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Exhibit 10(q)
TERM LOAN AND SECURITY AGREEMENT, DATED AS OF NOVEMBER 19, 1997, AMONG THE
REGISTRANT, VARIOUS LENDERS PARTICIPATING THERETO, AND BANKBOSTON RETAIL
FINANCE, INC., AS AGENT.
Agent: BankBoston Retail Finance, Inc.
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Lenders: BankBoston Retail Finance, Inc.
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Xxxxxxx Xxxxx Credit Partners
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxxx Brothers Retail Partners
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
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TERM LOAN AND SECURITY AGREEMENT
~~~~~~~~~~~~~~~~~~
BANKBOSTON RETAIL FINANCE INC.
~~~~~~~~~~~~~~~~~~
SUN TELEVISION AND APPLIANCES, INC.
............
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TABLE OF CONTENTS
ARTICLE 1 - DEFINITIONS.
ARTICLE 2 - THE TERM LOAN
2-1. Commitment to Make Term Loan
2-2. Use of Proceeds of Term Loan
2-3. The Term Note
2-4. Interest on Term Loan
2-5. Repayment of Term Loans
2-6. Optional Prepayments of Term Loans
2-7. Term Loan Commitment Fee
2-8. Indemnity
2-9. Increased Costs
ARTICLE 3 - CONDITIONS PRECEDENT.
3-1. Corporate Due Diligence.
3-2. Opinion.
3-3. Landlord Waivers.
3-4. Intercreditor Agreement
3-5. Mortgages/Deeds of Trust
3-6. Real Estate Requirements
3-7. Warrant
3-8. Additional Documents.
3-9. Officers' Certificates.
3-10. Due Diligence
3-11. Representations and Warranties.
3-12. Minimum Excess Availability.
3-13. No Suspension Event.
3-14. No Adverse Change.
3-15. Perfection of Liens
3-16. Litigation
3-17. Consents
3-18. Fees and Expenses
3-19. Capital Markets
ARTICLE 4 - GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
4-1. Payment and Performance of Liabilities.
4-2. Due Organization - Corporate Authorization - No
Conflicts.
4-3. Trade Names.
4-4. Locations.
4-5. Title to Assets.
4-6. Indebtedness
4-7. Insurance Policies.
4-8. Licenses
4-9. Leases; Real Estate.
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4-10. Requirements of Law
4-11. Maintain Properties
4-12. Pay Taxes.
4-13. No Margin Stock.
4-14. ERISA
4-15. Hazardous Materials
4-16. Litigation
4-17. Dividends or Investments
4-18. Loans
4-19. Protection of Assets
4-20. Line of Business
4-21. Affiliate Transactions
4-22. Executive Pay.
4-23. Additional Assurances
4-24. Adequacy of Disclosure
4-25. Other Covenants
ARTICLE 5 - REPORTING REQUIREMENTS / FINANCIAL COVENANTS
5-1. Maintain Records
5-2. Access to Records
5-3. Prompt Notice to The Lender
5-4 Weekly Reports
5-5. Monthly Reports
5-6. Quarterly Reports
5-7. Annual Reports
5-8. Officers' Certificates
5-9. Inventories, Appraisals, and Audits
5-10. Additional Financial Information
5-11. Financial Performance Covenants
ARTICLE 6 - USE AND COLLECTION OF COLLATERAL.
6-1. Use of Inventory Collateral
6-2. Inventory Quality
6-3. Adjustments and Allowances
6-4. Validity of Accounts
6-5. Notification to Account Debtors
ARTICLE 7 - GRANT OF SECURITY INTEREST
7-1. Grant of Security Interest
7-2. Extent and Duration of Security Interest
7-3. Mortgages
ARTICLE 8 - LENDER AS BORROWER'S ATTORNEY-IN-FACT.
8-1. Appointment as Attorney-In-Fact
8-2. No Obligation to Act
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ARTICLE 9 - EVENTS OF DEFAULT.
9-1. Failure to Pay Term Loan
9-2. Failure To Make Other Payments
9-3. Failure to Perform Covenant or Liability (No Grace
Period)
9-4. Failure to Perform Covenant or Liability (Grace
Period)
9-5. Misrepresentation
9-6. Revolving Credit Default
9-7. Default Under Other Agreements
9-8. Casualty Loss. Non-Ordinary Course Sales
9-9. Judgment. Restraint of Business
9-10. Business Failure
9-11. Bankruptcy
9-12. Default by Guarantor or Related Entity
9-13. Indictment - Forfeiture
9-14. Termination of Guaranty
9-15. Challenge to Loan Documents
9-16. Executive Management.
9-17. Change in Control.
9-18. Material Adverse Change
ARTICLE 10 - RIGHTS AND REMEDIES UPON DEFAULT
10-1. Rights of Enforcement
10-2. Sale of Collateral
10-3. Occupation of Business Location
10-4. Grant of Nonexclusive License.
10-5. Assembly of Collateral
10-6. Rights and Remedies
ARTICLE 11 - NOTICES.
11-1. Notice Addresses
11-2. Notice Given
ARTICLE 12 - GENERAL
12-1. Protection of Collateral
12-2. Successors and Assigns; Intercreditor Agreement.
12-3. Severability
12-4. Amendments. Course of Dealing
12-5. Power of Attorney
12-6. Application of Proceeds
12-7. Costs and Expenses
12-8. Copies and Facsimiles
12-9. Massachusetts Law
12-10. Consent to Jurisdiction
12-11. Indemnification
12-12. Rules of Construction.
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12-13. Intent
12-14. Right of Set-Off
12-15. Maximum Interest Rate.
12-16. Waivers.
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EXHIBITS
1-1 : Allocated Loan Value
1-2 : Real Estate
2-3 : Term Note
4-2 : Related Entities
4-3 : Trade Names
4-4 : Locations
4-5 : Encumbrances
4-6 : Indebtedness
4-7 : Insurance Policies
4-9 : Leases
4-12 : Taxes
4-16 : Litigation
5-11 : Financial Performance Covenants
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================================================================================
TERM LOAN AND SECURITY AGREEMENT
================================================================================
November 19, 1997
THIS AGREEMENT is made between
BankBoston Retail Finance Inc. (the "LENDER"), a Delaware
corporation with offices at 00 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxxxxx
00000, and
Sun Television and Appliances, Inc. (hereinafter, the
"BORROWER"), an Ohio corporation with its principal executive offices
at 0000 Xxxx Xxxx, Xxxxxxxxx, Xxxx 00000
in consideration of the mutual covenants contained herein and benefits to be
derived herefrom,
WITNESSETH:
ARTICLE 1 - DEFINITIONS.
As herein used, the following terms have the following meanings or are
defined in the section of the within Agreement so indicated:
"ACCOUNTS" and "ACCOUNTS RECEIVABLE" include, without limitation,
"accounts" as defined in the UCC, and also all: accounts,
accounts receivable, credit card receivables, notes, drafts,
acceptances, and other forms of obligations and receivables
and rights to payment for credit extended and for goods sold
or leased, or services rendered, whether or not yet earned by
performance; all "contract rights" as formerly defined in the
UCC; all Inventory which gave rise thereto, and all rights
associated with such Inventory, including the right of
stoppage in transit; all reclaimed, returned, rejected or
repossessed Inventory (if any) the sale of which gave rise to
any Account.
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"ACCOUNT DEBTOR": Has the meaning given that term in the UCC.
"AFFILIATE": With respect to any two Persons, a relationship in which
(a) one holds, directly or indirectly, not less than Twenty
Five Percent (25%) of the capital stock, beneficial interests,
partnership interests, or other equity interests of the other;
or (b) one has, directly or indirectly, Control of the other;
or (c) not less than Twenty Five Percent (25%) of their
respective ownership is directly or indirectly held by the
same third Person.
"ALLOCATED LOAN VALUE": As to any parcel of Real Estate, the amount set
forth in EXHIBIT 1-1 hereto, as such EXHIBIT may be amended to
reflect the acquisition of other Real Estate by the Borrower.
"BANKRUPTCY CODE": Title 11, U.S.C., as amended from time to time.
"BORROWER": Is defined in the Preamble.
"BUSINESS DAY": Any day other than (a) a Saturday or Sunday; (b) any
day on which banks in Boston, Massachusetts or Groveport,
Ohio, generally are not open to the general public for the
purpose of conducting commercial banking business; or (c) a
day on which the Lender is not open to the general public to
conduct business.
"BUSINESS PLAN": The Borrower's business plan annexed hereto as EXHIBIT
5-11(b) and any revision, amendment or update of such business
plan.
"CAPITAL EXPENDITURES": The expenditure of funds or the incurrence of
liabilities which may be capitalized in accordance with GAAP.
"CAPITAL LEASE": Any lease which may be capitalized in accordance with
GAAP.
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"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 20% or more of the issued and outstanding
capital stock of the Borrower having the right, under ordinary
circumstances, to vote for the election of directors of the
Borrower.
(b) More than half of the persons who were directors
of the 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 the within Agreement was executed), cease,
for any reason other than death or disability, to be directors
of the Borrower.
"CHATTEL PAPER": Has the meaning given that term in the UCC.
"COLLATERAL": Is defined in Section 7-1 and includes the Real Estate as
provided in Section 7-3.
"CONTROL": A Person or group of Persons (the "Controlling Person")
shall be deemed to Control another Person if such Controlling Person
possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such other Person, whether
through ownership of voting securities, by contract, or otherwise.
Included among such powers, with respect to a corporation, are power to
cause any of following: (a) the election of a majority of its Board of
Directors; (b) the issuance of additional shares of its common stock;
(c) the issuance and designation of rights and shares of its preferred
stock (if any); (d) the distribution and timing of dividends; (e) the
award of performance bonuses to its management; (f) the termination or
severance of officers or key employees; and (g) all or any similar
matters.
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"COSTS OF COLLECTION" includes, without limitation, all attorneys'
reasonable fees and reasonable out-of-pocket expenses incurred
by the Lender's and any Participant's attorneys, and all
reasonable costs incurred by the Lender and any Participant in
the administration of the Liabilities and/or the Loan
Documents, including, without limitation, reasonable costs and
expenses associated with travel on behalf of the Lender and
any Participant, which costs and expenses are directly or
indirectly related to or in respect of the Lender's or such
Participant'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 Rights and
Remedies and/or any of the rights and remedies 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), but excluding, in any event
those costs and expenses for which the Borrower is not
responsible under Section 5-9 hereof. The Costs of Collection
are Liabilities, and at the Lenders's option may bear
interest, if not paid within Three (3) Business Days after
demand, at the rate which the Lender is then charging the
Borrower hereunder as if such had been lent, advanced, and
credited by the Lender to, or for the benefit of, the
Borrower.
"DEPOSIT ACCOUNT": Has the meaning given that term in the UCC.
"DOCUMENTS": Has the meaning given that term in the UCC.
"DOCUMENTS OF TITLE": Has the meaning given that term in the UCC.
"EMPLOYEE BENEFIT PLAN": As defined in ERISA.
"ENCUMBRANCE": Each of the following:
(a) security interest, mortgage, pledge,
hypothecation,
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lien, attachment, or charge of any kind (including any
agreement to give any of the foregoing); 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 or which constitutes an interest in
property to secure an obligation; 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.
"ENVIRONMENTAL LAWS": (a) Any and all federal, state, local or
municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees or requirements which regulate or
relate to, or impose 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; and
(b) the common law relating to damage to Persons
or property from Hazardous Materials.
"EQUIPMENT" includes, without limitation, "equipment" as defined in the
UCC, and also all motor vehicles, rolling stock, machinery,
office equipment, plant equipment, tools, dies, molds, store
fixtures, furniture, and other goods, property, and assets
which are used and/or were purchased by the Borrower for use
in the operation or furtherance of the Borrower's business,
and any and all accessions or additions thereto, and
substitutions therefor.
"ERISA": The Employee Retirement Security Act of 1974, as amended.
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"ERISA AFFILIATE": Any Person which is under common control with the
Borrower within the meaning of Section 4001 of ERISA or is
part of a group which includes the 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.
"EXECUTIVE AGREEMENT": Any agreement or understanding (whether or not
written) to which the Borrower is a party or by which the
Borrower may be bound, which agreement or understanding
relates to Executive Pay.
"EXECUTIVE OFFICER": Each of X. Xxxxxx Xxxx, Xxxxxx Xxx, and any other
Person who (without regard to title) is the successor to any
of the foregoing or who exercises a substantial portion of the
authority being exercised, at the execution of the within
Agreement, by any of the foregoing or a combination of such
authority of more than one of the foregoing or who otherwise
has Control of the Borrower.
"EXECUTIVE PAY": All salary, bonuses, and other value directly or
indirectly provided by or on behalf of the Borrower to or for
the benefit of any Executive Officer or any Affiliate, spouse,
parent, or child of any Executive Officer.
"FIXTURES": Has the meaning given that term in the UCC.
"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, provided, however, in the event of a Material
Accounting Change, then unless otherwise specifically agreed
to by the
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Lender, (a) the Borrower's compliance with the financial
performance covenants imposed pursuant to Section 5-11 shall
be determined as if such Material Accounting Change had not
taken place and (b) the Borrower shall include, with its
monthly, quarterly, and annual financial statements a
schedule, certified by the Borrower's chief financial officer,
on which the effect of such Material Accounting Change to the
statement with which provided shall be described.
"GENERAL INTANGIBLES" includes, without limitation, "general
intangibles" as defined in the UCC; and also all: rights to
payment for credit extended; deposits; amounts due to the
Borrower; credit memoranda in favor of the Borrower; warranty
claims; tax refunds and abatements; insurance refunds and
premium rebates; all means and vehicles of investment or
hedging, including, without limitation, options, warrants, and
futures contracts; records; customer lists; telephone numbers;
goodwill; causes of action; judgments; payments under any
settlement or other agreement; literary rights; rights to
performance; royalties; license and/or franchise fees; rights
of admission; licenses; franchises; license agreements,
including all rights of the Borrower to enforce same; permits,
certificates of convenience and necessity, and similar rights
granted by any governmental authority; patents, patent
applications, patents pending, and other intellectual
property; internet addresses and domain names; developmental
ideas and concepts; proprietary processes; blueprints,
drawings, designs, diagrams, plans, reports, and charts;
catalogs; manuals; technical data; computer software programs
(including the source and object codes therefor), computer
records, computer software, rights of access to computer
record service bureaus, service bureau computer contracts, and
computer data; tapes, disks, semi-conductors chips and
printouts; trade secrets rights, copyrights, mask work rights
and interests, and derivative works and interests; user,
technical reference, and
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other manuals and materials; trade names, trademarks, service
marks, and all goodwill relating thereto; applications for
registration of the foregoing; and all other general
intangible property of the Borrower in the nature of
intellectual property; proposals; cost estimates, and
reproductions on paper, or otherwise, of any and all concepts
or ideas, and any matter related to, or connected with, the
design, development, manufacture, sale, marketing, leasing, or
use of any or all property produced, sold, or leased, by the
Borrower or credit extended or services performed, by the
Borrower, whether intended for an individual customer or the
general business of the Borrower, or used or useful in
connection with research by the Borrower.
"GOODS": Has the meaning given that term in the UCC.
"GUARANTORS": All subsidiaries of the Borrower, presently existing and
hereafter organized or acquired (nothing herein being deemed a
waiver of the provisions of Section 4-17 hereof).
"HAZARDOUS MATERIALS:" Any (a) hazardous materials, hazardous waste,
hazardous or toxic substances, petroleum products, which (as
to any of the foregoing) are defined or regulated as a
hazardous material in or under any Environmental Law and (b)
oil in any physical state.
"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) For the payment of the purchase price of goods or
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services deferred for more than Thirty (30) days beyond then
current trade terms provided to such person by the supplier of
such goods or services.
(c) 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).
(d) In connection with the sale or discount of
accounts receivable or chattel paper of such Person.
(e) On account of deposits or advances.
(f) As lessee under Capital Leases.
"INDEBTEDNESS" of any Person shall also include:
(x) Indebtedness of others secured by an
Encumbrance on any asset of such Person, whether or
not such Indebtedness is assumed by such Person.
(y) Any guaranty, endorsement, suretyship or
other undertaking pursuant to which that Person may
be liable on account of any obligation of any third
party.
(z) The Indebtedness of a partnership or
joint venture in which such Person is a general
partner or joint venturer.
"INDEMNIFIED PERSON": Is defined in Section 12-11.
"INSTRUMENTS": Has the meaning given that term in the UCC.
"INVESTMENT PROPERTY": Has the meaning given that term in the UCC.
"INVENTORY" includes, without limitation, "inventory" as defined in the
UCC and also all: packaging, advertising, and shipping
materials related to any of the foregoing, and all names or
marks affixed or to be affixed thereto for identifying or
selling the same; Goods held for sale or lease or furnished or
to be furnished under a contract or contracts of sale or
service by the Borrower, or used
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or consumed or to be used or consumed in the Borrower's
business; Goods of said description in transit: returned,
repossessed and rejected Goods of said description; and all
documents (whether or not negotiable) which represent any of
the foregoing.
"LEASE": Any lease or other agreement, no matter how styled or
structured, pursuant to which the Borrower is entitled to the
use or occupancy of any space.
"LENDER": Is defined in the Preamble hereto.
"LIABILITIES" (in the singular, "LIABILITY") includes, without
limitation, all and each of the following with respect to any
of the Loan Documents, whether now existing or hereafter
arising:
(a) Any and all direct and indirect liabilities,
debts, and obligations of the Borrower to the Lender or any
Participant hereunder, each of every kind, nature, and
description.
(b) Each obligation to repay any loan, advance,
indebtedness, note, obligation, overdraft, or amount now or
hereafter owing by the Borrower to the Lender or any
Participant hereunder (including all future advances whether
or not made pursuant to a commitment by the 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 Lender or any
Participant may hold against the Borrower.
(c) All notes and other obligations of the Borrower
now or hereafter assigned to or held by the Lender, each of
every kind, nature, and description.
(d) All interest, fees, and charges and other amounts
which may be charged by the Lender to the Borrower and/or
which may be due from the Borrower to the Lender from time to
time.
(e) Except as otherwise provided in Section 5-9
hereof,
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all costs and expenses incurred or paid by the Lender or any
Participant hereunder in respect of any agreement between the
Borrower and the Lender or instrument furnished by the
Borrower to the Lender (including, without limitation, Costs
of Collection, attorneys' reasonable fees, and all court and
litigation costs and expenses).
(f) Any and all covenants of the Borrower to or with
the Lender and any and all obligations of the Borrower to act
or to refrain from acting in accordance with any agreement
between the Borrower and the Lender or instrument furnished by
the Borrower to the Lender.
"LOAN DOCUMENTS": The within 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, as each may be amended from time to time.
"MATERIAL ACCOUNTING CHANGE": Any change in GAAP applicable to
accounting periods subsequent to the Borrower's fiscal year
most recently completed prior to the execution of the within
Agreement, which change has a material effect on the
Borrower's financial condition or operating results, as
reflected on financial statements and reports prepared by or
for the Borrower, when compared with such condition or results
as if such change had not taken place or where preparation of
the Borrower's statements and reports in compliance with such
change results in the breach of a financial performance
covenant imposed pursuant to Section 5-11 where such a breach
would not have occurred if such change had not taken place or
visa versa.
"MATURITY DATE": February 28, 2000.
"NET PROCEEDS": The entire proceeds received from a sale or other
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disposition of any of the assets of the Borrower, less the
reasonable costs and expenses incident to realizing such
proceeds, including, without limitation, reasonable brokerage
commissions and reasonable legal fees and expenses of counsel.
"NEW STORE COSTS": The initial stocking of $20,000,000.00 of
Inventory and ancillary expenses (including, without
limitation, new lease costs, store fixtures, equipment, and
leasehold improvements) associated with the opening by the
Borrower of Thirty (30) additional rural retail stores.
"PARTICIPANT": Any Person which purchase a participation in the Term
Loan and the Loan Documents from the Lender or from another
Participant; provided that there may be no more than two (2)
Participants at any time.
"PERMITTED ENCUMBRANCES": Those Encumbrances permitted as provided
in Section 4-5(a) hereof.
"PERSON": Any natural person, and any corporation, limited liability
company, trust, partnership, joint venture, or other
enterprise or entity.
"PROCEEDS": include, without limitation, "Proceeds" as defined in the
UCC (defined below), and each type of property described in
Section 7-1 hereof.
"QUALIFIED TAKEOUT": A single transaction which consists of any of the
following:
(a) The sale by the Borrower of all or any
portion of its capital stock in a secondary offering
or otherwise.
(b) The sale of the Borrower (whether an
asset sale or the sale of capital stock of the
Borrower resulting in a Change in Control) or the
merger of the Borrower with
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another Person (with such other Person being the
surviving entity).
(c) The refinancing of the Term Loan by a
financial institution other than the Lender.
"REAL ESTATE": All land and improvements thereon now owned or
hereafter acquired by the Borrower or any Guarantor (other
than interests under any Leases, as lessee).
"RECEIVABLES COLLATERAL": That portion of the Collateral which consists
of the Borrower's Accounts, Accounts Receivable, contract
rights, General Intangibles, Chattel Paper, Instruments,
Documents of Title, Documents, Securities, letters of credit
for the benefit of the Borrower, and bankers' acceptances held
by the Borrower, and any rights to payment.
"RELATED ENTITY": (a) Any corporation, limited liability company,
trust, partnership, joint venture, or other enterprise which:
is a parent, brother-sister, subsidiary, or affiliate, of the
Borrower; could have such enterprise's tax returns or
financial statements consolidated with the Borrower's; could
be a member of the same controlled group of corporations
(within the meaning of Section 1563(a)(1), (2) and (3) of the
Internal Revenue Code of 1986, as amended from time to time)
of which the Borrower is a member; Controls or is Controlled
by the Borrower or by any Affiliate of the Borrower.
(b) Any Affiliate.
"REQUIREMENT OF LAW": As to any Person:
(a)(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,
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tribunal, panel, or other body which has or claims
jurisdiction over such Person, or any property of such Person,
or of any other Person for whose conduct such Person would be
responsible.
(b) That Person's charter, certificate of
incorporation, articles of organization, and/or other
organizational documents, as applicable; and (c) that Person's
by-laws and/or other instruments which deal with corporate or
similar governance, as applicable.
"REVOLVING CREDIT": The revolving credit facility in the principal
amount of $100,000,000.00 entered into contemporaneously
herewith among the Borrower, the Lenders party thereto, and
BankBoston Retail Finance Inc., as Agent for the Revolving
Credit Lenders, as such facility may hereafter be modified,
amended, extended, supplemented or restated from time to time.
"REVOLVING CREDIT LENDERS": The lenders who agree to make loans to the
Borrower under the Revolving Credit.
"RIGHTS AND REMEDIES": Is defined in Section 10-6.
"SEGREGATED ACCOUNT": Is defined in Section 2-2 hereof.
"SUSPENSION EVENT": Any occurrence, circumstance, or state of facts
which (a) is an Event of Default; or (b) would become an Event
of Default if any requisite notice were given and/or any
requisite period of time were to run and such occurrence,
circumstance, or state of facts were not absolutely cured
within any applicable grace period.
"TERM LOAN": Is defined in Section 2-1.
"TERM LOAN COMMITMENT FEE": Is defined in Section 2-7(a).
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"TERM NOTE": Is defined in Section 2-3.
"TERMINATION DATE": The earliest of (a) the Maturity Date; or (b) the
occurence of any event described in Sections 9-10 or 9-11,
below; or (c) the Lender's notice to the Borrower setting the
Termination Date on account of the occurrence of any Event of
Default other than as described in Sections 9-10 or 9-11,
below.
"UCC": The Uniform Commercial Code as presently in effect in
Massachusetts (Mass. Gen. Laws, Ch. 106).
ARTICLE 2 - THE TERM LOAN
2-1. Commitment to Make Term Loan. Subject to the terms and conditions
set forth in this Agreement, the Borrower shall borrow, and the Lender shall
lend, on the satisfaction of the conditions precedent hereto (Article 3), the
sum of $25,000,000.00 (the "TERM LOAN").
2-2. Use of Proceeds of Term Loan. The proceeds of the Term Loan shall
be used solely for New Store Costs; provided that pending use for such purposes,
the proceeds of the Term Loan shall be utilized FIRST, to reduce the amounts due
under the Revolving Credit, and SECOND, to fund a segregated collateral account
(the "Segregated Account") which shall be pledged to the Lender as collateral
for the Liabilities. After the initial disbursement of the proceeds of the Term
Loan, as provided above, if the Borrower desires to utilize the proceeds of the
Term Loan for the payment of New Store Costs and (a) no Suspension Event then
exists, the Borrower may request an advance from the Revolving Credit Lenders
for that purpose (the Lender not hereby representing that the Revolving Credit
Lenders will in fact make such advance) or may obtain a release of funds from
the Segregated Account for the purpose, or (b) if a Suspension Event then
exists, the Borrower shall furnish the Lender with ten (10) Business Days' prior
written notice thereof, which notice shall be accompanied by a certification by
the Borrower (in form satisfactory to the Lender) of the amount of the Term Loan
proceeds to be so utilized and a breakdown of the actual proposed use thereof;
in the event a Suspension Event
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then exists, the Lender, in its discretion, may release or refuse to release,
funds held in the Segregated Account, or direct or refuse to direct, the
Revolving Credit Lenders to advance to the Borrower, the amounts so requested.
During the existence of a Suspension Event, the Borrower shall have no authority
to, and shall not, request the Revolving Credit Lenders to make an advance for
the payment of the New Store Costs without the prior written consent of the
Lender.
2-3. The Term Note. The Term Loan shall be evidenced by a promissory
note of the Borrower payable to the Lender, substantially in the form of EXHIBIT
2-3 (the "TERM NOTE"), completed with appropriate insertions.
2-4. Interest on Term Loan.
(a) The Outstanding principal balance of the Term Loan shall
bear interest at a rate equal to fourteen and one-half percent (14-1/2%) per
annum.
(b) Following the occurrence of an Event of Default (and
whether or not the Lender exercises any of the Lender's rights on account of
such Event of Default, the principal balance of the Term Loan shall bear
interest at the option of the Lender, at the rate of sixteen and one-half
percent (16-1/2%) per annum.
(c) The Borrower shall pay interest on the outstanding
principal balance of the Term Loan in arrears on the first day of each month and
on the Termination Date.
2-5. Repayment of Term Loans. (a) The Borrower, without notice or
demand from the Lender, shall pay the Lender, an amount equal to the greater of
(i) one hundred twenty-five percent (125%) of the Allocated Loan Value of any
Real Estate sold by the Borrower or (ii) ninety percent (90%) of the gross
proceeds from any Real Estate sold by the Borrower. Nothing contained herein
shall be deemed to constitute the Lender's consent to any such sale or
disposition or a waiver of the provisions of Section 4-11(d) hereof.
(b) After final and irrevocable payment in full and
termination of the Revolving Credit (other than by a refinancing of the
Revolving Credit),
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the Borrower, without notice or demand from the Lender, shall pay to the Lender,
the Net Proceeds from the sale by the Borrower of any of its capital stock or
assets other than Real Estate (other than asset sales permitted under Section
4.11(d) hereof), immediately upon receipt of such Net Proceeds by the Borrower.
Nothing contained herein shall be deemed to constitute the Lender's consent to
any such sale or disposition or a waiver of the provisions of Section 4-11(d)
hereof.
(c) On May 31, 1999, the Borrower, without notice or demand
from the Lender, shall pay the Lender, an amount equal to the net proceeds of
the Term Loan not theretofore utilized by the Borrower for New Store Costs.
(d) All payments under subparagraphs (a), (b), and (c) hereof
shall be applied to the principal balance of the Term Loan and shall not reduce
the amount, or postpone the time for payment, of any other amounts due or to
become due under the Term Loan. Any portion of the Term Loan which is prepaid
may not be reborrowed. Each such prepayment shall be accompanied by payment of
Term Loan Commitment Fees and any amounts due under Section 2-8 hereof.
(e) In all events and under all circumstances, unless sooner
paid or accelerated, the then unpaid principal balance of the Term Note and all
accrued and unpaid interest thereon shall be due and payable on the Termination
Date.
2-6. Optional Prepayments of Term Loans.
The Borrower shall have the right, at its election, to repay the
outstanding amount of the Term Loan, as a whole or in part, in multiples of
$100,000.00, at any time after the first anniversary of this Agreement, subject,
however, to the provisions of Sections 2-7(b) and 2-8 hereof. No prepayment
hereunder shall postpone the date for, or reduce the amount of, any subsequent
payment under the Term Loan. Any portion of the Term Loan which is prepaid may
not be reborrowed.
2-7. Term Loan Commitment Fee. (a) As compensation for the Lender's
commitments included herein to make the Term Loan, the Lender has earned a TERM
LOAN COMMITMENT FEE (so referred to herein) in the sum of $4,375,000.00
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payable, subject to the provisions of Subparagraphs (b) and (c) hereof, as
follows:
(i) The sum of $875,000.00 shall have been received
by the Lender as of the date of the execution of this Agreement. The
Lender acknowledges receipt of the sum of $500,000.00 from the Borrower
at the time of the execution of the commitment letter for the Term
Loan; the balance of $375,000.00 shall be paid upon from the initial
advance of the proceeds of the Term Loan.
(ii) The sum of $875,000.00 shall be due on the first
anniversary of this Agreement.
(iii) The sum of $875,000.00 shall be due on the
second anniversary of this Agreement.
(iv) The sum of $1,750,000.00 shall be due on the
earlier of the Termination Date or the date the Term Loan is paid in
full.
Subject to the provisions of Subparagraph (c) hereof, in the event of the
repayment of the Term Loan prior to the Maturity Date (whether as a result of
acceleration or otherwise), any remaining installments of the Term Loan
Commitment Fee shall become immediately due and payable.
(b) Upon any prepayment of the Term Loan pursuant to Section
2-5 or 2-6 hereof, the Borrower shall pay the Lender an allocable share of the
remaining installments of the Term Loan Commitment Fee equal to the amount of
such prepayment multiplied by the decimal equivalent of the ratio of such
prepayment to the then outstanding balance of the Term Loan. Any such prepayment
of the Term Loan Commitment Fee shall be applied to the annual installments of
the Term Loan Commitment Fee in inverse order of maturity and shall not reduce
the amount, or postpone the time for payment, of any installments thereafter
coming due.
(c) In the event that the entire unpaid balance of the Term
Loan, all accrued and unpaid interest thereon, and all fees otherwise due and
payable with respect thereto, are paid with the proceeds of a Qualified Takeout,
and if no Event of Default then exists as a result of which the Lender has
accelerated the time for payment of the Liabilities, the Lender shall waive (i)
payment of the installment of the Term Loan Commitment Fee due
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and payable under Section 2-7(a)(iii), if such full payment occurs prior to the
second anniversary of this Agreement and (ii) $750,000.00 of the installment due
under Section 2-7(a)(iv) if such full payment occurs prior to the Maturity Date.
In the event that the Term Loan is repaid with the proceeds of a Qualified
Takeout resulting in the waiver of a portion of the Term Loan Commitment Fee,
any portion of the Term Loan Commitment Fee paid hereunder and applied to the
portion of the Term Loan Commitment Fee so waived shall be credited against the
amounts required to be paid at the time of the Qualified Takeout.
(d) Except as provided in Subparagraph (c), above, the
Borrower shall not be entitled to any credit, rebate, or repayment of the Term
Loan Commitment Fee notwithstanding the termination of this Agreement.
2-8. Indemnity. The Borrower agrees to indemnify the Lender and each
Participant and to hold the Lender and each Participant harmless from and
against any loss, cost or expense (including loss of anticipated profits) that
the Lender or such Participant may sustain or incur (including, without
limitation, by virtue of acceleration after the occurrence of any Event of
Default) as a consequence of the making of any prepayment (whether mandatory or
optional) of the Term Loan, including interest or fees payable by the Lender or
such Participant to lenders of funds obtained by it in order to maintain such
Term Loan.
2-9 Increased Costs. If, as a result of any change in any requirement
of law, or of the interpretation or application thereof by any court or by any
governmental or other authority or entity charged with the administration
thereof, whether or not having the force of law, which:
(a) subjects the Lender or any Participant to any taxes or
changes the basis of taxation, or increases any existing taxes, on
payments of principal, interest or other amounts payable by the
Borrower to the Lender or such Participant under this Agreement (except
for taxes on the Lender's or Participant's overall net income or
capital imposed by the jurisdiction in which the Lender's or
Participant's principal or lending offices are located);
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(b) imposes, modifies or deems applicable any reserve, cash
margin, special deposit or similar requirements against assets held by,
or deposits in or for the account of or loans by or any other
acquisition of funds by the relevant funding office of the Lender or
any Participant;
(c) imposes on the Lender or any Participant any other
condition with respect to any Loan Document; or
(d) imposes on the Lender or any Participant a requirement to
maintain or allocate capital in relation to the Liabilities;
and the result of any of the foregoing is to increase the cost to the Lender or
any Participant of making or maintaining any loan, advance or financial
accommodation or to reduce the income receivable by the Lender or any such
Participant in respect of any loan, advance or financial accommodation by an
amount which the Lender or any Lender or such Participant deems to be material,
then upon the Lender's giving written notice thereof, from time to time, to the
Borrower (such notice to set out in reasonable detail the facts giving rise to
and a summary calculation of such increased cost or reduced income), the
Borrower shall pay to the Lender, within seven(7) Business Days after receipt of
such notice, that amount which shall compensate the Lender or Participant for
such additional cost or reduction in income.
ARTICLE 3 - CONDITIONS PRECEDENT.
As a condition to the effectiveness of this Agreement, the
establishment of the Term Loan, and the making of the Term Loan, each of the
documents respectively described in Sections 3-1 through and including 3-9,
(each in form and substance reasonably satisfactory to the Lender) shall have
been delivered to the Lender, and the conditions respectively described in
Sections 3-11 through and including 3-19, shall have been satisfied:
3-1. Corporate Due Diligence.
(a) A Certificate of corporate good standing issued by the
Secretary of State of Ohio.
(b) Certificates of due qualification, in good standing,
issued by the Secretary(ies) of State of each State in which the nature of the
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Borrower's business conducted or assets owned requires such qualification,
except for those States in which the failure to so qualify would not have a
material adverse effect on the Borrower's business, assets, financial condition,
operations or prospects.
(c) A Certificate of the Borrower's Assistant Secretary of the
due adoption, continued effectiveness, and setting forth the texts of, each
corporate resolution adopted in connection with the establishment of the loan
arrangement contemplated by the Loan Documents and attesting to the true
signatures of each Person authorized as a signatory to any of the Loan
Documents.
3-2. Opinion. An opinion of counsel to the Borrower in form and
substance reasonably satisfactory to the Lender.
3-3. Landlord Waivers. Either, (a) the delivery to the agent for the
Revolving Credit Lenders of waivers or subordinations (each in form reasonably
satisfactory to the Lender) executed by (i) each of the owners of the Borrower's
leased warehouses, (ii) seventy-five percent (75%) of the Borrower's landlords,
and (iii) without duplication, the landlords for each of the Borrower's stores
located in a jurisdiction in which the landlord could obtain an Encumbrance on
any of the Borrower's assets having priority over the liens granted to the
Lender, or (b) the Revolving Credit Lenders shall have established a reserve
against Availability (as defined in the documents evidencing the Revolving
Credit), pending receipt of such waivers, in an amount acceptable to the Lender.
3-4. Intercreditor Agreement. The execution and delivery of an
Intercreditor Agreement between the Lender and the Revolving Credit Lenders, in
form and substance reasonably satisfactory to the Lender. The Revolving Credit
shall have been consummated and be in full force and effect and the
documentation evidencing the Revolving Credit shall be reasonably satisfactory
to the Lender.
3-5. Mortgages/Deeds of Trust. Mortgages/Deeds of Trust and
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Assignments of Leases and Rents with respect to the Real Estate presently owned
by the Borrower (each in form satisfactory to the Lender).
3-6. Real Estate Requirements. To the extent not previously delivered
to the Lender:
(a) Appraisals. The Lender shall have been provided with
appraisals of the Borrower's Real Estate, which appraisals shall have been
prepared by one or more appraisers acceptable to the Lender, utilizing
methodology satisfactory to the Lender, and the results of which appraisals are
satisfactory to the Lender.
(b) Environmental Review. The Borrower shall provide
information, to the Lender's reasonable satisfaction, (a) that the Borrower's
operations comply in all material respects (as determined by the Lender in its
reasonable discretion) with all applicable Environmental Laws; (b) whether the
operations of the Borrower are the subject of any federal, state or provincial,
municipal or local investigation evaluating whether any remedial action,
involving a material expenditure by the Borrower, is needed to respond to a
release of any Hazardous Materials; and (c) whether the Borrower has any
contingent liability reasonably deemed material by the Lender in connection with
any past or present treatment, storage, recycling, disposal or release or
threatened release, at any location, of any Hazardous Materials or pursuant to
Environmental Laws.
(b) Title Insurance. The Lender shall have received an ALTA
standard form title insurance policy issued by a title insurance company
approved by the Lender (with such reinsurance or co-insurance as the Lender may
require, any such reinsurance to be with direct access endorsements), insuring
the Lender that Borrower holds marketable fee title to the Real Estate owned by
the Borrower and that the mortgages granted to the Lender creates valid,
enforceable and first priority liens on Borrower's title to such Real Estate,
subject only to such exceptions as the Lender may be approve in writing, and
which shall contain no exceptions for surveys, mechanic's liens or persons in
occupancy, and shall not insure over any matter except to the extent that any
such affirmative insurance is acceptable to the Lender in its sole discretion.
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(c) Other Real Estate Due Diligence. The Lender shall have
received (i) engineering reports (including code and ADA compliance), (ii) if
requested by Lender, reliance letters in form and substance satisfactory to
Lender from Borrower's environmental engineers, structural engineers and
appraisers, and (iii) to the extent required by the Lender, matters relating to
title, zoning, survey, the provisions of mortgages and debt instruments, plans,
leases, management agreements, service contracts, historical financial
information, operating and capital budgets insurance, financial information,
building plans and specifications, construction schedules, construction-related
contracts, and other customary matters, provided that the Borrower shall not be
required to deliver Subordination, Attornment and Non-Disturbance Agreements
from the Borrower's tenants as long as, pending receipt of such agreements, the
Revolving Credit Lenders shall have established a reserve against Availability
(as defined in the documents evidencing the Revolving Credit) in an amount
acceptable to the Lender.
3-7. Warrant. Warrants in favor of the Lender permitting the Lender to
purchase up to 400,000 shares of the Borrower's common stock (subject to
customary anti-dilution and other provisions) for a strike price equal to the
lesser of $2.50 per share or the bid price on the opening of the market on the
date of this Agreement.
3-8. Additional Documents. Such additional instruments and documents as
the Lender or its counsel may reasonably require or reasonably request.
3-9. Officers' Certificates. Certificates executed by the President and
the Chief Financial Officer of the Borrower and stating that the representations
and warranties made by the Borrower to the Lender in the Loan Documents are true
and complete as of the date of such Certificate, and that no Suspension Event
has occurred.
3-10. Due Diligence. The Lender shall have completed its due diligence,
the results of which shall be reasonably satisfactory to the Lender. Without
limiting, the generality of the foregoing,
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(a) The Lender shall have completed its investigation of the
business, affairs, capital structure, real estate, material agreements,
transactions between affiliates, related parties, properties and prospects of
the Borrower including, without limitation, analysis of all material contracts,
and pending and threatened litigation, with results reasonably satisfactory to
the Lender and its counsel.
(b) The Lender, in connection with its conduct of due
diligence, shall have been given such access to the management, records, books
of account, contracts and properties of the Borrower and its Related Entities
and shall have received such financial, business, and other information
regarding the Borrower and its Related Entities as it shall have requested,
including, without limitation, information as to possible contingent
liabilities, transactions with affiliates, tax matters, environmental matter,
and obligations under ERISA and welfare plans, collective bargaining agreements
and other arrangements with employees.
3-11. Representations and Warranties. Each of the representations made
by or on behalf of the Borrower in this Agreement or in any of the other Loan
Documents or in any other report, statement, document, or paper provided by any
or on behalf of the Borrower shall be true and complete as of the date as of
which such representation or warranty was made.
3-12. Minimum Excess Availability. Availability, after giving effect to
the first loans and advances to be made under the Revolving Credit; all then
held checks (if any); accounts payable which are beyond credit terms then
accorded the Borrower; overdrafts; any charges to the Loan Account made in
connection with the establishment of the credit facility contemplated hereby;
and L/C's to be issued at, or immediately subsequent to, the establishment of
such credit facility, and any proceeds of the Term Loan applied in reduction of
the Revolving Credit is not less than (a) $40,000,000.00, minus (b) the initial
Rent Reserve and Real Estate Reserve established under the Revolving Credit.
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3-13. No Suspension Event. No Suspension Event shall then be extant.
3-14. No Adverse Change. No event shall have occurred or failed to
occur, which occurrence or failure is or could have a materially adverse effect
upon the Borrower's business, financial condition, operations, properties or
prospects when compared with such condition at September 30, 1997.
3-15. Perfection of Liens. All filings, recordings, deliveries of
instruments and other actions necessary or desirable in the opinion of the
Lender to protect and preserve its security and mortgage interests in the
Collateral shall have been duly effected. The Lender shall have received
evidence thereof in form and substance reasonably satisfactory to the Lender.
3-16 Litigation. No action, suit, investigation, litigation or
proceeding shall be pending or threatened in any court or before any arbitrator
or governmental instrumentality that (i) reasonably could be expected to have a
material adverse effect on the business, condition (financial or otherwise),
operations, performance, properties or prospects of the Borrower other than
those which have theretofore been disclosed or (ii) would materially adversely
affect the Term Loan, other than those which have theretofore been disclosed.
Borrower shall represent and warrant the current status of all pending
litigation, and such status shall be reasonably satisfactory to the Lender.
3-17 Consents. All governmental and third party consents and approvals,
if any, necessary in connection with the Term Loan, shall have been obtained
(without the imposition of any conditions that are not acceptable to the Lender)
and shall remain in effect; all applicable waiting periods with respect to such
consents and approvals shall have expired without any action being taken by any
competent authority; and, in the judgment of the Lender, no law or regulation
shall be applicable which restrains, prevents, or imposes materially adverse
conditions upon the Term Loan.
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3-18 Fees and Expenses. The portion of the Term Loan Commitment Fee
payable upon execution of this Agreement and all accrued fees and expenses of
the Lender and each Participant in connection with the establishment of the Term
Loan (including the fees and expenses of counsel to the Lender and each
Participant) then due and payable shall have been paid.
3-19 Capital Markets. There shall not have occurred any disruption or
adverse change in the U.S. financial capital markets generally, or in the U.S.
market for loan syndications in particular, which the Lender in its discretion
deems to be material.
No document shall be deemed delivered to the Lender until received and accepted
by the Lender at the Lender's head office in Boston, Massachusetts. Under no
circumstances will the within Agreement take effect until executed and accepted
by the Lender at said head office.
ARTICLE 4 - GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
To induce the Lender to establish the loan arrangement contemplated
herein and to make the Term Loan (which loan shall be deemed to have been made
in reliance thereupon) the Borrower, in addition to all other representations,
warranties, and covenants made by the Borrower in any other Loan Document, makes
the following representations, warranties, and covenants included in the within
Agreement.
4-1. Payment and Performance of Liabilities. The Borrower shall pay
each Liability when due (or within three (3) Business Days after demand, if
payable on demand) and shall promptly, punctually, and faithfully perform each
other Liability.
4-2. Due Organization - Corporate Authorization - No Conflicts.
(a) The Borrower presently is and shall hereafter remain in good
standing as an Ohio corporation and is and shall hereafter remain duly qualified
and in good standing in every other State in which, by reason of the nature or
location of the Borrower's assets or operation of the Borrower's
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business, such qualification is necessary, except for those States in which the
failure to so qualify would not have a material adverse effect on the Borrower's
business, assets, financial condition, operations or prospects.
(b) Each Related Entity is listed on EXHIBIT 4-2, annexed
hereto. Each Related Entity is and shall hereafter remain in good standing in
the State in which incorporated and is and shall hereafter remain duly qualified
in each other State in which, by reason of that entity's assets or the operation
of such entity's business, such qualification may be necessary, except for those
States in which the failure to so qualify would not have a material adverse
effect on the Borrower's business, assets, financial condition, operations or
prospects. The Borrower shall provide the Lender with prior written notice of
any entity's becoming or ceasing to be a Related Entity.
(c) The Borrower has all requisite corporate power and
authority to execute and deliver all and singular the Loan Documents to which
the Borrower is a party and has and will hereafter retain all requisite
corporate power to perform all and singular the Liabilities.
(d) The execution and delivery by the Borrower of each Loan
Document to which it is a party; the Borrower's consummation of the transactions
contemplated by such Loan Documents (including, without limitation, the creation
of security and mortgage interests by the Borrower as contemplated hereby); the
Borrower's performance under those of the Loan Documents to which it is a party;
the borrowings hereunder; and the use of the proceeds thereof:
(i) Have been duly authorized by all necessary
corporate action.
(ii) Do not, and will not, contravene in any material
respect any provision of any Requirement of Law or material obligation
of the Borrower.
(iii) Will not result in the creation or imposition
of, or the obligation to create or impose, any Encumbrance upon any
assets of the Borrower pursuant to any Requirement of Law or material
obligation, except pursuant to the Loan Documents.
(e) The Loan Documents have been duly executed and delivered
by
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Borrower and are the legal, valid and binding obligations of the Borrower,
enforceable against the Borrower in accordance with their respective terms.
4-3. Trade Names.
(a) EXHIBIT 4-3, annexed hereto, is a listing of:
(i) All names under which the Borrower has conducted its
business within the last ten (10) years.
(ii) All entities and/or persons with whom the Borrower
consolidated or merged, or from whom the Borrower acquired in a single
transaction or in a series of related transactions substantially all of
such entity's or person's assets, within the last ten (10) years.
(b) Except (i) upon not less than twenty-one (21) days prior
written notice given the Lender, and (ii) in compliance with all other
provisions of the within Agreement, the Borrower will not undertake or commit to
undertake any action such that the results of that action, if undertaken prior
to the date of this Agreement, would have been reflected on EXHIBIT 4-3.
(c) The Borrower owns and possesses, or has the right to use
all patents, industrial designs, trademarks, trade names, trade styles, brand
names, service marks, logos, copyrights, trade secrets, know-how, confidential
information, and other intellectual or proprietary property of any third Person
necessary for the Borrower's conduct of the Borrower's business.
(d) Except as set forth on EXHIBIT 4-16, the conduct by the
Borrower of the Borrower's business does not infringe on the patents, industrial
designs, trademarks, trade names, trade styles, brand names, service marks,
logos, copyrights, trade secrets, know-how, confidential information, or other
intellectual or proprietary property of any third Person.
4-4. Locations.
(a) The Collateral, and the books, records, and papers of
Borrower pertaining thereto, are kept and maintained solely at the Borrower's
chief executive offices at 0000 Xxxx Xxxx, Xxxxxxxxx, Xxxx 00000 and at those
locations which are listed on EXHIBIT 4-4, annexed hereto, which EXHIBIT
includes all service bureaus with which any such records are maintained and
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the names and addresses of each of the Borrower's landlords. Except (i) to
accomplish sales of Inventory in the ordinary course of business, (ii) to
utilize such of the Collateral as is removed from such locations in the ordinary
course of business (such as motor vehicles), (iii) is otherwise permitted by
this Agreement, or (iv) to move Collateral between Locations listed on said
EXHIBIT 4-4, the Borrower shall not remove any Collateral from said chief
executive offices or those locations listed on EXHIBIT 4-4.
(b) As long as the financial performance covenants set forth
on EXHIBIT 5-11 hereto or in the documents evidencing the Revolving Credit are
not violated as a result of the following actions, the Borrower may, after
furnishing the Lender with thirty (30) days prior notice thereof:
(i) Execute a new lease for an existing location as
long as the Borrower has obtained a landlord's waiver acceptable to the
Lender therefor, and, if necessary, has executed additional financing
statements to protect the Lender's liens and security interests.
(ii) Close any location at which the Borrower
maintains, offers for sale, or stores any of the Collateral or
(iii) Open any location at which the Borrower
maintains, offers for sale or stores any of the Collateral, so long as
the Borrower has obtained a landlord's waiver acceptable to the Lender
therefor, and, if necessary, has executed additional financing
statements to protect the Lender's liens and security interests.
(c) Except (i) as otherwise disclosed pursuant to, or
permitted by, this Section 4-4, (iii) for goods in transit, and(iii) Inventory
in the process of being repaired, no tangible personal property of the Borrower
is in the care or custody of any third party or stored or entrusted with a
bailee or other third party and none shall hereafter be placed under such care,
custody, storage, or entrustment.
4-5. Title to Assets.
(a) The Borrower is, and shall hereafter remain, the owner of
the Collateral free and clear of all Encumbrances with the exceptions of the
following (the "PERMITTED ENCUMBRANCES"):
(i) The security interest and liens on the Collateral
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created herein and by the mortgages and/or deeds of trust in favor of
the Lender on the Real Estate.
(ii) The Encumbrances in favor of the Revolving
Credit Lenders.
(iii) Those Encumbrances (if any) listed on EXHIBIT
4-5, annexed hereto.
(iv) Encumbrances in favor of The CIT Group/Business
Credit, Inc., as Agent, to be released in connection with payment of
proceeds of the loans contemplated hereby.
(v) Encumbrances for payment of taxes, assessments or
governmental charges and levies that are not yet due.
(vi) Encumbrances created by operation of law such as
materialmen's liens, mechanics' liens, warehouse liens and other
similar liens, arising in the ordinary course of business, that secure
amounts not overdue for a period of more than thirty (30) days, not to
exceed $100,000.00 in the aggregate outstanding at any time.
(vii) Encumbrances incurred or deposits or pledges
made in the ordinary course of business securing: obligations incurred
for workers' compensation, unemployment insurance or other forms of
governmental insurance or benefits (other than liens arising under
ERISA); the performance of bids, tenders, leases, contracts (other than
contracts for the payment of money) and statutory obligations; and
obligations on surety, appeal, supersedeas and performance bonds.
(viii) Encumbrances or other restrictions on the use
of real property such as zoning restrictions, licenses, covenants, and
building restrictions and minor irregularities in the title thereto
that do not secure obligations for the payment of money or materially
impair the value of the real property or its use by the Borrower in the
ordinary conduct of the Borrower's business.
(ix) Encumbrances securing Capital Leases permitted
hereunder.
(x) Judgment liens in existence for less than thirty
(30) days after entry thereof or with respect to which execution has
been stayed or with respect to which payment in full above any
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deductible is covered by insurance or bond, not to exceed $750,000.00
in the aggregate at any time outstanding.
(xi) Renewals and replacements of Permitted
Encumbrances, provided that the renewal or replacement is limited to
the same property or assets and the Indebtedness secured by such
Encumbrance is not increased.
(b) The Borrower does not and shall not have possession of any
property on consignment to the Borrower.
4-6. Indebtedness. The Borrower does not and shall not hereafter
have any Indebtedness with the exceptions of:
(a) Any Indebtedness to the Lender under the Loan Documents.
(b) Indebtedness to the Revolving Credit Lenders under the
Revolving Credit.
(c) The Indebtedness (if any) listed on EXHIBIT 4-6, annexed
hereto.
(d) Indebtedness for taxes, assessments, governmental charges
and claims for labor, material or supplies, to the extent that payment
thereof is not then due.
(e) Indebtedness in connection with Permitted Encumbrances.
(f) Indebtedness arising in the ordinary course of business
pursuant to endorsement of negotiable instruments for deposit or
collection.
(g) Capital Leases, the annual payments under which do not
exceed $75,000.00 in the aggregate in any fiscal year.
(h) Indebtedness for the payment of the purchase price of
goods or services deferred for more than thirty (30) days beyond then
current trade terms provided to the Borrower, which are the subject of
a dispute with the vendor or supplier.
(g) Renewals, replacements, extensions and refundings of the
Indebtedness listed in (a) through (g), provided that any renewal,
replacement, extension or refunding is in aggregate principal amount
not greater than the principal amount of, and is payable on terms no
less favorable to the Borrower of, the Indebtedness renewed, replaced,
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extended or refunded.
4-7. Insurance Policies.
(a) EXHIBIT 4-7, annexed hereto, is a schedule of all
insurance policies owned by the Borrower or under which the Borrower is the
named insured. Each of such policies is in full force and effect. Neither the
issuer of any such policy nor the Borrower is in default or violation of any
such policy.
(b) The Borrower shall have and maintain at all times
insurance covering such risks, in such amounts, containing such terms, in such
form, for such periods, and written by such companies as may be reasonably
satisfactory to the Lender. The coverage reflected on EXHIBIT 4-7 presently
satisfies the foregoing requirements, it being recognized by the Borrower,
however, that such requirements may change hereafter to reflect changing
circumstances. All insurance carried by the Borrower shall provide for a minimum
of Sixty (60) days' written notice of cancellation to the Lender and all such
insurance which covers the Collateral shall include an endorsement in favor of
the Lender, as mortgagee, loss payee or additional insured, as applicable, which
endorsement shall also provide that the insurance, to the extent of the Lender's
interest therein, shall not be impaired or invalidated, in whole or in part, by
reason of any act or neglect of the Borrower or by the failure of the Borrower
to comply with any warranty or condition of the policy. In the event of the
failure by the Borrower to maintain insurance as required herein, the Lender, at
its option, may obtain such insurance, provided, however, the Lender's obtaining
of such insurance shall not constitute a cure or waiver of any Event of Default
occasioned by the Borrower's failure to have maintained such insurance. The
Borrower shall furnish to the Lender certificates or other evidence satisfactory
to the Lender regarding compliance by the Borrower with the foregoing insurance
provisions.
(c) The Borrower shall advise the Lender of each claim in
excess of $150,000.00 made by the Borrower under any policy of insurance which
covers the Collateral and will permit the Lender, at the Lender's option in each
instance, to the exclusion of the Borrower, to conduct the adjustment of each
such claim (and of all claims following the occurrence of any Suspension
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Event). The Borrower hereby appoints the Lender as the Borrower's attorney in
fact to obtain, adjust, settle, and, after the occurrence of an Event of
Default, cancel any insurance described in this section and to endorse in favor
of the Lender any and all drafts and other instruments with respect to such
insurance. The within appointment, being coupled with an interest, is
irrevocable until this Agreement is terminated by a written instrument executed
by a duly authorized officer of the Lender. The Lender shall not be liable on
account of any exercise pursuant to said power except for any exercise in actual
willful misconduct, bad faith or with gross negligence. After the occurrence of
an Suspension Event, the Lender may apply all proceeds of insurance from the
Real Estate (and other assets after the Revolving Credit Lenders have been paid
in full and their obligations to make loans to the Borrower under the Revolving
Credit terminated) against the Liabilities, whether or not such have matured, in
such order of application as the Lender may determine. Prior to the occurrence
of a Suspension Event, the proceeds from any Real Estate shall be held by the
Lender as cash collateral and shall be released to the Borrower, following such
reasonable disbursement procedures as the Lender may establish, for the repair
or restoration of the Real Estate on account of which such proceeds were paid
(as long as such insurance proceeds are sufficient to pay the entire cost of
repair or restoration); if such proceeds are not sufficient to pay such costs,
the Lender may apply such proceeds against the Liabilities, whether or not such
have matured, in such order of application as the Lender may determine. All
proceeds of insurance from assets other than the Real Estate shall be paid to
the Revolving Credit Lenders, whether or not a Suspension Event exists, until
the Revolving Credit is paid in full and all obligations of the Revolving Credit
Lenders under the Revolving Credit to make loans to the Borrower have been
terminated.
4-8. Licenses. Each material license, distributorship, franchise, and
similar agreement issued to the Borrower, or to which the Borrower is a party is
in full force and effect. The Borrower is not in default or violation thereof.
The Borrower has not received any notice or threat of cancellation of any such
license or agreement.
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4-9. Leases; Real Estate. (a) EXHIBIT 4-9, annexed hereto, is a
schedule of all presently effective Leases and Capital Leases. Each of such
Leases and Capital Leases is in full force and effect. Other than as set forth
in EXHIBIT 4-16, the Borrower is not in default or violation of any such Lease
or Capital Lease and the Borrower has not received any written notice or written
threat of cancellation of any such Lease or Capital Lease. The Borrower hereby
authorizes the Lender at any time and from time to time after the occurrence of
a Suspension Event to contact any of the Borrower's landlords in order to
confirm the Borrower's continued compliance with the terms and conditions of the
Lease(s) between the Borrower and that landlord and to discuss such issues,
concerning the Borrower's occupancy under such Lease(s), as the Lender may
determine.
(b) EXHIBIT 1-2 annexed hereto, is a schedule of all Real
Estate presently owned by the Borrower.
4-10. Requirements of Law. The Borrower is in material compliance with,
and shall hereafter comply with and use its assets in material compliance with,
all Requirements of Law. The Borrower has not received any notice of any
material violation of any Requirement of Law, which violation has not been cured
or otherwise remedied.
4-11. Maintain Properties. The Borrower shall:
(a) Keep the Collateral in good order and repair (ordinary
reasonable wear and tear excepted).
(b) Not suffer or cause the waste or destruction of any
material part of the Collateral.
(c) Not use any of the Collateral in violation of any policy
of insurance thereon.
(d) Not sell, lease, or otherwise dispose of any of the
Collateral, other than the following:
(i) The sale of Inventory and Accounts in compliance
with the within Agreement.
(ii) The disposal of Equipment which is (A) obsolete,
worn out, or damaged beyond repair, which Equipment is replaced to the
extent
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necessary to preserve or improve the operating efficiency of the
Borrower, or (B) no longer used or useful in the conduct of the
Borrower's business.
(iii) The turning over to the Lender of all Receipts
as provided herein.
(iv) Sales of Inventory and fixtures resulting from
store closures or new store openings.
(v) Sales of Inventory, Accounts, and fixtures as
long as none of the financial covenants set forth in EXHIBIT 5-11
hereof would be breached, or any event of default under the Revolving
Credit occur, as a result thereof.
(vi) Sales of Real Estate, provided that the sales
price for any parcel is at least equal to the Allocated Loan Value
therefor and the proceeds are paid to the Lender in accordance with the
terms hereof.
4-12. Pay Taxes.
(a) The Borrower has received written notice from the Internal
Revenue Service that the Internal Revenue Service has completed its examination
of the Borrower's federal income tax returns for all tax years through and
including the Borrower's taxable year referenced on EXHIBIT 4-12, annexed
hereto, and that all deficiencies, assessments, and other amounts asserted as a
result of such examinations have been fully paid or settled. No agreement is
extant which waives or extends any statute of limitations applicable to the
right of the Internal Revenue Service to assert a deficiency or make any other
claim for or in respect to federal income taxes. No issue has been raised in any
such examination which, by application of similar principles, reasonably could
be expected to result in the assertion of a deficiency for any fiscal year open
for examination, assessment, or claim by the Internal Revenue Service.
(b) To the Borrower's knowledge, no state and local income,
excise, sales and other taxes are past due. No agreement is extant which waives
or extends any statute of limitations applicable to the right of any state
taxing authority to assert a deficiency or make any other claim for or
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in respect to any such state or local taxes. No issue has been raised in any
examination which, by application of similar principles, reasonably could be
expected to result in the assertion of a deficiency for any fiscal year open for
examination, assessment, or claim by any state or local taxing authority.
(c) Except as disclosed on said EXHIBIT 4-12, there are no
examinations of or with respect to the Borrower presently being conducted by the
Internal Revenue Service or any other taxing authority.
(d) The Borrower has, and hereafter shall: pay, as they become
due and payable, all taxes and unemployment contributions and other charges of
any kind or nature levied, assessed or claimed against the Borrower or the
Collateral by any person or entity whose claim could result in an Encumbrance
other than a Permitted Encumbrance) upon any asset of the Borrower or by any
governmental authority; properly exercise any trust responsibilities imposed
upon the Borrower by reason of withholding from employees' pay or by reason of
the Borrower's receipt of sales tax or other funds for the account of any third
party; timely make all contributions and other payments as may be required
pursuant to any Employee Benefit Plan now or hereafter established by the
Borrower; and timely file all tax and other returns and other reports with each
governmental authority to whom the Borrower is obligated to so file.
(e) At its option, the Lender may, but shall not be obligated
to, pay any taxes, unemployment contributions, and any and all other charges
levied or assessed upon the Borrower or the Collateral by any person or entity
or governmental authority, and make any contributions or other payments on
account of the Borrower's Employee Benefit Plan as the Lender, in the Lender's
discretion, may deem necessary or desirable, to protect, maintain, preserve,
collect, or realize upon any or all of the Collateral or the value thereof or
any right or remedy pertaining thereto, provided, however, the Lender's making
of any such payment shall not constitute a cure or waiver of any Event of
Default occasioned by the Borrower's failure to have made such payment.
4-13. No Margin Stock. The Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying any margin stock
(within the meaning of Regulations G,U,T, and X of the Board of Governors of the
Federal Reserve System of the United States). No part of the proceeds of
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any borrowing hereunder will be used at any time to purchase or carry any such
margin stock or to extend credit to others for the purpose of purchasing or
carrying any such margin stock.
4-14. ERISA. Neither the Borrower nor any ERISA Affiliate ever has or
hereafter shall:
(a) Violate or fail to be in full compliance with the Borrower's
Employee Benefit Plan.
(b) Fail timely to file all reports and filings required by ERISA
to be filed by the Borrower.
(c) Engage in any "prohibited transactions" or "reportable
events" (respectively as described in ERISA).
(d) Engage in, or commit, any act such that a tax or penalty
could be imposed upon the Borrower on account thereof pursuant to ERISA.
(e) Accumulate any material funding deficiency within the meaning
of ERISA.
(f) Terminate any Employee Benefit Plan such that a lien could be
asserted against any assets of the Borrower on account thereof pursuant to
ERISA.
(g) Be a member of, contribute to, or have any obligation under
any Employee Benefit Plan which is a multiemployer plan within the meaning of
Section 4001(a) of ERISA.
4-15. Hazardous Materials.
(a) Except as described in EXHIBIT 4-16, the Borrower has never:
(i) been legally responsible for any release or threat of
release of any Hazardous Material; or
(ii) received notification of any release or threat of
release of any Hazardous Material from any site or vessel occupied or
operated by the Borrower and/or of the incurrence of any expense or
loss in connection with the assessment, containment, or removal of any
release or threat of release of any Hazardous Material from any such
site or vessel.
(b) The Borrower shall:
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(i) dispose of any Hazardous Material only in compliance with
all Environmental Laws; and
(ii) not store on any site or vessel occupied or operated by
the Borrower and not transport or arrange for the transport of any
Hazardous Material, except if such storage or transport is in the
ordinary course of the Borrower's business and is in compliance with
all Environmental Laws.
(c) The Borrower shall provide the Lender with written notice
upon the Borrower's obtaining knowledge of any incurrence of any expense or loss
by any governmental authority or other Person in connection with the assessment,
containment, or removal of any Hazardous Material, for which expense or loss the
Borrower may be liable.
4-16. Litigation. Except as described in EXHIBIT 4-16, annexed hereto,
there is not presently pending or threatened by or against the Borrower any
suit, action, proceeding, or investigation which, if determined adversely to the
Borrower, would have a material adverse effect upon (a) the Borrower's financial
condition or ability to conduct its business as such business is presently
conducted or is contemplated to be conducted in the foreseeable future, or (b)
the Borrower's ability to perform its obligations under the Loan Documents.
4-17. Dividends or Investments. Without the prior written consent of
the Lender, the Borrower shall not:
(a) Pay any cash dividend or make any other distribution in
respect of any class of the Borrower's capital stock, other than the payment of
dividends (as long as no Suspension Event then exists or would arise therefrom)
in an amount not to exceed fifty percent (50%) of such net income (as determined
in accordance with GAAP), provided that the Borrower will not pay any such
dividends until fifteen (15) days after the date the Lender receives the
financial statements required under Section 5-6 hereof.
(b) Own, redeem, retire, purchase, or acquire any of the
Borrower's capital stock.
(c) Invest in or purchase any stock or securities or rights to
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purchase any such stock or securities, of any corporation or other entity.
(d) Merge or consolidate or be merged or consolidated with or
into any other corporation or other entity, other than with a Related Entity and
then only if the Borrower is the surviving corporation.
(e) Consolidate any of the Borrower's operations with those of
any other corporation or other entity.
(f) Organize or create any Related Entity, unless (i) the Related
Entity executes a guaranty of the Liabilities and grants the Lender a first
perfected lien on its assets and (ii) the only assets owned by such Related
Entity consist of Real Estate or Leases of real property in which the Related
Entity is the lessee.
(g) Subordinate any debts or obligations owed to the Borrower by
any third party to any other debts owed by such third party to any other Person.
4-18. Loans. The Borrower shall not make any loans or advances to, nor
acquire the Indebtedness of, any Person, provided, however, the foregoing does
not prohibit any of the following:
(a) Advance payments made to the Borrower's suppliers in the
ordinary course.
(b) Advances to the Borrower's officers, employees, and
salespersons with respect to reasonable expenses to be incurred by such
officers, employees, and salespersons for the benefit of the Borrower, which
expenses are properly substantiated by the person seeking such advance and
properly reimbursable by the Borrower.
4-19. Protection of Assets. The Lender, in the Lender's discretion, and
from time to time, may discharge any tax or Encumbrance on any of the
Collateral, or take any other action that the Lender may deem necessary or
desirable to repair, insure, maintain, preserve, collect, or realize upon any of
the Collateral. The Lender shall not have any obligation to undertake any of the
foregoing and shall have no liability on account of any action so undertaken
except where there is a specific finding in a judicial proceeding (in which the
Lender has had an opportunity to be heard), from which finding
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no further appeal is available, that the Lender had acted in actual bad faith or
in a grossly negligent manner. The Borrower shall pay to the Lender, within
three (3) Business Days after demand, or the Lender, in its discretion, may add
to the Loan Account, all amounts paid or incurred by the Lender pursuant to this
section. The obligation of the Borrower to pay such amounts is a Liability.
4-20. Line of Business. The Borrower shall not engage in any business
other than the business in which it is currently engaged or a business
reasonably related thereto.
4-21. Affiliate Transactions. The Borrower shall not make any payment,
nor give any value to any Related Entity except for (a) goods and services
actually purchased by the Borrower from, or sold by the Borrower to, such
Related Entity and (b) Leases of real property from any Guarantor, in each case
for a price which shall
(i) be competitive and fully deductible as an
"ordinary and necessary business expense" and/or fully depreciable
under the Internal Revenue Code of 1986 and the Treasury Regulations,
each as amended; and
(ii) not differ from that which would have been
charged in an arms length transaction.
4-22. Executive Pay.
(a) For purposes of this Agreement, the only Executive Officers
of the Borrower, at the execution of the within Agreement, are those individuals
referenced in the definition of "Executive Officers", above.
(b) Prior to the execution of the within Agreement, the Borrower
furnished the Lender with copies of all written Executive Agreements and
outlines of the salient features of all unwritten Executive Agreements (as
amended to date) then extant. There are no unwritten agreements or
understandings between the Borrower and any Executive Officer which relate to
Executive Pay, written disclosure of which has not been made to the Lender.
(c) Without the prior written consent of the Agent, the Borrower
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will not
(i) Enter into any Executive Agreement not extant at
the execution of the within Agreement.
(ii) Alter, amend, supplement, or otherwise change
any Executive Agreement in any material respect.
(iii) Pay, provide, or facilitate any Executive Pay
in excess of the immediately preceding year's compensation by more than
fifteen percent (15%) or, if not covered by an Executive Agreement, as
permitted pursuant to Section 4-21 hereof.
4-23. Additional Assurances.
(a) The Borrower shall execute and deliver to the Lender such
instruments, documents, and papers, and shall do all such things from time to
time hereafter as the Lender may request to carry into effect the provisions and
intent of this Agreement; to protect and perfect the Lender's security and
mortgage interests in the Collateral; and to comply with all applicable statutes
and laws, and facilitate the collection of the Receivables Collateral. The
Borrower shall execute all such instruments as may be required by the Lender
with respect to the recordation and/or perfection of the security interests
created herein.
(b) A carbon, photographic, or other reproduction of this
Agreement or of any financing statement or other instrument executed pursuant to
this Section 4-23 shall be sufficient for filing to perfect the security
interests granted herein.
4-24. Adequacy of Disclosure.
(a) All financial statements furnished to the Lender by the
Borrower have been prepared in accordance with GAAP consistently applied and
present fairly the condition of the Borrower at the date(s) thereof and the
results of operations and cash flows for the period(s) covered. There has been
no change in the financial condition, results of operations, or cash flows of
the Borrower since the date(s) of such financial statements, other than changes
in the ordinary course of business, which changes have not been materially
adverse, either singularly or in the aggregate.
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(b) The Borrower does not have any material contingent
obligations or obligation under any Lease or Capital Lease which is not noted in
the Borrower's financial statements furnished to the Lender prior to the
execution of the within Agreement.
(c) No document, instrument, agreement, or paper now or
hereafter given the Lender by or on behalf of the Borrower in connection with
the execution of the within Agreement by the Lender contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements therein not materially
misleading. There is no fact known to the Borrower which has, or which, in the
foreseeable future could have, a material adverse effect on the financial
condition of the Borrower which has not been disclosed in writing to the Lender.
4-25. Other Covenants. The Borrower shall not indirectly do or cause to
be done any act which, if done directly by the Borrower, would breach any
covenant contained in this Agreement.
ARTICLE 5 - REPORTING REQUIREMENTS / FINANCIAL COVENANTS.
5-1. Maintain Records. The Borrower shall:
(a) At all times, keep proper books of account, in which full,
true, and accurate entries shall be made of all of the Borrower's transactions,
all in accordance with GAAP applied consistently with prior periods to fairly
reflect the financial condition of the Borrower at the close of, and its results
of operations for, the periods in question.
(b) Timely provide the Lender with those financial reports,
statements, and schedules required by this Article 5 or otherwise, each of which
reports, statements and schedules shall be prepared, to the extent applicable,
in accordance with GAAP applied consistently with prior periods to fairly
reflect the financial condition of the Borrower at the close of, and its results
of operations for, the period(s) covered therein.
(c) At all times, keep accurate current records of the
Collateral including, without limitation, accurate current stock, cost, and
sales records of its Inventory, accurately and sufficiently itemizing and
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describing the kinds, types, and quantities of Inventory and the cost and
selling prices thereof.
(d) At all times, retain independent certified public
accountants who are reasonably satisfactory to the Lender and instruct such
accountants to fully cooperate with, and be available to, the Lender to discuss
the Borrower's financial performance, financial condition, operating results,
controls, and such other matters, within the scope of the retention of such
accountants, as may be raised by the Lender.
(e) Not change the Borrower's fiscal year.
(f) Not change the Borrower's taxpayer identification number.
5-2. Access to Records.
(a) The Borrower shall accord the Lender, the Participants and
their respective representatives with reasonable access from time to time as the
Lender, such Participants and such representatives may reasonably require to all
properties owned by or over which the Borrower has control. The Lender, the
Participants and their respective representatives shall have the right, and the
Borrower will permit the Lender, the Participants and such representatives from
time to time as the Lender, such Participants and such representatives may
request, to examine, inspect, copy, and make extracts from any and all of the
Borrower's books, records, electronically stored data, papers, and files. The
Borrower shall make all of the Borrower's copying facilities available to the
Lender and the Participants.
(b) The Borrower hereby authorizes the Lender, the
Participants and their respective representatives to:
(i) Inspect, copy, duplicate, review, cause to be
reduced to hard copy, run off, draw off, and otherwise use any and all
computer or electronically stored information or data which relates to
the Borrower, or any service bureau, contractor, accountant, or other
person, and directs any such service bureau, contractor, accountant, or
other person fully to cooperate with the Lender, the Participants and
their respective representatives with respect thereto.
(ii) After the occurrence of a Suspension Event,
verify at any time the Collateral or any portion thereof, including
verification
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with Account Debtors, and/or with the Borrower's computer billing
companies, collection agencies, and accountants and to sign the name of
the Borrower on any notice to the Borrower's Account Debtors or
verification of the Collateral.
5-3. Prompt Notice to The Lender.
(a) The Borrower shall provide the Lender with written notice
promptly upon the occurrence of any of the following events, which written
notice shall be with reasonable particularity as to the facts and circumstances
in respect of which such notice is being given:
(i) Any change in the Borrower's Executive Officers,
officers, directors, or key employees.
(ii) The completion of any physical count of the
Borrower's Inventory (together with a copy of the certified results
thereof).
(iii) Any ceasing of the Borrower's making of
payment, in the ordinary course, to any of its creditors (including the
ceasing of the making of such payments, but not the withholding of
payments to trade creditors in the ordinary course, on account of a
dispute with the subject creditor).
(iv) Any failure by the Borrower to pay rent at any
of the Borrower's locations, which failure continues for more than Ten
(10) days following the day on which such rent first came due (other
than as described on EXHIBIT 4-16.
(v) Any material change in the business, operations,
or financial affairs of the Borrower.
(vi) The occurrence of any Suspension Event.
(vii) Any decision on the part of the Borrower to
discharge the Borrower's present independent accountants or any
withdrawal or resignation by such independent accountants from their
acting in such capacity.
(viii) Any litigation which, if determined adversely
to the Borrower, would have a material adverse effect on the financial
condition of the Borrower.
(b) The Borrower shall:
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(i) Provide the Lender, when so distributed, with
copies of any materials distributed to the shareholders of the Borrower
(qua such shareholders).
(ii) Provide the Lender, when received by the
Borrower, with a copy of any management letter or similar
communications from any accountant of the Borrower.
5-4 Weekly Reports. Weekly, on Wednesday of each week (as of the then
immediately preceding Saturday) the Borrower shall provide the Lender with a
flash collateral report (in such form as may be specified from time to time by
the Lender). Such report may be sent to the Lender by facsimile transmission,
provided that the original thereof is forwarded to the Lender on the date of
such transmission.
5-5. Monthly Reports.
(a) Fifteen days after the end of each fiscal month,
(i) Inventory Certificate signed by the Borrower's Chief
Financial Officer concerning the Borrower's Inventory.
(ii) Borrowing Base Report.
(iii) General Ledger Inventory Report.
(b) Thirty days after the end of each fiscal month,
(i) Sales Tax Payment Verification.
(ii) A report detailing New Store Costs.
(iii) an original counterpart of a management prepared
financial statement of the Borrower for the period from the
beginning of the Borrower's then current fiscal year through
the end of the subject month, with comparative information for
the same period of the previous fiscal year, which statement
shall include, at a minimum, a balance sheet, income statement
(on a store specific and on a "consolidated" basis), statement
of changes in shareholders' equity, and cash flows and
comparisons for the corresponding month of the then
immediately previous year, as well as to the Business Plan.
each in form satisfactory to the Lender.
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5-6. Quarterly Reports. Quarterly, within Forty Five (45) days
following the end of each of the Borrower's fiscal quarters, the Borrower shall
provide the Lender with (a) a Real Estate Tax Verification Report, and (b) an
original counterpart of a management prepared financial statement of the
Borrower for the period from the beginning of the Borrower's then current fiscal
year through the end of the subject quarter, with comparative information for
the same period of the previous fiscal year, which statement shall include, at a
minimum, a balance sheet, income statement (on a store specific and on a
"consolidated" basis), statement of changes in shareholders' equity, and cash
flows and comparisons for the corresponding quarter of the then immediately
previous year, as well as to the Business Plan.
5-7. Annual Reports.
(a) Annually, within ninety (90) days following the end of the
Borrower's fiscal year, the Borrower shall furnish the Lender with an original
signed counterpart of the Borrower's annual financial statement, which statement
shall have been prepared by, and bearing the unqualified opinion of, the
Borrower's independent certified public accountants, who shall be acceptable to
the Lender in its reasonable discretion (any of the "Big 4" national accounting
firms being acceptable) (i.e. said statement shall be "certified" by such
accountants). Such annual statement shall include, at a minimum (with
comparative information for the then prior fiscal year) a balance sheet, income
statement, statement of changes in shareholders' equity, and cash flows.
(b) No later than the earlier of Fifteen (15) days prior to
the end of each of the Borrower's fiscal years or the date on which such
accountants commence their work on the preparation of the Borrower's annual
financial statement, the Borrower shall give written notice to such accountants
(with a copy of such notice, when sent, to the Lender) that:
(i) Such annual financial statement will be delivered
by the Borrower to the Lender (for subsequent distribution to
each Participant).
(ii) It is the primary intention of the Borrower, in
its
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engagement of such accountants, to satisfy the financial
reporting requirements set forth in this Article 5.
(iii) The Borrower has been advised that the Lender
(and each Participant) will rely thereon with respect to the
administration of, and transactions under, the credit facility
contemplated by the within Agreement.
(c) Each annual statement shall be accompanied by such
accountant's Certificate indicating that, in the preparation of such annual
statement, such accountants did not conclude that any Suspension Event had
occurred during the subject fiscal year (or if one or more had occurred, the
facts and circumstances thereof).
5-8. Officers' Certificates. The Borrower shall cause the Borrower's
President and Chief Financial Officer, as applicable, respectively to provide
such Person's Certificate with those monthly, quarterly, and annual statements
to be furnished pursuant to this Agreement, which Certificate shall:
(a) Indicate that the subject statement was prepared in accordance
with GAAP consistently applied and presents fairly the financial condition of
the Borrower at the close of, and the results of the Borrower's operations and
cash flows for, the period(s) covered, subject, however to the following:
(i) (With the exception of the Certificate which
accompanies such annual statement) to usual year end adjustments.
(ii) Material Accounting Changes (in which event,
such Certificate shall include a schedule (in reasonable detail) of the
effect of each such Material Accounting Change) not previously
specifically taken into account in the determination of the financial
performance covenants imposed pursuant to Section 5-11.
(b) Indicate either that (i) no Suspension Event has occurred or
(ii) if such an event has occurred, its nature (in reasonable detail) and the
steps (if any) being taken or contemplated by the Borrower to be taken on
account thereof.
(c) Include calculations concerning the Borrower's compliance (or
failure to comply) at the date of the subject statement with each of the
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financial performance covenants included in Section 5-11 hereof.
5-9. Inventories, Appraisals, and Audits.
(a) The Lender and each Participant, at the expense of the
Borrower, may participate in and/or observe each physical count and/or inventory
of so much of the Collateral as consists of Inventory which is undertaken on
behalf of the Borrower.
(b) Upon the Lender's request from time to time, the Borrower
shall obtain, or shall permit the Lender to obtain (in all events, at the
Borrower's expense) physical counts and/or inventories of the Collateral,
conducted by such inventory takers as are satisfactory to the Lender and
following such methodology as may be required by the Lender, one of which
physical counts and/or inventories shall be observed by the Borrower's
accountants in each fiscal year.
(c) Upon the Lender's request from time to time, the Borrower
shall permit the Lender to obtain appraisals (in all events, at the Borrower's
expense) conducted by such appraisers as are satisfactory to the Lender and the
Participants. The Lender contemplates conducting one (1) inventory appraisal and
one Real Estate appraisal during any Twelve (12) month period during which the
within Agreement is in effect, but in its discretion may undertake additional
such appraisals during such period (provided that the Borrower shall not be
responsible for the cost of such additional appraisals unless either (i) the
Borrower's Availability under the Revolving Credit is ever less than
$10,000,000.00, in which event the Borrower shall pay for up to two (2)
additional inventory appraisals, or (ii) an Event of Default then exists).
(d) The Lender contemplates conducting Two (2) commercial finance
audits (in each event, at the Borrower's expense) of the Borrower's books and
records during any Twelve (12) month period during which the within Agreement is
in effect, but in its discretion, may undertake additional such audits during
such period (provided that the Borrower shall not be responsible for the cost of
such additional audits unless an Event of Default then exists).
(e) Upon the Lender's request from time to time, the Borrower
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shall permit the Lender to obtain environmental site assessments (in all events,
at the Borrower's expense) conducted by such Persons as are satisfactory to the
Lender. The Lender contemplates conducting One (1) such site assessment during
any Twelve (12) month period during which the within Agreement is in effect, but
in its discretion, after the occurrence of an Event of Default, may undertake
additional site assessments during such periods.
(f) The Lender agrees that, to the extent that any of the actions
set forth in this Section 5-9 are also undertaken by the Revolving Credit
Lenders by Persons and methodology acceptable to the Lender and the Participants
and the results thereof are shared by the Revolving Credit Lenders with the
Lender and the Participants hereunder, the Lender will not undertake any action
described in this Section 5-9 which would duplicate the efforts of the Revolving
Credit Lenders.
5-10. Additional Financial Information.
(a) In addition to all other information required to be provided
pursuant to this Article 5, the Borrower promptly shall provide the Lender, with
such other and additional information concerning the Borrower, the Collateral,
the operation of the Borrower's business, and the Borrower's financial
condition, including original counterparts of financial reports and statements,
as the Lender may from time to time reasonably request from the Borrower.
(b) The Borrower may provide the Lender, from time to time
hereafter, with updated projections of the Borrower's anticipated performance
and operating results.
(c) In all events, the Borrower, no sooner than Ninety (90) nor
later than Thirty (30) days prior to the end of each of the Borrower's fiscal
years, shall furnish the Lender with an updated and extended projection which
shall extend at least through the end of the then next fiscal year.
(d) Such updated and extended projections shall be prepared
pursuant to a methodology and shall include such assumptions as are satisfactory
to the Lender.
(e) The Borrower recognizes that all appraisals, inventories,
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analysis, financial information, and other materials which the Lender or any
Participant may obtain, develop, or receive with respect to the Borrower is
confidential to the Lender and the Participants and that, except as otherwise
provided herein, the Borrower is not entitled to receipt of any of such
appraisals, inventories, analysis, financial information, and other materials,
nor copies or extracts thereof or therefrom.
5-11. Financial Performance Covenants. The Borrower shall observe and
comply with those financial performance covenants set forth on EXHIBIT 5-11,
annexed hereto. Compliance with such financial performance covenants shall be
made as if no Material Accounting Changes had been made (other than any Material
Accounting Changes specifically taken into account in the setting of such
covenants). The Lender may, but shall not be obligated to, determine the
Borrower's compliance with such covenants based upon financial reports and other
reports and statements provided by the Borrower to the Lender (whether or not
such financial reports and statements are required to be furnished pursuant to
the within Agreement) as well as by reference to interim financial information
provided to, or developed by, the Lender.
ARTICLE 6 - USE AND COLLECTION OF COLLATERAL.
6-1. Use of Inventory Collateral.
(a) The Borrower shall not engage in any sale of the Inventory
other than for fair consideration in the conduct of the Borrower's business in
the ordinary course (including any sale programs) and shall not engage in sales
or other dispositions to creditors (other than sales in the ordinary course of
business on ordinary business terms) ; sales or other dispositions in bulk; and
any use of any of the Inventory in breach of any provision of this Agreement.
(b) Without the consent of the Lender, no sale of Inventory shall
be on consignment, approval, or under any other circumstances such that, with
the exception of the Borrower's customary return policy applicable to the return
of inventory purchased by the Borrower's retail customers in the ordinary
course, such Inventory may be returned to the Borrower.
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6-2. Inventory Quality. All Inventory now owned or hereafter acquired
by the Borrower is and will be of good and merchantable quality and free from
defects (other than defects within customary trade tolerances).
6-3. Adjustments and Allowances. The Borrower may grant such allowances
or other adjustments to the Borrower's Account Debtors (exclusive of extending
the time for payment of any Account or Account Receivable, which shall not be
done without first obtaining the Lender's prior written consent in each
instance) as the Borrower may reasonably deem to accord with sound business
practice, provided, however, the authority granted the Borrower pursuant to this
Section 6-3 may be limited or terminated by the Lender at any time after the
occurrence of an Event of Default in the Lender's discretion.
6-4. Validity of Accounts.
(a) The amount of each Account shown on the books, records,
and invoices of the Borrower represented as owing by each Account Debtor is and
will be the correct amount actually owing by such Account Debtor and shall have
been fully earned by performance by the Borrower.
(b) The Borrower has no knowledge of any impairment of the
validity or collectibility of any material portion of the Accounts and shall
notify the Lender of any such fact promptly after Borrower becomes aware of any
such impairment.
(c) Except as otherwise expressly permitted by this
Agreement, the Borrower shall not post any bond to secure the Borrower's
performance under any agreement to which the Borrower is a party nor cause any
surety, guarantor, or other third party obligee to become liable to perform any
obligation of the Borrower (other than to the Lender) in the event of the
Borrower's failure so to perform.
6-5. Notification to Account Debtors. The Lender shall have the right
at any time (after an Event of Default has occurred) to notify any of the
Borrower's Account Debtors to make payment directly to the Lender and to collect
all amounts due on account of the Collateral.
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ARTICLE 7 - GRANT OF SECURITY INTEREST
7-1. Grant of Security Interest. To secure the Borrower's prompt,
punctual, and faithful performance of all and each of the Borrower's
Liabilities, the Borrower hereby grants to the Lender a continuing security
interest in and to, and assigns to the Lender the following, and each item
thereof, whether now owned or now due, or in which the Borrower has an interest,
or hereafter acquired, arising, or to become due, or in which the Borrower
obtains an interest, and all products, Proceeds, substitutions, and accessions
of or to any of the following (all of which, together with any other property in
which the Lender may in the future be granted a security interest, is referred
to herein as the "COLLATERAL"):
(a) All Accounts and accounts receivable.
(b) All Inventory.
(c) All General Intangibles.
(d) All Equipment.
(e) All Goods.
(f) All Fixtures.
(g) All Chattel Paper.
(h) All books, records, and information relating to the
Collateral and/or to the operation of the Borrower's
business, and all rights of access to such books,
records, and information, and all property in which
such books, records, and information are stored,
recorded, and maintained.
(i) All Investment Property, Instruments, Documents,
Deposit Accounts, policies and certificates of
insurance, deposits, impressed accounts, compensating
balances, money, cash, or other property (including,
without limitation, the Segregated Accounts).
(j) All insurance proceeds, refunds, and premium rebates,
including, without limitation, proceeds of fire and
credit insurance, whether any of such proceeds,
refunds, and premium rebates arise out of any of the
foregoing (7-1(a) through 7-1(i)) or otherwise.
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(k) All liens, guaranties, rights, remedies, and privileges
pertaining to any of the foregoing (7-1(a) through
7-1(i)), including the right of stoppage in transit.
7-2. Extent and Duration of Security Interest. The within grant of a
security interest is in addition to, and supplemental of, any security interest
previously granted by the Borrower to the Lender and shall continue in full
force and effect applicable to all Liabilities until all Liabilities have been
paid and/or satisfied in full and the security interest granted herein is
specifically terminated in writing by a duly authorized officer of the Lender.
7-3. Mortgages. The Liabilities are also secured by mortgages and deeds
of trust on the Real Estate and assignments of leases and rents relating thereto
(all of which for purposes of this Agreement shall be deemed "Collateral").
ARTICLE 8 - LENDER AS BORROWER'S ATTORNEY-IN-FACT.
8-1. Appointment as Attorney-In-Fact. The Borrower hereby irrevocably
constitutes and appoints the Lender as the Borrower's true and lawful attorney,
with full power of substitution, exercisable after the occurrence and during the
continuance of any Event of Default, to convert the Collateral into cash at the
sole risk, cost, and expense of the Borrower, but for the sole benefit of the
Lender. The rights and powers granted the Lender by the within appointment
include but are not limited to the right and power to:
(a) Prosecute, defend, compromise, or release any action relating
to the Collateral.
(b) Sign change of address forms to change the address to which
the Borrower's mail is to be sent to such address as the Lender shall designate;
receive and open the Borrower's mail; remove any Receivables Collateral and
Proceeds of Collateral therefrom and turn over the balance of such mail either
to the Borrower or to any trustee in bankruptcy, receiver, assignee for the
benefit of creditors of the Borrower, or other legal
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representative of the Borrower whom the Lender determines to be the appropriate
person to whom to so turn over such mail.
(c) Endorse the name of the Borrower in favor of the Lender upon
any and all checks, drafts, notes, acceptances, or other items or instruments;
sign and endorse the name of the Borrower on, and receive as secured party, any
of the Collateral, any invoices, schedules of Collateral, freight or express
receipts, or bills of lading, storage receipts, warehouse receipts, or other
documents of title respectively relating to the Collateral.
(d) Sign the name of the Borrower on any notice to the Borrower's
Account Debtors or verification of the Receivables Collateral; sign the
Borrower's name on any Proof of Claim in Bankruptcy against Account Debtors, and
on notices of lien, claims of mechanic's liens, or assignments or releases of
mechanic's liens securing the Accounts.
(e) Take all such action as may be necessary to obtain the payment
of any letter of credit and/or banker's acceptance of which the Borrower is a
beneficiary.
(f) Repair, manufacture, assemble, complete, package, deliver,
alter or supply goods, if any, necessary to fulfill in whole or in part the
purchase order of any customer of the Borrower.
(g) Use, license or transfer any or all General Intangibles of the
Borrower.
(h) Sign and file or record any financing or other statements in
order to perfect or protect the Lender's security and mortgage interest in the
Collateral and other assets of the Borrower.
8-2. No Obligation to Act. The Lender shall not be obligated to do any
of the acts or to exercise any of the powers authorized by Section 8-1 herein,
but if the Lender elects to do any such act or to exercise any of such powers,
it shall not be accountable for more than it actually receives as a result of
such exercise of power, and shall not be responsible to the Borrower for any act
or omission to act except for any act or omission to act as to which there is a
final determination made in a judicial proceeding (in which proceeding the
Lender has had an opportunity to be heard) which determination includes a
specific finding that the subject act or omission to act had been
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grossly negligent or in actual bad faith.
ARTICLE 9 - EVENTS OF DEFAULT.
The occurrence of any event described in this Article 9 respectively
shall constitute an "EVENT OF DEFAULT" herein. Upon the occurrence of any Event
of Default described in Sections 9-10 or 9-11, any and all Liabilities shall
become due and payable without any further act on the part of the Lender. Upon
the occurrence of any other Event of Default, any and all Liabilities shall
become immediately due and payable, at the option of the Lender and without
notice or demand. The occurrence of any Event of Default shall also constitute,
without notice or demand, a default under all other agreements between the
Lender and the Borrower and instruments and papers given the Lender by the
Borrower, whether such agreements, instruments, or papers now exist or hereafter
arise.
9-1. Failure to Pay Term Loan. The failure by the Borrower to pay any
amount when due under the Term Loan.
9-2. Failure To Make Other Payments. The failure by the Borrower to pay
when due (or within Three (3) Business Days after demand, if payable on demand)
any payment Liability other than under the Term Loan.
9-3. Failure to Perform Covenant or Liability (No Grace Period). The
failure by the Borrower to promptly, punctually, faithfully and timely perform,
discharge, or comply with any covenant or Liability not otherwise described in
Section 9-1 or Section 9-2 hereof, and included in any of the following
provisions hereof:
Section Relates to :
--------------------------------------------------
4-2 Due Organization
4-4 Location of Collateral
4-5 Title to Assets
4-6 Indebtedness
4-7 Insurance Policies
4-9(b) Real Estate
4-11(d) Asset Sales
4-12 Pay taxes
4-17 Dividends, Mergers
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4-18 Loans and Advances
4-20 Lines of Business
4-21 Affiliate Transactions
4-23 Additional Assurances
Article 5 Reporting Requirements and Financial
Covenants
9-4. Failure to Perform Covenant or Liability (Grace Period). The
failure by the Borrower, upon Ten (10) days written notice by the Lender, to
cure the Borrower's failure to promptly, punctually and faithfully perform,
discharge, or comply with any covenant or Liability not described in any of
Sections 9-1, 9-2, or 9-3 hereof.
9-5. Misrepresentation. Any material representation or warranty at any
time made by the Borrower to the Lender under this Agreement, any Loan Document,
certificate, financial statement or report delivered pursuant hereto, was not
true or complete in all material respects when given.
9-6. Revolving Credit Default. The occurrence of any of the following
with respect to the Revolving Credit:
(a) The occurrence of a payment Event of Default, not cured
within applicable grace period, if any.
(b) The acceleration by the Revolving Credit Lenders of the
time for payment of the Revolving Credit as a result of the occurrence
of an Event of Default.
(c) The failure of the Borrower to comply with the provisions
of Article 7 (Cash Management) of the Loan and Security Agreement
evidencing the Revolving Credit (as amended and in effect from time to
time), which failure is not waived by the Revolving Credit Lenders or
cured by the Borrower within any applicable grace period.
(d) The outstanding principal balance of the Revolving Credit
exceeds Maximum Loan Exposure (as defined in the Loan and Security
Agreement referenced in Section 9-6(c), above) by an amount in excess
of the Permitted Overadvance (as defined in the Intercreditor Agreement
between the Lender and the Revolving Credit Lenders), which is not
cured by the Borrower within any applicable grace periods.
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9-7. Default Under Other Agreements. The occurrence of any breach or
default under any agreement between the Lender (other than with respect to the
Revolving Credit) and the Borrower or instrument or paper given the Lender by
the Borrower (other than with respect to the Revolving Credit), whether such
agreement, instrument, or paper now exists or hereafter arises (notwithstanding
that the Lender may not have exercised its rights upon default under any such
other agreement, instrument or paper).
9-8. Casualty Loss. Non-Ordinary Course Sales. The occurrence of any
(a) uninsured loss, theft, damage, or destruction of or to any material portion
of the Collateral, or (b) sale (other than sales in the ordinary course of
business or otherwise permitted under this Agreement) of any material portion of
the Collateral.
9-9. Judgment. Restraint of Business.
(a) The service of process upon the Lender seeking to attach, by
trustee, mesne, or other process, any of the Borrower's funds on deposit with,
or assets of the Borrower in the possession of, the Lender, which attachment is
not stayed, dissolved or otherwise satisfied within ten (10) days of its
issuance.
(b) The entry of any judgment against the Borrower which (i)
together with all other existing judgments against the Borrower, exceeds
$750,000.00 in the aggregate, or (ii) could reasonably be expected to have a
material adverse effect on the Borrower's business, financial condition,
operations, performance, properties or prospects, which judgment is not
satisfied (if a money judgment) or appealed from (with execution or similar
process stayed) within thirty (30) days of its entry.
(c) The entry of any order or the imposition of any other process
having the force of law, the effect of which is to restrain in any material way
the conduct by the Borrower of its business in the ordinary course.
9-10. Business Failure. Any act by, against, or relating to the
Borrower, or its property or assets, which act constitutes the application
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for, consent to, or sufferance of the appointment of a receiver, trustee, or
other person, pursuant to court action or otherwise, over all, or any part of
the Borrower's property; provided that the filing of such an application against
the Borrower by another Person shall not constitute an Event of Default unless
the Borrower fails to timely contest same, or if timely contested, such
application is not dismissed within sixty (60) days after its commencement; the
granting of any trust mortgage or execution of an assignment for the benefit of
the creditors of the Borrower, or the occurrence of any other voluntary or
involuntary liquidation or extension of debt agreement for the Borrower; the
offering by or entering into by the Borrower of any composition, extension, or
any other arrangement seeking relief from or extension of the debts of the
Borrower; or the initiation of any judicial or non-judicial proceeding or
agreement by, against, or including the Borrower which seeks or intends to
accomplish a reorganization or arrangement with creditors; and/or the initiation
by or on behalf of the Borrower of the liquidation or winding up of all or any
part of the Borrower's business or operations.
9-11. Bankruptcy. The failure by the Borrower to generally pay the
debts of the Borrower as they mature; adjudication of bankruptcy or insolvency
relative to the Borrower; the entry of an order for relief or similar order with
respect to the Borrower in any proceeding pursuant to the Bankruptcy Code or any
other federal bankruptcy law; the filing of any complaint, application, or
petition by or against the Borrower initiating any matter in which the Borrower
is or may be granted any relief from the debts of the Borrower pursuant to the
Bankruptcy Code or any other insolvency statute or procedure; provided that the
filing of any such complaint, application, or petition against the Borrower by
another Person shall not constitute an Event of Default unless the Borrower
fails to timely contest same, or if timely contested, such complaint,
application or petition is not dismissed within sixty (60) days after its
commencement.
9-12. Default by Guarantor or Related Entity. The occurrence of any of
the foregoing Events of Default with respect to any guarantor of the
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Liabilities, or the occurrence of any of the foregoing Events of Default with
respect to any parent, subsidiary, or Related Entity, as if such guarantor,
parent, or Related Entity were the "Borrower" described therein.
9-13. Indictment - Forfeiture. The indictment of, or institution of any
legal process or proceeding against, the Borrower, under any federal, state,
municipal, and other civil or criminal statute, rule, regulation, order, or
other requirement having the force of law where the relief, penalties, or
remedies sought or available include the forfeiture of any property of the
Borrower and/or the imposition of any stay or other order, the effect of which
could be to restrain in any material way the conduct by the Borrower of its
business in the ordinary course.
9-14. Termination of Guaranty. The termination or attempted termination
of any guaranty by any guarantor of the Liabilities.
9-15. Challenge to Loan Documents.
(a) Any challenge by or on behalf of the Borrower or any
guarantor of the Liabilities to the validity of any material provisions of any
Loan Document or the applicability or enforceability of any Loan Document in
accordance with the subject Loan Document's terms in all material respects or
which seeks to void, avoid, limit, or otherwise adversely affect any security
interest created by or in any Loan Document or any payment made pursuant
thereto.
(b) Any determination by any court or any other judicial or
government authority that any Loan Document is not enforceable in accordance
with the subject Loan Document's terms in all material respects or which voids,
avoids, limits, or otherwise adversely affects any security interest created by
any Loan Document or any payment made pursuant thereto.
9-16. Executive Management. The death, disability, or failure of any of
X. Xxxxxx Xxxx and/or Xxxxxx Xxx at any time to exercise that authority and
discharge those management responsibilities with respect to the Borrower as are
exercised and discharged by such Person at the execution of the within
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Agreement and a qualified successor reasonably acceptable to the Lender has not
replaced such Person within 100 days of such death, disability, or failure.
9-17. Change in Control. Any Change in Control.
9-18. Material Adverse Change. There shall occur any material adverse
change in the assets, liabilities, financial condition, business or prospects of
the Borrower, as determined by the Lender acting in good faith.
ARTICLE 10 - RIGHTS AND REMEDIES UPON DEFAULT.
In addition to all of the rights, remedies, powers, privileges, and
discretions which the Lender is provided prior to the occurrence of an Event of
Default, the Lender shall have the following rights and remedies upon the
occurrence of any Event of Default and at any time thereafter. No stay which
otherwise might be imposed pursuant to Section 362 of the Bankruptcy Code or
otherwise shall stay, limit, prevent, hinder, delay, restrict, or otherwise
prevent the Lender's exercise of any of such rights and remedies.
10-1. Rights of Enforcement. The Lender shall have all of the rights
and remedies of a secured party upon default under the UCC, in addition to which
the Lender shall have all and each of the following rights and remedies:
(a) To collect the Receivables Collateral with or without the
taking of possession of any of the Collateral.
(b) To take possession of all or any portion of the Collateral.
(c) To sell, lease, or otherwise dispose of any or all of the
Collateral, in its then condition or following such preparation or processing as
the Lender deems advisable and with or without the taking of possession of any
of the Collateral.
(d) To conduct one or more going out of business sales which
include the sale or other disposition of the Collateral.
(e) To apply the Receivables Collateral or the Proceeds of the
Collateral towards (but not necessarily in complete satisfaction of) the
Liabilities.
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(f) To exercise all or any of the rights, remedies, powers,
privileges, and discretions under all or any of the Loan Documents.
10-2. Sale of Collateral.
(a) Any sale or other disposition of the Collateral may be at
public or private sale upon such terms and in such manner as the Lender deems
advisable, having due regard to compliance with any statute or regulation which
might affect, limit, or apply to the Lender's disposition of the Collateral.
(b) The Lender, in the exercise of the Lender's rights and
remedies upon default, may conduct one or more going out of business sales, in
the Lender's own right or by one or more agents and contractors. Such sale(s)
may be conducted upon any premises owned, leased, or occupied by the Borrower.
The Lender and any such agent or contractor, in conjunction with any such sale,
may augment the Inventory with other goods (all of which other goods shall
remain the sole property of the Lender or such agent or contractor). Any amounts
realized from the sale of such goods which constitute augmentations to the
Inventory (net of an allocable share of the costs and expenses incurred in their
disposition) shall be the sole property of the Lender or such agent or
contractor and neither the Borrower nor any Person claiming under or in right of
the Borrower shall have any interest therein.
(c) Unless the Collateral is perishable or threatens to decline
speedily in value, or is of a type customarily sold on a recognized market (in
which event the Lender shall provide the Borrower with such notice as may be
practicable under the circumstances), the Lender shall give the Borrower at
least seven (7) days prior written notice of the date, time, and place of any
proposed public sale, and of the date after which any private sale or other
disposition of the Collateral may be made. The Borrower agrees that such written
notice shall satisfy all requirements for notice to the Borrower which are
imposed under the UCC or other applicable law with respect to the exercise of
the Lender's rights and remedies upon default.
(d) The Lender or any Participant may purchase the Collateral,
or any portion of it at any public sale held under this Article.
(e) The Lender shall apply the proceeds of any exercise of the
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Rights and Remedies under this Article 10 towards the Liabilities in such
manner, and with such frequency, as the Lender determines.
10-3. Occupation of Business Location. In connection with the Lender's
exercise of the Lender's rights under this Article 10, the Lender may enter
upon, occupy, and use any premises owned or occupied by the Borrower, and may
exclude the Borrower from such premises or portion thereof as may have been so
entered upon, occupied, or used by the Lender. The Lender shall not be required
to remove any of the Collateral from any such premises upon the Lender's taking
possession thereof, and may render any Collateral unusable to the Borrower. In
no event shall the Lender be liable to the Borrower for use or occupancy by the
Lender of any premises pursuant to this Article 10.
10-4. Grant of Nonexclusive License. The Borrower hereby grants to the
Lender a royalty free nonexclusive irrevocable license to use, apply, and affix
any trademark, trade name, logo, or the like in which the Borrower now or
hereafter has rights, such license being with respect to the Lender's exercise
of the rights hereunder including, without limitation, in connection with any
completion of the manufacture of Inventory or sale or other disposition of
Inventory.
10-5. Assembly of Collateral. The Lender may require the Borrower to
assemble the Collateral and make it available to the Lender at the Borrower's
sole risk and expense at a place or places which are reasonably convenient to
both the Lender and Borrower.
10-6. Rights and Remedies. The rights, remedies, powers, privileges,
and discretions of the Lender hereunder (herein, the "RIGHTS AND REMEDIES")
shall be cumulative and not exclusive of any rights or remedies which it would
otherwise have. No delay or omission by the Lender in exercising or enforcing
any of the Rights and Remedies shall operate as, or constitute, a waiver
thereof. No waiver by the Lender of any Event of Default or of any default under
any other agreement shall operate as a waiver of any other default hereunder or
under any other agreement. No single or partial exercise of any
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of the Rights or Remedies, and no express or implied agreement or transaction of
whatever nature entered into between the Lender and any person, at any time,
shall preclude the other or further exercise of the Rights and Remedies. No
waiver by the Lender of any of the Rights and Remedies on any one occasion shall
be deemed a waiver on any subsequent occasion, nor shall it be deemed a
continuing waiver. All of the Rights and Remedies and all of the Lender's
rights, remedies, powers, privileges, and discretions under any other agreement
or transaction are cumulative, and not alternative or exclusive, and may be
exercised by the Lender at such time or times and in such order of preference as
the Lender in its sole discretion may determine. The Rights and Remedies may be
exercised without resort or regard to any other source of satisfaction of the
Liabilities.
ARTICLE 11 - NOTICES.
11-1. Notice Addresses. All notices, demands, and other communications
made in respect of this Agreement shall be made to the following addresses, each
of which may be changed upon seven (7) days written notice to all others given
by certified mail, return receipt requested:
If to the Lender:
BankBoston Retail Finance Inc.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention : Xx. Xxxxxx X. XxXxxxxxx
Senior Vice President
Fax : 000 000-0000
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With a copy to:
Xxxxxx & Xxxxxxxxxx
Xxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention : Xxxxx X. Xxxxxx, Esquire
Fax : 000 000-0000
If to the Borrower:
Sun Television and Appliances, Inc.
0000 Xxxx Xxxx
Xxxxxxxxx, Xxxx 00000
Attention : Xx. X. Xxxxxx Xxxx
Fax : 000-000-0000 and 000-000-0000
With a copy to:
Porter, Wright, Xxxxxx & Xxxxxx
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attention : Attorney Xxxxxxxx X. Xxxxx
Fax: : 000 000-0000
11-2. Notice Given.
(a) Except as otherwise specifically provided herein, notices
shall be deemed made and correspondence received, as follows (all times being
local to the place of delivery or receipt):
(i) By mail: the sooner of when actually received or Three
(3) days following deposit in the United States mail, postage prepaid.
(ii) By recognized overnight express delivery: the Business
Day following the day when sent.
(iii) By Hand: If delivered on a Business Day after 9:00 AM
and no later than Three (3) hours prior to the close of customary
business hours of the recipient, when delivered. Otherwise, at the
opening of the then next Business Day.
(iv) By Facsimile transmission (which must include a header
indicated the party sending such transmission): If sent on a Business
Day no later than Three (3) hours prior to the close of customary
business hours of the recipient, one (1) hour after being sent (but in
no event earlier than 10:00 AM). Otherwise, at the opening of the then
next Business Day.
(b) Rejection or refusal to accept delivery and inability to
deliver because of a changed address or Facsimile Number for which no due
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notice was given shall each be deemed receipt of the notice sent.
ARTICLE 12 - GENERAL.
12-1. Protection of Collateral. The Lender has no duty as to the
collection or protection of the Collateral beyond the safe custody of such of
the Collateral as may come into the possession of the Lender and shall have no
duty as to the preservation of rights against prior parties or any other rights
pertaining thereto. The Lender may include reference to the Borrower (and may
utilize any logo or other distinctive symbol associated with the Borrower) in
connection with any advertising, promotion, or marketing undertaken by the
Lender.
12-2. Successors and Assigns; Intercreditor Agreement. (a) This
Agreement shall be binding upon the Borrower and the Borrower's representatives,
successors, and assigns and shall enure to the benefit of the Lender and each
Participant and the respective successors and assigns of each provided, however,
no trustee or other fiduciary appointed with respect to the Borrower shall have
any rights hereunder. In the event that the Lender assigns or transfers all or
any portion of its rights under this Agreement, the assignee shall thereupon be
deemed a "Lender" hereunder to extent of such assignment, shall succeed to and
become vested with all rights, powers, privileges, and duties of such assignor
hereunder to the extent so assigned and such assignor shall thereupon be
discharged and relieved from its duties and obligations hereunder.
(b) The Borrower recognizes that the Lender's exercise of any
discretion accorded to the Lender herein and of its rights, remedies, powers,
privileges, and discretions with respect to the Borrower is subject to the
provisions of an Intercreditor Agreement with the Revolving Credit Lenders and
of a Participation Agreement with the Participants (each of which sets forth,
among other things, certain prerequisites to the undertaking of certain action
under the Loan Documents).
12-3. Severability. Any determination that any provision of this
Agreement or any application thereof is invalid, illegal, or unenforceable in
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any respect in any instance shall not affect the validity, legality, or
enforceability of such provision in any other instance, or the validity,
legality, or enforceability of any other provision of this Agreement.
12-4. Amendments. Course of Dealing.
(a) This Agreement and the other Loan Documents incorporate
all discussions and negotiations between the Borrower and the Lender, either
express or implied, concerning the matters included herein and in such other
instruments, any custom, usage, or course of dealings to the contrary
notwithstanding. No such discussions, negotiations, custom, usage, or course of
dealings shall limit, modify, or otherwise affect the provisions thereof. No
failure by the Lender to give notice to the Borrower of the Borrower's having
failed to observe and comply with any warranty or covenant included in any Loan
Document shall constitute a waiver of such warranty or covenant or the amendment
of the subject Loan Document.
(b) The Borrower may undertake any action otherwise prohibited
hereby, and may omit to take any action otherwise required hereby, upon and with
the express prior written consent of the Lender. No consent, modification,
amendment, or waiver of any provision of any Loan Document shall be effective
unless executed in writing by or on behalf of the party to be charged with such
modification, amendment, or waiver (and if such party is the Lender, then by a
duly authorized officer thereof). Any modification, amendment, or waiver
provided by the Lender shall be in reliance upon all representations and
warranties theretofore made to the Lender by or on behalf of the Borrower (and
any guarantor, endorser, or surety of the Liabilities) and consequently may be
rescinded in the event that any of such representations or warranties was not
true and complete in all material respects when given.
12-5. Power of Attorney. In connection with all powers of attorney
included in this Agreement, the Borrower hereby grants unto the Lender full
power to do any and all things necessary or appropriate in connection with the
exercise of such powers as fully and effectually as the Borrower might or could
do, hereby ratifying all that said attorney shall do or cause to be done
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by virtue of this Agreement. No power of attorney set forth in this Agreement
shall be affected by any disability or incapacity suffered by the Borrower and
each shall survive the same. All powers conferred upon the Lender by this
Agreement, being coupled with an interest, shall be irrevocable until this
Agreement is terminated by a written instrument executed by a duly authorized
officer of the Lender.
12-6. Application of Proceeds. The proceeds of any collection, sale, or
disposition of the Collateral, or of any other payments received hereunder,
shall be applied towards the Liabilities in such order and manner as the Lender
determines in its sole discretion (subject, however, to the terms of the
Intercreditor Agreement with the Revolving Credit Lenders and participation
agreements with any Participants). The Borrower shall remain liable for any
deficiency remaining following such application.
12-7. Costs and Expenses. The Borrower shall pay on demand all Costs of
Collection and all reasonable expenses of the Lender and each Participant in
connection with the preparation, execution, and delivery of this Agreement and
of any other Loan Documents, whether now existing or hereafter arising, and all
other reasonable expenses which may be incurred by the Lender and each
Participant in preparing or amending this Agreement and all other agreements,
instruments, and documents related thereto, or otherwise incurred with respect
to the Liabilities, but excluding, in any event those costs and expenses for
which the Borrower is not responsible under Section 5-9 hereof. The Borrower
specifically authorizes the Lender to pay all such fees and expenses and in the
Lender's discretion, to add such fees and expenses to the Loan Account. The
within undertaking, on the part of the Borrower, shall survive payment of the
Liabilities and/or any termination, release, or discharge executed by the Lender
in favor of the Borrower, other than a termination, release, or discharge which
makes specific reference to this Section 12-7.
12-8. Copies and Facsimiles. This Agreement and all documents which
relate thereto, which have been or may be hereinafter furnished the Lender may
be reproduced by that Person or by the Lender by any photographic, microfilm,
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xerographic, digital imaging, or other process, and that Person may destroy any
document so reproduced. Any such reproduction shall be admissible in evidence as
the original itself in any judicial or administrative proceeding (whether or not
the original is in existence and whether or not such reproduction was made in
the regular course of business). Any facsimile which bears proof of transmission
shall be binding on the party which or on whose behalf such transmission was
initiated and likewise shall be so admissible in evidence as if the original of
such facsimile had been delivered to the party which or on whose behalf such
transmission was received.
12-9. Massachusetts Law. This Agreement and all rights and obligations
hereunder, including matters of construction, validity, and performance, shall
be governed by the laws of The Commonwealth of Massachusetts.
12-10. Consent to Jurisdiction.
(a) The Borrower agrees that any legal action, proceeding,
case, or controversy against the Borrower with respect to any Loan Document may
be brought in the Superior Court of Suffolk County Massachusetts or in the
United States District Court, District of Massachusetts, sitting in Boston,
Massachusetts, as the Lender may elect in the Lender's sole discretion. By
execution and delivery of this Agreement, the Borrower, for itself and in
respect of its property, accepts, submits, and consents generally and
unconditionally, to the jurisdiction of the aforesaid courts.
(b) The Borrower WAIVES personal service of any and all
process upon it, and irrevocably consents to the service of process out of any
of the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by certified mail, postage prepaid, to the Borrower at the
Borrower's address for notices as specified herein.
(c) The Borrower WAIVES any objection based on forum non
conveniens and any objection to venue of any action or proceeding instituted
under any of the Loan Documents.
(d) Nothing herein shall affect the right of the Lender to
bring legal actions or proceedings in any other competent jurisdiction.
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(e) The Borrower agrees that any action commenced by the
Borrower asserting any claim or counterclaim arising under or in connection with
this Agreement or any other Loan Document shall be brought solely in the
Superior Court of Suffolk County Massachusetts or in the United States District
Court, District of Massachusetts, sitting in Boston, Massachusetts, and that
such Courts shall have exclusive jurisdiction with respect to any such action.
12-11. Indemnification. The Borrower shall indemnify, defend, and hold
the Lender and each Participant and any director, employee, officer, partner,
agent, Affiliate, attorneys, accountants, and consultants of any of the
foregoing (each, an "INDEMNIFIED PERSON") harmless of and from any claim brought
or threatened against any Indemnified Person by the Borrower, any guarantor or
endorser of the Liabilities, or any other Person (as well as from attorneys'
reasonable fees and expenses in connection therewith) on account of the
relationship of the Borrower or of any Guarantor or endorser of the Liabilities
with the Lender or any Participant (each of claims which may be defended,
compromised, settled, or pursued by the Indemnified Person with counsel of the
Lender's selection, but at the expense of the Borrower) other than any claim as
to which a final determination is made in a judicial proceeding (in which the
Lender and any other Indemnified Person has had an opportunity to be heard),
which determination includes a specific finding that the Indemnified Person
seeking indemnification had acted in a grossly negligent manner or in actual bad
faith or in breach by such Indemnified Person of its contractual obligations
under the Loan Documents. If for any reason the foregoing indemnification is
unavailable to any Indemnified Person or insufficient to hold it harmless, then
the Borrower shall contribute to the amount paid or payable by such Indemnified
Person as a result of such loss, claim, damage or liability to the maximum
amount legally permissible. The within indemnification shall survive payment of
the Liabilities and/or any termination, release, or discharge executed by the
Lender in favor of the Borrower, other than a termination, release, or discharge
which makes specific reference to this Section 12-11. The Borrower also agrees
that any Indemnified Person shall not have any liability to the Borrower, any
person
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asserting claims on behalf or in right of the Borrower or any other person in
connection with or as a result of either this arrangement or any matter referred
to herein or in the Loan Documents except to the extent that there is a final
determination made in a judicial proceeding, which determination includes a
specific finding that the losses, claims, damages, liabilities or expenses
incurred by the Borrower resulted from the gross negligence or bad faith of such
Indemnified Person or the breach by such Indemnified Person of its contractual
obligations under the Loan Documents.
12-12. Rules of Construction. The following rules of construction shall
be applied in the interpretation, construction, and enforcement of this
Agreement and of the other Loan Documents:
(a) Words in the singular include the plural and words in the
plural include the singular.
(b) Headings (indicated by being underlined) and the Table of
Contents are solely for convenience of reference and do not constitute a part of
the instrument in which included and do not affect such instrument's meaning,
construction, or effect.
(c) The words "includes" and "including" are not limiting.
(d) Text which follows the words "including, without limitation"
(or similar words) is illustrative and not limitational.
(e) Text which is underlined, shown in italics, shown in BOLD,
shown IN ALL CAPITAL LETTERS, or in any combination of the foregoing, shall be
deemed to be conspicuous.
(f) The words "may not" are prohibitive and not permissive.
(g) The word "or" is not exclusive.
(h) Terms which are defined in one section of an instrument are
used with such definition throughout the instrument in which so defined.
(i) The symbol "$" refers to United States Dollars.
(j) References to "herein", "hereof", and "within" are to this
entire Loan Agreement and not merely the provision in which such reference is
included.
(k) Except as otherwise specifically provided, all references to
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time are to Boston time.
(l) In the determination of any notice, grace, or other period
of time prescribed or allowed hereunder, unless otherwise provided (A) the day
of the act, event, or default from which the designated period of time begins to
run shall not be included and the last day of the period so computed shall be
included unless such last day is not a Business Day, in which event the last day
of the relevant period shall be the then next Business Day and (B) the period so
computed shall end at 5:00 PM on the relevant Business Day.
(m) The Loan Documents shall be construed and interpreted in a
harmonious manner and in keeping with the intentions set forth in Section 12- 13
hereof, provided, however, in the event of any inconsistency between the
provisions of the within Agreement and any other Loan Document, the provisions
of the within Agreement shall govern and control.
12-13. Intent. It is intended that:
(a) This Agreement take effect as a sealed instrument.
(b) The scope of the security interests created by this
Agreement be broadly construed in favor of the Lender.
(c) The security interests created by this Agreement secure
all Liabilities, whether now existing or hereafter arising.
(d) All reasonable costs and expenses incurred by the Lender
and each Participant in connection with such Person's relationship(s) with the
Borrower shall be borne by the Borrower.
(e) Unless otherwise explicitly provided herein, the Lender's
consent to any action of the Borrower which is prohibited unless such consent is
given may be given or refused by the Lender in its sole discretion.
12-14. Right of Set-Off. Any and all deposits or other sums at any time
credited by or due to the undersigned from the Lender and any cash, securities,
instruments or other property of the undersigned in the possession of the
Lender, whether for safekeeping or otherwise (regardless of the reason such
Person had received the same) shall at all times constitute security for all
Liabilities and for any and all obligations of the undersigned to the Lender,
and may be applied or set off against the Liabilities and against such
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obligations at any time, whether or not such are then due and whether or not
other collateral is then available to the Lender.
12-15. Maximum Interest Rate. Regardless of any provision of any Loan
Document, none of the Lender or any Participant shall be entitled to contract
for, charge, receive, collect, or apply as interest on any Liability, any amount
in excess of the maximum rate imposed by applicable law. Any payment which is
made which, if treated as interest on a Liability would result in such
interest's exceeding such maximum rate shall be held, to the extent of such
excess, as additional collateral for the Liabilities as if such excess were
"Collateral."
12-16. Waivers.
(a) The Borrower (and all guarantors, endorsers, and sureties
of the Liabilities) make each of the waivers included in Section 12-16(b),
below, knowingly, voluntarily, and intentionally, and understands that the
Lender, in entering into the financial arrangements contemplated hereby and in
providing loans and other financial accommodations to or for the account of the
Borrower as provided herein, whether not or in the future, is relying on such
waivers.
(b) THE BORROWER, AND EACH SUCH GUARANTOR, ENDORSER, AND SURETY
RESPECTIVELY WAIVES THE FOLLOWING:
(i) Except as otherwise specifically required hereby, notice
of non-payment, demand, presentment, protest and all forms of demand
and notice, both with respect to the Liabilities and the Collateral.
(ii) Except as otherwise specifically required hereby, the
right to notice and/or hearing prior to the Lender's exercising of the
Lender's rights upon default.
(iii) THE RIGHT TO A JURY IN ANY TRIAL OF ANY CASE OR
CONTROVERSY IN WHICH THE LENDER OR ANY PARTICIPANT IS OR BECOMES A
PARTY (WHETHER SUCH CASE OR CONTROVERSY IS INITIATED BY OR AGAINST THE
LENDER OR ANY PARTICIPANT OR IN WHICH THE LENDER OR ANY PARTICIPANT IS
JOINED AS A PARTY LITIGANT), WHICH CASE OR CONTROVERSY ARISES OUT OF OR
IS IN RESPECT OF, ANY RELATIONSHIP AMONGST OR BETWEEN THE BORROWER OR
ANY
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OTHER PERSON AND THE LENDER OR ANY PARTICIPANT (AND THE LENDER AND EACH
PARTICIPANT LIKEWISE WAIVES THE RIGHT TO A JURY IN ANY TRIAL OF ANY
SUCH CASE OR CONTROVERSY).
(iv) The benefits or availability of any stay, limitation,
hindrance, delay, or restriction (including, without limitation, any
automatic stay which otherwise might be imposed pursuant to Section 362
of the Bankruptcy Code) with respect to any action which the Lender may
or may become entitled to take hereunder.
(v) Any defense, counterclaim, set-off, recoupment, or other
basis on which the amount of any Liability could be reduced or claimed
to be paid otherwise than in accordance with the tenor of and written
terms of such Liability.
(vi) Any claim to consequential, special, or punitive
damages.
SUN TELEVISION AND APPLIANCES, INC.
("BORROWER")
By /s/ X. XXXXXX XXXX
---------------------------------
Print Name: X. Xxxxxx Xxxx
--------------------------------
Title: President
--------------------------------
BANKBOSTON RETAIL FINANCE INC.
("LENDER")
By /s/ XXXXXX XXXXXXXXX
---------------------------------
Print Name: Xxxxxx XxXxxxxxx
--------------------------------
Title: Senior Vice President
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