LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT, dated as of the
16th day of December, 1994 (the "Loan Agreement" or "Agreement"),
is by and between
THE CATO CORPORATION, a Delaware corporation with its
principal offices in Charlotte, North Carolina ("Cato"); CHW
CORPORATION, a Delaware corporation ("CHW"); and
NATIONSBANK OF NORTH CAROLINA, N.A. ("NationsBank") and
WACHOVIA BANK OF NORTH CAROLINA, N.A. ("Wachovia"), each a
national banking association with offices in Charlotte, North
Carolina (collectively, the "Lenders"); and NATIONSBANK OF NORTH
CAROLINA, N.A., as agent, acting in the manner and to the extent
described in Article XII hereof (in such capacity, the "Agent").
Recitals
A. Cato and CHW are co-borrowers of the Loans to be made
hereunder. As such, each is sometimes referred to individually
as a "Borrower" and together they are sometimes collectively
referred to as the "Borrowers."
B. The Borrowers and the Lenders are parties to a Loan
Agreement dated March 9, 1993, pursuant to which (i) the Lenders
established a $35,000,000 revolving credit facility and the
Borrowers may convert up to $20,000,000 of the principal amount
of outstanding loans advanced thereunder into one or more term
loans, and (ii) the Lenders will from time to time issue for the
account of the Borrowers irrevocable letters of credit.
C. The Borrowers and the Lenders desire to amend and
restate the terms of their Agreement to incorporate an additional
$15,000,000 facility to support the issuance of letters of
credit, to amend certain negative covenants, and to change the
relative size of the Lenders' Commitments.
D. The Borrowers will use the proceeds of the Loans (i)
to provide working capital; (ii) to support the issuance of
letters of credit and (iii) for such other corporate purposes as
the Borrowers shall determine, other than uses restricted
hereunder, all as more fully set forth herein.
E. The Lenders are willing to make the Loans and issue
the Letters of Credit described herein based on the terms and
conditions set forth in this Loan Agreement.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
Borrowers, the Lenders and the Agent hereby agree as follows:
ARTICLE IDefinitions1.1Defined Terms. For purposes of this Loan
Agreement, the following terms shall have the meanings set forth
below:
"Additional LC Facility" means the facility made available
by the Lenders to the Borrowers pursuant to Article IIA hereof.
"Additional LC Facility Termination Date" means the date
that the Additional LC Facility will terminate pursuant to
Section 2.2A (as such date may be extended from time to time by
written agreement of all the Lenders).
"Adjusted Cash Flow" shall mean, for a specified period,
the sum of (i) the net income of Cato and its Subsidiaries on a
consolidated basis for such period, before deduction of income
taxes, depreciation expense, interest expense (including, without
limitation, interest expense attributable to Capital Leases) and
amortization of intangible assets plus (ii) the Gross Rental
Expense for such period, all as determined in accordance with
Generally Accepted Accounting Principles.
"Affiliate" shall mean, as to any Person, each of the
Persons that directly or indirectly, through one or more
intermediaries, owns or controls, or is controlled by or under
common control with, such Person. For the purpose of this
definition, "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of
management and policies, whether through the ownership of voting
securities, by contract or otherwise.
"Agent" shall mean the Agent as provided in Article XII
hereof, and its successors and assigns.
"Agreement" or "this Agreement" or "Loan Agreement" shall
mean this Loan Agreement and shall include all amendments,
modifications and supplements hereto, and all annexes, schedules
and exhibits hereto, and shall refer to this Agreement as the
same may be in effect at the time such reference becomes
operative.
"Applicable Rate" shall mean, for any day, the lesser of
(i) the then current Prime Rate or (ii) the Floating Adjusted
Certificate of Deposit Rate for such day. The Applicable Rate
shall be determined from time to time by each Lender with respect
to its pro rata portion of the Loans (based on such Lender's
Commitment as compared to the Total Commitment) and each such
calculation with respect to such portion of the Loans shall be
conclusive and binding upon the Borrowers in the absence of
manifest error.
"Assessment Rate" shall mean, for any day, the then maximum
net assessment rate (expressed as a decimal fraction) for
determining the annual assessment payable by the Lender to the
Federal Deposit Insurance Corporation (or any successor) for
insuring Dollar deposits made at the offices of the Lender in the
United States.
"Assignee" shall mean any Person to whom any Lender assigns
any of its rights and obligations under this Loan Agreement, and
its successors and assigns.
"Assignment and Acceptance" shall mean an Assignment and
Acceptance Agreement between any Lender and an Assignee, pursuant
to which such Lender assigns to such Assignee, and the Assignee
accepts, all or a portion of such Lender's rights and obligations
under this Loan Agreement.
"Bankruptcy Code" shall mean 11 U.S.C. 101 et. seq., as
amended, and any successor statute or statute having
substantially the same function.
"Borrower" or "Borrowers" shall mean each of Cato and each
of its Subsidiaries which is now or hereafter becomes a party to
this Loan Agreement, and their respective successors and assigns.
"Business Day" shall mean any day excluding Saturday,
Sunday and any day which shall be in the City of Charlotte, North
Carolina a legal holiday or a day on which national banking
institutions are authorized by law or other governmental actions
to close.
"CD Rate" shall mean, for any day, the average daily market
interest rate (per annum) in the secondary market on negotiable
certificates of deposit with a term of three months, as compiled
and published by the Federal Reserve System of the United States
of America, or any successor agency (such rate being currently
available in a weekly publication designated "H.15(519) -
Selected Interest Rates").
"CD Reserve Requirement" shall mean, on any date, that
percentage (expressed as a decimal fraction) that is in effect on
such date, applied for determining the maximum applicable reserve
requirements under Regulation D. Each determination by the
Lender of the CD Reserve Requirement of such Lender shall be
conclusive and binding on the Borrowers in the absence of
manifest error.
"CERCLA" shall mean the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C.A.
9601 et. seq., as amended from time to time, and all rules and
regulations from time to time promulgated thereunder.
"Capital Asset" shall mean any asset of a Person that
would, in accordance with Generally Accepted Accounting
Principles, be required to be classified and accounted for as a
capital asset.
"Capital Expenditure Limitation" shall mean, for any fiscal
year of Cato, the sum of (i) the net income of Cato and its
Subsidiaries on a consolidated basis, before deduction of
depreciation expense and amortization of intangible assets, for
the immediately preceding fiscal year, as determined in
accordance with Generally Accepted Accounting Principles plus
(ii) the amount of contributions made by any of the Borrowers or
a Subsidiary of the Borrower to the 401(k) Cato Associate Profit
Sharing/Retirement Savings Plan in such immediately preceding
fiscal year to the extent such contributions are reflected as
reductions in the net income of Cato and its Subsidiaries on a
consolidated basis for such period plus (iii) employee bonus
payments made by a Borrower or a Subsidiary of a Borrower in such
immediately preceding fiscal year in shares of the common stock
of Cato to the extent such payments are reflected as reductions
in net income of Cato and its Subsidiaries on a consolidated
basis for such period.
"Capital Expenditures" shall mean, for any fiscal year of
Cato, the aggregate cost (less the amount of trade-in allowance
included in such cost) of all capital assets acquired by any of
the Borrowers or any Subsidiary of a Borrower during such fiscal
year, less the proceeds of any capital dispositions made in the
ordinary course of business, plus all Capital Lease Obligations
incurred by Cato, during such fiscal year, each calculated in
accordance with Generally Accepted Accounting Principles.
"Capital Lease" shall mean any lease of any property that
would, in accordance with Generally Accepted Accounting
Principles, be required to be classified and accounted for as a
capital lease on a balance sheet of the lessee.
"Capital Lease Obligations" shall mean, with respect to any
Capital Lease, the amount of the obligation of the lessee
thereunder that would, in accordance with Generally Accepted
Accounting Principles, appear as a liability on a balance sheet
of such lessee in respect of such Capital Lease.
"Capitalized Rents" shall mean, at any time, the product of
(i) the Gross Rental Expense for the four most recent fiscal
quarters multiplied by (ii) eight (8).
"Cash" shall mean legal currency of the United States of
America.
"Change in Control" shall mean any event resulting in any
Person (i) owning, directly or indirectly, more than fifty
percent (50%) of the combined voting power of the outstanding
shares of voting stock of Cato or (ii) having the power to elect
a majority of the board of directors of Cato; provided, however,
that no change in control shall be deemed to have occurred so
long as Wayland H. Cato, Jr., Edgar T. Cato, and any of their
children and trusts for their benefit, own or have the right to
vote or to direct the voting of shares of the outstanding voting
stock of Cato equal to over 50% of the total combined voting
power of the outstanding voting stock of Cato.
"Closing" shall mean the consummation of the lending
transaction contemplated hereby to occur at the time and place
specified in Section 5.1 hereof.
"Closing Date" shall mean the date referred to in Section
5.1 hereof.
"Commitment" shall mean, at any time, for any Lender, the
amount set forth opposite such Lender's name on Annex I hereto
under the heading "Commitment."
"Conversion Date" shall mean, with respect to any Term
Loan, the date of conversion of certain of the Revolving Loans
into such Term Loan pursuant to Section 2.4 which date shall be
set forth in the Conversion Notice and shall be not later than
three (3) Business Days after the delivery of the Conversion
Notice by the Borrowers to the Agent and in no event shall be
later than May 31, 1998.
"Conversion Notice" shall mean the notice in the form
attached hereto as Exhibit C setting forth the Borrowers'
election to convert a certain portion of the Revolving Loans into
Term Loans pursuant to Section 2.4 and specifying the Conversion
Date.
"Current Assets" shall mean, at any date, the aggregate of
the current assets of Cato and its Subsidiaries on a consolidated
basis, determined in accordance with Generally Accepted
Accounting Principles.
"Current Liabilities" shall mean, at any date, the
aggregate of the current liabilities of Cato and its Subsidiaries
on a consolidated basis, all determined in accordance with
Generally Accepted Accounting Principles, except that outstanding
borrowings of the Borrowers under the Revolving Line of Credit
shall not be considered Current Liabilities.
"Default" shall mean any of the events specified in
Article IX, regardless of whether there shall have occurred any
passage of time or giving of notice or both that would be
necessary to constitute such default an Event of Default.
"Default Rate" shall mean, with respect to any Loan, an
interest rate equal to the Prime Rate plus four (4) percentage
points.
"Designated Officer" shall mean the President or Chief
Financial Officer of a Borrower or any other officer of a
Borrower authorized by resolution of the Board of Directors of
such Borrower to engage in the activity specified herein with
respect to such officer.
"Disbursement Date" shall mean the date on which the LC
Bank shall have notified the Borrowers of the presentation for
payment of a draft under any Letter of Credit.
"Documentary Letter of Credit" shall mean a Letter of
Credit that by its terms requires, as a condition to any draw
thereunder, the presentation of documents of title to goods
purchased upon payment pursuant to such draw.
"Dollars" or "$" shall mean dollars of the United States of
America.
"Employee Plan" shall mean any "employee benefit plan"
within the meaning of Section 3(3) of ERISA maintained by any
Borrower or one of its Subsidiaries.
"Environmental Laws" shall mean any and all federal, state,
local and foreign laws or regulations, codes, plans, orders,
decrees, judgments, injunctions, notices or demand letters
issued, promulgated, approved or entered under any of the
foregoing, relating to pollution or protection of the
environment, including without limitation, laws relating to
emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes into the environment (including
without limitation ambient air, surface water, ground water, land
surface or subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminates,
chemicals or industrial, toxic or hazardous substances or wastes,
and specifically including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C.
9601 et seq., as amended from time to time, and the Resource
Conversation and Recovery Act 42 U.S.C. 6901 et seq., as
amended from time to time.
"EPA" shall mean the United States Environmental Protection
Agency.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended from time to time, and all rules and
regulations from time to time promulgated thereunder.
"Event of Default" shall have the meaning specified in
Article IX hereof.
"Financials" or "Financial Statements" shall mean the
consolidated balance sheet and statements of income and cash
flow, delivered to the Lenders by the Borrowers prior to the
Closing Date in connection with this Loan Agreement or to be
delivered to the Lenders by the Borrowers pursuant to Section 7.3
hereof.
"Fixed Charge Coverage Ratio" shall mean, as of the end of
any fiscal quarter of Cato, the ratio of (i) the Adjusted Cash
Flow for the four-fiscal-quarter period then ended to (ii) the
Fixed Charges for such period.
"Fixed Charges" shall mean, for the relevant period, the
sum of (a) the interest expense (including, without limitation,
interest expense attributable to Capital Leases) of Cato and its
Subsidiaries on a consolidated basis, (b) regularly scheduled
payments of principal of Funded Debt of Cato and its Subsidiaries
on a consolidated basis and (c) the Gross Rental Expense for such
period, all as determined in accordance with Generally Accepted
Accounting Principles.
"Floating Adjusted Certificate of Deposit Rate" shall mean,
on any given day, with respect to the Loans made by a Lender, the
sum of:
(a) the quotient of (i) the CD Rate for the next
preceding Business Day divided by (ii) the difference
between one (1.00) minus the CD Reserve Requirement; plus
(b) the Assessment Rate of such Lender; plus
(c) 0.75 percentage points;
provided, however, that for any Saturday or Sunday, the CD Rate
used in the foregoing calculation shall be the CD Rate for the
immediately preceding Thursday (or if such Thursday is not a
Business Day, then the Business Day next preceding such Thursday)
and for any other day that is not a Business Day, the CD Rate
used in the foregoing calculation shall be the CD Rate for the
next preceding Business Day. The Floating Adjusted Certificate
of Deposit Rate shall be calculated from time to time by each
Lender with respect to its pro rata portion of the Loans (based
on such Lender's Commitment as compared to the Total Commitment)
and each such calculation with respect to such portion of the
Loans shall be conclusive and binding upon the Borrowers in the
absence of manifest error.
"Funded Debt" shall mean at any time the aggregate amount
of Indebtedness for money borrowed of Cato and its Subsidiaries,
on a consolidated basis, including the amount of any guaranties
but excluding the face amount of any Documentary Letter of Credit
issued for the account of any Borrower.
"Generally Accepted Accounting Principles" shall mean, with
respect to any Borrower, generally accepted accounting
principles, as recognized by the American Institute of Certified
Public Accountants, consistently applied and maintained on a
consistent basis for such Borrower throughout the period
indicated and consistent with the prior financial practice of
such Borrower as reflected on the respective Financial
Statements.
"Gross Rental Expense" shall mean for any period the rental
expense under non-cancellable operating leases for such period
of Cato and its Subsidiaries on a consolidated basis determined
in accordance with Generally Accepted Accounting Principles.
"Indebtedness" shall mean all liabilities, obligations and
indebtedness any of the Borrowers of any and every kind and
nature, including, without limitation, the Obligations and all
obligations to trade creditors, whether heretofore, now or
hereafter owing, arising, due or payable from any of the
Borrowers to any Person and howsoever evidenced, created,
incurred, acquired or owing, whether primary, secondary, direct,
contingent, fixed or otherwise and whether matured or unmatured.
Without in any way limiting the generality of the foregoing,
Indebtedness specifically includes the following:
(a) all obligations or liabilities of any Person that
are secured by any lien, claim, encumbrance or security
interest upon property owned by any of the Borrowers, even
though such Borrower has not assumed or become liable for
the payment thereof;
(b) all obligations or liabilities created or arising
under any lease (including but not limited to Capital
Leases) of real or personal property, or conditional sale
or other title retention agreement with respect to property
used or acquired by a Borrower, even though the rights and
remedies of the lessor, seller or lender thereunder are
limited to repossession of such property;
(c) all unfunded employee benefit plan obligations
and liabilities; and
(d) deferred taxes.
"Intangible Assets" shall mean all intangible assets of
Cato and its Subsidiaries, on a consolidated basis, including,
without limitation, covenants not to compete, and any other asset
that would be treated as an intangible under Generally Accepted
Accounting Principles.
"Intercompany Loans" shall mean any loans or advances or
other extensions of credit by either of the Borrowers solely to
or for the benefit of the other Borrower.
"Internal Revenue Code" shall mean the Internal Revenue
Code of 1986, as amended from time to time.
"LC Agreement" means the application for and all other
agreements and other documentation relating to a Letter of Credit
including the Continuing Letter of Credit Agreement in the form
attached hereto as Exhibit B.
"LC Bank" shall mean NationsBank or such other of the
Lenders as may be designated by the Required Lenders as the
issuing bank for the Letters of Credit to be issued pursuant to
Article III hereof.
"Lenders" shall mean, collectively, NationsBank of North
Carolina, N.A. and Wachovia Bank of North Carolina, N.A.,
national banking associations with offices in Charlotte, North
Carolina, and their successors or assigns.
"Letters of Credit" shall mean the Outstanding Letters of
Credit and all letters of credit issued upon the application by a
Borrower pursuant to Article III hereof.
"Loan" or "Loans" shall mean and collectively refer to the
advances made hereunder which shall be evidenced by the Notes.
"Loan Documents" shall mean and collectively refer to this
Agreement, the Notes, the LC Agreements, all Supplemental
Documentation and any and all amendments, modifications,
replacements, substitutes and supplements to such documents,
together with any other documents executed by or on behalf of any
of the Borrowers that designate themselves Loan Documents under
this Agreement.
"Margin Stock" shall have the meaning provided in
Regulation U.
"Material Adverse Effect" shall mean a material adverse
effect on the financial condition or results of operations of the
Borrowers and their Subsidiaries taken as a whole or upon the
Borrowers' ability to perform their obligations under any of the
Loan Documents.
"Multiemployer Plan" shall mean any "multiemployer plan"
within the meaning of Section 4001(a)(3) of ERISA to which any
Borrower is required to make contributions.
"Net Income" shall mean the consolidated net income of
Cato and its Subsidiaries determined in accordance with Generally
Accepted Accounting Principles.
"Net Worth" shall mean at any time the combined
stockholders' equity of Cato and its Subsidiaries on a
consolidated basis at such time determined in accordance with
Generally Accepted Accounting Principles.
"Notes" shall mean the promissory notes of the Borrowers
executed and delivered to the Lenders pursuant to Article II
hereof, evidencing the obligation of the Borrowers to repay funds
advanced pursuant to the Commitment of each Lender individually,
and the Total Commitment in the aggregate, together with any
amendments, modifications, substitutes and supplements thereto,
any substitutes therefor, and any replacements, renewals or
extension thereof, in whole or part.
"Notice of Borrowing" shall have the meaning given to such
term in Section 2.1(b).
"Obligations" shall mean and include the Loans and all
other loans, advances, indebtedness, liabilities, obligations,
covenants and duties (including post-petition interest on the
foregoing, to the extent lawful) owing, arising, due or payable
jointly or severally, from any Borrower to the Agent or any
Lender of any kind or nature, present or future, howsoever
evidenced, created, incurred, acquired or owing, whether arising
under this Agreement, the Notes, the LC Agreements or otherwise
with respect to the Letters of Credit, or the other Loan
Documents, whether direct or indirect (including those acquired
by assignment), absolute or contingent, primary or secondary, due
or to become due, now existing or hereafter arising and however
acquired, but excluding obligations under Letters of Credit
described in the final sentence of Section 3.1. The term
includes, without limitation, all interest, charges, expenses,
fees, attorneys' fees and any other sums chargeable to any
Borrower by the Agent or any Lender under this Agreement or any
of the other Loan Documents.
"OSHA" shall mean the Occupational Safety and Health Act,
as amended from time to time, and all rules and regulations from
time to time promulgated thereunder.
"Outstanding Letters of Credit" shall mean any and all
letters of credit issued by NationsBank for the account of any
Borrower that are outstanding as of the date hereof, including
any extensions or renewals thereof.
"Participant" shall mean any Person, now or at any time
hereafter, participating with any Lender in the Loans to the
Borrowers pursuant to this Agreement, and its successors and
assigns.
"Pension Plan" shall mean any "employee pension benefit
plan" within the meaning of Section 3(2) of ERISA which is
maintained by any of the Borrowers, except that Pension Plan
shall not include any Multiemployer Plan.
"Person" shall mean a corporation, an association, a joint
venture, a partnership, an organization, a business, an
individual, a trust or a government or political subdivision
thereof or any government agency.
"Permitted Liens" shall mean any of the following liens
securing any Indebtedness of a Borrower on its property, real or
personal, whether now owned or hereafter acquired:
(a) Liens of carriers, warehousemen, mechanics and
materialmen imposed by mandatory provisions of law arising
in the ordinary course of business for sums not yet due and
payable or such liens securing an aggregate Indebtedness of
not more than $100,000 that are being contested in good
faith;
(b) Liens incurred in the ordinary course of business
in connection with worker's compensation, unemployment
insurance or other forms of governmental insurance or
benefits or to secure obligations on surety or appeal
bonds;
(c) Liens for current taxes (including income
withholding taxes), assessments or other governmental
charges that are not delinquent or remain payable without
any penalty or that are being contested in good faith and
with due diligence by appropriate proceedings, if the
affected Borrower has established adequate reserves with
respect thereto in accordance with Generally Accepted
Accounting Principles or, with respect to liens arising in
connection with income tax withholding, such Borrower has
established adequate reserves with respect thereto;
(d) Statutory liens of banks and other financial
institutions arising during the collection of instruments
in the ordinary course of business;
(e) pledges or deposits in the ordinary course of a
Borrower's business to secure the performance of leases or
contracts entered into in the ordinary course of business;
(f) Liens upon any assets subject to a Capital Lease
and securing payment of the obligations arising under such
Capital Lease and any liens upon any equipment subject to
an equipment operating lease and securing payment of the
obligations arising under such lease;
(g) zoning restrictions, easements, licenses,
landlord's liens or restrictions on the use of property
which do not materially impair the use of such property in
the operation of the business of a Borrower;
(h) Purchase Money Liens securing aggregate
Indebtedness of the Borrowers and their Subsidiaries of no
more than $1,000,000; and
(i) Liens not described in subclauses (a) through (i)
above that relate to liabilities not in excess of $100,000
in the aggregate.
"Preferred Stock" shall mean Stock of any of the Borrowers
that gives the holder thereof a preference over the holders of
such Borrower's common stock with respect to the payment of
dividends or liquidation proceeds, or otherwise designated by
such Borrower as "preferred stock."
"Prime Rate" shall mean the per annum interest rate
publicly announced from time to time by NationsBank from its
principal office in Charlotte, North Carolina to be its prime
rate, which may not necessarily be its best lending rate, and
adjusted to conform to changes as of the opening of business on
the date of any such change in such prime rate. In the event
NationsBank shall abolish or abandon the practice of announcing
its prime rate or should the same be unascertainable, the
Required Lenders shall designate a comparable reference rate
which shall be deemed to be the Prime Rate under this Loan
Agreement and the other Loan Documents.
"Prohibited Transaction" shall have the meaning given such
term under ERISA.
"Purchase Money Liens" shall mean any lien or security
interest granted in Capital Assets at the time of, or within ten
(10) days after, the acquisition thereof by any Borrower or any
Subsidiary of a Borrower to secure Indebtedness for all or a
portion of the purchase price thereof, provided (i) any such lien
or security interest shall not encumber any other property of
such Borrower or such Subsidiary and (ii) any such lien shall not
exceed the purchase price of the Capital Assets so acquired.
"RCRA" shall mean the Resource Conservation and Recovery
Act, 42 U.S.C.A. 6901 et seq., as amended from time to time,
and all rules and regulations from time to time promulgated
thereunder.
"Realty" shall mean all realty and interests in realty
owned or leased by any Borrower or any Subsidiary of a Borrower,
now or in the future.
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System, 12 C.F.R. Part 204, or
any successor or other regulation relating to reserve
requirements applicable to member banks of the Federal Reserve
System.
"Regulation G" shall mean Regulation G promulgated by the
Board of Governors of the Federal Reserve System, 12 C.F.R. Part
207, or any successor or other regulation hereafter promulgated
by said Board to replace the prior Regulation G and having
substantially the same function.
"Regulation T" shall mean Regulation T promulgated by the
Board of Governors of the Federal Reserve System, 12 C.F.R. Part
220, or any successor or other regulation hereafter promulgated
by said Board to replace the prior Regulation T and having
substantially the same function.
"Regulation U" shall mean Regulation U promulgated by the
Board of Governors of the Federal Reserve System, 12 C.F.R. Part
221, or any successor or other regulation hereafter promulgated
by said Board to replace the prior Regulation U and having
substantially the same function.
"Regulation X" shall mean Regulation X promulgated by the
Board of Governors of the Federal Reserve System, 12 C.F.R. Part
224, or any successor or other regulation hereafter promulgated
by said Board to replace the prior Regulation X and having
substantially the same function.
"Reportable Event" shall have the meaning given such term
in ERISA.
"Required Lenders" shall mean at any time the Lenders
providing Commitments in the aggregate of at least 75% of the
Total Commitment.
"Revolving Credit Commitment" shall mean, at any time for
any Lender, the difference between such Lender's Commitment minus
such Lender's pro rata portion (based on such Lender's Commitment
as compared to the Total Commitment) of the aggregate principal
amount (as of the Conversion Date) of the Revolving Loans
converted to Term Loans pursuant to Section 2.4 hereof, if any.
"Revolving Line of Credit" shall mean the revolving line of
credit made available by the Lenders to the Borrowers pursuant to
Article II hereof.
"Revolving Loan Obligations" shall mean all Obligations of
the Borrower under this Loan Agreement and the other Loan
Documents other than the obligation to repay the Term Loans and
to make interest payments thereon and the obligations of the
Borrowers that, as set forth in this Loan Agreement, are to
survive the repayment of the Loans.
"Revolving Loan Termination Date" shall mean the earliest
of (i) prepayment by Borrowers of all Obligations, including
without limitation all outstanding principal of the Revolving
Loans and interest thereon, and termination of all Letters of
Credit, together with a notice from each Borrower terminating
this Agreement; (ii) May 31, 1998 (unless such date extended by
written agreement of all of the Lenders pursuant to Section 2.2
hereof); (iii) the date of termination of this Agreement by the
Lenders after the occurrence of an Event of Default; (iv) such
date as is mutually agreed upon by the parties; and (v) the date
after which all Obligations have been paid in full and no Lender
is obligated to make advances or Loans hereunder or under any
Letter of Credit.
"Revolving Loan" shall mean the Loans made by the Lenders
to the Borrowers under the Revolving Line of Credit.
"Stock" shall mean all shares, options, interests or other
equivalents (howsoever designated) of or in a corporation,
whether voting or nonvoting, including, without limitation,
common stock, warrants, preferred stock, convertible debentures
and all agreements, instruments and documents convertible, in
whole or in part, into any one or more or all of the foregoing.
"Subordinated Debentures" shall mean any Indebtedness of
any Borrower which expressly contains in the instruments
evidencing such Indebtedness, or in the indenture or other
similar instrument pursuant to which such Indebtedness is issued,
subordination provisions, satisfactory to the Required Lenders,
and substantially to the effect that the holder agrees that the
Indebtedness evidenced by such instrument, and any renewals or
extensions thereof, shall at all times and in all respects be
subordinate and junior in right of payment to the Obligations
hereunder.
"Subsidiary" shall mean any corporation, fifty percent
(50%) or more of the outstanding stock of which is at the time,
directly or indirectly, owned by any Borrower or one or more of
its Subsidiaries.
"Supplemental Documentation" shall mean all agreements,
instruments, documents or other written matter necessary or
requested by the Agent or the Lenders to consummate the
transactions contemplated by this Agreement and the other Loan
Documents.
"Tangible Net Worth" shall at any time mean Net Worth less
all Intangible Assets.
"Term Loan" means a Loan made by the Lenders pursuant to
the Borrowers' election to convert a portion of the Revolving
Loans, pursuant to Section 2.4, into a term loan to be repaid as
specified in Section 2.5.
"Total Commitment" shall mean, at any time, the sum of the
Commitments of each of the Lenders at such time.
"Total Revolving Credit Commitment" shall mean the
difference between the Total Commitment and the aggregate
principal amount (as of the Conversion Date) of the Revolving
Loans converted to Term Loans pursuant to Section 2.4 hereof, if
any.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code of the State of North Carolina, as amended from time to
time, unless in any particular instance the Uniform Commercial
Code of another state is applicable, in which case it shall mean
the Uniform Commercial Code of such state.
1.2Accounting Terms. Any accounting terms used in this
Agreement that are not specifically defined shall have the
meanings customarily given them in accordance with Generally
Accepted Accounting Principles; provided, however, that, in the
event that changes in Generally Accepted Accounting Principles
shall be mandated by the Financial Accounting Standard Board, or
any similar accounting body of comparable standing, or any change
in accounting practices shall be recommended by Cato's
independent certified public accountants, and to the extent that
such changes would modify or could modify such accounting terms
or the interpretation or computation hereof, such changes shall
be followed in defining such accounting terms only from and after
the date the Borrowers and the Required Lenders shall have
amended this Loan Agreement to the extent necessary to reflect
any such changes in the financial covenants and other terms and
conditions of this Loan Agreement.
1.3Singular/Plural. Unless the context otherwise requires,
words in the singular include the plural and words in the plural
include the singular.
1.4Other Terms. All terms contained in this Agreement
shall, when the context so indicates, have the meanings provided
for by the Uniform Commercial Code of the State of North Carolina
to the extent the same are used or defined therein.
ARTICLE II Loan Facility2.1Revolving Line of Credit.
(a) The Lenders hereby agree to establish, subject to the
terms and conditions of this Agreement and in reliance upon the
representations and warranties made hereunder, a Revolving Line
of Credit in favor of the Borrowers in the aggregate principal
amount of up to Thirty-five Million Dollars ($35,000,000) and
agree to make and remake one or more advances to the Borrowers,
upon the terms and conditions set forth in this Article II, from
time to time on any Business Day during the period from the date
hereof through the Revolving Loan Termination Date. The
Borrowers may borrow, repay and reborrow any amount of the
Revolving Line of Credit, provided that the sum of (i) the
aggregate principal amount outstanding at any one time under the
Revolving Line of Credit plus (ii) the face amount of all Letters
of Credit (excluding Letters of Credit issued pursuant to the
Additional LC Facility) then outstanding may not exceed the Total
Revolving Credit Commitment; provided further, that the amount
advanced by an individual Lender pursuant to this Article shall
not exceed such Lender's Revolving Credit Commitment at any time.
Notwithstanding the foregoing, no Lender shall have any
obligation to lend funds at any time when an Event of Default
exists or when there exists any event or condition that, with the
lapse of time, giving of notice or making of such advance, would
constitute an Event of Default or when one or more of the
conditions set forth in Article V has not been satisfied.
(b) Whenever the Borrowers desire to borrow Revolving
Loans under the Revolving Line of Credit, a Designated Officer or
other officer authorized by a Designated Officer shall give each
Lender prior to 2:00 p.m. (Charlotte, North Carolina time) on or
prior to the day of borrowing written notice (or telephonic
notice promptly confirmed in writing) of each Revolving Loan to
be made hereunder. Each such notice (each a "Notice of
Borrowing") shall be irrevocable and shall specify (i) the
aggregate principal amount of the Revolving Loans to be made by
each Lender (which shall be pro rata based on each Lender's
Revolving Credit Commitment as compared to the Total Revolving
Credit Commitment) pursuant to such borrowing, (ii) the date of
the borrowing (which shall be a Business Day), (iii) disbursement
instructions with respect to such Loan, (iv) the amount of
Revolving Loans outstanding, (v) the amount of the Revolving
Loans that had been converted to Term Loans, and (vi) the face
amounts of outstanding Letters of Credit issued pursuant to the
Revolving Line of Credit and the Additional LC Facility,
respectively. Each Notice of Borrowing shall also set forth the
total Revolving Loans and Letters of Credit outstanding with
respect to each Lender after giving effect to the Revolving Loans
requested.
(c) (i) No later than 3:00 p.m. (Charlotte, North
Carolina time) on the date specified in each Notice of Borrowing,
each Lender will make available its pro rata portion of each
borrowing requested to be made on such date in the manner
provided below.
(ii) All amounts that a Lender is to fund shall be
made available in Dollars and immediately available funds to the
Borrowers in accordance with the Notice of Borrowing.
(iii) Nothing herein shall be deemed to relieve any
Lender from its obligation to fulfill its commitments hereunder
or make any Lender responsible for the default of any other
Lender in its obligation to make Loans hereunder.
2.2Term. The term of the Revolving Line of Credit will
begin on the date hereof and end on May 31, 1998, unless
terminated sooner in accordance with the terms of this Agreement;
provided, however, that the term of the Revolving Line of Credit
may be extended for successive one-year periods upon the request
of the Borrowers and the agreement in writing of all of the
Lenders to any such extension.
2.3Notes. On the Closing Date, each of the Borrowers shall
execute and deliver to each of the Lenders a Note to evidence the
Loans to be made by such Lender. Each Note shall (i) be dated as
of the Closing Date, (ii) be in an amount equal to such Lender's
Commitment, (iii) be payable to the order of such Lender,
(iv) bear interest in accordance with this Loan Agreement hereof,
and (v) be in the form of Exhibit A attached hereto with blanks
appropriately completed in conformance herewith. On the date of
the amendment and restatement of this Agreement, as specified
above, the Borrowers will execute and deliver to each of the
Lenders a new note dated as of such date but otherwise in
accordance with the preceding sentence. The amount of principal
owing on the Notes at any given time shall be the aggregate
amount of all advances made under the Revolving Line of Credit,
less all payments of principal theretofore paid by the Borrower.
2.4Conversion to Term Loans. Subject to the terms and
conditions hereof, the Borrower, from time to time, may elect to
convert up to Twenty Million Dollars ($20,000,000) of the
aggregate principal amount of the Revolving Loans into Term Loans
by delivering to each of the Lenders at any time before May 31,
1998, an executed Conversion Notice setting forth the Conversion
Date. Notwithstanding any provision of this Loan Agreement, no
portion of the Revolving Loans may be converted to Term Loans at
any time during the continuance of a Default or Event of Default.
The amount of Revolving Loans held by any Lender that are so
converted into Term Loans on the Conversion Date shall be in the
proportion of such Lender's Commitment as compared to the Total
Commitment.
2.5Repayment.
(a) The Borrowers shall repay the outstanding principal
balance of the Revolving Loans in full, immediately upon the
occurrence of any Event of Default and acceleration by the
Lenders pursuant to Articles IX and X hereof of the principal and
interest due under the Notes.
(b) On the Revolving Loan Termination Date, the aggregate
outstanding principal balance of the Revolving Loans under the
Revolving Line of Credit plus all other Revolving Loan
Obligations as of the Revolving Loan Termination Date shall be
payable in full.
(c) The Borrowers shall repay the outstanding principal
balance of the Term Loans.
(i) In sixteen equal quarterly installments,
each equal to one sixteenth of the initial
principal amount of such Term Loan, due on
the last Business Day of each fiscal quarter
of Cato commencing on the first such date
following the Conversion Date of such Term
Loan;
(ii) In full, immediately upon the occurrence
of any Event of Default and acceleration by
the Lenders pursuant to Articles IX and X
hereof of the principal and interest due
under the Notes.
2.6Use of Proceeds. The proceeds of the Loans shall be used
by the Borrowers solely (i) to provide working capital; (ii) to
support the issuance of letters of credit; and (iii) for such
other corporate purposes as the Borrowers may determine, other
than uses restricted hereunder.
2.7Revolving Line of Credit Facility Fee. During the term
of the Revolving Line of Credit, the Borrowers shall pay to each
Lender such Lender's pro rata portion (based on such Lender's
Commitment as compared to the Total Commitment) of a facility fee
of Seventy Thousand Dollars ($70,000) per annum. Such fee shall
accrue from the Closing Date and shall be payable to each Lender
on the last day of each fiscal quarter of Cato thereafter, in
arrears.
2.8Term Loan Commitment Fee. On the Closing Date, the
Borrowers shall pay to each Lender its pro rata portion (based on
such Lender's Commitment as compared to the Total Commitment) of
a $50,000 fee in consideration of such Lender's commitment to
permit the conversion of Revolving Loans to Term Loans pursuant
to Section 2.4 hereof. On the date of this amendment and
restatement the Borrowers shall pay to each Lender its pro rata
portion (based on such Lender's Commitment as compared to the
Total Commitment) of a $10,000 fee in consideration of the
extension of such Lender's Commitment to permit the conversion of
Revolving Loans to Term Loans pursuant to Section 2.4.
2.9Interest. (a) The Borrowers covenant and agree to pay
to each Lender interest at the Applicable Rate on the unpaid
principal amount of the Revolving Loans made by such Lender.
(b) The Borrowers covenant and agree to pay to each Lender
interest at the Prime Rate on the unpaid principal amount of the
Term Loan made by such Lender.
(c) All interest accrued on the Loans pursuant to the Notes
shall be due and payable on the last Business Day of each fiscal
quarter of Cato.
2.10Computation. Interest on the Loans and fees due
hereunder shall be computed on the basis of the actual days
elapsed in a year consisting of 360 days.
2.11Default Rate; Post-petition Interest. Notwithstanding
any other provision of this Agreement, during the continuance of
any Event of Default all outstanding principal amounts of the
Loans, and to the full extent permitted by law, all interest
accrued on the Loans shall bear interest at the Default Rate, and
shall be payable on demand. To the full extent permitted by
applicable law, interest shall continue to accrue on the Notes
after the filing by or against any or all of the Borrowers of any
petition seeking any relief in bankruptcy or under any act or law
pertaining to insolvency or debtor relief, whether state, federal
or foreign.
2.12Maximum Interest Rate. Nothing contained in this
Agreement or in the Notes shall be deemed to establish or require
the payment of interest to any Lender at a rate in excess of the
maximum rate permitted in the jurisdiction of enforcement of this
Agreement or the Notes. In the event that the rate of interest
required to be paid under other provisions of this Agreement or
the Notes exceeds the maximum rate permitted in such
jurisdiction, the rate of interest required to be paid hereunder
and under the Notes shall be automatically reduced to the maximum
rate permitted in such jurisdiction and any amounts collected in
excess of the permissible amount shall be deemed a prepayment of
principal on the Notes.
2.13Payment.
(a) All payments (including prepayments) by any Borrower on
account of principal, interest and fees due hereunder and under
the Notes shall be made, in immediately available funds, to the
appropriate Lender at such Lender's address as shown on Annex I
attached hereto prior to 2:00 p.m., Charlotte, North Carolina
time, on the date payment is due, or at such other place as is
designated in writing by such Lender. Any payments under this
Agreement which are made later than 2:00 p.m. (Charlotte, North
Carolina time) shall be deemed to have been made on the next
succeeding Business Day.
(b) Upon the failure of the Borrowers to make any principal
or interest payment within five (5) days of the due date thereof,
and immediately upon the due date of any fees, expenses or other
charges due hereunder or under any of the Loan Documents, the
Borrowers hereby authorize and direct each Lender to pay itself
all such amounts by drawing such amounts under the Revolving Line
of Credit. Such Lender shall give the Borrowers telephonic
notice of the amount of any such draws on the day of such draws;
provided, however, that a failure to give such notice shall not
affect the validity of any such draws. Failure of any Lender to
make payments to itself pursuant to this subparagraph shall in no
way release or excuse the Borrowers from making the payments due
the Lenders hereunder.
2.14Application of Principal Payments; Register; Pro Rata
Borrowigs.
(a) All payments made by the Borrowers shall be applied
(i) first, to the payment of fees, interest and expenses due and
payable on the Notes, and (ii) second, to the payment of unpaid
principal on the Notes that is due and payable (to the extent any
payment of unpaid principal exceeds the amount of the installment
of principal of the Term Loans then due and payable, such excess
shall be applied to the principal amount of the Revolving Loans
unless otherwise specified by the Borrowers in a notice delivered
to the Lenders at the time of such payment).
(b) Each Lender will record on its internal records the
amount of each Loan made by it and each payment in respect
thereof. Failure to make any such recordation, or any error in
such recordation, shall not affect the Borrowers' obligations in
respect of such Loans.
(c) Each Loan under this Agreement shall be loaned by each
Lender in the proportion of such Lender's Commitment as compared
to the Total Commitment.
ARTICLE IIAAdditional Letter of Credit Facility
2.1AAdditional Letter of Credit Facility. The Lenders
hereby agree to establish, subject to the terms and conditions of
this Agreement and in reliance upon the representations and
warranties made hereunder, an Additional LC Facility in the
amount of Fifteen Million Dollars ($15,000,000.00).
2.2ATerm. The Additional LC Facility shall exist for a term
beginning on December 16, 1994 and ending on May 31, 1995;
provided, however, that the term of the Additional LC Facility
may be extended from time to time for additional periods of up to
364 days upon the request of the Borrowers and the agreement in
writing of all of the Lenders. The Borrowers may, within 60 days
prior to the end of the then-current term, make a written request
to the Lenders for an extension of the term of the Additional LC
Facility, and within 30 days after the Lenders' receipt of such a
request the Lenders shall give the Borrowers written notice of
their agreement to extend the term or their refusal to do so.
Any failure of the Lenders to respond will be deemed a refusal to
extend the term.
2.3APurpose. The sole purpose of the Additional LC Facility
is to support the issuance of Letters of Credit pursuant to
Article III.
2.4AFacility Fee. During the term of the Additional LC
Facility the Borrowers shall pay each Lender such Lender's pro
rata portion (based on such Lender's Commitment compared to the
Total Commitment) of a facility fee of Eighteen Thousand Seven
Hundred Fifty Dollars ($18,750) per annum. Such fee shall accrue
from December 16, 1994 and shall be payable to each Lender on the
last day of each fiscal quarter of Cato thereafter, in arrears.
2.5APayment; Computation. Payment, applications of
payments, and calculations with respect to such facility fee will
be made pursuant to the provisions of Article II.
ARTICLE IIILetters of Credit3.1Letters of Credit. During the
term of this Agreement, any Borrower may request from time to
time that the LC Bank issue for such Borrower's account one or
more Letters of Credit to facilitate the purchase of inventory by
the Borrowers in the ordinary course of business. Applications
for Letters of Credit shall be made on the forms provided by the
LC Bank to such Borrower for such purpose, which forms shall be
substantially similar to the form attached hereto as Exhibit B.
If the face amount of the Letter of Credit requested is available
under the terms hereof, the LC Bank agrees to issue the Letter of
Credit requested, on behalf of all of the Lenders, provided that
(i) the expiration date of the requested Letter of Credit is no
later than the Revolving Loan Termination Date; (ii) there is no
currently existing Event of Default, and (iii) all of the other
terms and conditions of this Agreement and any LC Agreements have
been met. Notwithstanding the restriction of clause (i) above,
the LC Bank agrees to issue Letters of Credit having expiration
dates that are after the Revolving Loan Termination Date and
having an aggregate face amount of not more than Four Million
Dollars ($4,000,000) provided that (w) the expiration date of
such Letters of Credit are not more than 91 days after the
Revolving Loan Termination Date, (x) such Letters of Credit by
their terms require, as a condition to any draw thereunder, the
presentation of documents of title to goods purchased upon
payment pursuant to such draw, (y) the Borrower's reimbursement
obligations to the LC Bank with respect to such Letters of Credit
are fully secured, to the satisfaction of the Lenders, by cash
collateral on deposit with the LC Bank, and (z) the conditions of
clauses (ii) and (iii) above are satisfied at the time the
Borrower applies for such Letters of Credit.
In each application for a Letter of Credit the Borrowers
shall designate whether such Letter of Credit shall be issued
pursuant to the Revolving Line of Credit or the Additional LC
Facility, but (i) no Letter of Credit with an expiration date
that is more than 90 days after the Additional LC Facility
Termination Date (as of the date of such application) will be
issued pursuant to such Additional LC Facility, and (ii) the
aggregate face amount of all Letters of Credit outstanding
pursuant to the Additional LC Facility at any one time may not
exceed $15,000,000.
3.2Notice of Issuance. Whenever a Borrower desires the
issuance of a Letter of Credit, it shall, in addition to
completing any application procedures and documents required by
the LC Bank for the issuance of a Letter of Credit, notify the LC
Bank no later than 2:00 p.m. (Charlotte time) on the Business Day
of the proposed date of issuance. Each such notice shall specify
(i) the proposed date of issuance (which shall be a Business
Day), (ii) the face amount of the Letter of Credit, (iii) the
expiration date of the Letter of Credit, and (iv) the name and
address of the beneficiary with respect to such Letter of Credit.
3.3Reimbursements. Prior to 2:00 p.m., Charlotte, North
Carolina time, on any Disbursement Date the Borrowers will
reimburse the LC Bank for all amounts which it has disbursed
under a Letter of Credit. In the event the LC Bank is not
reimbursed by the Borrowers on the Disbursement Date, the Lenders
shall fund (without any requirement that the conditions set forth
in Article V shall have been fulfilled) the reimbursement
obligation therefor by making Revolving Loans as provided in
Section 2.1 (the Borrowers being deemed to have given a timely
request therefor for such amount); provided, however, for the
purpose of determining the availability of a borrowing under the
Revolving Line of Credit immediately prior to giving effect to
the application of the proceeds of such Revolving Loans, such
Letter of Credit shall be deemed not to be outstanding at such
time.
The Borrowers' obligations under this Section 3.3 to
reimburse the LC Bank with respect to each disbursement
(including interest thereon) in respect of a Letter of Credit,
shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or
defense to payment that the Borrowers may have or have had
against any Lender or any beneficiary of a Letter of Credit,
including any defense based upon the occurrence of any Default or
Event of Default, any draft, demand or certificate or other
document presented under a Letter of Credit proving to be forged,
fraudulent, invalid or insufficient, the failure of any
disbursement to conform to the terms of the applicable Letter of
Credit (if in good faith opinion of the LC Bank, such
disbursement is determined to be appropriate) or any
nonapplication or misapplication by the beneficiary of the
proceeds of such disbursement, or the legality, validity, form,
regularity or enforceability of such Letter of Credit.
3.4Letter of Credit Fees. The Borrowers agree to pay the LC
Bank, on demand, the LC Bank's standard opening and operating
fees, commissions and charges in effect from time to time for
issuing and administering any Letters of Credit, all in
accordance with the LC Agreements relating to such Letters of
Credit, and all interest due under such LC Agreements. The
Borrowers further agree to pay to the LC Bank (i) a fee at the
rate of three-quarters percent (3/4%) per annum of any Letter of
Credit that is not a Documentary Letter of Credit for the period
commencing on the date of issuance of such Letter of Credit and
ending on the termination date of such Letter of Credit, payable
on the date of issuance of such Letter of Credit and (ii) a fee
at the rate of three-sixteenths of one percent (0.1875%) of the
amount of each drawing under a Documentary Letter of Credit,
payable at the time of the drawing; provided, however, that the
minimum fee for any Documentary Letter of Credit shall be $50.
The Lenders shall fund (without any requirement that the
conditions set forth in Article V shall have been fulfilled) the
amount of any such fees, commissions, charges and interest when
due and payable through Revolving Loans, to the extent available
(the Borrowers being deemed to have given a timely Loan request
therefor).
3.5Reimbursement and Other Obligations. All obligations of
a Borrower to pay money to the LC Bank, including without
limitation, any reimbursement obligations pursuant to Section 3.3
or pursuant to the LC Agreements, shall be deemed Obligations of
all Borrowers hereunder jointly and severally, and shall
constitute Obligations under the Agreement and the other Loan
Documents.
3.6Other Terms. All other terms and conditions of the
Letters of Credit shall be subject to and governed by the
provisions of the LC Agreements relating to each specific Letter
of Credit.
3.7Participations in Letters of Credit. The LC Bank will
sell and the other Lenders will purchase, participation interests
in the Letters of Credit, such that the relative risks, benefits,
fees and expenses of each Letter of Credit will be shared by the
Lenders pro rata based on each Lender's Commitment as compared to
the Total Commitment.
ARTICLE IVProvisions Applicable to Both the Letters Of Creditand
he Revolving Credit Loans
4.1 Capital Adequacy. In the event that any Lender shall
have determined that the adoption of any applicable law, rule,
regulation or guideline regarding capital adequacy, or any change
therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof
or by any court, or compliance by such Lender with any request or
directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of
return on such Lender's capital as a consequence of its
obligations hereunder to a level below that which such Lender
could have achieved but for such adoption, change or compliance
(taking into consideration such Lender's policies as the case may
be, with respect to capital adequacy) by an amount deemed by such
Lender to be material, then the Borrowers, within fifteen (15)
days of any written request by such Lender, shall pay to such
Lender such additional amount or amounts as will compensate such
Lender for any such reduction suffered; provided that no Borrower
shall be obligated to pay any such amounts for actual reductions
suffered more than one hundred-twenty (120) days prior to the
date of such request. Within a reasonable time after making a
request for such additional amount hereunder, the Lender will
furnish to the Borrowers a statement certifying the amount
hereunder, the Lender will furnish to the Borrowers a statement
certifying the amount of such reduction and describing the event
giving rise to such reduction, which describing the event giving
rise to such reduction, which determination shall be conclusive
absent manifest error. Failure on the part of a Lender to demand
payment of any additional amounts hereunder shall not constitute
a waiver of such Lender's right to demand payment of any amounts
arising at any subsequent time. Nothing herein contained shall
be construed or so operate as to require the Borrowers to pay any
interest, fees, costs or charges greater than is permitted by
applicable law.
4.2Taxes.
(a) Any and all payments by the Borrowers hereunder or
under the Notes, the LC Agreements or the other Loan Documents
shall be made in accordance with the terms hereof and thereof,
free and clear of and without deduction for any and all present
or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding
taxes measured by net income, and franchise taxes imposed on any
Lender, by the jurisdiction under the laws of which such Lender
is organized or transacting business or any political subdivision
thereof (all such nonexcluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred
to as "Taxes"). If the Borrowers shall be required by law to
deduct any Taxes from or in respect of any sum payable under any
such documents to a Lender, (i) the sum payable shall be
increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums
payable under this Section 4.2) such Lender receives an amount
equal to the sum it would have received had no such deductions
been made, (ii) the Borrowers shall make such deductions,
(iii) the Borrowers shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with
applicable law, and (iv) the Borrowers shall deliver to such
Lender evidence of such payment to the relevant taxation
authority or other authority.
(b) In addition, the Borrowers agree to pay any and all
present or future intangibles, stamp or documentary taxes or any
other excise or property taxes, charges or similar levies of the
United States or any state or political subdivision thereof or
any applicable foreign jurisdiction that arise from any payment
made hereunder or from the execution, delivery or registration
of, or otherwise with respect to, this Agreement (hereinafter
referred to as "Other Taxes").
(c) The Borrowers hereby agree jointly and severally to
indemnify the Agent and each Lender for the full amount of Taxes
or Other Taxes (including without limitation, any Taxes or Other
Taxes imposed by any jurisdiction on amounts payable under this
Section 4.2) paid by the Agent and any Lender (as the case may
be) and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto. This
indemnification shall be made within 30 days from the date the
Agent or any Lender makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes
pursuant to this Section 4.2, the Borrowers will furnish to the
relevant Lender the original or a certified copy of a receipt
evidencing payment thereof.
(e) Without prejudice to the survival of any other
agreement of the Borrowers hereunder, the agreements and
obligations of the Borrowers contained in this Section 4.2 shall
survive the payment in full of principal and interest and all
other payments due hereunder.
ARTICLE VClosing; Conditions of Closing and Borrowing
5.1Closing. The Closing shall take place at 10:00 a.m. on
March 9, 1993 at the offices of Robinson, Bradshaw & Hinson,
P.A., 1900 Independence Center, 101 North Tryon Street,
Charlotte, North Carolina 28246 or at such time as the parties
hereto shall mutually agree.
5.2Conditions of Loans and Advances. The obligation of the
Lenders to close this financing or to make any Loans or advances
under this Agreement is subject to: (a) the accuracy and
correctness of the representations and warranties of the
Borrowers contained herein, in the other Loan Documents and in
any certificate delivered pursuant to this Agreement or the other
Loan Documents, in all respects as if made on the date of such
Loan or advance; (b) the performance by the Borrowers of their
respective agreements contained herein and in the other Loan
Documents; and (c) the continued satisfaction of the following
conditions:
5.2.1Executed Loan Documents.
(a) Certain Documents. The following Loan Documents shall
have been duly authorized, executed and delivered by the
appropriate Borrower or Borrowers, in form and substance
satisfactory to each Lender, shall be in full force and effect
and no event of default, as defined therein, or event or
condition that, with the lapse of time or giving of notice, or
both, would constitute an event of default thereunder, shall
exist, and the Agent and each Lender shall have received fully
executed originals thereof:
(i) the Notes; and
(ii) the Continuing Letter of Credit Agreement
attached hereto as Exhibit B.
(b) Intercreditor Matters. The Agent and the Lenders shall
have entered into a satisfactory intercreditor agreement setting
forth the rights and responsibilities of the Agent and the
Lenders.
5.2.2Closing Certificates, etc.
(a) Certificates of the Borrowers. The Agent and the
Lenders shall have received a certificate dated as of the Closing
Date from each Borrower, in form and substance satisfactory to
the Lenders, to the effect that all representations and
warranties of such Borrower contained in this Agreement and the
other Loan Documents are true, correct and complete; that such
Borrower is not in violation of any of the covenants contained in
this Agreement or the other Loan Documents; that, giving effect
to the transactions contemplated by this Agreement, no Event of
Default nor any event or condition which with notice, lapse of
time, or both would constitute such an Event of Default, has
occurred and is continuing; and that each Borrower has satisfied
each of the closing conditions applicable to such Borrower. Each
request for an advance under the Revolving Line of Credit, each
application for a Letter of Credit and each advance made or
Letter of Credit issued by any Lender on behalf of a Borrower
pursuant to such request or application shall be deemed to be a
new certification by the Borrowers under this Section 5.2.2(a) as
of the date of such request or advance.
(b) Certificates of Secretary. The Agent and the Lenders
shall have received a certificate dated as of the Closing Date of
the Secretary or an Assistant Secretary of each Borrower
certifying: (a) that attached thereto is a true and complete copy
of the bylaws of such Borrower, 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 such
Borrower authorizing the execution, delivery and performance of
this Agreement and the other Loan Documents; and (c) as to the
incumbency and genuineness of the signature of each officer of
such Borrower, as applicable, executing this Agreement or any of
the other Loan Documents.
(c) Articles of Incorporation. The Agent and the Lenders
shall have received copies of the certificate of incorporation of
each Borrower and all amendments thereto, certified as of a
recent date by the Secretary of State of such Borrower's state of
incorporation and a certification by each Borrower that such
certificate of incorporation have not been amended since such
date.
(d) Certificates of Good Standing. With respect to each
Borrower, the Agent and the Lenders shall have received (i) a
long-form certificate as of a recent date of such corporation's
good standing under the laws its state of incorporation and of
each state in which it is authorized to transact business, and
(ii) good standing certificates from the Department of Revenue of
the state of incorporation of each Borrower, indicating that such
Borrower has filed all required tax returns and such Borrower
owes no delinquent taxes.
(e) Opinion of Counsel to the Borrower. The Lenders shall
have received the favorable opinion of the law firm of Moore &
Van Allen, counsel for the Borrowers, dated as of the Closing
Date and addressed to the Lenders, as to the matters set forth on
Exhibit D hereto, in form and substance satisfactory to the
Lenders.
5.2.3Consents, No Adverse Change.
(a) Governmental Approvals. All necessary approvals,
authorizations and consents, if any be required, of all
governmental bodies (including courts) having jurisdiction with
respect to the transactions contemplated by this Agreement shall
have been obtained.
(b) No Injunction, Etc. No injunction, restraining order,
or judgment before any court, governmental agency or legislative
body shall have been obtained which enjoins, restrains, or
prohibits, or awards substantial damages in respect of, this
Agreement or the consummation of the transactions contemplated
hereby.
(c) Event of Default. No Event of Default, nor any event
or condition which, with notice, lapse of time or the making of
any Loan or advance, would constitute an Event of Default, shall
have occurred and be continuing.
5.2.4Miscellaneous.
(a) Proceedings and Documents. All certificates and other
instruments and documents and all proceedings in connection with
the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Lenders. The Agent and
the Lenders shall have received copies of all other certificates,
instruments and documents, and other evidence as they may
reasonably request, in form and substance satisfactory to the
Lenders, with respect to the transactions contemplated by this
Agreement and the taking of all actions in connection therewith.
(b) Disbursement Instructions. The Lenders shall have
received written instructions and authorization from the
Borrowers to the Lenders as to the payment of any proceeds of
Loans made under this Agreement that are to be paid on the
Closing Date.
(c) Payment at Closing. There shall have been paid by the
Borrowers to the respective parties entitled thereto the fees and
expenses due hereunder, including the fees described in
Section 2.8.
5.3Waiver of Conditions Precedent. If any Lender makes any
Loan or advance hereunder prior to the fulfillment of any of the
conditions precedent set forth in this Article V, the making of
such Loan or advance shall constitute only an extension of time
for the fulfillment of such condition and not a waiver thereof,
and each Borrower shall thereafter use its best efforts to
fulfill each such condition promptly.
ARTICLE VIRepresentations and Warranties
In order to induce the Lenders to enter into this Agreement
and to make the Loans, each of the Borrowers (severally and
jointly with the other Borrowers) makes the following warranties
and representations to the Agent and the Lenders, all of which
shall be true and correct as of the date the initial Loan is made
hereunder and shall survive the execution of this Agreement and
the making of such initial Loan:
6.1Corporate Organization and Power. Each of the Borrowers
(i) is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and
(ii) is qualified to do business and is in good standing in every
other jurisdiction in which the nature of its business or the
ownership of its properties requires it to be so qualified and
where failure to so qualify would have a Material Adverse Effect.
Each Borrower (x) has the requisite corporate power and authority
and the right to own and operate its properties, to lease the
property it operates under lease, and to conduct its business as
now and proposed to be conducted; (y) has full power to engage in
the transactions contemplated hereby and in the other Loan
Documents; and (z) has the full power, authority and legal right
to execute and deliver this Agreement, and the other Loan
Documents executed by it and to perform and observe the terms and
provisions hereof and thereof. Cato, as of the date hereof, has
no Subsidiaries except CHW, which is a wholly owned Subsidiary of
Cato.
6.2Litigation; Government Regulation. As of the Closing
Date, there are no material actions, suits, investigations or
proceedings pending or, to the knowledge of each Borrower,
threatened against or affecting any Borrower, or that question
the validity of this Agreement, or any of the Loan Documents, at
law or in equity before any court or administrative officer or
agency, and no Borrower is in violation of or in default under
any applicable statute, rule, order, decree, writ, injunction or
regulation of any governmental body (including any court) where
such violation may have a Material Adverse Effect.
6.3Taxes. No Borrower is delinquent in the payment of any
taxes, including sales taxes, that have been levied or assessed
by any governmental authority against it or its assets, unless
such taxes are being diligently contested by such Borrower by
appropriate proceedings and the failure to timely pay such taxes
will not have a Material Adversely Effect. Each Borrower has
timely filed all tax returns that are required by law to be
filed, and has paid all taxes shown on said returns and all other
assessments or fees levied upon such Borrower, or upon its
properties to the extent that such taxes, assessments or fees
have become due and if not due, such taxes have been adequately
provided for. To the knowledge of each Borrower, no material
controversy in respect of income taxes is pending or threatened.
6.4Enforceability of Loan Documents; Compliance With Other
Instruents. Each of the Loan Documents executed by any Borrower
is the legal, valid and binding obligation of such Borrower,
enforceable against such Borrower in accordance with its terms.
No Borrower is in default in any material respect with respect to
any indenture, loan agreement, mortgage, lease, deed or similar
agreement related to the borrowing of monies to which such
Borrower is a party or by which it is bound. Neither the
execution, delivery or performance of the Loan Documents executed
by the Borrowers, nor compliance therewith: (a) conflicts or
will conflict with or results or will result in any breach of, or
constitutes or will constitute with the passage of time or the
giving of notice or both, a default under, (i) the certificate of
incorporation or bylaws of any Borrower, (ii) any law, order,
writ, injunction or decree of any court or governmental
authority, or (iii) any agreement or instrument to which any
Borrower is a party or by which any Borrower, or its respective
properties, is bound or (b) results or will result in the
creation or imposition of any lien, charge or encumbrance upon
its properties pursuant to any such agreement or instrument,
except Permitted Liens.
6.5Governmental Authorization. No authorization, consent or
approval of, or declaration or filing with, any governmental
authority is required for the valid execution, delivery and
performance by each Borrower of the Loan Documents or the
consummation by each Borrower of the transactions contemplated
hereby and thereby. Each Borrower has, and is in good standing
with respect to, all material governmental approvals, permits,
certificates, inspections, consents and franchises necessary to
continue to conduct its respective businesses as heretofore
conducted and to own or lease and operate its properties as now
owned or leased by it. None of such approvals, permits,
certificates, consents, or franchises contains any term,
provision, condition or limitation more burdensome than such as
are generally applicable to Persons engaged in the same or
similar business as such Borrower.
6.6Event of Default. No event has occurred and is
continuing that constitutes an Event of Default or would
constitute such an Event of Default after notice or lapse of time
or both.
6.7Margin Securities. Neither the making of any Loan
hereunder, nor the use of the proceeds thereof, will violate or
be inconsistent with the provisions of Regulation G, T, U or X of
the Board of Governors of the Federal Reserve System and no part
of the proceeds of any Loans will be used to purchase or carry
any Margin Stock in violation of Regulation U or to extend credit
for the purpose of purchasing or carrying any Margin Stock in
violation of Regulation U.
6.8Full Disclosure. None of the Loan Documents, nor any
statements furnished to the Agent or any Lender by or on behalf
of a Borrower in connection with the transactions contemplated
Loan Documents, contains any untrue statement of a material fact
or omits a material fact necessary to make the statements
contained therein or herein not misleading. There is no fact
known to either Borrower not disclosed to the Lenders in writing
that has or, to the best of either Borrower's knowledge, would
have a Material Adverse Effect.
6.9ERISA.
(a) No accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Internal Revenue
Code), whether or not waived, has occurred with respect to any
Employee Plan, and no termination event or Reportable Event has
occurred or is reasonably expected to occur with respect to any
Employee Plan. The present value of all accrued benefits under
each Employee Plan (based on those assumptions used to fund such
Employee Plan) did not, as of the most recent valuation date,
exceed the then current value of the assets of such Employee Plan
allocable to such benefits. Full payment has been made on or
before the due date thereof of all amounts that each Borrower is
required under the terms of each Employee Plan to have paid as
contributions to such plan.
(b) No Borrower has incurred any withdrawal liability under
Section 4201 of ERISA.
(c) No Borrower has participated in any prohibited
transaction (as defined in Section 406 or ERISA or Section 4975
of the Internal Revenue Code), which has subjected, or may
subject, it to any material civil penalty or tax imposed by
Section 502(i) of ERISA or Section 4975 of the Internal Revenue
Code, respectively. No Borrower has incurred, or is reasonably
expected to incur, any liability to the Pension Benefit Guaranty
Corporation (other than for insurance premiums which have been
paid when due).
(d) To the knowledge of each Borrower and based on
actuarial reports, the present value (determined using actuarial
and other assumptions that are reasonable in respect of the
benefits provided and the employees participating) of the
liability of each Borrower for post-retirement benefits to be
provided to its current and former employees under all welfare
benefit plans (as defined in Section 3(1) of ERISA) does not, in
the aggregate, exceed the assets under all such plans allocable
to such benefits by an amount that would have a Material Adverse
Effect.
(e) The execution and delivery of this Agreement will not
involve any transaction which is subject to the prohibitions of
Section 406 of ERISA or in connection with which a tax could be
imposed pursuant to Section 4975 of the Internal Revenue Code.
(f) No Borrower is making or has ever made or been required
to make any contributions to a Multiemployer Plan.
6.10Financial Statements. The Financial Statements of the
Borrowers delivered to the Lenders by the Borrowers in connection
with this Loan Agreement have been prepared by the Borrowers in
accordance with Generally Accepted Accounting Principles, and in
the case of the most recent annual Financial Statements have been
audited by Ernst and Young, independent certified public
accountants, in accordance with generally accepted auditing
standards, and they contain no material misstatement or omission
and fairly present the consolidated financial position, assets
and liabilities of the Borrowers as of the respective dates
thereof and the results of operations of the Borrowers for the
respective periods then ended. Since the date of the unaudited
Financial Statements for the most recent fiscal quarter, there
has been no material adverse change in the consolidated assets,
liabilities or financial position of Cato and its Subsidiaries or
in the consolidated results of operations of Cato and its
Subsidiaries, and neither of the Borrowers has incurred any
obligation or liability that would have a Material Adverse
Effect.
6.11Title to Assets. Each Borrower has good, indefeasible
and merchantable title in fee simple (or its equivalent under
applicable law) to and ownership of the properties owned by it
(as reflected in the Financial Statements) and all of its other
assets, including without limitation, the assets reflected in the
most recent Financial Statements, free and clear of all liens,
claims, security interests and encumbrances, except those in
favor of the Lenders and Permitted Liens; and, except for
financing statements filed in connection with a loan agreement
being terminated on the Closing Date following the discharge on
the Closing Date of all indebtedness thereunder, which financing
statements shall be promptly terminated, and financing statements
filed in connection with the Permitted Liens, no financing
statement under the Uniform Commercial Code that names any
Borrower as debtor has been filed and is still in effect, other
than in favor of the Lenders, and no Borrower has signed any
financing statement or any security agreement authorizing any
secured party thereunder to file any such financing statement.
Each Borrower enjoys peaceful and undisturbed possession under
substantially all of its leases and all such leases are valid and
subsisting and in full force and effect.
6.12Use of Proceeds. Each Borrower's uses of the proceeds
of any Loans made by the Lenders to the Borrowers pursuant to
this Agreement are, and continue to be, legal and proper uses and
such uses are and will be consistent with all applicable laws and
statutes, as in effect from time to time.
6.13Environmental Matters. Except for permitted operations
in full compliance with all applicable federal, state and local
Environmental Laws, regulations and rules: (a) No dangerous,
hazardous or toxic substances, pollutants, contaminants,
chemicals, wastes, or materials, within the meaning of any
applicable federal, state or local laws, regulations or orders
and including without limitation urea-formaldehyde,
polychlorinated biphenyls (PCB's), nuclear fuel or waste, and
petroleum, including but not limited to crude oil, natural gas,
natural gas liquids, gasoline and synthetic gas, are stored or
otherwise located on the Realty owned or leased by any Borrower
(excluding de minimis quantities of materials and quantities of
such materials in normal office and cleaning products) and no
part of the Realty owned or leased by any Borrower, including the
groundwater located thereon and thereunder, is presently known by
the Borrower to be contaminated by any such substance. No
improvement located on the Realty owned or leased by any Borrower
is known to contain any friable asbestos or substances containing
asbestos and deemed hazardous by any federal, state or local
laws, regulations or orders respecting such material. To the
knowledge of the Borrower, there were no releases of such
hazardous substances, materials or wastes on any Realty
previously owned by the Borrower while the Borrower owned such
Realty;
(b) No Realty owned or leased by the Borrower has, to the
knowledge of the Borrower, ever been used as or for a mine, a
gasoline service station, or an above-ground petroleum products
storage facility, a landfill, a dump or other disposal facility,
or for industrial, or manufacturing purposes;
(c) To the knowledge of the Borrowers, there are no
underground storage tanks situated on the Denmark Road Real
Estate, other than tanks installed by the Borrower which have
been appropriately emptied and filled in compliance with all
applicable Environment Laws and, to the knowledge of the
Borrower, no underground leakage from such tanks has occurred;
(d) All activities, and operations of each Borrower meet in
all material respects the requirements of all applicable
Environmental Laws and regulations of all federal, state and
local governments or regulatory bodies having jurisdiction over
such Borrower, or its properties, including without limitation,
RCRA and CERCLA;
(e) The Borrower, to its knowledge, has never sent a
hazardous substance to a site which, pursuant to CERCLA or any
similar state law, (1) has been placed on the "National
Priorities List" of hazardous wastes, or (2) which is subject to
a claim, an administrative order or other request to take
"removal" or "remedial" action (as defined under CERCLA) or to
pay for the costs of cleaning up such a site;
(f) The Borrower, to its knowledge, is not involved in any
suit or proceeding nor has it received any notice from any
governmental agency with respect to a release of hazardous
substances nor has it received notice of any claims from any
person or entity relating to personal injuries from exposure to
hazardous substances; and
(g) The Borrower has timely filed all material reports
required to be filed, has acquired all necessary certificates,
approvals and permits and has generated and maintained in all
material respects all required data, documentation and records
under any applicable Environmental Laws.
6.14Authorization. The execution, performance and delivery
of the Loan Documents by the Borrowers are within the corporate
powers of such Borrowers and have been duly authorized by all
necessary and appropriate corporate action and validly executed
and delivered.
6.15Assets for Conduct of Business. Each of the Borrowers
possesses adequate assets, licenses, patents, patent
applications, copyrights, trademarks, servicemarks and trade
names to continue to conduct its business as heretofore
conducted, without any material conflict with the rights of
others.
6.16Compliance With Laws. Each of the Borrowers has duly
complied with, and the Realty and its business operations and
leaseholds are in compliance in all material respects with, the
provisions of all federal, state and local law, rules and
regulations applicable to such Borrower, the Realty or the
conduct of such Borrower's business, including, without
limitation, all federal and state securities and antitrust laws,
ERISA and OSHA, and there have been no citations, notices or
orders of noncompliance issued to such Borrower under any such
law, rule or regulation which would have a Material Adverse
Effect.
6.17Withholding Taxes. Each of the Borrowers is current in
respect to payment of all federal and state withholding taxes,
social security taxes and other payroll taxes. Each of the
Borrowers currently accrues its payroll tax obligations and
maintains sufficient available funds or borrowing capacity to
satisfy its payroll tax liability, if any.
6.18Contracts; Labor Disputes. No Borrower is a party to
any contract or agreement, or subject to any charge, corporate
restriction, judgment, injunction, decree, rule, regulation or
order of any court of governmental authority, which has or would
have a Material Adverse Effect. As of the Closing Date, no
Borrower is a party to any general labor disputes, and there are
no strikes or walkouts relating to any labor contracts to which
any Borrower is a party.
6.19Outstanding Indebtedness. As of the Closing Date, no
Borrower has outstanding any Indebtedness for money borrowed,
other than for outstanding Letters of Credit issued for the
account of any Borrower, in excess of $50,000.
ARTICLE VIIAffirmative Covenants
Until payment in full of all Obligations of each of the
Borrowers to each of the Lenders, each of the Borrowers covenants
and agrees that, unless the Lenders consent otherwise in writing:
7.1Repayment of Obligations. The Borrowers will promptly
repay the Obligations when due, including without limitation the
amounts due under the Notes, according to the terms of this
Agreement and the other Loan Documents.
7.2Performance Under Loan Documents. Each Borrower will
perform all obligations required to be performed by it under the
terms of this Agreement and the other Loan Documents and any
other agreements now or hereafter existing or entered into
between any of the Borrowers and the Lenders, subject to notice
and cure provisions contained therein.
7.3Financial and Business Information about the Borrowers.
The Borrowers shall deliver, or cause to be delivered, to each
Lender:
(a) As soon as practicable and in any event within forty-
five (45) days after the close of each fiscal quarter (except the
fourth quarter in each fiscal year) of Cato, a consolidated
balance sheet of Cato and its Subsidiaries as of the close of
such fiscal quarter and consolidated statements of income and
retained earnings and cash flows for that fiscal quarter and for
the portion of the fiscal year then ended, prepared in accordance
with Generally Accepted Accounting Principles, applied on a basis
consistent with that of the preceding period or containing
disclosure of the effect on the financial position or results of
operation of any change in the application of accounting
principles and practices during the period and certified by the
chief financial officer of Cato;
(b) As soon as practicable and in any event within one
hundred twenty (120) days after the close of a fiscal year of
Cato, beginning with the close of the fiscal year ending January
30, 1993, an audited consolidated balance sheet of Cato and its
Subsidiaries as of the close of such fiscal year, and an audited
consolidated statement of income, and retained earnings and cash
flows prepared in accordance with Generally Accepted Accounting
Principles, each audited by an independent certified public
accountant acceptable to the Lenders in accordance with generally
accepted auditing standards, applied on a basis consistent with
those of the preceding year or containing disclosure of the
effect on the financial position or results of operation of any
change in the application of accounting principles and practices
during the year; such financial statements shall be accompanied
by a report thereon by such certified public accountants,
containing an opinion that is not qualified with respect to scope
limitations or accounting principles followed by Cato and its
Subsidiaries not being in accordance with Generally Accepted
Accounting Principles, all in a form acceptable to the Agent and
the Lenders;
(c) Concurrently with the delivery of the financial
statements of the Borrower described in subsection (b) above, a
certificate from the independent certified public accountants
that in making their examination of the financial statements of
the Borrower, they obtained no knowledge of the occurrence or
existence of any condition or event which constitutes or would
constitute, upon the giving of notice or lapse of time or both,
any Event of Default, or a statement specifying the nature and
period of existence of any such condition or event disclosed by
their examination;
(d) Concurrently with the delivery of the financial
statements described in subsections (a) and (b) above, a
certificate from the Borrowers by a Designated Officer certifying
to the Lenders that the Borrowers have kept, observed, performed
and fulfilled in all material respects each and every covenant,
obligation and agreement binding upon any Borrower contained in
this Loan Agreement or the other Loan Documents, and that no
Event of Default, or any event which with the giving of notice or
lapse of time or both would constitute an Event of Default, has
occurred, or specifying any such Event of Default;
(e) Such other information about the financial condition
and operations of any Borrower as the Required Lenders may from
time to time reasonably request.
7.4Notice of Certain Events. The Borrowers shall promptly,
but in no event later than three (3) Business Days after an
executive officer of any Borrower obtains knowledge thereof, give
written notice to the Lenders of: (a) any material litigation or
proceeding brought against any Borrower, whether or not the claim
is considered by any such Borrower to be covered by insurance
(for the purpose hereof, any litigation against any Borrower
seeking to recover $1,000,000 or more in damages shall be deemed
material); (b) any written notice of a violation received by any
Borrower from any governmental regulatory body or law enforcement
authority which, if such violation were established, would have a
Material Adverse Effect; (c) any labor controversy that has
resulted in a strike or other work action that might reasonably
be expected to have a Material Adverse Effect; (d) any
attachment, lien, or levy that may be placed on or assessed
against or threatened against any Borrower, or any property of a
Borrower, other than Permitted Liens; (e) any judgments or orders
involving cost to the Borrowers in aggregate of more than
$500,000 in any fiscal year; (f) any Event of Default or any
Default; and (g) any other matter that has or would have a
Material Adverse Effect. The Borrowers shall promptly give
notice to the Lenders of any change in any Designated Officer.
7.5Corporate Existence and Maintenance of Properties. (a)
Each of the Borrowers shall maintain and preserve its corporate
existence and all rights, privileges and franchises now enjoyed;
provided, however, that any Subsidiary of Cato may merge with and
into Cato or any other Subsidiary of Cato; (b) each of the
Borrowers shall conduct its business in an orderly, efficient and
customary manner, keep its tangible properties in good working
order and condition (normal wear and tear excepted), and from
time to time make all needed repairs to, renewals of or
replacements of such properties (except to the extent that any of
such properties is obsolete or is being replaced) so that the
efficiency of such property shall be fully maintained and
preserved; and (c) each Borrower shall file or cause to be filed
in a timely manner all reports, applications, estimates and
licenses that shall be required by any governmental authority and
which, if not timely filed, would have a Material Adverse Effect.
7.6Payment of Indebtedness; Performance of Other
Obligations. Each of the Borrowers shall pay all Indebtedness
for money borrowed at maturity when due, and all other
obligations in accordance with customary trade practices.
7.7Maintenance of Insurance.
Notwithstanding any provision in any other Loan Documents
requiring specified types or amounts of insurance, the Borrowers
shall maintain worker's compensation insurance, liability
insurance and insurance on its properties, assets and business,
now owned or hereafter acquired, against such casualties, risks
and contingencies, and in such types and amounts and with such
insurance companies as shall be selected by management of Cato in
its reasonable discretion and as are customarily maintained by
prudent companies similarly situated in the Borrower's industry.
7.8Maintenance of Books and Records; Inspection. The
Borrower shall maintain adequate books, accounts and records, and
prepare all financial statements required under this Agreement in
accordance with Generally Accepted Accounting Principles and in
compliance with the regulations of any governmental regulatory
body having jurisdiction over it. Each of the Borrowers shall
permit any representative of the Lenders to visit and inspect any
of the properties of such Borrower, to examine all books of
accounts, records, reports and other papers, to make copies and
extracts therefrom, and to discuss the affairs, finances and
accounts of such Borrower with its executive officers and, upon
the consent of such Borrower, which shall not be unreasonably
withheld, its independent public accountants (and by this
provision each Borrower authorizes said accountants to discuss
the finances and affairs of such Borrower and to provide said
accountants with such further written authorization as they may
require), all at such reasonable times and as often as may be
reasonably requested.
7.9Compliance with ERISA. Each Borrower shall: (i) make
timely payment of contributions required to meet the minimum
funding standards set forth in ERISA with respect to any Employee
Plan; (ii) promptly, upon the request of any Lender, furnish to
the Lenders copies of any annual report required to be filed
under ERISA in connection with the Employee Plan; (iii) not take
any action or fail to take action, the result of which action or
inaction could be a material liability of Borrower to the Pension
Benefit Guaranty Corporation or to a Multiemployer Plan; and
(iv) notify the Lenders as soon as practicable of any Reportable
Event and of any additional act or condition arising in
connection with any Pension Plan which such Borrower believes
might constitute grounds for the termination thereof by the
Pension Benefit Guaranty Corporation or for the appointment by
the appropriate United States District Court of a trustee to
administer such plan. No Borrower shall participate in any
Prohibited Transaction which could subject any Borrower to any
material civil penalty under ERISA or material tax under the
Internal Revenue Code. Each Borrower shall furnish to a Lender
upon a Lender's request such additional information about any
Employee Plan or other employee benefit plan as may be reasonably
requested by such Lender.
7.10COBRA. The Employee Plans shall be operated in such a
manner that none of the Borrowers will incur any material tax
liability under Section 4980B of the Internal Revenue Code or any
material liability to any qualified beneficiary as defined in
Section 4980B.
7.11Payment of Taxes. Each Borrower will pay and discharge
all taxes, assessments and governmental charges or levies imposed
upon it or upon its income or profits, or upon any properties
belonging to it, prior to the date on which penalties attach
thereto, and all lawful claims which, if unpaid, might become a
lien or charge upon any properties of such Borrower, provided
that such Borrower shall not be required to pay any such tax,
assessment, charge, levy or claim that is being contested in good
faith and by proper proceedings if it has maintained adequate
reserves (in the good faith judgment of the management of such
Borrower) with respect thereto in accordance with Generally
Accepted Accounting Principles.
7.12Compliance with Statutes, etc. Each Borrower will
comply with all applicable statutes, regulations and orders of,
and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including applicable
statutes, regulations, orders and restrictions relating to
environmental standards and controls) other than those the
noncompliance with which would not have a Material Adverse
Effect. Each Borrower shall also observe and remain in
compliance with all licenses, permits, franchises or other
authorizations necessary to the ownership of its properties or
the conduct of its business, and all covenants and conditions of
all agreements and instruments to which a Borrower is a party,
where failure to comply or failure to obtain would have a
Material Adverse Effect.
ARTICLE VIIINegative Covenants
Until payment in full of the Obligations, the Borrowers
jointly and severally covenant and agree that, unless the
Required Lenders consent in writing, the Borrowers will not, nor
will any Borrower permit any of its Subsidiaries, if any, to,
individually or in the aggregate:
8.1Merger and Dissolution. Liquidate, windup or dissolve,
or enter into any consolidation, merger, syndicate or other
combination or sell, lease or dispose of, in a single transaction
or a series of related transactions, its business or assets as a
whole or such part as in the opinion of the Required Lenders
constitutes a substantial portion of its business or assets or
change its name; provided that any Borrower or Subsidiary of a
Borrower may enter into a merger or share exchange transaction
without the Required Lenders' prior written consent, if (i) such
Borrower or such Subsidiary will be the surviving entity; (ii)
immediately prior to the merger no Default or Event of Default
exists hereunder; (iii) immediately following the merger no
Default or Event of Default will exist hereunder; (iv) the merger
does not violate Section 8.13 hereof and (v) the merger will have
no material adverse effect on the Borrowers' ability to repay the
Loans when due.
8.2Indebtedness. Create, incur or suffer to exist any
Indebtedness for money borrowed or the equivalent except for:
(a) the Obligations owed to the Lenders under this Agreement and
the other Loan Documents; (b) Indebtedness owed from one Borrower
solely to the other Borrower; (c) aggregate Indebtedness of the
Borrowers and their Subsidiaries secured by Purchase Money Liens
not exceeding $1,000,000; (d) Indebtedness permitted pursuant to
Section 8.4; (e) Indebtedness permitted pursuant to Section 8.16;
and (f) other Indebtedness for money borrowed not in excess of
$250,000.
8.3Liens and Encumbrances. Create, assume or suffer to
exist any deed of trust, mortgage, encumbrance or other lien
(including a lien of attachment, judgment or execution) or
security interest (including the interest of a conditional seller
of goods), securing a charge or obligation, on or of any of its
property, real or personal, whether now owned or hereafter
acquired, except for the liens and security interests in favor of
the Lenders and the Permitted Liens.
8.4Subordinated Debentures and Preferred Stock. Issue any
Subordinated Debenture or Preferred Stock; provided, however,
that Cato may issue Subordinated Debentures or Preferred Stock if
each of the following conditions are satisfied: (i) such
Subordinated Debentures or Preferred Stock shall not entitle the
holder thereof to cause any of the Borrowers or their
Subsidiaries to redeem or repurchase such Subordinated Debentures
or Preferred Stock at any time before May 31, 2002 (or, if
earlier, a date four years after the Conversion Date if any of
the Revolving Loans are converted to Term Loans pursuant to
Section 2.4); (ii) at the time of issuance of such Subordinated
Debentures or Preferred Stock no Default or Event of Default
shall exist; and (iii) the issuance of such Subordinated
Debentures or Preferred Stock would not cause a Default or Event
of Default to exist.
8.5Transactions with Related Persons. (a) Directly or
indirectly make any loan or advance to, purchase, assume or
guarantee any note to or from any of its officers, directors, or
Affiliates, or to or from any member of the immediate family of
any of its officers, directors, or Affiliates, or subcontract any
operations to any Affiliate, except for (i) transactions, loans
or advances solely between Cato, CHW and their Subsidiaries and
(ii) transactions pursuant to the reasonable requirements of such
Borrower's or such Subsidiary's business and upon fair and
reasonable terms to such Borrower or Subsidiary that are no less
favorable to such Borrower or such Subsidiary than would be
obtained in a comparable arm's length transaction with a Person
not an Affiliate of such Borrower or such Subsidiary.
8.6Restrictions on Dividends, Share Repurchase, etc.
(a) Declare or pay any dividends (other than dividends
payable solely in its own Stock) upon any of its Stock (other
than dividends paid to a Borrower) if a Default or Event of
Default exists or would exist immediately after the payment of
such dividend;
(b) Repurchase shares of its own capital stock, provided,
however, that Cato may pay up to $12,000,000 in the aggregate to
purchase shares of its own capital stock unless a Default or
Event of Default exists or would exist immediately after payment
for any such purchase; or
(c) Make any other distribution of property or assets
(other than distributions of cash or Stock) among the holders of
shares of its Stock.
8.7Hazardous Wastes. Permit any hazardous or toxic wastes,
contaminants, oil, radioactive or other materials the removal of
which is required or the maintenance of which is restricted,
prohibited or penalized by any federal, state or local agency,
authority or governmental unit, to be brought on to any Realty
owned or operated by any Borrower or any Subsidiary of a
Borrower, or if so brought or found located thereon, the presence
of such material shall be related to operations in full
compliance with all applicable Environmental Laws, or the
Borrower shall cause such material to be removed as quickly as
practicable, with proper disposal, and all required environmental
cleanup procedures to be diligently undertaken pursuant to all
such laws, ordinances and regulations.
8.8Restricted Investments. Except as otherwise permitted
pursuant to this Agreement, purchase, own, invest in or otherwise
acquire, directly or indirectly, any Stock, evidence of
indebtedness, or other obligation or security or any interest
whatsoever in any other Person, or make or permit to exist any
loans, advances or extensions of credit to, or any investment in
cash or by delivery of property in, any Person, except for the
following:
(i) investments in Cash or in any of the
following:
(A) investments in debt instruments or preferred
stock of issuers having short-term debt
securities rated no less than A-1 by
Standard & Poor's Corporation or the
equivalent thereof or no less than P-1 by
Moody's Investor Service, Inc. or the
equivalent thereof or long-term securities
rated no less than A by Standard & Poor's
Corporation or the equivalent thereof by a
different rating agency, secured repurchase
agreements in which the underlying debt
instruments have such rating, or demand
deposits, time deposits, certificates of
deposit and banker's acceptances issued by or
entered into with a financial institution
organized under the laws of the United States
of America or any state thereof; and
(B) investments in common stock of issuers having
debt instruments rated at least A or A-1 or
the equivalent thereof by Standard & Poor's
Corporation or at least P-1 or the equivalent
thereof by Moody's Investor Service, Inc.;
(C) provided, however, that the aggregate amount
of investments in common stock described in
clause (B) shall not exceed ten percent (10%)
of the aggregate amount of investments
described in this clause (i);
(ii) Intercompany Loans;
(iii) loans and advances to employees for
reasonable travel and business and relocation
expenses in the ordinary course of business;
(iv) investments in Subsidiaries existing on the
Closing Date or created thereafter subject to the
conditions set forth in Section 8.14; and
(v) any other investments not exceeding in the
aggregate $500,000.
8.9Net Worth. Permit Tangible Net Worth at the end of any
fiscal quarter of Cato ending after October 29, 1994 to be less
than the sum of $120,000,000 plus (i) 50% of Net Income from
October 30, 1994 through the end of such fiscal quarter and
(ii) the net proceeds to Cato of the sale of any of its capital
stock from October 30, 1994 through the end of such fiscal
quarter, minus (x) any amount paid by Cato to purchase shares of
its own capital stock from October 30, 1994 through the end of
such fiscal quarter.
8.10Current Ratio. Permit the ratio of Current Assets to
Current Liabilities at the end of any Fiscal quarter of Cato to
be less than 1.5 to 1.0.
8.11Debt to Capitalization Ratio. Permit the ratio at the
end of any fiscal quarter of Cato of (a) the sum of the aggregate
amount of Funded Debt then outstanding plus Capitalized Rents to
(b) the sum of Tangible Net Worth plus the aggregate amount of
Funded Debt then outstanding plus Capitalized Rent to be greater
than 0.75 to 1.0.
8.12Fixed Charge Coverage Ratio. Permit the Fixed Charge
Coverage Ratio at the end of any fiscal quarter of Cato to be
less than 1.75 to 1.0.
8.13New Business. Engage in any business other than the
business in which any Borrower is currently engaged or a business
reasonably related thereto.
8.14Subsidiaries or Partnerships. Create any new Subsidiary
or transfer any assets to a Subsidiary, or become a partner or
joint venturer, except as otherwise provided herein; provided,
however, that the Borrowers may create any Subsidiary or transfer
any assets to a Subsidiary if such Subsidiary enters into this
Loan Agreement and delivers a guaranty of the Obligations, such
guaranty to be in form and substance satisfactory to the Required
Lenders.
8.15Capital Expenditures. Make Capital Expenditures in any
fiscal year of Cato in excess of the sum of (i) the Capital
Expenditure Limitation for such fiscal year plus (ii) the amount
by which the Capital Expenditure Limitation for the immediately
preceding fiscal year exceeded the Capital Expenditures for such
fiscal year.
8.16Guaranties. Guarantee or otherwise, in any way, become
liable with respect to the obligations or liabilities of any
Person except by endorsement of instruments or items of payment
for deposit to the general account of the Borrowers or for
delivery to the Lenders on account of the Obligations of the
Borrowers and except for guaranties of Indebtedness in an
aggregate amount of no more than $5,000,000.
8.17Change in Control. Permit a Change in Control to occur.
8.18Fiscal Year. Change its fiscal year from a fiscal year
ending on the Saturday nearest January 31.
ARTICLE IXEvents of Default9.1Events of Default. The occurrence
of any one or more of the following events shall constitute an
"Event of Default":
(a) Any Borrower fails to make when due any principal
payment, or any reimbursement for any amount disbursed under a
Letter of Credit, within five (5) Business Days of the date such
payment or reimbursement is due hereunder or any payment of
interest, fees or expenses relating to the Obligations within ten
(10) Business Days of the date such payment is due hereunder;
(b) Any Borrower fails or neglects to observe, perform or
comply with any term, provision, condition or covenant contained
in Sections 7.5(a) and 7.7 or any of the Sections in Article VIII
(other than Sections 8.5, 8.7, 8.9, 8.10, 8.11, 8.12 and 8.15) of
this Loan Agreement;
(c) Any Borrower fails or neglects to observe, perform or
comply with any other term, provision, condition or covenant
contained in this Loan Agreement, except those enumerated in
Sections 9.1(a) and 9.1(b) above, and the same is not cured to
the Lenders' satisfaction within thirty (30) days after any
executive officer of the Borrower acquires knowledge that such
failure has occurred and that such failure constitutes a Default
hereunder;
(d) If any representation or warranty made in writing by or
on behalf of any Borrower in this Agreement or the other Loan
Documents or in connection with the transactions contemplated
hereby, shall prove to have been false or incorrect in any
material respect at the time as of which such representation or
warranty was made;
(e) The filing by any Borrower of any voluntary petition
seeking liquidation, reorganization, arrangement, readjustment of
debts or for any other relief under the United States Bankruptcy
Code or under any other act or law pertaining to insolvency or
debtor relief, whether state, federal or foreign, now or
hereafter existing;
(f) The filing against any Borrower of any involuntary
petition seeking liquidation, reorganization, arrangement,
readjustment of debts or for any other relief under the
Bankruptcy Code or under any other act or law pertaining to
insolvency or debtor relief, whether state, federal or foreign,
now or hereafter existing;
(g) Any Borrower is enjoined, restrained or in any way
prevented by court order from conducting all or any material part
of its business affairs;
(h) There shall occur any material uninsured damage to or
loss, theft or destruction of any material portion of the assets
of any Borrower.
(i) A notice of lien, levy or assessment of a material
amount is filed of record (other than with respect to a Permitted
Lien) on all or any portion of the assets of any Borrower by the
United States, or any department, agency or instrumentality
thereof, or by any state, county, municipal or other governmental
agency, including, without limitation, the Pension Benefit
Guaranty Corporation, or if any taxes or debts owing at the time
or times hereafter by any one of them becomes a lien or
encumbrance upon any asset of the Borrower or its Subsidiaries
and the same is not dismissed, released or discharged within
thirty (30) days after the same becomes a lien or encumbrance or,
in the case of ad valorem taxes, prior to the last day when
payment may be made without penalty;
(j) The occurrence of any default or event of default on
the part of any Borrower (including specifically, but without
limitation, defaults due to nonpayment) under the terms of any
agreement, document or instrument pursuant to which such Borrower
has incurred any material Indebtedness for money borrowed, which
default would permit acceleration of such Indebtedness;
(k) The occurrence of any default or event of default on
the part of any Borrower under the terms of any agreement or
contract that is material to the affairs, financial or otherwise,
of such Borrower, and such default would have a Material Adverse
Effect;
(l) If a custodian, trustee, receiver or assignee for the
benefit of creditors is appointed or takes possession of any of
the assets of any of the Borrowers;
(m) The occurrence of any of the following events: (i) the
happening of a Reportable Event with respect to any Pension Plan;
(ii) the termination of any such plan; (iii) the appointment of a
trustee by an appropriate United States District Court to
administer any such plan; (iv) the institution of any proceedings
by the Pension Benefit Guaranty Corporation to terminate any such
plan or to appoint a trustee to administer any such plan; (v) the
failure of any Borrower to furnish promptly to each Lender, upon
request of the Required Lenders, a copy of each report that is
filed by such Borrower with the Secretary of Labor or the Pension
Benefit Guaranty Corporation; (vi) the failure of any of the
Borrowers to notify each Lender promptly upon receipt by such
Borrower of any notice of the institution of any proceeding or
any other actions that may result in the termination of any such
plan; or (vii) the failure of any Borrower to acquire and
maintain, when available, the contingent employer liability
coverage insurance provided for under Section 4023 of ERISA, such
insurance to be satisfactory to the Lenders in coverage and
amount;
(n) Any Borrower deliberately and willfully fails to
promptly provide any notice required by Section 7.4(f); or
(o) There shall occur any material adverse change in the
business of any Borrower, or its operations or conduct thereof,
that, individually or in the aggregate, would have a material
adverse effect on the ability of the Borrowers, taken as a whole,
to perform the obligations of the Borrowers under any of the Loan
Documents.
ARTICLE XRights and Remedies after Event of Default10.1Rights
andRemedies. Upon and after the occurrence of any Event of
Default, the Lenders may, in their sole discretion, take any or
all of the following actions, without prejudice to the rights of
any Lender to enforce its claims against the Borrowers, except as
otherwise specifically provided for in this Agreement (provided,
however, that if an Event of Default specified in clauses (f),
(g) or (n) shall occur, then the Lenders shall automatically be
deemed to have taken the following actions): (i) declare the
Total Commitment terminated, whereupon the Commitment of each
Lender shall forthwith terminate immediately and any accrued fees
payable in respect thereof shall forthwith become due and payable
without any other notice of any kind; (ii) declare all or any
part of the Obligations owing hereunder immediately due and
payable, whereupon such Obligations shall become immediately due
and payable without presentment, demand, protest, notice or legal
process of any kind, all of which are hereby expressly waived by
each Borrower and (iii) exercise all of the rights and remedies
of the Lenders under this Agreement, the other Loan Documents and
applicable law, in order to satisfy all of the Borrowers'
Obligations.
Notwithstanding the foregoing, if at any time within sixty
(60) days after an acceleration of the Loans, the Borrowers shall
pay all arrears of interest and all payments on account of
principal which shall have become due otherwise than by
acceleration (and, to the extent permitted by law, on interest or
overdue interest at the Default Rate) and all Events of Default
and Defaults (other than nonpayment of principal and interest due
solely by virtue of acceleration) shall have been remedied or
waived pursuant to Section 14.7, then the Lenders, by written
notice to the Borrowers, may at their option rescind and annul
the acceleration and its consequences; provided, however, that
such action shall not affect any subsequent Default or Event of
Default or remedies available thereon. The provisions of this
paragraph are for the benefit of the Lenders only, are not
intended to benefit the Borrowers and do not grant the Borrowers
the right to require the Lenders to rescind or annul any
acceleration hereunder, even if the conditions set forth herein
are met.
10.2Right of Set-off. In addition to any rights now or
hereafter granted under applicable law or otherwise, upon the
occurrence of an Event of Default, each Lender may, and is hereby
authorized by the Borrowers, at any time and from time to time,
to the fullest extent permitted by applicable laws, without
advance notice to any Borrower of any kind (any such notice being
expressly waived by each Borrower), to set off and apply any and
all deposits (general or special, time or demand, provisional or
final) at any time held and any other Indebtedness at any time
owing by such Lender to or for the credit or the account of any
Borrower against any or all of the Obligations of the Borrowers
to such Lender under this Agreement or any other agreement, now
or hereafter existing, whether or not such Obligations have
matured and any unreimbursed drawings made under any Letter of
Credit. Each Lender agrees promptly to notify the affected
Borrower after any such set-off or application, provided that the
failure to give such notice shall not affect the validity of such
set-off and application.
10.3Rights and Remedies Cumulative; Non-Waiver; Etc. The
enumeration of the Lenders' rights and remedies set forth in this
Agreement is not intended to be exhaustive and the exercise by
any Lender of any right or remedy shall not preclude the exercise
of any other rights or remedies, all of which shall be
cumulative, and shall be in addition to any other right or remedy
given hereunder, under the Loan Documents or under any other
Agreement between any of the Borrowers and any of the Lenders or
which may now or hereafter exist in law or in equity or by suit
or otherwise. No delay or failure to take action on the part of
the Agent or any Lender in exercising any right, power or
privilege shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right, power or privilege
preclude other or further exercise thereof or the exercise of any
other right, power or privilege or shall be construed to be a
waiver of any Event of Default. No course of dealing between any
Borrower and the Agent or any Lender or the agents or employees
of either of them shall be effective to change, modify or
discharge any provision of this Agreement or to constitute a
waiver of any Default or Event of Default.
ARTICLE XIPayment of Fees and Expenses
Whether or not the transactions contemplated by this
Agreement shall be consummated, the Borrowers jointly and
severally undertake:
11.1Fees and Expenses. To pay or reimburse the Lenders and
the Agent upon demand for all reasonable expenses (including,
without limitation, reasonable attorneys' fees) incurred or paid
by the Lenders in connection with: (a) the preparation,
execution, delivery, interpretation, modification or amendment of
this Agreement or the other Loan Documents; (b) any litigation,
contest, dispute, suit, or proceeding or action (whether
instituted by the Lenders or any of them, any Borrower or any
other Person) in any way relating to this Agreement or the other
Loan Documents; (c) any attempt to enforce any rights of any of
the Lenders against any Borrower or any other Person that may be
obligated to the Lender by virtue of this Agreement or the other
Loan Documents; and (d) any refinancing or restructuring of the
credit arrangement provided under this Loan Agreement in the
nature of a "work-out" or in any insolvency or bankruptcy
proceeding. In addition, the Borrowers shall pay to the Lenders
on demand any and all fees, costs and expenses that the Lenders
pay to a bank or other similar institution arising out of or in
connection with (i) the forwarding to any Borrower, or any other
Person on any of the Borrower's behalf, by the Lenders of
proceeds of the Loans made by the Lenders to the Borrower
pursuant to this Agreement.
ARTICLE XIIThe Agent12.1Appointment. The Lenders hereby
designate and appoint NationsBank as Agent to act as specified
herein and in the other Loan Documents. Each Lender hereby
irrevocably authorizes, and each holder of any Note by the
acceptance of such Note shall be deemed irrevocably to authorize,
the Agent to take such action on its behalf under the provisions
of this Agreement, the other Loan Documents and any other
instruments and agreements referred to herein or therein and to
exercise such powers and to perform such duties hereunder and
thereunder as are specifically delegated to or required of the
Agent by the terms hereof and thereof and such other powers as
are reasonably incidental thereto.
12.2Nature of Duties. The Agent shall not have any duties
or responsibilities except those expressly set forth in this
Agreement and in the other Loan Documents. Neither the Agent,
nor any of its officers, directors, employees or agents shall be
liable to the Lenders for any action taken or omitted by them as
such hereunder or under any other Loan Document or in connection
herewith or therewith, unless caused by their gross negligence or
willful misconduct. The duties of the Agent shall be mechanical
and administrative in nature; the Agent shall not have by reason
of this Agreement or any Loan Document a fiduciary relationship
in respect of any Lender; and nothing in this Agreement or any
Loan Document, expressed or implied, is intended to or shall be
so construed as to impose upon the Agent any obligations in
respect of this Agreement or any Loan Document except as
expressly set forth herein.
12.3Delegation of Duties. The Agent may execute any of its
duties under this Agreement or any other Loan Documents by or
through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such
duties. The Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with
reasonable care except to the extent otherwise required by
Section 12.8.
12.4Notice of Default. The Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or
Event of Default hereunder unless the Agent has received notice
from the Borrowers or a Lender describing such Default or Event
of Default and stating that such notice is a "notice of default."
In the event that the Agent receives such a notice, the Agent
shall give prompt notice thereof to the Lenders. The Agent shall
take such action with respect to such Default or Event of Default
as shall be reasonably directed by the Lenders, provided that,
unless and until the Agent shall have received such directions,
the Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default
or Event of Default as it shall deem advisable in the best
interests of the Lenders.
12.5Lack of Reliance on the Agent. Independently and
without reliance upon the Agent, each Lender, to the extent it
has deemed and shall deem appropriate, has made and shall
continue to make (i) its own independent investigation of the
financial condition and affairs of the Borrowers in connection
with the making and the continuance of the Loans hereunder and
the taking or not taking of any action in connection herewith,
and (ii) its own appraisal of the creditworthiness of the
Borrowers, and, except as expressly provided in this Agreement or
in any other Loan Document, the Agent shall have no duty or
responsibility, either initially or on a continuing basis, to
provide any Lender with any credit or other information with
respect thereto, whether coming into its possession before the
making of the Loans, or at any time or times thereafter. The
Agent shall not be responsible to any Lender for any recitals,
statements, information, representations or warranties herein or
in any other Loan Document or in any document, certificate or
other writing delivered in connection herewith or therewith or
for the execution, effectiveness, genuineness, validity,
enforceability, perfection, collectibility, priority or
sufficiency of this Agreement or any other Loan Document or the
financial condition of the Borrowers or any other Person or be
required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions of this
Agreement or any other Loan Document, or the financial condition
of the Borrowers or any other Person or the existence or possible
existence of any Default or Event of Default.
12.6Certain Rights of the Agent. If the Agent shall request
instructions from the Lenders with respect to any act or action
(including failure to act) in connection with this Agreement or
any other Loan Document, the Agent shall be entitled to refrain
from such act or taking such action unless and until the Agent
shall have received instructions from the Lenders; and the Agent
shall incur no liability to any Person by reason of so
refraining. The Agent shall be fully justified in failing or
refusing to take any action hereunder or under any Loan Document
(i) if such action would, in the opinion of the Agent, as the
case may be, be contrary to law or the terms of this Agreement or
the other Documents, (ii) if it shall not receive such advice or
concurrence of the Lenders as it deems appropriate, or (iii) if
it shall not first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such
action. Without limiting the foregoing, no Lender shall have any
right of action whatsoever against the Agent (absent the Agent's
gross negligence or willful misconduct) as a result of it acting
or refraining from acting hereunder or under any other Loan
Document in accordance with the instructions of the Lenders.
12.7Reliance. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing,
resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, radiogram, order or other
documentary, teletransmission or telephone message believed by it
to be genuine and correct and to have been signed, sent or made
by the proper Person. The Agent may consult with legal counsel
(including counsel for the Borrowers), independent public
accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants
or experts.
12.8Indemnification. To the extent the Agent is not
reimbursed and indemnified by or on behalf of the Borrowers, the
Lenders will reimburse and indemnify the Agent, in proportion to
their respective initial Commitments, for and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including counsel fees and
expenses) or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against the Agent in
performing its duties hereunder or under any other Loan Document
or in any way relating to or arising out of this Agreement or any
other Loan Document; provided, however, that no Lender shall be
liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements, finally determined by a court of competent
jurisdiction and not subject to any appeal, to be resulting from
the Agent's gross negligence or willful misconduct.
12.9Agent's Right to Seek Advice. The Agent shall have the
right, at any time, and from time to time, to seek advice or
directions from the Lenders regarding any action to be taken or
determination to be made under this Agreement. Upon delivery of
request for such advice or directions by the Agent to the
Lenders, the Lenders will respond to such request as soon as
reasonably possible with written instructions (or telephone
instructions promptly confirmed in writing). If such
instructions are not received by the Agent within a reasonable
time, the Agent may take such action as it deems appropriate in
its sole judgment, and the taking of such action by the Agent
shall not give rise to any liability on the part of the Agent,
except in the case of gross negligence or willful misconduct.
12.10The Agent in its Individual Capacity. With respect to
its obligations to make Loans under this Agreement, and with
respect to the Loans made by it and the Notes issued to it, the
Agent shall have the same rights and powers as any other Lender
or holder of a Note and may exercise the same as though it were
not performing the duties specified herein; and the term
"Lenders," "holders of Notes," or any similar terms shall, unless
the context clearly otherwise indicates, include the Agent in its
individual capacity. The Agent may accept deposits from, lend
money to, and generally engage in any kind of banking, trust,
financial advisory or other business with the Borrowers or any
Affiliate of the Borrower or any of its Subsidiaries as if it
were not performing the duties specified herein, and may accept
fees and other consideration from the Borrowers for services in
connection with this Agreement and otherwise without having to
account for the same to the Lenders.
12.11Holders. The Agent may deem and treat the payee of
any Note as the owner thereof for all purposes hereof unless and
until a written notice of the assignment, transfer or endorsement
thereof, as the case may be, shall have been filed with the
Agent. Any request, authority or consent of any Person or entity
who, at the time of making such request or giving such authority
or consent, is the holder of any Note shall be conclusive and
binding on any subsequent holder, transferee, assignee or
endorsee, as the case may be, of such Note or of any Note(s)
issued in exchange therefor.
12.12Successor Agent. The Agent may resign from the
performance of all its functions and duties hereunder and/or
under the other Loan Documents at any time by giving ten (10)
Business Days' prior written notice to the Borrowers and the
Lenders or may be removed, with or without cause, by the Lenders,
and, so long as no Event of Default has occurred and is
continuing, with the consent (which consent shall not be
unreasonably withheld) of the Borrowers, at any time by giving
ten (10) Business Days' prior written notice to the Borrowers and
the Agent. Such resignation or removal, as the case may be,
shall take effect upon the appointment of a successor Agent as
provided herein below. Upon any such notice of resignation or
removal (and, in the case of removal, upon the consent of the
Borrowers, if required), as the case may be, the Lenders shall
with the consent of the Borrowers (which consent shall not be
unreasonably withheld), appoint a successor Agent hereunder or
thereunder who shall be a commercial bank, trust company or other
financial institution with a combined capital and surplus in
excess of $1,000,000,000. 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 or removal, as the case may be, hereunder as Agent,
the provisions of this Article XII 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 XIIIAssignment And Participation13.1Assignments. (a)
Subject to the prior written consent of the Borrowers, which
shall not be unreasonably withheld, each Lender may at any time,
upon notice to the Agent of its intent to do so, assign to one or
more banks or other entities all or a portion of its rights and
obligations under this Agreement (including, without limitation,
all or a portion of the outstanding Loans and the Lender's
Revolving Credit Commitment) and may act as agent for all such
Assignees. Upon the execution and delivery of an Assignment and
Acceptance Agreement in a form reasonably satisfactory to such
Lender (an "Assignment and Acceptance"), from and after the
effective date specified in each Assignment and Acceptance, (i)
the Assignee thereunder shall be deemed a party hereto and, to
the extent that rights and obligations (including any portion of
any Loans or Revolving Credit Commitment) hereunder have been
assigned to it pursuant to such Assignment and Acceptance, shall
have the rights and obligations of the assigning Lender hereunder
with respect thereto, including, without limitation, (x) the
right to approve or disapprove actions which, in accordance with
the terms hereof, require the approval of the Lenders (y) the
obligation to fund Loans pursuant to Section 2.1 and (2) the
right to enter into Participation Agreements pursuant to Section
13.2, and (ii) such Lender shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released
from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion
of such Lender's rights and obligations under this Loan
Agreement, such Lender shall cease to be a party hereto).
13.2Participants. (a) Notwithstanding Section 13.1, each
Lender in its sole discretion may allow other Persons to
participate with such Lender in all or any part of the Loans or
the Commitments extended by such Lender or the Notes issued to
it; provided that such Lender shall act as sole agent for any
such Participant and such Participant, other than an Affiliate of
such Lender, shall not be entitled to require such Lender to take
or omit to take any action hereunder except action directly
affecting (i) the extension of the final maturity of the
principal amount of, or any payment date for interest on, a Loan
allocated to such participation, (ii) the reduction in the
principal amount of, or rate of interest payable on, the Loans,
or (iii) the release of all or substantially all of the
collateral or guaranties supporting any of the Loans or
Commitments in which such Participant is participating. The
Participant shall not have any rights under this Agreement or any
of the other Loan Documents (the Participant's rights against the
granting Lender in respect of such participation to be those set
forth in the agreement with such Lender creating such
participation) and all amounts payable by the Borrowers hereunder
shall be determined as if such Lender had not sold such
participation, provided that such Participant shall be considered
to be a "Lender" for purposes of Section 10.2, and shall be
entitled to the benefits thereto to the extent that such Lender
selling such participation would be entitled to such benefits if
the participation had not been entered into or sold. In the
event that any of the Lenders includes other Participants herein
at any time hereafter, the Borrowers will execute any documents
necessary to effectuate the rights of the Participants and to
delineate the rights, powers and obligations of the agent, such
as the Lender granting the participation may reasonably require.
(b) If a Participant shall at any time participate with a
Lender in making Loans hereunder or under any other Agreement
between such Lender and any Borrower, such Borrower hereby grants
to such Participant (in addition to any other rights that such
Participant shall have) and such Participant shall have and is
hereby given a continuing lien and security interest in any
money, securities or other property of such Borrower in the
custody or possession of the Participant, including the right to
set-off, to the extent of Participant's participation in the
Obligations of the Borrowers to such Lender, as it would have if
it were a direct lender to the Borrowers.
13.3Obligations of Lenders. Except pursuant to an
assignment, but only to the extent set forth in such Assignment
and Acceptance, no Lender shall, as between the Borrowers and
that Lender, be relieved of any of its obligations hereunder as a
result of any sale, transfer or negotiation of, or granting of
any participation in, all or any part of the Commitment, Loans or
Notes.
13.4Confidentiality. A Lender may, in connection with any
assignment or participation or proposed assignment or
participation pursuant to this Article XIII, disclose to the
Assignee or Participant or proposed Assignee or Participant any
information relating to the Borrowers furnished to the Lender by
or on behalf of the Borrowers; provided, however, that prior to
disclosing any such information to a Assignee or Participant or
proposed Assignee or Participant such Lender shall have obtained
from such Assignee or Participant or proposed Assignee or
Participant an agreement (being of a form standard or customary
in the banking industry) that such Assignee or Participant or
proposed Assignee or Participant keep such information
confidential (except to the extent such Assignee or Participant
deems necessary to enforce its rights hereunder or thereunder.)
ARTICLE XIVMiscellaneous14.1Survival of Agreements. All
agreements, representations and warranties contained herein or
made in writing by or on behalf of the Borrowers in connection
with the transactions contemplated hereby shall survive the
execution and delivery of this Agreement and the other Loan
Documents. No termination or cancellation (regardless of cause
or procedure) of this Agreement shall in any way affect or impair
the powers, obligations, duties, rights and liabilities of the
parties hereto in any way with respect to (a) any transaction or
event occurring prior to such termination or cancellation or (b)
any of the Borrowers' undertakings, agreements, covenants,
warranties and representations contained in this Agreement and
the other Loan Documents and all such undertakings, agreements,
covenants, warranties and representations shall survive such
termination or cancellation until payment in full of the
Obligations. The Borrowers further agree that to the extent any
Borrower makes a payment or payments to the Lenders, which
payment or payments or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other
party under any bankruptcy, insolvency or similar state or
federal law, common law or equitable cause, then, to the extent
of such payment or repayment, the Obligation or part thereof
intended to be satisfied shall be revived and continued in full
force and effect as if such payment had not been received by the
Lenders.
14.2Governing Law; Waiver of Jury Trial. THIS AGREEMENT
HAS BEEN EXECUTED, DELIVERED AND ACCEPTED AT, AND SHALL BE
DEEMED TO HAVE BEEN MADE IN, NORTH CAROLINA AND SHALL BE
INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO
DETERMINED, IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH
CAROLINA (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS
PRINCIPLES THEREOF). AS PART OF THE CONSIDERATION FOR NEW VALUE
THIS DAY RECEIVED, EACH BORROWER HEREBY CONSENTS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE
STATE OF NORTH CAROLINA, AND CONSENTS THAT ALL SERVICE OF PROCESS
BE MADE BY REGISTERED OR CERTIFIED MAIL DIRECTED TO SUCH BORROWER
AT THE ADDRESS STATED IN SECTION 15.3 BELOW AND SERVICE SO MADE
SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL
RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE UNITED
STATES MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS SECTION
SHALL AFFECT THE RIGHT OF ANY LENDER TO SERVE LEGAL PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF ANY
LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST ANY BORROWER OR
ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THAT HAS
JURISDICTION OVER ANY BORROWER OR ITS PROPERTY.
14.3Notice. All notices and other communications hereunder
shall be in writing and shall be deemed to have been validly
served, given or delivered three (3) days after deposit in the
United States mails with postage prepaid, and addressed to the
party to be notified as follows:
If to the Borrowers: The Cato Corporation
8100 Denmark Road
Charlotte, North Carolina 28273-5975
CHW Corporation
8100 Denmark Road
Charlotte, North Carolina 28272-5975
With a copy to: Robinson, Bradshaw & Hinson, P.A.
1900 Independence Center
101 North Tryon Street
Charlotte, North Carolina 28246
Attention: Robert G. Griffin
If to the Agent at: NationsBank of North Carolina, N.A.
NationsBank Corporate Center
NC 1007-08-08
8th Floor
Charlotte, North Carolina 28255
Attention: Mark D.
Halmrast
With a copy to: Wachovia Bank of
North Carolina, N.A.
P.O. Box 31608
Charlotte, North
Carolina 28231
Attention: Zeta M.
Pittman
and if to any Lender, at its address specified for such Lender on
Annex I hereto (provided, however, that the attorneys listed
above will not receive copies of any reports or other business
information required to be provided by the Borrowers until the
Required Lenders request the Borrowers to do so), or to such
other address as each party may designate for itself by like
notice, or shall be deemed to have been validly served, given or
delivered on the date of delivery to such party at such address,
if notice is given or delivered by hand, telex, telegram or
facsimile transmitter.
14.4Indemnification of the Agent and the Lenders. From and
at all times after the date of this Agreement, and in addition to
all of the Agent's and the Lenders' other rights and remedies
against the Borrowers, each Borrower agrees to indemnify and hold
harmless the Agent and each Lender and each director, officer,
employee, agent and Affiliate of the Agent and each Lender
against any and all claims, losses, damages, liabilities, costs
and expenses of any kind or nature whatsoever (including without
limitation reasonable attorneys' fees, costs and expenses)
incurred by or asserted against the Agent or such Lender or any
such director, officer, employee, agent or Affiliate, from and
after the date hereof, whether direct, indirect or consequential,
as a result of or arising from or in any way relating to any
suit, action or proceeding (including any inquiry or
investigation) by any Person other than a Borrower, whether
threatened or initiated, asserting a claim for any legal or
equitable remedy against any Person under any statute or
regulation, including, but not limited to, any federal or state
securities laws, or under any common law or equitable cause or
otherwise, arising from or in connection with the negotiation,
preparation, execution or performance of this Agreement or the
other Loan Documents or any transactions contemplated herein or
therein, whether or not the Agent or the Lender or any such
director, officer, employee, agent or Affiliate is a party to any
such action, proceeding, suit or the target of any such inquiry
or investigation; provided, however, that no indemnified party
shall have the right to be indemnified hereunder for any
liability resulting from the gross negligence or wilful
misconduct of such indemnified party. All of the foregoing
losses, damages, costs and expenses of the Agent or any Lender
shall be payable by the Borrowers upon demand by the Agent or
such Lender and shall be additional Obligations hereunder. The
Borrowers' obligations under this Section 14.4 shall survive any
termination of this Agreement or any other Loan Document.
14.5Waivers by the Borrowers. Except as otherwise provided
for in this Agreement, each Borrower waives (a) presentment,
demand and protest and notice of presentment, protest, default,
nonpayment, maturity and all other notices; (b) notice prior to
taking possession or control of any bond or security that might
be required by any court prior to allowing the Agent or any
Lender to exercise any of the Lenders' remedies under this
Agreement or the other Loan Documents; and (c) the benefit of all
valuation, appraisement and exemption laws.
14.6Assignment and Sale. The Borrowers may not sell,
assign or transfer this Agreement, or the other Loan Documents or
any portion thereof, including without limitation the Borrowers'
rights, title, interests, remedies, powers, and duties hereunder
or thereunder. No Lender may sell, assign or transfer this
Agreement, or the other Loan Documents or any portion thereof,
including without limitation such Lender's rights, title,
interests, remedies, powers and duties hereunder or thereunder
without the prior written consent of the Borrowers, which shall
not be unreasonably withheld.
14.7Amendment or Waiver. Neither this Agreement nor any
other Loan Document nor any terms hereof or thereof may be
changed, waived, discharged or terminated unless such change,
waiver, discharge or termination is in writing signed by the
Required Lenders; provided, however, that no such change, waiver,
discharge or termination shall, without the written consent of
each Lender, (i) extend the scheduled payment of principal of any
Loan, or any portion thereof, or reduce the rate of or extend the
time of payment of interest thereon (other than as a result of
waiving the applicability of any post-default increase in
interest rates) or any fees relating thereto, or reduce the
principal amount thereof; (ii) amend, modify or waive any
provisions of this Section 14.7, Sections 2.2, 2.13, 2.14(c),
3.7, 4.1, 4.2, 7.1 and 9.1(a) or Articles XI or XIII; or (iv)
change any percentage specified in, or otherwise modify, the
definition of Required Lenders, (v) consent to the assignment or
transfer by the Borrower of any of its rights and obligations
under this Agreement or (vi) amend any provision in the Loan
Documents that calls for action, inaction or consent by all of
the Lenders. No provision of Article XII may be amended without
the consent of the Agent.
14.8Severability. To the extent any provision of this
Agreement is prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
14.9Entire Agreement. This Agreement and the other
documents, certificates and instruments referred to herein
constitute the entire Agreement between the parties and supersede
and rescind any prior agreements relating to the subject matter
hereof, including, without limitation, the commitment letter
dated January 15, 1993 between Cato and NationsBank.
14.10Binding Effect. All of the terms of this Agreement
and the other Loan Documents, as the same may from time to time
be amended, shall be binding upon, inure to the benefit of and be
enforceable by the respective successors and assigns of the
Agent, the Borrowers and the Lenders. This provision, however,
shall not be deemed to modify Section 14.6.
14.11Execution in Counterparts. This Agreement may be
executed in two or more counterparts, which when assembled shall
constitute one and the same agreement.
14.12Conflict of Terms. The provisions of the exhibits
hereto and the other Loan Documents and any schedule or annex
hereto are incorporated in this Agreement by this reference
thereto. Except as otherwise provided in this Agreement and
except as otherwise provided in the other Loan Documents, if any
provision contained in this Agreement is in conflict with, or
inconsistent with, any provision of the other Loan Documents, the
provision contained in this Agreement shall control.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in their corporate names by their duly
authorized corporate officers, and have affixed their corporate
seals, as of the date first above written.
THE CATO CORPORATION
By: ______________________________
Wayland H. Cato, Jr.
Chief Executive Officer
ATTEST:
_________________________
Alan E. Wiley, Secretary
[CORPORATE SEAL]
CHW CORPORATION
By: ______________________________
Gordon W. Stewart, Vice President
ATTEST:
_________________________
Norman J. Shuman
Assistant Secretary
[CORPORATE SEAL]
NATIONSBANK OF NORTH CAROLINA, N.A.,
Individually and as Agent
By: _____________________________
Title:____________________________
WACHOVIA BANK OF NORTH CAROLINA, N.A.
By:______________________________
Title:___________________________
Annex I
Lenders
Lender and Address Commitment
NationsBank of North Carolina, N.A. $24,500,000
NationsBank Corporate Center
NC 1007-08-08
Eighth Floor
Charlotte, North Carolina 28255
Attn: Kenneth A. Gill, III
Wachovia Bank of North Carolina, N.A. 10,500,000
Post Office Box 31608
Charlotte, North Carolina 28231
Attention: Zeta M. Pittman ____________
Total Commitment $35,000,000
TABLE OF CONTENTS
Page
Recitals1
ARTICLE I
Definitions
1.1 Defined Terms2
1.2 Accounting Terms15
1.3 Singular/Plural15
1.4 Other Terms15
ARTICLE II
Loan Facility
2.1 Revolving Line of Credit16
2.2 Term17
2.3 Notes17
2.4 Conversion to Term Loans17
2.5 Repayment18
2.6 Use of Proceeds18
2.7 Revolving Line of Credit Facility Fee18
2.8 Term Loan Commitment Fee18
2.9 Interest19
2.10 Computation19
2.11 Default Rate; Post-petition Interest19
2.12 Maximum Interest Rate19
2.13 Payment19
2.14 Application of Principal Payments; Register;
Pro Rata Borrowings20
ARTICLE IIA
Additional Letter of Credit Facility
2.1A Additional Letter of Credit Facility20
2.2A Term21
2.3A Purpose21
2.4A Facility Fee21
2.5A Payment; Computation21
ARTICLE III
Letters of Credit
3.1 Letters of Credit21
3.2 Notice of Issuance22
3.3 Reimbursements22
3.4 Letter of Credit Fees23
3.5 Reimbursement and Other Obligations23
3.6 Other Terms23
3.7 Participations in Letters of Credit24
ARTICLE IV
Provisions Applicable to Both the Letters Of Credit
and the Revolving Credit Loans
4.1 Capital Adequacy24
4.2 Taxes25
ARTICLE V
Closing; Conditions of Closing and Borrowing
5.1 Closing26
5.2 Conditions of Loans and Advances26
5.2.1 Executed Loan Documents26
5.2.2 Closing Certificates, etc.27
5.2.3 Consents, No Adverse Change28
5.2.4 Miscellaneous28
5.3 Waiver of Conditions Precedent28
ARTICLE VI
Representations and Warranties
6.1 Corporate Organization and Power29
6.2 Litigation; Government Regulation29
6.3 Taxes29
6.4 Enforceability of Loan Documents; Compliance
With Other Instruments30
6.5 Governmental Authorization30
6.6 Event of Default30
6.7 Margin Securities31
6.8 Full Disclosure31
6.9 ERISA31
6.10 Financial Statements32
6.11 Title to Assets32
6.12 Use of Proceeds33
6.13 Environmental Matters33
6.14 Authorization34
6.15 Assets for Conduct of Business34
6.16 Compliance With Laws34
6.17 Withholding Taxes34
6.18 Contracts; Labor Disputes35
6.19 Outstanding Indebtedness35
ARTICLE VII
Affirmative Covenants
7.1 Repayment of Obligations35
7.2 Performance Under Loan Documents35
7.3 Financial and Business Information about the
Borrowers35
7.4 Notice of Certain Events36
7.5 Corporate Existence and Maintenance of Properties37
7.6 Payment of Indebtedness; Performance of
Other Obligations37
7.7 Maintenance of Insurance37
7.8 Maintenance of Books and Records; Inspection38
7.9 Compliance with ERISA38
7.10 COBRA38
7.11 Payment of Taxes38
7.12 Compliance with Statutes, etc.39
ARTICLE VIII
Negative Covenants
8.1 Merger and Dissolution39
8.2 Indebtedness40
8.3 Liens and Encumbrances40
8.4 Subordinated Debentures and Preferred Stock40
8.5 Transactions with Related Persons40
8.6 Restrictions on Dividends, Share Repurchase, etc.41
8.7 Hazardous Wastes41
8.8 Restricted Investments41
8.9 Net Worth42
8.10 Current Ratio42
8.11 Debt to Capitalization Ratio42
8.12 Fixed Charge Coverage Ratio43
8.13 New Business43
8.14 Subsidiaries or Partnerships43
8.15 Capital Expenditures43
8.16 Guaranties43
8.17 Change in Control43
8.18 Fiscal Year43
ARTICLE IX
Events of Default
9.1 Events of Default43
ARTICLE X
Rights and Remedies after Event of Default
10.1 Rights and Remedies46
10.2 Right of Set-off46
10.3 Rights and Remedies Cumulative; Non-Waiver; Etc47
ARTICLE XI
Payment of Fees and Expenses
11.1 Fees and Expenses47
ARTICLE XII
The Agent
12.1 Appointment48
12.2 Nature of Duties48
12.3 Delegation of Duties48
12.4 Notice of Default49
12.5 Lack of Reliance on the Agent49
12.6 Certain Rights of the Agent49
12.7 Reliance50
12.8 Indemnification50
12.9 Agent's Right to Seek Advice50
12.10 The Agent in its Individual Capacity51
12.11 Holders51
12.12 Successor Agent51
ARTICLE XIII
Assignment And Participation
13.1 Assignments52
13.2 Participants52
13.3 Obligations of Lenders53
13.4 Confidentiality53
ARTICLE XIV
Miscellaneous
14.1 Survival of Agreements54
14.2 Governing Law; Waiver of Jury Trial54
14.3 Notice55
14.4 Indemnification of the Agent and the Lenders55
14.5 Waivers by the Borrowers56
14.6 Assignment and Sale56
14.7 Amendment or Waiver57
14.8 Severability57
14.9 Entire Agreement57
14.10 Binding Effect57
14.11 Execution in Counterparts57
14.12 Conflict of Terms57
Exhibits
Exhibit A From of Promissory Note
Exhibit B Form of Continuing Letter of Credit Agreement
Exhibit C Form of Conversion Notice
Exhibit D Form of Opinion of Borrowers' Counsel