EXHIBIT 10.16
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REVOLVING CREDIT,
TRANCHE B LOAN AND SECURITY AGREEMENT
FLEET RETAIL FINANCE INC.
ADMINISTRATIVE, DOCUMENTATION
AND COLLATERAL AGENT FOR
THE LENDERS NAMED HEREIN
WELLS FARGO RETAIL FINANCE,LLC
NATIONAL CITY COMMERCIAL FINANCE, INC.
CO-AGENTS
THE REVOLVING CREDIT LENDERS
NAMED HEREIN
BACK BAY CAPITAL FUNDING LLC
THE TRANCHE B LENDER
MAYOR'S JEWELERS, INC.
MAYOR'S JEWELERS, INC.
AND THEIR DOMESTIC SUBSIDIARIES
THE BORROWERS
May 30, 2002
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TABLE OF CONTENTS
DEFINITIONS AND RULES OF INTERPRETATION..............................................................1
1.1 DEFINITIONS............................................................................1
2. THE REVOLVING CREDIT FACILITY....................................................................26
2.1. COMMITMENT TO LEND....................................................................26
2.2. MATURITY..............................................................................26
2.3. UNUSED FEE............................................................................26
2.4. REDUCTION OF COMMITMENT...............................................................26
2.5. MANDATORY REPAYMENTS OF REVOLVING CREDIT LOANS........................................27
2.6. OPTIONAL REPAYMENTS OF REVOLVING CREDIT LOANS.........................................27
2.7. THE LOAN ACCOUNT AND REVOLVING CREDIT NOTES...........................................27
2.7.1. LOAN ACCOUNT...............................................................27
2.7.2. REVOLVING CREDIT NOTES.....................................................28
2.8. INTEREST ON REVOLVING CREDIT LOANS....................................................28
2.8.1. ACCRUAL OF INTEREST........................................................29
2.8.2. AUTOMATIC DEBIT OF INTEREST................................................29
2.9. REQUESTS FOR REVOLVING CREDIT LOANS...................................................29
2.9.1. GENERAL....................................................................29
2.9.2. SWING LINE.................................................................29
2.10. CONVERSION OPTIONS...................................................................30
2.10.1. CONVERSION TO DIFFERENT TYPE OF REVOLVING CREDIT LOAN.....................30
2.10.2. CONTINUATION OF TYPE OF REVOLVING CREDIT LOAN.............................30
2.10.3. EURODOLLAR RATE LOANS.....................................................31
2.11. FUNDS FOR REVOLVING CREDIT LOAN......................................................31
2.11.1. FUNDING PROCEDURES........................................................31
2.11.2. ADVANCES BY ADMINISTRATIVE AGENT..........................................31
2.11.3. LIMITATION OF LIABILITY...................................................32
2.12. BORROWING BASE/REDUCTIONS TO AVAILABILITY...........................................32
2.12.1. CHANGE IN BORROWING BASE..................................................32
2.12.2. RISK OF VALUE OF COLLATERAL...............................................32
2.12.3. REDUCTIONS TO AVAILABILITY................................................33
2.13. SETTLEMENTS..........................................................................33
2.13.1. GENERAL...................................................................33
2.13.2. FAILURE TO MAKE FUNDS AVAILABLE...........................................33
2.13.3. NO EFFECT ON OTHER LENDERS................................................34
2.14. REPAYMENTS OF REVOLVING CREDIT LOANS ABSENT AN EVENT OF DEFAULT......................34
2.14.1. CREDIT FOR FUNDS RECEIVED IN CONCENTRATION ACCOUNT........................34
2.14.2. APPLICATION OF PAYMENTS ABSENT AN EVENT OF DEFAULT........................35
2.15. REPAYMENTS OF REVOLVING CREDIT LOANS AFTER EVENT OF DEFAULT..........................36
2.16. OVERLOANS AND PROTECTIVE OVERADVANCES................................................36
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2.16.1. PROTECTIVE OVERADVANCES..................................................36
2.16.2. OVERLOANS................................................................36
2.16.3. NO OBLIGATION TO PROVIDE OVERLOANS........................................36
3. THE TRANCHE B FACILITY...........................................................................36
3.1. COMMITMENT TO LEND....................................................................36
3.2. THE TRANCHE B LOAN NOTE...............................................................36
3.3. PAYMENTS OF PRINCIPAL OF TRANCHE B LOAN...............................................36
3.4. INTEREST ON TRANCHE B LOAN............................................................37
3.5. TRANCHE B LOAN ANNIVERSARY FEE........................................................38
3.6. PAYMENTS ON ACCOUNT OF TRANCHE B LOAN.................................................38
3.7. BUYOUT OPTION.........................................................................38
4. LETTERS OF CREDIT................................................................................39
4.1. LETTER OF CREDIT COMMITMENTS..........................................................39
4.1.1. COMMITMENT TO ISSUE LETTERS OF CREDIT......................................39
4.1.2. LETTER OF CREDIT APPLICATIONS..............................................39
4.1.3. TERMS OF LETTERS OF CREDIT.................................................39
4.1.4. REIMBURSEMENT OBLIGATIONS OF REVOLVING CREDIT LENDERS......................40
4.1.5. PARTICIPATIONS OF REVOLVING CREDIT LENDERS.................................40
4.2. REIMBURSEMENT OBLIGATION OF THE BORROWERS.............................................40
4.3. LETTER OF CREDIT PAYMENTS.............................................................41
4.4. OBLIGATIONS ABSOLUTE..................................................................41
4.5. RELIANCE BY ISSUER....................................................................42
4.6. LETTER OF CREDIT FEE..................................................................42
5. CERTAIN GENERAL PROVISIONS.......................................................................43
5.1. ADMINISTRATIVE AGENT FEES.............................................................43
5.2. TRANCHE B LENDER FEES.................................................................43
5.3. FUNDS FOR PAYMENTS....................................................................43
5.3.1. PAYMENTS TO ADMINISTRATIVE AGENT...........................................43
5.3.2. NO OFFSET, ETC.............................................................43
5.4. COMPUTATIONS..........................................................................44
5.5. INABILITY TO DETERMINE EURODOLLAR RATE................................................44
5.6. ILLEGALITY............................................................................44
5.7. ADDITIONAL COSTS, ETC.................................................................45
5.8. CERTIFICATE...........................................................................46
5.9. INDEMNITY.............................................................................46
5.10. INTEREST AFTER DEFAULT...............................................................46
5.11. FEES NON-REFUNDABLE..................................................................46
5.12. CONCERNING JOINT AND SEVERAL LIABILITY OF THE BORROWERS..............................46
6. COLLATERAL SECURITY AND GUARANTIES...............................................................48
6.1. GRANT OF SECURITY INTEREST............................................................48
6.2. AUTHORIZATION TO FILE FINANCING STATEMENTS............................................48
6.3. OTHER ACTIONS.........................................................................49
6.3.1. PROMISSORY NOTES AND TANGIBLE CHATTEL PAPER................................49
6.3.2. DEPOSIT ACCOUNTS...........................................................49
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6.3.3. INVESTMENT PROPERTY........................................................49
6.3.4. COLLATERAL IN THE POSSESSION OF A BAILEE...................................50
6.3.5. ELECTRONIC CHATTEL PAPER AND TRANSFERABLE RECORDS..........................50
6.3.6. LETTER-OF-CREDIT RIGHTS....................................................50
6.3.7. COMMERCIAL TORT CLAIMS.....................................................50
6.3.8. OTHER ACTIONS AS TO ANY AND ALL COLLATERAL.................................50
6.4. RELATION TO OTHER SECURITY DOCUMENTS..................................................51
6.4.1. STOCK PLEDGE AGREEMENT.....................................................51
6.4.2. TRADEMARK ASSIGNMENTS......................................................51
7 REPRESENTATIONS AND WARRANTIES....................................................................52
7.1. CORPORATE AUTHORITY...................................................................52
7.1.1. INCORPORATION; GOOD STANDING...............................................52
7.1.2. AUTHORIZATION..............................................................52
7.1.3. ENFORCEABILITY.............................................................52
7.2. GOVERNMENTAL APPROVALS................................................................52
7.3. TITLE TO PROPERTIES; LEASES...........................................................52
7.4. FINANCIAL STATEMENTS AND PROJECTIONS..................................................53
7.4.1. FISCAL YEAR................................................................53
7.4.2. FINANCIAL STATEMENTS.......................................................53
7.4.3. PROJECTIONS................................................................53
7.5. NO MATERIAL ADVERSE CHANGES, ETC......................................................53
7.6. FRANCHISES, PATENTS, COPYRIGHTS, ETC..................................................53
7.7. LITIGATION............................................................................53
7.8. NO MATERIALLY ADVERSE CONTRACTS, ETC..................................................54
7.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC..........................................54
7.10. TAX STATUS...........................................................................54
7.11. IN DEFAULT...........................................................................54
7.12. HOLDING COMPANY AND INVESTMENT COMPANY ACTS..........................................54
7.13. ABSENCE OF FINANCING STATEMENTS, ETC.................................................54
7.14. COLLATERAL...........................................................................54
7.14.1. PERFECTION CERTIFICATE....................................................54
7.14.2. NATURE OF COLLATERAL......................................................55
7.14.3. PERFECTION OF SECURITY INTEREST...........................................55
7.15. CERTAIN TRANSACTIONS.................................................................55
7.16. EMPLOYEE BENEFIT PLANS...............................................................55
7.16.1. IN GENERAL................................................................55
7.16.2. TERMINABILITY OF WELFARE PLANS............................................56
7.16.3. GUARANTEED PENSION PLANS..................................................56
7.16.4. MULTIEMPLOYER PLANS.......................................................56
7.17. USE OF PROCEEDS......................................................................56
7.17.1. GENERAL...................................................................56
7.17.2. REGULATIONS U AND X.......................................................57
7.18. ENVIRONMENTAL COMPLIANCE.............................................................57
7.19. SUBSIDIARIES, ETC....................................................................58
7.20. BANK ACCOUNTS; CREDIT CARD ARRANGEMENTS..............................................58
7.21. LABOR RELATIONS......................................................................58
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7.22. DISCLOSURE...........................................................................59
8. AFFIRMATIVE COVENANTS............................................................................59
8.1. PUNCTUAL PAYMENT......................................................................59
8.2. NOTICE OF CHANGE OF ORGANIZATION/MAINTENANCE OF OFFICE................................59
8.3. RECORDS AND ACCOUNTS..................................................................60
8.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION....................................60
8.5. NOTICES...............................................................................61
8.5.1. DEFAULTS...................................................................61
8.5.2. ENVIRONMENTAL EVENTS.......................................................62
8.5.3. NOTIFICATION OF CLAIM AGAINST COLLATERAL...................................62
8.5.4. NOTICE OF LITIGATION AND JUDGMENTS.........................................62
8.5.5. NOTICES CONCERNING INVENTORY COLLATERAL....................................62
8.5.6. CHANGE IN OFFICERS OR ACCOUNTANTS..........................................63
8.6. LEGAL EXISTENCE; MAINTENANCE OF PROPERTIES............................................63
8.7. INSURANCE.............................................................................63
8.7.1. MAINTENANCE OF INSURANCE...................................................63
8.7.2. INSURANCE PROCEEDS.........................................................64
8.7.3. CONTINUATION OF INSURANCE..................................................64
8.8. TAXES.................................................................................64
8.9. INSPECTION OF PROPERTIES AND BOOKS, ETC...............................................64
8.9.1. GENERAL....................................................................64
8.9.2 COLLATERAL REPORTS; PHYSICAL INVENTORIES....................................65
8.9.4. ENVIRONMENTAL ASSESSMENTS..................................................66
8.9.5. COMMUNICATIONS WITH ACCOUNTANTS AND OTHER PERSONS..........................66
8.9.6. RESTRUCTURING ADVISOR......................................................66
8.10. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES, AND PERMITS...............................66
8.11. EMPLOYEE BENEFIT PLANS...............................................................67
8.12. USE OF PROCEEDS......................................................................67
8.13. ADDITIONAL MORTGAGED PROPERTY........................................................67
8.14. BANK ACCOUNTS........................................................................67
8.14.1. GENERAL...................................................................67
8.14.2. ACKNOWLEDGMENT OF APPLICATION.............................................68
8.15. COVENANTS CONCERNING COLLATERAL, ETC.................................................68
8.16. FURTHER ASSURANCES...................................................................68
9. CERTAIN NEGATIVE COVENANTS.......................................................................68
9.1. RESTRICTIONS ON INDEBTEDNESS..........................................................69
9.2. RESTRICTIONS ON LIENS.................................................................69
9.2.1. PERMITTED LIENS............................................................69
9.2.2. RESTRICTIONS ON NEGATIVE PLEDGES AND UPSTREAM LIMITATIONS..................71
9.3. RESTRICTIONS ON INVESTMENTS...........................................................71
9.4. RESTRICTED PAYMENTS...................................................................72
9.5. MERGER, CONSOLIDATION AND DISPOSITION OF ASSETS.......................................72
9.5.1. MERGERS AND ACQUISITIONS...................................................72
9.5.2. DISPOSITION OF ASSETS......................................................72
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9.6. SALE AND LEASEBACK....................................................................72
9.7. COMPLIANCE WITH ENVIRONMENTAL LAWS....................................................72
9.8. EMPLOYEE BENEFIT PLANS................................................................72
9.9. BUSINESS ACTIVITIES; PERMITTED STORE CLOSINGS.........................................73
9.10. FISCAL YEAR..........................................................................73
9.11. TRANSACTIONS WITH AFFILIATES.........................................................73
9.12. BANK ACCOUNTS........................................................................73
10. FINANCIAL COVENANTS.............................................................................74
10.1. MINIMUM INVENTORY PURCHASES..........................................................74
10.2 CAPITAL EXPENDITURES..................................................................74
11. CLOSING CONDITIONS.............................................................................74
11.1. LOAN DOCUMENTS.......................................................................74
11.2. CERTIFIED COPIES OF GOVERNING DOCUMENTS..............................................74
11.3. CORPORATE OR OTHER ACTION............................................................74
11.4. INCUMBENCY CERTIFICATE...............................................................75
11.5. VALIDITY OF LIENS....................................................................75
11.6. PERFECTION CERTIFICATES AND UCC SEARCH RESULTS.......................................75
11.7. TAXES................................................................................75
11.8. TITLE INSURANCE......................................................................75
11.9. CERTIFICATES OF INSURANCE............................................................75
11.10. CONTROL AGREEMENTS; CREDIT CARD CLEARING HOUSE......................................75
11.11. BORROWING BASE REPORT...............................................................76
11.12. MINIMUM DAY ONE AVAILABILITY........................................................76
11.13. ACCOUNTS RECEIVABLE AGING REPORT....................................................76
11.14. HAZARDOUS WASTE ASSESSMENTS.........................................................76
11.15. APPRAISALS OF ELIGIBLE FIXED ASSETS.................................................76
11.16. OPINION OF COUNSEL..................................................................76
11.18. PAYMENT OF FEES.....................................................................76
11.19. PAYOFF LETTER.......................................................................76
11.20. ROLEX AGREEMENTS....................................................................76
12. CONDITIONS TO ALL BORROWINGS....................................................................76
12.1. REPRESENTATIONS TRUE; NOT IN DEFAULT.................................................77
12.2. NO LEGAL IMPEDIMENT..................................................................77
12.3. PROCEEDINGS AND DOCUMENTS............................................................77
12.4. BORROWING BASE REPORT................................................................77
12.5. MATERIAL ADVERSE CHANGE..............................................................77
12.6. SALES TAXES..........................................................................77
13. EVENTS OF DEFAULT; ACCELERATION; ETC............................................................77
13.1. EVENTS OF DEFAULT AND ACCELERATION...................................................77
13.2. TERMINATION OF COMMITMENTS...........................................................80
13.3. REMEDIES.............................................................................81
13.3.1. GENERAL...................................................................81
13.3.2. SECURITIES AND DEPOSITS...................................................82
13.3.3. NOTIFICATION TO ACCOUNT DEBTORS AND OTHER PERSONS
OBLIGATED ON COLLATERAL...................................................82
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13.3.4. STANDARDS FOR EXERCISING RIGHTS AND REMEDIES..............................82
13.4. DISTRIBUTION OF COLLATERAL PROCEEDS..................................................83
14. THE ADMINISTRATIVE AGENT........................................................................84
14.1. AUTHORIZATION........................................................................84
14.2. EMPLOYEES AND ADMINISTRATIVE AGENTS..................................................85
14.3. NO LIABILITY.........................................................................85
14.4. NO REPRESENTATIONS...................................................................85
14.4.1. GENERAL...................................................................85
14.4.2. CLOSING DOCUMENTATION, ETC................................................86
14.5. PAYMENTS.............................................................................86
14.5.1. PAYMENTS TO ADMINISTRATIVE AGENT..........................................86
14.5.2. DISTRIBUTION BY ADMINISTRATIVE AGENT......................................86
14.5.3. DELINQUENT LENDERS........................................................86
14.6. HOLDERS OF NOTES.....................................................................87
14.7. INDEMNITY............................................................................87
14.8. ADMINISTRATIVE AGENT AS LENDER.......................................................87
14.9. RESIGNATION..........................................................................87
14.10. NOTIFICATION IF DEFAULT EXISTS......................................................88
14.11. DUTIES IN THE CASE OF ENFORCEMENT...................................................88
14.12. ADMINISTRATIVE AGENT'S OBLIGATIONS AND DUTIES WITH REGARD TO COLLATERAL.............88
15. ASSIGNMENT AND PARTICIPATION...................................................................89
15.1. CONDITIONS TO ASSIGNMENT.............................................................89
15.1.1 CONDITIONS TO ASSIGNMENT BY REVOLVING CREDIT LENDERS.......................89
15.1.2. CONDITIONS TO ASSIGNMENT BY TRANCHE B LENDER...............................89
15.2. CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS; COVENANTS.......................90
15.3. NEW NOTES............................................................................91
15.4. PARTICIPATIONS.......................................................................91
15.5. ASSIGNEE OR PARTICIPANT AFFILIATED WITH THE BORROWERS................................91
15.6. MISCELLANEOUS ASSIGNMENT PROVISIONS..................................................92
15.7. ASSIGNMENT BY BORROWERS..............................................................92
16. PROVISIONS OF GENERAL APPLICATIONS..............................................................92
16.1. SETOFF...............................................................................92
16.2. EXPENSES.............................................................................93
16.3. INDEMNIFICATION......................................................................94
16.4. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION........................................95
16.4.1. CONFIDENTIALITY...........................................................95
16.4.2. PRIOR NOTIFICATION........................................................96
16.4.3. OTHER.....................................................................96
16.5. SURVIVAL OF COVENANTS, ETC...........................................................96
16.6. NOTICES..............................................................................96
16.7. GOVERNING LAW........................................................................97
16.8. HEADINGS.............................................................................98
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16.9. COUNTERPARTS.........................................................................98
16.10. ENTIRE AGREEMENT, ETC...............................................................98
16.11. WAIVER OF JURY TRIAL................................................................98
16.12. CONSENTS, AMENDMENTS, WAIVERS, ETC..................................................98
16.13. POWER OF ATTORNEY...................................................................101
16.13.1. APPOINTMENT AND POWERS OF ADMINISTRATIVE AGENT...........................101
16.13.2. RATIFICATION BY BORROWERS................................................102
16.13.3. NO DUTY ON ADMINISTRATIVE AGENT..........................................102
16.14. SURETYSHIP WAIVERS BY THE BORROWERS.................................................102
16.15. MARSHALLING.........................................................................102
16.16. SEVERABILITY........................................................................103
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EXHIBITS
EXHIBIT A Form of Borrowing Base Report
EXHIBIT B Form of Revolving Credit Note
EXHIBIT C Form of Loan Request
EXHIBIT D Form of Tranche B Note
EXHIBIT E Form of Compliance Certificate
EXHIBIT F(i) Assignment and Acceptance/Revolving Credit
EXHIBIT F(ii) Assignment and Acceptance/Tranche B Loan
SCHEDULES
SCHEDULE 1 Lenders and Commitments
SCHEDULE 2.12.1 Reserves
SCHEDULE 7.3 Title to Properties; Leases
SCHEDULE 7.5 Material Adverse Changes
SCHEDULE 7.7 Litigation
SCHEDULE 7.8 Contracts
SCHEDULE 7.10 Tax Status
SCHEDULE 7.18 Environmental Compliance
SCHEDULE 7.19 Subsidiaries Etc.
SCHEDULE 7.20 Bank Accounts
SCHEDULE 8.4(f) Borrowing Base Reports
SCHEDULE 8.4(i) Other Reports
SCHEDULE 8.7.1 Insurance Policies
SCHEDULE 8.10 Noncompliance with Laws, Contracts, Licenses and Permits
SCHEDULE 9.1 Existing Indebtedness
SCHEDULE 9.2 Existing Liens
SCHEDULE 9.3 Existing Investments
SCHEDULE 9.9 Permitted Store Closings
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REVOLVING CREDIT, TRANCHE B
LOAN AND SECURITY AGREEMENT FLEET RETAIL FINANCE INC.
Administrative, Documentation and Collateral Agent
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As of May 30, 2002
This REVOLVING CREDIT, TRANCHE B LOAN AND SECURITY AGREEMENT is made by and
among
Fleet Retail Finance Inc. (in such capacity, herein the "ADMINISTRATIVE
AGENT"), a Delaware corporation, with offices at 40 Broad Street, Boston,
Massachusetts 02109 as agent for itself and such other lending institutions,
and
Fleet Retail Finance Inc., a Delaware corporation, with offices at 40
Broad Street, Boston, Massachusetts 02109 and the other revolving credit lending
institutions listed on SCHEDULE 1,
and
Back Bay Capital Funding LLC, a Delaware limited liability company,
with offices at 40 Broad Street, Boston, Massachusetts 02109, as Tranche B
Lender,
and
Mayor's Jewelers, Inc. ("MAYOR'S"), a Delaware corporation and Mayor's
Jewelers, Inc. ("MAYOR'S FLA"), a Florida corporation, each having its principal
place of business at 14051 Northwest 14th Street, Sunrise, FL 33323 and the
other Domestic Subsidiaries of Mayor's parties hereto.
In consideration of the mutual covenants contained herein and benefits derived
herefrom
WITNESSETH:
DEFINITIONS AND RULES OF INTERPRETATION.
1.1 DEFINITIONS. The following terms shall have the meanings set forth in this
ss.1 or elsewhere in the provisions of this Agreement referred to below:
ACCOUNTS RECEIVABLE. All rights of the Borrowers or any of their
Subsidiaries to payment for goods sold, leased or otherwise
marketed in the ordinary course of business and all rights of
the Borrowers or any of their Subsidiaries to payment for
services rendered in the ordinary course of business and all
sums of money or other proceeds due thereon pursuant to
transactions with account debtors, except for that portion of
the sum of money or other proceeds due thereon that relate to
sales, use or property taxes in conjunction with such
transactions, recorded on the books of account in accordance
with GAAP.
ACH. Automated clearing house.
ADMINISTRATIVE AGENT. Fleet Retail Finance, acting as agent for the
Lenders and each other Person appointed as the successor
Administrative Agent in accordance with ss.14.9.
ADMINISTRATIVE AGENT FEES. See ss.5.1.
ADMINISTRATIVE AGENT'S OFFICE. The Administrative Agent's office
located at 40 Broad Street, Boston, Massachusetts 02109, or at
such other location as the Administrative Agent may designate
from time to time.
ADMINISTRATIVE AGENT'S SPECIAL COUNSEL. Bingham Dana LLP or such other
counsel as may be approved by the Administrative Agent.
AFFILIATE. Any Person that would be considered to be an affiliate of
the Borrowers under Rule 144(a) of the Rules and Regulations
of the Securities and Exchange Commission, as in effect on the
date hereof, if the Borrowers were issuing securities.
AGREEMENT. This Revolving Credit, Tranche B Loan and Security
Agreement, including the Schedules and Exhibits hereto.
APPLICABLE MARGIN. (a) At all times prior to an Approved
Recapitalization, the Applicable Margin for Base Rate Loans
shall be 2.75% and the Applicable Margin for Eurodollar Rate
Loans shall be 4.0%.
(b) Commencing with the first complete calendar quarter
following an Approved Recapitalization, the Applicable Margin
for each calendar quarter shall be the applicable margin set
forth below with respect to the average daily level of
Availability during the previous calendar quarter; PROVIDED,
HOWEVER, during the four complete calendar quarters following
the Closing Date, the Applicable Margin will be set at Level
II if the table would otherwise indicate that the Applicable
Margin was to be based on Level I:
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Applicable
Applicable Margin for
Margin for Base Eurodollar Rate
Level Availability Rate Loans Loans
-----------------------------------------------------------------------------------
I Greater than or equal to 1.50% 2.75%
$10,000,000
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II Greater than or equal to
$5,000,000 and less than 1.75% 3.00%
$10,000,000
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III Less than $5,000,000 2.00% 3.25%
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APPLICABLE PENSION LEGISLATION. At any time, any pension or retirement
benefits legislation (be it national, federal, provincial,
territorial or otherwise) then applicable to the Borrowers or
any of their Subsidiaries.
APPRAISED A/R LIQUIDATION VALUE. The product of (a) the net book value
of Private Label Accounts multiplied by (b) the percentage
determined from the then most recent appraisal of Private
Label Accounts undertaken at the request of the Administrative
Agent, to reflect the appraised estimate of the net recovery
on the Private Label Accounts on a forced liquidation basis.
APPRAISED A/R PERCENTAGE. 90%.
APPRAISED A/R TRANCHE B PERCENTAGE. 95%.
APPRAISED INVENTORY LIQUIDATION VALUE. The product of (a) the Cost of
Eligible Inventory (net of Inventory Reserves) MULTIPLIED by
(b) that percentage, determined from the then most recent
appraisal of the Borrowers' Inventory undertaken at the
request of the Administrative Agent, to reflect the
appraiser's estimate of the net recovery on the Borrowers'
Inventory in the event of an in-store liquidation of that
Inventory.
APPRAISED INVENTORY PERCENTAGE. 85%.
APPROVED RECAPITALIZATION. A transaction whereby (a) the Borrowers
receive not less than $11,500,000 of gross proceeds from the
sale or issuance of Approved Recapitalization Liabilities net
of reasonable transaction costs acceptable to the
Administrative Agent, (b) Availability exceeds $11,500,000
after receipt of such Net Proceeds, (c) the Borrowers have
delivered to the Administrative Agent pro forma financial
statements for the next 12 months demonstrating, in form and
substance satisfactory to the Administrative Agent that,
Availability will exceed (i) $2,500,000 at all times during
the next 12 months after giving effect to the Permitted Store
Closings and (ii) $4,500,000 on average during the 12 months
after giving effect to the Permitted Store Closings, (d) the
Borrowers are receiving, and will continue to receive,
adequate Inventory supplies of Rolex watches on terms and
conditions satisfactory to the Administrative Agent and (e) if
in connection with such transaction any person or group of
persons (within the meaning of Section 13 or 14 of the
Securities Exchange Act of 1934) shall acquire beneficial
ownership (within the meaning of Rule 13d-3 promulgated by the
Securities and Exchange Commission under said Act), directly
OR indirectly, of thirty-five percent (35%) or more of the
outstanding shares of Capital Stock of the Borrowers, such
person or group of persons is either Birks or a Subsidiary of
Birks or a person or group of persons acceptable to the
Administrative Agent.
APPROVED RECAPITALIZATION LIABILITIES. Indebtedness or Capital Stock of
Mayor's issued in connection with an Approved
Recapitalization, which Indebtedness or Capital Stock requires
no current cash payments and is otherwise on terms and
conditions acceptable to the Administrative Agent.
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ASSIGNMENT AND ACCEPTANCE. See ss.15.1.
AVAILABILITY: The lesser of (a), (b) or (c), where:
(a) is the result of
(i) The Total Commitment
MINUS
(ii) The Outstanding amount of the Revolving
Credit Loans (after giving effect to all
amounts requested).
MINUS
(iii) The Maximum Drawing Amount and all Unpaid
Reimbursement Obligations.
MINUS
(iv) The Availability Block.
(b) is the result of
(i) The Borrowing Base
MINUS
(ii) The Outstanding amount of the Revolving
Credit Loans (after giving effect to all
amounts requested).
MINUS
(iii) The Maximum Drawing Amount and all Unpaid
Re-imbursement Obligations.
MINUS
(iv) The aggregate of the Availability Reserves.
MINUS
(v) The Availability Block.
(c) is the result of
(i) The Tranche B Borrowing Base
MINUS
(ii) The Outstanding amount of the Revolving
Credit Loans and Tranche B Loans (after
giving effect to all amounts requested and
including Tranche B Loan PIK Interest).
MINUS
(iii) The Maximum Drawing Amount and all Unpaid
Reimbursement Obligations.
MINUS
(iv) The aggregate of the Availability Reserves.
MINUS
(v) The Availability Block.
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AVAILABILITY BLOCK. $8,000,000; PROVIDED, HOWEVER, after an Approved
Recapitalization the Availability Block will be $7,000,000.
AVAILABILITY RESERVES. Such reserves as the Administrative Agent from
time to time determines in the Administrative Agent's
reasonable discretion as being appropriate (determined in
accordance with its customary credit considerations) to
reflect the impediments to the Administrative Agent's ability
to realize upon the Collateral. Without limiting the
generality of the foregoing, Availability Reserves may include
(but are not limited to) reserves based on the following:
(a) Lease reserves.
(b) Customer Credit Liabilities.
(c) Taxes and other governmental charges, including, ad
valorem, personal property, and other taxes which
might have priority over the Collateral Interests of
the Administrative Agent in the Collateral.
BALANCE SHEET DATE. February 2, 2002
BASE RATE. The higher of (a) the variable annual rate of interest
so designated from time to time by Fleet National Bank as its
"prime rate", such rate being a reference rate and not
necessarily representing the lowest or best rate being charged
to any customer, and (b) one-half of one percent (1/2%) above
the Federal Funds Effective Rate. For the purposes of this
definition, "FEDERAL FUNDS EFFECTIVE RATE" shall mean for any
day, the rate per annum equal to the weighted average of the
rates on overnight federal funds transactions with members of
the Federal Reserve System arranged by federal funds brokers,
as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published
for any day that is a Business Day, the average of the
quotations for such day on such transactions received by Fleet
National Bank from three funds brokers of recognized standing
selected by the Administrative Agent. Changes in the Base Rate
resulting from any changes in Fleet National Bank's "PRIME
RATE" shall take place immediately without notice or demand of
any kind.
BASE RATE LOANS. Revolving Credit Loans bearing interest calculated
by reference to the Base Rate.
BIRKS. Henry Birks & Sons Inc.
BOARD OF DIRECTORS. The Board of Directors of any Borrower or any
committee thereof duly authorized to act on behalf of such
Board.
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BORROWER(S). Mayor's and Mayor's Fla and the Domestic Subsidiaries of
Mayor's and Mayor's Fla.
BORROWERS' REPRESENTATIVE. Mayor's.
BORROWING BASE. The aggregate of the following:
(a) The lesser of (i) the face amount of Eligible Credit
Card Receivables MULTIPLIED BY the Credit Card
Advance Rate or (ii) the Appraised A/R Percentage of
the Appraised A/R Liquidation Value.
PLUS
(b) The lesser of (i) the Cost of Eligible Inventory (net
of Inventory Reserves to the extent not taken into
account in setting the Inventory Advance Rate)
MULTIPLIED BY the Inventory Advance Rate or (ii) the
Appraised Inventory Percentage of the Appraised
Inventory Liquidation Value.
BORROWING BASE REPORT. A Borrowing Base Report signed by the chief
financial officer of the Borrowers' Representative and in
substantially the form of EXHIBIT A hereto.
BUSINESS DAY. Any day on which banking institutions in Boston,
Massachusetts and New York, New York, are open for the
transaction of banking business and, in the case of Eurodollar
Rate Loans, also a day which is a Eurodollar Business Day.
BUYOUT ACCEPTANCE NOTICE. See ss.3.7.
BUYOUT EXERCISE NOTICE. The Administrative Agent giving the Tranche B
Lender notice that the Administrative Agent intends to grant,
consent to, or otherwise approve, a sale or transfer by the
Borrowers of assets at a time when an OverLoan exists or an
OverLoan will exist, or is projected to exist, upon the
completion of such sale or transfer.
BUYOUT EXERCISE PERIOD. Any time (a) within sixty (60) days following
any Standstill Termination Date or (b) within ten (10) days
following the Tranche B Lender's receipt of a Buyout Exercise
Notice.
CAPITAL ASSETS. Fixed assets, both tangible (such as land, buildings,
fixtures, machinery and equipment) and intangible (such as
patents, copyrights, trademarks, franchises and good will);
PROVIDED that Capital Assets shall not include any item
customarily charged directly to expense or depreciated over a
useful life of twelve (12) months or less in accordance with
GAAP.
CAPITAL EXPENDITURES. Amounts paid or Indebtedness incurred by the
Borrowers or any of their Subsidiaries in connection with (i)
the purchase or lease by the Borrowers or any of their
Subsidiaries of Capital Assets that would be required to be
capitalized and shown on the balance sheet of such Person in
accordance with GAAP or (ii) the lease of any assets by the
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Borrowers or any of their Subsidiaries as lessee under any
Synthetic Lease to the extent that such assets would have been
Capital Assets had the Synthetic Lease been treated for
accounting purposes as a Capitalized Lease.
CAPITALIZED LEASES. Leases under which the Borrowers or any of their
Subsidiaries is the lessee or obligor, the discounted future
rental payment obligations under which are required to be
capitalized on the balance sheet of the lessee or obligor in
accordance with GAAP.
CAPITAL STOCK. Any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a
Person (other than a corporation) and any and all warrants,
rights or options to purchase any of the foregoing.
CASH EQUIVALENTS. As to the Borrowers and their Subsidiaries, (a)
securities issued or directly and fully guaranteed or insured
by the United States of America and having a maturity of not
more than six (6) months from the date of acquisition; (b)
certificates of deposit, time deposits and eurodollar time
deposits with maturities of six (6) months or less from the
date of acquisition, bankers' acceptances with maturities not
exceeding six (6) months and overnight bank deposits, in each
case, (i) with any Lenders or (ii) with any domestic
commercial bank organized under the laws of the United States
of America or any state thereof, in each case having a rating
of not less than A or its equivalent by S&P or any successor
and having capital and surplus in excess of $1,000,000,000;
(c) repurchase obligations with a term of not more than seven
(7) days for underlying securities of the types described in
clauses (a) and (b) above; and (d) any commercial paper or
finance company paper issued by (i) any Lender or any holding
company controlling any Lender or (ii) any other Person that
is rated not less than "P-1" or "A-1" or their equivalents by
Moody's or S&P or their successors.
CERCLA. See ss.7.18(a).
CHANGE OF CONTROL. Except in connection with an Approved
Recapitalization, an event or series of events by which any
person or group of persons (within the meaning of Section 13
or 14 of the Securities Exchange Act of 1934) shall have
acquired beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission
under said Act), directly or indirectly, of thirty-five
percent (35%) or more of the outstanding shares of Capital
Stock of the Borrowers; or, the individuals on the Closing
Date that constituted the Board of Directors (together with
any new directors whose election by such Board of Directors or
whose nomination for election by the stockholders of Mayor's
was approved by a vote of a majority of the directors of
Mayor's then still in office who were either directors on the
Closing Date or whose election or nomination for election was
previously so approved) cease for any reason to constitute a
majority of the Board of Directors then in office.
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CLOSING DATE. The first date on which the conditions set forth in
ss.11 have been satisfied and any Revolving Credit Loans or
Tranche B Loans are to be made or any Letter of Credit is to
be issued hereunder.
CODE. The Internal Revenue Code of 1986.
COLLATERAL. See ss.6.1.
COMMITMENT. With respect to each Revolving Credit Lender, the amount
set forth on SCHEDULE 1 hereto as the amount of such Revolving
Credit Lender's commitment to make Revolving Credit Loans to,
and to participate in the issuance, extension and renewal of
Letters of Credit for the account of, the Borrowers, as the
same may be reduced from time to time; or if such commitment
is terminated pursuant to the provisions hereof, zero. With
respect to the Tranche B Lender, the outstanding principal
amount of the Tranche B Loan.
COMMITMENT PERCENTAGE. With respect to each Revolving Credit Lender,
the percentage set forth on SCHEDULE 1 hereto as such
Revolving Credit Lender's percentage of the aggregate
Commitments of all of the Revolving Credit Lenders.
COMPLIANCE CERTIFICATE. See ss.8.4(d).
CONSOLIDATED OR CONSOLIDATED. With reference to any term defined
herein, shall mean that term as applied to the accounts of
Mayor's and its Subsidiaries, consolidated in accordance with
GAAP.
CONTROL AGREEMENT(S). See ss.6.3.2.
CONVERSION REQUEST. A notice given by the Borrowers to the
Administrative Agent of the Borrower's election to convert or
continue a Loan in accordance with ss.2.10.
COST. The calculated cost of purchases, based upon the Borrowers'
accounting practices, known to the Administrative Agent, which
practices are in effect on the date on which this Agreement
was executed as such calculated cost is determined from:
invoices received by the Borrowers; the Borrowers' purchase
journal; or the Borrowers' stock ledger. "Cost" does not
include inventory capitalization costs or other non-purchase
price charges (such as freight) used in the Borrowers'
calculation of cost of goods sold. The Cost of Eligible
Inventory will be determined in a manner consistent with the
Borrowers' then current tracking practices, based on the
Borrowers' stock ledger inventory.
CREDIT CARD ADVANCE RATE. 60%.
CREDIT CARD TRANCHE B ADVANCE RATE. 65%.
CUSTOMER CREDIT LIABILITY. Gift certificates, customer deposits,
offsets, merchandise credits, layaway obligations, frequent
shopping programs, and similar liabilities of the Borrowers
and their Subsidiaries to their retail customers and
prospective customers.
-8-
DEFAULT. Any occurrence, circumstance, or state of facts with respect
to the Borrowers which (a) is an Event of Default; or (b)
would become an Event of Default if any requisite notice were
given and/or any requisite period of time were to run and such
occurrence, circumstance, or state of facts were not
absolutely cured within any applicable grace period.
DELINQUENT LENDER. See ss.14.5.3.
DEPOSIT ACCOUNT. See ss.6.3.2.
DETERMINED VALUE. At the relevant time of reference thereto, the lesser
of (a) the net book value of Eligible Fixed Assets, determined
in accordance with GAAP, and (b) the appraised value of such
assets on forced liquidation basis determined by the most
recent appraisal thereof conducted pursuant to ss.8.4(h).
DISTRIBUTION. The declaration or payment of any dividend on or in
respect of any shares of any class of Capital Stock of the
Borrowers, other than dividends payable solely in shares of
common stock of the Borrowers; the purchase, redemption,
defeasance, retirement or other acquisition of any shares of
any class of Capital Stock of the Borrowers, directly or
indirectly through a Subsidiary of the Borrowers or otherwise
(including the setting apart of assets for a sinking or other
analogous fund to be used for such purpose); the return of
capital by the Borrowers to their shareholders as such; or any
other distribution on or in respect of any shares of any class
of Capital Stock of the Borrowers.
DOLLARS or $. Dollars in lawful currency of the United States of
America.
DOMESTIC LENDING OFFICE. Initially, the office of each Revolving Credit
Lender designated as such in SCHEDULE 1 hereto; thereafter,
such other office of such Revolving Credit Lender, if any,
located within the United States that will be making or
maintaining Base Rate Loans.
DOMESTIC SUBSIDIARIES. All Subsidiaries of Mayor's organized under the
laws of the United States of America.
DRAWDOWN DATE. The date on which any Revolving Credit Loan or Tranche B
Loans is made or is to be made, and the date on which any
Revolving Credit Loan is converted or continued in accordance
with ss.2.10.
ELIGIBLE CREDIT CARD RECEIVABLES. Accounts due on the Borrowers'
private label credit card program, which are deemed in the
reasonable discretion of the Administrative Agent (based on
customary credit considerations of the Administrative Agent)
to be eligible.
ELIGIBLE FIXED ASSETS. The Headquarters Facility to the extent that it
is (a) owned by the Borrowers, (b) subject to a Mortgage, (c)
properly insured in accordance with the provisions of ss.8.7
and (d) not encumbered by a lien or encumbrance other than
Permitted Liens.
-9-
ELIGIBLE INVENTORY. All of the Borrowers' Inventory at such locations,
and of such types, character, qualities and quantities, as the
Administrative Agent in its reasonable discretion (based on
customary credit considerations of the Administrative Agent)
from time to time determines to be acceptable for borrowing,
as to which Inventory, the Administrative Agent has a
perfected security interest which is prior and superior to all
security interests, claims, and Liens.
EMPLOYEE BENEFIT PLAN. Any employee benefit plan within the meaning of
ss.3(3) of ERISA maintained or contributed to by the Borrowers
or any ERISA Affiliate, other than a Guaranteed Pension Plan
or a Multiemployer Plan.
ENVIRONMENTAL LAWS. See ss.7.18(a).
EPA. See ss.7.18(b).
ERISA. The Employee Retirement Income Security Act of 1974.
ERISA AFFILIATE. Any Person which is treated as a single employer
with the Borrowers under ss.414(b), (c), (m) and (o) of the
Code.
ERISA REPORTABLE EVENT. A reportable event with respect to a
Guaranteed Pension Plan within the meaning of ss.4043 of ERISA
and the regulations promulgated thereunder.
EUROCURRENCY RESERVE RATE. For any day with respect to a Eurodollar
Rate Loan, the maximum rate (expressed as a decimal) at which
any bank subject thereto would be required to maintain
reserves under Regulation D of the Board of Governors of the
Federal Reserve System (or any successor or similar
regulations relating to such reserve requirements) against
"EUROCURRENCY LIABILITIES" (as that term is used in Regulation
D), if such liabilities were outstanding. The Eurocurrency
Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in the Eurocurrency Reserve Rate.
EURODOLLAR BUSINESS DAY. Any day on which commercial banks are open for
international business (including dealings in Dollar deposits)
in London or such other eurodollar interbank market as may be
selected by the Administrative Agent in its sole discretion
acting in good faith.
EURODOLLAR LENDING OFFICE. Initially, the office of each Revolving
Credit Lender designated as such in SCHEDULE 1 hereto;
thereafter, such other office of such Lender, if any, that
shall be making or maintaining Eurodollar Rate Loans.
EURODOLLAR RATE. For any Interest Period with respect to a Eurodollar
Rate Loan, the rate of interest equal to (a) the arithmetic
average of the rates per annum (rounded upwards to the nearest
1/100 of one percent) determined by the Administrative Agent
in good faith to be the highest prevailing rate per annum at
which Fleet National Bank is offered Dollar deposits two
Eurodollar Business Days prior to the beginning of such
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Interest Period in the interbank eurodollar market where the
eurodollar and foreign currency and exchange operations of
Fleet National Bank are customarily conducted, for delivery on
the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of
the Eurodollar Rate Loan of Fleet National Bank Lender to
which such Interest Period applies, divided by (b) a number
equal to 1.00 minus the Eurocurrency Reserve Rate, if
applicable.
EURODOLLAR RATE LOANS. Revolving Credit Loans bearing interest
calculated by reference to the Eurodollar Rate.
EVENT OF DEFAULT. See ss.13.1.
EXEMPT DDA: A depository account maintained by any of the Borrowers,
the only contents of which may be transfers from the Operating
Account and actually used solely (i) for petty cash purposes;
or (ii) for payroll, payroll taxes and other employee wages
and benefit payments to or for the benefit of the Borrowers'
salaried and hourly employees.
FEES. Collectively, the Unused Fee, the Letter of Credit Fees, the
Administrative Agent's Fee, the Commitment Fee, the Tranche B
Commitment Fee, the Administrative Agent Monitoring Fee and
the Tranche B Monitoring Fee.
FINANCIAL AFFILIATE. A Subsidiary of the bank holding company
controlling any Lender, which Subsidiary is engaging in any of
the activities permitted by ss.4(e) of the Bank Holding
Company Act of 1956 (12 U.S.C. ss.1843).
FISCAL. When followed by "month" or "quarter", the relevant fiscal
period based on the Borrowers' fiscal year and accounting
conventions. When followed by reference to a specific year,
the fiscal year which ends in a month of the year to which
reference is being made (e.g., if the Borrowers' fiscal year
ends in January 2001 reference to that year would be to the
Borrowers' "Fiscal 2000").
FLEET. Fleet National Bank, a national banking association.
FLEET CONCENTRATION ACCOUNT. See ss.8.14.1.
FRFI. Fleet Retail Finance Inc.
FRFI FEE LETTER. The fee letter dated as of May 30, 2002, among the
Borrowers and the Administrative Agent.
GAAP OR GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. Principles that
are (i) consistent with the principles promulgated or adopted
by the Financial Accounting Standards Board and its
predecessors, as in effect from time to time in the United
States of America, and (ii) consistently applied with past
financial statements of the Borrowers adopting the same
principles, provided that in each case referred to in this
definition of "GAAP" a certified public accountant would,
insofar as the use of such accounting principles is pertinent,
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be in a position to deliver an unqualified opinion (other than
a qualification regarding changes in GAAP) as to financial
statements in which such principles have been properly
applied.
GORDON BROTHERS. GB Retail Funding, LLC and its affiliates.
GOVERNING DOCUMENTS. With respect to any Person, its certificate or
articles of incorporation, its by-laws and all shareholder
agreements, voting trusts and similar arrangements applicable
to any of its Capital Stock.
GOVERNMENTAL AUTHORITY. Any foreign, federal, state, regional, local,
municipal or other government, or any department, commission,
board, bureau, agency, public authority or instrumentality
thereof, or any court or arbitrator.
GUARANTEED PENSION PLAN. Any employee pension benefit plan within the
meaning of ss.3(2) of ERISA maintained or contributed to by
the Borrowers or any ERISA Affiliate the benefits of which are
guaranteed on termination in full or in part by the PBGC
pursuant to Title IV of ERISA, other than a Multiemployer
Plan.
HAZARDOUS SUBSTANCES. See ss.7.18(b).
HEADQUARTERS FACILITY. The Borrowers headquarters building and related
real estate located at 14051 N.W. 14th Street, Sunrise,
Florida 33323.
INDEBTEDNESS. As to any Person and whether recourse is secured by or is
otherwise available against all or only a portion of the
assets of such Person and whether or not contingent, but
without duplication:
(a) every obligation of such Person for money borrowed,
(b) every obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments,
including obligations incurred in connection with the
acquisition of property, assets or businesses,
(c) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or
similar facilities issued for the account of such
Person,
(d) every obligation of such Person issued or assumed as
the deferred purchase price of property or services
(including securities repurchase agreements but
excluding trade accounts payable or accrued
liabilities arising in the ordinary course of
business which are not overdue or which are being
contested in good faith),
(e) every obligation of such Person under any Capitalized
Lease,
(f) every obligation of such Person under any Synthetic
Lease,
(g) all sales by such Person of (i) accounts or general
intangibles for money due or to become due, (ii)
chattel paper, instruments or documents creating or
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evidencing a right to payment of money or (iii) other
receivables (collectively "RECEIVABLES"), -----------
whether pursuant to a purchase facility or otherwise,
other than in connection with the disposition of the
business operations of such Person relating thereto
or a disposition of defaulted receivables for
collection and not as a financing arrangement, and
together with any obligation of such Person to pay
any discount, interest, fees, indemnities, penalties,
recourse, expenses or other amounts in connection
therewith,
(h) every obligation of such Person (an "EQUITY RELATED
PURCHASE OBLIGATION") to purchase, redeem, retire or
otherwise acquire for value any shares of Capital
Stock issued by such Person or any rights measured by
the value of such Capital Stock,
(i) every obligation of such Person under any forward
contract, futures contract, swap, option or other
financing agreement or arrangement (including,
without limitation, caps, floors, collars and similar
agreements), the value of which is dependent upon
interest rates, currency exchange rates, commodities
or other indices (a "DERIVATIVE CONTRACT"),
(j) every obligation in respect of Indebtedness of any
other entity (including any partnership in which such
Person is a general partner) to the extent that such
Person is liable therefor as a result of such
Person's ownership interest in or other relationship
with such entity, except to the extent that the terms
of such Indebtedness provide that such Person is not
liable therefor and such terms are enforceable under
applicable law,
(k) every obligation, contingent or otherwise, of such
Person guaranteeing, or having the economic effect of
guarantying or otherwise acting as surety for, any
obligation of a type described in any of clauses (a)
through (j) (the "PRIMARY OBLIGATION") of another
Person (the "PRIMARY OBLIGOR"), in any manner,
whether directly or indirectly, and including,
without limitation, any obligation of such Person (i)
to purchase or pay (or advance or supply funds for
the purchase of) any security for the payment of such
primary obligation, (ii) to purchase property,
securities or services for the purpose of assuring
the payment of such primary obligation, or (iii) to
maintain working capital, equity capital or other
financial statement condition or liquidity of the
primary obligor so as to enable the primary obligor
to pay such primary obligation.
The "AMOUNT" or "PRINCIPAL AMOUNT" of any Indebtedness at any
time of determination represented by (t) any Indebtedness,
issued at a price that is less than the principal amount at
maturity thereof, shall be the amount of the liability in
respect thereof determined in accordance with GAAP, (u) any
Capitalized Lease shall be the principal component of the
aggregate of the rentals obligation under such Capitalized
Lease payable over the term thereof that is not subject to
termination by the lessee, (v) any sale of receivables shall
be the amount of unrecovered capital or principal investment
of the purchaser (other than the Borrowers or any of their
wholly-owned Subsidiaries) thereof, excluding amounts
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representative of yield or interest earned on such investment,
(w) any Synthetic Lease shall be the stipulated loss value,
termination value or other equivalent amount, (x) any
derivative contract shall be the maximum amount of any net
termination or loss payment required to be paid by such Person
if such derivative contract were, at the time of
determination, to be terminated by reason of any event of
default or early termination event thereunder, whether or not
such event of default or early termination event has in fact
occurred, (y) any equity related purchase obligation shall be
the maximum fixed redemption or purchase price thereof
inclusive of any accrued and unpaid dividends to be comprised
in such redemption or purchase price and (z) any guaranty or
other contingent liability referred to in clause (k) shall be
an amount equal to the stated or determinable amount of the
primary obligation in respect of which such guaranty or other
contingent obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in
respect thereof (assuming such Person is required to perform
thereunder) as determined by such Person in good faith.
INELIGIBLE SECURITIES. Securities which may not be underwritten or
dealt in by member banks of the Federal Reserve System under
Section 16 of the Banking Act of 1933 (12 U.S.C. ss.24,
Seventh), as amended.
INTEREST PAYMENT DATE. (a) As to any Base Rate Loan, the last day of
the calendar month with respect to interest accrued during
such calendar month, including, without limitation, the
calendar month which includes the Drawdown Date of such Base
Rate Loan; (b) as to any Eurodollar Rate Loan, the last day of
such Interest Period and (c) following the occurrence of any
Event of Default, with such frequency as may be determined by
the Administrative Agent.
INTEREST PERIOD. With respect to each Revolving Credit Loan, (a)
initially, the period commencing on the Drawdown Date of such
Loan and ending on the last day of one of the periods set
forth below, as selected by the Borrowers' Representative in a
Loan Request or as otherwise required by the terms of this
Agreement (i) for any Base Rate Loan, the last day of the
calendar month; and (ii) for any Eurodollar Rate Loan, 1, 2 or
3 months; and (b) thereafter, each period commencing on the
last day of the next preceding Interest Period applicable to
such Revolving Credit Loan and ending on the last day of one
of the periods set forth above, as selected by the Borrowers'
Representative in a Conversion Request; PROVIDED that all of
the foregoing provisions relating to Interest Periods are
subject to the following:
(A) if any Interest Period with respect to a Eurodollar
Rate Loan would otherwise end on a day that is not a
Eurodollar Business Day, that Interest Period shall
be extended to the next succeeding Eurodollar
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Business Day unless the result of such extension
would be to carry such Interest Period into another
calendar month, in which event such Interest Period
shall end on the immediately preceding Eurodollar
Business Day;
(B) if any Interest Period with respect to a Base Rate
Loan would end on a day that is not a Business Day,
that Interest Period shall end on the next succeeding
Business Day;
(C) if the Borrowers' Representative shall fail to give
notice as provided in ss.2.10, the Borrowers shall be
deemed to have requested a conversion of the affected
Eurodollar Rate Loan to a Base Rate Loan and the
continuance of all Base Rate Loans as Base Rate Loans
on the last day of the then current Interest Period
with respect thereto;
(D) any Interest Period relating to any Eurodollar Rate
Loan that begins on the last Eurodollar Business Day
of a calendar month (or on a day for which there is
no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end
on the last Eurodollar Business Day of a calendar
month; and
(E) any Interest Period that would otherwise extend
beyond the Maturity Date.
INTEREST RATE AGREEMENT. Any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement, interest
rate futures contract, interest rate option agreement or other
similar agreement or arrangement to which the Borrowers and
the Administrative Agent is a party, designed to protect the
Borrowers against fluctuations in interest rates.
INTERIM CONCENTRATION ACCOUNT. Deposit Accounts (other than Local
Accounts and the Fleet Concentration Account) with financial
institutions which have entered into Control Agreements.
INVENTORY. With respect to the Borrowers, finished goods, work in
progress and raw materials and component parts inventory owned
by the Borrowers.
INVENTORY ADVANCE RATE. On the Closing Date, 56.5% as such amount is
adjusted from time to time by the Administrative Agent in its
reasonable discretion (determined in accordance with its
customary credit considerations) to reflect changes in the
nature and quality of the Borrowers' Inventory; PROVIDED,
HOWEVER, the Inventory Advance Rate may not exceed 64% without
the consent of all Lenders.
INVENTORY RESERVES. Such reserves as may be established from time to
time by the Administrative Agent in the Administrative Agent's
discretion with respect to the determination of shrink, the
saleability, at retail, of the Eligible Inventory or which
reflect such other factors as affect the market value of the
Eligible Inventory.
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INVESTMENTS. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock or
Indebtedness of, or for loans, advances, capital contributions
or transfers of property to, or in respect of any guaranties
(or other commitments as described under Indebtedness), or
obligations of, any Person. In determining the aggregate
amount of Investments outstanding at any particular time: (a)
the amount of any Investment represented by a guaranty shall
be taken at not less than the principal amount of the
obligations guaranteed and still outstanding; (b) there shall
be included as an Investment all interest accrued with respect
to Indebtedness constituting an Investment unless and until
such interest is paid; (c) there shall be deducted in respect
of each such Investment any amount received as a return of
capital (but only by repurchase, redemption, retirement,
repayment, liquidating dividend or liquidating distribution);
(d) there shall not be deducted in respect of any Investment
any amounts received as earnings on such Investment, whether
as dividends, interest or otherwise, except that accrued
interest included as provided in the foregoing clause (b) may
be deducted when paid; and (e) there shall not be deducted
from the aggregate amount of Investments any decrease in the
value thereof.
ISRAELI SUBSIDIARY ASSETS. $1,924,910.35 owed by Exclusive Diamonds
International, Ltd. to Mayor's pursuant to the judgment issued
by the United States District Court, Southern District of
Florida, on January 16, 2002.
LENDER AFFILIATE. (a) With respect to any Lender, (i) an Affiliate of
such Lender or (ii) any entity (whether a corporation,
partnership, limited liability company, trust or legal entity)
that is engaged in making, purchasing, holding or otherwise
investing in bank loans and similar extensions of credit in
the ordinary course of its business and is administered or
managed by such Lender or an Affiliate of such Lender and (b)
with respect to any Lender that is a fund which invests in
bank loans and similar extensions of credit, any other entity
(whether a corporation, partnership, limited liability
company, trust or other legal entity) that is a fund that
invests in bank loans and similar extensions of credit and is
managed by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.
LENDERS. The Revolving Credit Lenders and the Tranche B Lender.
LETTER OF CREDIT. See ss.4.1.1.
LETTER OF CREDIT APPLICATION. See ss.4.1.1.
LETTER OF CREDIT FEE. See ss.4.6.
LETTER OF CREDIT ISSUER. Fleet or such other Person selected by the
Administrative Agent to issue Letters of Credit.
LETTER OF CREDIT PARTICIPATION. See ss.4.1.4.
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LIEN. Any mortgage, deed of trust, security interest, pledge,
hypothecation, assignment, attachment, deposit arrangement,
encumbrance, lien (statutory, judgment or otherwise), or other
security agreement or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other
title retention agreement, any Capitalized Lease, any
Synthetic Lease, any financing lease involving substantially
the same economic effect as any of the foregoing and the
filing of any financing statement under the UCC or comparable
law of any jurisdiction).
LOAN DOCUMENTS. This Agreement, the Notes, the Letter of Credit
Applications, the Letters of Credit and the Security
Documents.
LOAN REQUEST. See ss.2.9.
LOANS. The Revolving Credit Loans and the Tranche B Loan.
LOCAL ACCOUNTS. Deposit Accounts maintained for the benefit of a
single retail location of the Borrowers.
LOAN ACCOUNT. See ss.2.7.1.
MATERIAL ADVERSE EFFECT. With respect to any event or occurrence of
whatever nature (including any adverse determination in any
litigation, arbitration or governmental investigation or
proceeding):
(a) a material adverse effect on the business,
properties, financial condition, assets, operations
or income of Mayor's, Mayor's Fla or the Borrowers
and their Subsidiaries, taken as a whole;
(b) any material impairment of the ability of the
Borrowers taken as a whole, to perform any of their
respective Obligations under any of the Loan
Documents to which it is a party; or
(c) any impairment of the validity, binding effect or
enforceability of this Agreement or any of the other
Loan Documents, any impairment of the rights,
remedies or benefits available to the Administrative
Agent or any Lender under any Loan Document or any
impairment of the attachment, perfection or priority
of any Lien of the Administrative Agent under the
Security Documents.
MATURITY DATE. May 30, 2005.
MAXIMUM DRAWING AMOUNT. The maximum aggregate amount that the
beneficiaries may at any time draw under outstanding Letters
of Credit, as such aggregate amount may be reduced from time
to time pursuant to the terms of the Letters of Credit.
MAYOR'S. See preamble.
MAYOR'S FLA. See preamble.
MOODY'S. Moody's Investors Services, Inc.
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MORTGAGED PROPERTY. The Headquarters Facility and any Real Estate which
is subject to any Mortgage.
MORTGAGE. The mortgage, dated or to be dated on or prior to the Closing
Date, from Mayor's to the Administrative Agent with respect to
the fee interest of Mayor's in the Headquarters Facility and
in form and substance satisfactory to the Lender and the
Administrative Agent.
MULTIEMPLOYER PLAN. Any multiemployer plan within the meaning
of ss.3(37) of ERISA maintained or contributed to by the
Borrowers or any ERISA Affiliate.
NET PROCEEDS. With respect to any sale or issuance by Mayor's of
its Capital Stock or Indebtedness, the excess of the gross
cash proceeds received by Mayor's for such sale or issuance
after deduction of all transfer and sales taxes and reasonable
and customary transaction expenses (including, without
limitation, underwriting discounts and commissions) actually
incurred in connection with such a sale or other issuance.
NOTES. The Revolving Credit Notes and Tranche B Notes.
OBLIGATIONS. (a) All indebtedness, obligations and liabilities of any
of the Borrowers and their Subsidiaries to any of the Lenders
and the Administrative Agent, individually or collectively,
existing on the date of this Agreement or arising thereafter,
direct or indirect, joint or several, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise,
to the extent arising or incurred under this Agreement or any
of the other Loan Documents or any Interest Rate Agreement or
in respect of any of the Loans made or Reimbursement
Obligations incurred or any of the Notes, Letter of Credit
Application, Letter of Credit or other instruments at any time
evidencing any thereof.
(b) Any and all direct or indirect liabilities,
debts, and obligations of the Borrowers to the Administrative
Agent or any Affiliate of the Administrative Agent, each of
every kind, nature, and description owing on account of any
service or accommodation provided to, or for the account of
the Borrowers pursuant to this or any other Loan Document,
including cash management services or any other fee based
banking products.
OPERATING ACCOUNT. See ss.2.9.2.
OUTSTANDING. With respect to the Loans, the aggregate unpaid principal
thereof as of any date of determination.
OVERLOAN: A Loan, advance, or providing of credit support (such as the
issuance of any Letter of Credit) to the extent that,
immediately after its having been made, Availability is less
than $0.
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PARTICIPANT. Any Person that acquires a direct or indirect
participation in a Lender's rights and obligations under this
Agreement and the other Loan Documents.
PBGC. The Pension Benefit Guaranty Corporation created by ss.4002 of
ERISA and any successor entity or entities having similar
responsibilities.
PERFECTION CERTIFICATE. See ss.7.14.1.
PERMITTED LIENS. Liens permitted by ss.9.2.
PERMITTED STORE CLOSINGS. The closing of the Borrowers' retail
locations listed on SCHEDULE 9.9 hereto and, with the consent
of the Administrative Agent, the closing by the Borrowers of
two (2) other retail locations per fiscal year.
PERSON. Any individual, corporation, limited liability company
partnership, limited liability partnership, trust, other
unincorporated association, business, or other legal entity,
and any Governmental Authority.
PRIVATE LABEL ACCOUNTS. Accounts Receivable due on the Borrowers'
private label credit card programs.
PROTECTIVE OVERADVANCES. Revolving Credit Loans which are OverLoans or
which are made at such time as there is a Default, but as to
which each of the following conditions is satisfied: (a) the
Total Commitment is not exceeded, (b) when aggregated with all
other Protective OverAdvances, such Revolving Credit Loans do
not aggregate more than 5% of the aggregate of the Borrowing
Base, (c) Protective OverAdvances may not be outstanding for
more than 45 consecutive Business Days or more than twice in
any twelve month period without the consent of the
SuperMajority Lenders and the Tranche B Lender and (d) such
Revolving Credit Loans are made or undertaken in the
Administrative Agent's sole discretion to protect and preserve
the interests of the Lenders.
RCRA. See ss.7.18(a).
REAL ESTATE. All real property at any time owned or leased (as
lessee or sublessee) by the Borrowers or any of their
Subsidiaries.
RECEIPTS.All cash, cash equivalents, money, checks, credit card slips,
receipts and other Proceeds from any sale of the Collateral.
RECORD. The grid attached to a Note, or the continuation of such grid,
or any other similar record, including computer records,
maintained by any Lender with respect to any Loan referred to
in such Note.
REGISTER. See ss.2.7.1.
REIMBURSEMENT OBLIGATION. The Borrowers' obligation to reimburse the
Letter of Credit Issuer and the Lenders on account of any
drawing under any Letter of Credit as provided in ss.4.2.
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REQUIRED LENDERS. As of any date, the Lenders whose aggregate
Commitments constitutes at least fifty-one percent (51%) (the
"Required Lenders Percentage") of the Commitments; PROVIDED,
HOWEVER, until such time as FRFI's and the Tranche B Lender's
aggregate Commitments constitutes less than fifty-one percent
(51%) of the Commitments, the Required Lenders Percentage
shall be fifty-six percent (56%).
REQUIRED REVOLVING CREDIT LENDERS. As of any date, the Revolving Credit
Lenders whose aggregate Commitments constitutes at least
fifty-five percent (55%) of the Total Commitment.
RESTRICTED PAYMENT. In relation to the Borrowers and their
Subsidiaries, any (a) Distribution, (b) payment or prepayment
by the Borrowers or their Subsidiaries to the Borrowers' or
any Subsidiary's shareholders (or other equity holders), in
each case, other than to the Borrowers, or to any Affiliate of
the Borrowers or any Subsidiary or any Affiliate of the
Borrowers' or such Subsidiary's shareholders (or other equity
holders), in each case, other than to the Borrowers or (c)
derivatives or other transactions with any financial
institution, commodities or stock exchange or clearinghouse (a
"DERIVATIVES COUNTERPARTY") obligating the Borrowers or any
Subsidiary to make payments to such Derivatives Counterparty
as a result of any change in market value of any Capital Stock
of the Borrowers or such Subsidiary.
RESTRUCTURING ADVISOR. Phoenix Management Services, Inc. or any other
restructuring advisor of the Borrowers' acceptable to the
Administrative Agent.
RESERVES. The following: Availability Reserves and Inventory Reserves.
REVOLVING CREDIT EARLY TERMINATION FEE. See ss.2.4.
REVOLVING CREDIT LENDERS. Fleet and the other lending institutions
listed on SCHEDULE 1 hereto and any other Person who becomes
an assignee of any rights and obligations of a Revolving
Credit Lender pursuant to ss.15.
REVOLVING CREDIT LOANS. Revolving credit loans made or to be made by
the Revolving Credit Lenders to the Borrowers pursuant to
ss.2.
REVOLVING CREDIT NOTE RECORD. A Record with respect to a Revolving
Credit Note.
REVOLVING CREDIT NOTES. See ss.2.7.2.
ROLEX LIENS. Liens on Inventory of the Borrowers consisting of Rolex
watches in favor of Rolex Watch U.S.A., Inc. to the extent
that such liens are junior and subordinate to the Liens
securing the Obligations on terms and conditions satisfactory
to the Administrative Agent.
SARA. See ss.7.18(a).
SECURITY DOCUMENTS. This Agreement, the Mortgage, the Trademark
Assignment, the Stock Pledge Agreement and all other
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instruments and documents, including without limitation
Uniform Commercial Code financing statements, required to be
executed or delivered pursuant to any Security Document.
SETTLEMENT. The making or receiving of payments, in immediately
available funds, by the Revolving Credit Lenders, to the
extent necessary to cause each Revolving Credit Lender's
actual share of the outstanding amount of Revolving Credit
Loans (after giving effect to any Loan Request) to be equal to
such Revolving Credit Lender's Commitment Percentage of the
outstanding amount of such Revolving Credit Loans (after
giving effect to any Loan Request), in any case where, prior
to such event or action, the actual share is not so equal.
SETTLEMENT AMOUNT. See ss.2.13.1.
SETTLEMENT DATE. (a) The Drawdown Date relating to any Loan Request
which would cause the Swing Line Loan to exceed the Swing Line
Ceiling, (b) at the option of the Administrative Agent, on any
Business Day following a day on which the account officers of
the Administrative Agent active upon the Borrowers' account
become aware that a Default exists, (c) at the option of the
Administrative Agent, the Business Day following notice to the
Lenders of the Administrative Agents intent to effect a
Settlement, (d) any Business Day on which the amount of
Revolving Credit Loans outstanding from FRFI PLUS FRFI's
Commitment Percentage of the sum of the Maximum Drawing Amount
and any Unpaid Reimbursement Obligations is equal to or
greater than FRFI's Commitment Percentage of the Total
Commitment, (e) the Business Day immediately following any
Business Day on which the amount of Swing Line Loans exceeds
the Swing Line Ceiling, (f) if it is a Business Day, Wednesday
of each week or (g) any Business Day on which (i) the amount
of outstanding Revolving Credit Loans decreases and (ii) the
amount of the Administrative Agent's Revolving Credit Loans
outstanding equals zero Dollars ($0).
SETTLING LENDER. See ss.2.13.1.
S&P. Standard & Poor's Ratings Group.
STANDSTILL TERMINATION DATE. Any date (a) that an Event of Default
under Section 13.1(g), (h) or (j) exists, (b) on which an
Event of Default exists under Section 13.1(a) or (b) and has
existed for at least fifteen (15) consecutive days prior to
such date, (c) on which Availability is less than $0 and (i)
fifteen (15) days prior to such date Availability was less
than $0 and during such fifteen (15) day period there was no
period of three (3) consecutive days in which Availablity was
equal to or exceeded $0 or (ii) during the forty-five (45)
days prior to such date Availability was less than $0 for
twenty-five (25) or more days during such period, and (d) the
date which is thirty (30) days after the Tranche B Lender has
given notice to the Administrative Agent that an Event of
Default in respect of ss.10.1 has occurred.
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STOCK PLEDGE AGREEMENT. The Stock Pledge Agreement, dated or to be
dated on or prior to the Closing Date, among certain of the
Borrowers and the Administrative Agent and in form and
substance satisfactory to the Administrative Agent.
SUBSIDIARY. Any corporation, association, trust, or other business
entity of which the designated parent shall at any time own
directly or indirectly through a Subsidiary or Subsidiaries at
least a majority (by number of votes) of the outstanding
Voting Stock.
SUPERMAJORITY LENDERS. As of any date, Revolving Credit Lenders holding
at least sixty-six and two thirds percent (66 2/3%) of the
outstanding principal amount of the Revolving Credit Notes on
such date; and if no such principal is outstanding, the
Revolving Credit Lenders whose aggregate Commitments
constitute at least sixty-six and two thirds percent (66 2/3%)
of the Total Commitment.
SWING LINE CEILING. $10,000,000.
SWING LINE LOANS. Revolving Credit Loans made by the Administrative
Agent to the Borrowers pursuant to ss.2.9.2.
SYNTHETIC LEASE. Any lease of goods or other property, whether real or
personal, which is treated as an operating lease under GAAP
and as a loan or financing for U.S. income tax purposes.
TITLE INSURANCE COMPANY. LandAmerica.
TITLE POLICY. In relation to each Mortgaged Property, an ALTA
standard form title insurance policy issued by the Title
Insurance Company (with such reinsurance or co-insurance as
the Administrative Agent may require, any such reinsurance to
be with direct access endorsements) in such amount as may be
determined by the Administrative Agent insuring the priority
of the Mortgage of such Mortgaged Property and that the
Borrowers or one of their Subsidiaries holds marketable fee
simple title to such Mortgaged Property, subject only to the
encumbrances permitted by such Mortgage and which shall not
contain exceptions for mechanics liens, persons in occupancy
or matters which would be shown by a survey (except as may be
permitted by such Mortgage), shall not insure over any matter
except to the extent that any such affirmative insurance is
acceptable to the Administrative Agent in its reasonable
discretion, and shall contain such endorsements and
affirmative insurance as the Administrative Agent in its
discretion may require, including but not limited to (a)
comprehensive endorsement, (b) variable rate of interest
endorsement, (c) revolving credit endorsement and (d) Florida
survey endorsement.
TOTAL COMMITMENT. The sum of the Commitments of the Revolving Credit
Lenders, as in effect from time to time.
TRADEMARK ASSIGNMENTS. The several Trademark Collateral Security and
Pledge Agreements, dated or to be dated on the Closing Date,
made by the Borrowers and their Subsidiaries in favor of the
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Administrative Agent and the Assignments of Trademarks and
Trademarks executed in connection therewith, all in form and
substance satisfactory to the Lenders and the Administrative
Agent.
TRANCHE B BORROWING BASE. The aggregate of the following:
(a) The lesser of (i) the face amount of Eligible Credit
Card Receivables MULTIPLIED BY the Credit Card
Tranche B Advance Rate or (ii) the Appraised A/R
Tranche B Percentage of the Appraised A/R Liquidation
Value.
PLUS
(b) The lesser of (a) the Cost of Eligible Inventory (net
of Inventory Reserves) MULTIPLIED BY 66.5% or (b)
100% of the Appraised Inventory Liquidation Value.
PLUS
(c) (i) Prior to the sale of the Headquarters Facility,
the lesser of (A) $4,000,000 and (B) the Determined
Value of Eligible Fixed Assets and (ii) after the
sale of the Headquarters Facility, $0.
TRANCHE B EARLY TERMINATION FEE. See ss.3.3.
TRANCHE B FEE LETTER. The fee letter dated as of May 30, 2002, among
the Borrowers and the Tranche B Lender.
TRANCHE B INVENTORY ADVANCE RATE. 66.5% or such higher percentage as
determined by the Tranche B Lender.
TRANCHE B LENDER. Back Bay Capital Funding LLC.
TRANCHE B LENDER FEES. See ss.5.2.
TRANCHE B LOAN. The Tranche B Loan made or to be made by the Tranche B
Lender to the Borrowers on the Closing Date originally in the
aggregate principal amount of $12,500,000 pursuant to ss.3.1.
TRANCHE B LOAN PIK INTEREST. See ss.3.4.(b).
TRANCHE B NOTES. See ss.3.2.
TYPE. As to any Revolving Credit Loan, its nature as a Base Rate
Loan or a Eurodollar Rate Loan.
UNIFORM COMMERCIAL CODE. The Uniform Commercial Code of the
Commonwealth of Massachusetts.
UNPAID REIMBURSEMENT OBLIGATION. Any Reimbursement Obligation for
which the Borrowers do not reimburse the Administrative Agent
and the Lenders on the date specified in, and in accordance
with, ss.4.2.
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UNUSED FEE. Seess.2.3.
VOTING STOCK. Stock or similar interests, of any class or classes
(however designated), the holders of which are at the time
entitled, as such holders, to vote for the election of a
majority of the directors (or persons performing similar
functions) of the corporation, association, trust or other
business entity involved, whether or not the right so to vote
exists by reason of the happening of a contingency.
1.2. RULES OF INTERPRETATION.
(a) A reference to any document or agreement shall include
such document or agreement as amended, modified or supplemented from
time to time in accordance with its terms and the terms of this
Agreement.
(b) The singular includes the plural and the plural includes
the singular.
(c) A reference to any law includes any amendment or
modification to such law.
(d) A reference to any Person includes its permitted
successors and permitted assigns.
(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by GAAP applied on a consistent basis by the
accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not
limiting.
(g) All terms not specifically defined herein or by GAAP,
which terms are defined in the Uniform Commercial Code as in effect in
the Commonwealth of Massachusetts, have the meanings assigned to them
therein, with the term "INSTRUMENT" being that defined under Article 9
of the Uniform Commercial Code.
(h) Reference to a particular "ss." refers to that section of
this Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of
like import shall refer to this Agreement as a whole and not to any
particular section or subdivision of this Agreement.
(j) Unless otherwise expressly indicated, in the computation
of periods of time from a specified date to a later specified date, the
word "from" means "from and including," the words "to" and "until" each
mean "to but excluding," and the word "through" means "to and
including."
(k) This Agreement and the other Loan Documents may use
several different limitations, tests or measurements to regulate the
same or similar matters. All such limitations, tests and measurements
are, however, cumulative and are to be performed in accordance with the
terms thereof.
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(l) Text which is shown in ITALICS (except for parenthesized
italicized text), shown in BOLD, shown IN ALL CAPITAL LETTERS, or in
any combination of the foregoing, shall be deemed to be conspicuous.
(m) The words "may not" are prohibitive and not permissive.
(n) Any reference to a Person's "knowledge" (or words of
similar import) are to such Person's knowledge assuming that such
Person has undertaken reasonable and diligent investigation with
respect to the subject of such "knowledge" (whether or not such
investigation has actually been undertaken).
(o) This Agreement and the other Loan Documents are the result
of negotiation among, and have been reviewed by counsel to, among
others, the Administrative Agent and the Borrowers and are the product
of discussions and negotiations among all parties. Accordingly, this
Agreement and the other Loan Documents are not intended to be construed
against the Administrative Agent or any of the Lenders merely on
account of the Administrative Agent's or any Lender's involvement in
the preparation of such documents.
2. THE REVOLVING CREDIT FACILITY.
2.1. COMMITMENT TO LEND. Subject to the terms and conditions set forth in this
Agreement, each of the Revolving Credit Lenders severally agrees to lend to the
Borrowers, and the Borrowers on a joint and several basis may borrow, repay, and
reborrow from time to time from the Closing Date up to but not including the
Maturity Date upon notice by the Borrowers' Representative to the Administrative
Agent given in accordance with ss.2.9, such sums as are requested by the
Borrowers' Representative up to a maximum aggregate amount outstanding (after
giving effect to all amounts requested) at any one time equal to such Revolving
Credit Lender's Commitment MINUS such Revolving Credit Lender's Commitment
Percentage of the sum of the Maximum Drawing Amount and all Unpaid Reimbursement
Obligations, PROVIDED that the Administrative Agent and the Revolving Credit
Lenders shall have no obligation to make any Revolving Credit Loans which would
constitute an OverLoan and the Borrowers shall never allow Availability to be
less than $0. Each request for a Revolving Credit Loan hereunder shall
constitute a representation and warranty by the Borrowers that the conditions
set forth in ss.11 and ss.12, in the case of the initial Revolving Credit Loans
to be made on the Closing Date, and ss.12, in the case of all other Revolving
Credit Loans, have been satisfied on the date of such request. No Revolving
Credit Lender has any obligation to make any Revolving Credit Loan, or otherwise
to provide any credit to or for the benefit of the Borrowers where the result of
such loan, advance, or credit is an OverLoan.
2.2. MATURITY. The Borrowers jointly and severally promise to pay on the
Maturity Date, and there shall become absolutely due and payable on the Maturity
Date, all of the Revolving Credit Loans outstanding on such date, together with
any and all accrued and unpaid interest thereon.
2.3. UNUSED FEE. The Borrowers jointly and severally agree to pay to the
Administrative Agent for the accounts of the Revolving Credit Lenders in
accordance with their respective Commitment Percentages a commitment fee (the
"UNUSED FEE") calculated at the rate of three eighth's of one percent (0.375%)
on the average daily amount during each calendar month or portion thereof from
the date hereof to the Maturity Date by which the Total Commitment MINUS the sum
of the Maximum Drawing Amount and all Unpaid Reimbursement Obligations exceeds
the outstanding amount of Revolving Credit Loans during such calendar month. The
Unused Fee shall be payable monthly in arrears on the first day of each month
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for the immediately preceding month commencing on the first such date following
the date hereof, with a final payment on the Maturity Date or any earlier date
on which the Commitments shall terminate.
2.4. REDUCTION OF COMMITMENT. The Borrowers shall have the right, at any time
and from time to time upon five (5) Business Days written notice to the
Administrative Agent, to reduce by $5,000,000 or an integral multiple of
$1,000,000 in excess thereof, or terminate entirely the Total Commitment,
whereupon the Commitments of the Revolving Credit Lenders shall be reduced PRO
RATA in accordance with their respective Commitment Percentages of the amount
specified in such notice, or as the case may be, terminated. Promptly after
receiving any notice of the Borrowers delivered pursuant to this ss.2.4, the
Administrative Agent will notify the Revolving Credit Lenders of the substance
thereof. If the Borrowers repay or prepay all outstanding Revolving Credit Loans
or the Total Commitment is reduced or terminated during the period commencing on
the Closing Date and ending on the second anniversary of the Closing Date in a
single transaction or series of related transactions, the Borrowers shall pay to
the Administrative Agent a premium in an amount equal to the Commitment
Reduction Fee of the amount of the reduction of the Total Commitment or on the
amount of the Total Commitment immediately prior to such repayment or prepayment
or the first of a related series of prepayments or repayments, as the case may
be (the "REVOLVING CREDIT EARLY TERMINATION FEE"); PROVIDED, HOWEVER, no
Revolver Early Termination Fee shall be due if the Total Commitment is
terminated in connection with the Borrowers entering into a new credit facility
agented by the FRFI. No reduction or termination of the Total Commitment may be
reinstated. The "COMMITMENT REDUCTION FEE" shall be one percent (1%); PROVIDED,
HOWEVER, if an Approved Recapitalization has occurred, the Commitment Reduction
Fee shall be one-half of one percent (0.5%) during the period from the date of
the Approved Recapitalization through the day which is ninety (90) days
following the Closing Date.
2.5. MANDATORY REPAYMENTS OF REVOLVING CREDIT LOANS. If at any time Availability
is less than $0 or there is an OverLoan, then the Borrowers shall immediately
pay to the Administrative Agent for the respective accounts of the Revolving
Credit Lenders for application amounts necessary so that Availability is $0 or
greater and there are no OverLoans to be applied: first, to any Unpaid
Reimbursement Obligations; second, to the Revolving Credit Loans; and third, to
provide to the Administrative Agent cash collateral for Reimbursement
Obligations as contemplated by ss.4.2(b) and (c). Each payment of any Unpaid
Reimbursement Obligations or prepayment of Revolving Credit Loans shall be
allocated among the Revolving Credit Lenders, in proportion, as nearly as
practicable, to each Reimbursement Obligation or (as the case may be) the
respective unpaid principal amount of each Revolving Credit Lender's Revolving
Credit Note, with adjustments to the extent practicable to equalize any prior
payments or repayments not exactly in proportion.
2.6. OPTIONAL REPAYMENTS OF REVOLVING CREDIT LOANS. The Borrowers shall have the
right, at their election, to repay the outstanding amount of the Revolving
Credit Loans, as a whole or in part, at any time without penalty or premium,
PROVIDED that any full or partial prepayment of the outstanding amount of any
Eurodollar Rate Loans pursuant to this ss.2.6 may be made only on the last day
of the Interest Period relating thereto. Except for repayments of the Revolving
Credit Loans as contemplated by ss.2.14 the Borrowers' Representative shall give
the Administrative Agent, no later than 12:00 noon, Boston time, at least one
(1) Business Day prior written notice of any proposed prepayment pursuant to
this ss.2.6 of Base Rate Loans, and three (3) Eurodollar Business Days notice of
any proposed prepayment pursuant to this ss.2.6 of Eurodollar Rate Loans, in
each case, specifying the proposed date of prepayment of Revolving Credit Loans
and the principal amount to be prepaid. Each such partial prepayment of the
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Revolving Credit Loans shall be in an amount equal to $1,000,000 or an integral
multiple of $1,000,000 in excess thereof, shall be accompanied by the payment of
accrued interest on the principal prepaid to the date of prepayment and shall be
applied, in the absence of instruction by the Borrowers' Representative, first
to the principal of Base Rate Loans and then to the principal of Eurodollar Rate
Loans. Each partial prepayment shall be allocated among the Lenders, in
proportion, as nearly as practicable, to the respective unpaid principal amount
of each Lender's Revolving Credit Note, with adjustments to the extent
practicable to equalize any prior repayments not exactly in proportion.
2.7. THE LOAN ACCOUNT AND REVOLVING CREDIT NOTES.
2.7.1. LOAN ACCOUNT. An account ("LOAN ACCOUNT") shall be opened on the books
of the Administrative Agent in which a record shall be kept of all
Revolving Credit Loans. The Administrative Agent shall also keep a
record (either in the Loan Account or elsewhere, as the Administrative
Agent may from time to time elect) (such record the "REGISTER") of the
name and addresses of the Revolving Credit Lenders, the Commitment
Percentage of the Revolving Credit Lenders, all interest, fees, service
charges, costs, expenses, and other debits owed to the Administrative
Agent and each Revolving Credit Lender on account of the Obligations
and of all credits against such amounts so owed. The Borrowers
irrevocably authorize the Administrative Agent to make or cause to be
made, at or about the time of the Drawdown Date of any Revolving Credit
Loan or at the time of receipt of any payment of principal on the Loan
Account, an appropriate notation on the Loan Account reflecting the
making of such Revolving Credit Loan or (as the case may be) the
receipt of such payment, but the failure to record, or any error in so
recording, any such amount on the Loan Account shall not limit or
otherwise affect the obligations of the Borrowers hereunder or under
any Revolving Credit Loan to make payments of principal of or interest
on any Revolving Credit Loan when due. The Borrowers jointly and
severally promise to pay all of the Obligations in accordance with the
provisions of this Agreement. All credits against the Obligations shall
be conditional upon final payment to the Administrative Agent for the
account of each Revolving Credit Lender of the items giving rise to
such credits. The amount of any item credited against the Obligations
due to the Revolving Credit Lenders which is charged back against the
Administrative Agent or any Revolving Credit Lender for any reason or
is not so paid shall be an Obligation and shall be added to the Loan
Account, whether or not the item so charged back or not so paid is
returned. Any statement rendered by the Administrative Agent to the
Borrowers concerning the Obligations shall be considered correct and
accepted (absent manifest error) by the Borrowers and shall be
conclusively binding upon the Borrowers unless the Borrowers'
Representative provides the Administrative Agent with written objection
thereto within thirty (30) days from the mailing of such statement,
which written objection shall indicate, with reasonable particularity,
the reason for such objection. The Loan Account, the Register and the
Administrative Agent's books and records concerning the loan
arrangement contemplated herein and the Obligations shall be prima
facie evidence and proof of the items described therein. The Loan
Account and Register shall be available for inspection by the
Borrowers' Representative and the Revolving Credit Lenders at any
reasonable time and from time to time upon reasonable prior notice.
2.7.2. REVOLVING CREDIT NOTES. At the request of any Revolving Credit Lender
the Borrowers shall deliver to such Revolving Credit Lender separate
promissory notes of the Borrowers in substantially the form of EXHIBIT
B hereto (each a "REVOLVING CREDIT NOTE"), dated as of the Closing Date
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(or such other date on which a Revolving Credit Lender may become a
party hereto in accordance with ss.15 hereof) and completed with
appropriate insertions. Each Revolving Credit Note shall be payable to
the order of such Revolving Credit Lender in a principal amount equal
to such Revolving Credit Lender's Commitment or, if less, the
outstanding amount of all Revolving Credit Loans made by such Revolving
Credit Lender, plus interest accrued thereon, as set forth below. No
Revolving Credit Note shall be required to establish or prove any
Obligation. In the event that any Revolving Credit Note is ever lost,
mutilated, or destroyed, the Borrowers shall execute a replacement
thereof and deliver such replacement to the Administrative Agent;
PROVIDED, HOWEVER, in the event that a Revolving Credit Note is to be
exchanged following its acceleration or the entry of an order for
relief under the Bankruptcy Code with respect to the Borrowers, the
Administrative Agent, in lieu of causing the Borrowers to execute one
or more new Revolving Credit Notes, may issue the Agent's Certificate
confirming the resulting Lender's Commitment and Percentage
Commitments.
2.8. INTEREST ON REVOLVING CREDIT LOANS.
2.8.1. ACCRUAL OF INTEREST. Except as otherwise provided in ss.5.10,
(a) Each Revolving Credit Loan which is a Base Rate
Loan shall bear interest for the period commencing with the
Drawdown Date thereof and ending on the last day of the
Interest Period with respect thereto at the rate per annum
equal to the Base Rate PLUS the Applicable Margin with respect
to Base Rate Loans as in effect from time to time.
(b) Each Revolving Credit Loan which is a Eurodollar
Rate Loan shall bear interest for the period commencing with
the Drawdown Date thereof and ending on the last day of the
Interest Period with respect thereto at the rate per annum
equal to the Eurodollar Rate determined for such Interest
Period PLUS the Applicable Margin with respect to Eurodollar
Rate Loans as in effect from time to time.
The Borrowers jointly and severally promise to pay
interest on each Revolving Credit Loan in arrears on each
Interest Payment Date with respect thereto.
2.8.2. AUTOMATIC DEBIT OF INTEREST. The Administrative Agent, without the
request of the Borrowers, may make Revolving Credit Loans to pay any
interest, fee, service charge, or other payment to which the
Administrative Agent or any Lender is entitled from the Borrowers
pursuant hereto and may charge the same to the Loan Account
notwithstanding that an OverLoan may result thereby. Such action on the
part of the Administrative Agent shall not constitute a waiver of the
Administrative Agent's rights and the Borrowers' obligations under
ss.13. Any amount which is added to the principal balance of the Loan
Account as provided in this ss.2.8.2 shall bear interest at the
interest rate then and thereafter applicable to Base Rate Loans.
2.9. REQUESTS FOR REVOLVING CREDIT LOANS.
2.9.1. GENERAL. The Borrowers' Representative shall give to the Administrative
Agent written notice in the form of EXHIBIT C hereto (or telephonic
notice confirmed in a writing in the form of EXHIBIT C hereto) of each
Revolving Credit Loan requested hereunder (a "LOAN REQUEST") no later
than (a) 12:00 noon on the Business Day of the proposed Drawdown Date
of any Base Rate Loan and (b) 1:00 p.m. three (3) Eurodollar Business
Days prior to the proposed Drawdown Date of any Eurodollar Rate Loan.
Each such notice shall specify (i) the principal amount of the
Revolving Credit Loan requested, (ii) the proposed Drawdown Date of
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such Revolving Credit Loan, (iii) the Interest Period for such
Revolving Credit Loan and (iv) the Type of such Revolving Credit Loan.
Promptly upon receipt of any such notice, but in any event no later
than [2:00PM] on the proposed Drawdown Date, the Administrative Agent
shall notify each of the Revolving Credit Lenders thereof. Each Loan
Request shall be irrevocable and binding on the Borrowers and shall
obligate the Borrowers to accept the Revolving Credit Loan requested
from the Lenders on the proposed Drawdown Date. Each Loan Request shall
be in a minimum aggregate amount of $1,000,000 or an integral multiple
of $1,000,000 in excess thereof.
2.9.2. SWING LINE. Notwithstanding the notice and minimum amount requirements
set forth in ss.2.9.1 but otherwise in accordance with the terms and
conditions of this Agreement (except with respect to Protective
OverAdvances), the Administrative Agent may, in its sole discretion and
without conferring with the Lenders, make Revolving Credit Loans to the
Borrowers (a) by entry of credits to the Borrowers' operating account
or such other account (the "OPERATING ACCOUNT") with the Administrative
Agent to cover checks or other charges which the Borrowers have drawn
or made against such account, (b) in an amount as otherwise requested
by the Borrowers or (c) as Protective OverAdvances. The Borrowers
hereby request and authorize the Administrative Agent to make from time
to time such Revolving Credit Loans by means of appropriate entries of
such credits sufficient to cover checks and other charges then
presented for payment from the Operating Account or as otherwise so
requested. The Borrowers acknowledge and agree that the making of such
Revolving Credit Loans shall, in each case, be subject in all respects
to the provisions of this Agreement as if they were Revolving Credit
Loans covered by a Loan Request including, without limitation, the
limitations set forth in ss.2.1 and the requirements that the
applicable provisions of ss.11 (in the case of Revolving Credit Loans
made on the Closing Date) and ss.12 be satisfied (except in the case of
Protective OverAdvances). All actions taken by the Administrative Agent
pursuant to the provisions of this ss.2.9.2 shall be conclusive and
binding on the Borrowers and the Revolving Credit Lenders absent the
Administrative Agent's gross negligence or willful misconduct.
Revolving Credit Loans made pursuant to this ss.2.9.2 shall be Base
Rate Loans until converted in accordance with the provisions of the
Agreement and, prior to a Settlement, such interest shall be for the
account of the Administrative Agent.
2.10. CONVERSION OPTIONS.
2.10.1. CONVERSION TO DIFFERENT TYPE OF REVOLVING CREDIT LOAN. The Borrowers'
Representative may elect from time to time to convert any outstanding
Revolving Credit Loan to a Revolving Credit Loan of another Type,
PROVIDED that (a) with respect to any such conversion of a Eurodollar
Rate Loan to a Base Rate Loan, the Borrowers' Representative shall give
the Administrative Agent at least one (1) Business Days prior written
notice of such election; (b) with respect to any such conversion of a
Base Rate Loan to a Eurodollar Rate Loan, the Borrowers' Representative
shall give the Administrative Agent at least three (3) Eurodollar
Business Days prior written notice of such election; (c) with respect
to any such conversion of a Eurodollar Rate Loan into a Base Rate Loan,
such conversion shall only be made on the last day of the Interest
Period with respect thereto and (d) no Revolving Credit Loan may be
converted into a Eurodollar Rate Loan when any Default has occurred and
is continuing. On the date on which such conversion is being made each
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Revolving Credit Lender shall take such action as is necessary to
transfer its Commitment Percentage of such Revolving Credit Loans to
its Domestic Lending Office or its Eurodollar Lending Office, as the
case may be. All or any part of outstanding Revolving Credit Loans of
any Type may be converted into a Revolving Credit Loan of another Type
as provided herein, PROVIDED that any partial conversion shall be in an
aggregate principal amount of $1,000,000 or an integral multiple of
$1,000,000 in excess thereof. Each Conversion Request relating to the
conversion of a Revolving Credit Loan to a Eurodollar Rate Loan shall
be irrevocable by the Borrowers.
2.10.2. CONTINUATION OF TYPE OF REVOLVING CREDIT LOAN. Any Revolving Credit
Loan of any Type may be continued as a Revolving Credit Loan of the
same Type upon the expiration of an Interest Period with respect
thereto by compliance by the Borrowers with the notice provisions
contained in ss.2.10.1; PROVIDED that no Eurodollar Rate Loan may be
continued as such when any Default has occurred and is continuing, but
shall be automatically converted to a Base Rate Loan on the last day of
the first Interest Period relating thereto ending during the
continuance of any Default of which officers of the Administrative
Agent active upon the Borrowers' account have actual knowledge. In the
event that the Borrowers fail to provide any such notice with respect
to the continuation of any Eurodollar Rate Loan as such, then such
Eurodollar Rate Loan shall be automatically converted to a Base Rate
Loan on the last day of the first Interest Period relating thereto. The
Administrative Agent shall notify the Lenders promptly when any such
automatic conversion contemplated by this ss.2.10.2 is scheduled to
occur.
2.10.3. EURODOLLAR RATE LOANS. Any conversion to or from Eurodollar Rate Loans
shall be in such amounts and be made pursuant to such elections so
that, after giving effect thereto, the aggregate principal amount of
all Eurodollar Rate Loans having the same Interest Period shall not be
less than $1,000,000 or an integral multiple of $1,000,000 in excess
thereof. No more than 5 Eurodollar Rate Loans having different Interest
Periods may be outstanding at any time.
2.11. FUNDS FOR REVOLVING CREDIT LOAN.
2.11.1. FUNDING PROCEDURES. Not later than 3:00 p.m. (Boston time) on the
proposed Drawdown Date of any Revolving Credit Loans, each of the
Revolving Credit Lenders will make available to the Administrative
Agent, at the Administrative Agent's Office, in immediately available
funds, the amount of such Revolving Credit Lender's Commitment
Percentage of the amount of the requested Revolving Credit Loans. Upon
receipt from each Revolving Credit Lender of such amount, and upon
receipt of the documents required by ss.ss.11 and 12 and the
satisfaction of the other conditions set forth therein, to the extent
applicable, the Administrative Agent will make available to the
Borrowers' Representative the aggregate amount of such Revolving Credit
Loans made available to the Administrative Agent by the Revolving
Credit Lenders. The failure or refusal of any Revolving Credit Lender
to make available to the Administrative Agent at the aforesaid time and
place on any Drawdown Date the amount of its Commitment Percentage of
the requested Revolving Credit Loans shall not relieve any other
Revolving Credit Lender from its several obligation hereunder to make
available to the Administrative Agent the amount of such other
Revolving Credit Lender's Commitment Percentage of any requested
Revolving Credit Loans.
2.11.2. ADVANCES BY ADMINISTRATIVE AGENT. The Administrative Agent may, unless
notified to the contrary by any Revolving Credit Lender prior to a
Drawdown Date, assume that such Revolving Credit Lender has made
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available to the Administrative Agent on such Drawdown Date the amount
of such Revolving Credit Lender's Commitment Percentage of the
Revolving Credit Loans to be made on such Drawdown Date, and the
Administrative Agent may (but it shall not be required to), in reliance
upon such assumption, make available to the Borrowers a corresponding
amount. If any Revolving Credit Lender makes available to the
Administrative Agent such amount on a date after such Drawdown Date,
such Revolving Credit Lender shall pay to the Administrative Agent on
demand all such costs and expenses as may be incurred by the
Administrative Agent in the enforcement of the Administrative Agent's
rights against such Revolving Credit Lender plus an amount equal to the
greater of (a) the amount of interest actually paid by the Borrowers on
account of such amounts or (b) the product of (i) the average computed
for the period referred to in clause (iii) below, of the weighted
average interest rate paid by the Administrative Agent for federal
funds acquired by the Administrative Agent during each day included in
such period, TIMES (ii) the amount of such Revolving Credit Lender's
Commitment Percentage of such Revolving Credit Loans, TIMES (iii) a
fraction, the numerator of which is the number of days that elapse from
and including such Drawdown Date to the date on which the amount of
such Revolving Credit Lender's Commitment Percentage of such Revolving
Credit Loans shall become immediately available to the Administrative
Agent, and the denominator of which is 360. A statement of the
Administrative Agent submitted to such Revolving Credit Lender with
respect to any amounts owing under this paragraph shall be PRIMA FACIE
evidence of the amount due and owing to the Revolving Credit
Administrative Agent by such Revolving Credit Lender. If the amount of
such Lender's Commitment Percentage of such Revolving Credit Loans is
not made available to the Administrative Agent by such Revolving Credit
Lender within three (3) Business Days following such Drawdown Date, the
Administrative Agent shall be entitled to recover such amount from the
Borrowers on demand, with interest thereon at the rate per annum
applicable to the Revolving Credit Loans made on such Drawdown Date.
2.11.3. LIMITATION OF LIABILITY. There shall not be any recourse to or
liability of the Administrative Agent or any Lender, on account of: (a)
any delay in the making of any Revolving Credit Loan, (b) any delay by
any bank or other depository institution in treating the proceeds of
any such Revolving Credit Loan as collected funds or (c) any delay in
the receipt, and/or any loss, of funds which constitute a Revolving
Credit Loan, the wire transfer of which was properly initiated by the
Administrative Agent in accordance with wire instructions provided to
the Administrative Agent by the Borrowers.
2.12. BORROWING BASE/REDUCTIONS TO AVAILABILITY.
2.12.1. CHANGE IN BORROWING BASE. The Borrowing Base shall be determined weekly
(or at such other interval as may be specified pursuant to ss.8.4(f))
by the Administrative Agent by reference to the Borrowing Base Report,
commercial finance and collateral audit reports, and the appraisals of
Eligible Fixed Assets, Inventory and Private Label Accounts delivered
to the Lenders and the Administrative Agent pursuant to ss.8.4(h) and
other information obtained by or provided to the Administrative Agent.
Without in any way limiting the Administrative Agent's right to modify
them at any time in the future, as of the Closing Date the current
Reserves are as set forth on SCHEDULE 2.12.1 hereto. In determining
whether to reduce the lending formula(s), the Administrative Agent may
consider events, conditions, contingencies or risks which are also
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considered in determining Eligible Accounts Receivable, Eligible
Inventory or in establishing the Reserves; PROVIDED, HOWEVER, that such
reduction lending formula shall not be based upon any event, condition,
contingency or risk to the extent that a Reserve has been established.
The Administrative Agent shall give to the Borrowers' Representative
five (5) days written notice of its determination of the actual
Borrowing Base and Availability taking into account such Reserves as
the Administrative Agent may reasonably determine as being applicable
thereto and shall have discussed its basis for such determination with
the Borrowers' Representative if the Borrowers' Representative shall so
request.
2.12.2. RISK OF VALUE OF COLLATERAL. The Administrative Agent's reference to a
given asset in connection with the making of Loans and advances and the
providing of financial accommodations under this Agreement and/or the
monitoring of compliance with the provisions hereof shall not be deemed
a determination by the Administrative Agent or any Lender relative to
the actual value of the asset in question. All risks concerning the
value of the Collateral are and remain upon the Borrowers. All
Collateral secures the prompt, punctual, and faithful performance of
the Obligations whether or not relied upon by the Administrative Agent
in connection with the making of Loans, credits, and advances and the
providing of financial accommodations under this Agreement.
2.12.3. REDUCTIONS TO AVAILABILITY. In the determination of Availability, the
Administrative Agent may deem fees, service charges, accrued interest,
and other payments which will be due and payable between the date of
such determination and the first day of the then next succeeding month
as having been advanced as Revolving Credit Loans whether or not such
amounts are then due and payable.
2.13. SETTLEMENTS.
2.13.1. GENERAL. On each Settlement Date, the Administrative Agent shall, not
later than 12:00 noon (Boston time), give telephonic or facsimile
notice (a) to the Revolving Credit Lenders and the Borrowers of the
respective outstanding amount of Revolving Credit Loans made by the
Administrative Agent on behalf of the Revolving Credit Lenders from the
immediately preceding Settlement Date through the close of business on
the prior day and the amount of any Eurodollar Rate Loans to be made
(following the giving of notice pursuant to ss.2.9.1) on such date
pursuant to a Loan Request and (b) to the Revolving Credit Lenders of
the amount (a "SETTLEMENT AMOUNT") that each Revolving Credit Lender (a
"SETTLING LENDER") shall pay to effect a Settlement of any Revolving
Credit Loan. A statement of the Administrative Agent submitted to the
Revolving Credit Lenders and the Borrowers or to the Revolving Credit
Lenders with respect to any amounts owing under this ss.2.13.1 shall be
PRIMA FACIE evidence of the amount due and owing (absent manifest
error). Each Settling Lender shall, not later than 3:00 p.m. (Boston
time) on such Settlement Date, effect a wire transfer of immediately
available funds to the Administrative Agent in the amount of the
Settlement Amount for such Settling Lender. All funds advanced by any
Lender as a Settling Lender pursuant to this ss.2.13.1 shall for all
purposes be treated as a Revolving Credit Loan made by such Settling
Lender to the Borrowers and all funds received by any Revolving Credit
Lender pursuant to this ss.2.13.1 shall for all purposes be treated as
repayment of amounts owed with respect to Revolving Credit Loans made
by such Revolving Credit Lender. In the event that any bankruptcy,
reorganization, liquidation, receivership or similar cases or
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proceedings in which any Borrower is a debtor prevent a Settling Lender
from making any Revolving Credit Loan to effect a Settlement as
contemplated hereby, such Settling Lender will make such dispositions
and arrangements with the other Revolving Credit Lenders with respect
to such Revolving Credit Loans, either by way of purchase of
participations, distribution, PRO TANTO assignment of claims,
subrogation or otherwise as shall result in each Revolving Credit
Lender's share of the outstanding Revolving Credit Loans being equal,
as nearly as may be, to such Revolving Credit Lender's Commitment
Percentage of the outstanding amount of the Revolving Credit Loans.
2.13.2. FAILURE TO MAKE FUNDS AVAILABLE. The Administrative Agent may, unless
notified to the contrary by any Settling Lender prior to a Settlement
Date, assume that such Settling Lender has made or will make available
to the Administrative Agent on such Settlement Date the amount of such
Settling Lender's Settlement Amount, and the Administrative Agent may
(but it shall not be required to), in reliance upon such assumption,
make available to the Borrowers a corresponding amount. If any Settling
Lender makes available to the Administrative Agent such amount on a
date after such Settlement Date, such Settling Lender shall pay to the
Administrative Agent on demand an amount equal to the product of (a)
the average computed for the period referred to in clause (c) below, of
the weighted average interest rate paid by the Administrative Agent for
federal funds acquired by the Administrative Agent during each day
included in such period, times (b) the amount of such Settlement
Amount, times (c) a fraction, the numerator of which is the number of
days that elapse from and including such Settlement Date to the date on
which the amount of such Settlement Amount shall become immediately
available to the Administrative Agent, and the denominator of which is
360. A statement of the Administrative Agent submitted to such Settling
Lender with respect to any amounts owing under this ss.2.13.2 shall be
prima facie evidence of the amount due and owing to the Administrative
Agent by such Settling Lender (absent manifest error). If such Settling
Lender's Settlement Amount is not made available to the Administrative
Agent by such Settling Lender within three (3) Business Days following
such Settlement Date, the Administrative Agent shall be entitled to
recover such amount from the Borrowers on demand, with interest thereon
at the rate per annum applicable to the Revolving Credit Loans as of
such Settlement Date.
2.13.3. NO EFFECT ON OTHER LENDERS. The failure or refusal of any Settling
Lender to make available to the Administrative Agent at the aforesaid
time and place on any Settlement Date the amount of such Settling
Lender's Settlement Amount shall not (a) relieve any other Settling
Lender from its several obligations hereunder to make available to the
Administrative Agent the amount of such other Settling Lender's
Settlement Amount or (b) impose upon any Lender, other than the
Settling Lender so failing or refusing, any liability with respect to
such failure or refusal or otherwise increase the Commitment of such
other Lender.
2.14. REPAYMENTS OF REVOLVING CREDIT LOANS ABSENT AN EVENT OF DEFAULT.
2.14.1. CREDIT FOR FUNDS RECEIVED IN CONCENTRATION ACCOUNT. (a) All funds and
cash proceeds in the form of money, checks and like items received in
the Fleet Concentration Account as contemplated by ss.8.14 shall be
credited, on the next Business Day on which the Administrative Agent
determines that good collected funds have been received, and, prior to
the receipt of good collected funds, on a provisional basis until final
receipt of good collected funds, and applied as contemplated by
ss.2.14.2, or as applicable, ss.13.4, (b) all funds and cash proceeds
in the form of a wire transfer received in the Fleet Concentration
Account as contemplated by ss.8.14 shall be credited on the next
Business Day as the Administrative Agent's receipt of such amounts (or
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up to such later date as the Administrative Agent determines that good
collected funds have been received), and applied as contemplated by
ss.2.14.2, or as applicable, ss.13.4, and (c) all funds and cash
proceeds in the form of an automated clearing house transfer received
in the Fleet Concentration Account as contemplated by ss.8.14 shall be
credited, on the next Business Day following the Administrative Agent's
receipt of such amounts (or up to such later date as the Administrative
Agent determines that good collected funds have been received), and
applied as contemplated by ss.2.14.2, or as applicable, ss.13.4. For
purposes of the foregoing provisions of this ss.2.14.1, the
Administrative Agent shall not be deemed to have received any such
funds or cash proceeds on any day unless received by the Administrative
Agent before 2:00 p.m. (Boston time) on such day. The Borrowers further
acknowledge and agree that any such provisional credits or credits in
respect of wire or automatic clearing house funds transfers shall be
subject to reversal if final collection in good funds of the related
item is not received by, or final settlement of the funds transfer is
not made in favor of, the Administrative Agent in accordance with the
Administrative Agent's customary procedures and practices for
collecting provisional items or receiving settlement of funds
transfers. No Revolving Credit Lender shall have any interest in, or
right to receive any part of any interest which reflects amounts
described in the provisions of this Section 2.14.1.
2.14.2. APPLICATION OF PAYMENTS ABSENT AN EVENT OF DEFAULT.
(a) Absent an Event of Default of which the account
officers of the Administrative Agent active on the Borrowers'
account have knowledge, all funds transferred to the Fleet
Concentration Account and for which the Borrowers have
received credits shall be applied to the Obligations as
follows:
(i) first, to pay amounts then due and
payable under this Agreement, the Notes and the other
Loan Documents;
(ii) second, to reduce Swing Line Loans made
by the Administrative Agent and for which Settlement
has not then been made;
(iii) third, to reduce other Revolving
Credit Loans which are Base Rate Loans;
(iv) fourth, to reduce Revolving Credit
Loans which are Eurodollar Rate Loans; and
(v) fifth, except as otherwise required
by ss.2.14.2(b) and (c), to the Operating Account.
(b) All prepayments of Eurodollar Rate Loans prior to
the end of an Interest Period shall obligate the Borrowers to
pay any breakage costs associated with such Eurodollar Rate
Loans in accordance with ss.5.9. Prior to the occurrence of an
Event of Default, the Borrowers may elect to avoid such
breakage costs by providing to the Administrative Agent cash
in an amount sufficient to cash collateralize such Eurodollar
Rate Loans, but in no event shall the Borrowers be deemed to
have paid such Eurodollar Rate Loans until such cash has been
paid to the Administrative Agent for application to such
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Eurodollar Rate Loans. The Administrative Agent may elect to
cause such cash collateral to be deposited into a cash
collateral account pursuant to the terms of a cash collateral
agreement executed by the Borrowers and the Administrative
Agent and in form and substance satisfactory to the
Administrative Agent. In each such case, the Borrowers agree
to execute and deliver to the Administrative Agent such
instruments and documents, including Uniform Commercial Code
financing statements and agreements with any third party
depository banks, as the Administrative Agent may request.
(c) All prepayments of the Revolving Credit Loans
pursuant to this ss.2.14.2 shall be allocated among the
Revolving Credit Lenders making such Revolving Credit Loans,
in proportion, as nearly as practicable, to the respective
unpaid principal amount of such Revolving Credit Loans
outstanding, with adjustments to the extent practicable to
equalize any prior payments or repayments not exactly in
proportion. Prior to any Settlement Date, however, all
prepayments of the Revolving Credit Loans shall be applied in
accordance with this ss.2.14.2, first to outstanding Revolving
Credit Loans of the Administrative Agent.
2.15. REPAYMENTS OF REVOLVING CREDIT LOANS AFTER EVENT OF DEFAULT. Following the
occurrence and during the continuance of an Event of Default of which the
account officers of the Administrative Agent active on the Borrower's account
have knowledge, all funds transferred to the Fleet Concentration Account and for
which the Borrowers have received credits shall be applied to the Obligations in
accordance with ss.13.4.
2.16. OVERLOANS AND PROTECTIVE OVERADVANCES.
2.16.1. PROTECTIVE OVERADVANCES. NOTWITHSTANDING ANY PROVISION CONTAINED IN
THIS AGREEMENT TO THE CONTRARY, THE ADMINISTRATIVE AGENT MAY (WITHOUT
ANY OBLIGATION TO DO SO) IN ITS SOLE AND ABSOLUTE DISCRETION MAKE
PROTECTIVE OVERADVANCES TO THE BORROWERS WHICH WOULD CONSTITUTE
OVERLOANS.
2.16.2. OVERLOANS. Each Revolving Credit Lender recognizes that subsequent to
the making of a Revolving Credit Loan which does not constitute a
Protective OverAdvance, Availability may be less than $0 on account of
changed circumstances beyond the control of the Administrative Agent
(such as a drop in collateral value).
2.16.3. NO OBLIGATION TO PROVIDE OVERLOANS. The Administrative Agent's and the
Revolving Credit Lenders' providing of an OverLoan or Protective
OverAdvance on any one occasion does not affect the obligations of the
Borrowers hereunder (including the Borrowers' obligation to immediately
repay any amount which otherwise constitutes an OverLoan) nor obligate
the Revolving Credit Lenders or the Administrative Agent to do so on
any other occasion.
3. THE TRANCHE B FACILITY.
3.1. COMMITMENT TO LEND. Subject to the terms and conditions set forth in this
Agreement, the Tranche B Lender agrees to lend to the Borrowers on the Closing
Date the principal amount of $12,500,000.
3.2. THE TRANCHE B LOAN NOTE. The Tranche B Loan shall be evidenced by a
separate promissory note of the Borrowers in substantially the form of EXHIBIT C
hereto (the "TRANCHE B NOTE"), dated the Closing Date, and completed with
appropriate insertions. The Borrowers irrevocably authorize the Tranche B Lender
to make or cause to be made a notation on the Tranche B Lender's records
reflecting the original principal amount of the Tranche B Loan and, at or about
the time of the Tranche B Lender's receipt of any principal payment on the
Tranche B Loan Note, an appropriate notation on the Tranche B Lender's records
reflecting such payment. The aggregate unpaid amount set forth on the Tranche B
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Lender's records shall be PRIMA FACIE evidence of the principal amount thereof
owed and unpaid on the Tranche B Loan, but the failure to record, or any error
in so recording, any such amount on the Tranche B Lender's records shall not
affect the obligations of the Borrowers hereunder or under the Tranche B Loan
Note to make payments of principal of and interest on the Tranche B Loan Note
when due.
3.3. PAYMENTS OF PRINCIPAL OF TRANCHE B LOAN. Except as contemplated by ss.13.4,
the Borrowers may not make any principal payments on account of the Tranche B
Loan until the Borrowers' Obligations to the Revolving Credit Lenders have been
paid in full and the Commitments have been terminated; PROVIDED, HOWEVER, the
Borrowers may prepay the Tranche B Loan in its entirety if at such time (i) a
Default does not exist and one would not result from such prepayment, (ii) after
giving effect to such payment Availability is in excess of $10,000,00 and (iii)
the Borrowers shall have delivered to the Administrative Agent pro forma
financial statements for the next 12 months demonstrating, in form and substance
satisfactory to the Administrative Agent, that Availability will exceed
$10,000,000 at all times during the next 12 months after giving effect to the
prepayment of the Tranche B Loan. The Borrowers jointly and severally promise to
pay on the Maturity Date, and there shall become absolutely due and payable on
the Maturity Date, all of the Tranche B Loans outstanding on such date, together
with any and all accrued and unpaid interest thereon. If the Borrowers prepay
the Tranche B Loans in whole or in part, the Borrowers shall pay a premium with
respect to each such prepayment (the "TRANCHE B EARLY TERMINATION FEE") in an
amount determined in accordance with the percentages set forth in the following
table opposite the period during which such prepayment is made:
PERIOD PREPAYMENT PREMIUM
------ ------------------
Closing Date through the ninetieth (90th) (a) 4% of amount prepaid if an Approved
day following the Closing Date Recapitalization has not occurred or an Event of
Default exists and (b) 2% of the amount prepaid if
an Approved Recapitalization has occurred
Ninety first (91st) day following
the Closing Date up to the first anniversary of the
Closing Date 4% of amount prepaid
First anniversary of
Closing Date up to the second
anniversary of Closing Date 3% of amount prepaid
Second anniversary of
Closing Date up to the third
anniversary of Closing Date 2% of amount prepaid
Thereafter -0-
3.4. INTEREST ON TRANCHE B LOAN. Except as otherwise provided in ss.ss.3.4(c)
and 16.12(c)(iv), the outstanding amount of the Tranche B Loan shall be
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calculated on the basis of a three hundred sixty (360) day year and actual days
elapsed and shall bear interest until repaid at the rate per annum equal to
sixteen and one half percent (16.5%) prior to an Approved Recapitalization and
sixteen percent (16.0%) following an Approved Recapitalization (the "TRANCHE B
LOAN INTEREST RATE"). The Tranche B Loan Interest Rate, shall be payable as
follows:
(a) Accrued interest on the unpaid principal balance of the
Tranche B Loan at a rate per annum equal to thirteen and three
quarter percent (13.75%) prior to an Approved Recapitalization
and thirteen and one half percent (13.50%) following an
Approved Recapitalization ("TRANCHE B LOAN CURRENT PAY
INTEREST") shall be payable monthly in arrears, on the first
Business Day of each month (the "TRANCHE B LOAN INTEREST
PAYMENT DATE"), and on the Maturity Date.
(b) Accrued interest on the unpaid principal balance of the
Tranche B Loan in excess of Tranche B Loan Current Pay
Interest (which excess is referred to herein as "TRANCHE B
LOAN PIK INTEREST") shall be payable as follows:
(i) Unless the payment would cause an OverLoan
or the Tranche B Lender has been given
written notice by the Borrowers'
Representative at least three (3) Business
Days prior to the relevant Tranche B Loan
Interest Payment Date that the Borrowers are
exercising their option to pay interest in
kind (the "PIK ELECTION"), the Tranche B
Loan PIK Interest will be due on such date
in cash.
(ii) If the Tranche B Lender has received a PIK
Election or the payment would cause an
OverLoan, all or any part of Tranche B Loan
PIK Interest shall be paid by adding the
same to the principal balance of the Tranche
B Loan Note on that Tranche B Loan Interest
Payment Date.
(iii) At the direction of the Tranche B Lender,
following the occurrence of any Default, all
interest shall be paid in cash on each
Tranche B Loan Interest Payment Date.
(c) Following the occurrence of any Event of Default, at
the direction of the Tranche B Loan Lender, interest
shall accrue and shall be payable on the unpaid
principal balance of the Tranche B Loan at the
aggregate of the Tranche B Loan Interest Rate plus
three percent (3%) per annum.
3.5. TRANCHE B LOAN ANNIVERSARY FEE. Until the Tranche B Loan has been paid in
full, on each anniversary of the Closing Date the Borrowers shall pay an
anniversary fee to the Tranche B Lender as set forth in the Tranche B Fee
Letter.
3.6. PAYMENTS ON ACCOUNT OF TRANCHE B LOAN. The Borrowers authorize the
Administrative Agent to determine and to pay over directly to the Tranche B
Lender any and all amounts due and payable from time to time under or on account
of the Tranche B Loan as advances under the Revolving Credit Loans IT BEING
UNDERSTOOD, HOWEVER, that the authorization of the Administrative Agent provided
in this ss. 3.6 shall not excuse the Borrowers from fulfilling their obligations
to the Tranche B Lender on account of the Tranche B Loan nor place any
obligation on the Administrative Agent to do so. The Administrative Agent shall
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provide prompt advice to the Borrowers of any amount which is so paid over by
the Administrative Agent to the Tranche B Lender pursuant to this ss.3.6. The
Borrowers shall not be entitled to any credit, rebate or repayment of any fee or
assessment previously earned by the Tranche B Lender pursuant to this Agreement
notwithstanding any termination of this Agreement or suspension or termination
of the Administrative Agent's and any Lender's respective obligation to make
loans and advances hereunder.
3.7. BUYOUT OPTION. At any time during any Buyout Exercise Period the Tranche B
Lender may (but shall not be obligated to) give notice to the Administrative
Agent (the "Buyout Acceptance Notice") of its intent to cause the assignment to
the Tranche B Lender, or its designee, by the Revolving Credit Lenders, of all
right, title and interest in, to, arising under or in respect of all Obligations
of the Revolving Credit Lenders. Such assignments shall be effected on the
Business Day which is not more than three (3) Business Days following the Buyout
Acceptance Notice by the execution, by the Revolving Credit Lenders, of an
Assignment and Acceptance in exchange for the payment, in immediately available
funds, of the amount of the Obligations in respect of the Revolving Credit Loans
(excluding the Revolving Credit Early Termination Fee) as of the date on which
such assignment is made. The Tranche B Lender's buy out right under this ss.3.7
may only be exercised completely with respect to all of the Obligations of the
Revolving Credit Lenders. Following its exercise of the buy out right under this
ss.3.7, the Tranche B Lender shall (a) not waive or alter the Revolving Credit
Early Termination Fee or alter the payment provisions in ss.13.4 to change when
the Revolving Credit Early Termination Fee would be paid and (b) upon receipt of
any amounts on account of the Revolving Credit Early Termination Fee, pay such
amounts to the Administrative Agent for the account of the Revolving Credit
Lenders in accordance with their Commitment Percentages as of the date of the
buy out under this ss.3.7.
4. LETTERS OF CREDIT.
4.1. LETTER OF CREDIT COMMITMENTS.
4.1.1. COMMITMENT TO ISSUE LETTERS OF CREDIT. Subject to the terms and
conditions hereof and the execution and delivery by the Borrowers'
Representative of a letter of credit application on the Letter of
Credit Issuer's customary form (a "LETTER OF CREDIT APPLICATION"), the
Borrowers' Representative may request that Administrative Agent cause
the Letter of Credit Issuer to issue on behalf of the Revolving Credit
Lenders and in reliance upon the agreement of the Revolving Credit
Lenders set forth in ss.4.1.4 and upon the representations and
warranties of the Borrowers contained herein, in its individual
capacity, to issue, extend and renew for the account of the Borrowers
one or more standby or documentary letters of credit (individually, a
"LETTER OF CREDIT"), in such form as may be requested from time to time
by the Borrowers' Representative and agreed to by the Letter of Credit
Issuer; PROVIDED, HOWEVER, that, after giving effect to such request,
(a) the sum of the aggregate Maximum Drawing Amount and all Unpaid
Reimbursement Obligations shall not exceed $10,000,000 at any one time,
(b) Availability is greater than $1 and (c) there are no OverLoans. In
addition to the Letter of Credit Application, the Borrowers'
Representative shall execute such other documents required by the
Letter of Credit Issuer to apply for and support the issuance of a
Letter of Credit. There shall not be any recourse to, nor liability of,
the Administrative Agent or any Lender or Letter of Credit Issuer on
account of any delay or refusal by any Letter of Credit Issuer to issue
a Letter of Credit.
4.1.2. LETTER OF CREDIT APPLICATIONS. Each Letter of Credit
Application shall be completed to the satisfaction of the
Administrative Agent and the Letter of Credit Issuer. In the event that
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any provision of any Letter of Credit Application shall be inconsistent
with any provision of this Agreement, then the provisions of this
Agreement shall, to the extent of any such inconsistency, govern.
4.1.3. TERMS OF LETTERS OF CREDIT. Each Letter of Credit issued, extended or
renewed hereunder shall, among other things, (a) provide for the
payment of sight drafts for honor thereunder when presented in
accordance with the terms thereof and when accompanied by the documents
described therein, and (b) have an expiry date no later than the
earlier of (i) the date which is fourteen (14) days (or, if the Letter
of Credit is confirmed by a confirmer or otherwise provides for one or
more nominated persons, forty-five (45) days) prior to the Maturity
Date and (ii) with respect to (A) standby Letters of Credit one (1)
year after the date of issuance and (B) documentary Letters of Credit
sixty (60) after the date of issuance . Each Letter of Credit so
issued, extended or renewed shall be subject to the Uniform Customs and
Practice for Documentary Credits (1993 Revision), International Chamber
of Commerce Publication No. 500 or any successor version thereto
adopted by the Letter of Credit Issuer in the ordinary course of its
business as a letter of credit issuer and in effect at the time of
issuance of such Letter of Credit (the "UNIFORM CUSTOMS") or, in the
case of a standby Letter of Credit, either the Uniform Customs or the
International Standby Practices (ISP98), International Chamber of
Commerce Publication No. 590, or any successor code of standby letter
of credit practices among banks adopted by the Letter of Credit Issuer
in the ordinary course of its business as a standby letter of credit
issuer and in effect at the time of issuance of such Letter of Credit.
4.1.4. REIMBURSEMENT OBLIGATIONS OF REVOLVING CREDIT LENDERS. Each Revolving
Credit Lender severally agrees that it shall be absolutely liable,
without regard to whether a Default exists or any other condition
precedent whatsoever, to the extent of such Revolving Credit Lender's
Commitment Percentage, to reimburse the Letter of Credit Issuer and/or
the Administrative Agent on demand for the amount of each draft paid by
the Letter of Credit Issuer under each Letter of Credit to the extent
that such amount is not reimbursed by the Borrowers pursuant to ss.4.2
(such agreement for a Lender being called herein the "LETTER OF CREDIT
PARTICIPATION" of such Revolving Credit Lender).
4.1.5. PARTICIPATIONS OF REVOLVING CREDIT LENDERS. Each such payment made by a
Revolving Credit Lender shall be treated as the purchase by such
Revolving Credit Lender of a participating interest in the Borrowers'
Reimbursement Obligation under ss.4.2 in an amount equal to such
payment. Each Revolving Credit Lender shall share in accordance with
its participating interest in any interest which accrues pursuant to
ss.4.2.
4.2. REIMBURSEMENT OBLIGATION OF THE BORROWERS. In order to induce the
Administrative Agent to cause the Letter of Credit Issuer to issue, extend and
renew each Letter of Credit and the Revolving Credit Lenders to participate
therein, the Borrowers hereby jointly and severally agree to reimburse or pay to
the Administrative Agent and the Letter of Credit Issuer, for the account of the
Administrative Agent and the Letter of Credit Issuer or (as the case may be) the
Revolving Credit Lenders, with respect to each Letter of Credit issued, extended
or renewed by the Letter of Credit Issuer hereunder,
(a) except as otherwise expressly provided in ss.4.2(b) and
(c), on each date that any draft presented under such Letter of Credit
is honored by the Letter of Credit Issuer, or the Letter of Credit
Issuer otherwise makes a payment with respect thereto, (i) the amount
paid by the Letter of Credit Issuer under or with respect to such
Letter of Credit, and (ii) the amount of any taxes, reasonable fees,
charges or other costs and expenses whatsoever incurred by the Letter
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of Credit Issuer, the Administrative Agent or any Lender in connection
with any payment made by the Letter of Credit Issuer, the
Administrative Agent or any Revolving Credit Lender under, or with
respect to, such Letter of Credit,
(b) upon the reduction (but not termination) of the Total
Commitment to an amount less than the Maximum Drawing Amount, an amount
equal to such difference, which amount shall be held by the
Administrative Agent for the benefit of the Letter of Credit Issuer,
the Revolving Credit Lenders and the Administrative Agent as cash
collateral for all Reimbursement Obligations, and
(c) upon the termination of the Total Commitment, or the
acceleration of the Reimbursement Obligations with respect to all
Letters of Credit in accordance with ss.13, an amount equal to the then
Maximum Drawing Amount on all Letters of Credit, which amount shall be
held by the Administrative Agent for the benefit of the Letter of
Credit Issuer, the Revolving Credit Lenders and the Administrative
Agent as cash collateral for all Reimbursement Obligations.
Each such payment shall be made to the Administrative Agent at the
Administrative Agent's Office in immediately available funds. Interest on any
and all amounts remaining unpaid by the Borrowers under this ss.4.2 at any time
from the date such amounts become due and payable (whether as stated in this
ss.4.2, by acceleration or otherwise) until payment in full (whether before or
after judgment) shall be payable to the Administrative Agent on demand at the
rate specified in ss.5.10 for overdue principal on the Revolving Credit Loans.
Notwithstanding the foregoing, the Administrative Agent, without the request of
the Borrowers, may advance Revolving Credit Loans in the amount of any honoring
of any Letter of Credit and other amount for which the Borrowers, the Letter of
Credit Issuer, the Administrative Agent or the Revolving Credit Lenders become
obligated on account of, or in respect to, any Letter of Credit. Such advance
shall be made whether or not a Default exists or such advance would result in an
OverLoan. Such action shall not constitute a waiver of the Administrative
Agent's and the Revolving Credit Lenders' rights under this Section 4.
4.3. LETTER OF CREDIT PAYMENTS. If any draft shall be presented or other demand
for payment shall be made under any Letter of Credit, the Letter of Credit
Issuer shall notify the Borrowers' Representative of the date and amount of the
draft presented or demand for payment and of the date and time when it expects
to pay such draft or honor such demand for payment. If the Borrowers'
Representative fails to reimburse the Letter of Credit Issuer and the
Administrative Agent as provided in ss.4.2 on or before the date that such draft
is paid or other payment is made by the Letter of Credit Issuer, the
Administrative Agent may at any time thereafter notify the Revolving Credit
Lenders of the amount of any such Unpaid Reimbursement Obligation. No later than
3:00 p.m. (Boston time) on the Business Day next following the receipt of such
notice, each Revolving Credit Lender shall make available to the Letter of
Credit Issuer in immediately available funds, such Revolving Credit Lender's
Commitment Percentage of such Unpaid Reimbursement Obligation, together with an
amount equal to the product of (a) the average, computed for the period referred
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to in clause (c) below, of the weighted average interest rate paid by the Letter
of Credit Issuer for federal funds acquired by the Letter of Credit Issuer
during each day included in such period, TIMES (b) the amount equal to such
Revolving Credit Lender's Commitment Percentage of such Unpaid Reimbursement
Obligation, TIMES (c) a fraction, the numerator of which is the number of days
that elapse from and including the date the Letter of Credit Issuer paid the
draft presented for honor or otherwise made payment to the date on which such
Revolving Credit Lender's Commitment Percentage of such Unpaid Reimbursement
Obligation shall become immediately available to the Letter of Credit Issuer,
and the denominator of which is 360. The responsibility of the Administrative
Agent and the Letter of Credit Issuer to the Borrowers and the Revolving Credit
Lenders shall be only to determine that the documents (including each draft)
delivered under each Letter of Credit in connection with such presentment shall
be in conformity in all material respects with such Letter of Credit.
4.4. OBLIGATIONS ABSOLUTE. The Borrowers' obligations under this ss.4 shall be
absolute and unconditional under any and all circumstances and irrespective of
whether a Default exists or any condition precedent whatsoever or any setoff,
counterclaim or defense to payment which the Borrowers may have or have had
against the Letter of Credit Issuer, the Administrative Agent, any Revolving
Credit Lender or any beneficiary of a Letter of Credit. The Borrowers further
agree with the Letter of Credit Issuer, the Administrative Agent and the
Revolving Credit Lenders that the Letter of Credit Issuer, the Administrative
Agent and the Revolving Credit Lenders shall not be responsible for, and the
Borrower's Reimbursement Obligations under ss.4.2 shall not be affected by,
among other things, the validity or genuineness of documents or of any
endorsements thereon, even if such documents should in fact prove to be in any
or all respects invalid, fraudulent or forged, or any dispute between or among
the Borrowers, the beneficiary of any Letter of Credit or any financing
institution or other party to which any Letter of Credit may be transferred or
any claims or defenses whatsoever of the Borrowers against the beneficiary of
any Letter of Credit or any such transferee. The Letter of Credit Issuer, the
Administrative Agent and the Revolving Credit Lenders shall not be liable for
any error, omission, interruption or delay in transmission, dispatch or delivery
of any message or advice, however transmitted, in connection with any Letter of
Credit. The Borrowers agree that any action taken or omitted by the Letter of
Credit Issuer, the Administrative Agent or any Revolving Credit Lender under or
in connection with each Letter of Credit and the related drafts and documents,
if done in good faith, shall be binding upon the Borrowers and shall not result
in any liability on the part of the Letter of Credit Issuer, the Administrative
Agent or any Revolving Credit Lender to the Borrowers.
4.5. RELIANCE BY ISSUER. To the extent not inconsistent with ss.4.4, the Letter
of Credit Issuer and the Administrative Agent shall be entitled to rely, and
shall be fully protected in relying upon, any Letter of Credit, draft, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document believed by it to be genuine and correct and to have been signed, sent
or made by the proper Person or Persons and upon advice and statements of legal
counsel, independent accountants and other experts selected by the Letter of
Credit Issuer or the Administrative Agent. The Letter of Credit Issuer and the
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement unless it shall first have received such advice or
concurrence of the Required Lenders as it reasonably deems appropriate or it
shall first be indemnified to its reasonable satisfaction by the Revolving
Credit 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. The Letter of
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Credit Issuer and the Administrative Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement in accordance with
a request of the Required Lenders, and such request and any action taken or
failure to act pursuant thereto shall be binding upon the Lenders and all future
holders of the Revolving Credit Notes or of a Letter of Credit Participation.
Unless otherwise agreed to, in the particular instance, the Borrowers hereby
authorize any Letter of Credit Issuer to select an advising bank, if any, select
a paying bank, if any and Select a negotiating bank.
4.6. LETTER OF CREDIT FEE. The Borrowers shall, on monthly in arrears on the
first day of each month and on the Maturity Date pay a fee (in each case, a
"LETTER OF CREDIT FEE") to the Administrative Agent (a) in respect of each
standby Letter of Credit an amount equal to two and one quarter percent (2.25%)
per annum of the face amount of such standby Letter of Credit for the accounts
of the Revolving Credit Lenders in accordance with their respective Commitment
Percentages and (b) in respect of each documentary Letter of Credit an amount
equal to two and one quarter percent (2.25%) points per annum of the face amount
of such documentary Letter of Credit shall be for the accounts of the Revolving
Credit Lenders in accordance with their respective Commitment Percentages.
Following the occurrence of any Event of Default, the Letter of Credit Fees
shall be increased by 200 basis points per annum. In respect of each Letter of
Credit, the Borrowers shall also pay to the Letter of Credit Issuer for the
Letter of Credit Issuer's own account, at such other time or times as such
charges are customarily made by the Letter of Credit Issuer, the Letter of
Credit Issuer's customary issuance, amendment, negotiation or document
examination and other reasonable administrative fees as in effect from time to
time.
5. CERTAIN GENERAL PROVISIONS.
5.1. ADMINISTRATIVE AGENT FEES. The Borrowers jointly and severally agree to pay
to the Administrative Agent, for the Administrative Agent's own account, the
fees as set forth in the FRFI Fee Letter (the "ADMINISTRATIVE AGENT FEES").
5.2. TRANCHE B LENDER FEES. The Borrowers jointly and severally agree to pay to
the Tranche B Lender, for the Tranche B Lender's own account, the fees as set
forth in the Tranche B Fee Letter (the "TRANCHE B LENDER FEES").
5.3. FUNDS FOR PAYMENTS.
5.3.1. PAYMENTS TO ADMINISTRATIVE AGENT. All payments of principal, interest,
Reimbursement Obligations, Fees and any other amounts due hereunder or
under any of the other Loan Documents shall be made on the due date
thereof to the Administrative Agent in Dollars, for the respective
accounts of the Lenders and the Administrative Agent, at the
Administrative Agent's Office or at such other place that the
Administrative Agent may from time to time designate, in each case at
or about 12:00 noon (Boston time or other local time at the place of
payment) and in immediately available funds.
5.3.2. NO OFFSET, ETC. All payments by the Borrowers hereunder and under any
of the other Loan Documents shall be made without recoupment, setoff or
counterclaim and free and clear of and without deduction for any taxes,
levies, imposts, duties, charges, reasonable fees, deductions,
withholdings, compulsory loans, restrictions or conditions of any
nature now or hereafter imposed or levied by any jurisdiction or any
political subdivision thereof or taxing or other authority therein
unless the Borrowers are compelled by law to make such deduction or
withholding. If any such obligation is imposed upon the Borrowers with
respect to any amount payable by it hereunder or under any of the other
Loan Documents, the Borrowers will pay to the Administrative Agent, for
the account of the Lenders or (as the case may be) the Administrative
Agent, on the date on which such amount is due and payable hereunder or
under such other Loan Document, such additional amount in Dollars as
shall be necessary to enable the Lenders or the Administrative Agent to
receive the same net amount which the Lenders or the Administrative
Agent would have received on such due date had no such obligation been
imposed upon the Borrowers. Where taxes, deductions or withholdings are
imposed upon the Borrowers with respect to any amount payable by the
Borrowers hereunder or under any of the other Loan Documents as a
result of characteristics of the Administrative Agent, a Lender or a
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Participant, no payment of additional amounts is required under this
ss.5.3.2, in respect of such taxes, deductions or withholdings to the
extent that such Administrative Agent, Lender or Participant (as the
case may be) was subject to such taxes, deductions or withholdings
under the law in effect at the time that it became an Administrative
Agent, Lender or Participant or subsequently became subject to such
taxes, deductions or withholdings other than as a result of a change in
law or any actions of the Borrowers. In addition, no payment of
additional amounts is required under this ss.5.3.2 in respect of taxes,
deductions or withholdings to the extent that such taxes, deductions or
withholdings are imposed as a result of a failure by the Administrative
Agent, a Lender, a Participant or any person in the chain of payment
between the Borrowers and the Administrative Agent, Lender or
Participant, as the case may be, to provide, in accordance with
applicable procedures, properly completed and executed tax forms that
they are legally permitted to provide. The Borrowers will deliver
promptly to the Administrative Agent certificates or other valid
vouchers reasonably available to them for all taxes or other charges
deducted from or paid with respect to payments made by the Borrowers
hereunder or under such other Loan Document.
5.4. COMPUTATIONS. All computations of interest on the Loans and of Fees shall
be based on a 360-day year and paid for the actual number of days elapsed.
Except as otherwise provided in the definition of the term "INTEREST PERIOD"
with respect to Eurodollar Rate Loans, whenever a payment hereunder or under any
of the other Loan Documents becomes due on a day that is not a Business Day, the
due date for such payment shall be extended to the next succeeding Business Day,
and interest shall accrue during such extension. The outstanding amount of the
Loans as reflected on the Revolving Credit Note Records and the Tranche B
Lenders records and from time to time shall be considered correct and binding on
the Borrowers unless within five (5) Business Days after receipt of any notice
by the Administrative Agent or any of the Lenders of such outstanding amount,
the Administrative Agent or such Lender shall notify the Borrowers
Representative to the contrary.
5.5. INABILITY TO DETERMINE EURODOLLAR RATE. In the event, prior to the
commencement of any Interest Period relating to any Eurodollar Rate Loan, the
Administrative Agent shall in good faith determine that (a) adequate and
reasonable methods do not exist for ascertaining the Eurodollar Rate that would
otherwise determine the rate of interest to be applicable to any Eurodollar Rate
Loan during any Interest Period or (b) the Eurodollar Rate determined or to be
determined for such Interest Period will not adequately and fairly reflect the
cost to the Revolving Credit Lenders of making or maintaining their Eurodollar
Rate Loans during such period, the Administrative Agent shall forthwith give
notice of such determination (which shall be conclusive and binding on the
Borrowers and the Revolving Credit Lenders) to the Borrowers' Representative and
the Revolving Credit Lenders. In such event (i) any Loan Request or Conversion
Request with respect to Eurodollar Rate Loans shall be automatically withdrawn
and shall be deemed a request for Base Rate Loans, (ii) each Eurodollar Rate
Loan will automatically, on the last day of the then current Interest Period
relating thereto, become a Base Rate Loan, and (iii) the obligations of the
Revolving Credit Lenders to make Eurodollar Rate Loans shall be suspended until
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the Administrative Agent determines that the circumstances giving rise to such
suspension no longer exist, whereupon the Administrative Agent shall so notify
the Borrowers' Representative and the Revolving Credit Lenders.
5.6. ILLEGALITY. Notwithstanding any other provisions herein, if any future law,
regulation, treaty or directive or the interpretation or application thereof
shall make it unlawful for any Revolving Credit Lender to make or maintain
Eurodollar Rate Loans, such Revolving Credit Lender shall forthwith give notice
of such circumstances to the Borrowers' Representative and the other Revolving
Credit Lenders and thereupon (a) the commitment of such Revolving Credit Lender
to make Eurodollar Rate Loans or convert Base Rate Loans to Eurodollar Rate
Loans shall forthwith be suspended and (b) such Revolving Credit Lender's
Revolving Credit Loans then outstanding as Eurodollar Rate Loans, if any, shall
be converted automatically to Base Rate Loans on the last day of each Interest
Period applicable to such Eurodollar Rate Loans or within such earlier period as
may be required by law. The Borrowers hereby agree promptly to pay the
Administrative Agent for the account of such Revolving Credit Lender, upon
demand by such Revolving Credit Lender, any additional amounts reasonably
necessary to compensate such Revolving Credit Lender for any costs incurred by
such Revolving Credit Lender in making any conversion in accordance with this
ss.5.6, including any interest or reasonable fees payable by such Revolving
Credit Lender to lenders of funds obtained by it in order to make or maintain
its Eurodollar Rate Loans hereunder.
5.7. ADDITIONAL COSTS, ETC. If any future applicable law, which expression, as
used herein, includes statutes, rules and regulations thereunder and
interpretations thereof after the date hereof by any competent court or by any
governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon or
otherwise issued to any Lender or the Administrative Agent by any central bank
or other fiscal, monetary or other authority (whether or not having the force of
law), shall:
(a) subject any Lender or the Administrative Agent to any tax,
levy, impost, duty, charge, fee, deduction or withholding of any nature
with respect to this Agreement, the other Loan Documents, any Letters
of Credit, such Lender's Commitment or the Loans (other than taxes
based upon or measured by the income or profits of such Lender or the
Administrative Agent), or
(b) materially change the basis of taxation (except for
changes in taxes on income or profits or taxes referred to in the first
sentence of ss.5.3.2, which shall be taken into account in the manner
provided by ss.5.3.2) of payments to any Lender of the principal of or
the interest on any Loans or any other amounts payable to any Lender or
the Administrative Agent under this Agreement or any of the other Loan
Documents, or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Agreement) any
special deposit, reserve, assessment, liquidity, capital adequacy or
other similar requirements (whether or not having the force of law)
against assets held by, or deposits in or for the account of, or loans
by, or letters of credit issued by, or commitments of an office of any
Lender, or
(d) impose on any Lender or the Administrative Agent any other
conditions or requirements with respect to this Agreement, the other
Loan Documents, any Letters of Credit, the Loans, such Lender's
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Commitment, or any class of loans, letters of credit or commitments of
which any of the Loans or such Lender's Commitment forms a part, and
the result of any of the foregoing is
(i) to increase the cost to any Lender of making,
funding, issuing, renewing, extending or maintaining any of
the Loans or such Lender's Commitment or any Letter of Credit,
or
(ii) to reduce the amount of principal, interest,
Reimbursement Obligation or other amount payable to such
Lender or the Administrative Agent hereunder on account of
such Lender's Commitment, any Letter of Credit or any of the
Loans, or
(iii) to require such Lender or the Administrative
Agent to make any payment or to forego any interest or
Reimbursement Obligation or other sum payable hereunder, the
amount of which payment or foregone interest or Reimbursement
Obligation or other sum is calculated by reference to the
gross amount of any sum receivable or deemed received by such
Lender or the Administrative Agent from the Borrowers
hereunder,
then, and in each such case, the Borrowers will, upon demand made by such Lender
or (as the case may be) the Administrative Agent at any time and from time to
time and as often as the occasion therefor may arise, pay to such Lender or the
Administrative Agent such additional amounts as will be sufficient to compensate
such Lender or the Administrative Agent for such additional cost, reduction,
payment or foregone interest or Reimbursement Obligation or other sum.
5.8. CERTIFICATE. A certificate setting forth any additional amounts payable
pursuant to ss.5.7 and a brief explanation of such amounts which are due,
submitted by any Lender or the Administrative Agent to the Borrowers'
Representative, shall be conclusive, absent manifest error, that such amounts
are due and owing.
5.9. INDEMNITY. The Borrowers agree to indemnify each Revolving Credit Lender
and to hold each Lender harmless from and against any loss, cost or expense or
other "breakage fees" (so-called) (including loss of anticipated profits) that
such Revolving Credit Lender may sustain or incur as a consequence of (a)
default by the Borrowers in payment of the principal amount of or any interest
on any Eurodollar Rate Loans as and when due and payable, including any such
loss or expense arising from interest or reasonable fees payable by such
Revolving Credit Lender to banks of funds obtained by it in order to maintain
its Eurodollar Rate Loans, (b) default by the Borrowers in making a borrowing or
conversion after the Borrowers' Representative has given (or is deemed to have
given) a Loan Request or a Conversion Request relating thereto in accordance
with ss.2.9 or ss.2.10 or (c) the making of any payment of a Eurodollar Rate
Loan or the making of any conversion of any such Loan to a Base Rate Loan on a
day that is not the last day of the applicable Interest Period with respect
thereto, including interest or reasonable fees payable by such Lender to lenders
of funds obtained by it in order to maintain any such Loans.
5.10. INTEREST AFTER DEFAULT. During the continuance of a Default (and whether
or not the Administrative Agent exercises the Administrative Agent's rights on
account thereof) the principal of the Revolving Credit Loans shall, at the
option of the Administrative Agent or at the instruction of the SuperMajority
Lenders, until such Default has been cured or remedied or such Default has been
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waived by the Required Revolving Credit Lenders pursuant to ss.16.12, bear
interest at a rate per annum equal to two percent (2%) above the rate of
interest otherwise applicable to such Revolving Credit Loans pursuant to ss.2.8.
5.11. FEES NON-REFUNDABLE. The Borrowers shall not be entitled to any credit,
rebate or repayment of any fee earned by the Administrative Agent or any Lender
pursuant to this Agreement or any Loan Document notwithstanding any termination
of this Agreement or suspension or termination of the Administrative Agent's and
any Lender's respective obligation to make loans and advances hereunder.
5.12. CONCERNING JOINT AND SEVERAL LIABILITY OF THE BORROWERS.
(a) Each of the Borrowers is accepting joint and several
liability hereunder in consideration of the financial accommodations to
be provided by the Administrative Agent, the Issuing Bank and the
Lenders under this Agreement, for the mutual benefit, directly and
indirectly, of each of the Borrowers and in consideration of the
undertakings of each of the Borrowers to accept joint and several
liability for the obligations of each of them.
(b) Each of the Borrowers, jointly and severally, hereby
irrevocably and unconditionally accepts, not merely as a surety but
also as a co-debtor, joint and several liability with each other
Borrower, with respect to the payment and performance of all of the
Obligations, it being the intention of the parties hereto that all the
Obligations shall be the joint and several obligations of all of the
Borrowers without preferences or distinction among them.
(c) If and to the extent that any of the Borrowers shall fail
to make any payment with respect to any of the Obligations as and when
due or to perform any of such Obligations in accordance with the terms
thereof, then in each such event each other Borrower will make such
payment with respect to, or perform, such Obligation.
(d) The obligations of each Borrower under the provisions of
this ss.5.12 constitute the absolute and unconditional obligations of
such Borrower enforceable against it to the full extent permitted under
the terms hereof, irrespective of the validity, regularity or
enforceability of this Credit Agreement or any other circumstance
whatsoever.
(e) Except as otherwise expressly provided for herein, each
Borrower hereby waives notice of acceptance of its joint and several
liability, notice of the Loans made under this Credit Agreement, notice
of the occurrence of any Default, or of any demand for any payment
under this Agreement, notice of any action at any time taken or omitted
by the Administrative Agent, the Issuing Bank or the Lenders under or
in respect of any of the Obligations, any requirement of diligence or
to mitigate damages and, generally, all demands, notices and other
formalities of every kind in connection with this Credit Agreement.
Each Borrower hereby assents to, and waives notice of, any extension or
postponement of the time for the payment of any of the Obligations, the
acceptance of any partial payment thereon, any waiver, consent or other
action or acquiescence by the Administrative Agent, the Issuing Bank or
the Lenders at any time or times in respect of any default by any
Borrowers or Guarantors in the performance or satisfaction of any term,
covenant, condition or provision of this Credit Agreement, any and all
other indulgences whatsoever by the Administrative Agent, the Issuing
Bank or the Lenders in respect of any of the obligations hereunder, and
the taking, addition, substitution or release, in whole or in part, at
any time or times, of any security for any of such obligations or the
addition, substitution or release, in whole or in part, of any Borrower
or any Guarantor. Without limiting the generality of the foregoing,
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each Borrower assents to any other action or delay in acting or failure
to act on the part of the Administrative Agent, the Issuing Bank or the
Lenders including, without limitation, any failure strictly or
diligently to assert any right or to pursue any remedy or to comply
fully with Applicable Laws thereunder, which might, but for the
provisions of this ss.5.12, afford grounds for terminating, discharging
or relieving such Borrower, in whole or in part, from any of its
Obligations under this ss.5.12, it being the intention of each Borrower
that, so long as any of the Obligations remain unsatisfied, the
Obligations of such Borrower under this ss.5.12 shall not be discharged
except by performance and then only to the extent of such performance.
Except as otherwise expressly provided for herein, the joint and
several liability of the Borrowers hereunder shall continue in full
force and effect notwithstanding any absorption, merger, amalgamation
or any other change whatsoever in the name, membership, constitution or
place of formation of any Borrower or the Administrative Agent, the
Issuing Bank or the Lenders. If at any time, any payment, or any part
thereof, made in respect of any of the Obligations, is rescinded or
must otherwise be restored or returned by the Administrative Agent, the
Issuing Bank or the Lenders upon the insolvency, bankruptcy or
reorganization of any of the Borrowers, or otherwise, the provisions of
this ss.5.12 will forthwith be reinstated in effect, as though such
payment had not been made.
(f) Each Borrower appoints the Borrowers' Representative as
its authorized representative to make loan request, receive funds and
notice and to take all other actions under this Agreement and the other
Loan Documents on its behalf.
6. COLLATERAL SECURITY AND GUARANTIES.
6.1. GRANT OF SECURITY INTEREST. The Borrowers each hereby grant to the
Administrative Agent, for the benefit of the Lenders and the Administrative
Agent, to secure the payment and performance in full of all of the Obligations,
a security interest in and so pledges and assigns to the Administrative Agent,
for the benefit of the Lenders and the Administrative Agent, the following
properties, assets and rights of the Borrowers, wherever located, whether now
owned or hereafter acquired or arising, and all proceeds and products thereof
(all of the same along with any other property, rights and interests of the
Borrowers that are or are intended to be subject to the Liens created by the
Security Documents being hereinafter called the "COLLATERAL"): all personal and
fixture property of every kind and nature including without limitation all goods
(including inventory, equipment and any accessions thereto), instruments
(including promissory notes), documents, accounts (including
health-care-insurance receivables), chattel paper (whether tangible or
electronic), deposit accounts, letter-of-credit rights (whether or not the
letter of credit is evidenced by a writing), commercial tort claims, securities
and all other investment property, supporting obligations, any other contract
rights or rights to the payment of money, insurance claims and proceeds, all
general intangibles (including all payment intangibles) and the Israeli
Subsidiary Assets. The Administrative Agent acknowledges that the attachment of
its security interest in any commercial tort claim as original collateral is
subject to the Company's compliance with ss.6.3.7.
6.2. AUTHORIZATION TO FILE FINANCING STATEMENTS. The Borrowers hereby
irrevocably authorize the Administrative Agent at any time and from time to time
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to file in any filing office in any Uniform Commercial Code jurisdiction any
initial financing statements and amendments thereto that (a) indicate the
Collateral (i) as all assets of the Borrowers or words of similar effect,
regardless of whether any particular asset comprised in the Collateral falls
within the scope of Article 9 of the Uniform Commercial Code of the State or
such jurisdiction, or (ii) as being of an equal or lesser scope or with greater
detail, and (b) provide any other information required by part 5 of Article 9 of
the Uniform Commercial Code of the State or such other jurisdiction for the
sufficiency or filing office acceptance of any financing statement or amendment,
including (i) whether the Borrowers are an organization, the type of
organization and any organizational identification number issued to the
Borrowers and, (ii) in the case of a financing statement filed as a fixture
filing or indicating Collateral as as-extracted collateral or timber to be cut,
a sufficient description of real property to which the Collateral relates. The
Borrowers agree to furnish any such information to the Administrative Agent
promptly upon the Administrative Agent's request. The Borrowers also ratify
their authorization for the Administrative Agent to have filed in any Uniform
Commercial Code jurisdiction any like initial financing statements or amendments
thereto if filed prior to the date hereof.
6.3. OTHER ACTIONS. Further to insure the attachment, perfection and first
priority of, and the ability of the Administrative Agent to enforce, the
Administrative Agent's security interest in the Collateral, the Borrowers agree,
in each case at the Borrowers' expense, to take the following actions with
respect to the following Collateral and without limitation on the Borrowers'
other obligations contained in this Agreement:
6.3.1. PROMISSORY NOTES AND TANGIBLE CHATTEL PAPER. If the Borrowers shall,
now or at any time hereafter, hold or acquire any promissory notes or
tangible chattel paper, the Borrowers shall forthwith endorse, assign
and deliver the same to the Administrative Agent, accompanied by such
instruments of transfer or assignment duly executed in blank as the
Administrative Agent may from time to time specify.
6.3.2. DEPOSIT ACCOUNTS. For each deposit account that any Borrower, now or at
any time hereafter, opens or maintains (each a "Deposit Account"), the
Borrowers shall (other than with respect to Local Accounts not with
Bank of America, N.A., SunTrust Bank/Miami, N.A. and SunTrust
Bank/Atlanta, N.A.), pursuant to an agreement in form and substance
satisfactory to the Administrative Agent (each a "CONTROL AGREEMENT"),
either (a) cause the depositary bank to agree to comply, without
further consent of the Borrowers, at any time with instructions from
the Administrative Agent to such depositary bank directing the
disposition of funds from time to time credited to such deposit
account, or (b) arrange for the Administrative Agent to become the
customer of the depositary bank with respect to the deposit account,
with the Borrowers being permitted, only with the consent of the
Administrative Agent, to exercise rights to withdraw funds from such
deposit account. The provisions of this paragraph shall not apply to
(i) a deposit account for which the Administrative Agent is the
depositary bank and is in automatic control, and (ii) Exempt DDA.
6.3.3. INVESTMENT PROPERTY. If the Borrowers shall, now or at any time
hereafter, hold or acquire any certificated securities, the Borrowers
shall forthwith endorse, assign and deliver the same to the
Administrative Agent, accompanied by such instruments of transfer or
assignment duly executed in blank as the Administrative Agent may from
time to time specify. If any securities now or hereafter acquired by
the Borrowers are uncertificated and are issued to the Borrowers or
their nominee directly by the issuer thereof, the Borrowers shall
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immediately notify the Administrative Agent thereof and, at the
Administrative Agent's request and option, pursuant to an agreement in
form and substance satisfactory to the Administrative Agent, either (a)
cause the issuer to agree to comply without further consent of the
Borrowers or such nominee, at any time with instructions from the
Administrative Agent as to such securities, or (b) arrange for the
Administrative Agent to become the registered owner of the securities.
If any securities, whether certificated or uncertificated, or other
investment property now or hereafter acquired by the Borrowers are held
by the Borrowers or their nominee through a securities intermediary or
commodity intermediary, the Borrowers shall immediately notify the
Administrative Agent thereof and, at the Administrative Agent's request
and option, pursuant to an agreement in form and substance satisfactory
to the Administrative Agent, either (i) cause such securities
intermediary or (as the case may be) commodity intermediary to agree to
comply, in each case without further consent of the Borrowers or such
nominee, at any time with entitlement orders or other instructions from
the Administrative Agent to such securities intermediary as to such
securities or other investment property, or (as the case may be) to
apply any value distributed on account of any commodity contract as
directed by the Administrative Agent to such commodity intermediary, or
(ii) in the case of financial assets or other investment property held
through a securities intermediary, arrange for the Administrative Agent
to become the entitlement holder with respect to such investment
property, with the Borrowers being permitted, only with the consent of
the Administrative Agent, to exercise rights to withdraw or otherwise
deal with such investment property. The provisions of this paragraph
shall not apply to any financial assets credited to a securities
account for which the Administrative Agent is the securities
intermediary.
6.3.4. COLLATERAL IN THE POSSESSION OF A BAILEE. If any Collateral is, now or
at any time hereafter, in the possession of a bailee, the Borrowers
shall promptly notify the Administrative Agent thereof and, at the
Administrative Agent's request and option, shall promptly obtain an
acknowledgement from the bailee, in form and substance satisfactory to
the Administrative Agent, that the bailee holds such Collateral for the
benefit of the Administrative Agent and such bailee's agreement to
comply, without further consent of the Borrowers, at any time with
instructions of the Administrative Agent as to such Collateral.
6.3.5. ELECTRONIC CHATTEL PAPER AND TRANSFERABLE RECORDS. If the Borrowers,
now or at any time hereafter, hold or acquire an interest in any
electronic chattel paper or any "transferable record," as that term is
defined in Section 201 of the federal Electronic Signatures in Global
and National Commerce Act, or in ss.16 of the Uniform Electronic
Transactions Act as in effect in any relevant jurisdiction, the
Borrowers shall promptly notify the Administrative Agent thereof and,
at the request and option of the Administrative Agent, shall take such
action as the Administrative Agent may reasonably request to vest in
the Administrative Agent control, under ss.9-105 of the Uniform
Commercial Code, of such electronic chattel paper or control under
Section 201 of the federal Electronic Signatures in Global and National
Commerce Act or, as the case may be, ss.16 of the Uniform Electronic
Transactions Act, as so in effect in such jurisdiction, of such
transferable record.
6.3.6. LETTER-OF-CREDIT RIGHTS. If the Borrowers are, now or at any time
hereafter, a beneficiary under a letter of credit now or hereafter, the
Borrowers shall promptly notify the Administrative Agent thereof and,
at the request and option of the Administrative Agent, the Borrowers
shall, pursuant to an agreement in form and substance satisfactory to
the Administrative Agent, either (a) arrange for the issuer and any
confirmer or other nominated person of such letter of credit to consent
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to an assignment to the Administrative Agent of the proceeds of the
letter of credit or (b) arrange for the Administrative Agent to become
the transferee beneficiary of the letter of credit, with the
Administrative Agent agreeing, in each case, that the proceeds of the
letter of credit are to be applied in accordance with ss.ss.2.14 and
2.15.
6.3.7. COMMERCIAL TORT CLAIMS. If the Borrowers shall, now or at any time
hereafter, hold or acquire a commercial tort claim, the Borrowers shall
immediately notify the Administrative Agent in a writing signed by the
Borrowers' Representative of the particulars thereof and grant to the
Administrative Agent, for the benefit of the Lenders and the
Administrative Agent, in such writing a security interest therein and
in the proceeds thereof, all upon the terms of this Agreement, with
such writing to be in form and substance satisfactory to the
Administrative Agent.
6.3.8. OTHER ACTIONS AS TO ANY AND ALL COLLATERAL. The Borrowers further
agrees, upon the request of the Administrative Agent and at the
Administrative Agent's option, to take any and all other actions as the
Administrative Agent may determine to be necessary or useful for the
attachment, perfection and first priority of, and the ability of the
Administrative Agent to enforce, the Administrative Agent's security
interest in any and all of the Collateral, including, without
limitation, (a) executing, delivering and, where appropriate, filing
financing statements and amendments relating thereto under the Uniform
Commercial Code, to the extent, if any, that the Borrowers' signature
thereon is required therefor, (b) causing the Administrative Agent's
name to be noted as secured party on any certificate of title for a
titled good if such notation is a condition to attachment, perfection
or priority of, or ability of the Administrative Agent to enforce, the
Administrative Agent's security interest in such Collateral, (c)
complying with any provision of any statute, regulation or treaty of
the United States as to any Collateral if compliance with such
provision is a condition to attachment, perfection or priority of, or
ability of the Administrative Agent to enforce, the Administrative
Agent's security interest in such Collateral, (d) obtaining
governmental and other third party waivers, consents and approvals, in
form and substance satisfactory to the Administrative Agent, including,
without limitation, any consent of any licensor, lessor or other person
obligated on Collateral, (e) obtaining waivers from mortgagees and
landlords in form and substance satisfactory to the Administrative
Agent and (f) taking all actions under any earlier versions of the
Uniform Commercial Code or under any other law, as reasonably
determined by the Administrative Agent to be applicable in any relevant
Uniform Commercial Code or other jurisdiction, including any foreign
jurisdiction.
6.4. RELATION TO OTHER SECURITY DOCUMENTS. The provisions of this Agreement
supplement the provisions of any real estate mortgage or deed of trust granted
by the Borrowers to the Administrative Agent, for the benefit of the Lenders and
the Administrative Agent, and which secures the payment or performance of any of
the Obligations. Nothing contained in any such real estate mortgage or deed of
trust shall derogate from any of the rights or remedies of the Administrative
Agent or any of the Lenders hereunder. In addition, to the provisions of this
Agreement being so read and construed with any such mortgage or deed of trust,
the provisions of this Agreement shall be read and construed with the other
Security Documents referred to below in the manner so indicated.
6.4.1. STOCK PLEDGE AGREEMENT. Concurrently herewith certain of the Borrowers
are executing and delivering to the Administrative Agent, for the
benefit of the Lenders and the Administrative Agent, stock pledge
agreement(s) pursuant to which the Borrowers are pledging to the
Administrative Agent all of the shares of the capital stock of the
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Borrowers' Subsidiary or Subsidiaries. Such pledge(s) shall be governed
by the terms of such stock pledge agreement(s) and not by the terms of
this Agreement.
6.4.2. TRADEMARK ASSIGNMENTS. Concurrently herewith the Borrowers are
executing and delivering to the Administrative Agent, for the benefit
of the Lenders and the Administrative Agent, the Trademark Assignment
pursuant to which the Borrowers are assigning to the Administrative
Agent, for the benefit of the Lenders and the Administrative Agent,
certain Collateral consisting of trademarks, service marks and
trademark and service mark rights, together with the goodwill
appurtenant thereto. The provisions of the Trademark Assignment are
supplemental to the provisions of this Agreement, and nothing contained
in the Trademark Assignment shall derogate from any of the rights or
remedies of the Administrative Agent or any of the Lenders hereunder.
Neither the delivery of, nor anything contained in, the Trademark
Assignment shall be deemed to prevent or postpone the time of
attachment or perfection of any security interest in such Collateral
created hereby.
7. REPRESENTATIONS AND WARRANTIES.
The Borrowers represent and warrant to the Lenders and the
Administrative Agent as follows:
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7.1. CORPORATE AUTHORITY.
7.1.1. INCORPORATION; GOOD STANDING. Each of the Borrowers and their
Subsidiaries (a) is a corporation (or similar business entity) duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or formation, (b) has all requisite
corporate (or the equivalent company) power to own its property and
conduct its business as now conducted and as presently contemplated,
and (c) is in good standing as a foreign corporation (or similar
business entity) and is duly authorized to do business in each
jurisdiction where such qualification is necessary except where a
failure to be so qualified would not have a Material Adverse Effect.
7.1.2. AUTHORIZATION. The execution, delivery and performance of this
Agreement and the other Loan Documents to which each Borrower or any of
its Subsidiaries is or is to become a party and the transactions
contemplated hereby and thereby (a) are within the corporate (or the
equivalent company) authority of such Person, (b) have been duly
authorized by all necessary corporate (or the equivalent company)
proceedings, (c) do not and will not conflict with or result in any
breach or contravention of any provision of law, statute, rule or
regulation to which the Borrowers or any of their Subsidiaries is
subject or any judgment, order, writ, injunction, license or permit
applicable to the Borrowers or any of their Subsidiaries and (d) do not
conflict with any provision of the Governing Documents of, or any
agreement or other instrument binding upon, the Borrowers or any of
their Subsidiaries.
7.1.3. ENFORCEABILITY. The execution and delivery of this Agreement and the
other Loan Documents to which each Borrower or any of its Subsidiaries
is or is to become a party will result in valid and legally binding
obligations of such Person enforceable against it in accordance with
the respective terms and provisions hereof and thereof, except as
enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the
enforcement of creditors' rights and except to the extent that
availability of the remedy of specific performance or injunctive relief
is subject to the discretion of the court before which any proceeding
therefor may be brought.
7.2. GOVERNMENTAL APPROVALS. The execution, delivery and performance by each
Borrower and any of its Subsidiaries of this Agreement and the other Loan
Documents to which such Borrower or any of its Subsidiaries is or is to become a
party and the transactions contemplated hereby and thereby do not require the
approval or consent of, or filing with, any governmental agency or authority
other than those already obtained.
7.3. TITLE TO PROPERTIES; LEASES. Except as indicated on SCHEDULE 7.3 hereto,
each Borrower and its Subsidiaries own all of the assets reflected in the
consolidated balance sheet of the Borrowers' Representative and its Subsidiaries
as at the Balance Sheet Date or acquired since that date (except property and
assets sold or otherwise disposed of in the ordinary course of business since
that date), subject to no Liens or other rights of others, except Permitted
Liens. Except as set forth on SCHEDULE 7.3 hereto, each of such Leases and
Capital Leases listed in the Perfection Certificate is in full force and effect.
No party to any such Lease or Capital Lease is in default or material violation
of any such Lease or Capital Lease, except for violations that would not have a
Material Adverse Effect. The Borrowers have not received any notice or threat of
cancellation of any such Lease or Capital Lease. The Borrowers hereby authorize
the Administrative Agent at any time and from time to time to contact any of the
Borrowers' landlords in order to confirm the Borrowers' continued compliance
with the terms and conditions of the Lease(s) between the Borrowers and that
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landlord and to discuss such issues, concerning the Borrowers' occupancy under
such Lease(s), as the Administrative Agent may determine.
7.4. FINANCIAL STATEMENTS AND PROJECTIONS.
7.4.1. FISCAL YEAR. Each of the Borrowers and each of their Subsidiaries has a
fiscal year which is the twelve months ending on the Saturday of each
year closest to January 31.
7.4.2. FINANCIAL STATEMENTS. There has been furnished to each of the Lenders a
consolidated balance sheet of the Borrowers' Representative and its
Subsidiaries as at the Balance Sheet Date, and a consolidated statement
of income of the Borrowers' Representative and its Subsidiaries for the
fiscal year then ended, certified by Deloitte & Touche LLP. Such
balance sheet and statement of income have been prepared in accordance
with GAAP and fairly present the financial condition of the Borrowers
as at the close of business on the date thereof and the results of
operations for the fiscal year then ended. There are no contingent
liabilities of the Borrowers' Representative or any of its Subsidiaries
as of such date involving material amounts, known to the officers of
the Borrowers, which were not disclosed in such balance sheet and the
notes related thereto.
7.4.3. PROJECTIONS. The projections of the annual operating budgets of the
Borrowers' Representative and its Subsidiaries on a consolidated basis,
balance sheets and cash flow statements for the fiscal year ended
February, 2003, copies of which have been delivered to each Lender,
disclose all assumptions made with respect to general economic,
financial and market conditions used in formulating such projections.
As of the Closing Date, to the knowledge of the Borrowers or any of
their Subsidiaries, no facts exist that (individually or in the
aggregate) would result in any material change in any of such
projections. The projections are based upon reasonable estimates and
assumptions, have been prepared on the basis of the assumptions stated
therein and reflect the reasonable estimates of the Borrowers and their
Subsidiaries of the results of operations and other information
projected therein.
7.5. NO MATERIAL ADVERSE CHANGES, ETC. Except as set forth on SCHEDULE 7.5
hereto, since the Balance Sheet Date there has been no event or occurrence which
has had a Material Adverse Effect. Since the Balance Sheet Date, the Borrowers
have not made any Restricted Payment.
7.6. FRANCHISES, PATENTS, COPYRIGHTS, ETC. The Borrowers and each of their
Subsidiaries possesses all franchises, patents, copyrights, trademarks, trade
names, licenses and permits, and rights in respect of the foregoing, adequate
for the conduct of its business substantially as now conducted without known
material conflict with any rights of others.
7.7. LITIGATION. There are no actions, suits, proceedings or investigations of
any kind pending or threatened against the Borrowers or any of their
Subsidiaries before any Governmental Authority, that, (a) if adversely
determined, would, either in any case or in the aggregate, have a Material
Adverse Effect, or (b) which question the validity of this Agreement or any of
the other Loan Documents, or any action taken or to be taken pursuant hereto or
thereto.
7.8. NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Borrowers nor any of
their Subsidiaries is subject to any Governing Document or other legal
restriction, or any judgment, decree, order, law, statute, rule or regulation
that has or is expected in the future to have a Material Adverse Effect. Except
as set forth on SCHEDULE 7.8 hereto, neither the Borrowers nor any of their
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Subsidiaries is a party to any contract or agreement that has or is expected, in
the judgment of the Borrowers' officers, to have any Material Adverse Effect.
7.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. Neither the Borrowers nor any
of their Subsidiaries is in violation of any provision of its Governing
Documents, or any agreement or instrument to which it may be subject or by which
it or any of its properties may be bound or any decree, order, judgment,
statute, license, rule or regulation, in any of the foregoing cases in a manner
that could result in the imposition of substantial penalties or have a Material
Adverse Effect.
7.10. TAX STATUS. Except as set forth on SCHEDULE 7.10 hereto, the Borrowers and
their Subsidiaries (a) have made or filed all federal, state and foreign income
and all other tax returns, reports and declarations required by any jurisdiction
to which any of them is subject, (b) have paid all taxes and other governmental
assessments and charges shown or determined to be due on such returns, reports
and declarations, except those being contested in good faith and by appropriate
proceedings and (c) have set aside on their books provisions reasonably adequate
for the payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and none of the officers of the Borrowers know of any basis for any such claim.
The Borrowing Base Report most recently delivered to the Administrative Agent
sets forth the amount of reserves established by the Borrowers and each of their
Subsidiaries to cover the Borrowers' or such Subsidiary's sales or use tax
obligations in each jurisdiction where the Borrowers or such Subsidiary is
required to pay such taxes. Such reserves are adequate for the payment of all of
such obligations.
7.11. IN DEFAULT. No Default exists.
7.12. HOLDING COMPANY AND INVESTMENT COMPANY ACTS. Neither the Borrowers nor any
of their Subsidiaries is a "HOLDING COMPANY", or a "SUBSIDIARY COMPANY" of a
"HOLDING COMPANY", or an "AFFILIATE" of a "HOLDING COMPANY", as such terms are
defined in the Public Utility Holding Company Act of 1935; nor is it an
"INVESTMENT COMPANY", or an "AFFILIATED COMPANY" or a "PRINCIPAL UNDERWRITER" of
an "INVESTMENT COMPANY", as such terms are defined in the Investment Company Act
of 1940.
7.13. ABSENCE OF FINANCING STATEMENTS, ETC. Except with respect to Permitted
Liens, there is no financing statement, security agreement, chattel mortgage,
real estate mortgage or other document filed or recorded with any filing
records, registry or other public office, that purports to cover, affect or give
notice of any present or possible future Lien on any assets or property of the
Borrowers or any of their Subsidiaries or any rights relating thereto.
7.14. COLLATERAL.
7.14.1. PERFECTION CERTIFICATE. The Borrowers has previously delivered to the
Administrative Agent a certificate signed by the Borrowers and entitled
"Perfection Certificate" (the "PERFECTION CERTIFICATE"). The Borrowers
represent and warrant to the Lenders and the Administrative Agent as
follows: (a) each of the Borrowers' exact legal name is that indicated
on the Perfection Certificate and on the signature page hereof, (b) the
Borrowers are an organization of the type, and are organized in the
jurisdiction, set forth in the Perfection Certificate, (c) the
Perfection Certificate accurately sets forth the Borrowers'
organizational identification number or accurately states that the
Borrowers have none, (d) the Perfection Certificate accurately sets
forth each Borrower's place of business or, if more than one, its chief
executive office, as well as each Borrower's mailing address, if
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different, (e) all other information set forth on the Perfection
Certificate pertaining to the Borrowers is accurate and complete and
(f) there has been no change in any of such information since the date
on which the Perfection Certificate was signed by the Borrowers.
7.14.2. NATURE OF COLLATERAL. The Borrowers are the owners of the Collateral,
free from any right or claim of any person or any adverse Lien, except
for the security interest created by this Agreement, (b) none of the
Collateral constitutes, or is the proceeds of, "farm products" as
defined in ss.9-102(a)(34) of the Uniform Commercial Code of the State,
(c) none of the account debtors or other persons obligated on any of
the Collateral is a governmental authority covered by the Federal
Assignment of Claims Act or like federal, state or local statute or
rule in respect of such Collateral, (d) the Borrowers hold no
commercial tort claim except as indicated on the Perfection
Certificate, (e) the Borrowers have at all times operated their
business in compliance with all applicable provisions of the federal
Fair Labor Standards Act, as amended, and with all applicable
provisions of federal, state and local statutes and ordinances dealing
with the control, shipment, storage or disposal of hazardous materials
or substances, (f) all other information set forth on the Perfection
Certificate pertaining to the Collateral is accurate and complete, and
(g) there has been no change in any of such information since the date
on which the Perfection Certificate was signed by the Borrowers.
7.14.3. PERFECTION OF SECURITY INTEREST. All filings, assignments, pledges and
deposits of documents or instruments have been made and all other
actions have been taken that are necessary or advisable, under
applicable law, to establish and perfect the Administrative Agent's
security interest in the Collateral. The Collateral and the
Administrative Agent's rights with respect to the Collateral are not
subject to any setoff, claims, withholdings or other defenses. The
Borrowers are the owners of the Collateral free from any Lien, except
for Permitted Liens.
7.15. CERTAIN TRANSACTIONS. None of the officers, directors, or employees of the
Borrowers or any of their Subsidiaries is presently a party to any transaction
with the Borrowers or any of their Subsidiaries (other than for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the
Borrowers, any corporation, partnership, trust or other entity in which any
officer, director, or any such employee has a substantial interest or is an
officer, director, trustee or partner.
7.16. EMPLOYEE BENEFIT PLANS.
7.16.1. IN GENERAL. Each Employee Benefit Plan and each Guaranteed Pension Plan
has been maintained and operated in compliance in all material respects
with the provisions of ERISA and all Applicable Pension Legislation
and, to the extent applicable, the Code, including but not limited to
the provisions thereunder respecting prohibited transactions and the
bonding of fiduciaries and other persons handling plan funds as
required by ss.412 of ERISA. The Borrowers have heretofore delivered to
the Administrative Agent the most recently completed annual report,
Form 5500, with all required attachments, and actuarial statement
required to be submitted under ss.103(d) of ERISA, with respect to each
Guaranteed Pension Plan.
7.16.2. TERMINABILITY OF WELFARE PLANS. No Employee Benefit Plan, which is an
employee welfare benefit plan within the meaning of ss.3(1) or
ss.3(2)(B) of ERISA, provides benefit coverage subsequent to
termination of employment, except as required by Title I, Part 6 of
ERISA or the applicable state insurance laws. The Borrowers may
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terminate each such Plan at any time (or at any time subsequent to the
expiration of any applicable bargaining agreement) in the discretion of
the Borrowers without liability to any Person other than for claims
arising prior to termination.
7.16.3. GUARANTEED PENSION PLANS. Each contribution required to be made to a
Guaranteed Pension Plan, whether required to be made to avoid the
incurrence of an accumulated funding deficiency, the notice or lien
provisions of ss.302(f) of ERISA, or otherwise, has been timely made.
No waiver of an accumulated funding deficiency or extension of
amortization periods has been received with respect to any Guaranteed
Pension Plan, and neither the Borrowers nor any ERISA Affiliate is
obligated to or has posted security in connection with an amendment to
a Guaranteed Pension Plan pursuant to ss.307 of ERISA or ss.401(a)(29)
of the Code. No liability to the PBGC (other than required insurance
premiums, all of which have been timely paid) has been incurred by the
Borrowers or any ERISA Affiliate with respect to any Guaranteed Pension
Plan and there has not been any ERISA Reportable Event (other than an
ERISA Reportable Event as to which the requirement of 30 days notice
has been waived under PBGC ss.4043), or any other event or condition
which presents a material risk of termination of any Guaranteed Pension
Plan by the PBGC. Based on the latest valuation of each Guaranteed
Pension Plan (which in each case occurred within twelve months of the
date of this representation), and on the actuarial methods and
assumptions employed for that valuation, the aggregate benefit
liabilities of all such Guaranteed Pension Plans within the meaning of
ss.4001 of ERISA did not exceed the aggregate value of the assets of
all such Guaranteed Pension Plans, disregarding for this purpose the
benefit liabilities and assets of any Guaranteed Pension Plan with
assets in excess of benefit liabilities, by more than $500,000.
7.16.4. MULTIEMPLOYER PLANS. Neither the Borrowers nor any ERISA Affiliate has
incurred any material liability (including secondary liability) to any
Multiemployer Plan as a result of a complete or partial withdrawal from
such Multiemployer Plan under ss.4201 of ERISA or as a result of a sale
of assets described in ss.4204 of ERISA. Neither the Borrowers nor any
ERISA Affiliate has been notified that any Multiemployer Plan is in
reorganization or insolvent under and within the meaning of ss.4241 or
ss.4245 of ERISA or is at risk of entering reorganization or becoming
insolvent, or that any Multiemployer Plan intends to terminate or has
been terminated under ss.4041A of ERISA.
7.17. USE OF PROCEEDS.
7.17.1. GENERAL. The proceeds of the Loans shall be used solely to refinance
existing Indebtedness of the Borrowers for working capital and general
corporate purposes. The Borrowers will obtain Letters of Credit solely
in accordance in the ordinary course of business. No proceeds of the
Loans may be used, nor shall any be requested, with a view towards the
accumulation of any general fund or funded reserve of the Borrowers
other than in the ordinary course of the Borrowers' business and
consistent with the provisions of this Agreement.
7.17.2. REGULATIONS U AND X. No portion of any Loan is to be used, and no
portion of any Letter of Credit is to be obtained, for the purpose of
purchasing or carrying any "MARGIN SECURITY" or "MARGIN STOCK" as such
terms are used in Regulations U and X of the Board of Governors of the
Federal Reserve System, 12 C.F.R. Parts 221 and 224.
7.18. ENVIRONMENTAL COMPLIANCE. The Borrowers have taken all commercially
reasonable steps to investigate the past and present condition and usage of the
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Real Estate and the operations conducted thereon and, based upon such diligent
investigation, has determined that:
(a) none of the Borrowers, their Subsidiaries or any operator
of the Real Estate or any operations thereon is in violation, or
alleged violation, of any judgment, decree, order, law, license, rule
or regulation pertaining to environmental matters, including without
limitation, those arising under the Resource Conservation and Recovery
Act ("RCRA"), the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 as amended ("CERCLA"), the Superfund
Amendments and Reauthorization Act of 1986 ("SARA"), the Federal Clean
Water Act, the Federal Clean Air Act, the Toxic Substances Control Act,
or any state, local or foreign law, statute, regulation, ordinance,
order or decree relating to health, safety or the environment
(hereinafter "ENVIRONMENTAL LAWS"), which violation would have a
material adverse effect on the environment or a Material Adverse
Effect;
(b) neither the Borrowers nor any of their Subsidiaries has
received notice from any third party including, without limitation, any
Governmental Authority, (i) that any one of them has been identified by
the United States Environmental Protection Agency ("EPA") as a
potentially responsible party under CERCLA with respect to a site
listed on the National Priorities List, 40 C.F.R. Part 300 Appendix B;
(ii) that any hazardous waste, as defined by 42 U.S.C. ss.6903(5), any
hazardous substances as defined by 42 U.S.C. ss.9601(14), any pollutant
or contaminant as defined by 42 U.S.C. ss.9601(33) and any toxic
substances, oil or hazardous materials or other chemicals or substances
regulated by any Environmental Laws ("HAZARDOUS SUBSTANCES") which any
one of them has generated, transported or disposed of has been found at
any site at which a Governmental Authority has conducted or has ordered
that any Borrowers or any of their Subsidiaries conduct a remedial
investigation, removal or other response action pursuant to any
Environmental Law; or (iii) that it is or shall be a named party to any
claim, action, cause of action, complaint, or legal or administrative
proceeding (in each case, contingent or otherwise) arising out of any
third party's incurrence of costs, expenses, losses or damages of any
kind whatsoever in connection with the release of Hazardous Substances;
(c) except as set forth on SCHEDULE 7.18 attached hereto: (i)
no portion of the Real Estate currently owned or leased or, to the best
of the Borrowers' knowledge, formerly owned or leased has been used for
the handling, processing, storage or disposal of Hazardous Substances
except in accordance with applicable Environmental Laws; and no
underground tank or other underground storage receptacle for Hazardous
Substances is located on any portion of the Real Estate; (ii) in the
course of any activities conducted by the Borrowers, their Subsidiaries
or operators of its properties, no Hazardous Substances have been
generated or are being used on the Real Estate except in accordance
with applicable Environmental Laws; (iii) to the best of the Borrowers'
knowledge, there have been no releases (i.e. any past or present
releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, disposing or dumping) or threatened
releases of Hazardous Substances on, upon, into or from the properties
of the Borrowers or their Subsidiaries, which releases would have a
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material adverse effect on the value of any of the Real Estate or
adjacent properties or the environment; (iv) to the best of the
Borrowers' knowledge, there have been no releases on, upon, from or
into any real property in the vicinity of any of the Real Estate which,
through soil or groundwater contamination, may have come to be located
on, and which would have a material adverse effect on the value of, the
Real Estate; and (v) in addition, any Hazardous Substances that have
been generated on any of the Real Estate have been transported offsite
only by carriers having an identification number issued by the EPA (or
the equivalent thereof in any foreign jurisdiction), treated or
disposed of only by treatment or disposal facilities maintaining valid
permits as required under applicable Environmental Laws, which
transporters and facilities have been and are, to the best of the
Borrowers' knowledge, operating in compliance with such permits and
applicable Environmental Laws; and
(d) none of the Borrowers and their Subsidiaries, any
Mortgaged Property or any of the other Real Estate is subject to any
applicable Environmental Law requiring the performance of Hazardous
Substances site assessments, or the removal or remediation of Hazardous
Substances, or the giving of notice to any Governmental Authority or
the recording or delivery to other Persons of an environmental
disclosure document or statement by virtue of the transactions set
forth herein and contemplated hereby, or as a condition to the
recording of any Mortgage or to the effectiveness of any other
transactions contemplated hereby.
(e) the Borrowers have furnished to the Administrative Agent
all environmental reports, audits and any other material environmental
documents relating to the Real Estate of the Borrowers and their
Subsidiaries which are in the Borrowers' possession or under their
reasonable control.
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7.19. SUBSIDIARIES, ETC. Mayor's has no Subsidiaries other than the other
Borrowers and Subsidiaries that are not Domestic Subsidiaries listed in SCHEDULE
7.19 hereto. Except as set forth on SCHEDULE 7.19 hereto, neither the Borrowers
nor any Subsidiary of the Borrowers is engaged in any joint venture or
partnership with any other Person. The jurisdiction of incorporation/formation
and principal place of business of each Subsidiary of Mayor's is listed on
SCHEDULE 7.19 hereto. Except for the Israeli Subsidiary Assets, the Subsidiaries
of Mayor's other than the Domestic Subsidiaries do not have any assets having an
aggregate value in excess of $25,000.
7.20. BANK ACCOUNTS; CREDIT CARD ARRANGEMENTS. SCHEDULE 7.20(A) sets forth the
account numbers and location of all Deposit Accounts and classifies such Deposit
Accounts as Local Accounts and Interim Concentration Accounts. SCHEDULE 7.20(B)
sets forth all arrangements to which the Borrowers are a party with respect to
the payment to the Borrowers of the proceeds of credit card charges for sales by
the Borrowers.
7.21. LABOR RELATIONS. The Borrowers have not been and are not presently a party
to any collective bargaining or other labor contract. No event has occurred or
circumstance exists which is likely to provide the basis for any work stoppage
or other labor dispute. The Borrowers have complied in all material respects
with all Applicable Laws relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closing. There is not presently pending and, to the Borrowers'
knowledge, there is not threatened any of the following:
(a) Any strike, slowdown, picketing, work stoppage, or
employee grievance process.
(b) Any proceeding against or affecting the Borrowers relating
to the alleged violation of any Applicable Law pertaining to labor
relations or before National Labor Relations Board, the Equal
Employment Opportunity Commission, or any comparable governmental body,
organizational activity, or other labor or employment dispute against
or affecting the Borrowers, which, if determined adversely to the
Borrowers would have a Material Adverse Effect on the Borrowers.
(c) Any lockout of any employees by the Borrowers (and no such
action is contemplated by the Borrowers).
(d) Any application for the certification of a collective
bargaining agent.
7.22. DISCLOSURE. None of this Agreement or any of the other Loan Documents
contains any untrue statement of a material fact or omits to state a material
fact (known to the Borrowers or any of their Subsidiaries in the case of any
document or information not furnished by it or any of their Subsidiaries)
necessary in order to make the statements herein or therein not misleading.
There is no fact known to the Borrowers or any of their Subsidiaries which has a
Material Adverse Effect, or which is reasonably likely in the future to have a
Material Adverse Effect, exclusive of effects resulting from changes in general
economic conditions, legal standards or regulatory conditions.
8. AFFIRMATIVE COVENANTS.
The Borrowers covenant and agree that, so long as any Loan, Unpaid
Reimbursement Obligation, Letter of Credit or Note is outstanding or any Lender
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has any obligation to make any Loans or the Administrative Agent has any
obligation to issue, extend or renew any Letters of Credit:
8.1. PUNCTUAL PAYMENT. The Borrowers will duly and punctually pay or cause to be
paid the principal and interest on the Loans, all Reimbursement Obligations, the
Fees, and all other amounts provided for in this Agreement and the other Loan
Documents to which the Borrowers or any of their Subsidiaries is a party, all in
accordance with the terms of this Agreement and such other Loan Documents.
8.2. NOTICE OF CHANGE OF ORGANIZATION/MAINTENANCE OF OFFICE. The Borrowers
will maintain their chief executive offices in Sunrise, Florida, or at such
other place in the United States of America as the Borrowers' Representative
shall designate upon written notice to the Administrative Agent, where notices,
presentations and demands to or upon the Borrowers in respect of the Loan
Documents to which the Borrowers is a party may be given or made. Each Borrower
will provide the Administrative Agent at least thirty (30) days prior written
notice of such Borrower changing its name, its place of business or, if more
than one, chief executive office, or its mailing address or organizational
identification number if it has one. If any Borrower does not have an
organizational identification number and later obtains one, such Borrower will
forthwith notify the Administrative Agent of such organizational identification
number. No Borrower will change its type of organization, jurisdiction of
organization or other legal structure.
8.3. RECORDS AND ACCOUNTS. The Borrowers will (a) keep, and cause each of their
Subsidiaries to keep, true and accurate records and books of account in which
full, true and correct entries will be made in accordance with GAAP, (b)
maintain adequate accounts and reserves for all taxes (including income taxes),
depreciation, depletion, obsolescence and amortization of its properties and the
properties of its Subsidiaries, contingencies, and other reserves, and (c) at
all times engage Deloitte & Touche LLP or other independent certified public
accountants satisfactory to the Administrative Agent as the independent
certified public accountants of the Borrowers and their Subsidiaries and will
not permit more than thirty (30) days to elapse between the cessation of such
firm's (or any successor firm's) engagement as the independent certified public
accountants of the Borrowers and their Subsidiaries and the appointment in such
capacity of a successor firm as shall be satisfactory to the Administrative
Agent.
8.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. The Borrowers will
deliver to each of the Lenders:
(a) as soon as practicable, but in any event not later than
one hundred and five (105) days after the end of each fiscal year of
the Borrowers, the consolidated balance sheet of the Borrowers'
Representative and its Subsidiaries as at the end of such year, and the
related consolidated statement of income and consolidated statement of
cash flow for such year, each setting forth in comparative form the
figures for the previous fiscal year and all such consolidated
statements to be in reasonable detail, prepared in accordance with
GAAP, and certified, without qualification and without an expression of
uncertainty as to the ability of the Borrowers' Representative or any
of its Subsidiaries to continue as going concerns, by Deloitte & Touche
LLP or by other independent certified public accountants satisfactory
to the Administrative Agent, together with a written statement from
such accountants to the effect that they have read a copy of this
Agreement, and that, in making the examination necessary to said
certification, they have obtained no knowledge of any Default, or, if
such accountants shall have obtained knowledge of any then existing
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Default they shall disclose in such statement any such Default;
PROVIDED that such accountants shall not be liable to the Lenders for
failure to obtain knowledge of any Default;
(b) as soon as practicable, but in any event not later than
forty-five (45) days after the end of each of the fiscal quarters of
the Borrowers, copies of the unaudited consolidated balance sheet of
the Borrowers' Representative and its Subsidiaries as at the end of
such quarter, and the related consolidated statement of income and
consolidated statement of cash flow for the portion of the Borrowers'
fiscal year then elapsed, all in reasonable detail and prepared in
accordance with GAAP, together with a certification by the principal
financial or accounting officer of the Borrowers that the information
contained in such financial statements fairly presents the financial
position of the Borrowers' Representative and its Subsidiaries on the
date thereof (subject to year-end adjustments);
(c) as soon as practicable, but in any event within thirty
(30) days after the end of each month in each fiscal year of the
Borrowers, unaudited monthly consolidated financial statements of the
Borrowers' Representative and its Subsidiaries for such month prepared
in accordance with GAAP, together with a certification by the principal
financial or accounting officer of the Borrowers that the information
contained in such financial statements fairly presents the financial
condition of the Borrowers' Representative and its Subsidiaries on the
date thereof (subject to year-end adjustments);
(d) simultaneously with the delivery of the financial
statements referred to in subsections (a) and (b) above, a statement
certified by the principal financial or accounting officer of the
Borrowers' Representative in substantially the form of EXHIBIT E hereto
(a "COMPLIANCE CERTIFICATE") and setting forth in reasonable detail
computations evidencing compliance with the covenants contained in
ss.10 and (if applicable) reconciliations to reflect changes in GAAP
since the Balance Sheet Date;
(e) promptly after the filing or mailing thereof, copies of
all material of a financial nature filed with the Securities and
Exchange Commission or sent to the stockholders of Mayor's. Further,
the Borrowers shall add the Administrative Agent as an addressee on all
mailing lists maintained by or for the Borrowers;
(f) on Wednesday of each week or at such other time as the
Administrative Agent may reasonably request, (i) a Borrowing Base
Report setting forth the Borrowing Base as at the end of the week most
recently ended or other date so requested by the Administrative Agent
(to the extent requested more frequently such Borrowing Base Report to
be based upon a roll forward of sales and purchases) and (ii) a sales
audit report and a flash collateral report (each in such form as may be
specified from time to time by the Administrative Agent);
(g) on Wednesday of each week or at such other time as the
Administrative Agent may reasonably request, an Accounts Receivable
aging report;
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(h) from time to time upon request of the Administrative
Agent, projections of the Borrowers' Representative and its
Subsidiaries updating those projections delivered to the Lenders and
referred to in ss.7.4.3 or, if applicable, updating any later such
projections delivered in response to a request pursuant to this
ss.8.4(h);
(i) such other reports listed on SCHEDULE 8.4(I) hereto;
(j) from time to time such other financial data, information
(including accountants, management letters) and copies of advertising
(including copies of all print advertising and duplicate tapes of all
video and radio advertising) as the Administrative Agent or any Lender
may reasonably request.
8.5. NOTICES.
8.5.1. DEFAULTS. The Borrowers will promptly notify the Administrative Agent
and each of the Lenders if the Borrowers are in Default, together with
a reasonably detailed description thereof, and the actions the
Borrowers propose to take with respect thereto. If any Person shall
give any notice or take any other action in respect of a claimed
default (whether or not constituting a Default) under this Agreement or
any other note, evidence of indebtedness, indenture or other obligation
to which or with respect to which the Borrowers or any of their
Subsidiaries is a party or obligor, whether as principal, guarantor,
surety or otherwise, the Borrowers shall forthwith give written notice
thereof to the Administrative Agent and each of the Lenders, describing
the notice or action and the nature of the claimed default.
8.5.2. ENVIRONMENTAL EVENTS. The Borrowers will promptly give notice to the
Administrative Agent and each of the Lenders (a) of any violation of
any Environmental Law that the Borrowers or any of their Subsidiaries
reports in writing or is reportable by such Person in writing (or for
which any written report supplemental to any oral report is made) to
any Governmental Authority and (b) upon becoming aware thereof, of any
inquiry, proceeding, investigation, or other action, including a notice
from any agency of potential environmental liability, of any
Governmental Authority that could reasonably have a Material Adverse
Effect.
8.5.3. NOTIFICATION OF CLAIM AGAINST COLLATERAL. The Borrowers will,
immediately upon becoming aware thereof, notify the Administrative
Agent and each of the Lenders in writing of any setoff, claims
(including, with respect to the Real Estate, environmental claims),
withholdings or other defenses to which any of the Collateral, or the
Administrative Agent's rights with respect to the Collateral, are
subject.
8.5.4. NOTICE OF LITIGATION AND JUDGMENTS. The Borrowers will, and will cause
each of their Subsidiaries to, give notice to the Administrative Agent
and each of the Lenders in writing within fifteen (15) days of becoming
aware of any litigation or proceedings threatened in writing or any
pending litigation and proceedings affecting the Borrowers or any of
their Subsidiaries or to which the Borrowers or any of their
Subsidiaries is or becomes a party involving an uninsured claim against
the Borrowers or any of their Subsidiaries that could reasonably be
expected to have a Material Adverse Effect and stating the nature and
status of such litigation or proceedings. The Borrowers will, and will
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cause each of their Subsidiaries to, give notice to the Administrative
Agent and each of the Lenders, in writing, in form and detail
satisfactory to the Administrative Agent, within ten (10) days of any
judgment not covered by insurance, final or otherwise, against the
Borrowers or any of their Subsidiaries in an amount in excess of
$750,000.
8.5.5. NOTICES CONCERNING INVENTORY COLLATERAL. The Borrowers shall provide to
the Administrative Agent and the Tranche B Lender prompt notice of (a)
any physical count of the Borrowers' or any of their Subsidiaries'
inventory, together with a copy of the results thereof certified by the
Borrowers or such Subsidiary, (b) any determination by the Borrowers or
any of their Subsidiaries that the inventory levels of the Borrowers or
such Subsidiary are not adequate to meet the sales projections of the
Borrowers or such Subsidiary, (c) details of all credit card
arrangements to which the Borrowers or any of their Subsidiaries is
from time to time a party, including details relating to the Borrowers'
or such Subsidiary's compliance with the terms of payment to the Fleet
Concentration Account of the proceeds of all credit card charges for
sales by the Borrowers or such Subsidiary, and (d) any failure of the
Borrowers or any of their Subsidiaries to pay rent at any location,
which failure continues for more than three days following the day on
which such rent is due and payable by the Borrowers or such Subsidiary.
If so requested by the Administrative Agent or any Lender, the
Borrowers shall provide to the Administrative Agent or such Lender
copies of all advertising by the Borrowers or any of their Subsidiaries
including copies of all print advertising and duplicate tapes of all
video and radio advertising.
8.5.6. CHANGE IN OFFICERS OR ACCOUNTANTS. The Borrowers shall provide to the
Administrative Agent prompt notice of any change in the Borrowers'
President, chief executive officer, chief operating officer, and chief
financial officer (without regard to the title(s) actually given to the
Persons discharging the duties customarily discharged by officers with
those titles) or any intention on the part of the Borrowers to
discharge the Borrowers' present independent accountants or any
withdrawal or resignation by such independent accountants from their
acting in such capacity.
8.6. LEGAL EXISTENCE; MAINTENANCE OF PROPERTIES. The Borrowers will do or cause
to be done all things commercially reasonable to preserve and keep in full force
and effect their legal existence, rights and franchises and those of their
Subsidiaries and will not, and will not cause or permit any of their
Subsidiaries to, convert to a limited liability company or a limited liability
partnership; PROVIDED, HOWEVER, Mayor's may, upon notice to the Administrative
Agent, dissolve Subsidiaries other than Mayor's Fla if the dissolution is, in
the judgment of the Borrowers, desirable and would not have a Material Adverse
Effect. Each (i) will cause all of its properties and those of its Subsidiaries
used or useful in the conduct of its business or the business of its
Subsidiaries to be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment, (ii) will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Borrowers may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times, and (iii) will, and will cause each of its Subsidiaries to,
continue to engage primarily in the businesses now conducted by them and in
related businesses; PROVIDED that nothing in this ss.8.6 shall prevent the
Borrowers from discontinuing the operation and maintenance of any of their
properties or any of those of its Subsidiaries if such discontinuance is, in the
judgment of the Borrowers, desirable in the conduct of its or their business and
that do not in the aggregate have a Material Adverse Effect.
8.7. INSURANCE.
8.7.1. MAINTENANCE OF INSURANCE. SCHEDULE 8.7.1 hereto, is a schedule of all
insurance policies owned by the Borrowers or under which the Borrowers
are the named insured. Each of such policies is in full force and
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effect. The Borrowers will maintain with financially sound and
reputable insurers insurance with respect to its properties and
business against such casualties and contingencies as shall be in
accordance with general practices of businesses engaged in similar
activities in similar geographic areas. Such insurance shall be in such
minimum amounts that the Borrowers will not be deemed a co-insurer
under applicable insurance laws, regulations and policies and otherwise
shall be in such amounts, contain such terms, be in such forms and be
for such periods as may be reasonably satisfactory to the
Administrative Agent. In addition, all such insurance shall be payable
to the Administrative Agent as loss payee under a "standard" or "New
York" loss payee clause for the benefit of the Lenders and the
Administrative Agent and shall not include an endorsement in favor of
any other Person. Without limiting the foregoing, the Borrowers will
(a) keep all of their physical property insured with casualty or
physical hazard insurance on an "all risks" basis, with broad form
flood and earthquake coverages and electronic data processing coverage,
with a full replacement cost endorsement and an "agreed amount" clause
in an amount equal to 100% of the full replacement cost of such
property, (b) maintain all such workers' compensation or similar
insurance as may be required by law and (c) maintain, in amounts and
with deductibles equal to those generally maintained by businesses
engaged in similar activities in similar geographic areas, general
public liability insurance against claims of bodily injury, death or
property damage occurring, on, in or about the properties of the
Borrowers; business interruption insurance; and product liability
insurance.
8.7.2. INSURANCE PROCEEDS. The proceeds of any casualty insurance in respect
of any casualty loss of any of the Collateral shall, subject to the
rights, if any, of other parties with an interest having priority in
the property covered thereby, (a) so long as no Default exists and to
the extent that the amount of such proceeds is less than $1,000,000, be
disbursed to the Borrowers for direct application by the Borrowers
solely to the repair or replacement of the Borrowers' property so
damaged or destroyed and (b) in all other circumstances, be held by the
Administrative Agent as cash collateral for the Obligations. The
Administrative Agent may, at its sole option, disburse from time to
time all or any part of such proceeds so held as cash collateral, upon
such terms and conditions as the Administrative Agent may reasonably
prescribe, for direct application by the Borrowers solely to the repair
or replacement of the Borrowers' property so damaged or destroyed, or
the Administrative Agent may apply all or any part of such proceeds to
the Obligations with the Commitment (if not then terminated) being
reduced by the amount so applied to the Obligations.
8.7.3. CONTINUATION OF INSURANCE. All policies of insurance shall provide for
at least sixty (60) days prior written cancellation notice to the
Administrative Agent. In the event of failure by the Borrowers to
provide and maintain insurance as herein provided, the Administrative
Agent may, at its option, provide such insurance and charge the amount
thereof to the Borrowers. The Borrowers shall furnish the
Administrative Agent with certificates of insurance and policies
evidencing compliance with the foregoing insurance provision.
8.8. TAXES. The Borrowers will, and will cause each of their Subsidiaries to,
duly pay and discharge, or cause to be paid and discharged, before the same
shall become overdue, all taxes, assessments and other governmental charges
imposed upon it and its Real Estate, sales and activities, or any part thereof,
or upon the income or profits therefrom, as well as all claims for labor,
materials, or supplies that if unpaid would by law become a Lien or charge upon
any of its property; PROVIDED that any such tax, assessment, charge, levy or
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claim need not be paid if the validity or amount thereof shall currently be
contested in good faith by appropriate proceedings and if the Borrowers or such
Subsidiary shall have set aside on its books adequate reserves with respect
thereto; and PROVIDED FURTHER that the Borrowers and each Subsidiary of the
Borrowers will pay all such taxes, assessments, charges, levies or claims
forthwith upon the commencement of proceedings to foreclose any Lien that may
have attached as security therefor.
8.9. INSPECTION OF PROPERTIES AND BOOKS, ETC.
8.9.1. GENERAL. The Borrowers shall permit the Lenders, through the
Administrative Agent or any of the Lenders' other designated
representatives, to visit and inspect any of the properties of the
Borrowers or any of their Subsidiaries, to examine the books of account
of the Borrowers and their Subsidiaries (and to make copies thereof and
extracts therefrom, duplicate, cause to be reduced to hard copy, run
off, draw off, and otherwise use any and all computer or electronically
stored information or data which relates to the Borrowers, or any
service bureau, contractor, accountant, or other person), and to
discuss the affairs, finances and accounts of the Borrowers and their
Subsidiaries with, and to be advised as to the same by, its and their
officers, and to conduct examinations and verifications (whether by
internal commercial finance examiners or independent auditors) of all
components included in the Borrowing Base, all at such reasonable times
and intervals as the Administrative Agent or any Lender may reasonably
request. The Administrative Agent may, at the Borrowers' expense,
participate in or observe any physical count of inventory included in
the Collateral.
8.9.2 COLLATERAL REPORTS; PHYSICAL INVENTORIES.
(a) Not less frequent than four times during each
calendar year, upon the request of the Administrative Agent,
the Borrowers will obtain and deliver to the Administrative
Agent, or, if the Administrative Agent so elects, will
cooperate with the Administrative Agent in the Administrative
Agent's obtaining, a report of an independent collateral
auditor satisfactory to the Administrative Agent (which may be
affiliated with one of the Lenders) with respect to the
Accounts Receivable and inventory components included in the
Borrowing Base, which report shall indicate whether or not the
information set forth in the Borrowing Base Report most
recently delivered is accurate and complete in all material
respects based upon a review by such auditors of the Accounts
Receivable (including verification with respect to the amount,
aging, identity and credit of the respective account debtors
and the billing practices of the Borrowers or their applicable
Subsidiary) and inventory (including verification as to the
value, location and respective types). All such collateral
value reports shall be conducted and made at the expense of
the Borrowers.
(b) The Borrowers, at their own expense, shall cause
not less than two (2) physical inventories to be undertaken in
each twelve (12) month period during which this Agreement is
in effect (the spacing of the scheduling of which inventories
shall be subject to the Administrative Agent's reasonable
discretion) conducted by such inventory takers as are
satisfactory to the Administrative Agent and following such
methodology as may be satisfactory to the Administrative
Agent. The Borrowers shall provide the Administrative Agent
with a copy of the preliminary results of each such inventory
(as well as of any other physical inventory undertaken by the
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Borrowers) within ten (10) days following the completion of
such inventory. The Borrowers, within thirty (30) days
following the completion of such inventory, shall provide the
Administrative Agent with a reconciliation of the results of
each such inventory (as well as of any other physical
inventory undertaken by the Borrowers) and shall post such
results to the Borrowers' stock ledger and, as applicable to
the Borrowers' other financial books and records. The
Administrative Agent, in its reasonable discretion, if a
Default exist, may cause such additional inventories to be
taken as the Administrative Agent determines (each, at the
expense of the Borrowers).
8.9.3. APPRAISALS. Not less frequently than four times during each calendar
year, the Borrowers will obtain and deliver to the Administrative Agent
appraisal reports in form and substance satisfactory to the
Administrative Agent stating the then current fair market orderly
liquidation and forced liquidation values of all or any portion of the
Inventory and Private Label Accounts. Upon the request of the
Administrative Agent or the Tranche B Lender, the Borrowers will obtain
and deliver to the Administrative Agent appraisal reports in form and
substance and from appraisers satisfactory to the Administrative Agent,
stating (a) the then current fair market, orderly liquidation and
forced liquidation values of all or any portion of the inventory,
Accounts Receivable, the equipment or real estate owned by the
Borrowers or any of their Subsidiaries and (b) the then current
business value of each of the Borrowers and their Subsidiaries. All
such appraisals shall be conducted and made at the expense of the
Borrowers.
8.9.4. ENVIRONMENTAL ASSESSMENTS. Whether or not a Default exist, the
Administrative Agent may, from time to time, in its reasonable
discretion for the purpose of assessing and ensuring the value of any
Mortgaged Property, obtain one or more environmental assessments or
audits of such Mortgaged Property prepared by a hydrogeologist, an
independent engineer or other qualified consultant or expert approved
by the Administrative Agent to evaluate or confirm (a) whether any
Hazardous Materials are present in the soil or water at such Mortgaged
Property and (b) whether the use and operation of such Mortgaged
Property complies with all Environmental Laws. Environmental
assessments may include without limitation detailed visual inspections
of such Mortgaged Property including any and all storage areas, storage
tanks, drains, dry wells and leaching areas, and the taking of soil
samples, surface water samples and ground water samples, as well as
such other investigations or analyses as the Administrative Agent deems
appropriate. All such environmental assessments shall be conducted and
made at the expense of the Borrowers.
8.9.5. COMMUNICATIONS WITH ACCOUNTANTS AND OTHER PERSONS. Upon prior notice to
the Borrowers' Representative, the Borrowers authorize the
Administrative Agent and, if accompanied by the Administrative Agent,
the Lenders to communicate directly with the Borrowers' independent
certified public accountants, service bureau, contractors and other
Persons, and authorizes such accountants, service bureaus, contractors
and other Persons to disclose to the Administrative Agent and the
Lenders any and all financial statements and other supporting financial
documents and schedules including copies of any management letter with
respect to the business, financial condition and other affairs of the
Borrowers or any of their Subsidiaries. At the request of the
Administrative Agent, the Borrowers shall deliver a letter addressed to
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such accountants, service bureaus, contractors and other Persons
instructing them to comply with the provisions of this ss.8.9.5.
8.9.6. RESTRUCTURING ADVISOR. The Borrowers authorize the Administrative Agent
and, if accompanied by the Administrative Agent, any of the Lenders, to
communicate directly with the Restructuring Advisor and to have the
Restructuring Advisor update the Administrative Agent on the status of
the Borrowers' attempts to achieve an Approved Recapitalization.
8.10. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES, AND PERMITS. Except as set
forth on SCHEDULE 8.10 hereto, the Borrowers will, and will cause each of their
Subsidiaries to, comply with (a) the applicable laws and regulations wherever
its business is conducted, including all Environmental Laws, (b) the provisions
of its Governing Documents, (c) all agreements and instruments by which it or
any of its properties may be bound and (d) all applicable decrees, orders, and
judgments. If any authorization, consent, approval, permit or license from any
officer, agency or instrumentality of any government shall become necessary or
required in order that the Borrowers or any of their Subsidiaries may fulfill
any of its obligations hereunder or any of the other Loan Documents to which the
Borrowers or such Subsidiary is a party, the Borrowers will, or (as the case may
be) will cause such Subsidiary to, immediately take or cause to be taken all
reasonable steps within the power of the Borrowers or such Subsidiary to obtain
such authorization, consent, approval, permit or license and furnish the
Administrative Agent and the Lenders with evidence thereof.
8.11. EMPLOYEE BENEFIT PLANS. The Borrowers will (a) promptly upon request of
the Administrative Agent, furnish to the Administrative Agent a copy of the most
recent actuarial statement required to be submitted under ss.103(d) of ERISA and
Annual Report, Form 5500, with all required attachments, in respect of each
Guaranteed Pension Plan, and (b) promptly upon receipt or dispatch, furnish to
the Administrative Agent any notice, report or demand sent or received in
respect of a Guaranteed Pension Plan under ss.ss.302, 4041, 4042, 4043, 4063,
4065, 4066 and 4068 of ERISA, or in respect of a Multiemployer Plan under
ss.4041A, 4202, 4219, 4242, or 4245 of ERISA.
8.12. USE OF PROCEEDS. The Borrowers will use the proceeds of the Loans and
obtain Letters of Credit solely for the purposes set forth in ss.7.17.1.
8.13. ADDITIONAL MORTGAGED PROPERTY. If, after the Closing Date, the Borrowers
or any of its Subsidiaries acquires Real Estate used as a manufacturing or
warehouse facility, the Borrowers shall, or shall cause such Subsidiary to,
forthwith deliver to the Administrative Agent a fully executed mortgage or deed
of trust over such Real Estate, in form and substance satisfactory to the
Administrative Agent, together with title insurance policies, surveys, evidences
of insurance with the Administrative Agent named as loss payee and additional
insured, legal opinions and other documents and certificates with respect to
such Real Estate as was required for Real Estate of the Borrowers or such
Subsidiary as of the Closing Date. The Borrowers further agree that, following
the taking of such actions with respect to such Real Estate, the Administrative
Agent shall have for the benefit of the Lenders and the Administrative Agent a
valid and enforceable first priority mortgage or deed of trust over such Real
Estate, free and clear of all Liens except for Permitted Liens. If, after an
Event of Default, the Borrowers or any of their Subsidiaries lease Real Estate
used as a manufacturing or warehouse facility, the Borrowers shall, or shall
cause such Subsidiary to, forthwith deliver to the Administrative Agent a
landlord waiver relating to such property in form and substance satisfactory to
the Administrative Agent.
8.14. BANK ACCOUNTS.
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8.14.1. GENERAL. On or prior to the Closing Date, the Borrowers will, and will
cause each of its Subsidiaries to, (a) establish a depository account
(the "FLEET CONCENTRATION ACCOUNT") under the control of the
Administrative Agent for the benefit of the Lenders and the
Administrative Agent, in the name of the Borrowers, (b) to cause all
Receipts or cash proceeds of Accounts Receivable to be deposited only
into Local Accounts or Interim Concentration Accounts and, if
applicable, lock box agreements or the Fleet Concentration Account, (c)
direct all depository institutions with Local Accounts to cause all
funds held in each such Local Account to be transferred no less
frequently than once each day to, and only to, an Interim Concentration
Account or the Fleet Concentration Account, (d) direct all depository
institutions with Interim Concentration Accounts to cause all funds of
the Borrowers and their Subsidiaries held in such Interim Concentration
Accounts to be transferred daily to, and only to, the Fleet
Concentration Account, and (e) at all times ensure that immediately
upon the Borrowers' or any of their Subsidiaries' receipt of any funds
constituting or cash proceeds of any Collateral, all such amounts shall
have been deposited in a Local Account, an Interim Concentration
Account or the Fleet Concentration Account.
8.14.2. ACKNOWLEDGMENT OF APPLICATION. The Borrowers hereby agree that all
amounts received by the Administrative Agent in the Fleet Concentration
Account will be the sole and exclusive property of the Administrative
Agent, for the accounts of the Lenders and the Administrative Agent, to
be applied in accordance ss.2.14.2 or ss.2.15 as applicable.
8.15. COVENANTS CONCERNING COLLATERAL, ETC. The Borrowers further covenant with
the Lenders and the Administrative Agent as follows: (a) the Collateral, to the
extent not delivered to the Administrative Agent pursuant to ss.6, will be kept
at those locations listed on the Perfection Certificate and the Borrowers will
not remove the Collateral from such locations, without providing at least 30
days prior written notice to the Administrative Agent, (b) except for the
security interest herein granted, the Borrowers shall be the owners of the
Collateral free from any right or claim of any other person or any Lien, and the
Borrowers shall defend the same against all claims and demands of all persons at
any time claiming the same or any interests therein adverse to the
Administrative Agent or any of the Lenders, (c) the Borrowers shall not pledge,
mortgage or create, or suffer to exist any right of any person in or claim by
any person to the Collateral, or any Lien in the Collateral in favor of any
person, other than the Administrative Agent and the Permitted Liens, (d) the
Borrowers will keep the Collateral in good order and repair and will not use the
same in violation of law or any policy of insurance thereon, (e) the Borrowers
will pay promptly when due all taxes, assessments, governmental charges and
levies upon the Collateral or incurred in connection with the use or operation
of the Collateral or incurred in connection with this Agreement and (f) the
Borrowers will continue to operate, their business in compliance with all
applicable provisions of the federal Fair Labor Standards Act, as amended, and
with all applicable provisions of federal, state and local statutes and
ordinances dealing with the control, shipment, storage or disposal of hazardous
materials or substances. No sale of Inventory shall be on consignment, approval,
or under any other circumstances such that, with the exception of the Borrowers'
customary return policy applicable to the return of inventory purchased by the
Borrowers' retail customers in the ordinary course, such Inventory may be
returned to the Borrowers without the consent of the Administrative Agent. The
Borrowers may grant such allowances or other adjustments to the Borrowers'
account debtors as the Borrowers may reasonably deem to accord with sound
business practice, PROVIDED, HOWEVER, the authority granted the Borrowers
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pursuant to this Section 8.15 may be limited or terminated by the Administrative
Agent at any time in the Administrative Agent's reasonable discretion.
8.16. FURTHER ASSURANCES. The Borrowers will, and will cause each of their
Subsidiaries to, cooperate with the Lenders and the Administrative Agent and
execute such further instruments and documents as the Lenders or the
Administrative Agent shall reasonably request to carry out to their satisfaction
the transactions contemplated by this Agreement and the other Loan Documents.
9. CERTAIN NEGATIVE COVENANTS.
The Borrowers covenant and agree that, so long as any Loan, Unpaid
Reimbursement Obligation, Letter of Credit or Note is outstanding or any Lender
has any obligation to make any Loans or the Administrative Agent has any
obligations to issue, extend or renew any Letters of Credit:
9.1. RESTRICTIONS ON INDEBTEDNESS. The Borrowers will not, and will not permit
any of their Subsidiaries to, create, incur, assume, guarantee or be or remain
liable, contingently or otherwise, with respect to any Indebtedness other than:
(a) Indebtedness to the Lenders and the Administrative Agent
arising under any of the Loan Documents;
(b) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the
ordinary course of business;
(c) Indebtedness incurred in connection with the acquisition
after the date hereof of any real or personal property by the Borrowers
or such Subsidiary or under any Capitalized Lease, PROVIDED that the
aggregate principal amount of such Indebtedness of the Borrowers and
their Subsidiaries shall not exceed the aggregate amount of $7,500,000
at any one time;
(d) Indebtedness existing on the date hereof and listed and
described on SCHEDULE 9.1 hereto;
(e) Approved Recapitalization Liabilities; and
(f) Indebtedness of a Borrower to another Borrower or of a
Subsidiary of the Borrowers existing on the date hereof to the
Borrowers.
9.2. RESTRICTIONS ON LIENS.
9.2.1. PERMITTED LIENS. The Borrowers will not, and will not permit any of
their Subsidiaries to, (a) create or incur or suffer to be created or
incurred or to exist any Lien upon any of their property or assets of
any character whether now owned or hereafter acquired, or upon the
income or profits therefrom; (b) transfer any of such property or
assets or the income or profits therefrom for the purpose of subjecting
the same to the payment of Indebtedness or performance of any other
obligation in priority to payment of its general creditors; (c)
acquire, or agree or have an option to acquire, any property or assets
upon conditional sale or other title retention or purchase money
security agreement, device or arrangement; (d) suffer to exist for a
period of more than thirty (30) days after the same shall have been
incurred any Indebtedness or claim or demand against it that if unpaid
could by law or upon bankruptcy or insolvency, or otherwise, be given
any priority whatsoever over its general creditors; or (e) sell,
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assign, pledge or otherwise transfer any "RECEIVABLES" as defined in
clause (g) of the definition of the term "INDEBTEDNESS," with or
without recourse; PROVIDED that the Borrowers or any of their
Subsidiaries may create or incur or suffer to be created or incurred or
to exist:
(i) Liens in favor of the Borrowers on all or part of
the assets of Subsidiaries of the Borrowers securing
Indebtedness owing by Subsidiaries of the Borrowers to the
Borrowers;
(ii) Liens to secure taxes, assessments and other
government charges in respect of obligations not overdue or
Liens on properties to secure claims for labor, material or
supplies in respect of obligations not overdue;
(iii) deposits or pledges made in connection with, or
to secure payment of, workmen's compensation, unemployment
insurance, old age pensions or other social security
obligations;
(iv) Liens on properties in respect of judgments or
awards that have been in force for less than the applicable
period for taking an appeal so long as execution is not levied
thereunder or in respect of which the Borrowers or such
Subsidiary shall at the time in good faith be prosecuting an
appeal or proceedings for review and in respect of which a
stay of execution shall have been obtained pending such appeal
or review;
(v) Liens of carriers, warehousemen, mechanics and
materialmen, and other like Liens on properties, in existence
less than 120 days from the date of creation thereof in
respect of obligations not overdue;
(vi) encumbrances on Real Estate consisting of
easements, rights of way, zoning restrictions, restrictions on
the use of real property and defects and irregularities in the
title thereto, landlord's or lessor's liens and other minor
Liens, PROVIDED that none of such Liens (A) interferes
materially with the use of the property affected in the
ordinary conduct of the business of the Borrowers and their
Subsidiaries, and (B) individually or in the aggregate have a
Material Adverse Effect;
(vii) Liens existing on the date hereof and listed on
SCHEDULE 9.2 hereto;
(viii) purchase money security interests in or
purchase money mortgages on real or personal property acquired
after the date hereof to secure purchase money Indebtedness of
the type and amount permitted by ss.9.1(c), incurred in
connection with the acquisition of such property, which
security interests or mortgages cover only the real or
personal property so acquired;
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(ix) Liens in favor of the Administrative Agent for
the benefit of the Lenders and the Administrative Agent under
the Loan Documents;
(x) The Rolex Liens;
(xi) Liens of a bank or financial institution with
respect to funds deposited with such institution;
(xii) Liens in favor of Citicorp USA, Inc. in
existence immediately prior to the Closing Date that are paid
and satisfied in full and released on the Closing Date as a
result of the application of a Borrower's cash on hand on the
Closing Date and/or the proceeds of the Revolving Credit Loan
or the Tranche B Loan being made on the Closing Date.
9.2.2. RESTRICTIONS ON NEGATIVE PLEDGES AND UPSTREAM LIMITATIONS. The
Borrowers will not, nor will it permit any of their Subsidiaries to (a)
enter into or permit to exist any arrangement or agreement (excluding
the Agreement and the other Loan Documents) which directly or
indirectly prohibits the Borrowers or any of their Subsidiaries from
creating, assuming or incurring any Lien upon its properties, revenues
or assets or those of any of their Subsidiaries whether now owned or
hereafter acquired, or (b) enter into any agreement, contract or
arrangement (excluding the Agreement and the other Loan Documents)
restricting the ability of any Subsidiary of the Borrowers to pay or
make dividends or distributions in cash or kind to the Borrowers, to
make loans, advances or other payments of whatsoever nature to the
Borrowers, or to make transfers or distributions of all or any part of
its assets to the Borrowers; in each case other than (i) restrictions
on specific assets which assets are the subject of purchase money
security interests to the extent permitted under ss.9.2.1, and (ii)
customary anti-assignment provisions contained in leases and licensing
agreements entered into by the Borrowers or such Subsidiary in the
ordinary course of its business.
9.3. RESTRICTIONS ON INVESTMENTS. The Borrowers will not, and will not permit
any of their Subsidiaries to, make or permit to exist or to remain outstanding
any Investment except Investments in:
(a) Cash Equivalents;
(b) Investments existing on the date hereof and listed on
SCHEDULE 9.3 hereto;
(c) Investments with respect to Indebtedness permitted
by ss.9.1(f) so long as such entities remain Subsidiaries of the
Borrowers;
(d) Investments by the Borrowers in each other existing on the
Closing Date;
(e) Investments consisting of promissory notes received as
proceeds of asset dispositions permitted by ss.9.5.2; and
(f) Investments consisting of loans and advances to employees
for moving, entertainment, travel and other similar expenses in the
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ordinary course of business not to exceed $250,000 in the aggregate at
any time outstanding;
PROVIDED, HOWEVER, that, such Investments will be considered Investments
permitted by this ss.9.3 only if all actions have been taken to the satisfaction
of the Administrative Agent to provide to the Administrative Agent, for the
benefit of the Lenders and the Administrative Agent, a first priority perfected
security interest in all of such Investments free of all Liens other than
Permitted Liens.
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9.4. RESTRICTED PAYMENTS. The Borrowers will not make any Restricted Payments.
9.5. MERGER, CONSOLIDATION AND DISPOSITION OF ASSETS.
9.5.1. MERGERS AND ACQUISITIONS. The Borrowers will not, and will not permit
any of their Subsidiaries to, become a party to any merger,
amalgamation or consolidation, or agree to or effect any asset
acquisition or stock acquisition (other than the acquisition of assets
in the ordinary course of business consistent with past practices)
except the merger or consolidation of one or more of the Subsidiaries
of the Borrowers with and into one of the Borrowers, or the merger or
consolidation of two or more Subsidiaries of the Borrowers.
9.5.2. DISPOSITION OF ASSETS. The Borrowers will not, and will not permit any
of their Subsidiaries to, become a party to or agree to or effect any
disposition of assets, other than (a) the sale of inventory, the
licensing of intellectual property and the disposition of obsolete
assets, in each case in the ordinary course of business consistent with
past practices, (b) the sale of the Headquarters Facility so long (i)
such sale is not to an Affiliate of any of the Borrowers and is
otherwise for fair value on an arms length basis, (ii) no Default
exists at the time the Borrowers enter into a binding contract to sell
the Headquarters Facility and (iii) the sale price shall not be less
than $5,600,000 and (c) the Borrowers may sell inventory and other
assets outside the ordinary course of business in connection with
Permitted Store Closings so long as the liquidation is conducted by a
liquidator and is otherwise on terms and conditions acceptable to the
Administrative Agent.
9.6. SALE AND LEASEBACK. The Borrowers will not, and will not permit any of
their Subsidiaries to, enter into any arrangement, directly or indirectly,
whereby the Borrowers or any Subsidiary of the Borrowers shall sell or transfer
any property owned by it in order then or thereafter to lease such property or
lease other property that the Borrowers or any Subsidiary of the Borrowers
intends to use for substantially the same purpose as the property being sold or
transferred.
9.7. COMPLIANCE WITH ENVIRONMENTAL LAWS. The Borrowers will not, and will not
permit any of their Subsidiaries to, (a) use any of the Real Estate or any
portion thereof for the handling, processing, storage or disposal of Hazardous
Substances, (b) cause or permit to be located on any of the Real Estate any
underground tank or other underground storage receptacle for Hazardous
Substances, (c) generate any Hazardous Substances on any of the Real Estate, (d)
conduct any activity at any Real Estate or use any Real Estate in any manner so
as to cause a release (i.e., releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, disposing or
dumping) or threatened release of Hazardous Substances on, upon or into the Real
Estate or (e) otherwise conduct any activity at any Real Estate or use any Real
Estate in any manner that would violate any Environmental Law or bring such Real
Estate in violation of any Environmental Law.
9.8. EMPLOYEE BENEFIT PLANS. Neither the Borrowers nor any ERISA Affiliate will:
(a) engage in any "PROHIBITED TRANSACTION" within the meaning
of ss.406 of ERISA or ss.4975 of the Code which could result in a
material liability for the Borrower or any of its Subsidiaries; or
(b) permit any Guaranteed Pension Plan to incur an
"ACCUMULATED FUNDING DEFICIENCY", as such term is defined in ss.302 of
ERISA, whether or not such deficiency is or may be waived; oR
(c) fail to contribute to any Guaranteed Pension Plan to an
extent which, or terminate any Guaranteed Pension Plan in a manner
which, could result in the imposition of a lien or encumbrance on the
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assets of the Borrowers or any of their Subsidiaries pursuant to
ss.302(f) or ss.4068 of ERISA; or
(d) amend any Guaranteed Pension Plan in circumstances
requiring the posting of security pursuant to ss.307 of ERISA
or ss.401(a)(29) of the Code;
(e) permit or take any action which would result in the
aggregate benefit liabilities (with the meaning of ss.4001 of ERISA) of
all Guaranteed Pension Plans exceeding the value of the aggregate
assets of such Plans, disregarding for this purpose the benefit
liabilities and assets of any such Plan with assets in excess of
benefit liabilities, by more than the amount set forth in ss.7.16.3; or
(f) permit or take any action which would contravene any
Applicable Pension Legislation.
9.9. BUSINESS ACTIVITIES; PERMITTED STORE CLOSINGS. The Borrowers will not, and
will not permit any of their Subsidiaries to, (a) engage directly or indirectly
(whether through Subsidiaries or otherwise) in any type of business other than
the businesses conducted by them on the Closing Date and in related businesses,
(b) execute, alter, modify, or amend any Lease; PROVIDED, HOWEVER, the
Borrower's may terminate the leases on the retail locations (i) listed on
SCHEDULE 9.9 hereto so long as the Borrowers have received Net Proceeds from the
sale or issuance of Approved Recapitalization Liabilities in an amount not less
than the amount which the Borrowers are required to pay to the landlord under
such leases in connection with the termination of such leases or (ii) which
otherwise constitute a Permitted Store Closing and are not listed on SCHEDULE
9.9, (c) except as provided in part (b) hereof, commit to, or open or close any
location at which the Borrowers maintains, offers for sales, or stores any of
the Collateral or (d) possess inventory on consignment in excess of $6,000,000
from February 1 to September 30 of each year, $9,000,000 from October 1 to
December 31 of each year, and $8,000,000 from January 1 to January 31 of each
year.
9.10. FISCAL YEAR. The Borrowers will not, and will not permit any of their
Subsidiaries to, change the date of the end of its fiscal year from that set
forth in ss.7.4.1.
9.11. TRANSACTIONS WITH AFFILIATES. Each Affiliate of the Borrowers is listed on
SCHEDULE 7.19. The Borrowers shall provide the Administrative Agent with prior
written notice of any entity's becoming or ceasing to be an Affiliate. The
Borrowers will not, and will not permit any of their Subsidiaries to, engage in
any transaction with any Affiliate (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
such Affiliate or, to the knowledge of the Borrowers, any corporation,
partnership, trust or other entity in which any such Affiliate has a substantial
interest or is an officer, director, trustee or partner, on terms more favorable
to such Person than would have been obtainable on an arm's-length basis in the
ordinary course of business.
9.12. BANK ACCOUNTS. The Borrowers will not, and will not permit any of their
Subsidiaries to, (a) establish any bank accounts, credit card clearinghouse or
processors, other than those Deposit Accounts, clearinghouses and processors and
other accounts, all listed on SCHEDULE 7.20, without the Administrative Agent's
prior written consent, (b) violate directly or indirectly any Control Agreement
or other bank agency or lock box agreement in favor of the Administrative Agent
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for the benefit of the Lenders and the Administrative Agent with respect to such
account, (c) deposit into any of the payroll accounts listed on SCHEDULE 7.20
any amounts in excess of amounts necessary to pay current payroll obligations
from such accounts or (d) change any direction or designation relating to any
credit card clearinghouse or processor.
10. FINANCIAL COVENANTS.
The Borrowers covenant and agree that, so long as any Loan, Unpaid
Reimbursement Obligation, Letter of Credit or Note is outstanding or any Lender
has any obligation to make any Loans or the Administrative Agent has any
obligation to issue, extend or renew any Letters of Credit:
10.1. MINIMUM INVENTORY PURCHASES. The Borrowers will at all times
cause Inventory for at least one calendar week out of every two calendar weeks
to exceed the amounts listed below opposite the period during which such week
began. Compliance with this ss.10.1 shall be determined by the Administrative
Agent based upon the Borrowing Base Certificates each week delivered to the
Administrative Agent pursuant to ss.8.4(f) of this Agreement and Inventory shall
be valued at cost pursuant to the Borrowers' ESSBASE stock ledger.
- ------------------------------------------------------- -----------------------------------------------------
Period Minimum Inventory Amount
- ------------------------------------------------------- -----------------------------------------------------
December 16 through September 30 $68,000,000
- ------------------------------------------------------- -----------------------------------------------------
October 1 through October 31 $70,000,000
- ------------------------------------------------------- -----------------------------------------------------
November 1 through December 15 $74,000,000
- ------------------------------------------------------- -----------------------------------------------------
10.2 CAPITAL EXPENDITURES. The Borrowers will not make, or permit any Subsidiary
of the Borrowers to make, Capital Expenditures in any fiscal year that exceed,
in the aggregate, $4,000,000 for such fiscal year.
11. CLOSING CONDITIONS
The obligations of the Lenders to make the initial Revolving Credit
Loans and the Tranche B Loan and of the Administrative Agent to issue any
initial Letters of Credit shall be subject to the satisfaction of the following
conditions precedent on or prior to May 30, 2002:
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11.1. LOAN DOCUMENTS. Each of the Loan Documents shall have been duly executed
and delivered by the respective parties thereto, shall be in full force and
effect and shall be in form and substance satisfactory to each of the Lenders.
Each Lender shall have received a fully executed copy of each such document.
11.2. CERTIFIED COPIES OF GOVERNING DOCUMENTS. Each of the Lenders shall have
received from the Borrowers a copy, certified by a duly authorized officer of
such Person to be true and complete on the Closing Date, of each of its
Governing Documents as in effect on such date of certification.
11.3. CORPORATE OR OTHER ACTION. All corporate (or other) action necessary for
the valid execution, delivery and performance by the Borrowers and each their
Subsidiaries of this Agreement and the other Loan Documents to which it is or is
to become a party shall have been duly and effectively taken, and evidence
thereof satisfactory to the Lenders shall have been provided to each of the
Lenders.
11.4. INCUMBENCY CERTIFICATE. Each of the Lenders shall have received from the
Borrowers and each of their Subsidiaries an incumbency certificate, dated as of
the Closing Date, signed by a duly authorized officer of the Borrowers or such
Subsidiary, and giving the name and bearing a specimen signature of each
individual who shall be authorized: (a) to sign, in the name and on behalf of
each of the Borrowers of such Subsidiary, each of the Loan Documents to which
the Borrowers or such Subsidiary is or is to become a party; (b) in the case of
the Borrowers' Representative, to make Loan Requests and Conversion Requests and
to apply for Letters of Credit; and (c) to give notices and to take other action
on its behalf under the Loan Documents.
11.5. VALIDITY OF LIENS. The Security Documents shall be effective to create in
favor of the Administrative Agent a legal, valid and enforceable first (except
for Permitted Liens entitled to priority under applicable law) security interest
in and Lien upon the Collateral. All filings, recordings, deliveries of
instruments and other actions necessary or desirable in the opinion of the
Administrative Agent to protect and preserve such security interests shall have
been duly effected. The Administrative Agent shall have received evidence
thereof in form and substance satisfactory to the Administrative Agent.
11.6. PERFECTION CERTIFICATES AND UCC SEARCH RESULTS. The Administrative Agent
shall have received from each of the Borrowers a completed and fully executed
Perfection Certificate and the results of UCC searches (and the equivalent
thereof in all applicable foreign jurisdictions) with respect to the Collateral,
indicating no Liens other than Permitted Liens and otherwise in form and
substance satisfactory to the Administrative Agent.
11.7. TAXES. The Administrative Agent shall have received evidence of payment of
real estate taxes and municipal charges on all Real Estate not delinquent on or
before the Closing Date.
11.8. TITLE INSURANCE. The Administrative Agent shall have received a Title
Policy covering each Mortgaged Property (or commitments to issue such policies,
with all conditions to issuance of the Title Policy deleted by an authorized
agent of the Title Insurance Company) together with proof of payment of all fees
and premiums for such policies, from the Title Insurance Company and in amounts
satisfactory to the Administrative Agent, insuring the interest of the
Administrative Agent and each of the Lenders as mortgagee under the Mortgages.
11.9. CERTIFICATES OF INSURANCE. The Administrative Agent shall have received
(a) a certificate of insurance from an independent insurance broker dated as of
the Closing Date, identifying insurers, types of insurance, insurance limits,
and policy terms, and otherwise describing the insurance obtained in accordance
with this Agreement and (b) certified copies of all policies evidencing such
insurance (or certificates therefore signed by the insurer or an agent
authorized to bind the insurer).
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11.10. CONTROL AGREEMENTS; CREDIT CARD CLEARING HOUSE. The Borrowers shall have
established the Fleet Concentration Account, and the Administrative Agent shall
have received a Control Agreement executed by each depository institution with
an Interim Concentration Account or Local Account with Bank of America, N.A.,
SunTrust Bank/Miami, N.A. and SunTrust Bank,/Atlanta, N.A.. The Borrowers shall
deliver to the Administrative Agent, notification, executed on behalf of the
Borrowers, to each of the Borrowers' credit card clearinghouses and processors
of notice (in form satisfactory to the Administrative Agent), which notice
provides that payment of all credit card charges submitted by the Borrowers to
that clearinghouse or other processor and any other amount payable to the
Borrowers by such clearinghouse or other processor shall be directed to the
Fleet Concentration Account or as otherwise designated from time to time by the
Administrative Agent.
11.11. BORROWING BASE REPORT. The Administrative Agent shall have received from
the Borrowers the initial Borrowing Base Report dated as of the Closing Date.
11.12. MINIMUM DAY ONE AVAILABILITY. After giving effect to the first funding of
the Revolving Credit Loans and the Tranche B Loan; all then held checks (if
any); accounts payable which are beyond credit terms then accorded the
Borrowers; overdrafts; any charges to the Loan Account made in connection with
the establishment of the credit facility contemplated hereby; and Letter's of
Credit to be issued at, or immediately subsequent to, such establishment,
Availability shall not be less than $5,500,000.
11.13. ACCOUNTS RECEIVABLE AGING REPORT. The Administrative Agent shall have
received from the Borrowers the most recent Accounts Receivable aging report of
the Borrowers and their Subsidiaries dated as of a date which shall be no more
than five (5) days prior to the Closing Date and the Borrowers shall have
notified the Administrative Agent in writing on the Closing Date of any material
deviation from the Accounts Receivable values reflected in such Accounts
Receivable aging report and shall have provided the Administrative Agent with
such supplementary documentation as the Administrative Agent may reasonably
request.
11.14. HAZARDOUS WASTE ASSESSMENTS. The Administrative Agent shall have received
hazardous waste site assessments from environmental engineers and in form and
substance satisfactory to the Administrative Agent, covering the Headquarters
Facility.
11.15. APPRAISALS OF ELIGIBLE FIXED ASSETS. The Administrative Agent shall have
received appraisal reports in form and substance and from appraisers
satisfactory to the Administrative Agent, stating the then current fair market,
forced liquidation value of all Eligible Fixed Assets.
11.16. OPINION OF COUNSEL. Each of the Lenders and the Administrative Agent
shall have received a favorable legal opinion addressed to the Lenders and the
Administrative Agent, dated as of the Closing Date, in form and substance
satisfactory to the Lenders and the Administrative Agent, from:
(a) Morgan, Lewis & Bockius LLP, counsel to the Borrowers and
their Subsidiaries; and
(b) local counsel to the Administrative Agent.
11.18. PAYMENT OF FEES. The Borrowers shall have paid to the Lenders or the
Administrative Agent, as appropriate, the Fees pursuant to ss.5.1 and 5.2.
11.19. PAYOFF LETTER. The Administrative Agent shall have received a payoff
letter from Citicorp USA, Inc., indicating the amount of the loan obligations of
the Borrowers to Citicorp USA, Inc. to be discharged on the Closing Date and an
acknowledgment by Citicorp USA, Inc. that upon receipt of such funds it will
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forthwith execute and deliver to the Administrative Agent for filing all
termination statements and take such other actions as may be necessary to
discharge all mortgages, deeds of trust and security interests granted by the
Borrowers or any of their Subsidiaries in favor of Citicorp USA, Inc.
11.20. ROLEX AGREEMENTS. To the extent that there are Rolex Liens on the Closing
Date, the liens shall be on terms and conditions satisfactory to the
Administrative Agent.
12. CONDITIONS TO ALL BORROWINGS.
The obligations of the Lenders to make any Loan, including the
Revolving Credit Loan and the Tranche B Loan, and of the Administrative Agent to
issue, extend or renew any Letter of Credit, in each case whether on or after
the Closing Date, shall also be subject to the satisfaction of the following
conditions precedent:
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12.1. REPRESENTATIONS TRUE; NOT IN DEFAULT. Each of the representations and
warranties of any of the Borrowers and their Subsidiaries contained in this
Agreement, the other Loan Documents or in any document or instrument delivered
pursuant to or in connection with this Agreement shall be true as of the date as
of which they were made and shall also be true at and as of the time of the
making of such Loan or the issuance, extension or renewal of such Letter of
Credit, with the same effect as if made at and as of that time (except to the
extent of changes resulting from transactions contemplated or permitted by this
Agreement and the other Loan Documents and changes occurring in the ordinary
course of business that singly or in the aggregate are not materially adverse,
and to the extent that such representations and warranties relate expressly to
an earlier date) and no Default shall exist.
12.2. NO LEGAL IMPEDIMENT. No change shall have occurred in any law or
regulations thereunder or interpretations thereof that in the reasonable opinion
of any Lender would make it illegal for such Lender to make such Loan or to
participate in the issuance, extension or renewal of such Letter of Credit or in
the reasonable opinion of the Administrative Agent would make it illegal for the
Administrative Agent to issue, extend or renew such Letter of Credit.
12.3. PROCEEDINGS AND DOCUMENTS. All proceedings in connection with the
transactions contemplated by this Agreement, the other Loan Documents and all
other documents incident thereto shall be satisfactory in substance and in form
to the Lenders and to the Administrative Agent and the Administrative Agent's
Special Counsel, and the Lenders, the Administrative Agent and such counsel
shall have received all information and such counterpart originals or certified
or other copies of such documents as the Administrative Agent may reasonably
request.
12.4. BORROWING BASE REPORT. The Administrative Agent shall have received the
most recent Borrowing Base Report required to be delivered to the Administrative
Agent in accordance with ss.8.4(f).
12.5. MATERIAL ADVERSE CHANGE. There shall have been no material adverse change
in the Borrowers' financial condition from the most recent financial information
furnished to the Administrative Agent or any Lender pursuant to this Agreement.
12.6. SALES TAXES. If requested by the Administrative Agent all or a portion of
any Loan will be set aside by the Borrowers to cover the Borrowers' obligations
for sales tax on account of sales since the then most recent borrowing pursuant
to the Loans Credit.
13. EVENTS OF DEFAULT; ACCELERATION; ETC.
13.1. EVENTS OF DEFAULT AND ACCELERATION. If any of the following events
("EVENTS OF DEFAULT") shall occur:
(a) the Borrowers shall fail to pay any principal of the Loans
or any Reimbursement Obligation when the same shall become due and
payable, whether at the stated date of maturity or any accelerated date
of maturity or at any other date fixed for payment;
(b) the Borrowers or any of their Subsidiaries shall fail to
pay any interest on the Loans, any Fees, or other sums due hereunder or
under any of the other Loan Documents, when the same shall become due
and payable, whether at the stated date of maturity or any accelerated
date of maturity or at any other date fixed for payment;
(c) the Borrowers shall fail to comply with any of their
covenants contained inss.ss.8, 9 or 10;
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(d) the Borrowers or any of their Subsidiaries shall fail to
perform any term, covenant or agreement contained herein or in any of
the other Loan Documents (other than those specified elsewhere in this
ss.13.1) for fifteen (15) days after written notice of such failure has
been given to the Borrowers' Representative by the Administrative
Agent;
(e) any representation or warranty of the Borrowers or any of
their Subsidiaries in this Agreement or any of the other Loan Documents
or in any other document or instrument delivered pursuant to or in
connection with this Agreement shall prove to have been false in any
material respect upon the date when made or deemed to have been made or
repeated;
(f) the Borrowers or any of their Subsidiaries shall fail to
pay at maturity, or within any applicable period of grace, any
obligation for borrowed money or credit received, in respect of any
Capitalized Leases or Lease, or fail to observe or perform any material
term, covenant or agreement contained in any agreement by which it is
bound, evidencing or securing borrowed money or credit received, in
respect of any Capitalized Leases or Lease for such period of time as
would permit (assuming the giving of appropriate notice if required)
the holder or holders thereof or of any obligations issued thereunder
to accelerate the maturity thereof, or any such holder or holders shall
rescind or shall have a right to rescind the purchase of any such
obligations;
(g) the Borrowers or any of their Subsidiaries shall make an
assignment for the benefit of creditors, or admit in writing its
inability to pay or generally fail to pay its debts as they mature or
become due, or shall petition or apply for the appointment of a trustee
or other custodian, liquidator or receiver of the Borrowers or any of
their Subsidiaries or of any substantial part of the assets of the
Borrowers or any of their Subsidiaries or shall commence any case or
other proceeding relating to the Borrowers or any of their Subsidiaries
under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law of any
jurisdiction, now or hereafter in effect, or shall take any action to
authorize or in furtherance of any of the foregoing, or if any such
petition or application shall be filed or any such case or other
proceeding shall be commenced against the Borrowers or any of their
Subsidiaries and the Borrowers or any of their Subsidiaries shall
indicate its approval thereof, consent thereto or acquiescence therein
or such petition or application shall not have been dismissed within
forty-five (45) days following the filing thereof;
(h) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating the Borrowers or any
of their Subsidiaries bankrupt or insolvent, or approving a petition in
any such case or other proceeding, or a decree or order for relief is
entered in respect of the Borrowers or any Subsidiary of the Borrowers
in an involuntary case under federal bankruptcy laws as now or
hereafter constituted;
(i) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty days, whether or not consecutive, any
final judgment against the Borrowers or any of their Subsidiaries that,
with other outstanding final judgments, undischarged, against the
Borrowers or any of their Subsidiaries exceeds in the aggregate
$500,000;
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(j) if any of the Loan Documents shall be cancelled,
terminated, revoked or rescinded or the Administrative Agent's security
interests, mortgages or liens in a substantial portion of the
Collateral shall cease to be perfected, or shall cease to have the
priority contemplated by this Agreement and the Security Documents, in
each case otherwise than in accordance with the terms thereof or with
the express prior written agreement, consent or approval of the
Lenders, or any action at law, suit or in equity or other legal
proceeding to cancel, revoke or rescind any of the Loan Documents shall
be commenced by or on behalf of the Borrowers or any of their
Subsidiaries party thereto or any of their respective stockholders, or
any court or any other governmental or regulatory authority or agency
of competent jurisdiction shall make a determination that, or issue a
judgment, order, decree or ruling to the effect that, any one or more
of the Loan Documents is illegal, invalid or unenforceable in
accordance with the terms thereof;
(k) the Borrowers or any ERISA Affiliate incurs any liability
to the PBGC or a Guaranteed Pension Plan pursuant to Title IV of ERISA
in an aggregate amount exceeding $100,000, or the Borrowers or any
ERISA Affiliate is assessed withdrawal liability pursuant to Title IV
of ERISA by a Multiemployer Plan requiring aggregate annual payments
exceeding $100,000, or any of the following occurs with respect to a
Guaranteed Pension Plan: (i) an ERISA Reportable Event, or a failure to
make a required installment or other payment (within the meaning of
ss.302(f)(1) of ERISA), PROVIDED that the Administrative Agent
determines in its reasonable discretion that such event (A) could be
expected to result in liability of the Borrowers or any of their
Subsidiaries to the PBGC or such Guaranteed Pension Plan in an
aggregate amount exceeding $* and (B) could constitute grounds for the
termination of such Guaranteed Pension Plan by the PBGC, for the
appointment by the appropriate United States District Court of a
trustee to administer such Guaranteed Pension Plan or for the
imposition of a lien in favor of such Guaranteed Pension Plan; or (ii)
the appointment by a United States District Court of a trustee to
administer such Guaranteed Pension Plan; or (iii) the institution by
the PBGC of proceedings to terminate such Guaranteed Pension Plan;
(l) the Borrowers or any of their Subsidiaries shall be
enjoined, restrained or in any way prevented by the order of any
Governmental Authority from conducting (i) any material part of its
business or (ii) business at more than five (5) retail locations or the
Headquarters Facility, and such order shall continue in effect for more
than fifteen (15) days;
(m) there shall occur any material damage to, or loss, theft
or destruction of, any Collateral, whether or not insured, or any
strike, lockout, labor dispute, embargo, condemnation, act of God or
public enemy, or other casualty, which in any such case causes, for
more than fifteen (15) consecutive days, the cessation or substantial
curtailment of revenue producing activities at more than five (5)
retail locations not covered by business interruption insurance or the
Headquarters Facility;
(n) there shall occur the loss, suspension or revocation of,
or failure to renew, any license or permit now held or hereafter
acquired by the Borrowers or any of their Subsidiaries if such loss,
suspension, revocation or failure to renew would have a Material
Adverse Effect;
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(o) the Borrowers or any of their Subsidiaries shall be
indicted for a state or federal crime, or any civil or criminal action
shall otherwise have been brought or threatened against the Borrowers
or any of their Subsidiaries, a punishment for which in any such case
could include the forfeiture of any assets of the Borrowers or such
Subsidiary included in the Borrowing Base or any assets of the
Borrowers or such Subsidiary not included in the Borrowing Base but
having a fair market value in excess of $500,000 (unless covered by
insurance);
(p) the Chief Executive of Officer of Mayor's is not either
Joseph Cicio or Thomas Andruskevich or David Boudreau shall cease to be
employed as Chief Financial Officer of Mayor's, and in each case an
individual acceptable to the Administrative Agent shall not have been
hired within 45 days to replace such person; or
(q) a Change of Control shall occur;
then, and in any such event, so long as the same may be continuing, the
Administrative Agent may, and shall upon the request of (i) the SuperMajority
Lenders or, (ii) following the Standstill Termination Date, the Tranche B
Lender, by notice in writing to the Borrowers Representative declare all amounts
owing with respect to this Agreement, the Loan Account, the Notes and the other
Loan Documents and all Reimbursement Obligations to be, and they shall thereupon
forthwith become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived by
the Borrowers; PROVIDED that in the event of any Event of Default specified in
ss.ss.13.1(g), 13.1(h) or 13.1(j), all such amounts shall become immediately due
and payable automatically and without any requirement of notice from the
Administrative Agent or any Lender. Following the Standstill Termination Date,
if requested by the Tranche B Lender the Administrative Agent will exercise
those rights accorded to the Collateral Agent under the Loan Documents as a
creditor of the Borrowers looking towards the realization on the Collateral (a
"LIQUIDATION"). Notwithstanding the foregoing, the Administrative Agent shall
have the sole authority to determine the procedures to effect a Liquidation.
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13.2. TERMINATION OF COMMITMENTS. If any one or more of the Events of Default
specified in ss.13.1(g), ss.13.1(h) or ss.13.1(j) shall occur, any unused
portion of the credit hereunder shall forthwith terminate and each of the
Lenders shall be relieved of all further obligations to make Loans to the
Borrowers and the Administrative Agent shall be relieved of all further
obligations to issue, extend or renew Letters of Credit. If any other Event of
Default shall have occurred and be continuing, or if on any Drawdown Date or
other date for issuing, extending or renewing any Letter of Credit the
conditions precedent to the making of the Loans to be made on such Drawdown Date
or (as the case may be) to issuing, extending or renewing such Letter of Credit
on such other date are not satisfied, the Administrative Agent may and, upon the
request of the SuperMajority Lenders shall, by notice to the Borrowers'
Representative, terminate the unused portion of the credit hereunder, and upon
such notice being given such unused portion of the credit hereunder shall
terminate immediately and each of the Lenders shall be relieved of all further
obligations to make Loans and the Administrative Agent shall be relieved of all
further obligations to issue, extend or renew Letters of Credit. No termination
of the credit hereunder shall relieve the Borrowers or any of their Subsidiaries
of any of the Obligations.
13.3. REMEDIES.
13.3.1. GENERAL.
(a) In case any one or more of the Events of Default shall
have occurred and be continuing, and whether or not the Lenders shall
have accelerated the maturity of the Loans pursuant to ss.13.1, each
Lender, if owed any amount with respect to the Loans or the
Reimbursement Obligations, may, with the consent of the SuperMajority
Lenders or the Administrative Agent but not otherwise, proceed to
protect and enforce its rights by suit in equity, action at law or
other appropriate proceeding, whether for the specific performance of
any covenant or agreement contained in this Agreement and the other
Loan Documents or any instrument pursuant to which the Obligations to
such Lender are evidenced, including as permitted by applicable law the
obtaining of the EX PARTE appointment of a receiver, and, if such
amount shall have become due, by declaration or otherwise, proceed to
enforce the payment thereof or any other legal or equitable right of
such Lender. No remedy herein conferred upon any Lender or the
Administrative Agent or the holder of any Note or purchaser of any
Letter of Credit Participation is intended to be exclusive of any other
remedy and each and every remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute or any other provision of
law.
(b) If a Default has occurred, the Administrative Agent,
without any other notice to or demand upon the Borrowers, shall have in
any jurisdiction in which enforcement hereof is sought, in addition to
all other rights and remedies, the rights and remedies of a secured
party under the Uniform Commercial Code of the State and any additional
rights and remedies as may be provided to a secured party in any
jurisdiction in which Collateral is located, including, without
limitation, the right to take possession of the Collateral, and for
that purpose the Administrative Agent may, so far as the Borrowers can
give authority therefor, enter upon any premises on which the
Collateral may be situated and remove the same therefrom. The
Administrative Agent may in its reasonable discretion require the
Borrowers to assemble all or any part of the Collateral at such
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location or locations within the jurisdiction(s) of the Company's
principal office(s) or at such other locations as the Administrative
Agent may reasonably designate. Unless the Collateral is perishable or
threatens to decline speedily in value or is of a type customarily sold
on a recognized market, the Administrative Agent shall give to the
Borrowers at least five (5) Business Days prior written notice of the
time and place of any public sale of Collateral or of the time after
which any private sale or any other intended disposition is to be made.
The Borrowers hereby acknowledges that five (5) Business Days prior
written notice of such sale or sales shall be reasonable notice. In
addition, the Borrowers waive any and all rights that they may have to
a judicial hearing in advance of the enforcement of any of the
Administrative Agent's rights and remedies hereunder, including,
without limitation, its right if a Default exists to take immediate
possession of the Collateral and to exercise its rights and remedies
with respect thereto.
13.3.2. SECURITIES AND DEPOSITS. The Administrative Agent may at any time, at
its option, transfer to itself or any nominee any securities
constituting Collateral, receive any income thereon and hold such
income as additional Collateral or apply it to the Obligations. Whether
or not any Obligations are due, the Administrative Agent may demand,
sue for, collect, or make any settlement or compromise which it deems
desirable with respect to the Collateral. Regardless of the adequacy of
Collateral or any other security for the Obligations, any deposits or
other sums at any time credited by or due from the Administrative Agent
or any Lender to the Borrowers may at any time be applied to or set off
against any of the Obligations.
13.3.3. NOTIFICATION TO ACCOUNT DEBTORS AND OTHER PERSONS OBLIGATED ON
COLLATERAL. The Borrowers shall, at the request and option of the
Administrative Agent, notify account debtors and other persons
obligated on any of the Collateral of the security interest of the
Administrative Agent in any account, chattel paper, general intangible,
instrument or other Collateral and that payment thereof is to be made
directly to the Administrative Agent or to any financial institution
designated by the Administrative Agent as the Administrative Agent's
agent therefor, and the Administrative Agent may itself, without notice
to or demand upon the Borrowers, so notify account debtors and other
persons obligated on Collateral. After the making of such a request or
the giving of any such notification, the Borrowers shall hold any
proceeds of collection of accounts, chattel paper, general intangibles,
instruments and other Collateral received by the Borrowers as trustee
for the Administrative Agent, for the benefit of the Lenders and the
Administrative Agent, without commingling the same with other funds of
the Borrowers and shall turn the same over to the Administrative Agent
in the identical form received, together with any necessary
endorsements or assignments. The Administrative Agent shall apply the
proceeds of collection of accounts, chattel paper, general intangibles,
instruments and other Collateral received by the Administrative Agent
to the Obligations, such proceeds to be immediately credited after
final payment in cash or other immediately available funds of the items
giving rise to them.
13.3.4. STANDARDS FOR EXERCISING RIGHTS AND REMEDIES. To the extent that
applicable law imposes duties on the Administrative Agent to exercise
remedies in a commercially reasonable manner, the Borrowers acknowledge
and agree that it is not commercially unreasonable for the
Administrative Agent (a) to fail to incur expenses reasonably deemed
significant by the Administrative Agent to prepare Collateral for
disposition or otherwise to fail to complete raw material or work in
process into finished goods or other finished products for disposition,
(b) to fail to obtain third party consents for access to Collateral to
be disposed of, or to obtain or, if not required by other law, to fail
to obtain governmental or third party consents for the collection or
disposition of Collateral to be collected or disposed of, (c) to fail
to exercise collection remedies against account debtors or other
persons obligated on Collateral or to fail to remove Liens on or any
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adverse claims against Collateral, (d) to exercise collection remedies
against account debtors and other persons obligated on Collateral
directly or through the use of collection agencies and other collection
specialists, (e) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the
Collateral is of a specialized nature, (f) to contact other persons,
whether or not in the same business as the Borrowers, for expressions
of interest in acquiring all or any portion of the Collateral, (g) to
hire one or more professional auctioneers to assist in the disposition
of Collateral, whether or not the collateral is of a specialized
nature, (h) to dispose of Collateral by utilizing internet sites that
provide for the auction of assets of the types included in the
Collateral or that have the reasonable capability of doing so, or that
match buyers and sellers of assets, (i) to dispose of assets in
wholesale rather than retail markets, (j) to disclaim disposition
warranties, (k) to purchase insurance or credit enhancements to insure
the Administrative Agent against risks of loss, collection or
disposition of Collateral or to provide to the Administrative Agent a
guaranteed return from the collection or disposition of Collateral, or
(l) to the extent deemed appropriate by the Administrative Agent, to
obtain the services of brokers, investment bankers, consultants and
other professionals to assist the Administrative Agent in the
collection or disposition of any of the Collateral, or (m) conduct
going out of business sales and otherwise liquidate the inventory. The
Borrowers acknowledge that the purpose of this ss.13.3.4 is tO provide
non-exhaustive indications of what actions or omissions by the
Administrative Agent would fulfill the Administrative Agent's duties
under the Uniform Commercial Code of the Commonwealth of Massachusetts
or any other relevant jurisdiction in the Administrative Agent's
exercise of remedies against the Collateral and that other actions or
omissions by the Administrative Agent shall not be deemed to fail to
fulfill such duties solely on account of not being indicated in this
ss.13.3.4. WithouT limitation upon the foregoing, nothing contained in
this ss.13.3.4. shall be construed to grant any rightS to the Borrowers
or to impose any duties on the Administrative Agent that would not have
been granted or imposed by this Agreement or by applicable law in the
absence of this ss.13.3.4.
13.4. DISTRIBUTION OF COLLATERAL PROCEEDS. In the event that, an Event of
Default exists, the Administrative Agent or any Lender, as the case may be,
receives any monies in connection with the enforcement of this Agreement or any
the Security Documents, or otherwise with respect to the realization upon, or
disposition of, any of the Collateral, such monies shall be distributed for
application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Administrative Agent for or in respect of all
reasonable costs, expenses, disbursements and losses which shall have
been incurred or sustained by the Administrative Agent in connection
with the collection of such monies by the Administrative Agent or, the
Administrative Agent's Special Counsel or Lender's Special Counsel, for
the exercise, protection or enforcement by the Administrative Agent,
the Administrative Agent's Special Counsel or Lender's Special Counsel
of all or any of the rights, remedies, powers and privileges of the
Administrative Agent, the Administrative Agent's Special Counsel or
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Lender's Special Counsel under this Agreement or any of the other Loan
Documents or in respect of the Collateral or in support of any
provision of adequate indemnity to the Administrative Agent against any
taxes or liens which by law shall have, or may have, priority over the
rights of the Administrative Agent to such monies;
(b) Second, to all Obligations owing to the Revolving Credit
Lenders and the Administrative Agent (including the making allowance to
take into account for any Obligations not then due and payable (i.e.,
to cash collateralize up to 105% of the Maximum Drawing Amount) and
excluding the Revolving Credit Early Termination Fee, Obligations under
Interest Rate Agreements and Obligations pursuant to subsection (b) of
the definition of Obligations to the extent that they do not relate to
cash management or similar services) in such order or preference as the
Required Revolving Credit Lenders may determine; PROVIDED, HOWEVER,
that (i) distributions shall be made (A) PARI PASSU among Obligations
with respect to the Administrative Agent's Monitoring Fee and all other
Obligations owed to the Revolving Credit Lenders and (B) with respect
to each type of Obligation owing to the Revolving Credit Lenders, such
as interest, principal, reasonable fees and expenses, among the
Revolving Credit Lenders PRO RATA, and (ii) the Administrative Agent
may in its reasonable discretion make proper allowance to take into
account any Obligations not then due and payable;
(c) Third, to all Obligations owing to the Tranche B Lender
(excluding the Tranche B Early Termination Fee);
(d) Fourth, to the Administrative Agent and the Revolving
Credit Lenders on account of Obligations relating to the Revolving
Credit Early Termination Fee;
(e) Fifth, to the Tranche B Lender on account of all other
Obligations owing to the Tranche B Lender;
(f) Sixth, to all other Obligations owing to the Revolving
Credit Lenders; and
(g) Seventh, upon payment and satisfaction in full or other
provisions for payment in full satisfactory to the Lenders and the
Administrative Agent of all of the Obligations, to the payment of any
obligations required to be paid pursuant to ss.9-608(a)(1)(C) or
9-615(a)(3) of the Uniform CommerciaL Code of the Commonwealth of
Massachusetts; and
(h) Seventh, the excess, if any, shall be returned to the
Borrowers or to such other Persons as are entitled thereto.
14. THE ADMINISTRATIVE AGENT.
14.1. AUTHORIZATION.
(a) The Administrative Agent is authorized to take such action
on behalf of each of the Lenders and to exercise all such powers as are
hereunder and under any of the other Loan Documents and any related
documents delegated to the Administrative Agent, together with such
powers as are reasonably incident thereto, including the authority,
without the necessity of any notice to or further consent of the
Lenders, from time to time to take any action with respect to any
Collateral or the Security Documents which may be necessary to perfect,
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maintain perfected or insure the priority of the security interest in
and liens upon the Collateral granted pursuant to the Security
Documents, PROVIDED that no duties or responsibilities not expressly
assumed herein or therein shall be implied to have been assumed by the
Administrative Agent.
(b) The relationship between the Administrative Agent and each
of the Lenders is that of an independent contractor. The use of the
term "ADMINISTRATIVE AGENT" is for convenience only and is used to
describe, as a form of convention, the independent contractual
relationship between the Administrative Agent and each of the Lenders.
Nothing contained in this Agreement nor the other Loan Documents shall
be construed to create an agency, trust or other fiduciary relationship
between the Administrative Agent and any of the Lenders.
(c) As an independent contractor empowered by the Lenders to
exercise certain rights and perform certain duties and responsibilities
hereunder and under the other Loan Documents, the Administrative Agent
is nevertheless a "REPRESENTATIVE" of the Lenders, as that term is
defined in Article 1 of the Uniform Commercial Code, for purposes of
actions for the benefit of the Lenders and the Administrative Agent
with respect to all collateral security and guaranties contemplated by
the Loan Documents. Such actions include the designation of the
Administrative Agent as "SECURED PARTY", "MORTGAGEE" or the like on all
financing statements and other documents and instruments, whether
recorded or otherwise, relating to the attachment, perfection, priority
or enforcement of any security interests, mortgages or deeds of trust
in collateral security intended to secure the payment or performance of
any of the Obligations, all for the benefit of the Lenders and the
Administrative Agent.
14.2. EMPLOYEES AND ADMINISTRATIVE AGENTS. The Administrative Agent may exercise
its powers and execute its duties by or through employees or agents and shall be
entitled to take, and to rely on, advice of counsel concerning all matters
pertaining to its rights and duties under this Agreement and the other Loan
Documents. The Administrative Agent may utilize the services of such Persons as
the Administrative Agent in its sole discretion may reasonably determine, and
all reasonable fees and expenses of any such Persons shall be paid by the
Borrowers.
14.3. NO LIABILITY. Neither the Administrative Agent nor any of its
shareholders, directors, officers or employees nor any other Person assisting
them in their duties nor any agent or employee thereof, shall be liable for any
waiver, consent or approval given or any action taken, or omitted to be taken,
in good faith by it or them hereunder or under any of the other Loan Documents,
or in connection herewith or therewith, or be responsible for the consequences
of any oversight or error of judgment whatsoever, except that the Administrative
Agent or such other Person, as the case may be, may be liable for losses due to
its willful misconduct or gross negligence. The burden of establishing that the
Administrative Agent has at any time failed to act in a reasonable manner in the
exercise of its discretion shall be on the Borrowers and may only be made on
clear and convincing evidence.
14.4. NO REPRESENTATIONS.
14.4.1. GENERAL. The Administrative Agent shall not be responsible for the
execution or validity or enforceability of this Agreement, the Notes,
the Letters of Credit, any of the other Loan Documents or any
instrument at any time constituting, or intended to constitute,
collateral security for the Notes, or for the value of any such
collateral security or for the validity, enforceability or
collectability of any such amounts owing with respect to the Notes, or
for any recitals or statements, warranties or representations made
herein or in any of the other Loan Documents or in any certificate or
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instrument hereafter furnished to it by or on behalf of the Borrowers
or any of their Subsidiaries, or be bound to ascertain or inquire as to
the performance or observance of any of the terms, conditions,
covenants or agreements herein or in any instrument at any time
constituting, or intended to constitute, collateral security for the
Notes or to inspect any of the properties, books or records of the
Borrowers or any of their Subsidiaries. The Administrative Agent shall
not be bound to ascertain whether any notice, consent, waiver or
request delivered to it by the Borrowers or any holder of any of the
Notes shall have been duly authorized or is true, accurate and
complete. The Administrative Agent has not made nor does it now make
any representations or warranties, express or implied, nor does it
assume any liability to the Lenders, with respect to the credit
worthiness or financial conditions of the Borrowers or any of their
Subsidiaries. Each Lender acknowledges that it has, independently and
without reliance upon the Administrative Agent or any other Lender, and
based upon such information and documents as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement.
14.4.2. CLOSING DOCUMENTATION, ETC. For purposes of determining compliance with
the conditions set forth in ss.11, each Lender that has executed this
Agreement shall be deemed to have consented to, approved oR accepted,
or to be satisfied with, each document and matter either sent, or made
available, by the Administrative Agent to such Lender for consent,
approval, acceptance or satisfaction, or required thereunder to be to
be consent to or approved by or acceptable or satisfactory to such
Lender, unless an officer of the Administrative Agent active upon the
Borrowers' account shall have received notice from such Lender not less
than two days prior to the Closing Date specifying such Lender's
objection thereto and such objection shall not have been withdrawn by
notice to the Administrative Agent to such effect on or prior to the
Closing Date.
14.5. PAYMENTS.
14.5.1. PAYMENTS TO ADMINISTRATIVE AGENT. A payment by the Borrowers to the
Administrative Agent hereunder or any of the other Loan Documents for
the account of any Lender shall constitute a payment to such Lender.
The Administrative Agent agrees promptly to distribute to each Lender
such Lender's PRO RATA share of payments received by the Administrative
Agent for the account of the Lenders except as otherwise expressly
provided herein or in any of the other Loan Documents.
14.5.2. DISTRIBUTION BY ADMINISTRATIVE AGENT. If in the reasonable opinion of
the Administrative Agent the distribution of any amount received by it
in such capacity hereunder, under the Notes or under any of the other
Loan Documents might involve it in liability, it may refrain from
making distribution until its right to make distribution shall have
been adjudicated by a court of competent jurisdiction. If a court of
competent jurisdiction shall adjudge that any amount received and
distributed by the Administrative Agent is to be repaid, each Person to
whom any such distribution shall have been made shall either repay to
the Administrative Agent its proportionate share of the amount so
adjudged to be repaid or shall pay over the same in such manner and to
such Persons as shall be determined by such court.
14.5.3. DELINQUENT LENDERS. Notwithstanding anything to the contrary contained
in this Agreement or any of the other Loan Documents, any Revolving
Credit Lender that fails (a) to make available to the Administrative
Agent its PRO RATA share of any Revolving Credit Loan or to purchase
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any Letter of Credit Participation or (b) to comply with the provisions
of ss.16.1 with respect to making dispositions and arrangements witH
the other Revolving Credit Lenders, where such Revolving Credit
Lender's share of any payment received, whether by setoff or otherwise,
is in excess of its PRO RATA share of such payments due and payable to
all of the Revolving Credit Lenders, in each case as, when and to the
full extent required by the provisions of this Agreement, shall be
deemed delinquent (a "DELINQUENT LENDER") and shall be deemed a
Delinquent Lender until such time as such delinquency is satisfied. A
Delinquent Lender shall be deemed to have assigned any and all payments
due to it from the Borrowers, whether on account of outstanding Loans,
Unpaid Reimbursement Obligations, interest, reasonable fees or
otherwise, to the remaining nondelinquent Revolving Credit Lenders for
application to, and reduction of, their respective PRO RATA shares of
all outstanding Loans and Unpaid Reimbursement Obligations. The
Delinquent Lender hereby authorizes the Administrative Agent to
distribute such payments to the nondelinquent Revolving Credit Lenders
in proportion to their respective PRO RATA shares of all outstanding
Revolving Credit Loans and Unpaid Reimbursement Obligations. A
Delinquent Lender shall be deemed to have satisfied in full a
delinquency when and if, as a result of application of the assigned
payments to all outstanding Loans and Unpaid Reimbursement Obligations
of the nondelinquent Lenders, the Revolving Credit Lenders' respective
PRO RATA shares of all outstanding Revolving Credit Loans and Unpaid
Reimbursement Obligations have returned to those in effect immediately
prior to such delinquency and without giving effect to the nonpayment
causing such delinquency.
14.6. HOLDERS OF NOTES. The Administrative Agent may deem and treat the payee of
any Note or the purchaser of any Letter of Credit Participation as the absolute
owner or purchaser thereof for all purposes hereof until it shall have been
furnished in writing with a different name by such payee or by a subsequent
holder, assignee or transferee.
14.7. INDEMNITY. The Lenders ratably agree hereby to indemnify and hold harmless
the Administrative Agent and its affiliates from and against any and all claims,
actions and suits (whether groundless or otherwise), losses, damages, costs,
expenses (including any expenses for which the Administrative Agent or such
affiliate has not been reimbursed by the Borrowers as required by ss.16.2), and
liabilities of every nature and character arising ouT of or related to this
Agreement, the Notes, or any of the other Loan Documents or the transactions
contemplated or evidenced hereby or thereby, or the Administrative Agent's
actions taken hereunder or thereunder, except to the extent that any of the same
shall be directly caused by the Administrative Agent's willful misconduct or
gross negligence.
14.8. ADMINISTRATIVE AGENT AS LENDER. In its individual capacity, FRFI shall
have the same obligations and the same rights, powers and privileges in respect
to its Commitment and the Loans made by it, and as the holder of any of the
Notes and as the purchaser of any Letter of Credit Participations, as it would
have were it not also the Administrative Agent.
14.9. RESIGNATION. The Administrative Agent may resign at any time by giving
sixty (60) days prior written notice thereof to the Lenders and the Borrowers'
Representative. Upon any such resignation, the Required Lenders and the Tranche
B Lender shall have the right to appoint a successor Administrative Agent.
Unless a Default or Event of Default shall have occurred and be continuing, such
successor Administrative Agent shall be reasonably acceptable to the Borrowers.
If no successor Administrative Agent shall have been so appointed by the
Required Lenders and the Tranche B Lender and shall have accepted such
appointment within thirty (30) days after the retiring Administrative Agent's
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giving of notice of resignation, then the retiring Administrative Agent may, on
behalf of the Lenders, appoint a successor Administrative Agent, which shall be
(a) a financial institution having a rating of not less than A or its equivalent
by S&P or (b) following the exercise of the buyout option set forth in ss.3.7,
the Tranche B Lender or any other Person appointed by the Tranche B Lender. Upon
thE acceptance of any appointment as Administrative Agent hereunder by a
successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Administrative Agent's resignation, the provisions of this Agreement
and the other Loan Documents shall continue in effect for its benefit in respect
of any actions taken or omitted to be taken by it while it was acting as
Administrative Agent.
14.10. NOTIFICATION IF DEFAULT EXISTS. Each Lender hereby agrees that, upon
learning of the existence of a Default or an Event of Default, it shall promptly
notify the Administrative Agent thereof. The Administrative Agent hereby agrees
that upon receipt of any notice under this ss.14.10 it shall promptly notify the
other LenderS that the a Default exist.
14.11. DUTIES IN THE CASE OF ENFORCEMENT. In case one of more Events of Default
have occurred and shall be continuing, and whether or not acceleration of the
Obligations shall have occurred, the Administrative Agent shall, if (a) so
requested by the SuperMajority Lenders or, following the Standstill Termination
Date, the Tranche B Lender, and (b) the Lenders have provided to the
Administrative Agent such additional indemnities and assurances against expenses
and liabilities as the Administrative Agent may reasonably request, proceed to
enforce the provisions of this Agreement and the other Security Documents
authorizing the sale or other disposition of all or any part of the Collateral
and exercise all or any such other legal and equitable and other rights or
remedies as it may have in respect of such Collateral. The SuperMajority Lenders
or, following the Standstill Termination Date if the SuperMajority Lenders have
not already done so, the Tranche B Lender, may direct the Administrative Agent
in writing as to the method and the extent of any such sale or other
disposition, the Lenders hereby agreeing to indemnify and hold the
Administrative Agent, harmless from all liabilities incurred in respect of all
actions taken or omitted in accordance with such directions, PROVIDED that the
Administrative Agent need not comply with any such direction to the extent that
the Administrative Agent reasonably believes the Administrative Agent's
compliance with such direction to be unlawful or commercially unreasonable in
any applicable jurisdiction.
14.12. ADMINISTRATIVE AGENT'S OBLIGATIONS AND DUTIES WITH REGARD TO COLLATERAL.
Anything herein to the contrary notwithstanding, the Borrowers shall remain
obligated and liable under each contract or agreement comprised in the
Collateral to be observed or performed by the Borrowers thereunder. Neither the
Administrative Agent nor any Lender shall have any obligation or liability under
any such contract or agreement by reason of or arising out of this Agreement or
the receipt by the Administrative Agent or any Lender of any payment relating to
any of the Collateral, nor shall the Administrative Agent or any Lender be
obligated in any manner to perform any of the obligations of the Borrowers under
or pursuant to any such contract or agreement, to make inquiry as to the nature
or sufficiency of any payment received by the Administrative Agent or any Lender
in respect of the Collateral or as to the sufficiency of any performance by any
party under any such contract or agreement, to present or file any claim, to
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take any action to enforce any performance or to collect the payment of any
amounts which may have been assigned to the Administrative Agent or to which the
Administrative Agent or any Lender may be entitled at any time or times. The
Administrative Agent's sole duty with respect to the custody, safe keeping and
physical preservation of the Collateral in its possession, under ss.9-207 of the
Uniform Commercial Code of thE State or otherwise, shall be to deal with such
Collateral in the same manner as the Administrative Agent deals with similar
property for its own account. In connection with any sale of assets permitted by
this Agreement, the Administrative Agent is authorized to release the liens
granted by the Borrowers to the Administrative Agent.
15. ASSIGNMENT AND PARTICIPATION.
15.1. CONDITIONS TO ASSIGNMENT.
15.1.1 CONDITIONS TO ASSIGNMENT BY REVOLVING CREDIT LENDERS. Except as
provided herein, each Revolving Credit Lender may assign to one or more
commercial banks, other financial institutions or other Persons, all or
a portion of its interests, rights and obligations under this Agreement
(including all or a portion of its Commitment Percentage and Commitment
and the same portion of the Revolving Credit Loans at the time owing to
it, the Notes held by it and its participating interest in the risk
relating to any Letters of Credit); PROVIDED that (a) the
Administrative Agent and, so long as no Default exists, the Borrowers'
Representative, shall have given their prior written consent to such
assignment, such consent not to be unreasonably withheld; except that
the consent of the Administrative Agent or the Borrowers'
Representative shall not be required in connection with any assignment
by a Lender to (i) an existing Lender or (ii) a Lender Affiliate of
such Lender, (b) each such assignment shall be of a constant, and not a
varying, percentage of all the assigning Revolving Credit Lender's
rights and obligations under this Agreement, it being understood that
non-PRO RATA assignments of the Commitments and the Revolving Credit
Loans are not permitted, (c) each assignment (or, in the case of
assignments by a Revolving Credit Lender to its Lender Affiliates, the
aggregate holdings of such Revolving Credit Lender and its Lender
Affiliates after giving effect to such assignments), shall be in an
amount that is not less than $10,000,000 or a whole multiple of
$1,000,000 in excess thereof (or such lesser amount as shall constitute
the aggregate holdings of such Lender and (d) the parties to such
assignment shall execute and deliver to the Administrative Agent, for
recording in the Register (as hereinafter defined), an Assignment and
Acceptance, substantially in the form of EXHIBIT F(I) hereto (an
"ASSIGNMENT AND ACCEPTANCE"), together with any Notes subject to such
assignment. Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five (5) Business
Days after the execution thereof, (y) the assignee thereunder shall be
a party hereto and, to the extent provided in such Assignment and
Acceptance, have the rights and obligations of a Revolving Credit
Lender hereunder, and (z) the assigning Revolving Credit Lender shall,
to the extent provided in such assignment and upon payment to the
Administrative Agent of the registration fee referred to in ss.15.3, be
released from its obligationS under this Agreement. In connection with
each assignment the Assigning Lender agrees to pay to the
Administrative Agent a registration fee in the sum of $3,500.
15.1.2. CONDITIONS TO ASSIGNMENT BY TRANCHE B LENDER. The Tranche B
Lender may assign to one or more commercial banks, other financial
institutions or other Persons, all or a portion of its interests,
rights and obligations under this Agreement; PROVIDED that (a) the
Administrative Agent shall have given its prior written consent to such
assignment, such consent not to be unreasonably withheld; except that
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the consent of the Administrative Agent shall not be required in
connection with any assignment by the Tranche B Lender (i) if an Event
of Default exists, (ii) to an existing Lender or (iii) to a Lender
Affiliate of such Tranche B Lender and (b) the parties to such
assignment shall execute and deliver to the Administrative Agent for
recording in the Register an Assignment and Acceptance substantially in
the form of EXHIBIT F(II).
15.2. CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS; COVENANTS. By
executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows:
(a) other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned thereby free
and clear of any adverse claim, the assigning Lender makes no
representation or warranty, express or implied, and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency
or value of this Agreement, the other Loan Documents or any other
instrument or document furnished pursuant hereto or the attachment,
perfection or priority of any security interest or mortgage,
(b) the assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition
of the Borrowers and their Subsidiaries or any other Person primarily
or secondarily liable in respect of any of the Obligations, or the
performance or observance by the Borrowers and their Subsidiaries or
any other Person primarily or secondarily liable in respect of any of
the Obligations of any of their obligations under this Agreement or any
of the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto;
(c) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements
referred to in ss.7.4 and ss.8.4 and such other documents And
information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance;
(d) such assignee will, independently and without reliance
upon the assigning Lender, the Administrative Agent or any other Lender
and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement;
(e) such assignee appoints and authorizes the Administrative
Agent to take such action as agent on its behalf and to exercise such
powers under this Agreement and the other Loan Documents as are
delegated to the Administrative Agent by the terms hereof or thereof,
together with such powers as are reasonably incidental thereto;
(f) such assignee agrees that it will perform in accordance
with their terms all of the obligations that by the terms of this
Agreement are required to be performed by it as a Lender;
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(g) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance; and
(h) such assignee acknowledges that it has made arrangements
with the assigning Revolving Credit Lender satisfactory to such
assignee with respect to its PRO RATA share of Letter of Credit Fees in
respect of outstanding Letters of Credit.
15.3. NEW NOTES. Upon its receipt of an Assignment and Acceptance executed by
the parties to such assignment, together with each Note subject to such
assignment, the Administrative Agent shall (a) record the information contained
therein in the Loan Account and the Register, and (b) give prompt notice thereof
to the Borrowers and the Lenders (other than the assigning Lender). Within five
(5) Business Days after receipt of such notice from the Assignee, the Borrowers,
at their own expense, shall execute and deliver to the Administrative Agent, in
exchange for each surrendered Note, a new Note to the order of such Assignee in
an amount equal to the amount assumed by such Assignee pursuant to such
Assignment and Acceptance and, if the assigning Revolving Credit Lender has
retained some portion of its obligations hereunder, a new Note to the order of
the assigning Revolving Credit Lender in an amount equal to the amount retained
by it hereunder. Such new Notes shall provide that they are replacements for the
surrendered Notes, shall be in an aggregate principal amount equal to the
aggregate principal amount of the surrendered Notes, shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of the assigned Notes. Within five (5) days of issuance
of any new Notes pursuant to this ss.15.3, the Borrowers shall deliver upon the
request of the Lender an opinion oF counsel, addressed to the Lenders and the
Administrative Agent, relating to the due authorization, execution and delivery
of such new Notes and the legality, validity and binding effect thereof, in form
and substance satisfactory to the Lenders. The surrendered Notes shall be
cancelled and returned to the Borrowers.
15.4. PARTICIPATIONS. Each Lender may sell participations to one or more Lenders
or other entities in all or a portion of such Lender's rights and obligations
under this Agreement and the other Loan Documents; PROVIDED that (a) (i) with
respect to Revolving Credit Lenders, each such participation shall be in an
amount of not less than $5,000,000 and (ii) with respect to the Tranche B
Lender, each such participation shall be in an amount of not less than
$1,000,000, (b) any such sale or participation shall not affect the rights and
duties of the selling Lender hereunder to the Borrowers, (c) the only rights
granted to the participant pursuant to such participation arrangements with
respect to waivers, amendments or modifications of the Loan Documents shall be
the rights to approve waivers, amendments or modifications that (i) with respect
to the Revolving Credit Lenders, would reduce the principal of or the interest
rate on any Loans, extend the term or increase the amount of the Commitment of
such Lender as it relates to such participant, reduce the amount of any Unused
Fee or Letter of Credit Fees to which such participant is entitled or extend any
regularly scheduled payment date for principal or interest and (ii) with respect
to the Tranche B Lender, would reduce the principal, interest or fees payable on
the Tranche B Loan, postpone any scheduled payment of any principal, interest or
fees on account of the Tranche B Loan or release Collateral which would cause an
OverLoan and (d) except for Gordon Brothers, no such sale may be to a person
whose business is the retail sale of jewelry.
15.5. ASSIGNEE OR PARTICIPANT AFFILIATED WITH THE BORROWERS. If any assignee
Lender is an Affiliate of the Borrowers, then any such assignee Lender shall
have no right to vote as a Lender hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or other modifications to any of the Loan Documents or
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for purposes of making requests to the Administrative Agent pursuant to ss.13.1
or ss.13.2, and the determination of the Required Lenders, Required Revolving
Credit Lenders And SuperMajority Lenders shall for all purposes of this
Agreement and the other Loan Documents be made without regard to such assignee
Lender's interest in any of the Loans or Reimbursement Obligations. If any
Lender sells a participating interest in any of the Loans or Reimbursement
Obligations to a participant, and such participant is the Borrowers or an
Affiliate of the Borrowers, then such transferor Lender shall promptly notify
the Administrative Agent of the sale of such participation. A transferor Lender
shall have no right to vote as a Lender hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or modifications to any of the Loan Documents or for
purposes of making requests to the Administrative Agent pursuant to ss.13.1 or
ss.13.2 to the extent that such participation is beneficially owned by the
Borrowers or any Affiliate of the Borrowers, and the determination of the
Required Lenders, Required Revolving Credit Lenders and SuperMajority Lenders
shall for all purposes of this Agreement and the other Loan Documents be made
without regard to the interest of such transferor Lender in the Loans or
Reimbursement Obligations to the extent of such participation.
15.6. MISCELLANEOUS ASSIGNMENT PROVISIONS. Any assigning Lender shall retain its
rights to be indemnified pursuant to ss.16.3 with respect to any claims or
actions arising prior to the date of such assignment. AnythinG contained in this
ss.15 to the contrary notwithstanding, any Lender may at any time pledge or
assign a securitY interest in all or any portion of its interest and rights
under this Agreement (including all or any portion of its Notes) to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to (a) any of the twelve Federal Reserve Banks organized under ss.4
of the Federal Reserve Act, 12 U.S.C. ss.341 and (b) with respect to any Lender
that is a fund that invests in bank loans, to any lender or any trustee for, or
any other representative of, holders of obligations owed or securities issued by
such fund as security for such obligations or securities or any institutional
custodian for such fund or for such lender. Any foreclosure or similar action by
any Person in respect of such pledge or assignment shall be subject to the other
provisions of this ss.15. No such pledge or the enforcement thereof shall
release the pledgor Lender from its obligationS hereunder or under any of the
other Loan Documents, provide any voting rights hereunder to the pledgee
thereof, or affect any rights or obligations of the Borrowers or Administrative
Agent hereunder.
15.7. ASSIGNMENT BY BORROWERS. The Borrowers shall not assign or transfer any of
their rights or obligations under any of the Loan Documents without the prior
written consent of each of the Lenders.
16. PROVISIONS OF GENERAL APPLICATIONS.
16.1. SETOFF. The Borrowers hereby grant to the Administrative Agent and each of
the Lenders a continuing lien, security interest and right of setoff as security
for all liabilities and obligations to the Administrative Agent and each Lender,
whether now existing or hereafter arising, upon and against all deposits,
credits, collateral and property, now or hereafter in the possession, custody,
safekeeping or control of the Administrative Agent or such Lender or any Lender
Affiliate and their successors and assigns or in transit to any of them.
Regardless of the adequacy of any collateral, if any of the Obligations are due
and payable and have not been paid or any Event of Default shall have occurred,
any deposits or other sums credited by or due from any of the Lenders to the
Borrowers and any securities or other property of the Borrowers in the
possession of such Lender may be applied to or set off by such Lender against
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the payment of Obligations and any and all other liabilities, direct, or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, of the Borrowers to such Lender. ANY AND ALL RIGHTS TO
REQUIRE ANY LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER
COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF
SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWERS
ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED. Each of the Lenders
agree with each other Lender that (a) if an amount to be set off is to be
applied to Indebtedness of the Borrowers to such Lender, other than Indebtedness
constituting Obligations owed to such Lender, such amount shall be applied
ratably to such other Indebtedness and to the Obligations owed to such Lender,
and (b) if such Lender shall receive from the Borrowers, whether by voluntary
payment, exercise of the right of setoff, counterclaim, cross action,
enforcement of the claim constituting the Obligation owed to such Lender by
proceedings against the Borrowers at law or in equity or by proof thereof in
bankruptcy, reorganization, liquidation, receivership or similar proceedings, or
otherwise, and shall retain and apply to the payment of Obligations owed to such
Lender any amount in excess of its "ratable portion" of the payments received by
all of the Lenders with respect to the Obligations owed to all of the Lenders,
such Lender will make such disposition and arrangements with the other Lenders
with respect to such excess, either by way of distribution, PRO TANTO assignment
of claims, subrogation or otherwise as shall result in each Lender receiving in
respect of the Obligations owed it its "ratable portion" as contemplated by this
Agreement; PROVIDED that if all or any part of such excess payment is thereafter
recovered from such Lender, such disposition and arrangements shall be rescinded
and the amount restored to the extent of such recovery, but without interest. As
used here in "ratable portion" shall mean the amounts such Lender would have
received if the amounts had been applied in accordance with ss.13.4.
16.2. EXPENSES. The Borrowers jointly and severally agree to pay (a) the
reasonable costs of producing and reproducing this Agreement, the other Loan
Documents and the other agreements and instruments mentioned herein, (b) any
taxes (including any interest and penalties in respect thereto) payable by the
Administrative Agent or any of the Lenders (other than taxes based upon the
Administrative Agent's or any Lender's or any interestholder in a Lender's net
income or profits and other than any taxes referred to in the first sentence of
ss.5.3.2, whicH shall be taken into account in the manner provided by ss.5.3.2)
on or with respect to the transactions contemplateD by this Agreement (the
Borrowers hereby agreeing to indemnify the Administrative Agent and each Lender
with respect thereto), (c) the reasonable fees, expenses and disbursements of
the Administrative Agent's Special Counsel, counsel to the Tranche B Lender or
any local counsel to the Administrative Agent incurred in connection with the
preparation, syndication, administration or interpretation of the Loan Documents
and other instruments mentioned herein, each closing hereunder, any amendments,
modifications, approvals, consents or waivers hereto or hereunder, or the
cancellation of any Loan Document upon payment in full in cash of all of the
Obligations or pursuant to any terms of such Loan Document for providing for
such cancellation, (d) the reasonable fees, expenses and disbursements of the
Administrative Agent, the Tranche B Lender or any of their affiliates incurred
by the Administrative Agent, the Tranche B Lender or any such affiliate in
connection with the preparation, syndication, administration or interpretation
of the Loan Documents and other instruments mentioned herein, including all
title insurance premiums and surveyor, engineering, appraisal and examination
charges, (e) any reasonable fees, costs, expenses and bank charges, including
bank charges for returned checks, incurred by the Administrative Agent in
establishing, maintaining or handling agency accounts, lock box accounts and
other accounts for the collection of any of the Collateral, (f) all reasonable
out-of-pocket expenses (including without limitation the Administrative Agent's
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and the Tranche B Lender's travel costs and reasonable attorneys' fees and
costs, which attorneys may be employees of the Administrative Agent or the
Tranche B Lender, and reasonable consulting, accounting, appraisal, investment
bankruptcy and similar professional fees and charges) incurred by the
Administrative Agent, the Tranche B Lender, the Administrative Agent's Special
Counsel, counsel to the Tranche B Lender or Lender's Special Counsel in
connection with (i) the enforcement of or preservation of rights under any of
the Loan Documents against the Borrowers or any of their Subsidiaries or the
administration thereof after a Default exists and (ii) any litigation,
proceeding or dispute whether arising hereunder or otherwise, in any way related
to any Lender's or the Administrative Agent's relationship with the Borrowers or
any of their Subsidiaries and (g) all reasonable fees, expenses and
disbursements of the Administrative Agent incurred in connection with UCC
searches, UCC filings, intellectual property searches, intellectual property
filings or mortgage recordings. In the Administrative Agent's reasonable
discretion, if the Borrowers fail to do so, the Administrative Agent may
discharge taxes and other encumbrances at any time levied or placed on any of
the Collateral, maintain any of the Collateral, make repairs thereto and pay any
necessary filing fees or insurance premiums. The Borrowers agree to reimburse
the Administrative Agent on demand for all expenditures so made. The
Administrative Agent shall have no obligation to the Borrowers to make any such
expenditures, nor shall the making thereof be construed as a waiver or cure if a
Default exist. The covenants contained in this ss.16.2 shall survive payment or
satisfaction in full of all other obligations. As used herein, "Lenders' SpeciaL
Counsel" shall mean a single counsel, selected by the Required Revolving Credit
Lenders following the occurrence of an Event of Default, to represent the
interests of the Lenders in connection with the enforcement, attempted
enforcement, or preservation of any rights and remedies under this, or any other
Loan Document, as well as in connection with any "workout", forbearance, or
restructuring of the credit facility contemplated hereby.
16.3. INDEMNIFICATION. The Borrowers agree to indemnify and hold harmless the
Administrative Agent, its affiliates and the Lenders from and against any and
all claims, actions and suits whether groundless or otherwise, and from and
against any and all liabilities, losses, damages and reasonable expenses of
every nature and character arising out of this Agreement or any of the other
Loan Documents or the transactions contemplated hereby including, without
limitation, (a) any actual or proposed use by the Borrowers or any of their
Subsidiaries of the proceeds of any of the Loans or Letters of Credit, (b) the
reversal or withdrawal of any provisional credits granted by the Administrative
Agent upon the transfer of funds from lock box, bank agency, concentration
accounts or otherwise under any cash management arrangements with the Borrowers
or any Subsidiary or in connection with the provisional honoring of funds
transfers, checks or other items, (c) any actual or alleged infringement of any
trademark, service mark or similar right of the Borrowers or any of their
Subsidiaries comprised in the Collateral, (d) the Borrowers or any of their
Subsidiaries entering into or performing this Agreement or any of the other Loan
Documents or (e) with respect to the Borrowers and their Subsidiaries and their
respective properties and assets, the violation of any Environmental Law, the
presence, disposal, escape, seepage, leakage, spillage, discharge, emission,
release or threatened release of any Hazardous Substances or any action, suit,
proceeding or investigation brought or threatened with respect to any Hazardous
Substances (including, but not limited to, claims with respect to wrongful
death, personal injury or damage to property), in each case including, without
limitation, the reasonable fees and disbursements of counsel and allocated costs
of internal counsel incurred in connection with any such investigation,
litigation or other proceeding. In litigation, or the preparation therefor, the
Lenders, the Tranche B Lender and the Administrative Agent and its affiliates
shall be entitled to select their own counsel and, in addition to the foregoing
indemnity, the Borrowers agree to pay promptly the reasonable fees and expenses
of such counsel. If, and to the extent that the obligations of the Borrowers
under this ss.16.3 are unenforceable for any reason, the BorrowerS hereby agrees
to make the maximum contribution to the payment in satisfaction of such
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obligations which is permissible under applicable law. The covenants contained
in this ss.16.3 shall survive payment or satisfaction iN full of all other
Obligations. The Borrowers acknowledge and agree that (a) Gordon Brothers has in
the past provided services to the Borrowers and their Subsidiaries and the
Administrative Agent and the Lenders, (b) Gordon Brothers may in the future
provide additional services to the Borrowers and their Affiliates and/or the
Administrative Agent and the Lenders, (c) Gordon Brothers may become a Lender or
a participant in the Loans and (d) the indemnity contained in this ss.16.3 shall
apply to any of the relationships among the Borrowers and theiR Subsidiaries,
the Administrative Agent, the Lenders and Gordon Brothers.
16.4. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.
16.4.1. CONFIDENTIALITY. Each of the Lenders and the Administrative Agent
agrees, on behalf of itself and each of its affiliates, directors,
officers, employees and representatives, to use reasonable precautions
to keep confidential, in accordance with their customary procedures for
handling confidential information of the same nature and in accordance
with safe and sound banking practices, any non-public information
supplied to it by the Borrowers or any of their Subsidiaries pursuant
to this Agreement. The Borrowers and each Lender will maintain, as
confidential, all of the following:(i) proprietary approaches,
techniques, and methods of analysis which are applied by the
Administrative Agent in the administration of the credit facility
contemplated by this Credit Agreement, (ii) proprietary forms and
formats utilized by the Administrative Agent in providing reports to
the Lenders pursuant hereto, which forms or formats are not of general
currency. Notwithstanding the foregoing, nothing herein shall limit the
disclosure of any such information (a) after such information shall
have become public other than through a violation of this ss.16.4, or
becomes available to any of the Lenders or the AdministrativE Agent on
a nonconfidential basis from a source other than the Borrowers, (b) to
the extent required by statute, rule, regulation or judicial process,
(c) to counsel for any of the Lenders or the Administrative Agent, (d)
to bank examiners or any other regulatory authority having jurisdiction
over any Lender or the Administrative Agent, or to auditors or
accountants, (e) to the Administrative Agent, any Lender or any
Financial Affiliate, (f) in connection with any litigation to which any
one or more of the Lenders, the Administrative Agent or any Financial
Affiliate is a party, or in connection with the enforcement of rights
or remedies hereunder or under any other Loan Document, (g) to a Lender
Affiliate or a Subsidiary or affiliate of the Administrative Agent, (h)
to any actual or prospective assignee or participant or any actual or
prospective counterparty (or its advisors) to any swap or derivative
transactions referenced to credit or other risks or events arising
under this Agreement or any other Loan Document so long as such
assignee, participant or counterparty, as the case may be, agrees to be
bound by the provisions of ss.16.4 or (i) with the consent of the
Borrowers' Representative. Moreover, each of the Administrative Agent,
the Lenders and any Financial Affiliate is hereby expressly permitted
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by the Borrowers to refer to any of the Borrowers and their
Subsidiaries in connection with any advertising, promotion or marketing
undertaken by the Administrative Agent, such Lender or such Financial
Affiliate and, for such purpose, the Administrative Agent, such Lender
or such Financial Affiliate may utilize any trade name, trademark, logo
or other distinctive symbol associated with the Borrowers or any of
their Subsidiaries or any of their businesses.
16.4.2. PRIOR NOTIFICATION. Unless specifically prohibited by applicable law or
court order, each of the Lenders and the Administrative Agent shall,
prior to disclosure thereof, notify the Borrowers' Representative of
any request for disclosure of any such non-public information by any
governmental agency or representative thereof (other than any such
request in connection with an examination of the financial condition of
such Lender by such governmental agency) or pursuant to legal process.
16.4.3. OTHER. In no event shall any Lender or the Administrative Agent be
obligated or required to return any materials furnished to it or any
Financial Affiliate by the Borrowers or any of their Subsidiaries. The
obligations of each Lender under this ss.16.4 shall supersede and
replace the obligations of such LendeR under any confidentiality letter
in respect of this financing signed and delivered by such Lender to the
Borrowers prior to the date hereof and shall be binding upon any
assignee of, or purchaser of any participation in, any interest in any
of the Loans or Reimbursement Obligations from any Lender. All
appraisals, inventories, analysis, financial information, and other
materials which the Administrative Agent and the Lenders may obtain,
develop, or receive with respect to the Borrowers are confidential to
the Administrative Agent and the Lenders and that, except as otherwise
provided herein, the Borrowers are not entitled to receipt of any of
such appraisals, inventories, analysis, financial information, and
other materials, nor copies or extracts thereof or therefrom.
16.5. SURVIVAL OF COVENANTS, ETC. All covenants, agreements, representations and
warranties made herein, in the Notes, in any of the other Loan Documents or in
any documents or other papers delivered by or on behalf of the Borrowers or any
of their Subsidiaries pursuant hereto shall be deemed to have been relied upon
by the Lenders and the Administrative Agent, notwithstanding any investigation
heretofore or hereafter made by any of them, and shall survive the making by the
Lenders of any of the Loans and the issuance, extension or renewal of any
Letters of Credit, as herein contemplated, and shall continue in full force and
effect so long as any Letter of Credit or any amount due under this Agreement or
the Notes or any of the other Loan Documents remains outstanding or any Lender
has any obligation to make any Loans or the Administrative Agent has any
obligation to issue, extend or renew any Letter of Credit, and for such further
time as may be otherwise expressly specified in this Agreement. All statements
contained in any certificate or other paper delivered to any Lender or the
Administrative Agent at any time by or on behalf of the Borrowers or any of
their Subsidiaries pursuant hereto or in connection with the transactions
contemplated hereby shall constitute representations and warranties by the
Borrowers or such Subsidiary hereunder.
16.6. NOTICES. Except as otherwise expressly provided in this Agreement, all
notices and other communications made or required to be given pursuant to this
Agreement or the Notes or any Letter of Credit Applications shall be in writing
and shall be delivered in hand, mailed by United States registered or certified
first class mail, postage prepaid, sent by overnight courier, or sent by
telegraph, telecopy, facsimile or telex and confirmed by delivery via courier or
postal service, addressed as follows:
(a) if to the Borrowers, to the Borrowers' Representative at
14051 Northwest 14th Street, Sunrise, FL 33323, Attention: Mr. David
Boudreau, Chief Financial Officer, or at such other address for notice
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as the Borrowers' Representative shall last have furnished in writing
to the Person giving the notice;
(b) if to the Administrative Agent, at 40 Broad Street,
Boston, Massachusetts 02109, USA, Attention: Keith F. Vercauteren,
Assistant Vice President, or such other address for notice as the
Administrative Agent shall last have furnished in writing to the Person
giving the notice with a copy to Robert A.J. Barry, Bingham Dana LLP,
150 Federal Street, Boston, MA 02110; and
(c) if to the Tranche B Lender, at 40 Broad Street, Boston,
Massachusetts 02109, USA, Attention: Mark J. Forti, Director, or such
other address for notice as the Administrative Agent shall last have
furnished in writing to the Person giving the notice with a copy to
Andrew P. Strehle, Brown Rudnick Berlack Israels LLP, One Financial
Center, Boston, MA 02111; and
(d) if to any Lender, at such Lender's address set forth on
SCHEDULE 1 hereto, or such other address for notice as such Lender
shall have last furnished in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (i) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile and
(ii) if sent by registered or certified first-class mail, postage prepaid, on
the third Business Day following the mailing thereof. Any notice or other
communication to be made hereunder or under the Notes or any Letter of Credit
Applications, even if otherwise required to be in writing under other provisions
of this Agreement, the Notes or any Letter of Credit Applications, may
alternatively be made in an electronic record transmitted electronically under
such authentication and other procedures as the parties hereto may from time to
time agree in writing (but not an electronic record), and such electronic
transmission shall be effective at the time set forth in such procedures. Unless
otherwise expressly provided in such procedures, such an electronic record shall
be equivalent to a writing under the other provisions of this Agreement, the
Notes or any Letter of Credit Applications, and such authentication, if made in
compliance with the procedures so agreed by the parties hereto in writing (but
not an electronic record), shall be equivalent to a signature under the other
provisions of this Agreement, the Notes or any Letter of Credit Applications.
16.7. GOVERNING LAW. THIS AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY
PROVIDED THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS
OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF MASSACHUSETTS
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWERS
AGREE THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS
OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE
UPON THE BORROWERS BY MAIL AT THE ADDRESS SPECIFIED IN SS.16.6. THE BORROWERS
HEREBY WAIVE ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE TO THE VENUE OF
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ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT
COURT.
16.8. HEADINGS. The captions in this Agreement are for convenience of reference
only and shall not define or limit the provisions hereof.
16.9. COUNTERPARTS. This Agreement and any amendment hereof may be executed in
several counterparts and by each party on a separate counterpart, each of which
when executed and delivered shall be an original, and all of which together
shall constitute one instrument. In proving this Agreement it shall not be
necessary to produce or account for more than one such counterpart signed by the
party against whom enforcement is sought. Delivery by facsimile by any of the
parties hereto of an executed counterpart hereof or of any amendment or waiver
hereto shall be as effective as an original executed counterpart hereof or of
such amendment or waiver and shall be considered a representation that an
original executed counterpart hereof or such amendment or waiver, as the case
may be, will be delivered.
16.10. ENTIRE AGREEMENT, ETC. The Loan Documents and any other documents
executed in connection herewith or therewith express the entire understanding of
the parties with respect to the transactions contemplated hereby. Neither this
Agreement nor any term hereof may be changed, waived, discharged or terminated,
except as provided in ss.16.12.
16.11. WAIVER OF JURY TRIAL. THE BORROWERS HEREBY WAIVE THEIR RIGHT TO A JURY
TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY OF THE OTHER LOAN DOCUMENTS,
ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH
RIGHTS AND OBLIGATIONS OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING ANY COURSE OF
CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF THE ADMINISTRATIVE AGENT
OR ANY LENDER RELATING TO THE ADMINISTRATION OF THE LOANS OR ENFORCEMENT OF THE
LOAN DOCUMENTS AND AGREES THAT IT WILL NOT SEEK TO CONSOLIDATE ANY SUCH ACTION
WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.
Except as prohibited by law, the Borrowers hereby waive any right they may have
to claim or recover in any litigation referred to in the preceding sentence any
special, exemplary, punitive or consequential damages or any damages other than,
or in addition to, actual damages. The Borrowers (a) certify that no
representative, agent or attorney of any Lender or the Administrative Agent has
represented, expressly or otherwise, that such Lender or the Administrative
Agent would not, in the event of litigation, seek to enforce the foregoing
waivers and (b) acknowledges that the Administrative Agent and the Lenders have
been induced to enter into this Agreement, the other Loan Documents to which it
is a party and the Subordination Documents to which it is a party by, among
other things, the waivers and certifications contained herein.
16.12. CONSENTS, AMENDMENTS, WAIVERS, ETC. Any consent or approval required or
permitted by this Agreement to be given by the Lenders may be given, and any
term of this Agreement, the other Loan Documents or any other instrument related
hereto or mentioned herein may be amended, and the performance or observance by
the Borrowers or any of their Subsidiaries of any terms of this Agreement, the
other Loan Documents or such other instrument or the continuance of any Default
or Event of Default may be waived (either generally or in a particular instance
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and either retroactively or prospectively) with, but only with, the written
consent of the Borrowers and the consent of the Required Lenders.
Notwithstanding the foregoing, no amendment, modification or waiver shall:
(a) without the written consent of the Borrowers'
Representative and each Lender directly affected thereby:
(i) reduce or forgive the principal amount of any
Loans or Reimbursement Obligations, or reduce the rate of
interest on the Notes or the amount of the Unused Fee or
Letter of Credit Fees (other than) interest accruing pursuant
to ss.5.10 following the effective date of anY waiver by the
Required Revolving Credit Lenders of the Default or Event of
Default relating thereto;
(ii) increase the amount of such Lender's Commitment
or extend the expiration date of such Lender's Commitment;
(iii) postpone or extend any regularly scheduled
dates for payments of interest on the Loans or any Fees or
other amounts (other than principal or Reimbursement
Obligations) payable to such Lender (it being understood that
a waiver of the application of the default rate of interest
pursuant to ss.5.10 shall only require the consent of the
Required Revolving Credit Lenders);
(b) without the written consent of the Borrowers'
Representative and each Lender:
(i) postpone or extend the Maturity Date or any other
regularly scheduled dates for payments of principal of the
Loans or Reimbursement Obligations (it being understood that
any vote to rescind any acceleration made pursuant to ss.13.1
of amounts owing with respect to thE Revolving Credit Loans
and other Obligations owing to the Revolving Credit Lenders
shall only require the consent of the SuperMajority Lenders
or, if the acceleration was initiated by the Tranche B Lender,
the Supermajority Lenders and the Tranche B Lender);
(ii) other than pursuant to a transaction permitted
by the terms of this Agreement or to facilitate a liquidation,
release all or substantially all of the Collateral;
(iii) amend the definitions of "Borrowing Base" or
"Availability" or of any definition of any component thereof,
such that more credit would be available to the Borrowers,
based on the same assets, as would have been available to the
Borrowers immediately prior to such amendment, IT BEING
UNDERSTOOD, HOWEVER, that: the foregoing shall not (i) limit
the adjustment by the Administrative Agent of any Reserve in
the Administrative Agent's administration of the Revolving
Credit Loans as otherwise permitted by this Agreement or (ii)
prevent the Administrative Agent, in its administration of the
Revolving Credit Loans, from restoring any component of
Borrowing Base which had been lowered by the Administrative
Agent back to the value of such component, as stated in this
Agreement or to an intermediate value;
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(iv) amend or waive ss.13.4, this ss.16.12 or the
definitions of Required LendeRs, Required Revolving Credit
Lenders, SuperMajority Lenders or Maturity Date;
(v) increase the amount of the Total Commitment;
(c) without the written consent of the Tranche B Lender:
(i) amend, modify or waive ss.ss.3, 10.1, 13.1, 14.9,
15.1.2 or 15.4;
(ii) amend the definitions of "Tranche B Borrowing
Base", "Standstill Termination Date", "Buyout Exercise
Period", "Buyout Exercise Notice", "Buyout Acceptance Notice"
or "Protective OverAdvance";
(iii) change the Tranche B Lender's reporting or
monitoring rights, or the conditions of assignment of the
Tranche B Loan;
(iv) increase the Applicable Margin (other than an
increase to the default rate in accordance with ss.5.10) by
more than two percent (2%); provided that in any event any
increasE in such rate shall result in an equal increase in the
rate of interest applicable to the Tranche B Loan and any
increased or additional fees paid to the Revolving Credit
Lenders (other than fees paid solely to the Administrative
Agent) shall result in pro rata increased or additional fees
paid to the Tranche B Lender;
(v) allow the Total Commitment to exceed $70,000,000;
(vi) amend, modify or waive ss.9.5;
(vii) accelerate the scheduled dates of principal or
interest payments, or the maturity of the Revolving Credit
Loans (other than following a Default), PROVIDED, HOWEVER,
that the foregoing shall not in any way limit the rights of
the Administrative Agent and the Revolving Credit Lenders to
make adjustments to Reserves or otherwise modify the Borrowing
Base and Tranche B Borrowing Base as permitted by this
Agreement;
(d) without the written consent of the Administrative Agent,
amend or waive ss.2.9.2., ss.15, The amount or time of payment of the
Administrative Agent Fee or any Letter of Credit Fees payable for the
Administrative Agent's account or any other provision applicable to the
Administrative Agent.
No waiver shall extend to or affect any obligation not expressly waived or
impair any right consequent thereon. No course of dealing or delay or omission
on the part of the Administrative Agent or any Lender in exercising any right
shall operate as a waiver thereof or otherwise be prejudicial thereto. No notice
to or demand upon the Borrowers shall entitle the Borrowers to other or further
notice or demand in similar or other circumstances. The Administrative Agent may
deem a Lender to have granted its consent or approval of a course of action
proposed by the Administrative Agent unless the Administrative Agent has
received objection for such Lender seven (7) Business Days after notice has been
given to such Lender of the Administrative Agent's request for a consent or
approval of a proposed course of action to be followed by the Administrative
Agent, PROVIDED THAT the Administrative Agent may rely on such passage of time
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as consent by a only if such notice states that consent will be deemed effective
if no objection is received within such time period. Notwithstanding anything
contained in this Agreement to the contrary, the Administrative Agent shall have
the authority to consent to the Borrowers selling, or entering into agreements
to sell, assets of the Borrowers (a) without the consent of the Revolving Credit
Lenders so long as (i) no OverLoan exists, or is projected to exist, upon the
completion of such sale or transfer or (ii) the Borrowers receive, or under the
terms of the agreements are projected to receive, net proceeds from such sales
or transfers (A) at least equal to the amount by which the Borrowing Base will
be decreased as a result of such sale or transfer or (B) sufficient to pay in
full all principal, interest, fees and other amounts due to the Revolving Credit
Lenders and cash collateralize the Maximum Drawing Amount or (b) without the
consent of the Tranche B Lender so long as (i) no OverLoan exists, will exist,
or is projected to exist, upon the completion of such sale or transfer or (ii)
the Tranche B Lender has received a Buyout Exercise Notice with respect to such
sale or transfer and either (A) the Administrative Agent shall not have received
a Buyout Acceptance Notice from the Tranche B Lender within ten (10) days
following the Tranche B Lender's receipt of such Buyout Exercise Notice or (B)
the Tranche B Lender shall have delivered a Buyout Acceptance Notice to the
Administrative Agent, but the Tranche B Lender shall have failed to complete the
assignment contemplated by ss.3.7 within three (3) Business Days following the
Buyout Acceptance Notice.
16.13. POWER OF ATTORNEY.
16.13.1. APPOINTMENT AND POWERS OF ADMINISTRATIVE AGENT. The Borrowers hereby
irrevocably constitute and appoint the Administrative Agent and any
officer or agent thereof, with full power of substitution, as their
true and lawful attorneys-in-fact with full irrevocable power and
authority in the place and stead of the Borrowers or in the
Administrative Agent's own name, for the purpose of carrying out the
terms of this Agreement, to take any and all appropriate action and to
execute any and all documents and instruments that may be necessary or
useful to accomplish the purposes of this Agreement and, without
limiting the generality of the foregoing, hereby gives said attorneys
the power and right, on behalf of the Borrowers, without notice to or
assent by the Borrowers, to do the following:
(a) if a Default exist, generally to sell, transfer,
pledge, make any agreement with respect to or otherwise
dispose of or deal with any of the Collateral in such manner
as is consistent with the Uniform Commercial Code of the State
and as fully and completely as though the Administrative Agent
were the absolute owner thereof for all purposes, and to do,
at the Borrowers' expense, at any time, or from time to time,
all acts and things which the Administrative Agent deems
necessary or useful to protect, preserve or realize upon the
Collateral and the Administrative Agent's security interest
therein, in order to effect the intent of this Agreement, all
no less fully and effectively as the Borrowers might do,
including, without limitation, (i) the filing and prosecuting
of registration and transfer applications with the appropriate
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federal, state or local agencies or authorities with respect
to trademarks, copyrights and patentable inventions and
processes, (ii) upon written notice to the Borrower's
Representative, the exercise of voting rights with respect to
voting securities, which rights may be exercised, if the
Administrative Agent so elects, with a view to causing the
liquidation of assets of the issuer of any such securities and
(iii) the execution, delivery and recording, in connection
with any sale or other disposition of any Collateral, of the
endorsements, assignments or other instruments of conveyance
or transfer with respect to such Collateral; and
(b) to the extent that the Borrowers' authorization
given in ss.6.2 is noT sufficient, to file such financing
statements with respect hereto, with or without the Borrowers'
signature, or a photocopy of this Agreement in substitution
for a financing statement, as the Administrative Agent may
deem appropriate and to execute in the Borrowers' name such
financing statements and amendments thereto and continuation
statements which may require the Borrowers' signature.
16.13.2. RATIFICATION BY BORROWERS. To the extent permitted by law, the
Borrowers hereby ratify all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power
coupled with an interest and is irrevocable.
16.13.3. NO DUTY ON ADMINISTRATIVE AGENT. The powers conferred on the
Administrative Agent hereunder are solely to protect the interests of
the Administrative Agent and the Lenders in the Collateral and shall
not impose any duty upon the Administrative Agent to exercise any such
powers. The Administrative Agent shall be accountable only for the
amounts that it actually receives as a result of the exercise of such
powers, and neither it nor any of its officers, directors, employees or
agents shall be responsible to the Borrowers for any act or failure to
act, except for the Administrative Agent's own gross negligence or
willful misconduct.
16.14. SURETYSHIP WAIVERS BY THE BORROWERS. The Borrowers waive demand, notice,
protest, notice of acceptance of this Agreement, notice of loans made, credit
extended, Collateral received or delivered or other action taken in reliance
hereon and all other demands and notices of any description. With respect to
both the Obligations and the Collateral, the Borrowers assent to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of or failure to perfect any security interest
in any Collateral, to the addition or release of any party or person primarily
or secondarily liable, to the acceptance of partial payment thereon and the
settlement, compromising or adjusting of any thereof, all in such manner and at
such time or times as the Administrative Agent may deem advisable. The
Administrative Agent shall have no duty as to the collection or protection of
the Collateral or any income therefrom, the preservation of rights against prior
parties, or the preservation of any rights pertaining thereto beyond the safe
custody thereof as set forth in ss.14.12. The Borrowers further waive any and
all other suretyship defenses.
16.15. MARSHALLING. Neither the Administrative Agent nor any Lender shall be
required to marshal any present or future collateral security (including but not
limited to the Collateral) for, or other assurances of payment of, the
Obligations or any of them or to resort to such collateral security or other
assurances of payment in any particular order, and all of the rights and
remedies of the Administrative Agent or any Lender hereunder and of the
Administrative Agent or any Lender in respect of such collateral security and
other assurances of payment shall be cumulative and in addition to all other
rights and remedies, however existing or arising. To the extent that it lawfully
may, the Borrowers hereby agree that they will not invoke any law relating to
the marshalling of collateral which might cause delay in or impede the
enforcement of the Administrative Agent's rights and remedies under this
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Agreement or under any other instrument creating or evidencing any of the
Obligations or under which any of the Obligations is outstanding or by which any
of the Obligations is secured or payment thereof is otherwise assured, and, to
the extent that it lawfully may, the Borrowers hereby irrevocably waive the
benefits of all such laws.
16.16. SEVERABILITY. The provisions of this Agreement are severable and if any
one clause or provision hereof shall be held invalid or unenforceable in whole
or in part in any jurisdiction, then such invalidity or unenforceability shall
affect only such clause or provision, or part thereof, in such jurisdiction, and
shall not in any manner affect such clause or provision in any other
jurisdiction, or any other clause or provision of this Agreement in any
jurisdiction.
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IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as a sealed instrument as of the date first set forth above.
"BORROWERS"
MAYOR'S JEWELERS, INC.
By: _______________________________________________
Name:
Title:
MAYOR'S JEWELERS, INC.
By: _______________________________________________
Name:
Title:
JBM RETAIL COMPANY, INC.
By: _______________________________________________
Name:
Title:
JBM VENTURE CO., INC.
By: _______________________________________________
Name:
Title:
MAYOR'S JEWELERS INTELLECTUAL PROPERTY HOLDING COMPANY
By: _______________________________________________
Name:
Title:
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"ADMINISTRATIVE AGENT"
FLEET RETAIL FINANCE INC.
By: _______________________________________________
Name:
Title:
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"REVOLVING CREDIT LENDERS"
FLEET RETAIL FINANCE INC.
By: _______________________________________________
Name:
Title:
NATIONAL CITY COMMERCIAL FINANCE, INC.
By: _______________________________________________
Name:
Title:
WELLS FARGO RETAIL FINANCE, LLC
By: _______________________________________________
Name:
Title:
"TRANCHE B LENDER"
BACK BAY CAPITAL FUNDING LLC
By: _______________________________________________
Name:
Title:
Date: June 18, 2002
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