Exhibit 10(a)
U.S. $135,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of July 9, 2002
Among
THE ELDER-BEERMAN STORES CORP.
as Borrower
-----------
and
THE LENDERS PARTY HERETO
CITIBANK, N.A.
as Issuer
---------
and
CITICORP USA, INC.
as Agent and Swing Loan Bank
----------------------------
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of July 9,
2002, among THE ELDER-BEERMAN STORES CORP., an Ohio corporation (the
"BORROWER"), the financial institutions listed on the signature pages hereof as
lenders hereunder (each individually a "LENDER" and collectively the "LENDERS"),
Citibank, N.A. ("CITIBANK"), as issuer (the "ISSUER"), and CITICORP USA, INC.
("CUSA"), as swing loan bank (in such capacity, the "SWING LOAN Bank") and as
agent for the Lenders, the Issuer and the Swing Loan Bank (in such capacity, the
"AGENT").
W I T N E S S E T H:
WHEREAS, the Borrower is currently party to an Amended and
Restated Credit Agreement, dated as of May 19, 2000 (as amended, supplemented or
otherwise modified to the date hereof, the "EXISTING CREDIT AGREEMENT"), with
the financial institutions party thereto from time to time (the "EXISTING
LENDERS"), Citibank, as issuer (the "EXISTING ISSUER"), and CUSA, as swing loan
bank (the "EXISTING SWING LOAN BANK") and as agent (the "EXISTING AGENT") for
the Existing Lenders, the Existing Issuer and the Existing Swing Loan Bank; and
WHEREAS, immediately prior to the Effective Date, certain of
the Existing Lenders will assign to CUSA, and CUSA will accept the assignment
of, such Existing Lenders' "Commitments", outstanding "Loans" and outstanding
participations in "Letters of Credit" (each as defined in the Existing Credit
Agreement); and
WHEREAS, upon such assignment, the parties to the Existing
Credit Agreement wish to amend and restate in its entirety the Existing Credit
Agreement to reflect, among other things, the addition of new Lenders hereunder
and a reallocation of the Commitments and the outstanding Loans;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1. DEFINED TERMS. As used in this Agreement, the following
terms have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"ACCOUNT" has the meaning specified in the Pledge and Security
Agreement.
"ACCOUNT DEBTOR" has the meaning specified in the Pledge and
Security Agreement.
"ADVANCE RATE" means, at any time, the rate set forth below
opposite the then-applicable time period:
TIME PERIOD ADVANCE RATE
----------- ------------
January 1 - March 31 60%
April 1 - October 31 65%
November 1 - December 15 70%
December 16 - December 31 65%
PROVIDED, HOWEVER, that (a) the foregoing rates may be increased or decreased
from time to time by the Agent in its sole discretion, exercised reasonably, so
long as the Liquidation Value Ratio is not greater than 0.85 to 1.00; and (b)
the foregoing rates only may be increased from time to time upon the approval of
the Agent and all of the Lenders if the Liquidation Value Ratio is greater than
0.85 to 1.00.
"AFFECTED LENDER" has the meaning specified in SECTION 2.19.
"AFFILIATE" means, as to any Person, any other Person which,
directly or indirectly, controls, is controlled by or is under common control
with such Person and includes each officer or director or general partner of
such Person, and each Person who is the beneficial owner of 10% or more of any
class of voting Stock of such Person. For the purposes of this definition,
"control" means the possession of the power to direct or cause the direction of
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
"AGREEMENT" means this Amended and Restated Credit Agreement,
together with all Exhibits and Schedules hereto, as the same may be amended,
supplemented or otherwise modified from time to time.
"APPLICABLE BASE RATE MARGIN" means, as of the date of any
determination, (a) for the six-month period commencing on the Effective Date,
0.75% per annum and (b) thereafter, a rate per annum equal to the rate set forth
below opposite the then applicable Leverage Ratio (determined on the last day of
the most recent Fiscal Quarter for which financial statements have been
delivered pursuant to SECTION 6.10(b) or (c)):
Leverage Applicable Base Rate
Ratio Margin (bps)
----- ------------
greater than or equal to 4.00 75.0
3.50 less than 4.00 50.0
less than 3.50 25.0
"APPLICABLE EURODOLLAR RATE MARGIN" means, as of the date of
any determination, (a) for the six-month period commencing on the Effective
Date, 2.25% per annum and (b) thereafter, a rate per annum equal to the rate set
forth below opposite the then applicable Leverage Ratio (determined on the last
day of the most recent Fiscal
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Quarter for which financial statements have been delivered pursuant to
SECTION 6.10(b) or (c)):
Leverage Applicable Eurodollar
Ratio Margin (Bps)
----- ------------
greater than or equal to 4.00 225.0
3.50 less than 4.00 200.0
less than 3.50 175.0
"APPLICABLE LENDING OFFICE" means, with respect to each
Lender, its Domestic Lending Office in the case of a Base Rate Loan and its
Eurodollar Lending Office in the case of a Eurodollar Rate Loan.
"APPLICABLE MARGIN" means the Applicable Base Rate Margin or
the Applicable Eurodollar Rate Margin, as applicable.
"APPROVED DEPOSIT ACCOUNT" has the meaning specified in the
Pledge and Security Agreement.
"ARRANGER" means Salomon Smith Barney Inc.
"ASSET SALE" means any sale or other disposition, or series of
sales or other dispositions (including, without limitation, by merger or
consolidation, and whether by operation of law or otherwise) of assets made on
or after the Effective Date by the Borrower or any of its Subsidiaries to any
Person, except: (a) sales by the Borrower to Chargit and sales by Chargit to
El-Bee of Chargit Receivables and (b) sales by the Borrower and its Subsidiaries
of Inventory or obsolete or used Equipment in the ordinary course of business.
"ASSET SALE PROCEEDS" means, with respect to any Asset Sale,
the aggregate amount of cash received from time to time by or on behalf of the
Person selling or otherwise disposing of such assets in connection therewith
after deducting therefrom only (a) reasonable expenses incurred directly in
connection with such transaction, including, without limitation, reasonable and
customary brokerage commissions, underwriting fees and discounts, legal and
accounting fees and expenses, finder's fees and other similar fees and
commissions, (b) the amount of taxes payable in connection with or as a result
of such transaction, (c) the amount of any Indebtedness secured by a Lien on
such asset that, by the terms of such Indebtedness, is required to be repaid
upon such disposition and (d) amounts received with respect to the sublease of
any asset to the extent such amounts received are paid to the lessor of such
asset, in each case to the extent, but only to the extent, that the amounts so
deducted are, at the time of receipt of such cash, actually paid to a Person
that is not an Affiliate of the Borrower and are properly attributable to such
transaction or to the asset that is the subject thereof; PROVIDED, HOWEVER, that
Asset Sale Proceeds shall not include any proceeds received from (x) a
Sale/Leaseback Transaction where the property was owned by the Borrower or a
Subsidiary of the Borrower for less than one year or (y) the sale or other
disposition by
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EBWVA of the Real Property located at the corner of Lee Street and Dickinson
Street in Charleston, West Virginia.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance
entered into by a Lender and an Eligible Assignee, and accepted by the Agent, in
substantially the form of EXHIBIT J.
"ATTRIBUTED VALUE" means, at any time, the value of all
Eligible Inventory computed at the lower of cost or market on a first-in,
first-out basis. Unless disputed by the Agent, the most recent Borrowing Base
Certificate delivered to the Agent pursuant to SECTION 6.10(e) shall be prima
facie evidence of such value.
"AVAILABLE CREDIT" means, at any time, an amount equal to (a)
the lower of (i) the then effective Commitments of the Lenders and (ii) the
Borrowing Base at such time, MINUS (b) the sum of (i) the principal amount of
the Loans outstanding at such time and (ii) the Letter of Credit Obligations
outstanding at such time.
"AVERAGE TOTAL DEBT" means, for any period of four consecutive
Fiscal Quarters, the average of the month-end balances of Debt of the Borrower
and its Subsidiaries outstanding during such four Fiscal Quarters determined on
a consolidated basis.
"BASE RATE" means, for any period, a fluctuating interest rate
per annum as shall be in effect from time to time, which rate per annum shall be
equal at all times to the highest of:
(a) the rate of interest announced publicly by Citibank in New
York, New York, from time to time, as Citibank's base rate; and
(b) the sum (adjusted to the nearest 0.25% or, if there is no
nearest 0.25%, to the next higher 0.25%) of (i) 0.50% per annum, PLUS (ii) the
rate per annum obtained by dividing (A) the latest three-week moving average of
secondary market morning offering rates in the United States for three-month
certificates of deposit of major United States money market banks, such
three-week moving average being determined weekly on each Monday (or, if any
such day is not a Business Day, on the next succeeding Business Day) for the
three-week period ending on the previous Friday by Citibank on the basis of such
rates reported by certificate of deposit dealers to and published by the Federal
Reserve Bank of New York or, if such publication shall be suspended or
terminated, on the basis of quotations for such rates received by Citibank from
three New York certificate of deposit dealers of recognized standing selected by
Citibank, by (B) a percentage equal to 100% MINUS the average of the daily
percentages specified during such three-week period by the Board of Governors of
the Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any emergency, supplemental
or other marginal reserve requirement) for Citibank in respect of liabilities
consisting of or including (among other liabilities) three-month U.S. dollar
non-personal time deposits in the United States, PLUS (iii) the average during
such three-week period of the maximum annual assessment rates
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estimated by Citibank for determining the then current annual assessment payable
by Citibank to the Federal Deposit Insurance Corporation (or any successor) for
insuring Dollar deposits in the United States; and
(c) (i) 0.50% per annum PLUS (ii) the Federal Funds Rate.
"BASE RATE LOAN" means any Loan that bears interest based on
the Base Rate.
"BLOCKAGE NOTICE" has the meaning specified in each Deposit
Account Control Agreement.
"BORROWING" means any Revolving Credit Borrowing or Swing Loan
Borrowing.
"BORROWING BASE" means, at any time, (a) the sum of (i) 95% of
the cash on deposit at such time in the Cash Collateral Account and (ii) the
product of the applicable Advance Rate at such time multiplied by the Attributed
Value of Eligible Inventory at such time LESS (b) such reserves as the Agent, in
its sole discretion in accordance with its customary practice, exercised
reasonably, deems appropriate.
"BORROWING BASE CERTIFICATE" means a certificate of the
Borrower substantially in the form of EXHIBIT E.
"BORROWING BASE DEFICIENCY" means, at any time, the failure of
the Borrowing Base to exceed the sum of (a) the then-outstanding Loans PLUS (b)
the then-outstanding Letter of Credit Obligations.
"bps" means basis points (I.E., 0.01%).
"BUSINESS DAY" means a day of the year on which banks are not
required or authorized to close in New York City and, if the applicable Business
Day relates to a Eurodollar Rate Loan, a day on which dealings are also carried
on in the London interbank market.
"CAPITAL EXPENDITURES" means, for any Person for any period,
without duplication, the aggregate of (a) all expenditures by such Person and
its consolidated Subsidiaries, except interest capitalized during construction,
during such period for property, plant or equipment, including, without
limitation, renewals, improvements, replacements and capitalized repairs, that
would be reflected as additions to property, plant or equipment on a
consolidated balance sheet of such Person and its Subsidiaries prepared in
conformity with GAAP, (b) the principal amount of all Indebtedness incurred or
assumed in connection with any such additions to property, plant and equipment.
For the purpose of this definition, the purchase price of equipment that is
acquired simultaneously with the trade-in of existing equipment owned by such
Person or any of its Subsidiaries or with insurance proceeds shall be included
in Capital Expenditures only to the extent of the gross amount of such purchase
price less the credit granted by the seller of such equipment being traded in at
such time or the amount of such proceeds, as
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the case may be and (c) the costs of purchasing software that would be
capitalized on a consolidated balance sheet of such Person and its Subsidiaries
prepared in conformity with GAAP.
"CAPITALIZED LEASE" means, as to any Person, any lease of
property by such Person as lessee that would be capitalized on a balance sheet
of such Person prepared in conformity with GAAP.
"CAPITALIZED LEASE OBLIGATIONS" means, as to any Person, the
capitalized amount of all obligations of such Person or any of its Subsidiaries
under Capitalized Leases, as determined on a consolidated basis in conformity
with GAAP.
"CASH COLLATERAL ACCOUNT" has the meaning specified in SECTION
2.18.
"CASH EQUIVALENTS" means any of the following, to the extent
owned by any Loan Party free and clear of all Liens and having a maturity of not
greater than 90 days from the date of acquisition thereof: (a) readily
marketable direct obligations of the Government of the United States or any
agency or instrumentality thereof or obligations unconditionally guaranteed by
the full faith and credit of the Government of the United States, (b) insured
certificates of deposit of, or time deposits with, any commercial bank that is a
Lender or a member of the Federal Reserve System, issues (or the parent of which
issues) commercial paper rated as described in CLAUSE (c) hereof, is organized
under the laws of the United States or any State thereof and has combined
capital and surplus of at least $250,000,000 or (c) commercial paper in an
aggregate amount of no more than $5,000,000 per issuer outstanding at any time,
issued by any corporation organized under the laws of any State of the United
States and rated at least "Prime-1" (or the then equivalent grade) by Moody's
Investors Service, Inc. or "A-1" (or the then equivalent grade) by Standard &
Poor's Ratings Group.
"CHANGE OF CONTROL" means any one of the following events:
(a) the merger or consolidation of the Borrower with or into
another Person or the merger of another Person with or into the Borrower, or the
sale of all or substantially all the assets of the Borrower to another Person,
and, in the case of any such merger or consolidation, the securities of the
Borrower that are outstanding immediately prior to such transaction and which
represent 100% of the aggregate voting power of the Borrower are changed into or
exchanged for cash, securities or property, unless pursuant to such transaction
such securities are changed into or exchanged for, in addition to any other
consideration, securities of the surviving corporation that represent
immediately after such transaction, at least a majority of the aggregate voting
power of the surviving corporation;
(b) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of
securities representing more than 40% of the total voting power of the Borrower,
except that such person shall be deemed to have "beneficial ownership" of all
shares that such person has the right to
6
acquire, whether such right is exercisable immediately or only after the passage
of time; or
(c) individuals who, on the Effective Date, constitute the
Board of Directors of the Borrower (the "INCUMBENT DIRECTORS") cease for any
reason to constitute at least a majority of the Board of Directors of the
Borrower, PROVIDED that any individual becoming a director subsequent to the
Effective Date whose election or nomination for election was approved by a vote
of at least two-thirds of the Incumbent Directors then in office (either by a
specific vote or by approval of the proxy statement of the Borrower in which
such individual is named as a nominee for director, without objection to such
nomination) shall be an Incumbent Director; PROVIDED, HOWEVER, that no
individual elected or nominated as a director of the Borrower initially as a
result of an actual or threatened election contest with respect to directors or
any other actual or threatened solicitation of proxies or consents by or on
behalf of any Person other than the Board of Directors of the Borrower shall be
deemed to be an Incumbent Director.
"CHARGIT" means The El-Bee Chargit Corp., an Ohio corporation
and a wholly owned Subsidiary of the Borrower.
"CHARGIT RECEIVABLES" means the private-label credit card
Receivables sold or otherwise conveyed by the Borrower to Chargit and by Chargit
to El-Bee pursuant to the Securitization Documents.
"CHATTEL PAPER" has the meaning specified in the Pledge and
Security Agreement.
"CITIBANK" has the meaning specified in the preamble hereto.
"CODE" means the Internal Revenue Code of 1986 (or any
successor legislation thereto), as amended from time to time.
"COLLATERAL" means all property and interests in property and
proceeds thereof now owned or hereafter acquired by any Loan Party in or upon
which a Lien is granted under any of the Collateral Documents.
"COLLATERAL DOCUMENTS" means the Security and Pledge Agreement
and any other document executed and delivered by a Loan Party granting a Lien on
any of its property to secure payment of the Obligations.
"COMMITMENT" means, as to each Lender, the commitment of such
Lender to make Revolving Credit Loans to the Borrower pursuant to SECTION 2.1 in
the aggregate principal amount outstanding not to exceed the amount set forth
opposite such Lender's name on SCHEDULE I hereto under the caption "Commitment,"
as such amount may be reduced or modified pursuant to this Agreement and
"COMMITMENTS" means the aggregate amount of all of the Lenders' Commitments.
"COMMITMENT FEE" has the meaning specified in SECTION 2.3(a).
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"COMPUTATION DATE" has the meaning specified in SECTION
2.17(c).
"CONTINGENT OBLIGATION" means, as applied to any Person, any
direct or indirect liability, contingent or otherwise, of such Person with
respect to any Indebtedness or Contractual Obligation of another Person, if the
purpose or intent of such Person in incurring the Contingent Obligation is to
provide assurance to the obligee of such Indebtedness or Contractual Obligation
that such Indebtedness or Contractual Obligation will be paid or discharged, or
that any agreement relating thereto will be complied with, or that any holder of
such Indebtedness or Contractual Obligation will be protected (in whole or in
part) against loss in respect thereof. Contingent Obligations of a Person
include, without limitation, (a) the direct or indirect guarantee, endorsement
(other than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by such Person of an
obligation of another Person, and (b) any liability of such Person for an
obligation of another Person through any agreement (contingent or otherwise) (i)
to purchase, repurchase or otherwise acquire such obligation or any security
therefor, or to provide funds for the payment or discharge of such obligation
(whether in the form of a loan, advance, stock purchase, capital contribution or
otherwise), (ii) to maintain the solvency or any balance sheet item, level of
income or financial condition of another Person, (iii) to make take-or-pay or
similar payments, if required, regardless of non-performance by any other party
or parties to an agreement, (iv) to purchase, sell or lease (as lessor or
lessee) property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such obligation or to assure the holder
of such obligation against loss or (v) to supply funds to or in any other manner
invest in such other Person (including, without limitation, to pay for property
or services irrespective of whether such property is received or such services
are rendered), if, in the case of any agreement described under CLAUSE (b)(i),
(ii), (iii), (iv) or (v) of this sentence, the primary purpose or intent thereof
is as described in the preceding sentence. The amount of any Contingent
Obligation shall be equal to the amount of the obligation so guaranteed or
otherwise supported.
"CONTRACTUAL OBLIGATION" of any Person means any obligation,
agreement, undertaking or similar provision of any security issued by such
Person or of any agreement, undertaking, contract, lease, indenture, mortgage,
deed of trust or other instrument (excluding a Loan Document) to which such
Person is a party or by which it or any of its property is bound or to which any
of its properties is subject.
"CONTROL ACCOUNT AGREEMENT" has the meaning specified in the
Pledge and Security Agreement.
"CSFB" means Credit Suisse First Boston or any designee
thereof.
"CSFB LEASE AGREEMENTS" means (a) a lease between CSFB and the
Borrower setting forth the terms and conditions pursuant to which CSFB will
lease to the Borrower, and the Borrower will lease from CSFB, the Montgomery
Sale/Leaseback Property (as defined in the definition of "CSFB Sale/Leaseback
Properties" below) and (b) a lease between CSFB and the Borrower setting forth
the terms and conditions pursuant to which CSFB will lease to the Borrower, and
the Borrower will lease from
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CSFB, the Erie Sale/Leaseback Property (as defined in the definition of "CSFB
Sale/Leaseback Properties" below).
"CSFB SALE/LEASEBACK" means the transactions pursuant to which
CSFB acquires the CSFB Sale/Leaseback Properties and leases the CSFB
Sale/Leaseback Properties to the Borrower on terms and conditions set forth in
the CSFB Lease Agreements.
"CSFB SALE/LEASEBACK PROPERTIES" means (a) that certain Dayton
Mall property consisting of an approximately 212,000 square foot retail store
and approximately 15.619 acres located in Montgomery County, Ohio (the
"MONTGOMERY SALE/LEASEBACK PROPERTY") and (b) that certain Millcreek Mall
property consisting of an approximately 119,800 square foot store and
approximately 8.4 acres located in Erie County, Pennsylvania (the "ERIE
SALE/LEASEBACK PROPERTY"), each as more specifically described in (x) that
certain Purchase and Sale Agreement, dated as of February 27, 1998, among
Mercantile Properties, Inc., Mercantile Stores Company, Inc., the Borrower and
Chicago Title Insurance Company and (y) that certain Purchase and Sale
Agreement, dated as of March 3, 1998, between Lazarus PA, Inc. and the Borrower.
"CUSA" has the meaning specified in the preamble hereto.
"DEBT" means the sum of all (a) obligations of the type set
forth in CLAUSES (a) through (g) of the definition of "Indebtedness", including,
without limitation, the principal amount of all outstanding Loans and the amount
of all outstanding Letter of Credit Obligations, but in no event shall Debt
include obligations of the type permitted by SECTION 7.2(b) and (b) Receivables
Securitization Attributed Indebtedness.
"DEFAULT" means any event which with the passing of time or
the giving of notice or both would become an Event of Default.
"DEPOSIT ACCOUNT" has the meaning specified in the Pledge and
Security Agreement.
"DEPOSIT ACCOUNT BANK" has the meaning specified in the Pledge
and Security Agreement.
"DEPOSIT ACCOUNT CONTROL AGREEMENT" has the meaning specified
in the Pledge and Security Agreement.
"DOL" means the United States Department of Labor, or any
successor thereto.
"DOLLARS" and the sign "$" each mean the lawful money of the
United States of America.
"DOMESTIC LENDING OFFICE" means, with respect to any Lender,
the office of such Lender specified as its "Domestic Lending Office" opposite
its name on SCHEDULE
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II or such other office of such Lender as such Lender may from time to time
specify to the Borrower and the Agent.
"DOMESTIC SUBSIDIARY" means any Subsidiary of the Borrower
organized under the laws of any state of the United States of America or the
District of Columbia.
"EBI" means Elder-Beerman Indiana, L.P., an Indiana limited
partnership.
"EBITDA" means, for any Person for any period, the Net Income
(Loss) of such Person for such period taken as a single accounting period PLUS
(a) the sum of the following amounts of such Person and its Subsidiaries for
such period determined on a consolidated basis in conformity with GAAP to the
extent included in the determination of such Net Income (Loss): (i) depreciation
expense, (ii) amortization expense, (iii) Net Interest Expense, (iv) income tax
expense, (v) losses that are characterized as extraordinary items under GAAP
(and other losses on Asset Sales not otherwise included in extraordinary losses
determined on a consolidated basis in conformity with GAAP), (vi) non-recurring
and non-cash writeoffs of deferred and unamortized assets and (vii) non-cash and
recurring charges related to changes in the market value of any interest rate
contract (to the extent not included in Net Interest Expense); LESS (b) the sum
of the following amounts of such Person and its Subsidiaries determined on a
consolidated basis in conformity with GAAP to the extent included in the
determination of such Net Income (Loss): (i) gains that are characterized as
extraordinary items under GAAP (and in the case of the Borrower and its
Subsidiaries, other gains on Asset Sales not otherwise included in extraordinary
gains determined on a consolidated basis in conformity with GAAP), (ii) the Net
Income (Loss) of any other Person that is accounted for by the equity method of
accounting except to the extent of the amount of dividends or distributions paid
to such Person and (iii) income tax benefit.
"EBWVA" means Elder-Beerman West Virginia, Inc., a West
Virginia corporation and a wholly owned Subsidiary of the Borrower.
"EFFECTIVE DATE" means the date on which the conditions set
forth in SECTIONS 3.1 and 3.2 have been satisfied or waived.
"EL-BEE" means The El-Bee Receivables Corporation, a Delaware
corporation and a wholly owned Subsidiary of Chargit.
"ELIGIBLE ASSIGNEE" means (a) a commercial bank organized
under the laws of the United States, or any State thereof, and having total
assets in excess of $5,000,000,000; (b) a commercial bank organized under the
laws of any other country which is a member of the OECD, or a political
subdivision of any such country, and having total assets in excess of
$5,000,000,000, PROVIDED that such bank is acting through a branch or agency
located in the country in which it is organized or another country that is also
a member of the OECD or the Cayman Islands; (c) the central bank of any country
that is a member of the OECD; (d) a corporation organized under the laws of the
United States, or any State thereof, and having total assets in excess of
$3,000,000,000; (e) an insurance company organized under the laws of the United
States, or any State thereof,
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and having total assets in excess of $5,000,000,000; (f) a finance company,
insurance company or other financial institution or fund (whether a corporation,
partnership, trust or other entity) that is engaged in making, purchasing or
otherwise investing in commercial loans in the ordinary course of its business
and having total assets in excess of $3,000,000,000; (g) any Lender; (h) any
Affiliate of any Lender; and (i) if an Event of Default has occurred and is
continuing, "ELIGIBLE ASSIGNEE" shall also mean any Person other than a Person
the substantial portion of whose business competes with the Borrower or any
Subsidiary or Affiliate thereof.
"ELIGIBLE INVENTORY" means the Inventory of the Borrower,
EBWVA and EBI constituting Collateral in which the Agent has a fully perfected,
first-priority security interest and, as the Agent, in its sole discretion
exercised reasonably, deems eligible.
"ENVIRONMENTAL LAWS" means all applicable Requirements of Law,
now or hereafter in effect, and in each case as amended or supplemented from
time to time, relating to the regulation and protection of human health, safety,
the environment or natural resources (including, without limitation, ambient
air, surface water, groundwater, wetlands, land surface or subsurface strata,
wildlife, aquatic species and vegetation). Environmental Laws include, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. Section 9601 ET SEQ.) ("CERCLA");
the Hazardous Material Transportation Act, as amended (49 U.S.C. Section 180 ET
SEQ.); the Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7
U.S.C. Section 136 ET SEQ.); the Resource Conservation and Recovery Act, as
amended (42 U.S.C. Section 6901 ET SEQ.) ("RCRA"); the Toxic Substance Control
Act, as amended (42 U.S.C. Section 7401 ET SEQ.); the Clean Air Act, as amended
(42 U.S.C. Section 740 ET SEQ.); the Federal Water Pollution Control Act, as
amended (33 U.S.C. Section 1251 ET SEQ.); the Occupational Safety and Health
Act, as amended (29 U.S.C. Section 651 ET SEQ.); and the Safe Drinking Water
Act, as amended (42 U.S.C. Section 300f ET SEQ.), and each of their respective
state and local counterparts or equivalents and any transfer of ownership
notification or approval statute, including, without limitation, the Industrial
Site Recovery Act (N.J. Stat. Ann. Section 13:1K-6 ET SEQ.) ("ISRA").
"ENVIRONMENTAL LIABILITIES AND COSTS" means, with respect to
any Person, all liabilities, obligations, responsibilities, Remedial Actions,
losses, damages (including, without limitation, punitive damages, consequential
damages and treble damages), costs and expenses (including, without limitation,
all fees, disbursements and expenses of counsel, experts and consultants and
costs of investigation and feasibility studies), fines, penalties, sanctions and
interest incurred as a result of any claim or demand by any other Person,
whether based in contract, tort, implied or express warranty, strict liability,
criminal or civil statute, whether arising under any Environmental Law, Permit,
order or agreement with any Governmental Authority or other Person, in each case
relating to any environmental, health or safety condition, or to any Release or
threatened Release, and resulting from the past, present or future operations
of, or ownership of property by, such Person or any of its Subsidiaries.
"ENVIRONMENTAL LIEN" means any Lien in favor of any
Governmental Authority for Environmental Liabilities and Costs.
11
"EQUIPMENT" has the meaning specified in the Pledge and
Security Agreement.
"ERISA" means the Employee Retirement Income Security Act of
1974 (or any successor legislation thereto), as amended from time to time.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) under common control, or treated as a single employer, with any
Loan Party or any of its Subsidiaries within the meaning of Section 414 (b),
(c), (m) or (o) of the Code.
"ERISA EVENT" means (a) a Reportable Event with respect to a
Title IV Plan or a Multiemployer Plan; (b) the withdrawal of any Loan Party, any
of its Subsidiaries or any ERISA Affiliate from a Title IV Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer,
as defined in Section 4001(a)(2) of ERISA; (c) the complete or partial
withdrawal of any Loan Party, any of its Subsidiaries or any ERISA Affiliate
from any Multiemployer Plan; (d) notice of reorganization or insolvency of a
Multiemployer Plan; (e) the filing of a notice of intent to terminate a Title IV
Plan or the treatment of a plan amendment as a termination under Section 4041 of
ERISA; (f) the institution of proceedings to terminate a Title IV Plan or
Multiemployer Plan by the PBGC; (g) the failure to make any required
contribution to a Title IV Plan or a Multiemployer Plan; (h) the imposition of a
Lien under Section 412 of the Code on any Loan Party, any of its Subsidiaries or
any ERISA Affiliate; or (i) any other event or condition that might reasonably
be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Title IV Plan
or Multiemployer Plan or the imposition of any liability under Title IV of
ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of
ERISA.
"EUROCURRENCY LIABILITIES" has the meaning specified in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"EURODOLLAR LENDING OFFICE" means, with respect to any Lender,
the office of such Lender specified as its "Eurodollar Lending Office" below its
name on SCHEDULE II (or, if no such office is specified, its Domestic Lending
Office) or such other office of such Lender as such Lender may from time to time
specify in writing to the Borrower and the Agent.
"EURODOLLAR RATE" means, for any Interest Period, an interest
rate per annum equal to the rate per annum obtained by dividing (a) the rate of
interest determined by the Agent to be the average (rounded upward to the
nearest whole multiple of 1/16 of 1% per annum, if such average is not such a
multiple) of the rate per annum at which deposits in Dollars are offered by the
principal office of Citibank in London, England to prime banks in the London
interbank market at 11:00 A.M. (London time) two Business Days before the first
day of such Interest Period in an amount substantially equal to the Eurodollar
Rate Loan of Citibank during such Interest Period and for a
12
period equal to such Interest Period by (b) a percentage equal to (i) 100% MINUS
(ii) the Eurodollar Rate Reserve Percentage for such Interest Period.
"EURODOLLAR RATE LOAN" means any Loan that, for an Interest
Period, bears interest based on the Eurodollar Rate.
"EURODOLLAR RATE RESERVE PERCENTAGE" for any Interest Period
means the reserve percentage applicable two Business Days before the first day
of such Interest Period under regulations issued from time to time by the Board
of Governors of the Federal Reserve System for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for a member bank of the Federal Reserve System in
New York City with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities (or with respect to any other category of liabilities
which includes deposits by reference to which the Eurodollar Rate is determined)
having a term equal to such Interest Period.
"EVENT OF DEFAULT" has the meaning specified in SECTION 8.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time.
"EXISTING AGENT" has the meaning specified in the recitals
hereto.
"EXISTING ISSUER" has the meaning specified in the recitals
hereto.
"EXISTING LENDERS" has the meaning specified in the recitals
hereto.
"EXISTING CREDIT AGREEMENT" has the meaning specified in the
recitals hereto.
"FACILITY" means the aggregate of all of the Commitments.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating
interest rate per annum equal for each day during such period 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 which is a Business Day, the average of the quotations for such day
on such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"FISCAL QUARTER" means a fiscal quarter of the Borrower and
its consolidated Subsidiaries for financial accounting purposes.
"FISCAL YEAR" means the period of 52 or 53 weeks, as the case
may be, ending on the Saturday nearest to January 31 of each calendar year.
"FLEET" means Fleet Retail Finance, Inc.
13
"GAAP" means generally accepted accounting principles in the
United States of America as in effect from time to time set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board, or in such other statements by such
other Person as may be in general use by significant segments of the accounting
profession, that are applicable to the circumstances as of the date of
determination except that, for purposes of ARTICLE V, GAAP shall be determined
on the basis of such principles in effect on the date hereof and consistent with
those used in the preparation of the audited financial statements referred to in
SECTION 4.5.
"GENERAL INTANGIBLES" has the meaning specified in the Pledge
and Security Agreement.
"GOVERNMENTAL AUTHORITY" means any nation, sovereign or
government, any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including any central bank.
"GUARANTORS" means Elder-Beerman Holdings, Inc., Elder-Beerman
Operations, LLC, EBI, Chargit and EBWVA.
"GUARANTY" means the Amended and Restated Guaranty, dated as
of the date hereof, substantially in the form of EXHIBIT G, made by the
Guarantors in favor of the Agent, as amended, supplemented or otherwise modified
from time to time.
"HAZARDOUS MATERIALS" means any substance, material or waste
regulated or forming the basis of liability under any Environmental Law,
including, without limitation, any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos, asbestos containing materials, polychlorinated
biphenyls, radon or any constituent or byproduct of any such substance or waste.
"INDEBTEDNESS" of any Person means, without duplication, (a)
all indebtedness of such Person for borrowed money (including, without
limitation, reimbursement and all other obligations with respect to surety
bonds, letters of credit and bankers' acceptances, whether or not matured) or
for the deferred purchase price of property or services, (b) all obligations of
such Person evidenced by notes, bonds, debentures or similar instruments, (c)
all indebtedness of such Person created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such Person
(even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (d) Capitalized Lease Obligations, (e) all obligations of such Person
to purchase, redeem, retire, defease or otherwise acquire for value any Stock of
such Person, valued, in the case of redeemable preferred stock, at the greater
of its voluntary or involuntary liquidation preference plus related accrued and
unpaid dividends, (f) all obligations of such Person under Interest Rate
Contracts, and (g) all Indebtedness
14
referred to in CLAUSE (a), (b), (c), (d), (e) or (f) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property (including, without
limitation, general intangibles) owned by such Person, even though such Person
has not assumed or become liable for the payment of such Indebtedness provided
that the amount of any such Indebtedness shall not exceed the value of any
property so secured, (h) in the case of the Borrower, the Obligations, (i) all
liabilities of such Person for the return of deposits or payments on account,
(j) all liabilities of such Person under Title IV of ERISA and (k) all
liabilities of such Person that would be shown on a balance sheet of such Person
prepared in conformity with GAAP, including, without limitation, in the case of
the Borrower, the Receivables Securitization Attributable Indebtedness.
"INDEMNIFIED MATTERS" has the meaning specified in SECTION
10.4(b).
"INDEMNITEE" has the meaning specified in SECTION 10.4(b).
"INSTRUMENT" has the meaning specified in the Pledge and
Security Agreement.
"INTERCREDITOR AGREEMENT" means the agreement, substantially
in the form of EXHIBIT F, executed by the Agent, the Borrower, Chargit and the
Trustee, as amended, supplemented or otherwise modified from time to time.
"INTEREST PERIOD" means in the case of any Eurodollar Rate
Loan, (a) initially, the period commencing on the date such Eurodollar Rate Loan
is made or on the date of conversion of a Base Rate Loan to a Eurodollar Rate
Loan and ending one, two or three months thereafter, as selected by the Borrower
in its Notice of Borrowing or Notice of Conversion or Continuation given to the
Agent pursuant to SECTION 2.2 or 2.7 and (b) thereafter, if such Eurodollar Rate
Loan is continued, in whole or in part, as a Eurodollar Rate Loan pursuant to
SECTION 2.7, a period commencing on the last day of the immediately preceding
Interest Period therefor and ending one, two, three or six months thereafter, as
selected by the Borrower in its Notice of Conversion or Continuation given to
the Agent pursuant to SECTION 2.7; PROVIDED, HOWEVER, that all of the foregoing
provisions relating to Interest Periods in respect of Eurodollar Rate Loans are
subject to the following:
(i) if any Interest Period would otherwise end on a
day that is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day, unless, in the
case of Eurodollar Rate Loans only, the result of such
extension would be to extend such Interest Period into another
calendar month, in which event such Interest Period shall end
on the immediately preceding Business Day;
(ii) any Interest Period of one month or more that
begins on the last 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 Business Day of a calendar month;
15
(iii) the Borrower may not select any Interest Period
which ends after the Termination Date; and
(iv) the Borrower may not select any Interest Period
in respect of Loans having an aggregate principal amount of
less than $3,000,000.
"INTEREST RATE CONTRACTS" means interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements, interest rate
insurance and any other agreements or arrangements designed to provide
protection against fluctuations in interest rates.
"INVENTORY" has the meaning specified in the Pledge and
Security Agreement.
"INVESTMENT" has the meaning specified in SECTION 7.5.
"IRS" means the Internal Revenue Service, or any successor
thereto.
"ISSUER" means Citibank or any successor thereto and any other
Lender approved by the Majority Lenders who agrees to issue one or more Letters
of Credit.
"LENDERS" has the meaning specified in the preamble hereof.
"LETTER OF CREDIT" means any letter of credit issued for the
account of the Borrower by an Issuer pursuant to ARTICLE II.
"LETTER OF CREDIT OBLIGATIONS" means, at any time, all
liabilities at such time of the Borrower to all Issuers with respect to Letters
of Credit, whether or not any such liability is contingent, and includes the sum
of (a) the Reimbursement Obligations at such time and (b) the Letter of Credit
Undrawn Amounts at such time.
"LETTER OF CREDIT REIMBURSEMENT AGREEMENT" has the meaning
specified in SECTION 2.16(d).
"LETTER OF CREDIT REQUEST" has the meaning specified in
SECTION 2.16(e).
"LETTER OF CREDIT UNDRAWN AMOUNTS" means, at any time, the
aggregate undrawn face amount of all Letters of Credit outstanding at such time.
"LEVERAGE RATIO" means with respect to any Fiscal Quarter, the
ratio of (a) the Average Total Debt of the Borrower with respect to any Fiscal
Quarter as of the end of such Fiscal Quarter to (b) EBITDA of the Borrower for
the four-Fiscal Quarter period ending at the end of such Fiscal Quarter.
"LIEN" means any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), security interest or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever intended to assure
payment of any Indebtedness or other
16
obligation, including, without limitation, any conditional sale or other title
retention agreement, the interest of a lessor under a Capitalized Lease
Obligation, any financing lease having substantially the same economic effect as
any of the foregoing, and the filing, under the UCC or comparable law of any
jurisdiction, of any financing statement naming the owner of the asset to which
such Lien relates as debtor.
"LIQUIDATION VALUE RATIO" means, at any time, the ratio of the
Advance Rate at such time to the orderly liquidation value of the Borrower's and
its Subsidiaries' Inventory at such time (determined by reference to the most
recent appraisal of such Inventory conducted by a third-party appraiser engaged
by the Agent).
"LOAN" means a Revolving Credit Loan or a Swing Loan.
"LOAN DOCUMENTS" means, collectively, this Agreement, the
Revolving Credit Notes (if any), the Guaranty, the Collateral Documents, the
Intercreditor Agreement, each Letter of Credit Reimbursement Agreement and each
certificate, agreement or document executed by a Loan Party and delivered to the
Agent, the Issuer or any Lender in connection with or pursuant to any of the
foregoing.
"LOAN PARTY" means the Borrower or any of its Subsidiaries
which executes and delivers a Loan Document and "LOAN PARTIES" means all of
them.
"MAJORITY LENDERS" means, at any time, Lenders holding at
least 51% of the then aggregate unpaid principal amount of the Loans and Letter
of Credit Obligations or, if no Loans or Letter of Credit Obligations are then
outstanding, Lenders having at least 51% of the Commitments.
"MATERIAL ADVERSE CHANGE" means a material adverse change in
any of (a) the condition (financial or otherwise), business, performance,
prospects, operations or properties of the Borrower and its Subsidiaries taken
as a whole, (b) the legality, validity or enforceability of any Loan Document,
(c) the perfection or priority of the Liens granted or purported to be granted
by or pursuant to the Loan Documents, (d) the ability of the Borrower to repay
the Obligations or of any Loan Party to perform its obligations under any Loan
Document or (e) the rights and remedies of the Lenders or the Agent under the
Loan Documents; provided, however, that the approximately $14,000,000 adjustment
to goodwill and other intangible assets required by SFAS No. 142 as reflected in
the Borrower's unaudited financial statements dated May 4, 2002 shall not be
deemed a Material Adverse Change.
"MATERIAL ADVERSE EFFECT" means an effect that results in or
causes, or has a reasonable likelihood of resulting in or causing, a Material
Adverse Change.
"MORAINE MORTGAGE" means that certain mortgage, dated March
26, 1990, between the Borrower, as mortgagor, and Principal Mutual Life
Insurance Company, as mortgagee.
17
"MULTIEMPLOYER PLAN" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which any Loan Party, any of its Subsidiaries or
any ERISA Affiliate has any obligation or liability, contingent or otherwise.
"NET INCOME (LOSS)" means, for any Person for any period, the
aggregate net income (or loss) from continuing operations of such Person and its
Subsidiaries for such period, determined on a consolidated basis in conformity
with GAAP.
"NET INTEREST EXPENSE" means, for any Person for any period,
gross interest expense of such Person and its Subsidiaries for such period
determined on a consolidated basis in conformity with GAAP LESS (a) the
following for such Person and its Subsidiaries determined on a consolidated
basis in conformity with GAAP: the sum of (i) interest capitalized during
construction for such period PLUS (ii) interest income (other than in respect of
Chargit Receivables) for such period PLUS (iii) gains for such period on
Interest Rate Contracts (to the extent not included in interest income above and
to the extent not deducted in the calculation of such gross interest expense)
PLUS (b) the following for such Person and its Subsidiaries determined on a
consolidated basis in conformity with GAAP: the sum of (i) losses for such
period on Interest Rate Contracts (to the extent not included in such gross
interest expense) PLUS (ii) the amortization of upfront costs or fees for such
period associated with any interest rate contract (to the extent not otherwise
included in gross interest expense).
"NON-FUNDING LENDER" has the meaning specified in SECTION
2.13(f).
"NON-U.S. LENDER" means each Lender (or the Agent) that is not
a United States person as defined in Section 7701(a)(30) of the Code.
"NOTICE OF BORROWING" has the meaning specified in SECTION
2.2(a).
"NOTICE OF CONVERSION OR CONTINUATION" means a notice in the
form of EXHIBIT C.
"OBLIGATIONS" means the Loans, the Letter of Credit
Obligations and all other advances, debts, liabilities, obligations, covenants
and duties owing by the Borrower to the Agent, any Lender, any Issuer, the Swing
Loan Bank, any Affiliate of any of them or any Indemnitee, of every type and
description, present or future, whether or not evidenced by any note, guaranty
or other instrument, arising under this Agreement or under any other Loan
Document, whether or not for the payment of money, whether arising by reason of
an extension of credit, opening or amendment of a Letter of Credit or payment of
any draft drawn thereunder, loan, guaranty, indemnification, foreign exchange
transaction or in any other manner, whether direct or indirect (including,
without limitation, those acquired by assignment), absolute or contingent, due
or to become due, now existing or hereafter arising and however acquired and all
obligations of the Borrower to Citibank under Interest Rate Contracts. The term
"OBLIGATIONS" includes, without limitation, "Obligations," as defined under the
Existing Credit Agreement and modified by this Agreement, in existence on the
Effective Date, and all interest, charges, expenses, fees, attorneys' fees and
disbursements and any other sum
18
chargeable to the Borrower under this Agreement or any other Loan Document and
all obligations of the Borrower to cash collateralize Letter of Credit
Obligations.
"OPEN YEAR" has the meaning specified in SECTION 4.3(b).
"OTHER TAXES" has the meaning specified in SECTION 2.14(b).
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"PCBS" has the meaning specified in SECTION 4.18(a).
"PENSION PLAN" means an employee pension benefit plan, as
defined in Section 3(2) of ERISA (other than a Multiemployer Plan), which is not
an individual account plan, as defined in Section 3(34) of ERISA, and which any
Loan Party, any of its Subsidiaries or, if subject to Title IV of ERISA, any
ERISA Affiliate maintains, contributes to or has an obligation to contribute to
on behalf of participants who are or were employed by any of them.
"PERMIT" means any permit, approval, authorization, license,
variance or permission required from a Governmental Authority under an
applicable Requirement of Law.
"PERMITTED LIENS" has the meaning specified in SECTION 7.1.
"PERSON" means (a) an individual, partnership, limited
liability company, corporation (including, without limitation, a business
trust), joint stock company, trust, unincorporated association, joint venture or
other entity or (b) a Governmental Authority.
"PLAN" means an employee benefit plan, as defined in Section
3(3) of ERISA, that any Loan Party or any of its Subsidiaries maintains,
contributes to or has an obligation to contribute to on behalf of participants
who are or were employed by any of them.
"PLEDGE AND SECURITY AGREEMENT" means the Amended and Restated
Pledge and Security Agreement, dated as of the date hereof, substantially in the
form of EXHIBIT I, executed by the Borrower and the Guarantors in favor of the
Agent, as amended, supplemented or otherwise modified from time to time.
"POOLING AND SERVICING AGREEMENT" means that certain Pooling
and Servicing Agreement, dated as of December 30, 1997, among El-Bee, Chargit,
as Servicer, and Bankers Trust Company, as trustee, as amended, supplemented or
otherwise modified from time to time.
"PROCEEDS" has the meaning specified in the Pledge and
Security Agreement.
"PURCHASING LENDER" has the meaning specified in SECTION
2.15(a).
19
"QUALIFIED PLAN" means an employee pension benefit plan, as
defined in Section 3(2) of ERISA (other than a Multiemployer Plan), which is
intended to be tax-qualified under Section 401(a) of the Code, and which any
Loan Party, any of its Subsidiaries or any ERISA Affiliate maintains,
contributes to or has an obligation to contribute to on behalf of participants
who are or were employed by any of them.
"RATABLE PORTION" or "RATABLY" means, with respect to any
Lender, the quotient obtained by dividing (a)(i) the Commitment of such Lender
by (ii) the Commitments of all Lenders or (b) if the Commitments have been
terminated, (i) the aggregate amount of outstanding Loans and Letter of Credit
Obligations owed to such Lender by (ii) the aggregate amount of outstanding
Loans and Letter of Credit Obligations owed to all Lenders.
"REAL PROPERTY" means all of those plots, pieces or parcels of
land now owned or hereafter acquired by the Borrower or any of its Subsidiaries
("LAND"), together with the right, title and interest of the Borrower or such
Subsidiary, if any, in and to the streets, the land lying in the bed of any
streets, roads or avenues, opened or proposed, in front of, the air space and
development rights pertaining to any such Land and the right to use such air
space and development rights, all rights of way, privileges, liberties,
tenements, hereditaments and appurtenances belonging or in any way appertaining
thereto, all fixtures, all easements now or hereafter benefiting any such Land
and all royalties and rights appertaining to the use and enjoyment of any such
Land, including, without limitation, all alley, vault, drainage, mineral, water,
oil and gas rights, together with all of the buildings and other improvements
now or hereafter erected on any such Land, and any fixtures appurtenant thereto.
"RECEIVABLES" has the meaning specified in the Pooling and
Servicing Agreement.
"RECEIVABLES SECURITIZATION" means the transactions described
in and contemplated by the Pooling and Servicing Agreement or any successor
arrangement approved by the Agent.
"RECEIVABLES SECURITIZATION ATTRIBUTED INDEBTEDNESS" at any
time shall mean the aggregate amount theretofore paid to El-Bee in respect of
the Receivables sold by Chargit to El-Bee pursuant to the Receivables
Securitization, in each case to the extent the respective underlying Receivables
have not yet been repaid or deemed repaid by the respective account debtor or
repurchased by the Borrower or Chargit (it being the intent of the parties that
the amount of Receivables Securitization Attributed Indebtedness at any time
outstanding approximate as closely as possible the principal amount of
Indebtedness that would be outstanding at such time under the Receivables
Securitization if the same were structured as a secured lending agreement rather
than a purchase agreement).
"REGISTER" has the meaning specified in SECTION 10.7(c).
20
"REIMBURSEMENT OBLIGATIONS" means all matured reimbursement or
repayment obligations of the Borrower to any Issuer with respect to Letters of
Credit pursuant to Letter of Credit Reimbursement Agreements.
"RELEASE" means, as to any Person, any release, spill,
emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration, in each case of any Hazardous Material, into the indoor
or outdoor environment or into or out of any property owned by such Person,
including, without limitation, the movement of contaminants through or in the
air, soil, surface water, ground water or property.
"REMEDIAL ACTION" means all actions required to (a) clean up,
remove, treat or in any other way address contaminants in the indoor or outdoor
environment, (b) prevent the Release or threat of Release or minimize the
further Release of contaminants so they do not migrate or endanger or threaten
to endanger public health or welfare or the indoor or outdoor environment or (c)
perform pre-remedial studies and investigations and post-remedial monitoring and
care.
"REPORTABLE EVENT" means any of the events described in
Section 4043(b) or (c)(1), (2), (3), (5), (6), (8) or (9) of ERISA.
"REQUIREMENT OF LAW" means, as to any Person, the certificate
of incorporation and by-laws or other organizational or governing documents of
such Person, and all federal, state and local laws, rules and regulations, and
all orders, judgments, decrees or other determinations of any Governmental
Authority or arbitrator, applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
"RESPONSIBLE OFFICER" means, with respect to any Person other
than the Borrower, any of the principal executive officers of such Person, and
with respect to the Borrower, any of the officers thereof with the following
titles: (a) President, (b) Chief Operating Officer, (c) Executive Vice President
and Chief Financial Officer, (d) Treasurer, (e) Controller, (f) Divisional Vice
President, Financial Planning & Treasury and (g) Divisional Vice President,
Accounting.
"REVOLVING CREDIT BORROWING" means a borrowing consisting of
Revolving Credit Loans made on the same day by the Lenders ratably according to
their respective Commitments.
"REVOLVING CREDIT LOAN" means a Loan made by a Lender to the
Borrower pursuant to SECTION 2.1.
"REVOLVING CREDIT NOTE" means a promissory note of the
Borrower payable to the order of any Lender in a principal amount equal to the
amount of such Lender's Commitment as originally in effect, in substantially the
form of EXHIBIT A, evidencing the aggregate Indebtedness of the Borrower to such
Lender resulting from the Revolving Credit Loans made by such Lender.
21
"SALE/LEASEBACK TRANSACTION" means an arrangement relating to
property now owned or hereafter acquired whereby the Borrower or a Subsidiary of
the Borrower transfers such property to a Person and the Borrower or a
Subsidiary of the Borrower leases it from such Person.
"SECURED PARTIES" means the Lenders, the Swing Loan Bank, the
Issuer, the Agent and Citibank, as obligee of the Borrower under Interest Rate
Contracts.
"SECURITIZATION DOCUMENTS" means each agreement, document and
instrument entered into by the Borrower or any Subsidiary of the Borrower in
connection with the Receivables Securitization, including, without limitation,
the documents listed on SCHEDULE IV, any promissory note of El-Bee in favor of
Chargit and any promissory note of Chargit in favor of the Borrower, in each
case made in connection therewith.
"SELLING LENDER" has the meaning specified in SECTION 2.15(b).
"SETTLEMENT DATE" has the meaning specified in SECTION
2.17(c).
"SOLVENT" means, with respect to any Person, that the value of
the assets of such Person (both at fair value and present fair saleable value)
is, on the date of determination, greater than the total amount of liabilities
(including, without limitation, contingent and unliquidated liabilities) of such
Person as of such date and that, as of such date, such Person is able to pay all
liabilities of such Person as such liabilities mature and does not have
unreasonably small capital. In computing the amount of contingent or
unliquidated liabilities at any time, such liabilities will be computed at the
amount which, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
"STOCK" means shares of capital stock, beneficial or
partnership interests, participations or other equivalents (regardless of how
designated) of or in a corporation or equivalent Person, whether voting or
non-voting, and includes, without limitation, common stock and preferred stock.
"STOCK EQUIVALENTS" means all securities convertible into or
exchangeable for Stock and all warrants, options or other rights to purchase or
subscribe for any Stock, whether or not presently convertible, exchangeable or
exercisable.
"STORE ACCOUNT LETTER" means a letter agreement, in
substantially the form of EXHIBIT L (with such changes as may be agreed to by
the Agent), executed by the Borrower and/or any Subsidiary and acknowledged and
agreed to by a depository bank.
"SUBSIDIARY" means, with respect to any Person, any
corporation, partnership or other business entity of which an aggregate of 50%
or more of the outstanding Stock having ordinary voting power to elect a
majority of the board of directors, managers, trustees or other controlling
persons, is, at the time, directly or indirectly, owned or controlled by such
Person and/or one or more Subsidiaries of such Person (irrespective of whether,
at the time, Stock of any other class or classes of such
22
entity shall have or might have voting power by reason of the happening of any
contingency).
"SWING LOAN" has the meaning set forth in SECTION 2.17(a).
"SWING LOAN AVAILABLE CREDIT" means the Ratable Portion of the
Available Credit of the Lender that is the Swing Loan Bank.
"SWING LOAN BANK" means CUSA or such other Lender who shall
also be the Agent or who, with the agreement of the Agent, shall agree to act
hereunder as Swing Loan Bank.
"SWING LOAN BORROWING" means a borrowing consisting of a Swing
Loan.
"TAX AFFILIATE" means, as to any Person, (a) any Subsidiary of
such Person and (b) any Affiliate of such Person with which such Person files or
is eligible to file consolidated, combined or unitary tax returns.
"TAX RETURNS" has the meaning specified in SECTION 4.3.
"TAXES" has the meaning specified in SECTION 2.14(a).
"TERMINATION DATE" means the earlier of (a) July 9, 2005 and
(b) the date of termination in whole of the Commitments pursuant to SECTION 2.4
or 8.2.
"TITLE IV PLAN" means a Pension Plan that is covered by Title
IV of ERISA.
"TRANSAMERICA NOTE" means the promissory note, dated March 26,
2002, made by the Borrower in favor of Transamerica Equipment Financial Services
in an original aggregate amount of $3,924,832.80.
"TRUSTEE" has the meaning specified in SECTION 6.15(b).
"UCC" means the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of New York; PROVIDED, HOWEVER, that in
the event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of the Agent's and the other Secured Parties'
security interest in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than the State of New York, the term "UCC"
shall mean the Uniform Commercial Code as in effect in such other jurisdiction
for purposes of the provisions hereof relating to such attachment, perfection or
priority and for purposes of definitions related to such provisions.
"UNFUNDED PENSION LIABILITY" means, as to any Loan Party or
any of its Subsidiaries at any time, the sum of (a) the aggregate amount, if
any, by which the present value of all accrued benefits under each Title IV Plan
of such Loan Party, any of its Subsidiaries or any ERISA Affiliate exceeds the
fair market value of all assets of such
23
Title IV Plan allocable to such benefits in accordance with Title IV of ERISA,
all determined as of the most recent valuation date for each such Title IV Plan
using the actuarial assumptions in effect under such Title IV Plan, (b) the
aggregate amount of withdrawal liability that could be assessed under Section
4063 with respect to each Title IV Plan subject to Section 4063, separately
calculated for each Title IV Plan as of its most recent valuation date and (c)
for a period of five years following a transaction reasonably likely to be
covered by Section 4069 of ERISA, the aggregate amount, if any, of liabilities
(whether or not accrued) that could be avoided by any Loan Party, any of its
Subsidiaries or any ERISA Affiliate as a result of such transaction.
"VOTING STOCK" means Stock of any Person having ordinary power
to vote in the election of members of the board of directors, managers, trustees
or other controlling Persons, of such Person (irrespective of whether, at the
time, Stock of any other class or classes of such entity shall have or might
have voting power by reason of the happening of any contingency).
"WELFARE BENEFIT PLAN" means an employee welfare benefit plan,
as defined in Section 3(1) of ERISA, to which any Loan Party or any of its
Subsidiaries has any obligation or liability, contingent or otherwise.
"WITHDRAWAL LIABILITY" means, as to any Loan Party or any of
its Subsidiaries at any time, the aggregate liability incurred (whether or not
assessed) with respect to all Multiemployer Plans pursuant to Section 4201 of
ERISA or for increases in contributions required to be made pursuant to Section
4243 of ERISA.
"ZANESVILLE BONDS" means the Variable Rate Demand Industrial
Development Revenue Bonds in the original aggregate principal amount of
$4,100,000 issued by the County of Muskingum, Ohio, on March 1, 1985, the
proceeds of which were used to finance the construction of the Borrower's Colony
Square Shopping Center Store located in Zanesville, Ohio.
1.2. COMPUTATION OF TIME PERIODS. In this Agreement, in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding" and the word "through" means "to and including".
1.3. ACCOUNTING TERMS; CHANGES IN GAAP. All accounting terms
not specifically defined herein shall be construed in conformity with GAAP and
all accounting determinations required to be made pursuant hereto shall, unless
expressly otherwise provided herein, be made in conformity with GAAP. Upon any
change in GAAP that would affect in any material respect the calculations
required by ARTICLE V, the Borrower and the Agent agree to negotiate in good
faith to modify ARTICLE V to reflect in such financial ratios and covenants such
changes in GAAP and still maintain the original economic terms of such financial
ratios and covenants as in effect under this Agreement on the date hereof. The
Agent shall promptly notify the Lenders in writing of any negotiated changes to
such financial ratios, covenants and definitions and propose that this Agreement
shall be amended in accordance with the terms of SECTION 10.1 to
24
reflect such changes as may be necessary to maintain the original economic terms
of such financial ratios and covenants.
1.4. CERTAIN TERMS. (a) The words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a
whole, and not to any particular Article, Section, subsection or clause in this
Agreement. References herein to an Exhibit, Schedule, Article, Section,
subsection or clause refer to the appropriate Exhibit or Schedule to, or
Article, Section, subsection or clause in this Agreement.
(b) The terms "Lender," "Issuer," "Swing Loan Bank" and
"Agent" include their respective successors and the term "Lender" includes each
assignee of such Lender who becomes a party hereto pursuant to SECTION 10.7.
ARTICLE II
AMOUNTS AND TERMS OF THE LOANS
2.1. THE REVOLVING CREDIT LOANS. (a) On the terms and subject
to the conditions contained in this Agreement, each Lender severally and not
jointly agrees to make loans (each a "REVOLVING CREDIT LOAN") in Dollars to the
Borrower from time to time on any Business Day during the period from the
Effective Date until the Termination Date in an aggregate principal amount not
to exceed at any time outstanding such Lender's Commitment; PROVIDED, HOWEVER,
that at no time shall any Lender be obligated to make a Revolving Credit Loan in
excess of such Lender's Ratable Portion of the Available Credit. Within the
limits of each Lender's Commitment, amounts prepaid pursuant to SECTION 2.6 may
be reborrowed under this SECTION 2.1.
(b) To the extent that "Loans" and/or participations in
"Letters of Credit" under and as defined in the Existing Credit Agreement are
outstanding on the Effective Date, such "Loans" and/or participations in
"Letters of Credit" shall be deemed to be Loans and/or participations in Letters
of Credit made on the Effective Date, as the case may be, and the Existing
Lenders and the Existing Issuers shall be deemed to have effected such
assignments, on the Effective Date, of such "Loans" and/or participations in
"Letters of Credit" such that, after giving effect thereto, such "Loans" and/or
participations in "Letters of Credit" shall be by each Lender in accordance with
its Commitment on the Effective Date. The assignments of "Loans" and/or
participations in "Letters of Credit" deemed to have been effected pursuant to
this SECTION 2.1(b) need not comply with the provisions of SECTION 10.7(a) and
(b). The Lenders shall make payments among themselves to reflect such deemed
assignments as set forth on SCHEDULE 2.1(b).
(c) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing Indebtedness of the Borrower to such
Lender resulting from each Loan of such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
(d) The Agent shall maintain accounts in accordance with its
usual practice in which it will record (i) the amount of each Loan made and, if
a Eurodollar
25
Rate Loan, the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable by the Borrower to each Lender hereunder
and (iii) the amount of any sum received by the Agent hereunder from the
Borrower and each Lender's share thereof, if applicable.
(e) The entries made in the accounts maintained pursuant to
CLAUSES (c) and (d) of this SECTION 2.1 shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations recorded therein; PROVIDED, HOWEVER, that the failure of any Lender
or the Agent to maintain such accounts or any error therein shall not in any
manner affect the obligations of the Borrower to repay the Loans in accordance
with their terms.
(f) Notwithstanding any other provision of the Agreement, in
the event that any Lender requests that the Borrower execute and deliver a
promissory note or notes payable to such Lender in order to evidence the
Indebtedness owing to such Lender by the Borrower hereunder, the Borrower will
promptly execute and deliver a Revolving Credit Note to such Lender evidencing
any Revolving Loans of such Lender, and the interests evidenced by such note
shall at all times (including after assignment of all or part of such interest)
be evidenced by one or more Revolving Credit Notes payable to the order of the
payee named therein.
2.2. MAKING THE LOANS. (a) Revolving Credit Loans shall be
made pursuant to a Revolving Credit Borrowing. Each Revolving Credit Borrowing
shall be made on notice, given by the Borrower to the Agent not later than 11:00
A.M. (New York City time) on the date of the proposed Revolving Credit
Borrowing; PROVIDED, HOWEVER, that in the case of Eurodollar Rate Loans, the
Borrower shall give notice to the Agent three Business Days prior to the date of
the proposed Revolving Credit Borrowing. Each such notice (a "NOTICE OF
BORROWING") shall be in substantially the form of EXHIBIT B. Revolving Credit
Loans shall be made as Base Rate Loans unless (subject to SECTION 2.11) the
Notice of Borrowing specifies that all or a pro rata portion thereof shall be
Eurodollar Rate Loans; PROVIDED, HOWEVER, that the aggregate of the Eurodollar
Rate Loans for each Interest Period must be in an amount of not less than
$3,000,000 or an integral multiple of $1,000,000 in excess thereof.
(b) Each Swing Loan shall be made upon such notice as the
Swing Loan Bank and the Borrower shall agree. All Swing Loan Borrowings shall be
made as Base Rate Loans.
(c) The Agent shall give to each Lender prompt notice of the
Agent's receipt of a Notice of Borrowing with respect to Revolving Credit Loans
and, if Eurodollar Rate Loans are properly requested in such Notice of
Borrowing, the information required under SECTION 2.9. Each Lender shall, before
1:00 P.M. (New York City time) on the date of the proposed Revolving Credit
Borrowing, make available for the account of its Applicable Lending Office to
the Agent at its address referred to in SECTION 10.2, in immediately available
funds, such Lender's Ratable Portion of such proposed Revolving Credit
Borrowing. After the Agent's receipt of such funds and upon
26
fulfillment of the applicable conditions set forth in ARTICLE III, the Agent
will make such funds available to the Borrower in a bank account maintained by
the Borrower at CUSA.
(d) Each Borrowing shall be in an aggregate amount of not less
than $1,000,000.
(e) Each Notice of Borrowing shall be irrevocable and binding
on the Borrower. In the case of any proposed Borrowing where the related Notice
of Borrowing specifies is to be comprised of Eurodollar Rate Loans, the Borrower
shall indemnify each Lender against any loss, cost or expense incurred by such
Lender as a result of any failure to fulfill on or before the date specified in
such Notice of Borrowing for such proposed Revolving Credit Borrowing the
applicable conditions set forth in ARTICLE III, including, without limitation,
any loss (including, without limitation, loss of anticipated profits), cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Lender to fund any Eurodollar Rate Loan to be made
by such Lender as part of such proposed Borrowing when such Eurodollar Rate
Loan, as a result of such failure, is not made on such date. There shall be no
more than six separate Interest Periods in the aggregate outstanding at any one
time in respect of Eurodollar Rate Loans.
(f) Unless the Agent shall have received notice from a Lender
prior to the date of any proposed Borrowing that such Lender will not make
available to the Agent such Lender's Ratable Portion of such Borrowing, the
Agent may assume that such Lender has made such Ratable Portion available to the
Agent on the date of such Revolving Credit Borrowing in accordance with this
SECTION 2.2 and the Agent may, in reliance upon such assumption, make available
to the Borrower on such date a corresponding amount. If and to the extent that
such Lender shall not have so made such Ratable Portion available to the Agent,
such Lender and the Borrower severally agree to repay to the Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the Agent, at (i) in the case of the Borrower, the interest
rate applicable at the time to the Loans comprising such Borrowing and (ii) in
the case of such Lender, the Federal Funds Rate. If such Lender shall repay to
the Agent such corresponding amount, the amount so repaid shall constitute such
Lender's Loan as part of such Borrowing for purposes of this Agreement. If the
Borrower shall repay to the Agent such corresponding amount, such payment shall
not relieve such Lender of any obligation it may have to the Borrower hereunder.
(g) The failure of any Lender to make the Loan to be made by
it as part of any Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Loan on the date of such Borrowing,
but no Lender shall be responsible for the failure of any other Lender to make
the Loan to be made by such other Lender on the date of any Borrowing.
27
2.3. FEES.
(a) The Borrower shall pay to each Lender a commitment fee
(the "COMMITMENT FEE") computed on the daily unused portion of such Lender's
Commitment from the date hereof until the Termination Date at the rate of 0.375%
per annum, payable (i) quarterly in arrears on the first Business Day of the
month following the close of each calendar quarter during the term of such
Lender's Commitment and (ii) on the Termination Date.
(b) The Borrower has agreed to pay CUSA, Fleet and the
Arranger additional fees, the amount, terms and dates of payment of which are
embodied in a separate letter agreement dated May 24, 2002 among the Borrower,
CUSA, Fleet and the Arranger, as amended, supplemented or otherwise modified
from time to time.
2.4. REDUCTION AND TERMINATION OF THE COMMITMENTS.
(a) The Borrower may, upon at least three Business Days' prior
notice to the Agent, terminate in whole or reduce ratably in part the unused
portions of the Commitments; PROVIDED, HOWEVER, that each partial reduction
shall be in the aggregate amount of not less than $5,000,000 or an integral
multiple of $1,000,000 in excess thereof.
(b) The then current Commitments shall be reduced (and the
Commitment of each Lender shall be reduced by its Ratable Portion of such
amount) on each date determined pursuant to PARAGRAPH (c) below in an amount
equal to (i) as long as no Default or Event of Default shall have occurred and
be continuing (A) with respect to each Asset Sale that includes Eligible
Inventory, an amount equal to the Advance Rate then in effect multiplied by the
Attributable Value of such Eligible Inventory sold, determined on the basis of
the most recent Borrowing Base Certificate and (B) with respect to all other
Asset Sales, (x) 50% of the aggregate amount of the Asset Sale Proceeds received
by any Loan Party or any of its Subsidiaries on or after the Effective Date in
excess of $10,000,000 (up to $15,000,000 in such Assets Sale Proceeds per year)
and (y) 100% of the aggregate amount of any such Asset Sale Proceeds received in
excess of $15,000,000 per year and (ii) following the occurrence of a Default or
an event of Default, 100% of all Asset Sale Proceeds.
(c) If pursuant to PARAGRAPH (b) above the Commitments are to
be reduced as a result of an Asset Sale, such reduction shall be made on the
date of receipt of such Asset Sale Proceeds by any Loan Party.
2.5. REPAYMENT. The Borrower shall repay the entire unpaid
principal amount of the Loans on the Termination Date.
2.6. PREPAYMENTS.
(a) The Borrower may, upon at least one Business Day's prior
notice to the Agent stating the proposed date and aggregate principal amount of
the prepayment, prepay the outstanding principal amount of the Loans in whole or
ratably in part, together
28
with accrued interest to the date of such prepayment on the principal amount
prepaid; PROVIDED, HOWEVER, that any such prepayment shall be applied first to
the Swing Loans outstanding and then to the Revolving Credit Loans outstanding;
and PROVIDED FURTHER that each partial prepayment shall be in an aggregate
principal amount not less than $5,000,000 or integral multiples of $1,000,000 in
excess thereof. Upon the giving of such notice of prepayment, the principal
amount of the Loans specified to be prepaid shall become due and payable on the
date specified for such prepayment. The notice requirement in this SECTION
2.6(a) shall not apply to any application of available funds pursuant to SECTION
2.6(c).
(b) (i) Upon receipt by the Borrower or any Subsidiary of the
Borrower of Asset Sale Proceeds, the Borrower shall forthwith prepay, in an
amount equal to such Asset Sale Proceeds, the Swing Loans outstanding and, if no
Swing Loans are outstanding (determined after the foregoing application), the
Revolving Credit Loans outstanding, together with accrued and unpaid interest
due and payable to the date of such prepayment.
(ii) If at any time (A) the sum of the aggregate principal
amount of the outstanding Swing Loans, Revolving Credit Loans and Letter of
Credit Obligations exceeds the Commitments at such time or (B) a Borrowing Base
Deficiency exists, the Borrower shall forthwith prepay the Swing Loans then
outstanding in an amount equal to such excess, together with accrued and unpaid
interest thereon, and, if there are no Swing Loans outstanding or if such
prepayment does not eliminate such excess, the Revolving Credit Loans then
outstanding to the extent necessary to eliminate such excess, together with
accrued and unpaid interest thereon, and if no Revolving Credit Loans are then
outstanding, the Borrower shall forthwith cash collateralize such excess by
paying to the Agent immediately available funds in the amount of such excess,
which funds shall be held by the Agent as cash collateral on terms satisfactory
to the Agent as long as and to the extent such excess exists.
(c) The Borrower agrees that all available funds in the Cash
Collateral Account shall be applied (i) FIRST, to accrued and unpaid interest on
the Loans to the extent then due and payable, (ii) NEXT, pro rata, to the amount
of the Swing Loans and any Reimbursement Obligations then outstanding, (iii)
NEXT, to the outstanding principal amount of the Revolving Credit Loans and
Loans deemed to be made by the Lenders pursuant to SECTION 2.16(m) and (iv)
LAST, to any other Obligations then due and payable, then on any Business Day
that any funds are on deposit in the Cash Collateral Account and no Default or
Event of Default has occurred, the Borrower may direct the Agent to disburse
such funds to the Borrower's disbursement account. The Borrower shall utilize
funds on deposit in the Cash Collateral Account that are available to it
pursuant to the terms hereof prior to requesting Loans to be made hereunder.
2.7. CONVERSION/CONTINUATION OPTION. The Borrower may elect
(a) at any time to convert any Base Rate Loans or any portion thereof to
Eurodollar Rate Loans or (b) at the end of any Interest Period with respect
thereto, to convert any Eurodollar Rate Loans or any portion thereof into Base
Rate Loans, or to continue such Eurodollar Rate Loans or any portion thereof for
an additional Interest Period; PROVIDED, HOWEVER,
29
that the aggregate amount of the Eurodollar Loans for each Interest Period
therefor must be in the amount of $3,000,000 or an integral multiple of
$1,000,000 in excess thereof. Each conversion or continuation shall be allocated
among the Loans of all Lenders in accordance with their Ratable Portions. Each
such election shall be stated in a notice substantially in the form of EXHIBIT C
(a "NOTICE OF CONVERSION OR CONTINUATION") and shall be made by the Borrower
giving the Agent at least three Business Days' prior written notice thereof
specifying (x) the amount and type of conversion or continuation, (y) in the
case of a conversion to or a continuation of Eurodollar Rate Loans, the Interest
Period therefor and (z) in the case of a conversion, the date of conversion
(which date shall be a Business Day and, if a conversion from Eurodollar Rate
Loans, shall also be the last day of the Interest Period therefor). The Agent
shall promptly notify each Lender of its receipt of a Notice of Conversion or
Continuation and of the contents thereof. Notwithstanding the foregoing, no
conversion in whole or in part of Base Rate Loans to Eurodollar Rate Loans, and
no continuation in whole or in part of Eurodollar Rate Loans upon the expiration
of any Interest Period therefor, shall be permitted at any time at which an
Event of Default shall have occurred and be continuing. If, within the time
period required under the terms of this SECTION 2.7, the Agent does not receive
a Notice of Conversion or Continuation from the Borrower containing a permitted
election to continue any Eurodollar Rate Loans for an additional Interest Period
or to convert any such Loans, then, upon the expiration of the Interest Period
therefor, such Loans will be automatically converted to Base Rate Loans. Each
Notice of Conversion or Continuation shall be irrevocable.
2.8. INTEREST. The Borrower shall pay interest on the unpaid
principal amount of each Loan from the date thereof until the principal amount
thereof shall be paid in full, at the following rates per annum:
(a) For Base Rate Loans, at a rate per annum equal at all
times to the Base Rate in effect from time to time PLUS the Applicable Base Rate
Margin, payable quarterly in arrears on the first day of each Fiscal Quarter, on
the Termination Date and on the date any Base Rate Loan is paid in full;
PROVIDED, HOWEVER, that during the continuance of an Event of Default, interest
shall be payable on demand and all Base Rate Loans shall bear interest at a rate
per annum equal at all times to 2.0% per annum above the Base Rate in effect
from time to time PLUS the Applicable Base Rate Margin.
(b) For Eurodollar Rate Loans, at a rate per annum equal at
all times during the applicable Interest Period for each Eurodollar Rate Loan to
the sum of the Eurodollar Rate for such Interest Period and, if such Interest
Period has a duration of more than three months, on each day during such
Interest Period occurring every three months from the first day of such Interest
Period, PLUS the Applicable Eurodollar Rate Margin in effect on the first day of
such Interest Period, payable on the last day of such Interest Period, on the
Termination Date and on the date any Eurodollar Rate Loan is paid in full;
PROVIDED, HOWEVER, that during the continuance of an Event of Default, all
Eurodollar Rate Loans shall bear interest, payable on demand, at a rate per
annum equal at all times to 2.0% per annum above the Eurodollar Rate in effect
from time to time PLUS the Applicable Eurodollar Rate Margin until the maturity
of the Loans or the end of such Interest Period, whichever occurs first, and
thereafter at the greater of (x) 2.0% per
30
annum above the Base Rate in effect from time to time and (y) 2.0% per annum
above the rate per annum required to be paid on such Loan immediately prior to
the date on which such Event of Default occurred.
2.9. INTEREST RATE DETERMINATION AND PROTECTION. (a) The
Eurodollar Rate for each Interest Period for Eurodollar Rate Loans shall be
determined by the Agent two Business Days before the first day of such Interest
Period in the case of Eurodollar Rate Loans.
(b) The Agent shall give prompt notice to the Borrower and the
Lenders of the applicable interest rate determined by the Agent for purposes of
SECTION 2.9(a).
(c) If, with respect to Eurodollar Rate Loans, the Majority
Lenders notify the Agent that the Eurodollar Rate for any Interest Period
therefor will not adequately reflect the cost to such Majority Lenders of making
such Loans or funding or maintaining their respective Eurodollar Rate Loans for
such Interest Period, the Agent shall forthwith so notify the Borrower and the
Lenders, whereupon:
(i) each Eurodollar Rate Loan will automatically, on the
last day of the then existing Interest Period therefor, convert into a Base Rate
Loan; and
(ii) the obligations of the Lenders to make Eurodollar
Rate Loans or to convert Base Rate Loans into Eurodollar Rate Loans shall be
suspended until the Agent shall notify the Borrower that such Lenders have
determined that the circumstances causing such suspension no longer exist.
(d) Any change in the Applicable Margin shall be based on the
Leverage Ratio on the last day of each Fiscal Quarter for which the Borrower
delivers financial statements and certificates pursuant to SECTION 6.10(b) and
shall take effect on the third Business Day following receipt by the Agent of
such financial statements and certificates in the case of Base Rate Loans and on
the first day of the next Interest Period commencing on or after such third
Business Day in the case of Eurodollar Rate Loans.
2.10. INCREASED COSTS. If, due to either (a) the introduction
of or any change in or in the interpretation of any law or regulation (other
than any change by way of imposition or increase of reserve requirements
included in determining the Eurodollar Rate Reserve Percentage) or (b)
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), there shall be
any increase in the cost to any Lender of agreeing to make or making, funding or
maintaining any Eurodollar Rate Loans (excluding for purposes of this SECTION
2.10 any such increased costs resulting from (x) Taxes or Other Taxes (as to
which SECTION 2.14 shall govern) and (y) changes in the basis of taxation of
overall net income or overall gross income by the United States or by the
foreign jurisdiction or state under the laws of which such Lender is organized
or has its Applicable Lending Office or any political subdivision thereof), then
the Borrower shall from time to time, upon demand by such Lender (with a copy of
such demand to the Agent), pay to the Agent for the account
31
of such Lender additional amounts sufficient to compensate such Lender for such
increased cost. Such demand shall be accompanied by a statement of the amount of
such compensation and include a summary of the basis for such demand. A
certificate as to the amount of such increased cost, submitted to the Borrower
and the Agent by such Lender, shall be conclusive and binding for all purposes,
absent manifest error. If the Borrower so notifies the Agent within five
Business Days after any Lender notifies the Borrower of any increased cost
pursuant to the foregoing provisions of this SECTION 2.10, the Borrower may
either (a) prepay in full all Eurodollar Rate Loans, as the case may be, of such
Lender then outstanding in accordance with SECTION 2.6(a) and, additionally,
reimburse such Lender for such increased cost in accordance with this SECTION
2.10 or (b) convert all Eurodollar Rate Loans, as the case may be, of all
Lenders then outstanding into Base Rate Loans in accordance with SECTION 2.7
and, additionally, reimburse such Lender for such increased cost in accordance
with this SECTION 2.10.
2.11. ILLEGALITY. Notwithstanding any other provision of this
Agreement, if the introduction of or any change in or in the interpretation of
any law or regulation shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender or its
Eurodollar Lending Office to make Eurodollar Rate Loans or to continue to fund
or maintain Eurodollar Rate Loans, then, on notice thereof and demand therefor
by such Lender to the Borrower through the Agent, (a) the obligation of such
Lender to make or to continue Eurodollar Rate Loans and to convert Base Rate
Loans into Eurodollar Rate Loans shall terminate and (b) the Borrower shall
forthwith prepay in full all Eurodollar Rate Loans of such Lender then
outstanding, together with accrued and unpaid interest thereon, unless the
Borrower, within five Business Days of such notice and demand, converts all
Eurodollar Rate Loans of all Lenders then outstanding into Base Rate Loans;
PROVIDED, HOWEVER, that to the extent permitted by law, the Borrower may defer
such prepayment or conversion to the end of the applicable Interest Period.
2.12. CAPITAL ADEQUACY. If (a) the introduction of or any
change in or in the interpretation of any law or regulation, (b) compliance with
any Requirement of Law, or (c) compliance with any guideline or request from any
central bank or other Governmental Authority (whether or not having the force of
law) affects or would affect the amount of capital required or expected to be
maintained by any Lender or any corporation controlling any Lender and such
Lender reasonably determines that such amount is based upon the existence of
such Lender's Commitments, Loans and commitments in respect of Letters of Credit
and its other commitments and loans of such type, including, without limitation,
its other commitments in respect of letters of credit (or similar contingent
obligations), then, upon demand by such Lender (with a copy of such demand to
the Agent), the Borrower shall pay to the Agent for the account of such Lender,
from time to time as specified by such Lender, additional amounts sufficient to
compensate such Lender in the light of such circumstances, to the extent that
such Lender reasonably determines such increase in capital to be allocable to
the existence of any or all of such Lender's Commitments, Loans and agreements
herein with respect to Letters of Credit. Such demand shall be accompanied by a
statement as to the amount of such compensation and shall include a summary of
the basis for such demand. A certificate as
32
to such amounts submitted to the Borrower and the Agent by such Lender shall be
conclusive and binding for all purposes absent manifest error.
2.13. PAYMENTS AND COMPUTATIONS. (a) The Borrower shall make
each payment hereunder and under the Revolving Credit Notes, if any, not later
than 1:00 P.M. (New York City time) on the day when due, in Dollars, to the
Agent at its address referred to in SECTION 10.2 in immediately available funds
without set-off or counterclaim. The Agent will promptly thereafter cause to be
distributed immediately available funds relating to the payment of principal or
interest or fees (other than amounts payable pursuant to SECTIONS 2.10, 2.11,
2.12, 2.14, 2.16 and 2.17) to the Lenders, in accordance with the respective
amounts owed to each, for the account of their respective Applicable Lending
Offices, and like funds relating to the payment of any other amount payable to
any Lender to such Lender for the account of its Applicable Lending Office, in
each case to be applied in accordance with the terms of this Agreement. Payment
received by the Agent after 1:00 P.M. (New York City time) shall be deemed to be
received on the next Business Day.
(b) The Borrower hereby authorizes each Lender, if and to the
extent payment owed to such Lender is not made when due hereunder or under any
Loan held by such Lender, to charge from time to time against any or all of the
accounts of the Borrower with such Lender any amount so due.
(c) All computations of interest based on the Base Rate, the
Eurodollar Rate or the Federal Funds Rate and of fees shall be made by the Agent
on the basis of a year of 360 days, in each case for the actual number of days
occurring in the period for which such interest and fees are payable. Each
determination by the Agent of an interest rate under this Agreement shall be
conclusive and binding for all purposes, absent manifest error.
(d) Whenever any payment under this Agreement or under the
Revolving Credit Notes, if any, shall be stated to be due on a day other than a
Business Day, such payment shall be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
payment of interest or fees, as the case may be; PROVIDED, HOWEVER, that if such
extension would cause payment of interest on or principal of any Eurodollar Rate
Loan to be made in the next calendar month, such payment shall be made on the
next preceding Business Day.
(e) Unless the Agent shall have received notice from the
Borrower prior to the date on which any payment is due under this Agreement to
the Lenders that the Borrower will not make such payment in full, the Agent may
assume that the Borrower has made such payment in full to the Agent on such date
and the Agent may, in reliance upon such assumption, cause to be distributed to
each Lender on such due date an amount equal to the amount then due such Lender.
If and to the extent the Borrower shall not have so made such payment in full to
the Agent, each Lender shall repay to the Agent forthwith on demand such amount
distributed to such Lender together with accrued and unpaid interest thereon for
each day from the date such amount is distributed
33
to such Lender until the date such Lender repays such amount to the Agent at
the Federal Funds Rate.
(f) If any Lender (a "NON-FUNDING LENDER") has (i) failed to
make a Revolving Credit Loan required to be made by it hereunder or (ii) given
notice to the Borrower or the Agent that it will not make, or that it has
disaffirmed or repudiated any obligation to make, Revolving Credit Loans, (A)
any payment made on account of the principal of the Revolving Credit Loans
outstanding shall be made as follows:
(x) in the case of any such payment made on any date when
due and to the extent that, in the determination of the Agent,
the Borrower would be able, under the terms and conditions
hereof, to reborrow the amount of such payment under the
Commitments and to satisfy any applicable conditions precedent
set forth in SECTION 3.3 to such reborrowing, such payment
shall be made on account of the outstanding Revolving Credit
Loans held by the Lenders other than the Non-Funding Lender
pro rata according to the respective outstanding principal
amounts of the Revolving Credit Loans of such Lenders;
(y) otherwise, such payment shall be made on account of
the outstanding Revolving Credit Loans held by the Lenders pro
rata according to the respective outstanding principal amounts
of such Revolving Credit Loans; and
(B) any payment made on account of interest on the Revolving Credit Loans shall
be made pro rata according to the respective amounts of accrued and unpaid
interest due and payable on the Revolving Credit Loans with respect to which
such payment is being made.
2.14. TAXES. (a) Any and all payments by the Borrower under
each Loan Document shall be made free and clear of, and without deduction for,
any and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the case
of each Lender and the Agent, taxes measured by its net income, and franchise
taxes imposed on it, by the jurisdiction under the laws of which such Lender or
the Agent (as the case may be) is organized or any political subdivision thereof
and, in the case of each Lender, taxes measured by its net income, and franchise
taxes imposed on it, by the jurisdiction of such Lender's Applicable Lending
Office or any political subdivision thereof (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "TAXES"). If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder to any Lender
or the Agent (i) the sum payable shall be increased as may be necessary so that
after making all required deductions (including, without limitation, deductions
applicable to additional sums payable under this SECTION 2.14) such Lender or
the Agent (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall make such
deductions, (iii) the Borrower shall pay the full amount deducted to the
relevant taxing authority or other authority in accordance with applicable
34
law and (iv) the Borrower shall deliver to the Agent evidence of such payment to
the relevant taxation or other authority.
(b) In addition, the Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies of the United States or any political subdivision thereof or
any applicable foreign jurisdiction which arise from any payment made under any
Loan Document or from the execution, delivery or registration of, or otherwise
with respect to, any Loan Document (collectively, "OTHER TAXES").
(c) The Borrower shall indemnify each Lender and the Agent for
the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
SECTION 2.14) paid by such Lender or the Agent (as the case may be) and any
liability (including, without limitation, liability for penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted. A certificate as to the
amount of such indemnification submitted to the Borrower or to the Agent by such
Lender or the Agent setting forth the calculation thereof in reasonable detail
shall be conclusive and binding for all purposes, absent manifest error. This
indemnification shall be made within 30 days from the date such Lender or the
Agent (as the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the
Borrower shall furnish to the Agent, at its address referred to in SECTION 10.2,
the original or a certified copy of a receipt evidencing such payment. In the
case of any payment under this Agreement or under the Revolving Credit Notes, if
any, by or on behalf of the Borrower through an account or branch outside the
United States or by or on behalf of the Borrower by a payor that is not a United
States person, if the Borrower determines that no Taxes are payable in respect
thereof, the Borrower shall furnish, or shall cause such payor to furnish, to
the Agent, at such address, an opinion of counsel acceptable to the Agent
stating that such payment is exempt from Taxes. For purposes of this PARAGRAPH
(d) and PARAGRAPH (e) below, the terms "UNITED STATES" and "UNITED STATES
PERSON" shall have the meanings specified in Section 7701 of the Code.
(e) Prior to the Effective Date, in the case of each Non-U.S.
Lender that is a signatory hereto, and on the date of the Assignment and
Acceptance pursuant to which it becomes a Lender in the case of each other
Non-U.S. Lender and from time to time thereafter if requested by the Borrower or
the Agent, each Non-U.S. Lender that is entitled at such time to an exemption
from United States withholding tax, or that is subject to such tax at a reduced
rate under an applicable tax treaty, shall provide the Agent and the Borrower
with two completed originals of each of the following: (i) Form W-8ECI (claiming
exemption from withholding because the income is effectively connected with a
U.S. trade or business) or any successor form, (ii) Form W-8BEN (claiming
exemption from, or a reduction of, withholding tax under an income tax treaty)
or any successor form, (iii) in the case of a Non-U.S. Lender claiming exemption
under Sections 871(h) or 881(c) of the Code, a Form W-8BEN (claiming exemption
from withholding under the portfolio interest exemption) or any successor form
or (iv) any
35
other applicable form, certificate or document prescribed by the IRS certifying
as to such Non-U.S. Lender's entitlement to such exemption from United States
withholding tax or reduced rate with respect to all payments to be made to such
Non-U.S. Lender under the Loan Documents. Unless the Borrower and the Agent have
received forms or other documents satisfactory to them indicating that payments
under any Loan Document to or for a Non-U.S. Lender are not subject to United
States withholding tax or are subject to such tax at a rate reduced by an
applicable tax treaty, the Borrower or the Agent shall withhold amounts required
to be withheld by applicable Requirements of Law from such payments at the
applicable statutory rate.
(f) For any period with respect to which a Lender has failed
to provide the Borrower and the Agent with the appropriate form described in
PARAGRAPH (e) above (other than if such failure is due to a change in law
occurring subsequent to the date on which a form originally was required to be
provided, or if such form otherwise is not required under PARAGRAPH (e) above),
such Lender shall not be entitled to indemnification under SECTION 2.14(a) or
(c) with respect to Taxes imposed by the United States by reason of such
failure; PROVIDED, HOWEVER, that should a Lender become subject to Taxes because
of its failure to deliver a form required hereunder, the Borrower shall take
such steps as the Lender shall reasonably request to assist the Lender to
recover such Taxes.
(g) Any Lender claiming any additional amounts payable
pursuant to this SECTION 2.14 agrees to use reasonable efforts (consistent with
its internal policy and legal and regulatory restrictions, and at the Borrower's
expense) to change the jurisdiction of its Eurodollar Lending Office if the
making of such a change would avoid the need for, or reduce the amount of, any
such additional amounts that may thereafter accrue and would not, in the sole
judgment of such Lender, be otherwise disadvantageous to such Lender.
(h) Without prejudice to the survival of any other agreement
of the Borrower under this Agreement, the agreements and obligations of the
Borrower contained in this SECTION 2.14 shall survive the payment in full of the
Obligations.
2.15. SHARING OF PAYMENTS, ETC. (a) If any Lender (other than
the Swing Loan Bank) shall obtain any payment (whether voluntary, involuntary,
through the exercise of any right of set off or otherwise) on account of Loans
made by it (other than pursuant to SECTION 2.10, 2.11, 2.12 or 2.14), and there
is any Swing Loan outstanding in respect of which the Swing Loan Bank has not
received payment in full from the Lenders pursuant to SECTION 2.17(c) or there
is any Reimbursement Obligation outstanding in respect of which the relevant
Issuer has not received payment in full from the Lenders pursuant to SECTION
2.16(i), such Lender (a "PURCHASING LENDER") shall purchase a participation in
all such Swing Loans and Reimbursement Obligations (pro rata as between each, if
both Swing Loans and Reimbursement Obligations are then outstanding) in an
amount equal to the lesser of such payment and the amount of such Swing Loan and
Reimbursement Obligation for which the Swing Loan Bank and the relevant Issuer
has not so received payment in full. If, after giving effect to the foregoing,
any Lender shall obtain any payment (whether voluntary, involuntary, through the
exercise of any right of set-off or otherwise) on account of the Revolving
Credit Loans made by it (other than
36
pursuant to SECTION 2.10, 2.11, 2.12 or 2.14) in excess of its Ratable Portion
of payments on account of the Revolving Credit Loans obtained by all the
Lenders, such Lender shall forthwith purchase from the other Lenders such
participations in their Loans as shall be necessary to cause such purchasing
Lender to share the excess payment ratably with each of them.
(b) If all or any portion of any payment received by a
Purchasing Lender is thereafter recovered from such Purchasing Lender, such
purchase from each selling Lender described in PARAGRAPH (a) above (a "SELLING
LENDER") shall be rescinded and such Selling Lender shall repay to the
Purchasing Lender the purchase price to the extent of such recovery together
with an amount equal to such Selling Lender's ratable share (according to the
proportion of (i) the amount of such Selling Lender's required repayment to (ii)
the total amount so recovered from the Purchasing Lender) of any interest or
other amount paid or payable by the Purchasing Lender in respect of the total
amount so recovered.
(c) The Borrower agrees that any Purchasing Lender purchasing
a participation from a Selling Lender pursuant to this SECTION 2.15 may, to the
fullest extent permitted by law, exercise all its rights of payment (including,
without limitation, the right of set-off) with respect to such participation as
fully as if such Lender were the direct creditor of the Borrower in the amount
of such participation.
2.16. LETTER OF CREDIT FACILITY. (a) On the terms and subject
to the conditions contained in this Agreement, each Issuer agrees to issue one
or more Letters of Credit at the request of the Borrower for the account of the
Borrower from time to time during the period commencing on the date hereof and
ending on July 9, 2005 (or, if earlier, on the Termination Date); PROVIDED,
HOWEVER, that no Issuer shall be under any obligation to issue any Letter of
Credit if:
(i) any order, judgment or decree of any Governmental
Authority or arbitrator shall purport by its terms to enjoin or restrain such
Issuer from issuing such Letter of Credit or any Requirement of Law applicable
to such Issuer or any request or directive (whether or not having the force of
law) from any Governmental Authority with jurisdiction over such Issuer shall
prohibit, or request that such Issuer refrain from, the issuance of letters of
credit generally or such Letter of Credit in particular or shall impose upon
such Issuer with respect to such Letter of Credit any restriction or reserve or
capital requirement (for which such Issuer is not otherwise compensated) not in
effect on the date hereof or result in any unreimbursed loss, cost or expense
which was not applicable, in effect or known to such Issuer as of the date
hereof and which such Issuer in good faith deems material to it;
(ii) such Issuer shall have received written notice from
the Agent, any Lender or the Borrower, on or prior to the Business Day prior to
the requested date of issuance of such Letter of Credit, that one or more of the
applicable conditions contained in ARTICLE III is not then satisfied;
37
(iii) after giving effect to the issuance of such Letter
of Credit, the Letter of Credit Obligations exceed $40,000,000;
(iv) the amount of the Letter of Credit requested
exceeds the Available Credit; or
(v) fees due in connection with a requested issuance
have not been paid.
Only an Issuer shall have an obligation hereunder to issue any Letter of Credit.
(b) Notwithstanding anything to the contrary contained in this
Agreement, any and all "Letters of Credit" issued and outstanding on the
Effective Date pursuant to and as defined in the Existing Credit Agreement shall
automatically and without any further action on the part of any party, be deemed
to be Letters of Credit issued by the Issuer pursuant to this SECTION 2.16 and
covered by the terms hereof and any reimbursement agreement pertaining to any
such "Letter of Credit" shall be deemed to be a Letter of Credit Reimbursement
Agreement hereunder. SCHEDULE 2.16(b) reflects all "Letters of Credit"
outstanding under the Existing Credit Agreement and deemed to be Letters of
Credit for purposes of this Agreement.
(c) In no event shall:
(i) the expiration date of (A) any standby Letter of
Credit be more than 360 days after the date of issuance thereof or (B) any other
Letter of Credit be more than 180 days after the date of issuance thereof, other
than the Letter of Credit in the face amount of $2,602,739.73 issued in respect
of the Zanesville Bonds, which may have a term of up to 360 days;
(ii) any Issuer issue any Letter of Credit for the purpose
of supporting the issuance of any letter of credit by any other Person; or
(iii) the expiration date of any Letter of Credit be later
than the seventh calendar day preceding the Termination Date unless on the date
of issuance thereof, the Borrower shall have cash collateralized such Letter of
Credit to the satisfaction of the Agent in an amount equal to 105% of the
undrawn face amount thereof.
(d) Prior to the issuance of each Letter of Credit, the
Borrower shall have delivered to the Issuer thereof a letter of credit
reimbursement agreement, in substantially the form of EXHIBIT L (a "LETTER OF
CREDIT REIMBURSEMENT AGREEMENT"), signed by the Borrower, and such other
documents or items as may be required pursuant to the terms thereof. In the
event of any conflict between the terms of any Letter of Credit Reimbursement
Agreement and this Agreement, the terms of this Agreement shall govern.
(e) In connection with the issuance of each Letter of Credit,
the Borrower shall give the Issuer thereof and the Agent at least two Business
Days' prior
38
written notice (a "LETTER OF CREDIT REQUEST"), in substantially the form of
EXHIBIT D, of the requested issuance of such Letter of Credit. Such notice shall
be irrevocable and shall specify the stated amount of the Letter of Credit
requested, the date of issuance of such requested Letter of Credit (which date
shall be a Business Day), the date on which such Letter of Credit is to expire
(which date shall be a Business Day), and the Person for whose benefit the
requested Letter of Credit is to be issued. Such notice, to be effective, must
be received by such Issuer and the Agent not later than 11:00 A.M. (New York
City time) on the last Business Day on which notice can be given under the
immediately preceding sentence.
(f) Subject to the terms and conditions of this SECTION 2.16
and provided that the applicable conditions set forth in ARTICLE III are
satisfied, such Issuer shall, on the requested date, issue a Letter of Credit on
behalf of the Borrower in accordance with such Issuer's usual and customary
business practices. On the date of the proposed issuance of the Letter of
Credit, the Agent shall confirm to the Issuer of the requested Letter of Credit
that the applicable conditions in ARTICLE III are satisfied. The Issuer shall
give prompt notice to the Agent of the issuance, modification or surrender of
Letters of Credit.
(g) Immediately upon the issuance by an Issuer of a Letter of
Credit in accordance with the terms and conditions of this Agreement, such
Issuer shall be deemed to have sold and transferred to each Lender, and each
Lender shall be deemed irrevocably and unconditionally to have purchased and
received from such Issuer, without recourse or warranty, an undivided interest
and participation, to the extent of such Lender's Ratable Portion, in such
Letter of Credit and the obligations of the Borrower with respect thereto
(including, without limitation, all Letter of Credit Obligations with respect
thereto) and any security therefor and guaranty pertaining thereto.
(h) In determining whether to pay under any Letter of Credit,
no Issuer shall have any obligation relative to the Lenders other than to
confirm that any documents required to be delivered under such Letter of Credit
appear to have been delivered and that they appear to comply on their face with
the requirements of such Letter of Credit. Any action taken or omitted to be
taken by any Issuer under or in connection with any Letter of Credit, if taken
or omitted to be taken in the absence of gross negligence or willful misconduct,
shall not put such Issuer under any resulting liability to any Lender.
(i) In the event that any Issuer makes any payment under any
Letter of Credit and the Borrower shall not have repaid such amount to such
Issuer pursuant to SECTION 2.16(m), such Issuer shall promptly notify the Agent,
and the Agent shall promptly notify each Lender of such failure, and each Lender
shall promptly and unconditionally pay to the Agent for the account of such
Issuer the amount of such Lender's Ratable Portion of such payment in Dollars
and in immediately available funds. If the Agent so notifies such Lender prior
to 11:00 A.M. (New York City time) on any Business Day, such Lender shall make
available to the Agent for the account of such Issuer its Ratable Portion of the
amount of such payment on such Business Day in immediately available funds. If
and to the extent such Lender shall not have so made such Lender's Ratable
Portion of the amount of such payment available to the Agent for
39
the account of such Issuer, such Lender agrees to pay to the Agent for the
account of such Issuer forthwith on demand such amount together with interest
thereon, for each day from such date until the date such amount is repaid to the
Agent for the account of such Issuer, at the Federal Funds Rate. The failure of
any Lender to make available to the Agent for the account of such Issuer its
Ratable Portion of any such payment shall not relieve any other Lender of its
obligation hereunder to make available to the Agent for the account of such
Issuer its Ratable Portion of any payment on the date such payment is to be
made, but no Lender shall be responsible for the failure of any other Lender to
make available to the Agent for the account of any Issuer such other Lender's
Ratable Portion of any such payment.
(j) Whenever any Issuer receives a payment of a Reimbursement
Obligation as to which the Agent has received for the account of such Issuer any
payment from a Lender pursuant to SECTION 2.15 or 2.16(i), the Issuer shall pay
to the Agent, and the Agent shall promptly pay to each Lender, in immediately
available funds, an amount equal to such Lender's pro rata share of such payment
based on the respective amounts the Lenders have paid in respect of such
Reimbursement Obligation.
(k) Upon the request of any Lender, each Issuer shall furnish
to such Lender copies of any Letter of Credit Reimbursement Agreement to which
such Issuer is a party and such other documentation as may reasonably be
requested by such Lender.
(l) The obligations of the Lenders to make payments to the
Agent for the account of each Issuer with respect to Letters of Credit shall be
irrevocable and not subject to any qualification or exception whatsoever and
shall be made in accordance with the terms and conditions of this Agreement
under all circumstances (except as otherwise expressly provided in SECTION
2.16(h)), including, without limitation, any of the following circumstances:
(i) any lack of validity or enforceability of this Agreement
or any of the other Loan Documents;
(ii) the existence of any claim, set-off, defense or other
right that the Borrower may have at any time against a beneficiary named in a
Letter of Credit, any transferee of any Letter of Credit (or any Person for whom
any such transferee may be acting), the Agent, any Issuer, any Lender or any
other Person, whether in connection with this Agreement or any of the other Loan
Documents, any Letter of Credit or any unrelated transaction (including, without
limitation, any underlying transaction between the Borrower and the beneficiary
named in any Letter of Credit);
(iii) any draft, certificate or any other document presented
under the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan Documents; or
(v) the occurrence of any Default or Event of Default.
40
(m) The Borrower agrees to pay to each Issuer the amount of
all Reimbursement Obligations owing to such Issuer under any Letter of Credit
immediately when due, irrespective of any claim, set-off, defense or other right
that the Borrower may have at any time against such Issuer or any other Person.
The Borrower agrees to reimburse each Issuer for all amounts that such Issuer
pays under such Letter of Credit no later than the time specified in the
relevant Letter of Credit Reimbursement Agreement. If the Borrower does not pay
(either from the proceeds of a Borrowing or otherwise) any such Reimbursement
Obligation when due, such Reimbursement Obligation shall bear interest computed
from the date on which such Reimbursement Obligation arose to the date of
repayment in full of such loan, at the rate of interest applicable to past due
Revolving Credit Loans bearing interest at a rate based on the Base Rate during
such period. If any payment made by or on behalf of the Borrower and received by
an Issuer with respect to any Letter of Credit is rescinded or must otherwise be
returned by such Issuer for any reason and if such Issuer has made payment to
the Agent on account thereof pursuant to SECTION 2.16(j), each Lender shall,
upon notice by such Issuer, forthwith pay over to such Issuer an amount equal to
such Lender's pro rata share of the amount which must be so returned by such
Issuer based on the respective amounts paid in respect thereof to the Lenders
pursuant to SECTION 2.16(j).
(n) The Borrower agrees to pay the following amounts with
respect to Letters of Credit issued:
(i) to each Issuer, with respect to each Letter of Credit
issued by such Issuer, a fee equal to 0.25% per annum of the Letter of Credit
Undrawn Amount thereof, payable quarterly in arrears on the first day of each
month following the end of each Fiscal Quarter and on the termination of such
Letter of Credit, and calculated on the basis of a 360-day year and the actual
number of days elapsed;
(ii) to the Agent for the account of the Lenders:
(1) with respect to standby Letters of Credit, an
amount equal to the product of (I) the Letter of Credit Undrawn Amount thereof
TIMES (II) (x) the Applicable Eurodollar Rate Margin LESS (y) 0.25%, payable
quarterly in arrears on the first of each month following the end of each Fiscal
Quarter and on the termination of such Letter of Credit, and calculated on the
basis of a 360-day year and the actual number of days elapsed;
(2) with respect to documentary Letters of Credit, an
amount equal to the product of (I) the Letter of Credit Undrawn Amount thereof
TIMES (II) 1.00% per annum, payable quarterly in arrears on the first of each
month following the end of each Fiscal Quarter and on the termination of such
Letter of Credit, and calculated on the basis of a 360-day year and the actual
number of days elapsed; and
(iii) to each Issuer, with respect to the issuance,
amendment or transfer of each Letter of Credit and each drawing made thereunder,
documentary and processing charges in accordance with such Issuer's standard
schedule for such charges in effect at the time of issuance, amendment, transfer
or drawing, as the case may be.
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2.17. SWING LOANS. (a) The Swing Loan Bank, in its sole
discretion, on the terms and subject to the conditions contained in this
Agreement, may make advances (each a "SWING LOAN") to the Borrower from time to
time on any Business Day during the period from the date hereof until the day
preceding the Termination Date in an aggregate amount not to exceed at any time
outstanding the lesser of (i) the Swing Loan Available Credit, (ii) the
difference between the Swing Loan Bank's Commitment and the sum of the
outstanding principal amount of the Swing Loans, the Revolving Credit Loans made
by it and its Ratable Portion of all Letter of Credit Obligations then
outstanding and (iii) $15,000,000. The Swing Loan Bank shall be entitled to rely
on the most recent Borrowing Base Certificate delivered to the Agent. Within the
limits set forth above, Swing Loans repaid may be reborrowed under this SECTION
2.17.
(b) Each Swing Loan shall be made upon such notice as the
Swing Loan Bank and the Borrower shall agree. Upon fulfillment of the applicable
conditions set forth in ARTICLE III and if the Swing Loan Bank elects, in its
sole discretion, to make such Swing Loan, the Swing Loan Bank will make each
Swing Loan available to the Borrower at the Agent's address referred to in
SECTION 10.2. Unless the Borrower advises the Swing Loan Bank to the contrary,
the Swing Loan Bank may make a Swing Loan to pay any of the Obligations that are
due and payable without notice or further request from the Borrower.
(c) The Agent shall notify each Lender no less frequently than
weekly, as determined by the Agent, of the amount of the Swing Loans outstanding
as of 1:00 P.M. (New York City time) as of such date (the "COMPUTATION Date")
and each Lender's Ratable Portion thereof. Each Lender shall before 11:00 A.M.
(New York City time) on the next Business Day (the "SETTLEMENT DATE") make
available to the Agent, in immediately available funds, the amount of its
Ratable Portion of the principal amount of all such Swing Loans. Upon such
payment by a Lender, such Lender shall be deemed to have made a Revolving Credit
Loan to the Borrower in the amount of such payment. The Agent shall use such
funds to repay the Swing Loan to the Swing Loan Bank. To the extent that any
Lender fails to make such payment to the Swing Loan Bank, the Borrower shall
repay such Swing Loan on demand and in any event on the Termination Date. The
Agent's books and records shall be conclusive and binding, absent manifest
error, for all purposes of determining the Swing Loans outstanding at any time.
2.18. CASH COLLATERAL ACCOUNT AND CASH MANAGEMENT SYSTEM. (a)
The Borrower shall, and shall cause its Subsidiaries to, cause all cash, checks,
notes, drafts or other similar items of payment relating to or constituting
Proceeds from the sale of any Collateral, and any other similar payments to be
deposited via wire transfer in immediately available funds, to a bank account
maintained at Citibank, Account No. 4068-3555 (the "CASH COLLATERAL ACCOUNT"),
which shall be under the sole dominion and control of the Agent and administered
as provided in this SECTION 2.18 and in SECTION 2.6(c).
(b) The Borrower hereby pledges and grants to the Agent for
the benefit of the Lenders a Lien on all of its right, title and interest in and
to all funds held in
42
the Cash Collateral Account from time to time, and all Proceeds thereof, as
security for the payment of the Obligations.
(c) All immediately available funds on deposit in the Cash
Collateral Account shall be applied by the Agent against the outstanding balance
of the Obligations in accordance with SECTION 2.6(c). Notwithstanding anything
contained herein to the contrary, upon the occurrence of any Event of Default,
the Agent shall have the continuing exclusive right to reverse and reapply any
and all proceeds from the Cash Collateral Account to any portion of and such of
the Obligations as it, in its sole discretion, shall determine.
(d) Neither the Borrower nor any Person claiming on behalf of
or through the Borrower shall have any right to withdraw any of the funds held
in the Cash Collateral Account.
(e) The Borrower agrees that it will not (i) sell or otherwise
dispose of any interest in the Cash Collateral Account or any funds held therein
or (ii) create or permit to exist any Lien upon or with respect to the Cash
Collateral Account or any funds held therein, except as provided in or
contemplated by this Agreement and the other Loan Documents.
2.19. SUBSTITUTION OF LENDERS. In the event that (a)(i) any
Lender makes a claim under SECTION 2.10 or 2.12, (ii) it becomes illegal for any
Lender to continue to fund or make any Eurodollar Rate Loan pursuant to SECTION
2.1, (iii) the Borrower is required to make any payment pursuant to SECTION 2.14
that is attributable to any Lender, or (iv) any Lender is in default of any of
its obligations hereunder or shall take or be the subject of any action or
proceeding of a type described in SECTION 8.1(e), (b) in the case of CLAUSE
(a)(i) above, as a consequence of increased costs in respect of which such claim
is made, the effective rate of interest payable to such Lender under this
Agreement with respect to its Loans materially exceeds the effective average
annual rate of interest payable to the Majority Lenders under this Agreement and
(c) Lenders holding at least 75% of the Commitments are not subject to such
increased costs or illegality, payment or proceedings (any such Lender, an
"AFFECTED LENDER"), the Borrower or the Majority Lenders may substitute another
financial institution for such Affected Lender hereunder, upon reasonable prior
written notice (which written notice must be given within 90 days following the
occurrence of any of the events described in CLAUSES (a)(i) through (iv) above)
by the Borrower or the Majority Lenders, as the case may be, to the Agent and
the Affected Lender that the Borrower or the Majority Lenders intend to make
such substitution, which substitute financial institution must be an Eligible
Assignee and, if not a Lender, reasonably acceptable to the Agent, PROVIDED that
if more than one Lender claims increased costs, illegality or right to payment
arising from the same act or condition and such claims are received by the
Borrower or the Majority Lender within 30 days of each other, then the Borrower
or the Majority Lenders may substitute all, but not (except to the extent the
Borrower or the Majority Lenders has already substituted one of such Affected
Lenders before the Borrower's or the Majority Lenders' receipt of the other
Affected Lenders' claim) less than all, Lenders making such claims. In the event
that the proposed substitute financial institution is reasonably acceptable to
the Agent and
43
the written notice was properly issued under this SECTION 2.19, the Affected
Lender shall sell and the substitute financial institution shall purchase,
pursuant to an Assignment and Acceptance, all rights and claims of such Affected
Lender under the Loan Documents and the substitute financial institution shall
assume and the Affected Lender shall be relieved of its Commitment and all other
theretofore unperformed obligations of the Affected Lender under the Loan
Documents (other than in respect of any damages (other than exemplary or
punitive damages, to the extent permitted by applicable law) in respect of any
such unperformed obligations). Upon the effectiveness of such sale, purchase and
assumption (which, in any event shall be conditioned upon the payment in full by
the Borrowers to the Affected Lender in cash of all fees, unreimbursed costs and
expenses and indemnities accrued and unpaid through such effective date), the
substitute financial institution shall become a "Lender" hereunder for all
purposes of this Agreement having a Commitment in the amount of such Affected
Lender's Commitment assumed by it and such Commitment of the Affected Lender
shall be terminated, PROVIDED that all indemnities under the Loan Documents
shall continue in favor of such Affected Lender.
ARTICLE III
CONDITIONS OF EFFECTIVENESS
3.1. CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS
AGREEMENT. The effectiveness of this Agreement is subject to satisfaction of the
conditions precedent that the Agent shall have received, on the Effective Date,
the following, each dated the Effective Date unless otherwise indicated, in form
and substance satisfactory to the Agent and (except for the Revolving Credit
Notes, if any) in sufficient copies for each Lender:
(a) This Agreement, duly executed and delivered by the
Borrower, in form and substance satisfactory to the Agent and the Lenders.
(b) A Revolving Credit Note, duly executed and delivered by
the Borrower, to the order of each Lender who requests a Revolving Credit Note
pursuant to SECTION 2.1(c).
(c) The Guaranty, duly executed and delivered by the
Guarantors, in form and substance satisfactory to the Agent and the Lenders.
(d) The Security Agreement, duly executed and delivered by
each of the Loan Parties, in form and substance satisfactory to the Agent and
the Lenders.
(e) Certified copies of (i) the resolutions of the Board of
Directors of each Loan Party approving the Loan Documents to which it is a party
and (ii) all documents evidencing other necessary corporate or other action and
required governmental and third-party approvals, licenses and consents with
respect to each Loan Document and the transactions contemplated thereby.
(f) A copy of the articles or certificate of incorporation (or
equivalent governing document) of each Loan Party certified as of a recent date
by the Secretary of State of the state of organization of such Loan Party,
together with certificates of such official attesting to the good standing of
each such Loan Party, and a copy of the
44
certificate of incorporation and the by-laws (or other equivalent governing
documents) of each Loan Party certified as of the Effective Date by the
Secretary or an Assistant Secretary of each such Loan Party.
(g) A certificate of the Secretary or an Assistant Secretary
of each Loan Party certifying the names and true signatures of each officer of
such Loan Party who has been authorized to execute and deliver any Loan Document
or any other document required hereunder to be executed and delivered by or on
behalf of such Loan Party.
(h) Certified copies of Requests for Information or Copies
(Form UCC-11), or equivalent reports, listing all effective financing statements
which name any Loan Party (under its present name and or previous name) as
debtor, together with copies of such other financing statements (none of which
shall cover the Collateral purported to be covered by the Pledge and Security
Agreement, except as otherwise permitted by the Loan Documents).
(i) Evidence that the insurance required by the terms of the
Collateral Documents and by SECTION 6.4 is in full force and effect.
(j) Copies of financing statements in appropriate form for
filing under the UCC of each jurisdiction as may be necessary to perfect the
security interests purported to be created by the Collateral Documents.
(k) Favorable opinions of counsel to the Loan Parties, in
substantially the form of EXHIBIT I, and as to such other matters as any Lender
or Issuer through the Agent may reasonably request, together with a copy of the
opinions rendered by such firms with respect to the enforceability of the
Securitization Documents and related matters accompanied by a letter to the
effect that the Agent, the Lenders and the Issuer may rely thereon (or language
in such opinions to such effect).
(l) A certificate, signed by a Responsible Officer of the
Borrower, stating that each of the conditions specified in SECTIONS 3.2(a)
through (d) and 3.3(b) has been satisfied.
(m) The Intercreditor Agreement, duly executed by each party
thereto.
(n) Copies of the Securitization Documents, certified by a
Responsible Officer.
(o) A third-party inventory appraisal and financial
projections for the Borrower and its Subsidiaries, each in form and substance
satisfactory to the Agent.
(p) Such additional documents, information and materials as
any Lender or Issuer, through the Agent, may reasonably request.
45
3.2. ADDITIONAL CONDITIONS TO THE EFFECTIVENESS OF THIS
AGREEMENT. It shall be a further condition to the effectiveness of this
Agreements that:
(a) There shall be no existing secured lenders to the Borrower
other than those specified in SCHEDULE 3.2(a).
(b) On the Effective Date, the following statements shall be
true:
(i) there has been no change since February 2, 2002 in the
corporate, capital or legal structure of the Borrower or any of its Subsidiaries
consummated without the consent of the Lenders and the Agent;
(ii) all necessary governmental and third-party approvals
required to be obtained by any Loan Party in connection with the financing to be
provided pursuant to this Agreement and the other Loan Documents shall have been
obtained and remain in effect;
(iii) there exists no judgment, order, injunction or other
restraint prohibiting or in the reasonable judgment of the Majority Lenders
imposing materially adverse conditions upon this Agreement, the other Loan
Documents or any of the transactions contemplated hereby or thereby; and
(iv) there exists no claim, action, suit, investigation or
proceeding (including, without limitation, shareholder or derivative litigation)
pending or, to the knowledge of the Borrower, threatened in any court or before
any arbitrator or Governmental Authority that relates to the financing hereunder
or that, if adversely determined, could reasonably be expected to have a
Material Adverse Effect.
(c) All costs and accrued and unpaid fees and expenses
(including, without limitation, legal fees and expenses) required to be paid to
the Agent or any of the Lenders on or before the Effective Date, including,
without limitation, those referred to in SECTIONS 2.3 and 10.4, to the extent
then due and payable, shall have been paid.
(d) The Lenders shall have received satisfactory annual
financial statements dated February 2, 2002 and the latest monthly financial
statements prepared by management of the Borrower on the same basis as the
financial statements reported on by the Borrower's independent public
accountants.
(e) There shall not exist any judgment, order, injunction or
other restraint prohibiting or, in the reasonable judgment of the Majority
Lenders, imposing materially adverse conditions upon this Agreement, the other
Loan Documents or any of the transactions contemplated hereby or thereby.
(f) Nothing contained in any disclosure made by the Borrower
or any of its Subsidiaries after the date hereof shall lead the Agent or any
Lender to determine that, and neither the Agent nor any Lender shall have become
aware of any fact or condition not disclosed to them prior to the date hereof
that shall lead the Agent or any Lender to determine that, the Borrower's
condition (financial or otherwise), operations,
46
performance, properties or prospects are different in any material and adverse
respect from that derived by the Agent or such Lender from the public filings of
the Borrower or any of its Subsidiaries prior to such date.
(g) There shall have occurred no adverse change since February
2, 2002, that the Agent or any Lender deems material, in the condition
(financial or otherwise), operations, performance, properties or prospects of
the Borrower and its Subsidiaries taken as a whole, and nothing shall have
occurred since the date hereof that, in the judgment of the Agent or any Lender,
has or can reasonably be expected to have a material adverse effect on the
rights and remedies of the Lenders or the Agent or on the ability of the
Borrower to perform its obligations to them; provided, however, that the
approximately $14,000,000 adjustment to goodwill and other intangible assets
required by SFAS No. 142 as reflected in the Borrower's unaudited financial
statements dated May 4, 2002 shall not be deemed to be such a material adverse
change or to have such a material adverse effect.
(h) There shall exist no event of default (or event which
would constitute an event of default with the giving of notice or lapse of time)
under, the Existing Credit Agreement, any of the other existing debt instruments
of the Borrower or any of its Subsidiaries or of any of the Loan Documents and
the representations and warranties in the Loan Documents shall be true and
correct in all material respects.
(i) Each Lender shall have received such financial and other
information regarding the Borrower and its Subsidiaries as such Lender shall
have reasonably requested through the Agent.
(j) There shall not have occurred any material change in loan
syndication, financial or capital market conditions generally that, in the
Agent's judgment, would materially impair syndication of the Facility.
(k) The Borrower shall have paid to the Agent, for the account
of the Lenders, the fees required to be paid pursuant to a separate agreement
between the Borrower, Fleet, CUSA and the Arranger dated May 24, 2002.
3.3. CONDITIONS PRECEDENT TO EACH LOAN AND LETTER OF CREDIT.
The obligation of each Lender to make any Loan and of each Issuer to issue any
Letter of Credit (including any Loans being made, or any Letters of Credit being
issued, by such Lender or Issuer on the Effective Date) shall be subject to the
further conditions precedent that:
(a) No Borrowing Base Deficiency shall exist.
(b) The following statements shall be true on the date of such
Loan or issuance, before and after giving effect thereto and to the application
of the proceeds therefrom and to such issuance (and the acceptance by the
Borrower of the proceeds of such Loan shall constitute a representation and
warranty by the Borrower that on the date of such Loan or issuance such
statements are true):
47
(i) The representations and warranties of the Borrower
contained in ARTICLE IV and of each Loan Party in the other Loan Documents are
true and correct on and as of such date as though made on and as of such date
other than any such representations and warranties that, by their terms, refer
specifically to a date other than the date of such Borrowing or issuance; and
(ii) No Default or Event of Default has occurred and is
continuing or would result from the Loans being made or any Letter of Credit
being issued on such date.
(c) The Borrower shall have delivered to the Agent a Borrowing
Base Certificate, required by SECTION 6.10(e), as of no more than nine days
prior to the date on which a Revolving Credit Loan is to be made or a Letter of
Credit is to be issued, which Borrowing Base Certificate shall include such
supporting schedules as required by the Agent.
(d) No Revolving Credit Loans shall be made if any Swing Loans
are outstanding unless, to the extent necessary, proceeds of such Revolving
Credit Loans are used to repay in full the outstanding Swing Loans.
(e) The making of the Loans, or the issuance of Letters of
Credit, on such date does not violate any Requirement of Law and is not stayed
or enjoined, temporarily, preliminarily or permanently.
(f) The Agent shall have received such additional documents,
information and materials as any Lender or Issuer, through the Agent, may
reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Lenders, the Issuers and the Agent to enter into
this Agreement, the Borrower represents and warrants to the Lenders, the Issuers
and the Agent that:
4.1. EXISTENCE; COMPLIANCE WITH LAW. Each Loan Party and each
of its Subsidiaries (a) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization; (b) is duly qualified in
each jurisdiction in which it conducts business, except for failures to so
qualify that in the aggregate would have no Material Adverse Effect; (c) has all
requisite corporate, partnership, limited liability company or other power and
authority and the legal right to own, pledge, mortgage and operate its
properties, to lease the property it operates under lease and to conduct its
business as now or currently proposed to be conducted; (d) is in compliance with
its certificate of incorporation and by-laws (or other equivalent governing
documents); (e) is in compliance with all other applicable Requirements of Law
except for such non-compliances as in the aggregate would have no Material
Adverse Effect. The only Subsidiaries of the Borrower are Chargit, El-Bee,
EBWVA, Elder-Beerman Holdings,
48
Inc., Elder-Beerman Operations, LLC and EBI, each of which is wholly owned,
directly or indirectly, by the Borrower.
4.2. POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. (a) The
execution, delivery and performance by each Loan Party of the Loan Documents and
the Securitization Documents to which it is a party and the consummation of the
transactions related to the financing contemplated hereby:
(i) are within such Loan Party's corporate, partnership,
limited liability company or other powers, as the case may be;
(ii) have been duly authorized by all necessary
corporate, partnership, limited liability company or other action, as the case
may be, including, without limitation, the consent of shareholders, partners or
members, as the case may be, where required;
(iii) do not and will not (A) contravene any Loan Party's
or any of its Subsidiaries' respective certificate of incorporation or by-laws
(or other equivalent governing documents), (B) violate any other applicable
Requirement of Law (including, without limitation, Regulations T, U and X of the
Board of Governors of the Federal Reserve System) or any order or decree of any
Governmental Authority or arbitrator, (C) conflict with, result in the breach
of, constitute a default under or result in or permit the termination or
acceleration of any Contractual Obligation of any Loan Party or any of its
Subsidiaries or (D) result in the creation or imposition of any Lien upon any of
the property of any Loan Party or any of its Subsidiaries, other than those in
favor of the Agent pursuant to the Loan Documents; and
(iv) do not require the consent of, authorization by,
approval of, notice to, or filing or registration with, any Governmental
Authority or any other Person other than those already obtained.
(b) This Agreement has been, and each of the other Loan
Documents and the Securitization Documents will have been upon delivery thereof
as required by SECTION 3.1, duly executed and delivered by each Loan Party party
thereto. This Agreement is, and each of the other Loan Documents will be, when
delivered as required hereunder, the legal, valid and binding obligation of each
Loan Party party thereto, enforceable against such Loan Party in accordance with
its terms.
4.3. TAXES. (a) All federal, state, local and foreign tax
returns, reports and statements (collectively, the "TAX RETURNS") required to be
filed by the Borrower or any of its respective Tax Affiliates have been filed
with the appropriate Governmental Authorities in all jurisdictions in which such
Tax Returns are required to be filed, all such Tax Returns are true and correct
in all material respects, and all taxes, charges and other impositions due and
payable have been timely paid prior to the date on which any fine, penalty,
interest, late charge or loss may be added thereto for nonpayment thereof,
except where contested in good faith and by appropriate proceedings if (i)
adequate reserves therefor have been established on the books of the Borrower or
such Tax Affiliate in
49
conformity with GAAP and (ii) all such nonpayments in the aggregate would have
no Material Adverse Effect. Proper and accurate amounts have been withheld by
the Borrower and each of its Tax Affiliates from their respective employees for
all periods in full and complete compliance with the tax, social security and
unemployment withholding provisions of applicable federal, state, local and
foreign law and such withholdings have been timely paid to the respective
Governmental Authorities, except where the Borrower or such Tax Affiliate, as
the case may be, has not withheld and paid such taxes on the basis of a good
faith determination that one or more individuals are not employees for
applicable employment tax purposes and a contrary determination by a Government
Authority as to the employment status of such individual or individuals would
not have a Material Adverse Effect. Neither the Borrower nor any of its Tax
Affiliates has any obligation under any written tax sharing agreement.
(b) Set forth on SCHEDULE 4.3(b) is a complete and accurate
list, as of the date hereof, of each taxable year of the Borrower (or of the
consolidated group of which the Borrower was a member prior to the Effective
Date of the Plan of Reorganization) for which Federal income tax returns have
been filed and for which the expiration of the applicable statute of limitations
for assessment or collection has not occurred by reason of extension or
otherwise (an "OPEN YEAR").
(c) The aggregate unpaid amount, as of the date hereof, of
adjustments to the Federal income tax liability of the Borrower proposed by the
IRS with respect to Open Years does not exceed $10,000,000. No issues have been
raised by the IRS in respect of Open Years that, in the aggregate, could be
reasonably be expected to have a Material Adverse Effect.
(d) The aggregate unpaid amount, as of the date hereof, of
adjustments to the state, local and foreign tax liability of the Borrower and
its Subsidiaries proposed by all state, local and foreign taxing authorities
(other than amounts arising from adjustments to Federal income tax returns) does
not exceed $1,000,000. No issues have been raised by such taxing authorities
that, in the aggregate, could reasonably be expected to have a Material Adverse
Effect.
4.4. FULL DISCLOSURE. (a) No information, exhibit or report
(whether or not in writing) furnished by or on behalf of any Loan Party or any
of its Affiliates to the Agent or any Lender in connection with any of the Loan
Documents or the consummation of the transactions contemplated thereby and no
financial statement delivered pursuant hereto or thereto contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements made therein not misleading. All facts known to the Borrower that
are material to an understanding of the financial condition, business,
properties or prospects of the Borrower and its Subsidiaries taken as one
enterprise have been disclosed to the Lenders.
(b) The pro forma forecasted balance sheets, income
statements and cash flow statements of the Borrower and its Subsidiaries
delivered to the Lenders pursuant to this Agreement were prepared in good faith
on the basis of the assumptions stated therein, which assumptions were fair in
the light of conditions existing at the time
50
of delivery of such forecasts, and represented, at the time of delivery, the
Borrower's best estimate of its future financial performance.
4.5. FINANCIAL MATTERS. (a) The consolidated balance sheet of
the Borrower and its Subsidiaries at February 2, 2002 and the related
consolidated statements of operations, shareholders' equity and cash flows of
the Borrower and its Subsidiaries for the fiscal year then ended, certified by
Deloitte & Touche LLP, copies of which have been furnished to each Lender,
fairly present the consolidated financial condition of the Borrower and its
Subsidiaries as at such date and the consolidated results of the operations of
the Borrower and its Subsidiaries for the period ended on such date, all in
conformity with GAAP.
(b) Since February 2, 2002, there has been no Material Adverse
Change and there have been no events or developments that in the aggregate have
had a Material Adverse Effect.
(c) The Borrower is, and on a consolidated basis the Borrower
and its Subsidiaries are, Solvent.
4.6. LITIGATION. As of the date hereof, each action, suit,
investigation, litigation or proceeding affecting any Loan Party or any of its
Subsidiaries, pending or, to the best of such Loan Party's knowledge, threatened
before any court, Governmental Authority or arbitrator that in the aggregate (a)
if adversely determined would have a Material Adverse Effect or (b) purports to
affect the legality, validity or enforceability of this Agreement, any Revolving
Credit Note (if any are outstanding) or any other Loan Document or the
consummation of the transactions contemplated hereby and thereby.
4.7. MARGIN REGULATIONS. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U issued by the Board of Governors of
the Federal Reserve System), and no proceeds of any Borrowing will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any margin stock in contravention of Regulation T, U
or X of the Board of Governors of the Federal Reserve System.
4.8. ERISA. (a) Each Qualified Plan is qualified under Section
401 of the Code, and the trusts created thereunder are exempt from tax under the
provisions of Section 501 of the Code, except where all such failures to be
qualified or exempt, as the case may be, in the aggregate, would have no
Material Adverse Effect.
(b) None of the Borrower, any of its Subsidiaries or any ERISA
Affiliate with respect to any Qualified Plan has failed to make any contribution
or pay any amount due as required by Section 412 of the Code or Section 302 of
ERISA.
(c) There has been no, nor, to the knowledge of the Borrower,
is there reasonably expected to occur, any ERISA Event or event described in
Section 4068 of ERISA with respect to any Title IV Plan or Multiemployer Plan
that would have a Material Adverse Effect.
51
(d) There are no pending or, to the knowledge of the Borrower,
threatened claims, actions or lawsuits (other than claims for benefits in the
normal course), asserted or instituted against (i) any Qualified Plan or
Multiemployer Plan, or the assets thereof, (ii) any fiduciary with respect to
any Qualified Plan or Multiemployer Plan or (iii) the Borrower, any of its
Subsidiaries or any ERISA Affiliate with respect to any Qualified Plan or
Multiemployer Plan, other than those that in the aggregate, if adversely
determined, would have no Material Adverse Effect.
(e) None of the Borrower, any of its Subsidiaries or any ERISA
Affiliate intends to take or is contemplating actions which reasonably could be
expected to result in any Withdrawal Liability under Section 4201 of ERISA as a
result of a complete or partial withdrawal from a Multiemployer Plan (and no
event has occurred which, with the giving of notice under Section 4219 of ERISA,
would result in any such liability) that would have a Material Adverse Effect.
(f) Neither the Borrower nor any of its Subsidiaries has
incurred any obligation or liability with respect to one or more prohibited
transactions, as defined in Section 4975 of the Code or Section 406 of ERISA, in
connection with any Qualified Plan or Multiemployer Plan, that would subject, or
has any reasonable likelihood of subjecting, the Borrower or any of its
Subsidiaries (after giving effect to any exemption) to a tax on prohibited
transactions imposed by Section 4975 of the Code or any other liability, in
either case, that in the aggregate could reasonably be expected to have a
Material Adverse Effect.
4.9. LIENS. There are no Liens of any nature whatsoever on any
properties of any Loan Party or any of its Subsidiaries other than Permitted
Liens. The Liens granted by the Loan Parties to the Agent pursuant to the
Collateral Documents are fully perfected, first-priority Liens in and to the
Collateral.
4.10. NO BURDENSOME RESTRICTIONS; NO DEFAULTS. (a) No Loan
Party or any Subsidiary thereof (i) is a party to any Contractual Obligation the
compliance with which would have a Material Adverse Effect or the performance of
which by any such Loan Party or Subsidiary, either unconditionally or upon the
happening of an event, will result in the creation of a Lien (other than
Permitted Liens) on the property or assets of any thereof or (ii) is subject to
any certificate of incorporation (or other equivalent governing document) or
corporate, partnership, limited liability company or other restriction that
would have a Material Adverse Effect.
(b) No Loan Party or any Subsidiary thereof is in default
under or with respect to any Contractual Obligation owed by it and, to the
knowledge of the Borrower, no other party is in default under or with respect to
any Contractual Obligation owed to any Loan Party or to any Subsidiary thereof,
other than those defaults that in the aggregate would have no Material Adverse
Effect.
(c) No Default or Event of Default has occurred and is
continuing.
52
(d) There is no Requirement of Law the compliance with which
by any Loan Party would have a Material Adverse Effect.
(e) No Subsidiary of the Borrower is subject to any
Contractual Obligation restricting or limiting its ability to declare or make
any dividend payment or other distribution on account of any shares of any class
of its Stock or its ability to purchase, redeem, or otherwise acquire for value
or make any payment in respect of any such shares or any shareholder rights.
4.11. NO OTHER VENTURES. Neither the Borrower nor any of its
Subsidiaries is engaged in any joint venture or partnership with any other
Person.
4.12. SECURITIZATION DOCUMENTS; INTEREST RATE CONTRACTS.
(a) The Agent has been provided with true and complete copies
of the Securitization Documents, none of which has been amended or modified
since the date hereof.
(b) SCHEDULE 4.12(b) sets forth a description of each Interest
Rate Contract to which any Loan Party or any Subsidiary thereof is party as of
the date hereof. The Agent has been provided true and complete copies of all
documentation relating to the Interest Rate Contracts.
4.13. INVESTMENT COMPANY ACT. The Borrower is not an
"investment company" or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended. The making of the Loans by the
Lenders, the application of the proceeds and repayment thereof by the Borrower
and the consummation of the other transactions contemplated by the Loan
Documents will not violate any provision of such Act or any rule, regulation or
order issued by the Securities and Exchange Commission thereunder.
4.14. PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Borrower
nor any of its Subsidiaries is a "holding company" or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
4.15. SECURITY INTERESTS. On and after the Effective Date,
each of the Collateral Documents creates, as security for the Obligations, a
valid and enforceable, perfected security interest in and Lien on all of the
Collateral, superior to and prior to the rights of all third parties and subject
to no other Liens, except Permitted Liens, in favor of the Agent for the benefit
of the Lenders. No filings or recordings are required in order to perfect the
security interests created under any Collateral Document except for filings or
recordings required in connection with any such Collateral Document that shall
have been made on or prior to the Effective Date.
4.16. INSURANCE. All policies of insurance of any kind or
nature owned by or issued to any Loan Party or any of its Subsidiaries,
including, without limitation,
53
policies of life, fire, theft, product liability, public liability, property
damage, other casualty, employee fidelity, workers' compensation and employee
health and welfare insurance, are in full force and effect and are of a nature
and provide such coverage as is sufficient and as is customarily carried by
companies of the size and character of such Person. No Loan Party or any
Subsidiary thereof has been refused insurance for which it applied or had any
policy of insurance terminated (other than at its request).
4.17. USE OF PROCEEDS. The proceeds of the Loans and the
Letters of Credit shall be used by the Borrower solely (a) to pay transaction
costs and fees related to this Agreement, the other Loan Documents and
transactions contemplated hereby and thereby and (b) for working capital and
other general corporate purposes.
4.18. ENVIRONMENTAL PROTECTION. (a) (i) The operations of each
Loan Party and each of its Subsidiaries or tenants comply with all Environmental
Laws other than any non-compliance the consequences of which in the aggregate
could not result in material liability under Environmental Laws;
(ii) Each Loan Party and each of its Subsidiaries has
obtained all environmental, health and safety Permits necessary for its
operations, and all such Permits are in good standing and each such Loan Party
and Subsidiary is in compliance with the terms and conditions of such Permits
other than such non-compliance the consequences of which individually or in the
aggregate could not result in material liability under Environmental Laws;
(iii) No Loan Party, any of its Subsidiaries or any of
their respective currently or, to the knowledge of the Borrower, previously
owned or leased property or operations is subject to any outstanding or, to the
knowledge of the Borrower, threatened order from or agreement with any
Governmental Authority or other Person or is subject to any judicial or docketed
administrative proceeding respecting any (A) Environmental Laws, (B) Remedial
Action or (C) Environmental Liabilities and Costs arising from a Release or
threatened Release, other than those the consequences of which individually or
in the aggregate could not result in material liability under Environmental
Laws;
(iv) There are no conditions or circumstances associated
with the currently or, to the knowledge of the Borrower, previously owned or
leased properties or operations of any Loan Party or any of its Subsidiaries or
tenants that may give rise to any such Loan Party or Subsidiary incurring any
Environmental Liabilities and Costs other than those which in the aggregate
could not result in material liability under Environmental Laws;
(v) No Loan Party or any of its Subsidiaries is a
treatment, storage or disposal facility requiring a permit under RCRA, the
regulations thereunder or any state analog;
(vi) No Loan Party or any of its Subsidiaries has filed
or failed to file any notice required under any applicable Environmental Law
reporting a Release
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under CERCLA or RCRA, other than those that individually or in the aggregate
could not result in material liability under Environmental Laws; and
(vii) There is not now on or in the property owned,
leased or operated by any Loan Party or any of its Subsidiaries (A) any
underground storage tanks or surface impoundments, (B) any friable
asbestos-containing material, the presence of which violates any Environmental
Law, (C) any polychlorinated biphenyls ("PCBS") used in electrical or other
equipment owned by any Loan Party or any of its Subsidiaries or (D) any other
Environmental Liabilities and Costs, other than, in case of any of CLAUSES (A)
through (D), those that could not result in material liability under
Environmental Laws.
(b) Each Loan Party has made available to the Lenders copies
of all environmental audits, reports and assessments relating to any currently
or formerly owned or operated real estate currently in its possession, custody
or control.
(c) The transactions contemplated by this Agreement do not
trigger any environmental property transfer laws, including, without limitation,
ISRA.
4.19. INTELLECTUAL PROPERTY. Each Loan Party and each of its
Subsidiaries owns or licenses or otherwise has the right to use all material
licenses, permits, patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, copyright applications,
franchises, authorizations and other intellectual property rights that are
necessary for the operations of its business, without infringement upon or
conflict with the rights of any other Person with respect thereto, including,
without limitation, all trade names associated with any private label brands of
any such Loan Party or Subsidiary. To the best knowledge of the Borrower, no
slogan or other advertising device, product, process, method, substance, part or
component, or other material now employed, or now contemplated to be employed,
by any Loan Party or any of its Subsidiaries infringes upon or conflicts with
any rights owned by any other Person, and no claim or litigation regarding any
of the foregoing is pending or threatened.
4.20. LEASED PROPERTY. Set forth on SCHEDULE 4.20 is a
complete and accurate list as of the date hereof of all leases of Real Property
under which any Loan Party or any of its Subsidiaries is the lessee, which list
sets forth the street address, state, lessor and lessee relating to such Real
Property. To the Borrower's knowledge, each such lease is the legal, valid and
binding obligation of the lessor thereof.
4.21. CERTAIN INDEBTEDNESS. SCHEDULE 4.21 separately
identifies all Indebtedness outstanding on the date hereof (other than trade
payables) of each Loan Party and each of its Subsidiaries that is either (a) for
borrowed money, (b) incurred outside of the ordinary course of the business or
in a manner and to the extent inconsistent with past practice or (c) material to
the financial condition, business, operations or prospects of such Loan Party or
such Subsidiary (or will be material to the financial condition, business,
operations or prospects of such Loan Party or such Subsidiary); PROVIDED that
$1,000,000 of Indebtedness is deemed material for the purposes of this SECTION
4.21.
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4.22. REAL PROPERTY. Set forth on SCHEDULE 4.22 is a complete
and accurate list of all Real Property owned by each Loan Party and each of its
Subsidiaries. Such Loan Party or Subsidiary has good, marketable and insurable
fee simple title to such Real Property located in the United States or any of
its territories, free and clear of all Liens, other than Permitted Liens.
4.23. RESTRICTED PAYMENTS. Since February 2, 2002, the
Borrower has not (a) except as permitted under SECTION 7.3, declared or made any
dividend payment or other distribution of assets, properties, cash, rights,
obligations or securities on account of any shares of any class of its Stock,
(b) except as permitted under SECTION 7.3, made any payment or distribution on
account of any Indebtedness for or in respect of borrowed money (other than the
making of regularly scheduled interest payments), including, without limitation,
to secure any waiver or consent in respect of any such Indebtedness, (c)
purchased, redeemed or otherwise acquired for value, or made any payment in
respect of, any of its Stock or Stock Equivalents, (d) purchased, redeemed,
prepaid, defeased or otherwise acquired for value any Indebtedness for or in
respect of borrowed money or (e) in the case of CLAUSES (b) and (d) above,
permitted any of its Subsidiaries to do so.
ARTICLE V
FINANCIAL COVENANT
As long as any of the Obligations remain outstanding or any of
the Commitments are still in effect, unless the Lenders otherwise consent in
writing, the Borrower agrees with the Lenders, the Issuers and the Agent that if
the Available Credit is less than $25,000,000 on any day during a Fiscal
Quarter, the Borrower shall maintain as of the end of such Fiscal Quarter, and
as of the end of each Fiscal Quarter thereafter, a Leverage Ratio of less than
4.75 to 1.00.
ARTICLE VI
AFFIRMATIVE COVENANTS
As long as any of the Obligations remain outstanding or any of
the Commitments are still in effect, unless the Majority Lenders otherwise
consent in writing, the Borrower agrees with the Lenders, the Issuers and the
Agent that:
6.1. COMPLIANCE WITH LAWS, ETC. The Borrower shall, and shall
cause each of its Subsidiaries to, comply with all applicable laws, rules,
regulations and orders, such compliance to include, without limitation,
compliance with ERISA, except where the failures to so comply in the aggregate
would have no Material Adverse Effect.
6.2. CONDUCT OF BUSINESS. The Borrower shall, subject to the
provisions of SECTION 6.5, (a) conduct, and cause each of its Subsidiaries to
conduct, its business in the ordinary course and consistent with past practice;
(b) use, and cause each of its Subsidiaries to use, its reasonable efforts, in
the ordinary course and consistent with past practice, to (i) preserve its
business and the goodwill and business of the customers, advertisers, suppliers
and others having business relations with the Borrower or any of its
Subsidiaries and (ii) keep available the services and goodwill of its present
employees;
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(c) preserve, and cause each of its Subsidiaries to preserve, all registered
patents, trademarks, trade names, copyrights and service marks with respect to
its business; and (d) perform and observe, and cause each of its Subsidiaries to
perform and observe, all the terms, covenants and conditions required to be
performed and observed by it under its Contractual Obligations (including,
without limitation, to pay all rent and other charges payable under any lease
and all debts and other obligations as the same become due), and do, and cause
each of its Subsidiaries to do, all things necessary to preserve and to keep
unimpaired its rights under such Contractual Obligations; PROVIDED, HOWEVER,
that, in the case of each of CLAUSES (a) through (d), the Borrower shall not be
deemed in default of this SECTION 6.2 if all such failures in the aggregate
would have no Material Adverse Effect.
6.3. PAYMENT OF TAXES, ETC. The Borrower shall, and shall
cause each of its Subsidiaries to, pay and discharge, before the same shall
become delinquent, all lawful governmental claims, taxes, assessments, charges
and levies imposed upon it or upon its property; PROVIDED, HOWEVER, that neither
the Borrower nor any of its Subsidiaries shall be required to pay or discharge
any such tax, assessment, charge or claim that is being contested in good faith
and by proper proceedings and as to which appropriate reserves are being
maintained, unless and until any Lien resulting therefrom attaches to its
property and becomes enforceable against its other creditors.
6.4. MAINTENANCE OF INSURANCE. The Borrower shall, and shall
cause each of its Subsidiaries to, maintain insurance with responsible and
reputable insurance companies or associations in such amounts and covering such
risks as is usually carried by companies engaged in similar businesses and
owning similar properties in the same general areas in which the Borrower or any
such Subsidiary operates and as otherwise satisfactory to the Agent in its sole
judgment, exercised reasonably, and, in any event, all insurance required by the
Collateral Documents. All such insurance shall name the Agent as an additional
insured or loss payee, as applicable. The Borrower will furnish to the Agent
from time to time such information as may be requested by the Agent or any of
the Lenders as to such insurance.
6.5. PRESERVATION OF EXISTENCE, ETC. The Borrower shall, and
shall cause each of its Subsidiaries to, preserve and maintain its corporate,
partnership or limited liability company existence, rights (charter and
statutory) and franchises, as the case may be, except as permitted under SECTION
7.4; PROVIDED, HOWEVER, that neither the Borrower nor any of its Subsidiaries
shall be prohibited from withdrawing its qualification to do business in any
jurisdiction from which it no longer is conducting its business.
6.6. ACCESS. The Borrower shall at any reasonable time and
from time to time, upon prior reasonable notice from the Agent or any of the
Lenders to the Borrower, permit the Agent or any such Lender, as the case may
be, or any agents or representatives thereof, to (a) examine and make copies of
and abstracts from the records and books of account of the Borrower or any of
its Subsidiaries, (b) visit the properties of the Borrower and its Subsidiaries,
(c) discuss the affairs, finances and accounts of the Borrower or any of its
Subsidiaries with any of its officers or directors and
57
(d) communicate directly with the Borrower's independent certified public
accountants. The Borrower shall authorize its independent certified public
accountants to disclose to the Agent or any Lender any and all financial
statements and other information of any kind, including, without limitation,
copies of any management letter, or the substance of any oral information that
such accountants may have with respect to the business, financial condition,
results of operations or other affairs of the Borrower or any of its
Subsidiaries.
6.7. KEEPING OF BOOKS. The Borrower shall, and shall cause
each of its Subsidiaries to, keep proper books of record and account, in which
full and correct entries in all material respects shall be made of all financial
transactions and the assets and business of the Borrower and each such
Subsidiary.
6.8. MAINTENANCE OF PROPERTIES, ETC. The Borrower shall, and
shall cause each of its Subsidiaries to, maintain and preserve (a) all of its
properties that are used or useful or necessary in the conduct of its business
in good working order and condition and (b) all rights, permits, licenses,
approvals and privileges (including, without limitation, all Permits) that are
used, useful or necessary in the conduct of its business; PROVIDED, HOWEVER,
that the Borrower shall not be deemed in default of this SECTION 6.8 if all such
failures in the aggregate would have no Material Adverse Effect.
6.9. APPLICATION OF PROCEEDS. The Borrower shall use the
entire amount of the proceeds of the Loans as provided in SECTION 4.17.
6.10. FINANCIAL STATEMENTS. The Borrower shall furnish to the
Lenders:
(a) within 30 days after the end of each fiscal month, the
unaudited consolidated balance sheet of the Borrower and its Subsidiaries as of
the end of such month and the related consolidated statements of operations and
consolidated statements of cash flows for that portion of the Fiscal Year ending
as of the end of such month setting forth in comparative form with respect to
the balance sheet and statements of income the results from both the comparable
period for the preceding Fiscal Year and the projected consolidated figures for
the current period accompanied by the certification of a Responsible Officer of
the Borrower stating (i) that all such financial statements fairly present the
consolidated financial condition of the Borrower and its Subsidiaries (subject
to year-end audit adjustments), (ii) the consolidated and consolidating
financial position, the consolidated and consolidating results of operations and
consolidated statements of cash flows of the Borrower and its Subsidiaries as at
the end of such months and for the periods then ended and (iii) that no Default
or Event of Default has occurred and is continuing as of such date;
(b) as soon as available, and in any event within 45 days
after the end of each Fiscal Quarter, consolidated and consolidating balance
sheets of the Borrower and its Subsidiaries as of the end of such Fiscal Quarter
and consolidated and consolidating statements of operations and retained
earnings and consolidated statements of cash flow of the Borrower and its
Subsidiaries for the period commencing at the end of the previous Fiscal Year
and ending with the end of such Fiscal Quarter, setting forth in
58
comparative form the results from the comparable period for the preceding Fiscal
Year all prepared in conformity with GAAP (subject to year-end audit
adjustments) and certified by a Responsible Officer of the Borrower as fairly
presenting the financial condition and results of operations of the Borrower and
its Subsidiaries at such dates and for such periods, together with (i) a
certificate of said Responsible Officer stating that no Default or Event of
Default has occurred and is continuing or, if a Default or an Event of Default
has occurred and is continuing, a statement as to the nature thereof and the
action which the Borrower proposes to take with respect thereto and (ii) a
schedule in form satisfactory to the Agent of the computations used by the
Borrower in determining compliance with the financial covenant contained in
ARTICLE V, if such covenant is effective at such time;
(c) as soon as available, and in any event within 90 days
after the end of each Fiscal Year, consolidated balance sheets of the Borrower
and its Subsidiaries as of the end of such year and consolidated statements of
operations and retained earnings and consolidated statements of cash flow of the
Borrower and its Subsidiaries and divisional operating results for such Fiscal
Year, setting forth in comparative form the results from the preceding Fiscal
Year, all prepared in conformity with GAAP and certified, in the case of such
consolidated financial statements, without qualification as to the scope of the
audit by Deloitte & Touche LLP or other independent public accountants of
recognized national standing acceptable to the Majority Lenders, together with
(i) a certificate of such accounting firm stating that in the course of the
regular audit of the business of the Borrower and its Subsidiaries, which audit
was conducted by such accounting firm in accordance with generally accepted
auditing standards, such accounting firm has obtained no knowledge that a
Default or Event of Default has occurred and is continuing, or, if in the
opinion of such accounting firm, a Default or Event of Default has occurred and
is continuing, a statement as to the nature thereof and (ii) a schedule in form
satisfactory to the Agent of the computations used by such accountants in
determining, as of the end of such Fiscal Year, the Borrower's compliance with
the financial covenant contained in ARTICLE V, if such covenant is effective at
such time;
(d) promptly after the same is received by the Borrower, a
copy of each management letter provided to the Borrower by its independent
certified public accountants that refers in whole or in part to any inadequacy,
defect, problem, qualification or other lack of fully satisfactory accounting
controls utilized by the Borrower or any of its Subsidiaries; and
(e) no later than the Friday immediately following the
Wednesday nearest to the 15th day of each month (whether prior to or subsequent
to such 15th day, PROVIDED that if the Wednesday prior to and the Wednesday
subsequent to such 15th day are equally close to such 15th day, the Wednesday
subsequent to such 15th day shall be used for the purposes of this PARAGRAPH
(e)), a Borrowing Base Certificate dated as of such Wednesday's date; PROVIDED
that if the Available Credit falls below $30,000,000 at any time, no later than
Friday of each week (through the Termination Date), the Borrower shall furnish
to the Lenders a Borrowing Base Certificate dated as of the date of the
59
immediately preceding Wednesday of such week), in each case executed by a
Responsible Officer of the Borrower.
6.11. REPORTING REQUIREMENTS. The Borrower shall furnish to
the Lenders:
(a) to the extent practicable prior to any Asset Sale
anticipated to generate in excess of $1,000,000 in Asset Sale Proceeds, a notice
(i) describing the assets being sold and (ii) stating the estimated Asset Sale
Proceeds in respect of such Asset Sale;
(b) as soon as available, and in any event no later than 30
days prior to the end of each Fiscal Year, an annual budget of the Borrower and
each of its Subsidiaries for the succeeding Fiscal Year, displaying on a monthly
and quarterly basis anticipated balance sheet information, forecasted revenues,
net income and cash flow and annual business and financial plans, such business
and financial plans being updated quarterly;
(c) as soon as available, and in any event within 30 days
prior to the end of each Fiscal Year, a forecast of annual sales, EBITDA,
Capital Expenditures, working capital requirements and projected cash flow
results of the Borrower and its Subsidiaries on a consolidated and consolidating
basis for the next succeeding 12 months;
(d) (i) promptly and in any event within 30 days after the
Borrower, any of its Subsidiaries or any ERISA Affiliate knows or has reason to
know that any ERISA Event has occurred and (ii) promptly and in any event within
10 days after the Borrower, any of its Subsidiaries or any ERISA Affiliate knows
or has reason to know that a request for a minimum funding waiver under Section
412 of the Code has been filed with respect to any Qualified Plan, a written
statement of the chief financial officer or other appropriate officer of the
Borrower describing such ERISA Event or waiver request and the action, if any,
that the Borrower, its Subsidiaries and its ERISA Affiliates propose to take
with respect thereto and a copy of any notice filed with the PBGC or the IRS
pertaining thereto;
(e) promptly and in any event within 30 days after the filing
thereof by the Borrower, any of its Subsidiaries or any ERISA Affiliate, a copy
of each annual report (Form 5500 Series, including Schedule B thereto) filed
with respect to a Pension Plan, and upon request by any Lender made through the
Agent, with respect to any other Plan;
(f) promptly and in any event within 30 days after receipt
thereof, a copy of any adverse notice, determination letter, ruling or opinion
that the Borrower, any of its Subsidiaries or any ERISA Affiliate receives from
the PBGC, DOL or IRS with respect to any Qualified Plan;
(g) promptly and in any event within 10 days after receipt
thereof, a copy of any correspondence the Borrower, any of its Subsidiaries or
any ERISA Affiliate receives from the plan sponsor (as defined by Section
4001(a)(10) of ERISA) of any
60
Multiemployer Plan concerning potential Withdrawal Liability of the Borrower,
any of its Subsidiaries or any ERISA Affiliate, or notice of any reorganization
with respect to any Multiemployer Plan, together with a written statement of a
Responsible Officer of the action which the Borrower, its Subsidiaries and its
ERISA Affiliates propose to take with respect thereto;
(h) promptly and in any event within 30 days after the
adoption thereof, notice of (i) any amendment to a Title IV Plan which results
in any material increase in benefits or the adoption of any new Title IV Plan
and (ii) any amendment to, or adoption of, a new Welfare Benefit Plan that
results in material new or increased benefits for retirees, their spouses or
their beneficiaries;
(i) promptly and in any event after receipt of written notice
of commencement thereof, notice of any action, suit or proceeding before any
Governmental Authority or arbitrator affecting the Borrower, any of its
Subsidiaries or any ERISA Affiliate with respect to any Plan, except those that
in the aggregate, if adversely determined, would have no Material Adverse
Effect;
(j) promptly and in any event within 30 days after notice or
knowledge thereof, notice that the Borrower or any of its Subsidiaries has
become subject to a material amount of tax on prohibited transactions imposed by
Section 4975 of the Code, together with a copy of any Form 5330 filed in respect
thereof;
(k) promptly after the commencement thereof, notice of all
actions, suits and proceedings before any Governmental Authority or arbitrator,
affecting the Borrower or any of its Subsidiaries, except those that in the
aggregate, if adversely determined, would have no Material Adverse Effect;
(l) promptly and in any event within two Business Days after
the Borrower becomes aware of the existence of (i) any Default or Event of
Default, (ii) any breach or non-performance of, or any default under, any
Contractual Obligation that is material to the business, prospects, operations
or financial condition of the Borrower and its Subsidiaries taken as one
enterprise or (iii) any Material Adverse Change or any event, development or
other circumstance which has any reasonable likelihood of causing or resulting
in a Material Adverse Change, telephonic or telegraphic notice in reasonable
detail specifying the nature of the Default, Event of Default, breach,
non-performance, default, event, development or circumstance, including, without
limitation, the anticipated effect thereof, which notice shall be promptly
confirmed in writing within five days of the receipt of such telephonic or
telegraphic notice;
(m) promptly after the sending or filing thereof, copies of
all reports that the Borrower sends to its security holders generally, and
copies of all reports and registration statements that the Borrower or any of
its Subsidiaries files with the Securities and Exchange Commission, any national
securities exchange or the National Association of Securities Dealers, Inc.;
61
(n) upon the request of any Lender, made through the Agent,
copies of all federal, state and local tax returns and reports filed by the
Borrower or any of its Subsidiaries in respect of taxes measured by income
(excluding sales, use and like taxes);
(o) promptly, and in any event within five days after any Loan
Party or any Subsidiary thereof learning of any of the following, written notice
of any of the following: (i) the Release or threatened Release of any Hazardous
Material on or from any property owned, operated or leased by such Loan Party or
any Subsidiary thereof required to be reported to any Governmental Authority
under any Environmental Laws; (ii) any Remedial Action taken by such Loan Party,
any Subsidiary thereof or any other Person in response to any Hazardous Material
on, under or about any real property owned, operated or leased by such Loan
Party or Subsidiary, unless such Remedial Action is not reasonably likely to
subject such Loan Party or any of its Subsidiaries to Environmental Liabilities
and Costs in excess of $1,000,000; (iii) receipt by such Loan Party or any
Subsidiary thereof of any notice of violation of, or knowledge by such Loan
Party or Subsidiary that there exists a condition which may result in a
violation by such Loan Party or any of its Subsidiaries of, any Environmental
Law, unless such violation is not reasonably likely to subject such Loan Party
to Environmental Liabilities and Costs in excess of $1,000,000; (iv) the
commencement of any judicial or administrative proceeding or investigation
alleging a material violation of any Environmental Law; (v) any material
non-compliance by any Loan Party or any of its Subsidiaries under Environmental
Laws; or (vi) any facts or circumstances at any Real Property owned, operated or
leased by any Loan Party or any of its Subsidiaries that could reasonably be
expected to result in such Loan Party incurring Environmental Liabilities and
Costs in excess of $1,000,000 or cause any such property to be subject to any
material restrictions on ownership, occupancy, use or transferability under
Environmental Laws;
(p) a schedule in the form of SCHEDULE 6.11(p) listing those
Persons who, as of the date hereof, own of record or, to the knowledge of the
Borrower, beneficially own 10% or more of any class of its outstanding Stock;
and
(q) such other information respecting the business,
properties, condition, financial or otherwise, or operations of the Borrower or
any of its Subsidiaries as any Lender made through the Agent may from time to
time reasonably request.
6.12. EMPLOYEE PLANS. With respect to each Qualified Plan
hereafter adopted or first maintained by the Borrower, any of its Subsidiaries
or any ERISA Affiliate, the Borrower shall (a) seek, and cause its Subsidiaries
and ERISA Affiliates to seek, and receive determination letters from the IRS to
the effect that such Qualified Plan is qualified within the meaning of Section
401(a) of the Code; and (b) from and after the adoption of any such Qualified
Plan, cause such Qualified Plan to be qualified within the meaning of Section
401(a) of the Code and to be administered in all material respects in accordance
with the requirements of ERISA and Section 401(a) of the Code.
6.13. FISCAL YEAR. The Borrower shall maintain as its Fiscal
Year the period of 52 or 53 weeks ending on the Saturday nearest to January 31
of each calendar year.
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6.14. BORROWING BASE DETERMINATION. (a) Upon the request of
the Agent, the Borrower shall conduct, or shall cause to be conducted, at its
expense, and shall present to the Agent for approval, such appraisals,
investigations and reviews as the Agent shall reasonably request for the purpose
of confirming the Borrowing Base, all upon reasonable notice and at such
reasonable times during normal business hours and as often as may be reasonably
requested by the Agent. The Borrower shall furnish to the Agent any information
that the Agent may reasonably request regarding the determination and
calculation of the Borrowing Base, including, without limitation, correct and
complete copies of any invoices, underlying agreements, instruments or other
documents and the identity of all obligors.
(b) The Borrower shall promptly notify the Agent and the
Lenders in writing in the event that at any time the Borrower receives or
otherwise gains knowledge that the outstanding Loans and Letter of Credit
Obligations exceed the Borrowing Base as a result of a decrease therein, and the
amount of such excess.
(c) The Agent may make physical verifications of the Loan
Parties' Inventory in any manner and through any medium that the Agent considers
advisable, and the Loan Parties shall furnish all such assistance and
information as the Agent may require in connection therewith.
6.15. CERTAIN COVENANTS REGARDING THE RECEIVABLES
SECURITIZATION. The Borrower shall:
(a) cause El-Bee to remain the sole record and beneficial
owner of the Exchangeable Transferor Certificate and the Subordinated Transferor
Certificate provided for in the Receivables Securitization;
(b) cause El-Bee to direct Bankers Trust Company, as Trustee
of the Elder-Beerman Master Trust (in such capacity, the "TRUSTEE"), established
as part of the Receivables Securitization, to make payment of the proceeds of
the Receivables Securitization to an account of El-Bee at Citibank; and
(c) cause El-Bee not to modify the foregoing payment
instructions to the Trustee;
(d) cause El-Bee to make all payments due and payable to
Chargit for purchases pursuant to the purchase agreement between Chargit, as
seller, and El-Bee, as purchaser, entered into as part of the Receivables
Securitization to be made to an account of Chargit at Citibank;
(e) cause Chargit to make all payments to the Borrower for
purchases pursuant to the purchase agreement between the Borrower, as seller,
and Chargit, as purchaser, entered into as part of the Receivables
Securitization to be made to the Cash Collateral Account; and
(f) cause El-Bee to make all payments on the Subordinated
Notes issued by El-Bee to Chargit as part of the Receivables Securitization and
assigned by
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Chargit to the Borrower as part of the Receivables Securitization to be made to
the Cash Collateral Account.
6.16. ENVIRONMENTAL MATTERS. (a) Each Loan Party shall, and
shall cause each of its Subsidiaries to, comply in all material respects with
all applicable Environmental Laws currently or hereafter in effect.
(b) If the Agent or any of the Lenders at any time have a
reasonable basis to believe that there may be a violation of any Environmental
Law that may result in liability to the Loan Parties in excess of $1,000,000 by
any Loan Party or any of its Subsidiaries related to any Real Property owned,
leased or operated by such Loan Party or any of its Subsidiaries, such Loan
Party agrees, promptly upon request from the Agent, to provide the Agent, at
such Loan Party's expense, with such reports, certificates, engineering studies
or other written material or data as the Agent or the Lenders may reasonably
require so as to reasonably satisfy the Agent and the Lenders that such Loan
Party or such Subsidiary is in material compliance with all applicable
Environmental Laws.
(c) Each Loan Party shall, and shall cause each of its
Subsidiaries to, take such Remedial Action or other action as required by
Environmental Laws, as any Governmental Authority requires, except to the extent
contested in good faith and by proper proceedings, or as is appropriate and
consistent with good business practice.
6.17. TERMINATION OF RECEIVABLES SECURITIZATION. The Borrower
shall cease selling Accounts pursuant to the Receivables Securitization upon
notice to the Borrower by the Agent if at the date such notice is given (a) an
Event of Default has occurred and is continuing and (b) the Available Credit is
less than $12,000,000.
6.18. REDUCTION OF SUBORDINATED NOTE. The Borrower promptly
shall cause each of El-Bee and Chargit to repay the outstanding principal amount
of the Pledged Debt (as defined in the Pledge and Security Agreement) to the
extent any cash is not needed that day to purchase Accounts pursuant to the
Securitization Documents.
6.19. DEPOSIT ACCOUNT CONTROL AGREEMENTS. The Borrower shall
provide the Agent not later than 90 days after the date hereof with executed
copies of a Deposit Account Control Agreement from each bank listed on SCHEDULE
6.19.
6.20. ADDITIONAL COLLATERAL AND GUARANTIES.
To the extent not delivered to the Agent on or before the
Effective Date, the Borrower agrees to provide promptly each of the following:
(a) execute and deliver, and cause its Subsidiaries to execute
and deliver, to the Agent such supplements, amendments and joinders to the
Collateral Documents (or, in the case of any Subsidiary of the Borrower that is
not a Domestic Subsidiary, foreign pledges and security agreements) as the Agent
deems necessary or advisable in order to grant to the Agent, for the benefit of
the Secured Parties, a perfected, first-priority security interest in the Stock
and Stock Equivalents and debt
64
securities of any Loan Party or Subsidiary thereof that are owned by such Loan
Party or such Subsidiary and requested by the Agent to be pledged; PROVIDED,
HOWEVER, that, unless otherwise agreed by the Borrower and the Agent, in no
event shall such Loan Party or such Subsidiary be required to pledge in excess
of 65% of the outstanding Voting Stock of any direct Subsidiary of any Borrower
or Guarantor that is not a Domestic Subsidiary or, unless such Stock is
otherwise held by the Borrower or any other Subsidiary Guarantor, any of the
Stock of any Subsidiary of such direct Subsidiary; and PROVIDED FURTHER that,
unless otherwise agreed by the Borrower and the Agent, in no event shall any
Subsidiary of any Loan Party that is not a Domestic Subsidiary be required to
guaranty the payment of the Obligations or grant a security interest on any of
its assets to secure the Secured Obligations;
(b) deliver to the Agent the certificates (if any)
representing such Stock and Stock Equivalents and debt securities, together with
(i) in the case of such certificated Stock and Stock Equivalents, undated stock
powers endorsed in blank and (ii) in the case of such certificated debt
securities, endorsed in blank, in each case executed and delivered by a
Responsible Officer of such Loan Party or such Subsidiary thereof, as the case
may be;
(c) in the case of any wholly owned Subsidiary of any Loan
Party that is a Domestic Subsidiary, cause such wholly owned Subsidiary (i) to
execute a supplement, amendment or joinder or otherwise become a party to the
Guaranty and the applicable Collateral Documents and (ii) to take such actions
necessary or advisable to grant to the Agent for the benefit of the Secured
Parties a perfected security interest in the Collateral described in the
Collateral Documents with respect to such wholly owned Subsidiary, including,
without limitation, the filing of UCC financing statements in such jurisdictions
as may be required by the Collateral Documents or by law or as may be reasonably
requested by the Agent; and
(d) if requested by the Agent, deliver to the Agent legal
opinions relating to the matters described above, which opinions shall be in
form and substance, and from counsel, reasonably satisfactory to the Agent.
6.21. INVENTORY APPRAISALS; COLLATERAL AUDITS. (a) At least
once annually, the Borrower shall permit the Collateral constituting Inventory
to be appraised by an independent appraiser satisfactory to the Agent; provided,
however, that, at the reasonable request of the Agent, the Borrower shall permit
such Collateral to be so appraised on a more frequent basis; and
(b) periodically, at the reasonable request of the Agent, the
Borrower shall permit the Agent to perform audits on the Collateral constituting
Inventory.
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ARTICLE VII
NEGATIVE COVENANTS
As long as any of the Obligations remain outstanding or any of
the Commitments remain in effect, the Borrower agrees with the Lenders, the
Issuer and the Agent that, without the written consent of the Majority Lenders:
7.1. LIENS, ETC. The Borrower shall not, and shall not permit
any of its Subsidiaries to, create or suffer to exist any Lien upon or with
respect to any of its or any such Subsidiary's properties, whether now owned or
hereafter acquired, or assign, or permit any of its Subsidiaries to assign, any
right to receive income, except for (the following are hereinafter referred to
collectively as the "PERMITTED LIENS"):
(a) Liens in favor of the Agent, the Issuers and the Lenders
created pursuant to the Loan Documents or to secure the Borrower's obligations
under Interest Rate Contracts with Citibank;
(b) Purchase money Liens upon or in any property acquired or
held by the Borrower or any of its Subsidiaries in the ordinary course of
business or in connection with the acquisition of new stores to secure the
purchase price of such property or to secure Indebtedness incurred solely for
the purpose of financing the acquisition of such property; PROVIDED, HOWEVER,
that the outstanding aggregate principal amount of the Indebtedness secured by
the Liens referred to in this PARAGRAPH (b) shall not exceed $20,000,000 at any
time;
(c) Any Lien securing the renewal, extension or refunding of
any Indebtedness or other Obligation secured by any Lien permitted by PARAGRAPHS
(b) or (i) of this SECTION 7.1 without any increase in the amount secured
thereby or in the assets subject to such Lien;
(d) Liens arising by operation of law in favor of materialmen,
mechanics, warehousemen, carriers, lessors or other similar Persons incurred by
the Borrower or any of its Subsidiaries in the ordinary course of business that
secure its obligations to such Person; PROVIDED, HOWEVER, that (i) the Borrower
or such Subsidiary is not in default with respect to such payment obligation to
such Person, (ii) the Borrower or such Subsidiary is in good faith and by
appropriate proceedings diligently contesting such obligation and adequate
provision is made for the payment thereof and (iii) all such failures in the
aggregate would have no Material Adverse Effect;
(e) Liens (excluding Environmental Liens) securing taxes,
assessments or governmental charges or levies; PROVIDED, HOWEVER, that (i)
neither the Borrower nor any of its Subsidiaries is in default in respect of any
payment obligation with respect thereto unless the Borrower or such Subsidiary
is in good faith and by appropriate proceedings diligently contesting such
obligation and adequate provision is made for the payment thereof and (ii) all
such failures in the aggregate would have no Material Adverse Effect;
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(f) Liens incurred or pledges and deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance, old-age pensions and other social security benefits;
(g) Liens securing the performance of bids, tenders, leases,
contracts (other than for the repayment of borrowed money), statutory
obligations, surety and appeal bonds and other obligations of like nature,
incurred as an incident to and in the ordinary course of business, and judgment
liens; PROVIDED, HOWEVER, that all such Liens (i) in the aggregate would have no
Material Adverse Effect and (ii) do not secure directly or indirectly judgments
in excess of $500,000 in the aggregate;
(h) Zoning restrictions, easements, licenses, reservations,
restrictions on the use of Real Property or minor irregularities incident
thereto which do not in the aggregate materially detract from the value or use
of the property or assets of the Borrower or any of its Subsidiaries or impair,
in any material manner, the use of such Real Property for the purposes for which
such Real Property is held by the Borrower or any such Subsidiary;
(i) Liens to secure Capitalized Lease Obligations if the
incurrence of such Indebtedness is permitted by SECTION 7.2; PROVIDED, HOWEVER,
that (i) any such Lien is created solely for the purpose of securing
Indebtedness representing, or incurred to finance, refinance or refund, the cost
(including, without limitation, the cost of construction) of the property
subject thereto, (ii) the principal amount of the Indebtedness secured by such
Lien does not exceed 100% of such cost, (iii) such Lien does not extend to or
cover any other property other than such item of property and any improvements
on such item of property and (iv) the outstanding aggregate principal amount of
Indebtedness secured by the Liens referred to in this PARAGRAPH (i) shall not
exceed $20,000,000 at any time; and
(j) Liens existing on the Effective Date set forth on SCHEDULE
7.1(j).
7.2. INDEBTEDNESS. The Borrower shall not create or suffer to
exist, or permit any of its Subsidiaries to create or suffer to exist, any
Indebtedness except:
(a) the Obligations;
(b) current liabilities in respect of taxes, assessments and
governmental charges or levies incurred, or claims for labor, materials,
inventory, services, supplies and rentals incurred, or for goods or services
purchased, in the ordinary course of business consistent with the past practice
of the Borrower and its Subsidiaries;
(c) Indebtedness arising under any performance bond
reimbursement obligation entered into by the Borrower consistent with the past
practice of the Borrower;
(d) Indebtedness permitted under SECTION 7.5;
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(e) Indebtedness secured by Liens permitted by SECTION 7.1(b)
and (j);
(f) Indebtedness of the Borrower or any of its Subsidiaries
under Capitalized Lease Obligations; PROVIDED, HOWEVER, that the sum of the
outstanding aggregate amount of Capitalized Lease Obligations incurred under
this PARAGRAPH (f) by the Borrower and its Subsidiaries and the outstanding
aggregate principal amount of Indebtedness incurred pursuant to PARAGRAPH (e)
above by the Borrower and its Subsidiaries shall not exceed $25,000,000 at any
time;
(g) Indebtedness of the Borrower arising under any third-party
credit card issued to certain employees of the Borrower or any of its
Subsidiaries for the incurrence of business expenses in the ordinary course of
business and consistent with past practices; PROVIDED, HOWEVER, that the
outstanding aggregate principal amount of such Indebtedness shall not exceed
$300,000 at any time;
(h) Receivables Securitization Attributed Indebtedness not to
exceed $150,000,000 in aggregate principal amount outstanding at any time; and
(i) Indebtedness of EBWVA set forth on SCHEDULE 4.21.
7.3. RESTRICTED PAYMENTS. The Borrower shall not, and shall
not permit any of its Subsidiaries to, (a) repurchase any of its Stock, declare
or make any dividend, payment or other distribution of assets, properties, cash,
rights, obligations or securities on account or in respect of any of its Stock
other than dividends paid to the Borrower or any wholly owned Subsidiary of the
Borrower by any Subsidiary of the Borrower, including, without limitation, to
the Borrower by Chargit or (b) purchase, redeem, prepay, defease or otherwise
acquire for value or make any payment (other than required interest payments) on
account or in respect of any principal amount of Indebtedness for borrowed
money, now or hereafter outstanding, except (i) the Loans, (ii) in the case of
any Subsidiary of the Borrower, payments may be made to the Borrower on account
of any Indebtedness owing to the Borrower by such Subsidiary, (iii) the
Zanesville Bonds, (iv) the Moraine Mortgage and (v) the Transamerica Note.
7.4. MERGERS, STOCK ISSUANCES, SALE OF ASSETS, ETC. (a) The
Borrower shall not, and shall not permit any of its Subsidiaries to, (i) merge
with any Person, (ii) consolidate with any Person, (iii) acquire all or
substantially all of the Stock and Stock Equivalents of any Person, (iv) acquire
all or substantially all of the assets of any Person, (v) enter into any joint
venture or partnership with any Person, (vi) sell, lease, transfer or otherwise
dispose of, whether in one transaction or in a series of transactions, all or
substantially all of its assets, except as permitted pursuant to PARAGRAPH (c)
below or (vii) form any Subsidiary.
(b) The Borrower shall not (i) issue or transfer, or permit
any of its Subsidiaries to issue or transfer, any Stock or Stock Equivalents
other than any such issuance or transfer (A) by a Subsidiary of the Borrower to
a wholly owned Subsidiary of the Borrower, (B) by a wholly owned Subsidiary of
the Borrower to the Borrower or
68
(C) to employees and directors of the Borrower pursuant to a plan approved by
the Board of Directors of the Borrower or (ii) sell, convey, transfer, lease or
otherwise dispose of, or permit any of its Subsidiaries to sell, convey,
transfer, lease or otherwise dispose of, any Stock or Stock Equivalents of any
of the Borrower's Subsidiaries unless, in any such case, both (A) all of the
Stock and Stock Equivalents of such Subsidiary owned by the Borrower and its
Subsidiaries is so sold, conveyed, transferred, leased or otherwise disposed of
and (B) such issuance, sale, conveyance, transfer, lease or disposition would be
permitted by PARAGRAPH (c) below.
(c) The Borrower shall not, and shall not permit any of its
Subsidiaries to, sell, convey, transfer, lease or otherwise dispose of any of
its assets or any interest therein to any Person, or permit, or suffer any other
Person to acquire any interest in any of the assets of the Borrower or any such
Subsidiary, except (i) the sale or disposition of Inventory or other assets in
the ordinary course of business or other tangible personal property that has
become obsolete or is replaced in the ordinary course of business, (ii) sales by
the Borrower of Chargit Receivables to Chargit and sales by Chargit of Chargit
Receivables to El-Bee, (iii) any sale or other disposition approved by the Agent
pursuant to SECTION 10.1 and (iv) Sale/Leaseback Transactions, PROVIDED that no
Default or Event of Default is continuing or would result from the consummation
of any such Sale/Leaseback Transaction and the cash proceeds thereof are
deposited in the Cash Collateral Account and applied in accordance with SECTION
6.15(b). In connection with any sale of assets permitted under this SECTION
7.4(c), at the request of the Borrower, the Agent shall release any Lien granted
to it by the Borrower or any Subsidiary of the Borrower upon any assets disposed
of in such sale of assets.
(d) The Borrower shall not, and shall not permit any of its
Subsidiaries to, sell or otherwise dispose of, or factor at maturity or
collection, any Accounts, except pursuant to the Receivables Securitization and
the bulk sale of written-off receivables.
7.5. INVESTMENTS IN OTHER PERSONS. The Borrower shall not, and
shall not permit any of its Subsidiaries to (a) directly or indirectly make or
maintain any loan or advance to any Person, (b) own, purchase or otherwise
acquire any Stock or Stock Equivalent, any other equity interest, obligations or
other securities of, or any assets constituting the purchase of a business or
line of business of, any Person or (c) make or maintain any capital contribution
to, or otherwise invest in, any Person (any such transaction referred to in the
foregoing CLAUSES (a) through (c) being an "INVESTMENT"), except:
(i) loans or advances to employees of the Borrower or any
of its Subsidiaries, which loans and advances shall not in the aggregate exceed
$250,000 outstanding at any time;
(ii) travel advances to employees of the Borrower or any
of its Subsidiaries in the ordinary course of business and consistent with past
practices;
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(iii) extensions of consumer credit by the Borrower or
any of its Subsidiaries to their respective employees, in the ordinary course of
business and consistent with past practices, in connection with its
private-label credit card;
(iv) Investments in Cash Equivalents;
(v) Investments existing on the date hereof and set forth
on SCHEDULE 7.5;
(vi) Investments in El-Bee arising from the transfer by
the Borrower to Chargit and by Chargit to El-Bee of Chargit Receivables or the
issuance by El-Bee of one or more promissory notes to Chargit, in each case in
connection with the Receivables Securitization; PROVIDED, HOWEVER, that at the
time of, and immediately after giving effect to, each such Investment, no
Default or Event of Default exists or would result therefrom and the aggregate
amount of such Investments in El-Bee does not exceed the amount necessary to
consummate the sales of Receivables and related assets contemplated by the
Securitization Documents; or
(vii) With respect to the types of Investments referred
to in CLAUSE (b) above only, other Investments not referred to in the foregoing
CLAUSES (i) through (vi) not to exceed $1,000,000 in the aggregate.
7.6. CHANGE IN NATURE OF BUSINESS. The Borrower shall not, and
shall not permit any of its Subsidiaries to, make any material change in the
nature or conduct of its business as carried on at the date hereof, except as
otherwise expressly permitted hereunder.
7.7. MODIFICATION OF SECURITIZATION DOCUMENTS, ETC. Except to
provide for the increase of the maximum Receivables Securitization Attributed
Indebtedness up to $150,000,000, the Borrower shall not, and shall not permit
any of its Subsidiaries to, (a) alter, rescind, terminate, amend, supplement,
waive or otherwise modify any provision of, or permit any breach or default to
exist under, any Securitization Document, (b) take or fail to take any action
thereunder if to do so would have a Material Adverse Effect or (c) amend, modify
or change, or consent or agree to any amendment, modification or change to, any
of the terms relating to the payment or prepayment of principal of, or premium
or interest on, any Indebtedness incurred or arising in connection with any
Securitization Document (other than any such amendment, modification or change
that would extend the maturity or reduce the amount of any payment of principal
thereof or that would reduce the rate or extend the date for payment of interest
thereon).
7.8. MODIFICATION OF MATERIAL AGREEMENTS. The Borrower shall
not, and shall not permit any of its Subsidiaries to, alter, amend, modify,
rescind, terminate or waive any of its rights under, or fail to comply in all
material respects with, any of its material Contractual Obligations; PROVIDED,
HOWEVER, that the Borrower shall not be deemed in default of this SECTION 7.8 if
all such failures in the aggregate have no Material Adverse Effect; and PROVIDED
FURTHER that in the event of any breach or event of default
70
under any such material Contractual Obligation by a Person other than the
Borrower or any of its Subsidiaries, the Borrower shall promptly notify the
Agent of any such breach or event of default and shall use its reasonable best
efforts to avoid having such breach or event of default cause a Material Adverse
Effect.
7.9. COMPLIANCE WITH ERISA.
(a) The Borrower shall not, and shall not permit any of its
Subsidiaries or any ERISA Affiliate to, directly or indirectly, by reason of an
amendment, or the adoption of, a Title IV Plan, permit the present value of all
benefit liabilities, as defined in Title IV of ERISA (using the actuarial
assumptions utilized by the PBGC upon termination of the respective plans), of
such Title IV Plan immediately after such amendment or adoption to increase by
more than $500,000 over what such amount was immediately prior to such amendment
or adoption; PROVIDED, HOWEVER, that this limitation shall not be applicable to
the extent (i) that the fair market value of assets allocable to such benefit
liabilities, all determined as of the most recent valuation date for each such
Title IV Plan for which a valuation is available, is in excess of the benefit
liabilities or (ii) that any such amendment is required by applicable law.
(b) Neither the Borrower nor any of its Subsidiaries shall
establish or become obligated with respect to any new Welfare Benefit Plan, or
modify any existing Welfare Benefit Plan, that would result in the accumulated
benefit obligations (in excess of plan assets) of post-retirement benefit
obligations (determined for SFAS 106 purposes) under all such plans immediately
after such establishment or modification to increase by more than $500,000 over
what such amount was immediately prior to such establishment or modification.
(c) Neither the Borrower nor any of its Subsidiaries shall
establish or become obligated to contribute to any new unfunded Pension Plan, or
modify any existing unfunded Pension Plan, that would result in the present
value of future liabilities under all such plans (using the actuarial
assumptions used for valuation purposes for the respective plans) immediately
after such establishment or modification to increase by more than $500,000 over
what such amount was immediately prior to such establishment or modification.
(d) The Borrower shall not, and shall not permit any of its
Subsidiaries or any ERISA Affiliate to, directly or indirectly, (i) satisfy any
liability under any Qualified Plan with a policy or other contract from an
insurance company or (ii) invest the assets of any Qualified Plan in the general
account of or in an obligation of an insurance company, unless in each case at
the time of application for any such policy or contract or of such investment,
as the case may be, such insurance company is rated AA or better by Standard &
Poor's Corporation or an equivalent or higher rating by another nationally
recognized rating agency.
7.10. ACCOUNTING CHANGES. The Borrower shall not, and shall
not permit any of its Subsidiaries to, make any "Change in Accounting Principle"
as defined in APB
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Opinion #20, except as required by GAAP or law and, in each case, as promptly
disclosed to the Lenders and the Agent.
7.11. TRANSACTIONS WITH AFFILIATES. The Borrower shall not,
and shall not permit any of its Subsidiaries to, except as otherwise expressly
permitted herein, enter into any other transaction directly or indirectly with,
or for the benefit of, any Affiliate of the Borrower that is not a wholly owned
Subsidiary of the Borrower (including, without limitation, guaranties and
assumptions of obligations of any such Affiliate), except for (a) transactions
in the ordinary course of business on a basis no less favorable to the Borrower
or such Subsidiary as would be obtained in a comparable arm's-length transaction
with a Person not an Affiliate, (b) reasonable salaries and other employee
compensation to officers or directors of the Borrower or any of its Subsidiaries
commensurate with current compensation levels and (c) any transaction required
or otherwise expressly permitted by this Agreement.
7.12. ADVERSE TRANSACTIONS. The Borrower shall not, and shall
not permit any of its Subsidiaries to, enter into or be a party to any
transaction the performance of which in the future would be inconsistent with or
has any reasonable likelihood of resulting in a breach of any covenant contained
herein or give rise to a Default or Event of Default.
7.13. CANCELLATION OF INDEBTEDNESS OWED TO IT. The Borrower
shall not, and shall not permit any of its Subsidiaries to, cancel any claim or
Indebtedness owed to it except for adequate consideration or in the ordinary
course of business.
7.14. NO NEGATIVE PLEDGE. The Borrower shall not, and shall
not permit any of its Subsidiaries to, enter into any agreement that restricts
its ability to create or suffer to exist any Lien, other than an agreement that
expressly permits the Liens contemplated by this Agreement and the other Loan
Documents and any agreement for the refinancing of the Facility.
7.15. CAPITAL STRUCTURE. The Borrower shall not, and shall not
permit any of its Subsidiaries to, make any change in its capital structure
(including, without limitation, in the terms of its outstanding Stock) or amend
its certificate of incorporation or by-laws (or other equivalent governing
documents), other than for amendments that in the aggregate would have no
Material Adverse Effect.
7.16. NO SPECULATIVE TRANSACTIONS. The Borrower shall not, and
shall not permit any of its Subsidiaries to, engage in any speculative
transaction or in any transaction involving commodity options or futures
contracts except for the sole purpose of hedging in the normal course of
business and consistent with industry practices.
7.17. ENVIRONMENTAL MATTERS. The Borrower shall not permit any
Loan Party, any Subsidiary thereof or, to the extent practicable, any other
Person to:
(a) dispose of any Hazardous Material by placing it in, or on
the ground or waters of, any property owned, operated or leased by any such Loan
Party or Subsidiary, except in compliance with all Environmental Laws; PROVIDED
that no such
72
Loan Party or Subsidiary shall undertake any activities that would require it to
obtain a permit as a treatment, storage or disposal facility under Environmental
Laws; or
(b) dispose, or arrange for the disposal, of any Hazardous
Material on any property owned, operated or leased by any other Person, except
in material compliance with all applicable Environmental Laws currently and
hereinafter in effect.
7.18. CHANGE IN OWNERSHIP UNDER SECTION 382 OF THE CODE. The
Borrower shall not, and shall not permit any of its Subsidiaries to, take any
action that, alone or in combination with any other action, would, within the
reasonable determination of the Agent, result in there being or having been an
ownership change within the meaning of Section 382 of the Code.
7.19. CONTINGENT OBLIGATIONS. The Borrower shall not, and
shall not permit any of its Subsidiaries to, incur, assume, endorse, be or
become liable for, guarantee, directly or indirectly, or permit or suffer to
exist any Contingent Obligation, except for:
(a) Contingent Obligations evidenced by a Loan Document;
(b) guarantees by the Borrower of Indebtedness of any of its
Subsidiaries to the extent such underlying Indebtedness is permitted hereunder;
(c) the "Parent Undertaking" pursuant to and as defined in the
Securitization Documents; and
(d) Contingent Obligations arising in connection with the CSFB
Sale/Leaseback.
7.20. STORE CLOSURES. The Borrower shall not (a) close greater
than 7.5% of its store locations in any Fiscal Year unless it provides 60 days'
prior written notice thereof to the Agent or (b) close greater than 15% of its
store locations in any Fiscal Year without the prior written consent of the
Agent (which consent shall not be unreasonably withheld).
ARTICLE VIII
EVENTS OF DEFAULT
8.1. EVENTS OF DEFAULT. Each of the following events shall be
an Event of Default:
(a) (i) The Borrower shall fail to pay any principal
(including, without limitation, mandatory prepayments of principal) of any Loan
when the same becomes due and payable or (ii) any Loan Party shall fail to make
any other payment under any other Loan Document within three days after such
payment becomes due and payable;
(b) Any representation or warranty made or deemed made by any
Loan Party in any Loan Document or by any Loan Party (or any of its officers) in
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connection with any Loan Document shall prove to have been incorrect in any
material respect when made or deemed made;
(c) Any Loan Party shall fail to perform or observe (i) any
term, covenant or agreement contained in ARTICLE V, VI (other than SECTION
6.10(a), (b) and (c)) or VII or (ii) any other term, covenant or agreement
contained in this Agreement or in any other Loan Document if such failure under
this CLAUSE (ii) shall remain unremedied for ten Business Days after the earlier
of the date on which (A) a Responsible Officer of the Borrower becomes aware of
such failure or (B) written notice thereof has been given to the Borrower by the
Agent or any Lender;
(d) (i) Any Loan Party or any of its Subsidiaries shall fail
to pay any principal of, or premium or interest on, Indebtedness of such Loan
Party or Subsidiary having an aggregate principal amount of $5,000,000 or more
(excluding the Loans), when such payment becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise),
(ii) any other event shall occur or condition shall exist under any agreement or
instrument relating to any such Indebtedness, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity of
such Indebtedness or (iii) any such Indebtedness shall become or be declared to
be due and payable, or required to be prepaid (other than by a regularly
scheduled required prepayment), or any Loan Party or any of its Subsidiaries
shall be required to repurchase or offer to repurchase such Indebtedness, prior
to the stated maturity thereof;
(e) (i) Any Loan Party or any of its Subsidiaries shall (A)
generally not pay its debts as such debts become due, (B) admit in writing its
inability to pay its debts generally or (C) make a general assignment for the
benefit of creditors, (ii) any proceeding shall be instituted by or against any
Loan Party or any of its Subsidiaries seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a custodian,
receiver, trustee or other similar official for it or for any substantial part
of its property and, in the case of any such proceedings instituted against any
Loan Party or any of its Subsidiaries (but not instituted by it), either such
proceedings shall remain undismissed or unstayed for a period of 30 days or any
of the actions sought in such proceedings shall occur or (iii) any Loan Party or
any of its Subsidiaries shall take any action to authorize any of the actions
set forth above in this PARAGRAPH (e);
(f) Any judgment or order for the payment of money in excess
of $1,000,000, to the extent not fully covered by insurance, shall be rendered
against any Loan Party or any of its Subsidiaries and either (i) enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order or (ii) there shall be any period of ten consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect;
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(g) (i) With respect to any Plan, a prohibited transaction
within the meaning of Section 4975 of the Code or Section 406 of ERISA shall
occur that in the reasonable determination of the Agent has a reasonable
likelihood of resulting in direct or indirect liability to the Borrower or any
of its Subsidiaries, (ii) with respect to any Title IV Plan, the filing of a
notice to voluntarily terminate any such Plan in a distress termination, (iii)
with respect to any Multiemployer Plan, the Borrower, any of its Subsidiaries or
any ERISA Affiliate shall incur any Withdrawal Liability, (iv) with respect to
any Qualified Plan subject to Section 412 of the Code, the Borrower, any of its
Subsidiaries or any ERISA Affiliate shall incur an accumulated funding
deficiency, as defined in Section 412 of the Code, or request a funding waiver
thereunder from the IRS or (v) with respect to any Title IV Plan or
Multiemployer Plan which has an ERISA Event not described in CLAUSES (i) through
(iv) hereof, in the reasonable determination of the Agent there is a reasonable
likelihood for termination of any such Plan by the PBGC; PROVIDED, HOWEVER, that
the events listed in CLAUSES (i) through (v) hereof shall constitute Events of
Default if the liability, deficiency or waiver request of the Borrower, any of
its Subsidiaries or any ERISA Affiliate, whether or not assessed, (x) exceeds
$500,000 in any case set forth in CLAUSES (i) through (v) above or (y) exceeds
$1,000,000 in the aggregate for all such cases;
(h) There shall occur a Change of Control;
(i) There shall occur in the reasonable judgment of the
Majority Lenders a Material Adverse Change or an event which would have a
Material Adverse Effect;
(j) The Borrower or any of its Subsidiaries shall have entered
into any consent or settlement decree or agreement or similar arrangement with a
Governmental Authority or any judgment, order, decree or similar action shall
have been entered against the Borrower or any of its Subsidiaries, in either
case based on or arising from the violation of or pursuant to any Environmental
Law, or the generation, storage, transportation, treatment, disposal or Release
of any Contaminant and, in connection with all the foregoing, the Borrower and
its Subsidiaries are likely to incur Environmental Liabilities and Costs in
excess of $1,000,000; or
(k) The Receivables Securitization shall be terminated
and the Borrower or any of its Subsidiaries shall enter into a receivables
securitization program without the consent of the Agent and the Majority
Lenders, such consent not to be unreasonably withheld.
8.2. REMEDIES. (a) If there shall occur and be continuing any
Event of Default, the Agent (i) shall at the request, or may with the consent,
of the Majority Lenders by notice to the Borrower, declare the obligation of
each Lender to make Loans and each Issuer to issue Letters of Credit to be
terminated, whereupon the same shall forthwith terminate and (ii) shall at the
request, or may with the consent, of the Majority Lenders by notice to the
Borrower, declare the Loans, all accrued and unpaid interest thereon and all
other amounts and Obligations payable under this Agreement and the other Loan
Documents to be forthwith due and payable, whereupon the Loans, the
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Revolving Credit Notes, if any, all such interest and all such other amounts and
Obligations shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower; PROVIDED, HOWEVER, that upon the occurrence of an Event
of Default specified in SECTION 8.1(e), (x) the obligation of each Lender to
make Loans and of each Issuer to issue Letters of Credit shall automatically be
terminated and (y) the Loans, all such interest and all such amounts and
Obligations shall automatically become and be due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by the Borrower. In addition to the remedies set forth above,
the Agent may exercise any remedies provided for by the Loan Documents in
accordance with the terms thereof or any other remedies provided by applicable
law.
(b) In addition to the remedies set forth above, the Agent, on
behalf of the Lenders and the Issuers, may, and, at the request of the Majority
Lenders, shall exercise any of the remedies with respect to the Collateral
provided for in the Collateral Documents or any other remedies provided by
applicable law.
8.3. ACTIONS IN RESPECT OF LETTERS OF CREDIT. (a) Upon the
Termination Date, the Borrower shall pay to the Agent in immediately available
funds at the Agent's office specified herein, for deposit in the Cash Collateral
Account to be maintained with, and be in the name of, the Agent on behalf of the
Secured Parties at such place as shall be designated by the Agent, an amount
equal to 105% of all outstanding Letter of Credit Obligations.
(b) Following the Termination Date, the Agent may, from time
to time, apply funds then held in the Cash Collateral Account to the payment of
any of the Obligations, in such order as the Agent may elect in its sole
discretion.
(c) Any cash held in the Cash Collateral Account may, in the
discretion of the Agent, be applied (after the expiration of all outstanding
Letters of Credit and the payment of any amounts payable pursuant to SECTION
10.4) in whole or in part by the Agent against all or any part of the other
Obligations in such order as the Agent shall elect in its sole discretion. Any
surplus of such cash held by the Agent and remaining after the indefeasible cash
payment in full of all of the Obligations shall be paid over to the Borrower or
to whomsoever may be lawfully entitled to receive such surplus.
ARTICLE IX
THE AGENT
9.1. AUTHORIZATION AND ACTION. (a) Each Lender hereby appoints
and authorizes CUSA, in its capacities as Agent and collateral monitoring agent,
and Fleet, in its capacity as syndication 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 them by the terms hereof and thereof, if any,
together with such powers as are reasonably incidental thereto. Without
limitation of the foregoing, each Lender hereby authorizes the Agent to execute
and deliver, and to perform its obligations under, each of the Loan
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Documents to which the Agent is a party, and to exercise all rights, powers and
remedies that the Agent may have under the Loan Documents.
(b) As to any matters not expressly provided for by this
Agreement and the other Loan Documents (including, without limitation,
enforcement or collection of the Revolving Credit Notes, if any), the Agent
shall not be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Majority Lenders,
and such instructions shall be binding upon all Lenders and all holders of
Revolving Credit Notes, if any; PROVIDED, HOWEVER, that the Agent shall not be
required to take any action that the Agent in good faith believes exposes it to
personal liability or is contrary to this Agreement, any of the other Loan
Documents or applicable law. The Agent agrees to give to each Lender prompt
notice of each notice given to it by any Loan Party pursuant to the terms of
this Agreement or the other Loan Documents.
9.2. AGENT'S RELIANCE, ETC. None of the Agent, any of its
Affiliates or any of their respective directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by such Person under
or in connection with this Agreement or any of the other Loan Documents, except
for liability caused by such Person's own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, the Agent (a)
may treat the payee of any Revolving Credit Note, if any, as the holder thereof
until such note has been assigned in accordance with SECTION 10.7; (b) may rely
on the Register to the extent set forth in SECTION 10.7(c); (c) may consult with
legal counsel (including, without limitation, counsel to the Borrower or any
other Loan Party), independent public accountants and other experts selected by
it, and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts; (d) makes no warranty or representation to any Lender or Issuer and
shall not be responsible to any Lender or Issuer for any statements, warranties
or representations made in or in connection with this Agreement or any of the
other Loan Documents; (e) shall not have any duty to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or conditions of
this Agreement or any of the other Loan Documents on the part of the Borrower or
any other Loan Party or to inspect the property (including, without limitation,
the books and records) of the Borrower or any other Loan Party; (f) shall not be
responsible to any Lender or Issuer for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any of
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; and (g) shall incur no liability under or in respect of this
Agreement or any of the other Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telegram, cable,
telex, facsimile or e-mail transmission) believed by it to be genuine and signed
or sent by the proper party or parties.
9.3. THE AGENT INDIVIDUALLY. With respect to its Commitment,
the Loans made by it, each Revolving Credit Note issued to it, if any, and
Letters of Credit issued by it, if any, the Agent hall have the same rights and
powers under this Agreement as any other Lender or Issuer and may exercise the
same as though it were not the Agent; and the term "Lender", "Lenders", "Issuer"
or "Issuers" shall, unless otherwise expressly
77
indicated, include the Agent in its individual capacity. The Agent and its
Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with, the Borrower,
any other Loan Party, any of their respective Subsidiaries or any Person who may
do business with, or own securities of, the Borrower, any other Loan Party or
any of their respective Subsidiaries, all as if the Agent were not the Agent and
without any duty to account therefor to the Lenders.
9.4. LENDER CREDIT DECISION. Each Lender acknowledges that it
has, independently and without reliance upon the Agent, any Issuer or any other
Lender and based on the financial statements referred to in ARTICLE IV and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and without
reliance upon the Agent, any Issuer 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 and other Loan Documents.
9.5. INDEMNIFICATION. The Lenders agree to indemnify the
Agent, its Affiliates and their respective directors, officers, employees,
agents and advisors (to the extent not reimbursed by the Borrower or the other
Loan Parties), ratably according to the respective principal amounts of the
Loans then held by each of them and Letter of Credit Obligations (including,
without limitation, participations therein) owing to them (or if no Loans and
Letter of Credit Obligations are at the time outstanding, ratably according to
their respective Commitments), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and disbursements (including, without limitation, fees and
disbursements of legal counsel) of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against, any such Person in any way
relating to or arising out of this Agreement or any of the other Loan Documents
or any action taken or omitted by any such Person under this Agreement or any of
the other Loan Documents; PROVIDED, HOWEVER, that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from such
Person's gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender agrees to reimburse the Agent promptly upon demand for
its ratable share of any out-of-pocket expenses (including, without limitation,
fees and disbursements of legal counsel) incurred by the Agent or any of its
Affiliates in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
its rights or responsibilities under, this Agreement or any of the other Loan
Documents, to the extent that the Agent or any such Affiliate is not reimbursed
for such expenses by the Borrowers or another Loan Party.
9.6. SUCCESSOR AGENT. The Agent may resign at any time by
giving written notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Majority Lenders shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Majority
Lenders, and shall have accepted such appointment, within 30 days after the
resigning Agent's giving of notice of
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resignation, then the resigning Agent may, on behalf of the Lenders, appoint a
successor Agent, which shall be a commercial bank organized under the laws of
the United States of America or of any State thereof and having a combined
capital and surplus of at least $50,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under this Agreement and the other Loan
Documents. After any retiring Agent's resignation hereunder as Agent, the
provisions of this ARTICLE IX shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement and the
other Loan Documents.
ARTICLE X
MISCELLANEOUS
10.1. AMENDMENTS, ETC. (a) No amendment or waiver of any
provision of this Agreement nor consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Majority Lenders, and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; PROVIDED, HOWEVER, that no amendment, waiver or consent shall, unless in
writing and signed by all of the Lenders, do any of the following: (i) increase
the Commitments of the Lenders or subject the Lenders to any additional
obligations; (ii) reduce the principal of, or interest on, the Loans or any fees
or other amounts payable hereunder; (iii) postpone any date fixed for any
payment of principal of, or interest on, the Loans or any fees or other amounts
payable hereunder; (iv) change the percentage of the Commitments, the aggregate
unpaid principal amount of the Loans or the number of Lenders that shall be
required for the Lenders or any of them to take any action hereunder; (v)
release any Collateral or Guarantor except as shall otherwise be provided in (A)
CLAUSE (ii) of the second proviso of this SECTION 10.1, (B) SECTION 7.4 or (C)
any of the other Loan Documents; (vi) amend this SECTION 10.1; or (vii) increase
the Advance Rates in effect from time to time in violation of the definition of
"Advance Rate"; and PROVIDED FURTHER, HOWEVER, that (i) no amendment, waiver or
consent shall, unless in writing and signed by the Agent in addition to the
Lenders required above to take such action, affect the rights or duties of the
Agent under this Agreement or the other Loan Documents and (ii) the Agent may,
without the consent of the Lenders, release (x) Collateral disposed of in one or
more transactions not constituting Asset Sales under this Agreement and (y)
other Collateral not disposed of pursuant to CLAUSE (x) above that has a value
determined at the lower of cost or net book value not in excess of $15,000,000
in the aggregate, PROVIDED that each disposition of Collateral pursuant to this
CLAUSE (ii) shall be at the fair market value of such Collateral, as determined
by the Agent in its reasonable discretion based upon facts and circumstances
existing at the time of such sale or other disposition as shall be presented to
it by the Borrower, and PROVIDED FURTHER that all net proceeds from any such
sale or other disposition shall be applied to prepay the Loans in the same
manner provided for the application of Asset Sales in SECTION 2.6(b)(i) and
reduce the Commitments in the same manner provided for Asset Sales in SECTION
2.4(b).
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(b) If, in connection with any proposed amendment or waiver of
any of the provisions of this Agreement as contemplated by CLAUSES (i) through
(vii) of the first proviso of SECTION 10.1(a) above, the consent of the Majority
Lenders is obtained but the consent of one or more of such other Lenders whose
consent is required is not obtained, then the Agent shall have the right to
purchase the interest of each such non-consenting Lender (so long as the
interests of all non-consenting Lenders are so purchased), together with accrued
and unpaid interest, and assume each such Lender's Commitment.
10.2. NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing telecopied or delivered by hand or by
nationally recognized overnight courier, if to the Borrower or any other Loan
Party, addressed to it at 3155 El-Bee Road, Dayton, Ohio 45439 (telecopy number:
(937) 296-4651) (telephone number: (937) 296-2700), Attention: Secretary; if to
any Lender, at its Domestic Lending Office specified opposite its name on
SCHEDULE II, or in any Assignment and Acceptance pursuant to which such Lender
became a Lender, as the case may be; if to any Issuer at its address set forth
on SCHEDULE III; and if to the Agent, at its address at 388 Greenwich Street,
New York, New York 10013 (telecopy number: (212) 816-1613) (telephone number:
(212) 816-2399), Attention: Jeffrey Nitz; or, as to the Borrowers or the Agent,
at such other address as shall be designated by such party in a written notice
to the other parties and, as to each other party, at such other address as shall
be designated by such party in a written notice to the Borrowers and the Agent.
All such notices and communications shall be effective when telecopied or
e-mailed with confirmation of receipt or delivered by hand or by nationally
recognized overnight courier to the addressee or its agent, respectively, except
that notices and communications to the Agent pursuant to ARTICLE II or IX shall
not be effective until received by the Agent.
10.3. NO WAIVER; REMEDIES. No failure on the part of any
Lender or the Agent to exercise, and no delay in exercising, any right hereunder
or under any Revolving Credit Note, if any, shall operate as a waiver thereof;
nor shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
10.4. COSTS; EXPENSES; INDEMNITIES. (a) The Borrower and each
other Loan Party jointly and severally agrees to pay on demand (i) all
reasonable costs and expenses of the Agent and the Arranger in connection with
the preparation, execution, delivery, administration, modification and amendment
of this Agreement, each of the other Loan Documents and each of the other
documents to be delivered hereunder and thereunder, including, without
limitation, all fees, out-of-pocket expenses and disbursements of counsel,
accountants, appraisers, consultants or industry experts retained by the Agent
and the Arranger with respect thereto, search, filing and recording fees, due
diligence, syndication (including, without limitation, printing, distribution
and bank meeting), transportation, computer, duplication, messenger, audit,
insurance, appraisal and consultation costs and expenses and, as to the Agent
and the Arranger, with respect to advising it as to its rights and
responsibilities under this Agreement and the other Loan Documents and (ii) all
costs and expenses of the Agent, the Arranger, each
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Issuer and each Lender (including, without limitation, the fees and
out-of-pocket expenses of counsel, accountants, appraisers, consultants or
industry experts retained by the Agent, the Arranger, any Issuer or any Lender)
in connection with the enforcement (whether through negotiation, legal
proceedings or otherwise) of this Agreement and the other Loan Documents.
(b) The Borrower agrees to indemnify and hold harmless the
Agent, the Arranger, each Issuer and each Lender, their respective Affiliates
and the directors, officers, employees, agents, attorneys, consultants and
advisors of or to any of the foregoing (including, without limitation, those
retained in connection with the satisfaction or attempted satisfaction of any of
the conditions set forth in ARTICLE III) (each of the foregoing being an
"INDEMNITEE") from and against any and all claims, damages, liabilities,
obligations, losses, penalties, actions, judgments, suits, costs, disbursements
and expenses of any kind or nature (including, without limitation, fees and
disbursements of counsel to any such Indemnitee) that may be imposed on,
incurred by or asserted against any such Indemnitee (including, without
limitation, in connection with or arising out of any investigation, litigation
or proceeding, whether or not any such Indemnitee is a party thereto, whether
direct, indirect, or consequential and whether based on any federal, state or
local law or other statutory regulation, securities or commercial law or
regulation, or under common law or in equity, or on contract, tort or
otherwise), in any manner relating to or arising out of this Agreement, any
other Loan Document, any Obligation, any Letter of Credit or any act, event or
transaction related or attendant to any thereof, including, without limitation,
(i) all Environmental Liabilities and Costs arising from or connected with the
past, present or future operations of the Borrower or any of its Subsidiaries
involving any property subject to a Collateral Document, or damage to Real
Property or personal property or natural resources or harm or injury alleged to
have resulted from any Release of contaminants on, upon or into such property or
any contiguous real estate; (ii) any costs or liabilities incurred in connection
with any Remedial Action concerning the Borrower or any of its Subsidiaries;
(iii) any costs or liabilities incurred in connection with any Environmental
Lien; (iv) any costs or liabilities incurred in connection with any other matter
under any Environmental Law, including, without limitation, CERCLA and
applicable state property transfer laws, whether, with respect to any of the
foregoing, such Indemnitee is a mortgagee pursuant to any leasehold mortgage, a
mortgagee in possession, the successor in interest to the Borrower or any of its
Subsidiaries, or the owner, lessee or operator of any property of the Borrower
or any of its Subsidiaries by virtue of foreclosure, except, with respect to any
of the foregoing referred to in CLAUSES (i), (ii), (iii) and (iv), to the extent
incurred following (A) foreclosure by the Agent or any Lender, or the Agent, any
Issuer or any Lender having become the successor in interest to the Borrower or
any of its Subsidiaries, and (B) attributable solely to acts of the Agent, such
Issuer or such Lender or any agent on behalf of the Agent, such Issuer or such
Lender; or (v) the use or intended use of the proceeds of the Loans or in
connection with any investigation of any potential matter covered hereby
(collectively, the "INDEMNIFIED Matters"); PROVIDED, HOWEVER, that the Borrower
shall not have any obligation under this SECTION 10.4(b) to an Indemnitee with
respect to any Indemnified Matter caused by or resulting from the gross
negligence or willful misconduct of that Indemnitee, as determined by a court of
competent jurisdiction
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in a final non-appealable judgment or order, but in no event shall an Indemnitee
be liable for punitive, exemplary or consequential damages.
(c) If any Lender receives any payment of principal of, or is
subject to a conversion of, any Eurodollar Rate Loan other than on the last day
of an Interest Period relating to such Loan, as a result of any payment or
conversion made by the Borrower or acceleration of the maturity of the Loans
pursuant to SECTION 8.2 or for any other reason, the Borrower shall, upon demand
by such Lender (with a copy of such demand to the Agent), pay to the Agent for
the account of such Lender all amounts required to compensate such Lender for
any additional losses, costs or expenses which it may reasonably incur as a
result of such payment or conversion, including, without limitation, any loss,
cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Lender to fund or maintain such Loan.
(d) The Borrower shall indemnify the Agent, the Issuers and
the Lenders for, and hold the Agent, the Issuers and the Lenders harmless from
and against, any and all claims for brokerage commissions, fees and other
compensation made against the Agent, the Issuers and the Lenders for any broker,
finder or consultant with respect to any agreement, arrangement or understanding
made by or on behalf of any Loan Party or any of its Subsidiaries in connection
with the transactions contemplated by this Agreement or any of the other Loan
Documents.
(e) The Agent, each Issuer and each Lender agrees that in the
event that any such investigation, litigation or proceeding set forth in
PARAGRAPH (b) above is asserted or threatened in writing or instituted against
it or any other Indemnitee, or any Remedial Action, is requested of it or any of
its officers, directors, agents and employees, for which any Indemnitee may
desire indemnity or defense hereunder, such Indemnitee shall promptly notify the
Borrower in writing.
(f) The Borrower, at the request of any Indemnitee, shall have
the obligation to defend against such investigation, litigation or proceeding or
requested Remedial Action, and the Borrower, in any event, may participate in
the defense thereof with legal counsel of the Borrower's choice. In the event
that such Indemnitee requests the Borrower to defend against such investigation,
litigation or proceeding or requested Remedial Action, the Borrower shall
promptly do so and such Indemnitee shall have the right to have legal counsel of
its choice participate in such defense; PROVIDED, HOWEVER, that in connection
with any such investigation, litigation or proceeding or the preparation of a
defense with respect thereto, the Borrower shall not be responsible for, or
required to hold harmless any Indemnitee from and against the fees and
disbursements of more than one counsel for all of the Indemnitees taken
together, except to the extent that any such Indemnitee requires its own counsel
in order to be adequately represented in the reasonable judgment of counsel for
such Indemnitee. No action taken by legal counsel chosen by such Indemnitee in
defending against any such investigation, litigation or proceeding or requested
Remedial Action, shall vitiate or in any way impair the Borrower's obligation
and duty hereunder to indemnify and hold harmless such Indemnitee.
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(g) The Borrower agrees that any indemnification or other
protection provided to any Indemnitee pursuant to this Agreement (including,
without limitation, pursuant to this SECTION 10.4) or any other Loan Document
shall (i) survive payment of the Obligations and (ii) inure to the benefit of
any Person who was at any time an Indemnitee under this Agreement or any other
Loan Document.
10.5. RIGHT OF SET-OFF. Upon the occurrence and during the
continuance of any Event of Default, each Lender and each Affiliate of any
Lender is hereby authorized at any time and from time to time, to the fullest
extent permitted by law, to set-off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and any other
Indebtedness at any time owing by such Lender or Affiliate to or for the credit
or the account of the Borrower against any and all of the Obligations now or
hereafter existing, whether or not such Lender or Affiliate shall have made any
demand under this Agreement, any Revolving Credit Note, if any, any Letter of
Credit Reimbursement Agreement or any other Loan Document and even if
Obligations are unmatured. Each Lender and each Affiliate thereof agrees
promptly to notify the Borrower after any such set-off and application made by
such Lender or Affiliate; PROVIDED, HOWEVER, that the failure to give such
notice shall not affect the validity of such set-off and application. The rights
of each Lender and each Affiliate thereof under this SECTION 10.5 are in
addition to the other rights and remedies (including, without limitation, other
rights of set-off) that such Lender or Affiliate may have.
10.6. BINDING EFFECT. This Agreement shall become effective
when it has been executed by the Borrower and the Agent and when the Agent shall
have been notified by each Lender and Issuer that such Lender or Issuer has
executed this Agreement and thereafter shall be binding upon and inure to the
benefit of the Borrower, the Agent, each Lender and each Issuer and their
respective successors and assigns, except that the Borrower shall not have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Lenders.
10.7. ASSIGNMENTS AND PARTICIPATIONS. (a) Each Lender may
sell, transfer, negotiate or assign to one or more other Lenders or Eligible
Assignees all or a portion of its Commitment, including, without limitation, in
the case of an Issuer, its commitment to issue Letters of Credit and, in the
case of each Lender, to participate in Letter of Credit Obligations and Swing
Loans, the Loans and Letter of Credit Obligations owing to it and the Revolving
Credit Note held by it, if any, and a commensurate portion of its rights and
obligations hereunder and under the other Loan Documents; PROVIDED, HOWEVER,
that (i) each such assignment shall be of a constant, and not a varying,
percentage of all of the assigning Lender's rights and obligations under this
Agreement and the other Loan Documents, (ii) the aggregate amount of the
Commitments, Letters of Credit, Letter of Credit Obligations and Loans being
assigned pursuant to each such assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall in no event (if
less than the Assignor's entire interest) be less than $5,000,000 or an integral
multiple of $1,000,000 in excess thereof, except, in either case, with the
consent of the Borrower and the Agent, and (iii) each assignee hereunder shall
also be an Eligible Assignee. The parties to each assignment shall execute and
deliver to the Agent, for its acceptance and recording, together with a $3,500
fee payable to the
83
Agent for processing such assignment, an Assignment and Acceptance, together
with the Revolving Credit Notes (or an Affidavit of Loss and Indemnity with
respect to such Revolving Credit Notes satisfactory to the Agent), if any,
subject to such assignment. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in such Assignment and
Acceptance, (A) the assignee thereunder shall become a party hereto and, to the
extent that rights and obligations under the Loan Documents have been assigned
to such assignee pursuant to such Assignment and Acceptance, have the rights and
obligations of a Lender, and if such Lender was an Issuer, of an Issuer
hereunder and thereunder and (B) the assignor thereunder shall, to the extent
that rights and obligations under this Agreement have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights (except those
that survive the payment in full of the Obligations) and be released from its
obligations under the Loan Documents (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under the Loan Documents, such Lender shall cease to be a party
hereto).
(b) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any of
the statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document furnished pursuant thereto or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement, any other Loan Document or any other instrument or document
furnished pursuant hereto or thereto; (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of any Loan Party or the performance or observance by any
Loan Party of any of its obligations under this Agreement, any other Loan
Document or any other instrument or document furnished pursuant hereto or
thereto; (iii) such assigning Lender confirms that it has delivered to the
assignee copies of the Loan Documents and the assignee confirms that it has
received such copies, together with a copy of the most recent financial
statements delivered by the Borrower to the Lenders pursuant to each of the
clauses of SECTION 6.10 (or if no such statements have been delivered, the
financial statements referred to in SECTION 4.5 of this Agreement) 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; (iv)
such assignee will, independently and without reliance upon the Agent, such
assigning Lender, any Issuer 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; (v)
such assignee confirms that it is an Eligible Assignee; (vi) such assignee
appoints and authorizes the 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 Agent by the terms hereof and thereof, together with such
powers as are reasonably incidental thereto; and (vii) such assignee agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of this Agreement are required to be performed by it as a Lender and
if such assignor Lender was an Issuer, as an Issuer.
84
(c) The Agent shall maintain at its address referred to in
SECTION 10.2 a copy of each Assignment and Acceptance delivered to and accepted
by it and a register for the recordation of the names and addresses of the
Lenders and the Commitments of, commitments to issue Letters of Credit, Letter
of Credit Obligations owing to, and principal amount of the Loans owing to each
Lender from time to time (the "REGISTER"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the Loan
Parties, the Agent, the Issuers and the Lenders may treat each Person whose name
is recorded in the Register as a Lender or Issuer, as the case may be, for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower, the Agent, any Issuer or any Lender at any reasonable time and
from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an assignee representing that it is an Eligible
Assignee, together with the Revolving Credit Notes subject to such assignment,
if any, the Agent shall, if such Assignment and Acceptance has been completed,
(i) accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Borrower. If
requested by such assignee, within five Business Days after its receipt of such
notice, the Borrower, at its own expense, shall execute and deliver to the
Agent, in exchange for such surrendered Revolving Credit Notes, new Revolving
Credit Notes to the order of such Eligible Assignee in an amount equal to the
Commitments assumed by it pursuant to such Assignment and Acceptance and, if the
assigning Lender has retained Commitments hereunder, and if any are requested,
new Revolving Credit Notes to the order of the assigning Lender in an amount
equal to the Commitments retained by it hereunder. Such new Revolving Credit
Notes, if any are requested, shall be dated the same date as the surrendered
Revolving Credit Notes, if any, and be in substantially the form of EXHIBIT A.
(e) In addition to the other assignment rights provided in
this SECTION 10.7, each Lender may assign, as collateral or otherwise, any of
its rights under this Agreement (including, without limitation, rights to
payments of principal or interest on the Revolving Credit Notes, if any) to any
Federal Reserve Bank without notice to or consent of the Borrower or the Agent;
PROVIDED, HOWEVER, that no such assignment shall release the assigning Lender
from any of its obligations hereunder. The terms and conditions of any such
assignment and the documentation evidencing such assignment shall be in form and
substance satisfactory to the assigning Lender and the assignee Federal Reserve
Bank.
(f) Each Lender may sell participations to one or more banks
or other Persons in or to all or a portion of its rights and obligations under
the Loan Documents (including, without limitation, all or a portion of its
Commitments, the Letter of Credit Obligations owing to it, the Loans owing to it
and the Revolving Credit Notes held by it, if any). The terms of such
participation shall not, in any event, require the participant's consent to any
amendments, waivers or other modifications of any provision of any Loan
Documents, the consent to any departure by any Loan Party therefrom, or to the
exercising or refraining from exercising any powers or rights which such Lender
may have under or in respect of the Loan Documents (including, without
limitation, the right
85
to enforce the obligations of the Loan Parties), except if any such amendment,
waiver or other modification or consent would (i) reduce the amount, or postpone
any date fixed for, any amount (whether of principal, interest or fees) payable
to such participant under the Loan Documents, to which such participant would
otherwise be entitled under such participation or (ii) result in the release of
all or substantially all of the Collateral other than in accordance with the
Loan Documents. In the event of the sale of any participation by any Lender, (i)
such Lender's obligations under the Loan Documents (including, without
limitation, its Commitment and its commitment hereunder to issue Letters of
Credit, if any) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender shall remain the holder of such Revolving Credit Notes, if
any, and Obligations for all purposes of this Agreement and (iv) the Borrower,
the Agent, the Issuers and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents.
(g) Each Issuer may at any time assign its rights and
obligations hereunder to any other Issuer or to any Lender by an instrument in
form and substance satisfactory to the Agent and the relevant parties thereto.
(h) Each participant shall be entitled to the benefits of
SECTIONS 2.10, 2.12 and 2.14 as if it were a Lender; PROVIDED, HOWEVER, that
anything herein to the contrary notwithstanding, the Borrower shall not, at any
time, be obligated to pay to any participant of any interest of any Lender, any
sum under SECTION 2.10, 2.12 or 2.14 in excess of the sum that the Borrower
would at the time of such participation have been obligated to pay to such
Lender in respect of such interest had such participation not been effected or
had such participation not been sold.
10.8. GOVERNING LAW. This Agreement and the Revolving Credit
Notes, if any, and the rights and obligations of the parties hereto and thereto
shall be governed by, and construed and interpreted in accordance with, the law
of the State of New York.
10.9. SUBMISSION TO JURISDICTION; SERVICE OF PROCESS. (a) Any
legal action or proceeding with respect to this Agreement or the Revolving
Credit Notes, if any, or any document related thereto may be brought in the
courts of the State of New York or of the United States of America for the
Southern District of New York, and, by execution and delivery of this Agreement,
each Borrower hereby accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts. The
parties hereto hereby irrevocably waive any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
FORUM NON CONVENIENS, which any of them may now or hereafter have to the
bringing of any such action or proceeding in such respective jurisdictions.
(b) The Borrower irrevocably consents to the service of
process of any of the aforesaid courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
the Borrower at its address provided herein.
86
(c) Nothing contained in this SECTION 10.9 shall affect the
right of the agent, any Lender or any holder of a Revolving Credit Note, if any,
to serve process in any other manner permitted by law or commence legal
proceedings or otherwise proceed against the Borrower in any other jurisdiction.
10.10. SECTION TITLES. The Section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.
10.11. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
10.12. ENTIRE AGREEMENT. This Agreement, together with all of
the other Loan Documents and all certificates and documents delivered hereunder
or thereunder, and the Fee Letter embodies the entire agreement of the parties
and supersedes all prior agreements and understandings relating to the subject
matter hereof.
10.13. CONFIDENTIALITY. Each Lender, each Issuer and the Agent
agrees to keep information obtained by it pursuant hereto and the other Loan
Documents confidential in accordance with such Lender's, such Issuer's or the
Agent's, as the case may be, customary practices and agrees that it will only
use such information in connection with the transactions contemplated by this
Agreement and not disclose any of such information other than (a) to such
Lender's, such Issuer's or the Agent's, as the case may be, employees,
representatives and agents who are or are expected to be involved in the
evaluation of such information in connection with the transactions contemplated
by this Agreement and who are advised of the confidential nature of such
information, (b) to the extent such information presently is or hereafter
becomes available to such Lender or the Agent, as the case may be, on a
non-confidential basis from a source other than the Borrower, (c) to the extent
disclosure is required by law, regulation or judicial order or requested or
required by any regulator having jurisdiction over such Lender, such Issuer or
the Agent, as the case may be, or auditors, or (d) to assignees or participants
or potential assignees or participants who agree to be bound by the provisions
of this sentence.
10.14. ACKNOWLEDGMENTS. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
(b) none of the Agent, any Lender or any Issuer has any
fiduciary relationship with or fiduciary duty to the Borrower arising out of or
in connection with this Agreement or any of the other Loan Documents, and the
relationship between the Agent and the Lenders and the Issuers, on the one hand,
and the Borrower, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and
87
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Lenders and Issuers or among the Borrower and the Lenders and Issuers
or among the Borrower and the Agent.
10.15. WAIVER OF TRIAL BY JURY. THE BORROWER, THE LENDERS, THE
ISSUER AND THE AGENT HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
10.16. SURRENDER OF ORIGINAL NOTES. Each Lender shall
surrender the original Revolving Credit Notes held by it with respect to the
Commitment of such Lender outstanding under the Existing Credit Agreement as at
the Effective Date.
10.17. DOCUMENTS EVIDENCE THE SAME INDEBTEDNESS. Upon its
effectiveness, this Agreement amends and restates in its entirety the Existing
Credit Agreement and the Revolving Credit Notes issued under this Agreement, if
any, amend and restate the "Notes" (as defined in the Existing Credit Agreement)
issued under the Existing Credit Agreement. This Agreement and the Revolving
Credit Notes, if any, do not constitute and shall not be construed to evidence a
novation of or a payment and re-advance of the loan principal, interest and
other sums, if any, heretofore outstanding under the Existing Credit Agreement,
it being the intention of the Borrower, and, by their respective signatures
hereto, the Agent, the Issuers and the Lenders, that this Agreement provide for
the terms and conditions of, and the Revolving Credit Notes, if any, evidence,
upon the effectiveness of this Agreement, the same Indebtedness as was then
outstanding under the Existing Credit Agreement. Each Lender shall surrender the
original "Notes" (as defined in the Existing Credit Agreement) outstanding on
the Effective Date issued to it under the Existing Credit Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
THE ELDER-BEERMAN STORES CORP.
By: /s/ Edward A. Tomechko
--------------------------------
Name: Edward A. Tomechko
Title: Executive Vice
President - Chief
Financial Officer,
Treasurer and Secretary
Agent:
-----
CITICORP USA, INC.
By: /s/ Jeffrey Nutz
--------------------------------
Name: Jeffrey Nutz
Title: Vice President
Structured Products/ABF
Issuer:
------
CITIBANK, N.A.
By: /s/ Jeffrey Nutz
--------------------------------
Name: Jeffrey Nutz
Title: Vice President
Structured Products/ABF
Lenders:
-------
CITICORP USA, INC.
By: /s/ Jeffrey Nutz
--------------------------------
Name: Jeffrey Nutz
Title: Vice President
Structured Products/ABF
FLEET RETAIL FINANCE, INC.
By: /s/ Daniel Platt
--------------------------------
Name: Daniel Platt
Title: AVP
BANK OF AMERICA, N.A.
By: /s/ Jang S. Kim
--------------------------------
Name: Jang S. Kim
Title: Assistant Vice President
NATIONAL CITY COMMERCIAL
FINANCE, INC.
By: /s/ Gregory A. Godec
--------------------------------
Name: Gregory A. Godec
Title: Senior Vice President
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Linda Skinner
--------------------------------
Name: Linda Skinner
Title: Vice President
SIEMENS FINANCIAL SERVICES, INC.
By: /s/ Frank Amodio
--------------------------------
Name: Frank Amodio
Title: Vice President - Credit
SOVEREIGN BANK
By: /s/ Michael Walcoff
--------------------------------
Name: Michael Walcoff
Title: SVP
GMAC COMMERCIAL CREDIT LLC
By: /s/ David M. Duffy
--------------------------------
Name: David M. Duffy
Title: Senior Vice President
WELLS FARGO RETAIL FINANCE, LLC
By: /s/ Kent Dahl
--------------------------------
Name: Kent Dahl
Title: President
Each of the undersigned Guarantors (i) reaffirms the Liens granted to the Agent
for the benefit of the Lenders pursuant to the Collateral Documents executed by
such Guarantor, which Liens shall continue in full force and effect during the
term of this Agreement and any renewals thereof and shall continue to secure the
Obligations identified in such Collateral Documents and (ii) consents to the
execution, delivery and performance of all of the Loan Documents to be executed
in connection with the Agreement and reaffirms its obligations under the
Guaranty and agrees that the Guaranty shall remain in full force and effect:
THE EL-BEE CHARGIT CORP.
By: /s/ Edward A. Tomechko
--------------------------
Name: Edward A. Tomechko
Title: Senior Vice President,
Treasurer and Secretary
ELDER-BEERMAN WEST VIRGINIA, INC.
By: /s/ Edward A. Tomechko
--------------------------
Name: Edward A. Tomechko
Title: Vice President,
Treasurer and Secretary
ELDER-BEERMAN HOLDINGS, INC.
By: /s/ Edward A. Tomechko
--------------------------
Name: Edward A. Tomechko
Title: Senior Vice President,
Treasurer and Secretary
ELDER-BEERMAN OPERATIONS, LLC
By: The Elder-Beerman Stores Corp.,
its Managing Member
By: /s/ Edward A. Tomechko
--------------------------
Name: Edward A. Tomechko
Title: Executive Vice President--Chief Financial
Officer, Treasuer and Secretary
ELDER-BEERMAN INDIANA, L.P.
By: The Elder-Beerman Stores Corp.,
its General Partner
By: /s/ Edward A. Tomechko
-----------------------------
Name: Edward A. Tomechko
Title: Executive Vice President--Chief
Financial Officer, Treasurer and Secretary
SCHEDULE I
COMMITMENTS
Lender Commitment
- ------ ----------
CITICORP USA, INC $ 17,000,000
FLEET RETAIL FINANCE, INC $ 17,000,000
BANK OF AMERICA, N.A $ 17,000,000
NATIONAL CITY COMMERCIAL $ 15,000,000
FINANCE, INC
SIEMENS FINANCIAL SERVICES, INC $ 10,000,000
SOVEREIGN BANK $ 10,000,000
GMAC COMMERCIAL CREDIT LLC $ 17,000,000
GENERAL ELECTRIC CAPITAL $ 17,000,000
CORPORATION
WELLS FARGO RETAIL FINANCE, LLC $ 15,000,000
------------
TOTAL $135,000,000
============