Exhibit 10.01
EXECUTION VERSION
LETTER OF CREDIT
AGREEMENT
WELLS FARGO RETAIL FINANCE II,
LLC
The Lender
DELIA*S, INC.
THE LEAD APPLICANT
FOR:
DELIA*S, INC.
ALLOY MERCHANDISE,
LLC
DELIA*S OPERATING
COMPANY
DELIA*S RETAIL
COMPANY
The Applicants
JUNE 26, 2009
TABLE OF CONTENTS
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Page
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ARTICLE
1: Definitions:
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3
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ARTICLE
2: The L/C
Facility:
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8
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2.1
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Establishment
of L/C Facility
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8
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2.2
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Advances in
Excess of Availability (Over Advances)
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9
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2.3
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Lender’s
Commitment
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9
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2.4
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The Loan
Account
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9
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2.5
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Payment on the
Loan Account
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10
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2.6
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Interest on
Overdue Amounts
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11
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2.7
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Unused Line
Fee
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11
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2.8
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Procedures For
Issuance of L/C’s; Auto-Extension Letters of
Credit
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12
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2.9
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Fees For
L/C’s
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15
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2.10
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Concerning
L/C’s
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16
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2.11
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Designation of
Lead Applicant as Applicants’ Agent
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17
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2.12
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Optional
Termination
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18
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2.13
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Assumption of
L/Cs Under Existing Loan Agreement
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18
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ARTICLE
3: Conditions
Precedent:
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18
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3.1
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Conditions
Precedent to Effectiveness of this Agreement
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18
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3.2
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Conditions
Precedent to Issuance of Each L/C
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21
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ARTICLE
4: General
Representations, Covenants and Warranties:
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21
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4.1
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Payment and
Performance of Liabilities
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21
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4.2
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Due
Organization. Authorization. No Conflicts
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21
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4.3
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Line of
Business
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23
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4.4
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Immediate
Notice to Lender
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23
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4.5
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Officers’
Certificates
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24
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4.6
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Use of L/C
Facility
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24
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4.7
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Cash Collateral
Account
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25
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4.8
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Solvency
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25
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4.9
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Corporate
Action
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25
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4.10
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Other
Covenants
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25
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ARTICLE
5: Events of
Default:
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25
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5.1
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Failure to Pay
the Loan Account
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25
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5.2
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Failure To Make
Other Payments
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25
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5.3
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Failure to
Perform Covenant or Liability (No Grace Period)
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26
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5.4
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Failure to
Perform Covenant or Liability (Grace Period)
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26
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5.5
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Misrepresentation
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26
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5.6
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Default Under
Other Agreements
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26
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5.7
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Attachment.
Judgment. Restraint of Business
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26
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5.8
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Business
Failure
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27
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Page 1
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5.9
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Bankruptcy
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27
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5.10
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Indictment -
Forfeiture
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27
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5.11
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Challenge to
Loan Documents
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28
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5.12
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Change in
Control
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28
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ARTICLE 6:
Rights and Remedies
Upon Default:
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28
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6.1
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Acceleration
and Setting Termination Date
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28
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6.2
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Rights and
Remedies
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28
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ARTICLE
7: Notices:
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29
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7.1
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Notice
Addresses
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29
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7.2
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Notice
Given
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30
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ARTICLE
8: Term:
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30
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8.1
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Termination of
L/C Facility
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30
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8.2
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Actions On
Termination
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31
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ARTICLE
9: General:
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31
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9.1
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Publicity
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31
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9.2
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Successors and
Assigns
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31
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9.3
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Severability
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32
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9.4
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Amendments.
Course of Dealing
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32
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9.5
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Costs and
Expenses of the Lender
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33
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9.6
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Copies and
Facsimiles
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33
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9.7
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Massachusetts
Law
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34
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9.8
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Consent to
Jurisdiction
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34
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9.9
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Indemnification
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35
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9.10
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Rules of
Construction
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35
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9.11
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Intent. It is
intended that:
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37
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9.12
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Participations
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37
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9.13
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Confidentiality
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38
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9.14
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Right of
Set-Off
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38
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9.15
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Pledges To
Federal Reserve Banks
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38
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9.16
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Maximum
Interest Rate
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39
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9.17
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Waivers
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39
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Page 2
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LETTER OF
CREDIT AGREEMENT
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Wells Fargo Retail Finance II,
LLC
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T HE L
ENDER
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THIS LETTER OF CREDIT AGREEMENT,
dated as of June 26, 2009, is made between Wells Fargo Retail
Finance II, LLC (the “ Lender ”), a Delaware
limited liability company with offices at One Boston Place - 19th
Floor, Boston, Massachusetts 02108, and
dELiA*s, Inc., a Delaware
corporation with its principal executive offices at 50 West
23 rd
Street, New York, New York 10010, as
agent (in such capacity, the “ Lead Applicant ”)
for the following (individually, an “ Applicant
” and, collectively, the “ Applicants
”):
dELiA*s, Inc., a Delaware
corporation,
Alloy Merchandise, LLC, a Delaware
limited liability company,
dELiA*s Operating Company, a
Delaware corporation, and
dELiA*s Retail Company, a Delaware
corporation,
each with its principal executive
offices at 50 West 23 rd Street New York, New York 10010, in
consideration of the mutual covenants herein contained and benefits
to be derived herefrom.
ARTICLE 1: D
EFINITIONS
:
As used herein, the following terms
have the following meanings or are defined in the section of this
Agreement so indicated:
“ Affiliate ”:
With respect to any two Persons, a relationship in which
(i) one holds, directly or indirectly, not less than Twenty
Five Percent (25%) of the capital stock, beneficial interests,
partnership interests, or other equity interests of the other; or
(ii) one has, directly or indirectly, the right, under
ordinary circumstances, to vote for the election of a majority of
the directors (or other body or Person who has those powers
customarily vested in a board of directors of a corporation); or
(iii) not less than Twenty Five Percent (25%) of their
respective ownership is directly or indirectly held by the same
third Person; or (iv) one directly or indirectly is under the
common control of the other by reason of direct or indirect power
to direct or cause the direction of management and policies of the
other (through the ownership of voting securities, by contract, or
on any other basis).
“ Applicable Law
”: As to any Person: (i) All statutes, rules,
regulations, orders, or other requirements having the force of law
and (ii) all (A) court orders and injunctions,
(B) arbitrator’s written decisions, and/or
(C) similar rulings which similar rulings are in writing, in
each instance ((i) and (ii)) of or by any federal, state,
municipal, and other governmental authority, or court, tribunal,
panel, or other legislative or administrative body which has or
claims jurisdiction over such Person, or any property of such
Person, or of any other Person for whose conduct such Person would
be responsible.
Page 3
“ Applicant ” and
“ Applicants ”: As defined in the Preamble to
this Agreement.
“ Availability ”:
The result of the following:
or
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(B)
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95.238% of the
available balance in the Cash Collateral Account.
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Minus
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(ii)
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The aggregate
unpaid balance of the Loan Account.
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Minus
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(iii)
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The aggregate
undrawn Stated Amount of all then outstanding
L/C’s.
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“ Bankruptcy Code
”: Title 11, U.S.C., as amended from time to time.
“ Business Day ”:
Any day other than (a) a Saturday or Sunday; (b) any day
on which banks in Boston, Massachusetts or in New York, New York,
generally are not open to the general public for the purpose of
conducting commercial banking business; or (c) a day on which
the principal office of the Lender is not open to the general
public to conduct business.
“ Cash Collateral
Account ”: All cash and cash equivalents deposited at
Wells Fargo Bank, N.A. for the account of any Applicant, which cash
and cash equivalents are under the sole and exclusive dominion and
control of the Lender, on terms and conditions satisfactory to the
Lender.
“ Change in Control
”: The occurrence of any of the following:
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(a)
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More than half
of the persons who were directors of the Lead Applicant on the
first day of any period consisting of Twelve (12) consecutive
calendar months (the first of which Twelve (12) month periods
commencing with the first day of the month following the Closing
Date), cease to be directors of the Lead Applicant for any reason
other than (i) death or disability or (ii) replacement by
individuals whose nomination for election to the relevant board of
directors is approved, prior to such election, by a majority of the
directors of the relevant board of directors.
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Page 4
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(b)
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Any failure of
the Lead Applicant directly or indirectly to own, beneficially and
of record, 100% of the capital stock or share capital or limited
liability company interests of all of the Applicants.
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“ Closing Date ”:
June 26, 2009.
“ Costs of Collection
”: Includes, without limitation, all reasonable
attorneys’ fees and reasonable out-of-pocket expenses
incurred by each Credit Party, including the fees and expenses of
outside counsel, and all reasonable out-of-pocket costs incurred by
each Credit Party in the administration of the Liabilities and/or
the Loan Documents, including, without limitation, reasonable costs
and expenses associated with travel on behalf of such Credit Party,
where such costs and expenses are directly or indirectly related to
or in respect of such Credit Party’s administration and
management of the Liabilities; negotiation, documentation, and
amendment of any Loan Document; or efforts to preserve, protect,
collect, or enforce any collateral, the Liabilities, and/or the
Lender’s Rights and Remedies and/or any of the rights and
remedies of such Credit Party against or in respect of any
guarantor or other person liable in respect of the Liabilities
(whether or not suit is instituted in connection with such
efforts). The Costs of Collection are Liabilities, and at the
Lender’s option may bear interest at the then effective Prime
Rate.
“ Credit Limit ”:
$15,000,000.00.
“ Credit Parties
”: The Lender, Issuer and/or any of their respective
Affiliates.
“ Default ”: Any
occurrence, circumstance, or state of facts with respect to a
Applicant which (a) is an Event of Default; or (b) would
become an Event of Default if any requisite notice were given
and/or any requisite period of time were to run and such
occurrence, circumstance, or state of facts were not cured within
any applicable grace period.
“Documentary
L/C” : An L/C
issued pursuant to this Agreement, the drawing under which requires
the delivery of bills of lading, airway bills or other similar
types of documents of title.
“ End Date ”: The
date upon which all of the following conditions are satisfied:
(a) all payment Liabilities described in Section 8.2(a)
have been paid in full; (b) those arrangements concerning
L/C’s and other financial accommodations which are described
in Section 8.2(b) have been made; and (c) all obligations
of each Credit Party to provide financial accommodations to the
Applicants hereunder shall have been irrevocably
terminated.
“ Events of Default
”: As defined in Article 5:. An “Event of
Default” shall be deemed to have occurred and to be
continuing unless and until that Event of Default has been duly
waived by the Lender or cured by the Applicants.
Page 5
“ Existing Loan
Agreement ”: That certain Second Amended and Restated
Loan and Security Agreement dated as of May 17, 2006, as
amended, by and among dELiA*s, Inc., for itself and as agent for
the other borrowers party thereto, the borrowers party thereto, and
Wells Fargo Retail Finance II, LLC, as lender.
“ Indemnified Person
”: As defined in Section 9.9.
“ Issuer ”: Well
Fargo Bank, N.A. or any other issuer of any L/C selected by the
Lender in its sole discretion.
“ Lender’s Rights and
Remedies ”: As defined in Section 6.2.
“ L/C ”: Any
letter of credit, the issuance of which is procured by the Lender
for the account of any Applicant and any acceptance made on account
of such letter of credit.
“ L/C Disbursement
”: Means any payment made under an L/C.
“ L/C Facility ”:
As defined in Section 2.1.
“ L/C Fee ”: As
defined in Section 2.9.
“ Lead Applicant
” As defined in the Preamble to this Agreement.
“ Lender ”: As
defined in the Preamble to this Agreement.
“ Liabilities ”:
means the due and punctual payment by the Applicant of
(i) each payment required to be made by any Applicant under
this Agreement, when and as due, including payments in respect of
reimbursement of disbursements of any L/C and interest thereon
(including all interest that accrues after the commencement of any
case or proceeding by or against any Applicant under any federal or
state bankruptcy, insolvency, receivership or similar law, whether
or not allowed in such case or proceeding) and (ii) all other
monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed
or otherwise, of the Applicants to each Credit Party under this
Agreement and the other Loan Documents.
“ Loan Account ”:
As defined in Section 2.4.
“ Loan Documents
”: All of the following:
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(a)
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This Agreement
and each other instrument or document from time to time executed
and/or delivered to a Credit Party in connection with the
arrangements contemplated hereby.
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(b)
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Each instrument
or document from time to time executed and/or delivered in
connection with the issuance of any L/C.
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Page 6
“ Maturity Date
”: The date that is the second anniversary of the Closing
Date.
“ Material Adverse
Change ”: Any event, fact, circumstance, change in, or
effect, on the business of the Applicants, when taken as a whole,
which, individually or in the aggregate or on a cumulative basis
with any other circumstances, changes in, or effects on, the
Applicants or any collateral granted to the Lender, constitutes any
of the following:
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(a)
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A material
adverse change in the business, operations, results of operations,
assets, liabilities, or condition (financial or otherwise) of the
Applicants (when taken as a whole), including, without limitation,
a material adverse change in the business, operations, results,
assets, liabilities or condition since the date of the latest
financial information supplied pursuant to this
Agreement.
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(b)
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The material
impairment of the Applicants’ ability to perform their
obligations under the Loan Documents or of the Lender’s
ability to enforce the Liabilities or to realize on the Cash
Collateral Account.
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(c)
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A material
adverse effect on the value of the Cash Collateral Account or the
amount which the Lender likely would receive (after giving
consideration to delays in payment and costs of
enforcement).
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(d)
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A material
impairment to the priority of the Lender’s lien on the Cash
Collateral Account.
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“ Material Adverse
Effect ”: A result, consequence, or outcome with respect
to the Applicants, taken as a whole, which constitutes a Material
Adverse Change.
“ Over Advance ”:
An issuance of any L/C, or the providing of another financial
accommodation, to the extent that, immediately after its having
been made, Availability is less than zero.
“ Person ”: Any
natural person, and any corporation, limited liability company,
trust, partnership, joint venture, or other enterprise or
entity.
“ Prime Rate ”:
The rate per annum equal to the Prime Rate announced from time to
time by Wells Fargo Bank, N.A. (or any successor in interest to
Wells Fargo Bank, N.A.). In the event that said bank (or any such
successor) ceases to announce such a rate, “Prime Rate”
shall refer to that rate or index announced or published from time
to time as the Lender, in good faith, designates as the functional
equivalent to said Prime Rate. Any change in “Prime
Rate” shall be effective, for purposes of the calculation of
interest due hereunder, when such change is made effective
generally by the bank on whose rate or index “Prime
Rate” is being set.
“ Requirements of Law
”: As to any Person:
Page 7
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(b)
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That
Person’s organizational documents.
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(c)
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That
Person’s by-laws and/or other instruments which deal with
corporate or similar governance, as applicable.
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“Solvent”
and “Solvency”:
With respect to any Person on a particular date, that on such date
(a) at fair valuation, all of the properties and assets of
such Person are greater than the sum of the debts, including
contingent liabilities, of such Person, (b) the present fair
saleable value of the properties and assets of such Person is not
less than the amount that would be required to pay the probable
liability of such Person on its debts as they become absolute and
matured, (c) such Person is able to realize upon its
properties and assets and pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the
normal course of business, (d) such Person does not intend to,
and does not believe that it will, incur debts beyond such
Person’s ability to pay as such debts mature, and
(e) such Person is not engaged in a business or a transaction,
and is not about to engage in a business or transaction, for which
such Person’s properties and assets would constitute
unreasonably small capital after giving due consideration to the
prevailing practices in the industry in which such Person is
engaged. The amount of all guarantees at any time shall be computed
as the amount that, in light of all the facts and circumstances
existing at the time, can reasonably be expected to become an
actual or matured liability.
“ Standby L/C ”:
An L/C issued pursuant to this Agreement, the drawing under which
does not require the delivery of bills of lading, airway bills or
other similar types of documents of title, or which are customarily
referred to as Standby Letters of Credit.
“ Stated Amount
”: The maximum amount for which an L/C may be
honored.
“ Termination Date
”: The earliest of (a) the Maturity Date; or
(b) the occurrence of any event described in Section 5.9,
below; or (c) the Lender’s notice to the Lead Applicant
setting the Termination Date on account of the occurrence of any
Event of Default other than as described in Section 5.9,
below; or (d) that date of which not less than ninety
(90) days irrevocable prior written notice is provided by the
Lead Applicant to the Lender pursuant to Section 2.12
hereof.
“ UCC ”: The
Uniform Commercial Code as in effect from time to time in
Massachusetts.
“ Unused Line Fee
”: As defined in Section 2.7.
ARTICLE 2: T
HE L/C F ACILITY :
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2.1
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E
STABLISHMENT
OF L/C F ACILITY .
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The Lender hereby establishes a
letter of credit facility (the “ L/C Facility ”)
in the Applicants’ favor pursuant to which the Lender,
subject to, and in accordance with, this Agreement, shall cause
L/Cs for the account of the Applicants to be issued by the Issuer
as provided herein.
Page 8
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2.2
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A
DVANCES IN E XCESS OF A VAILABILITY (O VER A DVANCES ).
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(a)
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The Lender does
not have any obligation to issue or cause to be issued any L/C for
the account of any Applicant where the result of the issuance is an
Over Advance.
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(b)
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The
Lender’s providing of an Over Advance on any one occasion
does not affect the obligations of each Applicant hereunder
(including each Applicant’s obligation to immediately repay
any amount which otherwise constitutes an Over Advance) nor
obligate the Lender to do so on any other occasion.
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2.3
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L
ENDER ’ S C OMMITMENT . Subject to the provisions of this Agreement, the
Lender shall cause the Issuer to issue L/Cs for the account of any
of the Applicants, in each instance if duly and timely requested by
the Lead Applicant as provided herein, provided
that:
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(a)
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No Over Advance
is then outstanding and none will result therefrom.
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(b)
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No Applicant is
then in Default and none will thereby become in Default.
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2.4
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T
HE L OAN A CCOUNT .
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(a)
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An account
(“ Loan Account ”) shall be opened on the books
of the Lender in which a record shall be kept of all unpaid L/C
Disbursements and fees, interest and expenses that have accrued
and/or become payable as set forth herein.
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(b)
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The Lender
shall also keep a record of all interest, fees, service charges,
costs, expenses, and other debts owed to a Credit Party on account
of the Liabilities and of all credits against such amounts so
owed.
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(c)
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The Lender
shall provide the Lead Applicant, monthly, with a statement of the
Loan Account.
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(d)
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All credits
against the Liabilities shall be conditional upon final payment to
the Lender of the items giving rise to such credits. The amount of
any item credited against the Liabilities which is charged back
against the Lender for any reason or is not so paid shall be a
Liability and shall be added to the Loan Account, whether or not
the item so charged back or not so paid is returned.
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Page 9
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(e)
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Except as
otherwise provided herein, all L/C Disbursements, fees, service
charges, costs, and expenses for which any Applicant is obligated
hereunder are payable on demand. In the event that the Lead
Applicant prevails in any dispute of the amount of any such fee,
service charge, cost, or expense, the Lender shall refund any
interest which accrued on any amount paid over to that Applicant in
consequence of the resolution of such dispute.
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(f)
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In the
determination of Availability, the Lender may deem fees, service
charges, accrued interest, and other payments which will be due and
payable between the date of such determination and the first day of
the then next succeeding month as having been advanced and recorded
in the Loan Account whether or not such amounts are then due and
payable.
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(g)
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The Lender,
without the request of the Lead Applicant, may charge to the Loan
Account any interest, fee, service charge, or other payment to
which a Credit Party is entitled from any Applicant pursuant hereto
notwithstanding that an Over Advance may result thereby. Such
action on the part of the Lender shall not constitute a waiver of
the Lender’s rights and each Applicant’s obligations
under Section 2.5(c). Any amount which is added to the Loan
Account as provided in this Subsection (g) shall bear interest
at the interest rate equal to the Prime Rate plus 2% per
annum. Upon charging the Loan Account as provided herein, the
Lender shall promptly notify the Lead Applicant thereof.
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(h)
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Any statement
rendered by the Lender to the Lead Applicant concerning the
Liabilities shall be considered correct and accepted by each
Applicant and shall be conclusively binding upon each Applicant
(absent an administrative or mathematical error) unless the Lead
Applicant provides the Lender with written objection thereto within
twenty (20) days from the mailing of such statement, which
written objection shall indicate, with reasonable particularity,
the reason for such objection. The Loan Account and the
Lender’s books and records concerning the financing
arrangement contemplated herein and the Liabilities shall be prima
facie evidence and proof of the items described therein absent
manifest error.
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2.5
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P
AYMENT ON THE L OAN A CCOUNT .
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(a)
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Upon receipt from the beneficiary
of any L/C of any notice of a drawing under any Standby L/C, the
Lender or Issuer shall notify the Lead Applicant thereof;
provided , however , that any failure to give or
delay in giving such notice shall not relieve the Applicants of
their obligation to reimburse the Lender for the benefit of the
Issuer an amount equal to such L/C Disbursement. Not later than
11:00 a.m. on the date of any payment by the Issuer under a Standby
L/C and the receipt of the notice to the Lead Applicant referred to
above (or, if such notice is
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Page 10
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received after 11:00 a.m., not later
than 11:00 a.m. the immediately succeeding Business Day), the
Applicants shall reimburse the Issuer through the Lender in an
amount equal to the amount of such drawing. In the event that the
Applicants have not reimbursed the Issuer within the time periods
set forth above, the Lender shall have the right to withdraw funds
from the Cash Collateral Account and apply such funds to pay such
reimbursement and to any other overdue Liabilities.
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(b)
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Not later than
2:00 p.m. on the date of any payment by the Issuer under a
Documentary L/C, the Applicants shall reimburse the Issuer through
the Lender in an amount equal to the amount of such drawing. In the
event that the Applicants have not reimbursed the Issuer within the
time period set forth above, the Lender shall have the right to
withdraw funds from the Cash Collateral Account and apply such
funds to pay such reimbursement and to any other overdue
Liabilities.
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(c)
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The Applicants,
without notice or demand from the Lender, shall pay the
Lender that amount, from time to time, which is necessary so that
there is no Over Advance outstanding.
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(d)
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The Applicants
shall repay that amount described in Section 8.2(a) on
the Termination Date.
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(e)
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The Applicants
on demand shall pay all interest, fees and cost and expenses due
pursuant to this Agreement.
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2.6
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I
NTEREST ON O VERDUE A MOUNTS . If
the Issuing Bank shall make any L/C Disbursement, then, unless the
Applicants shall reimburse the Lender on behalf of the Issuing Bank
in full on the date such reimbursement is due, the unpaid amount
thereof shall bear interest, for each day from and including the
date such reimbursement is due but excluding the date that the
Applicant reimburses the Lender therefor, at the rate per annum
equal to the Prime Rate plus 2.00%. Interest shall be calculated on
the basis of a 360 day year and actual days elapsed.
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2.7
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U
NUSED L INE F EE . In
addition to any other fee to be paid by the Applicants, the
Applicants shall pay the Lender an unused line fee (the “
Unused Line Fee ”) of 0.75% per annum of the
average daily difference, during the month just ended (or relevant
period with respect to the payment being made on the Termination
Date), between the Credit Limit and the aggregate undrawn Stated
Amount of L/Cs outstanding during the relevant period. The Unused
Line Fee shall be paid in arrears, on the first day of each month
after the execution of this Agreement and on the Termination
Date.
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Page 11
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2.8
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P
ROCEDURES
F OR I SSUANCE OF L/C’ S ;
A UTO
-E XTENSION L ETTERS OF C REDIT .
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(a)
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Each L/C shall
be issued or amended, as the case may be, upon the request of the
Lead Applicant delivered to the Issuer (with a copy to the Lender)
in the form of an L/C application, appropriately completed and
signed by a responsible officer of the Lead Applicant. Such
application must be received by the Issuer and the Lender not later
than 11:00 a.m. at least two Business Days (or such other date and
time as the Lender and the Issuer may agree in a particular
instance in their sole discretion) prior to the proposed issuance
date or date of amendment, as the case may be. In the case of a
request for an initial issuance of an L/C, such application shall
specify in form and detail satisfactory to the Lender and the
Issuer: (A) the proposed issuance date of the requested L/C
(which shall be a Business Day); (B) the amount thereof;
(C) the expiry date thereof; (D) the name and address of
the beneficiary thereof; (E) the documents to be presented by
such beneficiary in case of any drawing thereunder; (F) the
full text of any certificate to be presented by such beneficiary in
case of any drawing thereunder; and (G) such other matters as
the Lender or the Issuer may reasonably require. In the case of a
request for an amendment of any outstanding L/C, such application
shall specify in form and detail satisfactory to the Lender and the
Issuer (A) the L/C to be amended; (B) the proposed date
of amendment thereof (which shall be a Business Day); (C) the
nature of the proposed amendment; and (D) such other matters
as the Lender or the Issuer may reasonably require. Additionally,
the Lead Applicant shall furnish to the Issuer and the
Lender such other documents and information pertaining to such
requested L/C issuance or amendment, as the Issuer or the Lender
may reasonably require.
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(b)
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Unless one or
more applicable conditions contained in Article 3 shall not then be
satisfied and the Issuer has received written notice thereof from
the Lender or any Applicant, at least one Business Day prior to the
requested date of issuance or amendment of the applicable L/C,
then, subject to the terms and conditions hereof, the Lender shall
cause the Issuer, on the requested date, to issue an L/C for the
account of the applicable Applicant or enter into the applicable
amendment, as the case may be, in each case in accordance with the
Issuer’s usual and customary business practices.
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(c)
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The Lender will
cause the issuance of any L/C so requested by the Lead Applicant,
provided that , at the time that the request is made, no
Applicant is in Default and no Material Adverse Change has occurred
or would occur, and if so issued:
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(i)
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The aggregate
Stated Amount of all L/C’s then outstanding does not exceed
the Credit Limit.
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Page 12
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(ii)
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Except as
provided in clause (g) below, the expiry of the L/C is not
later than the earlier of Thirty (30) days prior to the
Maturity Date or the following:
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(A)
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In the case of
Standby L/Cs: One (1) year from initial issuance (without
regard to any evergreen feature).
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(B)
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In the case of
Documentary L/Cs: Ninety (90) days from issuance.
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(iii)
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An Over Advance
will not result from the issuance of the subject L/C.
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(iv)
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The Cash
Collateral Account is funded in an amount equal to no less than
105% of the Credit Limit.
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(d)
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No L/C shall be
issued without the prior consent of the Lender if:
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(i)
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any order,
judgment or decree of any governmental authority or arbitrator
shall by its terms purport to enjoin or restrain the Issuer from
issuing such L/C, or any law applicable to the Issuer or any
request or directive (whether or not having the force of law) from
any governmental authority with jurisdiction over the Issuer shall
prohibit, or request that the Issuer refrain from, the issuance of
letters of credit generally or such L/C in particular or shall
impose upon the Issuer with respect to such L/C any restriction,
reserve or capital requirement (for which the Issuer is not
otherwise compensated hereunder) not in effect on the Closing Date,
or shall impose upon the Issuer any unreimbursed loss, cost or
expense which was not applicable on the Closing Date and which the
Issuer in good faith deems material to it;
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(ii)
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the issuance of
such L/C would violate one or more policies of the Issuer
applicable to letters of credit generally; or
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(iii)
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such L/C is to
be denominated in a currency other than Dollars.
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(e)
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The Applicants
shall not permit any L/C to be amended if (A) the Issuer would
not be permitted at such time to issue such L/C in its amended form
under the terms hereof or (B) the beneficiary of such L/C does
not accept the proposed amendment to such L/C.
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Page 13
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(f)
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The Issuer
shall act on behalf of the Lender with respect to any L/C’s
issued by it and the documents associated therewith, and the Issuer
shall have all of the benefits and immunities provided to the
Lender in Article 9 with respect to any acts taken or omissions
suffered by the Issuer in connection with L/C’s issued by it
or proposed to be issued by it and documents pertaining to such
L/C’s.
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(g)
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If the Lead
Applicant so requests in any applicable L/C application, the Lender
may, in its sole and absolute discretion, cause the Issuer to issue
a Standby L/C that has automatic extension provisions (each, an
“ Auto-Extension L/C ”); provided that
any such Auto-Extension L/C must permit the Issuer to prevent any
such extension at least once in each twelve-month period
(commencing with the date of issuance of such Standby L/C) by
giving prior notice to the beneficiary thereof, with a copy of such
notice given to the Lead Applicant, not later than a day (the
“ Non-Extension Notice Date ”) in each such
twelve-month period to be agreed upon at the time such Standby L/C
is issued. Unless otherwise directed by the Lender or the Issuer,
the Lead Applicant shall not be required to make a specific request
to the Lender or the Issuer for any such extension. Once an
Auto-Extension L/C has been issued, the Lender shall be deemed to
have authorized (but may not require) the Issuer to permit the
extension of such Standby L/C at any time to an expiry date not
later than the Termination Date; provided , however ,
that the Lender shall instruct the Issuer not to permit any such
extension if (A) the Lender has determined that it would not
be permitted, or would have no obligation, at such time to cause
the Issuer to issue such Standby L/C in its revised form (as
extended) under the terms hereof, or (B) the Issuer has
received notice (which may be by telephone or in writing) on or
before the day that is five Business Days before the Non-Extension
Notice Date (1) from the Lender that the Lender has elected
not to permit such extension or (2) from the Lender or the
Lead Applicant that one or more of the applicable conditions
specified in Section 3.2 is not then satisfied, and in each
such case directing the Issuer not to permit such
extension.
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(h)
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There shall not
be any recourse to, nor liability of, the Lender on account
of
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(i)
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Any delay or
refusal by an Issuer to issue an L/C;
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(ii)
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Any action or
inaction of an Issuer on account of or in respect of, any
L/C.
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Page 14
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(a)
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The Applicants
shall pay to the Lender a fee (each, an “ L/C Fee
”), on account of outstanding L/C’s, the issuance of
which had been procured by the Lender, monthly in arrears, and on
the Termination Date and on the End Date, equal to 2.00% per
annum of the average daily Stated Amount of the of L/Cs outstanding
during the subject month.
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(b)
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In addition to
(but without duplication of) the fee to be paid as provided in
Subsection (a), above, the Applicants shall pay to the Lender (or
to the Issuer, if so requested by Lender), on demand, all issuance,
processing, negotiation, amendment, and administrative fees and
other amounts then generally charged by the Issuer on account of,
or in respect to, any L/C.
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(c)
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If any change
in Applicable Law after the date of this Agreement shall
either:
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(i)
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impose, modify
or deem applicable any reserve, special deposit or similar
requirements against letters of credit heretofore or hereafter
issued by any Issuer or with respect to which the Lender or any
Issuer has an obligation to lend to fund drawings under any L/C;
or
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(ii)
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impose on any
Issuer any other condition or requirements relating to any such
letters of credit;
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and the result of any event referred
to in Paragraphs (i) or (ii), above, shall be to increase the
cost to the Lender or to any Issuer of issuing or maintaining any
L/C (which increase in cost shall be the result of such
Issuer’s reasonable allocation among the Lender’s or
Issuer’s letter of credit customers of the aggregate of such
cost increases resulting from such events), then, subject to
Subsection (d), upon demand by the Lender and delivery by the
Lender to the Lead Applicant of a certificate of an officer of the
Lender or the subject Issuer describing such change in Applicable
Law or interpretation thereof, its effect on the Lender or such
Issuer, and the basis for determining such increased costs and
their allocation, the Applicants shall immediately pay to the
Lender, from time to time as specified by the Lender, such amounts
as shall be sufficient to compensate the Lender or the subject
Issuer for such increased cost. The Lender’s or any
Issuer’s determination of costs incurred under Paragraphs
(i) or (ii), above, and the allocation, if any, of such costs
among the Applicants and other similarly situated letter of credit
customers of the Lender or such Issuer, if done in good faith and
made on an equitable basis and in accordance with such
officer’s certificate, shall be conclusive and binding on the
Applicants.
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(d)
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The Applicants
shall be required to compensate the Lender pursuant to Subsection
(c)
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(i)
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only if the
Lender provides the Lead Applicant with notice thereof within
ninety (90) days after the Lender has received actual notice
of the occurrence of the relevant circumstances which gives rise to
the Applicants’ obligation to do so; and
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Page 15
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(ii)
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only to the
extent that the Lender imposes a like such compensation obligation
on other of its customers who are similarly situated to the
Applicants in respect of any increased costs described in
Subsection (c).
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2.10
|
C
ONCERNING
L/C’
S .
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(a)
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None of the
Issuer, the Issuer’s correspondents, the Lender, or any
advising, negotiating, or paying bank with respect to any L/C shall
be responsible in any way for:
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(i)
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The performance
by any beneficiary under any L/C of that beneficiary’s
obligations to any Applicant.
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(ii)
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The form,
sufficiency, correctness or genuineness of, or authority of any
person signing, falsification of, or the legal effect of, any
documents called for under any L/C if (with respect to the
foregoing) such documents on their face appear to be in
order.
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(b)
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The Issuer may
honor, as complying with the terms of any L/C and of any drawing
thereunder, any drafts or other documents otherwise in order, but
signed or issued by an administrator, executor, conservator,
trustee in bankruptcy, debtor in possession, assignee for the
benefit of creditors, liquidator, receiver, or other legal
representative of the party authorized under such L/C to draw or
issue such drafts or other documents.
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(c)
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Unless
otherwise agreed to, in the particular instance, each Applicant
hereby authorizes any Issuer to:
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(i)
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Select an
advising bank, if any.
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(ii)
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Select a paying
bank, if any.
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