein or therein) in any of the Collateral purported
to be covered thereby having a value which when aggregated with
Collateral purportedly covered by any Loan Document previously or
concurrently affected, is in excess of $500,000 unless the
absence of a valid and perfected first priority security interest
or Lien in such Collateral would adversely affect Agents' and
Lenders' ability to realize upon the Collateral.
(l) Any Change of Control shall occur.
(m) Any Material Adverse Effect shall occur.
(n) Any material default or breach by Borrower shall
occur and be continuing under any of the Material Agreements or
any of the Material Agreements shall be terminated for any reason
unless disputed in good faith by Borrower.
8.2. Remedies. (a) If any Event of Default shall have
occurred and be continuing, or if a Default shall have occurred
and be continuing and (i) with respect to all Advances, Agent or
Requisite Lenders shall have determined not to make any Advances
or incur any Letter of Credit Obligations so long as that
specific Default is continuing, Agent may (and at the written
request of the Requisite Lenders shall), without notice, suspend
the Revolving Loan facility with respect to further Advances
and/or the incurrence of further Letter of Credit Obligations
whereupon any further Advances and Letter of Credit Obligations
shall be made or extended in Agent's sole discretion (or in the
sole discretion of the Requisite Lenders, if such suspension
occurred at their direction) so long as such Default or Event of
Default is continuing, and (ii) with respect to Tranche B
Revolving Credit Advances, in the event (A) of a failure to make
any payment due to the Tranche B Revolving Lenders (whether by
operation of Section 1.11(b) or otherwise) and such payment
default remains outstanding and continuing for ten (10) Business
Days after written notice of such default to Agent, (B) of a
breach of the Eligible Inventory to Accounts Payable Ratio as set
forth in Annex G, (C) a breach of the collateral reporting
requirements in Annex F, (D) of the creation of any Liens or
Indebtedness (except as otherwise permitted under this Agreement)
senior to the Tranche B Revolving Lenders, (E) the outstanding
balance of Inventory Loans exceeds the Tranche B Inventory Loan
Limit as determined by the most recent appraisal of Oversight
Agent, or (F) Borrower fails to provide Oversight Agent with
information reasonably required by Oversight Agent to prepare an
appraisal of Eligible Inventory necessary to determine whether
the Tranche B Inventory Loan Limit has been reached, Requisite
Tranche B Revolving Lenders may in their discretion determine to
immediately suspend (without being required to wait until the
expiration of the ten (10) Business Day period described in
clause (ii) above) or terminate (which termination only shall be
effective after ten (10) days' notice which period shall run
concurrently with the ten (10) Business Day period referred to in
clause (ii)) their obligation to make Tranche B Revolving Credit
Advances. The events specified in this Section 8.2(a)(ii)(A)
through (F) shall hereinafter be collectively referred to as the
"Tranche B Super Defaults."
(b) If any Event of Default shall have occurred and be
continuing, Agent may (and at the written request of the
Requisite Lenders, and in the event of a Tranche B Super Default
at the direction of Agents and the Requisite Tranche B Lenders
shall), without notice, (i) terminate the Revolving Loan facility
with respect to further Advances or the incurrence of further
Letter of Credit Obligations; (ii) declare all or any portion of
the Obligations, including all or any portion of any Loan to be
forthwith due and payable, and require that the Letter of Credit
Obligations be cash collateralized as provided in Annex B, all
without presentment, demand, protest or further notice of any
kind, all of which are expressly waived by Borrower and each
other Credit Party; and (iii) exercise any rights and remedies
provided to Agents under the Loan Documents and/or at law or
equity, including the right to appoint a receiver or custodian
and all remedies provided under the Code; provided, however, that
upon the occurrence of an Event of Default specified in Sections
8.1(g), (h) or (i), the Revolving Loan facility shall be
immediately terminated and all of the Obligations, including the
Revolving Loan, shall become immediately due and payable without
declaration, notice or demand by any Person.
(c) In the event that (i) any two (2) Tranche B Super
Defaults (which may be two different Tranche B Super Defaults or
the same Tranche B Super Default occurring twice) occur during
any fifteen (15) day period, notwithstanding the prior cure or
waiver of any such Tranche B Super Defaults, and (ii) a conflict
arises among the Agents and the Tranche B Revolving Lenders with
respect to their right to accelerate the Obligations pursuant to
Section 8.2(b), Agents and Tranche B Revolving Lenders shall use
their good faith efforts to resolve such conflict. If such
conflict is not resolved within twenty-four hours, Requisite
Tranche B Revolving Lenders may require that advance rates
applicable to Eligible Inventory be reduced at the rate of one
and one-half percent (1.5%) per day until the amount of Inventory
Loans is equal to seventy percent (70%) of the Net Retail
Liquidation Value of Borrower's Eligible Inventory. Any exercise
by Requisite Tranche B Revolving Lenders of its rights under this
Section 8.2(c) shall in no manner subject the Tranche A Revolving
Lenders to any subordination whatsoever for Inventory
Overadvances, if any, resulting from such exercise.
8.3. Waivers by Credit Parties. Except as otherwise
provided for in this Agreement or by applicable law, each Credit
Party waives: (a) presentment, demand and protest and notice of
presentment, dishonor, notice of intent to accelerate, notice of
acceleration, protest, default, nonpayment, maturity, release,
compromise, settlement, extension or renewal of any or all
commercial paper, accounts, contract rights, documents,
instruments, chattel paper and guaranties at any time held by
Agent on which any Credit Party may in any way be liable, and
hereby ratifies and confirms whatever Agent may do in this
regard, (b) all rights to notice and a hearing prior to Agent's
taking possession or control of, or to Agent's replevy,
attachment or levy upon, the Collateral or any bond or security
which might be required by any court prior to allowing Agent to
exercise any of its remedies, and (c) the benefit of all
valuation, appraisal, marshaling and exemption laws.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENTS
9.1. Assignment and Participations.
(a) The Credit Parties signatory hereto consent to any
Lender's assignment to, in the case of Tranche A Revolving Loans,
an Eligible Assignee, and in the case of Tranche B Revolving
Loans, any Person, of, or sale of participations in, at any time
or times, the Loan Documents, Loans, Letter of Credit Obligations
and any Commitment or of any portion thereof or interest therein,
including any Lender's rights, title, interests, remedies, powers
or duties thereunder, whether evidenced by a writing or not. Any
assignment by a Lender shall (i) with respect to Tranche A
Revolving Lenders only, require the consent of Agent (which shall
not be unreasonably withheld or delayed with respect to an
Eligible Assignee) and the execution of an assignment agreement
(an "Assignment Agreement" substantially in the form attached
hereto as Exhibit 9.1(a) and otherwise in form and substance
reasonably satisfactory to, and acknowledged by, Agent; (ii) with
respect to Tranche A Revolving Lenders only, require the consent
of Borrower which consent shall not be unreasonably withheld or
delayed with respect to an Eligible Assignee; provided that no
such consent shall be required so long as any Event of Default
has occurred and is continuing; (iii) be conditioned on such
assignee Lender representing to the assigning Lender and Agent
that it is purchasing the applicable Loans to be assigned to it
for its own account, for investment purposes and not with a view
to the distribution thereof; (iv) if a partial assignment, be in
an amount at least equal to $5,000,000 and, after giving effect
to any such partial assignment, the assigning Lender shall have
retained Commitments in an amount at least equal to $5,000,000;
(v) include a payment to Agent of an assignment fee of $3,500;
and (vi) in the case of Tranche A Revolving Loans, only be to an
Eligible Assignee. Notwithstanding anything to the contrary
herein, if any of the events described in Sections 8.1(h) or
8.1(i) shall have occurred, the Tranche A Revolving Lenders may
assign the Tranche A Revolving Loans to any Person (including
Persons who are not Eligible Assignees) without the consent of
Borrower subject to compliance with the remaining conditions set
forth in Section 9.1(a)(i), (iii), (iv) and (v).In the case of an
assignment by a Lender under this Section 9.1, the assignee shall
have, to the extent of such assignment, the same rights, benefits
and obligations as it would if it were a Lender hereunder. The
assigning Lender shall be relieved of its obligations hereunder
with respect to its Commitments or assigned portion thereof from
and after the date of such assignment but shall remain liable for
matters which arose prior to the effective date of such
assignment. Borrower hereby acknowledges and agrees that any
assignment will give rise to a direct obligation of Borrower to
the assignee and that the assignee shall be considered to be a
"Lender". In all instances, each Lender's liability to make
Loans hereunder shall be several and not joint and shall be
limited to such Lender's Pro Rata Share of the applicable
Commitment. In the event Agent or any Lender assigns or
otherwise transfers all or any part of the Obligations, Agent or
any such Lender shall so notify Borrower and Borrower shall, upon
the request of Agent or such Lender, execute new Notes in
exchange for the Notes, if any, being assigned. Notwithstanding
the foregoing provisions of this Section 9.1(a), any Lender may
at any time pledge the Obligations held by it and such Lender's
rights under this Agreement and the other Loan Documents to a
Federal Reserve Bank, and any lender that is an investment fund
may assign the Obligations held by it and such Lender's rights
under this Agreement and the other Loan Documents to another
investment fund managed by the same investment advisor; provided,
however, that no such pledge to a Federal Reserve Bank shall
release such Lender from such Lender's obligations hereunder or
under any other Loan Document.
(b) Any participation by a Lender of all or any part
of its Commitments shall be made with the understanding that all
amounts payable by Borrower hereunder shall be determined as if
that Lender had not sold such participation, and that the holder
of any such participation shall not be entitled to require such
Lender to take or omit to take any action hereunder except
actions directly affecting (i) any reduction in the principal
amount of, or interest rate or Fees payable with respect to, any
Loan in which such holder participates, (ii) any extension of the
scheduled amortization of the principal amount of any Loan in
which such holder participates or the final maturity date
thereof, and (iii) any release of all or substantially all of the
Collateral (other than in accordance with the terms of this
Agreement, the Collateral Documents or the other Loan Documents).
Solely for purposes of Sections 1.13, 1.15, 1.16 and 9.8,
Borrower acknowledges and agrees that a participation shall give
rise to a direct obligation of Borrower to the participant and
the participant shall be considered to be a "Lender". Except as
set forth in the preceding sentence neither Borrower nor any
other Credit Party shall have any obligation or duty to any
participant and may continue to deal solely with the Lender
selling a participation as if no such sale had occurred. Neither
Agent nor any Lender (other than the Lender selling a
participation) shall have any duty to any participant and may
continue to deal solely with the Lender selling a participation
as if no such sale had occurred.
(c) Except as expressly provided in this Section 9.1,
no Lender shall, as between Borrower and that Lender, or Agent
and that Lender, be relieved of any of its obligations hereunder
as a result of any sale, assignment, transfer or negotiation of,
or granting of participation in, all or any part of the Loans,
the Notes or other Obligations owed to such Lender.
(d) Each Credit Party executing this Agreement shall
assist any Lender permitted to sell assignments or participations
under this Section 9.1 as reasonably required to enable the
assigning or selling Lender to effect any such assignment or
participation, including the execution and delivery of any and
all agreements, notes and other documents and instruments as
reasonably shall be requested and the preparation of
informational materials for, and the participation of management
in meetings with, potential assignees or participants. Each
Credit Party executing this Agreement shall certify the
correctness, completeness and accuracy of all descriptions of the
Credit Parties and their affairs contained in any selling
materials provided by it and all other information provided by it
and included in such materials, except that any Projections
delivered by Borrower shall only be certified by Borrower as
having been prepared by Borrower in compliance with the
representations contained in Section 3.4(c).
(e) A Lender may furnish any information concerning
Credit Parties in the possession of such Lender from time to time
to assignees and participants (including prospective assignees
and participants). Prior to furnishing any such information,
each Lender shall obtain from assignees or participants
confidentiality covenants substantially equivalent to those
contained in Section 11.8.
(f) So long as no Event of Default shall have occurred
and be continuing, no Lender shall assign or sell participations
in any portion of its Loans or Commitments to a potential Lender
or participant, if, as of the date of the proposed assignment or
sale, the assignee Lender or participant would be subject to
capital adequacy or similar requirements under Section 1.16(a),
increased costs under Section 1.16(b), an inability to fund LIBOR
Loans under Section 1.16(c), or withholding taxes in accordance
with Section 1.15(a).
9.2. Appointment of Agents. GE Capital is hereby
appointed to act on behalf of all Lenders as Agent under this
Agreement and the other Loan Documents. The provisions of this
Section 9.2 are solely for the benefit of Agents and Lenders and
no Credit Party nor any other Person shall have any rights as a
third party beneficiary of or shall otherwise be affected by any
of the provisions hereof. In performing its functions and duties
under this Agreement and the other Loan Documents, Agent shall
act solely as an agent of Lenders and does not assume and shall
not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for any Credit Party or
any other Person. Agents shall have no duties or
responsibilities except for those expressly set forth in this
Agreement and the other Loan Documents. The duties of Agents
shall be mechanical and administrative in nature and Agents shall
not have, or be deemed to have, by reason of this Agreement, any
other Loan Document or otherwise a fiduciary relationship in
respect of any Lender. Neither Agent nor any of their Affiliates
nor any of their respective officers, directors, employees,
agents or representatives shall be liable to any Lender for any
action taken or omitted to be taken by it hereunder or under any
other Loan Document, or in connection herewith or therewith,
except for damages caused by its or their own gross negligence or
willful misconduct.
If Agent shall request instructions from Requisite
Lenders, Requisite Tranche A Lenders, Requisite Tranche B
Lenders, Supermajority Tranche A Revolving Lenders, Supermajority
Tranche B Revolving Lenders or all affected Lenders with respect
to any act or action (including failure to act) in connection
with this Agreement or any other Loan Document, then Agent shall
be entitled to refrain from such act or taking such action unless
and until Agent shall have received instructions from Requisite
Lenders, Requisite Tranche A Lenders, Requisite Tranche B
Lenders, Supermajority Tranche A Revolving Lenders, Supermajority
Tranche B Revolving Lenders or all affected Lenders, as the case
may be, and Agent shall not incur liability to any Person by
reason of so refraining. Agents shall be fully justified in
failing or refusing to take any action hereunder or under any
other Loan Document (a) if such action would, in the opinion of
Agents, be contrary to law or the terms of this Agreement or any
other Loan Document, (b) if such action would, in the opinion of
Agents, expose Agents to Environmental Liabilities or (c) if
Agents shall not first be indemnified to its satisfaction against
any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. Without
limiting the foregoing, no Lender shall have any right of action
whatsoever against Agents as a result of Agents acting or
refraining from acting hereunder or under any other Loan Document
in accordance with the instructions of Requisite Lenders,
Supermajority Tranche A Revolving Lenders, Requisite Tranche A
Lenders, Requisite Tranche B. Lenders, Supermajority Tranche B
Revolving Lenders or all affected Lenders, as applicable.
9.3. Agents' Reliance, Etc. Neither Agent or Oversight
Agent nor any of their Affiliates nor any of their respective
directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them under or in
connection with this Agreement or the other Loan Documents,
except for damages caused by its or their own gross negligence or
willful misconduct. Without limitation of the generality of the
foregoing: (a) Agents may treat the payee of any Note as the
holder thereof until Agent or Oversight Agent, as the case may
be, receives written notice of the assignment or transfer thereof
signed by such payee and in form satisfactory to Agent or
Oversight Agent, as the case may be; (b) Agents may consult with
legal counsel, independent public accountants and other experts
selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (c) Agents make
no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, warranties or
representations made in or in connection with this Agreement or
the other Loan Documents; (d) Agents shall not have any duty to
ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of this Agreement or
the other Loan Documents on the part of any Credit Party or to
inspect the Collateral (including the books and records) of any
Credit Party; (e) Agents shall not be responsible to any Lender
for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or the other
Loan Documents or any other instrument or document furnished
pursuant hereto or thereto; and (f) Agents shall incur no
liability under or in respect of this Agreement or the other Loan
Documents by acting upon any notice, consent, certificate or
other instrument or writing (which may be by telecopy, telegram,
cable or telex) believed by it to be genuine and signed or sent
by the proper party or parties. Notwithstanding anything herein
which may be construed to the contrary, Lender and Borrower
acknowledge and agree that (A) Agent has engaged Paragon as the
Oversight Agent pursuant to the Oversight Agreement as it may be
modified and amended from time to time, (B) the Oversight Agent
may carry out its duties as set forth in such agreement, and (C)
Oversight Agent may not be removed without the consent of the
Requisite Tranche A Lenders and the Requisite Tranche B Lenders.
The foregoing shall not relieve the Agent of its responsibilities
for any duties assigned or delegated, if any, to the Oversight
Agent.
9.4. GE Capital, Paragon and Affiliates. With respect
to its Commitments hereunder, GE Capital and Paragon shall have
the same rights and powers under this Agreement and the other
Loan Documents as any other Lender and may exercise the same as
though it were not an Agent; and the term "Lender" or "Lenders"
shall, unless otherwise expressly indicated, include GE Capital
and Paragon, each in its individual capacity. GE Capital,
Paragon and their Affiliates may lend money to, invest in, and
generally engage in any kind of business with, any Credit Party,
any of their Affiliates and any Person who may do business with
or own securities of any Credit Party or any such Affiliate, all
as if GE Capital and Paragon were not Agents and without any duty
to account therefor to Lenders. GE Capital, Paragon and their
Affiliates may accept fees and other consideration from any
Credit Party for services in connection with this Agreement or
otherwise without having to account for the same to Lenders.
Each Lender acknowledges the potential conflict of interest
between GE Capital and Paragon as Lenders holding
disproportionate interests in the Loans and GE Capital and
Paragon as Agents.
9.5. Lender Credit Decision. Except as provided in
Section 12(d) of the Oversight Agreement, each Lender
acknowledges that it has, independently and without reliance upon
Agents or any other Lender and based on the Financial Statements
referred to in Section 3.4(a) and such other documents and
information as it has deemed appropriate, made its own credit and
financial analysis of the Credit Parties and its own decision to
enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon Agents or any other
Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement.
Each Lender acknowledges the potential conflict of interest of
each other Lenders as a result of Lenders holding
disproportionate interests in the Loans, and expressly consents
to, and waives any claim based upon, such conflict of interest.
9.6. Indemnification. Lenders agree to indemnify
Agents (to the extent not reimbursed by Credit Parties and
without limiting the obligations of Borrower hereunder), ratably
according to their respective Pro Rata Shares, from and against
any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of
any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against Agents in any way relating to or arising
out of this Agreement or any other Loan Document or any action
taken or omitted by Agents in connection therewith; provided,
however, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from
Agents' gross negligence or wilful misconduct. Without limiting
the foregoing, each Lender agrees to reimburse Agents promptly
upon demand for its ratable share of any out-of-pocket expenses
(including counsel fees) incurred by Agents in connection with
the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice
in respect of rights or responsibilities under, this Agreement
and each other Loan Document, to the extent that Agents are not
reimbursed for such expenses by Credit Parties.
9.7. Successor Agents. Agent or Oversight Agent, as
the case may be, may resign at any time by giving not less than
forty-five (45) days' prior written notice thereof to Lenders and
Borrower. Upon any such resignation, the Requisite Tranche A
Lenders and Requisite Tranche B Lenders shall have the right to
appoint a successor Agent. If no successor Agent shall have been
so appointed by the Requisite Tranche A Lenders and Requisite
Tranche B Lenders and shall have accepted such appointment within
45 days after the resigning Agent's giving notice of resignation,
then the resigning Agent may, on behalf of Lenders, appoint a
successor Agent, which shall be a Lender, if a Lender is willing
to accept such appointment, or otherwise shall be a commercial
bank or financial institution or a subsidiary of a commercial
bank or financial institution if such commercial bank or
financial institution is organized under the laws of the United
States of America or of any State thereof and has a combined
capital and surplus of at least $300,000,000. If no successor
Agent has been appointed pursuant to the foregoing, by the 30th
day after the date such notice of resignation was given by the
resigning Agent, such resignation shall become effective and the
Tranche A Requisite Lenders and the Requisite Tranche B Lenders
shall thereafter perform all the duties of Agent hereunder until
such time, if any, as the Tranche A Requisite Lenders and the
Requisite Tranche B Lenders appoint a successor Agent as provided
above. Any successor Agent appointed by Tranche A Requisite
Lenders and the Requisite Tranche B Lenders hereunder shall be
subject to the approval of Borrower, such approval not to be
unreasonably withheld or delayed; provided that such approval
shall not be required if a Default or an Event of Default shall
have occurred and be continuing. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such
successor Agent shall succeed to and become vested with all the
rights, powers, privileges and duties of the resigning Agent.
Upon the earlier of the acceptance of any appointment as Agent
hereunder by a successor Agent or the effective date of the
resigning Agent's resignation, the resigning Agent shall be
discharged from its duties and obligations under this Agreement
and the other Loan Documents, except that any indemnity rights or
other rights in favor of such resigning Agent shall continue and
Agent shall remain liable for matters arising prior to the
effective date of such resignation. After any resigning Agent's
resignation hereunder, the provisions of this Section 9 shall
inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement and the other
Loan Documents.
9.8. Setoff and Sharing of Payments. Subject to
Section 1.10 of this Agreement, in addition to any rights now or
hereafter granted under applicable law and not by way of
limitation of any such rights, upon the occurrence and during the
continuance of any Event of Default, each Lender and each holder
of any Note is hereby authorized at any time or from time to
time, without notice to any Credit Party or to any other Person,
any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all balances held by it at any
of its offices for the account of Borrower or any Guarantor
(regardless of whether such balances are then due to Borrower or
any Guarantor) and any other properties or assets any time held
or owing by that Lender or that holder to or for the credit or
for the account of Borrower or any Guarantor against and on
account of any of the Obligations which are not paid when due.
Any Lender or holder of any Note exercising a right to set off or
otherwise receiving any payment on account of the Obligations in
excess of its Pro Rata Share thereof shall purchase for cash (and
the other Lenders or holders shall sell) such participations in
each such other Lender's or holder's Pro Rata Share of the
Obligations as would be necessary to cause such Lender to share
the amount so set off or otherwise received with each other
Lender or holder in accordance with their respective Pro Rata
Shares. Each Tranche A Revolving Lender's obligation under this
Section 9.8 shall be in addition to and not limitation of its
obligations to purchase a participation in an amount equal to its
Pro Rata Share of the Swing Line Loans under Section 1.1.
Borrower and each Guarantor agrees, to the fullest extent
permitted by law, that (a) any Lender or holder may exercise its
right to set off with respect to amounts in excess of its Pro
Rata Share of the Obligations and may sell participations in such
amount so set off to other Lenders and holders and (b) any Lender
or holders so purchasing a participation in the Loans made or
other Obligations held by other Lenders or holders may exercise
all rights of set-off, bankers' lien, counterclaim or similar
rights with respect to such participation as fully as if such
Lender or holder were a direct holder of the Loans and the other
Obligations in the amount of such participation. Notwithstanding
the foregoing, if all or any portion of the set-off amount or
payment otherwise received is thereafter recovered from the
Lender that has exercised the right of set-off, the purchase of
participations by that Lender shall be rescinded and the purchase
price restored without interest.
9.9. Advances; Payments; Non-Funding Lenders;
Information; Actions in Concert.
(a) Advances; Payments. (i) Tranche A Revolving
Lenders shall refund or participate in the Swing Line Loan in
accordance with clauses (iii) and (iv) of Section 1.1(b). If the
Swing Line Lender declines to make a Swing Line Loan or if Swing
Line Availability is zero, Agent shall notify Revolving Lenders
promptly after receipt of a Notice of Revolving Advance and in
any event prior to 1:00 p.m. (New York time) on the date such
Notice of Revolving Advance is received, by telecopy, telephone
or other similar form of transmission of the requested Revolving
Credit Advance and whether and to the extent that such Advance
shall be a Tranche A Revolving Credit Advance or a Tranche B
Revolving Credit Advance, or both. Each Revolving Lender shall
make the amount of such Lender's Pro Rata Share of such Revolving
Credit Advance available to Agent in same day funds by wire
transfer to Agent's account as set forth in Annex H not later
than 3:00 p.m. (New York time) on the requested funding date, in
the case of an Index Rate Loan and not later than 11:00 a.m. (New
York time) on the requested funding date in the case of a LIBOR
Loan, provided, however, that, Agent shall not request any
Tranche A Revolving Lender to make, and no Tranche A Revolving
Lender shall have the obligation to make any Tranche A Revolving
Credit Advance in excess of Tranche A Borrowing Availability if
Agent shall have received written notice from any Tranche A
Revolving Lender, or otherwise has knowledge that the requested
Tranche A Revolving Credit Advance would result in the
outstanding Tranche A Revolving Credit Advances and Letter of
Credit Obligations exceeding the Tranche A Borrowing Availability
on such funding date; provided further, however, that Agent shall
not request any Tranche B Revolving Lender to make, and no
Tranche B Revolving Lender shall have the obligation to make, any
Tranche B Revolving Credit Advance in excess of Tranche B
Borrowing Availability, if Agent shall have received written
notice from any Tranche B Revolving Lender, or otherwise has
knowledge that the requested Tranche B Revolving Advance would
exceed the Tranche B Borrowing Availability on such funding date.
Notwithstanding the foregoing, if any requested Revolving Credit
Advance exceeds Borrowing Availability, Lenders shall make
Advances up to that amount otherwise available under the terms of
this Agreement. After receipt of such wire transfers (or, in the
Agent's sole discretion, before receipt of such wire transfers),
subject to the terms hereof, Agent shall make the requested
Revolving Credit Advance to Borrower. All payments by each
Revolving Lender shall be made without setoff, counterclaim or
deduction of any kind.
(ii) On the second (2nd) Business Day of each
calendar week or more frequently as aggregate cumulative
payments in excess of $3,000,000 are received with respect
to the Loans (other than the Swing Line Loan) (each, a
"Settlement Date"), Agent will advise each Lender by
telephone, or telecopy of the amount of such Lender's Pro
Rata Share of principal, interest and Fees paid for the
benefit of Lenders with respect to each applicable Revolving
Loan. Provided that such Lender has funded all payments and
Advances required to be made by it and purchased all
participations required to be purchased by it under this
Agreement and the other Loan Documents as of such Settlement
Date, Agent will pay to each Lender such Lender's Pro Rata
Share of principal, interest and Fees paid by Borrower since
the previous Settlement Date for the benefit of that Lender
on the Loans held by it. To the extent that any Lender (a
"Non-Funding Lender") has failed to fund all such payments
and Advances or failed to fund the purchase of all such
participations, Agent shall be entitled to set off the
funding short-fall against that Non-Funding Lender's
Pro Rata Share of all payments received from Borrower. Such
payments shall be made by wire transfer to such Lender's
account (as specified by such Lender in Annex H or the
applicable Assignment Agreement) not later than 2:00 p.m.
(New York time) on the next Business Day following each
Settlement Date.
(b) Availability of Lender's Pro Rata Share. Agent
may assume that each Revolving Lender will make its Pro Rata
Share of each Revolving Credit Advance available to Agent on each
funding date. If such Pro Rata Share is not, in fact, paid to
Agent by such Revolving Lender when due, Agent will be entitled
to recover such amount on demand from such Revolving Lender
without set-off, counterclaim or deduction of any kind. If any
Revolving Lender fails to pay the amount of its Pro Rata Share
forthwith upon Agent's demand, Agent shall promptly notify
Borrower and Borrower shall immediately repay such amount to
Agent. Nothing in this Section 9.9(b) or elsewhere in this
Agreement or the other Loan Documents shall be deemed to require
Agent to advance funds on behalf of any Revolving Lender or to
relieve any Revolving Lender from its obligation to fulfill its
Commitments hereunder or to prejudice any rights that Borrower
may have against any Revolving Lender as a result of any default
by such Revolving Lender hereunder. To the extent that Agent
advances funds to Borrower on behalf of any Revolving Lender and
is not reimbursed therefor on the same Business Day as such
Advance is made, Agent shall be entitled to retain for its
account all interest accrued on such Advance until reimbursed by
the applicable Revolving Lender.
(c) Return of Payments.
(i) If Agent pays an amount to a Lender under
this Agreement in the belief or expectation that a related
payment has been or will be received by Agent from Borrower
and such related payment is not received by Agent, then
Agent will be entitled to recover such amount from such
Lender on demand without set-off, counterclaim or deduction
of any kind.
(ii) If Agent determines at any time that any
amount received by Agent under this Agreement must be
returned to Borrower or paid to any other Person pursuant to
any insolvency law or otherwise, then, notwithstanding any
other term or condition of this Agreement or any other Loan
Document, Agent will not be required to distribute any
portion thereof to any Lender. In addition, each Lender
will repay to Agent on demand any portion of such amount
that Agent has distributed to such Lender, together with
interest at such rate, if any, as Agent is required to pay
to Borrower or such other Person, without set-off,
counterclaim or deduction of any kind.
(d) Non-Funding Lenders. The failure of any
Non-Funding Lender to make any Revolving Credit Advance or any
payment required by it hereunder, or, in the case of a Tranche A
Revolving Lender, to purchase any participation in any Swing Line
Loan to be made or purchased by it on the date specified
therefor, shall not relieve any other Revolving Lender (each such
other Revolving Lender, an "Other Lender") of its obligations to
make such Advance or purchase such participation on such date,
but neither any Other Lender nor Agent shall be responsible for
the failure of any Non-Funding Lender to make an Advance or to
purchase a participation required hereunder. Notwithstanding
anything set forth herein to the contrary, a Non-Funding Lender
shall not have any voting or consent rights under or with respect
to any Loan Document or constitute a "Lender" (or be included in
the calculation of "Requisite Lenders", "Requisite Tranche A
Lenders", Requisite Tranche B Lenders" or "Supermajority Tranche
A Revolving Lenders" or "Supermajority Tranche B Revolving
Lenders" hereunder) for any voting or consent rights under or
with respect to any Loan Document.
(e) Dissemination of Information. Agent will use
reasonable efforts to provide Lenders with any notice of Default
or Event of Default received by Agent from, or delivered by Agent
to, any Credit Party, with notice of any Event of Default of
which Agent has actually become aware and with notice of any
action taken by Agent following any Event of Default; provided,
however, that Agent shall not be liable to any Lender for any
failure to do so, except to the extent that such failure is
attributable to Agent's gross negligence or willful misconduct.
(f) Actions in Concert. Anything in this Agreement to
the contrary notwithstanding, each Lender hereby agrees with each
other Lender that no Lender shall take any action to protect or
enforce its rights arising out of this Agreement or the Notes
(including exercising any rights of set-off but not including the
exercise by the Tranche B Revolving Lenders of their rights under
Section 8.2(a)(ii), (b) and (c)) without first obtaining the
prior written consent of Agent and Requisite Lenders, it being
the intent of Lenders that any such action to protect or enforce
rights under this Agreement and the Notes shall be taken in
concert and at the direction or with the consent of Agent.
10. SUCCESSORS AND ASSIGNS
10.1. Successors and Assigns. This Agreement and
the other Loan Documents shall be binding on and shall inure to
the benefit of each Credit Party, Agent, Lenders and their
respective successors and assigns (including, in the case of any
Credit Party, a debtor-in-possession on behalf of such Credit
Party), except as otherwise provided herein or therein. No
Credit Party may assign, transfer, hypothecate or otherwise
convey its rights, benefits, obligations or duties hereunder or
under any of the other Loan Documents without the prior express
written consent of Agent and Lenders. Any such purported
assignment, transfer, hypothecation or other conveyance by any
Credit Party without the prior express written consent of Agent
and Lenders shall be void. The terms and provisions of this
Agreement are for the purpose of defining the relative rights and
obligations of each Credit Party, Agent and Lenders with respect
to the transactions contemplated hereby and no Person shall be a
third party beneficiary of any of the terms and provisions of
this Agreement or any of the other Loan Documents.
11. MISCELLANEOUS
11.1. Complete Agreement; Modification of
Agreement. The Loan Documents constitute the complete agreement
between the parties with respect to the subject matter thereof
and may not be modified, altered or amended except as set forth
in Section 11.2 below. Any letter of interest, commitment letter
and/or fee letter (other than the GE Capital Fee Letter and the
Paragon Fee Letter ) and/or confidentiality agreement between any
Credit Party and Agents or any Lender or any of their respective
affiliates, predating this Agreement and relating to a financing
of substantially similar form, purpose or effect shall be
superseded by this Agreement.
11.2. Amendments and Waivers. (a) Except for
actions expressly permitted to be taken by Agent, no amendment,
modification, termination or waiver of any provision of this
Agreement or any of the Notes, or any consent to any departure by
any Credit Party therefrom, shall in any event be effective
unless the same shall be in writing and signed by Agent and
Borrower, and by such of the Agents and such of the Lenders as
required hereby or all affected Lenders, as applicable as set
forth in Section 11.2 (b) and (c). Except as set forth in
clauses (b) and (c) below, all such amendments, modifications,
terminations or waivers requiring the consent of any Lenders
shall require the written consent of Requisite Lenders.
(b) No amendment, modification, termination or waiver
of or consent with respect to any provision of this Agreement
which (i) increases the percentage advance rates set forth in the
definition of the Tranche A Borrowing Base or the Tranche B
Borrowing Base, (ii) makes less restrictive the nondiscretionary
criteria for exclusion from Eligible Accounts and Eligible
Inventory set forth in Sections 1.6 and 1.7, (iii) makes less
restrictive the Eligible Inventory to Accounts Payable Ratio as
set forth in Annex G, (iv) makes less restrictive the collateral
reporting requirements in Annex F, or (v) permits any Liens or
Indebtedness senior to the Tranche B Revolving Lenders shall be
effective unless the same shall be in writing and signed by
Agents, Supermajority Tranche A Revolving Lenders, Supermajority
Tranche B Revolving Lenders and Borrower. No amendment,
modification, termination or waiver of or consent with respect to
any provision of this Agreement which waives compliance with the
conditions precedent set forth in Section 2.2 to the making of
any Loan or the incurrence of any Letter of Credit Obligations
shall be effective unless the same shall be in writing and signed
by (i) Agent, Requisite Lenders and Borrower, or (ii) in the case
of Section 2.2(c)(ii)(B), Agent, Requisite Tranche B Revolving
Lenders and Borrower. Notwithstanding anything contained in
this Agreement to the contrary, no waiver or consent with respect
to any Default (if in connection therewith Agent, Requisite
Lenders or Requisite Tranche B Lenders, as the case may be, have
exercised its or their right to suspend or terminate the making
or incurrence of further Advances or Letter of Credit Obligations
pursuant to Section 8.2(a) or (b)) or any Event of Default shall
be effective for purposes of the conditions precedent to the
making of Loans or the incurrence of Letter of Credit Obligations
set forth in Section 2.2 unless the same shall be in writing and
signed by (i) Agent, Requisite Lenders and Borrower, or (ii) in
the case of Section 2.2(c)(ii)(B), Agent, Requisite Tranche B
Revolving Lenders and Borrower.
(c) No amendment, modification, termination or waiver
shall, unless in writing and signed by Agent and each Lender
directly affected thereby, do any of the following: (i) increase
the principal amount of any Lender's Commitment or the rate of
interest (which action shall be deemed to directly affect all
Lenders); (ii) change the principal of, rate of interest on or
Fees payable with respect to any Loan or Letter of Credit
Obligations of any affected Lender; (iii) extend any scheduled
payment date or final maturity date of the principal amount of
any Loan of any affected Lender; (iv) waive, forgive, defer,
extend or postpone any payment of interest or Fees as to any
affected Lender; (v) release any Guaranty or, except as otherwise
permitted herein or in the other Loan Documents, release, or
permit any Credit Party to sell or otherwise dispose of, except
as otherwise expressly permitted hereunder, any Collateral with a
value exceeding $5,000,000 in the aggregate (which action shall
be deemed to directly affect all Lenders); (vi) change the
percentage of the Commitments or of the aggregate unpaid
principal amount of the Loans which shall be required for Lenders
or any of them to take any action hereunder; (vii) amend Sections
1.1(a)(ii), 1.3(c), 1.11(a), (b) or (c), 2.2 or 8.2 and (viii)
amend or waive this Section 11.2 or the definitions of the terms
"Requisite Lenders", "Requisite Tranche A Lenders", "Requisite
Tranche B Lenders", "Supermajority Tranche A Revolving Lenders",
"Supermajority Tranche B Revolving Lenders", "Senior
Obligations", "Inventory Loans", "Inventory Overadvances",
"Tranche A Inventory Loan Limit", "Tranche B Inventory Loan
Limit", "Super Tranche B Default", or "Reserves" insofar as such
definitions affect the substance of this Section 11.2.
Furthermore, no amendment, modification, termination or waiver
affecting the rights or duties of either Agent or Oversight Agent
under this Agreement or any other Loan Document shall be
effective unless in writing and signed by Agent or Oversight
Agent, as the case may be, in addition to Lenders required
hereinabove to take such action. Each amendment, modification,
termination or waiver shall be effective only in the specific
instance and for the specific purpose for which it was given. No
amendment, modification, termination or waiver shall be required
for Agent to take additional Collateral pursuant to any Loan
Document. No amendment, modification, termination or waiver of
any provision of any Note shall be effective without the written
concurrence of the holder of that Note. No notice to or demand
on any Credit Party in any case shall entitle such Credit Party
or any other Credit Party to any other or further notice or
demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in
accordance with this Section 11.2 shall be binding upon each
Lender.
(d) If, in connection with any proposed amendment,
modification, waiver or termination (a "Proposed Change"):
(i) requiring the consent of all affected
Lenders, the consent of Requisite Lenders is obtained,
but the consent of other Lenders whose consent is
required is not obtained (any such Lender whose consent
is not obtained as described this clause (i) and in
clauses (ii), (iii) and (iv) below being referred to as
a "Non-Consenting Lender"), or
(ii) requiring the consent of Requisite Lenders,
the consent of Lenders holding 51% or more of the
aggregate Commitments is obtained, but the consent of
Requisite Lenders is not obtained,
then, so long as Agent is not a Non-Consenting Lender, at
Borrower's request Agent, or a Person acceptable to Agent, shall
have the right with Agent's consent and in Agent's sole
discretion (but shall have no obligation) to purchase from such
Non-Consenting Lenders, and such Non-Consenting Lenders agree
that they shall, upon Agent's request, sell and assign to Agent
or such Person, all of the Commitments of such Non-Consenting
Lender for an amount equal to the principal balance of all Loans
held by the Non-Consenting Lender and all accrued interest and
Fees with respect thereto through the date of sale, such purchase
and sale to be consummated pursuant to an executed Assignment
Agreement.
(e) Upon indefeasible payment in full in cash and
performance of all of the Obligations (other than indemnification
Obligations under Section 1.13), termination of the Commitments
and a release of all claims (other than claims for gross
negligence, willful misconduct or breach of the terms of this
Agreement or any other Loan Documents) against Agents and
Lenders, and so long as no suits, actions proceedings, or claims
are pending or threatened against any Indemnified Person
asserting any damages, losses or liabilities that are Indemnified
Liabilities, Agent shall deliver to Borrower termination
statements, mortgage releases and other documents necessary or
appropriate to evidence the termination of the Liens securing
payment of the Obligations.
11.3. Fees and Expenses. Borrower shall reimburse
Agents for all reasonable out-of-pocket expenses incurred in
connection with the preparation of the Loan Documents (including
the reasonable fees and expenses of all of its special loan
counsel, advisors, consultants and auditors retained in
connection with the Loan Documents and the Related Transactions
and advice in connection therewith). Borrower shall reimburse
Agents (and, with respect to clauses (c), (d) and (e) below, all
Lenders) for all reasonable fees, costs and expenses, including
the reasonable fees, costs and expenses of counsel or other
advisors (including environmental and management consultants and
appraisers) for advice, assistance, or other representation in
connection with:
(a) the forwarding to Borrower or any other Person on
behalf of Borrower by Agent of the proceeds of the Loans;
(b) any amendment, modification or waiver of, or
consent with respect to, any of the Loan Documents or Related
Transactions Documents or advice in connection with the
administration of the Loans made pursuant hereto or its rights
hereunder or thereunder;
(c) any litigation, contest, dispute, suit, proceeding
or action (whether instituted by Agent, any Lender, Borrower or
any other Person) in any way relating to the Collateral, any of
the Loan Documents or any other agreement to be executed or
delivered in connection therewith or herewith (excluding any
litigation asserted against Agents and/or Lenders that is
resolved in favor of Borrower by a court of competent
jurisdiction by final and nonappealable judgment which is based
upon Agents' and/or Lenders' willful misconduct, gross negligence
or breach of the terms of this Agreement), whether as party,
witness, or otherwise, including any litigation, contest,
dispute, suit, case, proceeding or action, and any appeal or
review thereof, in connection with a case commenced by or against
Borrower or any other Person that may be obligated to Agent by
virtue of the Loan Documents; including any such litigation,
contest, dispute, suit, proceeding or action arising in
connection with any work-out or restructuring of the Loans during
the pendency of one or more Events of Default; provided that in
the case of reimbursement of counsel for Lenders other than
Agents, such reimbursement shall be limited to one counsel for
all such Lenders;
(d) any attempt to enforce any remedies, during the
pendency of an Event of Default, of Agent or any Lender against
any or all of the Credit Parties or any other Person that may be
obligated to Agent or any Lender by virtue of any of the Loan
Documents; including any such attempt to enforce any such
remedies in the course of any work-out or restructuring of the
Loans during the pendency of one or more Events of Default;
provided that in the case of reimbursement of counsel for Lenders
other than Agents, such reimbursement shall be limited to one
counsel for all such Lenders;
(e) any work-out or restructuring of the Loans during
the pendency of one or more Events of Default;
(f) efforts to (i) monitor the Loans or any of the
other Obligations, (ii) evaluate, observe or assess any of the
Credit Parties or their respective affairs, and (iii) verify,
protect, evaluate, assess, appraise, collect, sell, liquidate or
otherwise dispose of any of the Collateral provided however that
so long as no Event of Default shall have occurred and be
continuing, any fees and expenses incurred by Agents and Lenders
pursuant to this Section 11.3(f), together with expenses (other
than the Monthly Oversight Fee as defined in the Oversight
Agreement) incurred by Agents pursuant to Section 1.14, shall
only be reimbursable up to the amount of $60,000, plus reasonable
out-of-pocket expenses, per annum; including, as to each of
clauses (a) through (f) above, all reasonable attorneys' and
other professional and service providers' reasonable fees arising
from such services, including those in connection with any
appellate proceedings; and all reasonable expenses, costs,
charges and other fees incurred by such counsel and others in any
way or respect arising in connection with or relating to any of
the events or actions described in this Section 11.3 shall be
payable, on demand, by Borrower to Agents. Without limiting the
generality of the foregoing, such reasonable expenses, costs,
charges and fees may include: fees, costs and expenses of
accountants, environmental advisors, appraisers, investment
bankers, management and other consultants and paralegals; court
costs and expenses; photocopying and duplication expenses; court
reporter fees, costs and expenses; long distance telephone
charges; air express charges; telegram or telecopy charges;
secretarial overtime charges; and expenses for travel, lodging
and food paid or incurred in connection with the performance of
such legal or other advisory services.
11.4. No Waiver. Agent's or any Lender's failure,
at any time or times, to require strict performance by the Credit
Parties of any provision of this Agreement and any of the other
Loan Documents shall not waive, affect or diminish any right of
Agent or such Lender thereafter to demand strict compliance and
performance therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of
Default whether the same is prior or subsequent thereto and
whether the same or of a different type. Subject to the
provisions of Section 11.2, none of the undertakings, agreements,
warranties, covenants and representations of any Credit Party
contained in this Agreement or any of the other Loan Documents
and no Default or Event of Default by any Credit Party shall be
deemed to have been suspended or waived by Agent or any Lender,
unless such waiver or suspension is by an instrument in writing
signed by an officer of or other authorized employee of Agent and
the applicable required Lenders and directed to Borrower
specifying such suspension or waiver.
11.5. Remedies. Agent's and Lenders' rights and
remedies under this Agreement shall be cumulative and
nonexclusive of any other rights and remedies which Agent or any
Lender may have under any other agreement, including the other
Loan Documents, by operation of law or otherwise. Recourse to
the Collateral shall not be required.
11.6. Severability. Wherever possible, each
provision of this Agreement and the other Loan Documents shall be
interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
11.7. Conflict of Terms. Except as otherwise
provided in this Agreement or any of the other Loan Documents by
specific reference to the applicable provisions of this
Agreement, if any provision contained in this Agreement is in
conflict with, or inconsistent with, any provision in any of the
other Loan Documents, the provision contained in this Agreement
shall govern and control.
11.8. Confidentiality. Agent and each Lender agree
to use commercially reasonable efforts (equivalent to the efforts
Agent or such Lender applies to maintain the confidentiality of
its own confidential information) to maintain as confidential all
proprietary and confidential information provided to them by the
Credit Parties and designated as confidential from the date of
receipt thereof through the later of (i) July 26, 2002, or (ii)
the second anniversary of the Commitment Termination Date, except
that Agent and each Lender may disclose such information (a) to
Persons employed or engaged by Agent or such Lender to the extent
necessary for them to perform their duties in evaluating,
approving, structuring or administering the Loans and the
Commitments; (b) to any bona fide assignee or participant or
potential assignee or participant that has agreed in writing to
comply with the covenant contained in this Section 11.8 (and any
such bona fide assignee or participant or potential assignee or
participant may disclose such information to Persons employed or
engaged by them as described in clause (a) above); (c) as
required or requested by any Governmental Authority or reasonably
believed by Agent or such Lender to be compelled by any court
decree, subpoena or legal or administrative order or process,
provided that if Agent or such Lender is requested by any
Government Authority, but does not believe it is compelled by law
to disclose such information, Agent or such Lender shall provide
Borrower with five (5) Business Days' notice of such request
prior to disclosing the requested information; (d) as, on the
advise of Agent's or such Lender's counsel, required by law; (e)
as is reasonably necessary to the exercise of any right or remedy
under the Loan Documents or in connection with any Litigation to
which Agent or such Lender is a party; or (f) which ceases to be
confidential through no fault of Agent or such Lender. All
business plans and projections of any Credit Party shall be
deemed to be confidential whether or not specifically designated
as confidential.
11.9. GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THE LOAN
DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND
ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH CREDIT
PARTY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS
LOCATED IN NEW YORK COUNTY, CITY OF NEW YORK, NEW YORK SHALL HAVE
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN THE CREDIT PARTIES, AGENTS AND LENDERS
PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS
OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS, PROVIDED, THAT AGENT, LENDERS
AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY APPEALS FROM THOSE
COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW
YORK COUNTY, CITY OF NEW YORK, NEW YORK AND, PROVIDED, FURTHER
NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE
AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY
OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER IN FAVOR OF AGENT. EACH CREDIT PARTY EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH CREDIT PARTY
HEREBY WAIVES ANY OBJECTION WHICH SUCH CREDIT PARTY MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM
NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL
OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH
CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS,
COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS
MAY BE MADE BY REGISTERED, CERTIFIED MAIL OR BY REPUTABLE
OVERNIGHT COURIER ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS
SET FORTH IN ANNEX I OF THIS AGREEMENT AND THAT SERVICE SO MADE
SHALL BE DEEMED COMPLETED UPON SUCH CREDIT PARTY'S ACTUAL RECEIPT
THEREOF OR REFUSAL OF DELIVERY.
11.10. Notices. Except as otherwise provided
herein, whenever it is provided herein that any notice, demand,
request, consent, approval, declaration or other communication
shall or may be given to or served upon any of the parties by any
other parties, or whenever any of the parties desires to give or
serve upon any other parties any communication with respect to
this Agreement, each such notice, demand, request, consent,
approval, declaration or other communication shall be in writing
and shall be deemed to have been validly served, given or
delivered (a) upon the earlier of actual receipt or refusal of
delivery, (b) upon transmission, when sent by telecopy or other
similar facsimile transmission (with such telecopy or facsimile
promptly confirmed by delivery of a copy as otherwise provided in
this Section 11.10), (c) one (1) Business Day after deposit with
a reputable overnight courier with all charges prepaid or (d)
when delivered, if hand-delivered by messenger, all of which
shall be addressed to the party to be notified and sent to the
address or facsimile number indicated on Annex I or to such other
address (or facsimile number) as may be substituted by notice
given as herein provided. The giving of any notice required
hereunder may be waived in writing by the party entitled to
receive such notice. Failure or delay in delivering copies of
any notice, demand, request, consent, approval, declaration or
other communication to any Person designated on Annex I caused as
a result of substitution of counsel or a Person's change of
address, telecopy or facsimile and such Person's failure to
notify the parties hereto of such change shall in no way
adversely affect the effectiveness of such notice, demand,
request, consent, approval, declaration or other communication.
11.11. Section Titles. The Section titles and Table
of Contents contained in this Agreement are and shall be without
substantive meaning or content of any kind whatsoever and are not
a part of the agreement between the parties hereto.
11.12. Counterparts. This Agreement may be executed
in any number of separate counterparts, each of which shall
collectively and separately constitute one agreement.
11.13. WAIVER OF JURY TRIAL. BECAUSE DISPUTES
ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE
MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE
THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF
THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG AGENTS, LENDERS
AND ANY CREDIT PARTY ARISING OUT OF, CONNECTED WITH, RELATED TO,
OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
11.14. Press Releases. Each Credit Party executing
this Agreement agrees that neither it nor its Affiliates will in
the future issue any press releases or other public disclosure
using the name of GE Capital or its affiliates or referring to
this Agreement, the other Loan Documents or the Related
Transactions Documents without at least two (2) Business Days'
prior notice to GE Capital and without the prior written consent
of GE Capital unless (and only to the extent that) such Credit
Party or Affiliate is required to do so under law and then, in
any event, such Credit Party or Affiliate will consult with GE
Capital before issuing such press release or other public
disclosure. Each Credit Party consents to the publication by
Agent, Oversight Agent or any Lender of a tombstone or similar
advertising material relating to the financing transactions
contemplated by this Agreement. Agent or such Lender shall
provide a draft of any such tombstone or similar advertising
material to each Credit Party for review and comment prior to the
publication thereof. Agent reserves the right to provide to
industry trade organizations information necessary and customary
for inclusion in league table measurements with Borrower's
consent which shall not be unreasonably withheld or delayed.
11.15. Reinstatement. This Agreement shall remain
in full force and effect and continue to be effective should any
petition be filed by or against Borrower for liquidation or
reorganization, should Borrower become insolvent or make an
assignment for the benefit of any creditor or creditors or should
a receiver or trustee be appointed for all or any significant
part of Borrower's assets, and shall continue to be effective or
to be reinstated, as the case may be, if at any time payment and
performance of the Obligations, or any part thereof, is, pursuant
to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the
Obligations, whether as a "voidable preference," "fraudulent
conveyance," or otherwise, all as though such payment or
performance had not been made. In the event that any payment, or
any part thereof, is rescinded, reduced, restored or returned,
the Obligations shall be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or
returned.
11.16. Advice of Counsel. Each of the parties
represents to each other party hereto that it has discussed this
Agreement and, specifically, the provisions of Sections 11.9 and
11.13, with its counsel.
11.17. Entities Related to Paragon. Borrower
acknowledges notice that Paragon is affiliated with The Ozer
Group, LLC ("Ozer"), Ozer Valuation Services, Inc. ("Ozer
Valuation") and Ozer Wholesale Services, Inc. ("OWS"), Ozer, Ozer
Valuation, OWS and other entities related to Paragon may, from
time to time act as a merchant consultant or provide other
services to Paragon with respect to Borrower, provided that
services to be provided by such entities shall be at charges no
more than market rate for their services.
11.18. Entire Agreement. This Agreement and the
other Loan Documents embody the final, entire agreement among the
parties hereto and supersedes any and all prior commitments,
proposals, agreements, representations understandings, whether
oral or written, relating to the subject written hereof and may
not be contradicted or varied by evidence of prior,
contemporaneous or subsequent oral agreements of the parties.
11.19. Disclosure. Agents and Lenders acknowledge
and agree that any disclosure made by any of the Credit Parties
in any of the Disclosure Schedules shall constitute disclosure to
Agents and Lenders for all purposes of this Agreement and the
other Loan Documents, regardless of whether such disclosure is
specifically referenced in any other Disclosure Schedule and/or
in any other section of this Agreement and/or other Loan
Documents.
IN WITNESS WHEREOF, this Agreement has been duly
executed as of the date first written above.
FILENE'S BASEMENT, INC.
By:/s/ Steven R. Siegel
Steven R. Siegel,
Executive Vice President
and Chief Financial Officer
GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent and Lender
By: /s/ James P. Hogan
Title: Vice-President
PARAGON CAPITAL LLC, as
Oversight Agent and Lender
By: /s/ Andrew Moser
Title: President
B III CAPITAL PARTNERS, L.P.
By: DDJ CAPITAL III, LLC, its general
partner
By: DDJ CAPITAL MANAGEMENT LLC, Manager
By: /s/ Judy Mencher__________
Title: Member____________________
The following Persons are signatories to this Agreement
in their capacity as Credit Parties and not as Borrowers.
FILENE'S BASEMENT CORP.
By:/s/ Steven R. Siegel
Steven R. Siegel,
Executive Vice President
and Chief Financial Officer
ANNEX A (Recitals)
to
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have
(unless otherwise provided elsewhere in the Loan Documents) the
following respective meanings and all section references in the
following definitions shall refer to Sections of the Agreement:
"Account Debtor" shall mean any Person who may become
obligated to any Credit Party under, with respect to, or on
account of, an Account.
"Accounts" shall mean all "accounts," as such term is
defined in the Code, now owned or hereafter acquired by any
Credit Party and, in any event, including (a) all accounts
receivable, other receivables, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel
Paper, Documents or Instruments) now owned or hereafter received
or acquired by or belonging or owing to any Credit Party, whether
arising out of goods sold or services rendered by it or from any
other transaction (including any such obligations which may be
characterized as an account or contract right under the Code),
(b) all of each Credit Party's rights in, to and under all
purchase orders or receipts now owned or hereafter acquired by it
for goods or services, (c) all of each Credit Party's rights to
any goods represented by any of the foregoing (including unpaid
sellers' rights of rescission, replevin, reclamation and stoppage
in transit and rights to returned, reclaimed or repossessed
goods), (d) all monies due or to become due to any Credit Party,
under all purchase orders and contracts for the sale of goods or
the performance of services or both by such Credit Party or in
connection with any other transaction (whether or not yet earned
by performance on the part of such Credit Party) now or hereafter
in existence, including the right to receive the proceeds of said
purchase orders and contracts, and (e) all collateral security
and guarantees of any kind, now or hereafter in existence, given
by any Person with respect to any of the foregoing.
"Accounts Payable" shall mean all liabilities of
Borrower for the payment for Inventory.
"Advance" shall mean any Revolving Credit Advance or
Swing Line Advance, as the context may require."
Affiliate" shall mean, with respect to any Person, (a)
each Person that, directly or indirectly, owns or controls,
whether beneficially, or as a trustee, guardian or other
fiduciary, five percent (5%) or more of the Stock having ordinary
voting power in the election of directors of such Persons, (b)
each Person that controls, is controlled by or is under common
control with such Person, (c) each of such Person's officers,
directors, joint venturers and partners and (d) in the case of
Borrower, the immediate family members, spouses and lineal
descendants of individuals who are Affiliates of Borrower. For
the purposes of this definition, "control" of a Person shall mean
the possession, directly or indirectly, of the power to direct or
cause the direction of its management or policies, whether
through the ownership of voting securities, by contract or
otherwise; provided, however, that the term "Affiliate" shall
specifically exclude Agent and each Lender.
"Agent" shall mean GE Capital or its successor solely
in its capacity as agent appointed pursuant to Section 9.7.
"Agent Advances" shall have the meaning assigned to it
in Section 1.1(d).
"Agents" means collectively, the Agent and the
Oversight Agent solely in their respective capacities as Agent
and Oversight Agent.
"Agreement" shall mean the Credit Agreement by and
among Borrower, the other Credit Parties named therein, GE
Capital, as Agent and Lender, Paragon, as Oversight Agent and
Lender, and the other Lenders signatory from time to time to the
Agreement.
"Appendices" shall have the meaning assigned to it in
the recitals to the Agreement.
"Applicable L/C Margin" shall mean the per annum fee,
from time to time in effect, payable with respect to outstanding
Letter of Credit Obligations as determined by reference to
Section 1.5(a).
"Applicable Margins" means collectively the Applicable
L/C Margin, the Applicable Unused Line Fee Margin, the Applicable
Tranche A Revolver Index Margin, the Applicable Tranche B
Revolver Index Margin and the Applicable Tranche A Revolver LIBOR
Margin.
"Applicable Tranche A Revolver Index Margin" shall mean
the per annum interest rate margin from time to time in effect
and payable in addition to the Index Rate applicable to the
Tranche A Revolving Loan, as determined by reference to Section
1.5(a) of the Agreement.
"Applicable Tranche A Revolver LIBOR Margin" shall
mean the per annum interest rate from time to time in effect and
payable in addition to the LIBOR Rate applicable to the Tranche A
Revolving Loan, as determined by reference to Section 1.5(a) of
the Agreement.
"Applicable Tranche B Revolver Index Margin" shall mean
the per annum interest rate from time to time in effect and
payable in addition to the Index Rate applicable to the Tranche B
Revolving Loan, as determined by reference to Section 1.5(a) of
the Agreement.
"Applicable Unused Line Margin" shall mean the per
annum amount, from time to time in effect, payable in respect to
Borrower's non-use of committed funds pursuant to Section 1.9(b),
which amount is determined by reference to Section 1.5(a).
"Assignment Agreement" shall have the meaning assigned
to it in Section 9.1(a).
"Borrower" shall have the meaning assigned thereto in
the recitals to the Agreement.
"Borrower Accounts" shall have the meaning assigned to
it in Annex C.
"Borrower Pledge Agreement" shall mean the Pledge
Agreement of even date herewith executed by Borrower in favor of
Agent, on behalf of itself and Lenders, pledging all Stock of its
Subsidiaries, if any, and all Intercompany Notes owing to or held
by it.
"Borrowing Availability" shall mean collectively,
Tranche A Borrowing Availability and Tranche B Borrowing
Availability.
"Borrowing Base" shall mean collectively, the Tranche A
Borrowing Base and the Tranche B Borrowing Base.
"Borrowing Base Certificate" shall mean a certificate
to be executed and delivered from time to time by Borrower in the
form attached to the Agreement as Exhibit 4.1(b).
"Business Day" shall mean any day that is not a
Saturday, a Sunday or a day on which banks are required or
permitted to be closed in the State of New York and in reference
to LIBOR Loans shall mean any such day that is also a LIBOR
Business Day.
"Capital Expenditures" shall mean, with respect to any
Person, all expenditures (by the expenditure of cash or the
incurrence of Indebtedness) by such Person during any measuring
period for any fixed assets or improvements or for replacements,
substitutions or additions thereto, that have a useful life of
more than one year and that are required to be capitalized under
GAAP.
"Capital Lease" shall mean, with respect to any Person,
any lease of any property (whether real, personal or mixed) by
such Person as lessee that, in accordance with GAAP, would be
required to be classified and accounted for as a capital lease on
a balance sheet of such Person.
"Capital Lease Obligation" shall mean, with respect to
any Capital Lease of any Person, the amount of the obligation of
the lessee thereunder that, in accordance with GAAP, would appear
on a balance sheet of such lessee in respect of such Capital
Lease.
"Carothers Notes" shall mean those certain promissory
notes executed by W. Jay Carothers in favor of Borrower and
scheduled on Disclosure Schedule 6.2.
"Cash Management Systems" shall have the meaning
assigned to it in Section 1.8.
"Change of Control" means any of the following: (a)
any person or group of persons (within the meaning 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 the
Securities Exchange Act of 1934, as amended) of 30% or more of
the issued and outstanding shares of capital Stock of Holdings
having the right to vote for the election of directors of
Holdings under ordinary circumstances; (b) during any period of
twelve consecutive calendar months, individuals who at the
beginning of such period constituted the board of directors of
Holdings (together with any new directors whose election by the
board of directors of Holdings or whose nomination for election
by the stockholders of Holdings was approved by a vote of at
least two-thirds of the directors then still in office who either
were directors at the beginning of such period or whose elections
or nomination for election was previously so approved) cease for
any reason other than death or disability to constitute a
majority of the directors then in office, (c) Holdings shall
cease to own and control all of the economic and voting rights
associated with all of the outstanding capital Stock of Borrower,
(d) Borrower shall cease to own and control all of the economic
and voting rights associated with all of the outstanding capital
Stock of any of its Subsidiaries, or (e) any two (2) of Kathleen
Mason, Jay Carothers, Samuel Gerson or Steven Siegel shall cease
to act under any circumstances as officers of Borrower performing
duties essentially the same as those performed on the Closing
Date.
"Charges" shall mean all federal, state, county, city,
municipal, local, foreign or other governmental taxes (including
taxes owed to the PBGC at the time due and payable), levies,
assessments, charges, liens, claims or encumbrances upon or
relating to (a) the Collateral, (b) the Obligations, (c) the
employees, payroll, income or gross receipts of any Credit Party,
(d) any Credit Party's ownership or use of any properties or
other assets, or (e) any other aspect of any Credit Party's
business.
"Chattel Paper" shall mean any "chattel paper," as such
term is defined in the Code, now owned or hereafter acquired by
any Credit Party, wherever located.
"Closing Date" shall mean July 26, 1999.
"Closing Checklist" shall mean the schedule, including
all appendices, exhibits or schedules thereto, listing certain
documents and information to be delivered in connection with the
Agreement, the other Loan Documents and the transactions
contemplated thereunder, substantially in the form attached
hereto as Annex D.
"Code" shall mean the Uniform Commercial Code as the
same may, from time to time, be enacted and in effect in the
State of New York; provided, however, in the event that, by
reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of Agent's or any Lender's
security interest in any Collateral is governed by the Uniform
Commercial Code as enacted and in effect in a jurisdiction other
than the State of New York, the term "Code" shall mean the
Uniform Commercial Code as enacted and in effect in such other
jurisdiction solely for purposes of the provisions hereof
relating to such attachment, perfection or priority and for
purposes of definitions related to such provisions.
"Collateral" shall mean the property covered by the
Security Agreement, the Mortgages and the other Collateral
Documents and any other property, real or personal, tangible or
intangible, now existing or hereafter acquired, that may at any
time be or become subject to a security interest or Lien in favor
of Agent, on behalf of itself and Lenders, to secure the
Obligations.
"Collateral Documents" shall mean the Security
Agreements, the Pledge Agreements, the Guaranties, the Mortgages,
the Intellectual Property Security Agreement, and all similar
agreements entered into guaranteeing payment of, or granting a
Lien upon property as security for payment of, the Obligations.
"Collateral Reports" shall mean the reports with
respect to the Collateral referred to in Annex F.
"Collection Account" shall mean that certain account of
Agent, account number 502-328-54 in the name of Agent at Bankers
Trust Company in New York, New York or such other account as
Agent shall specify.
"Commitment Termination Date" shall mean the earliest
of (a) July 26, 2002, (b) the date of termination of Lenders'
obligations to make Advances and/or incur Letter of Credit
Obligations or permit existing Loans to remain outstanding
pursuant to Section 8.2(b), and (c) the date of indefeasible
prepayment in full by Borrower of the Loans and the cancellation
and return (or stand-by guarantee) of all Letters of Credit or
the cash collateralization of all Letter of Credit Obligations
pursuant to Annex B, and the permanent reduction of the Revolving
Loan Commitment and the Swing Line Commitment to zero dollars
($0).
"Commitments" shall mean (a) as to any Lender, the
aggregate of such Lender's Revolving Loan Commitment (including
without duplication the Swing Line Lender's Swing Line Commitment
as a subset of its Revolving Loan Commitment) as set forth on
Annex J to the Agreement or in the most recent Assignment
Agreement executed by such Lender and (b) as to all Lenders, the
aggregate of all Lenders' Revolving Loan Commitments (including
without duplication the Swing Line Lender's Swing Line Commitment
as a subset of its Revolving Loan Commitment) which aggregate
commitment shall be One Hundred Twenty Five Million Dollars
($125,000,000) on the Closing Date, as to each of clauses (a) and
(b), as such Commitments may be reduced, amortized or adjusted
from time to time in accordance with the Agreement.
"Compliance Certificate" shall have the meaning
assigned to it in Annex E.
"Concentration Account" shall have the meaning assigned
to it in Annex C.
"Contracts" shall mean all "contracts," as such term is
defined in the Code, now owned or hereafter acquired by any
Credit Party, in any event, including all contracts,
undertakings, or agreements (other than rights evidenced by
Chattel Paper, Documents or Instruments) in or under which any
Credit Party may now or hereafter have any right, title or
interest, including any agreement relating to the terms of
payment or the terms of performance of any Account.
"Copyright License" shall mean any and all rights now
owned or hereafter acquired by any Credit Party under any written
agreement granting any right to use any Copyright or Copyright
registration.
"Copyrights" shall mean all of the following now owned
or hereafter acquired by any Credit Party: (a) all copyrights and
general intangibles of like nature (whether registered or
unregistered), now owned or existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all
applications in connection therewith, including all
registrations, recordings and applications in the United States
Copyright Office or in any similar office or agency of the United
States, any state or territory thereof, or any other country or
any political subdivision thereof, and (b) all reissues,
extensions or renewals thereof.
"Credit Card Notices" shall mean those certain notices
issued by Borrower in favor of Agent to the Credit Card Providers
pursuant to which such Credit Card Providers agree to transfer
all credit card receipts of Borrower into the Collection Account.
"Credit Card Providers" shall mean the banks and
finance companies listed on Disclosure Schedule 3.26, as updated
or supplemented from time to time.
"Credit Parties" shall mean Holdings, Borrower, and
each of their respective Subsidiaries.
"Default" shall mean any event which, with the passage
of time or notice or both, would, unless cured or waived, become
an Event of Default.
"Default Rate" shall have the meaning assigned to it in
Section 1.5(d).
"Disbursement Accounts" shall have the meaning assigned
to it on Annex C.
"Disclosure Schedules" shall mean the Schedules
prepared by Borrower and denominated as Disclosure Schedules 1.4
through 6.7 in the Index to the Agreement.
"Documents" shall mean any "documents," as such term is
defined in the Code, now owned or hereafter acquired by any
Credit Party, wherever located.
"Dollars" or "$" shall mean lawful currency of the
United States of America.
"EBITDA" shall mean, with respect to any Person for any
fiscal period, an amount equal to (a) consolidated net income of
such Person for such period, minus (b) the sum of (i) income tax
credits, (ii) interest income, (iii) gain from extraordinary
items for such period, (iv) any aggregate net gain (but not any
aggregate net loss) during such period arising from the sale,
exchange or other disposition of capital assets by such Person
(including any fixed assets, whether tangible or intangible, all
inventory sold in conjunction with the disposition of fixed
assets and all securities), and (v) any other non-cash gains
which have been added in determining consolidated net income, in
each case to the extent included in the calculation of
consolidated net income of such Person for such period in
accordance with GAAP, but without duplication, plus (c) the sum
of (i) any provision for income taxes, (ii) Interest Expense,
(iii) loss from extraordinary items for such period, (iv) the
amount of non-cash charges (including depreciation and
amortization) for such period, (v) amortized debt discount for
such period, and (vi) the amount of any deduction to consolidated
net income as the result of any grant to any members of the
management of such Person of any Stock, in each case to the
extent included in the calculation of consolidated net income of
such Person for such period in accordance with GAAP, but without
duplication. For purposes of this definition, the following
items shall be excluded in determining consolidated net income of
a Person: (1) the income (or deficit) of any other Person accrued
prior to the date it became a Subsidiary of, or was merged or
consolidated into, such Person or any of such Person's
Subsidiaries; (2) the income (or deficit) of any other Person
(other than a Subsidiary) in which such Person has an ownership
interest, except to the extent any such income has actually been
received by such Person in the form of cash dividends or
distributions; (3) the undistributed earnings of any Subsidiary
of such Person to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary is not at
the time permitted by the terms of any contractual obligation or
requirement of law applicable to such Subsidiary; (4) any
restoration to income of any contingency reserve, except to the
extent that provision for such reserve was made out of income
accrued during such period; (5) any write-up of any asset; (6)
any net gain from the collection of the proceeds of life
insurance policies; (7) any net gain arising from the acquisition
of any securities, or the extinguishment, under GAAP, of any
Indebtedness, of such Person, (8) in the case of a successor to
such Person by consolidation or merger or as a transferee of its
assets, any earnings of such successor prior to such
consolidation, merger or transfer of assets, and (9) any deferred
credit representing the excess of equity in any Subsidiary of
such Person at the date of acquisition of such Subsidiary over
the cost to such Person of the investment in such Subsidiary.
"Eligible Accounts" shall have the meaning assigned to
it in Section 1.6 of the Agreement.
"Eligible Assignee" means with respect to any
prospective assignee of a Tranche A Revolving Loan (a) any
Lender, any Affiliate of any Lender and with respect to any
Lender that is an investment fund that invests in commercial
loans, any other investment fund that is managed or advised by
the same investment advisor as such Lender or by an Affiliate of
such investment advisor; (b) 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 $500,000,000 and having a net worth in excess of
$50,000,000; (c) 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; (d) 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; (e) the central bank of any country which
is a member of the OECD; and (f) 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 approved by Agent, such approval not to be
unreasonably withheld, provided that no Person determined by
Agent to be acting in the capacity of a vulture fund or
distressed debt purchaser shall be an Eligible Assignee.
"Eligible Inventory" shall have the meaning assigned to
it in Section 1.7 of the Agreement.
"Eligible Leasehold Real Estate" shall mean any Real
Estate which is leased to Borrower (other than under ground
leases), which satisfies each of the following conditions:
(a) the subject lease has a NLV of at least $300,000;
(b) Borrower has delivered to Oversight Agent such
leasehold mortgages and other documents as the Oversight Agent
may reasonably request to provide the Agent, for itself and
Lenders, with a perfected first-priority security interest in
such leaseholds, and shall have delivered title certifications,
appraisals and other Real Estate requirements, as reasonably
required by Oversight Agent, including but not limited to, those
items required by FIRREA;
(c) Borrower has provided Oversight Agent with
evidence satisfactory to Oversight Agent in its reasonable
discretion of the existence of all deeds, assignments, waivers,
consents, non-disturbance and recognition or similar agreements,
bills of sale and other documents and has duly effected all
recordings, filings and other actions necessary to establish,
protect, and perfect Borrower's right, title and interest in and
to such Real Estate;
(d) the Real Estate (i) is or was used by Borrower for
the conduct of a retail store business, provided however no Real
Estate which was previously used by Borrower for the operation of
a retail store which is no longer in operation and is "dark"
shall be eligible unless such Real Estate is actively being
marketed for sale in a commercially reasonable manner; and
(e) Borrower has the legal right and authority to
transfer all of its right, title and interest in such leasehold
without the consent of landlords and free of any recapture,
termination or other similar rights of landlords.
"Environmental Laws" shall mean all applicable federal,
state, local and foreign laws, statutes, ordinances, codes,
rules, standards and regulations, now or hereafter in effect, and
in each case as amended or supplemented from time to time, and
any applicable judicial or administrative interpretation thereof,
including any applicable judicial or administrative order,
consent decree, order or judgment, imposing liability or
standards of conduct for or relating to the regulation and
protection of human health, safety, the environment and natural
resources (including ambient air, surface water, groundwater,
wetlands, land surface or subsurface strata, wildlife, aquatic
species and vegetation). Environmental Laws include the
Comprehensive Environmental Response, Compensation, and Liability
Act of 1980 (42 U.S.C. 9601 et seq.) ("CERCLA"); the Hazardous
Materials Transportation Authorization Act of 1994 (49 U.S.C.
5101 et seq.); the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. 136 et seq.); the Solid Waste
Disposal Act (42 U.S.C. 6901 et seq.); the Toxic Substance
Control Act (15 U.S.C. 2601 et seq.); the Clean Air Act (42
U.S.C. 7401 et seq.); the Federal Water Pollution Control Act
(33 U.S.C. 1251 et seq.); the Occupational Safety and Health
Act (29 U.S.C. 651 et seq.); and the Safe Drinking Water Act
(42 U.S.C. 300(f) et seq.), each as from time to time amended,
and any and all regulations promulgated thereunder, and all
analogous state, local and foreign counterparts or equivalents
and any transfer of ownership notification or approval statutes.
"Environmental Liabilities" shall mean, with respect to
any Person, all liabilities, obligations, responsibilities,
response, remedial and removal costs, investigation and
feasibility study costs, capital costs, operation and maintenance
costs, losses, damages, punitive damages, property damages,
natural resource damages, consequential damages, treble damages,
costs and expenses (including all fees, disbursements and
expenses of counsel, experts and consultants), fines, penalties,
sanctions and interest incurred as a result of or related to any
claim, suit, action, investigation, proceeding or demand by any
Person, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute or common
law, including any arising under or related to any Environmental
Laws, Environmental Permits, or in connection with any Release or
threatened Release or presence of a Hazardous Material whether
on, at, in, under, from or about or in the vicinity of any real
or personal property.
"Environmental Permits" shall mean all permits,
licenses, authorizations, certificates, approvals or
registrations required by any Governmental Authority under any
Environmental Laws.
"Equipment" shall mean all "equipment," as such term is
defined in the Code, now owned or hereafter acquired by any
Credit Party, wherever located and, in any event, including all
such Credit Party's machinery and equipment, including processing
equipment, conveyors, machine tools, data processing and computer
equipment with software and peripheral equipment (other than
software constituting part of the Accounts), and all engineering,
processing and manufacturing equipment, office machinery,
furniture, materials handling equipment, tools, attachments,
accessories, automotive equipment, trailers, trucks, forklifts,
molds, dies, stamps, motor vehicles, rolling stock and other
equipment of every kind and nature, trade fixtures and fixtures
not forming a part of real property, all whether now owned or
hereafter acquired, and wherever situated, together with all
additions and accessions thereto, replacements therefor, all
parts therefor, all substitutes for any of the foregoing, fuel
therefor, and all manuals, drawings, instructions, warranties and
rights with respect thereto, and all products and proceeds
thereof and condemnation awards and insurance proceeds with
respect thereto.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974 (or any successor legislation thereto), as
amended from time to time, and any regulations promulgated
thereunder.
"ERISA Affiliate" shall mean, with respect to any
Credit Party, any trade or business (whether or not incorporated)
which, together with such Credit Party, are treated as a single
employer within the meaning of Sections 414(b), (c), (m) or (o)
of the IRC.
"ERISA Event" shall mean, with respect to any Credit
Party or any ERISA Affiliate, (a) any event described in Section
4043(c) of ERISA with respect to a Title IV Plan; (b) the
withdrawal of any Credit Party or ERISA Affiliate from a Title IV
Plan subject to Section 4063 of ERISA during a plan year in which
it was a substantial employer, as defined in Section 4001(a)(2)
of ERISA; (c) the complete or partial withdrawal of any Credit
Party or any ERISA Affiliate from any Multiemployer Plan; (d) the
filing of a notice of intent to terminate a Title IV Plan or the
treatment of a plan amendment as a termination under Section 4041
of ERISA; (e) the institution of proceedings to terminate a Title
IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any
Credit Party or ERISA Affiliate to make when due required
contributions to a Multiemployer Plan or Title IV Plan unless
such failure is cured within 30 days; (g) any other event or
condition which might reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Title IV Plan or
Multiemployer Plan or for the imposition of liability under
Section 4069 or 4212(c) of ERISA; (h) the termination of a
Multiemployer Plan under Section 4041A of ERISA or the
reorganization or insolvency of a Multiemployer Plan under
Section 4241 of ERISA; (i) the loss of a Qualified Plan's
qualification or tax exempt status; or (j) the termination of a
Plan described in Section 4064 of ERISA.
"ESOP" shall mean a Plan which is intended to satisfy
the requirements of Section 4975(e)(7) of the IRC."Event of
Default" shall have the meaning assigned to it in Section 8.1.
"Federal Funds Rate" shall mean, for any day, a
floating rate equal to the weighted average of the rates on
overnight federal funds transactions among members of the Federal
Reserve System, as determined by Agent.
"Federal Reserve Board" means the Board of Governors of
the Federal Reserve System, or any successor thereto.
"Fees" shall mean any and all fees and compensation
payable to Agent, Oversight Agent or any Lender pursuant to the
Agreement or any of the other Loan Documents.
"Financial Statements" shall mean the consolidated
income statements, statements of cash flows and balance sheets of
Borrower delivered in accordance with Section 3.4 of the
Agreement and Annex E to the Agreement, provided however, that
upon the formation of any Subsidiaries as permitted under this
Agreement, such statements and balance sheets shall be prepared
on a consolidated and consolidating basis.
"Fiscal Month" shall mean any of the monthly accounting
periods of Borrower.
"Fiscal Quarter" shall mean any of the quarterly
accounting periods of Borrower which quarterly accounting periods
through the Termination Date are as set forth on Schedule 10
annexed hereto.
"Fiscal Year" shall mean any of the annual accounting
periods of Borrower ending on the Saturday closest to January 31
of each year.
"Fixtures" shall mean any "fixtures" as such term is
defined in the Code, now owned or hereafter acquired by any
Credit Party.
"Funded Debt" shall mean, with respect to any Person,
all Indebtedness for borrowed money evidenced by notes, bonds,
debentures, or similar evidences of Indebtedness and which by its
terms matures more than one year from, or is directly or
indirectly renewable or extendible at such Person's option under
a revolving credit or similar agreement obligating the lender or
lenders to extend credit over a period of more than one year from
the date of creation thereof, and specifically including Capital
Lease Obligations, current maturities of long-term debt,
revolving credit and short-term debt extendible beyond one year
at the option of the debtor, and also including, in the case of
Borrower, the obligations and, without duplication, Guaranteed
Indebtedness consisting of guaranties of Funded Debt of other
Persons.
"GAAP" shall mean generally accepted accounting
principles in the United States of America, consistently applied,
as such term is further defined in Annex G to the Agreement.
"GE Capital Fee Letter" shall mean that certain letter,
dated as of July 26, 1999, between GE Capital and Borrower with
respect to certain Fees to be paid from time to time by Borrower
to GE Capital.
"General Intangibles" shall mean any "general
intangibles," as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party, and, in any event,
including all right, title and interest which such Credit Party
may now or hereafter have in or under any Contract, all customer
and mailing lists, web sites, domain names, Licenses, Copyrights,
Trademarks, Patents, and all applications therefor and reissues,
extensions or renewals thereof, rights in Intellectual Property,
interests in partnerships, joint ventures and other business
associations, licenses, permits, copyrights, trade secrets,
proprietary or confidential information, inventions (whether or
not patented or patentable), technical information, procedures,
designs, knowledge, know-how, software, data bases, data, skill,
expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any
Trademark or Trademark License), all rights and claims in or
under insurance policies (including insurance for fire, damage,
loss and casualty, whether covering personal property, real
property, tangible rights or intangible rights, all liability,
life, key man and business interruption insurance, and all
unearned premiums), uncertificated securities, choses in action,
deposit, checking and other bank accounts, rights to receive tax
refunds and other payments, rights of indemnification, all books
and records, correspondence, credit files, invoices and other
papers, including without limitation all tapes, cards, computer
runs and other papers and documents in the possession or under
the control of such Credit Party or any computer bureau or
service company from time to time acting for such Credit Party.
"Governmental Authority" shall mean any nation or
government, any state or other political subdivision thereof, and
any agency, department or other entity exercising executive,
legislative, judicial, regulatory or administrative functions of
or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person,
any obligation of such Person guaranteeing any indebtedness,
lease, dividend, or other obligation ("primary obligations") of
any other Person (the "primary obligor") in any manner, including
any obligation or arrangement of such Person (a) to purchase or
repurchase any such primary obligation, (b) to advance or supply
funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet condition of the primary obligor,
(c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such
primary obligation, or (d) to indemnify the owner of such primary
obligation against loss in respect thereof. The amount of any
Guaranteed Indebtedness at any time shall be deemed to be an
amount equal to the lesser at such time of (x) the stated or
determinable amount of the primary obligation in respect of which
such Guaranteed Indebtedness is made and (y) the maximum amount
for which such Person may be liable pursuant to the terms of the
instrument embodying such Guaranteed Indebtedness; or, if not
stated or determinable, the maximum reasonably anticipated
liability (assuming full performance) in respect thereof.
"Guaranties" shall mean, collectively, the Holdings
Guaranty, each Subsidiary Guaranty and any other guaranty
executed by any Guarantor in favor of Agent and Lenders in
respect of the Obligations.
"Guarantors" shall mean Holdings, each Subsidiary of
Borrower, and each other Person, if any, which executes a
guarantee or other similar agreement in favor of Agent in
connection with the transactions contemplated by the Agreement
and the other Loan Documents.
"Hazardous Material" shall mean any substance, material
or waste which is regulated by or forms the basis of liability
now or hereafter under, any Environmental Laws, including any
material or substance which is (a) defined as a "solid waste,"
"hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste," "restricted hazardous waste,"
"pollutant," "contaminant," "hazardous constituent," "special
waste," "toxic substance" or other similar term or phrase under
any Environmental Laws, (b) petroleum or any fraction or
by-product thereof, asbestos, polychlorinated biphenyls (PCB's),
or any radioactive substance.
"Holdings" shall have the meaning ascribed thereto in
the recitals to the Agreement.
"Holdings Guaranty" shall mean the guaranty of even
date herewith executed by Holdings in favor of Agent and Lenders.
"Holdings Pledge Agreement" shall mean the Pledge
Agreement of even date herewith executed by Holdings in favor of
Agent, on behalf of itself and Lenders, pledging all Stock of
Borrower and its other Subsidiaries and all Intercompany Notes
owing to or held by it.
"Indebtedness" of any Person shall mean without
duplication (a) all indebtedness of such Person for borrowed
money or for the deferred purchase price of property payment for
which is deferred six (6) months or more, but excluding
obligations to trade creditors incurred in the ordinary course of
business that are not overdue by more than six (6) months unless
being contested in good faith, (b) all reimbursement and other
obligations with respect to letters of credit, bankers'
acceptances and surety bonds, whether or not matured, (c) all
obligations evidenced by notes, bonds, debentures or similar
instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect
to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the
event of default are limited to repossession or sale of such
property), (e) all Capital Lease Obligations and the present
value (discounted at the Index Rate as in effect on the Closing
Date) of future rental payments under all synthetic leases, (f)
all obligations of such Person under commodity purchase or option
agreements or other commodity price hedging arrangements, in each
case whether contingent or matured, (g) all obligations of such
Person under any foreign exchange contract, currency swap
agreement, interest rate swap, cap or collar agreement or other
similar agreement or arrangement designed to alter the risks of
that Person arising from fluctuations in currency values or
interest rates, in each case whether contingent or matured, (h)
all Indebtedness referred to above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property or
other assets (including accounts and contract rights) owned by
such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness, and (i) the
Obligations. Indebtedness specifically does not include, without
limitation, Borrower's obligations under real estate leases and
other operating leases.
"Indemnified Liabilities" shall have the meaning
assigned to it in Section 1.13.
"Index Rate" shall mean, for any day, a floating rate
equal to the higher of (i) the rate publicly quoted from time to
time by The Wall Street Journal as the "base rate on corporate
loans at large U.S. money center commercial banks" (or, if
The Wall Street Journal ceases quoting a base rate of the type
described, the highest per annum rate of interest published by
the Federal Reserve Board in Federal Reserve statistical release
H.15 (519) entitled "Selected Interest Rates" as the Bank prime
loan rate or its equivalent), and (ii) the Federal Funds Rate
plus fifty (50) basis points per annum. Each change in any
interest rate provided for in the Agreement based upon the Index
Rate shall take effect at the time of such change in the Index
Rate.
"Index Rate Loan" shall mean a Loan or portion thereof
bearing interest by reference to the Index Rate.
"Initial Tranche B Advance" shall have the meaning
assigned to it in Section 1.1(e).
"Instruments" shall mean any "instrument," as such term
is defined in the Code, now owned or hereafter acquired by any
Credit Party, wherever located, and, in any event, including all
certificated securities, all certificates of deposit, and all
notes and other, without limitation, evidences of indebtedness,
other than instruments that constitute, or are a part of a group
of writings that constitute, Chattel Paper.
"Intellectual Property" shall mean any and all
Licenses, Patents, Copyrights, Trademarks, trade secrets and
customer lists.
"Intellectual Property Security Agreement" shall mean
the Intellectual Property Security Agreement made in favor of
Agent, on behalf of itself and Lenders, by each applicable Credit
Party.
"Intercompany Notes" shall have the meaning assigned to
it in Section 6.3.
"Interest Expense" shall mean, with respect to any
Person for any fiscal period, interest expense (whether cash or
non-cash) of such Person determined in accordance with GAAP for
the relevant period ended on such date, including, in any event,
interest expense with respect to any Funded Debt of such Person
and interest expense for the relevant period that has been
capitalized on the balance sheet of such Person.
"Interest Payment Date" means (a) as to any Index Rate
Loan, the first Business Day of each month to occur while such
Loan is outstanding, (b) as to any LIBOR Loan, the last day of
the applicable LIBOR Period; provided, that in the case of any
LIBOR Period greater than three months in duration, interest
shall be payable at three month intervals and on the last day of
such LIBOR Period; and provided further that, in addition to the
foregoing, each of (x) the date upon which all of the Commitments
have been terminated and the Loans have been paid in full and (y)
the Commitment Termination Date shall be deemed to be an
"Interest Payment Date" with respect to any interest which is
then accrued under the Agreement.
"Inventory" shall mean any "inventory," as such term is
defined in the Code, now or hereafter owned or acquired by any
Credit Party, wherever located, and in any event including
inventory, merchandise, goods and other personal property which
are held by or on behalf of any Credit Party for sale or lease or
are furnished or are to be furnished under a contract of service,
or which constitute raw materials, work in process or materials
used or consumed or to be used or consumed in such Credit Party's
business or in the processing, production, packaging, promotion,
delivery or shipping of the same, including other supplies.
"Inventory Loans" shall mean Revolving Loans advanced
against the Eligible Inventory portion of the Borrowing Base.
"Inventory Overadvances" shall mean that portion of
Tranche A Revolving Loans which results in the outstanding
balance of the Inventory Loans exceeding the Tranche A Inventory
Loan Limit as determined by the most recent appraisal of the
Oversight Agent received by Agent prior to any such Tranche A
Revolving Loan, provided, however, Tranche A Revolving Lenders
(i) are entitled to rely absolutely on the most recent appraisal
provided by Oversight Agent in determining whether Tranche A
Revolving Loans to be made will constitute Inventory
Overadvances, and (ii) shall not be subject to any subordination
whatsoever for Inventory Overadvances made in the event
subsequent Reserves, changes in eligibility criteria, appraisals
or other valuation evidence indicate that outstanding Tranche A
Revolving Loans constituting Inventory Loans exceed the Tranche A
Inventory Loan Limit when at the time such Tranche A Revolving
Loans were made, the Tranche A Inventory Loan Limit had not been
exceeded.
"Investment Property" shall have the meaning ascribed
thereto in Section 9-115 of the Code in those jurisdictions in
which such definition has been adopted and shall include (i) all
securities, whether certificated or uncertificated, including
stocks, bonds, interests in limited liability companies,
partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any
Credit Party, including the rights of such Credit Party to any
securities account and the financial assets held by a securities
intermediary in such securities account and any free credit
balance or other money owing by any securities intermediary with
respect to that account; (iii) all securities accounts held by
any Credit Party; (iv) all commodity contracts held by any Credit
Party; and (v) all commodity accounts held by any Credit Party.
"IRC" shall mean the Internal Revenue Code of 1986, as
amended, and any successor thereto.
"IRS" shall mean the Internal Revenue Service, or any
successor thereto.
"Landlord Waiver States" shall have the meaning
assigned to such term in Section 5.9.
"L/C Issuer" shall have the meaning assigned to such
term in Annex B.
"Lenders" shall mean GE Capital, Paragon, the other
Lenders named on the signature page of the Agreement, and, if any
such Lender shall decide to assign all or any portion of the
Obligations, such term shall include such assignee.
"Letter of Credit Fee" has the meaning ascribed thereto
in Annex B.
"Letter of Credit Obligations" shall mean all
outstanding obligations incurred by Agent and Tranche A Revolving
Lenders at the request of Borrower, whether direct or indirect,
contingent or otherwise, due or not due, in connection with the
issuance of a reimbursement agreement or guaranty by Agent or
purchase of a participation as set forth in Annex B with respect
to any Letter of Credit. The amount of such Letter of Credit
Obligations shall equal the maximum amount which may be payable
by Agent or Tranche A Revolving Lenders thereupon or pursuant
thereto.
"Letters of Credit" shall mean commercial or standby
letters of credit issued for the account of Borrower by any L/C
Issuer, and bankers' acceptances issued by Borrower, for which
Agent and Tranche A Revolving Lenders have incurred Letter of
Credit Obligations.
"LIBOR Business Day" shall mean a Business Day on which
banks in the city of London are generally open for interbank or
foreign exchange transactions.
"LIBOR Loan" shall mean a Loan or any portion thereof
bearing interest by reference to the LIBOR Rate.
"LIBOR Period" shall mean, with respect to any LIBOR
Loan, each period commencing on a LIBOR Business Day selected by
Borrower pursuant to the Agreement and ending one, two, three or
six months thereafter, as selected by Borrower's irrevocable
notice to Agent as set forth in Section 1.5(e); provided that the
foregoing provision relating to LIBOR Periods is subject to the
following:
(a) if any LIBOR Period would otherwise end on a day
that is not a LIBOR Business Day, such LIBOR Period shall be
extended to the next succeeding LIBOR Business Day unless the
result of such extension would be to carry such LIBOR Period into
another calendar month in which event such LIBOR Period shall end
on the immediately preceding LIBOR Business Day;
(b) any LIBOR Period that would otherwise extend
beyond the Commitment Termination Date shall end two (2) LIBOR
Business Days prior to such date;
(c) any LIBOR Period pertaining to a LIBOR Loan that
begins on the last LIBOR Business Day of a calendar month (or on
a day for which there is no numerically corresponding day in the
calendar month at the end of such LIBOR Period) shall end on the
last LIBOR Business Day of a calendar month;
(d) Borrower shall select LIBOR Periods so as not to
require a payment or prepayment of any LIBOR Loan during a LIBOR
Period for such Loan; and
(e) Borrower shall select LIBOR Periods so that there
shall be no more than eight (8) separate LIBOR Loans in existence
at any one time.
"LIBOR Rate" shall mean for each LIBOR Period, a rate
of interest determined by Agent equal to:
(a) the offered rate for deposits in United States
Dollars for the applicable LIBOR Period which appears on Telerate
Page 3750 as of 11:00 a.m., London time, on the second full LIBOR
Business Day next preceding the first day of each LIBOR Period
(unless such date is not a Business Day, in which event the next
succeeding Business Day will be used); divided by
(b) a number equal to 1.0 minus the aggregate (but
without duplication) of the rates (expressed as a decimal
fraction) of reserve requirements in effect on the day which is
two (2) LIBOR Business Days prior to the beginning of such LIBOR
Period (including basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of the
Federal Reserve system or other governmental authority having
jurisdiction with respect thereto, as now and from time to time
in effect) for Eurocurrency funding (currently referred to as
"Eurocurrency liabilities" in Regulation D of such Board which
are required to be maintained by a member bank of the Federal
Reserve System.
If such interest rates shall cease to be available from
Telerate News Service, the LIBOR Rate shall be determined
from such financial reporting service or other information
as shall be mutually acceptable to Agent and Borrower.
"License" shall mean any Copyright License, Patent
License, Trademark License or other license of rights or
interests now held or hereafter acquired by any Credit Party.
"Lien" shall mean any mortgage or deed of trust,
pledge, hypothecation, assignment, deposit arrangement, lien,
charge, claim, security interest, easement or encumbrance, or
preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any lease
or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing,
and the filing of, or agreement to give, any financing statement
perfecting a security interest under the Code or comparable law
of any jurisdiction).
"Litigation" shall have the meaning assigned to it in
Section 3.13.
"Loan Account" shall have the meaning assigned to it in
Section 1.12.
"Loan Documents" shall mean the Agreement, the Notes,
the Oversight Agreement, the Collateral Documents and all other
agreements, instruments, documents and certificates identified in
the Closing Checklist executed and delivered to, or in favor of,
Agent and/or Lenders and including all other pledges, powers of
attorney, consents, assignments, contracts, notices, and all
other written matter whether heretofore, now or hereafter
executed by or on behalf of any Credit Party, or any employee of
any Credit Party, and delivered to Agent or any Lender in
connection with the Agreement or the transactions contemplated
hereby. Any reference in the Agreement or any other Loan
Document to a Loan Document shall include all appendices,
exhibits or schedules thereto, and all amendments, restatements,
supplements or other modifications thereto, and shall refer to
such Agreement as the same may be in effect at any and all times
such reference becomes operative.
"Loans" shall mean the Tranche A Revolving Loan, the
Tranche B Revolving Loan and the Swing Line Loan.
"Material Adverse Effect" shall mean a material adverse
effect on (a) the business, assets, operations, prospects or
financial or other condition of any Credit Party including,
without limitation, any material adverse change in the financial
performance of any Credit Party as compared to the Projections
attached hereto as Schedule 3.4(C), (b) Borrower's ability to pay
any of the Loans or any of the other Obligations in accordance
with the terms of the Agreement, (c) the Collateral or Agent's
Liens, on behalf of itself and Lenders, on the Collateral or the
priority of such Liens, or (d) Agent's or any Lender's rights and
remedies under the Agreement and the other Loan Documents. A
Material Adverse Effect shall not include the closing of any
Stores identified in the Projections attached hereto as
Disclosure Schedule 3.4(B) and/or the disposition of assets as
permitted under Section 6.8 hereof. Without limiting the
foregoing, any event or occurrence adverse to one or more Credit
Parties which results or could reasonably be expected to result
in costs and/or liabilities and/or loss of revenues,
individually, or in the aggregate, to any Credit Party in any 30-
day period in excess of the lesser of $10,000,000 and 10% of
Borrowing Availability as of any date of determination shall be
deemed to have had Material Adverse Effect.
"Material Agreements" shall mean those agreements
identified on Disclosure Schedule 6.19.
"Maximum Amount"means collectively, the Maximum Tranche
A Amount and the Maximum Tranche B Amount.
"Maximum Tranche A Amount" shall mean, at any
particular time, an amount equal to the Tranche A Revolving Loan
Commitment of all Tranche A Revolving Lenders.
"Maximum Tranche B Amount" shall mean, at any
particular time, an amount equal to the Tranche B Revolving Loan
Commitment of all Tranche B Revolving Lenders.
"Monogram Agreement" shall mean that certain Credit
Card Program dated as of July 20, 1995, among Borrower, Monogram
Credit Card Bank of Georgia and General Electric Capital
Corporation, as amended and in effect on the Closing Date, and as
further amended in accordance with Section 6.20 hereof, as the
same may be replaced by Borrower with Household Bank (SB), N.A.,
on substantially the same terms as the draft of such agreement
previously delivered to Agents.
"Mortgaged Properties" shall have the meaning assigned
to it in Annex D.
"Mortgages" shall mean each of the mortgages, deeds of
trust, leasehold mortgages, leasehold deeds of trust, collateral
assignments of leases or other real estate security documents
delivered by any Credit Party to Oversight Agent with respect to
the Mortgaged Properties, all in form and substance satisfactory
to Oversight Agent.
"Multiemployer Plan" shall mean a "multiemployer plan"
as defined in Section 4001(a)(3) of ERISA, and to which any
Credit Party or ERISA Affiliate is making, is obligated to make,
has made or been obligated to make, contributions on behalf of
participants who are or were employed by any of them.
"Net Borrowing Availability" shall mean as of any date
of determination, the sum of Tranche A Borrowing Availability and
Tranche B Borrowing Availability.
"Net Retail Liquidation Value " shall mean the
appraised liquidation value of Eligible Inventory less
liquidation expenses as reasonably determined in good faith by
Agents from time to time.
"Net Worth" shall mean, with respect to any Person as
of any date of determination, the book value of the assets of
such Person, minus (a) reserves applicable thereto, and minus (b)
all of such Person's liabilities on a consolidated basis
(including accrued and deferred income taxes), all as determined
in accordance with GAAP.
"NLV" shall mean as to any Eligible Leasehold Real
Estate, the net liquidation value of such Eligible Leasehold Real
Estate determined in accordance with an appraisal acceptable to
Oversight Agent.
"Non-Funding Lender" shall have the meaning assigned to
it in Section 9.9(a)(ii).
"Notes" shall mean the Revolving Notes and the Swing
Line Note, collectively.
"Notice of Conversion/Continuation" shall have the
meaning assigned to it in Section 1.5(e).
"Notice of Revolving Credit Advance" shall have the
meaning assigned to it in Section 1.1(a).
"Obligations" shall mean all loans, advances, debts,
liabilities and obligations, for the performance of covenants,
tasks or duties or for payment of monetary amounts (whether or
not such performance is then required or contingent, or such
amounts are liquidated or determinable) owing by any Credit Party
to Agents or any Lender, and all covenants and duties regarding
such amounts, of any kind or nature, present or future, whether
or not evidenced by any note, agreement or other instrument,
arising under the Agreement or any of the other Loan Documents.
This term includes all principal, interest (including all
interest which accrues after the commencement of any case or
proceeding in bankruptcy after the insolvency of, or for the
reorganization of any Credit Party, whether or not allowed in
such proceeding), Fees, Charges, expenses, attorneys' fees and
any other sum chargeable to any Credit Party under the Agreement
or any of the other Loan Documents.
"Oversight Agent" means Paragon, solely in its
capacity, as oversight agent for the Agent under the Oversight
Agreement, or such other "oversight agent " designated by Agent,
Requisite Tranche B Lenders and approved by Borrower which
consent of Borrower shall not be unreasonably withheld or
delayed; provided that no such consent shall be required so long
as any Event of Default has occurred and is continuing.
"Oversight Agreement" means that certain Oversight
Agent Agreement, of even date herewith, among Agent, Lenders,
Borrower and Oversight Agent.
"Paragon" shall mean Paragon Capital LLC.
"Paragon Fee Letter" shall mean that certain letter,
dated as of July 26, 1999, between Paragon and Borrower with
respect to certain Fees to be paid from time to time by Borrower
to Paragon.
"Patent License" shall mean rights under any written
agreement now owned or hereafter acquired by any Credit Party
granting any right with respect to any invention on which a
Patent is in existence.
"Patents" shall mean all of the following in which any
Credit Party now holds or hereafter acquires any interest: (a)
all letters patent of the United States or any other country, all
registrations and recordings thereof, and all applications for
letters patent of the United States or any other country,
including registrations, recordings and applications in the
United States Patent and Trademark Office or in any similar
office or agency of the United States, any State or Territory
thereof, or any other country, and (b) all reissues,
continuations, continuations-in-part or extensions thereof.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation or any successor thereto.
"Permitted Discretion" means Agents' reasonable good
faith judgment in consideration of any factor which (i) could
adversely affect the value of any Collateral, the ability to
realize upon the Collateral, the enforceability or priority of
the liens thereon or the amount that Agents and Lenders would be
likely to receive (after giving consideration to delays in
payment and costs of enforcement) in the liquidation thereof; or
(ii) materially increases the likelihood that Agents and Lenders
would not receive payment for all of the Obligations.
"Permitted Encumbrances" shall mean the following
encumbrances: (a) Liens for taxes or assessments or other
governmental Charges not yet due and payable; (b) pledges or
deposits of money securing statutory obligations under workmen's
compensation, unemployment insurance, social security or public
liability laws or similar legislation (excluding Liens under
ERISA); (c) pledges or deposits of money securing bids, tenders,
contracts (other than contracts for the payment of money) or
leases to which any Credit Party is a party as lessee made in the
ordinary course of business; (d) inchoate and unperfected
workers', mechanics' or similar liens arising in the ordinary
course of business, so long as such Liens attach only to
Equipment, Fixtures and/or Real Estate; (e) carriers',
mechanics', materialmen's, warehousemen's, suppliers' or other
similar possessory liens in existence less than 120 days from the
date of creation thereof in respect of obligations not overdue or
otherwise discharged or bonded over within sixty (60) days
following the imposition of such liens securing liabilities in an
outstanding aggregate amount not in excess of $500,000; (f)
deposits securing, or in lieu of, surety, appeal or customs bonds
in proceedings to which any Credit Party is a party; (g) any
attachment or judgment lien not constituting an Event of Default
under Section 8.1(j); (h) zoning restrictions, easements,
licenses, or other restrictions on the use of any Real Estate or
other minor irregularities in title (including leasehold title)
thereto, so long as the same do not materially impair the use,
value, or marketability of such Real Estate; (i) presently
existing or hereinafter created Liens in favor of Agent, on
behalf of Lenders; and (j) Liens expressly permitted under
clauses (b), (c) and (d) of Section 6.7 of the Agreement.
"Permitted Inventory Locations" shall mean those Stores
and warehouse facilities of Borrower located in the United States
and listed on Disclosure Schedule 3.2 hereto, as such Disclosure
Schedule 3.2 may be supplemented from time to time in accordance
with the provisions of Section 5.6 hereof, subject to Agents'
receipt of a waiver, in form and substance reasonably
satisfactory to Agents, with respect to any inventory
consolidator not identified on Disclosure Schedule 3.2 on the
Closing Date.
"Person" shall mean any individual, sole
proprietorship, partnership, joint venture, trust, unincorporated
organization, association, corporation, limited liability
company, institution, public benefit corporation, other entity or
government (whether federal, state, county, city, municipal,
local, foreign, or otherwise, including any instrumentality,
division, agency, body or department thereof).
"Plan" shall mean, at any time, an employee benefit
plan, as defined in Section 3(3) of ERISA, which any Credit Party
maintains, contributes to or has an obligation to contribute to
on behalf of participants who are or were employed by any Credit
Party.
"Pledge Agreements" shall mean the Borrower Pledge
Agreement, the Holdings Pledge Agreement, and any other pledge
agreement entered into after the Closing Date by any Credit Party
(as required by the Agreement or any other Loan Document).
"POS System" shall have the meaning assigned to it in
Section 5.13.
"Prior Lender" shall mean collectively, BankBoston
Retail Finance Inc. and the other financial institutions party to
the Second Amended and Restated Credit Agreement, dated as of
January 22, 1999, as amended, evidencing the Prior Lenders
Obligations.
"Prior Lender Obligations" shall mean all obligations
and liabilities of any Credit Party to the Prior Lender pursuant
to the Second Amended and Restated Credit Agreement, dated as of
January 22, 1999, as amended, between Borrower and the Prior
Lender and all instruments and documents executed pursuant
thereto or in connection therewith.
"Proceeds" shall mean "proceeds," as such term is
defined in the Code and, in any event, shall include (a) any and
all proceeds of any insurance, indemnity, warranty or guaranty
payable to any Credit Party from time to time with respect to any
of the Collateral, (b) any and all payments (in any form
whatsoever) made or due and payable to any Credit Party from time
to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the
Collateral by any Governmental Authority (or any Person acting
under color of governmental authority), (c) any claim of any
Credit Party against third parties (i) for past, present or
future infringement of any Patent or Patent License, or (ii) for
past, present or future infringement or dilution of any
Copyright, Copyright License, Trademark or Trademark License, or
for injury to the goodwill associated with any Trademark or
Trademark License, (d) any recoveries by any Credit Party against
third parties with respect to any litigation or dispute
concerning any of the Collateral, and (e) any and all other
amounts from time to time paid or payable under or in connection
with any of the Collateral, upon disposition or otherwise.
"Projections" means Borrower's forecasted consolidated:
(a) balance sheets; (b) profit and loss statements; and (c) cash
flow statements prepared on a basis consistent with the
historical Financial Statements of Borrower, together with
appropriate supporting details and a statement of underlying
assumptions, provided however, that upon the formation of any
Subsidiaries as permitted under this Agreement, such Projections
shall be prepared on a consolidated and consolidating basis.
"Pro Rata Share" shall mean with respect to all matters
relating to any Lender (a) with respect to the Tranche A
Revolving Loan (including the Swing Line Loan as a subset of the
Swing Line Lender's Tranche A Revolving Loan), the percentage
obtained by dividing (i) the Tranche A Revolving Loan Commitment
of that Tranche A Revolving Lender (including the Swing Line
Commitment as a subset of the Swing Line Lender's Tranche A
Revolving Loan Commitment), by (ii) the aggregate Tranche A
Revolving Loan Commitments, (b) with respect to the Tranche B
Revolving Loan, the percentage obtained by dividing (i) the
Tranche B Revolving Loan Commitment of that Tranche B Revolving
Lender by (ii) the aggregate Tranche B Revolving Loan Commitments
of all Tranche B Revolving Lenders, as any such percentages may
be adjusted by assignments permitted pursuant to Section 9.1, (c)
with respect to all Loans, the percentage obtained by dividing
(i) the aggregate Commitments of that Lender by (ii) the
aggregate Commitments of all Lenders, and (d) with respect to all
Loans on and after the Commitment Termination Date, the
percentage obtained by dividing (i) the aggregate outstanding
principal balance of the Loans held by that Lender, by (ii) the
outstanding principal balance of the Loans held by all Lenders.
"Qualified Plan" shall mean a Plan which is intended to
be tax-qualified under Section 401(a) of the IRC.
"Real Estate" shall have the meaning assigned to it in
Section 3.6.
"Refinancing" shall mean the repayment in full by
Borrower of the Prior Lender Obligations on the Closing Date.
"Refunded Swing Line Loan" shall have the meaning
assigned to it in Section 1.1(b)(iii).
"Related Transactions" means each borrowing under the
Revolving Loan on the Closing Date, the Refinancing, the payment
of all fees, costs and expenses associated with all of the
foregoing and the execution and delivery of all of the Related
Transactions Documents.
"Related Transactions Documents" shall mean the Loan
Documents.
"Relationship Bank" shall have the meaning assigned to
it in Annex C.
"Release" shall mean any release, threatened release,
spill, emission, leaking, pumping, pouring, emitting, emptying,
escape, injection, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of Hazardous Material in the
indoor or outdoor environment, including the movement of
Hazardous Material through or in the air, soil, surface water,
ground water or property.
"Requisite Lenders" shall mean (a) Lenders having more
than sixty-six and two-thirds percent (66-2/3%) of the
Commitments of all Lenders, or (b) if the Commitments have been
terminated, more than sixty-six and two-thirds percent (66-2/3%)
of the aggregate outstanding amount of the Loans.
"Requisite Tranche A Lenders" shall mean (a) Tranche A
Revolving Lenders having more than sixty-six and two-thirds
percent (66-2/3%) of the Commitments of all Tranche A Revolving
Lenders, or (b) if the Commitments have been terminated, more
than sixty-six and two-thirds percent (66-2/3%) of the aggregate
amount outstanding of the Tranche A Revolving Loans.
"Requisite Tranche B Lenders" shall mean (a) Tranche B
Revolving Lenders having more than sixty-six and two-thirds
percent (66-2/3%) of the Commitments of all Tranche B Revolving
Lenders, or (b) if the Commitments have been terminated, more
than sixty-six and two-thirds percent (66-2/3%) of the aggregate
outstanding amount of the Tranche B Revolving Loans.
"Reserves" shall mean as reasonably determined by
Agents subject to the last sentence of this definition, such
amounts as Agents may from time to time reasonably establish and
revise, pursuant to their Permitted Discretion, upon three (3)
days' written notice to Borrower (a) to reflect events,
conditions, contingencies or risks which (i) adversely affect
either (A) any Collateral included in the Borrowing Base, the
rights of Agents or any of Lenders in any Collateral included in
the Borrowing Base or its value or (b) the security interest and
other rights of Agents or any of Lenders in the Collateral
included in the Borrowing Base (including the enforceability,
perfection and priority thereof) or (ii) adversely affect in any
material respect the business or financial condition of Borrower
or any of its Subsidiaries or (b) to reflect the belief (based
upon a comparison to historical information) of Agents that any
Borrowing Base Report or other collateral report or financial
information furnished by or on behalf of Borrower to Agents or
any of Lenders is or may have been incomplete, inaccurate or
misleading in any material respect. Initial Reserves to be
established as of the Closing Date will include an amount equal
to the sum of (x) the aggregate amount of one (1) month's rent
for all of Borrower's Stores located in the states of
Pennsylvania, Florida, New Jersey, Virginia and Washington,
provided that the foregoing shall not apply to such locations
where landlord waivers in the form of Exhibits 5.9(a) or (b) or
otherwise on terms reasonably acceptable to Agents have been
received by Agents and (y) customer liability reserves equal to
50% of gift and merchandise credits issued and outstanding during
the last twelve months and adjusted monthly. Reserves may
include, but are not limited to: rent, whether for personal or
real property and, in the case of rent fifteen (15) or more days
past due, whether or not a lessor's or landlord's waiver,
reasonably acceptable to Agents, has been received by Agents from
such lessor or landlord; payables based upon past due normal
trade terms; taxes and other governmental charges, whether ad
valorem, personal or real property or otherwise if Agents
reasonably believe that the tax claims therefor may have priority
over Agents' security interest in any of the Collateral of if
Agents reasonably believe that such taxes or governmental charges
may adversely affect the recovery realized on the Collateral; and
any customs, duty, freight or other out-of-pocket costs or
expenses required or advisable to "land" any Eligible Inventory
the purchase of which is supported by a Letter of Credit. In the
event (i) a conflict arises between Agent and Oversight Agent as
to the appropriate amount of Reserves, and (ii) Agents, after
using their best efforts in good faith, are unable to resolve
such dispute, the higher and more conservative Reserve
recommended in good faith by either Agent or Oversight Agent
shall be implemented.
"Restricted Payment" shall mean (a) the declaration or
payment of any dividend or the incurrence of any liability to
make any other payment or distribution of cash or other property
or assets in respect of a Person's Stock, (b) any payment on
account of the purchase, redemption, defeasance, sinking fund or
other retirement of a Person's Stock or any other payment or
distribution made in respect thereof, either directly or
indirectly, (c) any payment made to redeem, purchase, repurchase
or retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire Stock of such Person
now or hereafter outstanding; (d) any payment of a claim for the
rescission of the purchase or sale of, or for material damages
arising from the purchase or sale of, any shares of such Person's
Stock or of a claim for reimbursement, indemnification or
contribution arising out of or related to any such claim for
damages or rescission; (e) any payment, loan, contribution, or
other transfer of funds or other property to any Stockholder of
such Person other than payment of compensation in the ordinary
course to stockholders who are employees of such Person; and (f)
any payment of management fees (or other fees of a similar
nature) by such Person to any Stockholder of such Person or their
Affiliates.
"Retiree Welfare Plan" shall mean, at any time, a Plan
that is a "welfare plan" as defined in Section 3(2) of ERISA,
that provides for continuing coverage or benefits for any
participant or any beneficiary of a participant after such
participant's termination of employment, other than continuation
coverage provided pursuant to Section 4980B of the IRC and at the
sole expense of the participant or the beneficiary of the
participant.
"Revolving Credit Advance" shall mean any Tranche A
Revolving Credit Advance, and/or Tranche B Revolving Credit
Advance, as applicable.
"Revolving Loan" shall mean, at any time, the sum of
(i) the aggregate amount of Tranche A Revolving Credit Advances
and Tranche B Revolving Credit Advances outstanding to Borrower
plus (ii) the aggregate Letter of Credit Obligations incurred on
behalf of Borrower. Unless the context otherwise requires,
references to the outstanding principal balance of the Revolving
Loan shall include the outstanding balance of Letter of Credit
Obligations.
"Revolving Loan Commitment" shall mean (a) as to any
Tranche A Revolving Lender, the aggregate commitment of such
Tranche A Revolving Lender to make Tranche A Revolving Credit
Advances (including without duplication Swing Line Advances as a
subset of the Swing Line Lender's Tranche A Revolving Loan
Commitment) and/or incur Letter of Credit Obligations, (b) as to
any Tranche B Revolving Lender, the aggregate commitment of such
Tranche B Revolving Lender to make Tranche B Revolving Credit
Advances, or (c) as to all Revolving Lenders, the aggregate
commitment of all Revolving Lenders to make Revolving Credit
Advances (including without duplication Swing Line Advances as a
subset of the Swing Line Lender's Tranche A Revolving Loan
Commitment) and/or incur Letter of Credit Obligations, which
aggregate commitment shall be One Hundred and Twenty Five Million
Dollars ($125,000,000) on the Closing Date, as such amount may be
adjusted, if at all, from time to time in accordance with the
Agreement.
"Revolving Notes" shall mean collectively, the Tranche
A Revolving Notes and the Tranche B Revolving Notes.
"Security Agreement" shall mean the Security Agreement
of even date herewith entered into among Agent, on behalf of
itself and Lenders, and each Credit Party that is a signatory
thereto.
"Senior Obligations" shall mean all Obligations other
than the principal of and interest on the Tranche B Revolving
Loan (excluding any interest which accrues after the commencement
of any case or proceeding in bankruptcy after the insolvency of,
or for the reorganization of any Credit Party only to the extent
such interest is not allowed in such proceeding).
"Senior Obligations Termination Date" shall mean the
date on which the Loans (other than the Tranche B Revolving Loan)
have been indefeasibly repaid in full and all other Senior
Obligations under the Agreement and the other Loan Documents have
been completely discharged and Letter of Credit Obligations have
been cash collateralized, canceled or backed by stand-by letters
of credit in accordance with Annex B, and Borrower shall have no
further right to borrow any monies under the Agreement.
"Solvent" shall mean, with respect to any Person on a
particular date, that on such date (a) the fair value of the
property of such Person is greater than the total amount of
liabilities, including contingent liabilities, of such Person;
(b) the present fair salable value of the assets of such Person
is not less than the amount that will be required to pay the
probably liability of such Person on its debts as they become
absolute and matured; (c) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond
such Person's ability to pay as such debts and liabilities
mature; and (d) such Person is not engaged in a business or
transaction, and is not about to engage in a business or
transaction, for which such Person's property would constitute an
unreasonably small capital. The amount of contingent liabilities
(such as litigation, guarantees and pension plan liabilities) at
any time shall be computed as the amount which, in light of all
the facts and circumstances existing at the time, represents the
amount which can be reasonably be expected to become an actual or
matured liability.
"Stock" shall mean all shares, options, warrants,
general or limited partnership interests or other equivalents
(regardless of how designated) of or in a corporation,
partnership or equivalent entity whether voting or nonvoting,
including common stock, preferred stock or any other "equity
security" (as such term is defined in Rule 3a11-1 of the General
Rules and Regulations promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as
amended).
"Stores" shall mean any retail store currently owned or
leased or hereafter acquired or leased by Holdings, Borrower or
any of their Subsidiaries.
"Subsidiary" shall mean, with respect to any Person,
(a) any corporation of which an aggregate of more than fifty
percent (50%) of the outstanding Stock having ordinary voting
power to elect a majority of the board of directors of such
corporation (irrespective of whether, at the time, Stock of any
other class or classes of such corporation shall have or might
have voting power by reason of the happening of any contingency)
is at the time, directly or indirectly, owned legally or
beneficially by such Person and/or one or more Subsidiaries of
such Person, or with respect to which any such Person has the
right to vote or designate the vote of fifty percent (50%) or
more of such Stock whether by proxy, agreement, operation of law
or otherwise, and (b) any partnership or limited liability
company in which such Person and/or one or more Subsidiaries of
such Person shall have an interest (whether in the form of voting
or participation in profits or capital contribution) of more than
fifty percent (50%) or of which any such Person is a general
partner or may exercise the powers of a general partner.
"Subsidiary Guaranty" shall mean the Subsidiary
Guaranty of even date herewith executed by each Subsidiary of
Borrower in favor of Agent, on behalf of itself and Lenders.
"Supermajority Tranche A Revolving Lenders" shall mean
(a) Tranche A Revolving Lenders having eighty percent (80%) or
more of the Tranche A Revolving Loan Commitments of all Tranche A
Revolving Lenders, or (b) if the Tranche A Revolving Loan
Commitments have been terminated, eighty percent (80%) or more of
the aggregate outstanding amount of the Tranche A Revolving Loan
(with the Swing Line Loan being attributed to the Tranche A
Lenders making such Loan) and Letter of Credit Obligations.
"Supermajority Tranche B Revolving Lenders" shall mean
(a) Tranche B Revolving Lenders having eighty percent (80%) or
more of the Tranche B Revolving Loan Commitments of all Tranche B
Revolving Lenders, or (b) if the Tranche B Revolving Loan
Commitments have been terminated, eighty percent (80%) or more of
the aggregate outstanding amount of the Tranche B Revolving Loan.
"Supplemental Executive Retirement Plan" shall mean
collectively, (a) the Supplementary Executive Retirement Plan of
the Borrower effective as of August 1, 1988, as amended by
Amendment Number 1 dated as of August 1, 1988, by a Second
Amendment dated as of August 1, 1995 and by Amendment No. 3 dated
January 7, 1997; (b) the Executive Severance Plan for Samuel
Gerson, dated as of August, 1995; (c) the Executive Split Dollar
Life Insurance Agreement (Collateral Assignment Method) between
Borrower and Samuel Gerson, dated June 5, 1994; (d) the Executive
Severance Plan for Mone Anathan, III, dated August, 1995; (e) the
Executive Split Dollar Life Insurance Agreement (Collateral
Assignment Method) between Borrower and Mone Anathan, dated June
5, 1994; (f) the Executive Severance Plan Trust Agreement dated
June 4, 1994 between Holdings and the trustee thereof; (g) the
Executive Severance Plan for Steven R. Siegel, Esq., dated July
15, 1997; (h) the Executive Split Dollar Life Insurance Agreement
(Collateral Assignment Method) between the Borrower and Steven R.
Siegel, Esq., dated July 15, 1997; and (i) plans of a similar
type and nature created after January 30, 1998 for the benefit of
W. Jay Carothers.
"Swing Line Advance" has the meaning assigned to it in
Section 1.1(b)(i).
"Swing Line Availability" has the meaning assigned to
it in Section 1.1(b)(i).
"Swing Line Commitment" shall mean, as to the Swing
Line Lender, the commitment of the Swing Line Lender to make
Swing Line Loans as set forth on Annex J to the Agreement, which
commitment constitutes a subfacility of the Revolving Loan
Commitment of the Swing Line Lender.
"Swing Line Lender" shall mean GE Capital.
"Swing Line Loan" shall mean at any time, the aggregate
amount of Swing Line Advances outstanding to Borrower.
"Swing Line Note" has the meaning assigned to it in
Section 1.1(b)(ii).
"Tangible Net Worth" shall mean, with respect to any
Person at any date, the Net Worth of such Person at such date,
excluding, however, from the determination of the total assets at
such date, (a) all goodwill, capitalized organizational expenses,
capitalized research and development expenses, trademarks, trade
names, copyrights, patents, patent applications, licenses and
rights in any thereof, and other intangible items, (b) all
unamortized debt discount and expense, (c) treasury Stock, and
(d) any write-up in the book value of any asset resulting from a
revaluation thereof.
"Taxes" shall mean taxes, levies, imposts, deductions,
Charges or withholdings, and all liabilities with respect
thereto, excluding taxes and franchise taxes imposed on or
measured by the net income of Agent or a Lender by the
jurisdictions under the laws of which Agent and Lenders are
organized or any political subdivision thereof.
"Termination Date" shall mean the date on which the
Loans have been indefeasibly repaid in full and all other
Obligations under the Agreement and the other Loan Documents have
been completely discharged and Letter of Credit Obligations have
been cash collateralized, canceled or backed by stand-by letters
of credit in accordance with Annex B, and Borrower shall not have
any further right to borrow any monies under the Agreement.
"Third Party Interactives" shall mean all Persons with
whom any Credit Party exchanges data electronically in the
ordinary course of business, including, without limitation,
customers, suppliers, third-party vendors, subcontractors,
processors-converters, shippers and warehousemen.
"Title IV Plan" shall mean an employee pension benefit
plan, as defined in Section 3 (2) of ERISA (other than a
Multiemployer Plan), which is covered by Title IV of ERISA, and
which any Credit Party or ERISA Affiliate maintains, contributes
to or has an obligation to contribute to on behalf of
participants who are or were employed by any of them.
"Trademark License" shall mean rights under any written
agreement now owned or hereafter acquired by any Credit Party
granting any right to use any Trademark.
"Trademarks" shall mean all of the following now owned
or hereafter acquired by any Credit Party: (a) all trademarks,
trade names, domain names, corporate names, business names, trade
styles, service marks, logos, other source or business
identifiers, prints and labels on which any of the foregoing have
appeared or appear, designs and general intangibles of like
nature (whether registered or unregistered), now owned or
existing or hereafter adopted or acquired, all registrations and
recordings thereof, and all applications in connection therewith,
including registrations, recordings and applications in the
United States Patent and Trademark Office or in any similar
office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision
thereof; (b) all reissues, extensions or renewals thereof; and
(c) all goodwill associated with or symbolized by any of the
foregoing.
"Tranche A Borrowing Availability" shall have the
meaning assigned to it in Section 1.1(a)(i).
"Tranche A Borrowing Base" shall mean, as of any date
of determination by Agents, from time to time, an amount equal to
the sum at such time of:
(a) up to eighty-five percent (85%) of the book value
of Borrower's Eligible Accounts, less any Reserves established by
Agents at such time; plus
(b) up to (i) the lesser of (A) eighty percent (80%)
of the Net Retail Liquidation Value of Borrower's Eligible
Inventory, or (B) sixty-five percent (65%), for the period
October 16th through June 14th inclusive, and seventy percent
(70%) for the period June 15th through October 15th inclusive, of
the book value of Borrower's Eligible Inventory valued on a
first-in, first-out basis (at the lower of cost or market), less
any Reserves established by Agents at such time; plus (ii) fifty
percent (50%) of the aggregate amount of documentary Letters of
Credit issued and outstanding in connection with the purchase of
otherwise Eligible Inventory provided however, that with respect
to Advances on Eligible Inventory, at no time shall such Advances
exceed one hundred percent (100%) of the Net Retail Liquidation
Value of Borrower's Eligible Inventory.
"Tranche A Inventory Loan Limit" shall mean the lesser
of (i) eighty-five percent (85%) of the Net Retail Liquidation
Value of Borrower's Eligible Inventory, or (ii) seventy percent
(70%), for the period October 16th through June 14th inclusive,
and seventy-five percent (75%) for the period June 15th through
October 15th inclusive, of the book value of Borrower's Eligible
Inventory valued on a first-in, first-out basis (at the lower of
cost or market).
"Tranche A Revolving Credit Advance" shall have the
meaning assigned to it in Section 1.1(a)(i).
"Tranche A Revolving Lenders" shall mean, as of any
date of determination, Lenders having a Tranche A Revolving Loan
Commitment.
"Tranche A Revolving Loan" shall mean at any time, the
(i) aggregate amount of Tranche A Revolving Credit Advances
outstanding to Borrower plus (ii) the aggregate Letter of Credit
Obligations incurred on behalf of Borrower. Unless the context
otherwise requires, references to the outstanding principal
balance of the Tranche A Revolving Loan shall include the
outstanding balance of Letter of Credit Obligations.
"Tranche A Revolving Loan Commitment" shall mean (a) as
to any Lender with a Tranche A Revolving Loan Commitment, the
commitment of such Lender to make its Pro Rata Share of the
Tranche A Revolving Loan as set forth on Annex J to the Agreement
or in the most recent Assignment Agreement executed by such
Lender, and (b) as to all Lenders with a Tranche A Revolving Loan
Commitment, the aggregate commitment of all such Lenders to make
the Tranche A Revolving Loan, which aggregate commitment shall be
Eighty Five Million Dollars ($85,000,000) on the Closing Date, as
to each of clauses (a) and (b), as such Tranche A Revolving Loan
Commitment may be reduced, amortized, or adjusted from time to
time in accordance with the Agreement.
"Tranche A Revolving Note" shall have the meaning
assigned to it in Section 1.1(a)(iv).
"Tranche B Borrowing Availability" shall have the
meaning assigned to it in Section 1.1(a)(ii).
"Tranche B Borrowing Base" shall mean, as of any date
of determination by Agents, from time to time, an amount equal to
the sum at such time of:
(a) up to the greater of (i) eight-five percent (85%),
of Borrower's Eligible Inventory valued on a first-in, first-out
basis (at the lower of cost of market), or (ii) ninety percent
(90%) of the Net Retail Liquidation Value of Borrower's Eligible
Inventory, less any Reserves established by Agents at such time,
less an amount equal to the greater of (x) the then Tranche A
Borrowing Availability minus the outstanding Tranche A Revolving
Credit Advances, or (y) the then outstanding Tranche A Revolving
Credit Advances and Letter of Credit Obligations; provided
however, that with respect to Advances on Eligible Inventory, at
no time shall such Advances exceed one hundred percent (100%) of
the Net Retail Liquidation Value of Borrower's Eligible
Inventory; plus
(b) at the election of Requisite Tranche B Lenders, up
to the lesser of (i) $5,000,000, or (ii) seventy percent (70%) of
the NLV of Eligible Leasehold Real Estate.
"Tranche B Inventory Loan Limit" shall mean the greater
of (i) ninety percent (90%) of the Net Retail Liquidation Value
of Borrower's Eligible Inventory, or (ii) the lesser of (A)
eighty five percent (85%) of Borrower's Eligible Inventory valued
on a first-in first out basis (at the lower of cost or market),
or (B) one hundred percent (100%) of the Net Retail Liquidation
Value of Borrower's Eligible Inventory.
"Tranche B Revolving Credit Advance" shall have the
meaning assigned to it in Section 1.1(a)(ii).
"Tranche B Revolving Lenders" shall mean, as of any
date of determination, Lenders having a Tranche B Revolving Loan
Commitment.
"Tranche B Revolving Loan" shall mean at any time, the
aggregate amount of Tranche B Revolving Credit Advances
outstanding to Borrower.
"Tranche B Revolving Loan Commitment" shall mean (a) as
to any Lender with a Tranche B Revolving Loan Commitment, the
commitment of such Lender to make its Pro Rata Share of the
Tranche B Revolving Loan as set forth on Annex J to the Agreement
or in the most recent Assignment Agreement executed by such
Lender, and (b) as to all Lenders with a Tranche B Revolving Loan
Commitment, the aggregate commitment of all such Lenders to make
the Tranche B Revolving Loan, which aggregate commitment shall be
Forty Million Dollars ($40,000,000) on the Closing Date, as to
each of clauses (a) and (b), as such Tranche B Revolving Loan
Commitment may be reduced, amortized, or adjusted from time to
time in accordance with the Agreement.
"Tranche B Revolving Note"shall have the meaning
assigned to it in Section 1.1(a)(v).
"Tranche B Super Defaults"shall have the meaning
assigned to it in Section 8.2.
"Unfunded Pension Liability" shall mean, at any time,
the aggregate amount, if any, of the sum of (a) the amount by
which the present value of all accrued benefits under each Title
IV Plan exceeds the fair market value of all assets of such Title
IV Plan allocable to such benefits in accordance with Title IV of
ERISA, all determined as of the most recent valuation date for
each such Title IV Plan using the actuarial assumptions for
funding purposes in effect under such Title IV Plan, and (b) for
a period of five (5) years following a transaction which might
reasonably be expected to be covered by Section 4069 of ERISA,
the liabilities (whether or not accrued) that could be avoided by
any Credit Party or any ERISA Affiliate as a result of such
transaction.
"Year 2000 Assessment" shall mean a comprehensive
written assessment of the nature and extent of each Credit
Party's Year 2000 Problems and Year 2000 Date-Sensitive
Systems/Components, including, without limitation, Year 2000
Problems regarding data exchanges with Third Party Interactives.
"Year 2000 Corrective Actions" shall mean, as to each
Credit Party, all actions necessary to eliminate such Person's
Year 2000 Problems, including, without limitation, computer code
enhancements and revisions, upgrades and replacements of Year
2000 Date-Sensitive Systems/Components, and coordination of such
enhancements, revisions, upgrades and replacements with Third
Party Interactives.
"Year 2000 Corrective Plan" shall mean, with respect to
each Credit Party, a comprehensive plan to eliminate all of its
Year 2000 Problems on or before October 31, 1999, including
without limitation (i) computer code enhancements or revisions,
(ii) upgrades or replacements of Year 2000 Date-Sensitive
Systems/Components, (iii) test and validation procedures, (iv) an
implementation time line and budget and (v) designation of
specific employees who will be responsible for planning,
coordinating and implementing each phase or subpart of the Year
2000 Corrective Plan.
"Year 2000 Date-Sensitive System/Component" shall mean,
as to any Person, any system software, network software,
applications software, data base, computer file, embedded
microchip, firmware or hardware that accepts, creates,
manipulates, sorts, sequences, calculates, compares or outputs
calendar-related data accurately; such systems and components
shall include, without limitation, mainframe computers, file
server/client systems, computer workstations, routers, hubs,
other network-related hardware, and other computer-related
software, firmware or hardware and information processing and
delivery systems of any kind and telecommunications systems and
other communications processors, security systems, alarms,
elevators and HVAC systems.
"Year 2000 Implementation Testing" shall mean, as to
each Credit Party, (i) the performance of test and validation
procedures regarding Year 2000 Corrective Actions on a unit basis
and on a systemwide basis; (ii) the performance of test and
validation procedures regarding data exchanges among the Credit
Parties' Year 2000 Date-Sensitive Systems/Components and data
exchanges with Third Party Interactives, and (iii) the design and
implementation of additional Corrective Actions, the need for
which has been demonstrated by test and validation procedures.
"Year 2000 Problems" shall mean, with respect to each
Credit Party, limitations on the capacity or readiness of any
such Credit Party's Year 2000 Date-Sensitive Systems/Components
to accurately accept, create, manipulate, sort, sequence,
calculate, compare or output calendar date information with
respect to calendar year 1999 or any subsequent calendar year
beginning on or after January 1, 2000 (including leap year
computations), including, without limitation, exchanges of
information among Year 2000 Date-Sensitive Systems/Components of
the Credit Parties and exchanges of information among the Credit
Parties and Year 2000 Date-Sensitive Systems/Components of Third
Party Interactives and functionality of peripheral interfaces,
firmware and embedded microchips.
All other undefined terms contained in any of the Loan
Documents shall, unless the context indicates otherwise, have the
meanings provided for by the Code as in effect in the State of
New York to the extent the same are used or defined therein.
Unless otherwise specified, references in the Agreement or any of
the Appendices to a Section, subsection or clause refer to such
Section, subsection or clause as contained in the Agreement. The
words "herein," "hereof" and "hereunder" and other words of
similar import refer to the Agreement as a whole, including all
Annexes, Exhibits and Schedules, as the same may from time to
time be amended, restated, modified or supplemented, and not to
any particular section, subsection or clause contained in the
Agreement or any such Annex, Exhibit or Schedule.
Wherever from the context it appears appropriate, each
term stated in either the singular or plural shall include the
singular and the plural, and pronouns stated in the masculine,
feminine or neuter gender shall include the masculine, feminine
and neuter genders. The words "including", "includes" and
"include" shall be deemed to be followed by the words "without
limitation"; references to Persons include their respective
successors and assigns (to the extent and only to the extent
permitted by the Loan Documents) or, in the case of governmental
Persons, Persons succeeding to the relevant functions of such
Persons; and all references to statutes and related regulations
shall include any amendments of the same and any successor
statutes and regulations. Whenever any provision in any Loan
Document refers to the knowledge (or an analogous phrase) of any
Credit Party, such words are intended to signify that such Credit
Party has actual knowledge or awareness of a particular fact or
circumstance or that such Credit Party, if it had exercised
reasonable business diligence, would have known or been aware of
such fact or circumstance.
ANNEX B (Section 1.2)
to
CREDIT AGREEMENT
LETTERS OF CREDIT
(a) Issuance. Subject to the terms and conditions of
the Agreement, Agent and Tranche A Revolving Lenders agree to
incur, from time to time prior to the Commitment Termination
Date, upon the request of Borrower and for Borrower's account,
Letter of Credit Obligations by causing Letters of Credit to be
issued (by a bank or other legally authorized Person selected by
or acceptable to Agent in its sole discretion and acceptable to
Borrower in the event no Default or Event of Default has occurred
(each, an "L/C Issuer")) for Borrower's account and guaranteed by
Agent; provided, however, that if the L/C Issuer is a Tranche A
Revolving Lender, then such Letters of Credit shall not be
guaranteed by Agent but rather each Tranche A Revolving Lender
shall, subject to the terms and conditions hereinafter set forth,
purchase (or be deemed to have purchased) risk participations in
all such Letters of Credit issued with the written consent of
Agent, as more fully described in paragraph (b)(ii) below. The
aggregate amount of all such Letter of Credit Obligations shall
not at any time exceed the least of (i) Twenty Five Million
Dollars ($25,000,000) (the "L/C Sublimit"), and (ii) the Tranche
A Maximum Amount less the aggregate outstanding principal
balance of the Tranche A Revolving Credit Advances and the Swing
Line Loan, and (iii) the Tranche A Borrowing Base less the
aggregate outstanding principal balance of the Tranche A
Revolving Credit Advances and the Swing Line Loan. No such
Letter of Credit shall have an expiry date which is more than one
year following the date of issuance thereof, provided however, in
the event Borrower requests a Letter of Credit be issued,
extended or renewed with any expiry date which will occur after
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 Commitment
Termination Date, Borrower shall, by not later than (a) forty-
five (45) days prior to the Commitment Termination Date for
standby Letters of Credit and (b) twenty-one (21) days prior to
the Commitment Termination Date for documentary Letters of
Credit, deliver to the L/C Issuer for the benefit of Lenders,
cash in the amount of one hundred three percent (103%) of the
maximum drawing amount, to be held as cash collateral by the L/C
Issuer for the Letter of Credit Obligations.
(b) Advances Automatic; Participations. In the event
that Agent or any Tranche A Revolving Lender shall make any
payment on or pursuant to any Letter of Credit Obligation, such
payment shall then be deemed automatically to constitute a
Tranche A Revolving Credit Advance under Section 1.1(a) of the
Agreement regardless of whether a Default or Event of Default
shall have occurred and be continuing and notwithstanding
Borrower's failure to satisfy the conditions precedent set forth
in Section 2, and each Tranche A Revolving Lender shall be
obligated to pay its Pro Rata Share thereof in accordance with
the Agreement. The failure of any Tranche A Revolving Lender to
make available to Agent for Agent's own account its Pro Rata
Share of any such Tranche A Revolving Credit Advance or payment
by Agent under or in respect of a Letter of Credit shall not
relieve any other Tranche A Revolving Lender of its obligation
hereunder to make available to Agent its Pro Rata Share thereof,
but no Tranche A Revolving Lender shall be responsible for the
failure of any other Tranche A Revolving Lender to make available
such other Tranche A Revolving Lender's Pro Rata Share of any
such payment.
(i) If it shall be illegal or unlawful for
Borrower to incur Tranche A Revolving Credit Advances as
contemplated by paragraph (b)(i) above because of an Event of
Default described in Section 8.1(h) or (i) or otherwise or if it
shall be illegal or unlawful for any Tranche A Revolving Lender
to be deemed to have assumed a ratable share of the reimbursement
obligations owed to an L/C Issuer, or if the L/C Issuer is a
Tranche A Revolving Lender, then (i) immediately and without
further action whatsoever, each Tranche A Revolving Lender shall
be deemed to have irrevocably and unconditionally purchased from
Agent (or such L/C Issuer, as the case may be) an undivided
interest and participation equal to such Tranche A Revolving
Lender's Pro Rata Share (based on the Tranche A Revolving Loan
Commitments) of the Letter of Credit Obligations in respect of
all Letters of Credit then outstanding and (ii) thereafter,
immediately upon issuance of any Letter of Credit, each Tranche A
Revolving Lender shall be deemed to have irrevocably and
unconditionally purchased from Agent (or such L/C Issuer, as the
case may be) an undivided interest and participation in such
Tranche A Revolving Lender's Pro Rata Share (based on the Tranche
A Revolving Loan Commitments) of the Letter of Credit Obligations
with respect to such Letter of Credit on the date of such
issuance. Each Tranche A Revolving Lender shall fund its
participation in all payments or disbursements made under the
Letters of Credit in the same manner as provided in the Agreement
with respect to Tranche A Revolving Credit Advances.
(c) Cash Collateral. If Borrower is required to
provide cash collateral for any Letter of Credit Obligations
pursuant to the Agreement prior to the Commitment Termination
Date, Borrower will pay to Agent for the benefit of Tranche A
Revolving Lenders cash or cash equivalents acceptable to Agent
("Cash Equivalents") in an amount equal to 103% of the maximum
amount then available to be drawn under each applicable Letter of
Credit outstanding. Such funds or Cash Equivalents shall be held
by Agent in a cash collateral account (the "Cash Collateral
Account") maintained at a bank or financial institution
acceptable to Agent. Cash Equivalents acceptable to Agent shall
include those investments described in Section 6.2(b)(i)-(v)
hereof. The Cash Collateral Account shall be in the name of
Borrower and shall be pledged to, and subject to the control of,
Agent, for the benefit of Agent and Tranche A Revolving Lenders,
in a manner reasonably satisfactory to Agent. Borrower hereby
pledges and grants to Agent, on behalf of Tranche A Revolving
Lenders, a security interest in all such funds and Cash
Equivalents held in the Cash Collateral Account from time to time
and all proceeds thereof, as security for the payment of all
amounts due in respect of the Letter of Credit Obligations and
other Obligations, whether or not then due. The Agreement,
including this Annex B, shall constitute a security agreement
under applicable law.
If any Letter of Credit Obligations, whether or not
then due and payable, shall for any reason be outstanding on the
Commitment Termination Date, Borrower shall either (i) provide
cash collateral therefor in the manner described above, or (ii)
cause all such Letters of Credit and guaranties thereof to be
canceled and returned, or (iii) deliver a stand-by letter (or
letters) of credit in guarantee of such Letter of Credit
Obligations, which stand-by letter (or letters) of credit shall
be of like tenor and duration (plus thirty (30) additional days)
as, and in an amount equal to 103% of the aggregate maximum
amount then available to be drawn under, the Letters of Credit to
which such outstanding Letter of Credit Obligations relate and
shall be issued by a Person, and shall be subject to such terms
and conditions, as are be satisfactory to Agent in its sole
discretion.
From time to time after funds are deposited in the Cash
Collateral Account by Borrower, whether before or after the
Commitment Termination Date, Agent may apply such funds or Cash
Equivalents then held in the Cash Collateral Account to the
payment of any amounts, in such order as Agent may elect, as
shall be or shall become due and payable by Borrower to Lenders
with respect to such Letter of Credit Obligations of Borrower
and, upon the satisfaction in full of all Letter of Credit
Obligations of Borrower, to any other Obligations then due and
payable.
Neither Borrower nor any Person claiming on behalf of
or through Borrower shall have any right to withdraw any of the
funds or Cash Equivalents held in the Cash Collateral Account,
except that upon the termination of all Letter of Credit
Obligations and the payment of all amounts payable by Borrower to
Tranche A Revolving Lenders in respect thereof, any funds
remaining in the Cash Collateral Account shall be applied to
other Obligations when due and owing and upon payment in full of
such Obligations, any remaining amount shall be paid to Borrower
or as otherwise required by law.
(d) Fees and Expenses. Borrower agrees to pay to
Agent for the benefit of Tranche A Revolving Lenders, as
compensation to such Lenders for Letter of Credit Obligations
incurred hereunder, (x) all costs and expenses incurred by Agent
or any Tranche A Revolving Lender on account of such Letter of
Credit Obligations, and (y) for each month during which any
Letter of Credit Obligation shall remain outstanding, a fee (the
"Letter of Credit Fee") in an amount equal to the Applicable L/C
Margin from time to time in effect multiplied by the maximum
amount available from time to time to be drawn under the
applicable Letter of Credit. Such fee shall be paid to Agent for
the benefit of the Tranche A Revolving Lenders in arrears, on the
first day of each month. In addition, Borrower shall pay to any
L/C Issuer, on demand, such fees (including all per annum fees),
charges and expenses of such L/C Issuer in respect of the
issuance, negotiation, acceptance, amendment, transfer and
payment of such Letter of Credit or otherwise payable pursuant to
the application and related documentation under which such Letter
of Credit is issued.
(e) Request for Incurrence of Letter of Credit
Obligations. Borrower shall give Agent at least two (2) Business
Days prior written notice requesting the incurrence of any Letter
of Credit Obligation, specifying the date such Letter of Credit
Obligation is to be incurred, identifying the beneficiary to
which such Letter of Credit Obligation relates and describing the
nature of the transactions proposed to be supported thereby. The
notice shall be accompanied by the form of the Letter of Credit
(which shall be acceptable to the L/C Issuer) to be guarantied
and, to the extent not previously delivered to Agent, copies of
all agreements between Borrower and the L/C Issuer pertaining to
the issuance of Letters of Credit. Notwithstanding anything
contained herein to the contrary, Letter of Credit applications
by Borrower and approvals by Agent and the L/C Issuer may be made
and transmitted pursuant to electronic codes and security
measures mutually agreed upon and established by and among
Borrower, Agent and the L/C Issuer.
(f) Obligation Absolute. The obligation of Borrower
to reimburse Agent and Tranche A Revolving Lenders for payments
made with respect to any Letter of Credit Obligation shall be
absolute, unconditional and irrevocable, without necessity of
presentment, demand, protest or other formalities, and the
obligations of each Tranche A Revolving Lender to make payments
to Agent with respect to Letters of Credit shall be unconditional
and irrevocable. Such obligations of Borrower and Tranche A
Revolving Lenders shall be paid strictly in accordance with the
terms hereof under all circumstances including the following
circumstances:
(i) any lack of validity or enforceability of any
Letter of Credit or the Agreement or the other Loan Documents or
any other agreement;
(ii) the existence of any claim, set-off, defense
or other right which Borrower or any of its Affiliates or any
Tranche A Revolving Lender may at any time have against a
beneficiary or any transferee of any Letter of Credit (or any
Persons or entities for whom any such transferee may be acting),
Agent, any Tranche A Revolving Lender, or any other Person,
whether in connection with the Agreement, the Letter of Credit,
the transactions contemplated herein or therein or any unrelated
transaction (including any underlying transaction between
Borrower or any of its Affiliates and the beneficiary for which
the Letter of Credit was procured);
(iii) any draft, demand, certificate or any
other document presented under any Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;
(iv) payment by Agent (except as otherwise
expressly provided in paragraph (g)(ii)(C) below) or any L/C
Issuer under any Letter of Credit or guaranty thereof against
presentation of a demand, draft or certificate or other document
which does not comply with the terms of such Letter of Credit or
such guaranty;
(v) any other circumstance or happening
whatsoever, which is similar to any of the foregoing; or
(vi) the fact that a Default or an Event of
Default shall have occurred and be continuing.
(g) Indemnification; Nature of Lenders' Duties. In
addition to amounts payable as elsewhere provided in the
Agreement, Borrower hereby agrees to pay and to protect,
indemnify, and save harmless Agent and each Tranche A Revolving
Lender from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including
reasonable attorneys' fees and reasonably allocated costs of
internal counsel) which Agent or any Tranche A Revolving Lender
may incur or be subject to as a consequence, direct or indirect,
of (A) the issuance of any Letter of Credit or guaranty thereof,
or (B) the failure of Agent or any Tranche A Revolving Lender
seeking indemnification or of any L/C Issuer to honor a demand
for payment under any Letter of Credit or guaranty thereof as a
result of any act or omission, whether rightful or wrongful, of
any present or future de jure or de facto government or
Governmental Authority, in each case other than to the extent as
a result of the gross negligence or willful misconduct of Agent
or such Tranche A Lender (as finally determined by a court of
competent jurisdiction).
(i) As between Agent and any Tranche A Revolving
Lender and Borrower, Borrower assumes all risks of the acts and
omissions of, or misuse of any Letter of Credit by beneficiaries
of any Letter of Credit. In furtherance and not in limitation of
the foregoing, to the fullest extent permitted by law neither
Agent nor any Tranche A Revolving Lender shall be responsible for
any of the following unless caused by Agent's or any Tranche A
Revolving Lender's gross negligence or wilful misconduct: (A)
for the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document issued by any party in connection
with the application for and issuance of any Letter of Credit,
even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (B) for
the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of
Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, which may prove to be invalid or ineffective
for any reason; (C) for failure of the beneficiary of any Letter
of Credit to comply fully with conditions required in order to
demand payment under such Letter of Credit; provided that, in the
case of any payment by Agent under any Letter of Credit or
guaranty thereof, Agent shall be liable to the extent such
payment was made as a result of its gross negligence or willful
misconduct (as finally determined by a court of competent
jurisdiction) in determining that the demand for payment under
such Letter of Credit or guaranty thereof complies on its face
with any applicable requirements for a demand for payment under
such Letter of Credit or guaranty thereof; (D) for errors,
omissions, interruptions or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telex or otherwise,
whether or not they be in cipher; (E) for errors in
interpretation of technical terms; (F) for any loss or delay in
the transmission or otherwise of any document required in order
to make a payment under any Letter of Credit or guaranty thereof
or of the proceeds thereof; (G) for the credit of the proceeds of
any drawing under any Letter of Credit or guaranty thereof; and
(H) for any consequences arising from causes beyond the control
of Agent or any Tranche A Revolving Lender. None of the above
shall affect, impair, or prevent the vesting of any of Agent's or
any Tranche A Revolving Lender's rights or powers hereunder or
under the Agreement.
(ii) Nothing contained herein shall be deemed to
limit or to expand any waivers, covenants or indemnities made by
Borrower in favor of any L/C Issuer in any letter of credit
application, reimbursement agreement or similar document,
instrument or agreement between Borrower and such L/C Issuer.
ANNEX C (Section 1.8)
to
CREDIT AGREEMENT
CASH MANAGEMENT SYSTEMS
Borrower shall, and shall cause its Subsidiaries to,
establish and maintain the Cash Management Systems described
below:
(a) On or before the Closing Date and until the
Termination Date, Borrower shall deposit and cause its
Subsidiaries to deposit or cause to be deposited promptly, and in
any event no later than the first Business Day after the date of
receipt thereof, all cash, checks, drafts or other similar items
of payment relating to or constituting payments made in respect
of any and all Collateral (whether or not otherwise delivered to
a Lock Box) into bank accounts in Borrower's name or any such
Subsidiary's name (collectively, the "Borrower Accounts") at
banks set forth on Disclosure Schedule (3.19) (each, a
"Relationship Bank"). On or before the Closing Date, Borrower
shall have established a concentration account in its name (the
"Concentration Account") at the bank which shall be designated as
the Concentration Account Bank for Borrower on Disclosure
Schedule (3.19) (the "Concentration Account Bank") which bank
shall be satisfactory to Agent. Notwithstanding the foregoing,
Borrower shall be permitted to retain cash in the amount of
$38,000 per Store (and in the case of the Store located at 426
Washington Street, Boston, Massachusetts, the amount of $120,000)
for purposes of maintaining cash in the cash registers in the
ordinary course of its business operations.
(b) On or before the Closing Date (or such later date
as Agent shall consent to in writing), the Concentration Account
Bank shall have entered into a tri-party blocked account
agreement with Agent, for the benefit of itself and Lenders, and
Borrower and Subsidiaries thereof, as applicable, in form and
substance acceptable to Agent, which shall become operative on or
prior to the Closing Date. Such blocked account agreement shall
provide, among other things, that (i) all amounts deposited in
such Concentration Account are held by such bank as agent or
bailee-in-possession for Agent, on behalf of Lenders, (ii) the
Concentration Account Bank has no rights of setoff or recoupment
or any other claim against such account, as the case may be,
other than for payment of its service fees and other charges
directly related to the administration of such account, for
returned checks or other items of payment and for any
indemnification rights of the Concentration Account Bank against
Borrower pursuant to Section 9 of the blocked account agreement,
and (iii) from and after the Closing Date (A) with respect to
banks at which a Borrower Account is located, such bank has been
given irrevocable instructions by Borrower and Agent to forward
immediately all collected amounts in each Borrower Account to the
Concentration Account Bank and to commence the process of daily
sweeps from such Borrower Account into the Concentration Account,
(B) each Credit Card Provider referenced on Disclosure Schedule
3.26 has been given irrevocable instructions by Borrower and
Agent to forward immediately all amounts held by such Credit Card
Provider for Borrower to the Concentration Account Bank and
commence daily sweeps from such Credit Card Provider to the
Concentration Account, and (C) with respect to the Concentration
Account Bank, such bank agrees to immediately forward all amounts
received in the Concentration Account to the Collection Account
through daily sweeps from such Concentration Account into the
Collection Account. Borrower shall not, and shall not cause or
permit any Subsidiary thereof to, accumulate or maintain cash in
disbursement or payroll accounts as of any date of determination
in excess of checks outstanding against such accounts as of that
date and amounts necessary to meet minimum balance requirements.
(c) So long as no Default or Event of Default has
occurred and is continuing, Borrower may amend Disclosure
Schedule (3.19) to add or replace a Relationship Bank or Borrower
Account or to replace any Concentration Account or any
Disbursement Account; provided, however, that (i) Agent shall
have consented in writing in advance to the opening of such
account with the relevant bank and (ii) prior to the time of the
opening of such account (A) with respect to any new Concentration
Account, Borrower and/or the Subsidiaries thereof, as applicable,
and such bank shall have executed and delivered to Agent a tri-
party blocked account agreement, in form and substance
satisfactory to Agent and (B) with respect to any new
Relationship Bank or Borrower Account, such bank shall have been
given irrevocable instructions as set forth in paragraph
(b)(iii)(A) of this Annex C. So long as no Default or Event of
Default has occurred and is continuing, Borrower may amend
Disclosure Schedule 3.26 to add or replace a Credit Card
Provider; provided, however, that (i) Agent shall have consented
in writing in advance to the engagement of such Credit Card
Provider (other than Household Bank (SB), N.A.) (ii) prior to the
time of the engagement of such Credit Card Provider, such Credit
Card Provider shall have been given irrevocable instructions as
set forth in paragraph (b)(iii)(B) of this Annex C. Borrower
shall close any of its accounts (and establish replacement
accounts in accordance with the foregoing sentence) or replace
any Credit Card Provider, as the case may be, promptly and in any
event within thirty (30) days of notice from Agent that the
creditworthiness of any bank holding an account or Credit Card
Provider is no longer acceptable in Agent's reasonable judgment,
or as promptly as practicable and in any event within sixty (60)
days of notice from Agent that the operating performance, funds
transfer and/or availability procedures or performance with
respect to accounts of the bank holding such accounts or the
Credit Card Provider or Agent's liability under any tri-party
blocked account agreement with such bank is no longer acceptable
in Agent's reasonable judgment.
(d) The amounts held by the Credit Card Providers,
Borrower Accounts, Disbursement Accounts and the Concentration
Account shall be cash collateral accounts, with all cash, checks
and other similar items of payment in such accounts securing
payment of the Loans and all other Obligations, and in which
Borrower and each Subsidiary thereof shall have granted a Lien to
Agent, on behalf of itself and Lenders, pursuant to the Security
Agreement.
(e) All amounts deposited in the Collection Account
shall be deemed received by Agent in accordance with Section 1.10
of the Agreement and shall be applied (and allocated) by Agent in
accordance with Section 1.11 of the Agreement. In no event shall
any amount be so applied unless and until such amount shall have
been credited in immediately available funds to the Collection
Account.
(f) Borrower may maintain, in its name, an account
(each a "Disbursement Account") and collectively, the
"Disbursement Accounts") at a bank acceptable to Agent into which
Agent shall, from time to time, deposit proceeds of Revolving
Credit Advances and Swing Line Advances made to Borrower pursuant
to Section 1.1 for use by Borrower solely in accordance with the
provisions of Section 1.4.
(g) Borrower shall and shall cause its Affiliates,
officers, employees, agents, directors or other Persons acting
for or in concert with Borrower (each a "Related Person") to (i)
hold in trust for Agent, for the benefit of itself and Lenders,
all checks, cash and other items of payment received by Borrower
or any such Related Person, and (ii) within one (1) Business Day
after receipt by Borrower or any such Related Person of any
checks, cash or other items or payment, deposit the same into a
Borrower Account. Borrower and each Related Person thereof
acknowledges and agrees that all cash, checks or items of payment
constituting proceeds of Collateral are the property of Agent and
Lenders. All proceeds of the sale or other disposition of any
Collateral, shall be deposited directly into Borrower Accounts.
ANNEX D (Section 2.1(a))
to
CREDIT AGREEMENT
SCHEDULE OF ADDITIONAL CLOSING DOCUMENTS
In addition to, and not in limitation of, the conditions
described in Section 2.1 of the Agreement, pursuant to Section
2.1(a), the following items must be received by Agents in form
and substance reasonably satisfactory to Agents on or prior to
the Closing Date (each capitalized term used but not otherwise
defined herein shall have the meaning ascribed thereto in Annex A
to the Agreement):
1. Appendices. All Appendices to the Agreement, in form and
substance reasonably satisfactory to Agents.
2. Revolving Notes and Swing Line Note. Duly executed
originals of the Revolving Notes and Swing Line Note for each
applicable Lender, dated the Closing Date.
3. Security Agreement. Duly executed originals of the Security
Agreements, dated the Closing Date, and all instruments,
documents and agreements executed pursuant thereto.
4. Insurance. Satisfactory evidence that the insurance
policies required by Section 5.4 are in full force and effect,
together with appropriate evidence showing loss payable and/or
additional insured clauses or endorsements, as requested by
Agents, in favor of Agent, on behalf of Lenders.
5. Security Interests and Code Filings. Evidence reasonably
satisfactory to Agents that Agent (for the benefit of itself and
Lenders) has a valid and perfected first priority security
interest in the Collateral, including (i) such documents duly
executed by each Credit Party (including financing statements
under the Code and other applicable documents under the laws of
any jurisdiction with respect to the perfection of Liens) as
Agents may request in order to perfect its security interests in
the Collateral and (ii) copies of Code search reports listing all
effective financing statements that name any Credit Party as
debtor, together with copies of such financing statements, none
of which shall cover the Collateral, except for those relating to
the Prior Lender Obligations (all of which shall be terminated on
the Closing Date).
(a) Evidence satisfactory to Agents, including copies,
of all UCC-1 and other financing statements filed in favor of any
Credit Party with respect to each location, if any, at which
Inventory may be consigned.
6. Payoff Letter; Termination Statements. Copies of a duly
executed payoff letter, in form and substance reasonably
satisfactory to Agent, by and between all parties to the Prior
Lender loan documents evidencing repayment in full of all Prior
Lender Obligations, together with (a) UCC-3 or other appropriate
termination statements, in form and substance reasonably
satisfactory to Agents, manually signed by the Prior Lender
releasing all liens of Prior Lender upon any of the personal
property of each Credit Party, and (b) termination of all blocked
account agreements, bank agency agreements or other similar
agreements or arrangements or arrangements in favor of Prior
Lender or relating to the Prior Lender Obligations.
7. Intellectual Property Security Agreements. Duly executed
originals of the Intellectual Property Security Agreements dated
the Closing Date and signed by each Credit Party which owns
Trademarks, Copyrights and/or Patents, as applicable, all in form
and substance satisfactory to Agents, together with all
instruments, documents and agreements executed pursuant thereto.
8. Holdings Guaranty. Duly executed originals of the Holdings
Guaranty, dated the Closing Date, and all documents, instruments
and agreements executed pursuant thereto.
9. Subsidiary Guaranties. Guaranties executed by and each
direct and indirect Subsidiary of Borrower in favor of Agent, for
the benefit of Lenders.
10. Initial Borrowing Base Certificate. Duly executed originals
of an initial Borrowing Base Certificate from Borrower, dated the
Closing Date, reflecting information concerning Eligible Accounts
and Eligible Inventory of Borrower as of a date not more than
seven (7) days prior to the Closing Date.
11. Initial Notice of Revolving Credit Advance. Duly executed
originals of a Notice of Revolving Credit Advance, dated the
Closing Date, with respect to the initial Revolving Credit
Advance to be requested by Borrower on the Closing Date.
12. Letter of Direction. Duly executed originals of a letter of
direction from Borrower addressed to Agent, on behalf of itself
and Lenders, with respect to the disbursement on the Closing Date
of the proceeds of the initial Revolving Credit Advance.
13. Cash Management System; Blocked Account Agreements.
Evidence reasonably satisfactory to Agents that, as of the
Closing Date, Cash Management Systems complying with Annex C to
the Agreement have been established and are currently being
maintained in the manner set forth in such Annex C, together with
copies of duly executed tri-party blocked account and lock box
agreements, satisfactory to Agents, with the banks as required by
Annex C.
14. Charter and Good Standing. For each Credit Party, such
Person's (a) charter and all amendments thereto, (b) good
standing certificates (including verification of tax status) in
its state of incorporation and (c) good standing certificates
(including verification of tax status) and certificates of
qualification to conduct business in each jurisdiction where its
ownership or lease of property or the conduct of its business
requires such qualification, each dated a recent date prior to
the Closing Date and certified by the applicable Secretary of
State or other authorized Governmental Authority.
1.
15. Bylaws and Resolutions. For each Credit Party, (a) such
Person's bylaws, together with all amendments thereto and (b)
resolutions of such Person's Board of Directors and stockholders,
approving and authorizing the execution, delivery and performance
of the Loan Documents to which such Person is a party and the
transactions to be consummated in connection therewith, each
certified as of the Closing Date by such Person's corporate
secretary or an assistant secretary as being in full force and
effect without any modification or amendment.
16. Incumbency Certificates. For each Credit Party, signature
and incumbency certificates of the officers of each such Person
executing any of the Loan Documents, certified as of the Closing
Date by such Person's corporate secretary or an assistant
secretary as being true, accurate, correct and complete.
17. Opinions of Counsel. Duly executed originals of opinions of
Chappell White LLP, counsel for the Credit Parties, each in form
and substance reasonably satisfactory to Agents and their
counsel, dated the Closing Date, and each accompanied by a letter
addressed to such counsel from the Credit Parties, authorizing
and directing such counsel to address its opinion to Agent, on
behalf of Lenders, and to include in such opinion an express
statement to the effect that Agent and Lenders are authorized to
rely on such opinion.
18. Pledge Agreements. Duly executed originals of each of the
Pledge Agreements accompanied by (as applicable) (a) share
certificates representing all of the outstanding Stock being
pledged pursuant to such Pledge Agreement and stock powers for
such share certificates executed in blank and (b) the original
Intercompany Notes and other instruments evidencing Indebtedness
being pledged pursuant to such Pledge Agreement, duly endorsed in
blank.
19. Accountants' Letters. A letter from the Credit Parties to
their independent auditors authorizing the independent certified
public accountants of the Credit Parties to communicate with
Agent and Lenders in accordance with Section 4.2.
20. Appointment of Agent for Service. An appointment of CSC
Corp. as each Credit Party's agent for service of process.
21. Solvency Certificate. The Credit Parties shall deliver to
Agent for the benefit of Lenders a solvency opinion certified by
the Chief Financial Officer of Holdings and Borrower as to the
solvency of Holdings and Borrower following the consummation of
the Related Transactions reasonably satisfactory in form and
substance to Agents.
22. Fee Letter. Duly executed originals of the GE Capital Fee
Letter and the Paragon Fee Letter.
23. Officer's Certificate. Agent shall have received duly
executed originals of a certificate of the Chief Financial
Officer of Borrower, dated the Closing Date, stating that, since
January 30, 1999 (a) except as disclosed in Disclosure Schedule
3.5 no event or condition has occurred or is existing which could
reasonably be expected to have a Material Adverse Effect; (b) no
Litigation has been commenced which, if successful, would have a
Material Adverse Effect or could challenge any of the
transactions contemplated by the Agreement and the other Loan
Documents; (c) there have been no Restricted Payments made by any
Credit Party; and (d) except as provided in the consolidated
balance sheet and related statement of income and cash flow of
Holdings and its Subsidiaries for the fiscal month ended May 29,
1999 there has been no material increase in liabilities,
liquidated or contingent, and no material decrease in assets of
Borrower or any of its Subsidiaries.
24. Waivers. Agent, on behalf of Lenders, shall have received
landlord waivers and consents, bailee letters and mortgagee
agreements in form and substance satisfactory to Agents, in each
case as required pursuant to Section 5.9.
25. Leasehold Mortgages. Leasehold Mortgages covering certain
Real Estate (the "Mortgaged Properties") together with: (a) title
certifications, in each case satisfactory in form and substance
to Oversight Agent, in its sole discretion; (b) evidence that
counterparts of the Leasehold Mortgages have been recorded in all
places to the extent necessary or desirable, in the judgment of
Oversight Agent, to create a valid and enforceable first priority
lien (subject to Permitted Encumbrances) on each Mortgaged
Property in favor of Agent for the benefit of itself and Lenders
(or in favor of such other trustee as may be required or desired
under local law); and (c) an opinion of counsel in each state in
which any Mortgaged Property is located in form and substance and
from counsel satisfactory to Oversight Agent.
26. Appraisals. Agents shall have received appraisals as to all
Mortgaged Properties, each of which shall be in form and
substance satisfactory to Oversight Agent.
27. Audited Financials; Financial Condition. Agents shall have
received Holdings' and Borrower's final Financial Statements for
its Fiscal Year ended January 31, 1999 audited by Arthur Andersen
LLP. Borrower and Holdings shall have provided Agent with its
current operating statements, a consolidated balance sheet and
statement of cash flows, Projections and a Borrowing Base
Certificate with respect to Borrower certified by its Chief
Financial Officer, in each case in form and substance reasonably
satisfactory to Agents, and Agents shall be satisfied, in their
reasonable discretion, with all of the foregoing. Agents shall
have further received a certificate of the Chief Executive
Officer and/or the Chief Financial Officer of Borrower, based on
such Projections, to the effect that (a) Borrower will be Solvent
upon the consummation of the transactions contemplated herein;
and (b) the Projections are based upon estimates and assumptions
stated therein, all of which Borrower believes to be reasonable
and fair in light of current conditions and current facts known
to Borrower and, as of the Closing Date, reflect Borrower's good
faith and reasonable estimates of its future financial
performance and of the other information projected therein for
the period set forth therein.
28. Credit Card Notices. Agents shall have received Credit Card
Notices executed by the Credit Card Providers in favor of Agent,
for the benefit of Lenders, in form and substance reasonably
satisfactory to Agents.
29. Other Documents. Such other certificates, documents and
agreements respecting any Credit Party as Agents may, in their
reasonable discretion, request.
ANNEX E (Section 4.1(a))
to
CREDIT AGREEMENT
FINANCIAL STATEMENTS AND PROJECTIONS -- REPORTING
Borrower shall deliver or cause to be delivered to Agents or to
Agent and Lenders, as indicated, the following:
(a) Monthly Financials. To Agents, within thirty-one
(31) days after the end of each Fiscal Month, financial
information regarding Borrower and its Subsidiaries, certified by
the Chief Financial Officer of Borrower, consisting of
consolidated (i) unaudited balance sheets as of the close of such
Fiscal Month and the related statements of income and cash flow
for that portion of the Fiscal Year ending as of the close of
such Fiscal Month; (ii) unaudited statements of income and cash
flows for such Fiscal Month, setting forth in comparative form
the figures for the corresponding period in the prior year and
the figures contained in the Projections for such Fiscal Year,
all prepared in accordance with GAAP (subject to normal year-end
adjustments); and (iii) a summary of the outstanding balance of
all Intercompany Notes as of the last day of that Fiscal Month.
Such financial information shall be accompanied by (A) a
statement in reasonable detail (each, a "Compliance Certificate")
showing the calculations used in determining compliance with each
financial covenant set forth on Annex G which is tested on a
monthly basis, and (B) the certification of the Chief Financial
Officer of Borrower that (i) such financial information presents
fairly in accordance with GAAP (subject to normal year-end
adjustments) the financial position and results of operations of
Borrower and its Subsidiaries, on a consolidated basis, in each
case as at the end of such month and for the period then ended
and (ii) any other information presented is true, correct and
complete in all material respects and that there was no Default
or Event of Default in existence as of such time or, if a Default
or Event of Default shall have occurred and be continuing,
describing the nature thereof and all efforts undertaken to cure
such Default or Event of Default;
(b) Quarterly Financials. To Agents, within forty-
eight (48) days after the end of each Fiscal Quarter,
consolidated financial information regarding Borrower and its
Subsidiaries, certified by the Chief Financial Officer of
Borrower, including (i) unaudited balance sheets as of the close
of such Fiscal Quarter and the related statements of income and
cash flow for that portion of the Fiscal Year ending as of the
close of such Fiscal Quarter and (ii) unaudited statements of
income and cash flows for such Fiscal Quarter, in each case
setting forth in comparative form the figures for the
corresponding period in the prior year and the figures contained
in the Projections for such Fiscal Year, all prepared in
accordance with GAAP (subject to normal year-end adjustments).
Such financial information shall be accompanied by (A) a
statement in reasonable detail (each, a "Compliance Certificate")
showing the calculations used in determining compliance with a
Compliance Certificate in respect of each of the financial
covenants set forth on Annex G which is tested on a quarterly
basis and (B) the certification of the Chief Financial Officer of
Borrower that (i) such financial information presents fairly in
accordance with GAAP (subject to normal year-end adjustments) the
financial position, results of operations and statements of cash
flows of Borrower and its Subsidiaries, on a consolidated basis,
as at the end of such Fiscal Quarter and for the period then
ended, (ii) any other information presented is true, correct and
complete in all material respects and that there was no Default
or Event of Default in existence as of such time or, if a Default
or Event of Default shall have occurred and be continuing,
describing the nature thereof and all efforts undertaken to cure
such Default or Event of Default. In addition, Borrower shall
deliver to Agents and Lenders, within forty-eight (48) days after
the end of each Fiscal Quarter, a management discussion and
analysis which includes a comparison to budget for that Fiscal
Quarter and a comparison of performance for that Fiscal Quarter
to the corresponding period in the prior year;
(c) Operating Plan. To Agents, as soon as available,
but not later than thirty (30) days after the end of each Fiscal
Year, an annual operating plan for Borrower, approved by the
Board of Directors of Borrower, for the following year, which
will include a statement of all of the material assumptions on
which such plan is based, will include monthly balance sheets and
a monthly budget for the following year and will integrate sales,
gross profits, operating expenses, operating profit, cash flow
projections and Borrowing Availability projections all prepared
on the same basis and in similar detail as that on which
operating results are reported (and in the case of cash flow
projections, representing management's good faith estimates of
future financial performance based on historical performance),
and including plans for personnel, Capital Expenditures and
facilities;
(d) Annual Audited Financials. To Agents, within
ninety-three (93) days after the end of each Fiscal Year, audited
Financial Statements for Borrower and its Subsidiaries on a
consolidated basis, consisting of balance sheets and statements
of income and retained earnings and cash flows, setting forth in
comparative form in each case the figures for the previous Fiscal
Year, which Financial Statements shall be prepared in accordance
with GAAP, certified without qualification, by Arthur Andersen
LLP or another independent certified public accounting firm of
national standing or otherwise reasonably acceptable to Agent.
Such Financial Statements shall be accompanied by (i) a statement
prepared in reasonable detail showing the calculations used in
determining compliance with each of the financial covenants set
forth on Annex G, (ii) a report from such accounting firm to the
effect that, in connection with their audit examination, nothing
has come to their attention to cause them to believe that a
Default or Event of Default has occurred (or specifying those
Defaults and Events of Default that they became aware of), it
being understood that such audit examination extended only to
accounting matters and that no special investigation was made
with respect to the existence of Defaults or Events of Default,
(iii) a letter addressed to Agent, on behalf of itself and
Lenders, in form and substance reasonably satisfactory to Agent
and subject to standard qualifications taken by nationally
recognized accounting firms, signed by such accounting firm
acknowledging that Agent and Lenders are entitled to rely upon
such accounting firm's certification of such audited Financial
Statements, (iv) the annual letters to such accountants in
connection with their audit examination detailing contingent
liabilities and material litigation matters, and (v) the
certification of the Chief Executive Officer or Chief Financial
Officer of Borrower that all such Financial Statements present
fairly in accordance with GAAP the financial position, results of
operations and statements of cash flows of Borrower and its
Subsidiaries on a consolidated basis, as at the end of such year
and for the period then ended, and that there was no Default or
Event of Default in existence as of such time or, if a Default or
Event of Default shall have occurred and be continuing,
describing the nature thereof and all efforts undertaken to cure
such Default or Event of Default;
(e) Management Letters. To Agents, within five (5)
Business Days after receipt thereof by any Credit Party, copies
of all management letters, exception reports or similar letters
or reports received by such Credit Party from its independent
certified public accountants;
(f) Default Notices. To Agents, as soon as
practicable, and in any event within five (5) Business Days after
an executive officer of Borrower has actual knowledge of the
existence of any Default, Event of Default or other event which
has had a Material Adverse Effect, telephonic or telecopied
notice specifying the nature of such Default or Event of Default
or other event, including the anticipated effect thereof, which
notice, if given telephonically, shall be promptly confirmed in
writing on the next Business Day;
(g) SEC Filings and Press Releases. To Agents,
promptly upon their becoming available, copies of: (i) all
Financial Statements, reports, notices and proxy statements made
publicly available by any Credit Party to its security holders;
(ii) all regular and periodic reports and all registration
statements and prospectuses, if any, filed by any Credit Party
with any securities exchange or with the Securities and Exchange
Commission or any governmental or private regulatory authority;
and (iii) all press releases and other statements made available
by any Credit Party to the public concerning material changes or
developments in the business of any such Person;
(h) Equity Notices. To Agents, as soon as
practicable, copies of all material written notices given or
received by any Credit Party with respect to any Stock of such
Person that are otherwise not disclosed pursuant to item (g) of
this Annex E.
(i) Supplemental Schedules. To Agents, supplemental
disclosures, if any, required by Section 5.6 of the Agreement;
(j) Litigation. To Agents in writing, promptly upon
learning thereof, notice of any Litigation commenced against any
Credit Party that (i) seeks damages in excess of $500,000, (net
of any claims Borrower in good faith believes is covered by
insurance), (ii) seeks injunctive relief, (iii) is asserted or
instituted against any Plan, its fiduciaries or its assets or
against any Credit Party or ERISA Affiliate in connection with
any Plan, (iv) alleges criminal misconduct by any Credit Party,
(v) alleges the violation of any law regarding, or seeks remedies
in connection with, any Environmental Liabilities; or (vi)
involves any product recall;
(k) Insurance Notices. To Agents, disclosure of
losses or casualties required by Section 5.4 of the Agreement;
(l) Lease Default Notices. To Agents, copies of (i)
any and all default notices received under or with respect to any
leased location or public warehouse where Collateral is located,
and (ii) such other notices or documents as Agent may request in
its reasonable discretion; and
(m) Lease Amendments. To Agents, copies of all
material amendments to real estate leases.
(n) Other Documents. To Agents and Lenders, such
other financial and other information respecting any Credit
Party's business or financial condition as Agent or any Lender
shall, from time to time, request, provided however, that if any
Credit Party forms a Subsidiary as permitted under this
Agreement, any documents required to be delivered pursuant to
this Annex E or otherwise in this Agreement on a consolidated
basis shall be delivered also on a consolidating basis.
(o) Delivery of Documents to Lenders. Agent shall
deliver to the Tranche A Revolving Lenders copies of the
information set forth in clauses (a), (b), (c), (d) and (f) above
after receipt of such information from Borrower. Oversight Agent
shall deliver to the Tranche B Revolving Lenders copies of the
information set forth above after receipt of such information
from Borrower.
ANNEX F (Section 4.1(b))
to
CREDIT AGREEMENT
COLLATERAL REPORTS
Borrower shall deliver or cause to be delivered the following:
(a) To Agents, on a daily basis, a Borrowing Base
Certificate with respect to Borrower, accompanied by such
supporting detail and documentation as shall be requested by
Agents in their reasonable discretion;
(b) To Agents, upon their request, and in no event
less frequently than ten (10) Business Days after the end of each
Fiscal Month (together with a copy of all or any part of such
delivery requested by any Lender in writing after the Closing
Date), each of the following:
(i) with respect to Borrower, a summary of
Inventory by location and type with a supporting perpetual
Inventory report, in each case accompanied by such supporting
detail and documentation as shall be requested by Agents in their
reasonable discretion; and
(ii) with respect to Borrower, a monthly trial
balance showing Accounts outstanding aged from invoice due date
as follows: 1 to 30 days, 31 to 60 days, 61 to 90 days and 91
days or more, accompanied by such supporting detail and
documentation as shall be requested by Agents in their reasonable
discretion.
(c) To Agents, on a weekly basis or at such more
frequent intervals as Agents may request from time to time
(together with a copy of all or any part of such delivery
requested by any Lender in writing after the Closing Date),
collateral reports with respect to Borrower, including all
additions and reductions (cash and non-cash) with respect to
Accounts of Borrower, in each case accompanied by such supporting
detail and documentation as shall be requested by Agents in their
reasonable discretion;
(d) To Agents, at the time of delivery of each of the
monthly Financial Statements delivered pursuant to Annex E, a
reconciliation of the Accounts trial balance and month-end
Inventory reports of Borrower to Borrower's general ledger and
monthly Financial Statements delivered pursuant to such Annex E,
in each case accompanied by such supporting detail and
documentation as shall be requested by Agents in their reasonable
discretion;
(e) To Agents, at the time of delivery of each of the
quarterly or annual Financial Statements delivered pursuant to
Annex E, (i) a listing of government contracts of Borrower
subject to the Federal Assignment of Claims Act of 1940; and (ii)
a list of any applications for the registration of any Patent,
Trademark or Copyright with the United States Patent and
Trademark Office, the United States Copyright Office or any
similar office or agency which any Credit Party thereof has filed
in the prior Fiscal Quarter;
(f) Borrower, at its own expense, shall obtain, or
shall permit Agents to obtain (at Borrower's expense) financial
or SKU based physical counts and/or inventories of the
Collateral, conducted by such inventory takers as are
satisfactory to Agents and following such methodology as may be
required by Agents, each of which physical counts and/or
financial or SKU based inventories shall be observed by
Borrower's accountants. Borrower shall conduct one (1) such
count and/or inventories during each twelve (12) month period
this Agreement is in effect, and shall deliver to Agents the
results of each physical counts and/or inventories immediately
upon receipt thereof. Additionally, if an Event of Default shall
have occurred and be continuing, Borrower shall, upon the request
of Agents, conduct, and deliver the results of, additional
physical counts and/or inventories as Agents may require);
(g) Borrower, at its own expense, shall deliver to
Agents such appraisals of its assets as Agents may reasonably
request at any time after the occurrence and during the
continuance of a Default or an Event of Default, such appraisals
to be conducted by an appraiser, and in form and substance,
reasonably satisfactory to Agents; and
(h) All reporting information set forth on the
Required Reporting List attached hereto as Annex F-1 and in the
time frames specified therein and such other reports, statements
and reconciliations with respect to the Borrowing Base or
Collateral of any or all Credit Parties as Agents shall from time
to time request in its reasonable discretion.
(i) Delivery of Documents to Lenders. Agent shall
deliver to the Tranche A Revolving Lenders, and Oversight Agent
shall deliver to the Tranche B Revolving Lenders, respectively,
copies of information set forth in this Annex F and Annex F-1 as
such information is reasonably requested by such Lenders.
ANNEX F-1
to
CREDIT AGREEMENT
REQUIRED REPORTING
Daily:
Borrowing Base Certificate with summary backup information
Weekly:
Sales Audit Report
Sales By Day Flash
Collateral Activity Report
Current Inventory v. Planned EOM Inventory
Monthly:
On the 15th Day following month-end
Stock Ledger by Department from the RSL
Summary Open-to-Buy
On-Order Report - "Order Analysis by PO - Report
POM251"
Merchandise By Season
A/P Open Invoices by Vendor
Purchases and A/P Aging Analysis Form with A/P Aging (Lender format)
Rent, Tax and Insurance Compliance Certificate (Lender format)
On the 30th Day following month-end
Financial Statements (inclusive of Income Statement, Balance Sheet,
Cash Flow)
Reconciliation of the Stock Ledger Inventory Report to Availability
and to the G/L (Lender format)
Credit Cart A/R Aging
Charge Back System Report
Sales vs Plan Report (UN03)
Summary Chain Plan Report - MTD
Statement of Store Activity (Lender format)
Inventory Certificate (Lender format)
Officer's Compliance Certificate (Lender format)
Annually:
Audited Final year-end financial statements within 90
days after fiscal year-end Interim "draft" financial
statements within 60 days after year-end (inclusive of
subsequent periods until the year-end statements are
finalized).
Accountant's Certificate.
ANNEX G (Section 6.10)
to
CREDIT AGREEMENT
FINANCIAL COVENANTS
Borrower shall not breach or fail to comply with any of
the following financial covenants, each of which shall be
calculated in accordance with GAAP consistently applied:
(a) Maximum Capital Expenditures. Borrower and its
Subsidiaries on a consolidated basis shall not make Capital
Expenditures that exceed as of each Fiscal Month the amounts set
forth below for the immediately preceding four (4) Fiscal Months,
including the Fiscal Month then ended (or with respect to the
Fiscal Months ending on or before August 31, 2000, the period
commencing on August 1, 1999 and ending on the last of such
Fiscal Month):
Maximum Aisle 3 New Maximum Other
Month Store Capital Capital
Expenditures Expenditures
August 31, 1999 557,000 807,000
September 30, 1999 2,229,000 2,056,000
October 31, 1999 4,237,000 3,052,000
November 30, 1999 5,073,000 4,085,000
December 31, 1999 4,516,000 4,168,000
January 31, 2000 2,844,000 4,060,000
February 29, 2000 1,728,000 4,566,000
March 31, 2000 3,568,000 5,048,000
April 30, 2000 6,761,000 5,359,000
May 31, 2000 8,119,000 5,419,000
June 30, 2000 7,227,000 5,118,000
July 31, 2000 5,443,000 4,804,000
August 31, 2000 4,906,000 4,804,000
September 30, 2000 6,781,000 4,804,000
October 31, 2000 8,119,000 4,804,000
November 30, 2000 7,227,000 4,804,000
December 31, 2000 4,551,000 4,804,000
January 31, 2001 1,338,000 4,804,000
(b) Minimum EBITDA. Holdings and Borrower on a
consolidated basis shall have, at the end of each Fiscal Month,
EBITDA for the 12 month period then ended (or with respect to the
Fiscal Months ending on or before July 31, 2000, the period
commencing on August 1, 1999 and ending on the last day of such
Fiscal Month) of not less than the following:
Month EBITDA
August 31, 1999 (7,892,500)
September 30, 1999 (5,860,000)
October 31, 1999 (1,539,400)
November 30, 1999 (1,271,800)
December 31, 1999 (2,774,200)
January 31, 2000 (4,286,200)
February 29, 2000 (6,190,600)
March 31, 2000 (6,715,000)
April 30, 2000 (7,957,000)
May 31, 2000 (6,214,600)
June 30, 2000 (4,145,800)
July 31, 2000 (5,731,000)
August 31, 2000 (724,300)
September 30, 2000 5,863,200
October 31, 2000 10,555,200
November 30, 2000 15,377,600
December 31, 2000 22,329,600
January 31, 2001 22,441,600
(c) Eligible Inventory to Accounts Payable Ratio.
Holdings and Borrower will not permit the ratio of Eligible
Inventory to Accounts Payable at any time for any month set forth
in the table below to be less than the "Minimum Ratio" nor
greater than the "Maximum Ratio", in each case set forth opposite
such date:
Minimum Maximum
Month Ending Ratio Ratio
September 30, 1999 2.3:1.0 3.2:1.0
October 31, 1999 2.3:1.0 3.2:1.0
November 30, 1999 2.3:1.0 3.2:1.0
December 31, 1999 2.3:1.0 3.2:1.0
January 31, 2000 2.0:1.0 3.0:1.0
February 28, 2000 1.7:1.0 2.4:1.0
March 31, 2000 1.7:1.0 2.4:1.0
April 30, 2000 1.7:1.0 2.4:1.0
May 31, 2000 1.6:1.0 2.2:1.0
June 30, 2000 1.6:1.0 2.2:1.0
July 31, 2000 1.6:1.0 2.2:1.0
August 31, 2000 1.6:1.0 2.2:1.0
September 30, 2000 1.6:1.0 2.2:1.0
October 31, 2000 1.7:1.0 2.2:1.0
November 30, 2000 1.7:1.0 2.2:1.0
December 31, 2000 1.7:1.0 2.2:1.0
January 31, 2001 1.7:1.0 2.2:1.0
(d) Minimum Net Borrowing Availability. Borrower
shall have Net Borrowing Availability as of September 1, 1999, as
determined by Agents, after giving effect to Eligible Accounts
and Eligible Inventory of Borrower supporting Revolving Credit
Advances and Letter of Credit Obligations incurred (with expenses
and liabilities being paid in the ordinary course of business and
without acceleration of sales) of at least $7,000,000.
Unless otherwise specifically provided herein, any
accounting term used in the Agreement shall have the meaning
customarily given such term in accordance with GAAP, and all
financial computations hereunder shall be computed in accordance
with GAAP consistently applied. That certain items or
computations are explicitly modified by the phrase "in accordance
with GAAP" shall in no way be construed to limit the foregoing.
If any "Accounting Changes" (as defined below) occur and such
changes result in a change in the calculation of the financial
covenants, standards or terms used in the Agreement or any other
Loan Document, then Borrower, Agent and Lenders agree to enter
into negotiations in order to amend such provisions of the
Agreement so as to equitably reflect such Accounting Changes with
the desired result that the criteria for evaluating Borrower's
and its Subsidiaries' financial condition shall be the same after
such Accounting Changes as if such Accounting Changes had not
been made; provided, however, that the agreement of those Lenders
having the right to consent to any required amendments of such
provisions under Section 11.2 shall be sufficient to bind all
Lenders. "Accounting Changes" means (a) changes in accounting
principles required by the promulgation of any rule, regulation,
pronouncement or opinion by the Financial Accounting Standards
Board of the American Institute of Certified Public Accountants
(or successor thereto or any agency with similar functions), (b)
changes in accounting principles concurred in by Borrower's
certified public accountants; (c) purchase accounting adjustments
under A.P.B. 16 and/or 17 and EITF 88-16, and the application of
the accounting principles set forth in FASB 109, including the
establishment of reserves pursuant thereto and any subsequent
reversal (in whole or in part) of such reserves; and (d) the
reversal of any reserves established as a result of purchase
accounting adjustments. All such adjustments resulting from
expenditures made subsequent to the Closing Date (including
capitalization of costs and expenses or payment of pre-Closing
Date liabilities) shall be treated as expenses in the period the
expenditures are made and deducted as part of the calculation of
EBITDA in such period. If Agent, Borrower and required Lenders
(determined under Section 11.2) agree upon the required
amendments, then after appropriate amendments have been executed
and the underlying Accounting Change with respect thereto has
been implemented, any reference to GAAP contained in the
Agreement or in any other Loan Document shall, only to the extent
of such Accounting Change, refer to GAAP, consistently applied
after giving effect to the implementation of such Accounting
Change. If Agent and required Lenders (determined under Section
11.2) cannot agree upon the required amendments within thirty
(30) days following the date of implementation of any Accounting
Change, then all Financial Statements delivered and all
calculations of financial covenants and other standards and terms
in accordance with the Agreement and the other Loan Documents
shall be prepared, delivered and made without regard to the
underlying Accounting Change. For purposes of Section 8.01, a
breach of a Financial Covenant contained in this Annex G shall be
deemed to have occurred as of any date of determination by Agent
as of the last day of any specified measurement period,
regardless of when the Financial Statements reflecting such
breach are delivered to Agent.
ANNEX H (Section 1.1(d))
to
CREDIT AGREEMENT
LENDERS' WIRE TRANSFER INFORMATION
Bankers Trust Company
New York, New York
Account No. 50-232-854
ABA Number: 021-001-033
Account Name: GE Capital
Reference: Filene's Basement
ANNEX I (Section 11.10)
to
CREDIT AGREEMENT
NOTICE ADDRESSES
(A) If to Agent or GE Capital, at
General Electric Capital Corporation
201 High Ridge Road
Stamford, Connecticut 06927-5100
Attention: Account Manager
Telecopier No.: (203) 316-7893
Telephone No.: (203) 316-7500
with copies to:
Paul, Hastings, Janofsky & Walker LLP
600 Peachtree Street, N.E. - Suite 2400
Atlanta, Georgia 30308
Attention: Jesse H. Austin, III, Esq.
Telecopier No.: (404) 815-2424
Telephone No.: (404) 815-2400
Paul, Hastings, Janofsky & Walker LLP
1055 Washington Boulevard
Stamford, Connecticut 06901
Attention: Leslie Plaskon, Esq.
Telecopier No.: (203) 359-3031
Telephone No.: (203) 961-7400
(B) If to Oversight Agent or Paragon, at
Paragon Capital LLC
75 Second Avenue
Suite 400
Needham, Massachusetts 02494-2800
Attention: Andrew H. Moser
Telecopier No.: (781) 707-2107
Telephone No.: (781) 707-2121
with copies to:
Shapiro, Israel & Weiner
100 North Washington Street #6
Boston, Massachusetts 02114
Attention: Joel Rosenthal, Esq.
Telecopier No.: (617) 742-2355
Telephone No.: (617) 314-4260
(C) If to Borrower, at
Filene's Basement, Inc.
40 Walnut Street
Wellesley, Massachusetts 02481
Attention: Steven R. Siegel
Telecopier No.: (617) 348-7130
Telephone No.: (617) 348-7000
with copies to:
Chappell White LLP
99 Summer Street
Boston, Massachusetts 02108
Attention: Robert C. Zinnershine, Esq.
Telecopier No.: (617) 772-9696
Telephone No.: (617) 772-9600
ANNEX J (from Annex A - Commitments definition)
to
CREDIT AGREEMENT
Tranche A Lender(s):
General Electric Capital Corporation
Tranche A Revolving Loan Commitment
(including a Swing Line Commitment
of $10,000,000): $85,000,000
Tranche B Lender(s)
Paragon Capital LLC $10,000,000
B III Capital Partners, L.P. $30,000,000
Schedules to Credit Agreement
DISCLOSURE SCHEDULE 1.1
Responsible Individual
General Electric Capital Corporation
201 High Ridge Road
Stamford, Connecticut 06927
Telephone No.: (203) 316-7500
Telecopier No.: (203) 316-7893
Attention: Account Manager - Filene's Basement
Paragon Capital LLC
Hillsite Office Building
75 Second Avenue
Suite 400
Needham, MA 02494
Telephone No.: (781) 707-2121
Telecopier No.: (781) 707-2107
Attention: Andrew H. Moser
President & COO
CREDIT AGREEMENT
Dated as of July 26, 1999
among
FILENE'S BASEMENT, INC.
as Borrower,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
PARAGON CAPITAL LLC,
as Oversight Agent,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent
TABLE OF CONTENTS
Page
1. AMOUNT AND TERMS OF CREDIT 2
1.1. Credit Facilities 2
1.2. Letters of Credit 7
1.3. Prepayments 7
1.4. Use of Proceeds 9
1.5. Interest and Applicable Margins 10
1.6. Eligible Accounts 13
1.7. Eligible Inventory 14
1.8. Cash Management Systems 15
1.9. Fees and Other Compensation 15
1.10. Receipt of Payments 16
1.11. Application and Allocation of Payments; Subordination 16
1.12. Loan Account and Accounting 18
1.13. Indemnity 18
1.14. Access; Appraisals; Mystery Shopping 20
1.15. Taxes 21
1.16. Capital Adequacy; Increased Costs; Illegality 21
1.17. Single Loan 23
2. CONDITIONS PRECEDENT 23
2.1. Conditions to the Initial Loans 23
2.2. Further Conditions to Each Loan 24
3. REPRESENTATIONS AND WARRANTIES 25
3.1. Corporate Existence; Compliance with Law 25
3.2. Executive Offices; FEIN 26
3.3. Corporate Power, Authorization, Enforceable Obligations 26
3.4. Financial Statements and Projections 26
3.5. Material Adverse Effect 27
3.6. Ownership of Property; Liens 27
3.7. Labor Matters 28
3.8. Ventures, Subsidiaries and Affiliates; Outstanding
Stock and Indebtedness 29
3.9. Government Regulation 29
3.10. Margin Regulations 29
3.11. Taxes 30
3.12. ERISA 30
3.13. No Litigation 31
3.14. Brokers 31
3.15. Intellectual Property 31
3.16. Full Disclosure 31
3.17. Environmental Matters 32
3.18. Insurance 33
3.19. Deposit and Disbursement Accounts 33
3.20. Government Contracts 33
3.21. Intentionally omitted 33
3.22. Agreements and Other Documents 33
3.23. Solvency 33
3.24. Year 2000 Representations 34
3.25. Status of Holdings 34
3.26. Credit Card Providers 34
4. FINANCIAL STATEMENTS AND INFORMATION 34
4.1. Reports and Notices 34
4.2. Communication with Accountants 34
5. AFFIRMATIVE COVENANTS 35
5.1. Maintenance of Existence and Conduct of Business 35
5.2. Payment of Obligations 35
5.3. Books and Records 36
5.4. Insurance; Damage to or Destruction of Collateral 36
5.5. Compliance with Laws 37
5.6. Supplemental Disclosure 38
5.7. Intellectual Property 38
5.8. Environmental Matters 38
5.9. Landlords' Agreements, Mortgagee Agreements and Bailee
Letters 39
5.10. Further Assurances 39
5.11. Year 2000 Problems 40
5.12. Credit Card Notices 40
5.13. Point of Sale System 40
5.14. Leasehold Mortgages 40
6. NEGATIVE COVENANTS 40
6.1. Mergers, Subsidiaries, Etc. 40
6.2. Investments; Loans and Advances 41
6.3. Indebtedness 41
6.4. Employee Loans and Affiliate Transactions 43
6.5. Capital Structure and Business 43
6.6. Guaranteed Indebtedness 43
6.7. Liens 44
6.8. Sale of Stock and Assets 44
6.9. ERISA 45
6.10. Financial Covenants 45
6.11. Hazardous Materials 45
6.12. Sale-Leasebacks 45
6.13. Cancellation of Indebtedness 46
6.14. Restricted Payments 46
6.15. Change of Corporate Name or Location; Change of
Fiscal Year 46
6.16. No Impairment of Intercompany Transfers 46
6.17. No Speculative Transactions 46
6.18. Credit Parties Other than Borrower 47
6.19. Amendments to Material Agreements 47
6.20. Credit Card Notices 47
7. TERM 47
7.1. Termination 47
7.2. Survival of Obligations Upon Termination of Financing
Arrangements 47
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES 47
8.1. Events of Default 47
8.2. Remedies 50
8.3. Waivers by Credit Parties 51
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENTS 52
9.1. Assignment and Participations 52
9.2. Appointment of Agents 54
9.3. Agents' Reliance, Etc. 55
9.4. GE Capital, Paragon and Affiliates 55
9.5. Lender Credit Decision 56
9.6. Indemnification 56
9.7. Successor Agents 56
9.8. Setoff and Sharing of Payments 57
9.9. Advances; Payments; Non-Funding Lenders; Information;
Actions in Concert 58
10. SUCCESSORS AND ASSIGNS 61
10.1. Successors and Assigns 61
11. MISCELLANEOUS 61
11.1. Complete Agreement; Modification of Agreement 61
11.2. Amendments and Waivers 61
11.3. Fees and Expenses 63
11.4. No Waiver 65
11.5. Remedies 65
11.6. Severability 65
11.7. Conflict of Terms 65
11.8. Confidentiality 66
11.9. GOVERNING LAW 66
11.10.Notices 67
11.11.Section Titles 68
11.12.Counterparts 68
11.13.WAIVER OF JURY TRIAL 68
11.14.Press Releases 68
11.15.Reinstatement 68
11.16.Advice of Counsel 69
11.17.Entities Related to Paragon. 69
11.18.Entire Agreement. 69
11.19.Disclosure. 69
INDEX OF APPENDICES
Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(iv) - Form of Tranche A Revolving Note
Exhibit 1.1(a)(v) - Form of Tranche B Revolving Note
Exhibit 1.1(b)(ii) - Form of Swing Line Note
Exhibit 1.5(e) - Form of Notice of Conversion/Continuation
Exhibit 4.1(b) - Form of Borrowing Base Certificate
Exhibit 5.9(a) - Form of Landlord Waiver
Exhibit 5.9(b) - Alternative Form of Landlord Waiver
Exhibit 5.12 - Form of Credit Card Agreement
Exhibit 9.1(a) - Form of Assignment Agreement
Schedule 1.1 - Responsible Individual
Schedule 1.1(c) - Authorized Signatories
Schedule 1.4 - Sources and Uses; Funds Flow Memorandum
Schedule 3.2 - Executive Offices; FEIN
Schedule 3.4(A) - Financial Statements
Schedule 3.4(B) - Projections
Schedule 3.5 - Pre-Closing Materially Adverse Events
Schedule 3.6(a) - Real Estate and Leases
Schedule 3.6(b) - Leases in Default
Schedule 3.6(c) - Leases (Borrower as Lessor, Sublessor or Assignor)
Schedule 3.6(d) - Leased Department License Agreements
Schedule 3.7 - Labor Matters
Schedule 3.8 - Ventures, Subsidiaries and Affiliates; Outstanding
Stock
Schedule 3.11 - Tax Matters
Schedule 3.12 - ERISA Plans
Schedule 3.13 - Litigation
Schedule 3.15 - Intellectual Property
Schedule 3.17 - Hazardous Materials
Schedule 3.18 - Insurance
Schedule 3.19 - Deposit and Disbursement Accounts
Schedule 3.20 - Government Contracts
Schedule 3.22 - Agreements and Other Documents
Schedule 3.26 - Credit Card Providers
Schedule 5.1 - Trade Names
Schedule 6.2 - Investments
Schedule 6.3 - Indebtedness
Schedule 6.4(a) - Transactions with Affiliates
Schedule 6.4(b) - Employee Loans
Schedule 6.7(a) - Existing Liens
Schedule 6.7(b) - Existing Capital Leases
Schedule 6.8(c) - Permitted Dispositions
Schedule 6.19 - Material Agreements
Schedule 10 - Fiscal Quarters
Annex A (Recitals) - Definitions
Annex B (Section 1.2) - Letters of Credit
Annex C (Section 1.8) - Cash Management System
Annex D (Section 2.1(a)) - Schedule of Additional Closing Documents
Annex E (Section 4.1(a)) - Financial Statements and
Projections -- Reporting
Annex F (Section 4.1(b)) - Collateral Reports
Annex F-1 - Required Reporting List
Annex G (Section 6.10) - Financial Covenants
Annex H (Section 9.9(a)) - Lenders' Wire Transfer Information
Annex I (Section 11.10) - Notice Addresses
Annex J (from Annex A-
Commitments definition) - Commitments as of Closing Date
