EXHIBIT INDEX ON PAGE 3
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 8, 1996
CARSON PIRIE SCOTT & CO.
- -----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois
- -----------------------------------------------------------------------------
(State or other jurisdiction of incorporation)
0-22682 37-0175980
- -----------------------------------------------------------------------------
Commission File Number (IRS Employer Identification No.)
331 West Wisconsin Avenue, Milwaukee, Wisconsin 53203
- -----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(414) 347-4141
- -----------------------------------------------------------------------------
Registrant's Telephone Number
Page 1
Item 5. Other Events.
On August 8, 1996, Carson Pirie Scott & Co. reported its
sales for the second quarter in a news release, a copy of which
is attached as Exhibit 1. Also, on August 15, 1996, Carson reported
its earnings for the second quarter in a news release, a copy of which is
attached as Exhibit 2.
Item 7. Exhibits.
See Exhibit Index on page 3 of this Current Report on Form 8-K.
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly
authorized.
Dated August 27, 1996.
CARSON PIRIE SCOTT & CO.
By: /s/ Charles J. Hansen
------------------------
Charles J. Hansen
Vice President,
General Counsel,
and Secretary
Page 2
EXHIBIT INDEX
1. News release, dated August 8, 1996.
2. News release, dated August 15,1996.
4.8 Revolving Credit and Guaranty Agreement, dated as of May 24, 1996,
among Carson, certain of Carson's subsidiaries, the lenders named
therein, ABN AMRO Bank N.V., as agent, and Dresdner Bank AG and The
CIT Group/Business Credit, Inc., as co-agents.
Page 3
EXHIBIT 1
Investors Media
- ----------- -------
John M. Doyle Edward P. Carroll, Jr.
V.P.--Treasurer Executive V.P. Marketing
(414) 278-5757 (414) 347-5340
FOR IMMEDIATE RELEASE THURSDAY, August 8, 1996
CARSON PIRIE SCOTT & CO. SALES FOR JULY UP 1.2%
MILWAUKEE, WISCONSIN, August 8, 1996--Carson Pirie Scott & Co.(NYSE: CRP)
today reported that sales for the four weeks ended August 3, 1996 increased
1.2% to $60.8 million. On a comparable store basis sales decreased 1.6%.
SALES SUMMARY
--------------
($ in Millions)
Comparable
Sales Store Sales
Period 1996 1995** % Change** % Change*
- -------- ---- ------ ---------- ----------
July $60.8 $60.1 + 1.2% - 1.6%
Second
quarter $225.0 $220.7 + 1.9% - 0.4%
Year to date $461.8 $445.1 + 3.7% + 2.1%
Total Stores 55 53
* Comparable sales represent sales of those stores open
during both years.
** 1995 year to date sales exclude $25.0 million of sales from
eight stores that were sold in March 1995.
- -----------------------------------------------------------------------------
Stanton J. Bluestone, Chairman and Chief Executive Officer
of Carson Pirie Scott & Co., commented:
"Sales in the month of July were below my expectation. After an encouraging
start, business weakened over the last two weeks of the month. The largest
sales gains were registered in Better and Special Size Sportswear, Wear-to
- -Work apparel, Jewelry, Home Textiles and Housewares."
"The July sales results brought to a close a difficult quarter during which
comparable sales declined 0.4%; however, I believe that second quarter
earnings per share will equal last year levels. In addition, I remain
cautiously optimistic about the prospects for the second half of the year.
Our inventories are in good shape for Fall, three new store locations will
open in the third quarter and five locations will complete renovation
activity in the third quarter."
Carson Pirie Scott & Co., a major department store retailer, operates 52
department stores and 3 furniture stores: 31 Carson Pirie Scott stores in
greater Chicago, Indiana and Minnesota; 13 Bergner's stores in central
Illinois; and 11 Boston Stores in Wisconsin.
Page 4
EXHIBIT 2
Investors Media
- ----------- -------
John Doyle Edward P. Carroll, Jr.
Vice President - Treasurer Executive V.P. Marketing
(414) 278-5757 (414) 347-5340
FOR IMMEDIATE RELEASE THURSDAY, AUGUST 15, 1996
CARSON PIRIE SCOTT & CO. SECOND QUARTER EARNINGS
INCREASE TO $0.17 PER SHARE
MILWAUKEE, WISCONSIN, AUGUST 15, 1996 - Carson Pirie Scott & Co. (NYSE:CRP),
announced its second quarter financial results. Stanton J. Bluestone,
Chairman and Chief Executive Officer of Carson Pirie Scott & Co. commented:
"I am pleased to report our fifth consecutive quarter of improvement in
earnings from ongoing operations. The second quarter was difficult as
unseasonably cool weather and the related slow down in customer spending
constrained sales. However, I was pleased with the 80 basis point gross
margin rate improvement in the quarter. A combination of fewer clearance
events at our downtown locations, improved shortage results and early
selling of Fall apparel created the margin enhancement. In addition, I was
pleased with the strong sales results throughout the quarter in Special Size
and Better feminine sportswear, Coats, Mens and Accessories, particularly
in the Handbags and Jewelry areas. The 1995 renovated stores continued to
produce exceptional sales gains, posting a 26% increase in the quarter.
I remain cautiously optimistic about our prospects for the balance of the
year. In the third quarter we will open three new store locations and close
one underperforming location. We will complete the renovation of five stores
by the end of the third quarter and will expand the rollout of the three
American Men's Designers and introduce the feminine apparel offerings of
these vendors into select locations."
1996 Second Quarter Results Summary
-----------------------------------------
($ in millions, Net Net
except EPS) Sales EBITDA Income EPS
- ----------------- ----- ------ ------ ---
ONGOING OPERATIONS(1) $225.0 $12.9 $3.3 $0.20
NON-RECURRING ITEMS
Preopen expenses - (0.8) (0.5) (0.03)
------------------------------------------
TOTAL COMPANY $225.0 $12.1 $2.8 $0.17
------------------------------------------
------------------------------------------
(1) Excludes non-recurring items.
- ----------------------------------------------------------------------------
Page 5
1995 Second Quarter Results Summary
-----------------------------------------
($ in millions, Net Net
except EPS) Sales EBITDA Income EPS
- ------------------ ----- ------ ------ ---
ONGOING OPERATIONS(1) $220.7 $12.4 $2.7 $0.16
NON-RECURRING ITEMS:
Preopen expenses - - - -
-------------------------------------------------
TOTAL COMPANY $220.7 $12.4 $2.7 $0.16
-------------------------------------------------
-------------------------------------------------
(1) Excludes non-recurring items.
- -----------------------------------------------------------------------------
SECOND QUARTER RESULTS: Ongoing Operations exclude from Total Company results
the impact of non-operating and non-recurring items. Sales increased 1.9%
to $225.0 million in the second quarter of 1996 from the prior year's sales
of $220.7 million. Sales decreased 0.4% on a same-store basis. Earnings
before interest, taxes, depreciation, amortization and other non-cash items
("EBITDA") decreased 2.4% to $12.1 million in 1996 from $12.4 million in
1995. Ongoing EBITDA, excluding the impact of preopening expenses associated
with the opening of the Company's Cherryvale store, increased 4.0% to $12.9
million. Net income from Ongoing Operations increased $0.6 million in the
quarter versus the prior year second quarter as a result of the improved
EBITDA performance. Earnings per share from Ongoing Operations ("EPS")
improved 25.0% from $0.16 to $0.20 per share.
On a Total Company basis, EPS increased $0.01 to $0.17 per share.
1996 Year to Date Results Summary
--------------------------------------
($ in millions, Net Net
except EPS) Sales EBITDA Income EPS
- --------------------- ----- ------ ------ -----
ONGOING OPERATIONS(1) $461.8 $24.7 $ 5.7 $0.34
NON-RECURRING ITEMS:
Minnesota
clearance sales - - - -
Minnesota sale gain - - - -
Preopen expenses - (0.8) (0.5) (0.03)
Write-off of loan fees - - (0.2) (0.01)
Sale of Proffitt's stock - - 9.0 0.53
Charitable contribution - - (1.5) (0.09)
----------------------------------------------
TOTAL COMPANY $461.8 $23.8 $12.5 $0.74
----------------------------------------------
----------------------------------------------
(1) Excludes the results of the 8 stores sold to Mervyns in March
1995 and non-recurring items.
- --------------------------------------------------------------------------
Page 6
1995 Year to Date Results Summary
-------------------------------------
($ in millions, Net Net
except EPS) Sales EBITDA Income EPS
- ------------------ ----- ------ ------ ---
ONGOING OPERATIONS(1) $445.1 $21.6 $4.0 $0.23
NON-RECURRING ITEMS:
Minnesota
clearance sales 25.0 - - -
Minnesota sale gain - - 33.0 1.86
Preopen expenses - - - -
Write-off of loan fees - - - -
Sale of Proffitt's stock - - - -
Charitable contribution - - - -
------------------------------------------------
TOTAL COMPANY $470.1 $21.6 $37.0 $2.09
------------------------------------------------
------------------------------------------------
(1) Excludes the results of the 8 stores sold to Mervyns in
March 1995 and non-recurring items.
- ----------------------------------------------------------------------------
RESULTS OF ONGOING OPERATIONS: Ongoing Operations exclude
from Total Company results the operations of the eight-store Minnesota
Division sold to Mervyn's in March 1995, non-operating and non-recurring
items. Sales from Ongoing Operations increased 3.7% to $461.8 million
in the first half of 1996 from the prior year's sales of $445.1 million.Sales
increased 2.1% on a same-store basis. EBITDA from Ongoing Operations
increased 14.4% to $24.7 million in 1996 from $21.6 million in 1995. Net
income from Ongoing Operations increased $1.7 million in the first half
versus the prior year first half as a result of the improved EBITDA
performance. EPS from Ongoing Operations improved by 47.8% from $0.23 to
$0.34 per share.
TOTAL COMPANY RESULTS: Total Company sales declined $8.3 million in
the first half of 1996 versus the first half of 1995. The decline resulted
from the sale of the Minnesota Division. The Minnesota Division
contributed $25.0 million in sales to the 1995 first half results that were
absent in the 1996. These sales were clearance sales and did not generate
incremental EBITDA.
Total Company net income declined $24.5 million and EPS was lower by
$1.35 in 1996 compared to 1995. The decreases are a result of lower net
non-recurring gains in the 1996 first half compared to the non-recurring
gain recorded in the same period of last year. Specifically, the 1996 first
half included net non-recurring after-tax gain of $6.8 million or $0.40
per share consisting of a $9.0 million gain related to the Company's sale
of all of its shares of Proffitt's Inc. common stock, offset by a one-time
$1.5 million charitable contribution to the Carson Pirie Scott Foundation,
$0.5 million in preopening expenses and $0.2 million write-off of
capitalized loan costs. The 1995 first half included a net non-recurring
after-tax gain of $33.0 million or $1.86 per share from the sale of the
Minnesota division.
Page 7
SHARE REPURCHASE PROGRAM: During the second quarter, the Company
repurchased 166,100 shares of its common stock for $4.0 million. Year to
date, the Company has repurchased 316,100 shares, or 1.9% of outstanding
shares, for $7.4 million under a $20 million buyback program.
Carson Pirie Scott & Co., a major department store retailer, operates 52
traditional department stores and 3 furniture stores: 31 Carson Pirie Scott
stores in greater Chicago, Indiana and Minnesota; 13 Bergner's in central
Illinois, and 11 Boston Stores in Wisconsin.
Page 8
CARSON PIRIE SCOTT & CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
ASSETS August 3, 1996 July 29, 1995
- ----------------------------------------------------------------------------
Current assets:
Cash and cash equivalents $ 25,946 $133,226
Receivables, net 214,433 216,774
Inventories 186,587 176,271
Other current assets 19,701 18,461
- ----------------------------------------------------------------------------
Total current assets 446,667 544,732
- ----------------------------------------------------------------------------
Property and equipment, net 155,915 126,223
Other assets 61,402 69,531
- ----------------------------------------------------------------------------
$663,984 $740,486
- ----------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
- ----------------------------------------------------------------------------
Current liabilities:
Current maturities of
long-term debt $ 2,766 $ 3,009
Accounts payable and
accrued liabilities 150,898 148,334
- ----------------------------------------------------------------------------
Total current liabilities 153,664 151,343
- ----------------------------------------------------------------------------
Other liabilities 43,451 51,061
Accounts receivable securitization 99,000 165,920
Long-term debt, less
current maturities 47,431 107,167
- ----------------------------------------------------------------------------
Total liabilities 343,546 475,491
- ----------------------------------------------------------------------------
Shareholders' equity:
Common stock 161 163
Paid-in capital and
amortized stock compensation 165,248 148,320
Unrealized gain on
investments 597 2,051
Retained earnings 154,432 114,461
- ----------------------------------------------------------------------------
Total shareholders' equity 320,438 264,995
- ----------------------------------------------------------------------------
$663,984 $740,486
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Balance Sheet Statistics:
Net Debt/Capitalization (1) 27.8% 35.0%
Net Debt/Capitalization (1) (excluding
A/R debt) 7.0% NM
- ----------------------------------------------------------------------------
(1) Net Debt = Long-term debt + A/R Securitization - Cash
Page 9
CARSON PIRIE SCOTT & CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(dollars in thousands, except per-share amounts)
Three months ended
--------------------------
August 3, 1996 July 29, 1995
----------------------------------------------
Net sales $224,986 $220,751
Cost of sales (141,464) (140,522)
Selling, general and
administrative expense (70,613) (67,823)
Store preopening costs (857) -
- ----------------------------------------------------------------------------
EBITDA 12,052 12,406
Depreciation and
amortization expense (4,031) (3,116)
Other (42) 49
Non-recurring items - -
- ----------------------------------------------------------------------------
Income from operations 7,979 9,339
Non-recurring items - -
Acquisition expense - -
Interest expense, net (3,391) (4,915)
- ----------------------------------------------------------------------------
Income before income taxes
and extraordinary item 4,588 4,424
Income tax expense (1,808) (1,767)
- ----------------------------------------------------------------------------
Net income $2,780 $2,657
- ----------------------------------------------------------------------------
Net income per share:
ONGOING OPERATIONS $0.20 $0.16
Primary $0.17 $0.16
Fully diluted $0.17 $0.16
Shares Outstanding
(in 000's) 16,782 16,708
Statistics:
Same-store sales increase (0.4%) 3.6%
Gross margin rate (r) 37.1% 36.3%
Gross margin rate (C) 37.1% 36.3%
Net SG&A rate (r) 31.8%) (30.7%)
Net SG&A rate (C) 31.4%) (30.7%)
EBITDA rate (r) 5.4% 5.6%
EBITDA rate (C) 5.7% 5.6%
- ----------------------------------------------------------------------------
(r)Total Company rates as reported.
(C) Ongoing Operations rates which exclude the impact of eight stores sold
to Mervyn's in 1995 and non-recurring items.
Page 10
Six months ended
--------------------------
August 3, 1996 July 29, 1995
-----------------------------------------------
Net sales $461,755 $470,107
Cost of sales (295,206) (310,207)
Selling, general and
administrative expense (141,853) (138,329)
Store preopening costs (857) -
- ----------------------------------------------------------------------------
EBITDA 23,839 21,571
Depreciation and
amortization expense (8,063) (6,170)
Other (135) 42
Non-recurring items - 55,000
- ----------------------------------------------------------------------------
Income from operations 15,641 70,443
Non-recurring items 12,065 -
Acquisition expense - -
Interest expense, net (7,135) (8,719)
- ----------------------------------------------------------------------------
Income before income taxes
and extraordinary item 20,571 61,724
Income tax expense (8,105) (24,687)
- ----------------------------------------------------------------------------
Net income $12,466 $37,037
- ---------------------------------------------------------------------------
Net income per share:
ONGOING OPERATIONS $0.34 $0.23
Primary $0.74 $2.09
Fully diluted $0.74 $2.09
Shares Outstanding
(in 000's) 16,791 17,702
Statistics:
Same-store sales increase 2.1% 3.6%
Gross margin rate (r) 36.1% 34.0%
Gross margin rate (C) 36.1% 35.9%
Net SG&A rate (r) (30.9%) (29.4%)
Net SG&A rate (C) (30.7%) (31.1%)
EBITDA rate (r) 5.2% 4.6%
EBITDA rate (C) 5.3% 4.8%
- ----------------------------------------------------------------------------
(r)Total Company rates as reported.
(C) Ongoing Operations rates which exclude the impact of eight stores sold
to Mervyn's in 1995 and non-recurring items.
Page 11
Trailing twelve months ended
---------------------------------
August 3, 1996 July 29, 1995
------------------------------------------
Net sales $1,075,460 $1,140,338
Cost of sales (685,434) (741,977)
Selling, general and
administrative expense (298,925) (305,742)
Store preopening costs (1,180) (214)
- ----------------------------------------------------------------------------
EBITDA 89,921 92,405
Depreciation and
amortization expense (13,285) (9,622)
Other 35 (194)
Non-recurring items 904 71,171
- ----------------------------------------------------------------------------
Income from operations 77,575 153,760
Non-recurring items 12,065 -
Acquisition expense (6,835) -
Interest expense, net (16,390) (17,877)
- ----------------------------------------------------------------------------
Income before income taxes
and extraordinary item 66,415 135,883
Income tax expense (26,445) (54,347)
- ----------------------------------------------------------------------------
Net income $39,970 $81,536
- ----------------------------------------------------------------------------
Statistics:
Same-store sales increase 2.6% 4.3%
Gross margin rate (r) 36.3% 34.9%
Gross margin rate (C) 36.3% 36.3%
Net SG&A rate (r) (27.9%) (26.8%)
Net SG&A rate (C) (27.8%) (28.3%)
EBITDA rate (r) 8.4% 8.1%
EBITDA rate (C) 8.5% 8.0%
- --------------------------------------------------------------------------
(r)Total Company rates as reported.
(C) Ongoing Operations rates which exclude the impact of eight stores sold
to Mervyn's in 1995 and non-recurring items.
Page 12
EXHIBIT 4.8
REVOLVING CREDIT AND GUARANTY AGREEMENT
Among
CARSON PIRIE SCOTT & CO.,
as Borrower
CPS DEPARTMENT Stores, INC.,
AND EACH OF THE OTHER SUBSIDIARIES NAMED HEREIN,
as Guarantors
THE BANKS PARTY HERETO
ABN AMRO BANK N.V.,
as Agent
and
DRESDNER BANK AG,
and
THE CIT GROUP/BUSINESS CREDIT, INC.,
as Co-Agents
Dated as of May 24, 1996
TABLE OF CONTENTS
Page
Introductory Statement...................................................
ARTICLE I DEFINITIONS............................................
Section 1.01. Defined Terms..........................................
Section 1.02. Terms Generally........................................
ARTICLE II AMOUNT AND TERMS OF CREDIT.............................
Section 2.01. Commitment of the Banks................................
Section 2.02. Borrowing Base.........................................
Section 2.03. Letters of Credit......................................
Section 2.04. Issuance...............................................
Section 2.05. Nature of Letter of Credit Obligations Absolute........
Section 2.06. Making of Loans........................................
Section 2.07. Notes; Repayment of Loans..............................
Section 2.08. Interest on Loans......................................
Section 2.09. Default Interest.......................................
Section 2.10. Optional Termination or Reduction of Commitment........
Section 2.11. Alternate Rate of Interest.............................
Section 2.12. Refinancing of Loans...................................
Section 2.13. Mandatory Prepayment; Commitment Termination; Cash
Collateral.............................................
Section 2.14. Optional Prepayment of Loans...........................
Section 2.15. Reserve Requirements; Change in Circumstances..........
Section 2.16. Change in Legality.....................................
Section 2.17. Pro Rata Treatment, Etc................................
Section 2.18. Taxes..................................................
Section 2.19. Certain Fees...........................................
Section 2.20. Commitment Fee.........................................
Section 2.21. Letter of Credit Fees..................................
Section 2.22. Closing Fee............................................
Section 2.23. Nature of Fees.........................................
Section 2.24. Right of Set-Off.......................................
Section 2.25. Security Interest in Cash Collateral Account...........
Section 2.26. Making of Loans........................................
Section 2.27. Settlement Among Banks.................................
ARTICLE IIA COLLATERAL SECURITY....................................
Section 2A.01. Security Documents.....................................
Section 2A.02. Filing and Recording...................................
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BORROWER.............
Section 3.01. Organization and Authority.............................
Section 3.02. Due Execution..........................................
Section 3.03. Statements Made........................................
Section 3.04. Financial Statements...................................
Section 3.05. Ownership..............................................
Section 3.06. Liens..................................................
Section 3.07. Litigation: Compliance with Law, Etc..................
Section 3.08. Insurance..............................................
Section 3.09. Labor Relations, Etc...................................
Section 3.10. Use of Proceeds........................................
Section 3.11. Collateral Locations, Chief Executive Office, Store
Locations and Bank Accounts............................
Section 3.12. Litigation.......................................... ..
Section 3.13. Governmental Approvals.................................
Section 3.14. Federal Reserve Regulations............................
Section 3.15. Taxes..................................................
Section 3.16. Employee Benefit Plans.................................
Section 3.17. Investment Company Act; Public Utility Holding Company
Act....................................................
Section 3.18. Security Interest......................................
Section 3.19. Subsidiaries...........................................
Section 3.20. Title to Properties; Possession Under Leases; Trademark
Licenses and Supplier Agreements.......................
Section 3.21. Solvency...............................................
Section 3.22. Permits, Etc...........................................
Section 3.23. No Change in Credit Criteria Collection Policies.......
Section 3.24. Landlord's Liens.......................................
Section 3.25. Environmental Matters..................................
ARTICLE IV CONDITIONS OF LENDING..................................
Section 4.01. Conditions Precedent to Effectiveness..................
Section 4.02. Conditions Precedent to Each Loan and Each Letter of
Credit.................................................
ARTICLE V AFFIRMATIVE COVENANTS..................................
Section 5.01. Financial Statements, Reports, Etc.....................
Section 5.01A. Litigation and Other Notices...........................
Section 5.02. Corporate Existence....................................
Section 5.03. Insurance..............................................
Section 5.04. Obligations and Taxes..................................
Section 5.05. Notice of Event of Default, Etc........................
Section 5.06. Borrowing Base Certificate.............................
Section 5.07. Access to Books and Records............................
Section 5.08. Concentration of Cash..................................
Section 5.09. Business Plan..........................................
Section 5.10. Compliance with Laws, Etc..............................
Section 5.11. Use of Proceeds........................................
Section 5.12. Fiscal Year-End........................................
Section 5.13. Further Assurances.....................................
Section 5.14. Additional Grantors and Guarantors.....................
Section 5.15. Environmental Laws.....................................
Section 5.16. Cleanup Period.........................................
Section 5.17. Credit Card Agreements and Credit Card Guidelines......
ARTICLE VI NEGATIVE COVENANTS.....................................
Section 6.01. Liens..................................................
Section 6.02. Merger, Acquisitions, Etc..............................
Section 6.03. Indebtedness...........................................
Section 6.04. Sales, Etc, of Assets..................................
Section 6.05. Capital Expenditures...................................
Section 6.06. Funded Debt to EBITDA Ratio............................
Section 6.07. Cash Flow Coverage.....................................
Section 6.08. Interest Coverage Ratio................................
Section 6.09. Minimum Tangible Net Worth.............................
Section 6.10. Funded Debt to Equity..................................
Section 6.11. Limitation on Voluntary Payments and Modifications of
Coordinated Indebtedness...............................
Section 6.12. Guarantees and Other Liabilities.......................
Section 6.13. Liquidation Sales......................................
Section 6.14. Receivables Agreement Documents........................
Section 6.15. Merchandise Returns....................................
Section 6.16. Investments, Loans and Advances........................
Section 6.17. Lease-Backs............................................
Section 6.18. Transactions with Affiliates...........................
Section 6.19. Business...............................................
Section 6.20. ERISA..................................................
Section 6.21. Accounting Changes.....................................
Section 6.22. Modification of Charter Documents......................
Section 6.23. Fees...................................................
Section 6.24. Landlord's Liens.......................................
Section 6.25. NBGL...................................................
ARTICLE VII EVENTS OF DEFAULT......................................
Section 7.01. Events of Default......................................
Section 7.02. Receivables Purchases..................................
Section 7.03. Additional Undertakings................................
ARTICLE.VII GUARANTY...............................................
Section 8.01. Guaranty...............................................
Section 8.02. No Impairment of Guaranty..............................
Section 8.03. Waiver of Subrogation..................................
Section 8.04. Maximum Guaranteed Amount..............................
ARTICLE IX THE AGENT..............................................
Section 9.01. Administration by Agent................................
Section 9.02. Advances and Payments..................................
Section 9.03. Sharing of Setoffs.....................................
Section 9.04. Agreement of Required Banks............................
Section 9.05. Liability of Agent.....................................
Section 9.06. Reimbursement and Indemnification......................
Section 9.07. Rights of Agent........................................
Section 9.08. Independent Investigation by Banks.....................
Section 9.09. Notice of Transfer.....................................
Section 9.10. Successor Agent........................................
ARTICLE X MISCELLANEOUS..........................................
Section 10.01. Notices................................................
Section 10.02. Survival of Agreement, Representations and
Warranties, Etc........................................
Section 10.03. Successors and Assigns.................................
Section 10.04. Confidentiality........................................
Section 10.05. Expenses...............................................
Section 10.06. Indemnity..............................................
Section 10.07. Choice of Law..........................................
Section 10.08. No Waiver..............................................
Section 10.09. Extension of Maturity..................................
Section 10.10. Amendments, Etc........................................
Section 10.11. Severability...........................................
Section 10.12. Headings...............................................
Section 10.13. Execution in Counterparts..............................
Section 10.14. Prior Agreements.......................................
Section 10.15. Further Assurance......................................
Section 10.16. Submission to Jurisdiction; Waiver of Jury Trial.......
Exhibit A - Form of Notes
Exhibit B - Form of Security Agreement (Borrower)
Exhibit B-1 - Form of Security Agreement (Guarantor)
Exhibit B-2 - Form of Pledge Agreement
Exhibit B-3 - Form of Mortgage and Security Agreement Trademarks
Exhibit C - Form of Opinions of Counsel
Exhibit D - Form of Borrowing Base Certificate
Exhibit E - Form of Assignment and Acceptance
Exhibit F - Settlement Report
Schedule I - Permitted Investments
Schedule II - Permitted Liens
Schedule 3.07 - Litigation; Compliance With Law
Schedule 3.11 - Collateral Locations, Store Locations, Bank Accounts and
Chief Executive Office
Schedule 3.15 - Taxes
Schedule 3.16 - Employee Benefit Plans
Schedule 3.19 - Subsidiaries
Schedule 3.22 - Permits, Licenses, Approvals and Consents
Schedule 3.23 - Credit Criteria and Collection Policies
Schedule 3.25 - Environmental Matters
Schedule 5.08 - Collection Procedures
Schedule 6.01 - Liens
Schedule 6.03 - Indebtedness
REVOLVING CREDIT AND GUARANTY AGREEMENT
Dated as of May 24, 1996
REVOLVING CREDIT and GUARANTY AGREEMENT, dated as of May 24, 1996,
among Carson Pirie Scott & Co., an Illinois corporation (the "Borrower"), CPS
Department Stores, Inc., a Delaware corporation ("CPS"); and, together with
each of the other Subsidiaries listed on the signature pages hereof, (the
"Guarantors"), each of the financial institutions from time to time party
hereto (the "Banks"), ABN AMRO Bank N.V., as Administrative Agent (in such
capacity, the "Agent") for the Banks, and Dresdner Bank AG and The CIT
Group/Business Credit, Inc. as Co-Agents (collectively, the "Co-Agents")
INTRODUCTORY STATEMENT
The Borrower has applied to the Banks for a revolving credit and letter
of credit facility in an aggregate principal amount not to exceed
$150,000,000.
The Borrower owns directly or indirectly all of the issued and
outstanding equity securities of each Guarantor.
To provide guarantees and security for the repayment of the Loans, the
reimbursement of any draft drawn under a Letter of Credit and the payment of
the other obligations of the Borrower and the Guarantors hereunder, the
Borrower and the Guarantors will provide to the Agent and the Banks the
following (each as more fully described herein):
(a) a guaranty from each of the Guarantors of the due and punctual
payment and performance of the obligations of the Borrower hereunder;
(b) a first perfected Lien upon all cash and cash equivalents in the
Cash Collateral Account; and
(c) a first perfected Lien on all other Collateral (as such term is
hereinafter defined).
Accordingly, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. DEFINED TERMS. As used in this Agreement, the following
terms shall have the meanings specified below:
"ABN AMRO" shall mean ABN AMRO Bank N.V.
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any Loan bearing interest at a rate determined by
reference to the Alternate Base Rate in accordance with the provisions of
Article II.
"Account" shall mean each individual private label revolving credit
account that exists on the Closing Date or is established after the Closing
Date pursuant to a Credit Card Agreement between CPS, NBGL or the Borrower and
the Obligor.
"Additional Seller" shall have the meaning set forth in the Liquidity
Agreement.
"Adjusted LIBOR Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the quotient of
(a) the LIBOR Rate in effect for such Interest Period divided by (b) a
percentage (expressed as a decimal) equal to 100% minus Statutory Reserves.
For purposes hereof, the term "LIBOR Rate" shall mean the rate (rounded
upwards, if necessary, to the next 1/16 of 1%) at which dollar deposits
approximately equal in principal amount to such Eurodollar Borrowing and for
a maturity comparable to such Interest Period are offered to the principal
London office of the Agent or its London affiliate in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.
"Affiliate" shall mean, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under
common control with such Person. For purposes of this definition, a Person
(a "Controlled Person") shall be deemed to be "controlled by" another Person
(a "Controlling Person") if the Controlling Person possesses, directly or
indirectly, power either to (i) vote 10% or more of the securities having
ordinary voting power for the election of directors of the Controlled Person
or (ii) direct or cause the direction of the management and policies of the
Controlled Person whether by contract or otherwise.
"Agent" shall have the meaning set forth in the preamble to this
Agreement.
"Agreement" shall mean this Amended and Restated Revolving Credit and
Guaranty Agreement as the same may from time to time be amended, modified or
supplemented.
"Alternate Base Rate" shall mean, for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a) the
Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. If for any reason the Agent shall have
determined (which determination shall be conclusive absent manifest error)
that it is unable to ascertain the Federal Funds Effective Rate for any
reason, including the inability or failure of the Agent to obtain sufficient
quotations in accordance with the terms thereof, the Alternate Base Rate
shall be determined without regard to clause (b) of the first sentence of
this definition until the circumstances giving rise to such inability no
longer exist. Any change in the Alternate Base Rate due to a change in the
Prime Rate or the Federal Funds Effective Rate shall be effective on the
effective date of such change in the Prime Rate or the Federal Funds
Effective Rate, respectively.
"AMC" shall mean The Associated Merchandising Corporation, a New York
corporation.
"AMC Shareholders' Agreement" shall mean the Certificate of
Incorporation of The Associated Merchandising Corporation as originally filed
with the State of New York on February 24, 1939 as amended through April,
1994, the by-laws of The Associated Merchandising Corporation (as amended
through April, 1994) and Rules and Regulations of The Associated
Merchandising Corporation (as amended through April, 1994).
"Applicable Margin" means, on any date, for any Alternate Base Rate Loan
or Eurodollar Loan, the rate per annum set forth below, as in effect on such
date as determined pursuant to the provisions of the definition of Pricing
Date:
LEVEL EURODOLLAR LOANS ALTERNATE BASE
RATE LOANS
Level I Status 1.00% 0%
Level II Status 1.25% 0%
Level III Status 1.50% 0.25%
Level IV Status 1.75% 0.50%
Level V Status 2.00% 0.75%
Level VI Status 2.25% 1.00%
Level III Status shall be deemed to exist from the Effective Date until
November 4, 1996.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Bank and an Eligible Assignee, and accepted by the Agent,
substantially in the form of Exhibit E.
"Bank Termination Date" shall have the meaning set forth in the
Liquidity Agreement.
"Bankruptcy Code" shall mean The Bankruptcy Reform Act of 1978, as
heretofore and hereafter amended, and codified as 11 U.S.C. Section 101 et
seq.
"Banks" shall have the meaning set forth in the preamble to this
Agreement.
"Bergner Credit Corporation" shall mean Bergner Credit Corporation, a
Delaware corporation, an indirect wholly-owned Subsidiary of Borrower.
"Board" shall mean the Board of Governors of the Federal Reserve System
of the United States.
"Borrower" shall have the meaning set forth in the preamble to this
Agreement.
"Borrowing" shall mean the incurrence of Loans of a single Type made
from all the Banks on a single date and having, in the case of Eurodollar
Loans, a single Interest Period (with any ABR Loan made pursuant to
Section 2.16 being considered a part of the related Borrowing of Eurodollar
Loans).
"Borrowing Base" shall mean on any day (a) from October 1 through and
including November 30 of each calendar year, an amount which is equal to (A)
40% of Eligible Retail Value of Inventory, minus (B) the Interest Rate Hedge
Amount and (b) at all other times, an amount which is equal to (A) the lower
of (x) 60% of Eligible Book Value of Inventory and (y) 40% of Eligible Retail
Value of Inventory, minus (B) the Interest Rate Hedge Amount.
"Borrowing Base Certificate" shall mean a certificate substantially in
the form of Exhibit D, executed and certified by a Responsible Officer of
the Borrower, which shall include appropriate exhibits thereto.
"Business Day" shall mean any day other than a Saturday, Sunday or other
day on which banks in the State of New York and/or in the State of Illinois
are required or permitted to close (and, for a Letter of Credit, other than a
day on which the Fronting Bank issuing such Letter of Credit is closed);
provided, however, that when used in connection with a Eurodollar Loan, the
term "Business Day" shall also exclude any day on which banks are not open
for dealings in dollar deposits on the London interbank market.
"Capital Expenditures" shall mean, for any period, on a consolidated
basis for the Borrower and its Subsidiaries, the sum, without duplication,
of the aggregate of all expenditures, except interest capitalized during
construction, during such period which, in accordance with GAAP, are required
to be included in property, plant or equipment or a similar fixed asset
account (excluding assets subject to capital leases). For purposes of this
definition, the purchase price of equipment which is purchased simultaneously
with the trade-in or sale of existing equipment owned by the Borrower or any
of its Subsidiaries or with insurance proceeds or cash landlord/vendor
allowances shall be included in Capital Expenditures only to the extent of
the gross amount of such purchase price less the credit granted by the seller
of such equipment for the equipment being traded in at such time, the purchase
price of such existing equipment or the amount of such proceeds or
allowances, as the case may be.
"Cash Collateral Account" shall mean the account established by the
Borrower under the sole and exclusive control of the Agent maintained at
LaSalle National Bank at 135 South LaSalle, Chicago, Illinois, designated as
the "Carson Pirie Scott & Co. Cash Collateral Account."
"Cleanup Period" shall have the meaning set forth in Section 5.16 of
this Agreement.
"Closing Date" shall mean the date on which this Agreement has been
executed and the conditions precedent to its effectiveness set forth in
Section 4.01 have been satisfied or waived.
"Co-Agents" shall have the meaning set forth in the preamble to this
Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral" shall mean all collateral and security as described in the
Security Documents.
"Collections" shall mean all payments, including insurance proceeds, if
any, in respect of Credit Card Receivables in the form of cash, checks, wire
transfers, ATM transfers or other forms of payment in accordance with the
Credit Card Agreements.
"Commitment" shall mean, with respect to each Bank, the commitment of
each Bank hereunder in the amount set forth opposite such Bank's name on the
appropriate signature page hereof or as may subsequently be set forth in the
Register from time to time, as the same may be reduced from time to time
pursuant to Sections 2.10 and 2.13.
"Commitment Fee" shall have the meaning set forth in Section 2.20.
"Commitment Percentage" shall mean at any time, with respect to each
Bank, the percentage obtained by dividing its Commitment at such time by the
Total Commitment at such time.
"Compliance Certificate" means the certificate delivered to the Agent
and the Banks pursuant to Section 5.01(b) hereof.
"Concentration Account" shall mean the account established by the
Borrower under the sole and exclusive control of the Agent maintained at
LaSalle National Bank at 135 South LaSalle, Chicago, Illinois, designated as
"Carson Pirie Scott & Co. Concentration Account."
"Consignment Agreement" shall mean any consignment agreement between a
consignor and the Borrower or any Guarantor (including between the Borrower
and CPS).
"Consignment Liens" shall have the meaning ascribed thereto in the
definition of Eligible Book Value of Inventory.
"Consolidated Net Income" shall mean, for any period, the aggregate of
the Net Income of the Borrower and its Subsidiaries, determined on a
consolidated basis.
"CPS" shall have the meaning set forth in the preamble to this
Agreement.
"CPS Holding Co." shall mean CPS Holding Co. (formerly known as Carson
Pirie Scott & Company), a Delaware corporation.
"Credit Card Agreement" shall mean, with respect to an Account, the
agreement governing such Account.
"Credit Card Guidelines" shall mean the policies and procedures of the
Borrower, CPS, and NBGL, as the case may be, as in effect on the Closing
Date, relating to the operation of their respective credit card businesses,
including the creditworthiness of credit card customers, the extension of
credit to credit card customers, the terms on which repayments are required
to be made, and the terms relating to finance charges and the amounts thereof
and relating to the maintenance of credit card accounts and collection of
credit card receivables.
"Credit Card Receivable" shall mean a right to receive payment arising
from a sale of merchandise or service by the Borrower or CPS pursuant to an
arrangement with any Obligor pursuant to which such Obligor is obligated to
pay for merchandise or service under a credit plan that permits the purchase
of such merchandise and services on credit, and includes the right to payment
of any interest or finance charges and other obligations of such Obligor with
respect thereto.
"Designated Event of Default" shall mean (i) any Event of Default
arising from noncompliance with any of the following Sections of this
Agreement: Sections 5.08, 5.16, 6.02, 6.04, 6.05, 6.06, 6.07, 6.08, 6.09,
6.10, 6.11, 6.13 and (ii) any Event of Default under Section 7.01(b) of this
Agreement, Section 7.01(k) of this Agreement or 7.01(o) of this Agreement.
"Dollars" and "$" shall mean lawful money of the United States of
America.
"EBITDA" shall mean, for any period, the consolidated Net Income (or net
loss) of the Borrower and its Subsidiaries for such period, plus, to the
extent deducted in computing Net Income, (a)the sum of, without duplication
(i) depreciation expense, (ii) amortization expense, (iii) provision for LIFO
charges, (iv) gross interest expense for such period minus gross interest
income for such period, (v) total income tax expense and (vi) extraordinary
losses, which include the cumulative effect on earnings from the adoption of
new GAAP pronouncements and non-cash pension expense and less(b)extraordinary
gains.
"Eligible Assignee" shall mean (i) any Subsidiary or Affiliate of a
Bank; (ii) a commercial bank having total assets in excess of $1,000,000,000;
(iii) a finance company, insurance company, or other financial institution or
fund acceptable to the Agent, which in the ordinary course of business
extends credit of the type evidenced by the Notes and has total assets in
excess of $200,000,000 and whose becoming an assignee would not constitute a
prohibited transaction under Section 4975 of ERISA; and (iv) any other
financial institution satisfactory to the Borrower and the Agent.
"Eligible Book Value of Inventory" shall mean the cost value of all
Inventory of the Borrower (including inventory owned by the Borrower and
consigned to CPS) which (i) is free and clear of all Liens (other than the
Securitization Subordinated Liens as defined in the Intercreditor Agreement)
and any claim of others (including the Liens and claims of consignors
("Consignment Liens")), (ii) is subject to the first priority perfected Lien
of the Agent, (iii) is located at one of the collateral locations of the
Borrower or CPS set forth on Schedule 3.11 hereof, and (iv) is substantially
similar in quality and mix to Inventory maintained by the Borrower and CPS in
recent historical operations prior to the date hereof as determined by the
Agent in the exercise of its reasonable discretion. Inventory as to which
Eligible Book Value of Inventory is determined shall include Inventory as to
which a documentary Letter of Credit has been issued and which if in the
possession of the Borrower or CPS would be included in the determination of
the Eligible Book Value of Inventory, but only if such Inventory has been
shipped to the Borrower or CPS, title thereto has passed to the Borrower and
the Agent shall have been granted a first priority perfected security
interest therein pursuant to terms reasonably acceptable to the Agent.
Inventory as to which Eligible Book Value of Inventory is determined shall
exclude, without limitation, damaged goods, defective goods and goods to be
returned to vendor.
"Eligible Retail Value" shall mean, as to any category of Inventory,
the retail value of all Inventory in such category of the Borrower (including
inventory owned by the Borrower and consigned to CPS) which (i) is free and
clear of all Liens (other than the Securitization Subordinated Liens as
defined in the Intercreditor Agreement) and any claim of others (including
Consignment Liens), (ii) is subject to the first priority perfected Lien of
the Agent, (iii) is located at one of the collateral locations of the
Borrower or CPS set forth on Schedule 3.11 hereof, and (iv) is substantially
similar in quality and mix to Inventory maintained by the Borrower and CPS in
recent historical operations prior to the date hereof, as determined by the
Agent in the exercise of its reasonable discretion, less, at the time of any
determination thereof, an amount equal to the 12-Month Historic Rolling
Markdown Percentage times the retail value of all such Inventory. "12-Month
Historic Rolling Markdown Percentage" shall mean, as of the date of any
determination thereof, the weighted average for the immediately preceding
12-month period of Point of Sale Markdowns taken by the Borrower and CPS as
shown on the Price Change Recap Report by Department prepared by the Borrower
and CPS from time to time in substantially the form heretofore delivered to
the Agent, provided that the 12-Month Historic Rolling Markdown Percentage
shall be no less than 17% at any time. Inventory as to which Eligible Retail
Value is determined shall include Inventory as to which a documentary Letter
of Credit has been issued and which if in the possession of the Borrower or
CPS would be included in the determination of the Eligible Retail Value, but
only if such Inventory has been shipped to the Borrower or CPS, title thereto
has passed to the Borrower and the Agent shall have been granted a first
priority perfected security interest therein pursuant to terms reasonably
acceptable to the Agent. Inventory as to which Eligible Retail Value is
determined shall exclude, without limitation, damaged goods, defective goods
and goods to be returned to vendor.
"Environmental Laws" shall mean the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. Section 9601 et seq.),
the Hazardous Material Transportation Act (49 U.S.C. Section 1801 et seq.),
the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.),
the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), the
Oil Pollution Act of 1990 (P.L. 101-380), the Safe Drinking Water Act (42
U.S.C. Section 300f et seq.), the Clean Air Act (42 U.S.C. Section 7401 et
seq.), the Toxic Substances Control Act, as amended (15 U.S.C. Section 2601
et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
Section 136 et seq.), and the Occupational Safety and Health Act (29 U.S.C.
Section 651 et seq.), as such laws have been and hereafter may be amended or
supplemented, and any related or analogous present or future Federal, state
or local, statutes, rules, regulations, ordinances and binding
interpretations and orders of any Governmental Authority.
"Environmental Lien" shall mean a Lien in favor of any Governmental
Authority for (i) any liability under any Environmental Law, or (ii) damages
arising from or costs incurred by such Governmental Authority in response to
a Release or threatened Release of any Hazardous Material.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the applicable regulations promulgated
thereunder.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) which is a member of a group of which the Borrower or any
Subsidiary is a member and which is under common control within the meaning
of Section 414(b) or (c) of the Code and the applicable regulations
promulgated thereunder.
"Eurocurrency Liabilities" shall have the meaning assigned thereto in
Regulation D.
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
Loans.
"Eurodollar Loan" shall mean any Loan bearing interest at a rate
determined by reference to the Adjusted LIBOR Rate in accordance with the
provisions of Article II.
"Event of Default" shall have the meaning given such term in Article VII
"Federal Funds Effective Rate" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers, as published on
the next succeeding Business Day by the Federal Reserve Bank of New York, or,
if such rate is not so published for any day which is a Business Day, the
average of the quotations for the day of such transactions received by the
Agent from three Federal funds brokers of recognized standing selected by it
"Fees" shall collectively mean the Commitment Fees, Letter of Credit
Fees and other fees referred to in Section 2.19.
"Final Maturity Date" shall mean the earlier to occur of (i) May 24,
1999 and (ii) the termination of the Total Commitment in accordance with
Section 7.01 hereof.
"Fronting Bank" shall mean ABN AMRO or any Affiliate of ABN AMRO or
such other Bank designated by the Borrower (which other Bank shall be
reasonably acceptable to the Agent).
"Funded Debt" means, without duplication, for any Person (i) all
indebtedness in respect of borrowed money, including without limitation all
capital leases, the deferred purchase price of any property or asset,
obligations evidenced by a promissory note, bond or similar written
obligation for the payment of money (including, but not limited to,
conditional sales or similar title retention agreements), the aggregate
dollar amount of outstandings under financing arrangements in connection with
receivable securitizations, whether or not any such receivable securitization
is reflected on the balance sheet of such Person, all payment obligations
under acceptance facilities and all unpaid reimbursement obligations for any
letter of credit which has been drawn plus (ii) all obligations referred to
in clause (i) above guaranteed directly or indirectly by such Person or which
such Person has agreed (contingently or otherwise) to purchase or otherwise
acquire or in respect of which such Person has otherwise assured a creditor
against loss.
"Funded Debt to EBITDA Ratio" shall have the meaning given such term in
Section 6.06 hereof.
"GAAP" shall mean generally accepted accounting principles applied on a
basis consistent with those used in preparing the financial statements
referred to in Section 3.04 hereof.
"Governmental Authority" shall mean any Federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality or any court, in each case whether of the United States or
foreign.
"Great Lakes" shall mean Great Lakes Credit Corp., a Delaware
corporation, which is a wholly-owned subsidiary of NBGL.
"Guarantors" shall have the meaning set forth in the preamble to this
Agreement.
"Hazardous Material" shall mean any pollutant, contaminant, chemical, or
industrial or hazardous, toxic or dangerous waste, substance or material,
defined or regulated as such in (or for purposes of) any Environmental Law
and any other toxic, reactive, or flammable chemicals, including (without
limitation) any asbestos, any petroleum (including crude oil or any
fraction), any radioactive substance and any polychlorinated biphenyls or any
constituent of any such substance or waste.
"Indebtedness" shall mean, at any time and with respect to any Person:
(i) all indebtedness of such Person for borrowed money;
(ii) all indebtedness of such Person for the deferred purchase price
of property or services (other than property and services purchased, and
expense accruals and deferred compensation items arising, in the ordinary
course of business);
(iii) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments (other than performance, surety and
appeal bonds arising in the ordinary course of business);
(iv) all indebtedness of such Person created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to
repossession or sale of such property);
(v) all obligations of such Person under leases which have been or
should be, in accordance with GAAP, recorded as capital leases, to the extent
required to be so recorded;
(vi) all reimbursement, payment or similar obligations of such Person,
contingent or otherwise, under acceptance, letter of credit or similar
facilities (other than letters of credit in connection with trade obligations
incurred in the ordinary course of business (including Letters of Credit in
favor of AMC as beneficiary), workers' compensation, general liability,
unemployment insurance, old-age pensions and other social security benefits
in the ordinary course of business other than in respect of employee benefit
plans subject to ERISA);
(vii) all Indebtedness referred to in clauses (i) through (vi) above
guaranteed directly or indirectly by such Person, or in effect guaranteed
directly or indirectly by such Person through an agreement (A) to pay or
purchase such Indebtedness or to advance or supply funds for the payment or
purchase of such Indebtedness, (B) to purchase, sell or lease (as lessee or
lessor) property, or to purchase or sell services, primarily for the purpose
of enabling the debtor to make payment of such Indebtedness or to assure the
holder of such Indebtedness against loss in respect of such Indebtedness,
(C) to supply funds to or in any other manner invest in the debtor (including
any agreement to pay for property or services irrespective of whether such
property is received or such services are rendered) or (D) otherwise to
assure a creditor against loss in respect of such Indebtedness, including,
without limitation, with respect to the Borrower, CPS, Great Lakes and any
Additional Sellers, their respective obligations, indebtedness and
liabilities (whether direct or indirect and whether contingent or otherwise)
arising under, or in connection with, any of the Receivables Agreement
Documents;
(viii) all Indebtedness referred to in clauses (i) through (vii) above
secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien upon or in
property (including, without limitation, 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
(ix) all Indebtedness referred to in clauses (i) through (viii) above
of a partnership of which such Person is a general partner unless such
Indebtedness is non-recourse to the general partner.
"Insurance Proceeds" shall mean any amounts paid pursuant to any credit
insurance policies covering any Obligor with respect to Credit Card
Receivables under such Obligor's Account.
"Intercreditor Agreement" shall mean the Intercreditor Agreement dated
as of May 24, 1996 among the Banks, Great Lakes, the Borrower, CPS, and NBGL,
as the same may from time to time be amended, supplemented or modified in
accordance with its terms.
"Interest Expense" shall mean, for any period and with respect to any
Person, the sum of (a) cash interest paid by such Person during such period
minus (b) cash interest income of such Person during such period.
"Interest Rate Hedge Agreement" means any interest rate swap, cap,
collar, floor or other agreement between the Borrower and a Bank entered into
for the purpose of hedging or otherwise protecting the Borrower against
changes in interest rates, a copy of which shall be delivered to the Agent
within five Business Days (or such other period as is acceptable to the
Agent) of execution thereof.
"Interest Rate Hedge Amount" shall mean, for any Interest Rate Hedge
Agreement, an amount as determined by the Agent from time to time with the
consent of the Banks.
"Interest Payment Date" shall mean (i)as to any Eurodollar Loan having
an Interest Period of one month, the last day of such Interest Period, (ii)
as to any Eurodollar Loan having an Interest Period of three or six months,
each quarterly anniversary of the commencement of such Interest Period and
the last day of such Interest Period and (iii) as to all ABR Loans, the last
Business Day of each calendar month and the date on which any ABR Loans are
refinanced with Eurodollar Loans pursuant to Section 2.12, and (iv) as to any
Loan, the date such Loan is repaid.
"Interest Period" shall mean, as to any Borrowing of Eurodollar Loans,
the period commencing on the date of such Borrowing (including as a result of
a refinancing of ABR Loans) or on the last day of the preceding Interest
Period applicable to such Borrowing and ending on the numerically
corresponding day (or if there is no corresponding day, the last day) in the
calendar month that is one, three or six months thereafter, as the Borrower
may elect in the related notice delivered pursuant to Section 2.06(b) or
2.12; provided, however, that (i) if any Interest Period would end on a day
which shall not be a Business Day, such Interest Period shall be extended to
the next succeeding Business Day unless such next succeeding Business Day
would fall in the next calendar month, in which case such Interest Period
shall end on the next preceding Business Day, (ii) no Interest Period for any
Eurodollar Loan that commences before a Cleanup Period may end during or
after a Cleanup Period, and (iii) no Interest Period shall end later than the
Final Maturity Date.
"Inventory" shall mean goods held for sale by the Borrower or CPS in the
normal course of business (and shall in no event include goods title to which
is held by a concessionaire or lessee of a leased department); in calculating
the amount of Inventory for all purposes hereunder, there shall be deducted a
reserve for goods which have been segregated by the Borrower or CPS to be
returned to the applicable vendor for credit.
"Knowledge" shall mean actual knowledge of a Responsible Officer.
"Letter of Credit" shall mean any irrevocable letter of credit issued
pursuant to Section 2.03, which letter of credit shall be (i) a standby or
documentary letter of credit, (ii) issued in connection with the purchase of
Inventory by the Borrower and for such other purposes for which the Borrower
or CPS has historically obtained letters of credit, or for such other
purposes as are reasonably acceptable to the Agent, (iii) denominated in
Dollars, and (iv) otherwise in such form as may be reasonably approved from
time to time by the Agent and the applicable Fronting Bank; provided,
however, that the term "Letter of Credit" as used in this Agreement shall
include all letters of credit in existence on the Closing Date issued under
the Original Credit Agreement, which letters of credit shall be deemed to
have been issued pursuant to this Agreement.
"Letter of Credit Fees" shall mean the fees payable in respect of
Letters of Credit pursuant to Section 2.21.
"Letter of Credit Outstandings" shall mean, at any time, the sum of (i)
the aggregate amount available for drawing under any contingency on all
Letters of Credit then outstanding plus (ii) all amounts theretofore drawn
under Letters of Credit and not then reimbursed.
"Level I Status" exists at any date if, at such date, the Funded Debt to
EBITDA Ratio is less than 1.5 to 1.0.
"Level II Status" exists at any date if, at such date, Level I Status
does not exist and the Funded Debt to EBITDA Ratio is less than 2.0 to 1.0
"Level III Status" exists at any date if, at such date, neither Level I
nor Level II Status exists and the Funded Debt to EBITDA Ratio is less than
3.0 to 1.0.
"Level IV Status" exists at any date if, at such date, neither Level I
nor Level II nor Level III Status exists and the Funded Debt to EBITDA Ratio
is less than 3.5 to 1.0.
"Level V Status" exists at any date if, at such date, neither Level I
Status, Level II Status, Level III Status nor Level IV Status exists and the
Funded Debt to EBITDA Ratio is less than 4.0 to 1.0.
"Level VI Status" exists at any date if, at such date, neither Level I
Status, Level II Status, Level III Status, Level IV Status nor Level V Status
exists.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind whatsoever (including any conditional sale or
other title retention agreement or any lease in the nature thereof).
"Liquidity Agreement" shall mean the Liquidity Agreement dated as of
July 22, 1994 between Great Lakes and ABN AMRO Bank N.V., as agent for the
lenders named therein (the "Receivables Agreement Agent"), as the same may
from time to time be amended, supplemented or modified in accordance with its
terms.
"Liquidity Termination Event" shall have the same meaning herein as the
term "Termination Event" set forth in the Liquidity Agreement.
"Loan" shall have the meaning given such term in Section 2.01.
"Loan Documents" shall mean this Agreement, the Notes, the Security
Documents and any other instrument or agreement executed and delivered in
connection herewith.
"Margin Stock" shall have the meaning assigned to such term in
Regulation U.
"Material Adverse Effect" shall mean a material adverse effect on (i)
the business, assets, prospects, operations or financial or other condition
of
the Borrower or CPS, or of the Borrower and its Subsidiaries taken as a
whole, (ii) the ability of the Borrower or Guarantors to perform or pay the
Obligations in accordance with the terms hereof or of any other Loan Document
or (iii) (x) the Agent's Lien on any material portion of the Collateral or
(y) the priority of such Lien on any material portion of the Collateral.
"Multiemployer Plan" shall mean a pension plan that qualifies as a
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA.
"Multiple Employer Plan" shall mean a Single Employer Plan, which (i) is
maintained for employees of the Borrower or an ERISA Affiliate and at least
one Person other than the Borrower and its ERISA Affiliates or (ii) was so
maintained and in respect of which the Borrower or an ERISA Affiliate could
have liability under Section 4064 or 4069 of ERISA in the event such Plan has
been or were to be terminated.
"NBGL" shall mean National Bank of the Great Lakes, a national bank
"NBGL Documents" shall mean (i) each of the Credit Card Program
Agreements dated December 11, 1995 (as amended, collectively, the "NBGL
Program Agreement") between NBGL and the Borrower and between NBGL and CPS;
(ii) the Security Agreement dated as of February 2, 1996 (as amended, the
"NBGL Security Agreement") by NBGL in favor of the Borrower and CPS; and
(iii) the Pledge Agreement dated as of February 2, 1996 (as amended, the
"NBGL Pledge Agreement") by NBGL in favor of the Borrower and CPS.
"Net Income" shall mean, for any Person and for any period, the net
ncome (loss) of such Person for such period, provided that: (i) all gains
and all losses realized by such Person and its Subsidiaries upon the sale or
other disposition (including, without limitation, pursuant to sale and
easeback transactions) of property or assets which are not sold or otherwise
disposed of in the ordinary course of business, or pursuant to the sale of
any capital stock of such Person or any subsidiary, shall be excluded, (ii)
net income or net loss of any Person combined with such Person on a "pooling
of interests" basis attributable to any period prior to the date of such
combination shall be excluded, and (iii) net income of any Person which is
not a Subsidiary of such Person and which is consolidated with such Person or
is accounted for by such Person by the equity method of accounting shall be
included only to the extent of the amount of dividends or distributions paid
to such Person or a Subsidiary.
"Net Worth" shall mean, at any date, the amount by which (a) the total
consolidated assets of the Borrower and its Subsidiaries exceed (b) the total
consolidated liabilities of the Borrower and its Subsidiaries.
"Non-Purchased Receivables" shall have the meaning assigned thereto in
the Liquidity Agreement as in effect on the Closing Date.
"Non-Ratable Loan" shall have the meaning given such term in Section
2.27(b)(iii) of this Agreement.
"Notes" shall mean the promissory notes of the Borrower, substantially
in the form of Exhibit A hereto, each payable to the order of a Bank,
evidencing Loans.
"Obligations" shall mean (a) the due and punctual payment of principal
of and interest on the Loans and the Notes and the reimbursement of all
mounts drawn under Letters of Credit, and (b) the due and punctual payment of
the Fees and all other present and future, fixed or contingent, monetary
obligations of the Borrower and/or the Guarantors to the Banks and/or the
Agent under the Loan Documents.
"Obligor" shall mean the Person or Persons obligated to make payments
with respect to an Account, including any guarantor thereof.
"Other Taxes" shall have the meaning given such term in Section 2.18.
"Payment Office" shall have the meaning given such term in Section
2.06(b) of this Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor agency or entity performing substantially the same functions
"Pension Plan" shall mean a defined benefit pension or retirement plan
which
meets and is subject to the requirements of Section 401(a) of the Code
"Permitted Investments" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof), in each case maturing within six months
from the date of acquisition thereof;
(b) without limiting the provisions of paragraph (d) below,
investments in commercial paper maturing within six months from the date of
acquisition thereof and having, at such date of acquisition, a rating of at
least "A-1" or the equivalent thereof from Standard & Poor's Ratings Group, a
division of The McGraw-Hill Companies, Inc. ("S&P") or of at least "Prime-1"
or the equivalent thereof from Moody's Investors Service, Inc. ("Moody's")
and investments in bid notes maturing within six months from the date of
acquisition thereof, issued by an issuer whose short term rating is at least
"A-1" or the equivalent thereof from S&P or at least "Prime-1" or the
equivalent thereof from Moody's (in each case, excluding any commercial paper
or bid notes of Great Lakes or any other Affiliate of the Borrower);
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within six months from the date of acquisition thereof
issued or guaranteed by or placed with (i) any domestic office of the Agent
or (ii) any domestic office of any other commercial bank of recognized
standing organized under the laws of the United States of America or any
State thereof that has a combined capital and surplus and undivided profits
of not less than $250,000,000 and is the principal banking Subsidiary of a
bank holding company having a long-term unsecured debt rating of at least
"A-1" or the equivalent thereof from S&P or at least "Prime-1" or the
equivalent thereof from Moody's;
(d) investments in repurchase obligations with a term of not more
than one hundred eighty days for underlying securities of the types described
in clause (a) above entered into with any office of a bank or trust company
meeting the qualifications specified in clause (c) above;
(e) investments in money market funds which money market funds comply
with the provisions of Rule 2a-7 of the Securities and Exchange Commission as
in effect on the date hereof or investments in mutual funds substantially all
the assets of which are comprised of securities of the type described in
clause (a) above;
(f) to the extent owned on the Closing Date (i) investments in the
capital stock or partnership interests of any direct or indirect Subsidiary
of the Borrower, and (ii) other investments in the notes, bonds, capital
stock or partnership interests of any Person listed on Schedule I to this
Agreement, including in each case any dividends or distributions in respect
of such capital stock or partnership interests;
(g) other investment instruments approved in writing by the Required
Banks, which approval shall not be unreasonably withheld, and offered by
financial institutions that have a combined capital and surplus and undivided
profits of not less than $250,000,000; and
(h) investments described in clauses (a), (b), (c) or (e) hereof
maturing between six and twenty-four months of the Borrower's acquisition, if
the Borrower's holdings of such investments do not exceed $40,000,000 at any
time in the aggregate.
"Permitted Liens" shall mean:
(i) Liens imposed by law (other than Environmental Liens and any Lien
imposed under ERISA) for taxes, assessments or charges of any Governmental
Authority for claims not yet due or which are being contested in good faith
by appropriate proceedings and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with GAAP;
(ii) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other Liens (other than any Lien imposed under
ERISA) imposed by law created in the ordinary course of business for amounts
not yet due or which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with GAAP;
(iii) Liens (other than any Lien imposed under ERISA) incurred or
deposits made in the ordinary course of business (including, without
limitation, surety bonds and appeal bonds) in connection with workers'
compensation, unemployment insurance and other types of social security
benefits or to secure the performance of tenders, bids, leases, contracts
(other than for the repayment of Indebtedness), statutory obligations and
other similar obligations or arising as a result of progress payments under
government contracts;
(iv) easements (including, without limitation, reciprocal easement
agreements and utility agreements), rights-of-way, covenants, consents,
reservations, encroachments, variations and zoning and other restrictions,
charges or encumbrances (whether or not recorded), which do not interfere
materially with the ordinary conduct of the business of the Borrower or any
Guarantor, as the case may be and which do not materially detract from the
value of the property to which they attach or materially impair the use
thereof to the Borrower or such Guarantor, as the case may be;
(v) purchase money Liens upon or in any property (other than
Inventory) acquired or held in the ordinary course of business to secure the
purchase price of such property to the extent such Indebtedness is permitted
by Section 6.03(iv) solely for the purpose of financing the acquisition of
such property;
(vi) extensions, renewals or replacements of any Lien referred to in
paragraphs (i) through (v) above, provided that the principal amount of the
obligation secured thereby is not increased and that any such extension,
renewal or replacement is limited to the property originally encumbered
thereby;
(vii) Liens in favor of the Agent;
(viii) Liens on Permitted Investments of up to $20,000,000 at any time
in the aggregate in favor of the Borrower's liability insurance carriers to
secure the Borrower's reimbursement obligations to the carriers;
(ix) Liens with respect to Non-Purchased Receivables and the
Securitization Subordinated Liens (as defined in the Intercreditor Agreement)
in favor of the "Collateral Agent" under the Receivables Agreement Documents,
provided, however, that such Liens shall be subordinated to the Liens of the
Agent under this Agreement as set forth in the Intercreditor Agreement; and
(x) Liens and encumbrances with respect to the real property of the
Borrower and/or any Guarantor which are reasonably acceptable to the Agent.
"Person" shall mean any natural person, corporation, division of a
corporation, partnership, trust, joint venture, association, company, estate,
unincorporated organization or government or any agency or political
subdivision thereof.
"Pledge Agreement" shall mean the Amended and Restated Pledge Agreement
by the Borrower and CPS in favor of the Agent for the benefit of the Banks
substantially in the form of Exhibit B-2 to this Agreement, as amended,
restated, modified and supplemented from time to time.
"Pricing Date" means, for any fiscal month of the Borrower ended after
October 30, 1996, the latest date by which the Borrower is required to
deliver a Compliance Certificate for such fiscal month pursuant to Section
5.01(b). If the Borrower has not delivered a Compliance Certificate by the
date such Compliance Certificate is required to be delivered under Section
5.01(b), Level VI Status shall be deemed to exist from such required delivery
date until a Compliance Certificate is delivered before the next Pricing Date
If the Borrower subsequently delivers such a Compliance Certificate before
the next Pricing Date, the Applicable Margin and Commitment Fee established
by such late delivered Compliance Certificate shall take effect from the date
of delivery until the next Pricing Date. In all other circumstances, the
Applicable Margin and Commitment Fee established by a Compliance Certificate
shall be in effect from the Pricing Date that occurs immediately after the
end of the Company's fiscal month covered by such Compliance Certificate
until the next Pricing Date.
"Prime Rate" shall mean the rate of interest per annum announced from
time to time by the Agent as its prime lending rate in effect at its
principal office in Chicago, Illinois; each change in the Prime Rate shall be
effective on the date such change is announced. The Prime Rate is a
reference rate and does not necessarily represent the lowest or best rate
charged to any customers. ABN AMRO and the other Banks may make commercial
loans or other loans at rates of interest at, above or below the Prime Rate
"Purchase Termination Date" shall have the meaning set forth in the
Liquidity Agreement.
"Purchased Receivables" shall have the meaning assigned thereto in the
Liquidity Agreement as in effect on the Closing Date.
"Receivables" shall mean and include all of the Borrower's, CPS's and
NBGL' accounts, instruments, chattel paper and general intangibles, whether
secured or unsecured, whether now existing or hereafter created or arising,
and whether or not specifically assigned to the Agent for the ratable benefit
of the Banks.
"Receivables Agreement" shall mean the Amended and Restated Receivables
Purchase Agreement dated as of July 22, 1994 among Great Lakes, the Borrower,
CPS and NBGL providing for the purchase by Great Lakes of Credit Card
Receivables from the Borrower and CPS, as the same may from time to time be
amended, supplemented or modified in accordance with its terms.
"Receivables Agreement Agent" shall have the meaning given such term in
the definition of "Liquidity Agreement" in this Agreement.
"Receivables Agreement Documents" shall mean the Liquidity Agreement,
The Receivables Agreement and all other agreements, documents and instruments
executed in connection therewith, as each may from time to time be amended,
supplemented or modified in accordance with their respective terms.
"Register" shall have the meaning set forth in Section 10.3(d).
"Regulation D" shall mean Regulation D of the Board, as the same is from
time to time in effect, and all official rulings and interpretations
thereunder and thereof.
"Regulation G" shall mean Regulation G of the Board, as the same is from
time to time in effect, and all official rulings and interpretations
thereunder and thereof.
"Regulation T" shall mean Regulation T of the Board, as the same is from
time to time in effect, and all official rulings and interpretations
thereunder and thereof.
"Regulation U" shall mean Regulation U of the Board, as the same is from
time to time in effect, and all official rulings and interpretations
thereunder and thereof.
"Regulation X" shall mean Regulation X of the Board, as the same is from
time to time in effect, and all official rulings and interpretations
thereunder and thereof.
"Release" shall mean any releasing, spilling, leaking, seepage, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping of any Hazardous Material into the environment, and
shall include any threatened Release.
"Remedial Work" shall mean any investigation, site monitoring,
containment, cleanup, removal, treatment, restoration or other remedial work
of any kind or nature with respect to any property of the Borrower or its
Subsidiaries (whether such property is owned, leased, subleased or used),
including, without limitation, with respect to Hazardous Material and the
Release thereof.
"Rental Expense" shall mean, for any period, the aggregate amount of
payments required to be made by the Borrower and its Subsidiaries during such
period in respect of operating leases or similar arrangements.
"Reportable Event" shall mean a Reportable Event as defined in Section
4043(b) of ERISA.
"Required Banks" shall mean, at any time, Banks holding Loans
representing at least 51% of the aggregate principal amount of the Loans
outstanding or, if no Loans are outstanding, Banks having Commitments
representing at least 51% of the Total Commitment.
"Requirements of Law" shall mean for any Person or any of its property
the certificate of incorporation or articles of association and by-laws or
other organizational or governing documents of such Person, and any law,
treaty, rule or regulation, or determination of an arbitrator or Governmental
Authority, in each case applicable to or binding upon such Person or any of
its property or to which such Person or any of its property is subject,
whether Federal, state or local (including, without limitation, usury laws,
the Federal Truth in Lending Act and retail installment sales acts).
"Responsible Officer" shall mean, with respect to any person, the
President, Chief Financial Officer, Chief Operating Officer, Treasurer or
Secretary of such person.
"Retail Stock Ledger" shall mean the ledger of the Borrower designated
as the "Retail Stock Ledger."
"Seasonal Termination Date" shall have the meaning set forth in the
Liquidity Agreement.
"Security Agreement (Borrower)" shall mean the Amended and Restated
Security Agreement by the Borrower in favor of the Agent for the benefit of
the Banks substantially in the form of Exhibit B to this Agreement, as
amended, restated, modified and supplemented from time to time.
"Security Agreement (Guarantor)" shall mean the Amended and Restated
Security Agreement by the Guarantors in favor of the Agent for the benefit of
the Banks substantially in the form of Exhibit B-1 to this Agreement, as
amended, restated, modified and supplemented from time to time.
"Security Documents" shall mean the Security Agreement (Borrower), the
Security Agreement (Guarantor), the Pledge Agreement, Trademark Mortgage and
each other agreement now existing or hereafter created providing collateral
security for the payment or performance of any Obligations.
"Seller Notes" shall have the meaning set forth in the Liquidity
Agreement.
"Settlement Date" shall mean each Business Day after the Closing Date
selected by the Agent in its sole discretion subject to and in accordance
with the provisions of Section 2.27(b) as of which a Settlement Report is
delivered by the Agent and on which settlement is to be made among the Banks
in accordance with the provisions of Section 2.27 hereof.
"Settlement Report" shall mean each report, substantially in the form
attached hereto as Exhibit F hereto, prepared by the Agent and delivered to
each Bank and setting forth, among other things, as of the Settlement Date
indicated thereon and as of the next preceding Settlement Date, the aggregate
principal balance of all Loans outstanding, each Bank's ratable portion
thereof, each Bank's Loans and all Non-Ratable Loans made, and all payments
of principal received by the Agent from the Borrower during the period
beginning on such next preceding Settlement Date and ending on such
Settlement Date.
"Single Employer Plan" shall mean a Pension Plan (i) that constitutes a
single employer plan, as defined in Section 4001(a)(15) of ERISA, and
(ii) that is maintained for employees of the Borrower or an ERISA Affiliate
or was so maintained and in respect of which the Borrower could have
liability under Section 4069 of ERISA in the event such Plan has been or were
to be terminated.
"Statutory Reserves" shall mean, on any date, the percentage (expressed
as a decimal) established by the Board and any other banking authority which
is for purposes of the definition of Adjusted LIBOR Rate, the then stated
maximum rate for all reserves (including but not limited to any emergency,
supplemental or other marginal reserve requirements) applicable to any member
bank of the Federal Reserve System in respect of Eurocurrency Liabilities (or
any successor category of liabilities under Regulation D). Such reserve
percentages shall include, without limitation, those imposed pursuant to said
Regulation. The Statutory Reserves shall be adjusted automatically on and as
of the effective date of any change in such percentage.
"Subordinated Indebtedness" shall mean any Indebtedness which is
ubordinated in right of payment to the prior payment of the Loans and other
Obligations, pursuant to documentation, containing interest rates, payment
terms, maturities, amortization schedules, covenants, defaults, remedies and
other material terms in form and substance satisfactory to the Super-majority
Banks; provided that the subordinated indebtedness payable by Great Lakes to
the Sellers (as defined in the Receivables Agreement Documents) shall not be
considered Subordinated Indebtedness hereunder.
"Subsidiary" shall mean, with respect to any Person (herein referred to
s the "parent"), any corporation, association or other business entity
(whether now existing or hereafter organized) of which at least a majority of
the securities or other ownership interests having ordinary voting power for
the election of directors is, at the time as of which any determination is
being made, owned or controlled by the parent or one or more subsidiaries of
the parent or by the parent and one or more subsidiaries of the parent.
"Super-majority Banks" shall mean, at any time, Banks holding Loans
representing at least 66-2/3% of the aggregate principal amount of the Loans
outstanding, or if no Loans are outstanding, Banks having Commitments
representing at least 66-2/3% of the Total Commitment.
"Tangible Net Worth" shall mean, at any date, Net Worth minus all assets
of the Borrower and its Subsidiaries which would be classified as intangible
assets.
"Tax Sharing Agreement" shall have the meaning given such term in
Section 3.15 hereof.
"Taxes" shall have the meaning given such term in Section 2.18 hereof.
"Termination Event" shall mean (i) a "reportable event," as such term is
described in Section 4043 of ERISA and the regulations issued thereunder
(other than a "reportable event" not subject to the provision for 30-day
notice to the PBGC under such regulations) or an event described in
Section 4068 of ERISA excluding events described in 29 CFR Section 2615.21 or
2615.23, or (ii) the withdrawal of the Borrower or any ERISA Affiliate from a
Multiple Employer Plan during a plan year in which it was a "substantial
employer," as such term is defined in Section 4001(c) of ERISA, or the
incurrence of liability by the Borrower or any ERISA Affiliate under
Section 4064 of ERISA upon the termination of a Multiple Employer Plan, or
(iii) providing notice of intent to terminate a Plan pursuant to
Section 4041(c) of ERISA or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA, or (iv) the institution of
proceedings to terminate a Plan by the PBGC under Section 4042 of ERISA, or
(v) any other event or condition which might reasonably constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the imposition of any liability under
Title IV of ERISA (other than for the payment of premiums to the PBGC).
"Total Commitment" shall mean, at any time, the sum of the Commitments
at such time.
"Total Liabilities" shall mean the total of all items which would
properly be included as liabilities on a consolidated balance sheet of the
Borrower and its Subsidiaries.
"Trademark Mortgage" shall mean the Amended and Restated Mortgage and
Security Agreement_ Trademarks by the Borrower and CPS in favor of the Agent
for the benefit of the Banks substantially in the form of Exhibit B-3 to this
Agreement, as amended, restated, modified and supplemented from time to time;
provided, however, that the Collateral under such Trademark Mortgage shall be
limited to general intangibles relating to inventory (including, without
limitation, all trademarks, trade names and licenses in connection with the
sale of inventory).
"Transactions" shall have the meaning set forth in Section 3.02 of this
Agreement.
"Transferee" shall have the meaning set forth in Section 2.18 of this
Agreement.
"Type" when used in respect of any Loan or Borrowing shall refer to the
rate of interest by reference to which interest on such Loan or on the Loans
comprising such Borrowing is determined. For purposes hereof, "Rate" shall
mean the Adjusted LIBOR Rate and the Alternate Base Rate.
"Uniform Commercial Code" shall mean the Illinois Uniform Commercial
Code, as in effect from time to time.
"Unused Borrowing Availability" shall mean, at any time, (i) the lesser
of (x) the Total Commitment and (y) the Borrowing Base at such time less (ii)
the sum of (x) the aggregate outstanding principal amount of all Loans and
(y) the aggregate Letter of Credit Outstandings at such time.
"Unused Total Commitment" shall mean, at any time, (i) the Total
Commitment less (ii) the sum of (x) the aggregate outstanding principal
amount of all Loans and (y) the aggregate Letter of Credit Outstandings.
"Windmill Termination Date" shall have the meaning set forth in the
Liquidity Agreement.
"Withdrawal Liability" shall have the meaning given such term under Part
I of Subtitle E of Title IV of ERISA.
Section 1.02. TERMS GENERALLY;. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. All references herein to Articles,
Sections, Exhibits and Schedules shall be deemed references to Articles and
Sections of, and Exhibits and Schedules to, this Agreement unless the context
shall otherwise require. Except as otherwise expressly provided herein, all
terms of an accounting or financial nature shall be construed in accordance
with GAAP, as in effect from time to time; provided, however, that for
purposes of determining compliance with any covenant set forth in Article VI,
such terms shall be construed in accordance with GAAP as in effect on the
date of this Agreement applied on a basis consistent with the application
used in the Borrower's audited financial statements referred to in Section
3.04.
ARTICLE II
AMOUNT AND TERMS OF CREDIT
Section 2.01. COMMITMENT OF THE BANKS. (a) Each Bank severally and not
jointly with the other Banks agrees, upon the terms and subject to the
conditions herein set forth, to make revolving credit loans (each a "Loan,"
and collectively, the "Loans") to the Borrower at any time and from time to
time during the period commencing on the Closing Date and ending on the Final
Maturity Date (or the earlier date of termination of the Total Commitment) in
an aggregate principal amount not to exceed, when added to such Bank's
Commitment Percentage multiplied by the then aggregate Letter of Credit
Outstandings, the Commitment of such Bank, which Loans may be repaid and
reborrowed in accordance with the provisions of this Agreement. At no time
shall the sum of the then outstanding aggregate principal amount of the Loans
plus the then aggregate Letter of Credit Outstandings exceed the lesser of
(i) the Total Commitment of $150,000,000, as the same may be reduced from
time to time pursuant to Section 2.10 or 2.13, as the case may be and (ii)
the sum of the Borrowing Base plus 95.24% of the cash then held in the Cash
Collateral Account pursuant to Section 2.03(b) and 2.13(a).
(b) Each Borrowing shall be made by the Banks pro rata in accordance
with their respective Commitments; provided, however, that the failure of any
Bank to make any Loan shall not in itself relieve the other Banks of their
obligations to lend.
Section 2.02. BORROWING BASE. (a) Notwithstanding any other provision of
this Agreement to the contrary, the aggregate principal amount of all
outstanding Loans plus the then aggregate Letter of Credit Outstandings shall
not at any time exceed the Borrowing Base and no Loan shall be made or Letter
of Credit issued in violation of the foregoing.
(b) Cash held in the Cash Collateral Account shall not be available
for use by the Borrower or any Guarantor.
Section 2.03. LETTERS OF CREDIT. (a) Upon the terms and subject to the
conditions herein set forth, the Borrower may request a Fronting Bank, at any
time and from time to time after the date hereof and prior to the Final
Maturity Date, to issue, and subject to the terms and conditions contained
herein, such Fronting Bank shall issue, for the account of the Borrower one
or more Letters of Credit, provided, however, that no Letter of Credit shall
be issued if after giving effect to such issuance (i) the aggregate Letter of
Credit Outstandings shall exceed $90,000,000, (ii) the aggregate Letter of
Credit Outstandings, when added to the aggregate outstanding principal amount
of the Loans, would exceed the Total Commitment or (iii) the provisions of
Section 2.02 would be violated thereby.
(b) No commercial Letter of Credit shall expire later than the earlier
of (u) 180 days after its date of issue and (v) the Final Maturity Date, and
no standby Letter of Credit shall expire later than the earlier of (w) one
year after the date of its issue and (x) the Final Maturity Date, provided,
however, that the foregoing clause (w) shall not prohibit the issuance of
"evergreen" standby Letters of Credit with an initial term of one year or
less from the date of issue if the Agent or the Fronting Bank may (without
the agreement of the Borrower) prevent the renewal of such standby Letter of
Credit pursuant to terms consistent with the past practice of the Borrower;
provided, however, that if any Letter of Credit shall be outstanding on the
Final Maturity Date, the Borrower shall, at or prior to the Final Maturity
Date (i) cause all Letters of Credit which expire after the Final Maturity
Date to be returned to the Fronting Bank undrawn and marked "cancelled" or
(ii) if the Borrower is unable to do so in whole or in part, either
(y) provide a "back-to-back" letter of credit to one or more Fronting Banks
in a form satisfactory to such Fronting Banks, the Agent and the Banks (in
their sole discretion), issued by a bank reasonably satisfactory to such
Fronting Bank and the Agent (in their reasonable discretion) in an amount
equal to 105% of the then undrawn stated amount of all outstanding Letters of
Credit issued by such Fronting Banks and/or (z) deposit cash in the Cash
Collateral Account in an amount equal to 105% of the then undrawn stated
amount of all outstanding Letters of Credit as collateral security for the
Borrower's reimbursement obligations in connection therewith. "Back-to-back"
letters of credit and cash deposited in the Cash Collateral Account in
respect of a particular Letter of Credit pursuant to this Section 2.03(b)
shall be returned to the Borrower upon the expiration of such Letter of
Credit undrawn or upon the payment in full of all reimbursement and other
obligations in connection therewith.
(c) The Borrower shall pay to each Fronting Bank, in addition to such
other fees and charges as are specifically provided for in Section 2.21
hereof, such fees and charges in connection with the issuance and processing
of the Letters of Credit issued by such Fronting Bank as are customarily
imposed by such Fronting Bank from time to time in connection with letter of
credit transactions.
(d) Drafts drawn under each Letter of Credit shall be reimbursed by
the Borrower not later than the first Business Day following the date of draw
and shall bear interest from the date of draw until reimbursed in full at a
rate per annum equal to the Alternate Base Rate (computed on the basis of the
actual number of days elapsed over a year of 360 days).
(e) Immediately upon the issuance of any Letter of Credit by any
Fronting Bank, such Fronting Bank shall be deemed to have sold to each Bank
other than such Fronting Bank and each such other Bank shall be deemed
unconditionally and irrevocably to have purchased from such Fronting Bank,
without recourse or warranty, an undivided interest and participation, to the
extent of such Bank's Commitment Percentage, in such Letter of Credit, each
drawing thereunder and the obligations of the Borrower and the Guarantors
under this Agreement with respect thereto. Upon any change in the
Commitments pursuant to Section 10.03, it is hereby agreed that with respect
to all Letter of Credit Outstandings, there shall be an automatic adjustment
to the participations hereby created to reflect the new Commitment
Percentages of the assigning and assignee Banks. Any action taken or omitted
by a Fronting Bank under or in connection with a Letter of Credit, if taken
or omitted in the absence of gross negligence or willful misconduct, shall
not create for such Fronting Bank any resulting liability to any other Bank
(f) In the event that a Fronting Bank makes any payment under any
Letter of Credit and the Borrower shall not have reimbursed such amount in
full to such Fronting Bank pursuant to this Section, the Fronting Bank shall
promptly notify the Agent, which shall promptly notify each Bank of such
failure, and each Bank shall promptly and unconditionally pay to the Agent
for the account of the Fronting Bank the amount of such Bank's Commitment
Percentage of such unreimbursed payment in Dollars and in same day funds. If
the Fronting Bank so notifies the Agent, and the Agent so notifies the Banks
prior to 11:00 a.m. (New York City time) on any Business Day, such Banks
shall make, available to the Fronting Bank such Bank's Commitment Percentage
of the amount of such unreimbursed payment on such Business Day in same day
funds. If and to the extent such Bank shall not have so made its Commitment
Percentage of the amount of such payment available to the Fronting Bank, such
Bank agrees to pay to such Fronting Bank, forthwith on demand such amount,
together with interest thereon, for each day from such date until the date
such amount is paid to the agent for the account of such Fronting Bank at the
Federal Funds Effective Rate. The failure of any Bank to make available to
the Fronting Bank its Commitment Percentage of any payment under any Letter
of Credit shall not relieve any other Bank of its obligation hereunder to
make available to the Fronting Bank its Commitment Percentage of any payment
under any Letter of Credit on the date required, as specified above, but no
Bank shall be responsible for the failure of any other Bank to make available
to such Fronting Bank such other Bank's Commitment Percentage of any such
payment. Whenever a Fronting Bank receives a payment of a reimbursement
obligation as to which it has received any payments from the Banks pursuant
to this paragraph, such Fronting Bank shall pay to each Bank which has paid
its Commitment Percentage thereof, in Dollars and in same day funds, an
amount equal to such Bank's Commitment Percentage thereof.
Section 2.04. ISSUANCE. Whenever the Borrower desires a Fronting Bank to
issue a Letter of Credit, it shall give to such Fronting Bank and the Agent
at least two Business Days' prior written (including telex, facsimile or
cable communication) notice (or such shorter period as may be agreed upon by
the Agent, the Borrower and the Fronting Bank) specifying the date on which
the proposed Letter of Credit is to be issued (which shall be a Business
Day), the stated amount of the Letter of Credit so requested, the expiration
date of such Letter of Credit and the name and address of the beneficiary
thereof.
Section 2.05. NATURE OF LETTER OF CREDIT OBLIGATIONS ABSOLUTE. The
obligations of the Borrower to reimburse the Banks for drawings made under
any Letter of Credit shall be unconditional and irrevocable and shall be paid
strictly in accordance with the terms of this Agreement under all
circumstances, including, without limitation (it being understood that any
such payment by the Borrower shall be without prejudice to, and shall not
constitute a waiver of, any rights the Borrower might have or might acquire
as a result of the payment by the Fronting Bank of any draft or the
reimbursement by the Borrower thereof): (i) any lack of validity or
enforceability of any Letter of Credit; (ii) the existence of any claim,
setoff, defense or other right which the Borrower or any Guarantor may have
at any time against a beneficiary of any Letter of Credit or against any of
the Banks, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction; (iii) any draft, demand,
certificate or other document presented under any Letter of Credit proving to
be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect; (iv) payment by
a Fronting Bank of any Letter of Credit against presentation of a demand,
draft or certificate or other document which does not comply with the terms
ofsuch Letter of Credit in the absence of willful misconduct on the part
of such Fronting Bank; (v) any other circumstances or happening whatsoever,
which is similar to any of the foregoing; or (vi) the fact that any Event of
Default shall have occurred and be continuing.
Section 2.06. MAKING OF LOANS. (a) Except as contemplated by
Section 2.11, Loans shall be either ABR Loans or Eurodollar Loans as the
Borrower may request subject to and in accordance with this Section, provided
that all Loans made pursuant to the same Borrowing shall, unless otherwise
specifically provided herein, be Loans of the same Type. Subject to
Sections 2.26 and Section 2.27 of this Agreement, each Bank may fulfill its
Commitment with respect to any Eurodollar Loan or ABR Loan by causing any
lending office of such Bank to make such Loan; provided that any such use of
a lending office shall not affect the obligation of the Borrower to repay
such Loan in accordance with the terms of the applicable Note. Each Bank
shall, subject to its overall policy considerations, use reasonable efforts
to select a lending office which will not result in the payment of increased
costs by the Borrower pursuant to Section 2.15. Subject to the other
provisions of this Section and the provisions of Section 2.12, Borrowings of
Loans of more than one Type may be incurred at the same time, provided that
no more than ten Borrowings of Eurodollar Loans may be outstanding at any
time.
(b) The Borrower shall give the Agent prior notice of each Borrowing
hereunder of at least three Business Days for Eurodollar Loans and one
Business Day for ABR Loans (except as provided in the last sentence of this
Section 2.06(b)); such notice shall be irrevocable and shall specify the
amount of the proposed Borrowing (which shall not be less than $10,000,000 in
the case of Eurodollar Loans and $1,000,000 in the case of ABR Loans) and the
date thereof (which shall be a Business Day) and shall contain disbursement
instructions. Such notice, to be effective, must be received by the Agent
not later than 11:00 a.m., Chicago time, on the third Business Day in the
case of Eurodollar Loans and the first Business Day in the case of ABR Loans,
preceding the date on which such Borrowing is to be made (except as provided
in the last sentence of this Section 2.06(b)). Such notice shall specify
whether the Borrowing then being requested is to be a Borrowing of ABR Loans
or Eurodollar Loans and, if Eurodollar Loans, the Interest Period with
respect thereto. If no election of Interest Period is specified in any such
notice, such notice shall be deemed a request for an Interest Period of one
month. If no election is made to the Type of Loan, such notice shall be
deemed a request for Borrowing of ABR Loans. Subject to Section 2.26 and
Section 2.27 of this Agreement, the Agent shall promptly notify each Bank of
its proportionate share of such Borrowing, the date of such Borrowing, the
Type of Borrowing being requested and the Interest Period or Interest Periods
applicable thereto, as appropriate. Subject to Section 2.26 and Section 2.27
of this Agreement, on the borrowing date specified in such notice, each Bank
shall make its share of the Borrowing available at the office of the Agent at
335 Madison Avenue, New York, New York 10017, Attention: Loan Operations (the
"Payment Office"), no later than 11:00 a.m., Chicago time, in immediately
available funds. Subject to Section 2.26 and Section 2.27 of this Agreement,
upon receipt of the funds made available by the Banks to fund any Borrowing
hereunder, the Agent shall disburse such funds in the manner specified in the
notice of borrowing delivered by the Borrower and shall use reasonable
efforts to make the funds so received from the Banks available to the
Borrower no later than 2:00 p.m. Chicago time (other than as provided in the
following sentence). With respect to ABR Loans of $10,000,000 or less,
subject to Section 2.26 and Section 2.27 of this Agreement, the Banks shall
make such borrowings available to the Borrower by 3:00 p.m., Chicago time, on
the same Business Day that the Borrower gives notice to the Agent of such
borrowing by 11:00 a.m., Chicago time.
Section 2.07. NOTES; REPAYMENT OF LOANS. The Loans made by each Bank
shall be evidenced by a Note, duly executed on behalf of the Borrower, dated
the Closing Date or the effective date of the applicable Assignment and
Acceptance, as the case may be, in substantially the form attached hereto as
Exhibit A, payable to the order of such Bank in an aggregate principal amount
equal to such Bank's Commitment. The outstanding principal balance of all of
the Loans, as evidenced by such Notes, shall be payable on the Final Maturity
Date (or such earlier date as is set forth in Section 7.01 hereof). Each
Note shall bear interest from the date thereof on the outstanding principal
balance thereof as set forth in Section 2.08. Each Bank shall, and is hereby
authorized by the Borrower to, endorse on the schedule attached to each Note
delivered to such Bank (or on a continuation of such schedule attached to
such Note and made a part thereof), or otherwise to record in such Bank's
internal records, an appropriate notation evidencing the date and amount of
each Loan from such Bank, each payment and prepayment of principal of any
such Loan, each payment of interest on any such Loan and the other
information provided for on such schedule; provided, however, that the
failure of any Bank to make such a notation or any error therein shall not
affect the obligation of the Borrower to repay the Loans made by such Bank in
accordance with the terms of this Agreement.
Section 2.08. INTEREST ON LOANS. (a) Subject to the provisions of
Section 2.08(c) and Section 2.09, each ABR Loan shall bear interest (computed
on the basis of the actual number of days elapsed over a year of 365 or 366
days, as applicable), at a rate per annum equal to the Alternate Base Rate
plus the Applicable Margin.
(b) Subject to the provisions of Section 2.08(c) and Section 2.09,
each Eurodollar Loan shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 360 days) at a rate per annum equal,
during each Interest Period applicable thereto, to the Adjusted LIBOR Rate
for such Interest Period in effect for such Borrowing plus the Applicable
Margin.
(c) Accrued interest on all Loans shall be payable in arrears on each
Interest Payment Date applicable thereto, at maturity (whether by
acceleration or otherwise) and after such maturity on demand.
Section 2.09. DEFAULT INTEREST. If the Borrower shall default in the
payment of the principal of or interest on any Loan or in the payment of any
other amount becoming due hereunder (including, without limitation, the
reimbursement pursuant to Section 2.03(d) of any draft drawn under a Letter
of Credit), whether at stated maturity, by acceleration or otherwise, the
Borrower shall on demand from time to time pay interest, to the extent
permitted by law, on such defaulted amount up to (but not including) the date
of actual payment (after as well as before judgment) at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of
360 days) equal to (a) for any Eurodollar Loan the sum of two percent (2%)
plus the rate otherwise applicable thereto and (b) for all other amounts
owing hereunder, the sum of the Alternate Base Rate plus 2%.
Section 2.10. OPTIONAL TERMINATION OR REDUCTION OF COMMITMENT. Upon at
least two Business Days' prior written notice to the Agent, the Borrower may
at any time in whole permanently terminate, or from time to time in part
permanently reduce, the Unused Total Commitment. Each such reduction of the
Commitments shall be in the principal amount of $5,000,000 or any integral
multiple thereof. Simultaneously with each reduction or termination of the
Commitment, the Borrower shall pay to the Agent for the account of each Bank
the Commitment Fee accrued on the amount of the Commitment of such Bank so
terminated or reduced through the date thereof. Any reduction of the Total
Commitment pursuant to this Section shall be applied pro rata to reduce the
Commitment of each Bank.
Section 2.11. ALTERNATE RATE OF INTEREST. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Loan, the Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower absent
manifest error) that reasonable means do not exist for ascertaining the
applicable Adjusted LIBOR Rate, the Agent shall, as soon as practicable
thereafter, give written notice of such determination to the Borrower and the
Banks, and any request by the Borrower for a Borrowing of Eurodollar Loans
(including pursuant to a refinancing with Eurodollar Loans) pursuant to
Section 2.06 or 2.12 shall be deemed a request for a Borrowing of ABR Loans.
After such notice shall have been given and until the circumstances giving
rise to such notice no longer exist, each request for a Borrowing of
Eurodollar Loans shall be deemed to be a request for a Borrowing of ABR
Loans.
Section 2.12. REFINANCING OF LOANS. The Borrower shall have the right,
at any time, on three Business Days' prior irrevocable notice to the Agent
(which notice, to be effective, must be received by the Agent not later than
11:00 a.m., Chicago time, on the third Business Day preceding the date of any
refinancing), (x) to refinance any outstanding Borrowing or Borrowings of
Loans of one Type (or a portion thereof) with a Borrowing of Loans of the
other Type or (y) to continue an outstanding Borrowing of Eurodollar Loans
for an additional Interest Period, subject to the following:
(a) in the case of a refinancing of ABR Loans with Eurodollar Loans
or the continuing of a Borrowing of Eurodollar Loans for an additional
Interest Period, no Event of Default shall have occurred and be continuing at
the time of such refinancing;
(b) if less than a full Borrowing of Loans shall be refinanced, such
refinancing shall be made pro rata among the Banks in accordance with the
respective principal amounts of the Loans comprising such Borrowing held by
the Banks immediately prior to such refinancing;
(c) the aggregate principal amount of Loans being refinanced shall be
at least $10,000,000, provided that no partial refinancing of a Borrowing of
Eurodollar Loans shall result in the Eurodollar Loans remaining outstanding
pursuant to such Borrowing being less than $10,000,000 in aggregate principal
amount;
(d) each Bank shall effect each refinancing by applying the proceeds
of its new Eurodollar Loan or ABR Loan, as the case may be, to its Loan being
refinanced;
(e) the Interest Period with respect to a Borrowing of Eurodollar
Loans effected by a refinancing or in respect to the Borrowing of Eurodollar
Loans being continued as Eurodollar Loans shall commence on the date of
refinancing or the expiration of the current Interest Period applicable to
such continuing Borrowing, as the case may be; and
(f) each request for a refinancing with a Borrowing of Eurodollar
Loans which fails to state an applicable Interest Period shall be deemed to
be a request for an Interest Period of one month.
In the event that the Borrower shall not give notice to refinance any
Borrowing of Eurodollar Loans, or to continue such Borrowing as Eurodollar
Loans, in each case as provided above, such Borrowing shall automatically be
refinanced with a Borrowing of ABR Loans at the expiration of the then-
current Interest Period. The Agent shall, after it receives notice from the
Borrower, promptly give each Bank notice of any refinancing, in whole or in
part, of any Loan made by such Bank.
Section 2.13. MANDATORY PREPAYMENT; COMMITMENT TERMINATION; CASH
COLLATERAL. The outstanding Obligations shall be subject to mandatory
prepayment as follows:
(a) if at any time the aggregate principal amount of the outstanding
Loans plus the aggregate Letter of Credit Outstandings exceeds the lesser of
(x) the Total Commitment and (y) the Borrowing Base, the Borrower will within
three Business days (i) prepay the Loans in an amount necessary to cause the
aggregate principal amount of the outstanding Loans plus the aggregate Letter
of Credit Outstandings to be equal to or less than the Total Commitment
and/or the Borrowing Base, as the case may be, and (ii) if, after giving
effect to the prepayment in full of the Loans, the aggregate Letter of Credit
Outstandings exceeds the Total Commitment and/or the Borrowing Base, as the
case may be, deposit into the Cash Collateral Account an amount equal to 105%
of the amount by which the aggregate Letter of Credit Outstandings so exceeds
the Total Commitment or Borrowing Base, as the case may be;
(b) upon receipt by the Borrower of any payment of proceeds of any
insurance required to be maintained pursuant to Section 5.03 hereof on
account of each separate loss, damage or injury to any tangible property
subject to the Agent's Lien, Borrower will apply, or to the extent the Agent
is loss payee under any insurance policy, Borrower will irrevocably direct
the Agent to apply, without premium or penalty, such proceeds to the
Obligations in such order as is required under Section 9.02(b) and thereafter
in such order as the Agent shall choose in its sole discretion; provided,
however, that so long as no Event of Default (or event which would, with the
lapse of time or the giving of notice or both, constitute an Event of
Default) shall have occurred and be continuing, if no Obligations are
outstanding other than with respect to undrawn Letters of Credit and the
Unused Borrowing Availability, after giving effect to such loss, damage or
injury, is greater than $30,000,000, then the Borrower shall be entitled to
retain such proceeds for the purposes of repair or replacement of such
property and provided, further, that so long as no Event of Default (or event
which would, with the lapse of time or the giving of notice or both,
constitute an Event of Default) shall have occurred and be continuing, the
Borrower shall be entitled to retain such proceeds for the purpose of repair
or replacement of such property, where the amount of such proceeds on account
of a single event of loss, damage or injury is less than $2,500,000 valued at
cost (provided that the aggregate amount of such proceeds on account of all
events of loss, damage or injury during the term of this Agreement shall be
less than $3,000,000 valued at cost). The Borrower agrees to provide such
evidence of, and other information concerning, any such repair or replacement
as the Agent shall reasonably request;
(c) upon receipt by the Borrower or any of its Subsidiaries of (i)
the proceeds of any transaction described in Section 6.17 hereof or (ii) any
proceeds in excess of $10,000,000 from a sale of a single asset or a series
of related sales permitted under Section 6.04(iv) hereof, then the Borrower
shall apply or cause the application of such funds to the repayment of the
Obligations (other than the undrawn amount of Letters of Credit) in such
order as required under Section 9.02(b) provided that to the extent such
amounts are to be applied to the payment of the principal amount of any
Eurodollar Loan, the Borrrower shall only be obligated to deliver such
proceeds to the Agent on the last day of the applicable Interest Period.
(d) upon the Final Maturity Date, the Total Commitment shall be
terminated in full; and
(e) upon receipt by the Borrower or any of its Subsidiaries of the
proceeds of any Subordinated Indebtedness, then the Borrower shall apply or
cause the application of such funds to the repayment of the Obligations
(other than the undrawn amount of Letters of Credit) in such order as
required under Section 9.02(b).
Section 2.14. OPTIONAL PREPAYMENT OF LOANS; REIMBURSEMENT OF BANKS. (a)
The Borrower shall have the right at any time and from time to time to prepay
any Loans, in whole or in part, (x) with respect to Eurodollar Loans, upon at
least three Business Days' prior written notice to the Agent and (y) with
respect to ABR Loans, on the same Business Day if written notice is received
by the Agent prior to 11:00 a.m. Chicago time and thereafter upon at least
one Business Day's prior written notice to the Agent; provided, however, that
(i) with respect to Eurodollar Loans, each such partial prepayment shall be
in multiples of $1,000,000 and accompanied by any amounts owed the Banks
under Section 2.14(b) hereof, (ii) with respect to ABR Loans, each such
partial prepayment shall be in multiples of $1,000,000, and (iii) no partial
prepayment of a Borrowing of Eurodollar Loans shall result in the aggregate
principal amount of the Eurodollar Loans remaining outstanding pursuant to
such Borrowing being less than $10,000,000. Each notice of prepayment shall
specify the prepayment date, the principal amount of the Loans to be prepaid
and in the case of Eurodollar Loans, the Borrowing or Borrowings pursuant to
which made, shall be irrevocable and shall commit the Borrower to prepay such
Loan by the amount and on the date stated therein. The Agent shall, promptly
after receiving notice from the Borrower hereunder, notify each Bank of the
principal amount of the Loans held by such Bank which are to be prepaid, the
prepayment date and the manner of application of the prepayment.
(b) The Borrower shall reimburse each Bank on demand for any loss
incurred or to be incurred by it in the reemployment of the funds (i)
resulting from any prepayment (for any reason whatsoever, including, without
limitation, refinancing with ABR Loans) of any Eurodollar Loan required or
permitted under this Agreement, if such Loan is prepaid other than on the
last day of the Interest Period for such Loan or (ii) in the event that after
the Borrower delivers a notice of borrowing under Section 2.06 in respect of
Eurodollar Loans, such Loans are not made on the first day of the Interest
Period specified in such notice of borrowing for any reason other than a
breach by such Bank of its obligations hereunder. Such loss shall be the
amount as reasonably determined by such Bank as the excess, if any, (A) of
the amount of interest which would have accrued to such Bank on the amount so
paid or not borrowed at a rate of interest equal to the Adjusted LIBOR Rate
for such Loan, for the period from the date of such payment or failure to
borrow to the last day (x) in the case of a payment or refinancing with ABR
Loans other than on the last day of the Interest Period for such Loan, of the
then current Interest Period for such Loan, or (y) in the case of such
failure to borrow, of the Interest Period for such Loan which would have
commenced on the date of such failure to borrow, over (B) the amount of
interest which would have accrued to such Bank on such amount by placing such
amount on deposit for a comparable period with leading banks in the London
interbank market. Each Bank shall deliver to the Borrower from time to time
one or more certificates setting forth the amount of such loss as determined
by such Bank and such statement shall be conclusive absent manifest error.
The Borrower shall pay such Bank the amount shown as due on any such
statement within ten (10) days after the receipt of the same.
(c) In the event the Borrower fails to prepay any Loan on the date
specified in any prepayment notice delivered pursuant to Section 2.14(a), the
Borrower on demand by any Bank shall pay to the Agent for the account of such
Bank any amounts required to compensate such Bank for any loss incurred by
such Bank as a result of such failure to prepay, including, without
limitation, any loss, cost or expenses incurred by reason of the acquisition
of deposits or other funds by such Bank to fulfill deposit obligations
incurred in anticipation of such prepayment. Each Bank shall deliver to the
Borrower from time to time one or more certificates setting forth the amount
of such loss as determined by such Bank and such statement shall be
conclusive absent manifest error. The Borrower shall pay such Bank the
amount shown as due on any such certificate within ten (10) days after the
receipt of the same.
(d) Any partial prepayment of the Loans by the Borrower pursuant to
Section 2.13 or this 2.14 shall be applied as specified by the Borrower or,
in the absence of such specification, as determined by Section 9.02(b) (with
any excess being applied as determined by the Agent), provided that in each
case no Eurodollar Loans shall be prepaid pursuant to Section 2.13 to the
extent that such Loan has an Interest Period ending after the required date
of prepayment unless and until all outstanding ABR Loans and Eurodollar Loans
with Interest Periods ending on such date have been repaid in full.
Section 2.15. RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES. (a)
Notwithstanding any other provision herein, if after the date of this
Agreement any change in applicable law or regulation or in the interpretation
or administration thereof by any governmental authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall (i) subject the Agent or any Bank (which shall for the purpose of
this Section 2.15 include any assignee or lending office of the Agent or such
Bank) to any tax with respect to any amount paid or to be paid by the Agent
or any Bank with respect to any Eurodollar Loans made by a Bank to the
Borrower (other than (x) taxes imposed on the overall net income or gross
receipts of such Agent or Bank and (y) franchise taxes imposed on the Agent
or such Bank; in either case by the jurisdiction in which such Bank has its
principal office or its lending office with respect to such Eurodollar Loan
or any political subdivision or taxing authority therein, or by any other
jurisdiction or by any political subdivision or taxing authority therein
other than a jurisdiction in which the Agent or such Bank would not be
subject to tax but for the execution and performance of this Agreement); (ii)
change the basis of taxation of payments to the Agent or any Bank of the
principal of or interest on any Eurodollar Loan made by such Bank or any fees
or other amounts payable hereunder (other than franchise taxes or taxes
imposed on the overall net income or gross receipts of the Agent or such Bank
by the jurisdiction in which the Agent or such Bank has its principal office
or by any political subdivision or taxing authority therein, or by any other
jurisdiction or by any political subdivision or taxing authority therein
other than a jurisdiction in which the Agent or such Bank would not be
subject to tax but for the execution and performance of this Agreement);
(iii) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of or
loans or loan commitments extended by such Bank (except any such reserve
requirement which is reflected in the Adjusted LIBOR Rate) or (iv) impose on
such Bank or the London interbank market any other condition affecting this
Agreement or the Eurodollar Loans or other Loans made by such Bank, and the
result of any of the foregoing shall be to increase the cost to such Bank of
making or maintaining any Eurodollar Loan or to reduce the amount of any
payment (whether of principal, interest or otherwise) received or receivable
by the Agent or such Bank hereunder or under the Notes (whether of principal,
interest or otherwise) or to require the Agent or such Bank to make any
payment in respect of any Eurodollar Loan, then the Borrower shall pay to the
Agent or such Bank, as the case may be, such additional amount or amounts as
will compensate the Agent or such Bank for such additional costs or
reduction. The Borrower's obligation to pay the amounts required to be paid
pursuant to this Section 2.15 shall be limited, as to any Bank, to the
amounts under this Section 2.15 that such Bank received actual knowledge of
no more than 120 days prior to the date on which the Borrower received an
initial certificate from such Bank pursuant to paragraph (c) below unless the
event giving rise to such demand is applied retroactively. Notwithstanding
anything contained herein to the contrary, nothing in clause (i) or (ii) of
this Section 2.15(a) shall be deemed to (x) permit the Agent or any Bank to
recover any amount thereunder which would not be recoverable under
Section 2.18 hereof or (y) require the Borrower to make any payment of any
amount to the extent that such payment would duplicate any payment made by
the Borrower pursuant to Section 2.18 hereof.
(b) If any Bank shall have determined that the applicability of any
law, rule, regulation or guideline adopted pursuant to or arising out of the
July 1988 report of the Basle Committee on Banking Regulations and
Supervisory Practices entitled "International Convergence of Capital
Measurement and Capital Standards," or the adoption or effectiveness after
the date hereof of any law, rule, regulation or guideline regarding capital
adequacy, or any change in any of the foregoing or in the interpretation or
administration of any of the foregoing by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or any lending office of such Bank) or
any Bank's holding company with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing
the rate of return on such Bank's capital or on the capital of such Bank's
holding company, if any, as a consequence of this Agreement, the Loans made
by such Bank pursuant hereto, such Bank's Commitment hereunder or the
issuance of, or participation in, any Letter of Credit by such Bank to a
level below that which such Bank or such Bank's holding company could have
achieved but for such adoption, change or compliance (taking into account
such Bank's policies and the policies of such Bank's holding company with
respect to capital adequacy) by an amount deemed by such Bank to be material,
then from time to time the Borrower shall pay to such Bank such additional
amount or amounts as will compensate such Bank or such Bank's holding company
for any such reduction suffered.
(c) certificate of each Bank setting forth such amount or amounts
as shall be necessary to compensate such Bank or its holding company as
specified in paragraph (a) or (b) above, as the case may be, shall be
delivered to the Borrower and shall be conclusive absent manifest error. The
Borrower shall pay each Bank the amount shown as due on any such certificate
delivered to it within 10 days after its receipt of the same. Any Bank
receiving any such payment shall promptly make a refund thereof to the
Borrower if the law, regulation, guideline or change in circumstances giving
rise to such payment is subsequently deemed or held to be invalid or
inapplicable, but such refund to the Borrower shall be limited to the amount
received as a refund by the Bank (including interest, if any).
(d) Failure on the part of any Bank to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction
in return on capital with respect to any period shall not constitute a waiver
of such Bank's right to demand compensation with respect to such period or
any other period. The protection of this Section shall be available to each
Bank regardless of any possible contention of the invalidity or
inapplicability of the law, rule, regulation, guideline or other change or
condition which shall have occurred or been imposed.
Section 2.16. CHANGE IN LEGALITY. (a) Notwithstanding anything to the
contrary contained elsewhere in this Agreement, if (x) any change in any law
or regulation or in the interpretation thereof by any governmental authority
charged with the administration thereof shall make it unlawful for a Bank to
make or maintain a Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to a Eurodollar Loan or (y) at any time any
Bank determines that the making or continuance of any of its Eurodollar Loans
has become impracticable as a result of a contingency occurring after the
date hereof which adversely affects the London interbank market or the
position of such Bank in such market, then, by written notice to the
Borrower, such Bank may (i) declare that Eurodollar Loans will not thereafter
be made by such Bank hereunder, whereupon any request by the Borrower for a
Eurodollar Borrowing shall, as to such Bank only, be deemed a request for an
ABR Loan unless such declaration shall be subsequently withdrawn; and (ii)
require that all outstanding Eurodollar Loans made by it be converted to ABR
Loans, in which event all such Eurodollar Loans shall be automatically
converted to ABR Loans as of the effective date of such notice as provided in
paragraph (b) below. In the event any Bank shall exercise its rights under
clause (i) or (ii) of this paragraph (a), all payments and prepayments of
principal which would otherwise have been applied to repay the Eurodollar
Loans that would have been made by such Bank or the converted Eurodollar
Loans of such Bank shall instead be applied to repay the ABR Loans made by
such Bank in lieu of, or resulting from the conversion of, such Eurodollar
Loans.
(b) For purposes of this Section 2.16, a notice to the Borrower by
any Bank pursuant to paragraph (a) above shall be effective, if lawful, and
if any Eurodollar Loans shall then be outstanding, on the last day of the
then-current Interest Period, otherwise, such notice shall be effective on
the date of receipt by the Borrower.
Section 2.17. PRO RATA TREATMENT, ETC. All payments and repayments of
principal and interest in respect of the Loans (except as provided in
Sections 2.15, 2.16 and 10.10(b)) shall be made pro rata among the Banks in
accordance with the then outstanding principal amount of the Loans and/or
participations in Letter of Credit Outstandings hereunder and all payments of
Commitment Fees and Letter of Credit Fees (other than those payable to a
Fronting Bank) shall be made pro rata among the Banks in accordance with
their Commitments. All payments by the Borrower hereunder and under the
Notes shall be (i) net of any tax applicable to the Borrower or Guarantor and
(ii) made in Dollars in immediately available funds at the office of the
Agent by 10:00 a.m., Chicago time, on the date on which such payment shall be
due. Interest in respect of any Loan hereunder shall accrue from and
including the date of such Loan to but excluding the date on which such Loan
is paid in full or converted to a Loan of a different Type. The Agent may
charge the Borrower's account with the Agent for all interest, principal,
fees and other amounts owing to the Agent and/or the Banks on or with respect
to this Agreement and/or the Loans and other Loan Documents if any such
amount is not paid when due and payable.
Section 2.18. TAXES. (a) Any and all payments by the Borrower hereunder
and under the Notes shall be made free and clear of and without deduction for
any and all current or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding (i) taxes
imposed on or measured by the net income or overall gross receipts of the
Agent or any Bank (or any transferee or assignee thereof, including a
participation holder (any such entity being called a "Transferee")) and
franchise taxes imposed on the Agent or any Bank (or Transferee) by the
United States or any jurisdiction under the laws of which the Agent or any
such Bank (or Transferee) is organized or any political subdivision thereof
or by any other jurisdiction or by any political subdivision or taxing
authority therein other than a jurisdiction in which the Agent or such Bank
would not be subject to tax but for the execution and performance of this
Agreement and (ii) levies, imposts, deductions, charges or withholdings
("Amounts") with respect to payments hereunder or under the Notes to a Bank
(or Transferee) in accordance with laws in effect on the later of the date of
this Agreement and the date such Bank (or Transferee) becomes a Bank (or
Transferee, as the case may be), but not excluding, with respect to such Bank
(or Transferee), any increase in such Amounts solely as a result of any
change in such laws occurring after such later date or any Amounts that would
not have been imposed but for actions (other than actions contemplated by
this Agreement or the Notes) taken by the Borrower after such later date (all
such nonexcluded taxes, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as "Taxes"). If the Borrower
shall be required by law to deduct any Taxes from or in respect of any sum
payable hereunder to the Banks (or any Transferee) or the Agent, (i) the sum
payable shall be increased by the amount necessary so that after making all
required deductions (including deductions applicable to additional sums
payable under this Section 2.18) such Bank (or Transferee) or the Agent (as
the case may be) shall receive an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall make such
deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant taxing authority or other Governmental Authority in accordance with
applicable law.
(b) In addition, the Borrower agrees to pay any current or future
stamp or documentary taxes or any other excise or property taxes, charges,
assessments or similar levies that arise from any payment made hereunder or
from the execution, delivery or registration of, or otherwise with respect
to, this Agreement or any other Loan Document (hereinafter referred to as
"Other Taxes").
(c) The Borrower will indemnify each Bank (or Transferee) and the
Agent for the full amount of Taxes and Other Taxes paid by such Bank (or
Transferee) or the Agent, as the case may be, and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted
by the relevant taxing authority or other Governmental Authority. Such
indemnification shall be made within 30 days after the date any Bank (or
Transferee) or the Agent, as the case may be, makes written demand therefor.
If a Bank (or Transferee) or the Agent shall become aware that it is entitled
to receive a refund in respect of Taxes or Other Taxes as to which it has
been indemnified by the Borrower pursuant to this Section, it shall promptly
notify the Borrower of the availability of such refund and shall, within 30
days after receipt of a request by the Borrower, apply for such refund at the
Borrower's expense. If any Bank (or Transferee) or the Agent receives a
refund in respect of any Taxes or Other Taxes as to which it has been
indemnified by the Borrower pursuant to this Section 2.18, it shall promptly
notify the Borrower of such refund and shall, within 30 days after receipt of
a request by the Borrower (or promptly upon receipt, if the Borrower has
requested application for such refund pursuant hereto), repay such refund to
the Borrower (to the extent of amounts that have been paid by the Borrower
under this Section 2.18 with respect to such refund plus interest that is
received by the Bank (or Transferee) as part of the refund), net of all out-
of-pocket expenses of such Bank and without additional interest thereon;
provided that the Borrower, upon the request of such Bank (or Transferee) or
the Agent, agrees to return such refund (plus penalties, interest or other
charges) to such Bank (or Transferee) or the Agent in the event such Bank (or
Transferee) or the Agent is required to repay such refund. Nothing contained
in this subsection (c) shall require any Bank (or Transferee) or the Agent to
make available any of its tax returns (or any other information relating to
its taxes that it deems to be confidential).
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by the Borrower in respect of any payment to any Bank (or
Transferee) or the Agent, the Borrower will furnish to the Agent, at its
address referred to on the signature pages hereof, the original or a
certified copy of a receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section
2.18 shall survive the payment in full of the principal of and interest on
all Loans made hereunder.
(f) Each Bank (or Transferee) that is organized under the laws of a
jurisdiction outside the United States shall, if legally able to do so, prior
to the immediately following due date of any payment by the Borrower
hereunder, deliver to the Borrower and Agent such certificates, documents or
other evidence, as required by the Code or Treasury Regulations issued
pursuant thereto, including (A) Internal Revenue Service Form W-8 or W-9 and
(B) Internal Revenue Service Form 1001 or Form 4224 and any other certificate
or statement of exemption required by Treasury Regulation Section 1.1441-1,
1.1441-4 or 1.1441-6(c) or any subsequent version thereof or successors
thereto, properly completed and duly executed by such Bank (or Transferee)
establishing that such payment is (i) not subject to United States Federal
withholding tax under the Code because such payment is effectively connected
with the conduct by such Bank (or Transferee) of a trade or business in the
United States or (ii) totally exempt from United States Federal withholding
tax or subject to a reduced rate of such tax under a provision of an
applicable tax treaty. Unless the Borrower and the Agent have received forms
or other documents satisfactory to them indicating that such payments
hereunder or under the Notes are not subject to United States Federal
withholding tax or are subject to such tax at a rate reduced by an applicable
tax treaty, the Borrower or the Agent shall withhold taxes from such payments
at the applicable statutory rate.
(g) The Borrower shall not be required to pay any additional amounts
to any Bank (or Transferee) in respect of United States Federal withholding
tax pursuant to subsection (a) above if the obligation to pay such additional
amounts would not have arisen but for a failure by such Bank (or Transferee)
to comply with the provisions of subsection (f) above.
(h) Any Bank (or Transferee) claiming any additional amounts payable
pursuant to this Section 2.18 shall use reasonable efforts (consistent with
legal and regulatory restrictions) to file any certificate or document
requested by the Borrower or to change the jurisdiction of its applicable
lending office if the making of such a filing or change would avoid the need
for or reduce the amount of any such additional amounts that may thereafter
accrue and would not, in the sole reasonable determination of such Bank, be
otherwise materially disadvantageous to such Bank (or Transferee).
Section 2.19. CERTAIN FEES. The Borrower shall pay to the Agent for the
Agent's own account, the fees set forth in that certain letter dated May 24,
1996 between the Agent and the Borrower, and such other fees as may be agreed
upon by such parties.
Section 2.20. COMMITMENT FEE. The Borrower shall pay to the Banks a
commitment fee (the "Commitment Fee") for the period commencing on the
Closing Date to the Final Maturity Date or the earlier date of termination of
the Commitment, computed (on the basis of the actual number of days elapsed
over a year of 360 days) on the average daily Unused Total Commitment at a
rate of:
(i) .20% per annum for each day Level I Status exists,
(ii) .25% per annum for each day Level II Status exists,
(iii) .30% per annum for each day Level III Status exists,
(iv) .375% per annum for each day Level IV Status or Level V Status
exists, and
(v) 0.50% for each day Level VI Status exists;
provided that the Commitment Fee shall be 0.30% per annum from the Effective
Date until November 4, 1996. The Commitment Fee, to the extent then accrued,
shall be payable (x) monthly, in arrears, on the last Business Day of each
month commencing on May 1, 1996, (y) on the Final Maturity Date and (z) as
provided in Section 2.10 hereof, upon any reduction or termination in whole
or in part of the Total Commitment.
Section 2.21. LETTER OF CREDIT FEES. (a) Standby Letters of Credit.
The Borrower shall pay with respect to each standby Letter of Credit (i) to
the Agent on behalf of the Banks a fee calculated (on the basis of the actual
number of days elapsed over a year of 360 days) at the rate per annum equal
to the Applicable Margin in effect for Eurodollar Loans on the stated amount
of each standby Letter of Credit then outstanding and (ii) to the Fronting
Bank such Fronting Bank's customary fees for issuance and processing referred
to in Section 2.03.
(b) Trade Letters of Credit. The Borrower shall pay with respect to
each trade Letter of Credit (i) to the Agent on behalf of the Banks a fee
calculated (on the basis of the actual number of days elapsed over a year of
360 days) at the rate per annum equal to the Applicable Margin in effect for
Eurodollar Loans times 0.75 on the stated amount of each trade Letter of
Credit then outstanding and (ii) to the Fronting Bank such Fronting Bank's
customary fees for issuance and processing referred to in Section 2.03.
(c) Fronting Bank. The Borrower agrees to pay each Fronting Bank for
its account a fronting fee in respect of each Letter of Credit issued by such
Fronting Bank, for the period from and including the date of issuance of such
Letter of Credit to and including the date of termination of such Letter of
Credit calculated (on the basis of the actual number of days elapsed over a
year of 360 days) at the rate as may be agreed between such Fronting Bank and
the Borrower from time to time.
(d) Payment. Accrued fees described in this Section 2.21 in respect
of each Letter of Credit shall be due and payable monthly in arrears on the
last Business Day of each month, on the expiration of each Letter of Credit
and on the Final Maturity Date, or such earlier date as the Total Commitment
is terminated.
Section 2.22. CLOSING FEE. The Borrower shall pay to the Agent for the
account of the Banks a closing fee as agreed upon between the Banks and the
Borrower.
Section 2.23. NATURE OF FEES. All fees shall be paid on the dates due,
in immediately available funds, to the Agent for itself and for distribution,
as provided herein and in the letter described in Section 2.19.
Section 2.24. RIGHT OF SET-OFF. Upon the occurrence and during the
continuance of any Event of Default, the Agent and each Bank is hereby
authorized at any time and from time to time, to the fullest extent permitted
by law, to set off and apply any and all deposits (general or special, time
or demand, provisional or final) at any time held and other indebtedness at
any time owing by such Bank to or for the credit or the account of the
Borrower or any Guarantor against any and all of the obligations of such
Borrower or Guarantor now or hereafter existing under the Loan Documents,
irrespective of whether or not such Bank shall have made any demand under any
Loan Document and although such obligations may be unmatured. Each Bank
agrees promptly to notify the Borrower and Guarantors after any such set-off
and application made by such Bank, provided that the failure to give such
notice shall not affect the validity of such set-off and application. The
rights of each Bank under this Section 2.24 are in addition to other rights
and remedies which such Bank may have upon the occurrence and during the
continuance of any Event of Default.
Section 2.25. SECURITY INTEREST IN CASH COLLATERAL ACCOUNT. The Borrower
and the Guarantors hereby assign and pledge to the Agent, for its benefit and
for the ratable benefit of the Banks, and hereby grant to the Agent, for its
benefit and for the ratable benefit of the Banks a first priority security
interest, senior to all other Liens, if any, in all of the Borrower's and the
Guarantors' right, title and interest in and to the Cash Collateral Account
and any direct investment of the funds contained therein. The foregoing
grant of security interest shall be in addition to any other grants of
security pursuant to this Agreement and/or any of the other Loan Documents.
Section 2.26. MAKING OF LOANS. The Agent may assume that each Bank
will make its ratable portion of any amount to be borrowed available to the
Agent in accordance with Section 2.06, and the Agent may in its discretion,
in reliance upon such assumption, make available to the Borrower on such date
a corresponding amount. If and to the extent such Bank shall not make such
ratable portion available to the Agent, such Bank and the Borrower severally
agree to repay to the Agent forthwith on demand such corresponding amount,
together with interest thereon for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the Agent,
as to the Borrower, at the rate of interest applicable to Loans hereunder,
and as to such Bank, at the Federal Funds Effective Rate and until so repaid
such amount shall be deemed to constitute a Loan by the Agent to the Borrower
hereunder entitled to the benefits of the Collateral and the other provisions
hereof applicable to the Loans. If such Bank shall repay to the Agent such
corresponding amount, the amount so repaid shall constitute such Bank's
ratable portion of the Loans made on such borrowing date for purposes of this
Agreement. No Bank shall be responsible for the failure of any other Bank to
make its ratable portion of such Loans available on the borrowing date.
Section 2.27. SETTLEMENT AMONG BANKS. (a) It is agreed that each
Bank's Loans are intended by the Banks to be equal at all times to such
Bank's ratable portion (as determined in accordance with such Bank's
Commitment Percentage) of the aggregate principal amount of all Loans
outstanding. Notwithstanding such agreement, the Banks agree that in order
to facilitate the administration of this Agreement and the other Loan
Documents, settlement among them shall, subject to the provisions of clause
(c) below, take place on a periodic basis in accordance with the provisions
of clause (b) below.
(b) (i) To the extent and in the manner hereinafter provided in this
Section 2.27, settlement among the Banks as to Loans shall occur periodically
on Settlement Dates determined from time to time by the Agent, which may
occur before or after the occurrence or during the continuance of an Event of
Default (or an event which, with the giving of notice or the lapse of time or
both, would constitute an Event of Default) and whether or not all of the
conditions to the making of Loans set forth in Section 4.01 and/or
Section 4.02 have been met. On each Settlement Date, payments shall be made
to the Agent for the account of the Banks in the manner provided in this
Section 2.27 in accordance with the Settlement Report delivered by the Agent
pursuant to the provisions of this Section 2.27 in respect of such Settlement
Date so that as of each Settlement Date, and after giving effect to the
transactions on such Settlement Date, each Bank's Loans shall equal such
Bank's ratable portion of the Loans outstanding as determined in accordance
with its Commitment Percentage.
(ii) The Agent shall designate periodic Settlement Dates which may
occur on any Business Day after the Closing Date; provided, however, that the
Agent shall designate as a Settlement Date (A) each Business Day on which a
Loan of $10,000,000 or more is made under this Agreement; (B) each Business
Day on which the aggregate outstanding principal amount of Non-Ratable Loans
exceeds $10,000,000; (C) each Business Day on which a repayment of Loans of
$10,000,000 or more is made under this Agreement; and (D) each Interest
Payment Date, and provided, further, that Settlement Dates shall occur on
Tuesday and Thursday of each week or more frequently as determined by the
Agent in its discretion (including, without limitation, under clause (c)(i)
hereof). The Agent shall designate a Settlement Date by delivering to each
Bank a Settlement Report not later than 11:00 a.m. (Chicago time) on the
proposed Settlement Date, which Settlement Report shall be with respect to
the period beginning on the next preceding Settlement Date and ending on the
close of the Borrower's business on the day before such designated Settlement
Date.
(iii) Between Settlement Dates, the Agent shall request and ABN
AMRO as a Bank may, in its sole and absolute discretion and, subject to the
provisions of clause (c) below, advance to the Borrower out of ABN AMRO's own
funds, the entire principal amount of any Loan requested or deemed requested
pursuant to Section 2.06 (any such Loan being referred to as a "Non-Ratable
Loan"). The making of each Non-Ratable Loan by ABN AMRO shall be deemed to
be a purchase by ABN AMRO of a 100% participation in each other Bank's
ratable portion of the amount of such Non-Ratable Loan. All payments of
principal, interest and any other amount with respect to such Non-Ratable
Loan shall be payable to and received by the Agent for the account of ABN
AMRO. Any payments received by the Agent between Settlement Dates which in
accordance with the terms of this Agreement are to be applied to the
eduction of the outstanding principal balance of Loans, shall be paid over to
and retained by ABN AMRO for such application, and such payment to and
retention by ABN AMRO shall be deemed, to the extent of each other Bank's
ratable portion of such payment, to be a purchase by each such other Bank of
a participation in the Loans (including the repurchase of participations in
Non-Ratable Loans) held by ABN AMRO immediately prior to the receipt and
application of such payment.
(iv) If on any Settlement Date the increase, if any, in the dollar
amount of any Bank's Loans which is required to comply with the first
sentence of Section 2.27(a) is less than such Bank's ratable portion of
amounts received by the Agent and paid only to ABN AMRO since the next
preceding Settlement Date, such Bank and the Agent, in their respective
records, shall apply such Bank's ratable portion of such amounts to the
decrease in such Bank's Loans, and ABN AMRO shall pay to the Agent, for the
account of such Bank, the excess.
(v) If on any Settlement Date the increase, if any, in the dollar
amount of any Bank's Loans which is required to comply with the first
sentence of Section 2.27(a) exceeds such Bank's ratable portion of amounts
received by the Agent and paid only to ABN AMRO since the next preceding
Settlement Date, such Bank and the Agent, in their respective records, shall
apply such Bank's ratable portion of such amounts to the increase in such
Bank's Loans, and such Bank shall pay to the Agent, for the account of ABN
AMRO, the excess.
(vi) If a Settlement Report indicates that no Loans have been made
during the period since the next preceding Settlement Date, then such Bank's
ratable portion of any amounts received by the Agent but paid only to ABN
AMRO shall be paid by ABN AMRO to the Agent, for the account of such Bank.
If a Settlement Report indicates that the increase in the dollar amount of a
Bank's Loans which is required to comply with the first sentence of
Section 2.27(a) is exactly equal to such Bank's ratable portion of amounts
received by the Agent but paid only to ABN AMRO since the next preceding
Settlement Date, such Bank and the Agent, in their respective records, shall
apply such Bank's ratable portion of such amounts to the increase in such
Bank's Loans.
(vii) If any amounts received by ABN AMRO in respect of the Obligations
are later required to be returned or repaid by ABN AMRO to the Borrower or
any other obligor or their respective representatives or successors in
interest, whether by court order, settlement or otherwise, and such amounts
repaid or returned by ABN AMRO are in excess of ABN AMRO's ratable portion of
all such amounts required to be returned by all Banks, each other Bank shall,
upon demand by ABN AMRO with notice to the Agent, pay to the Agent for the
account of ABN AMRO, an amount equal to the excess of such Bank's ratable
portion of all such amounts required to be returned by all Banks over the
amount, if any, returned directly by such Bank.
(viii) (x) Payment by any Bank to the Agent shall be made to the Payment
Office not later than 11:00 a.m. (Chicago time) on the Business Day such
payment is due, provided that if such payment is due on written demand by
another Bank, including pursuant to clause (c) below, such written demand
shall be made on the paying Bank not later than 9:00 a.m. (Chicago time) on
such Business Day. Payment by the Agent to any Bank shall be made by wire
transfer, promptly following the Agent's receipt of funds for the account of
such Bank and in the type of funds received by the Agent, provided that if
the Agent receives such funds at or prior to 11:00 a.m. (Chicago time), the
Agent shall pay such funds to such Bank by 4:00 p.m. (Chicago time) on such
Business Day. If a demand for payment is made after the applicable time set
forth above, the payment due shall be made by 4:00 p.m. (New York City time)
on the first Business Day following the date of such demand.
(y) If a Bank shall, at any time, fail to make any payment to the
Agent required hereunder, the Agent may, but shall not be required to, retain
payments that would otherwise be made to such Bank hereunder and apply such
payments to such Bank's defaulted obligations hereunder, at such time, and in
such order, as the Agent may elect in its sole discretion.
(z) With respect to the payment of any funds under this
Section 2.27(b), whether from the Agent to a Bank or from a Bank to the
Agent, the party failing to make full payment when due pursuant to the terms
hereof shall, upon written demand by the other party, pay such amount
together with interest on such amount at the Federal Funds Effective Rate.
(c) (i) The Agent shall have the right at any time to require, by
notice to each Bank, that all settlements in respect of advances and
repayments of Loans be made on a daily basis. From and after the giving of
such notice (and until such time, if any, as the Agent notifies the Banks of
its determination to return to a periodic settlement basis), each Bank shall
pay to the Agent such Bank's ratable portion of the amount of each Loan on
the date such Loan is made in accordance with the provisions of clause
(b)(viii) above and the Agent shall pay to each Bank by wire transfer by 4:00
p.m. (Chicago time) funds received before 11:00 a.m. (Chicago time) on such
Business Day by the Agent from the Borrower and by 11:00 a.m. (Chicago time)
funds received after 11:00 a.m. (Chicago time) of the preceding Business Day
by the Agent from the Borrower, by wire transfer, such Bank's ratable portion
of the net amount of all payments received by the Agent hereunder in respect
of the principal of the Loans (after deducting the principal amount of Loans
made on such day) or in respect of interest on the Loans; provided that the
Agent shall use its best efforts to distribute funds on the same day
received. Any amount payable pursuant to this subsection which is not paid
when due shall bear interest, payable by the Agent, for each day until paid
in full at the Federal Funds Effective Rate in effect on such day.
(ii) In addition to, and without limiting the right of the Agent to
require daily settlement pursuant to clause (i), upon written demand by ABN
AMRO with notice thereof to the Agent, each other Bank shall pay to the
Agent,for the account of ABN AMRO, as the repurchase of ABN AMRO's
participation interest in such Bank's Loans, an amount equal to 100% of such
Bank's ratable portion of the unpaid principal amount of all Non-Ratable
Loans. Payments made pursuant to this clause (ii) shall be made not later
than 4:00 p.m. (Chicago time) on any Business Day if demand for such payment
is received not later than 10:00 a.m. (Chicago time) on such Business Day;
otherwise, any such payment shall be made on the next Business Day after
demand is received therefor.
ARTICLE IIA
COLLATERAL SECURITY
Section 2A.01. SECURITY DOCUMENTS. The Obligations shall be secured by
the Collateral described in the Security Documents and are entitled to the
benefits thereof. The Borrower and the Guarantors shall duly execute and
deliver the Security Documents, financing statements pursuant to the Uniform
Commercial Code and other documents, all in form and substance satisfactory
to the Agent, as may be reasonably required by the Agent to grant to the
Agent, for the benefit of the Banks a valid, perfected and enforceable first
priority Lien on and security interest in (subject only to the Liens
permitted under Section 6.01 hereof) the Collateral. Any Bank now or
hereafter party to any Interest Rate Hedge Agreement shall not be entitled to
voting rights hereunder other than any voting rights it may have been granted
by virtue of its status as a Bank hereunder. No Bank now or hereafter party
to any Interest Rate Hedge Agreement shall have the right to direct the Agent
to call defaults or to exercise any remedies with respect to the Collateral.
In the event that the Banks are required to disgorge any proceeds of any
Collateral, then the Banks party to any Interest Rate Hedge Agreement agree
to promptly disgorge their pro rata share of any proceeds of Collateral.
Each Bank hereby confirms that it has received a copy of the Intercreditor
Agreement, authorizes the Agent to execute the Intercreditor Agreement in its
capacity as Agent hereunder and agrees to be bound by the terms thereof.
Section 2A.02. FILING AND RECORDING. The Borrower shall, at its sole
cost and expense, cause all instruments and documents given as evidence of
security pursuant to this Agreement to be duly recorded and/or filed or
otherwise perfected in all places necessary, in the opinion of the Agent, and
take such other actions as the Agent may reasonably request, in order to
perfect and protect the Liens of the Agent and Banks in the Collateral. The
Borrower, to the extent permitted by law, hereby authorizes the Agent to file
any financing statement in respect of any Lien created pursuant to the
Security Documents which may at any time be required or which, in the opinion
of the Agent, may at any time be desirable although the same may have been
executed only by the Agent or, at the option of the Agent, to sign such
financing statement on behalf of the Borrower and file the same, and the
Borrower hereby irrevocably designates the Agent, its agents, representatives
and designees as its agent and attorney-in-fact for this purpose. In the
event that any rerecording or refiling thereof (or the filing of any
statements of continuation or assignment of any financing statement) is
required to protect and preserve such Lien, the Borrower shall, at the
Borrower's cost and expense, cause the same to be recorded and/or refiled at
the time and in the manner requested by the Agent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BORROWER
In order to induce the Banks to make Loans and issue and/or participate in
Letters of Credit hereunder, the Borrower and each of the Guarantors
represents and warrants as follows:
Section 3.01. ORGANIZATION AND AUTHORITY. Each of the Borrower and the
Guarantors (i) is a corporation duly organized, validly existing and in good
standing under the laws of the State of its incorporation and is duly
qualified as a foreign corporation and is in good standing in each
jurisdiction in which the failure to so qualify would have a Material Adverse
Effect; (ii) has the requisite corporate power and authority to effect the
transactions contemplated herezby, and by the other Loan Documents; and (iii)
has all requisite corporate authority and the legal right to own, pledge,
mortgage and operate its properties, and to conduct its business as now or
currently proposed to be conducted.
Section 3.02. DUE EXECUTION. The execution, delivery and performance by
each of the Borrower and the Guarantors of each of the Loan Documents to
which it is a party, the borrowings hereunder by the Borrower, the execution
and delivery of the Notes, the grant of security interests in the Collateral
created by the Security Documents and the transactions contemplated to occur
under or in connection with this Agreement and/or the other Loan Documents
(collectively, the "Transactions") (i) are within the respective corporate
powers of each of the Borrower and the Guarantors, have been duly authorized
by all necessary corporate action, including the consent of shareholders
where required, and do not (A) contravene the charter or by-laws of any of
the Borrower or the Guarantors, (B) violate any law (including, without
limitation, the Securities Exchange Act of 1934) or regulation (including,
without limitation, Regulation G, T, U or X of the Board), or any order or
decree of any court or governmental instrumentality, (C) conflict with or
result in a breach of, or constitute a default under, any material indenture,
mortgage or deed of trust, any material lease, agreement or other instrument
binding on the Borrower or the Guarantors or any of their properties, or (D)
result in or require the creation or imposition of any Lien upon any of the
property of any of the Borrower or the Guarantors other than the Liens
granted pursuant to this Agreement and the Security Documents; and do not
require the consent, authorization by or approval of or notice to or filing
or registration with any Governmental Authority. This Agreement has been
duly executed and delivered by each of the Borrower and the Guarantors. This
Agreement is, and each of the other Loan Documents to which the Borrower and
each of the Guarantors, is or will be a party, when delivered hereunder or
thereunder, will be, a legal, valid and binding obligation of the Borrower,
and each Guarantor, as the case may be, enforceable against the Borrower, and
the Guarantors, as the case may be, in accordance with its terms.
Section 3.03. STATEMENTS MADE. The (a) written statements of all
officers and employees of the Borrower and the Guarantors, and (b) oral
statements of the Chief Executive Officer, Chief Operating Officer, Chief
Financial Officer, Senior Vice President-Chief Information Officer,
Treasurer, Director of Finance and Planning, Controller and Cash Manager of
the Borrower and the Guarantors, in each case which have been furnished by
the Borrower or any of the Guarantors to the Agent or to the Banks in
connection with any Loan Document, and any financial statement delivered
pursuant hereto or thereto (other than to the extent that any such statements
constitute projections), taken as a whole and in light of the circumstances
in which made, contain no untrue statement of a material fact and do not omit
to state a material fact necessary to make such statements not misleading;
and, to the extent that any such written statements constitute projections,
such projections were prepared in good faith on the basis of assumptions,
methods, data, tests and information believed by the Borrower or such
Guarantor to be valid and accurate at the time such projections were
furnished to the Agent or the Banks, as the case may be.
Section 3.04. FINANCIAL STATEMENTS. The Borrower has furnished the
Banks with copies of the audited Consolidated Financial Statement and
Schedules of the Borrower for its fiscal year ended February 3, 1996. Such
financial statements present fairly in all material respects the financial
position and results of operations of the Borrower and its consolidated
Subsidiaries as of such date and for such period; such balance sheets and the
notes thereto disclose all liabilities, direct or contingent, of the Borrower
and its consolidated Subsidiaries as of the date thereof required to be
disclosed by GAAP and such financial statements were prepared in accordance
with GAAP applied on a consistent basis. Since February 3, 1996, there has
been no material adverse change in the condition (financial or otherwise),
operations, properties, assets or prospects of the Borrower and its
Subsidiaries, taken as a whole.
Section 3.05. OWNERSHIP. No owner or group of owners acting together
control 50% or more of the outstanding common shares of the Borrower. Each
Guarantor is a direct or indirect wholly-owned Subsidiary of the Borrower.
Section 3.06. LIENS. There are no Liens (including Liens or
retained security titles of conditional vendors) of any nature whatsoever on
any properties of the Borrower or any of the Guarantors, other than Permitted
Liens, Liens as set forth in Schedule II and those in favor of the Agent for
the ratable benefit of the Banks created by the Loan Documents. The Borrower
and the Guarantors are not parties to any contract, agreement, lease or
instrument the performance of which, either unconditionally or upon the
happening of an event, will result in or require the creation of a Lien on
the property or assets of the Borrower or any Guarantor or otherwise result
in a violation of this Agreement.
Section 3.07. LITIGATION: COMPLIANCE WITH LAW, ETC. (a) Except as set
forth on Schedule 3.07, (i) the operations of the Borrower and the Guarantors
comply in all respects with all applicable Environmental Laws, except where
such noncompliance would not have a Material Adverse Effect; (ii) to the best
knowledge of the Borrower and the Guarantors, none of the operations of the
Borrower or the Guarantors is the subject of any Federal or state
investigation evaluating whether any Remedial Work is needed to address
Hazardous Material; and (iii) to the best knowledge of the Borrower and the
Guarantors, the Borrower and the Guarantors do not have any material
contingent liability in connection with any Release that is reasonably likely
to result in a Material Adverse Effect.
(b Except as set forth on Schedule 3.07, neither the Borrower nor any
Guarantor is, to the best of its knowledge, in violation of any law, rule or
regulation, or in default with respect to any judgment, writ, injunction or
decree of any Governmental Authority, except where such violation would not
have a Material Adverse Effect.
Section 3.08. INSURANCE. All policies of insurance of any kind or nature
owned by or issued to the Borrower and the Guarantors, including, without
limitation, policies of life, fire, theft, product liability, public
liability, property damage, other casualty, employee fidelity, workers'
compensation, employee health and welfare, title, property and liability
insurance, are in full force and effect and are of a nature and provide such
coverage as is sufficient and as is customarily carried by companies of the
size and character of the Borrower and the Guarantors. Neither the Borrower
nor any Guarantor has been refused insurance for which it applied or had any
policy of insurance terminated (other than at its request).
Section 3.09. LABOR RELATIONS, ETC. Neither the business nor any of the
properties of the Borrower or any Guarantor is affected by any fire,
explosion, accident, strike, lockout or other labor dispute, drought, storm,
hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance), which has individually or in
the aggregate a reasonable likelihood of having a Material Adverse Effect.
Section 3.10. USE OF PROCEEDS. The proceeds of the Loans shall be used
only for general corporate purposes of the Borrower and for Inventory
purchases for retail stores operated by the Borrower and CPS.
Section 3.11. COLLATERAL LOCATIONS, CHIEF EXECUTIVE OFFICE, STORE
LOCATIONS AND BANK ACCOUNTS. Set forth on Schedule 3.11 hereto is a
complete and accurate list containing the chief executive office of the
Borrower and the Guarantors, all locations of Collateral, the names and
addresses of all the retail stores operated by the Borrower and the
Guarantors.
Section 3.12. LITIGATION. There are no unstayed actions, suits or
proceedings pending or, to the knowledge of Borrower or the Guarantors,
threatened against or affecting the Borrower or the Guarantors or any of its
properties, including (without limitation) the Inventory, before any court or
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which is reasonably likely to be
determined adversely to the Borrower or the Guarantors and, if so determined
adversely to the Borrower or the Guarantors would have a Material Adverse
Effect.
Section 3.13. GOVERNMENTAL APPROVALS. No registration or filing (other
than the filings necessary to perfect the Liens created by the Security
Documents) with consent or approval of, or other action by, any Federal,
state or other governmental agency, authority or regulatory body is or will
be required in connection with the Transactions, other than any which have
been made or obtained.
Section 3.14. FEDERAL RESERVE REGULATIONS. (a) Neither the Borrower nor
any of the Guarantors is engaged principally, or as one of its important
activities, in the purpose of purchasing or business of extending credit for
carrying Margin Stock.
(b) No part of the proceeds of the Loans will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately,
(i) to purchase or carry Margin Stock or to extend credit to others for the
purpose of purchasing or carrying Margin Stock or to refund indebtedness
originally incurred for such purpose, or (ii) for any purpose which entails a
violation of, or which is inconsistent with, the provisions of the
Regulations of the Board, including, without limitation, Regulation G, T, U
or X thereof. If requested by any Bank, the Borrower or any of the
Guarantors shall furnish to such Bank a statement on Federal Reserve Form U-1
referred to in said Regulation U.
Section 3.15. TAXES. Except as set forth on Schedule 3.15 hereto, the
Borrower and each of the Guarantors have filed or caused to be filed all
Federal, state, local and foreign tax returns which are required to be filed
by them, on or prior to the date hereof, other than tax returns in respect of
taxes that (x) are not franchise, capital, sales or income taxes, (y) in the
aggregate are not material and (z) would not, if unpaid, result in the
imposition of any material Lien on any property or assets of the Borrower or
any of the Guarantors. The Borrower and the Guarantors have paid or provided
for the payment of all taxes shown to be due and payable on such filed
returns or on any assessments received by them, other than (i) any taxes or
assessments the validity of which the Borrower or such Guarantor is
contesting in good faith by appropriate proceedings, and with respect to
which the Borrower or such Guarantor shall, to the extent required by GAAP
have set aside on its books adequate reserves and (ii) taxes other than
income, capital, sales or franchise taxes that in the aggregate are not
material and which would not, if unpaid, result in the imposition of any
material Lien on any property or assets of the Borrower or any of the
Guarantors. Except as set forth on Schedule 3.15 hereto, no such Federal
income tax returns of the Borrower and the Guarantors have been audited by
the United States Internal Revenue Service and neither the Borrower nor any
of the Guarantors has as of the date hereof requested or been granted any
extension of time to file any Federal, state, local or foreign tax return.
Except as set forth on Schedule 3.15 hereto, neither the Borrower nor any of
the Guarantors is party to or has any obligation under any tax sharing
agreement other than the Federal Income Tax Allocation Agreement dated as of
February 5, 1990 (as heretofore amended, the "Tax Sharing Agreement"), by and
among the Borrower and the parties listed on the signature pages thereto.
Section 3.16. EMPLOYEE BENEFIT PLANS. With respect to the provisions
of ERISA and except as disclosed on Schedule 3.16 hereto:
(i) No Reportable Event has occurred or is continuing with respect to
any Single Employer Plan.
(ii) No prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) has occurred with respect to any Single
Employer Plan subject to Part 4 of Subtitle B of Title I of ERISA (other than
a Multiple Employer Plan).
(iii) Neither the Borrower nor any ERISA Affiliate is now, or has been
during the preceding five years, obligated to contribute to a Pension Plan.
Neither the Borrower nor any ERISA Affiliate has (A) ceased operations at a
facility so as to become subject to the provisions of Section 4068(f) of
ERISA, (B) withdrawn as a substantial employer so as to become subject to the
provisions of Section 4063 of ERISA, (C) ceased making contributions to any
Pension Plan subject to the provisions of Section 4064(a) of ERISA to which
the Borrower, any subsidiary of the Borrower or any ERISA Affiliate made
contributions, (D) incurred or caused to occur a "complete withdrawal"
(within the meaning of Section 4203 of ERISA) or a "partial withdrawal"
(within the meaning of Section 4205 of ERISA) from a Multiemployer Plan that
is a Pension Plan so as to incur withdrawal liability under Section 4201 of
ERISA (without regard to subsequent reduction or waiver of such liability
under Section 4207 or 4208 of ERISA), or (E) been a party to any transaction
or agreement under which the provisions of Section 4204 of ERISA were
applicable.
(iv) No notice of intent to terminate a Single Employer Plan has been
filed, nor has any Single Employer Plan been terminated pursuant to the
provisions of Section 4041(e) of ERISA.
(v) The PBGC has not instituted proceedings to terminate (or appoint
a trustee to administer) a Single Employer Plan and no event has occurred or
condition exists which might constitute grounds under the provisions of
Section 4042 of ERISA for the termination of (or the appointment of a trustee
to administer) any such plan.
(vi) With respect to each Single Employer Plan (other than a Multiple
Employer Plan) that is subject to the provisions of Title I, Subtitle B, Part
3 of ERISA, the funding method used in connection with such plan is
acceptable under ERISA, and the actuarial assumptions and methods used in
connection with funding such plan satisfy the requirements of Section 302 of
ERISA. Except as described on Schedule 3.16, the assets of each such plan
are at least equal to the present value of the greater of (i) accrued
benefits (both vested and non-vested) under such Plan, or (ii) "benefit
liabilities" (within the meaning of Section 4001(a)(16) of ERISA) under such
Plan, in each case as of the latest actuarial valuation date for such Plan
(determined in accordance with the actuarial assumptions and methods in
effect for the Pension Benefit Guaranty Corporation on the date of such
determination), except where the amount of any shortfall and the resultant
contingent liability is not reasonably likely to result in a Material Adverse
Effect. No such plan has incurred any "accumulated funding deficiency" (as
defined in Section 412 of the Code), whether or not waived.
(vii) Except as provided on Schedule 3.16, there are no actions, suits
or claims pending (other than routine claims for benefits) or, to the
knowledge of the Borrower or any ERISA Affiliate, which could reasonably be
expected to be asserted, against any Single Employer Plan (other than a
Multiple Employer Plan) and any defined contribution plan within the meaning
of Section 3(34) of ERISA or the assets of any such plan and no such action,
suit or claim, if decided against the Borrower or any ERISA Affiliate, could
reasonably be expected to have a Material Adverse Effect. No civil or
criminal action brought pursuant to the provisions of Title I, Subtitle B,
Part 5 of ERISA is pending or threatened against any fiduciary of any Single
Employer Plan (other than a Multiple Employer Plan) and any defined
contribution plan within the meaning of Section 3(34) of ERISA. None of the
Plans or any fiduciary thereof (in its capacity as such) has been the direct
or indirect subject of any audit, investigation or examination by any
governmental or quasi-governmental agency.
(viii) All of the Single Employer Plans (other than a Multiple Employer
Plan) and any defined contribution plan within the meaning of Section 3(34)
of ERISA comply currently, and have complied in the past, both as to form and
operation, in all material respects with their terms and with the provisions
of ERISA and the Code, and all other applicable laws, rules and regulations;
all necessary governmental approvals for such plans have been obtained and a
favorable determination as to the qualification under Section 401(a) of the
Code of each of such plans has been made by the Internal Revenue Service.
(ix) To the best knowledge of the Borrower, if it were to incur a
complete withdrawal from all Multiple Employer Plans to which it contributes
as of the date hereof, the aggregate withdrawal liability payable to such
Plans would not have a Material Adverse Effect.
Section 3.17. INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT
Neither the Borrower nor any of the Guarantors is an "investment company"
as defined in, or is otherwise subject to regulation under, the Investment
Company Act of 1940. Neither the Borrower nor any of the Guarantors is a
"holding company" as that term is defined in or is otherwise subject to
regulation under, the Public Utility Holding Company Act of 1935.
Section 3.18. SECURITY INTEREST. Upon the execution and delivery of the
Security Documents, the filing of the UCC-1 financing statements to be filed
pursuant thereto and the filing of one or more Assignments for Security
regarding the Trademark Mortgage with the United States Patent and Trademark
Office, each of the Security Documents creates and grants to the Agent, for
the benefit of the Banks, a legal, valid and perfected first (except as
permitted pursuant to Section 6.01 hereof) priority security interest in the
collateral identified therein (other than real property). Such collateral or
property is not subject to any other Liens whatsoever, except Liens permitted
by Section 6.01 hereof.
Section 3.19. SUBSIDIARIES. As of the Closing Date, Schedule 3.19
annexed hereto sets forth each Subsidiary of the Borrower and its
jurisdiction of incorporation.
Section 3.20. TITLE TO PROPERTIES; POSSESSION UNDER LEASES; TRADEMARKS;
LICENSES AND SUPPLIER AGREEMENTS. (a) The Borrower and each of the
Guarantors have good and marketable title to, or valid leasehold interest in,
all of their respective properties and assets shown on the most recent
balance sheet referred to in Section 3.04 hereof and all assets and
properties acquired since the date of such balance sheet, except for such
properties as are no longer used or useful in the conduct of its business or
as have been disposed of in the ordinary course of business, and except for
minor defects in title that do not interfere with the ability of the Borrower
or any of the Guarantors to conduct its business as now conducted. All such
assets and properties are free and clear of all Liens other than those
permitted by Section 6.01 hereof. All improvements are in compliance in all
material respects with all applicable laws, ordinances, zoning laws and
restrictive covenants and do not encroach on the property of others. No
charges or violations have been filed or made with respect to any violations
or alleged violations by such property or structure of any applicable
ordinances, laws, requirements, regulations or restrictive covenants except
for any charges or violations which would not have a Material Adverse Effect.
(b) The Borrower and each of the Guarantors have complied with all
obligations under all leases to which they are a party and under which they
are in occupancy except where the failure to so comply would not have a
Material Adverse Effect, and all such leases are in full force and effect and
the Borrower and each of the Guarantors enjoy peaceful and undisturbed
possession under all such leases.
(c) The Borrower and each of the Guarantors own or control or have
the right to use all material trademarks, trademark rights, trade names,
trade name rights, copyrights, patents, patent rights and licenses which are
necessary for the conduct of the business of the Borrower and each of the
Guarantors; provided, however, that the Banks acknowledge that the trademarks
"P.A. Bergner" and "Boston Stores" have not been registered by the Borrower
with the United States Patent and Trademark Office. Neither the Borrower nor
any of the Guarantors is infringing upon or otherwise acting adversely to or
in violation of, nor would the exercise by the Banks of their rights under
the Loan Documents infringe upon, be adverse to or violate, any trademarks,
trademark rights, trade names, trade name rights, copyrights, patent rights
or licenses owned by any other person or persons. There is no claim or
action by any such other person pending, or to the knowledge of any
Responsible Officer of the Borrower or any Guarantor thereof, threatened,
against the Borrower or any of the Guarantors with respect to any of the
rights or property referred to in this Section 3.21(c) other than any such
claim or action which would not have a Material Adverse Effect.
(d) No material licensee agreements, supplier agreements or similar
agreements (other than Consignment Agreements) (collectively, the "Supplier
Agreements") between the Borrower, any Guarantor and any vendor or supplier
of inventory prohibits or restricts the grant of a security interest in the
Borrower or Guarantor's interest in such Supplier Agreements (or with respect
to the inventory subject thereto) or the exercise of remedies with respect
thereto (including, without limitation, the resale of trademarked goods) by
the Agent under the Security Documents and the consent of the supplier or
licensor under such Supplier Agreements is not required in connection with
the grant of such security interest or the exercise of remedies under the
Security Documents.
Section 3.21. SOLVENCY. (a) As of the Closing Date, the fair salable
value of the assets of the Borrower and the Guarantors taken as a whole is
not less than the amount that will be required to be paid on or in respect of
the probable liability on the existing debts and other liabilities (including
contingent liabilities) of the Borrower and the Guarantors, as they become
absolute and mature.
(b) As of the Closing Date, the assets of the Borrower and the
Guarantors taken as a whole do not constitute unreasonably small capital for
the Borrower and the Guarantors to carry out their business as now conducted
and as proposed to be conducted including the capital needs of the Borrower
and the Guarantors, taking into account the particular capital requirements
of the business conducted by the Borrower and the Guarantors and projected
capital requirements and capital availability thereof.
(c) The Borrower and the Guarantors do not intend to incur debts
beyond their ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be received by the Borrower and the
Guarantors, and of amounts to be payable on or in respect of debt of the
Borrower and the Guarantors). The cash flow of the Borrower and the
Guarantors, after taking into account all anticipated uses of the cash of the
Borrower and the Guarantors, will at all times be sufficient to pay all such
amounts on or in respect of debt of the Borrower and the Guarantors when such
amounts are required to be paid.
Section 3.22. PERMITS, ETC. Except as specified on Schedule 3.22 hereof,
the Borrower and each of the Guarantors possess all material, licenses,
permits, approvals and consents (collectively, "Permits"), including, without
limitation, all those required under Environmental Law to conduct properly
their business, each such Permit is and will be in full force and effect, the
Borrower and each of the Guarantors are in compliance in all material
respects with all such Permits, and no event (including, without limitation,
any violation of any law, rule or regulation) has occurred which allows the
revocation or termination of any such Permit or any restriction thereon.
Section 3.23. NO CHANGE IN CREDIT CRITERIA COLLECTION POLICIES. There
has been no change in credit criteria or collection policies concerning
account receivables of the Borrower, CPS or NBGL from those set forth in the
Credit Card Guidelines attached hereto as Schedule 3.23, except as permitted
under Section 5.17 hereof.
Section 3.24. LANDLORD'S LIENS. No landlord or other lessor has been
granted by the Borrower or any Guarantor (by contract) a Lien or other
interest in any Inventory of the Borrower or the Guarantors.
Section 3.25. ENVIRONMENTAL MATTERS. Without limiting the generality of
Section 3.07 hereof, except as specified on Schedule 3.25 hereto, neither the
Borrower nor the Guarantors has received any claim, written notice,
complaint, suit or order from any Governmental Authority or other Person
concerning the Release of Hazardous Materials for which the Borrower or any
Guarantor may be responsible under Environmental Law.
ARTICLE IV
CONDITIONS OF LENDING
Section 4.01. CONDITIONS PRECEDENT TO EFFECTIVENESS. This Agreement
shall become effective on the date on which:
(a) Supporting Documents. The Agent shall have received for each of
the Borrower, CPS and (with respect to item (iii) below only) the other
Guarantors:
(i) a copy of such entity's certificate of incorporation, as amended,
certified as of a recent date by the Secretary of State of the state of its
incorporation;
(ii) a certificate of such Secretary of State, dated as of a recent
date, as to the good standing of and payment of taxes by, that entity and as
to the charter documents on file in the office of such Secretary of State;
and
(iii) a certificate of the Secretary or an Assistant Secretary of that
entity dated the date of the initial Loan or the initial Letter of Credit
hereunder, whichever first occurs, and certifying (A) that attached thereto
is a true and complete copy of the certificate of incorporation and the
by-laws of that entity as in effect on the date of such certification,
(B) that attached thereto is a true and complete copy of resolutions adopted
by the Board of Directors of that entity authorizing the Borrowings and
Letter of Credit extensions hereunder, the execution, delivery and
performance in accordance with their respective terms of this Agreement, the
Notes to be executed by it, the Loan Documents and any other documents
required or contemplated hereunder or thereunder and the granting of the
security interests contemplated hereby, (C) that the certificate of
incorporation of that entity has not been amended since the date of the last
amendment thereto indicated on the certificate of the Secretary of State
furnished pursuant to clause (i) above (or as currently in effect with
respect to the Guarantors) and (D) as to the incumbency and specimen
signature of each officer of that entity executing this Agreement, the Notes
to be executed by it and the Loan Documents or any other document delivered
by it in connection herewith or therewith (such certificate to contain a
certification by another officer of that entity as to the incumbency and
signature of the officer signing the certificate referred to in this clause
(iii)).
(b) Notes. On or before the date of the initial Loans or the
issuance of the initial Letter of Credit hereunder, whichever first occurs,
the Agent shall have received Notes executed on behalf of the Borrower, dated
the Closing Date, payable to the order of each of the Banks, in an amount
equal to such Bank's Commitment.
(c) UCC Searches. On or before the date of the initial Loans or the
issuance of the initial Letter of Credit hereunder, whichever first occurs,
the Agent shall have received the results of UCC searches or other evidence
reasonably satisfactory to the Agent indicating the absence of Liens other
than those permitted hereunder.
(d) Opinion of Counsel to the Borrower and the Guarantors. The Agent
and the Banks shall have received (i) the favorable written opinion of
Charles J. Hansen, Esq., Vice President and General Counsel of the Borrower
and certain of the Guarantors, dated the date of the initial Loans or the
issuance of the initial Letter of Credit, whichever first occurs,
substantially in the form of Exhibit C, (ii) the favorable written opinion of
Quarles & Brady dated the date of the initial Loans or the issuance of the
initial Letter of Credit, whichever first occurs, substantially in the form
of Exhibit C-1 and (iii) the favorable written opinion of Sidley & Austin
dated the date of the initial Loans or the issuance of the initial Letter of
Credit, whichever first occurs, substantially in the form of Exhibit C-2.
(e) Payment of Fees. The Borrower shall have paid to the Agent the
closing fees referred to in Section 2.22 and then unpaid balance of all
accrued and unpaid Fees then payable under and pursuant to this Agreement and
the letter referred to in Section 2.19.
(f) Inventory. The Agent shall be satisfied that the Inventory of the
Borrower and CPS is located at such places and is in the aggregate amounts
heretofore represented by the Borrower and CPS to the Agent.
(g) Interim Financials. The Agent shall have received the interim
consolidated and consolidating financial statements of the Borrower and the
Guarantors for each month following the fiscal year ended February 3, 1996
(to the extent that the subject month ends greater than 20 days prior to the
Closing Date), prepared and certified by the Borrower, and such interim
financial statements shall not differ in any material and adverse respect
from estimates thereof previously delivered in writing to the Agent.
(h) Accuracy of Information. None of the information submitted by
the Borrower and/or the Guarantors to the Agent or any Bank prior to the
Closing Date shall have been or become false, incomplete, or inaccurate in
any material and adverse respect, and none of the conditions represented or
indicated to exist shall change in any material and adverse respect.
(i) Ongoing Due Diligence. The Agent's ongoing due diligence
investigation shall not disclose information, or the Agent shall not
otherwise discover information not previously disclosed to it, that the
Agent believes has had or could have a Materially Adverse Effect.
(j) Notice Regarding Section 7.02. The Borrower and CPS shall have
joined the Agent in notifying the Purchaser under the Receivables Purchase
Agreement and the Collateral Agent and the Receivables Agreement Agent (or
the Agent under any other agreement entered into by such Purchaser to fund
its purchase of Credit Card Receivables from the Borrower and CPS) of the
provisions of Section 7.02 of this Agreement.
(k) Loan Documents. The Borrower and the Guarantors shall have duly
executed and delivered, or caused to be duly executed and delivered, such
Loan Documents as the Agent shall reasonably request, including, without
limitation, security agreements, UCC financing statements, warehouse waivers
and delivery of all instruments included in the Collateral. Each of the
foregoing shall be in form and substance satisfactory to the Agent and its
counsel.
(l) Consents and Approvals. The Agent shall have received evidence
in form and substance satisfactory to the Agent that the Borrower and the
Guarantors have obtained all requisite governmental, regulatory or judicial
consents and appraisals for the borrowings under this Agreement and the
granting of the security interests in the Collateral with the priority
described herein.
(m) Termination of Existing Credit Facility. The Borrower shall have
terminated the Revolving Credit and Guaranty Agreement dated as of October
14, 1993 among the Borrower, the Subsidiaries listed on the signature pages
thereof, the financial institutions party thereto and Fleet Bank N.A. (f/k/a
National Westminster Bank USA), as Agent, all amounts payable thereunder
shall have been paid or shall be paid with the proceeds of the first
Borrowing hereunder and Fleet Bank N.A. shall have released any Liens granted
to it by the Borrower or any Guarantor.
(n) NBGL Documents. The Borrower shall have delivered true and
correct copies of the NBGL Documents to the Agent.
Section 4.02. CONDITIONS PRECEDENT TO EACH LOAN AND EACH LETTER OF
CREDIT. The obligation of the Banks to make each Loan and of the Fronting
Bank to issue each Letter of Credit, including the initial Loan and the
initial Letter of Credit, is subject to the following conditions precedent:
(a) Notice. The Agent shall have received a notice with respect to
such borrowing or issuance, as the case may be, as required by Article II.
(b) Representations and Warranties. All representations and
warranties contained in this Agreement and the other Loan Documents or
otherwise made in writing in connection herewith or therewith shall be true
and correct in all material respects on and as of the date of each Borrowing
or the issuance of each Letter of Credit hereunder with the same effect as if
made on and as of such date, except for representations or warranties which
are violated as a result of transactions permitted in accordance with the
terms of this Agreement.
(c) No Default. On the date of each Borrowing hereunder or the
issuance of each Letter of Credit, the Borrower and Guarantors shall be in
compliance with all of the terms and provisions set forth herein to be
observed or performed and no Event of Default or event which upon notice or
lapse of time or both would constitute an Event of Default shall have
occurred and be continuing.
(d) Corporate and Judicial Proceedings. All corporate and judicial
proceedings and all instruments and agreements in connection with the
Transactions among the Borrower, the Guarantors, the Agent and the Banks
contemplated by this Agreement shall be reasonably satisfactory in form and
substance to the Agent, and the Agent shall have received all information and
copies of all documents and papers, including good standing and foreign
qualification certificates and records of corporate and judicial proceedings,
which the Agent may have reasonably requested in connection therewith, such
certificates, documents and papers where appropriate to be certified by
proper corporate, governmental or judicial authorities.
(e) Borrowing Base Certificate. The Agent shall have received the
timely delivery of the most recent Borrowing Base Certificate required to be
delivered hereunder.
(f) Payment of Fees. The Borrower shall have paid to the Agent the
then unpaid balance of all accrued and unpaid Fees then payable under and
pursuant to this Agreement and the letter referred to in Section 2.19.
The request by the Borrower for, and the acceptance by the Borrower of, each
extension of credit hereunder (including each refinancing of a Loan hereunder
(other than a conversion of a Eurodollar Loan to an ABR Loan)) shall be
deemed to be a representation and warranty by the Borrower that the
conditions specified in this Section have been satisfied at that time and
that after giving effect to such extension of credit the Borrower shall
continue to be in compliance with the Borrowing Base.
ARTICLE V
AFFIRMATIVE COVENANTS
From the Closing Date and for so long as any Commitment shall be in
effect orany Letter of Credit shall remain outstanding (in a face amount in
excess of 95.24% of the amount of cash then held in the Cash Collateral
Account pursuant to Section 2.03(b) or 2.13(a)), or any amount shall remain
outstanding under any Note or unpaid under this Agreement, the Borrower and
each of the Guarantors agrees that, unless the Required Banks shall otherwise
consent in writing, it will:
Section 5.01. FINANCIAL STATEMENTS, REPORTS, ETC. In the case of the
Borrower, deliver to the Agent and each of the Banks:
(a) within 90 days after the end of each fiscal year, its
consolidated balance sheet and related statement of income and cash flows,
showing the financial position of the Borrower and its Subsidiaries as of the
close of such fiscal year and the results of the Borrower's operations and
the operations of its Subsidiaries during such year, audited by KPMG Peat
Marwick or other independent public accountants of recognized national
standing and accompanied by an opinion of such accountants (which shall not
be qualified in any material respect) to the effect that such consolidated
financial statements present fairly in all material respects the financial
position and results of operations of the Borrower and its Subsidiaries on a
consolidated basis in accordance with generally accepted accounting
principles consistently applied;
(b) concurrently with any delivery of financial statements under (a)
above or (c) below, a certificate of the accounting firm or a Responsible
Officer, as the case may be, opining on or certifying such statements (i)
certifying that no Event of Default or event which upon notice or lapse of
time or both would constitute an Event of Default has occurred, or, if such
an Event of Default or event has occurred, specifying the nature and extent
thereof and any corrective action taken or proposed to be taken with respect
thereto and (ii) setting forth computations in reasonable detail satisfactory
to the Agent demonstrating compliance with the covenants contained in
Sections 6.04, 6.05, 6.06, 6.07, 6.08, 6.09, 6.10 and 6.17;
(c) (i) within twenty days of the end of each fiscal month, its
unaudited consolidated balance sheet and related statements of income and
cash flows showing the financial position of the Borrower and its
Subsidiaries as of the close of such fiscal month and the results of its
operations and the operations of its Subsidiaries during such fiscal month
and the then elapsed portion of the fiscal year, together with a comparison
of such consolidated information with the written projections furnished by
the Borrower to the Agent and with the results for such period in the
previous fiscal year, all certified by a Responsible Officer as presenting
fairly in all material respects the financial position and results of
operations of the Borrower and its Subsidiaries on a consolidated basis in
accordance with generally accepted accounting principles consistently
applied, subject to normal year-end adjustments; and (ii) (x) within forty
five days of the end of each fiscal quarter, unaudited consolidating balance
sheets of the Borrower and its Subsidiaries and related statements of income
and cash flows and (y) within forty-five days of the end of each of the first
three fiscal quarters of the fiscal year of the Borrower, unaudited
consolidated balance sheets of the Borrower and its Subsidiaries and related
statements of income and cash flows, in each case showing the financial
position of the Borrower and its Subsidiaries as of the close of such fiscal
quarter and the results of its operations and the operations of its
Subsidiaries during such fiscal quarter and the then elapsed portion of the
fiscal year, together with a comparison of such information with the written
projections furnished by the Borrower to the Agent and with the results for
such period in the previous fiscal year, all certified by a Responsible
Officer as presenting fairly in all material respects the financial position
and results of operations of the Borrower and its Subsidiaries on a
consolidating or consolidated basis, as the case may be, in accordance with
generally accepted accounting principles consistently applied, subject to
normal year-end adjustments;
(d) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by it
with the Securities and Exchange Commission, or any governmental authority
succeeding to any of or all the functions of said commission, or with any
national securities exchange, as the case may be;
(e) as soon as available and in any event (A) within 20 days after
the Borrower or any of its ERISA Affiliates knows or has reason to know that
any Termination Event described in clause (i) of the definition of
Termination Event with respect to any Single Employer Plan of the Borrower or
such ERISA Affiliate has occurred and (B) within 5 days after the Borrower or
any of its ERISA Affiliates knows or has reason to know that any other
Termination Event with respect to any such Plan has occurred, a statement of
the chief financial officer of the Borrower describing such Termination Event
and the action, if any, which the Borrower or such ERISA Affiliate proposes
to take with respect thereto;
(f) promptly and in any event within 5 days after receipt thereof by
the Borrower or any of its ERISA Affiliates from the PBGC copies of each
notice received by the Borrower or any such ERISA Affiliate of the PBGC's
intention to terminate any Single Employer Plan of the Borrower or such ERISA
Affiliate or to have a trustee appointed to administer any such Plan;
(g) promptly and in any event within 20 days after the filing thereof
with the Internal Revenue Service, copies of each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) with respect to each
Single Employer Plan of the Borrower or any of its ERISA Affiliates;
(h) within 5 days after notice is given or required to be given to
the PBGC under Section 302(f)(4)(A) of ERISA of the failure of the Borrower
or any of its ERISA Affiliates to make timely payments to a Single Employer
Plan or Multiemployer Plan, a copy of any such notice filed and a statement
of a Responsible Officer of the Borrower setting forth (A) sufficient
information necessary to determine the amount of the lien under Section
302(f)(3), (B) the reason for the failure to make the required payments and
(C) the action, if any, which the Borrower or any of its ERISA Affiliates
proposed to take with respect thereto;
(i) promptly and in any event within 10 days after receipt thereof by
the Borrower or any ERISA Affiliate from a Multiemployer Plan sponsor, a copy
of each notice received by the Borrower or any ERISA Affiliate concerning (A)
the imposition of Withdrawal Liability by a Multiemployer Plan, (B) the
determination that a Multiemployer Plan is, or is expected to be, in
reorganization within the meaning of Title IV of ERISA, (C) the termination
of a Multiemployer Plan within the meaning of Title IV of ERISA, or (D) the
amount of liability incurred, or which may be incurred, by the Borrower or
any ERISA Affiliate in connection with any event described in clause (A), (B)
or (C) above;
(j) promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of the Borrower or any
Subsidiary, or compliance with the terms of any material loan or financing
agreements as the Agent or any Bank may reasonably request;
(k) furnish to the Agent promptly after the same is available, copies
of all material pleadings, motions, applications, judicial information,
financial information and other documents filed by or on behalf of the
Borrower or any of the Guarantors in connection with any litigation or other
proceeding described in Section 5.01A hereof;
(1) immediately upon obtaining actual knowledge thereof, notice of
any Liquidity Termination Event and/or Purchase Termination Event (as such
term is defined in the Receivables Agreement Documents) or termination of any
of the NBGL Documents;
(m) (i) upon the request of the Agent, furnish to the Agent the Daily
Reports delivered under the Receivables Agreement and (ii) furnish to the
Agent after the same is available, the Settlement Reports delivered under the
Receivables Agreement and any information furnished by NBGL to the Borrower
or CPS under any of the NBGL Documents;
(n) promptly upon receipt thereof, copies of all final financial
reports (including, without limitation, management letters), if any,
submitted to the Borrower or any of its Subsidiaries by its auditors, in
connection with each annual or interim audit or review of its books by such
auditors;
(o) written notice in the event that the Bank Termination Date,
Seasonal Termination Date and/or Windmill Termination Date under the
Liquidity Agreement has occurred or shall be scheduled to occur within 365
days; and
Section 5.01A. LITIGATION AND OTHER NOTICES. Give the Agent prompt
written notice of the following:
(a) the issuance by any court or governmental agency or authority of
any injunction, order, decision or other restraint prohibiting, or having the
effect of prohibiting, the making of the Loans or the issuance of Letters of
Credit, or invalidating, or having the effect of invalidating, any provision
of this Agreement, the Notes or the other Loan Documents, or the initiation
of any litigation or similar proceeding seeking any such injunction, order,
decision or other restraint;
(b) the filing or commencement of any action, suit or proceeding
against the Borrower or any of the Guarantors, whether at law or in equity or
by or before any court or any Federal, state, municipal or other governmental
agency or authority, (i) which is material and is brought by or on behalf of
any governmental agency or authority, or in which injunctive or other
equitable relief is sought or (ii) as to which it is probable (within the
meaning of Statement of Financial Accounting Standards No. 5) that there will
be an adverse determination and which, if adversely determined, would (A)
reasonably be expected to result in liability of the Borrower or any
Guarantor in an aggregate amount of $500,000 or more, not reimbursable by
insurance, or (B) materially impair the right of the Borrower or any
Guarantor to perform its obligations under this Agreement, any Note or any
other Loan Document to which it is a arty; and
(c) any development in the business or affairs of the Borrower or the
Borrower and Guarantors taken as a whole which has had or which is likely, in
the reasonable judgment of any Responsible Officer of the Borrower, to have,
a Material Adverse Effect.
Section 5.02. CORPORATE EXISTENCE. Do or cause to be done and cause each
of the Guarantors to do or cause to be done all things necessary to preserve,
renew and keep in full force and effect its corporate existence, material
rights, licenses, permits and franchises and comply in all material respects
with all laws and regulations applicable to it; provided, however, that any
Guarantor or Subsidiary (other than Great Lakes, Bergner Credit Corporation,
NBGL or Bergner Finance Corporation) may be merged into the Borrower or CPS
so long as the Borrower or CPS, as the case may be, is the surviving entity,
CPS may be merged into CPS Holding Co., so long as CPS Holding Co. is the
surviving entity and any Guarantor (other than CPS or CPS Holding Co.) which
is directly or indirectly wholly owned by the Borrower may merge into any
other Guarantor or adopt a plan of dissolution and make a liquidating
distribution of its assets to its shareholders (so long as such shareholder
is a Guarantor). Subject to the proviso in the immediately preceding
sentence, each Subsidiary is and shall remain a direct or indirect wholly
owned Subsidiary of the Borrower.
Section 5.03. INSURANCE. (a) Keep its insurable real properties, the
Collateral and all other personal property insured at all times, against such
risks, including fire and other risks insured against by extended coverage,
as is customary with companies of the same or similar size in the same or
similar businesses.
(b) maintain in full force and effect public liability insurance
against claims for personal injury or death or property damage occurring
upon, in, about or in connection with the use of any properties owned,
occupied or controlled by the Borrower or any Subsidiary, as the case may be,
in such amounts and with such deductibles as are customary with companies of
the same or similar size in the same or similar businesses and in the same
geographic area; and maintain such other insurance as may be required by law.
The Agent and each of the Banks shall be named as an additional insured with
respect to all liability policies and shall be named as loss payee with
respect to all casualty insurance covering Collateral to the extent that any
individual casualty or loss is in excess of $500,000. The insurance policies
described in this Section 5.03 shall (i) provide for at least 30 days' prior
written notice to the Agent of the cancellation thereof (without substitution
of a comparable policy which complies with the requirements of this Section
5.03) and 10 days' prior written notice to the Agent of the substantial
modification thereof, (ii) provide that the Agent shall have the right (but
not the obligation) to cure any default by the Borrower or such Subsidiary
under such insurance (the Agent acknowledging (without waiving any rights
against the Borrower under or in connection with this Agreement) that such
failure to cure may result in the cancellation of such insurance), (iii) to
the extent available through the best efforts of Borrower, shall be primary
without right of contribution from any other insurance which is carried by
the Agent or any Bank to the extent that such other insurance provides Agent
or such Bank with contingent and/or excess liability insurance and shall
expressly provide that all of the provisions thereof, except the limits of
liability (which shall be applicable to all insureds as a group) and except
liability for premiums (which shall be solely a liability of the Borrower),
shall operate in the same manner as if there were a separate policy covering
each insured, (iv) provide that, in respect of the interests of the Agent and
the Banks, such insurance shall not be invalidated by any action or inaction
of the Borrower or any Subsidiary, as the case may be, (v) insure the Agent's
interests regardless of any breach of or violation by the Borrower or any
Subsidiary, as the case may be, of any warranties, declarations, or
conditions contained in such insurance and (vi) shall be otherwise reasonably
satisfactory to the Agent. The insurance companies issuing the insurance
described in this Section 5.03 shall be rated A-10 or better by Best's Rating
Guide. In the event that the Borrower or CPS receives any proceeds of
casualty insurance resulting from a casualty to the equipment comprising the
management information system of the Borrower or CPS necessary to service a
"Purchased Receivables" under the Receivables Agreement and issue Settlement
Reports under the Receivables Agreement, the Agent and the Banks agree that
such proceeds may be used to purchase replacement equipment or services. All
other proceeds of casualty insurance shall be applied by the Agent and the
Banks pursuant to the terms of Section 2.13(b) of this Agreement.
(c) From time to time upon request of the Agent, promptly furnish or
cause to be furnished to the Agent evidence, in form and substance reasonably
satisfactory to the Agent, of the maintenance of all insurance required to be
maintained by this Section 5.03 hereof, including, but not limited to, such
originals or copies as the Agent may reasonably request of policies,
certificates of insurance, riders and endorsements relating to such insurance
and proof of premium payments.
Section 5.04. OBLIGATIONS AND TAXES. With respect to the Borrower and
each Guarantor, pay all its material obligations promptly and in accordance
with their terms and pay and discharge promptly all material taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or in respect of its property, before the same shall become
in default, as well as all material lawful claims for labor, materials and
supplies or otherwise which, if unpaid, might become a Lien or charge upon
such properties or any part thereof; provided, however, that the Borrower and
each Subsidiary shall not be required to pay and discharge or to cause to be
paid and discharged any such tax, assessment, charge, levy or claim so long
as the validity or amount thereof shall be contested in good faith by
appropriate proceedings (if the Borrower and the Guarantors shall have set
aside on their books adequate reserves therefor).
Section 5.05. NOTICE OF EVENT OF DEFAULT, ETC. Promptly give to the
Agent notice in writing of any Event of Default or the occurrence of any
event or circumstance which with the passage of time or giving of notice or
both would constitute an Event of Default, specifying the nature and extent
thereof and the action (if any) which is proposed to be taken with respect
thereto.
Section 5.06. BORROWING BASE CERTIFICATE. Furnish to the Agent as soon
as available and in any event on or before Wednesday of each week a Borrowing
Base Certificate as at the end of the immediately preceding week
substantially in the form of Exhibit D, provided that if there shall occur a
"system failure" or other similar technical failure in the operations which
produce data included in the Borrowing Base Certificate or such reports, such
Borrowing Base Certificate or reports which are required to be delivered on a
Wednesday shall be delivered to the Agent on or before Friday of such week.
Section 5.07. ACCESS TO BOOKS AND RECORDS. Maintain or cause to be
maintained at all times true and complete books and records of the financial
operations of the Borrower, the Guarantors and NBGL and customer lists in
connection with the business of the Borrower, the Guarantors and NBGL; and
provide the Agent and its representatives (including representatives of the
Banks, who shall accompany the Agent and who shall pay their own costs in
connection therewith) access to all such books, records and customer lists
during regular business hours, in order that the Agent may examine and make
abstracts from such books, accounts, records, customer lists and other papers
(including, but not limited to, Inventory included in the Borrowing Base) for
the purpose of verifying the accuracy of the various reports delivered by the
Borrower, the Guarantors or NBGL to the Agent or the Banks pursuant to this
Agreement, for otherwise ascertaining compliance with this Agreement and for
such other purposes as the Agent may reasonably request; and at any time and
from time to time during regular business hours, permit the Agent and any
agents or representatives (including, without limitation, appraisers) thereof
to visit the properties of the Borrower with a view to, among other things,
ascertaining compliance with the Borrowing Base. The Borrower, the
Guarantors and NBGL jointly and severally agree to pay to the Agent the
customary per diem rates plus reasonable out-of-pocket expenses for each of
the Agent's examiners and the reasonable costs to the Agent with respect to
third party examiners, for a total of three examinations per calendar year
prior to an Event of Default and for unlimited examinations after an Event of
Default. Upon the occurrence and during the continuance of an Event of
Default, the Agent shall be provided with access to all customer lists of the
Borrower, the Guarantors and NBGL and the Agent shall be permitted to copy
and use such customer lists, computer programs and data (but not sell such
customer lists, computer programs and data) in connection with the exercise
of its rights and remedies under this Agreement and/or the Security
Documents.The Borrower, the Guarantors and NBGL each agree not to agree to
(and to cause NBGL to agree not to agree to), or suffer the creation of, any
Lien on any customer lists, computer programs or data, provided, however,
that the Agent consents to the grant by the Borrower, the Guarantors and NBGL
of rights to access and use of customer lists, computer programs and data to
the Receivables Agent and "Collateral Agent" in connection with the
Receivables Agreement Documents pursuant to terms that are substantially the
same as those set forth in the immediately preceding two sentences of this
Section 5.07.
Section 5.08. CONCENTRATION OF CASH. (a) All cash of the Borrower, any
Guarantor or NBGL arising from the Receivables Agreement and/or from the
Borrower's, any Guarantor's or NBGL's ordinary course of business shall be
subject to the Borrower's Cash Management System (the "System") as outlined
on Schedule 5.08 in a manner (including timing of transfers) consistent with
the Borrower's past practices. The Borrower, any Guarantor or NBGL may
modify or change the System (other than with respect to Collection Account
Banks) upon ten days prior written notice to the Agent, which notice shall
contain an updated Schedule 5.08 containing the information comparable to the
information set forth on Schedule 5.08 on the Closing Date, provided,
however, that the Borrower, the Guarantors and NBGL may not, without the
prior written consent of the Agent, modify or change the System in a manner
that would (i) result in a co-mingling of proceeds of Collateral with
property that is not subject to the Lien of the Agent (except to the extent
that such co-mingling already occurs on the Closing Date as described on
Schedule 5.08), (ii) reduce the cash flow to the Collection Account Banks or
result in less than all of the proceeds of the Collateral or less than all of
the proceeds of Purchased Receivables (with respect to in-store payments)
being deposited in the Collection Account Banks or transferred to Collection
Account Banks, (iii) change the time schedule for deposits and transfers or
the residual balances in deposit accounts materially from past practice, or
(iv) subject any of the proceeds of Collateral to any Lien (other than as
permitted under Section 6.01 of this Agreement). The Borrower may substitute
for and/or replace the Collection Account Banks upon thirty (30) days prior
written notice to the Agent, which notice shall contain an updated Schedule
5.08 containing the information comparable to the information set forth on
Schedule 5.08 on the Closing Date. No proposed Collection Account Bank may
become a Collection Account Bank unless and until it has executed and
delivered a Collection Account Letter to the Agent.
(b) The Borrower and the Guarantors agree to furnish the Agent with
collection account letters (collectively, the "Collection Account Letters")
executed by the Borrower or (where appropriate) the Guarantors and NBGL and
LaSalle National Bank (collectively, together with any financial institutions
who in the future execute and deliver Collection Account Letters, the
"Collection Account Banks"). Such Collection Account Letters shall be in
form and substance satisfactory to the Agent, including, without limitation,
the agreement of the Borrower, the Guarantors and the applicable Collection
Account Bank that, upon notification by the Agent to the Collection Account
Bank that a Designated Event of Default has occurred or that the Obligations
have been accelerated by the Agent, such Collection Account Bank shall
transfer to the Agent's Concentration Account on a daily basis and in
immediately available funds, all funds on deposit with such Collection
Account Bank other than funds that the Borrower or (where appropriate) a
Guarantor directs to be paid to Great Lakes or its assignee as required by
the Receivables Agreement and other than funds remaining on deposit with the
Collection Account Bank in accordance with the express terms of the
Collection Account Letter (such transfer to the Agent's Concentration
Account, the "Concentration Account Funding"). The Borrower agrees that, at
all times before and after the execution of Collection Account Letters, upon
notice by the Agent to the Borrower of a Designated Event of Default or the
acceleration of the Obligations, to direct the Collection Account Banks (and
take all other action necessary) to promptly transfer all funds in such
Collection Account Banks (other than funds required to be paid to Great Lakes
under the Receivables Agreement and funds remaining on deposit with the
Collection Account Bank in accordance with the express terms of the
Collection Account Letters) to the Agent's Concentration Account. Upon the
Agent's request, the Borrower shall promptly furnish the Agent with
reasonable supporting documentation regarding the amount of funds transferred
or paid after the date hereof to Great Lakes under the Receivables Agreement,
whether from Collection Account Banks or otherwise.
(c) On the date which is sixty days after the cure in full of all
Designated Events of Default (such date, a "Designated Event of Default Cure
Date"), so long as such cure has been completed prior to the acceleration of
the Obligations, the Agent and the Banks agree that the Agent shall instruct
the Collection Account Banks to discontinue the Concentration Account Funding
referred to in the foregoing clause (b) and the Borrower and the Guarantors
agree that the cash funds of the Borrower, the Guarantors and NBGL shall
thereafter continue to be deposited as required under Section 5.08(a) of this
Agreement, subject to the occurrence of another Designated Event of Default
or the acceleration of the Obligations.
(d) All amounts deposited in the Concentration Account shall be
promptly applied at the option of the Agent to the repayment of outstanding
Obligations and to furnish cash collateral with respect to the outstanding
amount of undrawn Letters of Credit in such manner and order of priority as
the Agent shall elect, and any excess over the amount of outstanding
Obligations and the amount of undrawn Letters of Credit shall be released to
the Borrower. Notwithstanding the foregoing, on the Designated Event of
Default Cure Date (if such date occurs prior to the acceleration of the
Obligations), all cash collateral previously furnished pursuant to this
paragraph (d) with respect to Letters of Credit shall be promptly released to
the Borrower.
Section 5.09. BUSINESS PLAN. As soon as practicable, furnish to the
Agent any material amendments and supplements with respect to the Borrower's
business plan and make its senior officers available to discuss the same with
the Agent. In addition to the foregoing, the Borrower agrees to furnish the
Agent with an update of its business plan at least once every twelve months.
Section 5.10. COMPLIANCE WITH LAWS, ETC. Comply, and cause each
of its Subsidiaries to comply, with all applicable laws, rules, regulations
and orders, and duly observe, and cause each of its Subsidiaries to duly
observe, all valid requirements of governmental authorities (including,
without limitation, ERISA and the rules and regulations thereunder), and all
applicable statutes, rules, regulations and orders relating to environmental
protection and to public and employee health, safety and labor other than any
such laws, rules, regulations, orders, requirements and statutes the failure
to comply with would not have a Material Adverse Effect.
Section 5.11. USE OF PROCEEDS. Use the proceeds of Loans only for the
purposes set forth in Section 3.10 hereof and use Letters of Credit only for
the purposes permitted in this Agreement.
Section 5.12. FISCAL YEAR-END. Cause its fiscal year to end on the
Saturday which is closest to the last day in January in each year.
Section 5.13. FURTHER ASSURANCES. Execute any and all further documents
and take all further actions which may be required under applicable law, or
which the Agent may reasonably request, to grant, preserve, protect and
perfect the first priority security interest created by the Security
Documents in the Collateral.
Section 5.14. ADDITIONAL GRANTORS AND GUARANTORS. Promptly inform the
Agent of the creation or acquisition of any direct or indirect subsidiary
(subject to the provisions of Section 6.19 hereof) and cause each direct or
indirect subsidiary not in existence on the date hereof to enter into a
Guarantee in form and substance satisfactory to the Agent, and to execute the
Security Documents, as applicable, and grant a lien in favor of the Agent on
its assets which are of a type covered by the Security Agreement (Guarantor).
Section 5.15. ENVIRONMENTAL LAWS. (a) Comply, and cause each of
its Subsidiaries to comply, in all material respects with the provisions of
all applicable Environmental Laws, and shall keep its properties and the
properties of its Subsidiaries free of any Environmental Lien. The Borrower
shall not cause or suffer, or permit, and shall not suffer or permit any of
its Subsidiaries to cause or suffer or permit, the property of the Borrower
or its Subsidiaries to be used for the treatment, transporting or disposal of
any Hazardous Material such as would require a Permit, or, except as
necessary for the normal operations of the Borrower and its Subsidiaries, and
in material compliance with Environmental Law, the storage of any waste or
Hazardous Materials.
(b) Supply to the Agent copies of all submissions (other than those
submissions such as permit applications and renewal notices, wastewater
discharge monitoring reports and solid waste activity reports that may be
made in the ordinary course of business) under Environmental Law by the
Borrower or any of its Subsidiaries to any Governmental Authority and of the
reports of all environmental audits and of all other environmental tests,
studies or assessments (including the data derived from any sampling or
survey of asbestos, soil, or subsurface or other materials or conditions)
that may be conducted or performed by or on behalf of the Borrower or any of
its Subsidiaries on or regarding the properties owned, operated, leased or
occupied by the Borrower or any of its Subsidiaries or regarding any
conditions that might have been affected by Hazardous Materials on or
Released or removed from such properties. Upon the request of the Agent, the
Borrower shall also promptly permit and authorize, and shall cause its
subsidiaries to permit and authorize, the consultants, attorneys or other
persons that prepare such submissions or reports or perform such audits,
tests, studies or assessments to discuss such submissions, reports or audits
with the Agent and the Banks, provided, however, that Borrower shall have the
right to be present at and participate in all such discussions.
(c) Promptly (and in no event more than ten Business Days after the
Borrower becomes aware or is otherwise informed of such event) provide oral
and written notice to the Agent upon the happening of any of the following:
(I) the Borrower, any Subsidiary of the Borrower, or any tenant or
other occupant of any property of the Borrower or such Subsidiary receives
written notice of any claim, complaint, charge or notice of a violation or
potential violation of any Environmental Law which if adversely determined
may reasonably be expected to result in the incurrence by the Borrower of
costs of $250,000 or more;
(ii) there has been a Release of Hazardous Materials reportable
under applicable Environmental Law upon, under or about or affecting any of
the properties owned, operated, leased or occupied by the Borrower or any of
its Subsidiaries, or Hazardous Materials at levels or in amounts that may
have to be reported, remedied or responded to under Environmental Law are
detected on or in the soil or groundwater;
(iii) the Borrower or any of its Subsidiaries receives written
notice that it or they are or may be liable for any costs of cleaning up or
otherwise responding to a Release of Hazardous Materials at, on, under or
from any property other than a property described in clause (i) above which
may reasonably be expected to result in the incurrence by the Borrower of
costs of $500,000 or more;
(iv) the Borrower or any of its Subsidiaries receives written notice
that any part of the properties owned, operated, leased or occupied by the
Borrower or any of its Subsidiaries is or may be subject to an Environmental
Lien under any Environmental Law; or
(v) the Borrower or any of its Subsidiaries undertakes any Remedial
Work with respect to any Hazardous Materials which may reasonably be expected
to result in the incurrence by the Borrower of costs of $2,500,000 or more.
(d) Without in any way limiting the scope of Section 10.06 and in
addition to any obligations thereunder, the Borrower hereby indemnifies and
agrees to hold the Agent and the Banks harmless from and against any
liability, loss, damage, suit, action or proceeding arising out of its
business or the business of its subsidiaries pertaining to Hazardous
Materials, including, but not limited to, claims of any Governmental
Authority or any third person arising under any Environmental Law or under
tort, contract or common law. To the extent laws of the United States or any
applicable state or local law in which property owned, operated, leased or
occupied by the Borrower or any of its Subsidiaries is located provide that
an Environmental Lien upon such property of the Borrower or such Subsidiary
may be obtained for the removal of Hazardous Materials which have been or may
be Released, and a Release has occurred on the subject property, no later
than thirty days after notice is given by the Agent to the Borrower or such
Subsidiary of the attachment or threatened attachment of such Lien, the
Borrower or such Subsidiary shall make its best efforts to deliver to the
Agent a report issued by a qualified third party engineer identifying the
existence of, and describing the extent of, any Hazardous Materials located
upon or beneath the specified property.
(e) In the event that any Remedial Work is required to be performed
by the Borrower or any of its Subsidiaries under any applicable Environmental
Law, the Borrower or such Subsidiary shall commence all such Remedial Work at
or prior to the time required therefor under such Environmental Law and
thereafter diligently prosecute to completion all such Remedial Work in
accordance with and within the time allowed under such applicable
Environmental Laws; and (ii) notwithstanding clause (i) hereof, the Borrower
shall have no such obligation to diligently prosecute such Remedial Work if
the Borrower is contesting the related remedial order in good faith.
Section 5.16. CLEANUP PERIOD. Reduce all outstanding Obligations
(other than undrawn Letters of Credit) to zero for the entire period from
December 31 of each year to and including February 28 or (if a "leap year")
29, of each following year (each such period, a "Cleanup Period"), and reduce
Letter of Credit Outstandings to $70,000,000 during each such Cleanup Period.
Section 5.17. CREDIT CARD AGREEMENTS AND CREDIT CARD GUIDELINES. Each of
the Borrower and CPS will perform (and will cause NBGL to perform) its
obligations in accordance with, and will comply in all material respects
with, the Credit Card Guidelines and will not change or modify the Credit
Card Agreements or its Credit Card Guidelines, except insofar as any change
or failure so to comply or conform would not materially and adversely affect
the amount of Collections, or the timing or receipt thereof, or the rights of
the Borrower, the Agent or any of the Banks under this Agreement or if such
changes are necessary under any Requirement of Law. Except as limited by the
preceding sentence, the Borrower and CPS shall be free (and shall be free to
cause NBGL) to change the terms and provisions of such Credit Card Agreements
or the Credit Card Guidelines in any respect so long as such changes are in a
commercially reasonable manner consistent with prudent credit card practices,
and such change shall not cause a downgrading or withdrawal of the then
current rating of commercial paper issued in connection with the Receivables
Agreement Documents by any rating agency (unless such change is necessary
under any Requirement of Law). In furtherance of the foregoing, the Borrower
and CPS shall give (and will cause NBGL to give) the Agent 30 days' advance
notice of any material change in the Credit Card Guidelines (including the
timing and calculation of write-offs) except that if such change is necessary
under any Requirement of Law prior to the expiration of such 30-day period,
the Borrower and CPS shall give (and will cause NBGL to give) advance notice
of any such change as soon as practicable. In any event, the Borrower and
CPS will not change (and will ensure that NBGL will not change except as
required by law or as shall be necessary to obtain a satisfactory examination
report from the Office of the Comptroller of the Currency, the Federal
Deposit Insurance Corporation, or other applicable government authority)
(A) their practice with respect to writing off of Credit Card Receivables as
uncollectible if such change would result in the writing off of Credit Card
Receivables later than is the practice of the Borrower and CPS as of the
Closing Date or (B) their practice with respect to aging Credit Card
Receivables from that set forth in the Credit Card Guidelines as in effect on
the Closing Date, nor shall they reschedule, revise, forgive or defer amounts
due on the Receivables other than in accordance with the Credit Card
Guidelines or under any Requirement of Law; provided, however, that each of
the Borrower and CPS may (and may cause NBGL to) reschedule, revise, forgive
or defer amounts due on Credit Card Receivables from employees consistent
with its current practice. The Agent has the sole right to waive the
provisions hereunder and permit the Borrower and CPS to change or modify (or
cause NBGL to change or modify) the Credit Card Agreements or its' Credit
Card Guidelines, provided, however, that to the extent that such waiver,
change or modification would have a Material Adverse Effect, the consent of
the Required Banks shall be obtained. Notwithstanding the foregoing, if
Section 5.01(h) of the Receivables Agreement shall be duly amended at any
time prior to a Bank Termination Date, Seasonal Termination Date, Windmill
Termination Date and/or Purchase Termination Date, then the Agent and the
Banks agree that, upon the request of the Borrower, this Section 5.17 shall
be deemed amended to reflect such amendment.
ARTICLE VI
NEGATIVE COVENANTS
From the Closing Date and for so long as any Commitment shall be in
effect or any Letter of Credit shall remain outstanding (in a face amount in
excess of 95.24% of the amount of cash then held in the Cash Collateral
Account pursuant to Section 2.03(b) or 2.13(a)) or any amount shall remain
outstanding under any Note or unpaid under this Agreement, unless the
Required Banks shall otherwise consent in writing, the Borrower and each of
the Guarantors will not:
Section 6.01. LIENS. Incur, create, assume or suffer to exist any Lien
on any asset (including, without limitation, any Inventory or unsold Credit
Card Receivables) of the Borrower or any of the Guarantors, now owned or
hereafter acquired, other than (i) Liens existing on the Closing Date as set
forth on Schedule 6.01; (ii) Permitted Liens; (iii) restrictions on transfer
by the Borrower of its AMC shares set forth in Article VI of AMC's by-laws
and in the AMC Shareholders' Agreement, and the right of AMC to purchase such
shares set forth in Article VI of AMC's by-laws; (iv) Liens in favor of the
Agent and the Banks; (v) arrangements for the prepayment of future Inventory
purchases; and (vi) Liens securing the Indebtedness permitted under
Section 6.03(iv) hereof.
Section 6.02. MERGER, ACQUISITIONS, ETC. Consolidate or merge with or
into, or transfer its properties and assets substantially as an entirety to,
another Person, or acquire substantially all of the assets or properties of
any Person except as permitted under Section 5.02 or Section 6.16 hereof.
Section 6.03. INDEBTEDNESS. Contract, create, incur, assume or
suffer to exist any Indebtedness, except for (i) Indebtedness under this
Agreement; (ii) Indebtedness incurred on or prior to the Closing Date as
described on Schedule 6.03 hereto; (iii) unsecured Indebtedness (excluding
trade credit) incurred after the Closing Date in an outstanding aggregate
principal amount not in excess of $5,000,000; (iv) Indebtedness secured by
purchase money liens in an aggregate amount not to exceed $25,000,000;
(v) Indebtedness permitted under Section 6.16; (vi) to the extent the same
constitutes Indebtedness, guarantees permitted under Section 6.12; (vii)
(a) capital lease obligations incurred by the Borrower and its Subsidiaries
not in excess of $25,000,000 in the aggregate during the term of this
Agreement and (b) capital lease obligations incurred by the Borrower and its
Subsidiaries in connection with sale lease-back transactions permitted by
Section 6.17 hereof; (viii) a refinancing, refunding or exchange of
Indebtedness permitted in clauses (iv) and (v) of this Section 6.03, but not
the increase in principal amount or extension of maturity thereof;
(ix) Indebtedness of the Borrower, CPS, Great Lakes and/or any Additional
Seller arising under, or in connection with, any of the Receivables Agreement
Documents as amended in a manner that does not violate Section 6.14 of this
Agreement; and (x) Subordinated Indebtedness not to exceed $150,000,000 in an
aggregate principal amount outstanding at any one time.
Section 6.04. SALES, ETC. OF ASSETS. Sell, assign, lease, consign or
otherwise dispose of any of its assets including without limitation, the
capital stock of any Guarantor or any other Subsidiary, Inventory (through
bulk sales or otherwise), store leases or Receivables or permit any
Subsidiary so to do, except for (i) sales of Inventory, fixtures and
equipment in the ordinary course of business and in a manner consistent with
the Borrower's past practices and consignments of Inventory by the Borrower
to CPS in the ordinary course of business and in a manner consistent with the
Borrower's past practices (provided, that the Borrower shall be prohibited
from disposing of any of its assets to CPS, other than inventory by
consignment); (ii) sales of "Purchased Receivables" under the Receivables
Agreement by the Borrower, CPS and NBGL pursuant to the Receivables Agreement
or any successor agreement satisfactory to the Required Banks; (iii) sales of
obsolete fixtures and equipment and sales of fixtures and equipment
substantially contemporaneously with the replacement thereof; and (iv) other
sales, assignments, leases, consignments or other dispositions of assets not
otherwise permitted pursuant to clauses (i) through (iii) above in a
principal amount (valued at the greater of fair market value or book value of
such asset) not to exceed $100,000,000 in the aggregate for all such
dispositions from the Closing Date.
Section 6.05. CAPITAL EXPENDITURES. Make Capital Expenditures in any
fiscal year in an aggregate amount in excess of the amount set forth below
opposite the ratio of (i) the average Funded Debt of the Borrower and its
Subsidiaries as of the last day of each of the last three fiscal months of
the Borrower's previous fiscal year to (ii) EBITDA for such previous fiscal
year:
Average Funded Debt to EBITDA Capital Expenditures
1. Less than 1.5 to 1.0 $90,000,000
2. Greater than or equal to 1.5 to 1.0 but
less than 2.0 to 1.0 $80,000,000
3. Greater than or equal to 2.0 to 1.0 but
less than 3.0 to 1.0 $70,000,000
4. Greater than or equal to 3.0 to 1.0 but
less than 3.5 to 1.0 $60,000,000
5. Greater than or equal to 3.5 to 1.0 but
less than 4.0 to 1.0 $50,000,000
6. Greater than or equal to 4.0 to 1.0 $40,000,000
Section 6.06. FUNDED DEBT TO EBITDA RATIO. Permit the ratio of Funded
Debt of the Borrower and its Subsidiaries as of the last day of each fiscal
month to EBITDA for the twelve-consecutive-month period ending on such day
(the "Funded Debt to EBITDA Ratio") to be greater than 4.5 to 1.0.
Section 6.07. CASH FLOW COVERAGE. Permit, as of the last day of each
fiscal month, the ratio of (i) (A) EBITDA for the twelve fiscal months of the
Borrower then ended plus (B) Rental Expense for the same twelve fiscal months
minus (C) the aggregate principal amount of capital expenditures of the
Borrower and its Subsidiaries for the same twelve fiscal months to (ii) the
sum of (A) Interest Expense of the Borrower and its Subsidiaries on a
consolidated basis for the same twelve fiscal months plus (B) Rental Expense
for the same twelve fiscal months to be less than:
From and Including To and Including Ratio
Closing Date August 2, 1997 0.95 to 1.00
August 3, 1997 January 31, 1998 1.10 to 1.00
February 1, 1998 August 1, 1998 1.15 to 1.00
August 2, 1998 Thereafter 1.20 to 1.00
Section 6.08. INTEREST COVERAGE RATIO. Permit, as of the last day of
each fiscal month, the ratio of EBITDA for the twelve fiscal months of the
Borrower then ended to Interest Expense of the Borrower and its Subsidiaries
on a consolidated basis for the same twelve months to be less than 2.8 to
1.0.
Section 6.09. MINIMUM TANGIBLE NET WORTH. Permit the Tangible Net Worth
at any time to be less than $250,000,000 plus 75% of positive Net Income of
the Borrower and its Subsidiaries for each fiscal year commencing on or after
February 4, 1996 (but without subtraction for any negative Net Income for any
such period).
Section 6.10. FUNDED DEBT TO EQUITY. Permit the ratio of Funded Debt of
the Borrower and its Subsidiaries on a consolidated basis to shareholder's
equity of the Borrower and its Subsidiaries as of the last day of each fiscal
quarter of the Borrower to be greater than 1.5 to 1.0.
Section 6.11. LIMITATION ON VOLUNTARY PAYMENTS AND MODIFICATIONS OF
SUBORDINATED INDEBTEDNESS. The Borrower will not, and will not permit any
of its Subsidiaries to, (i) make (or give any notice for) any principal
payment or prepayment on or redemption or acquisition for value of any
Subordinated Indebtedness or, after any Event of Default, make any interest
payment on any Subordinated Indebtedness, (ii) amend or modify, or permit the
amendment or modification of, any provision of any Subordinated Indebtedness,
or (iii) set-off any amounts against the Subordinated Indebtedness.
Section 6.12. GUARANTEES AND OTHER LIABILITIES. Purchase or repurchase
(or agree, contingently or otherwise, so to do) the Indebtedness of, or
assume, guarantee (directly or indirectly or by an instrument having the
effect of assuring another's payment or performance of any obligation or
capability of so doing, or otherwise), endorse or otherwise become liable,
directly or indirectly, in connection with the obligations, stock or
dividends of any Person, or permit any Subsidiary so to do, except (i) by
endorsement of negotiable instruments for deposit or collection in the
ordinary course of business, (ii) guarantees pursuant to Article VIII,
(iii) guarantees by the Borrower of the obligations of any Guarantor and
guarantees by any Guarantor of obligations of the Borrower, (iv) guarantees
by a Guarantor of the obligations of any other Guarantor (to the extent that
such obligations are permitted under this Agreement), (v) in addition to the
guarantees permitted under clause (iii) of this Section 6.12, guarantees by
the Borrower or CPS of obligations of any Guarantor or Subsidiary of the
Borrower under leases of real property where such Guarantor or such
Subsidiary of the Borrower is lessee, and as to such real property, such
Guarantor is sublessor or assignor and the Borrower or CPS, as the case may
be, is sublessee or assignee, (vi) in addition to the guarantees permitted
under clause (iii) of this Section 6.14, guarantees by the Borrower or CPS of
obligations of any Person with respect to a lease of the property located at
5700 Durand Avenue, Racine, Wisconsin 53406 (vii) all obligations,
indebtedness and liabilities of the Borrower, CPS, Great Lakes and/or any
Additional Seller (whether direct or indirect and whether contingent or
otherwise) arising under, or in connection with, any of the Receivables
Agreement Documents as amended in a manner which does not violate
Section 6.14 of this Agreement, and (viii) guarantees made by the Borrower
under the Merchandise Distribution Participation Agreement to be entered into
by AMC in substantially the form of Schedule A thereto.
Section 6.13. LIQUIDATION SALES. Subject to compliance with
Section 6.04, in the event the Borrower or any Guarantor conducts any
liquidation, going out of business or similar Inventory sale with respect to
stores comprising greater than five percent (5%) of the gross revenues of the
Borrower and the Guarantors for the preceding 12 consecutive months, accept
payment for any merchandise sold in connection with such liquidation, going
out of business or similar Inventory sale in the form of a Receivable arising
under any credit or charge arrangement currently maintained by the Borrower,
CPS or NBGL ("GOB Receivables") unless at the time of such inventory sale,
the Purchaser (as defined in the Receivables Agreement Documents) is
continuing to purchase Credit Card Receivables including GOB Receivables for
cash, Seller Notes and Subordinated Notes pursuant to the terms of the
Receivables Agreement.
Section 6.14. RECEIVABLES AGREEMENT DOCUMENTS. Agree to or enter into
any amendment or modification of the Receivables Agreement Documents which
would add any Additional Seller or if the Required Banks otherwise determine
(in their sole discretion) that such amendment or modification would have a
material adverse effect on the Borrower or upon the rights and remedies of
the Required Banks or any Bank. In addition to the foregoing, and
notwithstanding anything to the contrary contained in this Section, neither
the Borrower nor CPS shall (nor shall NBGL be permitted to), unless the
Required Banks otherwise consent in writing, repurchase any Credit Card
Receivables from Great Lakes pursuant to section 2.05 of the Receivables
Agreement.
Section 6.15. MERCHANDISE RETURNS. Modify its merchandise return
policies in any way which would materially adversely affect the Borrower's
ability to repay the Obligations.
Section 6.16. INVESTMENTS, LOANS AND ADVANCES. Purchase, hold or acquire
any capital stock, evidences of indebtedness or other securities of, make or
permit to exist any loans or advances to, or make or permit to exist any
investment or any other interest in, any other Person (all of the foregoing
"Investments"), except (i) Permitted Investments, (ii) (A) subordinated
promissory notes issued by Great Lakes pursuant to the terms of the
Receivables Agreement (x) in respect of a portion of the purchase price of
Credit Card Receivables thereunder and (y) to evidence loans which may be
made by the Borrower and CPS to Great Lakes thereunder to enable Great Lakes
to pay operating expenses, provided that the aggregate outstanding amount of
such loans in respect of such operating expenses shall not exceed $1,000,000
at any time, (B) Seller Notes (as defined in the Receivables Agreement)
issued by Great Lakes pursuant to the terms of the Receivables Agreement in
respect of a portion of the purchase price of Credit Card Receivables
thereunder, and (C) all obligations, indebtedness and liabilities of the
Borrower, CPS, Great Lakes and/or any Additional Seller (whether direct or
indirect and whether contingent or otherwise) arising under, or in connection
with, any of the Receivables Agreement Documents as amended in a manner which
does not violate Section 6.14 of this Agreement, (iii) advances by the
Borrower to CPS and by CPS to the Borrower, (iv) advances by any Guarantor
(other than CPS) to the Borrower and advances by the Borrower to any
Guarantor (other than CPS) in an aggregate annual amount for all Guarantors
(other than CPS) of $1,125,000, (v) other advances by the Borrower and CPS in
the ordinary course of business in an aggregate amount not to exceed
$100,000, (vi) investments not in excess of an aggregate of $500,000 during
the term of this Agreement in non-operating Subsidiaries of the Borrower
(which Subsidiaries shall be required to become a Guarantor and a grantor of
Collateral under this Agreement), (vii) loans and advances made by the
Borrower or any Guarantor to the Borrower and/or any other Guarantor pursuant
to the Tax-Sharing Agreement (as defined in Section 3.15 of this Agreement),
(viii) open market, negotiated, or other purchases of the indebtedness of,
claims against, or equity interests in any corporation whose primary business
is in the department store industry or in a closely related industry up to
(I) $75,000,000 in the aggregate for all such transactions if at the time of
such investment the Funded Debt to EBITDA Ratio most recently calculated
pursuant to Section 6.06 as shown on the most recent Compliance Certificate
delivered is less than or equal to 3.0 to 1.0 or (II) $20,000,000 in the
aggregate for all such transactions if at the time of such investment the
Funded Debt to EBITDA Ratio most recently calculated pursuant to Section 6.06
as shown on the most recent Compliance Certificate delivered is greater than
3.0 to 1.0, and (ix) advances by the Borrower to NBGL in an aggregate
principal amount at any one time outstanding not exceeding $25,000,000.
Section 6.17. LEASE-BACKS. Enter into any arrangements, directly
or indirectly, with any person, whereby the Borrower or any of its
Subsidiaries shall sell or transfer any property, whether now owned or
hereafter acquired, used or useful in its business, in connection with the
rental or lease of the property so sold or transferred or of other property
which the Borrower or such Subsidiary intends to use for substantially the
same purpose or purposes as the property so sold or transferred, if the
aggregate gross proceeds of such sale of such property when added to the
aggregate gross sale proceeds from all other such transactions entered into
from and after the Closing Date exceeds $75,000,000.
Section 6.18. TRANSACTIONS WITH AFFILIATES. Directly or indirectly
purchase, acquire or lease any property from, or sell, transfer or lease any
property to, or enter into any other transaction with, any stockholder,
Affiliate or agent of the Borrower, or any relative thereof, or permit or
suffer any Subsidiary to do so, except at prices and on terms not less
favorable to the Borrower or such Subsidiary than that which would have been
obtained in an arm's-length transaction with a non-affiliated third party;
provided, however, that there shall be excluded from this Section
transactions between the Borrower and any Guarantor, transactions between
Guarantors, and transactions among Bergner Credit Corporation, NBGL, Great
Lakes, CPS and the Borrower under the Receivables Agreement and among the
Borrower and the Guarantors under the Tax-Sharing Agreement.
Section 6.19. BUSINESS. Alter materially the nature of its business as
operated on the date of this Agreement in any material respect.
Section 6.20. ERISA. (a) Engage in any transaction in connection with
which the Borrower or any ERISA Affiliate could be subject to either a
material civil penalty assessed pursuant to the provisions of Section 502 of
ERISA or a material tax imposed under the provisions of Section 4975 of the
Code.
(b) Terminate any Single Employer Plan in a "distress termination"
under Section 4041 of ERISA, or take any other action which could reasonably
be expected to result in a material liability of the Borrower or any ERISA
Affiliate to the PBGC.
(c) Fail to make payment when due of all amounts which, under the
provisions of any Single Employer Plan defined contribution plan (within the
meaning of Section 3(34) of ERISA), or Multiemployer Plan, the Borrower or
any ERISA Affiliate is required to pay as contributions thereto, or, with
respect to any such plan, permit to exist any material "accumulated funding
deficiency" (within the meaning of Section 302 of ERISA and Section 412 of
the Code), whether or not waived, with respect thereto.
(d) Adopt an amendment to any Single Employer Plan requiring the
provision of security under Section 307 of ERISA or Section 401(a)(29) of the
Code.
Section 6.21. ACCOUNTING CHANGES. Make, or permit any Subsidiary to make
any change in their accounting treatment or financial reporting practices
except as required or permitted by generally accepted accounting principles
in effect from time to time.
Section 6.22. MODIFICATION OF CHARTER DOCUMENTS. Modify, amend or alter
their respective certificates or articles of incorporation or their by-laws
in any respect which is material and adverse to the Agent or any of the
Banks.
Section 6.23. FEES. Pay any management, consulting or directors fees,
other than usual and customary directors fees paid by the Borrower to its
directors and consulting fees consistent with the practice of the Borrower's
industry.
Section 6.24. LANDLORD'S LIENS. Enter into any lease or similar
arrangement pursuant to which a Lien or other interest in any Inventory of
the Borrower or the Guarantors is granted by the Borrower or any Guarantor to
any landlord or other lessor.
Section 6.25. NBGL. (a) Permit NBGL to engage in any business activity
(including, without limitation, derivative transactions (including, without
limitation, over the counter derivative transactions)) other than (i) the
issuance of credit cards; and (ii) the sale of Credit Card Receivables to
Great Lakes pursuant to the Receivables Purchase Agreement, as amended in
accordance with Section 6.14.
(b) Permit NBGL to incur any Indebtedness, other than under the NBGL
Documents and under the Receivables Agreement Documents as amended in a
manner which does not violate Section 6.14 of this Agreement.
(c) Permit NBGL to incur, create, assume or suffer to exist any Lien
on any of its assets, now owned or hereafter acquired, other than (i) Liens
under the Receivables Agreement Documents as in effect on the Closing Date
and as thereafter amended, modified and supplemented in accordance with
Section 6.14 and (ii) Liens in favor of the Borrower and/or CPS under the
NBGL Documents.
(d) Permit NBGL to sell, assign, lease, consign or otherwise dispose
of any of its assets, other than (i) the sale of Purchased Receivables to
Great Lakes under the Receivables Agreement as amended in accordance with
Section 6.14 and (ii) as permitted under clause (c) above.
(e) Permit NBGL to fail to be in compliance with any material
statute, material regulation of any governmental agency or instrumentality,
material agreement, or any order or decree.
(f) Permit NBGL to amend or modify any of the NBGL Documents or its
charter, bylaws or any of its other organizational documents in any respect
which is material and adverse to the Agent or any of the Banks.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.01. EVENTS OF DEFAULT. In the case of the happening of any of
the following events and the continuance thereof beyond the applicable period
of grace if any (each, an "Event of Default"):
(a) any representation or warranty made by the Borrower or any
Guarantor in this Agreement or in any Loan Document or in connection with
this Agreement or with the execution and delivery of the Notes or the credit
extensions hereunder or any material statement or representation made in any
report, financial statement, certificate or other document furnished by the
Borrower or any of the Guarantors to the Banks under or in connection with
this Agreement shall prove to have been false or misleading in any material
respect when made or delivered or deemed made or delivered pursuant to
Section 4.02 hereof; or
(b) default shall be made in the payment of any (i) Fees or interest
on the Loans when due, or (ii) principal of the Loans or other amounts
payable by the Borrower hereunder (including, without limitation,
reimbursement obligations in respect of Letters of Credit), when and as the
same shall become due and payable, whether at the due date thereof or at a
date fixed for prepayment thereof or by acceleration thereof or otherwise; or
(c) default shall be made by the Borrower or any Guarantor in the due
observance or performance of any covenant, condition or agreement contained in
Article VI or Section 5.08 or 5.16 hereof; or
(d) default shall be made by the Borrower or any Guarantor in the due
observance or performance of any other covenant, condition or agreement to be
observed or performed pursuant to the terms of this Agreement or any of the
other Loan Documents and such default shall continue unremedied for more than
10 days (provided, that the Agent shall have given the Borrower two days
prior notice of default with respect to any default arising out of a
noncompliance with Section 5.01(a), Section 5.01(b), Section 5.01(c) or (with
respect to the furnishing of quarterly and annual reports only)
Section 5.01(d) and provided, further, that the Agent shall have given the
Borrower one day prior notice of default with respect to any default arising
out of a noncompliance with Section 5.06 of this Agreement); or
(e) the Borrower, any Guarantor or any Subsidiary of any thereof
shall (i) voluntarily commence any proceeding or file any petition seeking
relief under Title 11 of the United States Code or any other Federal, state
or foreign bankruptcy, insolvency, liquidation or similar law, (ii) consent
to the institution of, or fail to contest in a timely and appropriate manner,
any such proceeding or the filing of any such petition, (iii) apply for or
consent to the appointment of a receiver, trustee, custodian, sequestrator or
similar official for the Borrower, such Guarantor or such Subsidiary or for a
substantial part of its property or assets, (iv) file an answer admitting the
material allegations of a petition filed against it in any such proceeding,
(v) make a general assignment for the benefit of creditors, (vi) become
unable, admit in writing its inability or fail generally to pay its debts as
they become due or (vii) take corporate action for the purpose of effecting
any of the foregoing; or
(f) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking
(i) relief in respect of the Borrower, any Guarantor or any Subsidiary of any
thereof, or of a substantial part of the property or assets of the Borrower,
any Guarantor or any Subsidiary of any thereof, under Title 11 of the United
States Code or any other Federal state or foreign bankruptcy, insolvency,
receivership or similar law, (ii) the appointment of a receiver, trustee,
custodian, sequestrator or similar official for the Borrower, any Guarantor
or any Subsidiary of any thereof or for a substantial part of the property of
the Borrower, any Guarantor or any Subsidiary of any thereof or (iii) the
winding-up or liquidation of the Borrower, any Guarantor or any Subsidiary of
any thereof; and such proceeding or petition shall continue undismissed for
60 days or an order or decree approving or ordering any of the foregoing
shall continue unstayed and in effect for 45 days; or
(g) default shall be made under Indebtedness or obligations under a
capitalized lease of the Borrower, any Guarantor or any Subsidiary of any
thereof (excluding Indebtedness outstanding hereunder) and the aggregate
principal amount of such Indebtedness or obligations under capitalized leases
exceeds $2,500,000, if the effect of any such default shall be to accelerate,
or to permit the holder or obligee of any such Indebtedness or obligations
under a capitalized lease (or any trustee on behalf of such holder or obligee)
at its option to accelerate, the maturity of such Indebtedness or obligations
under a capitalized lease; or
(h) (i) a Reportable Event shall have occurred with respect to a
Single Employer Plan, (ii) the filing by the Borrower, any ERISA Affiliate,
or an administrator of any Single Employer Plan of a notice of intent to
terminate such plan in a "distress termination" under the provisions of
Section 4041 of ERISA, (iii) the receipt of notice by the Borrower, any ERISA
Affiliate, or an administrator of a Single Employer Plan that the PBGC has
instituted proceedings to terminate (or appoint a trustee to administer) such
Plan, (iv) any other event or condition exists which might, in the reasonable
opinion of the Agent, constitute grounds under the provisions of Section 4042
of ERISA for the termination of (or the appointment of a trustee to
administer) any Single Employer Plan by the PBGC, (v) a Single Employer Plan
shall fail to maintain the minimum funding standard required by Section 412
of the Code for any plan year or a waiver of such standard is sought or
granted under the provisions of Section 412(d) of the Code, (vi) the Borrower
or any ERISA Affiliate has incurred, or is likely to incur, a liability under
the provisions of Section 4062, 4063, 4064 or 4201 of ERISA, (vii) the
Borrower or any ERISA Affiliate fails to pay the full amount of an
installment required under Section 412(m) of the Code, (viii) the occurrence
of any other event or condition with respect to any Single Employer Plan
which would constitute an event of default under any other agreement entered
into by the Borrower or any ERISA Affiliate, and in each case in clauses (i)
through (viii) of this subsection (h), such event or condition, together with
all other such events or conditions, if any, could reasonably be expected to
subject the Borrower or any ERISA Affiliate to any taxes, penalties or other
liabilities which, in the reasonable opinion of the Agent, could reasonably
be expected to have a Material Adverse Effect; or
(i) the Borrower or any ERISA Affiliate (i) shall have been notified
by the sponsor of a Multiemployer Plan that it has incurred any material
withdrawal liability to such Multiemployer Plan, and (ii) does not have
reasonable grounds for contesting such withdrawal liability and (iii) is not
in fact contesting such withdrawal liability in a timely and appropriate
manner; or
(j) this Agreement, any Note, any of the Security Documents or other
Loan Documents shall for any reason cease to be, or shall be asserted by the
Borrower or any Guarantor not to be, a legal, valid and binding obligation of
the Borrower or such Guarantor, as applicable, enforceable in accordance with
its terms, or the security interest or Lien purported to be created by any of
the Security Documents shall for any reason cease to be, or be asserted by
the Borrower or any Guarantor not to be, a valid, first priority perfected
security interest in any Collateral (except to the extent otherwise permitted
under this Agreement or any of the Security Documents); or
(k) (w) the Receivables Agreement shall be terminated by any party
thereto or shall fail to be in full force and effect; or (x) there shall
exist any event of default or event of termination or similarly designated
event under the Receivables Agreement; or (y) there shall have occurred and
be continuing any other event or state of facts which relieves Great Lakes
from the obligation to purchase Credit Card Receivables thereunder; or
(z)(i) a default shall occur under Section 7.18 of the Liquidity Agreement as
in effect on the Closing Date (without giving effect to any waivers
thereunder) or (ii) the Liquidity Agreement shall fail to be in full force
and effect; or
(1) if (i) the individuals serving as Chief Financial Officer and
Treasurer of the Borrower as of the Closing Date shall both, for any reason
or circumstance, cease to serve as such and the Borrower shall not, within 90
days thereof, replace both such individuals with other persons reasonably
acceptable to the Agent, or (ii) during any twelve-month period, 6 or more of
the 18 individuals currently serving on the Borrower's Executive Committee
shall, for any reason or circumstance, cease to serve on the Executive
Committee or (iii) any individual owner or group of owners acting together
shall own or control 50% or more of the outstanding common shares of the
Borrower or (iv) the Borrower shall cease to own, directly or indirectly,
100% of the outstanding capital stock of CPS; or
(m) any judgment or order as to a liability or debt for the payment
of money in excess of $7,500,000 (to the extent not covered by insurance)
shall be rendered against the Borrower or any of the Guarantors and either
(i) enforcement proceedings shall have been commenced and shall be continuing
by any creditor upon such judgment or order or (ii) there shall be any period
of 30 consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect; or
(n) any non-monetary judgment or order shall be rendered against the
Borrower or any of the Guarantors which does or would reasonably be expected
to (i) cause a material adverse change in the condition (financial or
otherwise), business, operations or properties of the Borrower and the
Guarantors taken as a whole on a consolidated basis, (ii) have a material
adverse effect on the ability of the Borrower or any of the Guarantors to
perform their respective obligations under any Loan Document, or (iii) have a
material adverse effect on the rights and remedies of the Agent or any Bank
under any Loan Document, and there shall be any period of 10 consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or
(o) the Borrower, any Guarantor or NBGL is aware that an aggregate of
$1,000,000 or more in proceeds of Collateral (excluding Purchased
Receivables) have been either (i) not deposited with Collection Account Banks
pursuant to the requirements of Section 5.08 and/or (ii) have been paid to
the Receivables Agreement Agent, the Collateral Agent under the Receivables
Agreement Documents, Great Lakes or have been otherwise applied for the
benefit of indebtedness, obligations and liabilities under or in connection
with the Receivables Agreement Documents (collectively, a "Misapplication of
Funds"), and such Misapplication of Funds shall continue unremedied for two
Business Days after the Borrower, any Guarantor or NBGL obtains actual
knowledge of such Misapplication of Funds (provided that no default shall
arise under this clause (o) in the event that such Misapplication of Funds is
solely the result of a malfunction in the operations of a deposit bank or
Collection Account Bank, so long as the Borrower cures such Misapplication of
Funds promptly upon correction of such malfunction); then, and in every such
event (other than an event described in paragraph (e), (f) or (g) above), and
at any time thereafter during the continuance of such event, the Agent may,
and at the request of the Required Banks, shall, by notice to the Borrower,
take one or more of the following actions, at the same or different times:
(i) terminate forthwith the Total Commitment and/or the obligation of the
Fronting Bank to issue Letters of Credit hereunder; (ii) declare the Loans
then outstanding to be forthwith due and payable, whereupon the principal of
the Loans together with accrued interest thereon and any unpaid accrued Fees
and all other liabilities of the Borrower accrued hereunder and under any
other Loan Document, shall become forthwith due and payable, without
presentment, demand, protest or any other notice of any kind, all of which
are hereby expressly waived by the Borrower, anything contained herein or in
any other Loan Document to the contrary notwithstanding; (iii) require the
Borrower and the Guarantors upon demand to forthwith deposit in the Cash
Collateral Account cash so that the balance of cash in such account after
giving effect to such deposit shall be in an amount equal to the sum of 105%,
of the then outstanding Letters of Credit plus an amount which shall be equal
to the Fees and expenses which are reasonably calculated by the Agent and
each Fronting Bank to be or become due with respect to such outstanding
Letters of Credit and to the extent the Borrower and the Guarantors shall
fail to furnish such funds as demanded by the Agent, the Agent shall be
authorized to debit the accounts of the Borrower and the Guarantors
maintained with the Agent in such amount; (iv) set-off amounts in the Cash
Collateral Account or any other accounts maintained with the Agent and apply
such amounts to the obligations of the Borrower and the Guarantors hereunder
and in the other Loan Documents; and (v) exercise any and all remedies under
the Loan Documents and under applicable law available to the Agent and the
Banks; provided, however, that with respect to a default described in
paragraph (e), (f) or (g) above, the Total Commitment and the obligation of
the Fronting Bank to issue Letters of Credit hereunder shall automatically
terminate and the principal of the Loans together with accrued interest
thereon and any unpaid accrued Fees and all other liabilities of the Borrower
accrued hereunder and under any other Loan Document shall automatically
become due and payable, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived by the Borrower,
anything contained herein or in any other Loan Document to the contrary
notwithstanding.
Section 7.02. RECEIVABLES PURCHASES. The Borrower and CPS agree that
upon the occurrence and during the continuance of any Event of Default beyond
the applicable grace period, if any, and without in any way limiting or
otherwise affecting the rights of the Agent set forth in this Article VII,
the Borrower and CPS will cause each cash payment to each Seller under the
Receivables Agreement and/or any Receivables Agreement Documents in respect
of the Purchase Price for Credit Card Receivables or in respect of the
Subordinated Notes or Seller Notes (the terms "Seller" and "Purchase Price"
being used as such terms are defined in the Receivables Agreement) to be paid
directly by Great Lakes to the Agent for application to the obligations of
the Borrower hereunder and under the Notes (and if received by the Borrower,
CPS or NBGL shall be held in trust for the Agent and forthwith paid over to
the Agent).
Section 7.03. ADDITIONAL UNDERTAKINGS. Notwithstanding anything to the
contrary contained in this Agreement, the Borrower and CPS hereby covenant
and agree that the terms of the Receivables Agreement shall at all times
expressly acknowledge (in a manner satisfactory in form and substance to the
Agent) the rights and remedies of the Agent and the Banks set forth in
Section 7.02.
ARTICLE VIII
GUARANTY
Section 8.01. GUARANTY. (a) Each of the Guarantors unconditionally and
irrevocably guarantees the due and punctual payment and performance by the
Borrower of the Obligations. Each of the Guarantors further agrees that the
Obligations may be extended or renewed, in whole or in part, without notice
to or further assent from it, and it will remain bound upon this guaranty
notwithstanding any extension or renewal of any of the Obligations. The
Obligations of the Guarantors shall be joint and several.
(b) Each of the Guarantors waives presentation to, demand for payment
from and protest to the Borrower or any other Guarantor, and also waives
notice of protest for nonpayment. The obligations of the Guarantors
hereunder shall not be affected by (i) the failure of the Agent or a Bank to
assert any claim or demand or to enforce any right or remedy against the
Borrower or any other Guarantor under the provisions of this Agreement or any
other Loan Document or otherwise; (ii) any extension or renewal of any
provision hereof or thereof; (iii)any rescission, waiver, compromise,
acceleration, amendment or modification of any of the terms or provisions of
any of the Loan Documents; (iv) the release, exchange, waiver or foreclosure
of any security held by the Agent for the Obligations or any of them; (v) the
failure of the Agent or a Bank to exercise any right or remedy against any
other Guarantor; or (vi) the release or substitution of any Guarantor or any
other Guarantor.
(c) Each of the Guarantors further agrees that this guaranty
constitutes a guaranty of performance and of payment when due and not just of
collection, and waives any right to require that any resort be had by the
Agent or a Bank to any security held for payment of the Obligations or to any
balance of any deposit, account or credit on the books of the Agent or a in
favor of the Borrower or any other Guarantor, or to any other Person.
(d) Each of the Guarantors hereby waives any defense that it might
have based on a failure to remain informed of the financial condition of the
Borrower and of any other Guarantor and any circumstances affecting the
Collateral or the ability of the Borrower to perform under this Agreement.
(e) Each Guarantor's guaranty shall not be affected by any question
as to the genuineness, validity, regularity or enforceability of the
Obligations, the Notes or any other instrument evidencing any Obligations, or
as to the existence, validity, enforceability, perfection, or extent of any
collateral therefor or by any other circumstance relating to the Obligations
which might otherwise constitute a defense to this Guaranty. Neither of the
Agent, nor any of the Banks makes any representation or warranty in respect
to any such circumstances or shall have any duty or responsibility whatsoever
to any Guarantor in respect of the management and maintenance of the
Obligations.
(f) Upon the Obligations becoming due and payable (by acceleration or
otherwise), the Banks shall be entitled to immediate payment of such
obligations by the Guarantors upon written demand by the Agent.
Section 8.02. No IMPAIRMENT OF GUARANTY. The obligations of the
Guarantors hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason, including, without limitation, any
claim of waiver, release, surrender, alteration or compromise, and shall not
be subject to any defense or set-off, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
Obligations. Without limiting the generality of the foregoing, the
obligations of the Guarantors hereunder shall not be discharged or impaired
otherwise affected by the failure of the Agent or a Bank to assert any claim
or demand or to enforce any remedy under this Agreement or any other
agreement, by any waiver or modification of any provision thereof, by any
default, failure or delay, willful or otherwise, in the performance of the
Obligations, or by any other act or thing or omission or delay to do any
other act or thing which may or might in any manner or to any extent vary the
risk of the Guarantors or would otherwise operate as a discharge of the
Guarantors as a matter of law, unless and until the Obligations are paid in
full.
Section 8.03. WAIVER OF SUBROGATION. Each Guarantor hereby waives all
rights of such Guarantor against the Borrower by way of right of subrogation
or otherwise to the extent arising out of any payment by any Guarantor of any
sums to the Agent or a Bank hereunder. If any amount shall be paid to such
Guarantor for the account of the Borrower, such amount shall be held in trust
for the benefit of the Agent and the Banks and shall forthwith be paid to the
Agent and the Banks to be credited and applied to the Obligations, whether
matured or unmatured.
Section 8.04. MAXIMUM GUARANTEED AMOUNT. Anything herein or in any other
document, instrument or agreement executed and delivered in connection
herewith to the contrary notwithstanding, the maximum individual liability
of each Guarantor hereunder as at any date of determination thereof shall in
no event exceed $1.00 less than the amount which would render such
Guarantor's obligations under this Section 8 void or voidable under
applicable law, including without limitation fraudulent conveyance law.
ARTICLE IX
THE AGENT
Section 9.01. ADMINISTRATION BY AGENT. The general administration of the
Loan Documents shall be by the Agent. Each Bank hereby irrevocably
authorizes the Agent, at its discretion, to take or refrain from taking such
actions as agent on its behalf and to exercise or refrain from exercising
such powers under the Loan Documents, the Notes and with respect to the
Collateral as are delegated by the terms hereof or thereof, as appropriate,
together with all powers reasonably incidental thereto. The Agent shall have
no duties or responsibilities except as set forth in this Agreement and the
remaining Loan Documents. Except as expressly set forth in Section 10.06 of
this Agreement, no Co-Agent shall have any authority, duties or
responsibilities solely by virtue of its status as a Co-Agent.
Section 9.02. ADVANCES AND PAYMENTS. (a) On the date of each Loan, the
Agent shall be authorized (but not obligated) to advance, for the account of
each of the Banks, the amount of the Loan to be made by it in accordance with
its Commitment hereunder. Should the Agent do so, each of the Banks agrees
forthwith to reimburse the Agent in immediately available funds for the
amount so advanced on its behalf by the Agent, together with interest at the
Federal Funds Effective Rate if not so reimbursed on the date due from and
including such date but not including the date of reimbursement.
(b) Any amounts received by the Agent in connection with this
Agreement or the Notes (other than amounts to which the Agent is entitled
pursuant to Sections 9.06, 10.05 and 10.06), the application of which is not
otherwise provided for in this Agreement shall be applied, first, in
accordance with each Bank's Commitment Percentage to pay accrued but unpaid
Commitment Fees, Letter of Credit Fees, and second, in accordance with each
Bank's Commitment Percentage to pay accrued but unpaid interest with respect
to the principal balance outstanding on each Note and all unreimbursed Letter
of Credit drawings and third, in accordance with each Bank's Commitment
Percentage to pay the unpaid principal balance outstanding on each Note and
all unreimbursed Letter of Credit drawings. All amounts to be paid to a Bank
by the Agent shall be credited to that Bank, after collection by the Agent,
in immediately available funds either by wire transfer or deposit in that
Bank's correspondent account with the Agent, as such Bank and the Agent shall
from time to time agree.
Section 9.03. SHARING OF SETOFFS. Each Bank agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim
against the Borrower, including, but not limited to, a secured claim under
Section 506 of the Bankruptcy Code or other security or interest arising
from, or in lieu of, such secured claim and received by such Bank under any
applicable bankruptcy, insolvency or other similar law, or otherwise, obtain
payment in respect of its Loans as a result of which the unpaid portion of
its Loans is proportionately less than the unpaid portion of the Loans of any
other Bank (a) it shall promptly purchase at par (and shall be deemed to have
thereupon purchased) from such other Bank a participation in the Loans of
such other Bank, so that the aggregate unpaid principal amount of each Bank's
Loans and its participation in Loans of the other Banks shall be in the same
proportion to the aggregate unpaid principal amount of all Loans then
outstanding as the principal amount of its Loans prior to the obtaining of
such payment was to the principal amount of all Loans outstanding prior to
the obtaining of such payment and (b) such other adjustments shall be made
from time to time as shall be equitable to ensure that the Banks share such
payment pro-rata, provided that if any such non-pro-rata payment is
thereafter recovered or otherwise set aside such purchase of participations
shall be rescinded (without interest). The Borrower expressly consents to
the foregoing arrangements and agrees that any Bank holding (or deemed to be
holding) a participation in a Loan may exercise any and all rights of
banker's lien, setoff or counterclaim with respect to any and all moneys
owning by the Borrower to such Bank as fully as if such Bank held a Note and
was the original obligee thereon, in the amount of such participation.
Section 9.04. AGREEMENT OF REQUIRED BANKS. Upon any occasion requiring
or permitting an approval, consent, waiver, election or other action on the
part of the Required Banks, action shall be taken by the Agent for and on
behalf or for the benefit of all Banks upon the direction of the Required
Banks, and any such action shall be binding on all Banks. No amendment,
modification, consent, or waiver shall be effective except in accordance with
the provisions of Section 10.10.
Section 9.05. LIABILITY OF AGENT. (a) The Agent when acting on behalf of
the Banks, may execute any of its duties under this Agreement by or through
its officers, agents, and employees, and neither the Agent nor its directors,
officers, agents, or employees shall be liable to the Banks or any of them
for any action taken or omitted to be taken in good faith, or be responsible
to the Banks or to any of them for the consequences of any oversight or error
of judgment, or for any loss, unless the same shall happen through its gross
negligence or willful misconduct. The Agent and its directors, officers,
agents, and employees shall in no event be liable to the Banks or to any of
them for any action taken or omitted to be taken by it pursuant to
instructions received by it from the Required Banks or in reliance upon the
advice of counsel selected by it. Without limiting the foregoing, neither
the Agent, nor any of its directors, officers, employees, or agents shall be
responsible to any Bank for the due execution, validity, genuineness,
effectiveness, sufficiency, or enforceability of, or for any statement,
warranty, or representation in, this Agreement or any related agreement,
document or order, or shall be required to ascertain or to make any inquiry
concerning the performance or observance by the Borrower of any of the terms,
conditions, covenants, or agreements of this Agreement or any of the Loan
Documents.
(b) Neither the Agent nor any of its directors, officers, employees, or
agents shall have any responsibility to the Borrower or the Guarantors on
account of the failure or delay in performance or breach by any Bank or by
the Borrower or the Guarantors of any of their respective obligations under
this Agreement or the Notes or any of the Loan Documents or in connection
herewith or therewith.
(c) The Agent, as Agent hereunder, shall be entitled to rely on any
communication, instrument, or document reasonably believed by it to be
genuine or correct and to have been signed or sent by a person or persons
believed by it to be the proper person or persons, and it shall be entitled
to rely on advice of legal counsel, independent public accountants, and other
professional advisers and experts selected by it.
Section 9.06. REIMBURSEMENT AND INDEMNIFICATION. Each Bank agrees (i) to
reimburse the Agent for such Bank's Commitment Percentage of any expenses and
fees incurred for the benefit of the Banks under this Agreement, the Notes
and any of the Loan Documents, including, without limitation, counsel fees
and compensation of agents and employees paid for services rendered on behalf
of the Banks, and any other expense incurred in connection with the
operations or enforcement thereof not reimbursed by the Borrower or the
Guarantors and (ii) to indemnify and hold harmless the Agent and any of its
directors, officers, employees, or agents, on demand, in the amount of its
proportionate share, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against it or any of them in any way relating to or
arising out of this Agreement, the Notes or any of the Loan Documents or any
action taken or emitted by it or any of them under this Agreement, the Notes
or any of the Loan Documents to the extent not reimburse by the Borrower or
the Guarantors (except such as shall result from their gross negligence or
willful misconduct).
Section 9.07. RIGHTS OF AGENT. It in understood and agreed that ABN AMRO
shall have the same rights and powers hereunder (including the right to give
such instructions) as the other Banks and may exercise such rights and
powers, as well as its rights and powers under other agreements and
instruments to which it is or may be party, and engage in other transactions
with the Borrower or any Guarantor, as though it were not the Agent of the
Banks under this Agreement.
Section 9.08. INDEPENDENT INVESTIGATION BY BANKS. Each Bank acknowledges
that it has decided to enter into this Agreement and to make the Loans
hereunder based on its own analysis of the transactions contemplated hereby
and of the creditworthiness of the Borrower and the Guarantors and agrees
that the Agent shall bear no responsibility therefor.
Section 9.09. NOTICE OF TRANSFER. The Agent may deem and treat a Bank
party to this Agreement as the owner of such Bank's portion of the Loans for
all purposes, unless and until a written notice of the assignment or transfer
thereof executed by such Banks all have been received by the Agent.
Section 9.10. SUCCESSOR AGENT. Subject to the appointment and
acceptance of a successor agent as provided below, the Agent may resign at
any time by giving written notice thereof to the Banks and the Borrower.
Upon any such resignation, the Required Banks shall have the right to appoint
a successor Agent, which shall be reasonably satisfactory to the Borrower.
If no successor Agent shall have been so appointed by the Required Banks and
shall have accepted such appointment, within 30 days after the retiring
Agent's giving of notice of resignation, the retiring Agent may, on behalf of
the Banks, appoint a successor Agent, which shall be a commercial bank
organized under the laws of the United States of America or of any State
thereof and having a combined capital and surplus of at least $100,000,000,
which shall be reasonably satisfactory to the Borrower. Upon the acceptance
of any appointment as Agent hereunder by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent; and the retiring Agent
shall be discharged from its duties and obligations under this Agreement.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Article IX shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.01. NOTICES. Notices and other communications provided for
herein shall be in writing (including electronic communication pursuant to
agreed upon procedures or facsimile communication) and shall be mailed,
transmitted or delivered in the case of a Bank or the Agent to it at its
address set forth on the signature pages of this Agreement, or in the case
of the Borrower and each Guarantor, to it at the address set forth below the
signature line for the Borrower or the Guarantors, as the case may be, on the
signature pages of this Agreement, or such other address as such party may
from time to time designate by giving written notice to the other parties
hereunder. All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given when received, if delivered by hand or by overnight courier, or on the
fifth Business Day after the date when sent by registered or certified mail,
postage prepaid, return receipt requested, if by mail; or when receipt is
acknowledged, if by any electronic communications or facsimile equipment of
the sender; in each case addressed to such party as provided in this
Section 10.01 or in accordance with the latest unrevoked written direction
from such party; provided, however, that in the case of notices to the Agent
notices pursuant to the preceding sentence and pursuant to Article II shall
be effective only when received by the Agent.
Section 10.02. SURVIVAL OF AGREEMENT, REPRESENTATIONS AND WARRANTIES, ETC.
All warranties, representations and covenants made by the Borrower or any
Guarantor herein or in any certificate or other instrument delivered by it or
on its behalf in connection with this Agreement shall be considered to have
been relied upon by the Banks and shall survive the making of the Loans
herein contemplated and the issuance and delivery to the Banks of the Notes
regardless of any investigation made by any Bank or on its behalf and shall
continue in full force and effect so long as any amount due or to become due
hereunder is outstanding and unpaid and so long as the Commitments have not
been terminated. All statements in any such certificate or other instrument
shall constitute representations and warranties by the Borrower and the
Guarantors hereunder. All indemnities and all other provisions relative to
reimbursement to the Banks of amounts sufficient to protect the yield of the
Banks with respect to the Loans shall survive the termination of this
Agreement and the payment of the Obligations.
Section 10.03. SUCCESSORS AND ASSIGNS. (a) This Agreement shall be
binding upon and inure to the benefit of the Borrower, the Agent and the
Banks and their respective successors and assigns. Neither the Borrower nor
any of the Guarantors may assign or transfer any of their rights or
obligations hereunder without the prior written consent of all of the Banks.
With the prior written consent of the Agent, each Bank may sell
participations to any Person in all or part of any Loan, or all or part of
its Note or Commitment to another Bank or other entity, in which event,
without limiting the foregoing, the provisions of Sections 2.14 and 2.15
shall inure to the benefit of each purchaser of a participation (provided
that such participant shall look solely to the seller of such participation
for such benefits and the Borrower's and the Guarantor's liability, if any,
under Sections 2.15 and 2.18 shall not be increased as a result of the sale
of any such participation) and the pro rata treatment of payments, as
described in Section 2.17, shall be determined as if such Bank had not sold
such participation. In the event any Bank shall sell any participation, such
Bank shall retain the sole right and responsibility to enforce the
obligations of the Borrower and each of the Guarantors relating to the Loans,
including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement other than
amendments, modifications or waivers which would (i) increase any Commitment
of such Bank if such increase would also increase the participant's
obligations, (ii) forgive any amount of or postpone the date for payment of
any principal of or interest on any Loan or of any fee payable hereunder in
which such participant has an interest, (iii) reduce the stated rate at which
interest or fees accrue or other amounts payable hereunder in which such
participant has an interest, (iv) permit Liens on Inventory (other than as
expressly permitted under Section 6.01 of this Agreement as in effect on the
Closing Date), (v) release a material amount of Collateral (except in
connection with a sale or other disposition permitted or required to be
effected by the provisions hereof or of the Security Documents) or release
any Guarantor from its obligations hereunder, (vi) increase the advance rates
set forth in the definition of "Borrowing Base" or (vii) amend, modify or
waive any provision of the Intercreditor Agreement.
(b) Subject to the provisions of Section 10.03(a), each Bank may
assign to one or more Banks or Eligible Assignees all or a portion of its
interests, rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment and the same portion of the
related Loans at the time owing to it and the related Note held by it)
provided, however, that (i) no such assignment may occur unless the Agent,
the Fronting Bank and, for so long as no Event of Default has occurred and is
continuing, the Borrower shall have given their respective prior written
consent (which consents shall not be unreasonably withheld), (ii) the
aggregate amount of the Commitment and/or Loans of the assigning Bank subject
to each such assignment (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to the Agent) shall,
unless otherwise agreed to in writing by the Borrower and the Agent, in no
event be less than $5,000,000 (or $1,000,000 in the case of an assignment
between Banks) and (iii) the parties to each such assignment shall execute
and deliver to the Agent, for its acceptance and recording in the Register
(as defined below), an Assignment and Acceptance with blanks appropriately
completed, together with any Note subject to such assignment and a processing
and recordation fee of $3,000 (for which the Borrower shall have no
liability). Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in each Assignment and Acceptance,
which effective date shall be at least five Business Days after the execution
thereof (unless otherwise agreed to in writing by the Agent), (A) the
assignee thereunder shall be a party thereto and, to the extent provided in
such Assignment and Acceptance, have the rights and obligations of a Bank
hereunder and (B) the Bank thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or
the remaining portion of any assigning Bank's rights and obligations under
this Agreement, such Bank shall cease to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance, the
Bank assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim, such
Bank assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or any of the other Loan
Documents or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any of the other Loan Documents or
of any Collateral; (ii) such Bank assignor makes no representation or
warranty and assumes no responsibility with respect to the financial
condition of the Borrower or any Guarantor or the performance or observance
by the Borrower or any Guarantor of any of its obligations under this
Agreement or any of the other Loan Documents or any other instrument or
document furnished pursuant hereto; (iii) such assignee confirms that it has
received a copy of this Agreement and the other Loan Documents (as well as
the Intercreditor Agreement), together with copies of the financial
statements referred to in Section 3.04 and such other documents and
information as it has deemed appropriate to make its own debt analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee
will, independently and without reliance upon the Agent, such Bank assignor
or any other Bank and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) such assignee appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Agent by
the terms hereof, together with such powers as are reasonably incidental
hereof; (vi) such assignee agrees to be bound by the terms of this Agreement
and the other Loan Documents (as well as the Intercreditor Agreement); and
(vii) such assignee agrees that it will perform in accordance with their
terms all obligations that by the terms of this Agreement are required to be
performed by it as a Bank.
(d) The Agent shall maintain at its office a copy of each Assignment
and Acceptance delivered to it and a register for the recordation of the
names and addresses of the Banks and the Commitments of, and principal amount
of the Loans owing to, each from time to time (the "Register"). The entries
in the Register shall be conclusive, in the absence of manifest error, and
the Borrower, the Guarantors, the Agent and the Banks shall treat each Person
the name of which is recorded in the Register as a Bank hereunder for all
purposes of this Agreement. The Register shall be available for inspection
by the Borrower or any Bank at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Bank and the assignee thereunder together with any Note subject to
such assignment and the fee payable in respect thereto, the Agent shall, if
such Assignment and Acceptance has been completed with blanks appropriately
filled, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Borrower. Within five Business Days after receipt of notice,
the Borrower, at its own expense, shall execute and deliver to the Agent in
exchange for the surrendered Note a new Note to the order of such assignee in
an amount equal to the Commitment and/or Loans assumed by it pursuant to such
Assignment and Acceptance and, if the assigning Bank has retained commitments
and/or Loans hereunder, a new Note to the order of the assigning Bank in an
amount equal to the Commitment and/or Loans retained by it hereunder. Such
new Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Note, shall be dated the effective date
of such Assignment and Acceptance and shall otherwise be in substantially the
form of the surrendered Note. Thereafter, such surrendered Note shall be
marked cancelled and returned to the Borrower.
(f) Any Bank may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 10.03,
disclose to the assignee or participant or proposed assignee or participant,
any information relating to the Borrower or any of the Guarantors furnished
to such Bank by or on behalf of the Borrower or any of the Guarantors;
provided that prior to any disclosure of any information marked or designated
as confidential by the Borrower or any Guarantor, each such assignee or
participant or proposed assignee or participant shall agree in writing to be
bound by the provisions of Section 10.04.
(g) The Borrower hereby agrees to actively assist and cooperate with
the Agent in the Agent's efforts to sell participations herein (as described
in Section 10.03(a)) and to assign to one or more Banks or Eligible Assignees
a portion of its interests, rights and obligations under this Agreement (as
set forth in Section 10.03(b)).
Section 10.04. CONFIDENTIALITY. Each Bank agrees to keep any information
delivered or made available by the Borrower or any of the Guarantors to it
confidential from anyone other than persons employed or retained by such Bank
who are or are expected to become engaged in evaluating, approving,
structuring or administering the Loans; provided that nothing herein shall
prevent any Bank from disclosing such information (i) to any other Bank,
(ii) to any other person if reasonably incidental to the administration of
the Loans, (iii) upon the order of any court or administrative agency,
(iv) upon the request or demand of any regulatory agency or authority,
(v) which has been publicly disclosed other than as a result of a disclosure
by the Agent or any Bank which is not permitted by this Agreement, (vi) in
connection with any litigation to which the Agent, any Bank, or their
respective Affiliates may be a party, (vii) to the extent reasonably required
in connection with the exercise of any remedy hereunder, (viii) to such
Bank's legal counsel and independent auditors, and (ix) to any actual or
proposed participant or assignee of all or part of its rights hereunder
subject to the proviso in Section 10.03(f).
Section 10.05. EXPENSES. Whether or not the transactions hereby
contemplated shall be consummated, the Borrower agrees to pay all reasonable
out-of-pocket expenses incurred by the Agent (including, but not limited to,
the reasonable fees and disbursements of Chapman and Cutler, special counsel
for the Agent, and any other counsel that the Agent shall retain), in
connection with the preparation, execution, delivery and administration of
this Agreement, the Notes and the other Loan Documents, the making of the
Loans and the issuance of the Letters of Credit, the syndication of the
transactions contemplated hereby, the reasonable costs and fees of the Agent
in connection with its monitoring of Inventory and publicity expenses (which
publicity expenses shall not in the aggregate exceed $25,000) and all
reasonable out-of-pocket expenses incurred by the Banks and the Agent in the
enforcement or protection of the rights of any one or more of the Banks or
the Agent in connection with this Agreement, the Notes, the Collateral or the
other Loan Documents, including, but not limited to, the reasonable fees and
disbursements of any counsel for the Agent and, after the occurrence and
during the continuation of an Event of Default, the reasonable fees and
disbursements of any counsel for the Agent and each Bank incurred in
connection with any such enforcement or protection of the Banks, rights
hereunder (including, in the event that a Bank does not retain outside
counsel, the allocable cost of any in-house counsel for such Bank). Such
payments shall be made on the Closing Date and thereafter on demand. The
Borrower hereby authorizes the Agent to charge the loan account or checking
account of the Borrower for any amounts payable under this Section 10.05,
without prior notice to the Borrower or any other Person. The obligations of
the Borrower under this Section shall survive the termination of this
Agreement and/or the payment of the Loans.
Section 10.06. INDEMNITY. The Borrower and each of the Guarantors agrees
to indemnify and hold harmless the Agent, the Co-Agents and the Banks and
their directors, counsel, officers, employees and agents (each an
"Indemnified Party") from and against any and all expenses, losses, claims,
damages and liabilities incurred by the Indemnified Party arising out of
claims made by any Person in any way relating to the transactions
contemplated hereby, but excluding therefrom all expenses, losses, claims,
damages, and liabilities arising out of or resulting from the gross
negligence or willful misconduct of such Indemnified Party.
Section 10.07. CHOICE OF LAW. This Agreement and the Notes shall in all
respects be construed in accordance with and governed by the laws of the
State of Illinois applicable to contracts made and to be performed wholly
within such state.
Section 10.08. NO WAIVER. No failure on the part of the Agent or any of
the Banks to exercise, and no delay in exercising, any right, power or remedy
hereunder or under the Notes or any of the other Loan Documents shall operate
as a waiver thereof, nor shall any single or partial exercise of any such
right, power or remedy preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law.
Section 10.09. EXTENSION OF MATURITY. Should any payment of principal of
or interest on the Notes or any other amount due hereunder become due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day and, in the case of principal,
interest shall be payable thereon at the rate herein provided.
Section 10.10. AMENDMENTS, ETC. (a) No modification, amendment or waiver
of any provision of this Agreement, and no consent to any departure by the
Borrower or any Guarantor therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Required Banks, and then such
waiver or consent shall be effective only in the specific instance and for
the purpose for which given; provided, however, that no such modification,
amendment, waiver or consent shall without the written consent of the Bank or
holder affected thereby (x) increase the Commitment of a Bank, or (y) reduce
the amount of any scheduled principal payment on any Loan or reduce the
principal amount of any Loan or the rate of interest payable thereon, or
extend any date for the payment of interest hereunder or reduce or extend the
date of payment for any Fees payable hereunder or extend the maturity of the
Borrower's obligations hereunder; and further provided that no such
modification or amendment shall without the written consent of all of the
Banks (i) amend or modify any provision of this Agreement which provides for
the unanimous consent or approval of the Banks, (ii) amend this Section 10.10
or the definition of Required Banks, (iii) permit Liens on Inventory (other
than as expressly permitted under Section 6.01 of this Agreement as in effect
on the Closing Date), (iv) release a material amount of Collateral (except in
connection with a sale or other disposition permitted or required to be
effected by the provisions hereof or of the Security Documents) or release
any Guarantor from its obligations hereunder, (v) increase the advance rates
set forth in the definition of "Borrowing Base" or (vi) amend, modify or
waive any provisions of the Intercreditor Agreement. Notwithstanding the
terms of this Section 10.10, if the terms of this Agreement permit the Agent
to amend, waive or consent to any departures from, the terms of this
Agreement, then the Agent may, without the consent or authorization of any or
all of the Banks, exercise such rights to amend, waive or consent to the
departure from, the term of this Agreement. No such amendment or
modification may adversely affect the rights and obligations of the Agent or
any Fronting Bank hereunder without its prior written consent. No notice to
or demand on the Borrower or any Guarantor shall entitle the Borrower or any
Guarantor to any other or further notice or demand in the same, similar or
ther circumstances. Each holder of a Note shall be bound by any amendment,
modification, waiver or consent authorized as provided herein, whether or not
a Note shall have been marked to indicate such amendment, modification,
waiver or consent and any consent by a Bank, or any holder of a Note, shall
bind any Person subsequently acquiring a Note, whether or not a Note is so
marked. No amendment to this Agreement shall be effective against the
Borrower or any Guarantor unless signed by the Borrower or such Guarantor, as
the case may be.
(b) Notwithstanding anything to the contrary contained in Section
10.10(a), in the event that the Borrower requests that this Agreement be
modified or amended in a manner which would require the unanimous consent of
all of the Banks or of any particular Bank and such modification or amendment
is agreed to by the Super-majority Banks, then with the consent of the
Borrower and the Super-majority Banks, the Borrower and the Super-majority
Banks shall be permitted to amend the Agreement without the consent of the
Bank or Banks which did not agree to the modification or amendment requested
by the Borrower (such Bank or Banks, collectively the "Minority Banks") to
provide for (w) the termination of the Commitment of each of the Minority
Banks, (x) the addition to this Agreement of one or more other financial
institutions (each of which shall be an Eligible Assignee), or an increase in
the Commitment of one or more of the Super-majority Banks, so that the Total
Commitment after giving effect to such amendment shall be in the same amount
as the Total Commitment immediately before giving effect to such amendment,
(y) if any Loans are outstanding at the time of such amendment, the making of
such additional Loans by such new financial institutions or Super-majority
Bank or Banks, as the case may be, as may be necessary to repay in full the
outstanding Loans of the Minority Banks immediately before giving effect to
such amendment and (z) such other modifications to this Agreement as may be
appropriate. Any Minority Bank which is replaced pursuant to this Section
10.10 (b) shall be released from its obligations under this
Agreement and shall be entitled to retain its pro rata share of all interest
and fees for the period prior to its replacement (it being understood that
the closing fee paid to each Bank on or before the Closing Date shall be
deemed earned and nonrefundable on the Closing Date).
Section 10.11. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
Section 10.12. HEADINGS. Section headings used herein are for
convenience only and are not to affect the construction of or be taken into
consideration in interpreting this Agreement.
Section 10.13. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which shall constitute an original, but
all of which taken together shall constitute one and the same instrument.
Section 10.14. PRIOR AGREEMENTS. This Agreement represents the entire
agreement of the parties with regard to the subject matter hereof and the
terms of any letters and other documentation entered into between the
Borrower or a Guarantor and any Bank or the Agent prior to the execution of
this Agreement which relate to Loans to be made hereunder shall be replaced
by the terms of this Agreement (except as to letters or agreements referred
to herein or as otherwise expressly provided herein with respect to that
certain letter between the Agent and the Borrower referred to in Section 2.19
hereof.
Section 10.15. FURTHER ASSURANCE. Whenever and so often as reasonably
requested by the Agent, the Borrower and the Guarantors will promptly execute
and deliver or cause to be executed and delivered all such other further
instruments, documents or assurances, and promptly do or cause to be done all
such other and further things as may be necessary and reasonably required in
order to further and more fully vest in the Agent all rights, interests,
powers, benefits, privileges and advantages conferred or intended to be
conferred by this Agreement and the other Loan Documents.
Section 10.16. SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL. Each
of the Borrower and Guarantors hereby submits to the non-exclusive
jurisdiction of the United States District Court for the Northern District of
Illinois and of any Illinois State court sitting in the City of Chicago for
purposes of all legal proceedings arising out of or relating to this
Agreement, the other Loan Documents or the transactions contemplated hereby
orthereby. Each of the Borrower and Guarantors irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a
court and any claim that an such proceeding brought in such a court has been
brought in an inconvenient forum. Each of the Borrower, the Guarantors, the
Agent and each Bank hereby irrevocably waives all right to trial by jury in
any action, proceeding or counterclaim arising out of or relating to any of
the Loan Documents or the transactions contemplated thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and the year first written.
CARSON PIRIE SCOTT & CO.
By: /s/ Charles J. Hansen
-------------------------
Title: Vice President
331 West Wisconsin Avenue
Milwaukee, Wisconsin 53203
Telecopy: (414) 347-5333
Attention: Charles J. Hansen
GUARANTORS:
CPS HOLDING CO.
CPS DEPARTMENT STORES, INC.
FRANKLIN STREET CORPORATION
TELEGRAPH-120 CORPORATION
1-29 S. STATE STREET CORP.
331 W. WISCONSIN AVENUE CORPORATION
CARSON PIRIE SCOTT INSURANCE
SERVICES, INC.
CPS HOTEL MANAGEMENT SERVICES, INC.
HIGHLAND AVENUE CORPORATION
I-65 U.S. 30 CORP.
LATHROP AVENUE CORPORATION
LINCOLN CICERO CORPORATION
URBANA CENTRAL DEVELOPMENT CO.
151 MANNHEIM CORP.
P.A. BERGNER & CO.
By: /s/ Charles J. Hansen
-------------------------
Title: Vice President
331 West Wisconsin Avenue
Milwaukee, Wisconsin 53203
Telecopy: (414) 347-5333
Attention: Charles J. Hansen
Accepted and Agreed to as of the day and year last above written.
Addresses and Amount of Commitments
Commitment: $28,000,000 ABN AMRO Bank N.V., in its individual
capacity as a Bank and as Agent
By: ABN AMRO North America, Inc.
as agent for ABN AMRO Bank N.V.
Address for Notices: By: /s/ Ryan D. Robinson
-------------------------
Name: Ryan D. Robinson
ABN AMRO Bank N.V. Title: Vice President and
135 South LaSalle Street Director
Chicago, Illinois 60674
Attention: Ryan Robinson By: /s/ David H. Hannah
Telephone: (312) 904-2979 ------------------------
Telecopy: (312) 904-6376 Name: David H. Hannah
Title: Group Vice President and
Director
with a copy to:
ABN AMRO Bank N.V.
335 Madison Avenue
New York, New York 10017
Attention: Linda Boardman
Telephone: (212) 370-8509
Telecopy: (212) 682-0364
Commitment: $25,000,000 DRESDNER BANK AG, New York and Grand
Cayman Branches
Address for Notices: By: /s/ Thomas J. Nadramia
-------------------------
Name: Thomas J. Nadramia
Dresdner Bank AG Title: Vice President
190 South LaSalle Street, Suite 2700
Chicago, Illinois 60603
Attention: Jeff Mumm By: /s/ John W. Sweeney
Telephone: (312 444-1317 -------------------------
Telecopy: (312) 444-1305 Name: John W. Sweeney
Title: Assistant Vice President
Commitment: $25,000,000 THE CIT GROUP/BUSINESS CREDIT, INC.
Address for Notices: By: /s/ Jon Oldham
-------------------------
Name: John Oldham
The CIT Group/Business Credit, Inc. Title: Assistant Secretary
1211 Avenue of the Americas
22nd Floor
New York, New York 10036
Attention: Jon Oldham
Telephone: (212) 536-1229
Telecopy: (212) 536-1295
Commitment: $12,000,000 BANK OF MONTREAL
Address for Notices: By: /s/ Lisa Donoghue
-------------------------
Name: Lisa Donoghue
Bank of Montreal Title: Director
15 South LaSalle Street
Chicago, Illinois 60603
Attention: Erin M. Keyser
Telephone: (312) 750-5943
Telecopy: (312) 750-3783
Commitment: $12,000,000 THE BANK OF NEW YORK
Address for Notices: By: /s/ Michael Flannery
-------------------------
Name: Michael Flannery
The Bank of New York Title: Vice President
1 Wall Street
Retailing Industry Division, 8th Floor
New York, New York 10286
Attention: Mike Flanery
Telephone: (212) 635-7885
Telecopy: (212) 635-1483
Commitment: $12,000,000 CAISSE NATIONALE DE CREDIT AGRICOLE
Address for Notices: By: /s/ David Bouhl
-------------------------
Name: David Bouhl, V.V.P.
Caisse Nationale de Credit Agricole Title: Head of Corporate Banking
55 East Monroe Street, Suite 4700 Chicago
Chicago, Illinois 60603
Attention: Ray Falkenberg By:
Telephone: (312) 917-7426 --------------------------
Telecopy: (312) 372-3724 Name:
Title:
Commitment: $12,000,000 FIRST BANK (N.A.)
Address for Notices: By: /s/ Alan M. Holman
-------------------------
Name: Alan M. Holman
First Bank (N.A.) Title: Vice President
201 West Milwaukee
Milwaukee, Wisconsin 53259-0911
Attention: Alan M. Holman
Telephone: (414) 227-5505
Telecopy: (414) 227-5881
Commitment: $12,000,000 THE FIRST NATIONAL BANK OF BOSTON
Address for Notices: By: /s/ Peter L. Griswold
-------------------------
Name: Peter L. Griswold
The First National Bank of Boston Title: Director
100 Federal Street
Mail Stop 01-09-05
Boston, Massachusetts 02110
Attention: Peter Griswold
Telephone: (617) 434-8312
Telecopy: (617) 434-0630
Commitment: $12,000,000 THE FUJI BANK, LIMITED
Address for Notices: By: /s/ Peter L. Chinnici
--------------------------
Name: Peter L. Chinnici
The Fuji Bank, Limited Title: Joint General Manager
225 West Wacker Drive, Suit 2000
Chicago, Illinois 60606
Attention: Stephen Peca
Telephone: (312) 621-9484
Telecopy: (312) 621-0539
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