<PAGE>
EXHIBIT 10(z)
================================================================================
LOAN AND SECURITY AGREEMENT
================================================================================
FLEET RETAIL GROUP, INC.
ADMINISTRATIVE AGENT FOR
THE REVOLVING CREDIT LENDERS REFERENCED HEREIN
FLEET NATIONAL BANK
AS ISSUER
CLAIRE'S STORES, INC.
AS LEAD BORROWER FOR
BMS DISTRIBUTING CORP.,
CLAIRE'S BOUTIQUES, INC.,
CBI DISTRIBUTING CORP.,
CLAIRE'S PUERTO RICO CORP.,
THE BORROWERS
================================================================================
================================================================================
March 31, 2004
<PAGE>
TABLE OF CONTENTS
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ARTICLE 1 -
DEFINITIONS:........................................................................................
1
ARTICLE 2 - THE REVOLVING
CREDIT:...............................................................................
28
2-1. ESTABLISHMENT OF REVOLVING
CREDIT......................................................................
28
2-2. ADVANCES IN EXCESS OF BORROWING
BASE
(OVERLOANS).......................................................
29
2-3. RISKS OF VALUE OF
COLLATERAL...........................................................................
29
2-4. COMMITMENT TO MAKE REVOLVING
CREDIT LOANS AND SUPPORT LETTERS OF
CREDIT................................ 29
2-5. REVOLVING CREDIT LOAN
REQUESTS.........................................................................
30
2-6 MAKING OF REVOLVING CREDIT
LOANS.......................................................................
31
2-7. THE LOAN
ACCOUNT.......................................................................................
32
2-8. THE REVOLVING CREDIT
NOTES.............................................................................
33
2-9. PAYMENT (AND PREPAYMENTS) OF THE
LOAN
ACCOUNT..........................................................
33
2-10. INTEREST ON
REVOLVING CREDIT
LOANS.................................................................
35
2-11. VOLUNTARY
REDUCTION OF COMMITMENT AND REVOLVING CREDIT
CEILING..................................... 36
2-12. REVOLVING CREDIT
COMMITMENT
FEE....................................................................
37
2-13. ADMINISTRATIVE
AGENT'S
FEE.........................................................................
37
2-14. UNUSED
FEE.........................................................................................
37
2-15. PROCEDURES FOR
ISSUANCE OF
L/Cs....................................................................
37
2-16. FEES FOR
L/Cs......................................................................................
38
2-17. CONCERNING
L/Cs....................................................................................
39
2-18. CHANGED
CIRCUMSTANCES..............................................................................
41
2-19. DESIGNATION OF
LEAD BORROWER AS BORROWERS'
AGENT...................................................
42
2-20. LENDERS'
COMMITMENTS...............................................................................
43
2-21. REPLACEMENT OF
REVOLVING CREDIT
LENDER.............................................................
44
ARTICLE 3 - CONDITIONS
PRECEDENT:...............................................................................
45
3-1. CORPORATE DUE
DILIGENCE................................................................................
45
3-2. OPINION. 45
3-3. ADDITIONAL
DOCUMENTS...................................................................................
45
3-4. OFFICERS'
CERTIFICATES.................................................................................
45
3-5. DUE
DILIGENCE..........................................................................................
45
3-6. REPRESENTATIONS AND
WARRANTIES.........................................................................
46
3-7. ALL FEES AND EXPENSES
PAID.............................................................................
46
3-8. NO
DEFAULT.............................................................................................
46
3-9. NO MATERIAL ADVERSE
CHANGE.............................................................................
46
3-10. PERFECTION OF
ENCUMBRANCES.........................................................................
46
3-11. CONSENTS AND
APPROVALS.............................................................................
46
3-12. NO DEFAULTS
UNDER APPLICABLE LAW OR MATERIAL
AGREEMENTS............................................ 46
3-13. NO
LITIGATION......................................................................................
47
3-14.
BUDGETS............................................................................................
47
3-15. NO MATERIAL
ADVERSE CHANGE IN GOVERNMENTAL
REGULATIONS.............................................
47
3-16. BENEFIT OF
CONDITIONS
PRECEDENT....................................................................
47
ARTICLE 4 - GENERAL REPRESENTATIONS,
COVENANTS AND
WARRANTIES:..................................................
47
4-1. PAYMENT AND PERFORMANCE OF
LIABILITIES.................................................................
47
4-2. DUE ORGANIZATION. AUTHORIZATION. NO
CONFLICTS........................................................
48
4-3. TRADE
NAMES............................................................................................
49
4-4. INTELLECTUAL
PROPERTY..................................................................................
49
4-5.
LOCATIONS..............................................................................................
50
4-6. TITLE TO
ASSETS........................................................................................
51
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10
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4-7.
INDEBTEDNESS...........................................................................................
51
4-8.
INSURANCE..............................................................................................
52
4-9.
LICENSES...............................................................................................
53
4-10.
LEASES.............................................................................................
53
4-11. REQUIREMENTS OF
LAW................................................................................
54
4-12. LABOR
RELATIONS....................................................................................
54
4-13. MAINTAIN
PROPERTIES................................................................................
55
4-14.
TAXES..............................................................................................
56
4-15. NO MARGIN
STOCK....................................................................................
56
4-16.
ERISA..............................................................................................
57
4-17. HAZARDOUS
MATERIALS................................................................................
58
4-18.
LITIGATION.........................................................................................
58
4-19. DIVIDENDS.
INVESTMENTS. CORPORATE
ACTION...........................................................
58
4-20.
LOANS..............................................................................................
60
4-21. PROTECTION OF
ASSETS...............................................................................
60
4-22. LINE OF
BUSINESS...................................................................................
61
4-23. AFFILIATE
TRANSACTIONS.............................................................................
61
4-24. FURTHER
ASSURANCES.................................................................................
61
4-25. ADEQUACY OF
DISCLOSURE.............................................................................
61
4-26. NO RESTRICTIONS
ON
LIABILITIES.....................................................................
62
4-27. OTHER
COVENANTS....................................................................................
62
4-28.
SOLVENCY...........................................................................................
62
4-29. OTHER
LIENS........................................................................................
63
4-30. PEMBROKE PINES,
FLORIDA
LOCATION...................................................................
63
ARTICLE 5 - FINANCIAL REPORTING AND
PERFORMANCE
COVENANTS:......................................................
63
5-1. MAINTAIN
RECORDS.......................................................................................
63
5-2. ACCESS TO
RECORDS......................................................................................
64
5-3. NOTICE TO ADMINISTRATIVE
AGENT.........................................................................
64
5-4. BORROWING BASE
CERTIFICATE.............................................................................
66
5-5. MONTHLY
REPORTS........................................................................................
67
5-6. QUARTERLY
REPORTS......................................................................................
67
5-7. ANNUAL
REPORTS.........................................................................................
67
5-8. OFFICERS'
CERTIFICATES.................................................................................
68
5-9. ADDITIONAL FINANCIAL
INFORMATION.......................................................................
68
ARTICLE 6 - CASH MANAGEMENT. PAYMENT OF
LIABILITIES:............................................................
69
6-1. DEPOSITORY
ACCOUNTS....................................................................................
69
6-2. CREDIT CARD
RECEIPTS...................................................................................
71
6-3. THE CONCENTRATION AND BLOCKED
ACCOUNTS.................................................................
71
6-4. PROCEEDS AND
COLLECTIONS...............................................................................
72
6-5. PAYMENT OF
LIABILITIES.................................................................................
73
ARTICLE 7 - GRANT OF SECURITY INTEREST;
COLLATERAL:.............................................................
74
7-1. GRANT OF SECURITY
INTEREST.............................................................................
74
7-2. EXTENT AND DURATION OF SECURITY
INTEREST...............................................................
75
7-3. PERFECTION OF COLLATERAL
INTEREST......................................................................
75
7-4. PRESERVATION OF
COLLATERAL.............................................................................
77
7-5. OWNERSHIP OF
COLLATERAL................................................................................
77
7-6. DEFENSE OF ADMINISTRATIVE AGENT'S
AND REVOLVING CREDIT LENDERS'
INTERESTS.............................. 77
7-7. FINANCING
STATEMENTS...................................................................................
78
7-8. REPRESENTATIONS, WARRANTIES AND
COVENANTS CONCERNING LEGAL STATUS AND
COLLATERAL....................... 78
7-9. INVENTORIES, APPRAISALS AND
AUDITS.....................................................................
78
7-10. USE OF
COLLATERAL..................................................................................
79
7-11.
MARSHALLING........................................................................................
81
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7.12 NOTICE OF
TERMINATION.................................................................................
81
ARTICLE 8 - ADMINISTRATIVE AGENT AS
BORROWER'S
ATTORNEY-IN-FACT:................................................
81
8-1. APPOINTMENT AS
ATTORNEY-IN-FACT........................................................................
81
8-2. NO OBLIGATION TO
ACT...................................................................................
82
ARTICLE 9 - EVENTS OF
DEFAULT:..................................................................................
82
9-1. FAILURE TO PAY THE REVOLVING
CREDIT....................................................................
83
9-2. FAILURE TO MAKE OTHER
PAYMENTS.........................................................................
83
9-3. FAILURE TO PERFORM CERTAIN
COVENANTS OR
LIABILITIES....................................................
83
9.4 FAILURE TO PERFORM COVENANT
OR LIABILITY (GRACE
PERIOD)................................................
83
9-5.
MISREPRESENTATION......................................................................................
84
9.6. ACCELERATION OF OTHER DEBT. BREACH
OF
LEASE............................................................
84
9-7. UNINSURED CASUALTY
LOSS................................................................................
84
9-8. ATTACHMENT. JUDGMENT. RESTRAINT OF
BUSINESS............................................................
84
9-9. BUSINESS
FAILURE.......................................................................................
85
9-10.
BANKRUPTCY.........................................................................................
85
9-11. INDICTMENT -
FORFEITURE............................................................................
85
9-12. CHALLENGE TO
LOAN
DOCUMENTS........................................................................
85
9-13. CHANGE IN
CONTROL..................................................................................
86
ARTICLE 10 - RIGHTS AND REMEDIES UPON
DEFAULT:..................................................................
86
10-1
ACCELERATION..........................................................................................
86
10-2. RIGHTS OF
ENFORCEMENT..............................................................................
87
10-3. SALE OF
COLLATERAL AFTER EVENT OF
DEFAULT..........................................................
88
10-4. OCCUPATION OF
BUSINESS
LOCATION....................................................................
89
10-5. GRANT OF
NONEXCLUSIVE
LICENSE......................................................................
89
10-6. ASSEMBLY OF
COLLATERAL.............................................................................
89
10-7. RIGHTS AND
REMEDIES................................................................................
90
ARTICLE 11 - REVOLVING CREDIT FUNDINGS AND
DISTRIBUTIONS:.......................................................
90
11-1. REVOLVING CREDIT
FUNDING
PROCEDURES................................................................
90
11-2. ADMINISTRATIVE
AGENT'S COVERING OF
FUNDINGS:.......................................................
90
11-3. ORDINARY COURSE
DISTRIBUTIONS......................................................................
93
ARTICLE 12 - ACCELERATION AND
LIQUIDATION:......................................................................
94
12.1 ACCELERATION
NOTICES..................................................................................
94
12.2
ACCELERATION..........................................................................................
94
12-3. INITIATION OF
LIQUIDATION..........................................................................
94
12-4. ACTIONS AT AND
FOLLOWING INITIATION OF
LIQUIDATION.................................................
94
12-5. ADMINISTRATIVE
AGENT'S CONDUCT OF
LIQUIDATION......................................................
94
12-6. DISTRIBUTION OF
LIQUIDATION
PROCEEDS...............................................................
95
12-7. RELATIVE
PRIORITIES TO PROCEEDS OF
LIQUIDATION.....................................................
95
ARTICLE 13 - THE ADMINISTRATIVE
AGENT:..........................................................................
96
13-1. APPOINTMENT OF
THE ADMINISTRATIVE
AGENT............................................................
96
13-2. RESPONSIBILITIES
OF ADMINISTRATIVE AGENT; OTHER
AGENTS............................................. 96
13-3. CONCERNING
DISTRIBUTIONS BY THE ADMINISTRATIVE
AGENT............................................... 97
13-4. DISPUTE
RESOLUTION:................................................................................
98
13-5. DISTRIBUTIONS OF
NOTICES AND OF
DOCUMENTS..........................................................
98
13-6. CONFIDENTIAL
INFORMATION...........................................................................
99
13-7. RELIANCE BY
ADMINISTRATIVE
AGENT...................................................................
99
13-8. NON-RELIANCE ON
ADMINISTRATIVE AGENT AND OTHER REVOLVING CREDIT
LENDERS............................ 99
13-9.
INDEMNIFICATION....................................................................................
100
13-10. RESIGNATION OF
ADMINISTRATIVE
AGENT................................................................
101
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ARTICLE 14 - ACTION BY ADMINISTRATIVE AGENT
- CONSENTS - AMENDMENTS -
WAIVERS:.................................. 101
14-1. ADMINISTRATION
OF CREDIT
FACILITIES................................................................
101
14-2. ACTIONS
REQUIRING OR ON DIRECTION OF MAJORITY
LENDERS.............................................. 102
14-3. ACTIONS
REQUIRING OR DIRECTED BY UNANIMOUS
CONSENT.................................................
102
14-4. ACTIONS
REQUIRING ISSUER
CONSENT...................................................................
104
14-5. ACTIONS
REQUIRING ADMINISTRATIVE AGENT'S
CONSENT...................................................
104
14-6. MISCELLANEOUS
ACTIONS..............................................................................
104
14-7. ACTIONS
REQUIRING LEAD BORROWER'S
CONSENT..........................................................
104
14-8. NONCONSENTING
REVOLVING CREDIT
LENDER..............................................................
105
ARTICLE 15 - ASSIGNMENTS BY REVOLVING
CREDIT
LENDERS:...........................................................
106
15-1. ASSIGNMENTS AND
ASSUMPTIONS........................................................................
106
15-2. ASSIGNMENT
PROCEDURES..............................................................................
107
15-3. EFFECT OF
ASSIGNMENT...............................................................................
108
ARTICLE 16 -
NOTICES:...........................................................................................
108
16-1. NOTICE
ADDRESSES...................................................................................
108
16-2. NOTICE
GIVEN.......................................................................................
109
ARTICLE 17 -
TERM:..............................................................................................
110
17-1. TERMINATION OF
REVOLVING
CREDIT....................................................................
110
17-2. ACTIONS ON
TERMINATION.............................................................................
110
ARTICLE 18 -
GENERAL:...........................................................................................
111
18-1. PROTECTION OF
COLLATERAL...........................................................................
111
18-2.
PUBLICITY..........................................................................................
111
18-3. SUCCESSORS AND
ASSIGNS.............................................................................
111
18-4.
SEVERABILITY.......................................................................................
111
18-5. AMENDMENTS.
COURSE OF
DEALING......................................................................
111
18-6. POWER OF
ATTORNEY..................................................................................
112
18-7. APPLICATION OF
PROCEEDS............................................................................
112
18-8. INCREASED
COSTS....................................................................................
112
18-9. COSTS AND
EXPENSES OF THE ADMINISTRATIVE
AGENT.....................................................
113
18-10. COPIES AND
FACSIMILES..............................................................................
114
18-11. MASSACHUSETTS
LAW..................................................................................
114
18-12. CONSENT TO
JURISDICTION............................................................................
114
18-13.
INDEMNIFICATION....................................................................................
115
18-14. RULES OF
CONSTRUCTION..............................................................................
115
18-15.
INTENT.............................................................................................
116
18-16.
PARTICIPATIONS:....................................................................................
117
18-17. RIGHT OF
SET-OFF...................................................................................
117
18-18. PLEDGES TO FEDERAL
RESERVE
BANKS...................................................................
117
18-19. MAXIMUM INTEREST
RATE..............................................................................
118
18-20.
WAIVERS............................................................................................
118
18-21 ADDITIONAL
WAIVERS.................................................................................
119
18-22.
CONFIDENTIALITY....................................................................................
120
</TABLE>
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EXHIBITS
1-1 Realty
Sales; Leases with respect to landlord liens
2-5 Notice of
Borrowing/Conversion
2-8 Revolving
Credit Note
2-20 Revolving Credit
Lenders' Commitments
3-3 Additional
Documents
4-2 Corporate
Information
4-3 Trade
Names
4-6
Encumbrances; Unrestricted trusts
4-7
Indebtedness
4-8 Insurance
Policies
4-12 Collective
Bargaining Agreements/Labor Relations
4-14 Taxes
4-18 Litigation
4-19 Existing
Investments
4-19(f) Joinder Agreement
4-23 Affiliate
Transactions
5-4 Borrowing
Base Certificate
5-5 Financial
Reporting Requirements
5-8 Officer's
Compliance Certificate
6-1 DDA's
6-2 Credit
Card Arrangements
6-3 Blocked
Account Banks
15-2 Assignment /
Acceptance
<PAGE>
================================================================================
LOAN AND SECURITY AGREEMENT
================================================================================
March 31,
2004
THIS AGREEMENT is made between
Fleet Retail Group, Inc. (in such capacity, herein the
"ADMINISTRATIVE
AGENT"), a Delaware corporation with
offices at 40 Broad Street, Boston,
Massachusetts 02109, as agent for the
ratable benefit of the "REVOLVING CREDIT
LENDERS", who are, at present, those
financial institutions identified on the
signature pages of this Agreement and who
in the future are those Persons (if
any) who become "Revolving Credit Lenders"
in accordance with the provisions of
Section 2-20, below;
and
The Revolving Credit Lenders (as of the Closing Date, the only
Revolving Credit Lender is Fleet Retail
Group, Inc.);
Fleet National Bank ("FLEET"), a bank organized under the laws of
the
United States of America, having an office
at 100 Federal Street, Boston,
Massachusetts 02210;
and
Claire's Stores, Inc. (in such capacity, the "LEAD BORROWER"),
a
Florida corporation with its principal
executive offices at 3 Southwest 129th
Avenue, Pembroke Pines, Florida 33027, as
agent for the following (individually,
a "BORROWER" and collectively, the
"BORROWERS"): BMS Distributing Corp., a
Delaware corporation, Claire's Boutiques,
Inc., a Delaware corporation, CBI
Distributing Corp., a Delaware corporation,
and Claire's Puerto Rico Corp., a
Delaware corporation,
in consideration of the mutual covenants
contained herein and benefits to be
derived herefrom,
WITNESSETH:
ARTICLE 1 - DEFINITIONS:
As used herein, the following terms have
the following meanings or are defined
in the section of this Agreement so
indicated:
"ACCOUNT DEBTOR":
Has the meaning given that term in the UCC.
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"ACCOUNTS" and "ACCOUNTS RECEIVABLE"
include, without limitation, "accounts" as
defined in the UCC, and also all: accounts,
accounts receivable, receivables,
and rights to payment (whether or not
earned by performance): for Inventory that
has been or is to be sold, leased,
licensed, assigned, or otherwise disposed of
and/or arising out of the use of a credit
or charge card or information
contained on or used with that card, and
also all reclaimed, returned, rejected
or repossessed Inventory (if any) the sale
of which gave rise to any Account.
"ACH": Automated clearing house.
"ACQUISITION": The purchase or acquisition
of all or substantially all of the
assets of, or a division of, any Person,
the purchase of a controlling equity
interest in any Person, or the merger or
consolidation of any Person with any
other Person, in any transaction or group
of transactions which are part of a
common plan.
"ADJUSTED EXCESS LIQUIDITY": At any date of
determination, the sum of (i)
Availability on such date plus (ii) Cash
and Cash Equivalents on such date.
"ADMINISTRATIVE AGENT": Is referred to in
the Preamble.
" ADMINISTRATIVE AGENT'S COVER": Defined in
Section 11-2(c)(i).
"ADMINISTRATIVE AGENT'S FEE": Is defined in
Section 2-13.
"ADMINISTRATIVE AGENT'S RIGHTS AND
REMEDIES": Is defined in Section 10-7.
"AFFILIATE": For purposes of this Agreement
and the other Loan Documents only
and for no other purpose, the following:
With respect to any specified Person,
any other Person that (i) holds, directly
or indirectly, ten percent (10%) or
more of the capital stock, beneficial
interests, partnership interests, or other
equity interests of the other; or (ii) has,
directly or indirectly, the power,
under ordinary circumstances, to elect 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) directly or
indirectly controls or is controlled by,
or is under common control with, the Person
specified, whether through a
management agreement, voting agreement,
other contract or otherwise.
Notwithstanding the foregoing, an
institutional investor in the Lead Borrower
shall not be considered an Affiliate solely
by reason of its ownership of ten
percent (10%) or more of the equity
interests identified in clause (i) above.
"AGREEMENT": This Loan and Security
Agreement, as such may hereafter be
modified, amended, restated, or
supplemented from time to time.
"APPLICABLE LAW": As to any Person: (i) All
statutes, rules, regulations,
orders, or other requirements having the
force of law and (ii) all court orders
and injunctions, arbitrator's decisions,
and/or similar rulings, in each
instance ((i) and (ii)) of or by any
federal, state, municipal, and other
governmental authority, or court, tribunal,
panel, or other body which has or
claims jurisdiction over such Person, or
any property of such Person.
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"APPLICABLE MARGIN": The rates for Base
Margin Loans and Libor Loans based upon
the following criteria:
<TABLE>
<CAPTION>
BASE MARGIN APPLICABLE
LEVEL ADJUSTED
EXCESS LIQUIDITY
MARGIN
LIBOR APPLICABLE MARGIN
-------------------------------------------------------------------------------------------------------
<S>
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<C>
1
Greater than $150,000,000 0%
0.75%
-------------------------------------------------------------------------------------------------------
2
Less than or equal to
0%
0.875%
$150,000,000, but greater
than $100,000,000
-------------------------------------------------------------------------------------------------------
3
Less than or equal to
0%
1.00%
$100,000,000, but greater
than $75,000,000
-------------------------------------------------------------------------------------------------------
4
Less than or equal to
0%
1.25%
$75,000,000, but greater
than or equal to
$50,000,000
-------------------------------------------------------------------------------------------------------
5
Less than $50,000,000
0%
1.50%
</TABLE>
The Applicable Margin shall initially be set based upon Adjusted
Excess
Liquidity on the Closing Date (after giving
effect to any Revolving Credit Loans
to be made or L/Cs issued on the Closing
Date) and shall be adjusted quarterly
as of the first day of each fiscal quarter,
commencing May 3, 2004, based upon
the Adjusted Excess Liquidity at the end of
the most recently completed fiscal
quarter. During the existence of an Event
of Default, interest shall accrue at
the rate set forth in Section 2-10(f).
"APPRAISED INVENTORY LIQUIDATION VALUE":
The product of (a) the Cost of Eligible
Inventory (net of Inventory Reserves)
multiplied by (b) that percentage,
determined from the then most recent
appraisal of the Borrowers' Inventory
undertaken at the request of the
Administrative Agent by an independent
appraiser reasonably acceptable to the Lead
Borrower, to reflect the appraiser's
estimate of the net recovery on the
Borrowers' Inventory in the event of an
in-store liquidation of that Inventory. As
of the Closing Date, the percentage
referred to in clause (b) of this
definition is equal to 118%.
"ASSIGNING REVOLVING CREDIT LENDER":
Defined in Section 15-1(a).
"ASSIGNMENT AND ACCEPTANCE": Defined in
Section 15-2.
"AVAILABILITY": The lesser of (a) or (b),
where:
(a) is the result of
(i) The
Revolving Credit Ceiling
Minus
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(ii)
The aggregate unpaid balance of the Loan
Account
Minus
(iii) The
aggregate undrawn Stated Amount of all
then outstanding L/Cs.
and
(b) is the result of
(i) The
Borrowing Base (it being acknowledged
that if Inventory Reserves are deducted in
determining the Borrowing Base, they
will not be deducted again pursuant to
clause (iv) below)
Minus
(ii)
The aggregate unpaid balance of the Loan
Account
Minus
(iii) The
aggregate undrawn Stated Amount of all
then outstanding L/Cs.
Minus
(iv)
The aggregate of the Availability Reserves
and the Inventory Reserves.
"AVAILABILITY RESERVES": As of the Closing
Date, the aggregate amount of
availability reserves imposed based on the
following matters listed in clauses
(i) through (iv) below (the "Initial
Reserve Categories") (equal to $5,652,000
on the Closing Date) and thereafter, in
addition to availability reserves based
on such Initial Reserve Categories (as such
reserves under clauses (ii), (iii)
and (iv) below may be adjusted higher or
lower in amount), at any time that a
Reserve Event has occurred or exists, such
other categories of availability
reserves as the Administrative Agent from
time to time determines in the
Administrative Agent's discretion,
exercised in a commercially reasonable manner
(after consultation with the Lead Borrower
(whose consent to any Availability
Reserve shall not be required)) as being
appropriate to reflect the impediments
to the Administrative Agent's ability to
realize upon the Collateral, but only
to the extent not already considered in
calculating Availability. Availability
Reserves shall be established and
calculated in a manner and methodology
consistent with the Administrative Agent's
practices with other similarly
situated borrowers.
(i) as of the
Closing Date, $2,000,000, and thereafter at
any time that a Reserve Event has occurred or exists,
the amount determined by the Administrative Agent,
acting in a commercially reasonable manner, based on
an amount equal to two months base rent for all
leases in Landlord's Lien States, except that no such
Reserve shall be established for locations
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for which the Borrowers have obtained a landlord's
waiver reasonably acceptable in form and substance to
the Administrative Agent), plus (b) two months base
rent for any warehouses utilized by any Borrower
(except no such Reserve shall be established for
warehouses for which the Borrowers have obtained a
warehouseman's waiver reasonably acceptable in form
and substance to the Administrative Agent), plus (c)
all past due rent and warehouse charges for any of
the
Borrowers' locations, wherever located.
(ii)
an amount equal to 50% of outstanding Customer Credit
Liabilities.
(iii) Past
due taxes and other governmental charges,
including, ad valorem, personal property, and other
taxes which have priority over the Collateral
Interests of the Administrative Agent in the
Collateral.
(iv)
Payables more than forty-five (45) days beyond normal
terms with respect to which the Borrowers have no
defense for non-payment.
(v) as of the
Closing Date, $500,000.00, which amount
reflects a reserve for the rental obligations owing
to the landlords under the leases described on and
each with the respective lease term as set forth on
EXHIBIT 1-1, provided that (i) should the rental
obligations set forth on EXHIBIT 1-1 be increased
after the Closing Date, the Administrative Agent
shall have the right to increase such amount by a
corresponding amount, and (ii) should the security
interests granted to such landlords pursuant to the
leases described on EXHIBIT 1-1 and the corresponding
UCC financing statements be amended to the reasonable
satisfaction of the Administrative Agent or
terminated after the Closing Date, the Administrative
Agent shall ratably decrease such amount.
"BANKRUPTCY CODE": Title 11, U.S.C., as
amended from time to time.
"BASE": For any day, (a) the Prime Rate
announced from time to time by Fleet
National Bank (or any successor in interest
to Fleet National Bank) as its
"Prime Rate" or (b) if no such Prime Rate
is announced by Fleet National Bank,
the Federal Funds Effective Rate in effect
on such day plus one-half of one
percent (0.50%) per annum. The "Prime Rate"
is a reference rate and does not
necessarily represent the lowest or best
rate being charged to any customer. Any
change in the Prime Rate due to a change in
Fleet National Bank's Prime Rate or
the Federal Funds Effective Rate shall be
effective on the effective date of
such change in Fleet National Bank's Prime
Rate or the Federal Funds Effective
Rate, respectively.
"BASE MARGIN LOAN": Each Revolving Credit
Loan while bearing interest at the
Base Margin Rate.
"BASE MARGIN RATE": The aggregate of Base
plus the Applicable Margin for Base
Margin Loans.
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"BLOCKED ACCOUNT": (i) Any DDA into which
the contents of any other DDA, or any
cash receipts or collections of the
Borrowers, are transferred which is the
subject of a Blocked Account Agreement and
(ii) any securities account or
commodities account which is the subject of
a Blocked Account Agreement. As of
the Closing Date, the only Blocked Accounts
are listed and designated as such on
EXHIBIT 6-1, including the Primary Blocked
Account.
"BLOCKED ACCOUNT AGREEMENT": An Agreement,
in form satisfactory to the
Administrative Agent, which Agreement
recognizes the Administrative Agent's
Collateral Interest in the contents of the
Blocked Account which is the subject
of such Agreement and agrees that, after
and during the continuance of a Cash
Control Event, such contents shall be
transferred only to the Concentration
Account or as otherwise instructed by the
Administrative Agent.
"BORROWER" AND "BORROWERS": Is defined in
the Preamble. Additional Subsidiaries
of the Lead Borrower may become a Borrower
hereunder from time to time in
accordance with the terms of this
Agreement.
"BORROWING BASE": The aggregate of the
following:
The lesser of (a) the Cost of Eligible Inventory multiplied by
the
Inventory Advance Rate or (b) 80% of the
Appraised Inventory Liquidation Value,
provided that any reduction in the amounts
available to be borrowed under this
paragraph as a result of a change in the
Appraised Inventory Liquidation Value
shall not take place until five (5) days
after the date that the Lead Borrower
is advised by the Administrative Agent of
such change in the Appraised Inventory
Liquidation Value.
"BORROWING BASE CERTIFICATE": Is defined in
Section 5-4.
"BUSINESS DAY": Any day other than (a) a
Saturday or Sunday; (b) any day on
which banks in Boston, Massachusetts, and
when involving any DDA or Blocked
Account, the office of the financial
institution at which that DDA or Blocked
Account, as the case may be, is maintained,
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
Administrative Agent is not open to
the general public to conduct business.
"CAPITAL EVENT": Except for such events
which individually or in the aggregate
in a series of related transactions are for
an amount not in excess of
$5,000,000, the issuance by any Borrower on
or after the Closing Date (a) of
Indebtedness for borrowed money in an
underwritten public offering or private
placement with institutional investors or
(b) of any equity interest for cash,
excluding any sale or issuance to
management, employees or directors pursuant to
stock option or similar plans of proceeds
received from and after the Closing
Date. Nothing contained in this definition
or in any provision relating to
Capital Events shall permit or be deemed to
permit the Borrowers to effectuate a
Capital Event which is otherwise prohibited
hereunder.
"CAPITAL EXPENDITURES": The expenditure of
funds or the incurrence of
liabilities which may be capitalized in
accordance with GAAP.
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"CAPITAL LEASE": Any lease which is, or is
required to be, capitalized by the
Borrowers in accordance with GAAP.
"CASH AND CASH EQUIVALENTS": As of any date
of determination, the sum of (a) the
aggregate amount of unrestricted cash
(including, in any event, up to $5,000,000
maintained in Unrestricted Trusts) of the
Borrowers and their respective
Subsidiaries (on a Consolidated basis), and
(b) the aggregate Permitted
Investments of the Borrowers and their
respective Subsidiaries (on a
Consolidated basis) listed in clauses (a)
through (i) of that definition (valued
at the lesser of par value or fair market
value). As used in this definition,
"unrestricted" means the specified asset is
not subject to any Encumbrances in
favor of any Person other than the Lenders.
Notwithstanding anything contained
herein to the contrary, the term Cash and
Cash Equivalents shall not include the
Revolving Credit Commitments of the Lenders
to make Revolving Credit Loans under
this Agreement.
"CASH CONTROL EVENT": Either (a) the
occurrence and continuance of any Event of
Default (other than (i) a Specified Event
of Default, unless the Agent and the
Lenders have commenced any enforcement
action or are otherwise exercising
remedies against the Borrowers with respect
to such Specified Event of Default,
or (ii) an Excess Liquidity Default for
which a Hold Period is in effect) and
such Event of Default has not been waived
in writing by the required Lenders, or
(b) Excess Liquidity at any time is less
than $10,000,000 for at least three (3)
consecutive Business Days. For purposes
hereof, the occurrence of a Cash Control
Event under clause (b) hereof shall be
deemed continuing notwithstanding that
Excess Liquidity may thereafter exceed the
amounts set forth in such clause
unless and until Excess Liquidity exceeds
such amounts for thirty (30)
consecutive days, in which case a Cash
Control Event shall no longer be deemed
to be continuing for purposes hereof;
provided that a Cash Control Event under
clause (b) hereof shall be deemed
continuing for six (6) months (even if Excess
Liquidity exceeds the required amounts for
thirty (30) consecutive days) if a
Cash Control Event has occurred and been
discontinued on two occasions in any
twelve month period.
"CHANGE IN CONTROL": The occurrence of any
of the following:
(a) The
acquisition, by any group of persons (within the meaning
of the Securities Exchange Act of 1934, as
amended) or by any Person, of
beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and
Exchange Commission) of shares of the
issued and outstanding capital stock of
the Lead Borrower having the right, under
ordinary circumstances, to cast 40% or
more of the vote for the election of
directors of the Lead Borrower, provided
that such 40% shall be increased to 49%
solely for the Family Individuals (as
such term is defined in part (d) of EXHIBIT
4-2).
(b) More than
half of the persons who were directors of the Lead
Borrower 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 during which
this Agreement was executed), cease to
be directors of the Lead Borrower, and
their respective replacements are not
nominated or appointed by a majority of the
Persons who were directors on
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the first day of such twelve (12)
consecutive calendar months or who were
nominated or appointed by directors so
nominated or appointed.
(c) Any
failure of the Lead Borrower to own, directly or
indirectly, beneficially and of record,
100% of the capital stock of all other
Borrowers, except as expressly permitted
pursuant to Section 4-19.
"CHATTEL PAPER": Has the meaning given that
term in the UCC.
"CHICAGO DISTRIBUTION CENTER": The
distribution center of the Borrowers located
at 2400 West Central Road, Hoffman Estates,
Chicago, Illinois 60195.
"CLOSING DATE": The date upon
which the conditions precedent set forth in
Article 3 hereof have been satisfied or
waived.
"COLLATERAL": Is defined in Section
7-1.
"COLLATERAL INTEREST": Any interest in
property to secure an obligation,
including, without limitation, a security
interest, mortgage, and deed of trust.
"COMMERCIAL TORT CLAIMS": Has the meaning
given that term in the UCC.
"CONCENTRATION ACCOUNT": Is defined in
Section 6-3.
"CONSENT": Actual consent given by the
Lender from whom such consent is sought;
or the passage of seven (7) Business Days
from receipt of written notice to a
Revolving Credit Lender from the
Administrative Agent of a proposed course of
action to be followed by the Administrative
Agent without such Revolving Credit
Lender's giving the Administrative Agent
written notice of that Revolving Credit
Lender's objection to such course of
action, provided that the Administrative
Agent may rely on such passage of time as
consent by a Revolving Credit Lender
only if such written notice states that
consent will be deemed effective if no
objection is received within such time
period.
"CONSOLIDATED": When used to modify a
financial term, test, statement, or
report, refers to the application or
preparation of such term, test, statement
or report (as applicable) based upon the
consolidation, in accordance with GAAP,
of the financial condition or operating
results of the Lead Borrower and its
Subsidiaries.
"COST": The lower of (a) or (b), where:
(a) is the calculated cost of purchases, based upon the
Borrowers'
accounting practices in effect on the date
on which this Agreement was executed
as such calculated cost is determined from:
invoices received by the Borrowers;
the Borrowers' purchase journal; or the
Borrowers' perpetual inventory system.
(b) is, without duplication of any Inventory Reserves for
markdowns,
the lowest ticketed or promoted price at
which the subject Inventory is offered
to the public by the Borrowers, after
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all mark-downs (whether or not such price
is then reflected on the Borrowers'
accounting system).
"Cost" does not include inventory capitalization costs or other
non-purchase price charges (other than
freight) used in the Borrowers'
calculation of cost of goods sold.
"COSTS OF COLLECTION": Includes, without
limitation, all reasonable attorneys'
fees and reasonable out-of-pocket expenses
incurred by the Administrative
Agent's attorneys, and all out-of-pocket
costs incurred by the Administrative
Agent in the administration of the
Liabilities and/or the Loan Documents,
including, without limitation, costs and
expenses associated with travel on
behalf of the Administrative Agent, where
such costs and expenses are directly
or indirectly related to or in respect of
the Administrative Agent's
administration and management of the
Liabilities; negotiation, documentation,
and amendment of any Loan Document; or
efforts to preserve, protect, collect, or
enforce the Collateral, the Liabilities,
and/or the Administrative Agent's
Rights and Remedies and/or any of the
rights and remedies of the Administrative
Agent 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). "Costs of Collection" shall also
include the reasonable fees and
expenses of Lenders' Special Counsel. The
Costs of Collection are Liabilities,
and at the Administrative Agent's option
may bear interest at the then effective
Base Margin Rate.
"CUSTOMER CREDIT LIABILITY": .Gift
certificates, merchandise credits, layaway
obligations, frequent shopping programs,
and similar liabilities of any Borrower
to its retail customers and prospective
customers.
"DDA": Any checking or other demand daily
depository account maintained by any
Borrower in which proceeds of the
Borrowers' Inventory and Accounts are
deposited.
"DEFAULT": Any occurrence, circumstance, or
state of facts with respect to a
Borrower 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
(with such cure having been accepted) or
waived in writing within any applicable
grace period.
"DELINQUENT REVOLVING CREDIT LENDER":
Defined in Section 11-2(c).
"DEPOSIT ACCOUNT": Has the meaning given
that term in the UCC.
"DOCUMENTARY L/CS": L/Cs issued pursuant to
this Agreement to support any
Borrower's purchases in the ordinary course
of business of Inventory for use in
its business (as permitted by Section
4-22), the drawing under which requires
the delivery of bills of lading, airway
bills or other similar types of
documents of title.
"DOCUMENTS": Has the meaning given that
term in the UCC.
"EBITDA": For any period, an amount equal
to Consolidated net income of the Lead
Borrower and its Subsidiaries for such
period, as determined in accordance with
GAAP, plus the following to
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<PAGE>
the extent deducted in computing such
Consolidated net income for such period:
(i) Interest Charges for such period, (ii)
taxes on income for such period,
(iii) depreciation for such period, and
(iv) amortization for such period.
Notwithstanding the foregoing, for purposes
of determining EBITDA, the Lead
Borrower and its Subsidiaries shall not be
required to deduct retirement
compensation accrued for or made to the
Chairman Emeritus of the Lead Borrower
in the two fiscal quarters ending on or
before May 1, 2004, provided such
retirement payments not deducted from
EBITDA do not exceed $10,000,000 in the
aggregate.
"ELIGIBLE ASSIGNEE": A bank, insurance
company, finance company or other
financial institution or fund engaged in
the business of making or investing in
commercial loans in the ordinary course of
its business having a combined
capital and surplus in excess of
$500,000,000 or any Affiliate of any Revolving
Credit Lender, or any Person to whom a
Revolving Credit Lender assigns its
rights and obligations under this Agreement
as part of a programmed assignment
and transfer of such Revolving Credit
Lender's rights in and to a material
portion of such Revolving Credit Lender's
portfolio of asset based credit
facilities.
"ELIGIBLE IN-TRANSIT INVENTORY": Without
duplication of other Eligible
Inventory, Inventory (a) which has been
shipped from a foreign location for
receipt by the Borrower within sixty (60)
days of the date of determination, but
which has not yet been delivered to a
Borrower, (b) for which title has passed
to a Borrower (and such title is not
subject to reversion) and there are no
claims (other than for payment under normal
terms not yet due) of the sellers of
such Inventory against the applicable
Borrower, and (c) which otherwise would
constitute Eligible Inventory.
"ELIGIBLE INVENTORY": Inventory which is
Eligible In-Transit Inventory or which
are finished goods, merchantable and
readily saleable to the public in the
ordinary course deemed by the
Administrative Agent in its discretion, exercised
in a commercially reasonable manner, to be
eligible for inclusion in the
calculation of the Borrowing Base. Without
limiting the foregoing, none of the
following shall be deemed to be Eligible
Inventory:
(a) Inventory
that is not owned solely by the Borrowers,
or is leased or on consignment (as defined in Section 9-102 of
the
Uniform Commercial Code as in effect in the Commonwealth of
Massachusetts) or the Borrowers do not have good and valid
title
thereto;
(b) Inventory
(including any portion thereof in transit
from vendors, other than Eligible In-Transit Inventory) that is
not
located at a warehouse facility used by a Borrower in the
ordinary
course (and for which the Administrative Agent has received a
satisfactory warehouseman waiver), at a property that is owned
or
leased by a Borrower or in transit between any property,
including
distribution centers, warehouses and stores owned, leased or used
by a
Borrower;
(c) Inventory
that represents (i) goods damaged,
defective or otherwise unmerchantable, (ii) goods that do not
conform
in all material respects to the representations and warranties
contained in this Agreement or any of the Loan Documents, or
(iii)
goods to be returned to the vendor;
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<PAGE>
(d) Inventory
that is not located in the United States of
America (excluding territories and possessions thereof) other
than
Eligible In-Transit Inventory;
(e) Inventory
that is not subject to a perfected
first-priority security interest in favor of the Administrative
Agent
for the benefit of the Lenders, except to the extent that such
Inventory is subject to Permitted Encumbrances;
(f) Inventory
which consists of salesman's samples,
labels, bags, packaging, installation inventory, and other
similar
non-merchandise categories;
(g) Inventory
as to which insurance in compliance with
the provisions of Section 4-8 hereof is not in effect; and
(h) Inventory
which is acquired in a Permitted
Acquisition unless and until the Administrative Agent has completed
an
appraisal of such Inventory, established an Inventory Advance Rate
and
Inventory Reserves (if applicable) therefor, and otherwise agreed
that
such Inventory shall be deemed Eligible Inventory.
"EMPLOYEE BENEFIT PLAN": As defined in
ERISA.
"ENCUMBRANCE": Each of the following:
(a) A
Collateral Interest or agreement to create or grant a
Collateral Interest; the interest of a
lessor under a Capital Lease; conditional
sale or other title retention agreement;
sale of accounts receivable or chattel
paper; or other arrangement pursuant to
which any Person is entitled to any
preference or priority with respect to the
property or assets of another Person
or the income or profits of such other
Person; each of the foregoing whether
consensual or non-consensual and whether
arising by way of agreement, operation
of law, legal process or otherwise.
(b) The filing
of any financing statement under the UCC or
comparable law of any jurisdiction.
"END DATE": The date upon which both (a)
all Liabilities (excluding any
contingent Liabilities not then due and
payable) have been paid in full and (b)
all obligations of any Revolving Credit
Lender to make loans and advances and to
provide other financial accommodations to
the Borrowers hereunder shall have
been irrevocably terminated.
"ENVIRONMENTAL LAWS": All of the
following:
(a) Applicable
Law which regulates or relates to, or imposes any
standard of conduct or liability on account
of or in respect to environmental
protection matters, including, without
limitation, Hazardous Materials, as are
now or hereafter in effect.
(b) The common
law relating to damage to Persons or property from
Hazardous Materials.
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<PAGE>
"EQUIPMENT": Has the meaning given that
term in the UCC.
"ERISA": The Employee Retirement Income
Security Act of 1974, as amended.
"ERISA AFFILIATE": Any Person which is
under common control with a Borrower
within the meaning of Section 4001 of ERISA
or is part of a group which includes
any Borrower and which would be treated as
a single employer under Section 414
of the Internal Revenue Code of 1986, as
amended.
"EVENTS OF DEFAULT": Is defined in Article
9.
"EXCESS LIQUIDITY": At any date of
determination, the sum of (i) Availability on
such date plus (ii) Cash and Cash
Equivalents maintained in a Blocked Account
subject to a Blocked Account Agreement in
favor of the Administrative Agent on
such date.
"EXCLUDED REAL ESTATE": Is defined in
Section 4-5.
"EXEMPT DDA": A depository account
maintained by any Borrower, the only contents
of which are (i) for petty cash purposes
(and maintaining a balance not in
excess of $15,000 at any time); (ii) for
payroll; and (iii) individual store
level receipts to the extent that the
balances maintained therein are
transferred or swept daily to a corporate
level concentration account (and then
to the Primary Blocked Account) or to the
Primary Blocked Account.
"FEDERAL FUNDS EFFECTIVE RATE". For any
day, a fluctuating interest rate per
annum equal to the weighted average of the
rates on overnight federal funds
transactions with members of the Federal
Reserve System arranged by federal fund
brokers, as published for such day (or, if
such day is not a Business Day, for
the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if
such rate is not so published for any day
that is a Business Day, the average of
the quotations for such day on such
transactions received by the Administrative
Agent from three federal funds brokers of
recognized standing selected by the
Administrative Agent.
"FEE LETTER": That letter dated March 31,
2004 and styled "Fee Letter" between
the Lead Borrower and the Administrative
Agent, as amended and supplemented as
of the date hereof, and as such letter may
from time to time hereafter be
amended.
"FISCAL": When followed by "month" or
"quarter", the relevant fiscal period
based on the Borrowers' fiscal year and
accounting conventions.
"FLEET": Is defined in the Preamble
hereto.
"FOREIGN LENDER": Any Revolving Credit
Lender that is organized under the laws
of a jurisdiction other than the United
States of America or any State thereof
or the District of Columbia.
"FRG": Fleet Retail Group, Inc.
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<PAGE>
"GAAP": Principles which are consistent
with those promulgated or adopted by the
Financial Accounting Standards Board and
its predecessors (or successors) in
effect and applicable to that accounting
period in respect of which reference to
GAAP is being made.
"GENERAL INTANGIBLES": Has the meaning
given that term in the UCC.
"GOODS": Has the meaning given that term in
the UCC.
"HAZARDOUS MATERIALS": Any (a) substance
which is defined or regulated as a
hazardous material in or under any
Environmental Law and (b) oil in any physical
state.
"HEDGE AGREEMENTS": All obligations of any
Person in respect of interest rate
swap agreements, currency swap agreements
and other similar agreements designed
to hedge against fluctuations in interest
rates or foreign exchange rates.
"INCREASED REPORTING EVENT": ..Either (a)
the occurrence and continuance of any
Event of Default, or (b) Excess Liquidity
at any time is less than $10,000,000
for three (3) or more Business Days. For
purposes hereof, the occurrence of an
Increased Reporting Event under clause (b)
above shall be deemed continuing
notwithstanding that Excess Liquidity may
thereafter exceed the amounts set
forth in the preceding sentence unless and
until Excess Liquidity exceeds such
amounts for thirty (30) consecutive days,
in which case a Increased Reporting
Event shall no longer be deemed to be
continuing for purposes hereof.
"INDEBTEDNESS": All indebtedness and
obligations of or assumed by any Person on
account of or in respect to any of the
following:
(a) In respect
of money borrowed (including any indebtedness which
is non-recourse to the credit of such
Person but which is secured by an
Encumbrance on any asset of such Person)
whether or not evidenced by a
promissory note, bond, debenture or other
written obligation to pay money.
(b) In
connection with any letter of credit or acceptance
transaction (including, without limitation,
the face amount of all letters of
credit and acceptances issued for the
account of such Person or reimbursement on
account of which such Person would be
obligated).
(c) In
connection with the sale or discount of accounts receivable
or chattel paper of such Person.
(d) On account
of deposits or advances.
(e) As lessee
under Capital Leases.
(f) On account
of Hedge Agreements.
(g) In
connection with any sale and leaseback transaction.
"Indebtedness" also includes:
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(1)
Indebtedness of others secured by an Encumbrance on any asset
of such Person, whether or not such
Indebtedness is assumed by such Person.
(2) Any
guaranty, endorsement, suretyship or other undertaking
pursuant to which that Person may be liable
on account of any obligation of any
third party.
(3) The
Indebtedness of a partnership or joint venture for which
such Person is liable as a general partner
or joint venturer.
Indebtedness and obligations of or assumed by any Subsidiary of
the
Lead Borrower that is not a Borrower,
including Claire's Nippon, Ltd., shall not
constitute Indebtedness for purposes of
this Agreement except to the extent that
any Borrower is directly or indirectly
liable for the payment for all or any
portion thereof, whether as a guarantor, by
contract, by operation of law or
otherwise.
"INDEMNIFIED PERSON": Is defined in Section
18-13.
"INFORMATION": Is defined in Section
18-22.
"INSTRUMENTS": Has the meaning given that
term in the UCC.
"INTEREST CHARGES" For any period, means,
without duplication, all interest,
both expensed and capitalized, and all
amortization of debt discount and expense
(including commitment fees, L/C fees,
balance deficiency fees and similar
expenses) on any particular Indebtedness
(including outstanding L/C's) for which
such calculations are being made, all as
determined in accordance with GAAP.
Computations of Interest Charges on a pro
forma basis for Indebtedness having a
variable interest rate shall be calculated
at the rate in effect on the date of
any determination.
"INTEREST PAYMENT DATE": With reference
to:
Each Libor Loan: The last day of the Interest Period relating
thereto
(provided that if the Interest Period is
six months in length, the Interest
Payment Date shall be the last day of the
third month of such Interest Period
and the last day of the Interest Period);
the Termination Date; and the End
Date.
Each Base Margin Loan: The first day of each month; the
Termination
Date; and the End Date.
"INTEREST PERIOD": The following:
(a) With
respect to each Libor Loan: Subject to Subsection (c),
below, the period commencing on the date of
the making or continuation of, or
conversion to, the subject Libor Loan and
ending seven days, or one, two, three,
or six months thereafter, as the Lead
Borrower may elect by notice (pursuant to
Section 2-5) to the Administrative
Agent
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<PAGE>
(b) With
respect to each Base Margin Loan: Subject to Subsection
(c), below, the period commencing on the
date of the making or continuation of
or conversion to such Base Margin Loan and
ending on that date (i) as of which
the subject Base Margin Loan is converted
to a Libor Loan, as the Lead Borrower
may elect by notice (pursuant to Section
2-5) to the Administrative Agent, or
(ii) on which the subject Base Margin Loan
is paid by the Borrowers.
(c) The
setting of Interest Periods is in all instances subject to
the following:
(i) Any
Interest Period for a Base Margin Loan which
would otherwise end on a day which is not a
Business Day shall be extended to
the next succeeding Business Day.
(ii)
Any Interest Period for a Libor Loan which would
otherwise end on a day that is not a
Business Day shall be extended to the next
succeeding Business Day, unless that
succeeding Business Day is in the next
calendar month, in which event such
Interest Period shall end on the last
Business Day of the month during which the
Interest Period ends.
(iii)
Subject to Subsection (iv) below, any Interest Period
applicable to a Libor Loan, which Interest
Period begins on a day for which
there is no numerically corresponding day
in the calendar month during which
such Interest Period ends, shall end on the
last Business Day of the month
during which that Interest Period ends.
(iv)
Any Interest Period which would otherwise end after
the Termination Date shall end on the
Termination Date.
(v) The number
of Interest Periods in effect at any one
time is subject to Section 2-10(d)
hereof.
"INVENTORY": Includes, without limitation,
"inventory" as defined in the UCC and
also all: (a) Inventory in transit; (b)
Inventory which is returned, repossessed
or rejected; (c) packaging, advertising,
and shipping materials related to any
of the foregoing; and (d) Documents which
represent any of the foregoing.
"INVENTORY ADVANCE RATE": 94%.
"INVENTORY RESERVES": As of the Closing
Date, an aggregate amount equal to $0.
At any time after the Closing Date during
which a Reserve Event has occurred or
exists, such inventory reserves as may be
established from time to time by the
Administrative Agent, without duplication
and only to the extent not already
deducted in determining Eligible Inventory,
in the Administrative Agent's
discretion, acting in a commercially
reasonable manner (after consultation with
the Lead Borrower (whose consent to any
Inventory Reserve shall not be
required)) with respect to the
determination of the saleability, at retail, of
the Eligible Inventory or which reflect
such other factors as affect the market
value of the Eligible Inventory, which
Reserves may be established with respect
to the following matters listed in clauses
(i) through (ix) below. Inventory
Reserves shall be established and
calculated in a manner and methodology
consistent with the Administrative Agent's
practices with other similarly
situated borrowers.
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<PAGE>
(i)
Obsolescence (based upon Inventory on hand beyond a
given number of days).
(ii)
Seasonality.
(iii)
Shrinkage.
(iv)
Imbalance.
(v) Change in
Inventory character except as permitted
pursuant to Section 4-22 hereof.
(vi)
Change in Inventory composition.
(vii)
Change in Inventory mix.
(viii) Markdowns
(both permanent and point of sale).
(ix)
Retail markons and markups inconsistent with prior
period practice and performance; or advertising
calendar and planned
advertising events.
"INVESTMENT PROPERTY": Has the meaning
given that term in the UCC.
"ISSUER": The Issuer shall be Fleet.
"L/C": Any letter of credit, the issuance
of which is procured by the
Administrative Agent for the account of any
Borrower and any acceptance made on
account of such letter of credit.
"LANDLORD'S LIEN STATES": Collectively,
Pennsylvania, Washington, Virginia,
Arizona, Georgia, New Jersey, Oregon,
Texas, Utah, and with respect to stores
opened after June 29, 2001, Alabama and
Florida, and each other state, if any,
in which Applicable Law grants a landlord a
priority lien for amounts due or to
become due under a Lease after the date
hereof.
"LEAD BORROWER": Is defined in the Preamble
hereto.
"LEASE": Any lease or other agreement, no
matter how styled or structured,
pursuant to which a Borrower is entitled to
the use or occupancy of any space.
"LENDERS' SPECIAL COUNSEL": Up to two legal
counsel (one representing the
Agent and, if required, one representing
the Lenders), plus any local legal
counsel deemed necessary by the Agent or
the Lenders to deal with local legal
matters, selected by the Agent or the
Lenders to represent their interests in
connection with the enforcement, attempted
enforcement, or preservation of any
rights and remedies under this Agreement or
any other Loan Document, as well as
in connection with any "workout",
forbearance, or restructuring of the credit
facility contemplated hereby.
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"LETTER-OF-CREDIT RIGHT": Has the meaning
given that term in the UCC and also
refers to any right to payment or
performance under an L/C, whether or not the
beneficiary has demanded or is at the time
entitled to demand payment or
performance.
"LIABILITIES": Collectively, the
following:
(a) All and
each of the following, whether now existing or
hereafter arising, under this Agreement or
under any of the other Loan
Documents:
(i) Any and
all direct and indirect liabilities, debts,
and obligations of each Borrower to the
Administrative Agent or any Revolving
Credit Lender, each of every kind, nature,
and description, including under
Hedge Agreements.
(ii)
Each obligation to repay any loan, advance,
indebtedness, note, obligation, overdraft,
or amount now or hereafter owing by
any Borrower to the Administrative Agent or
any Revolving Credit Lender
(including all future advances whether or
not made pursuant to a commitment by
the Administrative Agent or any Revolving
Credit Lender), whether or not any of
such are liquidated, unliquidated, primary,
secondary, secured, unsecured,
direct, indirect, absolute, contingent, or
of any other type, nature, or
description, or by reason of any cause of
action which the Administrative Agent
or any Revolving Credit Lender may hold
against any Borrower.
(iii) All
notes and other obligations of each Borrower now
or hereafter assigned to or held by the
Administrative Agent or any Revolving
Credit Lender, each of every kind, nature,
and description.
(iv)
All interest, fees, and charges and other amounts
which may be charged by the Administrative
Agent or any Revolving Credit Lender
to any Borrower and/or which may be due
from any Borrower to the Administrative
Agent or any Revolving Credit Lender from
time to time.
(v) All
reasonable costs and expenses incurred or paid by
the Administrative Agent or any Revolving
Credit Lender in respect of any
agreement between any Borrower and the
Administrative Agent or any Revolving
Credit Lender or instrument furnished by
any Borrower to the Administrative
Agent or any Revolving Credit Lender
(including, without limitation, Costs of
Collection, reasonable attorneys' fees, and
all reasonable court and litigation
costs and expenses).
(vi)
Any and all covenants of each Borrower to or with the
Administrative Agent or any Revolving
Credit Lender and any and all obligations
of each Borrower to act or to refrain from
acting in accordance with any
agreement between that Borrower and the
Administrative Agent or any Revolving
Credit Lender or instrument furnished by
that Borrower to the Administrative
Agent or any Revolving Credit Lender.
(vii) Each of the foregoing as if
each reference to the
"the Administrative Agent or any Revolving
Credit Lender" were to each Affiliate
of the Administrative Agent.
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<PAGE>
(b) Any and
all direct or indirect liabilities, debts, and
obligations of each Borrower to the
Administrative Agent or any Affiliate of the
Administrative Agent, each of every kind,
nature, and description owing on
account of any service or accommodation
provided to, or for the account of any
Borrower pursuant to this or any other Loan
Document, including cash management
services and the issuances of L/Cs.
"LIBOR BUSINESS DAY": Any day which is both
a Business Day and a day on which
the principal market in Libor funds in
which Fleet National Bank participates is
open for dealings in United States Dollar
deposits.
"LIBOR LOAN": Any Revolving Credit Loan
which bears interest at a Libor Rate.
"LIBOR OFFER RATE": That rate of interest
(rounded upwards, if necessary, to the
next 1/100 of 1%) determined by the
Administrative Agent to be the highest
prevailing rate per annum at which deposits
in U.S. Dollars are offered to Fleet
National Bank, by first-class banks in the
Libor market in which Fleet National
Bank participates at or about 10:00 AM
(Boston Time) two (2) Libor Business Days
before the first day of the Interest Period
for the subject Libor Loan, for a
deposit approximately in the amount of the
subject loan for a period of time
approximately equal to such Interest
Period.
"LIBOR RATE": That per annum rate which is
the aggregate of the Libor Offer Rate
plus the Applicable Margin for Libor Loans,
except that, in the event that the
Administrative Agent determines that any
Revolving Credit Lender may be subject
to the Reserve Percentage, the "Libor Rate"
shall mean, with respect to any
Libor Loans then outstanding (from the date
on which that Reserve Percentage
first became applicable to such Libor
Loans), and with respect to all Libor
Loans thereafter made, an interest rate per
annum equal the sum of (a) plus (b),
where:
(a) is the decimal equivalent of the following
fraction:
Libor Offer Rate
1 minus Reserve Percentage
(b) is the Applicable Margin for Libor Loans.
"LIQUIDATION": The exercise, by the
Administrative Agent, of those rights
accorded to the Administrative Agent under
the Loan Documents as a creditor of
the Borrowers during the existence of an
Event of Default looking towards the
realization on the Collateral. Derivations
of the word "Liquidation" (such as
"Liquidate") are used with like meaning in
this Agreement.
"LOAN ACCOUNT": Is defined in Section
2-7.
"LOAN DOCUMENTS": This Agreement, the
Pledge Agreement, each instrument and
document executed and/or delivered as
contemplated by Article 3, below, and each
other instrument or document from time to
time executed and/or delivered in
connection with the arrangements
contemplated hereby or in connection with any
transaction with the Administrative Agent
or any Affiliate of the Administrative
Agent, including, without limitation, any
transaction which
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arises out of any cash management,
depository, investment, letter of credit,
interest rate protection, or equipment
leasing services provided by the
Administrative Agent or any Affiliate of
the Administrative Agent, as each may
be amended from time to time.
"MAJORITY LENDERS": Prior to termination of
the Revolving Credit Commitments,
Revolving Credit Lenders (other than
Delinquent Revolving Credit Lenders)
holding more than 50% of the Revolving
Credit Commitments (other than any
Revolving Credit Commitments held by
Delinquent Revolving Credit Lenders). After
termination of the Revolving Credit
Commitments, Revolving Credit Lenders (other
than Delinquent Revolving Credit Lenders)
holding more than 50% of the
Liabilities (other than any Liabilities
held by Delinquent Revolving Credit
Lenders).
"MATERIAL SUBSIDIARIES": Collectively, (i)
BMS Distributing Corp., a Delaware
corporation, (ii) CBI Distributing Corp., a
Delaware corporation, (iii) Claire's
Boutiques, Inc., a Delaware corporation,
and (iv) each other direct and indirect
domestic Subsidiary of the Lead Borrower
which has assets in excess of
$5,000,000 and/or has revenue in excess of
$10,000,000 in any fiscal year
(excluding intercompany revenue and assets,
in each case as determined in
accordance with GAAP) or is otherwise a
domestic Subsidiary which holds title to
or has possession of Inventory, Accounts
(excluding intercompany Accounts) or
Collateral (excluding intercompany
Accounts) or is utilized in the distribution
of Inventory, Accounts (excluding
intercompany Accounts) or Collateral
(excluding intercompany Accounts), provided
that any such Subsidiary that has
Inventory or Accounts (excluding
intercompany Accounts) having an aggregate
value not in excess of $1,000,000 shall not
constitute a Material Subsidiary
until such time as the aggregate value of
the assets (excluding intercompany
Accounts) of such non-Material Subsidiaries
exceeds $10,000,000 (at which point
the Administrative Agent may deem one or
more of such Subsidiaries to be
Material Subsidiaries for purposes hereof
so that the aggregate value of assets
(excluding intercompany Accounts) of
non-Material Subsidiaries does not exceed
$10,000,000).
"MATURITY DATE": March 31, 2009.
"NEW YORK APARTMENT": The apartment owned
by the Lead Borrower in Manhattan, New
York.
"NOMINEE": A business entity (such as a
corporation or limited partnership)
formed by the Administrative Agent to own
or manage any Post Foreclosure Asset.
"NOTICE OF ACCELERATION": Written notice as
follows:
(a) From the
Administrative Agent to the Revolving Credit Lenders,
as provided in Section 12-1(a).
(b) From the
Majority Lenders to the Administrative Agent, as
provided in Section 12-1(b).
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<PAGE>
"OVERLOAN": A loan, advance, or providing
of credit support (such as the
issuance of any L/C) to the extent that,
immediately after its having been made,
Availability is less than zero.
"PARTICIPANT": Is defined in Section 18-16,
hereof.
"PAYMENT INTANGIBLE": Has the meaning given
that term in the UCC and also refers
to any General Intangible under which the
Account Debtor's primary obligation is
a monetary obligation.
"PERMISSIBLE OVERLOANS": Revolving Credit
Loans which are OverLoans, but as to
which each of the following conditions is
satisfied: (a) the Revolving Credit
Ceiling is not exceeded; and (b) when
aggregated with all other Permissible
OverLoans, such Revolving Credit Loans do
not aggregate more than ten percent
(10%) of the aggregate of the Borrowing
Base; (c) the Permissible Overloans
shall not remain outstanding for more than
thirty (30) consecutive days, and (d)
such Revolving Credit Loans are made or
undertaken in the Administrative Agent's
discretion to protect and preserve the
interests of the Revolving Credit
Lenders.
"PERMITTED ACQUISITIONS": An Acquisition in
which each of the following
conditions are satisfied:
(i) No Default
then exists or would arise from the consummation of
such Acquisition.
(ii)
Such Acquisition shall have been approved by the Board of
Directors of the Person (if such Person is
a corporation) which is the subject
of such Acquisition and such Person shall
not have announced that it will oppose
such Acquisition or shall not have
commenced any action which alleges that such
Acquisition will violate applicable
law.
(iii) At
any time at which the Borrowers have made, in the most
recent twelve month period (including the
month in which the Acquisition is
proposed to be made), more than $30,000,000
in Acquisitions (taking into account
the entire purchase price of any such
Acquisition, including, without
limitation, cash, equity and assumed
liabilities (excluding accounts payable and
normal, ordinary course operating accrued
liabilities)), the Lead Borrower shall
have furnished the Administrative Agent
with at least ten (10) days prior notice
of such intended Acquisition and shall have
furnished the Administrative Agent,
at the request of the Administrative Agent,
with a current draft of the
acquisition agreement, summary of any due
diligence undertaken by the Borrowers
in connection with such Acquisition,
appropriate financial statements of the
Person which is the subject of such
Acquisition, pro forma financial statements
for the twelve month period following such
Acquisition after giving effect to
such Acquisition, and such other
information as the Administrative Agent may
reasonably require.
(iv)
After consummation of the Acquisition, a Borrower shall own
directly or indirectly a majority of the
equity interests in the Person being
acquired and shall control a
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<PAGE>
majority of any voting interests, and/or
shall otherwise control the governance
of the Person being acquired.
(v) If the
Acquisition involves a merger, consolidation or stock
acquisition, the Person which is the
subject of such Acquisition shall be
engaged in a line of business related to
that of the Lead Borrower as conducted
in accordance with Section 4-22 hereof
(provided that, notwithstanding the
provisions of Section 4-22, in connection
with an Acquisition, the Lead Borrower
may during the term of the Agreement make
investments of up to $7,500,000
individually and in the aggregate (provided
that such amount shall be
$50,000,000 individually and in the
aggregate (but no additional investments) so
long as at the time any such investment is
made after investments of $7,500,000
individually and in the aggregate have
already been made, Excess Liquidity is at
least $100,000,000) in Persons which are
not engaged in a line of business
related to that of the Lead Borrower as
conducted in accordance with Section
4-22 hereof), and a Borrower shall be the
surviving entity in any such merger or
consolidation.
(vi)
If the Person which is the subject of such Acquisition will be
maintained as a domestic Subsidiary of the
Borrower and is a Material
Subsidiary, such Person shall have entered
into a joinder agreement (in the form
of EXHIBIT 4-19(F)) pursuant to which it
becomes a Borrower hereunder, to be
effective upon the consummation of the
Acquisition, and shall have granted a
security interest in such Person's
Inventory, Accounts and other property of the
same nature as constitutes Collateral in
order to secure the Liabilities, and
shall have entered such other documents,
instruments and agreements and provided
such due diligence information and
certificates as are required by the
Administrative Agent.
(vii) As
of the date of such Acquisition, Excess Liquidity has been
at least $20,000,000 for the prior thirty
(30) days and Excess Liquidity is
projected on a pro forma basis to be at
least $20,000,000 for the thirty (30)
day period immediately following the
consummation of such Acquisition.
(viii) Any
Indebtedness incurred or assumed by a Borrower in
connection with such Acquisition shall be
in compliance with the provisions of
Section 4-7.
Notwithstanding the foregoing, but subject in any event to the
limitations set forth in clauses (v) and
(vii) above and the other provisions of
this Agreement, any Acquisition by a Person
that is not a Borrower (or a
Subsidiary that would be required to become
a Borrower after giving effect to
the Acquisition by virtue of becoming a
Material Subsidiary), including any
foreign direct or indirect Subsidiary of
the Lead Borrower, shall be a Permitted
Acquisition.
"PERMITTED ENCUMBRANCES": Any of the
following:
(a)
Encumbrances for taxes not yet due or which are being
contested in good faith by appropriate
proceedings, provided that adequate
reserves with respect thereto are
maintained on the books of the Borrowers in
accordance with GAAP, and provided further
that, no notice of tax lien has been
filed with respect thereto.
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(b) Carrier's,
warehousemen's, mechanics', materialmen's,
repairmen's, landlord's or similar
Encumbrances arising in the ordinary course
of business which are not overdue or that
are being contested in good faith by
appropriate proceedings, provided that
adequate reserves with respect thereto
are maintained on the books of the
Borrowers in accordance with GAAP.
(c) Pledges or
deposits in connection with workers' compensation,
unemployment insurance and other social
security legislation.
(d) Deposits
to secure the performance of bids, trade contracts
(other than for borrowed money), leases,
statutory obligations, surety and
appeal bonds, performance bonds and other
obligations of a like nature in the
ordinary course of business.
(e) Easements,
rights of way, leases, restrictions and other
similar encumbrances incurred in the
ordinary course of business that in the
aggregate are not substantial in amount and
which do not in any case materially
detract from the value of the real estate
subject thereto or materially
interfere with the conduct of the business
of the Borrowers.
(f) Judgment
liens in respect of judgments not in excess of
$3,000,000 in the aggregate so long as such
liens do not attach to any
Collateral.
The inclusion of the foregoing as "Permitted Encumbrances" shall
not
limit or impair the right of the
Administrative Agent to impose Reserves on
account thereof in accordance with the
provisions of this Agreement.
"PERMITTED EXISTING LITIGATION AMOUNT": In
connection with the litigation
disclosed in writing to the Administrative
Agent pursuant to a letter from the
Lead Borrower dated March 31, 2004 (the
"Existing Litigation"), an amount not to
exceed the amount set forth in such letter
in connection with a judgment
rendered or a settlement in connection with
the Existing Litigation.
"PERMITTED INVESTMENTS": Each of the
following:
(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);
(b)
investments in commercial paper maturing not more than one
year from the date of acquisition thereof
and having, at such date of
acquisition, a credit rating of not less
than prime-one from Standard & Poors or
A-1 from Moody's Investment Services,
Inc.;
(c)
investments in certificates of deposit, banker's acceptances
and time deposits maturing not more than
one year 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
that has a combined capital and surplus and
undivided profits of not less than
$500,000,000;
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<PAGE>
(d) fully
collateralized repurchase agreements with a term of not
more than 30 days for securities described
in clause (a) above (without regard
to the limitation on maturity contained in
such clause) and entered into with a
financial institution satisfying the
criteria described in clause (c) above;
(e) marketable
direct obligations issued by any U.S. corporation,
state of the United States of America or
any political subdivision of any such
state or any public instrumentality thereof
maturing within one year from the
date of acquisition thereof and, at the
time of acquisition, having a rating of
no lower than single A from either Standard
& Poors or from Moody's Investment
Services, Inc.;
(f) auction
rate preferred stocks, whether taxable, tax-exempt or
DRD, issued by a domestic or foreign
corporation, a domestic or foreign bank, or
closed-end municipal or taxable bond fund,
maturing within one year from the
date of acquisition thereof and, at the
time of acquisition, having a rating of
no lower than single A from either Standard
& Poors or from Moody's Investment
Services, Inc.;
(g) floating
rate, variable rate and auction rate bonds, whether
taxable or tax-exempt, issued by
municipalities, states, state agencies,
political subdivision of states or any
public instrumentality thereof, maturing
within one year from the date of
acquisition thereof and, at the time of
acquisition, having a rating of no lower
than single A from either Standard &
Poors or from Moody's Investment Services,
Inc.;
(h)
investments in money market funds, substantially all the
assets of which are comprised of securities
of the types described in clauses
(a) through (e) above;
(i) investments of up to $1,000,000 in
bonds issued by the State of Israel;
(j) subject to
the provisions of Section 4-19, investments in
Subsidiaries that are not Borrowers as long
as no Default exists or would arise
therefrom and as long as, for each of the
thirty (30) days prior to, and after
giving effect to, the making of such
investments, Excess Liquidity is at least
$20,000,000.00 and Excess Liquidity is
projected on a pro forma basis to be at
least $20,000,000.00 for the thirty (30)
day period immediately following the
making of such investments (it being
acknowledged that existing investments in
non-Borrower Subsidiaries will not be
required to be divested); and
(k)
investments in direct and indirect wholly-owned Subsidiaries
that are Borrowers.
"PERSON": Any natural person, and any
corporation, limited liability company,
trust, partnership, joint venture, or other
enterprise or entity.
"PLEDGE AGREEMENT": The Pledge Agreement
entered into by the Borrowers in favor
of the Administrative Agent and the
Revolving Credit Lenders, pursuant to which
the equity of each Borrower (other than the
Lead Borrower) is pledged.
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"POST FORECLOSURE ASSET": All or any part
of the Collateral, ownership of which
is acquired by the Administrative Agent or
a Nominee on account of the "bidding
in" at a disposition as part of a
Liquidation or by reason of a "deed in lieu"
type of transaction.
"PRIMARY BLOCKED ACCOUNT": The
concentration account maintained by the Lead
Borrower with LaSalle Bank which is subject
to the Blocked Account Agreement as
of the date hereof, or such other account
as the Borrower may so designate and
the Administrative Agent shall approve. The
Primary Blocked Account shall be
deemed a Blocked Account for all purposes
of this Agreement and shall be subject
to a Blocked Account Agreement.
"PROCEEDS": Includes, without limitation,
"Proceeds" as defined in the UCC and
each type of property described in Section
7-1 hereof.
"REALTY SALE": Any sale, lease, conveyance,
transfer, financing, or other
disposition by any Borrower (including by
way of merger, consolidation or a
sale-leaseback transaction) in any
transaction or group of transactions that are
part of a common plan, of any real estate
described on EXHIBIT 1-1 hereto.
"RECEIPTS": All cash, cash equivalents,
money, checks, credit card slips,
receipts and other Proceeds from any sale
of the Collateral.
"RECEIVABLES COLLATERAL": That portion of
the Collateral which consists of (i)
Accounts, (ii) Instruments arising from,
relating to, or constituting proceeds
of, the Borrowers' Accounts and Inventory,
(iii) Documents relating to the
Borrowers' Inventory, (iv) Payment
Intangibles arising from, relating to, or
constituting proceeds of, the Borrowers'
Accounts and Inventory, and (v)
Letter-of-Credit Rights, bankers'
acceptances, and all other rights to payment
arising from, or relating to, or
constituting proceeds of, the Borrowers'
Accounts and Inventory.
"REGISTER": Is defined in Section
15-2(c).
"RELATED ENTITY": Any Person in which a
Borrower is a partner, joint venturer,
stockholder, or member or in which a
Borrower holds an equity or other ownership
interest, and which Person does not
constitute a Subsidiary of any Borrower.
"REQUIREMENTS OF LAW": As to any
Person:
(a) Applicable
Law.
(b) That
Person's organizational documents.
(c) That
Person's by-laws and/or other instruments which deal with
corporate or similar governance, as applicable.
"RESERVE EVENT": Any of the following: (i)
a Cash Control Event, (ii) for any 12
consecutive months, EBITDA, as evidenced by
a monthly compliance certificate (as
required by Section 5-5(b)) of the Lead
Borrower satisfactory to the
Administrative Agent, is less than
$100,000,000,
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or (iii) the outstanding Revolving Credit
Loans and L/Cs at any time exceed 80%
of the Appraised Inventory Liquidation
Value.
"RESERVE PERCENTAGE": The decimal
equivalent of that rate applicable to a
Revolving Credit Lender under regulations
issued from time to time by the Board
of Governors of the Federal Reserve System
for determining the maximum reserve
requirement of that Revolving Credit Lender
with respect to "Eurocurrency
liabilities" as defined in such
regulations. The Reserve Percentage applicable
to a particular Libor Loan shall be based
upon that in effect during the subject
Interest Period, with changes in the
Reserve Percentage which take effect during
such Interest Period to take effect (and to
consequently change any interest
rate determined with reference to the
Reserve Percentage) if and when such
change is applicable to such loans.
"RESERVES": The following: Availability
Reserves and Inventory Reserves.
Notwithstanding any provisions of this
Agreement to the contrary, (a) the
imposition of a new Reserve or a change to
a then existing Reserve may be made
only with not less than ten (10) Business
Days prior notice to the Lead Borrower
and only as permitted for Availability
Reserves and Inventory Reserves, except
that an increase or decrease in the amount
of a then existing Reserve, which
increase or decrease is calculated in
accordance with the same methodology as
was utilized to establish the existing
Reserve and merely reflects the results
of mathematical computations of the items
already in the category to which such
Reserve applies (such as a change in the
aggregate of Customer Credit
Liabilities or leases in jurisdictions
pursuant to which a priority landlord's
lien may exist), may be made without such
notice, (b) a new Reserve or change a
Reserve may be established only utilizing
the same criteria as utilized for
other of its similar borrowers, subject to
the limitations on establishing
additional Availability Reserves and
Inventory Reserves, and (c) Availability
Reserves imposed for Rent shall at no time
exceed the sum of (i) two months base
rent for any locations in Landlord's Lien
States (except no such Reserve shall
be established for locations for which the
Borrowers have obtained a landlord's
waiver reasonably acceptable in form and
substance to the Administrative Agent),
plus (ii) subject to the provisions of
Section 4-5(d) hereof, two months base
rent for any warehouses utilized by any
Borrower (except no such Reserve shall
be established for warehouses for which the
Borrowers have obtained a
warehouseman's waiver reasonably acceptable
in form and substance to the
Administrative Agent), plus (iii) an amount
equal to all past due rent and
warehouse charges for any of the Borrowers'
locations, wherever located .
"REVOLVING CREDIT": Is defined in Section
2-1.
"REVOLVING CREDIT CEILING": $60,000,000.00,
less any permanent reduction in the
Revolving Credit Ceiling pursuant to
Section 2-11.
"REVOLVING CREDIT COMMITMENT": With respect
to each Revolving Credit Lender,
that amount set forth on EXHIBIT 2-20,
annexed hereto (as such amounts may
change in accordance with the provisions of
this Agreement).
"REVOLVING CREDIT COMMITMENT FEE": Is
defined in Section 2-12.
-25-
<PAGE>
"REVOLVING CREDIT COMMITMENT PERCENTAGE":
With respect to each Revolving Credit
Lender, that percentage set forth on
EXHIBIT 2-20, annexed hereto (as such
percentages may change in accordance with
the provisions of this Agreement).
"REVOLVING CREDIT LENDERS": Each Person who
is or becomes a "Revolving Credit
Lender" in accordance with the provisions
of this Agreement.
"REVOLVING CREDIT LOANS": Loans made under
the Revolving Credit, except that
where the term "Revolving Credit Loan" is
used with reference to available
interest rates applicable to the loans
under the Revolving Credit, it refers to
so much of the unpaid principal balance of
the Loan Account as bears the same
rate of interest for the same Interest
Period. (See Section 2-10(c)).
"REVOLVING CREDIT NOTE": Is defined in
Section 2-8.
"SEC": The Securities and Exchange
Commission.
"SOLVENT": With respect to any Person on a
particular date, that on such date
(a) at fair valuations, 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.
"SPECIFIED EVENT OF DEFAULT": .Any Event of
Default under Section 9-4(b) (except
with respect to Events of Default relating
to Sections 5-2, 5-3, 5-4 and 5-8(c))
and Section 9-4(c) (except with respect to
Events of Default under Sections 6-1,
7-5, 7-9 and 7-10).
"STANDBY L/CS": L/Cs 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.
"SUBSIDIARY": Any corporation, association,
partnership, limited liability
company, trust, or other business entity of
which the designated parent shall at
any time own directly or indirectly through
a Subsidiary or Subsidiaries at
least a majority (by number of votes or
controlling interests) of the
outstanding voting interests.
"SUPPORTING OBLIGATION": Has the meaning
given that term in the UCC and also
refers to a Letter-of-Credit Right or
secondary obligation which supports the
payment or performance of an Account, a
Document, or an Instrument.
-26-
<PAGE>
"TERMINATION DATE": The earliest of (a) the
Maturity Date; or (b) the occurrence
of any event described in Section 9-10
below; or (c) the Administrative Agent's
notice to the Lead Borrower setting the
Termination Date on account of the
occurrence and continuance of any Event of
Default other than as described in
Section 9-10 below. An Event of Default
shall be deemed to be continuing unless
it is waived in writing by the
Administrative Agent and the Lenders or unless it
has been cured by the Borrowers and such
cure has been accepted in writing by
the Administrative Agent and the Lenders,
in each case in accordance with
Section 14 hereof.
"TRANSFER": Wire transfer pursuant to the
wire transfer system maintained by the
Board of Governors of the Federal Reserve
Board, or as otherwise may be agreed
to from time to time by the Administrative
Agent making such Transfer and the
subject Revolving Credit Lender. Wire
instructions may be changed in the same
manner that Notice Addresses may be changed
(Section 16-1), except that no
change of the wire instructions for
Transfers to any Revolving Credit Lender
shall be effective without the consent of
the Administrative Agent.
"UCC": The Uniform Commercial Code as in
effect from time to time in
Massachusetts.
"UNANIMOUS CONSENT": Prior to termination
of the Revolving Credit Commitments,
Consent of Revolving Credit Lenders (other
than Delinquent Revolving Credit
Lenders) holding 100% of the Revolving
Credit Commitments (other than Revolving
Credit Commitments held by a Delinquent
Revolving Credit Lender). After
termination of the Revolving Credit
Commitments, Revolving Credit Lenders (other
than Delinquent Revolving Credit Lenders)
holding 100% of the Liabilities (other
than any Liabilities held by Delinquent
Revolving Credit Lenders).
"UNRESTRICTED TRUSTS": The one or more
so-called "rabbi" trusts maintained by
the Lead Borrower in connection with
deferred compensation benefits for
employees, each of which is an asset of the
Lead Borrower and is available to
the creditors of the Lead Borrower in the
event of the Lead Borrower's
bankruptcy or insolvency.
"UNUSED FEE": A fee equal to the applicable
percentage per annum of the average
difference, during the quarter just ended
(or relevant period with respect to
the payment being made on the Termination
Date) between the Revolving Credit
Ceiling and the sum of (a) the aggregate of
the unpaid principal balance of the
Revolving Credit Loans and (b) the undrawn
Stated Amount of L/Cs outstanding
during the relevant period, as determined
based on the following criteria:
<TABLE>
<CAPTION>
LEVEL
ADJUSTED EXCESS LIQUIDITY UNUSED FEE
-----------------------------------------------------------------------
<S>
<C>
<C>
1
Greater than $100,000,000
0.20%
-----------------------------------------------------------------------
2
Less than or equal to
0.25%
$100,000,000, but greater
than
</TABLE>
-27-
<PAGE>
<TABLE>
<S>
<C>
<C>
$75,000,000
-----------------------------------------------------------------------
3
Less than or equal to
0.30%
$75,000,000, but greater
than or equal to
$50,000,000
-----------------------------------------------------------------------
4
Less than $50,000,000
0.375%
</TABLE>
ARTICLE 2 - THE REVOLVING CREDIT:
2-1. ESTABLISHMENT OF REVOLVING CREDIT.
(a) Subject to
Section 2-20, the Revolving Credit Lenders hereby
establish a revolving line of credit (the
"REVOLVING CREDIT") in the Borrowers'
favor and each Revolving Credit Lender
severally and not jointly agrees, subject
to, and in accordance with, this Agreement,
acting through the Administrative
Agent, to extend credit to the Borrowers on
a revolving basis, in the form of
Revolving Credit Loans and participations
in L/Cs and otherwise provide
financial accommodations to and for the
account of the Borrowers as provided
herein.
(b) Loans,
advances, and financial accommodations under the
Revolving Credit shall be made with
reference to the Borrowing Base and shall be
subject to Availability.
The Borrowing Base and Availability shall be determined by the
Administrative Agent (in accordance with
the respective definitions thereof and
of Availability Reserves and Inventory
Reserves) by reference to Borrowing Base
Certificates furnished as provided in
Section 5-4, below. Such determination
shall take into account those Reserves as
may be applicable thereto.
(c) The
commitment of each Revolving Credit Lender to provide such
loans, advances, and financial
accommodations is subject to Section 2-20 and to
the following clause (d).
(d) The
proceeds of borrowings under the Revolving Credit shall be
used solely to refinance existing
Indebtedness of the Borrowers and for general
corporate purposes, including to fund stock
repurchases and dividends, for the
Borrowers' working capital and Capital
Expenditures, and for Permitted
Acquisitions, all solely to the extent
permitted by this Agreement.
Notwithstanding the foregoing, in the event
that the Borrowers intend to use the
proceeds of any Revolving Credit Loan for
the purpose of funding a stock
repurchase or paying dividends or
distributions to shareholders, the Borrowers
shall notify the Administrative Agent
thereof in the applicable Revolving Credit
Loan request pursuant to Section 2-5, and
shall provide the Administrative Agent
with a solvency certificate, and with such
other evidence of solvency (including
financial calculations) as the
Administrative Agent may request, prior to the
funding by the Lenders of any such
requested Revolving Credit Loan (provided
that no such solvency certificate shall be
required if the dividend or
distribution is being made solely from one
Borrower to another Borrower).
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<PAGE>
2-2. ADVANCES IN EXCESS OF BORROWING BASE (OVERLOANS).
(a) No
Revolving Credit Lender has any obligation to make any
Revolving Credit Loan, or otherwise to
provide any credit to or for the benefit
of the Borrowers where the result of such
Revolving Credit Loan or credit is an
OverLoan.
(b) The
Revolving Credit Lenders' obligations, among themselves,
are subject to Section 11-2(a) (which
relates to each Revolving Credit Lender's
making amounts available to the
Administrative Agent) and to Section 14-3(i)
(which relates to Permissible
OverLoans).
(c) The
Revolving Credit Lenders' providing of an OverLoan on any
one occasion does not affect the
obligations of each Borrower hereunder
(including each Borrower's obligation to
immediately repay any amount which
otherwise constitutes an OverLoan) nor
obligate the Revolving Credit Lenders to
do so on any other occasion.
2-3. RISKS OF VALUE OF COLLATERAL. The Administrative Agent's
reference
to a given asset in connection with the
making of Revolving Credit Loans and the
providing of financial accommodations under
the Revolving Credit and/or the
monitoring of compliance with the
provisions hereof shall not be deemed a
determination by the Administrative Agent
or any Revolving Credit Lender
relative to the actual value of the asset
in question. All risks concerning the
value of the Collateral are and remain upon
the Borrowers. All Collateral
secures the prompt, punctual, and faithful
performance of the Liabilities
whether or not relied upon by the
Administrative Agent in connection with the
making of Revolving Credit Loans and the
providing of financial accommodations
under the Revolving Credit.
2-4. COMMITMENT TO MAKE REVOLVING CREDIT LOANS AND SUPPORT LETTERS
OF
CREDIT. Subject to the provisions of this
Agreement, including Article 3 hereof,
the Revolving Credit Lenders shall make a
loan or advance under the Revolving
Credit and the Issuer shall issue an L/C
for the account of any Borrower, in
each instance if duly and timely requested
by the Lead Borrower as provided
herein provided that:
(a)
Availability will not be exceeded.
(b) No Default
has occurred and is continuing.
(c) All
representations and warranties contained in this Agreement
and the other Loan Documents or otherwise made in writing in
connection
herewith or therewith shall be true and correct in all material
respects on and as of the date of each Borrowing or the issuance
of
each Letter of Credit hereunder with the same effect as if made on
and
as of such date, other than representations and warranties that
relate
solely to an earlier date.
(d) The
Administrative Agent shall have received a notice with
respect to such Borrowing or issuance, as the case may be, as
required
by Article II.
(e) The
Administrative Agent shall have received the timely
delivery of the most recently required Borrowing Base Certificate,
with
each such Borrowing Base Certificate including schedules as
required by
the Administrative Agent.
-29-
<PAGE>
The request by the Borrowers for, and the
acceptance by the Borrowers of, each
extension of credit hereunder shall be
deemed to be a representation and
warranty by the Borrowers that the
conditions specified in this Section 2-4 have
been satisfied at that time and that after
giving effect to such extension of
credit the Borrowers shall continue to be
in compliance with the Borrowing Base.
The conditions set forth in this Section
2-4 are for the sole benefit of the
Administrative Agent and each Lender and
may be waived by the Administrative
Agent, in whole or in part, without
prejudice to the Administrative Agent or any
Lender.
2-5. REVOLVING CREDIT LOAN REQUESTS.
(a) Requests
for Revolving Credit Loans or for the continuance or
conversion of an interest rate applicable to a Revolving Credit
Loan
may be requested by the Lead Borrower in such manner as may from
time
to time be reasonably acceptable to the Administrative Agent.
(b) Subject to the
provisions of this Agreement, the Lead Borrower
may request a Revolving Credit Loan and elect an interest rate
and
Interest Period to be applicable to that Revolving Credit Loan
by
giving notice to the Administrative Agent by no later than the
following:
(i) If such
Revolving Credit Loan is to be or is to be
converted to a Base Margin Loan: By 12:00 noon on the
Business Day on which the subject Revolving Credit
Loan is to be made or is to be so converted. Base
Margin Loans requested by the Lead Borrower, other
than those resulting from the conversion of a Libor
Loan, shall not be less than $10,000.00.
(ii)
If such Revolving Credit Loan is to be, or is to be
continued as, or converted to, a Libor Loan: By
l:00PM three (3) Libor Business Days before the
commencement of any new Interest Period or the end of
the then applicable Interest Period. Libor Loans and
conversions to Libor Loans shall each be not less
than $1,000,000 and in increments of $1,000,000 in
excess of such minimum.
(iii) Any
Libor Loan which matures while an Event of
Default exists shall be converted to a Base Margin
Loan notwithstanding any notice from the Lead
Borrower that such Loan is to be continued as a Libor
Loan.
(c)
Any
request for a Revolving Credit Loan or for the continuance
or conversion of an interest rate
applicable to a Revolving Credit Loan which is
made after the applicable deadline
therefor, as set forth above, shall be deemed
to have been made at the opening of
business on the then next Business Day or
Libor Business Day, as applicable.
(d) The Lead
Borrower may request that the Administrative Agent
cause the issuance by the Issuer of L/Cs
for the account of the Borrowers as
provided in Section 2-15.
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<PAGE>
(e) The
Administrative Agent may rely on any request for a
Revolving Credit Loan or other financial
accommodation under the Revolving
Credit which the Administrative Agent, in
good faith, believes to have been made
by a Person duly authorized to act on
behalf of the Lead Borrower and may, in
good faith, decline to make any such
requested loan or advance, or issuance, or
to provide any such financial accommodation
pending the Administrative Agent's
being furnished with such documentation
concerning that Person's authority to
act as may be satisfactory to the
Administrative Agent.
(f) A request
by the Lead Borrower for loan or advance, or other
financial accommodation under the Revolving
Credit shall be irrevocable and
shall constitute certification by each
Borrower that as of the date of such
request, each of the following is true and
correct:
(i) Each
representation which is made herein or in any of
the Loan Documents is then true and complete in all
material respects as of and as if made on the date of
such request (except for representations that relate
to an earlier date, in which case that representation
shall have been true on such earlier date).
(ii)
No Default then exists.
(g) If, at any
time or from time to time, any Default exists:
(i) The
Administrative Agent may, or at the request of
the Majority Lenders shall, suspend the Revolving
Credit immediately.
(ii)
Neither the Administrative Agent nor any Revolving
Credit Lender shall be obligated, during such
suspension, to make any Revolving Credit Loans or to
provide any financial accommodation hereunder nor
shall the Administrative Agent, any Revolving Credit
Lender or the Issuer be obligated, during such
suspension, to issue, or cause to be issued, any L/C.
(iii) The
right of the Lead Borrower to request any Libor
Loan or to convert any Base Margin Loan to a Libor
Loan shall be suspended.
2-6 MAKING OF REVOLVING CREDIT LOANS.
(a) A
Revolving Credit Loan shall be made by the transfer of the
proceeds of such Revolving Credit Loan to
the Primary Blocked Account or as
otherwise instructed by the Lead
Borrower.
(b) A
Revolving Credit Loan shall be deemed to have been made
under the Revolving Credit (and the
Borrowers shall be indebted to the
Administrative Agent and the Revolving
Credit Lenders for the amount thereof
immediately) at the following:
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<PAGE>
(i) The
Administrative Agent's transfer of the proceeds
of such Revolving Credit Loan in accordance with the
Lead Borrower's instructions on thus Agreement (if
such Revolving Credit Loan is of funds requested by
the Lead Borrower).
(ii)
The charging of the amount of such Revolving Credit
Loan to the Loan Account in accordance with the terms
hereof (in all other circumstances).
(c) There
shall not be any recourse to or liability of the
Administrative Agent or any Revolving
Credit Lender, on account of:
(i) Any delay
in the making of any Revolving Credit Loan
requested under the Revolving Credit.
(ii)
Any delay by any bank or other depository institution
in treating the proceeds of any such Revolving Credit
Loan as collected funds.
(iii) Any
delay in the receipt, and/or any loss, of funds
which constitute a Revolving Credit Loan under the
Revolving Credit, the wire transfer of which was
properly initiated by the Administrative Agent in
accordance with wire instructions provided to the
Administrative Agent by the Lead Borrower.
2-7. THE LOAN ACCOUNT.
a) An
account ("LOAN ACCOUNT") shall be opened on the books of
the Administrative Agent in which a record
shall be kept of all Revolving Credit
Loans made and L/Cs issued under the
Revolving Credit.
(b) The
Administrative Agent shall also keep a record (either in
the Loan Account or elsewhere, as the
Administrative Agent may from time to time
elect) of all interest, fees, service
charges, costs, expenses, and other debits
owed to the Administrative Agent and each
Revolving Credit Lender on account of
the Liabilities and of all credits against
such amounts so owed.
(c) All
credits against the Liabilities shall be conditional upon
final payment to the Administrative Agent
for the account of each Revolving
Credit Lender of the items giving rise to
such credits. The amount of any item
credited against the Liabilities which is
charged back against the
Administrative Agent or any Revolving
Credit 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.
(d) Except as
otherwise provided herein, all fees, service
charges, costs, and expenses for which any
Borrower is obligated hereunder are
payable on demand. In the determination of
Availability, the Administrative
Agent may deem fees, service charges,
accrued interest, and other payments which
will be due and payable between the date of
such
-32-
<PAGE>
determination and the first day of the then
next succeeding month as having been
advanced under the Revolving Credit whether
or not such amounts are then due and
payable.
(e) The
Administrative Agent, without the request of the Lead
Borrower, may advance under the Revolving
Credit any interest, fee, service
charge, or other payment to which the
Administrative Agent or any Revolving
Credit Lender is entitled from any Borrower
pursuant hereto and may charge the
same to the Loan Account notwithstanding
that such amount so advanced may result
in the Borrowing Base being exceeded. Such
action on the part of the
Administrative Agent shall not constitute a
waiver of the Administrative Agent's
rights and each Borrower's obligations
under Section 2-9(b). Any amount which is
added to the principal balance of the Loan
Account as provided in this Section
2-7(e) shall bear interest at the interest
rate then and thereafter applicable
to Base Margin Loans.
(f) Any
statement rendered by the Administrative Agent or any
Revolving Credit Lender to the Lead
Borrower concerning the Liabilities shall be
considered correct and accepted by each
Borrower and shall be conclusively
binding upon each Borrower unless the Lead
Borrower provides the Administrative
Agent with written objection thereto within
sixty (60) days from the mailing of
such statement, which written objection
shall indicate, with particularity, the
reason for such objection. The Loan Account
and the Administrative Agent's books
and records concerning the loan arrangement
contemplated herein and the
Liabilities shall be prima facie evidence
and proof of the items described
therein.
2-8. THE REVOLVING CREDIT NOTES. The Borrowers' obligation to
repay
loans and advances under the Revolving
Credit, with interest as provided herein,
shall be evidenced by Notes (each, a
"REVOLVING CREDIT NOTE") in the form of
EXHIBIT 2-8, annexed hereto, executed by
each Borrower, one payable to each
Revolving Credit Lender. Neither the
original nor a copy of any Revolving Credit
Note shall be required, however, to
establish or prove any Liability. Upon a
Revolving Lender's request and, if
applicable, the delivery of an appropriate
lost instrument indemnity, each Borrower
shall execute a replacement thereof and
deliver such replacement to the
Administrative Agent in the event that any
Revolving Credit Note is ever lost,
mutilated, or destroyed.
2-9. PAYMENT (AND PREPAYMENTS) OF THE LOAN ACCOUNT.
(a) Subject to
the provisions of Section 2-9(f), the Borrowers may
prepay all or any portion of the principal
balance of the Loan Account from time
to time until the Termination Date,
provided that any partial prepayment of the
Loan Account shall be in a minimum amount
equal to $10,000.
(b) Subject to
the provisions of Section 2-9(f), the Borrowers,
without notice or demand from the
Administrative Agent or any Revolving Credit
Lender, shall pay the Administrative Agent
that amount, from time to time, which
is necessary so that there is no OverLoan
outstanding.
(c) Subject to
the provisions of Section 2-9(f) and without
limiting any of the Administrative Agent's
rights during the continuance of an
Event of Default,
-33-
<PAGE>
during the continuance of a Cash Control
Event, the Borrowers shall prepay the
Revolving Credit
(i) in an
amount equal to the proceeds realized from the
sale or other disposition of, or realization upon,
any Collateral;
(ii)
in an amount equal to the proceeds realized from any
Realty Sale, Capital Event and/or condemnation and
casualty insurance proceeds received by any Borrower
to the extent that such proceeds are not reinvested
in replacement assets within 180 days after the date
of receipt of such proceeds; and
(iii) in
accordance with the provisions of Article 6
hereof.
All amounts prepaid under this Section
2-9(c) may be reborrowed under the
Revolving Credit, subject to and in
accordance with, the terms of this
Agreement.
(d) The
Borrowers shall repay, and hereby jointly and severally
promise to pay, the then entire unpaid
balance of the Loan Account and all other
Liabilities, and all other amounts owing
hereunder, on the Termination Date.
(e) No payment
of Libor Loans shall be permitted hereunder other
than on the last day of an Interest Period
applicable thereto, unless the
Borrowers simultaneously reimburse the
Revolving Credit Lenders for all amounts
described in Section 2-9(f) below
associated therewith. In order to avoid
payment of the amounts described in Section
2-9(f) below, as long as no Event of
Default has occurred and is continuing, at
the request of the Lead Borrower, the
Administrative Agent shall hold all amounts
required to be applied to Libor
Loans in a non-interest bearing cash
collateral account and will apply such
funds to the applicable Libor Loans at the
end of the then pending Interest
Period therefor (provided that the
foregoing shall in no way limit or restrict
the Administrative Agent's rights upon the
subsequent occurrence of an Event of
Default).
(f) The
Borrowers shall indemnify the Administrative Agent and
each Revolving Credit Lender and hold the
Administrative Agent and each
Revolving Credit Lender harmless from and
against any loss, cost or expense
(including loss of anticipated profits and
amounts payable by the Administrative
Agent or such Revolving Credit Lender on
account of "breakage fees" (so-called))
which the Administrative Agent or such
Revolving Credit Lender may sustain or
incur (including, without limitation, by
virtue of acceleration after the
occurrence of any Event of Default) as a
consequence of the following:
(i) Default by
any Borrower in payment of the principal
amount of or any interest on any Libor Loan as and
when due and payable, including any such loss or
expense arising from interest or fees payable by such
Revolving Credit Lender in order to maintain its
Libor Loans.
(ii)
Default by any Borrower in making a borrowing or
conversion after the Lead Borrower has given (or is
deemed to have given) a request for a
-34-
<PAGE>
Revolving Credit Loan or a request to convert a
Revolving Credit
Loan from one applicable interest
rate to another.
(iii) The
making of any payment on a Libor Loan or the
making of any conversion of any such Loan to a Base
Margin Loan on a day that is not the last day of the
applicable Interest Period with respect thereto.
(g) At least 5
Business Days prior to the first date on which
interest or fees are payable hereunder for
the account of any Lender, each
Lender that is not incorporated under the
laws of the United States of America
or a state thereof (herein, a "Foreign
Lender") agrees that it will deliver to
each of the Borrower and the Administrative
Agent two duly completed copies of
either U.S. Internal Revenue Service Form
W-8BEN or Form W-8ECI (or any
subsequent versions thereof or successors
thereof), or, in the case of a Foreign
Lender claiming exemption from U.S. federal
withholding tax under Section 871(h)
or 881(c) of the Code with respect to
payments of "portfolio interest", a
statement substantially in the form of
Exhibit I (any such certificate an
"Exemption Certificate") and a Form W-8BEN
(or any subsequent versions thereof
or successors thereto), certifying in
either case that such Foreign Lender is
entitled to receive payments under this
Agreement and the Notes without
deduction or withholding of any United
States federal income taxes. Each Foreign
Lender which so delivers a Form W-8BEN or
Form W-8ECI further undertakes to
deliver to each of the Borrower and the
Administrative Agent two additional
copies of such form (or a successor form)
on or before the date that such form
expires or becomes obsolete or after the
occurrence of any event requiring a
change in the most recent form so delivered
by it, and such amendments thereto
or extensions or renewals thereof as may be
reasonably requested by the Borrower
or the Administrative Agent, in each case
certifying that such Foreign Lender is
entitled to receive payments under this
Agreement and the Notes without
deduction or withholding of any United
States federal income taxes, unless an
event (including without limitation any
change in treaty, law or regulation) has
occurred prior to the date on which any
such delivery would otherwise be
required which renders all such forms
inapplicable or which would prevent such
Foreign Lender from duly completing and
delivering any such form with respect to
it and such Foreign Lender advises the
Borrower and the Administrative Agent
that it is not capable of receiving
payments without any deduction or
withholding of United States federal income
tax.
2-10. INTEREST ON REVOLVING CREDIT LOANS.
(a) Each
Revolving Credit Loan shall bear interest at the Base
Margin Rate unless timely notice is given
(as provided in Section 2-5) that the
subject Revolving Credit Loan (or a portion
thereof) is, or is to be converted
to, a Libor Loan.
(b) Each
Revolving Credit Loan which consists of a Libor Loan
shall bear interest at the applicable Libor
Rate.
(c) Subject
to, and in accordance with, the provisions of this
Agreement, the Lead Borrower may cause all
or a part of the unpaid principal
balance of the Loan Account to bear
interest at the Base Margin Rate or the
Libor Rate as specified from time to time
by the Lead Borrower.
-35-
<PAGE>
(d) The Lead
Borrower shall not select, renew, or convert any
interest rate for a Revolving Credit Loan
such that, in addition to interest at
the Base Margin Rate, there are more than
six (6) Libor Rates applicable to the
Revolving Credit Loans at any one time.
(e) The
Borrowers shall pay accrued and unpaid interest on each
Revolving Credit Loan in arrears as
follows:
(i) On the
applicable Interest Payment Date for that
Revolving Credit Loan.
(ii)
On the Termination Date and on the End Date.
(iii)
During the existence of any Event of Default, with
such frequency as may be determined by the
Administrative Agent.
(f) During the
existence of any Event of Default (and whether or
not the Administrative Agent exercises the
Administrative Agent's rights on
account thereof), all Revolving Credit
Loans shall bear interest, at the option
of the Administrative Agent or at the
instruction of the Majority Lenders, at a
rate which is the aggregate of the rate
otherwise in effect plus two percent
(2%) per annum.
(g) Interest
shall be calculated (i) with respect to Base Margin
Loans, on the basis of a 365 day year and
for actual days elapsed, and (ii) with
respect to Libor Loans, on the basis of a
360 day year and for actual days
elapsed. L/C Fees and Unused Fees shall be
calculated on the basis of a 360 day
year and for actual days elapsed.
2-11. VOLUNTARY REDUCTION OF COMMITMENT AND REVOLVING CREDIT
CEILING.
The Lead Borrower may reduce, or terminate,
the Revolving Credit Commitments and
the Revolving Credit Ceiling, in whole or
in part from time to time, by
furnishing three (3) Business Days' written
notice to the Administrative Agent,
whereupon the Revolving Credit Commitments
of the Revolving Credit Lenders shall
be reduced pro rata in accordance with
their respective Revolving Credit
Commitment Percentages. Upon the effective
date of any such reduction, (a) the
Borrowers shall pay to the Administrative
Agent for the benefit of the Revolving
Credit Lenders the accrued Unused Fee as of
the date of such reduction or
termination, and (b) the Borrowers shall
pay to the Administrative Agent for the
benefit of the Revolving Credit Lenders any
amounts required under Section
2-9(b) and Section 2-9(f) hereof. Any
partial reduction of the Revolving Credit
Commitments or the Revolving Credit Ceiling
shall be in a minimum amount equal
to $1,000,000.00. No reduction or
termination of the Revolving Credit
Commitments or the Revolving Credit Ceiling
may be reinstated. If the Revolving
Credit Commitments have been terminated in
full by the Borrowers and all
Liabilities (excluding any contingent
Liabilities not then due and payable) have
been paid in full in cash (or, in
connection with outstanding L/Cs, cash
collateral therefor has been provided to
the Administrative Agent in an amount
determined by the Administrative Agent to
be equal to 105% of the aggregate
amount thereof), as determined by the
Administrative Agent acting in a
commercially reasonable manner, then the
Borrower shall have the right to
terminate this Agreement and such
termination date shall constitute the End
Date.
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2-12. REVOLVING CREDIT COMMITMENT FEE. In consideration of the
commitment to make loans and advances to
the Borrowers under the Revolving
Credit, and to maintain sufficient funds
available for such purpose, there has
been earned and the Borrowers shall pay the
"REVOLVING CREDIT COMMITMENT FEE"
(so referred to herein) in the amount and
payable as provided in the Fee Letter.
2-13. ADMINISTRATIVE AGENT'S FEE. In addition to any other fee
or
expense to be paid by the Borrowers on
account of the Revolving Credit, the Lead
Borrower and the Administrative Agent shall
negotiate in good faith an
Administrative Agent's fee (the
"ADMINISTRATIVE AGENT'S FEE") at such time as
there is more than one Revolving Credit
Lender hereunder. As of the Closing
Date, the Administrative Agent's Fee is
zero.
2-14. UNUSED FEE. The Unused Fee shall be paid in arrears, on the
first
day of each quarter after the execution of
this Agreement and on the Termination
Date or, if earlier or on the same date,
the End Date.
2-15. PROCEDURES FOR ISSUANCE OF L/CS.
(a) The Lead
Borrower may request that the Administrative Agent
cause the issuance by the Issuer of L/Cs
for the account of any Borrower. Each
such request shall be in such manner as may
from time to time be acceptable to
the Administrative Agent.
(b) The Issuer
shall issue any L/C so requested by the Lead
Borrower, provided that, at the time that
the request is made, the Revolving
Credit has not been suspended as provided
in Section 2-5(g) and if so issued:
(i) The
aggregate Stated Amount of all L/Cs then
outstanding, does not exceed Fifteen Million Dollars
and No Cents ($15,000,000.00).
(ii)
The expiry of the L/C is not later than the
following:
(A) Standbys:
One (1) year from initial issuance
(subject to annual renewal in the sole
discretion of the Issuer, so long as the
conditions to issuance are then met).
(B)
Documentaries: One hundred eighty (180) days
from issuance;
and if the expiry of any L/C is later than the
Maturity Date, the Borrowers shall be required to
place cash collateral with the Issuer equal to 105%
of the face amount of such L/C or provide to the
Issuer a backing letter of credit satisfactory to the
Issuer on or before the Maturity Date.
(iii) An
OverLoan will not result from the issuance of the
subject L/C.
(c) Each
Borrower shall execute such documentation to apply for
and support the issuance of an L/C as may
be required by the Issuer.
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(d) There
shall not be any recourse to, nor liability of, the
Administrative Agent or any Revolving
Credit Lender on account of
(i) Any delay
or refusal by an Issuer to issue an L/C;
(ii)
Any action or inaction of an Issuer on account of or
in respect to, any L/C.
(e) The
Borrowers shall reimburse the Issuer for the amount of any
honoring of a drawing under an L/C no later
than the date following the date on
which the Issuer notifies the Lead Borrower
that such honoring will take place
(or if later, the date on which such
honoring takes place, unless the Issuer has
not notified the Lead Borrower thereof
until the date of such honoring, in which
event such reimbursement shall be made no
later than the date following the date
of such honoring). The Lead Borrower may
determine, subject to the conditions to
borrowing set forth herein, that such
payment be financed with a Revolving Loan,
and if the Borrowers do not reimburse the
Issuer for such amount on the due date
thereof, the Administrative Agent, without
the request of any Borrower, may
advance under the Revolving Credit (and
charge to the Loan Account) the amount
of any honoring of any L/C and other amount
for which any Borrower, the Issuer,
or the Revolving Credit Lenders become
obligated on account of, or in respect
to, any L/C. Such advance shall be made
whether or not any Default exists or
such advance would result in an OverLoan.
Such action shall not constitute a
waiver of the Administrative Agent's rights
under Section 2-9(b) hereof.
2-16. FEES FOR L/CS.
(a) The
Borrowers shall pay to the Administrative Agent (for the
benefit of the Revolving Credit Lenders) a
fee, on account of L/Cs, the issuance
of which had been procured by the
Administrative Agent, quarterly in arrears,
and on the Termination Date and on the End
Date, equal to the following
(i) With
respect to Standby L/Cs at a rate per annum
equal to the Applicable Margin for Libor Loans at the
time of calculation of such fees multiplied by the
weighted average Stated Amount of all such Standby
L/Cs outstanding during the period in respect of
which such fee is being paid; and
(ii)
With respect to all Documentary L/Cs: At a rate per
annum equal to the Applicable Margin for Libor Loans
at the
time of calculation of such fees multiplied by
the weighted average Stated Amount of all such
Documentary L/Cs outstanding during the period in
respect of which such fee is being paid;
provided that, during the existence of any
Event of Default, such fees shall be
increased by two percent (2%) per
annum.
(b) In
addition to the fees to be paid as provided in Subsection
2-16(a), above, the Borrowers shall pay to
the Administrative Agent (or to the
Issuer, if so requested by Administrative
Agent), on demand, all usual and
customary fronting, issuance,
processing,
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negotiation, amendment, and administrative
fees and other amounts customarily
charged by the Issuer on account of, or in
respect to, any L/C. Fronting fees
shall be payable quarterly in arrears on
the first day of each fiscal quarter in
which an L/C is outstanding.
(c) If any
change in Applicable Law shall either:
(i) 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 any Revolving
Credit Lender or any Issuer has an obligation to lend
to fund drawings under any L/C; or
(ii)
impose on any Issuer any other condition or
requirements relating to any such L/Cs;
and the result of any event referred to in
Section 2-16(c)(i) or 2-16(c)(ii),
above, shall be to increase the cost to any
Revolving Credit 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 that Revolving Credit
Lender's or Issuer's letter of credit
customers of the aggregate of such cost
increases resulting from such events),
then, within then (10) Business Days of
receipt from the Administrative Agent and
delivery by the Administrative Agent
to the Lead Borrower of a certificate of an
officer of the subject Revolving
Credit Lender or the subject Issuer
describing such change in law, executive
order, regulation, directive, or
interpretation thereof, its effect on such
Revolving Credit Lender or such Issuer, and
the basis for determining such
increased costs and their allocation, the
Borrowers shall, upon demand therefor,
pay to the Administrative Agent, from time
to time as specified by the
Administrative Agent, such amounts as shall
be sufficient to compensate the
subject Revolving Credit Lender or the
subject Issuer for such increased cost
relating to the applicable L/Cs. Any
Revolving Credit Lender's or any Issuer's
determination of costs incurred under
Section 2-16(c)(i) or 2-16(c)(ii) above,
and the allocation, if any, of such costs
among the Borrowers and other letter
of credit customers of such Revolving
Credit 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 Borrowers absent manifest
error. Failure or delay on the part of the
Administrative Agent or any Lender to
demand compensation pursuant to this
Section 2-16(c) within three (3) months of
the increased cost or reduction in return
shall constitute a waiver of the
applicable Lender's right to demand such
compensation.
2-17. CONCERNING L/CS.
(a) None of
the Issuer, the Issuer's correspondents, any Revolving
Credit Lender, the Administrative Agent, or
any advising, negotiating, or paying
bank with respect to any L/C shall be
responsible in any way for:
(i) The
performance by any beneficiary under any L/C of
that beneficiary's obligations to any Borrower.
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(ii)
The form, sufficiency, correctness, genuineness,
authority of any person signing; falsification; 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, unless
a final judicial determination has been or is made
(in a proceeding in which the Administrative Agent
has had an opportunity to be heard) that the
Administrative Agent had acted in a grossly negligent
manner or in willful misconduct.
(b) 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.
(c) Unless
otherwise agreed to, in the particular instance, each
Borrower hereby authorizes any Issuer
to:
(i) Select an
advising bank, if any.
(ii)
Select a paying bank, if any.
(iii)
Select a negotiating bank.
(d) All
directions, correspondence, and funds transfers relating
to any L/C are at the risk of the
Borrowers, unless and to the extent a final
judicial determination has been or is made
(in a proceeding in which the
Administrative Agent has had an opportunity
to be heard) that the Administrative
Agent had acted in a grossly negligent
manner or in willful misconduct. The
Issuer shall have discharged the Issuer's
obligations under any L/C which, or
the drawing under which, includes payment
instructions, by the initiation of the
method of payment called for in, and in
accordance with, such instructions (or
by any other commercially reasonable and
comparable method). None of the
Administrative Agent, any Revolving Credit
Lender, or the Issuer shall have any
responsibility for any inaccuracy,
interruption, error, or delay in transmission
or delivery by post, telegraph or cable, or
for any inaccuracy of translation.
(e) The
Administrative Agent's, each Revolving Credit Lender's,
and the Issuer's rights, powers, privileges
and immunities specified in or
arising under this Agreement are in
addition to any heretofore or at any time
hereafter otherwise created or arising,
whether by statute or rule of law or
contract.
(f) Except to
the extent otherwise expressly provided hereunder or
agreed to in writing by the Issuer and the
Lead Borrower, documentary L/Cs will
be governed by the Uniform Customs and
Practice for Documentary Credits,
International Chamber of Commerce,
Publication No. 500, and standby L/Cs will be
governed by International Standby Practices
ISP98 (adopted by the International
Chamber of Commerce on April 6, 1998) and
any respective subsequent revisions
thereof.
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(g) The
obligations of the Borrowers under this Agreement with
respect to L/Cs are absolute,
unconditional, and irrevocable and shall be
performed strictly in accordance with the
terms hereof under all circumstances,
whatsoever including, without limitation,
the following:
(i) Any lack
of validity or enforceability or
restriction, restraint, or stay in the enforcement of
this Agreement, any L/C, or any other agreement or
instrument relating thereto.
(ii)
Any Borrower's consent to any amendment or waiver of,
or consent to the departure from, any L/C.
(iii) The
existence of any claim, set-off, defense, or
other right which any Borrower may have at any time
against the beneficiary of any L/C.
(iv)
Any honoring of a drawing under any L/C, which
drawing possibly could have been dishonored due to a
non-material technicality based upon a strict
construction of the terms of the L/C, unless a final
judicial determination has been or is made (in a
proceeding in which the Administrative Agent has had
an opportunity to be heard) that the Administrative
Agent had acted in a grossly negligent manner or in
willful misconduct.
2-18. CHANGED CIRCUMSTANCES.
(a) The
Administrative Agent may advise the Lead Borrower that the
Administrative Agent has made the good
faith determination (which determination
shall be final and conclusive) of any of
the following:
(i)
Adequate
and fair means do not exist for ascertaining
the rate for Libor Loans.
(ii)
The continuation of or conversion of any Revolving
Credit Loan to a Libor Loan has been made
impracticable or unlawful by the occurrence of a
contingency that materially and adversely affects the
applicable market or the compliance by the
Administrative Agent or any Revolving Credit Lender
in good faith with any Applicable Law.
(iii) The
indices on which the interest rates for Libor
Loans are based shall no longer represent the
effective cost to the Administrative Agent or any
Revolving Credit Lender for U.S. dollar deposits in
the interbank market for deposits in which it
regularly participates.
(b) In the
event that the Administrative Agent advises the Lead
Borrower of an occurrence described in
Section 2-18(a), then, until the
Administrative Agent notifies the Lead
Borrower that the circumstances giving
rise to such notice no longer apply:
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(i) The
obligation of the Administrative Agent or each
Revolving Credit Lender to make loans of the type
affected by such changed circumstances or to permit
the Lead Borrower to select the affected interest
rate as otherwise applicable to any Revolving Credit
Loans shall be suspended.
(ii)
Any notice which the Lead Borrower had given the
Administrative Agent with respect to any Libor Loan,
the time for action with respect to which has not
occurred prior to the Administrative Agent's having
given notice pursuant to Section 2-18(a), shall be
deemed at the option of the Administrative Agent to
not having been given.
2-19. DESIGNATION OF LEAD BORROWER AS BORROWERS' AGENT.
(a) Each
Borrower hereby irrevocably designates and appoints the
Lead Borrower as that Borrower's agent to
obtain Revolving Credit Loans and L/Cs
under the Revolving Credit, the proceeds of
which shall be available to each
Borrower for those uses as those set forth
in Section 2-1(d). As the disclosed
principal for its agent, each Borrower
shall be obligated to the Administrative
Agent and each Revolving Credit Lender on
account of Revolving Credit Loans so
made and L/Cs so issued under the Revolving
Credit as if made directly by the
Revolving Credit Lenders to that Borrower,
notwithstanding the manner by which
such Revolving Credit Loans and L/Cs are
recorded on the books and records of
the Lead Borrower and of any Borrower.
(b) Each
Borrower recognizes that credit available to it under the
Revolving Credit is in excess of and on
better terms than it otherwise could
obtain on and for its own account and that
one of the reasons therefor is its
joining in the credit facility contemplated
herein with all other Borrowers.
Consequently, each Borrower hereby assumes
and agrees to discharge all
Liabilities of all other Borrowers as if
the Borrower so assuming were each
other Borrower.
(c) The Lead
Borrower shall act as a conduit for each Borrower
(including itself, as a "Borrower") on
whose behalf the Lead Borrower has
requested a Revolving Credit Loan.
(d) The
proceeds of each loan and advance provided under the
Revolving Credit which is requested by the
Lead Borrower shall be deposited into
the Primary Blocked Account or as otherwise
indicated by the Lead Borrower. The
Lead Borrower shall cause the transfer of
the proceeds thereof to the (those)
Borrower(s) on whose behalf such loan and
advance was obtained. Neither the
Administrative Agent nor any Revolving
Credit Lender shall have any obligation
to see to the application of such
proceeds.
(e)
[Reserved.]
(f) In the
event that the Administrative Agent is entitled to
forgo the procedures included herein
pursuant to which Revolving Credit Loans
and L/Cs are to be channeled through the
Lead Borrower and determines to do so,
then the Administrative Agent may designate
one or more of the Borrowers to
fulfill the financial and other reporting
requirements otherwise imposed herein
upon the Lead Borrower.
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(g) Each of
the Borrowers shall remain liable to the
Administrative Agent and the Revolving
Credit Lenders for the payment and
performance of all Liabilities (which
payment and performance shall continue to
be secured by all Collateral granted by
each of the Borrowers) notwithstanding
any determination by the Administrative
Agent to cease making Revolving Credit
Loans or L/Cs to or for the benefit of any
Borrower.
(h) The
authority of the Lead Borrower to request loans on behalf
of, and to bind, the Borrowers, shall
continue during the term of this
Agreement.
2-20. LENDERS' COMMITMENTS
(a) Subject to
Section 15-1 (which provides for assignments and
assumptions of commitments), each Revolving
Credit Lender's "REVOLVING CREDIT
COMMITMENT PERCENTAGE", and "REVOLVING
CREDIT COMMITMENT" (respectively so
referred to herein) is set forth on EXHIBIT
2-20, annexed hereto.
(b) The
obligations of each Revolving Credit Lender are several
and not joint. No Revolving Credit Lender
shall have any obligation to make any
loan or advance under the Revolving Credit
in excess of the lesser of the
following:
(i) That
Revolving Credit Lender's Revolving Credit
Commitment Percentage of the subject loan or advance
or of Availability.
(ii)
that Revolving Credit Lender's Revolving Credit
Commitment.
(c) No
Revolving Credit Lender shall have any liability to the
Borrowers on account of the failure of any
other Revolving Credit Lender to
provide any loan or advance under the
Revolving Credit nor any obligation to
make up any shortfall which may be created
by such failure.
(d) The
Revolving Credit Commitments, Revolving Credit Commitment
Percentages, and identities of the
Revolving Credit Lenders may be changed, from
time to time by the reallocation or
assignment of Revolving Credit Commitments
and Revolving Credit Commitment Percentages
amongst the Revolving Credit Lenders
or with other Persons who determine to
become "Revolving Credit Lenders" in
accordance with the provisions of Article
15 hereof.
(e) Upon
written notice given the Lead Borrower from time to time
by the Administrative Agent, of any
assignment or allocation referenced in
Section 2-20(d):
(i) Each
Borrower shall execute one or more replacement
Revolving Credit Notes to reflect such changed
Revolving Credit Commitments, Revolving Credit
Commitment Percentages, and identities and shall
deliver such replacement Revolving Credit Notes to
the Administrative Agent (which promptly thereafter
shall deliver to the Lead Borrower the Revolving
Credit Notes so replaced) provided, however, in the
event
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that a Revolving Credit Note is to be exchanged
following its acceleration or the entry of an order
for relief under the Bankruptcy Code with respect to
any Borrower, the Administrative Agent, in lieu of
causing the Borrowers to execute one or more new
Revolving Credit Notes, may issue the Administrative
Agent's Certificate
confirming the resulting
Revolving Credit Commitments and Revolving Credit
Commitment Percentages.
(ii)
Such change shall be effective from the effective
date specified in such written notice and any Person
added as a Revolving Credit Lender shall have all
rights and privileges of a Revolving Credit Lender
hereunder
thereafter as if such Person had been a
signatory to this Agreement and any other Loan
Document to which a Revolving Credit Lender is a
signatory and any Person removed as a Revolving
Credit Lender shall be relieved of any obligations or
responsibilities of a Revolving Credit Lender
hereunder thereafter.
2-21. REPLACEMENT OF REVOLVING CREDIT LENDER
(a) If any
Revolving Credit Lender requests compensation under
Sections 2-16(c) or 18-8, then such
Revolving Credit Lender shall use its
reasonable best efforts to designate a
different lending office for funding or
booking L/Cs hereunder or to assign its
rights and obligations hereunder to
another of its offices, branches or
affiliates, if, in the judgment of such
Revolving Credit Lender, such designation
or assignment (i) would eliminate or
reduce amounts payable pursuant to Sections
2-16(c) or 18-8, in the future and
(ii) would not subject such Revolving
Credit Lender to any unreimbursed cost or
expense and would not otherwise be
disadvantageous to such Revolving Credit
Lender. The Borrowers hereby agree to pay
all reasonable costs and expenses
incurred by any Revolving Credit Lender in
connection with any such designation
or assignment.
(b) If any
Revolving Credit Lender requests compensation under
Sections 2-16(c) or 18-8, then the
Borrowers may, at their sole expense and
effort, upon notice to such Revolving
Credit Lender and the Administrative
Agent, require such Revolving Credit Lender
to assign and delegate, without
recourse (in accordance with and subject to
the restrictions contained in
Article 15), all its interests, rights and
obligations under this Agreement to
an assignee that shall assume such
obligations (which assignee may be another
Revolving Credit Lender, if a Revolving
Credit Lender accepts such assignment),
provided that (i) if such assignee is not
an existing Revolving Credit Lender,
the Borrowers shall have received the prior
written consent of the
Administrative Agent and the Issuer, which
consent shall not unreasonably be
delayed or withheld, (ii) such Revolving
Credit Lender shall have received
payment of an amount equal to the
outstanding principal of its Revolving Credit
Loans and participations in unreimbursed
drawings under L/Cs, accrued interest
thereon, accrued fees and all other amounts
payable to it hereunder, from the
assignee (to the extent of such outstanding
principal and accrued interest and
fees) or the Borrowers (in the case of all
other amounts) and (iii) such
assignment will result in a reduction in
such compensation, payments or costs. A
Revolving Credit Lender shall not be
required to make any such assignment and
delegation if, prior thereto, as a result
of a waiver by
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such Revolving Credit Lender or otherwise,
the circumstances entitling the
Borrowers to require such assignment and
delegation cease to apply.
ARTICLE 3 - CONDITIONS PRECEDENT:
As a condition to the effectiveness of this Agreement, each of
the
documents respectively described in
Sections 3-1 through and including 3-5,
(each in form and substance satisfactory to
the Administrative Agent) shall have
been delivered to the Administrative Agent,
and the conditions respectively
described in Sections 3-6 through and
including 3-18, shall have been satisfied:
3-1. CORPORATE DUE DI
