EXHIBIT 99.1
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$260,000,000
POSTPETITION
CREDIT AGREEMENT
AMONG
XXXXXX FURNITURE INCORPORATED
XXXXXX FURNITURE CORPORATION
XXXXXX FURNITURE REALTY CORPORATION
XXXXXX SHOPPING SERVICE, INC.
XXXXXX FURNITURE COMPANY OF THE MIDWEST, INC.
XXXXXX FURNITURE COMPANY OF THE PACIFIC, INC.
XXXXXX FURNITURE COMPANY OF WASHINGTON, INC.
XXXXXX FURNITURE COMPANY OF THE MIDWEST REALTY, INC.
XXXXXX FURNITURE COMPANY OF THE PACIFIC REALTY, INC.
XXXXXX FURNITURE COMPANY OF WASHINGTON REALTY, INC.
XXXX X. XXXXX COMPANY
AND
XXXX X. XXXXX REALTY COMPANY,
DEBTORS AND DEBTORS IN POSSESSION,
AS BORROWERS
THE FINANCIAL INSTITUTIONS
FROM TIME TO TIME PARTIES HERETO
AS LENDERS
WITH
XXXXXX FURNITURE CORPORATION
AS LFC FUNDS ADMINISTRATOR
AND
BT COMMERCIAL CORPORATION,
AS AGENT
DATED AS OF SEPTEMBER 5, 1997
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TABLE OF CONTENTS
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ARTICLE 1. DEFINITIONS............................................................................. 3
1.1 General Definitions............................................................... 3
1.2 Accounting Terms and Determinations............................................... 24
1.3 Other Terms; Headings............................................................. 25
1.4 Separate Capacity................................................................. 25
ARTICLE 2. REVOLVING LOANS.......................................................................... 25
2.1 Revolving Commitments............................................................. 25
2.2 Borrowing of Revolving Loans...................................................... 26
2.3 Notice of Request for Revolving Lender
Revolving Advances................................................................ 27
2.4 Periodic Settlement of Agent Revolving
Advances; Interest and Revolving Fees;
Statements........................................................................ 27
2.5 Sharing of Payments............................................................... 28
2.6 Defaulting Revolving Lenders...................................................... 29
2.7 Superpriority and Liens........................................................... 30
ARTICLE 2A. TERM LOAN............................................................................... 31
ARTICLE 3. LETTERS OF CREDIT........................................................................ 31
3.1 Issuance of Letters of Credit..................................................... 31
3.2 Terms of Letters of Credit........................................................ 32
3.3 Notice of Issuance................................................................ 32
3.4 Revolving Lenders' Participation.................................................. 32
3.5 Payments of Amounts Drawn Under Letters of
Credit............................................................................ 32
3.6 Payment by Revolving Lenders...................................................... 33
3.7 Obligations Absolute.............................................................. 33
3.8 Agent's Execution of Applications and Other
Issuing Bank Documentation; Reliance on
Credit Agreement by Issuing Bank.................................................. 33
3.9 Existing Letters of Credit........................................................ 34
ARTICLE 4. COMPENSATION, REPAYMENT AND REDUCTION OF
COMMITMENTS.............................................................................. 34
4.1 Interest on Revolving Loans....................................................... 34
4.1A Interest on Term Loan............................................................. 35
4.1B Interest on Prepetition Obligations............................................... 35
4.2 Unused Line Fee................................................................... 36
4.3 Letter of Credit Fees............................................................. 36
4.4 Facility Fee...................................................................... 36
4.5 Interest and Letter of Credit Fees After
Event of Default.................................................................. 36
4.6 Expenses.......................................................................... 37
4.7 Mandatory Payment of Revolving Loans;
Reductions of Revolving Commitments............................................... 37
4.7A No Permitted Prepayment of Term Loan.............................................. 38
4.8 Maintenance of Revolving Loan Account;
Statements of Account............................................................. 38
4.9 Payment Procedures................................................................ 38
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4.10 Collection of Accounts............................................................ 39
4.11 Distribution and Application of Collections
and other Amounts................................................................. 39
4.12 Calculations...................................................................... 40
4.13 Special Provisions Relating to LIBOR Rate
Loans............................................................................. 41
4.14 Indemnification in Certain Events................................................. 44
ARTICLE 5. CONDITIONS PRECEDENT..................................................................... 47
5.1 Conditions Precedent to Initial Loans and
Letter of Credit.................................................................. 47
5.2 Conditions Precedent to All Revolving Loans
and Letters of Credit............................................................. 47
ARTICLE 6. REPRESENTATIONS AND WARRANTIES........................................................... 48
6.1 Organization and Qualification.................................................... 48
6.2 Authority......................................................................... 49
6.3 Enforceability.................................................................... 49
6.4 Reserved.......................................................................... 49
6.5 Consents and Filings.............................................................. 49
6.6 Government Regulation............................................................. 50
6.7 Rights in Collateral; Priority of Liens........................................... 50
6.8 Financial Data.................................................................... 50
6.9 Locations of Offices, Records and Inventory....................................... 50
6.10 Subsidiaries; Ownership of Stock.................................................. 51
6.11 No Judgments or Litigation........................................................ 51
6.12 Labor Matters..................................................................... 51
6.13 Compliance with Law............................................................... 52
6.14 ERISA............................................................................. 52
6.15 Compliance with Environmental Laws................................................ 52
6.16 Intellectual Property............................................................. 53
6.17 Licenses and Permits.............................................................. 53
6.18 Taxes and Tax Returns............................................................. 53
6.19 Material Contracts................................................................ 54
6.20 Accuracy and Completeness of Information.......................................... 54
6.21 No Change......................................................................... 54
ARTICLE 7. AFFIRMATIVE COVENANTS.................................................................... 55
7.1 Financial Reporting............................................................... 55
7.2 Collateral Reporting.............................................................. 57
7.3 Notification Requirements......................................................... 57
7.4 Corporate Existence............................................................... 59
7.5 Books and Records; Inspections.................................................... 59
7.6 Insurance......................................................................... 59
7.7 Postpetition Charges.............................................................. 60
7.8 Compliance with Laws.............................................................. 60
7.9 Use of Proceeds................................................................... 61
7.10 Fiscal Year....................................................................... 61
7.11 Maintenance of Property........................................................... 61
7.12 ERISA Documents................................................................... 61
7.13 Environmental and Other Matters................................................... 62
7.14 Restoration and Repair of Borrowers' Real
Property.......................................................................... 62
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7.15 Store Closings.................................................................... 63
ARTICLE 8. NEGATIVE COVENANTS....................................................................... 63
8.1 Minimum EBITDA.................................................................... 63
8.2 Capital Expenditures.............................................................. 64
8.2A Establishment of Continuing Financial
Covenants......................................................................... 64
8.3 Additional Indebtedness........................................................... 64
8.4 Liens............................................................................. 65
8.5 Contingent Obligations............................................................ 66
8.6 Sale of Assets.................................................................... 66
8.7 Restricted Payments............................................................... 66
8.8 Investments....................................................................... 67
8.9 Affiliate Transactions............................................................ 68
8.10 Additional Bank Accounts.......................................................... 68
8.11 Excess Cash....................................................................... 68
8.12 Additional Negative Pledges....................................................... 69
8.13 Additional Subsidiaries........................................................... 69
8.14 Changes to Certain Documents...................................................... 69
8.15 Returns to Vendors................................................................ 69
8.16 Reclamation Claims................................................................ 69
8.17 Application to the Bankruptcy Court............................................... 70
8.18 Modifications to Interim Financing Order or
Permanent Financing Order......................................................... 70
ARTICLE 9. EVENTS OF DEFAULT AND REMEDIES........................................................... 70
9.1 Events of Default................................................................. 70
9.2 Remedies.......................................................................... 73
9.2A Acceleration of Postpetition Obligations in
Respect of Term Loans............................................................. 74
9.3 Right of Setoff................................................................... 74
9.4 Application of Proceeds; Surplus;
Deficiencies...................................................................... 75
ARTICLE 10. THE AGENT............................................................................... 75
10.1 Appointment of Agent.............................................................. 75
10.2 Nature of Duties of Agent......................................................... 75
10.3 Lack of Reliance on Agent......................................................... 76
10.4 Certain Rights of the Agent....................................................... 76
10.5 Reliance by Agent................................................................. 77
10.6 Indemnification of Agent.......................................................... 77
10.7 The Agent in its Individual Capacity.............................................. 77
10.8 Holders of Notes.................................................................. 78
10.9 Successor Agent................................................................... 78
10.10 Collateral Matters................................................................ 78
ARTICLE 11. MISCELLANEOUS........................................................................... 80
11.1 GOVERNING LAW..................................................................... 80
11.2 SUBMISSION TO JURISDICTION........................................................ 80
11.3 SERVICE OF PROCESS................................................................ 81
11.4 JURY TRIAL........................................................................ 81
11.5. LIMITATION OF LIABILITY........................................................... 81
11.6 Delays............................................................................ 81
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11.7 Notices........................................................................... 81
11.8 Assignments and Participations.................................................... 82
11.9 Confidentiality................................................................... 84
11.10 Indemnification................................................................... 84
11.11 Amendments and Waivers............................................................ 85
11.12 Counterparts and Effectiveness.................................................... 86
11.13 Severability...................................................................... 86
11.14 Maximum Rate...................................................................... 87
11.15 Entire Agreement; Successors and Assigns.......................................... 87
11.16 Joint and Several Liability of Borrowers.......................................... 88
11.17 Prepetition Lender Consents....................................................... 88
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ANNEXES
ANNEX I
List of Revolving Lenders; Revolving Commitment Amounts;
Applicable Lending Offices
ANNEX II
List of Term Lenders; Term Commitment Amounts
SCHEDULES
SCHEDULE A Closing Document List
SCHEDULE B Disclosure Schedules
SCHEDULE B, PART 6.1 States in which Qualified
SCHEDULE B, PART 6.8 Contingent Obligations and
Other Liabilities
SCHEDULE B, PART 6.9 Chief Executive Offices;
Locations of Collateral
SCHEDULE B, PART 6.10 Subsidiaries
SCHEDULE B, PART 6.11 Pending Judgments, Litigation
and other Claims
SCHEDULE B, PART 6.12 Labor Contracts
SCHEDULE B, PART 6.14 Plans
SCHEDULE B, PART 6.15 Environmental Matters
SCHEDULE B, PART 6.18 Tax Matters; Tax Sharing
Agreements
SCHEDULE B, PART 6.19 Material Contracts
SCHEDULE B, PART 8.3 Existing Indebtedness
SCHEDULE B, PART 8.4 Existing Liens
SCHEDULE B, PART 8.8 Existing Investments
SCHEDULE B, PART 8.10 Disbursement Accounts
EXHIBITS
EXHIBIT A Form of Borrowing Base
Certificate
EXHIBIT B Form of Notice of Borrowing
EXHIBIT C-1 Form of Revolving Note
EXHIBIT C-2 Form of Term Note
EXHIBIT D Form of Notice of Continuation
EXHIBIT E Form of Notice of Conversion
EXHIBIT F Form of Compliance Certificate
EXHIBIT G-1 Form of Revolving Assignment
and Assumption Agreement
EXHIBIT G-2 Form of Term Assignment and
Assumption Agreement
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THIS POSTPETITION CREDIT AGREEMENT, dated as of September 5, 1997 (this
"CREDIT AGREEMENT"), is among XXXXXX FURNITURE INCORPORATED, a Delaware
corporation and a debtor and debtor in possession ("LFI"), XXXXXX FURNITURE
COMPANY, a Florida corporation and a debtor and debtor in possession ("LFC"),
XXXXXX FURNITURE REALTY CORPORATION, a Florida corporation and a debtor and
debtor in possession ("LFR"), XXXXXX SHOPPING SERVICE, INC., a Florida
corporation and a debtor and debtor in possession ("LSS"), XXXXXX FURNITURE
COMPANY OF THE MIDWEST, INC., a Colorado corporation and a debtor and debtor in
possession ("LFC MIDWEST"), XXXXXX FURNITURE COMPANY OF THE PACIFIC, INC., a
California corporation and a debtor and debtor in possession ("LFC PACIFIC"),
XXXXXX FURNITURE COMPANY OF WASHINGTON, INC., a Washington corporation and a
debtor and debtor in possession ("LFC WASHINGTON") XXXXXX FURNITURE COMPANY OF
THE MIDWEST REALTY, INC., a Colorado corporation and a debtor and debtor in
possession ("LFC MIDWEST REALTY"), XXXXXX FURNITURE COMPANY OF THE PACIFIC
REALTY, INC., a California corporation and a debtor and a debtor in possession
("LFC PACIFIC REALTY"), XXXXXX FURNITURE COMPANY OF WASHINGTON REALTY, INC., a
Washington corporation and debtor and a debtor in possession ("LFC WASHINGTON
REALTY"), XXXX X. XXXXX COMPANY, an Illinois corporation and a debtor and debtor
in possession ("JMS") and XXXX X. XXXXX REALTY COMPANY an Illinois corporation
and a debtor and debtor in possession ("JMS REALTY") (LFI, LFC, LFR, LSS, LFC
Midwest, LFC Pacific, LFC Washington, LFC Midwest Realty, LFC Pacific Realty,
LFC Washington Realty, JMS and JMS Realty sometimes hereinafter individually
called a "BORROWER" and collectively called the "BORROWERS"); each financial
institution identified on ANNEX I (together with its successors and permitted
assigns hereinafter individually called a "REVOLVING LENDER" and collectively
called the "REVOLVING LENDERS"); each financial institution identified on ANNEX
II (together with its successors and permitted assigns, hereinafter individually
called a "TERM LENDER" and collectively called the "TERM LENDERS"; the Term
Lenders, together with the Revolving Lenders, are hereinafter collectively
called the "LENDERS"); and BT COMMERCIAL CORPORATION, a Delaware corporation (in
its individual capacity, hereinafter called "BTCC"), acting in its capacity as
agent for the Lenders (in such capacity, together with its successors in such
capacity, hereinafter called the "AGENT").
PRELIMINARY STATEMENTS:
A. Certain of the Borrowers are parties to (i) the $150,000,000 Credit
Agreement dated as of July 1, 1996 (the "TRANCHE A CREDIT AGREEMENT") with the
Lenders, as revolving lenders and the term lenders thereunder (the Lenders in
such capacities hereinafter individually called the "PREPETITION REVOLVING
LENDERS" and the "PREPETITION TERM LENDERS", respectively, and collectively the
"TRANCHE A LENDERS") and BTCC, as agent, and (ii) the $40,000,000 Credit
Agreement dated as of July 1, 1996 (the "TRANCHE B CREDIT AGREEMENT" and,
collectively with the Tranche A Credit Agreement, the "PREPETITION CREDIT
AGREEMENTS") with the Lenders, as lenders thereunder (the "TRANCHE
B LENDERS" and, collectively with the Tranche A Lenders, the "PREPETITION
LENDERS") and BTCC, as agent.
B. Under the Tranche A Credit Agreement, the Prepetition Revolving
Lenders provided certain of the Borrowers with a revolving credit facility up to
an aggregate outstanding principal amount of $115,000,000, of which
$77,041,536.30 is presently outstanding and the Prepetition Term Lenders made a
term loan to the Borrowers in the original principal amount of $35,000,000,
under which $36,356,250 is presently outstanding (the "PREPETITION TRANCHE A
TERM LOAN").
C. Under the Tranche B Credit Agreement, the Tranche B Lenders provided
certain of the Borrowers with a nonrevolving line of credit in the original
principal amount of $40,000,000, of which $39,515,134 is presently outstanding.
D. To secure their obligations under the Prepetition Credit Agreements,
certain of the Borrowers granted to BTCC, as collateral agent for the
Prepetition Lenders, security interests in substantially all of their respective
assets.
E. The security interests granted by certain of the Borrowers to secure
the Prepetition Obligations (hereinafter defined) were properly perfected and
are subject to no prior liens or security interests, and the liquidation value
of certain of the Borrowers' assets securing the Prepetition Obligations
presently exceeds the outstanding amount of the Prepetition Obligations.
F. On September 5, 1997 (the "PETITION DATE"), each of the Borrowers
filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code
with the United States Bankruptcy Court for the District of Delaware (the
"BANKRUPTCY COURT").
G. The Borrowers are continuing to operate their businesses and manage
their properties as debtors in possession under sections 1107 and 1108 of the
Bankruptcy Code.
H. An immediate and on-going need exists for Borrowers to obtain
additional funds in order to continue the operation of their businesses as
debtors in possession under chapter 11 of the Bankruptcy Code, and accordingly
the Borrowers have requested that the Lenders extend postpetition financing to
the Borrowers.
I. To secure such postpetition financing, the Borrowers have agreed to
grant to the Collateral Agent on a postpetition basis a security interest in all
of the Borrowers' respective assets, thereby continuing and maintaining the
security interests certain of the Borrowers granted to the Prepetition
Collateral Agent (hereinafter defined) pursuant to the Prepetition Credit
Documents and providing the Collateral Agent a security interest in all property
of the Borrowers that was not subject to the security interests securing the
Prepetition Obligations other than any GECC Account.
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J. The Lenders are willing to provide such postpetition financing on
the terms and conditions set forth in this Credit Agreement and the other Credit
Documents (hereinafter defined).
K. The Borrowers and the Lenders contemplate that on or after the
Petition Date the Bankruptcy Court will enter the Interim Financing Order, which
will approve this Credit Agreement and will authorize the Borrowers to incur
interim secured and superpriority indebtedness under the terms and conditions of
this Credit Agreement pursuant to sections 363 and 364 of the Bankruptcy Code.
L. In accordance with the Interim Financing Order, the Permanent
Financing Order (when entered into by the Bankruptcy Court), and this Credit
Agreement, the Lenders will make postpetition loans and other financial
accommodations to the Borrowers.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained in this Credit Agreement, the Borrowers, the Lenders and
the Agent hereby agree as follows:
ARTICLE 1. DEFINITIONS.
1.1 GENERAL DEFINITIONS.
ACCOUNT has the meaning set forth in the Postpetition Security
Agreement and shall mean and include the GECC Receivable.
ACTIONABLE DEFAULT has the meaning set forth in the Collateral Agency
Agreement.
AFFILIATE of a Person means another Person who directly or indirectly
controls, is controlled by, is under common control with or is a director or
officer of, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to vote five percent (5%) or
more of the securities having ordinary voting power for the election of
directors or the direct or indirect power to direct the management and policies
of a business.
AGENT has the meaning set forth in the Preamble.
AGENT REVOLVING ADVANCES has the meaning set forth in SECTION 2.2.
APPLICABLE LENDING OFFICE means, with respect to each Revolving Lender,
such Revolving Lender's LIBOR Lending Office in the case of a LIBOR Rate Loan,
and such Revolving Lender's Domestic Lending Office in the case of a Prime Rate
Loan.
APPRAISED VALUE means (i) with respect to the various parcels of real
property of the Borrowers for which a current appraisal dated August 29, 1997 or
later prepared by Ernst & Young L.L.P. has been delivered to the Agent, the
appraised liquidation value of
3
each such property as reflected in the applicable appraisal, (ii) with respect
to any leasehold interest of any Borrower in any real property on the date of
its sale, transfer or other disposition by such Borrower the fair market value
of such leasehold interest (assuming the same to be freely assignable to the
extent provided in section 365 of the Bankruptcy Code) on such date as
determined by a nationally recognized real estate appraisal firm retained by the
Agent and reasonably acceptable to the Majority Term Lenders for purposes of
making such determination and in an appraisal reasonably satisfactory to the
Agent and the Majority Term Lenders; it being understood that, if any appraisal
delivered to the Agent pursuant to clause (i) or (ii) sets forth a range of
values for the subject property, the "Appraised Value" of such property shall be
the arithmetic mean of the high and low values specified for such property, as
determined by the Agent in its Permitted Discretion and (iii) with respect to
any other fixed assets of any Borrower, (including without limitation fixtures,
furniture and equipment) the fair market value of such assets as determined by
the Agent in the exercise of its Permitted Discretion.
ASSET DISPOSITION means, with respect to any Borrower, any sale,
transfer, conveyance, assignment, exchange, liquidation or other disposition of
all or any portion of any asset of such Borrower or any interest therein outside
the ordinary course of business of such Borrower (including, without limitation,
any Casualty Loss and any disposition of any real property or interest in real
property); PROVIDED, THAT the term "ASSET DISPOSITION" shall not mean or include
the sale, assignment or other transfer by any Borrower to GECC of any GECC
Account pursuant to the GECC Account Purchase Agreement.
AUDITORS means a nationally recognized firm of independent public
accountants selected by the Borrowers and reasonably satisfactory to the Agent;
PROVIDED, THAT for purposes of this Credit Agreement, the firm of Xxxxxx
Xxxxxxxx LLP shall be deemed to be satisfactory to the Agent.
BANKRUPTCY CODE means Title 11 of the U.S. Code, 11 U.S.C. xx.xx.
101-1330, as now in effect or hereafter amended.
BANKRUPTCY COURT has the meaning set forth in the Preliminary
Statements and includes any other court having competent jurisdiction over the
Borrowers' chapter 11 cases.
BENEFIT PLAN means a "defined benefit plan" (as defined in Section
3(35) of ERISA) for which any Borrower, any Subsidiary of any Borrower or any
ERISA Affiliate has been an "employer" (as defined in Section 3(5) of ERISA)
within the past six years.
BORROWERS has the meaning set forth in the Preamble.
BORROWING means a borrowing of Revolving Loans of the same Type by the
LFC Funds Administrator for the joint and several account of the Borrowers from
(or, in the case of Agent Advances,
4
on behalf of) the Revolving Lenders on a pro rata basis on a given date (whether
pursuant to SECTION 2.2 or resulting from continuations or conversions of
Revolving Loans on a given date pursuant to SECTIONS 4.12(A) and (B),
respectively) having, in the case of LIBOR Loans, the same Interest Period.
BORROWING BASE means, at any time, the sum at such time of:
(a) the Fixed Asset Sublimit, PLUS
(b) eighty-five percent (85%) of Eligible Accounts
Receivable, PLUS
(c) seventy-five percent (75%) of Eligible
Inventory; provided that the foregoing percentage may
be adjusted by the Agent in the exercise of its
Permitted Discretion based upon appraisals of the
Borrowers' inventory prepared from time to time at
the Agent's or the Majority Lenders' direction, LESS
(d) the aggregate amount of the Borrowers' allowed
professional fees and disbursements to which the
Postpetition Obligations and the Prepetition
Obligations may be subordinated pursuant to the
Interim Financing Order and the Permanent Financing
Order following a Default or an Event of Default;
PROVIDED, THAT so long as the LFC Funds Administrator has delivered a current
Borrowing Base Certificate to the Agent in accordance with the requirements of
SECTION 7.2, the amounts referred to in CLAUSES (b) and (c) above shall be
determined at any time by reference to such current Borrowing Base Certificate.
In addition, the Agent, in the exercise of its Permitted Discretion,
may (I) establish and increase or decrease reserves against Eligible Accounts
Receivable and Eligible Inventory, (II) reduce the advance rates provided for in
this definition, or restore such advance rates to any level equal to or below
the advance rates in effect as of the date of this Credit Agreement, and (III)
impose additional restrictions (or eliminate the same) to the standards of
eligibility set forth in the definitions of "ELIGIBLE ACCOUNTS RECEIVABLE" and
"ELIGIBLE INVENTORY."
BORROWING BASE CERTIFICATE means a certificate of the LFC Funds
Administrator concerning the Borrowing Base provided under SECTION 7.2 and
substantially in the form of EXHIBIT A.
BTCC has the meaning set forth in the Preamble.
BUSINESS DAY means any day that is neither a Saturday nor a Sunday nor
a day on which commercial banks in Chicago, Illinois are required or permitted
by law to be closed and, when used in connection with LIBOR Rate Loans, this
definition will also exclude any day on which commercial banks are not open for
dealing in
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United States dollar deposits in the London (U.K.) interbank market.
CAPITAL EXPENDITURES means, for any Person for any period, the sum of
all expenditures which have been, or should have been, capitalized by such
Person for financial statement purposes in accordance with GAAP during such
period (to the extent payable in cash or other property); PROVIDED, THAT the
term "CAPITAL EXPENDITURES" shall exclude (I) the capitalized portion of capital
leases and that portion of Investments made by such Person allocable to
property, plant or equipment and (II) proceeds of any Casualty Loss applied to
the repair, replacement or rebuilding of the property affected by such Casualty
Loss.
CASH EQUIVALENTS means either of the following, so long as the same are
maintained in accounts in which the Collateral Agent has a perfected security
interest, subject to no other Liens: (I) securities issued, guarantied or
insured by the full faith and credit of the United States and having maturities
of not more than one year; and (II) certificates of deposit having maturities of
not more than one year issued by a United States national or state chartered
commercial bank of recognized standing whose combined capital and unimpaired
surplus is in excess of $200,000,000 and whose short-term commercial paper
rating, or that of its parent holding company, is at least "A-1" or the
equivalent by S&P and at least "Prime-1" or the equivalent by Xxxxx'x.
CASUALTY LOSS means, for any Person, (I) the loss, damage, or
destruction of any asset or property owned or used by such Person, (II) the
condemnation, confiscation, or other taking, in whole or in part, of any such
asset or property, or (III) the diminishment of the use of any such asset or
property so as to render impracticable or unreasonable the use thereof for its
intended purpose.
CHANGE OF CONTROL means the occurrence of any of the following:
(A) the acquisition by a person, entity or group of
beneficial ownership of thirty-five percent (35%) or more of
the combined voting power of the then outstanding voting
securities of LFI or any Borrower;
(B) individuals who constitute the Board of Directors of LFI
or any Borrower (any such Board, an "INCUMBENT BOARD")
cease for any reason, during a period of two (2)
consecutive years, to constitute at least a majority of
such Board, PROVIDED, THAT any new director (X) serving
on the Board of a Borrower that is a wholly owned
Subsidiary of LFI or (Y) who is approved by a vote of at
least two-thirds of the applicable Incumbent Board shall
be considered a member of such Incumbent Board (other
than an individual initially assuming office as a result
of either an actual or threatened election contest or
other actual or threatened solicitation of proxies or
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consents by or on behalf of a person, entity or group
other than such Incumbent Board);
(C) the approval by the stockholders of LFI or any Borrower
of a merger, consolidation or reorganization involving
LFI or such Borrower, unless (I) the stockholders of LFI
or the relevant Borrower immediately before such merger,
consolidation or reorganization own immediately
thereafter at least fifty-one percent (51%) of the
combined voting power of the outstanding voting
securities of the surviving corporation in substantially
the same proportion as their ownership of securities
immediately before any such transaction; (II) the
individuals constituting an Incumbent Board immediately
prior to such merger, consolidation or reorganization
constitute at least a majority of the Board of the
applicable surviving corporation; and (III) no person,
entity or group (other than LFI or a wholly owned
subsidiary of LFI) has beneficial ownership of thirty-
five percent (35%) or more of the combined voting power
of the surviving corporation's then outstanding voting
securities; and
(D) the disposition by LFI of any material equity interest in
any Borrower.
CHARGES means all federal, state, county, city, municipal, local,
foreign or other governmental taxes (including taxes owed to the PBGC at the
time due and payable), levies, assessments, charges, liens, claims or
encumbrances upon or relating to (a) the Obligations, (b) the employees,
payroll, income or gross receipts of any Borrower, (c) any Borrower's ownership
or use of any properties or other assets, or (d) any other aspect of any
Borrower's business.
CLAIM has the meaning set forth in section 101(5) of the Bankruptcy
Code.
CLOSING DATE means the date of execution and delivery of this Credit
Agreement by all of the parties hereto, or if later, the date on which the
initial Revolving Loan is made.
CLOSING DOCUMENT LIST has the meaning set forth in SECTION 5.1.
CODE has the meaning set forth in SECTION 1.3.
COLLATERAL has the meaning set forth in the Postpetition Collateral
Agency Agreement.
COLLATERAL AGENT has the meaning set forth in the Postpetition
Collateral Agency Agreement.
COLLATERAL ACCOUNT has the meaning set forth in the Postpetition
Collateral Agency Agreement.
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COLLATERAL DOCUMENTS has the meaning set forth in the Postpetition
Collateral Agency Agreement.
COLLATERAL MONITORING FEE has the meaning set forth in the Postpetition
Collateral Agency Agreement.
COLLECTIONS means all cash, funds, checks, notes, instruments and any
other form of remittance tendered by account debtors in payment of Accounts of a
Borrower.
COMMITMENTS means, collectively, the Term Commitments and the Revolving
Commitments.
CONSOLIDATED ENTITY means LFI and those of its Subsidiaries, including
in any event each of the Borrowers, consolidated with it for purposes of
financial reporting.
CONTINGENT OBLIGATION means, with respect to any Person, any direct,
indirect, contingent or noncontingent guaranty or obligation of such Person for
the Indebtedness of another Person, except for endorsements in the ordinary
course of business.
CREDIT DOCUMENTS means, collectively, this Credit Agreement, the Notes,
the Letters of Credit, the Collateral Documents, the Postpetition Collateral
Agency Agreement and all other documents, agreements and instruments now or
hereafter executed in connection herewith or therewith.
DEFAULT means an event, condition or default that with the giving of
notice, the passage of time or both would be an Event of Default.
DEFAULTING REVOLVING LENDER has the meaning set forth in SECTION 2.6.
DEPOSITARY ACCOUNT has the meaning set forth in SECTION 8.10.
DEPOSITARY BANK has the meaning set forth in SECTION 8.10.
DISBURSEMENT ACCOUNT means the operating account of the LFC Funds
Administrator maintained with the Disbursement Account Bank.
DISBURSEMENT ACCOUNT BANK means Bankers Trust Company or any other
financial institution selected from time to time by the Agent and reasonably
acceptable to the LFC Funds Administrator.
DOMESTIC LENDING OFFICE means, with respect to any Revolving Lender,
the office of such Revolving Lender specified as its "DOMESTIC LENDING OFFICE"
on ANNEX I, as such annex may be amended from time to time, which office shall
in any event be located in the United States.
EBITDA means, for any period, the consolidated net income of the
Consolidated Entity (excluding extraordinary items) for such period, plus (a)
all interest expense, income tax expense, depreci-
8
ation and amortization (including amortization of any goodwill or other
intangibles) for such period; minus or plus (without double counting) (b) gains
and losses attributable to any fixed asset sales; plus or minus (c) any other
noncash charges (excluding ordinary course accruals) or gains which have been
subtracted or added in calculating such consolidated net income; provided, that
any such noncash charges (if the aggregate amount thereof in any fiscal year is
in excess of $2,000,000) subtracted in calculating consolidated net income and
added back in computing EBITDA for any period shall be subtracted from EBITDA as
and when such noncash charges are paid in cash, and (d) plus all restructuring
and similar costs, expenses and charges (including without limitation
professional fees and store closing expenses) taken, paid or incurred by the
Borrowers on account of or directly relating to the Borrowers' chapter 11 cases
to the extent such charges are reflected in the business plan dated August 27,
1997 submitted by the Borrowers to the Lenders.
ELIGIBLE ACCOUNTS RECEIVABLE means Accounts of the respective Borrowers
deemed by the Agent in the exercise of its Permitted Discretion to be eligible
for inclusion in the calculation of the Borrowing Base. In determining the
amount to be so included, the face amount of such Accounts shall be reduced by
the amount of all returns, discounts, deductions, claims, credits, charges, or
other allowances. Unless otherwise approved in writing by the Agent, no Account
of any Borrower shall be deemed to be an Eligible Account Receivable if:
(A) it arises out of a sale made by such Borrower to an
Affiliate of such Borrower or any other Borrower; or
(B) it (I) does not arise from a signed purchase agreement,
(II) does not have a deposit from the purchaser in an amount
equal to at least ten percent (10%) of the face amount of such
Account, (III) pertains to goods that are not currently in
stock, and (IV) pertains to goods that are not scheduled for
delivery within 30 days; or
(C) the account debtor is (or the assets of the account
debtor are) the subject of an Insolvency Event; or
(D) the Account is not payable in United States dollars or
the account debtor for the Account is located outside the
continental United States, unless the Account is supported by
an irrevocable letter of credit satisfactory to the Agent (as
to form, substance and issuer) and assigned to and directly
drawable by the Collateral Agent; or
(E) the sale to the account debtor is on a guarantied sale,
sale-and-return, sale on approval or consignment basis or made
pursuant to any other written agreement providing for
repurchase or return; or
9
(F) the Agent determines by its own credit analysis that
collection of the Account is uncertain or the Account may
not be paid; or
(G) the account debtor is the United States of America or
any department, agency or instrumentality thereof, unless such
Borrower duly assigns its rights to payment of such Account to
the Agent pursuant to the Assignment of Claims Act of 1940, as
amended (31 U.S.C. xx.xx. 3727 et seq.); or
(H) the Account does not comply with all Requirements of
Law, including, without limitation, the Federal Consumer
Protection Act, the Federal Truth-in-Lending Act and
Regulation Z; or
(I) the Account is not subject to a valid and perfected
first priority Lien in favor of the Collateral Agent or does
not otherwise conform to the representations and warran-ties
contained in the Credit Documents.
ELIGIBLE INVENTORY means the aggregate amount of Inventory of the
respective Borrowers deemed by the Agent in the exercise of its Permitted
Discretion to be eligible for inclusion in the calculation of the Borrowing
Base. In determining the amount to be so included, Inventory shall be valued at
the lower of cost or market on a basis consistent with the Borrowers' current
and historical accounting practice. Unless otherwise approved in writing by the
Agent, no Inventory of any Borrower shall be deemed Eligible Inventory if:
(A) it is not owned solely by such Borrower or such Borrower
does not have good, valid and marketable title thereto;
or
(B) it is not located in the United States; or
(C) it is not subject to a valid and perfected first
priority Lien in favor of the Collateral Agent, except, with
respect to such Inventory stored at locations other than
locations owned by a Borrower, for Liens for unpaid rent or
normal and customary warehousing charges; or
(D) it consists of goods returned or rejected by such
Borrower's customers or goods in transit to third
parties; or
(E) it is not first-quality finished goods, is obsolete or
slow moving, or does not otherwise conform to the
representations and warranties contained in the Credit
Documents.
ENVIRONMENTAL CLAIMS means any and all actual or threatened
administrative or judicial actions, orders, claims, liens, notices, violations
or proceedings, civil or criminal, brought, issued or asserted by (a) any
governmental authority under Environmental Laws
10
for compliance, damages, penalties, removal, response, remedial or other action,
or (b) by any third party response, remedial or other action, or (b) by any
third party seeking damages for personal injury, property damage, or loss of
use, arising from a release or threatened release of a Hazardous Substance at,
to or from any property owned, leased or occupied by any Borrower or any
Subsidiary of any Borrower.
ENVIRONMENTAL LAW means any applicable federal, state, local, civil or
criminal, statute, ordinance, guideline, guidance or code relating to pollution,
damage to or protection of the environment, and/or governing the presence,
generation, use, management, storage, transport, treatment, recycling,
reclamation, disposal, discharge, emission or release of any Hazardous
Substance.
ERISA means the Employee Retirement Income Security Act of 1974, 29
U.S.C. xx.xx. 1000 et seq., amendments thereto, successor statutes, and
regulations or guidance promulgated thereunder.
ERISA AFFILIATE means any entity required to be aggregated with any
Borrower or any Subsidiary of any Borrower under sections 414 (b), (c), (m) or
(o) of the Internal Revenue Code.
EVENT OF DEFAULT has the meaning set forth in ARTICLE 9.
EXISTING LETTERS OF CREDIT has the meaning set forth in SECTION 3.9.
EXPENSES means all reasonable costs and expenses of the Agent and the
Collateral Agent incurred in connection with the Credit Documents and the
respective transactions contemplated therein, including, without limitation, (I)
the costs of conducting record searches, examining collateral, opening bank
accounts and lockboxes, depositing checks, and receiving and transferring funds
(including charges for checks for which there are insufficient funds), (II) the
reasonable fees and expenses of legal counsel and paralegals, accountants,
appraisers and other consultants, experts or advisors retained by the Agent
including, without limitation, consultants, experts or advisors retained in
connection with due diligence investigations, (III) expenses incurred in
connection with the assignments of or sales of participations in the Revolving
Loans or the Term Loan, (IV) the cost of title insurance premiums, real estate
survey costs, and fees and taxes in connection with the filing of financing
statements, and (V) the costs of preparing and recording Collateral Documents,
releases of Collateral, and waivers, amendments, and terminations of any of the
Credit Documents. EXPENSES also means all reasonable costs and expenses
(including the reasonable fees and expenses of legal counsel and other
professionals) paid or incurred by the Agent, the Collateral Agent or any Lender
(I) during the continuance of an Event of Default, (II) in enforcing or
defending its respective rights under or in respect of any of the Credit
Documents, (III) collecting the Revolving Loans or the Term Loan, (IV)
foreclosing or otherwise collecting upon the Collateral or any part thereof and
(V) in
11
obtaining any legal, accounting or other advice in connection with any of the
foregoing.
EXPIRATION DATE means the earlier of (I) March 5, 1999 and the date on
which this Credit Agreement is terminated pursuant to SECTION 9.2(B).
FACILITY FEE has the meaning set forth in SECTION 4.4.
FEDERAL FUNDS RATE means, for any period, a fluctuating interest rate
per annum for each day during such period equal to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by the Agent.
FEDERAL RESERVE BOARD means the Board of Governors of the Federal
Reserve System or any Governmental Authority succeeding to its functions.
FEES means, collectively, the Unused Line Fee, the Letter of Credit
Fees, the L/C Facing Fee, the Issuing Bank Fees, the Facility Fee and the
Collateral Monitoring Fee.
FINANCIAL STATEMENTS means the consolidated balance sheets, statements
of operations, statements of cash flows and statements of changes in
shareholder's equity of the Consolidated Entity for the period specified,
prepared in accordance with GAAP and consistently with prior practices.
FIXED ASSET SUBLIMIT means an amount equal to $90,000,000; provided,
that such amount shall be automatically and permanently reduced on the date on
which Net Cash Disposition Proceeds of the sale, transfer or other disposition
of any real property, other fixed assets or any leasehold interest in real
property by any Borrower are received by or for the account of such or any other
Borrower, in an amount equal to (i) in the case of any sale, transfer or other
disposition of any real property or any leasehold interest in real property, the
Appraised Value thereof, and (ii) in the case of any sale, transfer or other
disposition of any other fixed assets (including without limitation fixtures,
furniture and equipment), twenty-five percent (25%) of the Appraised Value
thereof; provided that, no reduction of the Fixed Asset Sublimit pursuant to
this clause (ii) shall occur as a result of the Borrowers' selling, transferring
or otherwise disposing of obsolete or worn out fixed assets with an aggregate
Appraised Value of up to $1,800,000.
GAAP means generally accepted accounting principles in the United
States as in effect from time to time.
12
GECC means General Electric Capital Corporation, a New York
corporation.
GECC ACCOUNT has the meaning set forth in the Postpetition Security
Agreement.
GECC ACCOUNT PURCHASE AGREEMENT has the meaning set forth in the
Postpetition Security Agreement.
GECC RECEIVABLE means, at any time, the aggregate net amount payable by
GECC to Borrowers at such time pursuant to section 2.2 of the GECC Account
Purchase Agreement in respect of the purchase price of GECC Accounts.
GOVERNING DOCUMENTS means certificates or articles of incorporation,
by-laws and other similar organizational or governing documents.
GOVERNMENTAL AUTHORITY means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
HAZARDOUS SUBSTANCES means petroleum materials, petroleum wastes,
radioactive materials, polychlorinated biphenyls, urea formaldehyde, asbestos or
any materials containing asbestos, and any materials or substances defined as or
included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "hazardous constituents," "toxic substances," "toxic
pollutants," "pollutants," or "contaminants" or terms of similar import under
any Environmental Law.
HIGHEST LAWFUL RATE means, at any given time during which any
Obligations shall be outstanding hereunder, the maximum nonusurious interest
rate that at any time or from time to time may be contracted for, taken,
reserved, charged or received on such Obligations, under the laws of the State
of New York (or the law of any other jurisdiction whose laws may be mandatorily
applicable notwithstanding other provisions of this Credit Agreement and any of
the other Credit Documents), or under applicable federal laws that may presently
or hereafter be in effect and that allow a higher maximum nonusurious interest
rate than under the State of New York (or such other jurisdiction's) law, in any
case after taking into account, to the extent permitted by applicable law, any
and all relevant payments or charges under this Credit Agreement and any other
Credit Documents executed in connection herewith, and any available exemptions,
exceptions and exclusions.
INDEBTEDNESS of a Person means, without duplication, (a) indebtedness
for borrowed money or for the deferred purchase price of property or services
(other than trade liabilities incurred in the ordinary course of business and
payable in accordance with customary practices), whether on open account or
evidenced by a note, bond, debenture or similar instrument, (B) obligations
under capital leases, (C) reimbursement obligations for
13
letters of credit, banker's acceptances or other credit accommodations, whether
drawn or undrawn, (D) liabilities, as reasonably determined by the Agent, under
any Interest Rate Agreement, (E) Contingent Obligations and (F) Indebtedness
secured by any Lien on any property of that Person, even if that Person has not
assumed such Indebtedness.
INTEREST PERIOD means, for any LIBOR Rate Loan, the period commencing
on the date of such Borrowing and ending on the last day of the period selected
by the LFC Funds Administrator pursuant to the provisions below. The duration of
each such Interest Period shall be one, two, three or six months, in each case
as the LFC Funds Administrator may, in an appropriate Notice of Borrowing,
Notice of Continuation or Notice of Conversion, select; PROVIDED, THAT the LFC
Funds Administrator may not select any Interest Period that ends after the
Expiration Date. Whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such Interest Period
shall be extended to occur on the next succeeding Business Day; PROVIDED, THAT
if such extension would cause the last day of such Interest Period to occur in
the next following calendar month, the last day of such Interest Period shall
occur on the next preceding Business Day.
INTEREST RATE AGREEMENT means any interest rate protection or hedge
agreement, including, without limitation, interest rate future, option, swap,
and cap agreements.
INTERIM FINANCING ORDER means the order entered by the Bankruptcy Court
pursuant to section 364(c) and (d) of the Bankruptcy Code and Bankruptcy Rule
4001(c), authorizing the Borrowers to incur postpetition secured and
superpriority indebtedness in accordance with this Credit Agreement on an
interim basis in form and substance satisfactory to the Agent.
INTERNAL REVENUE CODE means the Internal Revenue Code of 1986,
amendments thereto, successor statutes, and regulations or guidance promulgated
thereunder.
INVENTORY has the meaning set forth in the Postpetition Security
Agreement.
INVESTMENT means all expenditures made and all liabilities incurred
(contingently or otherwise) for or in connection with the acquisition of stock
or Indebtedness of, or for loans, advances, capital contributions or similar
transfers of property to, or acquisition of substantially all the assets of, a
Person. In determining the aggregate amount of Investments outstanding at any
particular time, (I) the amount of any Investment represented by a guaranty
shall be taken at not less than the principal amount of the obligations
guaranteed and outstanding; (II) there shall be deducted in respect of each such
Investment any amount received as a return of capital (but only by repurchase,
redemption, retirement, repayment, liquidating dividend or liquidating
distribution); (III) there shall not be deducted in respect of any
14
Investment any amounts received as earnings on such Investment, whether as
dividends, interest or otherwise; and (IV) there shall not be deducted from the
aggregate amount of Investments any decrease in the market value thereof.
ISSUING BANK means Bankers Trust Company or any Revolving Lender or
other financial institution that is acceptable to the Agent and the Borrowers
that may at any time issue or be requested to issue a Letter of Credit for the
account of any Borrower.
ISSUING BANK FEES has the meaning set forth in SECTION 4.3.
L/C FACING FEE has the meaning set forth in SECTION 4.3.
LFC FUNDS ADMINISTRATOR means LFC acting in its capacity as borrowing
agent for the Borrowers under that certain Borrower Agency Agreement of even
date herewith among LFC, as borrowing agent, and the Borrowers.
LFI means Xxxxxx Furniture Incorporated, a Delaware corporation.
LFI DEBENTURES means the 15% Senior Deferred Coupon Debentures due 2002
issued by LFI pursuant to the LFI Debenture Indenture, as amended, restated,
supplemented or otherwise modified from time to time pursuant to the terms
hereof and thereof.
LFI DEBENTURE INDENTURE means the 15% Senior Deferred Coupon Indenture
dated as of December 1, 1992 by and between LFI and First National Association,
as trustee, as amended, restated, supplemented or otherwise modified from time
to time pursuant to the terms hereof and thereof.
LENDER means any of the Revolving Lenders or the Term Lenders.
LETTER OF CREDIT FEE has the meaning set forth in SECTION 4.3.
LETTER OF CREDIT OBLIGATIONS means, without duplication, the sum of the
aggregate undrawn face amount of all Letters of Credit outstanding, PLUS the
aggregate amount of all drawings under Letters of Credit for which the Borrowers
have not reimbursed the Issuing Bank, PLUS the aggregate amount of all payments
made by Revolving Lenders to the Issuing Bank for their participations in
Letters of Credit, for which the Borrowers have not reimbursed the Revolving
Lenders.
LETTER OF CREDIT REQUEST has the meaning set forth in SECTION 3.3.
LETTERS OF CREDIT means all letters of credit issued for the account of
any Borrower under ARTICLE 3 and all amendments, renewals, extensions or
replacements thereof.
LIBOR LENDING OFFICE means, with respect to any Revolving Lender, the
office of such Revolving Lender specified as its "LIBOR
15
LENDING OFFICE" opposite its name on ANNEX I, as such annex may be amended from
time to time (or, if no such office is specified, its Domestic Lending Office).
LIBOR RATE means, with respect to any Interest Period for each LIBOR
Rate Loan comprising part of the same Borrowing, an interest rate per annum
equal to the rate (rounded upward to the nearest whole multiple of one-sixteenth
(1/16) of one percent (1.00%) per annum, if such rate is not such a whole
multiple of one-sixteenth (1/16) of one percent (1.00%)) of the offered
quotation, if any, to first class banks in the London (U.K.) interbank market by
Bankers Trust Company for United States dollar deposits of amounts in
immediately available funds comparable to the principal amount of the LIBOR Rate
Loan of BTCC for which the LIBOR Rate is being determined with maturities
comparable to the Interest Period for which such LIBOR Rate will apply as of
approximately 10:00 a.m. Chicago time two (2) Business Days prior to the
commencement of such Interest Period.
LIBOR RATE LOAN means a Revolving Loan that bears interest as provided
in SECTION 4.1(B) hereof.
LIEN means any lien, claim, charge, pledge, security interest,
assignment, hypothecation, deed of trust, mortgage, lease, conditional sale,
retention of title, or other preferential arrangement having substantially the
same economic effect as any of the foregoing, whether voluntary or imposed by
law.
LOAN means the Term Loan or any Revolving Loan.
MAJORITY LENDERS means, at any time, those Lenders holding in the
aggregate more than fifty percent (50%) of the sum at such time of the total
Revolving Commitments and the aggregate outstanding principal amount of the
Prepetition Tranche A Term Loan and the Term Loan; PROVIDED, THAT if at such
time the Revolving Commitments have terminated, those Lenders then owed in the
aggregate more than fifty percent (50%) of the sum of the aggregate then
outstanding Revolving Loans, Letter of Credit Obligations and the aggregate
outstanding principal amount of the Prepetition Tranche A Term Loan and the Term
Loan, in each case including accrued but then unpaid interest thereon.
MAJORITY TERM LENDERS means, at any time, those Term Lenders holding in
the aggregate more than fifty percent (50%) of the aggregate outstanding
principal amount of the Prepetition Tranche A Term Loan and the Term Loan.
MATERIAL ADVERSE EFFECT means a material adverse effect on (I) the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of the Borrowers taken as a whole, (II) the
ability of any Borrower to perform its obligations under the Credit Documents to
which it is a party, or on the ability of the Agent, the Collateral Agent or the
Lenders to enforce the Postpetition Obligations or realize upon the Collateral,
or (III) the value of the Collateral consisting of
16
non-current assets, or the amount that the Agent, the Collateral Agent or the
Lenders would be likely to receive (after giving consideration to delays in
payment and costs of enforcement) in the liquidation of such Collateral.
MATERIAL CONTRACT means any contract or other arrangement to which a
Borrower or any Subsidiary of a Borrower is a party (other than the Credit
Documents) for which breach, nonperformance, cancellation or failure to renew
could reasonably be expected to have a Material Adverse Effect.
MOODY'S means Xxxxx'x Investors Service, Inc., or any successor
thereto.
MORTGAGE means each of the mortgages, deeds of trust, leasehold
mortgages, leasehold deeds of trust, collateral assignments of leases or other
real estate security documents delivered by any Borrower to the Prepetition
Collateral Agent with respect to any Borrower's interest in real property.
MULTIEMPLOYER PLAN means a "multiemployer plan" (as defined in section
4001(a) (3) of ERISA) to which a Borrower, any Subsidiary of Borrower or any
ERISA Affiliate has contributed within the past six years or with respect to
which a Borrower or any Subsidiary of a Borrower could reasonably be expected to
incur any liability.
NET CASH DISPOSITION PROCEEDS means proceeds in cash or Cash
Equivalents of an Asset Disposition by any Borrower to any Person other than
another Borrower, net of (A) direct costs and expenses relating to such Asset
Disposition, (B) taxes paid or payable as a result thereof and (C) amounts
required to be applied to the repayment of Indebtedness secured by a Lien on the
asset which is the subject of such Asset Disposition. Net Cash Disposition
Proceeds shall also include proceeds of insurance paid on account of loss or
damage to any property, condemnation awards (or payments made in lieu thereof)
by reason of, or in anticipation of, a permanent taking of any property pursuant
to condemnation proceedings or by the exercise of the right of eminent domain or
by conveyance in lieu of condemnation, in each case net of (I) funds actually
used to repair or reconstruct the damaged property or property affected by the
condemnation or taking, (II) costs and expenses reasonably incurred in
connection with the collection of such proceeds, awards or other payments and
(III) amounts retained by or paid to third parties having rights in such
proceeds, awards or other payments superior to the rights of the Secured Parties
and the applicable Borrower.
NOTE means any Term Note or Revolving Note.
NOTE DOCUMENTS means, collectively, the Senior Notes, the Senior Note
Indenture, the Senior Notes (12-3/8%), the Senior Note Indenture (12-3/8%), the
Senior Subordinated Notes and the Senior Subordinated Note Indenture and all
other documents, agreements and instruments now or hereafter executed in
connection therewith.
17
NOTICE OF BORROWING means an irrevocable and binding notice delivered
by the LFC Funds Administrator to the Agent either by telephone or by facsimile
transmission (and if by telephone, promptly confirmed in writing), of the
Borrowers' request for a Borrowing, which notice shall be substantially in the
form of EXHIBIT B.
NOTICE OF CONTINUATION has the meaning set forth in SECTION 4.13(A).
NOTICE OF CONVERSION has the meaning set forth in SECTION 4.13(B).
PERMANENT FINANCING ORDER means an order entered by the Bankruptcy
Court as to which no stay has been entered and that has not been vacated,
modified or overturned, in form and substance substantially similar to the
Interim Financing Order, authorizing the incurrence by the Borrowers of
permanent postpetition superpriority indebtedness in accordance with this Credit
Agreement and the other Loan Documents.
PERMITTED DISCRETION means the Agent's judgment exercised in good faith
and not in an irrational manner based upon its consideration of any factor which
the Agent believes in good faith could affect the value of any Collateral,
including any Inventory or Accounts of any Borrower or the amount which the
Agent and the Lenders would be likely to receive (after giving consideration to
delays in payment and costs of enforcement) in the liquidation of such
Collateral. In exercising such judgment, the Agent may consider such factors
which are already included in or tested by the definition of Eligible Accounts
Receivable or Eligible Inventory, as well as any of the following: (I) the
financial and business climate of any Borrower's industry and general
macroeconomic conditions, (II) changes in collection history and dilution with
respect to the Accounts of any Borrower, (III) changes in levels of backlog of
firm purchase orders and demand for, and pricing of, Inventory of any Borrower,
(IV) changes in any concentration of risk with respect to Accounts and Inventory
of any Borrower, and (V) any other factors that change the credit risk of
lending to the Borrowers on the security of the Accounts and Inventory of the
Borrowers.
PERMITTED EXPENSES means, collectively, (i) fees required to be paid to
the Office of the United States Trustee pursuant to 28 U.S.C. section 1930(a),
(ii) compensation for services rendered or reimbursement of expenses incurred
that are permitted to be paid by the Bankruptcy Court under sections 330 or 331
of the Bankruptcy Code after the date of the occurrence of an Event of Default
to professionals retained pursuant to an order of the Bankruptcy Court by the
Borrowers or any official committee appointed pursuant to section 1102 of the
Bankruptcy Code in an amount not to exceed $2,000,000 and (iii) so long as no
Event of Default has occurred and is continuing, Permitted Prepetition Claim
Payments.
18
PERMITTED LIENS means the Liens referred to in CLAUSES (A) through (J)
of SECTION 8.4.
PERMITTED PREPETITION CLAIM PAYMENT means any payment, approved by an
order of the Bankruptcy Court (as adequate protection or otherwise) on account
of any Claim arising or deemed to have arisen prior to the Petition Date in
respect of (i) prepetition employee wages, salaries, sick pay, vacation pay
(including "personal days"), holiday pay, and other accrued compensation; (ii)
obligations to reimburse prepetition employee business expenses (including
travel, lodging, moving, and relocation expenses); (iii) obligations to make
payments for which employee payroll deductions were made; (iv) obligations to
make prepetition contributions and pay benefits under employee benefit plans;
(v) all costs and expenses incident to the payments and contributions described
in (i) through (iv) (including payroll-related taxes and processing costs); (vi)
obligations to customers incurred in the ordinary course of business (including
honoring obligations arising from deposits, prepayments, gift certificates,
warranties, refunds, returns, exchanges and other credit balances); (vii)
obligations under the Borrowers' or any Subsidiary's self-insured workers'
compensation program; (viii) amounts owed to department lessees and licensees in
the ordinary course of Borrowers' or any Subsidiary's business; (ix) amounts
owed to certain individuals or entities who, although not employees of
Borrowers, (I) provide ongoing vital services to Borrowers on a regular and
recurring basis, (II) are paid for the services they perform for Borrowers
directly by Borrowers and not by any agency (such as an employment agency), and
(III) perform services that, with respect to Borrowers, are performed by
employees; (x) amounts owed to certain individuals or entities that (I) provide
services to Borrowers' customers on behalf of Borrowers, (II) have direct
contact with Borrowers' customers or take possession of customers' goods or
property, (III) the customers believe are employees of Borrowers, and (IV) are
compensated by Borrowers, who, in turn, receive customer payments for those
services; (xi) the claims of all contractors that have given or could give rise
to mechanics' or materialmen's liens against property of Borrowers or any
Subsidiary, (xii) employee withholding taxes, sales, use and excise and other
similar trust fund amounts.
PERSON means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, entity, party or government (including any
division, agency or department thereof), and its successors, heirs and assigns.
PETITION DATE has the meaning set forth in the Preliminary Statements.
PETITIONS means the voluntary petitions filed by the Borrowers for
relief under chapter 11 of the Bankruptcy Code with the Bankruptcy Court on the
Petition Date.
19
PLAN means any Benefit Plan, Multiemployer Plan, or Retiree Health
Plan, or any employee benefit plan, fund, program or arrangement, whether oral
or written, maintained or contributed to by any Borrower or any Subsidiary of
any Borrower, or with respect to which any of them could reasonably be expected
to incur liability.
PLAN OF REORGANIZATION means a plan or plans of reorganization for the
Borrowers promulgated and filed pursuant to section 1121 ET SEQ. of the
Bankruptcy Code.
POSTPETITION CHARGE means any Charge arising or levied after the
Petition Date.
POSTPETITION COLLATERAL AGENCY AGREEMENT means the Intercreditor and
Collateral Agency Agreement of even date herewith among BTCC, acting in its
capacity as collateral agent thereunder, the Agent and the Lenders.
POSTPETITION OBLIGATIONS means the unpaid principal and interest
hereunder (including interest accruing on or after the occurrence of an Event of
Default) in respect of Revolving Loans, Term Loans, reimbursement obligations
under Letters of Credit, Fees, Expenses and all other joint and several
obligations and liabilities of the Borrowers to the Agent, the Issuing Bank, the
Collateral Agent or any of the Lenders under this Credit Agreement, the Notes or
any of the other Credit Documents.
POSTPETITION PLEDGE AGREEMENT means the Pledge Agreement of even date
herewith executed by LFC in favor of the Collateral Agent for the benefit of the
Secured Parties identified therein.
POSTPETITION SECURITY AGREEMENT means the Security Agreement of even
date herewith executed by the Borrowers in favor of the Collateral Agent for the
benefit of the Secured Parties identified therein.
PREPETITION COLLATERAL AGENCY AGREEMENT means the Intercreditor and
Collateral Agency Agreement dated as of July 1, 1996 among BTCC, acting in its
capacity as collateral agent thereunder, BTCC, as agent for the Prepetition
Lenders, and the Prepetition Lenders.
PREPETITION COLLATERAL AGENT means BTCC, acting in its capacity as
collateral agent under the Prepetition Collateral Agency Agreement.
PREPETITION CREDIT AGREEMENTS has the meaning set forth in the
Preliminary Statements.
PREPETITION CREDIT DOCUMENTS means, collectively, all of the "Credit
Documents" and "Collateral Documents" under each of the Prepetition Credit
Agreements.
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PREPETITION INDEBTEDNESS of any Borrower means Indebtedness of such
Borrower outstanding on the Petition Date.
PREPETITION LENDERS has the meaning set forth in the Preliminary
Statements.
PREPETITION OBLIGATIONS means, collectively, the "Obligations" of the
Borrowers under each of the Prepetition Credit Agreements.
PREPETITION TRANCHE A TERM LOAN has the meaning set forth in the
Preliminary Statements.
PRIME LENDING RATE means the rate which Bankers Trust Company announces
as its prime lending rate, from time to time. The Prime Lending Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. Bankers Trust Company and each of the
Revolving Lenders may make commercial loans or other loans at rates of interest
at, above or below the Prime Lending Rate.
PRIME RATE LOAN means a Revolving Loan that bears interest as provided
in SECTION 4.1(A) hereof.
PROJECTIONS means the Borrowers' forecasted consolidated and
consolidating: (a) balance sheets; (b) profit and loss statements; (c) cash flow
statements; and (d) capitalization statements, if applicable, and otherwise
consistent with the historical Financial Statements of the Borrowers, together
with appropriate supporting details and a statement of underlying assumptions.
PROPORTIONATE SHARE of (i) a Revolving Lender means a fraction,
expressed as a percentage, obtained by dividing its Revolving Commitment by the
Revolving Line of Credit or, if the Revolving Commitments are terminated, by
dividing its then outstanding Revolving Loans and Letter of Credit
participations by the then outstanding aggregate Revolving Loans and Letter of
Credit Obligations and (ii) a Term Lender means a fraction, expressed as a
percentage, obtained by dividing its Term Commitment by the Term Loan Amount or,
if the Term Commitments are terminated, by dividing the sum of its outstanding
Term Loans and Prepetition Tranche A Loans by the outstanding aggregate Term
Loans and Prepetition Tranche A Loans.
PURCHASE MONEY LIENS has the meaning set forth in SECTION 8.3(E).
REGISTER has the meaning set forth in SECTION 11.8(D).
REGULATION D means Regulation D of the Federal Reserve Board, as in
effect from time to time.
REGULATION G means Regulation G of the Federal Reserve Board, as in
effect from time to time.
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REGULATION Z means Regulation Z of the Federal Reserve Board, as in
effect from time to time.
REPORTABLE EVENT means any of the events described in section 4043 of
ERISA and the regulations thereunder.
REQUIREMENT OF LAW means, with respect to any Person, (A) the Governing
Documents of such Person, (B) any law, treaty, rule or regulation or
determination of an arbitrator, court or other Governmental Authority binding on
such Person, or (C) any franchise, license, lease, permit, certificate,
authorization, qualification, easement, right of way, right or approval binding
on a Person or any of its property.
RETIREE HEALTH PLAN means an "employee welfare benefit plan" within the
meaning of section 3(1) of ERISA, and any other plan, program or arrangement,
whether oral or written, that provides benefits to persons after termination of
employment, other than as required by section 601 of ERISA.
REVOLVING ASSIGNMENT AND ASSUMPTION AGREEMENT has the meaning set forth
in SECTION 11.8(B).
REVOLVING COMMITMENT of a Revolving Lender means such Revolving
Lender's commitment, on the terms and subject to the conditions set forth
herein, to make Revolving Loans and to participate in Letters of Credit, up to
the amount set forth below its name on ANNEX I (as amended from time to time
pursuant to SECTION 11.8(B)), as such amount may be reduced from time to time in
accordance with the terms and provisions of this Credit Agreement.
REVOLVING LENDER has the meaning set forth in the Preliminary
Statements.
REVOLVING LENDER ADVANCES has the meaning set forth in SECTION 2.2.
REVOLVING LINE OF CREDIT means the aggregate revolving line of credit
extended pursuant to this Credit Agreement by the Revolving Lenders to the
Borrowers for Revolving Loans and Letters of Credit, in an aggregate principal
amount at any time of up to $260,000,000 less the aggregate outstanding
principal amount of the Prepetition Tranche A Term Loan and the Term Loan, as
such amount may be reduced from time to time pursuant to the terms and
provisions hereof.
REVOLVING LOAN ACCOUNT has the meaning set forth in SECTION 4.8.
REVOLVING LOANS has the meaning set forth in SECTION 2.1.
REVOLVING NOTE means a promissory note of the Borrowers payable to the
order of any Revolving Lender, substantially in the form of EXHIBIT C-1, as
amended, restated, supplemented or
22
otherwise modified from time to time, and including all notes issued in
replacement of, or in substitution or exchange for, any Revolving Note.
REVOLVING SETTLEMENT DATE has the meaning set forth in SECTION 2.4.
S&P means Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc., or any successor thereto.
SECURED PARTIES has the meaning set forth in the Postpetition
Collateral Agency Agreement.
SENIOR NOTE INDENTURE means the 13-3/8% Senior Note Indenture dated as
of March 1, 1996, by and between LFC and American Bank National Association, as
trustee, as amended, restated, supplemented or otherwise modified from time to
time in accordance with the respective terms and provisions hereof and thereof.
SENIOR NOTES means the 13-3/8% Senior Notes Due October 15, 1998,
issued by LFC pursuant to the Senior Note Indenture, as amended, restated,
supplemented or otherwise modified from time to time in accordance with the
respective terms hereof or thereof.
SENIOR SUBORDINATED NOTE INDENTURE means the 9-5/8% Senior Subordinated
Note Indenture dated as of July 15, 1993, between LFC and Norwest Bank
Minnesota, National Association, as Trustee, as amended, restated, supplemented
or otherwise modified from time to time in accordance with the respective terms
and provisions hereof and thereof.
SENIOR SUBORDINATED NOTES means the Senior Subordinated Notes Due July
15, 2003 issued by LFC pursuant to the Senior Subordinated Note Indenture, as
amended, restated, supplemented or otherwise modified from time to time in
accordance with the respective terms and provisions hereof and thereof.
SUBSIDIARY of a Person means a corporation or other entity in which
that Person directly or indirectly owns or controls the shares of stock or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or appoint other managers of such corporation or other
entity.
TERM ASSIGNMENT AND ASSUMPTION AGREEMENT has the meaning set forth in
SECTION 11.8(C).
TERM COMMITMENT of a Term Lender means such Term Lender's Commitment,
on the terms and subject to the conditions set forth herein, to make the Term
Loan up to the amount set forth below its name on Annex II (as amended from time
to time pursuant to SECTION 11.8(C)).
TERM LENDER has the meaning set forth in the Preliminary Statements.
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TERM LENDER ASSIGNMENT has the meaning set forth in SECTION 11.8(C).
TERM LOAN has the meaning set forth in Article 2A.
TERM LOAN AMOUNT means the sum of the Term Commitments.
TERM NOTE means, collectively, each promissory note of the Borrowers
payable to the order of any Term Lender, substantially in the form of EXHIBIT
C-2 as amended, restated, supplemented or otherwise modified from time to time,
and including all notes issued in replacement of, or in substitution or exchange
for, any of the foregoing.
TERMINATION EVENT means (I) a Reportable Event with respect to any
Benefit Plan or Multiemployer Plan; (II) the withdrawal of any Borrower, any
Subsidiary of any Borrower or any ERISA Affiliate from a Benefit Plan during a
plan year in which it was a "substantial employer" (as defined in section
4001(a) (2) of ERISA); (III) the providing of notice of intent to terminate a
Benefit Plan in a distress termination (as described in section 4041 (c) of
ERISA); (IV) the institution by the Pension Benefit Guaranty Corporation of
proceedings to terminate a Benefit Plan or Multiemployer Plan; (V) any event or
condition (A) which could reasonably be expected to constitute grounds under
section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Benefit Plan or Multiemployer Plan, or (B) that may result in
termination of a Multiemployer Plan pursuant to section 4041A of ERISA; or (VI)
the partial or complete withdrawal, within the meaning of sections 4203 and 4205
of ERISA, of a Borrower, any Subsidiary of a Borrower or any ERISA Affiliate
from a Multiemployer Plan.
TYPE means a LIBOR Rate Loan or a Prime Rate Loan.
UNUSED LINE FEE has the meaning set forth in SECTION 4.2.
1.2 ACCOUNTING TERMS AND DETERMINATIONS.
Unless otherwise defined or specified herein, all accounting terms used
in this Credit Agreement shall be construed in accordance with GAAP, applied on
a basis consistent in all material respects with the Financial Statements
referred to in SECTION 7.1. All accounting determinations for purposes of
determining compliance with the financial covenants contained in ARTICLE 8 shall
be made in accordance with GAAP as in effect on the Closing Date and applied on
a basis consistent in all material respects with the audited Financial
Statements referred to in SECTION 7.1. The Financial Statements required to be
delivered hereunder from and after the Closing Date, and all financial records,
shall be maintained in accordance with GAAP. If GAAP changes from the basis used
in preparing the audited Financial Statements delivered to the Agent on or
before the Closing Date, the certificates required to be delivered pursuant to
SECTION 7.1 demonstrating compliance with the covenants contained herein shall
include, at the election of
24
the Borrowers or upon the request of the Majority Lenders, calculations setting
forth the adjustments necessary to demonstrate that the Borrowers are in
compliance with the financial covenants based upon GAAP as in effect on the
Closing Date.
1.3 OTHER TERMS; HEADINGS.
Terms used herein and not otherwise defined in ARTICLE 1 that are
defined in the Uniform Commercial Code in effect in the State of New York (the
"CODE") shall have the meanings given in the Code. Each of the words "hereof,"
"herein," and "hereunder" refer to this Credit Agreement as a whole. An Event of
Default shall "continue" or be "continuing" until such Event of Default has been
waived in accordance with SECTION 11.11 hereof. References to Articles,
Sections, Annexes, Schedules, and Exhibits are internal references to this
Credit Agreement, and to its attachments, unless otherwise specified. The
headings and the Table of Contents are for convenience only and shall not affect
the meaning or construction of any provision of this Credit Agreement.
1.4 SEPARATE CAPACITY.
Any reference to a "Revolving Lender" or a "Term Lender" shall mean
such Lender sorely in its capacity as the holder of a Revolving Loan or a Term
Loan, as the case may be. If a Lender holds both Revolving Loans and Term Loans,
the rights, privileges, obligations or disabilities that may be enjoyed by or
imposed upon such Lender with respect to one kind of Loan shall not be imposed
upon or enjoyed by such Lender with respect to the other kind of Loan.
ARTICLE 2. REVOLVING LOANS.
2.1 REVOLVING COMMITMENTS.
Subject to the terms and conditions set forth in this Credit Agreement,
and in reliance on the representations and warranties of the Borrowers set forth
herein, on and after the Closing Date and to but excluding the Expiration Date,
each Revolving Lender severally agrees to make loans and advances to the
Borrowers on a joint and several basis (each a "REVOLVING LOAN") in an amount
not to exceed at any time its Proportionate Share of the lesser at such time of
(A) the Revolving Line of Credit and (B) the Borrowing Base MINUS, in each case,
the sum of (X) the aggregate outstanding principal amount of all Prepetition
Obligations other than any Prepetition Obligations relating to the Prepetition
Tranche A Term Loan and (Y) the aggregate outstanding Letter of Credit
Obligations. The Revolving Loans of each Revolving Lender shall be evidenced by
a Revolving Note dated as of the Closing Date and executed by each of the
Borrowers in the maximum amount of such Revolving Lender's Revolving Commitment.
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2.2 BORROWING OF REVOLVING LOANS.
Revolving Loans may be made available to the LFC Funds Administrator
for the account of Borrowers directly by the Revolving Lenders ("REVOLVING
LENDER ADVANCES") or, in the circumstances described in SECTION 2.2(B), from the
Agent acting on behalf of the Revolving Lenders ("AGENT REVOLVING ADVANCES").
(A) REVOLVING LENDER ADVANCES. Subject to the
determination by the Agent and the Revolving Lenders that the
conditions for borrowing contained in SECTION 5.2 are satisfied, upon
receipt of a Notice of Borrowing from the LFC Funds Administrator
received by the Agent before 1:00 P.M. Chicago time on a Business Day,
Revolving Lender Advances of Revolving Loans shall be made to the
extent of each Revolving Lender's Proportionate Share of the requested
Borrowing.
(B) AGENT REVOLVING ADVANCES. The Agent is authorized
by the Revolving Lenders, but is not obligated, to make Agent Revolving
Advances upon a receipt of any Notice of Borrowing received by the
Agent before 3:00 P.M. Chicago time on a Business Day. Agent Revolving
Advances shall be subject to periodic settlement with the Revolving
Lenders under SECTION 2.4. Agent Revolving Advances may be made only in
the following circumstances:
(I) NORMAL COURSE AGENT REVOLVING ADVANCES.
For administrative convenience, the Agent may, but is not
obligated, to make Agent Revolving Advances up to the amount
available for borrowing under SECTION 2.1 in reliance upon the
actual or deemed representations of the Borrowers under
SECTION 5.2 that the conditions for borrowing are satisfied.
(II) OTHER AGENT REVOLVING ADVANCES. When the
conditions for borrowing under SECTION 5.2 cannot be
fulfilled, and notwithstanding the Borrowing Base limitation
of SECTION 2.1, the Agent may, but is not obligated, to
continue to make Agent Revolving Advances for seven (7)
Business Days or until sooner instructed by the Majority
Lenders to cease, in an aggregate amount at any time not to
exceed $3,000,000.
(C) DISBURSEMENT OF REVOLVING LOANS. The proceeds of
Revolving Loans shall be transmitted: (X) in the circum-
stances described in SECTION 3.5, by the Agent directly to the
applicable Issuing Bank, and (Y) in all other circumstances,
by the Agent or Revolving Lenders, as the case may be, to the
Disbursement Account.
(D) NOTICES OF BORROWING. Notices of Borrowing may be
given under this SECTION 2.2 by telephone or facsimile transmission,
and, if by telephone, promptly confirmed in writing. The LFC Funds
Administrator shall specify in each Notice of Borrowing whether the
conditions for the requested
26
Borrowing are satisfied. The Borrowers may request one or more
Borrowings of Revolving Loans constituting Prime Rate Loans on the same
Business Day. Each Notice of Borrowing for LIBOR Rate Loans shall be
given not later than noon Chicago time on the third Business Day prior
to the proposed Borrowing. Each Notice of Borrowing shall, unless
otherwise specifically provided herein, consist entirely of Revolving
Loans of the same Type and, if such Borrowing is to consist of LIBOR
Rate Loans, shall be in an aggregate amount of not less than $5,000,000
or an integral multiple of $1,000,000 in excess thereof. The right of
the Borrowers to choose LIBOR Rate Loans is subject to the provisions
of SECTION 4.12. Once given, a Notice of Borrowing is irrevocable and
binding on the Borrowers. The LFC Funds Administrator shall provide to
the Agent a list, with specimen signatures, of officers and other
Persons, if any, authorized to request Revolving Loans. The Agent is
entitled to rely upon such list until it is replaced by the LFC Funds
Administrator.
2.3 NOTICE OF REQUEST FOR REVOLVING LENDER REVOLVING
ADVANCES.
Subject to the last sentence of this SECTION 2.3, the Agent shall give
each Revolving Lender prompt notice by telephone or facsimile transmission of a
Notice of Borrowing that is received pursuant to SECTION 2.2(A) and is to be
satisfied by Revolving Lender Advances. No later than 3:00 P.M. Chicago time on
the date of receipt of such notice, each Revolving Lender shall make available
for the account of its Applicable Lending Office to the Agent at the Agent's
address for deposit into the Loan Disbursement Account, its Proportionate Share
of such Borrowing in immediately available funds. Unless the Agent receives
contrary written notice prior to any such Borrowing, it is entitled to assume
that each Revolving Lender will make available its Proportionate Share of the
Borrowing and in reliance upon that assumption, but without any obligation to do
so, may advance such Proportionate Share on behalf of the Revolving Lender,
without the necessity of giving daily notice to each Revolving Lender of the
receipt of a Notice of Borrowing.
2.4 PERIODIC SETTLEMENT OF AGENT REVOLVING ADVANCES; INTEREST
AND REVOLVING FEES; STATEMENTS.
(a) THE REVOLVING SETTLEMENT DATE; ALLOCATION OF
INTEREST AND REVOLVING FEES. The amount of each Revolving Lender's
Proportionate Share of Revolving Loans shall be computed weekly (or
more frequently in the Agent's discretion) and shall be adjusted upward
or downward based on all Revolving Loans (including Agent Revolving
Advances) and repayments received by the Agent as of 5:00 P.M. Chicago
time on the last Business Day of the period specified by the Agent
(such date, the "REVOLVING SETTLEMENT DATE").
(b) SUMMARY STATEMENTS; SETTLEMENTS. The Agent shall
deliver to each of the Revolving Lenders promptly after the
27
Revolving Settlement Date a summary statement of the account of
outstanding Revolving Loans (including Agent Revolving Advances) for
the period, the amount of repayments received for the period, and the
amount allocated to each Revolving Lender of the interest and Unused
Line Fee for the period. After application of payments under SECTION
4.10, as reflected on the summary statement, (I) the Agent shall
transfer to each Revolving Lender its allocated share of interest and
Unused Line Fee, and its Proportionate Share of repayments received by
the Agent in respect of the period covered by such summary statement;
and (II) each Revolving Lender shall transfer to the Agent, or the
Agent shall transfer to each Revolving Lender, such amounts as are
necessary to insure that, after giving effect to all such transfers,
the amount of Loans made by each Revolving Lender shall be equal to
such Revolving Lender's Proportionate Share of the aggregate amount of
Loans outstanding as of such Revolving Settlement Date. If the summary
statement requires transfers to be made to the Agent by the Revolving
Lenders and is received by the Revolving Lenders prior to 12:00 noon
Chicago time on a Business Day, such transfers shall be made in
immediately available funds no later than 3:00 P.M. Chicago time that
day; and, if received after 12:00 noon Chicago time, then no later than
3:00 P.M. Chicago time on the next Business Day. The obligation of each
Revolving Lender to transfer such funds is irrevocable, unconditional
and without recourse to or warranty by the Agent.
(C) DISTRIBUTION OF INTEREST AND UNUSED LINE FEES.
Interest on the Revolving Loans (including Agent Revolving Advances)
and the Unused Line Fee shall be allocated by the Agent to each
Revolving Lender (I) in the case of interest, in accordance with the
Revolving Loans actually advanced by and repaid to such Revolving
Lender and (II) in the case of the Unused Line Fee, in accordance with
the Proportionate Share of such Revolving Lender. Interest shall accrue
from and including the date Revolving Loans are advanced and to but
excluding the date such Revolving Loans are either repaid by the
Borrowers or, if later, actually settled under this SECTION 2.3.
Promptly after the end of each month, the Agent shall distribute to
each Revolving Lender its portion, allocated as provided above, of the
interest and Unused Line Fee which has been received by the Agent
during such month.
2.5 SHARING OF PAYMENTS.
If any Revolving Lender shall obtain any payment (whether made
voluntarily or involuntarily, or through the exercise of any right of set-off,
or otherwise) on account of the Revolving Loans made by it or its participation
in the Letter of Credit Obligations in excess of its Proportionate Share of
payments on account of the Revolving Loans or Letter of Credit Obligations
obtained by all the Revolving Lenders, such Revolving Lender shall forthwith
purchase from the other Revolving Lenders such participations in the Revolving
Loans made by them or in their participation in Letters of
28
Credit as shall be necessary to cause such purchasing Revolving Lender to share
the excess payment ratably with each of them; PROVIDED, THAT if all or any
portion of such excess payment is thereafter recovered from such purchasing
Revolving Lender, such purchase from each Revolving Lender shall be rescinded
and each such Revolving Lender shall repay to the purchasing Revolving Lender
the purchase price to the extent of such recovery, together with an amount equal
to such Revolving Lender's ratable share (according to the proportion of (I) the
amount of such Revolving Lender's required repayment to (II) the total amount so
recovered from the purchasing Revolving Lender) of any interest or other amount
paid or payable by the purchasing Revolving Lender in respect to the total
amount so recovered. The Borrowers agree that any Revolving Lender so purchasing
a participation from another Revolving Lender pursuant to this SECTION 2.6, to
the fullest extent permitted by law, may exercise all of its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Revolving Lender were the direct creditor of the Borrowers in the amount
of such participation.
2.6 DEFAULTING REVOLVING LENDERS.
(a) A Revolving Lender who fails to pay the Agent its
Proportionate Share of any Revolving Loans (including Agent Revolving
Advances) made available by the Agent on such Revolving Lender's
behalf, or who fails to pay any other amounts owing by it to the Agent,
is a "DEFAULTING REVOLVING LENDER." The Agent is entitled to recover
from such Defaulting Revolving Lender all such amounts owing by such
Defaulting Revolving Lender on demand. If the Defaulting Revolving
Lender does not pay such amounts on the Agent's demand, the Agent shall
promptly notify the LFC Funds Administrator and the Borrowers shall pay
such amounts to the Agent (to the extent the Agent has made such
amounts available to or for the account of Borrowers) within five (5)
Business Days of its receipt of such notice. In addition, the
Defaulting Revolving Lender or the Borrowers shall pay to the Agent for
its own account interest on such amount for each day from the date it
was made available by the Agent to the Borrowers to the date it is
recovered by the Agent at a rate per annum equal to (X) the overnight
Federal Funds Rate, if paid by the Defaulting Revolving Lender, or (Y)
the then applicable rate of interest calculated under SECTION 4.1, if
paid by the Borrower; PLUS, in each case, the Expenses and losses, if
any, incurred as a result of the Defaulting Revolving Lender's failure
to perform its obligations. Nothing herein shall be deemed to relieve
any Revolving Lender of its obligation to fulfill its commitments
hereunder or to prejudice any rights which the Borrowers may have
against any Revolving Lender as a result of any default by such
Revolving Lender hereunder, including, without limitation, the right of
the Borrowers to seek reimbursement from any Defaulting Revolving
Lender for any amounts paid by the Borrowers under CLAUSE (Y) above on
account of such Defaulting Revolving Lender's default.
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(B) The failure of any Revolving Lender to fund its
Proportionate Share of a Revolving Loan shall not relieve any other
Revolving Lender of its obligation to fund its Proportionate Share of a
Revolving Loan. Conversely, no Revolving Lender shall be responsible
for the failure of another Revolving Lender to fund its Proportionate
Share of a Revolving Loan.
(C) The Agent shall not be obligated to transfer to a
Defaulting Revolving Lender any payments made by the Borrowers to the
Agent for the Defaulting Revolving Lender's benefit; nor shall a
Defaulting Revolving Lender be entitled to the sharing of any payments
hereunder. Amounts payable to a Defaulting Revolving Lender shall
instead be paid to or retained by the Agent. The Agent may hold and, in
its discretion, re-lend to the Borrowers the amount of all such
payments received by it for the account of such Revolving Lender. For
purposes of voting or consenting to matters with respect to the Credit
Documents and determining Proportionate Shares, such Defaulting
Revolving Lender shall be deemed not to be a "REVOLVING LENDER" and
such Revolving Lender's Commitment shall be deemed to be zero (-0-).
This SECTION 2.6 shall remain effective with respect to such Revolving
Lender until (X) the Postpetition Obligations shall have been declared
or shall have become immediately due and payable or (Y) the Majority
Lenders, the Agent and the Borrowers shall have waived such Revolving
Lender's default in writing. The operation of this SECTION 2.6 shall
not be construed to increase or otherwise affect the Revolving
Commitment of any Revolving Lender, or relieve or excuse the
performance by the Borrowers of their respective duties and obligations
hereunder.
2.7 SUPERPRIORITY AND LIENS.
The Postpetition Obligations shall constitute, in accordance with
Section 364(c)(1) of the Bankruptcy Code, claims against each of the Borrowers
in their Chapter 11 cases which are administrative expense claims having
priority over any and all administrative expenses of the kind and specified in
section 503(b) or 507(b) of the Bankruptcy Code, except for Permitted Expenses,
and such claims shall at all times be secured by a first priority Lien on all
Collateral as follows:
(a) pursuant to Bankruptcy Code section 364(c)(2), a
first priority, perfected Lien upon all of the Borrowers' right, title
and interest in, to and under all Collateral that is not otherwise
encumbered by a validly perfected Lien or security interest, including
without limitation, all personal and real property and the proceeds of
all causes of action arising under the Bankruptcy Code;
(b) pursuant to Bankruptcy Code section 364(d)(1), a
first priority, senior, priming, perfected Lien upon all of
30
the Borrowers' right, title and interest in, to and under the
Collateral that secures the Prepetition Obligations; and
(c) pursuant to Bankruptcy Code section 364(c)(3), a
second priority, perfected Lien upon all of the Borrowers' right, title
and interest in, to and under all Collateral that is subject to a
validly perfected security interest or Lien in existence as of the
Petition Date (other than the Collateral that secures the Prepetition
Obligations, which is covered by clause (b) above), junior to such
validity perfected Lien or security interest; provided, however, that
if review of updated title searches on the Borrowers' real property
(which review shall be completed prior to the hearing concerning the
entry of the Permanent Financing Order by the Bankruptcy Court) reveals
the existence of liens, claims or encumbrances by third parties that
the Lenders deem material, the Lenders reserve the right either to
reduce the Commitments or to condition any further extensions of credit
to the Borrowers under this Credit Agreement upon provisions in the
Permanent Financing Order granting the Lenders Liens upon such real
property senior to any other liens pursuant to section 364(d)(1) of the
Bankruptcy Code.
ARTICLE 2A. TERM LOAN.
On each Business Day that Collections are to be applied to repay the
principal of the Prepetition Tranche A Term Loan pursuant to the Postpetition
Collateral Agency Agreement, then, unless an Actionable Default has occurred and
is continuing, each Term Lender shall be deemed to fund a term loan to the
Borrowers in an amount equal to its Proportionate Share of the amount of the
Collections so to be applied (all term loans made in such manner by each Term
Lender herein collectively called the "Term Loan"). The Term Loan of each Lender
shall be evidenced by a Term Note and shall be governed in all respects by the
terms of this Credit Agreement and the other Credit Documents. All Collections
that would otherwise be applied to repay the principal of the Prepetition
Tranche A Term Loan under the Postpetition Collateral Agency Agreement shall be
remitted to the LFC Funds Administrator for the account of the Borrowers in
accordance with the deemed funding of the Term Loan under this Article 2A so
long as no Actionable Default has occurred and is continuing.
ARTICLE 3. LETTERS OF CREDIT.
3.1 ISSUANCE OF LETTERS OF CREDIT.
Subject to the terms and conditions hereof and in reliance on the
representations and warranties of the Borrowers set forth herein, the Agent
shall cause the Issuing Bank to issue Letters of Credit hereunder at the request
of the LFC Funds Administrator and for its account, as more specifically
described below. The Agent shall not be obligated to cause the Issuing Bank to
issue any Letter of Credit if:
31
(A) issuance of the requested Letter of Credit (I)
would cause the Letter of Credit Obligations then outstanding to exceed
$25,000,000 or (II) would cause the sum of the Revolving Loans PLUS the
Letter of Credit Obligations then outstanding to exceed the lesser of
the Revolving Line of Credit and an amount equal to the lesser of (X)
the Aggregate Line of Credit and (Y) the Borrowing Base then in effect;
or
(B) issuance of the Letter of Credit is enjoined,
restrained or prohibited by any Governmental Authority, Requirement of
Law or any request or directive of any Governmental Authority (whether
or not having the force of law) or would impose upon the Agent or the
Issuing Bank any material restriction, reserve, capital requirement,
loss, cost or expense (for which the Agent or the Issuing Bank is not
otherwise compensated) not in effect or known as of the Closing Date.
3.2 TERMS OF LETTERS OF CREDIT.
The proposed amount, terms and conditions, and form of each Letter of
Credit (and of any drafts or acceptances thereunder) shall be subject to
approval by the Issuing Bank. The term of each standby Letter of Credit shall
not exceed 360 days, but may be subject to annual renewal. The term of each
documentary Letter of Credit shall not exceed 120 days. No Letter of Credit
shall have an expiry date later than five (5) Business Days prior to the
Expiration Date.
3.3 NOTICE OF ISSUANCE.
A request for issuance of a Letter of Credit (a "LETTER OF CREDIT
REQUEST") may be given in writing or electronically and, if requested by the
Agent, promptly confirmed in writing. A Letter of Credit Request must be
received by the Agent no later than 1:00 P.M. Chicago time at least three (3)
Business Days (or such shorter period as may be agreed to by the Issuing Bank)
in advance of the proposed date of issuance.
3.4 REVOLVING LENDERS' PARTICIPATION.
Immediately upon issuance or amendment of any Letter of Credit, each
Revolving Lender shall be deemed to have irrevocably and unconditionally
purchased and received from the Issuing Bank, without recourse or warranty, an
undivided interest and participation in all rights and obligations under such
Letter of Credit (other than fees and other amounts owing to the Issuing Bank)
in accordance with such Revolving Lender's Proportionate Share.
3.5 PAYMENTS OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT.
The Agent shall notify the LFC Funds Administrator of the receipt by
the Agent of notice from the Issuing Bank of a draft or other presentation for
payment or drawing under a Letter of Credit not later than 3:00 P.M. Chicago
time on the Business Day
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immediately prior to the date on which the Issuing Bank intends to honor such
drawing. Unless the procedures set forth in SECTION 9.2(C) shall be applicable,
the LFC Funds Administrator shall be deemed to have concurrently given a Notice
of Borrowing to the Agent to make a Revolving Loan in the amount of and at the
time of such drawing (which Loan shall be a Prime Rate Loan), the proceeds of
which shall be applied directly by the Agent to reimburse the Issuing Bank for
the amount of such drawing.
3.6 PAYMENT BY REVOLVING LENDERS.
If a Revolving Loan is not made in an amount sufficient to reimburse
the Issuing Bank in full for the amount of any draw under a Letter of Credit,
the Agent shall promptly notify each Revolving Lender of the unreimbursed amount
of such drawing and of such Revolving Lender's respective participation therein.
Each Revolving Lender shall make available to the Agent, for the account of the
Issuing Bank, the amount of its participation in immediately available funds not
later than 1:00 P.M. Chicago time on the next Business Day after such Revolving
Lender receives notice from the Agent of the amount of such Revolving Lender's
participation in such unreimbursed amount. If any Revolving Lender fails to make
available to the Agent the amount of such Revolving Lender's participation, the
Issuing Bank shall be entitled to recover such amount on demand from such
Revolving Lender together with interest at the Federal Funds Rate for the first
three Business Days and thereafter at the Prime Lending Rate. For each Letter of
Credit, the Agent shall promptly distribute to each Revolving Lender which has
funded the amount of its participation its Proportionate Share of all payments
subsequently received by the Agent from the Borrowers in reimbursement of
honored drawings.
3.7 OBLIGATIONS ABSOLUTE.
The joint and several obligations of the Borrowers to reimburse the
Revolving Lenders under SECTION 3.5 hereof shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Credit Agreement under all circumstances including, without limitation, upon the
occurrence and during the continuance of an Event of Default.
3.8 AGENT'S EXECUTION OF APPLICATIONS AND OTHER ISSUING BANK
DOCUMENTATION; RELIANCE ON CREDIT AGREEMENT BY ISSUING
BANK.
The Agent shall be authorized to execute, deliver and perform on behalf
of the Revolving Lenders such letter of credit applications, shipping
indemnities, letter of credit modifications and consents and other undertakings
for the benefit of the Issuing Bank as may be reasonably necessary or
appropriate in connection with the issuance or modification of Letters of Credit
requested by the Borrowers hereunder. The Revolving Lenders, the Term Lenders,
the Agent, the Borrowers and the LFC Funds Administrator all expressly agree
that the terms of this ARTICLE 3 and various other provisions of this Credit
Agreement identifying the Issuing Bank
33
are also intended to benefit the Issuing Bank and the Issuing Bank shall be
entitled to enforce the provisions hereof which are for its benefit.
3.9 EXISTING LETTERS OF CREDIT.
Effective as of the Closing Date (I) the letters of credit issued for
the account of the Borrowers prior to the Closing Date pursuant to the
Prepetition Credit Agreements by Persons that are issuing Banks hereunder and
set forth on SCHEDULE 3.9 hereto (such letters of credit called the "EXISTING
LETTERS OF CREDIT") in an aggregate face amount not exceeding the total amount
set forth on such Schedule will be deemed to have been issued as, and be,
Letters of Credit under this Credit Agreement and (II) the Existing Letters of
Credit and the reimbursement and other obligations of the Borrowers in respect
thereof shall become Postpetition Obligations and shall no longer constitute
Prepetition Obligations.
ARTICLE 4. COMPENSATION, REPAYMENT AND REDUCTION
OF COMMITMENTS.
4.1 INTEREST ON REVOLVING LOANS.
(a) Interest on the unpaid principal amount of
Revolving Loans which are Prime Rate Loans shall be payable monthly in
arrears on the first Business Day of each month at an interest rate per
annum equal to the Prime Lending Rate PLUS one and one-half percent
(1.5%) calculated on the net balances owing to the Agent and the
Revolving Lenders at the close of business each day during such month.
The rate hereunder shall change each day the Prime Lending Rate
changes.
(B) Interest on the unpaid principal amount of
Revolving Loans which are LIBOR Rate Loans shall be payable on the
earlier to occur of (I) the last day of each Interest Period with
respect to such LIBOR Rate Loans, (II) ninety (90) days following the
commencement of such LIBOR Rate Loans, (III) the date of conversion of
such LIBOR Rate Loans (or a portion thereof) to a Prime Rate Loan and
(IV) the maturity of such LIBOR Rate Loans at an interest rate per
annum equal during the Interest Period for such LIBOR Rate Loans to the
LIBOR Rate for the Interest Period in effect for such LIBOR Rate Loans
PLUS three and three-quarters percent (3.75%). After maturity of such
LIBOR Rate Loans (whether by acceleration or otherwise), interest shall
be payable upon demand. The Agent upon determining the LIBOR Rate for
any Interest Period shall promptly notify the LFC Funds Administrator
and the Revolving Lenders by telephone (confirmed promptly in writing)
or in writing thereof. Each determination by the Agent of an interest
rate hereunder shall be conclusive and binding for all purposes, absent
demonstrable error.
(C) Notwithstanding the provisions of SECTION 4.1(B),
the Borrowers shall pay to each Revolving Lender, so long as
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and to the extent such Revolving Lender shall be required under
regulations of the Board of Governors of the Federal Reserve System to
maintain reserves with respect to liabilities or assets consisting of
or including Eurocurrency Liabilities, additional interest on the
unpaid principal amount of each Revolving Loan comprised of LIBOR Rate
Loans of such Revolving Lender, from the date of such LIBOR Rate Loan
until such principal amount is paid in full, at an interest rate per
annum equal at all times to the remainder obtained by subtracting (I)
the LIBOR Rate for the applicable Interest Period for such LIBOR Rate
Loan from (II) the rate obtained by dividing such LIBOR Rate by a
percentage equal to 1 MINUS the stated maximum rate (stated as a
decimal) applicable two (2) Business Days before the first day of such
Interest Period of all reserves, if any, required to be maintained
against "EUROCURRENCY LIABILITIES" as specified in Regulation D (or
against any other category of liabilities which includes deposits by
reference to which the interest rate on LIBOR Rate Loans is determined
or any category of extensions of credit or other assets which includes
loans by a non-United States office of any Revolving Lender to United
States residents) having a term equal to the Interest Period applicable
to such LIBOR Rate Loan. Such Revolving Lender shall as soon as
practicable provide notice to the Agent and the LFC Funds Administrator
of any such additional interest arising in connection with such LIBOR
Rate Loan, which notice shall be conclusive and binding, absent
demonstrable error.
4.1A INTEREST ON TERM LOAN.
(a) Interest on the outstanding principal amount of the
Term Loan shall be payable monthly in arrears on the last Business Day
of each month of the Borrowers at an interest rate per annum equal to
16%.
4.1B INTEREST ON PREPETITION OBLIGATIONS.
Interest on the outstanding Prepetition Obligations shall be
payable monthly in arrears on the first Business Day of each month at
an interest rate per annum equal to the nondefault rate of interest
specified with respect to each component of the Prepetition Obligations
in the applicable Prepetition Credit Agreement., and each Lender in its
capacity as a Prepetition Lender hereby (i) agrees that Prepetition
Obligations that may bear interest at a rate based upon the LIBOR Rate
under the applicable Prepetition Credit Agreement may continue to bear
interest at such a rate in accordance with the terms of such
Prepetition Credit Agreement and (ii) waives its right to charge
interest on the outstanding Prepetition Obligations at the postdefault
rate specified in the applicable Prepetition Credit Agreement, in each
case so long as no Event of Default under this Credit Agreement has
occurred and is continuing.
35
4.2 UNUSED LINE FEE.
The Borrowers shall pay to the Agent, for the ratable benefit of the
Revolving Lenders, a nonrefundable fee (the "UNUSED LINE FEE") equal to one-half
of one percent (0.50%) per annum of the unused portion of the Revolving Line of
Credit (with any outstanding Letters of Credit constituting usage of the
Revolving Line of Credit). The Unused Line Fee shall accrue daily from the
Closing Date until the Expiration Date and shall be due and payable monthly in
arrears on the first Business Day of each month and on the Expiration Date.
4.3 LETTER OF CREDIT FEES.
(a) The Agent, for the ratable benefit of the Revolving
Lenders, shall be entitled to charge to the account of the Borrowers on
the first Business Day of each month, a fee (the "LETTER OF CREDIT
FEE"), in an amount equal to two percent (2.0%) per annum of the daily
weighted average undrawn amount of Letters of Credit outstanding during
the immediately preceding month. In addition, the Agent, for its own
account, shall be entitled to charge to the account of the Borrowers on
the date of issuance of any standby Letter of Credit, a facing fee
equal to one-half of one percent (0.50%) on the initial face amount of
each such standby Letter of Credit (the "L/C FACING FEE").
(b) The Agent shall also be entitled to charge to the
account of the Borrowers, as and when incurred by the Agent or any
Revolving Lender, the customary charges, fees, costs and expenses
charged to the Agent or any Revolving Lender for the Borrower's account
by any Issuing Bank (the "ISSUING BANK FEES") in connection with the
issuance, transfer, drawing, amendment or negotiation of any Letters of
Credit by the Issuing Bank. Each determination by the Agent of Letter
of Credit Fees, L/C Facing Fees, Issuing Bank Fees and other fees,
costs and expenses charged under this SECTION 4.3 shall be conclusive
and binding for all purposes, absent manifest error.
4.4 FACILITY FEE.
The Borrowers shall pay to the Agent on the Closing Date, for the
ratable benefit of the Lenders a nonrefundable fee (the "Facility Fee") equal to
$2,600,000.
4.5 INTEREST AND LETTER OF CREDIT FEES AFTER EVENT OF
DEFAULT.
From the date of occurrence of an Event of Default until the earlier of
the date upon which (I) all Postpetition Obligations and Prepetition Obligations
shall have been paid and satisfied in full or (II) such Event of Default shall
have been waived: (A) interest on the Revolving Loans, the Term Loans, and
Letter of Credit Fees on Letter of Credit Obligations shall each be payable on
demand at
36
a rate per annum equal to, with respect to the Revolving Loans and the Term
Loans, the rate in effect under SECTION 4.1 and 4.1A, respectively, PLUS two
percent (2.0%), and with respect to the Letter of Credit Obligations, the rate
at which Letter of Credit Fees are charged pursuant to the first sentence of
SECTION 4.3(A), PLUS two percent (2.0%) and (B) interest on all outstanding
Prepetition Obligations shall accrue and be payable on demand at a rate per
annum equal to the rate specified in the applicable Prepetition Credit Agreement
as the rate to be applied to such Prepetition Obligations following an event of
default under such Prepetition Credit Agreement.
4.6 EXPENSES.
The Borrowers shall reimburse the Expenses of the Agent and the Lenders
promptly upon demand.
4.7 MANDATORY PAYMENT OF REVOLVING LOANS; REDUCTIONS OF
REVOLVING COMMITMENTS.
(a) Except during the period described in SECTION
2.2(B)(II), the aggregate outstanding principal amount of Revolving
Loans PLUS Letter of Credit Obligations at any time in excess of an
amount equal to the lesser of (X) the Borrowing Base and (Y) the
Revolving Line of Credit MINUS, in each case, the aggregate outstanding
principal amount of all Prepetition Obligations other than any
Prepetition Obligations relating to the Prepetition Tranche A Term
Loan, shall be immediately due and payable without the necessity of any
demand.
(b) On the Expiration Date, the Revolving Commitment of
each Revolving Lender shall automatically reduce to zero (-0-) and may
not be reinstated.
(c) The Borrowers may reduce or terminate the Revolving
Line of Credit in whole or in part at any time and from time to time;
PROVIDED, THAT each such reduction must be in an amount not less than
$5,000,000 (and in increments of $1,000,000 in excess thereof). Once
reduced, no portion of the Revolving Line of Credit may be reinstated.
If the Borrowers seek to reduce the Revolving Line of Credit to less
than $25,000,000, then the Revolving Line of Credit shall be reduced to
zero (-0-).
(d) Upon any Asset Disposition, the Fixed Asset
Sublimit shall be reduced by the amount prescribed in the definition of
"Fixed Asset Sublimit" set forth in Article 1. After the Fixed Asset
Sublimit has been reduced to zero (-0-), the Revolving Commitment of
each Revolving Lender shall be reduced upon any Asset Disposition by
such Revolving Lender's Proportionate Share of the amount by which the
Fixed Asset Sublimit would have been reduced under the definition of
"Fixed Asset Sublimit." After all the Revolving Commitments have been
reduced to zero (-0-) and all Letter of Credit
37
Obligations have been cash collateralized in the manner set forth in
SECTION 9.2(C), the Net Disposition Proceeds of any Asset Disposition
shall be applied to repay the outstanding Postpetition Obligations
relating to the Term Loan.
4.7A NO PERMITTED PREPAYMENT OF TERM LOAN.
Until payment in full of all Postpetition Obligations in respect of
Revolving Loans and Letter of Credit Obligations and termination of the
Revolving Commitments pursuant to the terms and provisions hereof, the Borrowers
may not prepay the Term Loan at any time in whole or in part.
4.8 MAINTENANCE OF REVOLVING LOAN ACCOUNT; STATEMENTS OF
ACCOUNT.
The Agent shall maintain an account on its books in the name of the
Borrowers (the "REVOLVING LOAN ACCOUNT") in which the Borrowers will be charged
with all loans and advances made by the Revolving Lenders to the Borrowers or
for the account of the Borrowers, including the Revolving Loans and all Letter
of Credit Obligations, the Fees, the Expenses and any other Postpetition
Obligations, as and when such payments become due. The Revolving Loan Account
will be credited with all payments received by the Agent from the Borrowers or
for the account of the Borrowers for application to the Postpetition Obligations
and the Prepetition Obligations. After the end of each month, the Agent shall
send the LFC Funds Administrator a monthly statement accounting for the charges,
loans, advances and other transactions occurring among and between the Agent,
the Revolving Lenders and the Borrowers during that month, PROVIDED, THAT the
failure of the Agent to send such statement to the LFC Funds Administrator shall
not relieve the Postpetition Borrowers of any Postpetition Obligations or
Prepetition Obligations. Absent demonstrable error, each monthly statement shall
be an account stated and shall be final, conclusive and binding on the
Borrowers.
4.9 PAYMENT PROCEDURES.
(a) Payments of Fees, principal of and interest on the Revolving
Loans and Expenses payable to the Agent or any Revolving Lender shall be made in
each case not later than 2:00 P.M. Chicago time on the day when due, in
immediately available funds, to the offices of the Agent, at the address set
forth in SECTION 11.7, or as the Agent may otherwise direct the LFC Funds
Administrator. The Borrowers hereby authorize the Agent to charge the Revolving
Loan Account with the amount of all payments to be made hereunder and under the
other Credit Documents, on account of Postpetition Obligations in respect of
Revolving Loans and Letter of Credit Obligations, including all Fees and
Expenses, as and when such payments become due. The joint and several obligation
of the Borrowers to the Revolving Lenders with respect to such payments shall be
discharged by making such payments to the Agent pursuant to this SECTION 4.9 or
by the charging of the Revolving Loan Account by the Agent.
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(b) Payments of principal and, other than as provided in SECTION
4.1A(C), interest in respect of the Term Loan and Expenses payable to any Term
Lender shall be made not later than 2:00 P.M. Chicago time on the day when due,
in immediately available funds, to the offices of the Agent, at the address set
forth in SECTION 11.7, or as the Agent may otherwise direct the LFC Funds
Administrator.
4.10 COLLECTION OF ACCOUNTS.
All Collections and other amounts received by each Borrower from any
account debtor, in addition to all other cash received by such Borrower from any
other Collateral, shall on a daily basis be deposited into one or more of the
Depositary Accounts, in each case in the identical form in which received,
whether by cash or check. Borrowers shall cause all available amounts deposited
in each Depositary Account to be transferred on each Business Day from and after
the Closing Date (and, with respect to each depositary account established by
any Borrower after the Closing Date, prior to the date such account is added to
SCHEDULE B, PART 8.10 pursuant to SECTION 11.11) into the Collateral Account.
Except for transfers to the Collateral Account pursuant to this SECTION 4.10,
from and after the Closing Date, no Borrower shall authorize or direct the
transfer of, or otherwise withdraw any funds from, any of the Depositary
Accounts.
4.11 DISTRIBUTION AND APPLICATION OF COLLECTIONS AND OTHER
AMOUNTS.
(a) All amounts received by the Collateral Agent in the
Collateral Account shall be distributed by the Collateral Agent for
application to the Prepetition Obligations and the Postpetition
Obligations, respectively, pursuant to SECTION 4 of the Postpetition
Collateral Agency Agreement.
(b) So long as no Actionable Default has occurred and
is continuing, all amounts distributed to the Agent pursuant to SECTION
4 of the Postpetition Collateral Agency Agreement for application to
the Postpetition Obligations and the Prepetition Obligations shall be
applied by the Agent in the following order: FIRST, to the payment of
any Prepetition Obligations payable to the Agent (in its capacity as
agent under the Prepetition Credit Agreements) and the Prepetition
Lenders under any of the Prepetition Credit Documents in the order
prescribed in SECTION 4.1 of the Postpetition Collateral Agency
Agreement and under the Prepetition Credit Agreements; SECOND, to the
payment of any Fees, Expenses or other Postpetition Obligations due and
payable to the Agent under any of the Credit Documents, including Agent
Revolving Advances and any other amounts advanced by the Agent on
behalf of the Revolving Lenders; THIRD, to the payment of any Fees,
Expenses or other Postpetition Obligations due and payable to the
Issuing Bank under any of the Credit Documents; FOURTH, to the ratable
payment of any Fees, Expenses or other Postpetition Obligations due and
payable to the Revolving
39
Lenders under any of the Credit Documents other than those Postpetition
Obligations specifically referred to in this SECTION 4.11(B); FIFTH, to
the ratable payment of any Fees, Expenses or other Postpetition
Obligations due and payable to the Term Lenders under any of the Credit
Documents other than those Postpetition Obligations specifically
referred to in this SECTION 4.11(B); SIXTH, to the ratable payment of
interest due and payable on the Revolving Loans to the Revolving
Lenders; SEVENTH, to the ratable payment of principal due on the
Revolving Loans to the Revolving Lenders; EIGHTH, to the payment of
interest due and payable on the Term Loan to the Term Lenders; and
NINTH, to the payment of principal due on the Term Loan to the Term
Lenders; it being understood and agreed that, notwithstanding any
acceleration of the maturity of the Postpetition Obligations in respect
of the Term Loan pursuant to SECTION 9.2A or any other provision of
this Credit Agreement or any other Credit Document, no amounts shall be
distributed to the Term Lenders pursuant to the foregoing clause ninth
if no Actionable Default has occurred and is continuing until all
Postpetition Obligations owing to the Revolving Lenders have been
indefeasibly paid in full and the Revolving Commitments have been
terminated.
(c) After an Actionable Default has occurred and is
continuing, all amounts distributed to the Agent pursuant to SECTION 4
of the Postpetition Collateral Agency Agreement for application to the
Postpetition Obligations and the Prepetition Obligations shall be
applied by the Agent in the following order: FIRST, to the payment of
the Postpetition Obligations in the order prescribed in SECTION
4.11(B), except that in such circumstance no payments shall be made
pursuant to clauses fifth, eighth or ninth of Section 4.11(b) until all
Postpetition Obligations owing to the Revolving Lenders have been
indefeasibly paid in full and the Revolving Commitments have been
terminated; and SECOND, to the payment of the Prepetition Obligations
in the order prescribed in Section 4.2 of the Postpetition Collateral
Agency Agreement.
4.12 CALCULATIONS.
All calculations of (I) interest hereunder and (II) Fees, including,
without limitation, Unused Line Fees and Letter of Credit Fees, shall be made by
the Agent, on the basis of a year of 360 days, or, if such computation would
cause the interest and fees chargeable hereunder to exceed the Highest Lawful
Rate, 365/366 days, in each case for the actual number of days elapsed
(including the first day but excluding the last day) occurring in the period for
which such interest or Fees are payable. Each determination by the Agent of an
interest rate, Fee or other payment hereunder shall be conclusive and binding
for all purposes, absent manifest error.
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4.13 SPECIAL PROVISIONS RELATING TO LIBOR RATE LOANS.
(a) CONTINUATION. With respect to any Borrowing
consisting of LIBOR Rate Loans, the Borrowers may, subject to the
provisions of SECTION 4.13(C), elect to maintain such Borrowing or any
portion thereof as consisting of LIBOR Rate Loans by selecting a new
Interest Period for such Borrowing, which new Interest Period shall
commence on the last day of the immediately preceding Interest Period.
Each selection of a new Interest Period shall be made by notice given
not later than noon Chicago time on the third Business Day prior to the
date of any such continuation relating to LIBOR Rate Loans, by the LFC
Funds Administrator to the Agent. Such notice by the LFC Funds
Administrator of a continuation (a "NOTICE OF CONTINUATION") shall be
by telephone or facsimile transmission, and if by telephone, promptly
confirmed in writing, substantially in the form of EXHIBIT D, in each
case specifying (I) the date of such continuation, (II) the Type of
Revolving Loans subject to such continuation, (III) the aggregate
amount of Revolving Loans subject to such continuation and (IV) the
duration of the selected Interest Period. The Borrowers may elect to
maintain more than one Borrowing consisting of LIBOR Rate Loans by
combining such Borrowings into one Borrowing and selecting a new
Interest Period pursuant to this SECTION 4.13(A). If the Borrowers
shall fail to select a new Interest Period for any Borrowing consisting
of LIBOR Rate Loans in accordance with this SECTION 4.13(A), such
Revolving Loans will automatically, on the last day of the then
existing Interest Period therefor, convert into Prime Rate Loans. The
Agent shall give each Revolving Lender prompt notice by telephone or
facsimile transmission of each Notice of Continuation.
(b) CONVERSION. The Borrowers may on any Business Day
(so long as no Default or Event of Default has occurred and is
continuing), upon notice (each such notice, a "NOTICE OF CONVERSION")
given to the Agent, and subject to the provisions of SECTION 4.13(C),
convert the entire amount of or a portion of all Revolving Loans of one
Type comprising the same Borrowing into Revolving Loans of another
Type; PROVIDED, THAT any conversion of any LIBOR Rate Loans into
Revolving Loans of another Type shall be made on, and only on, the last
day of an Interest Period for such LIBOR Rate Loans and, upon
conversion of any Prime Rate Loans into Revolving Loans of another
Type, the Borrowers shall pay accrued interest to the date of
conversion on the principal amount converted. Each such Notice of
Conversion shall be given not later than Noon Chicago time on the
Business Day prior to the date of any proposed conversion into Prime
Rate Loans and on the third Business Day prior to the date of any
proposed conversion into LIBOR Rate Loans. Subject to the restrictions
specified above, each Notice of Conversion shall be by telephone or
facsimile transmission, and if by telephone, promptly confirmed in
writing, substantially in the form of EXHIBIT E, in each case
specifying (I) the requested date of such
41
conversion, (II) the Type of Revolving Loans to be converted (III) the
portion of such Type of Revolving Loan to be converted, (IV) the Type
of Revolving Loans such Revolving Loans are to be converted into and
(V) if such conversion is into LIBOR Rate Loans, the duration of the
Interest Period of such Revolving Loan. Each conversion shall be in an
aggregate amount of not less than $5,000,000 or an integral multiple of
$1,000,000 in excess thereof. The Borrowers may elect to convert the
entire amount of or a portion of all Revolving Loans of one Type
comprising more than one Borrowing into Revolving Loans of another Type
by combining such Borrowings into one Borrowing; PROVIDED, THAT if the
Borrowings so combined consist of LIBOR Rate Loans, such Loans shall
have Interest Periods ending on the same date.
(C) CERTAIN LIMITATIONS ON LIBOR RATE LOANS. The right
of the Borrowers to maintain, select, continue or convert LIBOR Rate
Loans shall be limited as follows:
(i) If the Agent is advised by Bankers Trust
Company that it is not offering United States dollar deposits
(in the applicable amounts) in the London inter-bank market,
or the Agent determines that adequate and fair means do not
otherwise exist for ascertaining the LIBOR Rate or LIBOR Rate
Loans comprising any requested Borrowing, continuation or
conversion, the right of the Borrowers to select or maintain
LIBOR Rate Loans for such Borrowing or any subsequent
Borrowing shall be suspended until the Agent shall notify the
LFC Funds Administrator and the Revolving Lenders that the
circumstances causing such suspension no longer exists, and
each Revolving Loan shall be made as a Prime Rate Loan.
(ii) If the Majority Lenders shall, at least
one Business Day before the date of any requested Borrowing,
continuation or conversion, notify the Agent that the LIBOR
Rate for Revolving Loans comprising such Borrowing will not
adequately reflect the cost to such Revolving Lenders of
making or funding their respective Revolving Loans for such
Borrowing, the right of the Borrowers to select LIBOR Rate
Loans for such Borrowing shall be suspended until the Agent
shall notify the LFC Funds Administrator and the Revolving
Lenders that the circumstances causing such suspension no
longer exist, and each Revolving Loan comprising such
Borrowing and each other Borrowing requested during such
period of suspension shall be made as a Prime Rate Loan.
(iii) If at any time any Revolving Lender
determines (which determination shall, absent manifest error,
be conclusive and binding on all parties) that the making,
continuation or conversion of any Revolving Loan as a LIBOR
Rate Loan by such Revolving Lender has become unlawful or
impermissible by reason of compliance by that Revolving Lender
with any law, governmental rule,
42
regulation or order of any Governmental Authority (regardless
whether having the force of law), then, and in any such event,
such Revolving Lender may give notice of that determination in
writing, to the Agent and the LFC Funds Administrator and the
Agent shall promptly transmit the notice to each other
Revolving Lender. Until such Revolving Lender gives notice
otherwise, the right of the Borrowers to select LIBOR Rate
Loans from that Revolving Lender shall be suspended and each
Revolving Loan made by that Revolving Lender, notwithstanding
the Type of Revolving Loan made by the other Revolving
Lenders, shall be a Prime Rate Loan and each LIBOR Rate Loan
outstanding from that Revolving Lender shall automatically, on
the last day of the existing Interest Period therefor (or
earlier, if so required under such law, rule, regulation or
order), convert to a Prime Rate Loan.
(IV) No Agent Revolving Advance shall be made
as a LIBOR Rate Loan.
(V) No Revolving Loans may be made, continued
or converted as or to LIBOR Rate Loans at any time that a
Default or Event of Default shall have occurred and be
continuing.
(D) COMPENSATION.
(i) Each Notice of Continuation and Notice of
Conversion shall be irrevocable by and binding on the
Borrowers. In the case of any Borrowing, continuation or
conversion that the related Notice of Borrowing, Notice of
Continuation or Notice of Conversion specifies is to be
comprised of LIBOR Rate Loans, the Borrowers shall indemnify
each Revolving Lender against any loss, cost or expense
incurred by such Person as a result of any failure to fulfill,
on or before the date for such Borrowing, continuation or
conversion specified in such Notice of Borrowing, Notice of
Continuation or Notice of Conversion, the applicable
conditions set forth in ARTICLE 5, including, without
limitation, any loss (excluding loss of anticipated profits),
cost or expense incurred by reason of the liquidation or
re-employment of deposits or other funds acquired by such
Revolving Lender to fund the Revolving Loan to be made by such
Revolving Lender as part of such Borrowing, continuation or
conversion.
(ii) If any payment of principal of, or
conversion or continuation of, any LIBOR Rate Loan is made
other than on the last day of the Interest Period for such
Loan as a result of a payment, prepayment, conversion or
continuation of such Loan or acceleration of the maturity of
the Revolving Notes or for any other reason, the Borrowers
shall, upon demand by any Revolving Lender
43
(with a copy of such demand to the Agent), pay to the Agent
for the account of such Revolving Lender any amounts required
to compensate such Revolving Lender for any additional losses,
costs or expenses which it may reasonably incur as a result of
such payment, including, without limitation, any loss
(excluding loss of anticipated profits), cost or expense
incurred by reason of the liquidation or re-employment of
deposits or other funds acquired by any Revolving Lender to
fund or maintain such Loan.
(iii) Calculation of all amounts payable to a
Revolving Lender under this SECTION 4.13(D) shall be made as
though such Revolving Lender elected to fund all LIBOR Rate
Loans by purchasing United State dollar deposits in its LIBOR
Lending Office's interbank eurodollar market.
4.14 INDEMNIFICATION IN CERTAIN EVENTS.
(a) INCREASED COSTS. If after the Closing Date, either
(I) any change in or in the interpretation of any law or regulation is
introduced, including, without limitation, with respect to reserve
requirements applicable to the Agent, to any of the Lenders, Bankers
Trust Company or any other affiliated banking or financial institution
from whom any of the Lenders borrows funds or obtains credit (a
"FUNDING BANK"), or (II) the Agent, a Funding Bank or any of the
Lenders complies with any future guideline or request from any central
bank or other Governmental Authority proposed or promulgated after the
date of the Agreement or (III) the Agent, a Funding Bank or any of the
Lenders determines that the adoption of any applicable law, rule or
regulation regarding capital adequacy or any change therein, or any
change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with
the interpretation or administration thereof announced after the date
of this Credit Agreement has or would have the effect described below,
or the Agent, a Funding Bank or any of the Revolving Lenders complies
with any request or directive regarding capital adequacy (whether or
not having the force of law) of any such authority, central bank or
comparable agency announced after the date of this Credit Agreement and
in the case of any event set forth in this clause (III), such adoption,
change or compliance has or would have the direct or indirect effect of
reducing the rate of return on any of such Person's capital as a
consequence of its obligations hereunder to a level below that which
such Person could have achieved but for such adoption, change or
compliance (taking into consideration such Person's policies with
respect to capital adequacy) by an amount deemed by such Person to be
material, and any of the foregoing events described in CLAUSES (I),
(II) OR (III) increases the cost to the Agent, or any of the Lenders of
(A) funding or maintaining any Commitment or (B) issuing, causing the
issuance of making or maintaining any Letter of Credit or of purchasing
or main-
44
taining any participation therein, or reduces the amount receivable in
respect thereof by the Agent or any Lender, then the Borrowers shall
upon demand by the Agent at any time within one hundred eighty (180)
days after the date on which an officer of the Agent, such Funding Bank
or such Lender, as the case may be, responsible for overseeing this
Credit Agreement knows or has reason to know of its right to additional
compensation under this SECTION 4.14(A), pay to the Agent, for the
account of such Lender or, as applicable, the Agent or a Funding Bank,
additional amounts sufficient to reimburse the Agent, such Funding Bank
and such Lender against such increase in cost or reduction in amount
receivable; PROVIDED, HOWEVER, that if the Agent or any such Lender or
Funding Bank, as the case may be, fails to deliver such demand within
such 180 day period, such entity shall only be entitled to additional
compensation for any such costs incurred from and after the date that
is one hundred eighty (180) days prior to the date the Borrowers
received such demand; and PROVIDED FURTHER, HOWEVER, that before making
any such demand, the Agent and each Revolving Lender agree to use
reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions) to designate a different Applicable Lending
Office if the making of such a designation would avoid the need for, or
reduce the amount of, such increased cost and would not, in the
reasonable judgment of such Lender, be otherwise disadvantageous to
such Lender. A certificate as to the amount of such increased cost, and
setting forth in reasonable detail the calculation thereof, shall be
submitted to the LFC Funds Administrator by the Agent, or the
applicable Lender or Funding Bank, and shall be conclusive absent
demonstrable error.
(b) Each Lender will promptly notify the Agent, and the
Agent will promptly notify the LFC Funds Administrator, of any event of
which it has knowledge that would entitle such entity to additional
compensation under this SECTION 4.14. Neither the Agent nor any Lender
shall request any additional compensation under this SECTION 4.14
unless it is generally making similar requests of other borrowers
similarly situated, and the Agent and each Lender agrees to use a
reasonable basis for calculating amounts allocable to its commitment to
lend or its Loans and Letter of Credit Obligations, if any, hereunder.
4.15 TAXES.
(a) Each payment by the Borrowers hereunder or under
the Notes (A "PAYMENT") to the Agent or any Lender (A "PAYEE") shall be
made free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and
all liabilities with respect thereto, imposed by the United States or
any political subdivision or taxing authority thereof or therein (all
such taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "U.S. TAXES". If any U.S.
Taxes shall be required by law to be deducted from or
45
in respect of any sum payable hereunder to any Payee, (I) the sum
payable by the Borrowers shall be increased as may be necessary so that
after making all required deductions (including deductions applicable
to additional sums payable under this SECTION 4.15) the recipient shall
receive an amount equal to the sum it would have received had no such
deductions been made, (II) the Borrowers shall make such deductions and
(III) the Borrowers shall pay the full amount deducted to the relevant
taxing authority in accordance with applicable law. Within 30 days
after the date of any payment of U.S. Taxes withheld by the Borrowers
in respect of any payment to any Payee, the Borrowers will furnish to
the Agent the official receipt or receipts (or certified copies
thereof) from the relevant taxation or other authorities for the full
amount so deducted or withheld.
(b) Each Lender that is organized under the laws of any
jurisdiction other than the United States or any State thereof shall
deliver to the Agent for transmission to the Borrowers at such times as
may be necessary in the determination of the Borrowers or the Agent
(each in the reasonable exercise of its discretion), such certificates,
documents or other evidence, properly completed and duly executed by
such Lender (including, without limitation, Internal Revenue Service
Form W-8 or Form 1001 or any other certificate or statement of
exemption required by Treasury Regulation section 1.441-6(c) or any
successor thereto) to establish that such Lender is not subject to
deduction or withholding of United States federal income tax under
section 1441 or 1442 of the Code or otherwise (or under any comparable
provisions of any successor statute) with respect to any payments to
such Lender of principal, interest, fees or other amounts payable under
any of the Loans.
(c) Notwithstanding the preceding provisions of this
SECTION 4.15, the Borrowers shall not be obligated to make additional
payments under CLAUSE (A) above to any Payee that is an assignee of a
Loan pursuant to SECTION 11.8 and is organized under the laws of any
jurisdiction outside of the United States or any State for U.S. Taxes
which both (I) would not have been required had such assignee been
organized under the laws of the United States and (II) did not result
from a change in law or regulation or the interpretation thereof from
the law, regulation or interpretation prevailing at the time such
assignee became a Lender. Each Lender which is a Lender as of the
Closing Date and is not organized under the laws of the United States
or any State represents that as of the Closing Date, the Borrowers are
not required to make additional payments under CLAUSE (A) above to it
hereunder or under the Notes.
46
ARTICLE 5. CONDITIONS PRECEDENT.
5.1 CONDITIONS PRECEDENT TO INITIAL LOANS AND LETTER OF
CREDIT.
The obligation of each Revolving Lender to fund its Proportionate Share
of the initial Borrowing (or, if it shall occur earlier and the obligation of
the Agent to cause the issuance by the Issuing Bank of the initial Letter of
Credit) are subject to the satisfaction or waiver of the following conditions
precedent:
(A) CLOSING DOCUMENT LIST. The Agent and the Lenders
shall have received each of the agreements, opinions, reports,
approvals, consents, certificates and other documents set forth on the
closing document list attached hereto as SCHEDULE A (the "CLOSING
DOCUMENT LIST").
(B) FEES AND EXPENSES. All Fees and Expenses payable by
the Borrowers hereunder, and all fees payable by the Borrowers to the
Collateral Agent under the Postpetition Collateral Agency Agreement, in
each case on or before the Closing Date, shall have been paid in full.
(C) INTERIM FINANCING ORDER. The Bankruptcy Court shall have
entered the Interim Financing Order in the form and substance
satisfactory to the Agent. Such Interim Financing Order shall be in
full force and effect and shall not have been vacated, reversed,
modified or stayed in any respect and, if such order is the subject of
any pending appeal, no performance of any obligation of any party
hereto shall have been stayed pending such appeal.
(D) PAYMENTS. Prior to the Petition Date, the Borrowers
shall have paid all accrued interest, fees and expenses with respect to
the Prepetition Obligations (including without limitation all legal
fees and expenses incurred in connection with the preparation,
negotiation and consummation of this Credit Agreement).
(E) GECC ACCOUNT PURCHASE AGREEMENT. The Borrowers
shall have entered into an arrangement with GECC satisfactory in all
respects to the Agent and the Lenders to continue the effectiveness and
operation of the GECC Account Purchase Agreement on a postpetition
basis.
5.2 CONDITIONS PRECEDENT TO ALL REVOLVING LOANS AND LETTERS
OF CREDIT.
The obligation of each Revolving Lender to fund its Proportionate Share
of any requested Revolving Loan (or of the Agent to cause the Issuing Bank to
issue any requested Letter of Credit) are subject to the satisfaction of the
conditions precedent set forth below. Each Notice of Borrowing, each Letter of
Credit Request, and each issuance by any Borrower of a check drawn against, or
request for transfer from, the Disbursement Account
47
shall constitute a representation and warranty to the Agent and each Lender by
the Borrowers that such conditions are satisfied.
(A) All representations and warranties contained in
this Credit Agreement and the other Credit
Documents are true and correct in all material
respects on and as of the date of such Notice of
Borrowing, Letter of Credit Request, or issuance of
a check drawn against, or request for transfer
from, the Disbursement Account, both before and
after giving effect thereto and to the application
of the proceeds thereof, in each case as if then
made, other than representations and warranties
that expressly relate solely to an earlier date (in
which case such representations and warranties
shall have been true and accurate on and as of such
earlier date);
(B) No Default or Event of Default shall have
occurred or could reasonably be expected to result
from the making of the requested Loan or the issuance
of the requested Letter of Credit, that has not been
waived (or, in the case of a Default, cured) pursuant
to the terms hereof; and
(C) No event shall have occurred since the date of
this Credit Agreement that has had or could
reasonably be expected to have a Material Adverse
Effect.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES.
To induce the Agent and the Lenders to enter into this Credit Agreement
and to induce the Lenders to make the Loans and other financial accommodations
described herein, each of the Borrowers hereby represents and warrants to the
Agent and the Lenders that the representations and warranties contained in this
ARTICLE 6 are true and correct. Such representations and warranties, and all
other representations and warranties made by the Borrowers in any other Credit
Documents, shall survive the execution and delivery of this Credit Agreement and
such other Credit Documents.
6.1 ORGANIZATION AND QUALIFICATION.
Each Borrower and each Subsidiary of each Borrower (I) are corporations
duly organized, validly existing and in good standing under the laws of the
respective states or other jurisdictions of their incorporation, (II) have the
power and authority to own their respective properties and assets and to
transact their respective businesses in which they presently are, or propose to
be, engaged and (III) are duly qualified and are authorized to do business and
are in good standing in each of the respective jurisdictions where they
presently are, or propose to be, engaged in business, in each case, except where
any failures to do so could not reasonably be expected singly or in the
aggregate to have a Material Adverse
48
Effect. SCHEDULE B, PART 6.1 lists all jurisdictions in which each Borrower and
each Subsidiary of each Borrower are qualified to do business as foreign
corporations.
6.2 AUTHORITY.
The execution, delivery and performance by each Borrower of the Credit
Documents and all instruments and documents to be delivered by such Borrower, to
the extent it is party thereto: (i) are within such Borrower's corporate power;
(ii) have been duly authorized by all necessary or proper corporate action and
by the Closing Date will be authorized by the Interim Financing Order pursuant
to sections 363 and 364 of the Bankruptcy Code; (iii) are not in contravention
of any provision of such Borrower's certificates or articles of incorporation or
by-laws; (iv) will not, upon the entry of the Interim Financing Order by the
Bankruptcy Court, violate any law or regulation, or any order or decree of any
court or governmental instrumentality; (v) will not conflict with or result in
the breach or termination of, constitute a default under or accelerate any
performance required by, any indenture, mortgage, deed of trust, lease,
agreement or other instrument to which such Borrower is a party or by which such
Borrower or any of its property is bound and the effect of which will not be
subject to the automatic stay pursuant to Section 362 of the Bankruptcy Code
upon the entry of the Interim Financing Order by the Bankruptcy Court; (vi) will
not result in the creation or imposition of any Lien upon any of the property of
such Borrower (other than the Liens existing or created under the Collateral
Documents); and (vii) do not require the consent or approval of any governmental
body, agency, authority or any other Person other than the entry by the
Bankruptcy Court of the Interim Financing Order, which by the Closing Date will
be in full force and effect and the Permanent Financing Order. Each of the
Credit Documents has been duly executed and delivered for the benefit of or on
behalf of the Borrowers and each constitutes a legal, valid and binding
obligation of the Borrowers, enforceable against them in accordance with its
terms.
6.3 ENFORCEABILITY.
This Credit Agreement and each of the other Credit Documents,
including, without limitation, each Revolving Note, are the legal, valid and
binding obligations of each Borrower and each Subsidiary of each Borrower that
are parties thereto, enforceable in accordance with their respective terms.
6.4 RESERVED.
6.5 CONSENTS AND FILINGS.
No consent, authorization, permit or filing is required in connection
with the execution, delivery and performance of this Credit Agreement or any
Credit Document by any Borrower or any Subsidiary of any Borrower that are
parties thereto, or in
49
connection with the continuing operations of such Persons, except those that
have been obtained or made.
6.6 GOVERNMENT REGULATION.
No Borrower nor any Subsidiary of any Borrower is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, the Investment Company Act of 1940, or any other
similar Requirement of Law that limits the respective abilities of such Persons
to incur indebtedness or consummate the transactions contemplated in this Credit
Agreement and the other Credit Documents.
6.7 RIGHTS IN COLLATERAL; PRIORITY OF LIENS.
All property constituting Collateral is owned or leased by the
Borrowers. Upon entry of the Interim Financing Order, the security interests
granted pursuant to the Credit Documents constitute valid, enforceable and
perfected Liens on the Collateral, including without limitation all of the
Borrowers' respective interests in real property, with the priority set forth in
the Interim Financing Order.
6.8 FINANCIAL DATA.
The Borrowers have or caused to be provided to the Agent and each of
the Revolving Lenders complete and accurate copies of (I) annual audited
Financial Statements for the fiscal years ended March 31, 1997, and (II)
unaudited Financial Statements for the quarterly and monthly fiscal periods
ended June 30, 1997 and July 31, 1997, respectively. All such Financial
Statements have been prepared in accordance with GAAP consistently applied
throughout the periods involved and fairly present the respective consolidated
financial positions, results of operations and cash flows of the Consolidated
Entity for each of the periods covered subject, in the case of the Financial
Statements described in CLAUSES (I) and (II) above, to normal year-end audit
adjustments. The Consolidated Entity has no Contingent Obligation (or any other
material liabilities which were not incurred by the Borrowers in the ordinary
course of business) which is not reflected in such Financial Statements or the
footnotes thereto, or is not otherwise disclosed on SCHEDULE B, PART 6.8.
6.9 LOCATIONS OF OFFICES, RECORDS AND INVENTORY.
(A) The address of the principal place of business and, if there is
more than one principal place of business, the chief executive office, of each
Borrower is set forth on SCHEDULE B, PART 6.9(A), as the same may be amended
after the Closing Date in accordance with SECTION 11.11. The books and records
of each Borrower, and all its chattel paper, if any, and records of Accounts,
are maintained exclusively at one or more of such locations.
50
(B) There is no location in which any Borrower has any Collateral
(except for vehicles and Inventory in transit) other than those locations
identified on SCHEDULE B, PART 6.9(B), as the same may be amended after the
Closing Date in accordance with SECTION 11.11. A complete list of the legal name
and address of each warehouse at which Inventory of any Borrower is stored is
set forth on SCHEDULE B, PART 6.9(B), as the same may be amended after the
Closing Date in accordance with SECTION 11.11. None of the receipts received and
to be received by any Borrower from any warehouseman state that the Inventory
covered thereby is to be delivered to bearer or to the order of a named Person
or to a named Person and such named Person's assigns, in each case other than
such Borrower.
(C) No Borrower owns any real property other than those locations
identified as real property owned by a Borrower on SCHEDULE B, PART 6.9(B).
6.10 SUBSIDIARIES; OWNERSHIP OF STOCK.
As of the Closing Date, (I) the only direct or indirect Subsidiaries of
the respective Borrowers are those listed on SCHEDULE B, PART 6.10, (II) each
Borrower is the record and beneficial owner of all of the respective shares of
capital stock of each of its Subsidiaries listed on SCHEDULE B, PART 6.10, (III)
there are no proxies, irrevocable or otherwise, with respect to such shares, and
no equity securities of any of such Subsidiaries are or may become required to
be issued by reason of any options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of any capital stock of any
such Subsidiary, and (IV) there are no contracts, commitments, understandings or
arrangements by which any such Subsidiary is or may become bound to issue
additional shares of its capital stock or securities convertible into or
exchangeable for such shares. All of such shares so owned by any Borrower are
owned by such Borrower free and clear of any Liens.
6.11 NO JUDGMENTS OR LITIGATION.
No judgments, orders, writs or decrees are outstanding against any
Borrower or any Subsidiary of any Borrower, nor is there now pending or, to the
best of the Borrower's knowledge after diligent inquiry, threatened, any
litigation, contested claim, investigation, arbitration, or governmental
proceeding by or against any Borrower or any Subsidiary of any Borrower other
than (I) as set forth on SCHEDULE B, PART 6.11, or (II) with respect to matters
arising after the Closing Date, that singly or in the aggregate could reasonably
be expected to have a Material Adverse Effect.
6.12 LABOR MATTERS.
SCHEDULE B, PART 6.12 accurately sets forth all labor contracts to
which any Borrower or any Subsidiary of any Borrower
51
is a party as of the Closing Date (including their dates of expiration). There
are no existing or, to the knowledge of any Borrower, threatened strikes,
lockouts or other disputes relating to any collective bargaining or similar
agreement to which any Borrower or any Subsidiary of any Borrower is a party
that singly or in the aggregate could reasonably be expected to have a Material
Adverse Effect.
6.13 COMPLIANCE WITH LAW.
No Borrower nor any Subsidiary of any Borrower has violated or failed
to comply in any material respect with any Requirements of Law applicable to the
Collateral or any part thereof, or to the operation of its business or its
assets generally.
6.14 ERISA.
No Borrower, no Subsidiary of any Borrower and no ERISA Affiliate
maintains or contributes to any Plan other than those listed on SCHEDULE B, PART
6.14. Each Plan has been and is maintained and funded in accordance with its
terms and in compliance with all applicable provisions of ERISA and the Internal
Revenue Code. Each Borrower, each Subsidiary of a Borrower and each ERISA
Affiliate has fulfilled all contribution obligations for each Plan (including
obligations related to the minimum funding standards of ERISA and the Internal
Revenue Code). No Termination Event has occurred nor has any other event
occurred that may result in a Termination Event. No Borrower, no Subsidiary of
any Borrower, no ERISA Affiliate, and no fiduciary of any Plan is subject to any
direct or indirect liability with respect to any Plan under any Requirement of
Law or agreement. No Borrower, no Subsidiary of a Borrower and no ERISA
Affiliate, is required to provide security to any Plan under section 401(a)(29)
of the Internal Revenue Code.
6.15 COMPLIANCE WITH ENVIRONMENTAL LAWS.
Except as disclosed on SCHEDULE B, PART 6.15 or, with respect to
matters arising after the Closing Date, as could not singly or in the aggregate
reasonably be expected to have a Material Adverse Effect, (I) the operations of
each Borrower and each Subsidiary of each Borrower comply with all applicable
federal, state and local environmental, health and safety statutes, regulations,
directions, ordinances, criteria and guidelines; (II) no Borrower has received
notice that any of the operations of such Borrower or any of its Subsidiaries is
the subject of any judicial or administrative proceeding alleging the violation
of any federal, state or local environmental, health or safety statute,
regulation, direction, ordinance, criteria or guideline; (III) none of the
operations of such Borrower or any of its Subsidiaries is the subject of any
federal or state investigation evaluating whether such Borrower or any of its
Subsidiaries disposed of any Hazardous Substances at any site that may require
remedial action, or any federal or state investigation evaluating whether any
remedial action is needed to respond to a release of any Hazardous Substance
into the
52
environment; (IV) no Borrower nor any Subsidiary of any Borrower has filed any
notice under any federal or state law indicating past or present treatment,
storage or disposal of a Hazardous Substance or reporting a spill or release of
a Hazardous Substance into the environment; (V) no Hazardous Substances or
underground storage tanks are present in, under or on any property owned,
operated or leased by any Borrower or Subsidiary other than in compliance with
Environmental Law; and (VI) there are no past or pending Environmental Claims
against any Borrower or Subsidiary related to any of their respective operations
that have not been dismissed, withdrawn, settled or otherwise resolved.
6.16 INTELLECTUAL PROPERTY.
Each Borrower and each Subsidiary of each Borrower possesses such
assets, licenses, patents, patent applications, copyrights, service marks,
trademarks and trade names as are necessary or advisable to continue to conduct
their respective present and proposed business activities.
6.17 LICENSES AND PERMITS.
Each Borrower and each Subsidiary of each Borrower has obtained and
holds in full force and effect, all franchises, licenses, leases, permits,
certificates, authorizations, qualifications, easements, rights of way and other
rights and approvals which are necessary or advisable for the operation of its
business as presently conducted and as proposed to be conducted.
6.18 TAXES AND TAX RETURNS.
(A) Except as set forth on SCHEDULE B, PART 6.18, each
Borrower and each Subsidiary of each Borrower has timely filed, without
request for extension, all income tax returns it is required to file.
The information filed is complete and accurate in all material
respects. All deductions taken in such income tax returns are
appropriate and in accordance with applicable laws and regulations,
except deductions that may have been disallowed but are being
challenged in good faith and for which adequate reserves have been made
in accordance with GAAP.
(B) All taxes, assessments, fees and other governmental
charges for periods beginning prior to the date hereof, have been
timely paid and no Borrower nor any Subsidiary of any Borrower has any
liability for taxes in excess of the amounts so paid or reserves so
established.
(C) Except as set forth in SCHEDULE B, PART 6.18, no
material deficiencies for taxes have been claimed, proposed or assessed
by any taxing or other Governmental Authority against any Borrower or
any Subsidiary of any Borrower and no tax liens have been filed. Except
as set forth in SCHEDULE B, PART 6.18, there are no pending or
threatened audits, investigations or claims for or relating to any
liability for
53
taxes and there are no matters under discussion with any Governmental
Authority which could reasonably be expected to result in a material
additional liability for taxes. As of the Closing Date, either the
federal income tax returns of each Borrower have been audited by the
Internal Revenue Service and such audits have been closed, or the
period during which any assessments may be made by the Internal Revenue
Service has expired without waiver or extension for all years up to and
including the fiscal year of the Consolidated Entity ended March 31,
1990. Except as set forth in SCHEDULE B, PART 6.18, as of the Closing
Date, no extension of a statute of limitations relating to taxes,
assessments, fees or other governmental charges is in effect with
respect to any Borrower or any Subsidiary of any Borrower.
(D) Except as set forth on SCHEDULE B, PART 6.18, no
Borrower nor any Subsidiary of any Borrower has any obligation under
any written tax sharing agreement or agreement regarding payments in
lieu of taxes.
6.19 MATERIAL CONTRACTS.
SCHEDULE B, PART 6.19, contains a true, correct and complete list of
all the Material Contracts in effect on the Closing Date. Except as described on
SCHEDULE B, PART 6.19, no Material Contract contains any burdensome restrictions
on any Borrower or any Subsidiary of any Borrower or any of their respective
properties that could prevent such Borrower or Subsidiary from conducting its
business as conducted on the Closing Date. As of the Closing Date, all of the
Material Contracts are in full force and effect, and no defaults currently exist
thereunder by any Borrower or Subsidiary of a Borrower that is a party thereto
(other than defaults that need not be cured under section 365(b)(2) of the
Bankruptcy Code), or to the knowledge of the Borrowers, any other party thereto.
6.20 ACCURACY AND COMPLETENESS OF INFORMATION.
All factual information furnished by or on behalf of any Borrower or
any Subsidiary of any Borrower in writing to the Agent or any Revolving Lender
for purposes of or in connection with this Credit Agreement or any Credit
Documents or any transaction contemplated hereby or thereby, is or will be true
and accurate in all material respects on the date as of which such information
is dated or certified and, taken as a whole, is not incomplete by omitting to
state any material fact necessary to make such information not misleading at
such time.
6.21 NO CHANGE.
Since the date of this Credit Agreement, no event has occurred that has
had or could reasonably be expected to have a Material Adverse Effect.
54
ARTICLE 7. AFFIRMATIVE COVENANTS.
Until termination of this Credit Agreement and payment and satisfaction
of all Obligations due hereunder:
7.1 FINANCIAL REPORTING.
The Borrowers shall timely deliver to each Lender the following
information:
(A) AUDITOR'S ENGAGEMENT LETTER. As soon as available,
but in any event not later than the earlier of (I) 15 days prior to the
end of each fiscal year or (II) prior to the date the Auditors commence
work on the preparation of the annual audited Financial Statement, a
copy of the engagement letter between the Borrowers and their Auditors,
which engagement letter shall notify such Auditors that such annual
audited Financial Statement will be delivered by the Borrowers to the
Agent and the Lenders, and stating that the Agent and the Lenders shall
be entitled to rely thereon with respect to the transactions which are
the subject of this Credit Agreement.
(B) ANNUAL FINANCIAL STATEMENTS. As soon as available,
but not later than 90 days after each fiscal year end: (I) the annual
audited consolidated Financial Statements of the Consolidated Entity;
(II) a comparison in reasonable detail to the prior year annual audited
and unaudited Financial Statements; (III) the Auditors' opinion,
"Management Letter" (if any) and statement indicating whether the
Auditors have obtained knowledge of the existence of any Default or
Event of Default during their audit; (IV) a narrative discussion of the
consolidated financial condition and results of operations and the
consolidated liquidity and capital resources of the Consolidated Entity
for such fiscal year, prepared by the chief financial officer of LFI;
and (V) a compliance certificate substantially in the form of EXHIBIT F
with an attached schedule of calculations demonstrating compliance with
the financial covenants set forth in ARTICLE 8.
(C) MONTHLY AND ANNUAL PROJECTIONS. Not later than 45
days after each fiscal year end, beginning with the fiscal year ended
March 31, 1998, monthly projections of the statements of operations of
the Consolidated Entity for the next succeeding year, quarterly
projections for the second succeeding year, and annual projections for
each succeeding fiscal year thereafter, through and including the
fiscal year in which the Expiration Date will occur, in the case of
quarterly and annual projections, containing projected consolidated
balance sheets, statements of operations, statements of cash flows and
statements of changes in shareholders equity.
(D) QUARTERLY FINANCIAL STATEMENTS. As soon as avail-
able, but not later than 45 days after each end of each of the
first three fiscal quarters, and 90 days after the end of the
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last fiscal quarter: (I) Financial Statements of the Consolidated
Entity as of the fiscal quarter then ended, and for the fiscal year to
date; (II) a comparison in reasonable detail to the Financial
Statements for the corresponding periods of the prior fiscal year;
(III) the certification of the chief executive officer or chief
financial officer of LFI that such Financial Statements have been
prepared in accordance with GAAP (subject to year-end audit
adjustments); (IV) a narrative discussion of the consolidated financial
condition and results of operations and the consolidated liquidity and
capital resources of the Consolidated Entity for such fiscal quarter
and fiscal year to date, prepared by the chief financial officer of
LFI; and (V) a compliance certificate substantially in the form of
EXHIBIT F with an attached schedule of calculations demonstrating
compliance with the financial covenants set forth in ARTICLE 8.
(E) MONTHLY FINANCIAL STATEMENTS. As soon as available,
but not later than 30 days after the end of each of the first eleven
months, and 45 days after end of the last month: (I) a balance sheet
for the Consolidated Entity as at the end of such month and for the
fiscal year to date and statements of operations and cash flows for
such month and for the fiscal year to date; (II) a comparison to the
balance sheet, statement of operations and statement of cash flows for
the same periods in the prior year; (III) a certification by the chief
executive officer or chief financial officer of LFI that such balance
sheet, statement of operations and statement of cash flows have been
prepared in accordance with GAAP (subject to year-end audit
adjustments); and (IV) a compliance certificate substantially in the
form of EXHIBIT F with an attached schedule of calculations
demonstrating compliance with the financial covenants set forth in
ARTICLE 8.
(F) MONTHLY COMPARISON TO PRIOR PROJECTIONS. As soon as
available, but not later than 30 days after the end of each of the
first eleven months, and 45 days after end of the last month, a
comparison of actual results of operations, cash flow and capital
expenditures for the Consolidated Entity for such month and for the
period from the beginning of the current fiscal year through the end of
such month with amounts previously projected for those periods (see
SECTION 7.1(C)) and with actual results for corresponding periods in
the previous fiscal year.
(G) PUBLIC REPORTING. Promptly upon their becoming
available, copies of all regular and periodic reports, proxy statements
and other materials filed by any Borrower with the Securities and
Exchange Commission, or any Governmental Authority succeeding to any or
all of the functions of such Commission, or with any national
securities exchange, or distributed to the stockholders of any
Borrower.
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7.2 COLLATERAL REPORTING.
The Borrowers shall timely deliver to the Agent the following
certificates and reports:
(A) WEEKLY AND MONTHLY BORROWING BASE CERTIFICATES.
Weekly, before 12:00 noon on the second Business Day of each week
(except the last week of each month), monthly, within 2 Business Days
after the last Business Day of each month, and at any other time
reasonably requested by the Agent, a Borrowing Base Certificate, which
shall be: (I) substantially in the form of EXHIBIT A, detailing the
Eligible Accounts Receivable and Eligible Inventory, in each case of
each of the Borrowers, as of each Friday of the immediately preceding
week (if a weekly Borrowing Base Certificate), or as of the last
Business Day of the immediately preceding month (if a monthly Borrowing
Base Certificate), or as of such other date as the Agent may request;
and (II) prepared by or under the supervision of the chief executive
officer or chief financial officers of each Borrower and certified by
such officer subject only to adjustment upon completion of the normal
annual audit of physical inventory. Each Borrowing Base Certificate
shall have attached to it such additional schedules and other
information as the Agent may reasonably request, including, without
limitation, an Accounts Receivable Operational Report.
(B) APPRAISALS. When requested by the Agent, (I) so
long as an Event of Default shall not have occurred and be continuing,
not more than twice in any fiscal year of the Consolidated Entity and
(II) upon the occurrence and during the continuance of an Event of
Default, at any time, a report of Inventory of each Borrower, based
upon a physical count or rack cycle count procedure, which shall
describe each Borrower's Inventory by category and by item (in
reasonable detail) and report the then appraised value (at lower of
cost or market) of such Inventory.
(C) FURTHER ASSURANCES. When requested by the Agent,
any further information regarding the Collateral, business affairs and
financial condition of LFI, any Borrower or any Subsidiary of any
Borrower.
7.3 NOTIFICATION REQUIREMENTS.
The Borrowers shall timely give to the Agent and each of the Lenders
the following notices:
(A) NOTICE OF DEFAULTS. Promptly, and in any event
within two (2) Business Days after becoming aware of the occurrence of
a Default or Event of Default, a certificate of the chief executive
officer or chief financial officer of the LFC Funds Administrator
specifying the nature thereof and the proposed response of the
Borrowers thereto, each in reasonable detail.
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(B) PROCEEDINGS OR ADVERSE CHANGES. Promptly, and in
any event within five (5) Business Days after any Borrower becomes
aware of (I) any proceeding being instituted or threatened to be
instituted by or against such Borrower or any of its Subsidiaries in
any federal, state, local or foreign court or before any commission or
other regulatory body (federal, state, local or foreign) which could
reasonably be expected to result in uninsured liability in excess of
$1,000,000 for any Borrower, (II) any order, judgment or decree in
excess of $1,000,000 being entered against such Borrower or any of its
Subsidiaries or any of their respective properties or assets or (III)
any actual or prospective change, development or event which has had or
could reasonably be expected to have a Material Adverse Effect, a
written statement describing such proceeding, order, judgment, decree,
change, development or event and any action being taken with respect
thereto by such Borrower or such Subsidiary.
(C) ERISA NOTICES. (I) Promptly, and in any event
within ten (10) Business Days after any Borrower, any Subsidiary of any
Borrower or any ERISA Affiliate knows or has reason to know that a
Termination Event has occurred, a written statement of the chief
financial officer of LFC Funds Administrator describing such
Termination Event and any action that is being taken with respect
thereto by such Borrower, such Subsidiary or such ERISA Affiliate, and
any action taken or threatened by the Internal Revenue Service,
Department of Labor or Pension Benefit Guaranty Corporation. Each
Borrower, each Subsidiary of each Borrower and each ERISA Affiliate
shall be deemed to know all facts known by the administrator of any
Benefit Plan of which it is the plan sponsor; (II) promptly, and in any
event within three (3) Business Days after the filing thereof with the
Internal Revenue Service, a copy of each funding waiver request filed
with respect to any Benefit Plan and all communications received by any
Borrower, any Subsidiary of any Borrower or any ERISA Affiliate with
respect to such request; and (III) promptly, and in any event within
three (3) Business Days after receipt by any Borrower, any Subsidiary
of any Borrower or any ERISA Affiliate, of the PBGC's intention to
terminate a Benefit Plan or to have a trustee appointed to administer a
Benefit Plan, copies of each such notice.
(D) ENVIRONMENTAL AND HEALTH AND SAFETY NOTICES.
Promptly, and in any event within ten (10) Business Days after receipt
by any Borrower or any Subsidiary of any Borrower of any notice,
complaint or order alleging any actual or prospective violation of any
environmental, health or safety Requirement of Law or alleging
responsibility for costs of a cleanup, together with a copy of such
notice, complaint, or order and a written statement describing any
action being taken with respect thereto by such Borrower or Subsidiary.
(E) MATERIAL CONTRACTS. Promptly, and in any event
within ten (10) Business Days after any Material Contract of
58
any Borrower or any Subsidiary of any Borrower is terminated or amended
or any new Material Contract is entered into, a written statement
describing such event, with copies of amendments or new contracts, and
an explanation of any actions being taken with respect thereto.
(F) COLLATERAL MATTERS. At least thirty (30) Business
Days prior written notice to the Agent of any additional location of
any Collateral of any Borrower or in the location of the chief
executive office or places of business of any Borrower or any
Subsidiary of any Borrower from the respective locations specified in
SCHEDULE B, PART 6.9. At least twenty (20) Business Days prior to any
such change, the Borrowers shall cause to be executed and delivered to
the Agent any financing statements or other documents reasonably
required by the Agent, all in form and substance reasonably
satisfactory to the Agent.
7.4 CORPORATE EXISTENCE.
Each Borrower shall, and shall cause each of its Subsidiaries to, (I)
maintain its corporate existence, (II) maintain in full force and effect all
licenses, bonds, franchises, leases, trademarks and qualifications to do
business, and all patents, contracts and other similar rights necessary or
advisable for the profitable conduct of their businesses, (III) continue in, and
limit their operations to, the same general lines of business as presently
conducted by them and (IV) in the case of a Borrower, maintain all material
terms and provisions of its corporate charter and bylaws in the form in effect
on the Closing Date.
7.5 BOOKS AND RECORDS; INSPECTIONS.
Each Borrower agrees to maintain, and to cause each of its Subsidiaries
to maintain, books and records pertaining to the Collateral in such detail, form
and scope as is consistent with good business practice. Each Borrower agrees
that the Agent and its agents, may enter upon the premises of such Borrower or
any of its Subsidiaries at any time and from time to time, during normal
business hours and upon reasonable notice under the circumstances, and at any
time at all upon the occurrence and during the continuance of an Event of
Default, for the purposes of (I) inspecting and verifying the Collateral, (II)
inspecting and/or copying (at the expense of such Borrower) any and all records
pertaining thereto, and (III) discussing the affairs, finances and business of
such Borrower with any officers, employees and directors of such Borrower or,
upon reasonable notice to such Borrower of its intention to do so, with the
Auditors.
7.6 INSURANCE.
Each Borrower agrees to maintain, and to cause each of its Subsidiaries
to maintain, public liability insurance, fire and extended coverage insurance
and replacement value insurance on the Collateral under such policies of
insurance, with such insurance
59
companies, in such amounts and covering such risks as are at all times
satisfactory to the Agent in its commercially reasonable judgment; PROVIDED,
THAT the Agent acknowledges that the insurance coverage maintained by the
Borrowers and disclosed in writing to the Agent, in each case on or prior to the
Closing Date, satisfies the foregoing requirements. All policies covering the
Collateral are to name the Collateral Agent as an additional insured and/or the
loss payee in case of loss, and are to contain such other provisions as the
Agent may reasonably require to fully protect the Collateral Agent's interest in
the Collateral and to any payments to be made under such policies.
7.7 POSTPETITION CHARGES.
(A) Subject to SECTION 7.7(B), each Borrower shall pay and discharge or
cause to be paid and discharged promptly all Postpetition Charges payable by it,
including (i) Postpetition Charges imposed upon it, its income and profits, or
any of its property (real, personal or mixed) and all Postpetition Charges with
respect to tax, social security and unemployment withholding with respect to its
employees, and (ii) lawful claims incurred after the Petition Date for labor,
materials, supplies and services or otherwise, before any thereof shall become
past due.
(B) Each Borrower may in good faith contest, by appropriate
proceedings, the validity or amount of any Postpetition Charges or claims
described in SECTION 7.7(A); PROVIDED THAT (i) at the time of commencement of
any such contest no Event of Default shall have occurred and be continuing; (ii)
adequate reserves with respect to such contest are maintained on the books of
such Borrower, in accordance with GAAP; (iii) such contest is maintained and
prosecuted continuously and with diligence and operates to suspend collection or
enforcement of such Postpetition Charges or claims or any Lien in respect
thereof; (iv) no Lien shall be imposed to secure payment of such Postpetition
Charges or claims other than Permitted Liens; (v) such Borrower shall promptly
pay or discharge such contested Postpetition Charges or claims and all
additional charges, interest, penalties and expenses, if any, and shall deliver
to Agent evidence acceptable to Agent of such compliance, payment or discharge,
if such contest is terminated or discontinued adversely to such Borrower or the
conditions set forth in this SECTION 7.7(B) are no longer met; and (vi) Agent
has not advised Borrowers in writing that Agent reasonably believes that
nonpayment or nondischarge thereof could have or result in a Material Adverse
Effect.
7.8 COMPLIANCE WITH LAWS.
Each Borrower agrees to comply, and to cause each of its Subsidiaries
to comply, in all material respects with all Requirements of Law applicable to
the Collateral or any part thereof, or to the operation of its business or its
assets generally, unless such Borrower contests any such Requirements of Law in
a reasonable manner and in good faith.
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7.9 USE OF PROCEEDS.
Each Borrower agrees that the proceeds of the Loans may be used only
for general corporate purposes (including expenses of administration) and for
Permitted Expenses. Notwithstanding the foregoing, no amounts shall be paid or
used pursuant to this SECTION 7.9 for, and Permitted Expenses shall not include,
fees and disbursements incurred by professionals including, without limitation,
any professionals retained by the Borrowers, to the extent incurred to contest
in any proceeding or any other action (a) the validity, binding effect or
enforceability of any of the Credit Documents or the amount of the Loans or the
other Postpetition Obligations outstanding hereunder or (b) any other rights or
interests of the Agent or any Lender under the Credit Documents. Nothing herein
shall in any way prejudice or prevent the Agent or any Lender from objecting,
for any reason, to any requests or applications made by any party for
compensation or reimbursement of expenses pursuant to section 330 or 331 of the
Bankruptcy Code for which the Borrowers may seek to use proceeds of the Loans as
a Permitted Expense.
7.10 FISCAL YEAR.
Each Borrower agrees to maintain, and to cause each of its Subsidiaries
to maintain, its fiscal year as a year ending March 31.
7.11 MAINTENANCE OF PROPERTY.
Each Borrower agrees to keep, and to cause each of its Subsidiaries to
keep, all property useful and necessary to their respective businesses in good
working order and condition (ordinary wear and tear excepted) in accordance with
their past operating practices and not to commit or suffer any waste with
respect to any of their properties.
7.12 ERISA DOCUMENTS.
Each Borrower will cause to be delivered to the Agent, upon the Agent's
request, each of the following: (I) a copy of each Plan (or, where any such plan
is not in writing, complete description thereof) (and if applicable, related
trust agreements or other funding instruments) and all amendments thereto, all
written interpretations thereof and written descriptions thereof that have been
distributed to employees or former employees of such Borrower or any of its
Subsidiaries within two (2) years of the Closing Date; (II) the most recent
determination letter issued by the Internal Revenue Service with respect to each
Benefit Plan; (III) for the three most recent plan years, Annual Reports on Form
5500 Series required to be filed with any governmental agency for each Benefit
Plan; (IV) all actuarial reports prepared for the last three plan years for each
Benefit Plan; (V) a listing of all Multiemployer Plans, with the aggregate
amount of the most recent annual contributions required to be made by such
Borrower or any ERISA Affiliate to each such plan and copies of the collective
61
bargaining agreements requiring such contributions; (VI) any information that
has been provided to such Borrower or any ERISA Affiliate regarding withdrawal
liability under any Multiemployer Plan; and (VII) the aggregate amount of the
most recent annual payments made to former employees of such Borrower or any
ERISA Affiliate under any Retiree Health Plan.
7.13 ENVIRONMENTAL AND OTHER MATTERS.
(A) Each Borrower and each of its Subsidiaries will
conduct their businesses so as to comply in all material respects with
all environmental, land use, occupational, safety or health laws,
regulations, directions, ordinances, criteria and guidelines in all
jurisdictions in which any of them is or may at any time be doing
business, except to the extent that such Borrower or such Subsidiary is
contesting, in good faith by appropriate legal proceedings, any such
law, regulation, direction, ordinance, criteria, guideline, or
interpretation thereof or application thereof; PROVIDED, THAT such
Borrower and each of its Subsidiaries shall comply with the order of
any court or other Governmental Authority relating to such laws unless
such Borrower or such Subsidiary shall currently be prosecuting an
appeal or proceedings for review and shall have secured a stay of
enforcement or execution or other arrangement postponing enforcement or
execution pending such appeal or proceedings for review.
(B) If the Agent reasonably believes, or the Majority
Lenders reasonably believe, that the facts or circumstances evidence or
suggest that any Borrower or any Subsidiary of any Borrower is in
material non compliance with any environmental law and that such non
compliance could reasonably be expected to have a Material Adverse
Effect, then at the written request of the Agent or the Majority
Lenders, which request shall specify in reasonable detail the basis
therefor, at any time and from time to time, such Borrower will provide
at its sole cost and expense a Phase I or Phase II environmental site
assessment report or update report concerning the site owned, operated
or leased by such Borrower or such Subsidiary in respect of which such
material non compliance is believed to have occurred and be continuing,
such report to be prepared by an environmental consulting firm approved
by the Agent and the Majority Lenders, indicating the presence, release
or absence of hazardous materials on or from such site and the
potential cost of any removal, remedial or corrective action in
connection with any such hazardous materials on such site.
7.14 RESTORATION AND REPAIR OF BORROWERS' REAL PROPERTY.
Upon receipt of insurance or other proceeds of any Casualty Loss, the
Borrowers shall, insofar as is reasonably practicable, promptly commence and
diligently continue to restore, repair and rebuild the property subject to such
Casualty Loss as nearly as possible to its value, condition and character
immediately prior to such Casualty Loss and in the event such restoration,
repair and
62
rebuilding are not practicable, the Borrowers shall promptly invest an amount at
least equal to such proceeds in substitute or replacement fixed assets of like
or greater value, which shall be subjected to the Lien of the Mortgages, and/or
the other applicable Collateral Documents; PROVIDED, THAT in the case of
Casualty Losses affecting properties held under capital leases such restoration,
repair or replacement shall be subject to all of the terms of such leases; and
FURTHER PROVIDED that the Borrowers may elect to apply proceeds of a Casualty
Loss to satisfaction of any Liens on the property subject thereto prior to the
Lien of the Collateral Documents (including, in the case of property subject to
a capital lease, the Lien of the capital lessor). The Borrowers shall provide
the Lenders with such information with respect to such repair, replacement or
restoration as the Agent may reasonably request. The obligations of the
Borrowers pursuant to this SECTION 7.14 with respect to restoration, repair and
rebuilding are not limited to the amount of Casualty Loss proceeds received by
the Borrowers.
7.15 STORE CLOSINGS.
The Borrowers collectively shall close and cease conducting retailing
operations at no fewer than 20 of the store locations at which the Borrowers
conducted retailing operations on the Petition Date no later than January 31,
1998.
7.16 FURTHER ASSURANCES.
Each Borrower shall take, and shall cause each of its Subsidiaries to
take, all such further actions and execute all such further documents and
instruments as the Agent may at any time determine in its sole discretion to be
necessary or desirable to further carry out and consummate the transactions
contemplated by the Credit Documents, to cause the execution, delivery and
performance of the Credit Documents to be duly authorized and to perfect or
protect the Liens (and the priority status thereof) of the Collateral Agent on
the Collateral.
ARTICLE 8. NEGATIVE COVENANTS.
Until termination of this Credit Agreement and payment and satisfaction
of all Prepetition Obligations and Postpetition Obligations due hereunder, each
Borrower shall comply with, and, where required, shall cause each of its
Subsidiaries to comply with, the following covenants:
8.1 MINIMUM EBITDA.
At the end of each period beginning on the Petition Date and ending on
the last day of each month set forth below, EBITDA for such period shall be an
amount not less than the following:
PERIOD FROM PETITION
DATE TO END OF AMOUNT
-------------------- -------
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October 1997 $(1,800,000)
November 1997 2,700,000
December 1997 4,400,000
January 1997 4,700,000
February 1998 4,700,000
March 1998 5,000,000
8.2 CAPITAL EXPENDITURES.
The Borrowers shall not make payments for Capital Expenditures in the
aggregate for all Borrowers in excess of $5,000,000 during the period from the
Petition Date to and including March 31, 1998.
8.2A ESTABLISHMENT OF CONTINUING FINANCIAL COVENANTS.
The Borrowers and the Lenders intend that the financial covenants set
forth in SECTION 8.1 and 8.2 remain in effect until the Expiration Date, but
have not provided required levels for such covenants beyond March 1998 as of the
Closing Date because the Borrowers have not yet finalized their financial
projections and expectations beyond such date. Therefore, the Borrowers hereby
agree that on or before January 31, 1998, the Borrowers will provide the Agent
and the Lenders with financial forecasts and projections sufficient to enable
the Agent and the Majority Lenders to establish appropriate levels for such
financial covenants for the remaining term of this Credit Agreement, which the
Agent and the Majority Lenders will establish in their reasonable discretion.
8.3 ADDITIONAL INDEBTEDNESS. No Borrower nor any Subsidiary of any
Borrower shall directly or indirectly incur, create, assume or suffer to exist
any Indebtedness other than:
(A) Indebtedness under the Credit Documents;
(B) Indebtedness in the ordinary course of business
under Interest Rate Agreements entered into after the Petition Date in
form and substance satisfactory to the Agent;
(C) intercompany loans and advances permitted pursuant
to SECTION 8.8;
(D) Indebtedness described on SCHEDULE B, PART 8.3;
(E) Indebtedness secured by purchase money Liens on
equipment acquired after the Petition Date not to exceed $2,000,000 in
the aggregate for all of the Borrowers outstanding at any one time
("PURCHASE MONEY LIENS") so long as (I) such Indebtedness shall be from
parties and on terms and conditions satisfactory to the Agent, (II)
each Purchase Money Lien shall attach only to the property to be
acquired, (III) a description shall have been furnished to the Agent
for any item of equipment for which the purchase price is greater than
$100,000, and (IV) the debt incurred shall not exceed one hundred
percent (100%) of the purchase price of the item or items of equipment
purchased;
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(F) Indebtedness and other obligations under the GECC
Account Purchase Agreement, without giving effect to any amendments or
modifications or restatements thereof, or supplements thereto;
(G) Guarantees by any Borrower of the obligations of
any other Borrower incurred after the Petition Date, to the extent
incurred in the ordinary course of business and not otherwise
prohibited hereunder to the extent approved by the Bankruptcy Court;
and
(I) Indebtedness under capital leases incurred after
the Petition Date not to exceed $5,000,000 in the aggregate for all of
the Borrowers outstanding at any one time to the extent approved by the
Bankruptcy Court.
8.4 LIENS.
No Borrower nor any Subsidiary of any Borrower shall directly or
indirectly create, incur, assume, or suffer to exist any Lien on any of its
property now owned or hereafter acquired except:
(A) Liens granted to the Collateral Agent under the
Credit Documents;
(B) Liens granted to GECC under the GECC Account
Purchase Agreement;
(C) Liens listed on SCHEDULE B, PART 8.4;
(D) Purchase Money Liens and the interest of lessors
under capital leases permitted under SECTION 8.3 to the extent
approved by the Bankruptcy Court;
(E) Liens of warehousemen, mechanics, materialmen,
workers, repairmen, common carriers, or landlords, liens for taxes,
assessments or other governmental charges, and other similar Liens
arising after the Petition Date by operation of law, in each case for
amounts that are not yet due and payable or that are being diligently
contested in good faith by a Borrower or Subsidiary of a Borrower, so
long as the Agent has been notified thereof and adequate reserves are
maintained by such Person for their payment in accordance with GAAP;
(F) Attachment or judgment Liens arising after the
Petition Date not to exceed an aggregate of $1,000,000 for all of the
Borrowers, excluding amounts (I) bonded to the reasonable satisfaction
of the Agent or (II) covered by insurance to the reasonable
satisfaction of the Agent;
(G) Deposits or pledges made after the Petition Date to
secure obligations under workmen's compensation, social security or
similar laws, under unemployment insurance, or to secure public or
statutory obligations not to exceed an aggregate of $1,000,000 for all
Borrowers;
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(H) Deposits or pledges made after the Petition Date to
secure bids, tenders, contracts (other than contracts for the payment
of money), leases, statutory obligations, surety and appeal bonds and
other obligations of like nature arising in the ordinary course of
business not to exceed an aggregate of $1,000,000 for all Borrowers;
(I) Easements, rights-of-way, restrictions and other
similar encumbrances on title to, or restrictions on the use of, real
property, that, in the aggregate, do not materially detract from the
value of the item of property subject thereto or materially interfere
with the ordinary conduct of the business of any Borrower or any
Subsidiary of any Borrower and all title exceptions under the title
policies delivered to the Prepetition Collateral Agent under the
Prepetition Credit Agreements in respect of the Borrowers' real
property; and
(J) Extensions and renewals of any of the foregoing so
long as the aggregate amount of extended or renewed Liens are not
increased and are on terms and conditions no more restrictive than the
terms and conditions of the Liens extended or renewed.
8.5 CONTINGENT OBLIGATIONS.
No Borrower nor any Subsidiary of any Borrower shall directly or
indirectly incur, assume, or suffer to exist any Contingent Obligation,
excluding Contingent Obligations for Indebtedness permitted to be incurred under
SECTION 8.3, and Investments permitted under SECTION 8.8.
8.6 SALE OF ASSETS.
Notwithstanding any other provision of this Credit Agreement no
Borrower shall, or shall permit any of its Subsidiaries to, directly or
indirectly, sell, lease, assign, transfer or otherwise dispose of any assets
other than (to the extent not prohibited by the Bankruptcy Code) (I) GECC
Accounts pursuant to the GECC Account Purchase Agreement, (II) Inventory in the
ordinary course of business; (III) sales or other dispositions of real estate
(including without limitation leasehold estates) or other fixed assets for cash
or Cash Equivalents and for not less than fair market value so long as such sale
is approved by the Bankruptcy Court, (IV) obsolete or worn out property disposed
of in the ordinary course of business; and (V) to any Borrower.
8.7 RESTRICTED PAYMENTS.
No Borrower shall, or shall permit any of its Subsidiaries to, directly
or indirectly, (A) declare or pay any dividend (other than dividends payable
solely in capital stock of such Person) on, or make any payment on account of,
or set apart assets for a sinking or other analogous fund for, the purchase,
redemption, defeasance, retirement or other acquisition of, any shares of any
class of capital stock of such Person or any warrants, options or rights to
66
purchase any such capital stock, whether now or hereafter outstanding, or make
any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of such Person or any of its
Subsidiaries; (B) make any optional payment or optional prepayment on or
optional redemption (including, without limitation, by making payments to a
sinking or analogous fund) or optional repurchase of any Indebtedness (other
than Indebtedness pursuant to this Credit Agreement); PROVIDED, THAT,
notwithstanding the foregoing:
(I) any Borrower may make payments or prepayments on
account of Indebtedness owing to any other Borrower;
(II) any Borrower may prepay or redeem Indebtedness of
the type described in SECTIONS 8.3(E) OR (I), PROVIDED, THAT, in each
case, (A) such Indebtedness is paid in full, (B) effective upon
repayment of such Indebtedness, such Borrower acquires title to any
property or assets encumbered thereby and (C) concurrently with such
prepayment, such property is subjected to a first priority perfected
Lien thereon in favor of the Collateral Agent;
(III) any Subsidiary of a Borrower may declare and pay
dividends to such Borrower or any Subsidiary of such Borrower;
(IV) LFC may make distributions to LFI to permit LFI to
pay postpetition Federal, state and local income taxes attributable to
LFC and its Subsidiaries; PROVIDED, THAT such distributions do not
exceed actual payments by LFI for postpetition Federal, state and local
income taxes; and
(V) so long as before and after giving effect thereto
no Default or Event of Default shall have occurred and be continuing,
LFC may make distributions to LFI to permit LFI to pay its franchise
taxes and reasonable administrative expenses (including reasonable
professional fees and expenses); PROVIDED, THAT the aggregate amount of
all such distributions shall not exceed $250,000 in any fiscal year of
the Consolidated Entity.
8.8 INVESTMENTS.
No Borrower shall, or shall permit any of its Subsidiaries to, directly
or indirectly, make any Investment in any Person, whether in cash, securities,
or other property of any kind including, without limitation, any Subsidiary or
Affiliate of any Borrower, other than:
(A) Advances or loans made in the ordinary course of business
not to exceed $500,000 outstanding at any time to any one Person and
$1,000,000 in the aggregate outstanding at any one time;
(B) Loans, investments and advances between such
Borrower and any other Borrower;
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(C) Cash Equivalents;
(D) Loans, investments and advances between LFC and LFI, in an
aggregate amount, when added to the aggregate amount of distributions
made by LFC to LFI pursuant to SECTIONS 8.7(IV) and (V), not exceeding
the amount permitted to be distributed by LFC to LFI pursuant thereto;
(E) Investments in account debtors received in
connection with the bankruptcy or reorganization, or in settlement of
delinquent obligations of customers, in the ordinary course of business
and in accordance with applicable collection and credit policies
established by such Borrower or such Subsidiary, as the case may be;
(F) Deposits permitted pursuant to SECTION 8.11; and
(G) Such other Investments as the Agent may approve in
writing in the exercise of its sole discretion.
8.9 AFFILIATE TRANSACTIONS.
No Borrower shall, or shall permit any of its Subsidiaries to, directly
or indirectly, enter into any transaction with (including, without limitation,
the purchase, sale or exchange of property or the rendering of any service to)
any Subsidiary or Affiliate of any Borrower, except in the ordinary course of
and pursuant to the reasonable requirements of such Borrower's or such
Subsidiary's business, as the case may be, and upon fair and reasonable terms no
less favorable in any material respect to such Borrower or such Subsidiary than
could be obtained in a comparable arm's-length transaction with an unaffiliated
Person, except for transactions between or among Borrowers, to the extent not
otherwise prohibited under the Credit Documents, and transactions otherwise
permitted under SECTIONS 8.7 and 8.8;
8.10 ADDITIONAL BANK ACCOUNTS.
No Borrower shall, or shall permit any of its Subsidiaries to, directly
or indirectly, open, maintain or otherwise have any checking, savings or other
accounts at any bank or other financial institution, or any other account where
money is or may be deposited or maintained with any Person, other than the
Disbursement Account, payroll accounts, accounts satisfying the requirements of
SECTION 8.11 and the depositary accounts set forth on SCHEDULE B, PART 8.10
(each a "DEPOSITARY ACCOUNT") with the respective banks (each a "DEPOSITARY
BANK") indicated.
8.11 EXCESS CASH.
No Borrower shall, or shall permit any of its Subsidiaries to, directly
or indirectly, maintain in deposit accounts (other than the Disbursement
Account, the Depository Accounts, subject to the daily transfer requirements set
forth in SECTION 4.9, and payroll accounts), cash balances and Investments in
excess of $500,000 in
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the aggregate for all Borrowers, at any time during which any Revolving Loans
are outstanding hereunder.
8.12 ADDITIONAL NEGATIVE PLEDGES.
No Borrower shall, or shall permit any of its Subsidiaries to, directly
or indirectly, create or otherwise cause or suffer to exist or become effective,
(A) any prohibition or restriction (including any agreement to provide equal and
ratable security to any other Person in the event a Lien is granted to or for
the benefit of the Agent and the Lenders) on the creation or existence of any
Lien upon the assets of such Borrower or any of its Subsidiaries; or (B) any
contractual obligation which may restrict or inhibit the Collateral Agent's
rights or ability to sell or otherwise dispose of the Collateral or any part
thereof after the occurrence of an Event of Default, other than (I) Permitted
Liens, (II) Indebtedness permitted to be incurred under SECTION 8.3(D), (III)
restrictions set forth in the GECC Account Purchase Agreement, (IV) restrictions
consisting of customary non-assignment provisions in contracts which restrict
the assignment of such contracts or the Borrowers' interest thereunder, (V) any
restriction on the transfer of an asset pursuant to an agreement to sell such
asset to the extent such sale would be permitted under the terms hereof, and
(VI) restrictions on pledge or transfer of assets subject to Indebtedness
permitted under SECTION 8.3(E) or (I).
8.13 ADDITIONAL SUBSIDIARIES.
No Borrower shall, or shall permit any of its Subsidiaries to, directly
or indirectly, form or acquire any new Subsidiaries.
8.14 CHANGES TO CERTAIN DOCUMENTS.
No Borrower shall, or shall permit any of its Subsidiaries to, amend,
restate, supplement or otherwise modify (I) the GECC Account Purchase Agreement
and (II) any of the Note Documents.
8.15 RETURNS TO VENDORS.
No Borrower shall enter into any agreement to return any inventory to
any of its creditors for application against any Prepetition Indebtedness under
section 546(g) of the Bankruptcy Code, unless, after full performance of any
such agreement, no Default or Event of Default would occur as a result thereof,
and in no event shall the book value of such inventory exceed $2,000,000 in the
aggregate.
8.16 RECLAMATION CLAIMS.
No Borrower shall return goods to vendors pursuant to reclamation
claims unless ordered to do so by the Bankruptcy Court and unless, after giving
effect to any such return, no Default or Event of Default would occur as a
result thereof (and in no event shall the book value of such goods exceed
$2,000,000 in the
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aggregate), and no Borrower shall pay administrative priority claims on account
of reclamation claims prior to the indefeasible payment in full of all
Postpetition Obligations and Prepetition Obligations.
8.17 APPLICATION TO THE BANKRUPTCY COURT.
No Borrower shall apply to the Bankruptcy Court for authority to (a)
take any action that is prohibited by the terms of this Credit Agreement or the
other Loan Documents, (b) refrain from taking any action that is required to be
taken by the terms of this Credit Agreement or the other Credit Documents or (c)
permit any Indebtedness or claim to be pari passu with or senior to the
Postpetition Obligations, except, prior to the occurrence of an Event of
Default, for Permitted Prepetition Claim Payments and, after the occurrence of
an Event of Default, Permitted Expenses may be senior to the Postpetition
Obligations.
8.18 MODIFICATIONS TO INTERIM FINANCING ORDER OR PERMANENT
FINANCING ORDER.
(A) No Borrower shall consent to any amendment, supplement or
other modification of any of the terms or provisions contained in, or applicable
to the Interim Financing Order of the Permanent Financing Order.
(B) No Borrower shall make any Permitted Prepetition Claim
Payments after the occurrence and during the continuance of a Default or an
Event of Default.
ARTICLE 9. EVENTS OF DEFAULT AND REMEDIES.
9.1 EVENTS OF DEFAULT.
The occurrence of any of the following events shall constitute an event
of default (each an "EVENT OF DEFAULT") hereunder:
(a) FAILURE TO PAY. The Borrowers shall fail to pay any
Postpetition Obligations in respect of principal of or interest on the
Loans, in each case when the same shall become payable, or shall fail
to pay, within two (2) days after the same shall become payable, any
other amount due under this Credit Agreement or any of the other Credit
Documents.
(b) BREACH OF CERTAIN COVENANTS. Any Borrower shall
fail to comply with any covenant contained in ARTICLE 7 (other than
SECTION 7.4, 7.8, 7.11, 7.12 OR 7.13) or ARTICLE 8.
(c) BREACH OF REPRESENTATION OR WARRANTY. Any
representation or warranty made or deemed to be made by the LFC Funds
Administrator or any Borrower in this Credit Agreement or in any other
Credit Document (and in any statement or certificate given under this
Credit Agreement or any other Credit Document), shall be false or
misleading in any material respect when made or deemed to be made.
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(d) BREACH OF OTHER COVENANTS. The LFC Funds
Administrator or any Borrower shall fail to comply with any covenant
contained in this Credit Agreement or any other Credit Document, other
than as set forth in SECTION 9.1(B), and such failure shall continue
for fifteen (15) days after its occurrence.
(e) DISSOLUTION. Except for the merger or consolidated
of such Borrower with any other Borrower, any Borrower shall
dissolve, wind up or otherwise cease its business.
(F) CHANGE OF CONTROL. A Change of Control shall occur.
(G) DEFAULT UNDER GECC ACCOUNT PURCHASE AGREEMENT. Any
default or breach by any Borrower shall occur and be continuing under
the GECC Account Purchase Agreement or the GECC Account Purchase
Agreement shall be terminated for any reason.
(H) BANKRUPTCY COURT APPROVAL OF GECC ACCOUNT PURCHASE
AGREEMENT. (i) An interim order authorizing assumption of the GECC
Account Purchase Agreement in form and substance satisfactory to the
Lenders has not been entered by the Bankruptcy Court on or prior to the
date the Permanent Financing Order is entered, or the interim order of
the Bankruptcy Court authorizing assumption of the GECC Account
Purchase Agreement is reversed, modified, amended or stayed in any
respect, or (ii) a Final Order authorizing assumption of the GECC
Account Purchase Agreement in form and substance satisfactory to the
Lenders has not been entered by the Bankruptcy Court on or prior to
October 15, 1997.
(I) FAILURE OF ENFORCEABILITY OF CREDIT DOCUMENTS;
SECURITY. Any covenant, agreement or obligation of any Borrower
contained in or evidenced by any of the Credit Documents shall cease to
be enforceable, or shall be determined to be unenforceable, in
accordance with its terms; any Borrower shall deny or disaffirm its
obligations under any of the Credit Documents or any Liens granted in
connection therewith; or, any Liens granted in any of the Collateral
shall be determined to be void, voidable, invalid or unperfected, are
subordinated or not given the priority contemplated by this Credit
Agreement and the Postpetition Collateral Agency Agreement.
(J) MATERIAL ADVERSE EFFECT. There shall occur any event that
would have a Material Adverse Effect that has not been stayed as a
consequence of the Chapter 11 cases of the Borrowers; PROVIDED,
HOWEVER, no event disclosed by the Projections shall be deemed to have
a Material Adverse Effect if the effect of such event is not
substantially different than reflected in the Projections.
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(K) APPOINTMENT OF TRUSTEE. The Bankruptcy Court shall enter
an order appointing a trustee under section 1104(a) of the Bankruptcy
Code in any Credit Party's chapter 11 case.
(L) BANKRUPTCY COURT ORDERS. (i) The Interim Financing Order
shall cease to be in full force and effect and the Permanent Financing
Order shall not have been entered prior to such cessation, or (ii) the
Permanent Financing Order shall not have been entered by the Bankruptcy
Court on or before October 5, 1997 or (iii) the Permanent Financing
Order shall fail to contain findings, binding on all parties in
interest (including any statutorily appointed committees) that (x) all
Prepetition Obligations are valid and enforceable against the
Borrowers, (y) all Liens granted by the Borrowers to secure the
Prepetition Obligations are valid, enforceable and fully perfected, and
(z) the liquidation value of the Collateral that was pledged to secure
the Prepetition Obligations exceeds the outstanding amount of the
Prepetition Obligations and that, upon the granting of the Replacement
Liens (as defined in the Interim Financing Order) the liquidation value
of the collateral securing the Prepetition Obligations exceeds the
aggregate amount of the sum of the Prepetition Obligations plus the
aggregate amount of all additional credit made available to Borrowers
under this Credit Agreement (including Collateral pledged to secure
both Prepetition Obligations and Postpetition Obligations) exceeds the
aggregate amount of the Commitments; or (iv) from and after the date of
entry thereof, the Permanent Financing Order shall cease to be in full
force and effect, or (v) any Borrower shall fail to comply with the
terms of the Interim Financing Order or the Permanent Financing Order
in any material respect, or (vi) the Interim Financing Order or the
Permanent Financing Order shall be amended, supplemented, stayed,
reversed, vacated or otherwise modified (or any of the Borrowers shall
apply for authority to do so).
(M) APPOINTMENT OF EXAMINER. The Bankruptcy Court shall enter
an order appointing a responsible officer or an examiner with powers
beyond those set forth in section 1106(a)(3) and (4) of the Bankruptcy
Code under section 1106(b) of the Bankruptcy Code, in any Borrower's
chapter 11 case.
(N) PLAN OF REORGANIZATION. The Bankruptcy Court shall enter
an order confirming a Plan of Reorganization in either Borrower's
chapter 11 case and such Plan of Reorganization shall have been
consummated.
(O) OTHER CLAIMS. There shall arise any other Claim having
priority senior to or pari passu with the claims of the Lenders under
the Credit Documents or any other claim having priority over any and
all administrative expenses of the kind specified in section 503(b) or
507(b) of the Bankruptcy Code (other than Permitted Expenses), or there
shall arise any Lien on any property of any Borrower, except as
expressly permitted under the terms of the Loan Documents.
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(P) CONVERSION OF CHAPTER 11 CASE. The Bankruptcy Court shall
enter an order converting any Credit Party's chapter 11 case to a case
under chapter 7 of the Bankruptcy Code or dismissing any Borrower's
chapter 11 case.
9.2 REMEDIES.
(A) SUSPENSION OF ADDITIONAL CREDIT. If any Event of
Default shall have occurred and be continuing or if a Default shall
have occurred and be continuing and the Agent or Majority Lenders shall
have determined not to make any Loans (other than the Term Loan
automatically incurred pursuant to ARTICLE 2A) or incur any Letter of
Credit Obligations so long as that specific Default is continuing, the
Agent may (and at the written request of the Majority Lenders shall),
without notice, suspend the ability of the Borrowers under this Credit
Agreement to borrow any further Loans and/or to incur any further
Letter of Credit Obligations whereupon any further Loans and Letter of
Credit Obligations shall be made or extended in the Agent's sole
discretion (or in the sole discretion of the Majority Lenders, if such
suspension occurred at their direction) so long as such Default or
Event of Default is continuing.
(B) TERMINATION AND ACCELERATION. If any Event of
Default shall have occurred and be continuing, the Agent may (and at
the written request of the Majority Lenders shall) immediately (i)
terminate the ability of the Borrowers under this Credit Agreement to
borrow any further Loans or to incur any further Letter of Credit
Obligations; (ii) declare all or any portion of the Postpetition
Obligations, including all or any portion of any Loan to be immediately
due and payable, and require that the Letter of Credit Obligations be
cash collateralized as provided in SECTION 9.2(C), all without
presentment, demand, protest or further notice of any kind, all of
which are expressly waived by the Borrowers; and (iii) exercise any
rights and remedies provided to the Agent under the Credit Documents
and/or at law or equity; PROVIDED THAT the Agent may not exercise any
of the rights and remedies referred to in clause (iii) above without
first providing the Borrowers, the United States Trustee and counsel
for any statutorily appointed committee four (4) Business Days' prior
written notice of its intent so to exercise.
(C) CASH COLLATERALIZATION. If any Event of Default
shall have occurred and be continuing, on demand of the Agent or the
Majority Lenders, the Borrowers shall immediately deposit with the
Agent for each Letter of Credit then outstanding cash or Cash
Equivalents in an amount equal to 110% of the greatest amount drawable
thereunder. Such deposit shall be held by the Agent and used to
reimburse the Issuing Bank for the amount of each drawing made under
such Letters of Credit, as and when each such drawing is made.
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(D) AUTOMATIC STAY. Upon the occurrence and during the
continuation of an Event of Default, after four (4) business days
written notice by the Agent to the Borrowers, the automatic stay
provided by section 362 of the Bankruptcy Code shall be deemed
automatically vacated without further order of the Bankruptcy Code and
the Lenders shall be immediately permitted to, INTER ALIA, pursue any
and all of their remedies against the Credit Parties and seek payment
in respect of all Postpetition Obligations and Prepetition Obligations.
9.2A ACCELERATION OF POSTPETITION OBLIGATIONS IN RESPECT OF
TERM LOANS.
Upon the occurrence and during the continuance of any Event of Default
under (I) SECTION 8.6 or (II) SECTION 9.1(A), by reason of the Borrowers'
failure to make any payment of interest on the Term Loan when the same shall
become payable, then, without prejudice to the rights of the Agent or Term
Lender to enforce its claims against the Borrowers, upon the written request of
the Term Lenders and by delivery of written notice to the LFC Funds
Administrator from the Agent, all Postpetition Obligations in respect of the
Term Loan shall be immediately due and payable without presentment, demand,
protest or any other action or obligation of the Agent or any Term Lender;
PROVIDED, THAT, (x) notwithstanding the foregoing, the Term Lenders may not
accelerate the maturity of the Term Loan pursuant to this SECTION 9.2A if and
for so long as the Revolving Lenders shall not be receiving distributions of
their respective allocated shares of interest on the Revolving Loans pursuant to
SECTION 2.4(B) and (y) notwithstanding any acceleration of the Postpetition
Obligations in respect of the Term Loan pursuant to this SECTION 9.2A or any
other provision of this Credit Agreement or any other Credit Document, no
amounts shall be distributed to the Term Lenders in respect of the principal of
the Term Loan if no Actionable Default has occurred and is continuing until all
Postpetition Obligations owing to the Revolving Lenders have been indefeasibly
paid in full and the Revolving Commitments have been terminated.
9.3 RIGHT OF SETOFF.
In addition to and not in limitation of all rights of offset that any
Lender may have under applicable law, upon the occurrence and during the
continuance of any Event of Default, and regardless whether any Lender has made
any demand of the Postpetition Obligations and/or Prepetition Obligations of any
Borrower have matured, each Lender shall have the right to appropriate and apply
to the payment of the Postpetition Obligations and/or Prepetition Obligations of
such Borrower all deposits and other obligations then or thereafter owing by
such Lender to such Borrower. Each Lender exercising such rights shall notify
the Agent thereof and any amount received as a result of the exercise of such
rights shall be shared by the Lenders in accordance with Section 4 of the
Prepetition Collateral Agency Agreement.
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9.4 APPLICATION OF PROCEEDS; SURPLUS; DEFICIENCIES.
The net cash proceeds resulting from the Agent's exercise of any of the
foregoing rights against any Collateral (after deducting all of the Agent's
Expenses related thereto) shall be applied by the Agent to the payment of the
Postpetition Obligations and/or Prepetition Obligations, whether due or to
become due, in the order set forth in SECTION 4.11. The Borrowers shall remain
liable to the Agent and the Lenders for any deficiencies, and the Agent and the
Lenders in turn agree to remit to the Borrowers or its successors or assigns,
any surplus resulting therefrom.
ARTICLE 10. THE AGENT.
10.1 APPOINTMENT OF AGENT.
(A) Each Lender hereby designates BTCC as Agent to act
as herein specified. Each Lender hereby irrevocably authorizes, and
each holder of any Note, by the acceptance of such Note, shall be
deemed irrevocably to authorize the Agent to take such action on its
behalf under the provisions of this Credit Agreement and the other
Credit Documents and any other instruments and agreements referred to
herein and therein and to exercise such powers and to perform such
duties hereunder and thereunder as are specifically delegated to or
required of the Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto. The Agent may perform any
of its duties hereunder by or through its agents or employees.
(B) Other than the Borrowers' rights under SECTION
10.9, the provisions of this ARTICLE 10 are for the benefit of the
Agent and the Lenders only and none of the Borrowers or any other
Persons shall have any rights as a third party beneficiary of any of
the provisions hereof. In performing its functions and duties under
this Credit Agreement and the other Credit Documents, the Agent shall
act only for the Lenders and does not assume and shall not be deemed to
have assumed any obligation toward or relationship of agency or trust
with or for any Lender or Borrower.
10.2 NATURE OF DUTIES OF AGENT.
The Agent has no duties or responsibilities except those expressly set
forth in the Credit Documents. Neither the Agent nor any of its officers,
directors, employees or agents shall be liable for any action taken or omitted
hereunder or in connection herewith, unless caused by its or their gross
negligence or willful misconduct. The duties of the Agent shall be mechanical
and administrative in nature; the Agent shall not have by reason of this Credit
Agreement or any of the other Credit Documents a fiduciary relationship in
respect of any Lender or any participant of any Lender; and nothing in this
Credit Agreement or any other Credit Document, expressed or implied, is intended
to or shall be
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so construed as to impose upon the Agent any obligations in respect of this
Credit Agreement or any other Credit Document, except as expressly set forth
herein or therein.
10.3 LACK OF RELIANCE ON AGENT.
(A) Independently and without reliance upon the Agent,
each Lender, to the extent it deems appropriate, has made and shall
continue to make (I) its own independent investigation of the financial
or other condition and affairs of each Borrower in connection with the
taking or not taking of any action in connection herewith and (II) its
own appraisal of the creditworthiness of each Borrower, and, except as
expressly provided in this Credit Agreement, the Agent shall have no
duty or responsibility, either initially or on a continuing basis, to
provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the making of the
Loans or at any time or times thereafter.
(B) The Agent shall not be responsible to any Lender
for any recitals, statements, information, representations or
warranties herein or in any document, certificate or other writing
delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, collectibility, priority or
sufficiency of this Credit Agreement or any of the other Credit
Documents or the financial or other condition of any Borrower. The
Agent shall not be required to make any inquiry concerning either the
performance or observance of any other terms, provisions or conditions
of this Credit Agreement or any of the other Credit Documents, or the
financial condition of any Borrower, or the existence or possible
existence of any Default or Event of Default, unless specifically
requested to do so in writing by any Lender.
10.4 CERTAIN RIGHTS OF THE AGENT.
The Agent shall have the right to request instructions from the Lenders
by notice to each of such Lenders. If the Agent shall request instructions from
the Lenders with respect to any act or action (including the failure to act) in
connection with this Credit Agreement, the Agent shall be entitled to refrain
from such act or taking such action unless and until the Agent shall have
received instructions from such Lenders, and the Agent shall not incur liability
to any Person by reason of so refraining. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against the Agent as a result
of the Agent acting or refraining from acting hereunder in accordance with the
instructions of the requisite Lenders required to give such instructions
hereunder. The Agent may give any notice required under ARTICLE 9 hereof without
the consent of any of the Lenders unless otherwise directed by the Majority
Lenders in writing and will, at the direction of the Majority Lenders, give any
such notice required under ARTICLE 9.
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10.5 RELIANCE BY AGENT.
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, statement, certificate,
telex, teletype or telecopier message, cablegram, radiogram, order or other
documentary, facsimile or telephone message believed by it to be genuine and
correct and to have been signed, sent or made by the proper person. The Agent
may consult with legal counsel (including counsel for the Borrowers with respect
to matters concerning the Borrowers), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken by it in good faith in accordance with the advice of such counsel,
accountants or experts.
10.6 INDEMNIFICATION OF AGENT.
To the extent the Agent is not reimbursed and indemnified by the
Borrowers, each Lender will reimburse and indemnify the Agent, in proportion to
its voting percentage from time to time as a Lender hereunder, for and against
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including counsel fees and disbursements) or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against the Agent in performing its duties hereunder, in any way
relating to or arising out of this Credit Agreement; PROVIDED, THAT no Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or willful misconduct.
10.7 THE AGENT IN ITS INDIVIDUAL CAPACITY.
With respect to its obligation to lend under this Credit Agreement, the
Revolving Loans made by it and the Revolving Notes issued to it and its
participation in Letters of Credit issued hereunder, the Agent shall have the
same rights and powers hereunder as any other Revolving Lender or holder of a
Revolving Note or participation interests and may exercise the same as though it
was not performing the duties specified herein; and the terms "Revolving
Lenders," "Lenders," "Majority Lenders," "holders of Revolving Notes," or any
similar terms shall, unless the context clearly otherwise indicates, include the
Agent in its individual capacity. The Agent may accept deposits from, lend money
to, acquire equity interests in, and generally engage in any kind of banking,
trust, financial advisory or other business with any Borrower or any Affiliate
of any Borrower as if it were not performing the duties specified herein, and
may accept fees and other consideration from any Borrower for services in
connection with this Credit Agreement and otherwise without having to account
for the same to the Lenders.
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10.8 HOLDERS OF NOTES.
The Agent may deem and treat the payee of any Note as the owner thereof
for all purposes hereof unless and until a written notice of the assignment or
transfer thereof shall have been filed with the Agent. Any request, authority or
consent of any Person who, at the time of making such request or giving such
authority or consent, is the holder of any Note, shall be conclusive and binding
on any subsequent holder, transferee or assignee of such Note or of any Note or
Notes issued in exchange therefor.
10.9 SUCCESSOR AGENT.
(a) The Agent may, upon five (5) Business Days' notice
to the Revolving Lenders and the LFC Funds Administrator, resign at any
time (effective upon the appointment of a successor Agent pursuant to
the provisions of this SECTION 10.9) by giving written notice thereof
to the Lenders and the LFC Funds Administrator. Upon any such
resignation, the Majority Lenders shall have the right, upon five (5)
days' notice and approval by the LFC Funds Administrator (which
approval shall not be unreasonably withheld or delayed), to appoint a
successor Agent. If no successor Agent shall have been so appointed by
the Majority Lenders and accepted such appointment, within thirty (30)
days after the retiring Agent's giving of notice of resignation, then,
upon five (5) days' notice and approval by the LFC Funds Administrator
(which approval shall not be unreasonably withheld or delayed), the
retiring Agent may, on behalf of the Lenders, appoint a successor
Agent, which shall be a bank or a trust company or other financial
institution which maintains an office in the United States, or a
commercial bank organized under the laws of the United States of
America or of any State thereof, or any Affiliate of such bank or trust
company or other financial institution which is engaged in the banking
business, having a combined capital and surplus of at least
$500,000,000.
(b) Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under this Credit Agreement
and the other Credit Documents. After any retiring Agent's resignation
hereunder as Agent, the provisions of this ARTICLE 10 shall inure to
its benefit as to any actions taken or omitted to be taken by it while
it was Agent under or in connection with this Credit Agreement.
10.10 COLLATERAL MATTERS.
(a) Each Lender hereby agrees, and each holder of any
Note by the acceptance thereof will be deemed to agree, that, except as
otherwise set forth herein or in the other Credit
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Documents, any action taken by the Majority Lenders in accordance with
the provisions of this Credit Agreement and the other Credit Documents,
and the exercise by the Majority Lenders of the powers set forth herein
or therein, in a manner consistent herewith and therewith, together
with such other powers as are reasonably incidental thereto, shall be
authorized and binding upon all of the Lenders. The Agent is hereby
authorized on behalf of all of the Lenders, without the necessity of
any notice to or further consent from any Lender to take any action
with respect to any Collateral or Collateral Documents that may be
necessary to perfect and maintain the perfection of the Liens upon the
Collateral granted pursuant to the Collateral Documents.
(B) The Lenders hereby authorize the Agent, at its
option and in its discretion, to release any Lien granted to or held by
the Agent upon any Collateral (I) upon termination of the Commitments
and payment and satisfaction of all of the Postpetition Obligations and
Prepetition Obligations at any time arising under or in respect of this
Credit Agreement or the other Credit Documents or secured by the
Collateral Documents or the transactions contemplated hereby or thereby
or (II) if approved, authorized or ratified in writing by the Majority
Lenders, unless such release is required to be approved by all of the
Lenders pursuant to SECTION 11.11. Upon request by the Agent at any
time, the Lenders will confirm in writing the Agent's authority to
release particular types or items of Collateral pursuant to this
SECTION 10.10.
(C) The Agent shall have no obligation whatsoever to
the Lenders or to any other Person to assure that the Collateral exists
or is owned by any Borrower or is cared for, protected or insured or
that the Liens granted to the Collateral Agent in or pursuant to any of
the Collateral Documents have been properly or sufficiently or lawfully
created, perfected, protected or enforced or are entitled to any
particular priority, or to exercise or to continue exercising at all or
in any manner or under any duty of care, disclosure or fidelity any of
the rights, authorities and powers granted or available to the Agent in
this SECTION 10.10 or in any of the Collateral Documents, it being
understood and agreed that in respect of the Collateral, or any act,
omission or event related thereto, the Agent may act in any manner it
may deem appropriate permitted by the Credit Documents, in its sole
discretion, given the Agent's own interest in the Collateral as one of
the Lenders and that the Agent shall have no duty or liability
whatsoever to the Lenders, except for its gross negligence or willful
misconduct. The Agent agrees to conduct or cause to be conducted at
least one audit of the Collateral during each year that this Credit
Agreement shall remain in effect.
10.11 ACTIONS WITH RESPECT TO DEFAULTS. In addition to the Agent's
right to take actions on its own accord as permitted under this Credit
Agreement, the Agent shall take such action with
79
respect to a Default or Event of Default as shall be directed by the Majority
Lenders; PROVIDED, THAT until the Agent shall have received such directions, the
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable and in the best interests of the Lenders.
10.12 DELIVERY OF INFORMATION. The Agent shall not be required to
deliver to any Lender originals or copies of any documents, instruments,
notices, communications or other information received by the Agent from the LFC
Funds Administrator, any of the Borrowers, or any Subsidiary of any of the
Borrowers, the Majority Lenders, any Lender or any other Person under or in
connection with this Credit Agreement or any other Credit Document except (I) as
specifically provided in this Credit Agreement or any other Credit Document,
(II) copies of appraisals after receipt thereof by the Agent and (III) as
specifically requested from time to time in writing by any Lender with respect
to a specific document, instrument, notice or other written communication
received by and in the possession of the Agent at the time of receipt of such
request and then only in accordance with such specific request.
ARTICLE 11. MISCELLANEOUS.
11.1 GOVERNING LAW.
THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS CREDIT AGREEMENT
AND EACH OF THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE
LAWS AND DECISIONS OF THE STATE OF NEW YORK.
11.2 SUBMISSION TO JURISDICTION.
ALL DISPUTES AMONG THE BORROWERS AND THE LENDERS (OR THE AGENT OR LFC
FUNDS ADMINISTRATOR, RESPECTIVELY, ACTING ON THEIR BEHALF), WHETHER SOUNDING IN
CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY BY THE UNITED STATES
BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE AND THE COURTS TO WHICH AN APPEAL
THEREFROM MAY BE TAKEN; PROVIDED, HOWEVER, THAT THE AGENT AND THE COLLATERAL
AGENT, ON BEHALF OF THE LENDERS, SHALL HAVE THE RIGHT, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, TO PROCEED AGAINST ANY BORROWER OR ITS RESPECTIVE PROPERTIES
IN ANY LOCATION REASONABLY SELECTED BY SUCH PERSON IN GOOD FAITH TO ENABLE SUCH
PERSON TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT
ORDER IN FAVOR OF SUCH PERSON. THE LFC FUNDS ADMINISTRATOR AND EACH OF THE
BORROWERS AGREE THAT NONE OF SUCH PERSONS WILL ASSERT ANY PERMISSIVE
COUNTERCLAIMS, SETOFFS OR CROSS-CLAIMS IN ANY PROCEEDING BROUGHT BY THE AGENT OR
THE COLLATERAL AGENT. THE LFC FUNDS ADMINISTRATOR AND EACH OF THE BORROWERS
WAIVE ANY OBJECTION THAT ANY OF SUCH PERSONS MAY HAVE TO THE LOCATION OF THE
COURT IN WHICH THE AGENT OR THE COLLATERAL AGENT HAS COMMENCED A PROCEEDING,
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
FORUM NON CONVENIENS.
80
11.3 SERVICE OF PROCESS.
THE LFC FUNDS ADMINISTRATOR AND THE BORROWERS EACH IRREVOCABLY
DESIGNATE CT CORPORATION SYSTEM, WITH OFFICES ON THE DATE HEREOF AT 0000
XXXXXXXX; XXX XXXX, XXX XXXX 00000, AS ITS AGENT TO RECEIVE FOR AND ON BEHALF OF
SUCH PERSON SERVICE OF PROCESS IN THE STATE OF NEW YORK. THE LFC FUNDS
ADMINISTRATOR AND THE BORROWERS EACH FURTHER IRREVOCABLY AGREE THAT SERVICE OF
PROCESS IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS CREDIT AGREEMENT
OR ANY OTHER CREDIT DOCUMENT MAY BE EFFECTED BY MAILING A COPY THEREOF BY
REGISTERED MAIL, POSTAGE PREPAID, TO THE LFC FUNDS ADMINISTRATOR AT ITS ADDRESS
SET FORTH IN SECTION 11.7 AND AGREE THAT SUCH SERVICE, TO THE FULLEST EXTENT
PERMITTED BY LAW, (I) SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF
PROCESS UPON IT IN ANY SUCH LEGAL ACTION OR PROCEEDING AND (II) SHALL BE TAKEN
AND HELD TO BE VALID PERSONAL SERVICE UPON AND PERSONAL DELIVERY TO IT. NOTHING
HEREIN CONTAINED SHALL AFFECT THE RIGHT OF THE AGENT OR ANY LENDER TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
11.4 JURY TRIAL.
THE LFC FUNDS ADMINISTRATOR, THE BORROWERS, THE AGENT AND THE LENDERS
EACH HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY. INSTEAD, ANY DISPUTES WILL BE
RESOLVED IN A BENCH TRIAL.
11.5. LIMITATION OF LIABILITY.
NEITHER THE AGENT NOR ANY LENDER SHALL HAVE ANY LIABILITY TO ANY
BORROWER (WHETHER SOUNDING IN TORT, CONTRACT, OR OTHERWISE) FOR LOSSES SUFFERED
BY SUCH BORROWER IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO
THE TRANSACTIONS OR RELATIONSHIPS CONTEMPLATED BY THIS CREDIT AGREEMENT, OR ANY
ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS
DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OR COURT ORDER BINDING ON THE
AGENT OR ANY SUCH LENDER, THAT THE LOSSES WERE THE RESULT OF ACTS OR OMISSIONS
CONSTITUTING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
11.6 DELAYS.
No delay or omission of the Agent or the Lenders to exercise any right
or remedy hereunder shall impair any such right or operate as a waiver thereof.
11.7 NOTICES.
Except as otherwise provided herein, all notices and correspondences
hereunder shall be in writing and sent by certified or registered mail, return
receipt requested, or by overnight delivery service, with all charges prepaid,
if to the Agent or any of the Lenders, then to BT Commercial Corporation, 000
Xxxxx Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Credit Department, if to
the LFC Funds Administrator or any Borrower, then to Xxxxxx Furniture
Corporation at 0000 Xxxxxx Xxxxx Xxxxxxx, X.X., Xxxx Xxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx, Esq., Vice President and General Counsel, or by
facsimile transmission,
81
promptly confirmed in writing sent by first class mail, if to the Agent, or any
of the Lenders, at (000) 000-0000 and if to the LFC Funds Administrator or any
Borrower at (000) 000-0000 or (407) 998- 5615. All such notices and
correspondence shall be deemed given (I) if sent by certified or registered
mail, three Business Days after being postmarked, (II) if sent by overnight
delivery service, when received at the above stated addresses or when delivery
is refused and (III) if sent by telex or facsimile transmission, when receipt of
such transmission is acknowledged.
11.8 ASSIGNMENTS AND PARTICIPATIONS.
(A) BORROWER ASSIGNMENT. Neither the LFC Funds
Administrator nor any of the Borrowers shall have any right to
assign this Credit Agreement, or any rights or obligations
hereunder, without the prior written consent of the Agent and
the Lenders.
(B) OPTIONAL REVOLVING LENDER ASSIGNMENTS. Each
Revolving Lender may assign to one or more banks or other financial
institutions all or a portion of its rights and obligations under this
Credit Agreement, the Revolving Notes and the other Credit Documents,
with the consent of the Agent; and upon execution and delivery to the
Agent, for its acceptance and recording in the Register, of an
agreement in substantially the form of EXHIBIT G-1 (a "REVOLVING
ASSIGNMENT AND ASSUMPTION AGREEMENT"), together with surrender of any
Revolving Note or Revolving Notes subject to such assignment and a
processing and recordation fee of $2,500, such assignment shall be
effective and ANNEX I hereto shall be deemed to be modified
accordingly. No such assignment shall be for less than $10,000,000 or
such lesser amount as the Agent may reasonably agree of the Revolving
Commitments unless it is to another Revolving Lender or is an
assignment of all of such Revolving Lender's rights and obligations
under this Credit Agreement. (This SECTION 11.8(B) does not apply to
branches and Affiliates of a Revolving Lender, it being understood that
a Revolving Lender may make, carry or transfer Revolving Loans at or
for the account of any of its branch offices or Affiliates without
consent of the Borrowers, the Agent or any other Revolving Lender.)
(C) TERM LENDER ASSIGNMENT. Each Term Lender may assign
to one or more Persons all or a portion of its rights and obligations
under this Credit Agreement, the Term Notes and the other Credit
Documents, with the consent of the Agent, which consent shall not be
unreasonably withheld or delayed; and upon execution and delivery to
the Agent, for its acceptance and recording in the Register, of an
agreement in substantially the form of EXHIBIT G-2 (a "TERM ASSIGNMENT
AND ASSUMPTION AGREEMENT"), together with surrender of any Term Note or
Term Notes subject to such assignment and a processing and recordation
fee of $2,500, such assignment shall be effective, the Borrowers shall
issue a replacement Term Note or Term Notes to such Person or Persons
who thereupon shall be
82
a Term Lender or Term Lenders for all purposes hereunder to the extent
of the Term Note or Term Notes so issued and ANNEX II hereto shall be
deemed to be modified accordingly. No such assignment shall be for less
than $10,000,000 or such lesser amount as the Agent may reasonably
agree of the Term Commitments unless it is to another Lender or is an
assignment of all of such Term Lender's rights and obligations under
this Credit Agreement.
(D) AGENT'S REGISTER. The Agent shall maintain a
register of the names and addresses of the Lenders, their Commitments,
and the principal amount of their Loans (the "REGISTER") at the address
specified for the Agent in SECTION 11.7. The Agent shall also maintain
a copy of each Assignment and Assumption Agreement delivered to and
accepted by it, and each notice delivered to it of any assignments of
rights and obligations of a Term Lender (a "TERM NOTICE") and modify
the Register to give effect to each Assignment and Assumption
Agreement. Upon its receipt of each Assignment and Assumption Agreement
or Term Notes and surrender of the affected Note or Notes, the Agent
will give prompt notice thereof to the LFC Funds Administrator and
deliver to the LFC Funds Administrator a copy of the Assignment and
Assumption Agreement or Term Notice and the surrendered Note or Notes.
Within five Business Days after its receipt of such notice, the
Borrowers shall execute and deliver to the Agent a substitute Note or
Notes to the order of the assignee in the amount of the Commitment or
Commitments assumed by it and to the assignor in the amount of the
Commitment retained by it, if any. Such substitute Note or Notes shall
re-evidence the Indebtedness outstanding under the surrendered Note or
Notes and shall be dated as of the Closing Date. The Agent shall be
entitled to rely upon the Register exclusively for purposes of
identifying the Lenders hereunder. The Register shall be available for
inspection by the Borrowers and the Lenders (or any of them) at any
reasonable time and from time to time upon reasonable notice to the
Agent.
(E) PARTICIPATIONS. Each Lender may sell participations
(without the consent of the Agent, the Borrowers or any other Lender)
to one or more parties in or to all or a portion of its rights and
obligations under this Credit Agreement, the Notes and the other Credit
Documents. Notwithstanding a Lender's sale of a participation interest,
its obligations hereunder shall remain unchanged. The Borrower, the
Agent, and the other Lenders shall continue to deal solely and directly
with such Lender. No participant shall have rights to approve any
amendment or waiver of this Credit Agreement or any of the other Credit
Documents except to the extent such amendment or waiver would (I)
increase the participant's obligation in respect of the Commitment of
the Lender from whom the participant purchased its participation
interest; (II) reduce the principal of, or stated rate or amount of
interest on, the Loans subject to such participation, (III) postpone
any maturity date fixed for final payment of
83
principal of the Loans subject to the participation interest, and (IV)
release any guarantor of the Postpetition Obligations or all or a
substantial portion of the Collateral, other than when otherwise
permitted hereunder.
11.9 CONFIDENTIALITY.
Each Lender agrees that it will use its reasonable best efforts not to
disclose without the prior consent of the Borrowers any information with respect
to any of the Borrowers or any Subsidiary of any of the Borrowers that is
furnished pursuant to this Credit Agreement and which is designated by the
respective Borrowers to the Lenders in writing as confidential, PROVIDED, THAT,
each Lender may disclose any such information (A) to its employees, auditors, or
counsel, or to another Lender if the disclosing Lender or such disclosing
Lender's holding or parent company in its sole discretion determines that any
such party should have access to such information, (B) as has become generally
available to the public, (C) as may be required or appropriate in any report,
statement or testimony submitted to any Governmental Authority having or
claiming to have jurisdiction over such Lender, (D) as may be required or
appropriate in response to any summons or subpoena or in connection with any
litigation, (E) to comply with any Requirement of Law, and (F) so long as prior
to such disclosure such prospective or actual transferee or participant has
agreed to preserve the confidentiality of such information on terms
substantially similar to those set forth in the SECTION 11.9 or on terms
otherwise satisfactory to the LFC Funds Administrator, to any such prospective
or actual transferee or participant in connection with any contemplated transfer
or participation of any of the Notes or Commitments or any interest therein by
such Lender.
11.10 INDEMNIFICATION.
The Borrowers hereby jointly and severally indemnify and agree to defend
and hold harmless the Agent and each of the Lenders and their respective
directors, officers, agents, employees and counsel from and against any and all
losses, claims, damages, liabilities, deficiencies, judgments or expenses
incurred by any of them (except to the extent that it is finally judicially
determined to have resulted from their own gross negligence or willful
misconduct) arising out of or by reason of (A) any litigations, investigations,
claims or proceedings which arise out of or are in any way related to (I) this
Credit Agreement or the transactions contemplated hereby, (II) the issuance of
the Letters of Credit, (III) the failure of the Issuing Bank to honor a drawing
under any Letter of Credit, as a result of any act or omission, whether rightful
or wrongful, of any present or future de jure or de facto government or
Governmental Authority, (IV) any actual or proposed use by any Borrower of the
proceeds of the Loans or (V) the Agent's or the Lenders' entering into this
Credit Agreement, the other Credit Documents or any other agreements and
documents relating hereto, including, without limitation, amounts paid in
settlement, court costs and the fees and disbursements of counsel incurred in
connection with any such litigation, investigation, claim or
84
proceeding or any advice rendered in connection with any of the foregoing and
(B) any remedial or other action taken by any of the Borrowers or any of the
Lenders in connection with compliance by any of the Borrowers or any Subsidiary
of any of the Borrowers, or any of their respective properties, with any
federal, state or local environmental laws, acts, rules, regulations, orders,
directions, ordinances, criteria or guidelines.
Without limiting the generality of the foregoing, the Borrowers and
their Subsidiaries shall jointly and severally protect, indemnify, and hold
harmless the Agent, and the Lenders from and against all liabilities,
obligations, claims, demands, damages, penalties, causes of action, losses,
fines, costs and expenses (including without limitation reasonable attorneys'
and consultants' fees and disbursements) imposed upon or incurred by or asserted
against the Agent or the Lenders (collectively, a "CLAIM") by reason of (A) the
presence, disposal, escape, seepage, leakage, spillage, discharge, emission,
release, or threatened release of any Hazardous Substance in, on, under, from or
affecting any property owned, leased, or occupied by any Borrower or Subsidiary
or from any third party owned site at which such Borrower or Subsidiary has
disposed or arranged for the disposal of Hazardous Substances; (B) any personal
injury (including wrongful death) or property damage (real or personal) arising
out of such Hazardous Substance; (C) any lawsuit brought or threatened,
settlement reached, or government order arising out of such Hazardous Substance;
and (D) any violation of Environmental Law, which are based upon or in any way
related to such Hazardous Substance including, without limitation, the costs and
expenses of any remedial, removal, or response work, reasonable attorney and
consultant fees and disbursements, investigation and laboratory fees, court
costs, and litigation expenses.
11.11 AMENDMENTS AND WAIVERS.
No amendment or waiver of any provision of this Credit Agreement, any
part of SCHEDULE B, or any other Credit Document shall be effective unless in
writing and signed by the Majority Lenders (or by the Agent on their behalf),
except that:
(A) the consent of all the Lenders is required to (I)
increase the respective Revolving Commitments or Term Commitments, (II)
reduce the principal of, or interest on, any Note, any Letter of Credit
reimbursement obligations or any Fees hereunder (other than Fees that
are exclusively for the account of the Agent), (III) postpone any date
fixed for any payment in respect of principal of, or interest on, any
Note, any Letter of Credit reimbursement obligations or any Fees
hereunder, (IV) change the percentage of the Commitments, or any minimum
requirement necessary for the Lenders or the Majority Lenders to take
any action hereunder, (V) amend or waive this SECTION 11.11(a), or
change the definition of Majority Lenders or (VI) except as otherwise
expressly provided in this Credit Agreement, and other than in
connection with the financing, refinancing, sale or other disposition of
any asset
85
of a Borrower permitted under this Credit Agreement, release any Liens
in favor of the Collateral Agent on any of the Collateral.
(B) the consent of the Majority Term Lenders is
required, in addition to the consent of the Lenders otherwise required
by this SECTION 11.11, for any amendment or waiver (I) of this SECTION
11.11(b), (ii) with respect to any provision of any Collateral Document
or any Mortgage that permits the sale of any interest in real estate or
releases a Lien on any interest on real estate created thereby, or
allows the creation of any other Lien that is senior to or pari passu
with any Lien in favor of the Collateral Agent except in each case as
specifically permitted in this Credit Agreement as of the Closing Date,
(iii) ARTICLE 2A and SECTION 2.7, 4.1A, 4.5(b), 4.7A, 4.9(b), 4.11, 6.7,
7.14, 8.6, 8.17(c), 9.2A, 9.2(b) or 11.8(c) or (e), of this Credit
Agreement and (iv) any defined term used in any of the preceding
sections if the effect of any such amendment or waiver is to alter the
substantive rights and benefits provided to the Term Lenders by such
sections in a manner that materially and adversely affects the rights
and benefits, taken as a whole, of the Term Lenders under this Credit
Agreement with respect to the Term Loan.
(c) The consent of the Agent shall be required for any
amendment, waiver or consent affecting the rights or duties of the Agent
under any Credit Document, in addition to the consent of the Revolving
Lenders otherwise required by this SECTION 11.11.
The consent of the LFC Funds Administrator and the Borrowers shall not
be required for any amendment, modification or waiver of the provisions of
ARTICLE 10 (other than SECTION 10.9). The LFC Funds Administrator, the Borrowers
and the Revolving Lenders each hereby authorize the Agent to modify this Credit
Agreement by unilaterally amending or supplementing ANNEX I to reflect
assignments of the Revolving Commitments. Notwithstanding the foregoing, the
Borrowers may amend SCHEDULE B, PART 6.1, without the consent of the Majority
Lenders.
11.12 COUNTERPARTS AND EFFECTIVENESS.
This Credit Agreement and any waiver or amendment hereto may be executed
in any number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. This
Credit Agreement shall become effective on the date on which all of the parties
hereto shall have signed a copy hereof (whether the same or different copies)
and shall have delivered the same to the Agent.
11.13 SEVERABILITY.
In case any provision in or obligation under this Credit Agreement, the
Notes or the other Credit Documents shall be
86
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
11.14 MAXIMUM RATE. Notwithstanding anything to the contrary
contained elsewhere in this Credit Agreement or in any other Credit Document,
the Borrowers, the Agent, and the Lenders hereby agree that all agreements among
them under this Credit Agreement and the other Credit Documents, whether now
existing or hereafter arising and whether written or oral, are expressly limited
so that in no contingency or event whatsoever shall the amount paid, or agreed
to be paid, to the Agent or any Lender for the use, forbearance, or detention of
the money loaned to the Borrowers and evidenced hereby or thereby or for the
performance or payment of any covenant or obligation contained herein or
therein, exceed the Highest Lawful Rate. If due to any circumstance whatsoever,
fulfillment of any provisions of this Credit Agreement or any of the other
Credit Documents at the time performance of such provision shall be due shall
exceed the Highest Lawful Rate, then, automatically, the obligation to be
fulfilled shall be modified or reduced to the extent necessary to limit such
interest to the Highest Lawful Rate, and if from any such circumstance any
Lender should ever receive anything of value deemed interest by applicable law
which would exceed the Highest Lawful Rate, such excessive interest shall be
applied pursuant to the terms hereof to the reduction of the principal amount
then outstanding hereunder or on account of any other outstanding Postpetition
Obligations or Prepetition Obligations and not to the payment of interest, or if
such excessive interest exceeds the principal unpaid balance then outstanding
hereunder and such other outstanding Postpetition Obligations or Prepetition
Obligations, such excess shall be refunded to the Borrowers. All sums paid or
agreed to be paid to the Agent or any Lender for the use, forbearance, or
detention of the Postpetition Obligations or Prepetition Obligations and other
Indebtedness of the Borrowers to the Agent or any Lender, to the extent
permitted by applicable law, shall be amortized, prorated, allocated and spread
throughout the full term of such Indebtedness, until payment in full thereof, so
that the actual rate of interest on account of all such Indebtedness does not
exceed the Highest Lawful Rate throughout the entire term of such Indebtedness.
The terms and provisions of this SECTION 11.14 shall control over every other
provision of this Credit Agreement, the other Credit Documents, and all
agreements among the Borrower, the Agent and the Lenders.
11.15 ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS.
This Credit Agreement and the other Credit Documents constitute the
entire agreement among the Borrowers, the Agent and the Lenders, supersede any
prior agreements among them, and shall bind and benefit each of such Persons and
their respective successors and permitted assigns.
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11.16 JOINT AND SEVERAL LIABILITY OF BORROWERS.
Each of the Borrowers shall be jointly and severally liable hereunder
and under each of the other Credit Documents with respect to all Postpetition
Obligations, regardless of which of the Borrowers actually receives the proceeds
of the Loans or the benefit of any other extensions of credit hereunder or the
manner in which the LFC Funds Administrator, the Borrowers, the Agent or the
Lenders account therefor in their respective books and records. Notwithstanding
the foregoing, (A) each Borrower's obligations and liabilities with respect to
proceeds of Loans that it receives or Letters of Credit issued for its account,
and related fees, costs and expenses, and (B) its obligations and liabilities,
arising as a result of the joint and several liability of the Borrowers
hereunder, with respect to proceeds of Loans received by, or Letters of Credit
issued for the account of, any of the other Borrowers hereunder, together with
the related fees, costs and expenses, shall be separate and distinct
obligations, both of which are primary obligations of such Borrower. Neither the
joint and several liability of, nor the Liens granted to the Collateral Agent
under the Collateral Documents by, any of the Borrowers shall be impaired or
released by any action or inaction on the Agent's or any Lender's part, or any
other event or condition with respect to any other Borrower, including any such
action or inaction or other event or condition, that might otherwise constitute
a defense available to, or a discharge of, such other Borrower, or a guarantor
or surety of or for any or all of the Postpetition Obligations or Prepetition
Obligations.
11.17 PREPETITION LENDER CONSENTS.
Each Lender, in its capacity as a Prepetition Lender, hereby consents to
LFR, LFC Midwest Realty, LFC Washington Realty, LFC Pacific Realty and JMS
Realty becoming Borrowers and incurring Postpetition Obligations under this
Credit Agreement and granting Liens under the Credit Documents.
[The remainder of this page is intentionally left blank]
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IN WITNESS WHEREOF, the respective parties hereto have caused this
Credit Agreement to be executed and delivered by their duly authorized officers
as of the date first set forth above.
LFC FUNDS ADMINISTRATOR:
XXXXXX FURNITURE CORPORATION, a Florida
corporation, in its capacity as LFC
Funds Administrator
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Title: Vice President
-------------------------------
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BORROWERS:
XXXXXX FURNITURE CORPORATION, a Florida
corporation, in its individual capacity
and in its capacity as the LFC Funds
Administrator
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------------------
Title: Vice President
-----------------------------------
XXXXXX FURNITURE INCORPORATED, a
Delaware corporation
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------------------
Title: Vice President
-----------------------------------
XXXXXX FURNITURE REALTY CORPORATION, a
Florida corporation
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------------------
Title: Vice President
-----------------------------------
XXXXXX SHOPPING SERVICE, INC., a Florida
corporation
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------------------
Title: Vice President
-----------------------------------
XXXXXX FURNITURE COMPANY OF THE MIDWEST,
INC., a Colorado corporation
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------------------
Title: Vice President
-----------------------------------
XXXXXX FURNITURE COMPANY OF THE PACIFIC,
INC., a California corporation
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------------------
Title: Vice President
-----------------------------------
90
XXXXXX FURNITURE COMPANY OF WASHINGTON,
INC., a Washington corporation
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------------------
Title: Vice President
-----------------------------------
XXXXXX FURNITURE COMPANY OF THE MIDWEST
REALTY, INC. a Colorado corporation
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------------------
Title: Vice President
-----------------------------------
XXXXXX FURNITURE COMPANY OF THE PACIFIC
REALTY, INC., a California corporation
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------------------
Title: Vice President
-----------------------------------
XXXXXX FURNITURE COMPANY OF WASHINGTON
REALTY, INC., a Washington corporation
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------------------
Title: Vice President
-----------------------------------
XXXX X. XXXXX COMPANY, an Illinois
corporation
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------------------
Title: Vice President
-----------------------------------
XXXX X. XXXXX REALTY COMPANY, an
Illinois corporation
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------------------
Title: Vice President
-----------------------------------
91
AGENT:
BT COMMERCIAL CORPORATION, in its
capacity as Agent
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Title: Sr. V.P.
-----------------------------------
REVOLVING LENDERS:
BT COMMERCIAL CORPORATION, a Delaware
corporation in its respective capacities
as Revolving Lender and Collateral Agent
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxx
-----------------------------------
Title: Sr. V.P.
-----------------------------------
SANWA BUSINESS CREDIT CORPORATION, in
its capacity as Revolving Lender
By: /s/ Xxxxxxx X. Xxx
-----------------------------------
Name: Xxxxxxx X. Xxx
-----------------------------------
Title: Vice President
-----------------------------------
FINOVA CAPITAL CORPORATION, in its
capacity as Revolving Lender
By: /s/ Xxxx Xxxxxxxx
-----------------------------------
Name: Xxxx Xxxxxxxx
-----------------------------------
Title: Vice President
-----------------------------------
XXXXXX FINANCIAL, INC., in its capacity
as Revolving Lender
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxx
-----------------------------------
Title: V.P.
-----------------------------------
LASALLE NATIONAL BANK, in its capacity
as Revolving Lender
By: /s/ Xxxxxxxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxxxxxxx X. Xxxxxxxx
-----------------------------------
Title: Senior Vice President
-----------------------------------
92
CONGRESS FINANCIAL CORPORATION
(CENTRAL), in its capacity as Revolving
Lender
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxxxx
-----------------------------------
Title: Vice President
-----------------------------------
TRANSAMERICA BUSINESS CREDIT
CORPORATION, in its capacity as
Revolving Lender
By: /s/ Xxxxxxx X. XxXxxxxx
-----------------------------------
Name: Xxxxxxx X. XxXxxxxx
-----------------------------------
Title: Vice President
-----------------------------------
SILVER OAK CAPITAL L.L.C., in its
capacity as Revolving Lender
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
-----------------------------------
Title: Authorized Signatory
-----------------------------------
TERM LENDER:
SILVER OAK CAPITAL L.L.C., in its
capacity as Term Lender
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
-----------------------------------
Title: Authorized Signatory
-----------------------------------
93
