Exhibit 10.9
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CREDIT AGREEMENT
by and among
CONN APPLIANCES, INC.,
and the other Borrowers Hereunder,
The Lenders Party Hereto
and
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
as Administrative Agent
and
BANK OF AMERICA, N.A.,
as Syndication Agent
SUNTRUST BANK,
as Documentation Agent
___________________________
J.P. MORGAN SECURITIES INC.,
as Arranger
October 31, 2005
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TABLE OF CONTENTS
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Page
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ARTICLE I Certain Definitions...............................................1
SECTION 1.01. Defined Terms..............................................1
SECTION 1.02. Classification of Loans and Borrowings....................19
SECTION 1.03. Terms Generally...........................................19
SECTION 1.04. Accounting Terms; GAAP....................................20
ARTICLE II The Credits......................................................20
SECTION 2.01. Intentionally Left Blank..................................20
SECTION 2.02. Revolving Loan Commitments................................20
SECTION 2.03. Loans and Borrowings......................................20
SECTION 2.04. Requests for Revolving Borrowings.........................21
SECTION 2.05. Funding of Borrowings.....................................22
SECTION 2.06. Interest Elections........................................22
SECTION 2.07. Termination, Reduction and Increase of
Revolving Loan Commitments................................24
SECTION 2.08. Repayment of Loans; Evidence of Debt......................25
SECTION 2.09. Prepayment of Loans.......................................25
SECTION 2.10. Fees......................................................26
SECTION 2.11. Interest..................................................26
SECTION 2.12. Alternate Rate of Interest................................27
SECTION 2.13. Increased Costs...........................................28
SECTION 2.14. Break Funding Payments....................................28
SECTION 2.15. Taxes.....................................................29
SECTION 2.16. Payments Generally; Pro Rata Treatment;
Sharing of Set-offs.......................................30
SECTION 2.17. Swingline Loans...........................................31
ARTICLE III Representations and Warranties...................................32
SECTION 3.01. Organization; Powers......................................32
SECTION 3.02. Authorization; Enforceability.............................32
SECTION 3.03. Governmental Approvals; No Conflicts......................33
SECTION 3.04. Financial Condition; No Material Adverse Change...........33
SECTION 3.05. Properties................................................33
SECTION 3.06. Litigation and Environmental Matters......................34
SECTION 3.07. Compliance with Laws and Agreements.......................34
SECTION 3.08. Investment and Holding Company Status.....................35
SECTION 3.09. Taxes.....................................................35
SECTION 3.10. Public Utility Holding Company Act Not Applicable.........35
SECTION 3.11. Regulations G, U and X....................................35
SECTION 3.12. ERISA.....................................................35
SECTION 3.13. Disclosure................................................36
SECTION 3.14. Condition of Properties...................................36
SECTION 3.15. Capital Structure.........................................36
SECTION 3.16. Insurance.................................................37
SECTION 3.17. Solvency..................................................37
SECTION 3.18. Indebtedness..............................................37
ii
ARTICLE IV Conditions.......................................................37
SECTION 4.01. Insurance.................................................37
SECTION 4.02. Payment of Expenses.......................................38
SECTION 4.03. Corporate Review..........................................38
SECTION 4.04. Required Documents and Certificates.......................38
SECTION 4.05. Conditions Precedent to Each Loan.........................39
ARTICLE V Affirmative Covenants............................................40
SECTION 5.01. Financial Statements and Other Information................40
SECTION 5.02. Notices of Material Events................................41
SECTION 5.03. Existence; Conduct of Business............................41
SECTION 5.04. Payment of Obligations....................................42
SECTION 5.05. Maintenance of Properties; Insurance......................42
SECTION 5.06. Books and Records; Inspection Rights......................43
SECTION 5.07. Compliance with Laws......................................44
SECTION 5.08. Use of Proceeds...........................................44
SECTION 5.09. ERISA.....................................................44
SECTION 5.10. Security and Further Assurances...........................45
SECTION 5.11. Compliance with Environmental Laws........................45
SECTION 5.12. Landlord's Agreements.....................................46
SECTION 5.13. Additional Subsidiaries...................................46
SECTION 5.14. Patents, Trademarks and Licenses..........................47
SECTION 5.15. Notice of Labor Disputes..................................47
SECTION 5.16. Fee Properties and Leases.................................47
SECTION 5.17. Lease and Investment Schedule.............................48
SECTION 5.18. Pledge of Equity Interests................................48
ARTICLE VI Negative Covenants...............................................48
SECTION 6.01. Indebtedness..............................................48
SECTION 6.02. Liens.....................................................49
SECTION 6.03. Fundamental Changes.......................................49
SECTION 6.04. Investments, Loans, Advances, Guarantees
and Acquisitions..........................................50
SECTION 6.05. Hedging Agreements........................................50
SECTION 6.06. Restricted Payments.......................................50
SECTION 6.07. Transactions with Affiliates..............................51
SECTION 6.08. Restrictive Agreements....................................51
SECTION 6.09. Certain Contracts.........................................51
SECTION 6.10. Discount or Sale of Receivables...........................52
SECTION 6.11. Change in Accounting Method...............................52
SECTION 6.12. Sales and Leasebacks......................................52
SECTION 6.13. Sale of Inventory.........................................52
SECTION 6.14. Nature of Business........................................52
SECTION 6.15. Hazardous Materials.......................................52
SECTION 6.16. Amendment of Charter Documents............................53
SECTION 6.17. Use of Proceeds...........................................53
SECTION 6.18. Debt Service Coverage Ratio...............................53
SECTION 6.19. Total Leverage Ratio......................................53
SECTION 6.20. Net Worth.................................................53
SECTION 6.21. Extension, Delinquencies, Charge-Offs.....................53
SECTION 6.22. Prepayment of Indebtedness................................54
iii
ARTICLE VII Events of Default................................................54
ARTICLE VIII The Administrative Agent.........................................56
SECTION 8.01. INDEMNIFICATION...........................................58
ARTICLE IX Miscellaneous....................................................59
SECTION 9.01. Notices...................................................59
SECTION 9.02. Waivers; Amendments.......................................60
SECTION 9.03. Expenses; Indemnity; Damage Waiver........................60
SECTION 9.04. Successors and Assigns....................................62
SECTION 9.05. Survival..................................................64
SECTION 9.06. Counterparts; Integration; Effectiveness..................64
SECTION 9.07. Severability..............................................64
SECTION 9.08. Right of Set-off..........................................65
SECTION 9.09. Governing Law; Jurisdiction; Consent to
Service of Process........................................65
SECTION 9.10. WAIVER OF JURY TRIAL......................................66
SECTION 9.11. Headings..................................................66
SECTION 9.12. Payments Set Aside........................................66
SECTION 9.13. Loan Agreement Controls...................................66
SECTION 9.14. FINAL AGREEMENT...........................................66
SECTION 9.15. Interest Rate Limitation..................................66
SECTION 9.16. Limitation of Liens.......................................67
SECTION 9.17. USA Patriot Act...........................................67
SECTION 9.18. Amendment and Restatement.................................67
iv
SCHEDULES:
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Schedule 2.02 - Revolving Loan Commitments
Section 3.05(a)(i) - Fee Properties
Section 3.05(a)(ii) - Leasehold Properties
Schedule 3.15(a) - Subsidiaries of CAI
Schedule 3.15(b) - Outstanding Shares of CAI
Schedule 3.16 - Insurance coverage
Schedule 3.18 - Existing Indebtedness
Schedule 6.08 - Restrictive Agreements Permitted
Schedule 6.09 - Certain Contracts Permitted
EXHIBITS:
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Exhibit A - Form of Assignment and Acceptance
Exhibit B - Form of Landlord's Agreement
Exhibit C - Form of Borrowing Request
Exhibit D - Form of Interest Election Request
Exhibit E-1 - Form of Revolving Note
Exhibit E-2 - Form of Swingline Note
Exhibit F - Form of Compliance Certificate
v
CREDIT AGREEMENT
This CREDIT AGREEMENT dated as of October 31, 2005 (the "Agreement"),
is entered into by and among CONN APPLIANCES, INC., a Texas corporation ("CAI"),
and CAI CREDIT INSURANCE AGENCY, INC., a Louisiana corporation ("Louisiana
Insurance Company") (CAI and Louisiana Insurance Company are each a "Borrower"
and collectively the "Borrowers"), the financial institutions listed on the
signature pages hereof (collectively, the "Lenders" and individually, a
"Lender"), JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, individually and as
Administrative Agent for the Lenders hereunder (the "Administrative Agent"),
J.P. MORGAN SECURITIES INC., as arranger (the "Arranger") and BANK OF AMERICA,
N.A., individually and as Syndication Agent for the Lenders hereunder (the
"Syndication Agent"), SUNTRUST BANK, individually and as Documentation Agent for
the Lenders hereunder (the "Documentation Agent," and together with the
Administrative Agent and the Syndication Agent, collectively, the "Agents").
The parties hereto agree as follows:
ARTICLE I
Certain Definitions
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SECTION 1.01. Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:
"ABR," when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Adjusted LIBOR" means, with respect to any Eurodollar Borrowing for
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to (a) LIBOR for such Interest Period multiplied
by (b) the Statutory Reserve Rate.
"Administrative Questionnaire" means an Administrative Questionnaire in
a form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Alternate Base Rate" means, for any day, (i) with respect to an ABR
Loan other than a Swingline Loan, a rate per annum equal to, the Base Rate in
effect on such day plus the Base Rate Margin and (ii) with respect to any
Swingline Loan, the Federal Funds Rate in effect on such day plus the LIBOR
Margin. Any change in the Alternate Base Rate due to a change in the Prime Rate,
the Base Rate or the Federal Funds Effective Rate shall be effective from and
including the effective date of such change in the Prime Rate, the Base Rate or
the Federal Funds Effective Rate, respectively.
1
"Applicable Percentage" means, with respect to any Lender, the
percentage of the total Revolving Loan Commitments represented by such Lender's
Revolving Loan Commitment. If the Revolving Loan Commitments have terminated or
expired, the Applicable Percentages shall be determined based upon the Revolving
Loan Commitments most recently in effect, giving effect to any assignments.
"Applicable Margin" means, with respect to any ABR Loan or Eurodollar
Loan, as the case may be, the applicable margin per annum set forth under the
caption "Base Rate Margin" or "LIBOR Margin" in the applicable pricing matrix.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.
"Availability Period" means the period from and including the date
hereof to but excluding the earlier of the Revolving Maturity Date and the date
of termination of the Revolving Loan Commitments.
"Bank of America Letters of Credit" means the letters of credit issued
by Bank of America, N.A. to support CAI's purchase of inventory from foreign
suppliers in an aggregate face amount at any one time outstanding not exceeding
$5,000,000.
"Base Rate" means the greater of (a) the Prime Rate, or (b) the Federal
Funds Effective Rate plus .50%.
"Base Rate Margin" means, with respect to any ABR Loan, the applicable
margin set forth below under the caption "Base Rate Margin," based upon the
ratio of (i) the sum of (x) Consolidated Total Debt (exclusive of the undrawn
face amounts of the Collection Account Letters of Credit, the undrawn face
amounts of the Bank of America Letters of Credit and the undrawn face amounts of
the Letters of Credit issued under this Agreement) plus (y) eight times
Consolidated Rent Expense divided by (ii) Consolidated EBITDA plus Consolidated
Rent Expense, as determined quarterly on a rolling four quarter basis
Ratio Base Rate Margin
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x => 2.75 0.50%
2.25 <= x < 2.75 0.250
x < 2.25 0.000%
For purposes of the foregoing, each change in the Base Rate Margin resulting
from a change in the above described ratio shall be effective during the period
commencing on and including the date of delivery to the Administrative Agent of
the consolidated financial statements indicating such change and ending on the
date immediately preceding the effective date of the next such change.
2
"Board" means the Board of Governors of the Federal Reserve System of
the United States of America.
"Borrowing" means (a) Loans of the same Type, made, converted or
continued on the same date and, in the case of Eurodollar Loans, as to which a
single Interest Period is in effect and (b) a Swingline Loan.
"Borrowing Request" means a request by the Borrowers for a Revolving
Borrowing in accordance with Section 2.04.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in Houston, Texas or New York City are authorized
or required by law to remain closed; provided that, when used in connection with
a Eurodollar Loan, the term "Business Day" shall also exclude any day on which
banks are not open for dealings in dollar deposits in the London interbank
market.
"CAIAIR" shall mean CAIAIR, Inc., a Delaware corporation.
"CAILP" shall mean CAI, LP a Texas limited partnership.
"Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
"CCC" means Conn Credit Corporation, a Texas corporation.
"Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender (or, for
purposes of Section 2.13(b), by any lending office of such Lender or by such
Lender's holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement.
"Change of Control" means the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof) other than
the Control Group, of shares representing more than 33-1/3% of the aggregate
ordinary voting power represented by the issued and outstanding capital stock of
Parent.
"Charge-Off Ratio" shall mean the ratio of (a) the aggregate
outstanding balance of all Charge-Off Receivables of the Consolidated Group,
Conn Funding I LP and Conn Funding II LP to (b) the aggregate outstanding
balance of all accounts receivable of the Consolidated Group, Conn Funding I LP
and Conn Funding II LP.
3
"Charge-Off Receivable" means those accounts receivable (i) which have
been, or should be in accordance with the Credit and Collection Policy,
written-off or discounted any amount due thereunder or (ii) as to which the
account debtor of which has become subject to a bankruptcy, insolvency,
liquidation or reorganization proceeding or proceeding seeking an order of
relief or appointment of a receiver for any substantial part of its property.
"Class", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans
or Swingline Loans.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral" shall mean any property covered by the terms of the
Security Documents.
"Collection Account Letters of Credit" shall mean letters of credit as
contemplated by the Conn Funding II Indenture issued in order to permit the
delay in depositing amounts otherwise required to be held in a collection
account.
"Commitment Fee Rate" means, with respect to the commitment fees
payable hereunder, the applicable fee rate as set forth below under the caption
"Commitment Fee," based upon the ratio of (i) the sum of (x) Consolidated Total
Debt (exclusive of the undrawn face amounts of the Collection Account Letters of
Credit, the undrawn face amounts of the Bank of America Letters of Credit and
the undrawn face amounts of the Letters of Credit issued under this Agreement)
plus (y) eight times Consolidated Rent Expense divided by (ii) Consolidated
EBITDA plus Consolidated Rent Expense, as determined quarterly on a rolling four
quarter basis
Ratio Commitment Fee Rate
----- -------------------
x => 2.75 0.350%
2.25 => x < 2.75 0.275%
1.75 => x < 2.25 0.225%
1.25 => x < 1.75 0.200%
x < 1.25 0.175%
For purposes of the foregoing, each change in the Commitment Fee Rate resulting
from a change in the above described ratio shall be effective during the period
commencing on and including the date of delivery to the Administrative Agent of
the consolidated financial statements indicating such change and ending on the
date immediately preceding the effective date of the next such change.
4
"Conn CC LP" shall mean Conn CC, L.P., a Texas limited partnership.
"Conn Credit LLC" shall mean Conn Credit, L.L.C., a Delaware limited
liability company.
"Conn Funding I LP" shall mean Conn Funding I, L.P. a Texas limited
partnership.
"Conn Funding II LP" shall mean Conn Funding II, L.P. a Texas limited
partnership.
"Conn Funding II GP LLC" shall mean Conn Funding II GP, L.L.C., a Texas
limited liability company.
"Conn Funding II Indenture" means that certain Base Indenture dated as
of September 1, 2002 executed by and between Conn Funding II LP and Wells Fargo
Bank Minnesota, National Association, as Trustee, as the same may be amended,
restated, modified or supplemented from time to time.
"Conn Funding LLC" shall mean Conn Funding, L.L.C., a Texas limited
liability company.
"Consolidated Capital Expenditures" shall mean, for any period as to
the Consolidated Group, all capital expenditures made during such period, as
determined in accordance with GAAP (including the capital portion of lease
payments in respect of Capital Lease Obligations); provided, however, that
"Consolidated Capital Expenditures" shall not include expenditures for the
repair or replacement of any fixed or capital assets which were destroyed or
damaged, in whole or in part, to the extent financed by the proceeds of an
insurance policy maintained by such Person.
"Consolidated Cash Interest Expense" shall mean, for any period as to
the Consolidated Group, the sum of (i) the aggregate amount of interest accruing
and/or actually paid during such period on Consolidated Total Debt, including
the interest portion of payments under Capital Lease Obligations and any
capitalized interest, plus (ii) the net amount payable or paid by such Person
pursuant to any interest rate exchange agreements accruing during such period,
minus (iii) the net amount paid to such Persons pursuant to any interest rate
exchange agreements accruing during such period.
"Consolidated EBIT" shall mean, for any period the Consolidated Net
Income (plus or minus any non-recurring charges or credits) of the Consolidated
Group, plus (i) the aggregate amount of all state and federal income taxes of
such Person for such period, plus (ii) Consolidated Cash Interest Expense of
such Persons for such periods plus (or minus) (v) adjustments for extraordinary
gains (or losses) in accordance with GAAP.
"Consolidated EBITDA" shall mean, for any period, the Consolidated Net
Income (plus or minus and non-recurring charges or credits) of the Consolidated
Group, plus (i) the aggregate amount of all state and federal income taxes of
such Persons for such period, plus (ii) Consolidated Cash Interest Expense of
such Person for such period, plus (iii) the aggregate amount deducted in
determining Consolidated Net Income of such Persons for such period for
depreciation, obsolescence and amortization of Property, plus (or minus) (iv)
other Non-Cash Expense (or Income), plus (or minus) (v) adjustments for
extraordinary losses (or gains) in accordance with GAAP.
5
"Consolidated Group" shall mean, collectively, Parent and its
Subsidiaries other than Conn Funding I LP and Conn Funding II LP.
"Consolidated Net Income" shall mean, for any period for the
Consolidated Group, the net income minus the net losses of such Persons, as
determined in accordance with GAAP, excluding unusual or extraordinary gains or
losses.
"Consolidated Net Worth" shall mean, as of any date, the consolidated
net worth of the Consolidated Group as reflected in such Persons' financial
statements most recently provided pursuant to Section 5.01(a) or (b) hereof.
"Consolidated Rent Expense" means for any period for the Consolidated
Group the gross property lease obligations of such Persons for base rent
attributable to leased property (whether real or personal property).
"Consolidated Total Debt" shall mean, as of any date as to the
Consolidated Group, the sum of Senior Debt and Subordinated Debt.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Control Group" means, collectively, the persons identified on Schedule
3.15(b) and those officers and directors of Parent who are designated as Section
16 officers under the rules and regulations of the Securities and Exchange
Commission.
"Credit and Collection Policy" means, collectively, the credit,
collection, customer relations and service policies of CAI and CAILP in effect
on September 1, 2002, a summary of which has been delivered to the
Administrative Agent, as such policies may be amended, modified or supplemented
from time to time (any material amendments, modifications or supplements shall
require the consent of the Administrative Agent, such consent not to be
unreasonably withheld or delayed).
"Debt Service" means, for any period, the sum of (i) required principal
payments on Consolidated Total Debt for such period (including the capital
portion of lease payments made in respect of Capital Lease Obligations) plus
(ii) Consolidated Cash Interest Expense.
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Delinquency Ratio" means the ratio of (a) the aggregate outstanding
balance of all Delinquent Receivables to (b) the aggregate outstanding balance
of all accounts receivable of the Consolidated Group, Conn Funding I LP and Conn
Funding II LP.
6
"Delinquent Receivable" means any account receivable of the
Consolidated Group, Conn Funding I LP and Conn Funding II LP which is 31 days or
more past its original due date.
"DOJ" means the United States Department of Justice.
"Dollars" or "$" refers to lawful money of the United States of
America.
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"Environmental Liability" means, as to any Person, any liability,
contingent or otherwise (including any liability for damages, costs of
environmental remediation, fines, penalties or indemnities), of such Person
directly or indirectly resulting from or based upon (a) violation of any
Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the release or threatened release of any Hazardous Materials into
the environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with any Loan Party, is treated as a single
employer under Section 414(b) or (c) of the Code or, solely for purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
"ERISA Event" means (a) any "reportable event," as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by any Loan Party or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by any Loan Party or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by any
Loan Party or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by any Loan Party or any ERISA Affiliate of any notice, or the receipt
by any Multiemployer Plan from any Loan Party or any ERISA Affiliate of any
notice, concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA.
7
"Eurodollar," when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to LIBOR.
"Event of Default" has the meaning assigned to such term in Article
VII.
"Excluded Taxes" means, with respect to the Administrative Agent, any
Lender, or any other recipient of any payment to be made by or on account of any
obligation of any Loan Party hereunder, (a) income or franchise taxes imposed on
(or measured by) its net income by the United States of America, or by the
jurisdiction under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits taxes imposed by
the United States of America or any similar tax imposed by any other
jurisdiction in which any Loan Party is located and (c) in the case of a Foreign
Lender, any withholding tax that is imposed on amounts payable to such Foreign
Lender at the time such Foreign Lender becomes a party to this Agreement (or
designates a new lending office) or is attributable to such Foreign Lender's
failure to comply with Section 2.15(e), except to the extent that such Foreign
Lender (or its assignor, if any) was entitled, at the time of designation of a
new lending office (or assignment), to receive additional amounts from the Loan
Parties with respect to such withholding tax pursuant to Section 2.15(a).
"Extended Receivable" shall mean any account receivable of the
Consolidated Group, Conn Funding I LP and Conn Funding II LP as to which the
original due date has been extended.
"Extension Ratio" shall mean the ratio of (a) the aggregate outstanding
balance of all Extended Receivables to (b) the aggregate outstanding balance of
all accounts receivable of the Consolidated Group, Conn Funding I LP and Conn
Funding II LP.
"Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Financial Officer" means, as to any Person, the Chief Financial
Officer or Treasurer of such Person.
"Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than the United States of America.
"FTC" means the Federal Trade Commission.
"GAAP" means generally accepted accounting principles in effect from
time to time in the United States of America.
8
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee" of or by any Person means any obligation, contingent or
otherwise, of the guarantor guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other Person in any
manner, whether directly or indirectly, and including any obligation of the
guarantor, direct or indirect, (a) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or other obligation or
to purchase (or to advance or supply funds for the purchase of) any security for
the payment thereof, (b) to purchase or lease property, securities or services
for the purpose of assuring the owner of such Indebtedness or other obligation
of the payment thereof, (c) to maintain working capital, equity capital or any
other financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness or other obligation or (d)
as an account party in respect of any letter of credit or letter of guaranty
issued to support such Indebtedness or obligation; provided that the term
Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business.
"Guarantors" means the parties to the Guaranty Agreements, including
but not limited to Parent and all present and future direct and indirect
Subsidiaries of CAI (excluding CAIAIR, CCC, Conn Funding I LP, Conn Funding II
LP, Conn Funding LLC, Conn Funding II GP LLC, Conn CC LP and Conn Credit LLC, so
long as such Subsidiaries of CAI are not required to be treated as new
Subsidiaries under Section 5.13).
"Guaranty Agreements" shall mean, collectively, Guaranty Agreements
duly executed by all of the Guarantors on or prior to the date hereof, together
with any Guaranty Supplement hereafter executed and delivered pursuant to
Section 5.13, in each case as amended from time to time.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Hedging Agreement" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.
"Highest Lawful Rate" has the meaning set forth in Section 9.15.
9
"Indebtedness" shall mean (without duplication), for any Person,
(i) all indebtedness of such Person for borrowed money or
arising out of any extension of credit to or for the account of such
Person or with respect to deposits or advances of any kind (including,
without limitation, extensions of credit in the form of reimbursement
or payment obligations of such Person relating to letters of credit
issued for the account of such Person) or for the deferred purchase
price of property or services, except indebtedness which is owing to
trade creditors in the ordinary course of business and which is due
within 90 days after the original invoice date;
(ii) Indebtedness of the kind described in clause (i) of this
definition which is secured by (or for which the holder of such
Indebtedness has any existing right, contingent or otherwise, to be
secured by) any mortgage, deed of trust, pledge, lien, security
interest or other charge or encumbrance upon or in property (including,
without limitation, accounts and contract rights) owned by such Person,
whether or not such Person has assumed or become liable for the payment
of such Indebtedness or obligations;
(iii) Capitalized Lease Obligations of such Person;
(iv) all obligations, contingent or otherwise, of such Person
in respect of bankers' acceptances;
(v) all obligations of such Person upon which interest charges
are customarily paid;
(vi) all obligations of such Person under conditional sale or
other title retention agreements relating to property acquired by such
Person; and
(vii) all Guaranties or other contingent liabilities (other
than endorsements for collection in the ordinary course of business),
direct or indirect, with respect to Indebtedness (of the kind described
in clauses (i) through (vi) of this definition) of another Person,
through an agreement or otherwise, including, without limitation,
(A) any endorsement not for collection in the
ordinary course of business or discount with recourse or
undertaking substantially equivalent to or having economic
effect similar to a Guaranty in respect of any such
Indebtedness;
(B) any agreement (1) to purchase, or to advance or
supply funds for the payment or purchase of, any such
Indebtedness, (2) to purchase, sell or lease property,
products, materials or supplies, or transportation or
services, in order to enable such other Person to pay any such
Indebtedness or to assure the owner thereof against loss
regardless of the delivery or nondelivery of the property,
products, materials or supplies or transportation or services
or (3) to make any loan, advance or capital contribution to or
other investment in, or to otherwise provide funds to or for,
such other Person in order to enable such Person to satisfy
any obligation (including any liability for a dividend, stock
liquidation payment or expense) or to assure a minimum equity,
working capital or other balance sheet condition in respect of
any such obligation;
10
(C) obligations of such Person to the counterparty
under foreign currency "hedging" contracts and interest rate
contracts (including without limitation liquidated damages
specified therein) arising by reason of a default or breach
(however defined) by such Person thereunder, net of amounts to
be paid to such Person from such counterparty thereunder; and
(D) obligations under surety, appeal or customs
bonds.
The Indebtedness of any Person which shall include the Indebtedness of any other
entity (including any partnership in which such Person is a general partner) to
the extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Interest Election Request" means a request by the Borrowers to convert
or continue a Borrowing in accordance with Section 2.06.
"Interest Payment Date" means (a) with respect to any ABR Loan (other
than a Swingline Loan), the last day of each March, June, September and
December, or (b) with respect to any Eurodollar Loan, the last day of the
Interest Period applicable to the Borrowing of which such Loan is a part and, in
the case of a Eurodollar Borrowing with an Interest Period of more than three
months' duration, each day prior to the last day of such Interest Period that
occurs at intervals of three months' duration after the first day of such
Interest Period, and (c) with respect to any Swingline Loan, the day that such
Loan is required to be repaid.
"Interest Period" means, with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the applicable Borrower may elect; provided that (i) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless, in the case
of a Eurodollar Borrowing only, such next succeeding Business Day would fall in
the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day and (ii) any Interest Period pertaining to a
Eurodollar Borrowing that commences on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of
the last calendar month of such Interest Period. For purposes hereof, the date
of a Borrowing initially shall be the date on which such Borrowing is made and
thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.
"Landlord's Agreement" shall mean a Landlord's Agreement, substantially
in the form of Exhibit B hereto, in form and substance satisfactory to the
Administrative Agent.
11
"Lenders" means the Person listed on the signature pages hereto as the
Lenders and any other Person that shall have become a party hereto pursuant to
an Assignment and Acceptance, or pursuant to an amendment of this Agreement,
other than any such Person that ceases to be a party hereto pursuant to an
Assignment and Acceptance, or pursuant to an amendment of this Agreement. Unless
the context otherwise requires, the term "Lenders" includes the Swingline
Lender.
"Letter of Credit Agreement" means the Letter of Credit Agreement dated
November 12, 2004 executed by and among Borrowers, Lenders and Administrative
Agent, as it may from time to time be amended, modified, restated or
supplemented.
"LIBOR" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then "LIBOR" with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.
"LIBOR Margin" means, with respect to any Eurodollar Loan, the
applicable margin set forth below under the caption "LIBOR Margin," based upon
the ratio of (i) the sum of (x) Consolidated Total Debt (exclusive of the
undrawn face amounts of the Collection Account Letters of Credit, the undrawn
face amounts of the Bank of America Letters of Credit and the undrawn face
amounts of the Letters of Credit issued under this Agreement) plus (y) eight
times Consolidated Rent Expense divided by (ii) Consolidated EBITDA plus
Consolidated Rent Expense, as determined quarterly on a rolling four quarter
basis
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Ratio LIBOR Margin
----- ------------
x => 2.75 1.75%
2.25 <= x < 2.75 1.50%
1.75 <= x < 2.25 1.25%
1.25 <= x < 1.75 1.00%
x < 1.25 0.75%
For purposes of the foregoing, each change in the LIBOR Margin resulting from a
change in the above described ratio shall be effective during the period
commencing on and including the date of delivery to the Administrative Agent of
the consolidated financial statements indicating such change and ending on the
date immediately preceding the effective date of the next such change.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loans" means the loans made by the Lenders to the Borrowers pursuant
to this Agreement.
"Loan Documents" shall mean this Agreement, the Notes, all Security
Documents, any Hedging Agreement between any member of the Consolidated Group
and any Lender, and all instruments, certificates and agreements now or
hereafter executed or delivered to the Administrative Agent or any Lender
pursuant to any of the foregoing and the transactions connected therewith, and
all amendments, modifications, renewals, extensions, increases and
rearrangements of, and substitutions for, any of the foregoing.
"Loan Party" means Parent, CAI and each Subsidiary of CAI which is
required to execute a Guaranty under the terms and provisions of this Agreement.
"Louisiana Insurance Company" means CAI Credit Insurance Agency, Inc.,
a Louisiana corporation.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
the Consolidated Group taken as a whole, (b) the ability of any Loan Party to
perform any of its obligations under any Loan Document to which it is a party or
(c) the rights of or benefits available to the Administrative Agent and the
Lenders under the Loan Documents.
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"Material Indebtedness" means Indebtedness (other than the Loans), or
obligations in respect of one or more Hedging Agreements, of any one or more of
the Consolidated Group in an aggregate principal amount exceeding $5,000,000.
For purposes of determining Material Indebtedness, the "principal amount" of the
obligations of any Person in respect of any Hedging Agreement at any time shall
be the maximum aggregate amount (giving effect to any netting agreements) that
such Person would be required to pay if such Hedging Agreement were terminated
at such time.
"Moody's" means Moody's Investors Service, Inc.
"Mortgaged Property" shall mean all tangible assets and real property
interests subject to the Security Documents.
"Mortgages" means, collectively, Mortgages, Pledges, Assignments,
Security Agreements and Financing Statements and Deeds of Trust, Assignments,
Security Agreements and Financing Statements securing the Obligations and
covering all of the real property owned or leased by the Loan Parties as of the
date hereof (except such leased properties on which no Lien is required pursuant
to Section 5.16), together with any other mortgage or deed of trust hereafter
delivered pursuant to Section 5.16, in each case as amended from time to time.
"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"Non-Cash Expense (or Income)" shall mean, for any period, the amount
of non-cash expense or income; provided that, (i) if any cash outlay (receipt)
is made (received) during such period in respect of such non-cash expense
(income), only the amount of such non-cash expense (income) which exceeds the
amount of the cash outlay (receipt) may be added back to Consolidated Net Income
for purposes of calculating Consolidated EBITDA, and (ii) if any cash outlay
(receipt) is made (received) during such period in respect of a non-cash expense
(income) for a prior or future period, the amount of such cash outlay (receipt)
shall be deducted from (added to) Consolidated Net Income for the current period
for purposes of calculating Consolidated EBITDA.
"Note" or "Notes" shall mean a promissory note or promissory notes,
respectively, of the Borrowers, executed and delivered under this Agreement.
"Obligations" means, as at any date of determination thereof, the sum
of the following: (i) the aggregate principal amount of Loans outstanding
hereunder, plus (ii) the aggregate amount of the LC Exposure (as defined in the
Letter of Credit Agreement), plus (iii) all other liabilities, obligations and
indebtedness under any Loan Document of Borrower or any other Loan Party.
"Officer's Certificate" shall mean a certificate signed in the name of
a Person, by either its Chief Executive Officer, President, one of its Financial
Officers or Secretary.
"Originator Notes" shall mean (i) those two (2) certain Originator's
Notes dated as of May 12, 2000 executed by Conn Funding I LP payable to order of
CAI and CAILP, respectively, delivered pursuant to the terms and provisions of
the Receivables Purchase Agreement, and (ii) those two (2) certain Originator's
Notes dated as of September 13, 2002 executed by Conn Funding II LP payable to
order of CAI and CAILP, respectively, delivered pursuant to the terms and
provisions of the Receivables Purchase Agreement, as the same may be renewed,
extended, modified or rearranged from time to time.
14
"Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement.
"Parent" means Conn's, Inc., a Delaware corporation.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due or are being
contested in compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
and other like Liens imposed by law, arising in the ordinary course of business
and securing obligations that are not overdue by more than 30 days or are being
contested in compliance with Section 5.04;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other social
security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature, in each case in the ordinary course of
business;
(e) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary course
of business that do not secure any monetary obligations and do not materially
detract from the value of the affected property or interfere with the ordinary
conduct of business of any Loan Party or any of their Subsidiaries; and
(f) security interest filings by lessors under personal property
leases;
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
"Permitted Investments" means:
(a) direct obligations of, or obligations the principal of and interest
on which are unconditionally guaranteed by, the United States of America (or by
any agency thereof to the extent such obligations are backed by the full faith
and credit of the United States of America), in each case maturing within one
year from the date of acquisition thereof;
15
(b) investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, the highest
credit rating obtainable from S&P or from Moody's;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within 180 days from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts issued
or offered by, any domestic office of any commercial bank organized under the
laws of the United States of America or any State thereof which has a combined
capital and surplus and undivided profits of not less than $500,000,000;
(d) fully collateralized repurchase agreements with a term of not more
than 30 days for securities described in clause (a) above and entered into with
a financial institution satisfying the criteria described in clause (c) above;
and
(e) investments which are consistent with the corporate investment
policy of CAI from time to time in effect, as approved by the Administrative
Agent (such approval not to be unreasonably withheld).
"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which any Loan Party
or any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Pledge and Security Agreements" means, collectively, Pledge and
Security Agreements securing the Obligations and covering all of the issued and
outstanding equity interests in and to each of the Loan Parties (other than
equity interests in and to Parent), and those certain Pledge and Security
Agreements executed and delivered pursuant to Section 5.13, in each case as
amended from time to time.
"Prime Rate" means the rate of interest per annum publicly announced
from time to time by JPMorgan Chase Bank, National Association as its prime rate
in effect at its principal office in New York City; each change in the Prime
Rate shall be effective from and including the date such change is publicly
announced as being effective.
"Receivables Purchase Agreement" means that certain Receivables
Purchase Agreement dated as of September 1, 2002 between Conn Funding II LP, as
Purchaser, Conn Funding I LP, as the Initial Seller, and CAI and CAILP,
collectively as Originator, together with any and all amendments, restatements,
renewals and extensions thereof not in violation of Article VII(p).
16
"Receivables Purchase Documents" means, collectively, the Receivables
Purchase Agreement, the Originator Notes, the Conn Funding II Indenture, the
Collection Account Letters of Credit and any and all documents, instruments and
agreements executed in connection therewith.
"Register" has the meaning set forth in Section 9.04(c).
"Related Parties" means, with respect to any specified Person, such
Person's affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's affiliates.
"Required Lenders" means, at any time, Lenders having Revolving Credit
Exposures and unused Revolving Loan Commitments representing greater than 50% of
the sum of the total Revolving Credit Exposures and unused Revolving Loan
Commitments at such time.
"Restricted Payment" means any dividend or other distribution (whether
in cash, securities or other property) with respect to any shares of any class
of capital stock of any member of the Consolidated Group, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such shares of capital stock of
any such Person or any option, warrant or other right to acquire any such shares
of capital stock of any such Person.
"Revolving Credit Exposure" means, with respect to any Lender at any
time, the sum of the outstanding principal amount of such Lender's Loans and its
LC Exposure (as defined in the Letter of Credit Agreement) and Swingline
Exposure at such time.
"Revolving Loan" means a Loan made pursuant to Section 2.02.
"Revolving Loan Commitment" shall mean each Lender's initial Revolving
Loan Commitment set forth on Schedule 2.02, expressed as an amount representing
the maximum aggregate amount of such Lender's Revolving Credit Exposure
hereunder, as such commitment may be (i) reduced from time to time pursuant to
Section 2.07 and (ii) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 9.04.
"Revolving Maturity Date" shall mean November 1, 2010, or any earlier
date on which (i) the Revolving Loan Commitments shall have terminated in
accordance with this Agreement and (ii)(a) all unpaid amounts owing under the
Revolving Notes have been declared due and payable in accordance with this
Agreement or (b) all unpaid amounts owing under the Revolving Notes shall have
been prepaid in accordance with this Agreement.
"Revolving Notes" shall mean the promissory notes of the Borrowers
executed and delivered under Section 2.08(a).
"S&P" means Standard & Poor's Ratings Group.
"SEC" means the Securities and Exchange Commission, an agency of the
United States government.
17
"Security Agreements" means, collectively, Security Agreements securing
the Obligations and covering all material personal property of the Loan Parties
(other than personal property covered by the Pledge and Security Agreements),
and those certain Security Agreements executed and delivered pursuant to Section
5.13, in each case as amended from time to time.
"Security Documents" shall mean the Pledge and Security Agreements, the
Security Agreements, the Guaranty Agreements and the Mortgages, as they may be
amended or modified from time to time, and any and all other agreements, deeds
of trust, mortgages, chattel mortgages, security agreements, pledges,
guaranties, assignments of production or proceeds of production, assignments of
income, assignments of contract rights, assignments of partnership interest,
assignments of royalty interests, assignments of performance, completion or
surety bonds, standby agreements, subordination agreements, undertakings and
other instruments and financing statements now or hereafter executed and
delivered by any Person (other than solely by the Administrative Agent or any
Lender and/or any other creditor participating in the Loans evidenced by the
Notes or any collateral or security therefor) in connection with, or as security
for Obligations.
"Senior Debt" means, as to the Consolidated Group, Indebtedness minus
Subordinated Debt.
"Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject with
respect to the Adjusted LIBOR, for eurocurrency funding (currently referred to
as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
"Subordinated Debt" shall mean all Indebtedness of CAI which has been
subordinated on terms and conditions satisfactory to the Required Lenders, in
their sole discretion, to all of the Obligations, whether now existing or
hereafter incurred. Indebtedness shall not be considered as "Subordinated Debt"
unless and until the Administrative Agent shall have received copies of the
documentation evidencing or relating to such Indebtedness together with a
subordination agreement, in form and substance satisfactory to the Required
Lenders, duly executed by the holder or holders of such Indebtedness and
evidencing the terms and conditions of the required subordination.
"Subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held, or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.
18
"Swingline Exposure" means, at any time, the aggregate principal amount
of all Swingline Loans outstanding at such time. The Swingline Exposure of any
Lender at any time shall be its Applicable Percentage of the total Swingline
Exposure at such time. The maximum permitted amount of Swingline Exposure for
all of the Lenders is $8,000,000.
"Swingline Lender" means JPMorgan Chase Bank, National Association, in
its capacity as lender of Swingline Loans hereunder.
"Swingline Loan" means a Loan made pursuant to Section 2.17.
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Transactions" means the execution, delivery and performance by the
Loan Parties of this Agreement and the other Loan Documents, the borrowing of
Loans, and the use of the proceeds thereof.
"Type," when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to LIBOR or the Alternate Base Rate.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
"Working Capital" means, for any period, current assets minus current
liabilities, as defined in accordance with GAAP.
SECTION 1.02. Classification of Loans and Borrowings. For purposes of
this Agreement, Loans may be classified and referred to by Type (e.g., a
"Eurodollar Loan"). Borrowings also may be classified and referred to by Type
(e.g., a "Eurodollar Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include," "includes" and "including" shall
be deemed to be followed by the phrase "without limitation." The word "will"
shall be construed to have the same meaning and effect as the word "shall."
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
19
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein," "hereof" and "hereunder," and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrowers notify the Administrative Agent that the Borrowers
request an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrowers that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
ARTICLE II
The Credits
-----------
SECTION 2.01. Intentionally Left Blank.
SECTION 2.02. Revolving Loan Commitments. Subject to the terms and
conditions set forth herein, each Lender agrees to make Revolving Loans to the
Borrowers from time to time during the Availability Period in an aggregate
principal amount that will not result in (a) such Lender's Revolving Credit
Exposure to all Borrowers exceeding such Lender's Revolving Loan Commitment or
(b) the sum of the total Revolving Credit Exposures exceeding the total
Revolving Loan Commitments. Within the foregoing limits and subject to the terms
and conditions set forth herein, the Borrowers may borrow, prepay and reborrow
Revolving Loans.
SECTION 2.03. Loans and Borrowings.
(a) Each Loan (other than a Swingline Loan) shall be made as part of a
Borrowing consisting of Loans made by the Lenders ratably in accordance with
their respective Revolving Loan Commitments. The failure of any Lender to make
any Loan required to be made by it shall not relieve any other Lender of its
obligations hereunder; provided that the Revolving Loan Commitments of the
Lenders are several and no Lender shall be responsible for any other Lender's
failure to make Loans as required.
(b) Subject to Section 2.12, each Borrowing (other than a Swingline
Loan) shall be comprised entirely of ABR Loans or Eurodollar Loans as the
applicable Borrower may request in accordance herewith. Each Swingline Loan
shall be an ABR Loan. Each Lender at its option may make any Eurodollar Loan by
causing any domestic or foreign branch or affiliate of such Lender to make such
Loan; provided that any exercise of such option shall not affect the obligation
of the applicable Borrower to repay such Loan in accordance with the terms of
this Agreement.
20
(c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $500,000 and not less than $1,000,000. At the time that each ABR
Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that
is an integral multiple of $500,000 and not less than $1,000,000; provided that
an ABR Revolving Borrowing may be in an aggregate amount that is equal to the
entire unused balance of the total Revolving Loan Commitments. Each Swingline
Loan shall be in an amount that is an integral multiple of $100,000. Borrowings
of more than one Type may be outstanding at the same time; provided that there
shall not at any time be more than a total of twelve (12) Eurodollar Borrowings
outstanding.
(d) Notwithstanding any other provision of this Agreement, the
Borrowers shall not be entitled to request, or to elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto would end
after the Revolving Maturity Date.
SECTION 2.04. Requests for Revolving Borrowings. To request a Revolving
Borrowing, the applicable Borrower shall notify the Administrative Agent of such
request by telephone (a) in the case of a Eurodollar Borrowing, not later than
11:00 a.m., Houston time, three Business Days before the date of the proposed
Borrowing, or (b) in the case of an ABR Revolving Borrowing, not later than
11:00 a.m., Houston time, one Business Day before the date of the proposed
Revolving Borrowing. Each such telephonic Borrowing Request shall be irrevocable
and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Borrowing Request in the form set forth as
Exhibit C hereto and signed by the applicable Borrower. Each such telephonic and
written Borrowing Request shall specify the following information in compliance
with Sections 2.02 and 2.03:
(i) the applicable Borrower;
(ii) the aggregate amount of the requested Revolving
Borrowing;
(iii) the date of such Borrowing, which shall be a Business
Day;
(iv) whether such Revolving Borrowing is to be an ABR
Borrowing or a Eurodollar Borrowing;
(v) in the case of a Eurodollar Borrowing, the initial
Interest Period to be applicable thereto, which shall be a period
contemplated by the definition of the term "Interest Period"; and
(vi) the location and number of the Borrower's account to
which funds are to be disbursed.
21
If no election as to the Type of Borrowing is specified, then the
requested Revolving Borrowing shall be an ABR Borrowing. If no Interest Period
is specified with respect to any requested Eurodollar Borrowing, then the
applicable Borrower shall be deemed to have selected an Interest Period one
month's duration. Promptly following receipt of a Revolving Borrowing Request in
accordance with this Section, the Administrative Agent shall advise each Lender
of the details thereof and of the amount of such Lender's Loan to be made as
part of the requested Revolving Borrowing.
SECTION 2.05. Funding of Borrowings.
(a) Each Lender shall make each Loan to be made by it hereunder on the
proposed date thereof by wire transfer of immediately available funds by 12:00
noon, Houston time, to the account of the Administrative Agent most recently
designated by it for such purpose by notice to the Lenders; provided that
Swingline Loans shall be made as provided in Section 2.17. The Administrative
Agent will make such Loans available to the Borrowers by promptly crediting the
amounts so received, in like funds, to an account of the Borrowers maintained
with the Administrative Agent in Houston and designated by the Borrowers in the
applicable Borrowing Request.
(b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrowers a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrowers severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the
Borrowers to but excluding the date of payment to the Administrative Agent, at
(i) in the case of such Lender, the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation or (ii) in the case of the Borrowers,
the interest rate applicable to ABR Loans. If such Lender pays such amount to
the Administrative Agent, then such amount shall constitute such Lender's Loan
included in such Borrowing.
SECTION 2.06. Interest Elections.
(a) Each Borrowing initially shall be of the Type specified in the
applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall
have an initial Interest Period as specified in such Borrowing Request.
Thereafter, the Borrowers may elect to convert such Borrowing to a different
Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing,
may elect Interest Periods therefor, all as provided in this Section. The
Borrowers may elect different options with respect to different portions of the
affected Borrowing, in which case each such portion shall be allocated ratably
among the Lenders holding the Loans comprising such Borrowing, and the Loans
comprising each such portion shall be considered a separate Borrowing. This
Section shall not apply to Swingline Borrowings, which may not be converted or
continued.
22
(b) To make an election pursuant to this Section, the Borrowers shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrowers were
requesting a Borrowing of the Type resulting from such election to be made on
the effective date of such election. Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Interest Election Request in a
form set forth on Exhibit D attached hereto and signed by the applicable
Borrower.
(c) Each telephonic and written Interest Election Request shall specify
the following information in compliance with Section 2.03:
(i) the Borrowing to which such Interest Election Request
applies and, if different options are being elected with respect to
different portions thereof, the portions thereof to be allocated to
each resulting Borrowing (in which case the information to be specified
pursuant to clauses (iii) and (iv) below shall be specified for each
resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR
Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period."
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the applicable Borrower shall be deemed to
have selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
(e) If the Borrowers fail to deliver a timely Interest Election Request
with respect to a Eurodollar Revolving Borrowing prior to the end of the
Interest Period applicable thereto, then, unless such Borrowing is repaid as
provided herein, at the end of such Interest Period such Borrowing shall be
converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if
an Event of Default has occurred and is continuing and the Administrative Agent,
at the request of the Required Lenders, so notifies the Borrowers, then, so long
as an Event of Default is continuing (i) no outstanding Borrowing may be
converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each
Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the
Interest Period applicable thereto.
23
SECTION 2.07. Termination, Reduction and Increase of Revolving Loan
Commitments.
(a) Unless previously terminated, the Revolving Loan Commitments shall
terminate on the Revolving Maturity Date.
(b) The Borrowers may at any time terminate, or from time to time
reduce, the Revolving Loan Commitments; provided that each reduction of the
Revolving Loan Commitments shall be in an amount that is an integral multiple of
$250,000 and not less than $1,000,000.
(c) The Borrowers shall notify the Administrative Agent of any election
to terminate or reduce the Revolving Loan Commitments under paragraph (b) of
this Section at least five Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrowers pursuant to this Section shall be irrevocable. Any termination or
reduction of the Revolving Loan Commitments shall be permanent. Each reduction
of the Revolving Loan Commitments shall be made ratably among the Lenders in
accordance with their respective Revolving Loan Commitments.
(d) At any time prior to the expiration of the Availability Period, and
so long as no Default or Event of Default shall have occurred which is
continuing, Borrowers may elect to increase the aggregate of the Revolving Loan
Commitments to an amount not exceeding $90,000,000 minus any reductions in the
Revolving Loan Commitments pursuant to Section 2.07(b) hereof, provided that (i)
Borrowers shall give at least thirty (30) Business Days' prior written notice of
each such increase to the Administrative Agent and each existing Lender, (ii)
each existing Lender shall have the right (but not the obligation) to subscribe
to its pro rata share of the proposed increase in the Revolving Loan Commitments
by giving written notice of such election to Borrowers and the Administrative
Agent within twenty (20) Business Days after receipt of a notice from the
Borrowers as above described and only if an existing Lender does not exercise
such election may the Borrowers elect to add a new Lender, (iii) no Lender shall
be required to increase its Revolving Loan Commitment unless it shall have
expressly agreed to such increase in writing (but otherwise, no notice to or
consent by any Lender shall be required, notwithstanding anything to the
contrary set forth in Section 9.02 hereof), (iv) the addition of new Lenders
shall be subject to the terms and provisions of Section 9.04 hereof as if such
new Lenders were acquiring an interest in the Loans by assignment from an
existing Lenders (to the extent applicable, i.e. required approvals, minimum
amounts and the like), (v) Borrowers shall execute and deliver such additional
or replacement Notes and such other documentation (including evidence of proper
authorization) as may be reasonably requested by the Administrative Agent, any
new Lender or any Lender which is increasing its Revolving Loan Commitment, (vi)
no Lender shall have any right to decrease its Revolving Loan Commitment as a
result of any such increase of the aggregate amount of the Revolving Loan
Commitments, (vii) the Administrative Agent shall have no obligation to arrange,
find or locate any Lender or new bank or financial institution to participate in
any unsubscribed portion of any such increase in the aggregate committed amount
of the Revolving Loan Commitments, and (viii) each such increase shall be in an
aggregate amount of at least $10,000,000. Borrowers shall be required to pay (or
to reimburse each applicable Lender for) any breakage costs incurred by any
Lender in connection with the need to reallocate existing Loans among the
Lenders following any increase in the Revolving Loan Commitments pursuant to
this provision.
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SECTION 2.08. Repayment of Loans; Evidence of Debt.
(a) The Borrowers shall execute and deliver to the Administrative Agent
for each Lender a Revolving Note to evidence the Revolving Loans made by such
Lender to the Borrowers under such Lender's aggregate Revolving Loan Commitment,
which shall be (i) in the principal amount of such Lender's Revolving Loan
Commitment and (ii) in substantially the form attached hereto as Exhibit E-1,
with the blanks appropriately filled. The outstanding principal balance of each
Revolving Note shall be payable on the Revolving Maturity Date.
(b) The Borrowers shall execute and deliver to the Administrative Agent
for the Swingline Lender a Swingline Note to evidence the Swingline Loans made
by the Swingline Lender to the Borrowers, which shall be (i) in the principal
amount equal to maximum permitted amount of Swingline Exposure for all of the
Lenders and (ii) in substantially the form attached hereto as Exhibit E-2, with
the blanks appropriately filled. The unpaid principal amount of each Swingline
Loan shall be payable on the earlier of the Revolving Maturity Date and the date
that is 15 calendar days after such Swingline Loan is made; provided that on
each date that a Revolving Loan is made, the Borrowers shall repay all Swingline
Loans then outstanding.
(c) Each Revolving Note shall bear interest on the unpaid principal
amount thereof from time to time outstanding at the rate per annum determined as
specified in Section 2.11 payable on each Interest Payment Date and at maturity,
commencing with the first Interest Payment Date following the date of such
Revolving Note. The Swingline Note shall bear interest on the unpaid principal
amount thereof from time to time outstanding at the rate per annum determined as
specified in Section 2.11 payable as provided in Section 2.17 hereof.
SECTION 2.09. Prepayment of Loans.
(a) The Borrowers shall have the right at any time and from time to
time to prepay any Borrowing in whole or in part, subject to prior notice in
accordance with paragraph (d) of this Section; provided that such prepayment
shall be in an amount that is an integral multiple of $250,000 and not less than
$1,000,000.
(b) The Borrowers shall notify the Administrative Agent by telephone
(confirmed by telecopy) of any prepayment hereunder not later than 11:00 a.m.,
Houston time, five Business Days before the date of prepayment (or, in the case
of prepayment of a Swingline Loan, not later than 12:00 noon, Houston, Texas
time, on the date of prepayment). Each such notice shall be irrevocable and
shall specify the prepayment date and the principal amount of each Borrowing or
portion thereof to be prepaid. Promptly following receipt of any such notice
(other than a notice relating solely to Swingline Loans), the Administrative
Agent shall advise the Lenders of the contents thereof. Each prepayment of a
Revolving Borrowing shall be applied ratably to the Loans included in the
prepaid Borrowing. All prepayments shall be accompanied by accrued interest and,
if the prepayment is in respect of a Eurodollar Borrowing and is made on any day
other than the last day of the applicable Interest Period, such prepayment must
be accompanied by payment of all breakage costs and funding losses as provided
for in Section 2.14.
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SECTION 2.10. Fees.
(a) The Borrowers agree to pay to the Administrative Agent for the
account of each Lender a facility fee, which shall accrue at the Commitment Fee
Rate on the daily amount of the unutilized portion of the Revolving Loan
Commitment of such Lender during the period from and including the date hereof
to but excluding the date on which such Revolving Loan Commitment terminates.
Accrued facility fees shall be payable in arrears on the last day of April,
July, October and January of each year and on the date on which the Revolving
Loan Commitments terminate, commencing on the first such date to occur after the
date hereof; provided that any facility fees accruing after the date on which
the Revolving Loan Commitments terminate shall be payable on demand. All
facility fees shall be computed on the basis of a year of 360 days and shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day). For purposes of computing such commitment fees, a
Revolving Loan Commitment of a Lender shall be deemed to be used to the extent
of the outstanding Revolving Loans and LC Exposure of such Lender (and the
Swingline Exposure of such Lender shall be disregarded for such purpose, except
in respect of the Swingline Lender, whose Revolving Commitment shall be reduced
by the Swingline Exposure for purposes of calculating fees due under this
Section 2.10(a)).
(b) The Borrowers agree to pay to the Arranger an underwriting fee,
which shall be payable at closing and payable in the amounts and at the times
separately agreed upon between the Borrowers and the Arranger.
(c) The Borrowers agree to pay to the Administrative Agent, for its own
account, administrative fees payable in the amounts and at the times separately
agreed upon between the Borrowers and the Administrative Agent.
(d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the Arranger, in
the case of fees payable to it) for distribution, in the case of facility fees
and participation fees, to the Lenders. Fees paid shall not be refundable under
any circumstances.
SECTION 2.11. Interest.
(a) The Loans comprising each ABR Borrowing (including each Swingline
Loan) shall bear interest at the Alternate Base Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear interest
at the Adjusted LIBOR plus the applicable LIBOR Margin for the Interest Period
in effect for such Borrowing.
(c) Notwithstanding the foregoing, if any principal of or interest on
any Loan or any fee or other amount payable by the Borrowers hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 3% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount, 3% plus the rate
applicable to ABR Loans as provided in paragraph (a) of this Section.
26
(d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and, in the case of Revolving Loans, upon
termination of the Revolving Loan Commitments; provided that (i) interest
accrued pursuant to paragraph (c) of this Section shall be payable on demand,
(ii) in the event of any repayment or prepayment of any Loan, accrued interest
on the principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.
(e) All interest hereunder shall be computed on the basis of a year of
360 days, except that, interest computed by reference to the Alternate Base Rate
at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate and
LIBOR shall be determined by the Administrative Agent, and such determination
shall be conclusive absent manifest error.
SECTION 2.12. Alternate Rate of Interest. If prior to the commencement
of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining LIBOR for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders that
LIBOR for such Interest Period will not adequately and fairly reflect the cost
to such Lenders (or Lender) of making or maintaining their Loans (or its Loan)
included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrowers and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrowers and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective,
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing; provided that if the circumstances
giving rise to such notice affect only one Type of Borrowings, then the other
Type of Borrowings shall be permitted.
27
SECTION 2.13. Increased Costs.
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender (except any such
reserve requirement reflected in the Adjusted LIBOR); or
(ii) impose on any Lender or the London interbank market any
other condition affecting this Agreement or Eurodollar Loans made by
such Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or to
reduce the amount of any sum received or receivable by such Lender hereunder
(whether of principal, interest or otherwise), then the Borrowers will pay to
such Lender such additional amount or amounts as will compensate such Lender for
such additional costs incurred or reduction suffered.
(b) If any Lender determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of return on such
Lender's capital or on the capital of such Lender's holding company, if any, as
a consequence of this Agreement or the Loans made by such Lender to a level
below that which such Lender or such Lender's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy), then from time to time the Borrowers will pay to such Lender
such additional amount or amounts as will compensate such Lender or such
Lender's holding company for any such reduction suffered.
(c) A certificate of a Lender setting forth the amount or amounts
necessary to compensate such Lender or its holding company, as the case may be,
as specified in paragraph (a) or (b) of this Section shall be delivered to the
Borrowers and shall be conclusive absent manifest error. The Borrowers shall pay
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.
(d) Failure or delay on the part of any Lender to demand compensation
pursuant to this Section shall not constitute a waiver of such Lender's right to
demand such compensation.
SECTION 2.14. Break Funding Payments. In the event of (a) the payment
of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, or (c) the failure to borrow,
convert, continue or prepay any Loan on the date specified in any notice
delivered pursuant hereto then, in any such event, the Borrowers shall
compensate each Lender for the loss, cost and expense attributable to such
event. In the case of a Eurodollar Loan, such loss, cost or expense to any
Lender shall be deemed to include an amount determined by such Lender to be the
excess, if any, of (i) the amount of interest which would have accrued on the
principal amount of such Loan had such event not occurred, at LIBOR that would
28
have been applicable to such Loan, for the period from the date of such event to
the last day of the then current Interest Period therefor (or, in the case of a
failure to borrow, convert or continue, for the period that would have been the
Interest Period for such Loan), over (ii) the amount of interest which would
accrue on such principal amount for such period at the interest rate which such
Lender would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the Eurodollar
market. A certificate of any Lender setting forth any amount or amounts that
such Lender is entitled to receive pursuant to this Section shall be delivered
to the Borrowers and shall be conclusive absent manifest error. The Borrowers
shall pay such Lender the amount shown as due on any such certificate within 10
days after receipt thereof.
SECTION 2.15. Taxes.
(a) Any and all payments by or on account of any obligation of the
Borrowers hereunder shall be made free and clear of and without deduction for
any Indemnified Taxes or Other Taxes; provided that if the Borrowers shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments, then
(i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section) the Administrative Agent or Lender (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrowers shall make such deductions and (iii)
the Borrowers shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.
(b) In addition, the Borrowers shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrowers shall indemnify the Administrative Agent and each
Lender, within ten (10) days after written demand therefor, for the full amount
of any Indemnified Taxes or Other Taxes paid by the Administrative Agent or such
Lender, as the case may be, on or with respect to any payment by or on account
of any obligation of the Borrowers hereunder (including Indemnified Taxes or
Other Taxes imposed or asserted on or attributable to amounts payable under this
Section) and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability delivered
to the Borrowers by a Lender or by the Administrative Agent on its own behalf or
on behalf of a Lender, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrowers to a Governmental Authority, the Borrowers shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which any
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrowers (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law, such properly completed and executed documentation prescribed by applicable
law or reasonably requested by the Borrowers as will permit such payments to be
made without withholding or at a reduced rate.
29
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs.
(a) The Borrowers shall make each payment required to be made by it
hereunder (whether of principal, interest or fees, or of amounts payable under
Section 2.13, 2.14 or 2.15, or otherwise) prior to 12:00 noon, Houston time, on
the date when due, in immediately available funds, without set-off or
counterclaim. Any amounts received after such time on any date may, in the
discretion of the Administrative Agent, be deemed to have been received on the
next succeeding Business Day for purposes of calculating interest thereon. All
such payments shall be made to the Administrative Agent at its offices at 712
Main Street, Houston, Texas 77002. The Administrative Agent shall distribute any
such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day, and, in the case of any
payment accruing interest, interest thereon shall be payable for the period of
such extension. All payments hereunder shall be made in Dollars.
(b) If at any time insufficient funds are received by and available to
the Administrative Agent to pay fully all amounts of principal, interest and
fees then due hereunder, such funds shall be applied (i) first, towards payment
of interest and fees then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of interest and fees then due to such
parties, and (ii) second, towards payment of principal then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
principal then due to such parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans resulting in such Lender receiving
payment of a greater proportion of the aggregate amount of its Revolving Loans
and accrued interest thereon than the proportion received by any other Lender,
then the Lender receiving such greater proportion shall purchase (for cash at
face value) participations in the Revolving Loans of other Lenders to the extent
necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Revolving Loans; provided that (i) if any
such participations are purchased and all or any portion of the payment giving
rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by the Borrowers pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans to any assignee
or participant, other than to Parent or to the Borrowers or any Subsidiary or
affiliate thereof (as to which the provisions of this paragraph shall apply).
The Borrowers consent to the foregoing and agree, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrowers rights of setoff and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrowers in the amount
of such participation.
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(d) Unless the Administrative Agent shall have received notice from the
Borrowers prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders hereunder that the Borrowers will not make
such payment, the Administrative Agent may assume that the Borrowers have made
such payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lender, the amount due. In such event, if the
Borrowers have not in fact made such payment, then each of the Lenders severally
agrees to repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to be made by
it to the Administrative Agent pursuant to Section 2.05(b) or 2.16(d), then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Administrative
Agent for the account of such Lender to satisfy such Lender's obligations under
such Sections until all such unsatisfied obligations are fully paid.
SECTION 2.17. Swingline Loans.
(a) Subject to the terms and conditions set forth herein, the Swingline
Lender agrees to make Swingline Loans to the Borrowers from time to time during
the Availability Period, in an aggregate principal amount at any time
outstanding that will not result in (i) the aggregate principal amount of
outstanding Swingline Loans exceeding the maximum permitted amount of Swingline
Exposure for all of the Lenders or (ii) the sum of the total Revolving Credit
Exposures exceeding the total Revolving Loan Commitments; provided that the
Swingline Lender shall not be required to make a Swingline Loan to refinance an
outstanding Swingline Loan and provided further that the Swingline Lender shall
not, without the consent of the Required Lenders, make any Swingline Loan if any
Event of Default exists of which the Swingline Lender has actual knowledge.
Within the foregoing limits and subject to the terms and conditions set forth
herein, the Borrowers may borrow, prepay and reborrow Swingline Loans.
(b) To request a Swingline Loan, the Borrowers shall notify the
Administrative Agent of such request by telephone (confirmed by telecopy), not
later than 3:00 p.m., Houston, Texas time, on the day of a proposed Swingline
Loan. Each such notice shall be irrevocable and shall specify the requested date
(which shall be a Business Day) and amount of the requested Swingline Loan. The
Administrative Agent will promptly advise the Swingline Lender of any such
notice received from the Borrowers. The Swingline Lender shall make each
Swingline Loan available to the Borrowers by such means as may be reasonably
directed by the Borrowers.
(c) The Swingline Lender may by written notice given to the
Administrative Agent not later than 2:00 p.m., Houston, Texas time, on any
Business Day require the Revolving Lenders to acquire participations on such
Business Day in all or a portion of the Swingline Loans outstanding. Such notice
shall specify the aggregate amount of Swingline Loans in which Revolving Lenders
will participate. The Administrative Agent will give notice thereof to each
Revolving Lender by 3:00 p.m., Houston, Texas time on such Business Day,
specifying in such notice such Lender's Applicable Percentage of such Swingline
Loan or Loans. Each Revolving Lender hereby absolutely and unconditionally
agrees, upon receipt of notice as provided above, to pay to the Administrative
Agent, for the account of the Swingline Lender, such Lender's Applicable
Percentage of such Swingline Loan or Loans. Each Revolving Lender acknowledges
and agrees that its obligation to acquire participations in Swingline Loans
pursuant to this paragraph is absolute and unconditional, subject to Swingline
Lender's compliance with the provisions of Section 2.17(a) hereof, and shall not
be affected by any circumstance whatsoever, including the occurrence and
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continuance of a Default or reduction or termination of the Revolving Loan
Commitments, and that each such payment shall be made without any offset,
abatement, withholding or reduction whatsoever. Each Revolving Lender shall
comply with its obligation under this paragraph by wire transfer of immediately
available funds, in the same manner as provided in Section 2.05 with respect to
Loans made by such Lender (and Section 2.05 shall apply, mutatis mutandis, to
the payment obligations of the Revolving Lenders), and the Administrative Agent
shall promptly pay to the Swingline Lender the amounts so received by it from
the Revolving Lenders. The Administrative Agent shall notify the Borrowers in
writing of any participations in any Swingline Loan acquired pursuant to this
paragraph, and thereafter payments in respect of such Swingline Loan shall be
made to the Administrative Agent and not to the Swingline Lender. Any amounts
received by the Swingline Lender from the Borrowers (or other party on behalf of
the Borrowers) in respect of a Swingline Loan after receipt by the Swingline
Lender of the proceeds of a sale of participations therein shall be promptly
remitted to the Administrative Agent; any such amounts received by the
Administrative Agent shall be remitted by the Administrative Agent to the
Swingline Lender and to the Revolving Lenders that shall have made their
payments pursuant to this paragraph, as their interests may appear, such
remittance to be made on the day of receipt if such payment is received by 2:00
p.m., Houston, Texas time and prior to 10:00 a.m. of the following Business Day
if such payment is received after 2:00 p.m., Houston, Texas time. The purchase
of participations in a Swingline Loan pursuant to this paragraph shall not
relieve the Borrowers of any default in the payment thereof.
ARTICLE III
Representations and Warranties
------------------------------
The Borrowers represent and warrant to the Lenders that:
SECTION 3.01. Organization; Powers. Each Loan Party and each of their
Subsidiaries are duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.
SECTION 3.02. Authorization; Enforceability. The Transactions are
within the corporate powers of each Loan Party and have been duly authorized by
all necessary corporate and, if required, stockholder action. Each Loan Document
to which any Loan Party is a party has been duly executed and delivered by such
Person and constitutes a legal, valid and binding obligation of such Person,
enforceable in accordance with its terms.
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SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except such as have been
obtained or made and are in full force and effect, (b) will not violate any
applicable law or regulation or the charter, by-laws or other organizational
documents of any Loan Party or any of their Subsidiaries or any order of any
Governmental Authority, (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon any Loan Party or any of
their Subsidiaries or its assets, or give rise to a right thereunder to require
any payment to be made by any Loan Party or any of their Subsidiaries, and (d)
except for Liens in favor of the Lenders created by the Loan Documents, will not
result in the creation or imposition of any Lien on any asset of any Loan Party
or any of their Subsidiaries.
SECTION 3.04. Financial Condition; No Material Adverse Change.
(a) The Borrowers have heretofore furnished to the Administrative Agent
the following financial statements for the Consolidated Group: a consolidated
balance sheet and statements of income, stockholders equity and cash flows (i)
as of and for the fiscal year ended January 31, 2005 reported on by nationally
recognized independent public accountants, and (ii) as of and for the fiscal
quarter ended July 31, 2005, certified by a Financial Officer. Such financial
statements present fairly, in all material respects, the financial position and
results of operations and cash flows of the Consolidated Group as of such dates
and for such periods in accordance with GAAP, subject to year-end audit
adjustments and the absence of footnotes in the case of the statements referred
to in clause (ii) above.
(b) Since January 31, 2005, there has been no material adverse change
in the business, assets, operations, prospects or condition, financial or
otherwise, of the Consolidated Group, taken as a whole.
SECTION 3.05. Properties.
(a) Except for Liens permitted by Section 6.02, each Loan Party and
each of their Subsidiaries has good title to, or valid leasehold interests in,
all its real and personal property material to its business, except for minor
defects in title that do not interfere with its ability to conduct its business
as currently conducted or to utilize such properties for their intended
purposes. Set forth on Schedule 3.05(a)(i) hereto is a complete and accurate
list of all real property owned by any Loan Party or any of their Subsidiaries,
showing as of the date hereof the street address, county or other relevant
jurisdiction, state, record owner and the acquisition cost and book value
thereof. Each Loan Party and each of their Subsidiaries has good, marketable and
insurable fee simple title to such real property, free and clear of all Liens,
other than Liens permitted by Section 6.02. Set forth on Schedule 3.05(a)(ii)
hereto is a complete and accurate list of all leases of real property under
which any Loan Party or any of their Subsidiaries is the lessee or sublessee,
showing as of the date hereof the street address, county or other relevant
jurisdiction, state, lessor, lessee or sublessee, expiration date and annual
rental cost thereof. Each such lease or sublease is the legal, valid and binding
obligation of the lessor or sublessor, as the case may be thereof, enforceable
in accordance with its terms. Parent will own no material property other than
equity interests in and to CAI and such equity interests shall not be subject to
any Lien.
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(b) Each Loan Party and each of their Subsidiaries enjoy, peaceful and
undisturbed possession of the portion of the real property as to which any such
Person is a lessee under all leases necessary for the operation of its
properties and assets, and all such leases are valid and subsisting and are in
full force and effect.
(c) Each Loan Party and each of their Subsidiaries owns, or is licensed
to use, all trademarks, trade names, copyrights, patents and other intellectual
property material to its business, and the use thereof by such Person does not
infringe upon the rights of any other Person, except for any such infringements
that, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.
SECTION 3.06. Litigation and Environmental Matters.
(a) There are no actions, suits or proceedings by or before any
arbitrator or Governmental Authority pending against or, to the knowledge of any
Borrower, threatened against or affecting any Loan Party or any of their
Subsidiaries (i) as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect or (ii)
that involve any Loan Document or the Transactions. As of the date hereof, there
is no outstanding judgment, order or decree affecting any Loan Party or any of
their Subsidiaries before or by any administrative or Governmental Authority.
(b) Except with respect to any other matters that could not reasonably
be expected to result in a Material Adverse Effect, (i) all facilities and
property owned or leased by any Loan Party or any of their Subsidiaries have
been and continue to be, owned or leased and operated by such Person in material
compliance with all Environmental Laws; (ii) there has not been any Release of
Hazardous Materials at, on or under any property now or previously owned or
leased by any Loan Party or any of their Subsidiaries (A) in quantities that
would be required to be reported under any Environmental Law, or (B) that
required, or may reasonably be expected to require, any such Person to expend
funds on remediation or clean-up activities pursuant to any Environmental Law;
(iii) each Loan Party and each of their Subsidiaries have been issued and are in
material compliance with all permits, certificates, approvals, orders, licenses
and other authorizations relating to environmental matters necessary for their
respective businesses; (iv) there are not and in the past there have been none
of the following on or in any of the assets of any Loan Party or any of their
Subsidiaries or any property now or previously owned or leased by them which
would result in any Environmental Liability: (A) any Hazardous Materials, (B)
any generation, treatment, recycling, storage or disposal of any Hazardous
Materials, (C) any underground storage tanks or surface impoundments, (D) any
asbestos-containing material, or (E) any polychlorinated biphenyls (PCBs); and
(v) neither any Loan Party nor any of their Subsidiaries (A) has become subject
to any Environmental Liability, (B) has received notice of any claim with
respect to any Environmental Liability or (C) knows of any basis for any
Environmental Liability.
SECTION 3.07. Compliance with Laws and Agreements. Each Loan Party and
each of their Subsidiaries is in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property and all
indentures, agreements and other instruments binding upon it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. No Default has
occurred and is continuing.
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SECTION 3.08. Investment and Holding Company Status. No Loan Party nor
any of their Subsidiaries is (a) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 3.09. Taxes. As of the date hereof, each Loan Party and each of
their Subsidiaries have filed all tax returns required to be filed and have paid
all taxes shown on said returns and all assessments which are not yet
delinquent. No Borrower is aware of any pending investigation by any taxing
authority (except that the Federal income tax return for the Consolidated Group
for the fiscal year ended January 31, 2003 is currently being reviewed by the
Internal Revenue Service) or of any claims by any Governmental Authority for any
unpaid taxes by any Loan Party or any of their Subsidiaries.
SECTION 3.10. Public Utility Holding Company Act Not Applicable. No
Loan Party nor any of their Subsidiaries thereof is a "holding company," or a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company," or an affiliate of a "subsidiary company" of a "holding company," or a
"public utility," as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended.
SECTION 3.11. Regulations G, U and X. None of the proceeds of any Loan
will be used for the purpose of purchasing or carrying, directly or indirectly,
any "margin stock" within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System ("margin stock"), or to extend credit to others
for the purpose of purchasing or carrying any margin stock, or for any other
purpose which would constitute this transaction a "purpose credit" within the
meaning of said Regulation U, as now in effect or as the same may hereafter be
in effect. No Loan Party nor any of their Subsidiaries will take or permit any
action which would involve the Lenders in a violation of Regulation G,
Regulation U, Regulation X or any other regulation of the Board of Governors of
the Federal Reserve System or a violation of the Securities Exchange Act of
1934, in each case as now or hereafter in effect.
SECTION 3.12. ERISA. No "reportable event" (as defined in Section
4043(b) of ERISA) has occurred with respect to any Plan. Each Plan complies with
all applicable provisions of ERISA, and each Loan Party and each of their
Subsidiaries have filed all reports required by ERISA and the Code to be filed
with respect to each Plan. The Borrowers have no knowledge of any event which
could result in a liability of any Loan Party or any of their Subsidiaries to
the Pension Benefit Guaranty Corporation. Each Loan Party and each of their
Subsidiaries have met all requirements with respect to funding the Plans imposed
by ERISA or the Code. Since the effective date of Title IV of ERISA, there have
not been any, nor are there now existing any, events or conditions that would
permit any Plan to be terminated under circumstances which would cause the lien
provided under Section 4068 of ERISA to attach to any property of any Loan Party
or any of their Subsidiaries The value of the Plans' benefits guaranteed under
Title IV of ERISA on the date hereof does not exceed the value of such Plans'
assets allocable to such benefits as of the date of this Agreement and shall not
be permitted to do so hereafter.
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SECTION 3.13. Disclosure. The Borrowers have disclosed to the Lenders
all agreements, instruments and corporate or other restrictions to which any
Loan Party or any of their Subsidiaries is subject, and all other matters known
to it, that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect. None of the reports, financial statements,
certificates or other information furnished by or on behalf of any Loan Party or
any of their Subsidiaries to the Administrative Agent or any Lender in
connection with the negotiation of this Agreement or delivered hereunder or in
connection herewith (as modified or supplemented by other information so
furnished) contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. All estimates,
projections and pro forma financial information contained in materials hereafter
delivered to the Administrative Agent by or on behalf of any Loan Party or any
of their Subsidiaries will be based upon assumptions believed by such Persons to
be reasonable as of the date of the preparation of the same. Nothing in this
Section 3.13 shall be construed as a representation, warranty or covenant that
any of such estimates, projections or pro forma financial information shall in
fact be achieved.
SECTION 3.14. Condition of Properties.
(a) The retail sales locations of each Loan Party and each of their
Subsidiaries, to the extent they are in operation as of the date hereof, have
adequate rights of access to existing and necessary public streets and roads and
to all water, sanitary sewer and storm drainage facilities necessary for the
intended use of such locations.
(b) The inventory of each Loan Party and each of their Subsidiaries is
in materially merchantable condition and of a quality and quantity usable, or
salable, as appropriate, in the ordinary course of business. There is on hand at
each retail sales location inventory, levels of inventory in amounts consistent
with ordinary business practices of the Loan Parties and each appropriate
Subsidiary, and at levels sufficient for each Loan Party and each of their
Subsidiaries to operate the business in the ordinary course.
SECTION 3.15. Capital Structure.
(a) Schedule 3.15(a) is a complete and correct list, as of the date
hereof, of all Subsidiaries of CAI, showing the jurisdiction of their
incorporation or organization and the percentage of the outstanding shares of
each class of capital stock (or other equivalent interest) owned, directly or
indirectly, by CAI. Except as disclosed in Schedule 3.15(a) and except for Liens
created by the Security Documents, CAI owns, directly or indirectly, free and
clear of all Liens or restrictions on transferability or voting, the percentage
of outstanding shares of such Subsidiaries as shown on Schedule 3.15(a) and all
such shares are validly issued, fully paid and non-assessable. There are no
outstanding warrants, options, contracts or commitments of any such Subsidiary
of any kind entitling any Person to purchase or otherwise acquire (i) any shares
of the capital stock of any such Subsidiary or (ii) any securities convertible
into or exchangeable for any shares of such capital stock. No securities are
outstanding which are convertible into or exchangeable for any shares of capital
stock of any such Subsidiary thereof.
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(b) Parent owns all of the outstanding shares of each class of capital
stock (or other equivalent interest) of CAI.
SECTION 3.16. Insurance. Schedule 3.16, attached hereto and
incorporated herein by this reference, is a true, correct and complete list and
description of all policies of insurance and fidelity bonds relating to the
business of any Loan Party or any of their Subsidiaries (except for any such
policies maintained to provide benefits to employees under a benefit plan or
arrangement described elsewhere herein), all of which are in full force and
effect. All premiums thereon have been paid, and the Borrowers have received no
notice of cancellation with respect thereto. There are no material claims
pending under any of said policies or bonds or disputes with underwriters, the
denial of which would have a Material Adverse Effect. There are no pending or
threatened terminations of, or premium increases with respect to, any of such
policies and bonds and each Loan Party and each of their Subsidiaries are in
compliance with all conditions contained therein. The Borrowers have no reason
to believe that such insurance is not, or since the date of its inception has
not been, adequate with respect to risks normally insured against by comparable
companies similarly situated. The Borrowers have delivered to the Administrative
Agent true, complete and correct copies of all of the above-described insurance
policies.
SECTION 3.17. Solvency. No Loan Party nor any of their Subsidiaries (i)
is "insolvent", as such term is used in the United States Bankruptcy Code of
1978, as amended, and any successor statute, or the Texas Uniform Fraudulent
Transfer Act; (ii) is engaged in business or in a transaction, or is about to
engage in business or a transaction, for which its capital is unreasonably
small, or (iii) intends to incur, or believes it will incur, debts beyond its
ability to pay as they mature.
SECTION 3.18. Indebtedness. Attached hereto as Schedule 3.18 is a
complete list, as of the date hereof, of all agreements or instruments
evidencing Indebtedness of each Loan Party and each of their Subsidiaries (other
than the Loan Documents), showing as of the date hereof the principal amount
outstanding thereunder, the maturity date thereof and the amortization schedule
thereunder.
ARTICLE IV
Conditions
----------
SECTION 4.01. Insurance. The Administrative Agent shall have received
all such information as the Administrative Agent shall reasonably request
concerning the insurance maintained by each Loan Party and each of their
Subsidiaries described in Section 3.16 hereof, including, without limitation, as
to those policies identified on Schedule 3.16 as to which the Administrative
Agent is required to be loss payee or additional insured, certificates of
insurance naming the Administrative Agent as loss payee or additional insured,
as the case may be, and the Administrative Agent shall have approved the types
and amounts of such insurance and the issuers thereof.
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SECTION 4.02. Payment of Expenses. The Borrowers shall have reimbursed
the Administrative Agent for all reasonable fees and expenses in connection with
the preparation of this Agreement and all documentation contemplated hereby, the
satisfaction of the condition set forth herein, the filing and recordation of
the Security Documents, and the consummation of the Transactions.
SECTION 4.03. Corporate Review. The Administrative Agent shall have
made satisfactory completion of all corporate, ownership, solvency,
organizational, capital structure, environmental, employee benefit and
retirement savings and collateral audits of each Loan Party and each of their
Subsidiaries by the Administrative Agent as deemed necessary or prudent by the
Administrative Agent.
SECTION 4.04. Required Documents and Certificates. The Administrative
Agent (or its counsel) shall have received, in addition to the items listed in
Sections 4.01 through 4.03, the following, in each case in form, scope and
substance satisfactory to the Lenders:
(i) a counterpart of this Agreement signed on behalf of such
party or written evidence satisfactory to the Administrative Agent
(which may include telecopy transmission of a signed signature page of
this Agreement) that such party has signed a counterpart of this
Agreement, duly executed by the Borrowers;
(ii) the Notes duly executed by the Borrowers;
(iii) an Officer's Certificate of each applicable Loan Party
dated substantially concurrently herewith certifying, inter alia, (A)
true and correct copies of the Articles of Incorporation and Bylaws (or
equivalent corporate documents), as amended and in effect, of such
party, (B) corporate resolutions duly adopted by the Board of Directors
of such party authorizing the transactions contemplated by the Loan
Documents and (C) the incumbency and specimen signatures of the
officers of such party executing documents on its behalf;
(iv) a certificate from the Secretary of State and other
appropriate public officials in each jurisdiction in which the Loan
Parties are organized or incorporated, as the case may be, as to the
continued existence and good standing of such party;
(v) a certificate from the appropriate public official of each
jurisdiction in which the Loan Parties are authorized and qualified to
do business as to the due qualification and good standing of such
party;
(vi) a favorable written opinion (addressed to the
Administrative Agent and the Lenders and dated substantially
concurrently herewith) of Sydney K. Boone, Jr., Corporate General
Counsel for the Loan Parties, covering such other matters relating to
the Loan Parties, this Agreement or the Transactions as the Required
Lenders shall reasonably request. The Borrowers hereby request such
counsel to deliver such opinion;
(vii) the Security Agreements;
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(viii) the Mortgages, covering all real estate interests of
the Loan Parties, including but not limited to fee simple interests and
leasehold interests, to the extent required under Section 5.16;
(ix) the Pledge and Security Agreements;
(x) certificates representing the stock of CAI and its
Subsidiaries, pledged in accordance with the Pledge and Security
Agreements, accompanied by duly executed instruments of transfer or
assignment in blank, in form and substance satisfactory to the
Administrative Agent;
(xi) the Guaranty Agreements;
(xii) copies of all other requisite filing documents necessary
to perfect the Liens granted pursuant to the Security Documents and
duly executed releases or assignments of Liens and UCC-3 financing
statements in recordable form, and in form and substance satisfactory
to the Lenders, covering all of the collateral, as may be necessary to
reflect that the Liens granted to the Administrative Agent for the
benefit of the Lenders are first and prior Liens, except for the Liens
permitted under Section 6.02 herein;
(xiii) duly executed Landlord Agreements as to any property
consisting of or located in property leased by any Loan Party, subject
to the provisions of Section 5.16, and
(xiv) certified copies of Requests for Information of Copies
(Form UCC-11), or equivalent reports, listing all effective financing
statements which name any Loan Party (under its present name, any trade
names and any previous names) as debtor and which are filed, together
with copies of all such financing statements.
In addition, all legal matters incident to the transactions herein contemplated
shall be satisfactory to counsel for the Administrative Agent and the Lenders.
SECTION 4.05. Conditions Precedent to Each Loan. The obligation of each
Lender to make a Loan on the occasion of any Borrowing is subject to the
satisfaction of the following conditions:
(a) The representations and warranties of the Loan Parties set forth in
the Loan Documents shall be true and correct on and as of the date of such
Borrowing.
(b) At the time of and immediately after giving effect to such
Borrowing, no Default shall have occurred and be continuing and there shall have
occurred no event which would be reasonably likely to have a Material Adverse
Effect.
Each Borrowing shall be deemed to constitute a representation and warranty by
the Borrowers on the date thereof as to the matters specified in paragraphs (a)
and (b) of this Section.
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ARTICLE V
Affirmative Covenants
---------------------
Until the Revolving Loan Commitments have expired or been terminated
and the principal of and interest on each Loan and all fees payable hereunder
shall have been paid in full, the Borrowers covenant and agree with the Lenders
that:
SECTION 5.01. Financial Statements and Other Information. The Borrowers
will furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year of Parent, the
audited consolidated balance sheets and related statements of operations,
stockholders' equity and cash flows of the Consolidated Group as of the end of
and for such year, setting forth in each case in comparative form the figures
for the previous fiscal year, all reported on by Ernst & Young, L.L.P. or other
independent public accountants of recognized national standing (without a "going
concern" or like qualification or exception and without any qualification or
exception as to the scope of such audit) to the effect that such consolidated
financial statements present fairly in all material respects the financial
condition and results of operations of the Consolidated Group on a consolidated
basis in accordance with GAAP consistently applied (which may be in the form of
SEC 10K);
(b) within 45 days after the end of each of the first three fiscal
quarters of Parent, the consolidated balance sheets and related statements of
operations, stockholders' equity and cash flows of the Consolidated Group as of
the end of and for such fiscal quarter and the then elapsed portion of the
fiscal year, setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous fiscal year, all certified by one of its Financial
Officers as presenting fairly in all material respects the financial condition
and results of operations of the Consolidated Group on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes (which may be in the form of SEC 10Q);
(c) concurrently with any delivery of financial statements under clause
(a) or (b) above, a certificate of a Financial Officer of CAI, in the form of
Exhibit F hereto, (i) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken or
proposed to be taken with respect thereto, (ii) setting forth reasonably
detailed calculations demonstrating compliance with Sections 6.18 through 6.22
and (iii) stating whether any change in GAAP or in the application thereof has
occurred since the date of the audited financial statements referred to in
Section 3.04 and, if any such change has occurred, specifying the effect of such
change on the financial statements accompanying such certificate;
(d) concurrently with any delivery of financial statements under clause
(a) above, a certificate of the accounting firm that reported on such financial
statements stating whether they obtained knowledge during the course of their
examination of such financial statements of any Default (which certificate may
be limited to the extent required by accounting rules or guidelines);
40
(e) promptly upon receipt thereof, a copy of each other report or
"management letter" submitted to any Loan Party or any of their Subsidiaries by
their independent accountants in connection with any annual, interim or special
audit made by them;
(f) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by any
Loan Party or any of their Subsidiaries with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all of the
functions of said Commission, or with any national securities exchange, as the
case may be; and
(g) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of any Loan
Party or any of their Subsidiaries, or compliance with the terms of any Loan
Document, including but not limited to financial projection and budgets, as the
Administrative Agent or any Lender may reasonably request.
SECTION 5.02. Notices of Material Events. The Borrowers will furnish to
the Administrative Agent and each Lender immediate written notice of the
following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting any Loan
Party or any Affiliate thereof that, if adversely determined, could reasonably
be expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
liability of any Loan Party or any of their Subsidiaries in an aggregate amount
exceeding $500,000;
(d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect; and
(e) copies of all notices of default, notices, amendments, waivers and
other documents delivered or received by any Loan Party or any of their
Subsidiaries pursuant to the terms of any Receivables Purchase Document.
Each notice delivered under this Section shall be accompanied by a
statement of a Financial Officer or other executive officer of CAI setting forth
the details of the event or development requiring such notice and any action
taken or proposed to be taken with respect thereto.
SECTION 5.03. Existence; Conduct of Business. Each Borrower will, and
will cause the other Loan Parties and each of their Subsidiaries to, do or cause
to be done all things necessary to preserve, renew and keep in full force and
effect its legal existence and the rights, licenses, permits, privileges and
franchises material to the conduct of its business; provided that the foregoing
shall not prohibit any merger, consolidation, liquidation or dissolution
permitted under Section 6.03.
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SECTION 5.04. Payment of Obligations.
(a) Each Borrower will, and will cause the other Loan Parties and each
of their Subsidiaries to, pay its obligations before the same shall become
delinquent or in default, including, without limitation, all taxes, assessments,
and governmental charges or levies imposed upon any Loan Party or any of their
Subsidiaries or upon the income of any property of any Loan Party or any of
their Subsidiaries as well as all material claims of any kind (including,
without limitation, claims for labor, materials, supplies, and rent), except
where (a) the validity or amount thereof is being contested in good faith by
appropriate proceedings, (b) the applicable Person has set aside on its books
adequate reserves with respect thereto in accordance with GAAP and (c) the
failure to make payment pending such contest could not reasonably be expected to
result in a Material Adverse Effect or result in a Lien against its property.
(b) Each Borrower will, and will cause the other Loan Parties and each
of their Subsidiaries to, promptly pay all income, franchise and other taxes
owing by the applicable Person and any stamp taxes or other taxes which may be
required to be paid with respect to the Notes, the Security Documents or any
other Loan Documents. In the event of the enactment after this date of any law
of any Governmental Authority applicable to the Administrative Agent or the
Lenders, the Mortgaged Property or the Loan Documents, deducting from the value
of property for the purpose of taxation any lien or security interest thereon,
or imposing upon the Administrative Agent or any Lender the payment of the whole
or any part of the taxes or assessments or charges or Liens required by the Loan
Documents to be paid by any Loan Party, or changing in any way the laws relating
to the taxation of deeds of trust or mortgages or security agreements or debts
secured by deeds of trust or mortgages or security agreements or the interest of
the mortgagee or secured party in the property covered thereby, or the manner of
collection of such taxes, so as to affect the Security Documents or the
indebtedness secured thereby or any Administrative Agent or any Lender, then,
and in any such event each Borrower will, upon demand by the Administrative
Agent, pay such taxes, assessments, charges or Liens, or reimburse the
Administrative Agent or the Lenders therefor to the extent permitted by
applicable law.
SECTION 5.05. Maintenance of Properties; Insurance.
(a) Each Borrower will, and will cause the other Loan Parties and each
of their Subsidiaries to, (i) keep and maintain its property in good working
order and condition, ordinary wear and tear excepted, and (ii) maintain, with
financially sound and reputable insurance companies, insurance in such amounts
and against such risks as are customarily maintained by companies engaged in the
same or similar businesses operating in the same or similar locations, and
furnish to the Administrative Agent, together with each delivery of financial
statements under Section 5.01(a), an Officer's Certificate containing full
information as to the insurance carried.
(b) With respect to Mortgaged Property constituting real property, each
Borrower will maintain and cause the other Loan Parties and each of their
Subsidiaries to maintain the following insurance: (1) all-risk insurance with
respect to all such insurable Mortgaged Property, against loss or damage by
fire, lightning, windstorm, explosion, hail, tornado and such hazards as are
presently included in so-called "all-risk" coverage, in an amount not less than
the amount in effect on the date of this Agreement and disclosed to the
Administrative Agent in writing; (2) if and to the extent any portion of such
Mortgaged Property is in a special flood hazard area, a flood insurance policy
in an amount equal to the lesser of the principal face amount of the Notes or
the maximum amount of flood insurance available; and (3) statutory worker's
compensation insurance with respect to any work on or about such Mortgaged
Property. All insurance policies shall require not less than thirty (30) days'
prior written notice to the Administrative Agent of any cancellation or change
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of coverage. All insurance policies maintained, or caused to be maintained, with
respect to such Mortgaged Property, except for public liability insurance, shall
provide that each such policy shall be primary without right of contribution
from any other insurance that may be carried by any Loan Party or any of their
Subsidiaries or the Lenders and that all of the provisions thereof, except the
limits of liability, shall operate in the same manner as if there were a
separate policy covering each insured. If any insurer which has issued a policy
of title, hazard, liability or other insurance required pursuant to this Section
or any other Loan Document to which any Loan Party or any of their Subsidiaries
is a party becomes insolvent or the subject of any bankruptcy, receivership or
similar proceeding or if in the reasonable opinion the financial responsibility
of such insurer is or becomes inadequate, the Borrowers shall, or shall cause
the applicable Person to, in each instance promptly upon the request of the
Administrative Agent and at Borrowers' expense, obtain and deliver to the
Administrative Agent a like policy (or, if and to the extent permitted by the
Administrative Agent, a certificate of insurance) issued by another insurer,
which insurer and policy meet the requirements of this Section or such other
Loan Document, as the case may be. Without limiting the discretion of the
Administrative Agent with respect to required endorsements to insurance
policies, all such policies for loss of or damage to such Mortgaged Property
shall contain a standard mortgage clause (without contribution) naming the
Administrative Agent as mortgagee with loss proceeds payable to the
Administrative Agent notwithstanding (i) any act, failure to act or negligence
of or violation of any warranty, declaration or condition contained in any such
policy by any named insured; (ii) the occupation or use of such Mortgaged
Property for purposes more hazardous than permitted by the terms of any such
policy; (iii) any foreclosure or other action by the Administrative Agent under
the Loan Documents; or (iv) any change in title to or ownership of such
Mortgaged Property or any portion thereof, such proceeds to be held for
application as provided in the Loan Documents. The originals of each initial
insurance policy (or to the extent permitted by the Administrative Agent, a copy
of the original policy and a satisfactory certificate of insurance) shall be
delivered to the Administrative Agent at the time of execution of this
Agreement, with premiums fully paid, and each renewal or substitute policy (or
certificate) shall be delivered to the Administrative Agent with premiums fully
paid, at least ten (10) days before the termination of the policy it renews or
replaces. Each Borrower shall pay, and cause the other Loan Parties and each of
their Subsidiaries to pay, all premiums on policies required hereunder as they
become due and payable and promptly deliver to the Administrative Agent evidence
satisfactory to the Administrative Agent of the timely payment thereof. If any
loss occurs at any time when any Loan Party or any of their Subsidiaries has
failed to perform the covenants and agreements in this paragraph, the
Administrative Agent shall nevertheless be entitled to the benefit of all
insurance covering the loss and held by or for the applicable Person, to the
same extent as if it had been made payable to the Administrative Agent or the
Administrative Agent.
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SECTION 5.06. Books and Records; Inspection Rights. Each Borrower will,
and will cause the other Loan Parties and each of their Subsidiaries to, keep
proper books of record and account in which full, true and correct entries are
made of all dealings and transactions in relation to its business and
activities. Each Borrower will, and will cause the other Loan Parties and each
of their Subsidiaries to, permit any representatives designated by the
Administrative Agent or any Lender, upon reasonable prior notice, to visit and
inspect its properties, to examine and make extracts from its books and records,
and to discuss its affairs, finances and condition with its officers and
independent accountants, all at such reasonable times and as often as reasonably
requested.
SECTION 5.07. Compliance with Laws. Each Borrower will, and will cause
the other Loan Parties and each of their Subsidiaries to, comply with all laws,
rules, regulations and orders of any Governmental Authority applicable to it or
its property.
SECTION 5.08. Use of Proceeds. The proceeds of the Revolving Loans will
be used only for general corporate purposes, including working capital and
capital expenditures. No part of the proceeds of any Loan will be used, whether
directly or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board, including Regulations G, U and X.
SECTION 5.09. ERISA. Each Borrower will, and will cause the other Loan
Parties and each of their Subsidiaries to, at all times:
(a) Make contributions to each Plan in a timely manner and in an amount
sufficient to comply with the minimum funding standards requirements of ERISA;
(b) Immediately upon acquiring knowledge of any "reportable event" or
of any "prohibited transaction" (as such terms are defined in the Code) in
connection with any Plan, furnish the Administrative Agent with a statement
executed by the president or chief financial officer of CAI setting forth the
details thereof and the action which the Borrowers propose to take with respect
thereto and, when known, any action taken by the Internal Revenue Service with
respect thereto;
(c) Notify the Administrative Agent promptly upon receipt by any Loan
Party or any of their Subsidiaries of any notice of the institution of any
proceeding or other action which may result in the termination of any Plan and
furnish to the Administrative Agent copies of such notice;
(d) Acquire and maintain in amounts satisfactory to the Lenders from
either the Pension Benefit Guaranty Corporation or authorized private insurers,
when available, the contingent employer liability coverage insurance required
under ERISA;
(e) Furnish the Administrative Agent with copies of the annual report
for each Plan filed with the Internal Revenue Service not later than thirty (30)
days after such report has been filed; and
(f) Furnish the Administrative Agent with copies of any request for
waiver of the funding standards or extension of the amortization periods
required by Sections 303 and 304 of ERISA or Section 412 of the Code promptly
after the request is submitted to the Secretary of the Treasury, the Department
of Labor or the Internal Revenue Service, as the case may be.
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SECTION 5.10. Security and Further Assurances. Whenever and as often as
the Administrative Agent may reasonably request, each Borrower will, and will
cause the other Loan Parties and each of their Subsidiaries to, at its own
expense, promptly execute and deliver all such further instruments (including,
without limiting the generality of the foregoing, additional security
agreements, and financing statements) and do such other acts as the
Administrative Agent may request for the purpose of protecting or perfecting any
Lien created or granted or intended to be created or granted in the Security
Documents or in order to insure that any such Lien is of first priority, subject
only to Liens permitted by Section 6.02 hereof, or in order to police or protect
any Collateral or otherwise to carry out more effectually the purposes and
intent of the Loan Documents. Without limiting the generality of the foregoing,
Borrowers will, as soon as practicable after the date hereof, cause to be duly
recorded, published, registered and filed all Security Documents, in such manner
and in such places as is required by law to establish, perfect, preserve and
protect the rights and first priority security interests of the parties thereto
and their respective successors and assigns in all of the Collateral, subject to
Liens permitted under Section 6.02. Borrowers will pay all taxes, fees and other
charges then due in connection with the execution, delivery, recording,
publishing, registration and filing of such documents or instruments in such
places.
SECTION 5.11. Compliance with Environmental Laws. Each Borrower will,
and will cause the other Loan Parties and each of their Subsidiaries to, at all
times:
(a) use and operate all of their respective facilities and properties
in material compliance with all Environmental Laws, keep all necessary permits,
approvals, orders, certificates, licenses and other authorizations relating to
environmental matters in effect and remain in material compliance therewith,
handle all Hazardous Materials in material compliance with all applicable
Environmental Laws and dispose of all Hazardous Materials generated by any such
Person or at any property owned or leased by them at facilities or with carriers
that maintain valid permits, approvals, certificates, licenses or other
authorizations for such disposal under applicable Environmental Laws;
(b) promptly notify the Administrative Agent and provide copies upon
receipt of all written claims, complaints, notices or inquiries relating to the
environmental condition of the facilities and properties of any such Person or
their respective compliance with Environmental Laws; and
(c) promptly upon request by Administrative Agent, permit any Person
designated by the Administrative Agent, at the Borrowers' expense and upon
reasonable notice, to visit such Person and any of their respective properties
and discuss their respective environmental affairs with their principal
officers, all at such times as the Administrative Agent may reasonably request,
and without limiting the generality of the foregoing, permit any Person, agent
or environmental consultant designated by the Administrative Agent upon
reasonable notice, and at the Borrowers' expense, to (i) have access to and
examine and inspect any of the properties, books and records of such Person, and
(ii) conduct environmental assessments in respect of such properties, in scope
and substance satisfactory to Administrative Agent.
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SECTION 5.12. Landlord's Agreements. Each Borrower will use its best,
good faith, efforts to, and will cause the other Loan Parties to use their best,
good faith, efforts to, at Borrowers' expense, deliver to the Administrative
Agent a Landlord's Agreement with respect to each leased retail store location
at which any equipment or inventory of any such Person is stored or maintained.
SECTION 5.13. Additional Subsidiaries. Within thirty (30) Business Days
any Loan Party or any of their Subsidiaries creates, acquires or otherwise forms
a Subsidiary, Borrowers shall:
(a) execute and deliver, or cause the Person owning all of the
outstanding equity interests of such Subsidiary to execute and deliver, to the
Administrative Agent on behalf of the Lenders an agreement, substantially
similar to the Pledge and Security Agreements, with such changes as shall be
necessary in the circumstances, pursuant to which all of the outstanding equity
interests of such Subsidiary shall be pledged to the Administrative Agent on
behalf of the Lenders, together with any certificates representing all such
equity interests so pledged and for each such certificate a stock power executed
in blank;
(b) cause such Subsidiary to execute and deliver to the Administrative
Agent on behalf of the Lenders (i) the Supplement to the Guaranty Agreement;
(ii) an agreement substantially similar to the Security Agreement and (iii) a
Mortgage as to all real property interests owned or leased by such Subsidiary;
(c) cause such Subsidiary to execute and deliver to the Administrative
Agent on behalf of the Lenders appropriate Financing Statements, each with such
changes as shall be necessary in the circumstances, covering such Collateral of
such Subsidiary of the general types and values covered by the Security
Documents executed on or prior to the date hereof;
(d) deliver or cause to be delivered to the Administrative Agent on
behalf of the Lenders all agreements, documents, instruments and other writings
described in Section 4.04, with respect to such Subsidiary;
(e) cause such Subsidiary to deliver to the Administrative Agent on
behalf of the Lenders a Landlord's Agreement with respect to each leased
location located at which any inventory of such Person is stored or maintained;
and
(f) deliver or cause to be delivered to the Administrative Agent on
behalf of the Lenders all such information regarding the condition (financial or
otherwise), business and operations of such Subsidiary as the Administrative
Agent or any Lender through the Administrative Agent may reasonably request.
Notwithstanding anything to the contrary set forth in this Section, none of Conn
Funding I LP, Conn Funding II LP, Conn Funding LLC, Conn Funding II GP LLC, Conn
CC LP, Conn Credit LLC, CCC or CAIAIR shall be treated as a new Subsidiary under
this Section (other than for purposes of the pledge of limited partnership
interests in and to Conn Funding II LP, and, if any material assets are owned by
Conn Funding I LP, limited partnership interests in Conn Funding I LP, pursuant
to Section 5.13(a) above) or be required to execute or deliver any documents
under this Section so long as the sole property owned by such entities shall be
(i) in the case of CCC, a general partnership interest in and to Conn CC LP and
46
limited liability company membership interests in and to Conn Credit LLC, (ii)
in the case of Conn Credit LLC, a limited partnership interest in and to Conn CC
LP and a limited partnership interest in Conn Funding I LP, (iii) in the case of
Conn CC LP, contracts with Conn Funding I LP regarding the servicing of
receivables purchased by Conn Funding I LP, (iv) in the case of Conn Funding
LLC, a general partnership interest in and to Conn Funding I LP, (v) in the case
of Conn Funding II GP LLC, a general partnership interest in and to Conn Funding
II LP, (vi) in the case of Conn Funding II, LP, the Trust Estate (as such term
is defined in the Conn Funding II Indenture) and (vii) in the case of CAIAIR, a
leasehold interest in and to an aircraft subject to a lease as of the date
hereof. If any of such entities shall own property other than the property
described in the preceding sentence, then such entity shall be treated as a new
Subsidiary for purposes of this Section 5.13 and shall be required to execute
and deliver the documentation required by this Section.
SECTION 5.14. Patents, Trademarks and Licenses. Each Borrower shall,
and shall cause the other Loan Parties and each of their Subsidiaries to,
maintain all assets, licenses, patents, copyrights, trademarks, service marks,
trade names, permits and other governmental approvals and authorizations
necessary to conduct its business.
SECTION 5.15. Notice of Labor Disputes. Each Borrower shall notify the
Administrative Agent in writing upon learning of (i) any material strike or
walkouts or (ii) any material labor dispute to which any Loan Party or any of
their Subsidiaries becomes a party, and the expiration or termination of any
labor contract to which any Loan Party or any of their Subsidiaries is a party
or by which any Loan Party or any of their Subsidiaries is bound or of any
negotiations with respect thereto.
SECTION 5.16. Fee Properties and Leases. Concurrent with the
acquisition of any fee property of which the net book value exceeds $250,000
(other than a fee property which is acquired using financing permitted under
Section 6.01(d) hereof, for so long as such fee property is subject to a Lien
permitted under Section 6.02(c) hereof) or the execution of any lease of real
property for a term of five years or more (excluding any optional renewal
terms), each Borrower will, and will cause the other Loan Parties and each of
their Subsidiaries to, execute, acknowledge and deliver to the Administrative
Agent a deed of trust or mortgage, as the case may be, in form and substance
satisfactory to the Administrative Agent, covering (i) such fee property or (ii)
all of such Person's rights and interests as lessee, in, to and under such real
estate lease, together with evidence satisfactory to the Administrative Agent
and its counsel, in form and substance satisfactory to the Administrative Agent,
that such deed of trust or mortgage creates a valid, first and prior Lien on the
fee estate or the leasehold estate, as the case may be, in favor of the
Administrative Agent subject only to Liens permitted under Section 6.02 hereof.
To the extent that any applicable landlord or lessor fails or refuses to grant
its consent to such a leasehold mortgage or lien notwithstanding good faith
efforts by Borrower to obtain such consent, Borrower shall not be required to
execute and deliver such deed of trust or mortgage; provided, however, that at
least fifty percent (50%) of the leasehold estates owned or held by Borrowers
from time to time must be subject to a deed of trust or mortgage in favor of the
Administrative Agent.
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SECTION 5.17. Lease and Investment Schedule. Each Borrower will
deliver, and will cause the other Loan Parties and each of their Subsidiaries to
deliver, to the Administrative Agent,
(a) together with each delivery of financial statements under Section
5.01(a), a current, complete schedule of all agreements to rent or lease any
real property, or any personal property with rental payments in excess of
$250,000 over the term of the lease, to which any Loan Party or any of their
Subsidiaries is a party lessee, showing the total amounts payable under each
such agreement, the amounts and due dates of payments thereunder and containing
a description of the rented or leased property, and all other information the
Lenders may request, all in a form satisfactory to the Lenders;
(b) together with each delivery of financial statements under Section
5.01(a) a current, complete schedule listing all Persons (except Subsidiaries)
whose equity or debt any Loan Party or any of their Subsidiaries owns or holds,
containing all information required by, and in a form satisfactory to, the
Lenders; and
(c) notices of any default by any Loan Party or any of their
Subsidiaries with respect to the leases described in Section 5.17(a).
SECTION 5.18. Pledge of Equity Interests. CAI shall at all times cause
all equity interests in and to CAI and all equity interests in and to each
Subsidiary of CAI to be pledged to the Administrative Agent for the benefit of
Lenders pursuant to a Pledge and Security Agreement, whereby the Administrative
Agent shall have a first priority perfected Lien thereon.
ARTICLE VI
Negative Covenants
------------------
Until the Revolving Loan Commitments have expired or terminated and the
principal of and interest on each Loan and all fees payable hereunder have been
paid in full, each Borrower covenants and agrees with the Lenders that:
SECTION 6.01. Indebtedness. Each Borrower will not, and will not permit
any Loan Party or any of their Subsidiaries to, create, incur, assume or permit
to exist any Indebtedness, except:
(a) Indebtedness evidenced by the Loan Documents;
(b) endorsements in the ordinary course of business of negotiable
instruments in the course of collection;
(c) Indebtedness that is evidenced by the Originator Notes and
obligations under the Receivables Purchase Documents;
(d) Indebtedness of CAI incurred in connection with the purchase of
land and the construction of new retail stores and distribution centers, in an
aggregate principal amount at any time not to exceed $50,000,000;
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(e) contingent Indebtedness in respect of the Collection Account
Letters of Credit provided that the aggregate amounts of such contingent
Indebtedness may not exceed $20,000,000;
(f) other unsecured Indebtedness in aggregate principal amount at any
time not to exceed $10,000,000
(g) other Indebtedness of the Consolidated Group incurred in the
ordinary course of business to finance the acquisition of assets (including,
without limitation, indebtedness of the Consolidated Group incurred on ordinary
trade terms which is owing to vendors, suppliers, or such Persons providing
inventory for use by the Consolidated Group in the ordinary course of their
business) in an aggregate principal amount at any time not to exceed
$25,000,000;
(h) contingent unsecured Indebtedness in respect of letters of credit
issued to support workman's compensation insurance maintained by the Borrowers
or their Subsidiaries; provided that the aggregate amounts of such contingent
Indebtedness may not exceed $5,000,000 at any time.
SECTION 6.02. Liens. Each Borrower will not, and will not permit any
Loan Party or any of their Subsidiaries to, create, incur, assume or permit to
exist any Lien on any property or asset now owned or hereafter acquired by it,
or assign or sell any income or revenues (including accounts receivable) or
rights in respect of any thereof, except:
(a) Permitted Encumbrances;
(b) Liens in favor of the Administrative Agent, for the benefit of the
Lenders, created by the Security Documents;
(c) Liens securing the Indebtedness described in Section 6.01(d),
provided that such Liens do not cover any property other than the applicable
retails store or distribution center which is purchased or constructed with the
proceeds of such Indebtedness;
(d) Liens securing the Indebtedness described in Section 6.01(g),
provided that such Liens do not cover any property other than the applicable
assets which are acquired with the proceeds of such Indebtedness (and
identifiable cash proceeds thereof which are not commingled with any other
property of the Consolidated Group);
(e) Liens on property of Conn Funding I LP and Conn Funding II LP.
SECTION 6.03. Fundamental Changes. Each Borrower will not, and will not
permit any Loan Party or any of their Subsidiaries to, merge into or consolidate
with any other Person, or permit any other Person to merge into or consolidate
with it, or sell, transfer, lease or otherwise dispose of (in one transaction or
in a series of transactions) all or any substantial part of its assets, or any
stock or Indebtedness of any of their Subsidiaries (in each case, whether now
owned or hereafter acquired), or permit any Subsidiary to issue or dispose of
any of its stock, or take any action (directly or indirectly) which would have
the effect of causing any Subsidiary to cease to be a wholly-owned Subsidiary,
or liquidate or dissolve; provided the foregoing shall not prohibit the
transactions contemplated by the Receivables Purchase Documents. Notwithstanding
anything herein to the contrary, any Subsidiary which is wholly-owned (directly
or indirectly) by CAI may liquidate or dissolve if CAI determines in good faith
that such liquidation or dissolution is in the best interests of CAI and is not
materially disadvantageous to the Lenders. The Borrowers shall promptly deliver
written notice to the Administrative Agent of each such liquidation or
dissolution.
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SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions. Each Borrower will not, and will not permit any Loan Party or any
of their Subsidiaries to, purchase, hold or acquire (including pursuant to any
merger with any Person any capital stock, evidences of indebtedness or other
securities (including any option, warrant or other right to acquire any of the
foregoing) of, make or permit to exist any loans or advances to, guarantee any
obligations of, or make or permit to exist any investment or any other interest
in, any other Person, or purchase or otherwise acquire (in one transaction or a
series of transactions) any assets of any other Person constituting a business
unit, or become a general partner of any other Person, except:
(a) Permitted Investments;
(b) investments by Parent in the capital stock of CAI;
(c) loans or advances permitted under Section 6.01 hereof;
(d) Guarantees by the Borrowers or their Subsidiaries, in an aggregate
amount not to exceed $15,000,000 at any one time outstanding, of Indebtedness
incurred in connection with the acquisition and development of sites (and
construction of improvements thereon) which are subject to leases in favor of a
Borrower or a Subsidiary of a Borrower (such Guarantees to be permitted in
addition to and cumulative of the other Indebtedness permitted under Section
6.01 hereof); and
(e) investments in the form of membership or partnership interests, as
applicable, in Conn Funding LLC, Conn Funding I LP, Conn Funding II LP and Conn
Funding II GP LLC.
SECTION 6.05. Hedging Agreements. Each Borrower will not, and will not
permit any Loan Party or any of their Subsidiaries to, enter into any Hedging
Agreement, other than Hedging Agreements entered into by any Loan Party or any
of their Subsidiaries in the ordinary course of business to hedge or mitigate
risks to which any Loan Party or any of their Subsidiaries is exposed in the
conduct of its business or the management of its liabilities.
SECTION 6.06. Restricted Payments. Each Borrower will not, and will not
permit any of their Subsidiaries to, declare or make, or agree to pay or make,
directly or indirectly, any Restricted Payment; provided, however, that so long
as no Default or Event of Default has occurred, is continuing or would be
created thereby, CAI may make Restricted Payments in an aggregate amount not to
exceed $25,000,000 from and after January 31, 2005. Notwithstanding anything
herein to the contrary, any Subsidiary which is wholly-owned (directly or
indirectly) by CAI may declare and pay dividends to the owners of its equity
interests.
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SECTION 6.07. Transactions with Affiliates. Each Borrower will not, and
will not permit any Loan Party or any of their Subsidiaries to, sell, lease or
otherwise transfer any property or assets to, or purchase, lease or otherwise
acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except in the ordinary course of
business at prices and on terms and conditions not less favorable to such Person
than could be obtained on an arm's-length basis from unrelated third parties.
SECTION 6.08. Restrictive Agreements. Each Borrower will not, and will
not permit any Loan Party or any of their Subsidiaries to, directly or
indirectly, enter into, incur or permit to exist any agreement or other
arrangement that prohibits, restricts or imposes any condition upon (a) the
ability of any Loan Party or any of their Subsidiaries to create, incur or
permit to exist any Lien upon any of its property or assets, or (b) the ability
of any Subsidiary of CAI to pay dividends or other distributions with respect to
any shares of its capital stock or to make or repay loans or advances to CAI or
any other Subsidiary of CAI or to Guarantee Indebtedness of CAI or any other
Subsidiary of CAI; provided that (i) the foregoing shall not apply to
restrictions and conditions imposed by law or by this Agreement, (ii) the
foregoing shall not apply to restrictions and conditions existing on the date
hereof identified on Schedule 6.08 (but shall apply to any extension or renewal
of, or any amendment or modification expanding the scope of, any such
restriction or condition), (iii) the foregoing shall not apply to customary
restrictions and conditions contained in agreements relating to the sale of a
Subsidiary pending such sale, provided such restrictions and conditions apply
only to such Subsidiary that is to be sold and such sale is permitted hereunder,
(iv) clause (a) of the foregoing shall not apply to restrictions or conditions
imposed by any agreement relating to secured Indebtedness permitted by this
Agreement if such restrictions or conditions apply only to the property or
assets securing such Indebtedness and (v) clause (a) of the foregoing shall not
apply to customary provisions in leases and other contracts restricting the
assignment thereof.
SECTION 6.09. Certain Contracts. Except as identified in Schedule 6.09,
each Borrower will not, and will not permit any Loan Party or any of their
Subsidiaries to, enter into or be a party to:
(a) any contracts providing for the making by any Loan Party or any of
their Subsidiaries of loans, advances or capital contributions to any Person, or
for the purchase of any property from any Person, in each case primarily in
order to enable such Person to maintain any balance sheet condition or to pay
debts, dividends or expenses, or
(b) any contract for the purchase of materials, supplies or other
property or services if such contract (or any related document) requires that
payment by any Loan Party or any of their Subsidiaries for such materials,
supplies or other property or services shall be made regardless of whether or
not delivery of such materials, supplies or other property or services is ever
made or tendered, or
(c) any contract to rent or lease (as lessee) any real or personal
property if such contract (or any related document) provides that the obligation
to make payments thereunder is absolute and unconditional under conditions not
customarily found in commercial leases then in general use or requires that the
lessee purchase or otherwise acquire securities or obligations of the lessor
(provided that this subsection (c) shall not be construed to prevent any Loan
Party or any of their Subsidiaries from being a party to or complying with any
provision of any lease to which any of them is a party on the date hereof).
51
SECTION 6.10. Discount or Sale of Receivables. Each Borrower will not,
and will not permit any Loan Party or any of their Subsidiaries to, discount
(except discounts given in the ordinary course of business in connection with
credit card and programs and vendor promotional activity and in connection with
the settlement of claims against manufacturers in the ordinary course of
business) or sell with recourse, or sell for less than the face value thereof,
any of its notes receivable, receivables under leases or other accounts
receivable, except for any sale of receivables by CAI or CAILP or any of their
Subsidiaries to Conn Funding I LP or Conn Funding II LP, or by Conn Funding I LP
to Conn Funding II LP, under the Receivables Purchase Agreement.
SECTION 6.11. Change in Accounting Method. Each Borrower will not, and
will not permit any Loan Party or any of their Subsidiaries to, make any change
in the method of computing depreciation for either tax or book purposes or any
other material change in accounting method without the Required Lenders' prior
written approval, except for any changes required by GAAP or applicable law.
Each Borrower will not, and will not permit any Loan Party or any of their
Subsidiaries to, change its fiscal year.
SECTION 6.12. Sales and Leasebacks. Except for sale and leaseback
transactions entered into after July 1, 2005 which provide for lease payments in
an aggregate amount not to exceed $15,000,000, each Borrower will not, and will
not permit any Loan Party or any of their Subsidiaries to, become liable,
directly or indirectly, with respect to any lease or property whether now owned
or hereafter acquired (i) which such Person has sold or transferred or is to
sell or transfer to any other Person or (ii) which such Person intends to use
for substantially the same purposes as any other property which has been or is
to be sold or transferred by such Person to any other Person in connection with
such lease.
SECTION 6.13. Sale of Inventory. Each Borrower will not, and will not
permit any Loan Party or any of their Subsidiaries to, make any sale, lease or
other disposition of inventory except in the ordinary course of business.
SECTION 6.14. Nature of Business. Each Borrower will not, and will not
permit any Loan Party or any of their Subsidiaries to, engage in any line of
business other than the business as presently conducted or related thereto.
SECTION 6.15. Hazardous Materials. Each Borrower will not, and will not
permit any Loan Party or any of their Subsidiaries to (a) cause or permit any
Hazardous Materials to be treated, stored, or disposed of in a manner which
could reasonably be expected to result, singularly or in the aggregate, (i) in a
Material Adverse Effect or (ii) in costs, liabilities or expenses relating to
remediation under or violations of Environmental Laws in excess of $500,000; (b)
cause or permit any part of any property of any Loan Party or any of their
Subsidiaries to be used as a manufacturing, treatment, storage or disposal
facility for Hazardous Materials, where such action could reasonably be expected
to result, singularly or in the aggregate, (i) in a Material Adverse Effect or
(ii) in costs, liabilities or expenses relating to remediation under or
violations of Environmental Laws in excess of $500,000; or (c) cause or suffer
any Liens to be recorded against any property of any Loan Party or any of their
Subsidiaries as a consequence of, or in any way related to, the presence,
remediation, or disposal of Hazardous Materials in or about any property of any
Loan Party or any of their Subsidiaries, including any so-called state, federal
or local "superfund" lien relating to such matters.
52
SECTION 6.16. Amendment of Charter Documents. Each Borrower will not
effect any material amendment to or material modification of its charter
documents or by-laws, and will not permit any Loan Party or any of their
Subsidiaries to effect any material amendment to or material modification of
their charter documents or by-laws.
SECTION 6.17. Use of Proceeds. The Borrowers will not use, nor permit
the use of, all or any portion of any Loan for any purpose not permitted by
Section 5.09 hereof.
SECTION 6.18. Debt Service Coverage Ratio. The Borrowers will not
permit the ratio of (i) Consolidated EBITDA plus Consolidated Rent Expense minus
Consolidated Capital Expenditures divided by (ii) Consolidated Cash Interest
Expense (exclusive of any fees paid in respect of the undrawn face amounts of
the Collection Account Letters of Credit) plus Consolidated Rent Expense, as
determined as of the last day of each fiscal quarter for the twelve-month period
ending on such day, to be less than 2.00 to 1.00.
SECTION 6.19. Total Leverage Ratio. The Borrowers will not permit the
ratio of (i) the sum of (x) Consolidated Total Debt (exclusive of the undrawn
face amounts of the Collection Account Letters of Credit, the undrawn face
amounts of the Bank of America Letters of Credit and the undrawn face amounts of
the Letters of Credit issued under this Agreement) plus (y) eight times
Consolidated Rent Expense divided by (ii) Consolidated EBITDA plus Consolidated
Rent Expense, as determined as of the last day of each fiscal quarter for the
twelve-month period ending on such day, to be greater than 3.00 to 1.00.
SECTION 6.20. Net Worth. The Borrowers will not permit, at any time,
Consolidated Net Worth to be less than the sum of (i) $109,541,000 plus (ii) 75%
of positive Net Income generated after January 31, 2005 plus (iii) 100% of any
capital stock or other ownership or profit interest or any securities
convertible into or exchangeable for capital stock or other ownership or profit
interest or any warrants, rights or options to acquire the same, issued after
January 31, 2005. Any gains attributable to the effects of Statements of
Financial Accounting Standards Nos. 125/140 and/or 133, or their successors, and
any losses attributable thereto, shall be excluded in determining Consolidated
Net Worth for purposes of this Section.
SECTION 6.21. Extension, Delinquencies, Charge-Offs.
(a) The Borrowers will not permit the Charge-Off Ratio to be greater
than .06 to 1.00, determined as of the last day of each month averaged for the
three-month period ended on such date.
(b) The Borrowers will not permit the Extension Ratio to be greater
than .05 to 1.00, determined as of the last day of each month averaged for the
three-month period ended on such date.
53
(c) The Borrowers will not permit the Delinquency Ratio to be greater
than .13 to 1.00, determined as of the last day of each month averaged for the
three-month period ended on such date.
SECTION 6.22. Prepayment of Indebtedness. Each Borrower will not, and
will not permit any Loan Party or any of their Subsidiaries to, directly or
indirectly, prepay (by acceleration or otherwise) any Indebtedness (other than
to the Agents and the Lenders), or repurchase, redeem, retire or otherwise
acquire any Indebtedness of any Loan Party or any of their Subsidiaries if a
Default or Event of Default exists prior to or after giving effect thereto,
provided however, in no event shall any Loan Party or any of their Subsidiaries
take any such action with respect to the Subordinated Debt prior to the
repayment in full of the Obligations.
ARTICLE VII
Events of Default
-----------------
If any of the following events ("Events of Default") shall occur:
(a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise;
(b) any Loan Party shall fail to pay any fee or any other amount (other
than an amount referred to in clause (a) of this Article) payable under any Loan
Document, when and as the same shall become due and payable, and such failure
shall continue unremedied for a period of three Business Days;
(c) any representation or warranty made or deemed made by or on behalf
of any Loan Party or any Subsidiary thereof in or in connection with any Loan
Document or in any report, certificate, financial statement or other document
furnished to the Administrative Agent or any Lender pursuant to or in connection
with any Loan Document, shall prove to have been incorrect in any material
respect when made or deemed made;
(d) (i) any Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Article VI; or (ii) any Loan Party shall
fail to observe or perform any covenant, condition or agreement contained in any
Guaranty Agreement to which it is a party; or (iii) any Loan Party shall fail to
observe or perform any negative covenant, condition or agreement contained in
any other Loan Document to which it is a party and such violation shall not have
been remedied within five (5) days after the occurrence thereof;
(e) any Loan Party shall fail to observe or perform any affirmative
covenant, condition or agreement contained in this Agreement (other than those
specified in clause (a), (b) or (d) of this Article) or in any other Loan
Document to which it is a party, and such failure shall continue unremedied for
a period of 30 days after the occurrence thereof;
(f) (i) a Change of Control shall occur or (ii) Parent shall cease to
own all of the issued and outstanding equity interests in and to CAI, free and
clear of any Liens;
54
(g) any Loan Party or any of their Subsidiaries shall fail to make any
payment (whether of principal or interest and regardless of amount) in respect
of any Material Indebtedness, when and as the same shall become due and payable
and such non-payment continues after the applicable grace period;
(h) any event or condition occurs that results in any Material
Indebtedness of any Loan Party or any of their Subsidiaries becoming due prior
to its scheduled maturity or that enables or permits (with or without the giving
of notice, the lapse of time or both) the holder or holders of any such Material
Indebtedness or any trustee or agent on its or their behalf to cause any such
Material Indebtedness to become due, or to require the prepayment, repurchase,
redemption or defeasance thereof, prior to its scheduled maturity, unless such
event or condition is waived by the non-defaulting party thereto;
(i) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of any Loan Party or any Subsidiary thereof or its debts, or of a
substantial part of its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for such Loan Party or any Subsidiary thereof or for a
substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed for 30 days or an order or decree approving
or ordering any of the foregoing shall be entered;
(j) any Loan Party or any Subsidiary thereof shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation, reorganization
or other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in clause (i) of this Article, (iii) apply for
or consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for any Loan Party or any Subsidiary thereof or
for a substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;
(k) any Loan Party or any Subsidiary thereof shall become unable, admit
in writing or fail generally to pay its debts as they become due;
(l) one or more judgments for the payment of money in an aggregate
amount in excess of $500,000 shall be rendered against any Loan Party or any of
their Subsidiaries or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution shall
not be effectively stayed, or any action shall be legally taken by a judgment
creditor to attach or levy upon any assets of such Person(s) to enforce any such
judgment;
(m) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of any Loan Party
or any of their Subsidiaries in an aggregate amount exceeding (i) $500,000 in
any year or (ii) $1,000,000 for all periods;
55
(n) except pursuant to the express terms of any Loan Document, any Loan
Document shall, at any time after its execution and delivery and for any reason,
cease to be in full force and effect or be declared to be null and void, or any
Lien granted pursuant to any Loan Document shall cease to be perfected and of
first priority due to any action or in action of any Loan Party (except for
Liens permitted by Section 6.02 hereof and subject to the permitted parameters
set forth in the last sentence of Section 5.16 hereof), or the validity or
enforceability thereof shall be contested by any Loan Party, or any Loan Party
shall deny that it has any or any further liability or obligations under any
Loan Document to which it is a party;
(o) except as otherwise expressly permitted by the Loan Documents, any
Loan Party sells, encumbers or abandons any material portion of the Property now
or hereafter subject to any of the Security Documents; or any levy, seizure, or
attachment is made thereof or thereon; or any material portion of such Property
is lost, stolen, substantially damaged or destroyed;
(p) (i) except for violations or defaults that have been waived or
consented to, any party thereto shall violate any covenant, agreement or
condition contained in any Receivables Purchase Document or any default or event
of default occurs and is continuing under any Receivables Purchase Document or
(ii) any party thereto shall amend, modify or supplement any provision set forth
in any Receivables Purchase Document in any manner which could reasonably be
expected to have a material adverse affect on Lenders without the prior written
consent of the Required Lenders;
then, and in every such event (other than an event described in clause (i), (j)
or (k) of this Article), and at any time thereafter during the continuance of
such event, the Administrative Agent may, and at the request of the Required
Lenders shall, by notice to the Borrowers, take either or both of the following
actions, at the same or different times: (i) terminate the Revolving Loan
Commitments, and thereupon the Revolving Loan Commitments shall terminate
immediately, and (ii) declare the Loans then outstanding to be due and payable
in whole (or in part, in which case any principal not so declared to be due and
payable may thereafter be declared to be due and payable), and thereupon the
principal of the Loans so declared to be due and payable, together with accrued
interest thereon and all fees and other obligations of each Borrower accrued
hereunder, shall become due and payable immediately, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
each Borrower; and in case of any event described in clause (i), (j) or (k) of
this Article, the Revolving Loan Commitments shall automatically terminate and
the principal of the Loans then outstanding, together with accrued interest
thereon and all fees and other obligations of the Borrowers accrued hereunder,
shall automatically become due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by each Borrower.
ARTICLE VIII
The Administrative Agent
------------------------
Each of the Lenders hereby irrevocably appoints the Administrative
Agent as its agent and authorizes the Administrative Agent to take such actions
on its behalf and to exercise such powers as are delegated to the Administrative
Agent by the terms hereof, together with such actions and powers as are
reasonably incidental thereto.
56
The bank serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Borrowers or any Subsidiary or other affiliate
thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations
except those expressly set forth herein. Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or
other implied duties, regardless of whether a Default has occurred and is
continuing, (b) the Administrative Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby that the Administrative Agent is
required to exercise in writing by the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.02), and (c) except as expressly set forth herein, the
Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to the Loan Parties
or any of their Subsidiaries that is communicated to or obtained by the bank
serving as Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.02) or in the absence of its own gross negligence or
willful misconduct. The Administrative Agent shall be deemed not to have
knowledge of any Default unless and until written notice thereof is given to the
Administrative Agent by the Borrowers or a Lender, and the Administrative Agent
shall not be responsible for or have any duty to ascertain or inquire into (i)
any statement, warranty or representation made in or in connection with this
Agreement, (ii) the contents of any certificate, report or other document
delivered hereunder or in connection herewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere herein, other
than to confirm receipt of items expressly required to be delivered to the
Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrowers), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
57
Subject to the appointment and acceptance of a successor Administrative
Agent as provided in this paragraph, the Administrative Agent may resign at any
time by notifying the Lenders and the Borrowers. Upon any such resignation, the
Required Lenders shall have the right, in consultation with the Borrowers, to
appoint a successor. If no successor shall have been so appointed by the
Required Lenders and shall have accepted such appointment within 30 days after
the retiring Administrative Agent gives notice of its resignation, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent which shall be a bank with an office in Houston, Texas, or
an affiliate of any such bank. Upon the acceptance of its appointment as
Administrative Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. The fees payable by the
Borrowers to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrowers and such
successor. After the Administrative Agent's resignation hereunder, the
provisions of this Article and Section 9.03 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Administrative Agent.
SECTION 8.01. INDEMNIFICATION. NOTWITHSTANDING ANYTHING TO THE CONTRARY
HEREIN CONTAINED, THE ADMINISTRATIVE AGENT SHALL BE FULLY JUSTIFIED IN FAILING
OR REFUSING TO TAKE ANY ACTION HEREUNDER UNLESS IT SHALL FIRST BE INDEMNIFIED TO
ITS SATISFACTION BY THE LENDERS AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS,
LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES, AND
DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED
BY OR ASSERTED AGAINST THE ADMINISTRATIVE AGENT IN ANY WAY RELATING TO OR
ARISING OUT OF ITS TAKING OR CONTINUING TO TAKE ANY ACTION OR ITS REFRAINING TO
TAKE ANY ACTION. EACH LENDER AGREES TO INDEMNIFY THE ADMINISTRATIVE AGENT (TO
THE EXTENT NOT REIMBURSED BY THE BORROWERS OR ANY SUBSIDIARY), ACCORDING TO SUCH
LENDER'S REVOLVING LOAN COMMITMENTS, FROM AND AGAINST ANY AND ALL LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS,
EXPENSES, AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE
IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE ADMINISTRATIVE AGENT IN ANY WAY
RELATING TO OR ARISING OUT OF ANY LOAN DOCUMENT OR ANY ACTION TAKEN OR OMITTED
BY THE ADMINISTRATIVE AGENT UNDER ANY LOAN DOCUMENT; PROVIDED THAT NO LENDER
SHALL BE LIABLE FOR ANY PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES,
58
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES, OR DISBURSEMENTS
RESULTING FROM THE GROSS NEGLIGENCE OR WILFUL MISCONDUCT OF THE PERSON BEING
INDEMNIFIED; AND PROVIDED FURTHER THAT IT IS THE INTENTION OF EACH LENDER TO
INDEMNIFY THE ADMINISTRATIVE AGENT AGAINST THE CONSEQUENCES OF THE
ADMINISTRATIVE AGENT'S OWN NEGLIGENCE, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT,
CONCURRENT, ACTIVE OR PASSIVE. WITHOUT LIMITATION OF THE FOREGOING, EACH LENDER
AGREES TO REIMBURSE THE ADMINISTRATIVE AGENT PROMPTLY UPON DEMAND FOR ITS PRO
RATA PERCENTAGE OF ANY OUT-OF-POCKET EXPENSES (INCLUDING ATTORNEYS' FEES)
INCURRED BY THE ADMINISTRATIVE AGENT IN CONNECTION WITH THE PREPARATION,
ADMINISTRATION, OR ENFORCEMENT OF, OR LEGAL ADVICE IN RESPECT OF RIGHTS OR
RESPONSIBILITIES UNDER, ANY LOAN DOCUMENT, TO THE EXTENT THAT THE ADMINISTRATIVE
AGENT IS NOT REIMBURSED FOR SUCH EXPENSES BY THE BORROWERS.
Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any related agreement or any document furnished hereunder or thereunder.
ARTICLE IX
Miscellaneous
-------------
SECTION 9.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrowers, to Conn Appliances, Inc., Attention of Thomas
J. Frank (Telecopy No. (409) 832-4967), with copies to Office of the Treasurer
and Office of the Corporate General Counsel (Facsimile Number 409-212-9521);
(b) if to the Administrative Agent or to the Swingline Lender, to
JPMorgan Chase Bank, National Association, Attention of Michael Arnett (Telecopy
No. (713) 216-8686);
(c) if to any other Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
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SECTION 9.02. Waivers; Amendments.
(a) No failure or delay by the Administrative Agent or any Lender in
exercising any right or power hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent, and the
Lenders hereunder are cumulative and are not exclusive of any rights or remedies
that they would otherwise have. No waiver of any provision of this Agreement or
consent to any departure by the Borrowers therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) of this Section,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. Without limiting the generality of the
foregoing, the making of a Loan shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent or any Lender may have
had notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrowers and the Required Lenders or by the Borrowers and
the Administrative Agent with the consent of the Required Lenders; provided that
no such agreement shall (i) increase the Revolving Loan Commitment of any Lender
without the written consent of such Lender, (ii) reduce the principal amount of
any Loan or reduce the rate of interest thereon, or reduce any fees payable
hereunder, without the written consent of each Lender affected thereby, (iii)
postpone the scheduled date of payment of the principal amount of any Loan, or
any interest thereon, or any fees payable hereunder, or reduce the amount of,
waive or excuse any such payment, or postpone the scheduled date of expiration
of any Revolving Loan Commitment, without the written consent of each Lender
affected thereby, (iv) change Section 2.16 in a manner that would alter the pro
rata sharing of payments required thereby, without the written consent of each
Lender, (v) except in connection with a sale, transfer or other disposition
permitted hereby, release any Collateral, (vi) release of Guarantor from its
obligations, or (vii) change any of the provisions of this Section or the
definition of "Required Lenders" or any other provision hereof specifying the
number or percentage of Lenders required to waive, amend or modify any rights
hereunder or make any determination or grant any consent hereunder, without the
written consent of each Lender; provided further that no such agreement shall
amend, modify or otherwise affect the rights or duties of the Administrative
Agent or the Swingline Lender without the prior written consent of the
Administrative Agent or Swingline Lender, as the case may be.
SECTION 9.03. Expenses; Indemnity; Damage Waiver.
(a) The Borrowers shall pay (i) all out-of-pocket expenses incurred by
the Administrative Agent and its affiliates, including the reasonable fees,
charges and disbursements of counsel for the Administrative Agent, in connection
with the syndication of the credit facilities provided for herein, the
preparation and administration of this Agreement or any other Loan Document or
any amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all out-of-pocket expenses incurred by the Administrative
60
Agent or any Lender, including the fees, charges and disbursements of any
counsel for the Administrative Agent or any Lender, in connection with the
enforcement or protection of its rights in connection with this Agreement or any
other Loan Document, including its rights under this Section, or in connection
with the Loans made, including all such out-of-pocket expenses incurred during
any workout, restructuring or negotiations in respect of such Loans.
(b) The Borrowers shall indemnify the Administrative Agent, and each
Lender, and each related party of any of the foregoing persons (each such person
being called an "Indemnitee") against, and hold each Indemnitee harmless from,
any and all losses, claims, damages, liabilities and related expenses, including
the fees, charges and disbursements of any counsel for any Indemnitee, incurred
by or asserted against any indemnitee arising out of, in connection with, or as
a result of:
(i) the execution or delivery of this agreement or any
agreement or instrument contemplated hereby, the performance by the
parties hereto of their respective obligations hereunder or the
consummation of the transactions or any other transactions contemplated
hereby,
(ii) any Loan or the use of the proceeds therefrom,
(iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by the Borrowers or
any of their Subsidiaries, or any Environmental Liability related in
any way to the Borrowers or any of their Subsidiaries,
(iv) any transaction, act, omission, event or circumstance in
any way connected with the Mortgaged Property or with the Security
Documents, including but not limited to any bodily injury or death or
property damage occurring in or upon or in the vicinity of the
Mortgaged Property through any cause whatsoever any act performed or
omitted to be performed hereunder, any breach by any Loan Party of any
representation, warranty, covenant, agreement or condition contained in
the Security Documents, any default as defined herein, and any claim
under or with respect to any Lease (as defined in the Mortgages).
(v) any actual or prospective claim, litigation, investigation
or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether any
Indemnitee is a party thereto; provided that such indemnity shall not,
as to any Indemnitee, be available to the extent that such losses,
claims, damages, liabilities or related expenses are determined by a
court of competent jurisdiction by final and nonappealable judgment to
have resulted from the gross negligence or wilful misconduct of such
Indemnitee.
(c) To the extent that any Borrower fails to pay any amount required to
be paid by it to the Administrative Agent, under paragraph (a) or (b) of this
Section, each Lender severally agrees to pay to the Administrative Agent such
Lender's per rata percentage of such unpaid amount in accordance with Section
8.01.
61
(d) To the extent permitted by applicable law, the Borrowers shall not
assert, and hereby waive, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any agreement or instrument contemplated hereby, the
Transactions, any Loan or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable not later than
15 days after written demand therefor.
SECTION 9.04. Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that no Borrower may assign or otherwise transfer any
of its rights or obligations hereunder without the prior written consent of each
Lender (and any attempted assignment or transfer by any Borrower without such
consent shall be null and void). Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby and, to the
extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.
(b) Any Lender may assign to one or more assignees all or a portion of
its rights and obligations under this Agreement (including all or a portion of
its Revolving Loan Commitment and the Loans at the time owing to it); provided
that (i) except in the case of an assignment to a Lender or an affiliate of a
Lender, (x) the selling Lender must consult with the Borrowers prior to
effectuating any such assignment and must provide the Borrowers with a
reasonable opportunity to designate a purchaser reasonably acceptable to the
selling Lender and (y) each of the Borrowers and the Administrative Agent and
the Swingline Lender must give their prior written consent to such assignment
(which consent shall not be unreasonably withheld), (ii) except in the case of
an assignment to a Lender or an affiliate of a Lender or an assignment of the
entire remaining amount of the assigning Lender's Revolving Loan Commitment, the
amount of the Revolving Loan Commitment of the assigning Lender subject to each
such assignment (determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to the Administrative Agent) shall not
be less than $5,000,000 unless the Borrowers and the Administrative Agent
otherwise consent, (iii) each partial assignment shall be made as an assignment
of a proportionate part of all the assigning Lender's rights and obligations
under this Agreement, (iv) the parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Acceptance, together with
(except in the case of an assignment to a Lender or an affiliate of a Lender) a
processing and recordation fee of $3,500, and (v) the assignee, if it shall not
be a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire; and provided further that any consultation with or consent of the
Borrowers otherwise required under this paragraph shall not be required if an
Event of Default has occurred and is continuing. Subject to acceptance and
recording thereof pursuant to paragraph (d) of this Section, from and after the
effective date specified in each Assignment and Acceptance the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
62
by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 9.03). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an agent of
the Borrowers, shall maintain at one of its offices in Houston, Texas a copy of
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Revolving Loan
Commitment of, and principal amount of the Loans owing to, each Lender pursuant
to the terms hereof from time to time (the "Register"). The entries in the
Register shall be conclusive, and the Borrowers, the Administrative Agent, and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrowers, and any Lender, at any reasonable
time and from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment and
Acceptance and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrowers or the
Administrative Agent, sell participations to one or more banks or other entities
(a "Participant") in all or a portion of such Lender's rights and obligations
under this Agreement (including all or a portion of its Revolving Loan
Commitment and the Loans owing to it); provided that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrowers, the Administrative Agent, 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. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Section
9.02(b) that affects such Participant. Subject to paragraph (f) of this Section,
the Borrowers agree that each Participant shall be entitled to the benefits of
Sections 2.15, 2.16 and 2.17 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this Section.
To the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 9.08 as though it were a Lender, provided such Participant
agrees to be subject to Section 2.18(c) as though it were a Lender.
63
(f) A Participant shall not be entitled to receive any greater payment
under Section 2.15 or 2.17 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Borrowers'
prior written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 2.17 unless the
Borrowers are notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrowers, to comply with Section
2.17(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.
SECTION 9.05. Survival. All covenants, agreements, representations and
warranties made by the Borrowers herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that the Administrative Agent or any Lender may have had
notice or knowledge of any Default or incorrect representation or warranty at
the time any credit is extended hereunder, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or any
fee or any other amount payable under this Agreement is outstanding and unpaid
and so long as the Revolving Loan Commitments have not expired or terminated.
The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall
survive and remain in full force and effect regardless of the consummation of
the transactions contemplated hereby, the repayment of the Loans, and the
Revolving Loan Commitments or the termination of this Agreement or any provision
hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This Agreement
may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and any
separate letter agreements with respect to fees payable to the Administrative
Agent constitute the entire contract among the parties relating to the subject
matter hereof and supersede any and all previous agreements and understandings,
oral or written, relating to the subject matter hereof. This Agreement shall
become effective when it shall have been executed by the Administrative Agent
and when the Administrative Agent shall have received counterparts hereof which,
when taken together, bear the signatures of each of the other parties hereto,
and thereafter shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
64
SECTION 9.08. Right of Set-off. If an Event of Default shall have
occurred and be continuing, each Lender and each of its affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by such Lender or affiliate to or for the credit or the account of any
Borrower against any of and all the obligations of the Borrowers now or
hereafter existing under this Agreement held by such Lender, irrespective of
whether or not such Lender shall have made any demand under this Agreement and
although such obligations may be unmatured. The rights of each Lender under this
Section are in addition to other rights and remedies (including other rights of
set-off) which such Lender may have.
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of
Process.
(a) THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAW OF THE STATE OF TEXAS.
(b) EACH BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR
ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE DISTRICT COURT
OF THE STATE OF TEXAS SITTING IN HARRIS COUNTY AND OF THE UNITED STATES DISTRICT
COURT OF THE SOUTHERN DISTRICT OF TEXAS, AND ANY APPELLATE COURT FROM ANY
THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN TEXAS
OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES
HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY
RIGHT THAT THE ADMINISTRATIVE AGENT, OR ANY LENDER MAY OTHERWISE HAVE TO BRING
ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST ANY BORROWER OR ITS
PROPERTIES IN THE COURTS OF ANY JURISDICTION.
(c) EACH BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT REFERRED TO IN
PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
65
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.12. Payments Set Aside. To the extent that any Borrower makes
a payment or payments to the Administrative Agent or any Lender or the
Administrative Agent or any Lender enforces any security interest or exercises
its right of set-off, and such payment or payments or the proceeds of such
enforcement or set-off or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other Person under any debtor law or
equitable cause, then, to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied, and all rights and remedies
therefor, shall be revived and shall continue in full force and effect as if
such payment had not been made or such enforcement or set-off had not occurred.
SECTION 9.13. Loan Agreement Controls. If there are any conflicts or
inconsistencies among this Agreement and any of the other Loan Documents, the
provisions of this Agreement shall prevail and control.
SECTION 9.14. FINAL AGREEMENT. THIS WRITTEN AGREEMENT REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
66
SECTION 9.15. Interest Rate Limitation. Notwithstanding anything herein
to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively, the "Charges"), shall exceed
the maximum lawful rate (the "Highest Lawful Rate") which may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Highest Lawful Rate and, to the extent lawful, the interest and
Charges that would have been payable in respect of such Loan but were not
payable as a result of the operation of this Section shall be cumulated and the
interest and Charges payable to such Lender in respect of other Loans or periods
shall be increased (but not above the Highest Lawful Rate therefor) until such
cumulated amount, together with interest thereon at the Federal Funds Effective
Rate to the date of repayment, shall have been received by such Lender.
SECTION 9.16. Limitation of Liens. Notwithstanding anything in any Loan
Document to the contrary, The Administrative Agent and the Lenders hereby agree
that under no circumstances shall the Collateral include (i) "Purchased
Receivables" (as defined in the Receivables Purchase Agreement) or (ii) "Related
Security" or "Receivable Files" (each as defined in the Conn Funding II
Indenture), or products or proceeds of any of the foregoing.
SECTION 9.17. USA Patriot Act. Each Lender that is subject to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the "Act") hereby notifies the Borrowers that pursuant
to the requirements of the Act, it is required to obtain, verify and record
information that identifies the Borrowers, which information includes the names
and addresses of the Borrowers and other information that will allow such Lender
to identify the Borrowers in accordance with the Act.
SECTION 9.18. Amendment and Restatement. This Agreement amends and
restates in its entirety that certain Credit Agreement dated as of April 24,
2003 by and among CAI and certain related entities, as Borrowers, JPMorgan Chase
Bank, National Association, as Administrative Agent, and the other lenders named
therein.
67
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
CONN APPLIANCES, INC.
By: /s/ William C. Nylin, Jr.
----------------------------
Name: William C. Nylin, Jr.
----------------------------
Title: President
----------------------------
CAI CREDIT INSURANCE AGENCY, INC.
By: /s/ David R. Atnip
----------------------------
Name: David R. Atnip
----------------------------
Title: President
----------------------------
68
The undersigned Guarantors hereby join in this Agreement to evidence
their consent to execution by Borrower of this Agreement, to confirm that each
Loan Document now or previously executed by the undersigned applies and shall
continue to apply to this Agreement, and to acknowledge that without such
consent and confirmation, Lenders would not execute this Agreement.
CAI HOLDING CO., a Delaware corporation,
CONN APPLIANCES, L.L.C., a Delaware
limited liability company, CAI CREDIT, L.L.C.,
a Delaware limited liability company,
By: /s/ Victoria Garrett
----------------------------------------
Name: Victoria Garrett
----------------------------------------
Title: President and Secretary
----------------------------------------
CAI L.P., a Texas limited partnership
By: Conn Appliances, Inc., its
General Partner
By: /s/ William C. Nylin, Jr.
-----------------------------------
Name: William C. Nylin, Jr.
-----------------------------------
Title: President
-----------------------------------
CAI CREDIT INSURANCE AGENCY L.P., a
Louisiana limited partnership
By: CAI Credit Insurance Agency, Inc., its
General Partner
By: /s/ David R. Atnip
-----------------------------------
Name: David R. Atnip
-----------------------------------
Title: President
-----------------------------------
69
The undersigned Guarantor hereby joins in this Agreement to evidence
its consent to execution by Borrower of this Agreement, to confirm that each
Loan Document now or previously executed by the undersigned applies and shall
continue to apply to this Agreement, and to acknowledge that without such
consent and confirmation, Lenders would not execute this Agreement.
CONN'S, INC, a Delaware corporation
By: /s/ Thomas J. Frank
------------------------------
Name: Thomas J. Frank
------------------------------
Title: Chairman and CEO
------------------------------
70
JPMORGAN CHASE BANK, NATIONAL
ASSOCIATION, individually and as
Administrative Agent and
Swingline Lender
By: /s/Michael Arnett
------------------------------
Name: Michael Arnett
------------------------------
Title: Vice President
------------------------------
71
BANK OF AMERICA, N.A., individually
and as Syndication Agent
By: /s/ Gary L. Mingle
------------------------------
Name: Gary L. Mingle
------------------------------
Title: Senior Vice President
------------------------------
72
SUNTRUST BANK, individually and
as Documentation Agent
By: /s/ Katherine L. Base
------------------------------
Name: Katherine L. Base
------------------------------
Title: Vice President
------------------------------
73
HIBERNIA NATIONAL BANK
By: /s/ Bill C. Darling
------------------------------
Name: Bill C. Darling
------------------------------
Title: Vice President
------------------------------
74
GUARANTY BANK
By: /s/ Eric Luttrell
------------------------------
Name: Eric Luttrell
------------------------------
Title: Vice President
------------------------------
75
Exhibit E-1
-----------
REVOLVING NOTE
$___________________ ____________, 200__
FOR VALUE RECEIVED, the undersigned (collectively, the "Borrowers"),
HEREBY PROMISE TO PAY to the order of ____________________________________ (the
"Lender") the principal sum of _____________ Dollars ($__________________), or
the aggregate principal amount of Revolving Loans made to each of the several
Borrowers pursuant to this Revolving Note and outstanding as of the maturity
hereof, whichever is lesser, in accordance with the terms and provisions of that
certain Credit Agreement dated as of October 31, 2005, by and among the
Borrowers, the Lender, and JPMorgan Chase Bank, National Association, as
Administrative Agent (the "Agent") for itself and the other banks or financial
institutions (collectively, the "Lenders") that may hereafter become a party to
the hereinafter defined Credit Agreement (such agreement, together with any and
all amendments and modifications thereof, being hereinafter referred to as the
"Credit Agreement"; capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to such terms in the Credit Agreement).
The obligations of the Borrowers hereunder shall be joint and several.
The outstanding principal balance of this Revolving Note shall be due
and payable as provided in the Credit Agreement. Each Borrower promises to pay
interest on the unpaid principal balance of this Revolving Note from the date of
any Revolving Loan evidenced by this Revolving Note until the principal balance
hereof is paid in full. Interest shall accrue on the outstanding principal
balance of this Revolving Note from and including the date of any Revolving Loan
evidenced by this Revolving Note to but not including the Maturity Date at the
rate or rates, and shall be due and payable on the dates, set forth in the
Credit Agreement. Any amount not paid when due with respect to principal
(whether at stated maturity, by acceleration or otherwise), costs or expenses,
or, to the extent permitted by applicable law, interest, shall bear interest
from the date when due to and excluding the date the same is paid in full,
payable on demand, at the rate provided for in Section 2.11(c) of the Credit
Agreement.
Payments of principal and interest, and all amounts due with respect to
costs and expenses, shall be made in lawful money of the United States of
America in immediately available funds, without deduction, set-off or
counterclaim to the Agent for the account of the Lender not later than 10:00
a.m. (Houston time) on the dates on which such payments shall become due
pursuant to the terms and provisions set forth in the Credit Agreement.
If any payment of principal or interest on this Revolving Note shall
become due on a Saturday, Sunday, or public holiday on which the Lender is not
open for business, such payment shall be made on the next succeeding Business
Day and such extension of time shall in such case be included in computing
interest in connection with such payment.
76
In addition to all principal and accrued interest on this Revolving
Note, each Borrower agrees to pay (a) all reasonable costs and expenses incurred
by all owners and holders of this Revolving Note in collecting this Revolving
Note through any probate, reorganization, bankruptcy or any other proceeding and
(b) reasonable attorneys' fees when and if this Revolving Note is placed in the
hands of an attorney for collection after default.
All agreements between the Borrowers, the Lenders or the Agent whether
now existing or hereafter arising and whether written or oral, are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of demand being made on this Revolving Note or otherwise, shall the
amount paid, or agreed to be paid, to the Lenders or the Agent for the use,
forbearance, or detention of the money to be loaned under the Credit Agreement
and evidenced by this Revolving Note or otherwise or for the payment or
performance of any covenant or obligation contained in the Credit Agreement,
this Revolving Note or in any other Loan Document exceed the Highest Lawful
Rate. If, as a result of any circumstances whatsoever, fulfillment of any
provision hereof or of any of such documents, at the time performance of such
provision shall be due, shall involve transcending the limit of validity
prescribed by applicable usury law, then, ipso facto, the obligation to be
fulfilled shall be reduced to the limit of such validity, and if, from any such
circumstance, the Lender shall ever receive interest or anything which might be
deemed interest under applicable law which would exceed the Highest Lawful Rate,
such amount which would be excessive interest shall be applied to the reduction
of the principal amount owing on account of this Revolving Note or the amounts
owing on other obligations of the Borrowers to the Lenders and the Agent under
any Loan Document and not to the payment of interest, or if such excessive
interest exceeds the unpaid principal balance of this Revolving Note and the
amounts owing on other obligations of the Borrowers to the Lenders or the Agent
under any Loan Documents, as the case may be, such excess shall be refunded to
the Borrowers. In determining whether or not the interest paid or payable under
any specific contingencies exceeds the Highest Lawful Rate, each applicable
Borrower and the Lender shall, to the maximum extent permitted under applicable
law, (a) characterize any nonprincipal payment as an expense, fee or premium
rather than as interest; (b) exclude voluntary prepayments and the effects
thereof; and (c) amortize, prorate, allocate and spread, during the period of
the full stated term of this Revolving Note, all interest at any time contracted
for, charged, received or reserved in connection with the indebtedness evidenced
by this Revolving Note.
This Revolving Note is one of the Notes provided for in, and is
entitled to the benefits of the Credit Agreement, which Credit Agreement, among
other things, contains provisions for acceleration of the maturity hereof upon
the happening of certain stated events, for prepayments on account of principal
hereof prior to the maturity hereof upon the terms and conditions and with the
effect therein specified, and provisions to the effect that no provision of the
Credit Agreement or this Revolving Note shall require the payment or permit the
collection of interest in excess of the Highest Lawful Rate. The obligations of
the Borrowers hereunder are secured by the Security Documents executed by the
respective Borrowers and the other Loan Parties. It is contemplated that by
reason of prepayments or repayments hereon prior to the Maturity Date, there may
be times when no indebtedness is owing hereunder prior to such date, but
notwithstanding such occurrences, this Revolving Note shall remain valid and
shall be in full force and effect as to Revolving Loans made pursuant to the
Credit Agreement subsequent to each such occurrence.
77
Except as otherwise specifically provided for in the Credit Agreement,
each Borrower and any and all endorsers, guarantors and sureties severally waive
grace, demand, presentment for payment, notice of dishonor or default, protest,
notice of protest, notice of intent to accelerate, notice of acceleration and
diligence in collecting and bringing of suit against any party hereto, and agree
to all renewals, extensions or partial payments hereon, with or without notice,
before or after maturity.
THIS REVOLVING NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAW.
IN WITNESS WHEREOF, each Borrower has caused this Revolving Note to be
executed and delivered by its officer thereunto duly authorized effective as of
the date first above written.
CONN APPLIANCES, INC.
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
CAI CREDIT INSURANCE AGENCY, INC.
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
78
Exhibit E-2
-----------
SWINGLINE NOTE
--------------
$8,000,000 ____________, 200__
FOR VALUE RECEIVED, the undersigned (collectively, the "Borrowers"),
HEREBY PROMISE TO PAY to the order of JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
(the "Lender") the principal sum of Eight Million Dollars ($8,000,000), or the
aggregate principal amount of Swingline Loans made to each of the several
Borrowers pursuant to this Swingline Note and outstanding as of the maturity
hereof, whichever is lesser, in accordance with the terms and provisions of that
certain Credit Agreement dated as of October 31, 2005, by and among the
Borrowers, the Lender, and JPMorgan Chase Bank, National Association, as
Administrative Agent (the "Agent") for itself and the other banks or financial
institutions (collectively, the "Lenders") that may hereafter become a party to
the hereinafter defined Credit Agreement (such agreement, together with any and
all amendments and modifications thereof, being hereinafter referred to as the
"Credit Agreement"; capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to such terms in the Credit Agreement).
The obligations of the Borrowers hereunder shall be joint and several.
The outstanding principal balance of this Swingline Note shall be due
and payable as provided in the Credit Agreement. Each Borrower promises to pay
interest on the unpaid principal balance of this Swingline Note from the date of
any Swingline Loan evidenced by this Swingline Note until the principal balance
hereof is paid in full. Interest shall accrue on the outstanding principal
balance of this Swingline Note from and including the date of any Swingline Loan
evidenced by this Swingline Note to but not including the Maturity Date at the
rate or rates, and shall be due and payable on the dates, set forth in the
Credit Agreement. Any amount not paid when due with respect to principal
(whether at stated maturity, by acceleration or otherwise), costs or expenses,
or, to the extent permitted by applicable law, interest, shall bear interest
from the date when due to and excluding the date the same is paid in full,
payable on demand, at the rate provided for in Section 2.11(c) of the Credit
Agreement.
Payments of principal and interest, and all amounts due with respect to
costs and expenses, shall be made in lawful money of the United States of
America in immediately available funds, without deduction, set-off or
counterclaim to the Agent for the account of the Lender not later than 10:00
a.m. (Houston time) on the dates on which such payments shall become due
pursuant to the terms and provisions set forth in the Credit Agreement.
If any payment of principal or interest on this Swingline Note shall
become due on a Saturday, Sunday, or public holiday on which the Lender is not
open for business, such payment shall be made on the next succeeding Business
Day and such extension of time shall in such case be included in computing
interest in connection with such payment.
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In addition to all principal and accrued interest on this Swingline
Note, each Borrower agrees to pay (a) all reasonable costs and expenses incurred
by all owners and holders of this Swingline Note in collecting this Swingline
Note through any probate, reorganization, bankruptcy or any other proceeding and
(b) reasonable attorneys' fees when and if this Swingline Note is placed in the
hands of an attorney for collection after default.
All agreements between the Borrowers, the Lenders or the Agent whether
now existing or hereafter arising and whether written or oral, are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of demand being made on this Swingline Note or otherwise, shall the
amount paid, or agreed to be paid, to the Lenders or the Agent for the use,
forbearance, or detention of the money to be loaned under the Credit Agreement
and evidenced by this Swingline Note or otherwise or for the payment or
performance of any covenant or obligation contained in the Credit Agreement,
this Swingline Note or in any other Loan Document exceed the Highest Lawful
Rate. If, as a result of any circumstances whatsoever, fulfillment of any
provision hereof or of any of such documents, at the time performance of such
provision shall be due, shall involve transcending the limit of validity
prescribed by applicable usury law, then, ipso facto, the obligation to be
fulfilled shall be reduced to the limit of such validity, and if, from any such
circumstance, the Lender shall ever receive interest or anything which might be
deemed interest under applicable law which would exceed the Highest Lawful Rate,
such amount which would be excessive interest shall be applied to the reduction
of the principal amount owing on account of this Swingline Note or the amounts
owing on other obligations of the Borrowers to the Lenders and the Agent under
any Loan Document and not to the payment of interest, or if such excessive
interest exceeds the unpaid principal balance of this Swingline Note and the
amounts owing on other obligations of the Borrowers to the Lenders or the Agent
under any Loan Documents, as the case may be, such excess shall be refunded to
the Borrowers. In determining whether or not the interest paid or payable under
any specific contingencies exceeds the Highest Lawful Rate, each applicable
Borrower and the Lender shall, to the maximum extent permitted under applicable
law, (a) characterize any nonprincipal payment as an expense, fee or premium
rather than as interest; (b) exclude voluntary prepayments and the effects
thereof; and (c) amortize, prorate, allocate and spread, during the period of
the full stated term of this Swingline Note, all interest at any time contracted
for, charged, received or reserved in connection with the indebtedness evidenced
by this Swingline Note.
This Swingline Note is one of the Notes provided for in, and is
entitled to the benefits of the Credit Agreement, which Credit Agreement, among
other things, contains provisions for acceleration of the maturity hereof upon
the happening of certain stated events, for prepayments on account of principal
hereof prior to the maturity hereof upon the terms and conditions and with the
effect therein specified, and provisions to the effect that no provision of the
Credit Agreement or this Swingline Note shall require the payment or permit the
collection of interest in excess of the Highest Lawful Rate. The obligations of
the Borrowers hereunder are secured by the Security Documents executed by the
respective Borrowers and the other Loan Parties. It is contemplated that by
reason of prepayments or repayments hereon prior to the Maturity Date, there may
be times when no indebtedness is owing hereunder prior to such date, but
notwithstanding such occurrences, this Swingline Note shall remain valid and
shall be in full force and effect as to Swingline Loans made pursuant to the
Credit Agreement subsequent to each such occurrence.
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Except as otherwise specifically provided for in the Credit Agreement,
each Borrower and any and all endorsers, guarantors and sureties severally waive
grace, demand, presentment for payment, notice of dishonor or default, protest,
notice of protest, notice of intent to accelerate, notice of acceleration and
diligence in collecting and bringing of suit against any party hereto, and agree
to all renewals, extensions or partial payments hereon, with or without notice,
before or after maturity.
THIS SWINGLINE NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAW.
IN WITNESS WHEREOF, each Borrower has caused this Swingline Note to be
executed and delivered by its officer thereunto duly authorized effective as of
the date first above written.
CONN APPLIANCES, INC.
By:
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Name:
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Title:
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CAI CREDIT INSURANCE AGENCY, INC.
By:
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Name:
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Title:
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