<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1997
Commission file number 0-4769
DOLLAR GENERAL CORPORATION
(Exact name of registrant as specified in its charter)
KENTUCKY 61-0502302
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
104 Woodmont Blvd.
Suite 500
Nashville, Tennessee 37205
(Address of principal executive offices, zip code)
Registrant's telephone number, including area code: (615) 783-2000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
----
The number of shares of common stock outstanding at December 8, 1997 was
133,490,764.
1
<PAGE> 2
Dollar General Corporation
Form 10-Q
For the Quarter Ended October 31, 1997
Index
<TABLE>
<CAPTION>
Part I. Financial Information Page No.
<S> <C> <C>
Item 1. Financial Statements (unaudited):
Consolidated Balance Sheets as of October 31,
1997, January 31, 1997 (audited) and
November 1, 1996. 3
Consolidated Statements of Income
for the three months and nine months
ended October 31, 1997 and November 1, 1996. 4
Consolidated Statements of Cash Flows
for the nine months ended October 31, 1997
and November 1, 1996. 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations. 8
Part II. Other Information 12
Signatures 13
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
Oct. 31, Jan. 31, Nov. 1,
1997 1997 1996
(Unaudited) (Audited) (Unaudited)
---------- --------- --------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 13,168 $ 6,563 $ 8,769
Merchandise inventories 737,263 476,103 623,354
Deferred income taxes 3,776 3,689 11,954
Other current assets 21,694 18,244 16,447
---------- -------- --------
Total current assets 775,901 504,599 660,524
Property & equipment, at cost 378,506 321,917 285,084
Less: Accumulated depreciation 140,404 113,381 105,715
---------- -------- --------
Net property and equipment 238,102 208,536 179,369
Other assets 5,595 5,012 5,065
---------- -------- --------
Total assets $1,019,598 $718,147 $844,958
========== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities:
Current portion of long-term debt $ 1,597 $ 2,030 $ 2,060
Short-term borrowings 193,583 38,469 184,725
Accounts payable 210,845 103,523 144,684
Accrued expenses 75,547 70,441 67,937
Income taxes 14,363 10,002 4,913
---------- -------- --------
Total current liabilities 495,935 224,465 404,319
Long-term debt 1,411 2,582 2,748
Deferred income taxes 5,360 5,571 3,573
Shareholders' equity:
Preferred stock 858 858 858
Common stock 66,660 53,105 42,389
Additional paid-in capital 373,234 329,948 326,199
Retained earnings 276,667 302,145 265,399
---------- -------- --------
717,419 686,056 634,845
Less: treasury stock 200,527 200,527 200,527
---------- -------- --------
Total shareholders' equity 516,892 485,529 434,318
---------- -------- --------
Total liabilities and
shareholders' equity $1,019,598 $718,147 $844,958
========== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 4
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------- -------------------------
Oct. 31 Nov. 1 Oct. 31 Nov. 1
1997 1996 1997 1996
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $649,400 $508,977 $1,766,234 $1,459,222
Cost of goods sold 465,616 360,343 1,280,439 1,053,486
-------- -------- ---------- ----------
Gross profit 183,784 148,634 485,795 405,736
Selling, general and
administrative expense 128,220 104,178 355,254 299,444
-------- -------- ---------- ----------
Operating profit 55,564 44,456 130,541 106,292
Interest expense 1,559 1,485 2,625 3,791
-------- -------- ---------- ----------
Income before provision for
taxes on income 54,005 42,971 127,916 102,501
Provision for taxes on income 20,387 16,329 48,288 38,950
-------- -------- ---------- ----------
Net income $ 33,618 $ 26,642 $ 79,628 $ 63,551
======== ======== ========== ==========
Net income per common and
common equivalent share $ 0.24 $ 0.19 $ 0.58 $ 0.46
======== ======== ========== ==========
Weighted average number of
common shares outstanding 137,813 138,089 137,537 138,619
======== ======== ========== ==========
Cash dividends per common share
as declared $ .04 $ .05 $ .13 $ .15
======== ======== ========== ==========
As adjusted to give retroactive
effect to the five-for-four stock
splits distributed on February 12,
1997 and September 22, 1997: $ .04 $ .03 $ .12 $ .10
======== ======== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE> 5
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
Oct. 31, Nov. 1,
1997 1996
--------- ---------
<S> <C> <C>
Operating activities:
Net income $ 79,628 $ 63,551
Adjustments to reconcile net income
to net cash used in operating
activities:
Depreciation and amortization 27,750 23,027
Deferred income taxes (298) 615
Change in operating assets and liabilities:
Merchandise inventories (261,160) (134,992)
Accounts payable trade 107,322 41,508
Accrued expenses 5,106 5,838
Income taxes 4,361 (9,844)
Other (2,848) (1,712)
--------- ---------
Net cash used in operating activities (40,139) (12,009)
--------- ---------
Investing activities
Purchase of property and equipment (92,313) (46,897)
Proceeds from sale of property and equipment 33,811 0
--------- ---------
Net cash used in investing activities (58,502) (46,897)
--------- ---------
Financing activities:
Issuance of short-term borrowings 170,892 149,390
Repayments of short-term borrowings (15,777) (36,811)
Issuance of long-term debt 190 1,487
Repayments of long-term debt (1,794) (1,493)
Payment of cash dividends (17,562) (12,672)
Proceeds from exercise of stock options 26,072 15,257
Repurchase of common stock (75,123) (59,788)
Tax effect of stock options 17,748 7,437
Other 600 524
--------- ---------
Net cash provided by financing activities 105,246 63,331
--------- ---------
Net increase in cash and cash equivalents 6,605 4,425
Cash and cash equivalents at beginning of period 6,563 4,344
--------- ---------
Cash and cash equivalents at end of period $ 13,168 $ 8,769
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The accompanying consolidated financial statements are presented in accordance
with the requirements of Form 10-Q and consequently do not include all of the
disclosures normally required by generally accepted accounting principles or
those normally made in the Company's Annual Report on Form 10-K. Accordingly,
the reader of the quarterly report on Form 10-Q should refer to the Company's
Annual Report on Form 10-K for the year ended January 31, 1997 for additional
information.
The accompanying consolidated financial statements as of October 31, 1997 and
November 1, 1996, have been prepared in accordance with the Company's customary
accounting practices and have not been audited. All subsidiaries are included.
In management's opinion, all adjustments (which are of a normal recurring
nature) necessary for a fair presentation of the results of operations for the
three-month and nine-month periods ended October 31, 1997 and November 1, 1996,
have been made.
Interim cost of goods sold is determined using estimates of inventory shrinkage,
inflation, and markdowns which are adjusted during interim periods to reflect
actual results. Because of the seasonal nature of the Company's business, the
results for interim periods are not necessarily indicative of the results to be
expected for the entire year.
2. Net Income Per Common Share
Net income per common and common equivalent share is based upon the actual
weighted average number of common shares outstanding during each period
(including the presumed conversion of the Series A Convertible Preferred Stock)
plus the assumed exercise of dilutive stock options as follows:
As adjusted to give retroactive
effect to the five-for-four stock
splits distributed on February 12,
1997 and September 22, 1997:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------- ---------------------
(In thousands)
--------------
Oct. 31, Nov. 1, Oct. 31, Nov. 1,
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Actual weighted average number of
common shares outstanding during
the period 113,266 112,731 113,558 113,227
Common Stock Equivalents:
Dilutive effect of stock options
using the "Treasury Stock Method" 3,603 4,414 3,035 4,448
1,715,742 shares of Series A
Convertible Preferred Stock
Issued August 22, 1994 20,944 20,944 20,944 20,944
------- ------- ------- -------
Weighted Average Shares 137,813 138,089 137,537 138,619
======= ======= ======= =======
</TABLE>
6
<PAGE> 7
3. Changes in shareholders' equity for the nine months ended October 31,
1997 and November 1, 1996 were as follows (dollars in thousands except
per share amounts):
<TABLE>
<CAPTION>
Additional
Preferred Common Paid-In Retained Treasury
Stock Stock Capital Earnings Stock Total
--------- -------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balances, January 31, 1996 $ 858 $ 42,762 $ 303,609 $ 273,309 $ 200,527 $ 420,011
Net income 63,551 63,551
Cash dividend, $.15 per
common share, as declared (10,863) (10,863)
Cash dividend, $.75 per
preferred share (1,810) (1,810)
Issuance of common
stock under employee stock
incentive plans 614 14,643 15,257
Tax benefit from exercise
of options 7,436 7,436
Repurchase of common stock (1,000) (58,788) (59,788)
Transfer to ESOP 13 511 524
--------- -------- --------- --------- --------- ---------
Balances, November 1, 1996 $ 858 $ 42,389 $ 326,199 $ 265,399 $ 200,527 $ 434,318
========= ======== ========= ========= ========= =========
Balances, January 31, 1997 $ 858 $ 53,105 $ 329,948 $ 302,145 $ 200,527 $ 485,529
Net income 79,628 79,628
Cash dividend, $.13 per
common share as declared (15,132) (15,132)
Cash dividend, $.65 per
preferred share (2,430) (2,430)
Stock split adjusted
September 22, 1997 13,416 (13,416)
Issuance of common stock
under employee stock
incentive plans 1,119 24,953 26,072
Tax benefit from exercise
of options 17,748 17,748
Repurchase of common stock (995) (74,128) (75,123)
Transfer to ESOP 15 585 600
--------- -------- --------- --------- --------- ---------
Balances, October 31, 1997 $ 858 $ 66,660 $ 373,234 $ 276,667 $ 200,527 $ 516,892
========= ======== ========= ========= ========= =========
</TABLE>
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
This discussion and analysis contains both historical and forward-looking
information. The forward-looking statements are made pursuant to the safe-harbor
provisions of the Private Securities Litigation Reform Act of 1995. Although the
Company believes the assumptions underlying the forward-looking statements
contained herein are reasonable, any of the assumptions could be inaccurate, and
therefore, actual results may differ materially from those projected in the
forward-looking statements. Forward-looking statements may be significantly
impacted by certain risks and uncertainties, including, but not limited to,
general transportation and distribution delays or interruptions, inventory risks
due to shifts in market demand, changes in product mix, costs and delays
associated with building, opening and operating a new distribution center and
the risk factors listed in the Company Annual Report on Form 10-K for the year
ended January 31, 1997. The Company undertakes no obligation to publicly release
any revisions to any forward-looking statements contained herein to reflect
events or circumstances occurring after the date hereof or to reflect the
occurrence of unanticipated events.
The following text contains references to years 1998, 1997, and 1996, which
represent fiscal years ending or ended January 30, 1998, and January 31, 1997
and 1996, respectively. This discussion and analysis should be read in
conjunction with, and is qualified in its entirety by, the consolidated
financial statements, including the notes thereto.
RESULTS OF OPERATIONS
The nature of the Company's business is seasonal. Historically, sales in the
fourth quarter have been significantly higher than sales achieved in each of the
first three quarters of the fiscal year. Thus, expenses, and to a greater extent
operating income, vary by quarter. Results of a period shorter than a full year
may not be indicative of results expected for the entire year. Furthermore,
comparing any period to other than the same period of the previous year will not
reflect the seasonal nature of the Company's business.
In August 1996, the federal minimum wage law was changed to increase minimum
wage from $4.25 per hour to $4.75 per hour effective October 1, 1996 and from
$4.75 per hour to $5.15 per hour effective September 1, 1997. The Company
estimates that this change will result in an increase in wage expense during
fiscal 1998 of approximately $8.0 million and resulted in an increase during
fiscal 1997 of approximately $2.1 to $2.3 million above otherwise expected
levels. The Company believes that increased sales and employee productivity will
partially offset the financial impact to operations of the minimum wage increase
for fiscal 1998.
NINE MONTHS ENDED OCTOBER 31, 1997 AND NOVEMBER 1, 1996
NET SALES. Net sales for the first nine months of fiscal 1998 increased 21.0%,
to $1.77 billion from $1.46 billion for the comparable period of fiscal 1997.
The increase resulted from 455 net additional stores being in operation as of
October 31, 1997 as compared with November 1, 1996 and an increase of 6.6% in
same-store sales. Same store sales growth in the first nine months of fiscal
1997 was 7.9%.
The Company regards "same stores" as those opened prior to the beginning of the
previous fiscal year which have remained open throughout the previous fiscal
year and the period reported. Management believes that the same-store sales were
negatively impacted during the first six months by dropping an advertising
circular and by store interruptions caused by converting more than 2,400 stores
to the Company's new prototype during fiscal 1998. The new prototype and related
product mix reflects a 65%/35% hardlines to softlines space allocation versus
the previous 50%/50% allocation. The new prototype allocates more space to
faster-turning consumable merchandise. For the fourth quarter of fiscal 1998,
management expects continued improvement in net sales and same store sales
increases.
8
<PAGE> 9
GROSS PROFIT. Gross profit for the first nine months was $485.8 million, or
27.5% of net sales, compared to $405.7 million, or 27.8% of net sales, in the
same period last year. The decrease in gross profit as a percent to sales was
primarily impacted by higher freight costs associated with adding 700 new items
to the merchandise mix and lower margin on current purchases. These higher costs
were partially offset by lower estimated shrinkage and higher margin on
beginning inventory. Management currently anticipates a slight decline in gross
profit as a percent of net sales for fiscal 1998.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and administrative
expense for the nine months, ending October 31, 1997, totaled $355.3 million, or
20.1% of net sales, compared with $299.4 million, or 20.5% of net sales in the
comparable period last year. As a percentage of sales, increases in professional
fees and inventory services were offset by decreases in (i) employee incentive
compensation expense, (ii) self-insurance expense, and (iii) property and use
taxes. Total operating expense increased 18.6% primarily as a result of 455 net
additional stores being in operation as compared with the comparable period last
year. Management currently anticipates a continued slight decline in selling
general and administrative expense as a percent of net sales for fiscal 1998.
INTEREST EXPENSE. For the first nine months of fiscal 1998 interest expense
decreased 30.8% to $2.6 million (0.2% of sales) compared with $3.8 million (0.3%
of sales) in the comparable period last year primarily as a result of lower
average short-term borrowings due to faster-moving consumable merchandise and
improved accounts payable management. For fiscal 1998, management expects
interest expense in total dollars to be less than last year.
PROVISION FOR TAXES ON INCOME. The effective income tax rate was 37.8% for both
the three and nine month periods of 1998 compared with 38.0% in the comparable
periods last year, respectively.
THREE MONTHS ENDED OCTOBER 31, 1997 AND NOVEMBER 1, 1996
NET SALES. Net sales for the quarter increased 27.6%, to $649.4 million from
$509.0 million for the comparable period of fiscal 1997. The increase resulted
from an increase of 11.6% in same-store sales as compared with a 6.5% increase
in the same period last year and the operation of 455 additional stores as of
October 31, 1997.
GROSS PROFIT. Gross profit for the quarter was $183.8 million, or 28.3% of net
sales, compared to $148.6 million, or 29.2% of net sales, in the same period
last year. The decrease in gross profit as a percent of sales was primarily the
result of higher freight costs and lower margin on current purchases which were
partially offset by lower estimated shrinkage.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and administrative
expense for the quarter totaled $128.2 million, or 19.7% of net sales compared
with $104.2 million, or 20.5% of net sales, in the comparable period last year.
As a percentage of sales, higher purchased services, professional fees and
advertising expense were offset by decreases in (i) self-insurance expense, (ii)
employee compensation, (iii) employee incentive compensation expense and (iv)
property and use taxes. Total operating expense increased 23.1% primarily the
result of 455 net additional stores being in operation compared to last year.
INTEREST EXPENSE. Interest expense increased 5.0% to $1.6 million (0.2% of
sales) compared with $1.5 million (0.3% of sales) in the comparable period last
year. This increase was primarily a result of higher average short-term
borrowings due to increases in inventories, capital expenditures, and
common stock repurchases. Inventories increased primarily as a result of
opening an additional distribution center and opening new stores.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operating activities - Net cash used by operating activities
increased to $40.1 million during the first nine months of fiscal 1998 compared
with $12.0 million in the comparable period last year. This increase is
primarily the result of increased inventories being only partially offset by
increased accounts payable.
9
<PAGE> 10
Cash flows from investing activities - Net cash used by investing activities
increased to $58.5 million during the first nine months of 1998 compared with
$46.9 million in the comparable period last year. This increase was primarily
the result of increased capital expenditures primarily related to the expansion
of the Scottsville, Kentucky distribution center, the implementation of point-of
sale technology in stores and the conversion of stores to the Company's new
prototype. Partially offsetting the capital expenditures was $33.8 million
received from the sale (and subsequent leaseback) of the South Boston, Virginia
distribution center.
Cash flows from financing activities - The Company's short-term borrowings
during the first nine months of fiscal 1998 increased by $155.1 million compared
with an increase of $112.6 million in fiscal 1997. The increase in short-term
borrowings was the result of increased inventories and capital expenditures and
was partially offset by improved accounts payable management and the proceeds
from the sale/leaseback of the South Boston, Virginia distribution center.
Because of the significant impact of seasonal buying (e.g., Spring and Holiday
purchases), the Company's working capital needs vary significantly during the
year. Working capital needs, open market stock repurchase and general corporate
needs were financed by short-term borrowings under the Company's $175 million
revolving credit/term loan facility and short-term bank lines of credit totaling
$155 million at October 31, 1997. The Company had revolving credit/term loan
facility borrowings and short-term bank lines of credit borrowings of $175.0
million and $18.6 million as of October 31, 1997 and 160.0 million and 24.7
million as of November 1, 1996, respectively.
The Company also has available an additional $100 million leveraged lease
facility. The leveraged leased facility will be used to meet capital
requirements related to construction of new stores, a new distribution center in
Indianola, Mississippi and a new corporate headquarters complex in
Goodlettsville, Tennessee. The leveraged lease facility and the revolving
credit/term loan facility will expire August 29, 2002 and they contain financial
covenants similar to prior credit facilities.
10
<PAGE> 11
The Company's liquidity position is set forth in the following table (dollars in
thousands):
<TABLE>
<CAPTION>
Oct. 31 Jan. 31, Nov.1,
1997 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Current ratio 1.6x 2.2x 1.6x
Total borrowings/equity 38.0% 8.9% 43.6%
Long-term debt/equity 0.3% 0.5% 0.6%
Working capital $279,966 $281,134 $256,205
Average daily use of debt:
(fiscal year-to-date)
Short-term $ 66,911 $ 87,952 $ 90,548
Long-term 3,723 2,930 3,843
-------- -------- --------
Total $ 70,634 $ 90,882 $ 94,391
======== ======== ========
Maximum outstanding short-term
debt (fiscal year-to-date) $193,583 $184,725 $184,725
</TABLE>
11
<PAGE> 12
PART II - OTHER INFORMATION
Item 1. Not applicable.
Item 2. Not applicable.
Item 3. Not applicable.
Item 4. Not applicable
Item 5. Not applicable.
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits
10.1 Credit Agreement dated September 2, 1997 by and among
Dollar General Corporation and Sun Trust Bank, Nashville,
N.A.
10.2 Master Agreement dated September 2, 1997 among Dollar
General Corporation, Certain Subsidiaries of Dollar General
Corporation, Atlantic Financial Group, Ltd., Certain
Financial Institutions Parties hereto at SunTrust Bank,
Nashville, N.A.
27 Financial Data Schedule (for SEC use only)
(b) No reports on Form 8-K were filed during the quarter ended October
31, 1997.
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DOLLAR GENERAL CORPORATION
(Registrant)
December 12, 1997 By: /s/ Phil Richards
--------------------------------------
Phil Richards, Vice President
and Chief Financial Officer
13
<PAGE> 1
EXHIBIT_
CREDIT AGREEMENT
Dated as of September 2, 1997
By and Among
DOLLAR GENERAL CORPORATION
AND
SUNTRUST BANK, NASHVILLE, N.A.,
AGENT AND AS A LENDER
<PAGE> 2
EXHIBITS
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Competitive Bid Request
Exhibit C - Form of Assignment and Acceptance
Exhibit D - Form of Competitive Bid Request
Exhibit E - Form of Notice of Competitive Bid Request
Exhibit F - Form of Competitive Bid
Exhibit G - Form of Competitive Bid Accept/Reject Letter
Exhibit H - Closing Certificate
Exhibit I-1 - Form of Opinion of Corporate Counsel
Exhibit J - Form of Compliance Certificate
Exhibit K - Form of Subsidiary Guaranty
Exhibit L - Form of Notice of Borrowing
Exhibit M - Form of Continuance/Conversion Notice
SCHEDULES
Schedule 5.1. -
Schedule 5.5. -
Schedule 5.8.(a) -
Schedule 5.8.(b) -
Schedule 5.8.(c) -
Schedule 5.11. -
Schedule 5.13. -
Schedule 5.15. -
Schedule 5.16. -
Schedule 5.17. -
Schedule 5.18. -
Schedule 5.20. -
Schedule 5.21. -
<PAGE> 3
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made and entered into as of this 2nd day of
September, 1997 by and between DOLLAR GENERAL CORPORATION, a Kentucky
corporation (the "Borrower"), SUNTRUST BANK, NASHVILLE, N.A. ("SunTrust"), and
such other banks and lending institutions are referred to collectively as the
"Lenders"), and SUNTRUST BANK, NASHVILLE, N.A., in its capacity as agent for
Lenders and each successive agent for such Lenders as may be appointed from time
to time pursuant to Article 9. herein (the "Agent").
RECITALS:
1. The Borrower desires that the Lenders extend the Borrower credit
pursuant to the terms of this Credit Agreement.
2. The Lenders are willing to extend the Borrower credit pursuant to
the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the parties agree as follows:
ARTICLE 1. DEFINITIONS; CONSTRUCTION
SECTION 1.1. DEFINITIONS.
In addition to the other terms defined herein, the following terms used
herein shall have the meanings herein specified (to be equally applicable to
both the singular and plural forms of the terms defined):
"Acquisition" means the acquisition by any Consolidated Company of any
of the following: (a) the controlling interest in any Person, (b) a Consolidated
Company, or (c) substantially all of the Property of any Person.
"Adjusted LIBO Rate" shall mean with respect to each Interest Period
for a Eurodollar Advance, the rate obtained by dividing (A) LIBO for such
Interest Period by (B) a percentage equal to 1 minus the then stated maximum
rate (stated as a decimal) of all reserves requirements (including, without
limitation, any marginal, emergency, supplemental, special or other reserves)
applicable to any member bank of the Federal Reserve System in respect of
Eurocurrency liabilities as defined in Regulation D (or against any successor
category of liabilities as defined in Regulation D).
"Advance" shall mean any principal amount advanced and remaining
outstanding at any time under (i) the Revolving Loans, which Advances shall be
made or outstanding as Base Rate Advances or Eurodollar Advances, as the case
may be, or (ii) the Competitive Bid Loans, which Advances shall be made or
outstanding as Competitive Bid Rate Advances.
<PAGE> 4
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by, or under common control with, such Person, whether
through the ownership of voting securities, by contract or otherwise. For
purposes of this definition, "control" (including with correlative meanings, the
terms "controlling", "controlled by", and "under common control with") as
applied to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of that
Person.
"Agent" shall mean SunTrust, and any successor agent appointed pursuant
to Section 9.9. hereof.
"Agreement" shall mean this Credit Agreement, as hereafter amended,
restated, supplemented or otherwise modified from time to time.
"Applicable Commitment Percentage" shall mean, for each Lender, a
fraction, the numerator of which shall be the amount of such Lender's Commitment
and the denominator of which shall be the aggregate amount of the Commitments of
all the Lenders, which Applicable Commitment Percentage for each Lender as of
the Closing Date is as set forth on the signature pages hereof under the caption
"Applicable Commitment Percentage".
"Applicable Margin" shall mean the number of basis points per annum
determined in accordance with the table set forth below based on the fiscal
quarter-end ratios for Borrower's Fixed Charge Coverage Ratio:
<TABLE>
<CAPTION>
==================================================================================================================
FIXED CHARGE COVERAGE RATIO
==================================================================================================================
TIER ONE TIER TWO TIER THREE TIER FOUR
==================================================================================================================
<S> <C> <C> <C>
> or = 4.50 to 1.0 > or = 3.25 to 1.0 > or = 2.50 to 1.0 < 2.50 to 1.0
and < 4.50 to 1.0 and < 3.25 to 1.0
- ------------------------------------------------------------------------------------------------------------------
9 basis points per 13 basis points per 15 basis points per 22.50 basis points
annum annum annum per annum
==================================================================================================================
</TABLE>
provided, however, that:
(a) The Applicable Margin in effect as of the date of
execution and delivery of this Agreement shall be the number of basis
points under the heading "Tier Two" as described in the table above and
shall remain in effect until such time as the Applicable Margin may be
adjusted as hereinafter provided; and
(b) So long as no Default or Event of Default has occurred and
is continuing under this Agreement, adjustments, if any, to the
Applicable Margin based on changes in the ratio set forth above shall
be made and become effective on the Calculation Date set forth in
Section 3.6. herein.
- 2 -
<PAGE> 5
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an Eligible Assignee in accordance with the terms
of this Agreement and substantially in the form of Exhibit C.
"Available Revolving Credit Commitment" shall mean at any time that
amount equal to (A) Total Commitments less (B) the sum of (i) all outstanding
Revolving Loans, and (ii) all outstanding Competitive Bid Rate Advances.
"Bankruptcy Code" shall mean the Bankruptcy Code of 1978, as amended
and in effect from time to time (11 U.S.C. ss. 101 et seq.) and any successor
statute.
"Base Rate Advance" shall mean an Advance made or outstanding as a
Revolving Loan, bearing interest based on the Base Rate.
"Base Rate" shall mean (with any change in the Base Rate to be
effective as of the date of change of either of the following rates) the higher
of (i) the rate which the Agent publicly announces from time to time as its
"base" or "prime" lending rate, as the case may be, for Dollar loans in the
United States, as in effect from time to time, and (ii) the Federal Funds Rate,
as in effect from time to time, plus one-half of one percent (0.50%) per annum.
The Agent's "base" or "prime" lending rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to customers; the
Agent may make commercial loans or other loans at rates of interest at, above or
below the Agent's "base" or "prime" lending rate. The Base Rate is determined
daily.
"Borrower" shall mean Dollar General Corporation, a Kentucky
corporation, its successors and permitted assigns.
"Borrowing" shall mean the incurrence by Borrower under any Facility of
Advances of one Type concurrently having the same Interest Period or the
continuation or conversion of an existing Borrowing or Borrowings in whole or in
part.
"Business Day" shall mean any day excluding Saturday, Sunday and any
other day on which banks are required or authorized to close in Nashville,
Tennessee and, if the applicable Business Day relates to Eurodollar Advances,
excluding any day on which commercial banks are closed or required to be closed
for domestic and international business, including dealings in Dollar deposits
on the London Interbank Market.
"Capital Lease" shall mean, as applied to any Person, any lease of any
Property by such Person as lessee which would, in accordance with GAAP, be
required to be classified and accounted for as a capital lease on a balance
sheet of such Person.
"Capital Lease Obligation" shall mean, with respect to any Capital
Lease, the amount of the obligation of the lessee thereunder which would, in
accordance with GAAP, appear on a balance sheet of such lessee in respect of
such Capital Lease.
- 3 -
<PAGE> 6
"Closing Date" shall mean September 2, 1997 or such later date on which
the initial Loans are made and the conditions set forth in Section 4.1. and 4.2.
are satisfied or waived.
"Commitment" shall mean, for any Lender at any time its Revolving
Credit Commitment.
"Competitive Bid Accept/Reject Letter" shall mean a notification made
by the Borrower pursuant to Section 2.4. substantially in the form of Exhibit G.
"Competitive Bid Facility" shall mean the facility established pursuant
to Section 2.4.
"Competitive Bid Loan" shall mean a Loan made up of Advances by all of
those Lenders whose Competitive Bids have been accepted by the Borrower pursuant
to the same Competitive Bid Request under the bidding procedure described in
Section 2.4. for the same Interest Period and interest rate (with the
understanding that two Competitive Bid Loans may be made pursuant to a single
Competitive Bid Request).
"Competitive Bid Note" shall mean a promissory note of the Borrower
payable to the order of any Lender, in substantially the form of Exhibit B
hereto, evidencing the indebtedness of the Borrower to such Lender with respect
to outstanding Competitive Bid Rate Advances made by such Lender pursuant to
this Agreement, either as originally executed or as it may be from time to time
supplemented, modified, amended, renewed or extended.
"Competitive Bid Rate Advance" shall mean an Advance made by a Lender
to the Borrower pursuant to the bidding procedure described in Section 2.4.
"Competitive Bid Rate" shall mean, as to any Competitive Bid made by a
Lender pursuant to Section 2.4., the fixed rate of interest per annum offered by
the Lender making the Competitive Bid for the relevant Interest Period.
"Competitive Bid Request" shall mean a request made by the Borrower
pursuant to Section 2.4. substantially in the form of Exhibit D.
"Competitive Bid" shall mean an offer by a Lender to make a Competitive
Bid Loan pursuant to Section 2.4.
"Consolidated Companies" shall mean, collectively, Borrower, its
Subsidiaries, and any Person the financial statements of which are consolidated
with the Borrower or any Subsidiary.
"Consolidated EBITR" shall mean for any fiscal period of the Borrower,
an amount equal to (A) the sum of its Consolidated Net Income (Loss), plus, to
the extent deducted in determining Consolidated Net Income (Loss), (i)
provisions for taxes based on income, (ii) Consolidated Interest Expense, and
(iii) Consolidated Rental Expense.
"Consolidated Funded Debt" shall mean the Funded Debt of the
Consolidated Companies, on a consolidated basis.
"Consolidated Funded Debt to Total Capitalization Ratio" shall mean
that ratio determined in accordance with Section 7.1.(ii) herein.
- 4 -
<PAGE> 7
"Consolidated Interest Expense" shall mean, for any fiscal period of
Borrower, total interest expense (including without limitation, interest expense
attributable to Capital Leases in accordance with GAAP and any program costs
incurred by Borrower in connection with sales of accounts receivable pursuant to
a securitization program) of the Consolidated Companies on a consolidated basis.
"Consolidated Net Income (Loss)" shall mean for any fiscal period of
Borrower, the net income (or loss) of the Consolidated Companies on a
consolidated basis for such period (taken as a single accounting period)
determined in conformity with GAAP; provided that there shall be excluded
therefrom (i) any items of gain or loss which were included in determining such
consolidated net income and were not realized in the ordinary course of
business; and (ii) the income (or loss) of any Person accrued prior to the date
such becomes a Consolidated Company or is merged into or consolidated with a
Consolidated Company, or such Person's assets are acquired by a Consolidated
Company.
"Consolidated Net Worth" shall mean on a consolidated basis the excess
of (A) total assets over (B) total liabilities of the Consolidated Companies, as
determined in accordance with GAAP.
"Consolidated Rental Expense" shall mean for any fiscal period of
Borrower, the total operating lease expense of the Consolidated Companies on a
consolidated basis.
"Contractual Obligation" of any Person shall mean any provision of any
security issued by such Person or of any agreement, instrument or under-taking
under which such Person is obligated or by which it or any of the Property owned
by it is bound.
"Credit Documents" shall mean, collectively, this Agreement, the Notes,
the Fee Letter, the Subsidiary Guaranties, and all other instruments, documents,
certificates, agreements and writings executed in connection herewith.
"Default" shall mean any event or condition the occurrence of which
constitutes or would, with the lapse of time or the giving of notice, or both,
constitute an Event of Default.
"Dollar" and "U.S. Dollar" and the sign "$" shall mean lawful money of
the United States of America.
"Eligible Assignee" shall mean (i) a commercial bank organized under
the laws of the United States, or any state thereof, having total assets in
excess of $1,000,000,000 or any commercial finance or asset based lending
Affiliate of any commercial bank and (ii) any Lender or any Affiliate of any
Lender.
"Environmental Laws" shall mean all federal, state, local and foreign
statutes and codes or regulations, rules or ordinances issued, promulgated, or
approved thereunder, now or hereafter
- 5 -
<PAGE> 8
in effect (including, without limitation, those with respect to asbestos or
asbestos containing material or exposure to asbestos or asbestos containing
material), relating to pollution or protection of the environment and relating
to public health and safety, relating to (i) emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals or industrial toxic
or hazardous constituents, substances or wastes, including without limitation,
any Hazardous Substance, petroleum including crude oil or any fraction thereof,
any petroleum product or other waste, chemicals or substances regulated by any
Environmental Law into the environment (including, without limitation, ambient
surface water, ground water, land surface or subsurface strata), or (ii) the
manufacture, processing, distribution, use, generation, treatment, storage,
disposal, transport or handling of any Hazardous Substance, petroleum including
crude oil or any fraction thereof, any petroleum product or other waste,
chemicals or substances regulated by any Environmental Law, and (iii)
underground storage tanks and related piping, and emissions, discharges and
releases or threatened releases therefrom. Such Environmental Laws to include,
without limitation (i) the Clean Air Act (42 U.S.C. ss. 7401 et seq.), (ii) the
Clean Water Act (33 U.S.C. ss. 1251 et seq.), (iii) the Resource Conservation
and Recovery Act (42 U.S.C. ss. 6901 et seq.), (iv) the Toxic Substances Control
Act (15 U.S.C. ss. 2601 et seq.), (v) the Comprehensive Environmental Response
Compensation and Liability Act, as amended by the Superfund Amendments and
Reauthorization Act (42 U.S.C. ss. 9601 et seq.), and (vi) all applicable
national and local laws or regulations with respect to environmental control.
"ERISA Affiliate" shall mean, with respect to any Person, each trade or
business (whether or not incorporated) which is a member of a group of which
that Person is a member and which is under common control within the meaning of
the regulations promulgated under Section 414 of the Tax Code.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended and in effect from time to time.
"Eurodollar Advance" shall mean an Advance made or outstanding as a
Revolving Loan, bearing interest based on the Adjusted LIBO Rate.
"Event of Default" shall have the meaning provided in Article 8.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, any successor statute thereto.
"Executive Officer" shall mean with respect to any Person, the Chief
Executive Officer, President, Vice Presidents (if elected by the Board of
Directors of such Person), Chief Financial Officer, Treasurer, Secretary and any
Person holding comparable offices or duties (if elected by the Board of
Directors of such Person).
"Facility Fee" shall have the meaning ascribed to it in Section
3.5.(a).
"Facility" or "Facilities" shall mean the Revolving Credit Commitments
or the Competitive Bid Facility, as the context may indicate.
- 6 -
<PAGE> 9
"Facility Fee Percentage" shall mean the number of basis points per
annum determined in accordance with the table set forth below based on the
fiscal quarter-end ratios for Borrower's Fixed Charge Coverage Ratio:
<TABLE>
<CAPTION>
=====================================================================================================================
FIXED CHARGE COVERAGE RATIO
=====================================================================================================================
TIER ONE TIER TWO TIER THREE TIER FOUR
=====================================================================================================================
<S> <C> <C> <C>
> or = 4.50 to 1.0 > or = 3.25 to 1.0 > or = 2.50 to 1.0 < 2.50 to 1.0
and < 4.50 to 1.0 and < 3.25 to 1.0
- ---------------------------------------------------------------------------------------------------------------------
6 basis point per 7 basis points per 10 basis points per 12.50 basis points
annum annum annum per annum
=====================================================================================================================
</TABLE>
provided, however, that:
(a) The Facility Fee Percentage in effect as of the date of
execution and delivery of this Agreement shall be the number of basis
points under the heading "Tier Two" as described in the table above and
shall remain in effect until such time as the Facility Fee Percentage
may be adjusted as hereinafter provided; and
(b) So long as no Default or Event of Default has occurred and
is continuing under this Agreement, adjustments, if any, to the
Facility Fee Percentage based on changes in the ratio set forth above
shall be made and become effective on the Calculation Date set forth in
Section 3.6. herein.
"Federal Funds Rate" shall mean with respect to any Base Rate Advance,
a fluctuating interest rate per annum equal for each day during which such
Advance is outstanding to the weighted average of the rates on overnight Federal
funds transactions with member banks of the Federal Reserve System arranged by
Federal funds brokers, as set forth for each day on Page 4833 of the Telerate at
8:00 a.m. (Nashville, Tennessee time) or if such reporting service is
unavailable, 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 Atlanta, or,
if such rate is not so published for any day which 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.
"Fee Letter" means that certain letter agreement dated June 26, 1997
between the Borrower and the Agent relating to certain fees from time to time
payable by the Borrower to the Agent, together with all amendments and
supplements thereto.
"Financial Officer" means with respect to the Borrower, any of the
Chief Financial Officer, Vice President of Finance, and Treasurer.
"Financial Report" means at a specified date, the most recent financial
statements of the Consolidated Companies delivered pursuant to Section 6.7. of
this Agreement.
- 7 -
<PAGE> 10
"Fiscal Year" means the twelve (12) month accounting period ending on
January 31st of each year and presently used by Borrower as its fiscal year for
accounting purposes.
"Fixed Charge Coverage Ratio" shall mean, as at the end of any fiscal
quarter of Borrower, the ratio of (A) Consolidated EBITR, to (B) the sum of (i)
Consolidated Interest Expense plus (ii) Consolidated Rental Expense.
"Funded Debt" shall mean, with respect to the Consolidated Companies
without duplication on a consolidated basis, (i) Indebtedness for Borrowed
Money, (ii) Capital Lease Obligations, (iii) the present value of all minimum
lease commitments to make payments with respect to operating leases (excluding
Synthetic Leases) (for the purpose of this calculation, the present value of
such lease commitments shall be determined based upon a discount rate of ten
percent (10%) in accordance with the discounted present value analytical
technology), and (iv) any recourse deficiency amount or guaranteed residual
portion under any Synthetic Lease, and (v) all obligations under any direct or
indirect Guaranty of any Consolidated Company. Additionally, the calculation of
Funded Debt shall include the redemption amount with respect to any redeemable
preferred stock of any Consolidated Company required to be redeemed within the
next twelve (12) months.
"GAAP" shall mean generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of the
date of determination.
"Guaranty" shall mean any contractual obligation, contingent or
otherwise, of a Person with respect to any Indebtedness or other obligation or
liability of another Person, including without limitation, any such
Indebtedness, obligation or liability directly or indirectly guaranteed,
endorsed, co-made or discounted or sold with recourse by that Person, or in
respect of which that Person is otherwise directly or indirectly liable,
including contractual obligations (contingent or otherwise) arising through any
agreement to purchase, repurchase, or otherwise acquire such Indebtedness,
obligation or liability or any security therefor, or any agreement to provide
funds for the payment or discharge thereof (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), or to maintain
solvency, assets, level of income, or other financial condition, or to make any
payment other than for value received. The definition of Guaranty shall at all
times include any Synthetic Lease Guaranty. The amount of any Guaranty shall be
deemed to be an amount equal to the stated or determinable amount of the primary
obligation in respect of which guaranty is made or, if not so stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as determined by such
Person in good faith.
"Hazardous Substances" shall have the meaning assigned to that term in
the Comprehensive Environmental Response Compensation and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Acts of 1986.
- 8 -
<PAGE> 11
"Income Taxes" shall have the meaning given such term by GAAP.
"Indebtedness" of any Person shall mean, without duplication, (i) all
obligations of such Person which in accordance with GAAP would be shown on the
balance sheet of such Person as a liability (including, without limitation,
obligations for borrowed money and for the deferred purchase price of Property
or services, and obligations evidenced by bonds, debentures, notes or other
similar instruments, (ii) all Capital Lease Obligations; (iii) all Guaranties of
such Person (including the stated amount of undrawn letters of credit); (iv)
Indebtedness of others secured by any Lien upon Property owned by such Person,
whether or not assumed; and (v) obligations or other liabilities under currency
contracts, Interest Rate Contracts or similar agreements or combinations
thereof. Notwithstanding the foregoing, in determining the Indebtedness of any
Person, (x) there shall be included all obligations of such Person of the
character referred to in clauses (i) through (v) above deemed to be extinguished
under GAAP but for which such Person remains legally liable and (y) any deferred
obligations of such Person to make payments on any agreement not to compete
which was entered into by such Person in connection with the acquisition of any
business shall be reduced by the effective federal and state corporate tax rate
applicable to such Person in order to recognize the deductibility of such
payments and the resulting reduction of the cash actually expended by the Person
to satisfy such obligation.
"Indebtedness for Borrowed Money" shall mean, with respect to any
Person and without duplication:
(a) Indebtedness for money borrowed, including all revolving
and term Indebtedness and all other lines of credit; and
(b) Indebtedness which:
(i) is represented by a note payable or drafts
accepted, that represent extensions of credit;
(ii) constitutes obligations evidenced by bonds,
debentures, notes or similar instruments; or
(iii) constitutes Purchase Money Indebtedness,
conditional sales contracts, asset securitization vehicles,
title retention debt instruments or other similar instruments
upon which interest charges are customarily paid or that are
issued or assumed as full or partial payment for property;
(c) Indebtedness that constitutes a Capital Lease Obligation;
(d) all indemnity agreements and reimbursement obligations
under any acceptances or any letters of credit (other than commercial
letters of credit) issued in support of Indebtedness of the character
described in clauses (a) through (c) above; and
(e) all Indebtedness of others of the character described in
clauses (a) through (d) above, but only to the extent that such
Indebtedness is subject to a Guaranty of such Person.
- 9 -
<PAGE> 12
"Interest Period" shall mean (i) as to any Eurodollar Advances, the
interest period selected by the Borrower pursuant to Section 3.4.(a) hereof, and
(ii) as to any Competitive Bid Rate Advances, the interest period requested by
the Borrower and agreed to by the participating Lenders pursuant to Section 2.4.
hereof in conformity with Section 3.4.(b) hereof.
"Interest Rate Contract" shall mean all interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements, interest rate
insurance and other agreements and arrangements designed to provide protection
against fluctuations in interest rates, in each case as the same may be from
time to time amended, restated, renewed, supplemented or otherwise modified.
"Lender" or "Lenders" shall mean SunTrust, the other banks and lending
institutions listed on the signature pages hereof, including, without
limitation, each assignee thereof, if any, pursuant to Section 10.6.(c),
together with their corporate successors.
"Lending Office" shall mean for each Lender, the office such Lender may
designate in writing from time to time to Borrower and the Agent with respect to
each Type of Loan.
"LIBO" shall mean, for any Interest Period, with respect to Eurodollar
Advances, the offered rate for deposits in U.S. Dollars, for a period comparable
to the Interest Period appearing on the Telerate Screen Page 3750 as of 11:00
a.m. (London, England time) on the day that is two (2) Business Days prior to
the first day of the Interest Period. If the foregoing is unavailable for any
reason, then such rate shall be determined by and based on any other interest
rate reporting service of recognized standing designated in writing by the Agent
to Borrower and the other Lenders in any such case rounded, if necessary, to the
next higher 1/100 of 1.0%, if the rate is not such a multiple.
"Lien" means any security interest, mortgage, pledge, lien, claim,
charge, encumbrance, title retention agreement, lessor's interest under a
Capital Lease or analogous instrument, in, of or on any Property.
"Loans" shall mean, collectively, the Revolving Loans and the
Competitive Bid Loans.
"Margin Regulations" shall mean Regulation G, Regulation T, Regulation
U and Regulation X of the Board of Governors of the Federal Reserve System, as
the same may be in effect from time to time.
"Master Agreement" shall mean that certain Master Agreement dated as of
September 2, 1997 executed by the Borrower (as lessee and guarantor), certain
subsidiaries of the Borrower (as lessees), Atlantic Financial Group, Ltd. (as
lessor), and Agent (as agent), as such may be amended.
"Material" (or words derived therefrom) as used in this Agreement,
means an amount equal to five percent (5%) of the annual net income of the
Borrower reported by the Borrower on its most recent Form 10-K (filed with the
Securities and Exchange Commission pursuant to ss.13 of the Exchange Act) for
each Fiscal Year. The calculation of net income initially shall be determined
- 10 -
<PAGE> 13
by reference to the "net income" amount shown on its "Consolidated Statements of
Income" report for the 1997 Fiscal Year attached to its Form 10-K delivered by
Borrower to Agent for fiscal year ended January 31, 1997 and shall be
re-calculated on each occasion that Borrower delivers to Agent its most recently
filed Form 10-K.
"Materially Adverse Effect" shall mean any Material adverse change in
(i) the business, operations, financial condition or assets of the Consolidated
Companies, taken as a whole, (ii) the ability of Borrower to perform its
obligations under this Agreement, or (iii) the ability of the Consolidated
Companies (taken as a whole) to perform their respective obligations, if any,
under the Credit Documents.
"Maturity Date" shall mean the earlier of (i) September 2, 2002, and
(ii) the date on which all amounts outstanding under this Agreement have been
declared or have automatically become due and payable pursuant to the provisions
of Article 8.; provided, however, that the date listed in subsection (i) above
may be extended as provided in Section 2.13.
"Moody's" shall mean Moody's Investors Services, Inc. and each of its
successors.
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"Notes" shall mean, collectively, the Revolving Credit Notes, and the
Competitive Bid Notes.
"Notice of Borrowing" shall have the meaning provided in Section
3.1.(a)(i).
"Notice of Conversion/Continuation" shall have the meaning provided in
Section 3.1.(b).
"Obligations" shall mean all amounts owing to the Agent or any Lender
pursuant to the terms of this Agreement or any other Credit Document, including,
without limitation, all Loans (including all principal and interest payments due
thereunder), fees, expenses, indemnification and reimbursement payments,
indebtedness, liabilities, and obligations of the Consolidated Companies, direct
or indirect, absolute or contingent, liquidated or unliquidated, now existing or
hereafter arising, together with all renewals, extensions, modifications or
refinancings thereof
"Payment Office" shall mean with respect to payments of principal,
interest, fees or other amounts relating to the Loans and all other Obligations,
the office specified as the "Payment Office" for the Agent, on the signature
page of the Agent, or to such other place as the Agent directs by written notice
delivered to Borrower.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Person" shall mean any individual, partnership, firm, corporation,
association, joint venture, trust, limited liability company, limited liability
partnership, or other entity, or any government or political subdivision or
agency, department or instrumentality thereof
- 11 -
<PAGE> 14
"Plan" shall mean any "employee benefit plan" (as defined in Section
3(3) of ERISA), including, but not limited to, any defined benefit pension plan,
profit sharing plan, money purchase pension plan, savings or thrift plan, stock
bonus plan, employee stock ownership plan, Multiemployer Plan, or any plan,
fund, program, arrangement or practice providing for medical (including
post-retirement medical), hospitalization, accident, sickness, disability, or
life insurance benefits.
"Prior Revolving Credit Debt" means a revolving credit facility
provided to Borrower by NationsBank, N.A. (Carolinas), or its
successors-in-interest in the principal amount of $170,000,000.
"Property" or "Properties" means any interest in any kind of property
or asset, whether real or personal, or mixed, or tangible or intangible.
"Purchase Money Indebtedness" shall mean Indebtedness incurred or
assumed for the purpose of financing all or any part of the acquisition cost of
any Property (excluding trade payables incurred in the ordinary course of
business) and any refinancing thereof, in each case entered into in compliance
with this Agreement.
"Rating Agency" shall mean either Moody's or Standard & Poor's.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System, as the same may be in effect from time to time.
"Required Lenders" shall mean at any time, the Lenders holding at least
66 2/3% of the amount of the Total Commitments, whether or not advanced or,
following the termination of all of the Commitments, the Lenders holding at
least 66 2/3% of the aggregate outstanding Advances at such time.
"Requirement of Law" for any Person shall mean any law, treaty, rule or
regulation, or determination of an arbitrator or a court or other governmental
authority, in each case applicable to or binding upon such Person or any of its
Property or to which such Person or any of its Property is subject.
"Revolving Credit Commitment" shall mean, at any time for any Lender,
the amount of such commitment set forth opposite such Lender's name on the
signature pages hereof, as the same may be increased or decreased from time to
time as a result of any reduction thereof pursuant to Section 2.3., any
assignment thereof pursuant to Section 10.6., or any amendment thereof pursuant
to Section 10.2.
"Revolving Credit Notes" shall mean, collectively, the promissory notes
evidencing the Revolving Loans in the form attached hereto as Exhibit A, either
as originally executed or as hereafter amended, modified or supplemented.
"Revolving Loans" shall mean, collectively, the revolving loans made to
the Borrower by the Lenders pursuant to Section 2.1.
- 12 -
<PAGE> 15
"Shareholder's Equity" shall mean, with respect to any Person as at any
date of determination, shareholder's equity determined on a consolidated basis
in conformity with GAAP.
"Standard & Poor's" shall mean Standard & Poor's Ratings Group, a
division of McGraw-Hill, Inc. and its successors.
"Subsidiary" shall mean, with respect to any Person, any corporation or
other entity (including, without limitation, limited liability companies,
partnerships, joint ventures, limited liability companies, and associations)
regardless of its jurisdiction of organization or formation, at least a majority
of the total combined voting power of all classes of Voting Stock or other
ownership interests of which shall, at the time as of which any determination is
being made, be owned by such Person, either directly or indirectly through one
or more other Subsidiaries.
"Subsidiary Guaranty" shall mean a Subsidiary Guaranty substantially in
the form of Exhibit K executed and delivered by each of the Consolidated
Companies in favor of the Agent, for the ratable benefit of the Lenders,
together with all amendments and supplements thereto.
"Subsidiary Guaranties" shall mean more than one Subsidiary Guaranty.
"Subsidiary Guarantor" shall mean a Consolidated Company which will
execute a Subsidiary Guaranty pursuant to Section 6.10.
"SunTrust" means SunTrust Bank, Nashville, N.A., its successors and
assigns.
"Synthetic Lease" shall mean the Master Agreement and any future
synthetic lease that evidences a transaction that satisfies the requirements of
the Statement of Financial Accounting Standards No. 13 (SFAS 13) promulgated by
the Financial Accounting Standards Board (FASB) and the Emerging Issues Task
Force of the Financial Accounting Standards Board (1990) (EITF 90-15) that is
classified as a lease for financial accounting purposes and as a loan for tax
purposes.
"Synthetic Lease Guaranty" means that certain Guaranty Agreement
executed by Borrower (as guarantor) dated September 2, 1997 executed in
connection with the Master Agreement (guarantying among other things all
liabilities thereunder) and any guaranty agreement executed by Borrower with
regard to any other Synthetic Lease transaction.
"Tax Code" shall mean the Internal Revenue Code of 1986, as amended and
in effect from time to time.
"Taxes" shall mean any present or future taxes, levies, imposts,
duties, fees, assessments, deductions, withholdings or other charges of whatever
nature, including without limitation, income, receipts, excise, property, sales,
transfer, license, payroll, withholding, social security and franchise taxes now
or hereafter imposed or levied by the United States, or any state, local or
foreign government or by any department, agency or other political subdivision
or taxing authority thereof or therein and all interest, penalties, additions to
tax and similar liabilities with respect thereto.
- 13 -
<PAGE> 16
"Telerate Screen Page 3750" means the "British Bankers Association
LIBOR Rates" shown on page 3750 of the Telerate System Incorporated Service.
"Total Capitalization" shall mean for the Consolidated Companies on a
consolidated basis, the sum of their: (i) Shareholder's Equity, plus (ii) Funded
Debt.
"Total Commitments" shall mean the sum of the Revolving Credit
Commitments of all Lenders.
"Type" of Borrowing shall mean a Borrowing consisting of Base Rate
Advances, Eurodollar Advances, or Competitive Bid Rate Advances.
"Voting Stock" shall mean stock of a corporation of a class or classes
having general voting power under ordinary circumstances to elect a majority of
the board of directors, managers or trustees of such corporation (irrespective
of whether or not at the time stock of any other class or classes shall have or
might have voting power by the reason of the happening of any contingency).
SECTION 1.2. ACCOUNTING TERMS AND DETERMINATION.
Unless otherwise defined or specified herein, all accounting terms
shall be construed herein, all accounting determinations hereunder shall be
made, all financial statements required to be delivered hereunder shall be
prepared, and all financial records shall be maintained, in accordance with
GAAP. In the event of a change in GAAP that is applicable to the Consolidated
Companies, compliance with the financial covenants contained herein shall
continue to be determined in accordance with GAAP as in effect prior to such
change; provided, however, that the Borrower and the Required Lenders will
thereafter negotiate in good faith to revise such covenants to the extent
necessary to conform such covenants to GAAP as then in effect.
SECTION 1.3. OTHER DEFINITIONAL TERMS.
The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Article, Section,
Schedule, Exhibit and like references are to this Agreement unless otherwise
specified.
SECTION 1.4. EXHIBITS AND SCHEDULES.
Exhibits and Schedules attached hereto are by reference made a part
hereof.
ARTICLE 2. REVOLVING LOANS; COMPETITIVE BID LOANS
SECTION 2.1. COMMITMENT; USE OF PROCEEDS.
(a) Subject to and upon the terms and conditions herein set
forth, each Lender severally agrees to make to Borrower from time to
time on and after the Closing Date, but
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prior to the Maturity Date, Revolving Loans; provided that, immediately
after each such Revolving Loan is made, (i) the aggregate principal
amount of all Advances comprising Revolving Loans made by such Lender
shall not exceed such Lender's Revolving Credit Commitment, and (ii)
the aggregate principal amount of all outstanding Revolving Loans, plus
the aggregate principal amount of all Competitive Bid Rate Advances,
shall not exceed the Total Commitments. Absent a Default or Event of
Default, Borrower shall be entitled to reborrow Revolving Loans in
accordance with the provisions hereof.
(b) Each Revolving Loan shall, at the option of Borrower, be
made or continued as, or converted into, part of one or more Borrowings
that shall consist entirely of Base Rate Advances or Eurodollar
Advances. The aggregate principal amount of each Borrowing of Revolving
Loans comprised of Eurodollar Advances shall be not less than
$10,000,000 or a greater integral multiple of $500,000, and the
aggregate principal amount of each Borrowing of Revolving Loans
comprised of Base Rate Advances shall be not less than $1,000,000 or a
greater integral multiple of $100,000.
(c) The proceeds of Revolving Loans shall be used solely for
Acquisitions, capital expenditures, working capital, stock redemptions,
and for other general corporate purposes of the Borrower and the
Consolidated Companies.
SECTION 2.2. REVOLVING CREDIT NOTES; REPAYMENT OF PRINCIPAL.
(a) The Borrower's obligations to pay the principal of, and
interest on, the Revolving Loans to each Lender shall be evidenced by
the records of the Agent and such Lender and by the Revolving Credit
Note payable to such Lender (or the assignor of such Lender) completed
in conformity with this Agreement.
(b) All Borrowings outstanding under the Revolving Credit
Commitments shall be due and payable in full on the Maturity Date.
SECTION 2.3. VOLUNTARY REDUCTION OF REVOLVING CREDIT COMMITMENTS;
MANDATORY PREPAYMENT.
(a) Upon at least three (3) Business Days prior telephonic
notice (promptly confirmed in writing) to the Agent, Borrower shall
have the right, without premium or penalty, to terminate the Revolving
Credit Commitments, in part or in whole, provided that any partial
termination of the Revolving Credit Commitments pursuant to this
Section 2.3. shall be in an amount of at least $10,000,000 and in
integral multiples of $1,000,000.
(b) Any reduction of Revolving Credit Commitments pursuant to
subsection (a) of this Section 2.3. shall apply to proportionately, and
shall automatically and permanently reduce the Revolving Credit
Commitments of each of the Lenders based upon each Lender's Applicable
Commitment Percentage. Any amounts so reduced may not be reinstated.
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(c) If at any time the aggregate outstanding Competitive Bid
Loans and Revolving Loans exceed the Total Commitments, the Borrower
shall immediately cause an amount equal to such excess to be applied as
follows in the order of priority indicated:
First, to the prepayment of outstanding Revolving Loans; and
Second, to the prepayment of outstanding Competitive Bid
Loans,
with such prepayment to be applied to such Loans as designated by the
Borrower and, in the event the Borrower fails to designate a Loan, to such Loans
with the earliest maturity dates, based upon the remaining terms of their
respective Interest Periods, and with respect to Loans with the same Interest
Period, pro rata to the Lenders extending such Loans.
Any prepayment of Revolving Loans and Competitive Bid Loans pursuant to this
Section 2.3., shall be made, insofar as is possible, in such a way as to avoid
any funding losses pursuant to Section 3.13.
SECTION 2.4. COMPETITIVE BID LOANS.
(a) In addition to making Revolving Loans pursuant to the
Revolving Credit Commitments pursuant to Section 2.1. above, the
Lenders may, in their sole discretion and at the request of the
Borrower, make Competitive Bid Rate Advances to the Borrower in an
amount not to exceed the Available Revolving Credit Commitment.
(b) In order to request Competitive Bids, the Borrower shall
telecopy to the Agent a duly completed Competitive Bid Request in the
form of Exhibit D attached hereto to be received by Agent no later than
11:00 a.m. (Nashville, Tennessee time), three (3) Business Days prior
to the proposed Competitive Bid Loan or Loans. A Competitive Bid
Request that does not conform substantially to the format of Exhibit D
may be rejected in the Agent's sole discretion, and the Agent shall
notify the Borrower of such rejection by telecopy not later than 1:00
p.m. (Nashville, Tennessee time) on the date of receipt. The
Competitive Bid Request shall in each case refer to this Agreement and
specify (i) the date of such Borrowing or Borrowings (which shall be a
Business Day) and (ii) the aggregate principal amount thereof which
shall be in a minimum principal amount of $5,000,000 and in an integral
multiple of $1,000,000, and (iii) subject to Section 3.4. herein, the
Interest Period requested with respect thereto. Promptly after its
receipt of a Competitive Bid Request that is not rejected as aforesaid,
the Agent shall invite by telecopy (substantially in the form set forth
in Exhibit E attached hereto) the Lenders to bid, subject to the terms
and conditions of this Agreement, to make Competitive Bid Rate Advances
pursuant to the Competitive Bid Request. The Borrower may not make more
than two (2) Competitive Bid Requests in any seven (7) consecutive
Business Days.
(c) Each Lender may, in its sole discretion, make one or more
Competitive Bids (but not more than two) to the Borrower responsive to
a Competitive Bid Request. Each Competitive Bid by a Lender must be
received by the Agent via telecopy, substantially in the form of
Exhibit F attached hereto, not later than 9:30 a.m. (Nashville,
Tennessee time)
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on the Business Day of the proposed Competitive Bid Loan. Multiple bids
(not to exceed two per Lender) will be accepted by the Agent.
Competitive Bids that do not conform substantially to the format of
Exhibit F may be rejected by the Agent acting in consultation with the
Borrower, and the Agent shall notify the Lender making such
nonconforming bid of such rejection as soon as practicable. Each
Competitive Bid shall refer to this Agreement and specify (i) the
principal amount (which shall be in a minimum principal amount of
$5,000,000 and in an integral multiple of $1,000,000) of the
Competitive Bid Rate Advance or Advances that the Lender is willing to
make to the Borrower, (ii) the Competitive Bid Rate or Rates at which
the Lender is prepared to make the Competitive Bid Rate Advance or
Advances, and (iii) the Interest Period and the last day thereof. If
any Lender shall elect not to make a Competitive Bid, such Lender shall
so notify the Agent via telecopy by the time specified above for
submitting a Competitive Bid; provided, however, that failure by any
Lender to give such notice shall not cause such Lender to be obligated
to make any Competitive Bid Rate Advance as part of such Competitive
Bid Loan. A Competitive Bid submitted by a Lender pursuant to this
paragraph (c) shall be irrevocable (absent manifest error).
(d) The Agent shall promptly notify the Borrower by telecopy
of all the Competitive Bids made, the Competitive Bid Rate and the
principal amount of each Competitive Bid Rate Advance in respect of
which a Competitive Bid was made and the identity of the Lender that
made each bid. The Agent shall send a copy of all Competitive Bids to
the Borrower for its records as soon as practicable after completion of
the bidding process set forth in this Section 2.4.
(e) The Borrower may, in its sole and absolute discretion,
subject only to the provisions of this paragraph (e), accept or reject
any Competitive Bid referred to in paragraph (d) above. The Borrower
shall notify the Agent by telephone, confirmed by tele-copy in the form
of a Competitive Bid Accept/Reject Letter, whether and to what extent
it has decided to accept or reject any of or all the bids referred to
in paragraph (d) above not later than 11:30 a.m. (Nashville, Tennessee
time) on the Business Day of the proposed Competitive Bid Loan;
provided, however, that (i) the failure by the Borrower to give such
notice shall be deemed to be a rejection of all the bids referred to in
paragraph (d) above, (ii) the Borrower shall not accept a bid made at a
particular Competitive Bid Rate if the Borrower has decided to reject a
bid made at a lower Competitive Bid Rate with respect to the same
requested Advance, (iii) the aggregate amount of the Competitive Bids
accepted by the Borrower shall not exceed the principal amount
specified in the Competitive Bid Request, (iv) if the Borrower shall
accept a bid or bids made at a particular Competitive Bid Rate but the
amount of such bid or bids shall cause the total amount of bids to be
accepted by the Borrower to exceed the amount specified in the
Competitive Bid Request, then the Borrower shall accept a portion of
such bid or bids in an amount equal to the amount specified in the
Competitive Bid Request less the amount of all other Competitive Bids
accepted with respect to such Competitive Bid Request, which
acceptance, in the case of multiple bids at the same Competitive Bid
Rate, shall be made pro rata in accordance with the amount of each such
bid at such Competitive Bid Rate, and (v) except pursuant to clause
(iv) above, no bid shall be accepted for a Competitive Bid Loan unless
such Competitive Bid Loan is in a minimum principal amount of
$5,000,000 and
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<PAGE> 20
an integral multiple of $1,000,000; provided further, however, that if
a Competitive Bid Loan must be in an amount less than $5,000,000
because of the provisions of clause (iv) above, such Competitive Bid
Loan may be for a minimum of $1,000,000 or any integral multiple
thereof, and in calculating the pro rata allocation of acceptances of
portions of multiple bids at a particular Competitive Bid Rate pursuant
to clause (iv) above, the amounts shall be rounded to integral
multiples of $1,000,000 in a manner which shall be in the discretion of
the Borrower. A notice given by the Borrower pursuant to this paragraph
(e) shall be irrevocable.
(f) The Agent shall promptly notify each bidding Lender
whether or not its Competitive Bid has been accepted (and if so, in
what amount and at what Competitive Bid Rate) by telecopy sent by the
Agent, and each successful bidder will thereupon become bound, subject
to the other applicable conditions hereof, to make the Competitive Bid
Loan in respect of which its bid has been accepted.
(g) No more than two (2) Competitive Bid Requests shall be
made by the Borrower within any seven (7) consecutive Business Days.
(h) If the Agent shall elect to submit a Competitive Bid in
its capacity as a Lender, it shall submit such bid directly to the
Borrower one half of an hour earlier than the time at which the other
Lenders are required to submit their bids to the Agent pursuant to
paragraph (c) above.
(i) Each Lender participating in any Competitive Bid Loan
shall make its Competitive Bid Rate Advance available to the Agent on
the date specified in the Bid Request at the time and in the manner and
subject to the provisions specified in Section 3.2.
(j) The proceeds of each of the Competitive Bid Loans shall be
used by the Borrower for acquisitions, capital expenditures and as
working capital, stock redemption, and for other general corporate
purposes of the Borrower and other Consolidated Companies.
(k) Any Lender's Competitive Bid Rate Advance shall not reduce
such Lender's obligation to lend its share of the remaining unused
Commitments.
SECTION 2.5. COMPETITIVE BID NOTES; REPAYMENT OF PRINCIPAL.
(a) The Borrower's obligations to pay the principal of, and
interest on, the Competitive Bid Loans to each Lender shall be
evidenced by the records of the Agent and such Lender and by the
Competitive Bid Note payable to such Lender (or the assignor of such
Lender) completed in conformity with this Agreement.
(b) A Competitive Bid Loan shall be due and payable in full on
the earlier of (i) the expiration of the applicable Interest Period or
(ii) the Maturity Date.
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<PAGE> 21
SECTION 2.6. LIMITATION ON THE AMOUNT OF BID LOANS.
The aggregate outstanding principal amount of all Revolving Loans and
all Competitive Bid Loans at any time shall not exceed the Total Commitments at
such time.
SECTION 2.7. PRO RATA PAYMENTS.
Except as otherwise provided herein, (a) each payment on account of the
principal of and interest on the Revolving Loans and fees (other than the fees
payable under the Fee Letter, which shall be retained by the Agent) described in
this Agreement shall be made to the Agent for the account of the Lenders pro
rata based on their Applicable Commitment Percentages, (b) each payment on
account of principal of and interest on a Competitive Bid Loan shall be made to
the Agent for the account of the Lender making such Competitive Bid Loan, (c)
all payments to be made by the Borrower for the account each of the Lenders on
account of principal, interest and fees, shall be made in immediately available
funds, free and clear of any defenses, setoffs, counter-claims, or withholdings
or deductions for taxes, and (d) the Agent will promptly distribute payments
received by it to the Lenders. If, for any reason, the Agent makes any
distribution to any Lender prior to receiving the corresponding payment from the
Borrower, and the Borrower's payment is not received by the Agent within three
(3) Business Days after payment by the Agent to the Lender, the Lender shall,
upon written request from the Agent, return the payment to the Agent with
interest at the interest rate per annum for overnight borrowing by the Agent
from the Federal Reserve Bank for the period commencing on the date the Lender
received such payment and ending on, but excluding, the date of its repayment to
the Agent. If the Agent advises any Lender of any miscalculation of the amount
of such Lender's share that has resulted in an excess payment to such Lender,
promptly upon request by the Agent such Lender shall return the excess amount to
the Agent with interest calculated as set forth above. Similarly, if a Lender
advises the Agent of any miscalculation that has resulted in an insufficient
payment to such Lender, promptly upon written request by such Lender the Agent
shall pay the additional amount to such Lender with interest calculated as set
forth above. In the event the Agent is required to return any amount of
principal, interest or fees or other sums received by the Agent after the Agent
has paid over to any Lender its share of such amount, such Lender shall,
promptly upon demand by the Agent, return to the Agent such share, together with
applicable interest on such share.
SECTION 2.8. EXTENSION OF COMMITMENTS.
(a) The Borrower may, by written notice to the Agent (which shall
promptly deliver a copy to each of the Lenders), given not more than ninety (90)
days nor less than sixty (60) days prior to the annual anniversary of the
Closing Date while the Revolving Credit Commitments are in effect, request that
the Lenders extend the then scheduled Maturity Date (the "Existing Date") for an
additional one-year period, provided, however, that the Borrower is not entitled
to more than three renewals. Each Lender shall, by notice to the Borrower and
the Agent within thirty (30) days after the Borrower gives such notice, advise
the Borrower and the Agent whether or not such Lender consents to the extension
request (and any Lender that fails to respond during such thirty (30) day period
shall be deemed to have advised the Borrower and the Agent that it will not
agree to such extension).
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<PAGE> 22
(b) In the event that, on the 30th day after Borrower gives the notice
described in subsection (a) above, not all of the Lenders have agreed to extend
the Revolving Credit Commitments, the Borrower shall notify each of the
consenting Lenders ("Consenting Lenders") of the amount of the Revolving Credit
Commitments of the non-consenting Lenders ("NonConsenting Lender") and each of
such Consenting Lenders shall, by notice to the Borrower and the Agent given
within ten (10) Business Days after receipt of such notice, advise the Agent and
the Borrower whether or not such Lender wishes to purchase all or a portion of
the Revolving Credit Commitments of the Non-Consenting Lenders (and any Lender
which does not respond during such 10-Business Day period shall be deemed to
have rejected such offer). In the event that more than one Consenting Lender
agrees to purchase all or a portion of such Revolving Credit Commitments, the
Borrower and the Agent shall allocate such Revolving Credit Commitments among
such Consenting Lenders so as to preserve, to the extent possible, the relative
pro-rata shares of the Consenting Lenders of the Revolving Credit Commitments
prior to such extension request. If the Consenting Lenders do not elect to
assume all of the Revolving Credit Commitments of the Non-Consenting Lenders,
the Borrower shall have the right to arrange for one or more banks or other
lending institutions (any such bank or lending institution being called a "New
Lender"), to purchase the Revolving Credit Commitment of any NonConsenting
Lender. Such New Lender must meet the requirements of an Eligible Assignee. Each
Non-Consenting Lender shall assign its Revolving Credit Commitment and the Loans
outstanding hereunder to the Consenting Lender or New Lender purchasing such
Revolving Credit Commitment in accordance with Section 10.6., in return for
payment in full of all principal, interest, and other amounts owed to such
Non-Consenting Lender hereunder on or before the Existing Date and, as of the
effective date of such assignment, shall no longer be a party hereto, provided
that each New Lender shall be subject to the approval of the Agent (which
approval shall not be unreasonably withheld). If (and only if) Lenders
(including New Lenders) holding Revolving Credit Commitments representing at
least 100% of the aggregate Revolving Credit Commitments on the date of such
extension request shall have agreed in accordance with the terms hereof to such
extension (the "Continuing Lenders"), then (i) the Maturity Date shall be
extended for one additional year from the Existing Date and (ii) the Commitment
of any NonConsenting Lender which has not been assigned to a Consenting Lender
or to a New Lender shall terminate (with the result that the amount of the Total
Commitments shall be decreased by the amount of such Revolving Credit
Commitment), and all Loans of such Non-Consenting Lenders shall become due and
payable, together with all accrued interest thereon and all other amounts owed
to such Non-Consenting Lender hereunder, on the Existing Date applicable to such
Lender without giving effect to the extension of the Maturity Date.
(c) The effective date of any extension of the Maturity Date shall be
the date on which 100% of the Continuing Lenders have agreed to such extension
in accordance with the terms hereof.
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ARTICLE 3. GENERAL LOAN TERMS
SECTION 3.1. FUNDING NOTICES.
(a)(i) Whenever the Borrower desires to make a Borrowing of
Revolving Loans with respect to the Revolving Credit Commitments (other
than one resulting from a conversion or continuation pursuant to
Section 3.1.(b)), it shall give the Agent prior written notice in
substantially the same form as set forth in Exhibit L (or telephonic
notice promptly confirmed in writing) of such Borrowing (a "Notice of
Borrowing"), such Notice of Borrowing to be given at Agent's Payment
Office (x) prior to 11:00 a.m. (Nashville, Tennessee time) on the
Business Day which is the requested date of such Borrowing in the case
of Base Rate Advances, and (y) prior to 11:00 a.m. (Nashville,
Tennessee time) three (3) Business Days prior to the requested date of
such Borrowing in the case of Eurodollar Advances. Notices received
after 11:00 a.m. (Nashville, Tennessee time) shall be deemed received
on the next Business Day. Each Notice of Borrowing shall be irrevocable
and shall specify the aggregate principal amount of the Borrowing, the
date of Borrowing (which shall be a Business Day), and whether the
Borrowing is to consist of Base Rate Advances or Eurodollar Advances
and (in the case of Eurodollar Advances) the Interest Period to be
applicable thereto.
(ii) Whenever Borrower desires to receive Competitive Bids, it
shall follow the procedure set forth in Section 2.4.
(b) Whenever Borrower desires to convert all or a portion of
an outstanding Borrowing under the Revolving Credit Commitments
consisting of Base Rate Advances into a Borrowing consisting of
Eurodollar Advances, or to continue outstanding a Borrowing consisting
of Eurodollar Advances for a new Interest Period, it shall give the
Agent at least three (3) Business Days' prior written notice in
substantially the same form as Exhibit M (or telephonic notice promptly
confirmed in writing) of each such Borrowing to be converted into or
continued as Eurodollar Advances. Such notice (a "Notice of
Conversion/Continuation") shall be given prior to 11:00 a.m.
(Nashville, Tennessee time) on the date specified at the Payment Office
of the Agent. Each such Notice of Conversion/Continuation shall be
irrevocable and shall specify the aggregate principal amount of the
Advances to be converted or continued, the date of such conversion or
continuation and the Interest Period to be applicable thereto. If, upon
the expiration of any Interest Period in respect of any Borrowing
consisting of Eurodollar Advances, Borrower shall have failed to
deliver the Notice of Conversion/ Continuation, Borrower shall be
deemed to have elected to convert or continue such Borrowing to a
Borrowing consisting of Base Rate Advances. So long as any Executive
Officer of Borrower has knowledge that any Default or Event of Default
shall have occurred and be continuing, no Borrowing may be converted
into or continued as (upon expiration of the current Interest Period)
Eurodollar Advances unless the Agent and each of the Lenders shall have
otherwise consented in writing. No conversion of any Borrowing of
Eurodollar Advances shall be permitted except on the last day of the
Interest Period in respect thereof.
(c) The Agent shall promptly (and in any event by the same
time on the next succeeding Business Day as such notice is received)
give each Lender notice by telephone (confirmed in writing) or by
telex, telecopy or facsimile transmission of the matters covered by the
notices given to the Agent pursuant to this Section 3.1. with respect
to the Revolving Credit Commitments.
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SECTION 3.2. DISBURSEMENT OF FUNDS.
(a) No later than 2:00 p.m. (Nashville, Tennessee time), each
Lender will make available its Applicable Commitment Percentage of the
amount of such Borrowing in immediately available funds at the Payment
Office of the Agent. The Agent will make available to Borrower the
aggregate of the amounts (if any) so made available by the Lenders to
the Agent in a timely manner by crediting such amounts to Borrower's
demand deposit account maintained with the Agent or at Borrower's
option, by effecting a wire transfer of such amounts to Borrower's
account specified by the Borrower, by the close of business on such
Business Day. In the event that the Lenders do not make such amounts
available to the Agent by the time prescribed above, but such amount is
received later that day, such amount may be credited to Borrower in the
manner described in the preceding sentence on the next Business Day
(with interest on such amount to begin accruing hereunder on such next
Business Day).
(b) No later than 2:00 p.m. (Nashville, Tennessee time) on the
date of each Competitive Bid Loan, each Lender participating in such
Competitive Bid Loan will make available its pro rata share of the
amount of such Competitive Bid Loan in immediately available funds at
the Payment Office of the Agent. The Agent will make available to
Borrower the aggregate of the amounts (if any) so made available by the
Lenders to the Agent in a timely manner by crediting such amount to
Borrower's demand deposit account maintained with the Agent or at the
Borrower's option by effecting a wire transfer of such amounts to
Borrower's account specified by the Borrower by the close of business
on such Business Day. In the event that Lenders do not make such
amounts available to the Agent by the time prescribed above but such
amount is received later that day, such amount may be credited to the
Borrower in the manner described in the preceding sentence on the next
Business Day (with interest on such amount to begin accruing hereunder
on such next Business Day).
(c) Unless the Agent shall have been notified by any Lender
prior to the date of a Borrowing that such Lender does not intend to
make available to the Agent such Lender's portion of the Borrowing to
be made on such date, the Agent may assume that such Lender has made
such amount available to the Agent on such date and the Agent may make
available to Borrower a corresponding amount. If such corresponding
amount is not in fact made available to the Agent by such Lender on the
date of Borrowing, the Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest
at the Federal Funds Rate. If such Lender does not pay such
corresponding amount forthwith upon the Agent's demand therefor, the
Agent shall promptly notify Borrower, and Borrower shall immediately
pay such corresponding amount to the Agent together with interest at
the rate specified for the Borrowing which includes such amount paid
and any amounts due under Section 3.13. hereof. Nothing in this
subsection shall be deemed to relieve any Lender from its obligation to
fund its Commitments hereunder or to prejudice any rights which
Borrower may have against any Lender as a result of any default by such
Lender hereunder.
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<PAGE> 25
(d) All Borrowings under the Revolving Credit Commitments
shall be loaned by the Lenders on the basis of their Applicable
Commitment Percentage on the date of such Borrowing. No Lender shall be
responsible for any default by any other Lender in its obligations
hereunder, and each Lender shall be obligated to make the Loans
provided to be made by it hereunder, regardless of the failure of any
other Lender to fund its Commitment hereunder.
SECTION 3.3. INTEREST.
(a) Borrower agrees to pay interest in respect of all unpaid
principal amounts of the Revolving Loans from the respective dates such
principal amounts were advanced to maturity (whether by acceleration,
notice of prepayment or otherwise) at rates per annum equal to the
applicable rates indicated below:
(i) For Base Rate Advances--The Base Rate in effect
from time to time; and
(ii) For Eurodollar Advances--The relevant Adjusted
LIBO Rate plus the Applicable Margin.
(b) Borrower agrees to pay interest in respect of all unpaid
principal amounts of the Competitive Bid Loans made to Borrower from
the respective dates such principal amounts were advanced to maturity
(whether by acceleration, notice of prepayment or otherwise) at the
Competitive Bid Rate or Rates agreed to by the Borrower and the
Lender(s) participating therein for each Competitive Bid Loan.
(c) Overdue principal and, to the extent not prohibited by
applicable law, overdue interest, in respect of the Revolving Loans and
Competitive Bid Loans, and all other overdue amounts owing hereunder,
shall bear interest from each date that such amounts are overdue:
(i) in the case of overdue principal and interest
with respect to all Loans outstanding as Eurodollar Advances,
at the greater of (A) the rate otherwise applicable for the
then-current Interest Period plus an additional two percent
(2%) per annum or (B) the rate in effect for Base Rate
Advances plus an additional two percent (2%) per annum; and
(ii) in the case of overdue principal and interest
with respect to all other Loans outstanding as Base Rate
Advances or Competitive Bid Rate Advances, and all other
Obligations hereunder (other than Loans), at a rate equal to
the Base Rate plus an additional two percent (2%) per annum.
(d) Interest on each Loan shall accrue from and including the
date of such Loan to but excluding the date of any repayment thereof,
provided that, if a Loan is repaid on the same day made, one day's
interest shall be paid on such Loan. Interest on all outstanding Base
Rate Advances shall be payable quarterly in arrears on or before twelve
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<PAGE> 26
noon (Nashville, Tennessee time) at the Payment Office on the last day
of each calendar quarter, commencing on September 30, 1997. Interest on
all outstanding Eurodollar Advances and Competitive Bid Rate Advances
shall be payable on or before twelve noon (Nashville, Tennessee time)
at the Payment Office on the last day of each Interest Period
applicable thereto, and, in the case of Eurodollar Advances and
Competitive Bid Rate Advances having an Interest Period in excess of
three months, on or before twelve noon (Nashville, Tennessee time) at
the Payment Office each three month anniversary of the initial date of
such Interest Period. Interest on all Loans shall be payable on or
before twelve noon (Nashville, Tennessee time) at the Payment Office on
any conversion of any Advances comprising such Loans into Advances of
another Type (other than in connection with the conversion from a Base
Rate Loan), prepayment (on the amount prepaid), at maturity (whether by
acceleration, notice of prepayment or otherwise) and, after maturity,
on demand. All interest payments shall be paid to Agent in immediately
available funds, free and clear of any defenses, set-offs,
counterclaims, or withholdings or deduction for taxes.
(e) The Agent shall promptly notify the Borrower and the other
Lenders by telephone (confirmed in writing) or in writing, upon
determining the Adjusted LIBO Rate for any Interest Period. Any such
determination shall, absent manifest error, be final, conclusive and
binding for all purposes.
SECTION 3.4. INTEREST PERIODS; MAXIMUM NUMBER OF BORROWINGS.
(a) In connection with the making or continuation of, or
conversion into, each Borrowing of Eurodollar Advances, Borrower shall
select an Interest Period to be applicable to such Eurodollar Advances,
which Interest Period shall be either a 1, 2, 3 or 6 month period.
(b) In connection with the submission of each Competitive Bid
Request, the Borrower may select an Interest Period to be applicable to
such Competitive Bid Loan of not less than seven (7) days nor more than
one hundred eighty (180) days.
(c) Notwithstanding paragraphs (a) and (b) of this Section
3.4.:
(i) The initial Interest Period for any
Borrowing of Eurodollar Advances, Base Rate Advances, or
Competitive Bid Rate Advances shall commence on the date of
such Borrowing (including,the date of any conversion from a
Borrowing consisting of Base Rate Advances) and each Interest
Period occurring thereafter in respect of such Borrowing shall
commence on the day on which the next preceding Interest
Period expires;
(ii) If any Interest Period would otherwise
expire on a day which is not a Business Day, such Interest
Period shall expire on the next succeeding Business Day,
provided that if any Interest Period in respect of Eurodollar
Advances would otherwise expire on a day that is not a
Business Day but is a day of the month after
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<PAGE> 27
which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business
Day;
(iii) Any Interest Period in respect of Eurodollar
Advances which begins on a day for which there is no
numerically corresponding day in the calendar month at the end
of such Interest Period shall, subject to part (iv) below,
expire on the last Business Day of such calendar month; and
(iv) No Interest Period with respect to the Loans
shall extend beyond the Maturity Date,
(d) At no time shall there be more than eight (8) Eurodollar
Advances and Competitive Bid Rate Advances outstanding at any one time.
SECTION 3.5. FEES.
(a) Borrower shall pay to the Agent, for the ratable benefit
of each Lender based upon its respective Applicable Commitment
Percentage of the Total Commitments, a facility fee (the "Facility
Fee") for the period commencing on the Closing Date to and including
the Maturity Date, payable quarterly in arrears on the last day of each
calendar quarter, commencing on September 30, 1997, and on the Maturity
Date, equal to the Facility Fee Percentage multiplied by the average
daily amount of the Revolving Credit Commitments, whether or not
utilized.
(b) Borrower shall pay to the Agent the amounts and on the
dates agreed to in the Fee Letter.
SECTION 3.6. EFFECTIVE DATE FOR ADJUSTMENT TO FACILITY FEE PERCENTAGE
AND APPLICABLE MARGIN.
The Facility Fee Percentage and Applicable Margin (collectively
"Applicable Percentages") shall be determined and adjusted quarterly on the
Business Day next following the date on which the Agent accepts the officer's
certificate required to be furnished by the Borrower in accordance with the
provisions of Section 6.7.(d) (each a "Calculation Date"). Except as set forth
above, each Applicable Percentage shall be effective from one Calculation Date
until the next Calculation Date.
SECTION 3.7. VOLUNTARY PREPAYMENTS OF BORROWINGS.
(a) Borrower may, at its option, prepay Borrowings consisting
of Base Rate Advances at any time in whole, or from time to time in
part, in amounts aggregating $1,000,000 or any greater integral
multiple of $100,000, by paying the principal amount to be prepaid
together with interest accrued and unpaid thereon to the date of
prepayment. Upon two (2) Business Days' prior written notice given by
Borrower to Agent, Borrowings consisting of Eurodollar Advances or
Competitive Bid Rate Advances may be prepaid on the last day of any
applicable Interest Period, in whole, or from time to time in part, in
amounts aggregating $100,000 or an integral multiple of $1,000,000
(except that no partial
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<PAGE> 28
prepayment may be made if the remaining principal amount outstanding of
such Eurodollar Advance which comprises a Revolving Loan or Competitive
Bid Rate Advance would be less than $10,000,000), by paying the
principal amount to be prepaid, together with interest accrued and
unpaid thereon to the date of prepayment. Prepayment of Eurodollar
Advances or Competitive Bid Rate Advances may not be made except on the
last day of an Interest Period applicable thereto. Each such optional
prepayment shall be applied in accordance with Section 3.7.(b) below.
(b) All voluntary prepayments shall be applied to the payment
of interest then due and owing before application to principal.
SECTION 3.8. MANNER OF PAYMENT, CALCULATION OF INTEREST, TAXES.
(a) Except as otherwise specifically provided herein, all
payments under this Agreement and the other Credit Documents, other
than the payments specified in clause 3.8.(b)(iii) below, shall be made
without defense, set-off, or counterclaim to the Agent not later than
11:00 a.m. (Nashville, Tennessee time) on the date when due and shall
be made in Dollars in immediately available funds at the Agent's
Payment Office.
(b)(i) All such payments shall be made free and clear of and
without deduction or withholding for any Taxes in respect of this
Agreement, the Notes or other Credit Documents, or any payments of
principal, interest, fees or other amounts payable hereunder or
thereunder (but excluding, except as provided in paragraph (iii)
hereof, in the case of each Lender, taxes imposed on or measured by its
net income, and franchise taxes and branch profit taxes imposed on it
(A) by the jurisdiction under the laws of which such Lender is
organized or any political subdivision thereof, and in the case of each
Lender, taxes imposed on or measured by its net income, and franchise
taxes and branch profit taxes imposed on it, by the jurisdiction of
such Lender's appropriate Lending Office or any political subdivision
thereof, and (B) by a jurisdiction in which any payments are to be made
by any Borrower hereunder, other than the United States of America, or
any political subdivision thereof, and that would not have been imposed
but for the existence of a connection between such Lender and the
jurisdiction imposing such taxes (other than a connection arising as a
result of this Agreement or the transactions contemplated by this
Agreement), except in the case of taxes described in this clause (B),
to the extent such taxes are imposed as a result of a change in the law
or regulations of any jurisdiction or any applicable treaty or
regulations or in the official interpretation of any such law, treaty
or regulations by any government authority charged with the
interpretation or administration thereof after the date of this
Agreement). If any such Taxes are so levied or imposed, Borrower agrees
(A) to pay the full amount of such Taxes, and such additional amounts
as may be necessary so that every net payment of all amounts due
hereunder and under the Notes and other Credit Documents, after
withholding or deduction for or on account of any such Taxes (including
additional sums payable under this Section 3.8.), will not be less than
the full amount provided for herein had no such deduction or
withholding been required, (B) to make such withholding or deduction
and (C) to pay the full amount deducted to the relevant authority in
accordance with applicable law. Borrower will furnish to the Agent and
each Lender, within 30 days after the date the payment of any Taxes is
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<PAGE> 29
due pursuant to applicable law, certified copies of tax receipts
evidencing such payment by Borrower. Borrower will indemnify and hold
harmless the Agent and each Lender and reimburse the Agent and each
Lender upon written request for the amount of any such Taxes so levied
or imposed and paid by the Agent or Lender and any liability (including
penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes were correctly or illegally
asserted. A certificate as to the amount of such payment by such Lender
or the Agent, absent manifest error, shall be final, conclusive and
binding for all purposes.
(ii) Each Lender that is organized under the laws
of any jurisdiction other than the United States of America or
any State thereof (including the District of Columbia) agrees
to furnish to Borrower and the Agent, prior to the time it
becomes a Lender hereunder, two copies of either U.S. Internal
Revenue Service Form 4224 or U.S. Internal Revenue Service
Form 1001 or any successor forms thereto (wherein such Lender
claims entitlement to complete exemption from U.S. Federal
withholding tax on interest paid by Borrower hereunder) and to
provide to Borrower and the Agent a new Form 4224 or Form 1001
or any successor forms thereto if any previously delivered
form is found to be incomplete or incorrect in any Material
respect or upon the obsolescence of any previously delivered
form; provided, however, that no Lender shall be required to
furnish a form under this paragraph (ii) after the date that
it becomes a Lender hereunder if it is not entitled to claim
an exemption from withholding under applicable law.
(iii) Borrower shall also reimburse the Agent and
each Lender, upon written request, for any Taxes imposed
(including, without limitation, Taxes imposed on the overall
net income of the Agent or Lender or its applicable Lending
Office pursuant to the laws of the jurisdiction in which the
principal executive office or the applicable Lending Office of
the Agent or Lender is located) as the Agent or Lender shall
determine are payable by the Agent or Lender in respect of
amounts paid by or on behalf of Borrower to or on behalf of
the Agent or Lender pursuant to paragraph (i) hereof
(iv) In addition to the documents to be furnished
pursuant to Section 3.8.(b)(ii), each Lender shall, promptly
upon the reasonable written request of the Borrower to that
effect, deliver to the Borrower such other accurate and
complete forms or similar documentation as such Lender is
legally able to provide and as may be required from time to
time by any applicable law, treaty, rule or regulation or any
jurisdiction in order to establish such Lender's tax status
for withholding purposes or as may otherwise be appropriate to
eliminate or minimize any Taxes on payments under this
Agreement or the Notes.
(v) The Borrower shall not be required to pay any
amounts pursuant to Section 3.8.(b)(i), or (iii) to any Lender
for the account of any Lending Officer of such Lender in
respect of any United States withholding taxes payable
hereunder (and the Borrower, if required by law to do so,
shall be entitled to withhold such amounts and pays such
amounts to the United States Government) if the obligation
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<PAGE> 30
to pay such additional amounts would not have arisen but for a
failure by such Lender to comply with its obligations under
Section 3.8.(b)(ii), and such Lender shall not be entitled to
an exemption from deduction or withholding of United Stated
Federal income tax in respect of the payment of such sum by
the Borrower hereunder for the account of such Lending Office
for, in each case, any reason other than a change in United
States law or regulations by any governmental authority
charged with the interpretation or administration thereof
(whether or not having the force of law) after the date such
Lender became a Lender hereunder.
(vi) Within sixty (60) days of the written request
of the Borrower, each Lender shall execute and deliver such
certificates, forms or other documents, which can be
reasonably furnished consistent with the facts and which are
reasonably necessary to assist in applying for refunds of
Taxes remitted hereunder.
(vii) To the extent that the payment of any
Lender's Taxes by the Borrower gives rise from time to time to
a Tax Benefit (as hereinafter defined) to such Lender in any
jurisdiction other than the jurisdiction which imposed such
Taxes, such Lender shall pay to the Borrower the amount of
each such Tax Benefit so recognized or received. The amount of
each Tax Benefit and, therefore, payment to the Borrower will
be determined from time to time by the relevant Lender in its
sole discretion, which determination shall be binding and
conclusive on all parties hereto. Each such payment will be
due and payable by such Lender to the Borrower within a
reasonable time after the filing of the income tax return in
which such Tax Benefit is recognized or, in the case of any
tax refund, after the refund is received; provided, however if
at any time thereafter such Lender is required to rescind such
Tax Benefit or such Tax Benefit is otherwise disallowed or
nullified, the Borrower shall promptly, after notice thereof
from such Lender, repay to Lender the amount of such Tax
Benefit previously paid to the Borrower and rescinded,
disallowed or nullified. For purposed of this section, "Tax
Benefit" shall mean the amount by which any Lender's income
tax liability for the taxable period in question is reduced
below what would have been payable had the Borrower not been
required to pay the Lender's Taxes. In case of any dispute
with respect to the amount of any payment the Borrower shall
have no right to any offset or withholding of payments with
respect to future payments due to any Lender under this
Agreement or the Notes.
(c) Subject to Section 3.4.(c)(ii), whenever any payment to be
made hereunder or under any Note shall be stated to be due on a day
which is not a Business Day, the due date thereof shall be extended to
the next succeeding Business Day and, with respect to payments of
principal, interest thereon shall be payable at the applicable rate
during such extension.
(d) All computations of interest and fees shall be made on the
basis of a year of 360 days for the actual number of days (including
the first day but excluding the last day) occurring in the period for
which such interest or fees are payable (to the extent computed on the
basis of days elapsed). Interest on Base Rate Advances shall be
calculated based on
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<PAGE> 31
the Base Rate from and including the date of such Loan to but excluding
the date of the repayment or conversion thereof. Interest on Eurodollar
Advances and Competitive Bid Rate Advances shall be calculated as to
each Interest Period from and including the first day thereof to but
excluding the last day thereof. Each determination by the Agent of an
interest rate or fee hereunder shall be made in good faith and, except
for manifest error, shall be final, conclusive and binding for all
purposes.
(e) Payment by the Borrower to the Agent in accordance with
the terms of this Agreement shall, as to the Borrower, constitute
payment to the Lenders under this Agreement.
SECTION 3.9. INTEREST RATE NOT ASCERTAINABLE, ETC.
In the event that the Agent shall have determined (which determination
shall be made in good faith and, absent manifest error, shall be final,
conclusive and binding upon all parties) that on any date for determining the
Adjusted LIBO Rate for any Interest Period, by reason of any changes arising
after the date of this Agreement affecting the London interbank market, or the
Agent's position in such market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in the
definition of Adjusted LIBO Rate, then, and in any such event, the Agent shall
forthwith give notice (by telephone confirmed in writing) to Borrower and to the
Lenders, of such determination and a summary of the basis for such
determination. Until the Agent notifies Borrower that the circumstances giving
rise to the suspension described herein no longer exist, the obligations of the
Lenders to make or permit portions of the Revolving Loans to remain outstanding
past the last day of the then current Interest Periods as Eurodollar Advances
shall be suspended, and such affected Advances shall bear the same interest as
Base Rate Advances.
SECTION 3.10. ILLEGALITY.
(a) In the event that any Lender shall have determined (which
determination shall be made in good faith and, absent manifest error,
shall be final, conclusive and binding upon all parties) at any time
that the making or continuance of any Eurodollar Advance or Competitive
Bid Rate Advance has become unlawful by compliance by such Lender in
good faith with any applicable law, governmental rule, regulation,
guideline or order (whether or not having the force of law and whether
or not failure to comply therewith would be unlawful), then, in any
such event, the Lender shall give prompt notice (by telephone confirmed
in writing) to Borrower and to the Agent of such determination and a
summary of the basis for such determination (which notice the Agent
shall promptly transmit to the other Lenders).
(b) Upon the giving of the notice to Borrower referred to in
subsection (a) above, (i) Borrower's right to request and such Lender's
obligation to make Eurodollar Advances or Competitive Bid Rate Advances
shall be immediately suspended, and such Lender shall make an Advance
as part of the requested Borrowing of Eurodollar Advances as a Base
Rate Advance, which Base Rate Advance, as the case may be, shall, for
all other purposes, be considered part of such Borrowing, and (ii) if
the affected Eurodollar Advance or
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<PAGE> 32
Advances are then outstanding, Borrower shall immediately, or if
subject to applicable law, no later than the date permitted by
applicable law, upon at least one Business Day's written notice to the
Agent and the affected Lender, convert each such Advance into a Base
Rate Advance or Advances, provided that if more than one Lender is
affected at any time, then all affected Lenders must be treated the
same pursuant to this Section 3.10.(b).
SECTION 3.11. INCREASED COSTS.
(a) If, by reason of (x) after the date hereof, the
introduction of or any change (including, without limitation, any
change by way of imposition or increase of reserve requirements) in or
in the interpretation of any law or regulation, or (y) the compliance
with any guideline or request from any central bank or other
governmental authority or quasi-governmental authority exercising
control over banks or financial institutions generally (whether or not
having the force of law):
(i) any Lender (or its applicable Lending Office)
shall be subject to any tax, duty or other charge with respect
to its Eurodollar Advances or Competitive Bid Rate Advances,
or its obligation to make such Advances, or the basis of
taxation of payments to any Lender of the principal of or
interest on its Eurodollar Advances or Competitive Bid Rate
Advances or its obligation to make Eurodollar Advances shall
have changed (except for changes in the tax on the overall net
income of such Lender or its applicable Lending Office imposed
by the jurisdiction in which such Lender's principal executive
office or applicable Lending Office is located); or
(ii) any reserve (including, without limitation, any
imposed by the Board of Governors of the Federal Reserve
System), special deposit or similar requirement against assets
of, deposits with or for the account of, or credit extended
by, any Lender's applicable Lending Office shall be imposed or
deemed applicable or any other condition affecting its
Eurodollar Advances or Competitive Bid Rate Advances or its
obligation to make Eurodollar Advances or Competitive Bid Rate
Advances shall be imposed on any Lender or its applicable
Lending Office or the London interbank market;
and as a result thereof there shall be any increase in the cost to such Lender
of agreeing to make or making, funding or maintaining Eurodollar Advances
(except to the extent already included in the determination of the applicable
Adjusted LIBO Rate for Eurodollar Advances) or Competitive Bid Rate Advances or
its obligation to make Eurodollar Advances, or there shall be a reduction in the
amount received or receivable by such Lender or its applicable Lending Office,
then Borrower shall from time to time (subject, in the case of certain Taxes, to
the applicable provisions of Section 3.8.(b)), upon written notice from and
demand by such Lender to Borrower (with a copy of such notice and demand to the
Agent), pay to the Agent for the account of such Lender within ten (10) Business
Days after the date of such notice and demand, additional amounts sufficient to
indemnify such Lender against such increased cost. A certificate as to the
amount of such increased cost, submitted to Borrower and the Agent by such
Lender in good faith and accompanied by a statement prepared by such Lender
describing in reasonable detail the basis for
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<PAGE> 33
and calculation of such increased cost, shall, except for manifest error, be
final conclusive and binding for all purposes.
(b) If any Lender shall advise the Agent that at any time,
because of the circumstances described in clauses (x) or (y) in Section
3.11.(a) or any other circumstances beyond such Lender's reasonable
control arising after the date of this Agreement affecting such Lender
or the London interbank market or such Lender's position in such
market, the Adjusted LIBO Rate as determined by the Agent will not
adequately and fairly reflect the cost to such Lender of funding its
Eurodollar Advances or, if applicable, Competitive Bid Rate Advances,
then, and in any such event:
(i) the Agent shall forthwith give notice (by
telephone confirmed in writing) to Borrower and to the other
Lenders of such advice;
(ii) Borrower's right to request and such Lender's
obligation to make or permit portions of the Loans to remain
outstanding past the last day of the then current Interest
Periods as Eurodollar Advances or Competitive Bid Rate
Advances shall be immediately suspended; and
(iii) in the event the affected Loan is a Revolving
Loan, such Lender shall make a Loan as part of the requested
Borrowing under the Revolving Loan Commitments of Eurodollar
Advances as a Base Rate Advance, which such Base Rate Advance
shall, for all other purposes, be considered part of such
Borrowing.
SECTION 3.12. LENDING OFFICES.
(a) Each Lender agrees that, if requested by Borrower, it will
use reasonable efforts (subject to overall policy considerations of
such Lender) to designate an alternate Lending Office with respect to
any of its Eurodollar Advances or Competitive Bid Rate Advances, as the
case may be, affected by the matters or circumstances described in
Sections 3.8.(b), 3.9., 3.10., 3.11. or 3.17. to reduce the liability
of Borrower or avoid the results provided thereunder, so long as such
designation is not disadvantageous to such Lender as reasonably
determined by such Lender, which determination shall be conclusive and
binding on all parties hereto. Nothing in this Section 3.12. shall
affect or postpone any of the obligations of Borrower or any right of
any Lender provided hereunder.
(b) If any Lender that is organized under the laws of any
jurisdiction other than the United States of America or any State
thereof (including the District of Columbia) issues a public
announcement with respect to the closing of its Lending Offices in the
United States such that any withholdings or deductions and additional
payments with respect to Taxes may be required to be made by Borrower
thereafter pursuant to Section 3.8.(b), such Lender shall use
reasonable efforts to furnish Borrower notice thereof as soon as
practicable thereafter; provided, however, that no delay or failure to
furnish such notice shall in any event release or discharge Borrower
from its obligations to such Lender pursuant to Section 3.8.(b) or
otherwise result in any liability of such Lender.
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<PAGE> 34
SECTION 3.13. FUNDING LOSSES.
Borrower shall compensate each Lender, upon its written request to
Borrower (which request shall set forth the basis for requesting such amounts in
reasonable detail and which request shall be made in good faith and, absent
manifest error, shall be final, conclusive and binding upon all of the parties
hereto), for all actual losses, expenses and liabilities (including, without
limitation, any interest paid by such Lender to lenders of funds borrowed by it
to make or carry its Eurodollar Advances or Competitive Bid Rate Advances, in
either case to the extent not recovered by such Lender in connection with the
re-employment of such funds but excluding loss of anticipated profits), which
the Lender may sustain: (i) if for any reason (other than a default by such
Lender) a borrowing of, or conversion to or continuation of, Eurodollar Advances
or Competitive Bid Rate Advances to Borrower does not occur on the date
specified therefor in a Notice of Borrowing, Competitive Bid Accept/Reject
Letter, or Notice of Conversion/Continuation (whether or not withdrawn), (ii) if
any repayment (including mandatory prepayments and any conversions pursuant to
Section 3.10.(b)) of any Eurodollar Advances to Borrower occurs on a date which
is not the last day of an Interest Period applicable thereto, or (iii), if, for
any reason, Borrower defaults in its obligation to repay its Eurodollar Advances
when required by the terms of this Agreement.
SECTION 3.14. ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR AND
COMPETITIVE BID RATE ADVANCES.
Calculation of all amounts payable to a Lender under this Article 3.
shall be made as though that Lender had actually funded its relevant Eurodollar
Advances or Competitive Bid Rate Advances through the purchase of deposits in
the relevant market bearing interest at the rate applicable to such Eurodollar
Advances or Competitive Bid Rate Advance in an amount equal to the amount of the
Eurodollar Advances or Competitive Bid Rate Advance and having a maturity
comparable to the relevant Interest Period and through the transfer of such
Eurodollar Advances or Competitive Bid Rate Advance from an offshore office of
that Lender to a domestic office of that Lender in the United States of America;
provided, however that each Lender may fund each of its Eurodollar Advances or
Competitive Bid Rate Advances in any manner it sees fit and the foregoing
assumption shall be used only for calculation of amounts payable under this
Article 3.
SECTION 3.15. APPORTIONMENT OF PAYMENTS.
Aggregate principal and interest payments in respect of Loans and
payments in respect of Facility Fees shall be apportioned among all outstanding
Commitments and Loans to which such payments relate, proportionately to the
Lenders' respective pro rata portions of such Commitments and outstanding Loans.
The Agent shall promptly distribute to each Lender at its payment office
specified by any Lender its share of any such payments received by the Agent on
the same Business Day as such payment is deemed to be received by the Agent.
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SECTION 3.16. SHARING OF PAYMENTS, ETC.
If any Lender shall obtain any payment or reduction (including, without
limitation, any amounts received as adequate protection of a deposit treated as
cash collateral under the Bankruptcy Code) of the Obligations (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) in excess of its Applicable Commitment Percentage of payments or
reductions on account of such obligations obtained by all the Lenders (other
than payments of principal, interest and fees with respect to the Competitive
Bid Loans which are payable solely to the Lenders participating therein), such
Lender shall forthwith (i) notify each of the other Lenders and Agent of such
receipt, and (ii) purchase from the other Lenders such participations in the
affected obligations as shall be necessary to cause such purchasing Lender to
share the excess payment or reduction, net of costs incurred in connection
therewith, ratably with each of them, provided that if all or any portion of
such excess payment or reduction is thereafter recovered from such purchasing
Lender or additional costs are incurred, the purchase shall be rescinded and the
purchase price restored to the extent of such recovery or such additional costs,
but without interest unless the Lender obligated to return such funds is
required to pay interest on such funds. Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section 3.16.
may, to the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of Borrower in the amount of such
participation. Any payment received by the Agent or any Lender following the
occurrence and during the continuation of an Event of Default shall be
distributed pro rata amongst the Lenders based upon the percentage obtained by
dividing the Obligations owing to each Lender by the total amount of Obligations
on the date of receipt of such payment, with such amounts to be applied to the
outstanding Obligations in accordance with the terms of this Agreement.
SECTION 3.17. CAPITAL ADEQUACY.
Without limiting any other provision of this Agreement, in the event
that any Lender shall have determined that any law, treaty, governmental (or
quasi-governmental) rule, regulation, guideline or order regarding capital
adequacy not currently in effect or fully applicable as of the Closing Date, or
any change therein or in the interpretation or application thereof after the
Closing Date, or compliance by such Lender with any request or directive
regarding capital adequacy not currently in effect or fully applicable as of the
Closing Date (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) from a central bank or governmental
authority or body having jurisdiction, does or shall have the effect of reducing
the rate of return on such Lender's capital as a consequence of its obligations
hereunder to a level below that which such Lender could have achieved but for
such law, treaty, rule, regulation, guideline or order, or such change or
compliance (taking into consideration such Lender's policies with respect to
capital adequacy) by an amount deemed by such Lender to be Material, then within
ten (10) Business Days after written notice and demand by such Lender (with
copies thereof to the Agent), Borrower shall from time to time pay to such
Lender additional amounts sufficient to compensate such Lender for such
reduction (but, in the case of outstanding Base Rate Advances, without
duplication of any amounts already recovered by such Lender by reason of an
adjustment in the applicable Base Rate). Each certificate as to the amount
payable under this Section 3.17. (which certificate shall set forth the basis
for requesting such amounts in reasonable detail),
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<PAGE> 36
submitted to Borrower by any Lender in good faith, shall, absent manifest error,
be final, conclusive and binding for all purposes.
SECTION 3.18. LIMITATION ON CERTAIN PAYMENT OBLIGATIONS.
(a) Each Lender or the Agent shall make written demand on the
Borrower for indemnification or compensation pursuant to Section
3.8.(b) no later than six months after the earlier of (i) on the date
on which Lender or the Agent makes payment of any such Taxes and (ii)
the date on which the relevant taxing authority or other governmental
authority makes written demand upon such Lender or Agent for the
payment of such Taxes.
(b) Each Lender or Agent shall make written demand on the
Borrower for indemnification or compensation pursuant to Section 3.13.
no later than six months after the event giving rise to the claim for
indemnification or compensation occurs.
(c) Each Lender or the Agent shall make written demand on the
Borrower for identification or compensation pursuant to Section 3.11.
or Section 3.17. no later than six months after such Lender or Agent
receives actual notice or obtains actual knowledge of the promulgation
of a law, rule, order, interpretation or occurrence of another event
giving rise to a claim pursuant to such provisions.
(d) In the event that the Lenders or Agent fail to give the
Borrower notice within the time limitations set forth above, the
Borrower shall not have any obligation to pay amounts with respect to
such claims accrued prior to six months preceding any written demand
therefor.
ARTICLE 4. CONDITIONS TO BORROWINGS
The obligation of each Lender to make Advances to Borrower is subject
to the satisfaction of the following conditions:
SECTION 4.1. CONDITIONS PRECEDENT TO INITIAL LOANS.
At the time of the making of the initial Loans hereunder on the Closing
Date, all obligations of Borrower hereunder incurred prior to the initial Loans
(including, without limitation, Borrower's obligations to reimburse the
reasonable fees and expenses of counsel to the Agent and any fees and expenses
payable to the Agent as previously agreed with Borrower), shall have been paid
in full, and the Agent shall have received the following, in form and substance
reasonably satisfactory in all respects to the Agent:
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(a) the duly executed counterparts of this Agreement;
(b) the duly completed Revolving Credit Notes evidencing the
Revolving Credit Commitments, and any applicable, duly executed
Competitive Bid Notes evidencing the Competitive Bid Facility;
(c) all required, duly executed Subsidiary Guaranties;
(d) certificates of the Secretary or Assistant Secretary of
the Borrower attaching and certifying copies of the resolutions of the
board of directors of the Borrower, and each Subsidiary Guarantor
providing a required Subsidiary Guaranty (including Subsidiaries
serving as general partners of any Subsidiary), authorizing as
applicable the execution, delivery and performance of the Credit
Documents;
(e) certificates of the Secretary or an Assistant Secretary of
the Borrower certifying (i) the name, title and true signature of each
officer of the Borrower executing the Credit Documents, and (ii) the
bylaws of the Borrower and each Subsidiary Guarantor;
(f) certified copies of the certificate or articles of
incorporation of the Borrower and each of its Subsidiaries certified by
the Secretary of State and by the Secretary or Assistant Secretary of
the Borrower or such Subsidiaries, as appropriate, together with
certificates of good standing or existence, as may be available from
the Secretary of State of the jurisdiction of incorporation or
organization of the Borrower and each of its Subsidiaries, and each
other jurisdiction where the ownership of Property or the conduct of
its business require the Borrower or its Subsidiaries to be qualified,
except where a failure to be so qualified would not have a Materially
Adverse Effect;
(g) certificate of Borrower in substantially the form of
Exhibit H attached hereto and appropriately completed;
(h) the favorable opinion of corporate counsel to the
Consolidated Companies as to certain matters, substantially in the form
of Exhibit I, in each case addressed to the Agent and each of the
Lenders;
(i) copies of all documents and instruments, including all
consents, authorizations and filings, required under the articles or
certificate of incorporation and bylaws or other organizational or
governing documents, under any Requirement of Law or by any Material
Contractual Obligation of the Consolidated Companies, in connection
with the execution, delivery, performance, validity and enforceability
of the Credit Documents and the other documents to be executed and
delivered hereunder, and such consents, authorizations, filings and
orders shall be in full force and effect;
(j) any other document, opinion or certificate reasonably
requested by the Agent and the Lenders assuring the Agent and the
Lenders that all corporate proceedings and all other legal matters in
connection with the authorization, legality, validity and
enforceability of the Credit Documents are in form and substance
satisfactory to the Lenders; and
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(k) a certificate from the Chief Financial Officer of the
Borrower certifying that the first Advance under the Revolving Credit
Commitments shall be used to cancel and pay in full all Prior Revolving
Credit Debt.
SECTION 4.2. CONDITIONS TO ALL LOANS.
At the time of the making of all Loans, including the initial Loans
hereunder, (before as well as, after giving effect to such Loans and to the
proposed use of the proceeds thereon, the following conditions shall have been
satisfied or shall exist:
(a) there shall exist no Default or Event of Default;
(b) all representations and warranties by Borrower contained
herein shall be true and correct in all Material respects with the same
effect as though such representations and warranties had been made on
and as of the date of such Loans except to the extent they expressly
relate to an earlier date or have been updated to the extent permitted
herein;
(c) since the date of the most recent financial statements of
the Consolidated Companies described in Section 5.14., there shall have
been no change which has had or is reasonably likely to have a
Materially Adverse Effect (whether or not any notice with respect to
such change has been furnished to the Lenders pursuant to Section
6.7.);
(d) there shall be no action or proceeding instituted or
pending before any court or other governmental authority or, to the
knowledge of any Executive Officer of Borrower, threatened (i) which is
reasonably likely to have a Materially Adverse Effect, or (ii) seeking
to prohibit or restrict one or more of the Consolidated Companies'
right to own or operate any portion of its business or Properties, or
to compel one or more of the Borrower and its Consolidated Companies to
dispose of or hold separate all or any portion of its businesses or
Properties, where such portion or portions of such business(es) or
Properties, as the case may be, constitute a Material portion of the
total businesses or Properties, of the Consolidated Companies;
(e) the Loans to be made and the use of proceeds thereof shall
not contravene, violate or conflict with, or involve the Agent or any
Lender in a violation of, any law, rule, injunction, or regulation, or
determination of any court of law or other governmental authority
applicable to any Consolidated Company; and
(f) the Agent shall have received such other documents or
legal opinions as the Agent or any Lender may reasonably request, all
in form and substance reasonably satisfactory to the Agent.
Each request for a Borrowing or Competitive Bid Request and the acceptance by
Borrower of the proceeds thereof shall constitute a representation and warranty
by Borrower, as of the date of the Loans comprising such Borrowing, that the
applicable conditions specified in Sections 4.
1. and 4.2. have been satisfied.
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ARTICLE 5. REPRESENTATIONS AND WARRANTIES
Borrower (as to itself and all other Consolidated Companies) represents
and warrants as follows:
SECTION 5.1. CORPORATE EXISTENCE; COMPLIANCE WITH LAW.
Each of the Consolidated Companies is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation. Each of the Consolidated Companies (i) has the corporate power
and authority and the legal right to own and operate its Property and to conduct
its business, (ii) is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership of Property or
the conduct of its business requires such qualification, and (iii) is in
compliance with all Requirements of Law, where the failure to so comply is
reasonably likely to have a Materially Adverse Effect. The jurisdiction of
incorporation or organization, and the ownership of all issued and outstanding
capital stock, for each Subsidiary as of the date of this Agreement is
accurately described on Schedule 5.1. Schedule 5.1. may be updated from time to
time by the Borrower by giving written notice thereof to the Agent.
SECTION 5.2. CORPORATE POWER; AUTHORIZATION.
Each of the Borrower and its Subsidiary Guarantors has the corporate
power and authority to make, deliver and perform the Credit Documents to which
it is a party and has taken all necessary corporate action to authorize the
execution, delivery and performance of such Credit Documents. No consent or
authorization of, or filing with, any Person (including, without limitation, any
governmental authority), is required in connection with the execution, delivery
or performance by the Borrower or its Subsidiary Guarantors, or the validity or
enforceability against the Borrower or its Subsidiary Guarantors, of the Credit
Documents, other than such consents, authorizations or filings which have been
made or obtained.
SECTION 5.3. ENFORCEABLE OBLIGATIONS.
This Agreement has been duly executed and delivered, and each other
Credit Document will be duly executed and delivered, by the respective
Consolidated Companies, as applicable, and this Agreement constitutes, and each
other Credit Document when executed and delivered will constitute, legal, valid
and binding obligations of the Consolidated Companies executing the same,
enforceable against such Consolidated Companies in accordance with their
respective terms.
SECTION 5.4. NO LEGAL BAR.
The execution, delivery and performance by the Consolidated Companies
of the Credit Documents do not violate their respective articles or certificates
of incorporation, bylaws or other organizational or governing documents, or any
Requirement of Law, or any applicable judgment, court order, administrative
agency order, or cause a breach or default under any of their respective
Material Contractual Obligations.
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SECTION 5.5. NO MATERIAL LITIGATION.
Except as set forth on Schedule 5.5., no litigation, investigation or
proceeding of or before any court, tribunal, arbitrator or governmental
authority is pending or, to the knowledge of any Executive Officer of the
Borrower, threatened by or against any of the Consolidated Companies, or against
any of their respective Properties or revenues, existing or future (a) with
respect to any Credit Document, or any of the transactions contemplated hereby
or thereby, or (b) which, if adversely determined, is reasonably likely to have
a Materially Adverse Effect.
SECTION 5.6. INVESTMENT COMPANY ACT, ETC.
Neither of the Consolidated Companies is an "investment company" or a
company "controlled" by an "investment company" (as each of the quoted terms is
defined or used in the Investment Company Act of 1940, as amended). None of the
Consolidated Companies is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, or any foreign, federal or local
statute or regulation limiting its ability to incur Indebtedness for Money
Borrowed, guarantee such indebtedness, or pledge its assets to secure such
indebtedness, as contemplated hereby or by any other Credit Document.
SECTION 5.7. MARGIN REGULATIONS.
No part of the proceeds of any of the Loans will be used for any
purpose which violates, or which would be inconsistent or not in compliance
with, the provisions of the applicable Margin Regulations.
SECTION 5.8. COMPLIANCE WITH ENVIRONMENTAL LAWS.
(a) The Consolidated Companies have received no notices of
claims or potential liability under, and are in compliance with, all
applicable Environmental Laws, where such claims and liabilities under,
and failures to comply with, such statutes, regulations, rules,
ordinances, laws or licenses, is reasonably likely to result in
penalties, fines, claims or other liabilities to the Consolidated
Companies in amounts that would have a Materially Adverse Effect,
either individually or in the aggregate (including any such penalties,
fines, claims, or liabilities relating to the matters set forth on
Schedule 5.8.(a)), except as set forth on Schedule 5.8.(a)).
(b) Except as set forth on Schedule 5.8.(b), none of the
Consolidated Companies has received any notice of violation, or notice
of any action, either judicial or administrative, from any governmental
authority (whether United States or foreign) relating to the actual or
alleged violation of any Environmental Law, including, without
limitation any notice of any actual or alleged spill, leak, or other
release of any Hazardous Substance, waste or hazardous waste by any
Consolidated Company or its employees or agents, or as to the existence
of any continuation on any Properties owned by any Consolidated
Company, where any such violation, spill, leak, release or
contamination is reasonably likely to result in penalties, fines,
claims or other liabilities to the Consolidated
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Companies in amounts that would have a Materially Adverse Effect,
either individually or in the aggregate.
(c) Except as set forth on Schedule 5.8.(c), the Consolidated
Companies have obtained all necessary governmental permits, licenses
and approvals for the operations conducted on their respective
Properties, including without limitation, all required Material
permits, licenses and approvals for (i) the emission of air pollutants
or contaminants, (ii) the treatment or pretreatment and discharge of
waste water or storm water, (iii) the treatment, storage, disposal or
generation of hazardous wastes, (iv) the withdrawal and usage of ground
water or surface water, and (v) the disposal of solid wastes, in any
such case where the failure to have such license, permit or approval is
reasonably likely to have a Materially Adverse Effect.
SECTION 5.9. INSURANCE.
The Consolidated Companies currently maintain such insurance with
respect to their Properties and business with financially sound and reputable
insurers, and in such amounts and having such coverages against losses and
damages which the Borrower in the exercise of its reasonable prudent business
judgment has determined to be necessary to prevent the Consolidated Companies
from experiencing a loss which would cause a Materially Adverse Effect. The
Consolidated Companies have paid all Material amounts of insurance premiums now
due and owing with respect to such insurance policies and coverages, and such
policies and coverages are in full force and effect.
SECTION 5.10. NO DEFAULT.
None of the Consolidated Companies is in default under or with respect
to any Contractual Obligation in any respect which has had or is reasonably
likely to have a Materially Adverse Effect.
SECTION 5.11. NO BURDENSOME RESTRICTIONS.
Except as set forth on Schedule 5.11., none of the Consolidated
Companies is a party to or bound by any Contractual Obligation or Requirement of
Law or any provision of its respective articles or certificates of
incorporation, bylaws, or other organizational or governing documents which has
had or is reasonably likely to have a Materially Adverse Effect.
SECTION 5.12. TAXES.
The Consolidated Companies have filed all Federal tax returns and, to
the knowledge of any Executive Officer of the Borrower, the Consolidated
Companies have filed all other tax returns which are required to have been filed
in any jurisdiction; the Consolidated Companies have paid all taxes shown to be
due and payable on such Federal returns and other returns and all other taxes,
assessments, fees and other charges payable by them, in each case, to the extent
the same have become due and payable and before they have become delinquent,
except for the filing of any such returns or the payment of any taxes,
assessments, fees and other charges the amount,
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applicability or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which any Consolidated Company has
set aside on its books reserves (segregated to the extent required by GAAP)
deemed by it in good faith to be adequate. The Borrower has not received written
notice of any proposed Material tax assessment with respect to Federal income
taxes against any of the Consolidated Companies nor does any Executive Officer
of the Borrower know of any Material Federal income tax liability on the part of
the Consolidated Companies other than any such assessment or liability which is
adequately reserved for on the books of the Consolidated Companies in accordance
with GAAP.
SECTION 5.13. SUBSIDIARIES.
Except as disclosed on Schedule 5.13., Borrower has no Subsidiaries and
neither Borrower nor any Subsidiary is a joint venture partner or general
partner in any partnership. Schedule 5.13. may be updated from time to time by
the Borrower by giving written notice thereof to the Agent.
SECTION 5.14. FINANCIAL STATEMENTS.
Borrower has furnished to the Agent and the Lenders (i) the audited
consolidated balance sheets as of January 31, 1997 of the Consolidated Companies
and the related consolidated statements of income, shareholders' equity and cash
flows for the fiscal years then ended, including in each case the related notes.
The foregoing financial statements fairly present in all Material respects the
consolidated financial condition of the Consolidated Companies as at the dates
thereof and results of operations for such periods in conformity with GAAP
consistently applied (subject, in the case of the quarterly financial
statements, to normal year-end audit adjustments and the absence of certain
notes). The Consolidated Companies taken as a whole did not have any Material
contingent obligations, contingent liabilities, or Material liabilities for
known taxes, long-term leases or unusual forward or long-term commitments
required to be reflected in the foregoing financial statements or the notes
thereto that are not so reflected. Since May 2, 1997, there have been no changes
with respect to the Consolidated Companies which has had or is reasonably likely
to have a Materially Adverse Effect.
SECTION 5.15. ERISA.
Except as disclosed on Schedule 5.15.:
(a) Identification of Plans. None of the Consolidated
Companies nor any of their respective ERISA Affiliates maintains or
contributes to, or has during the past seven years maintained or
contributed to, any Plan that is subject to Title IV of ERISA;
(b) Compliance. Each Plan maintained by the Consolidated
Companies has at all times been maintained, by their terms and in
operation, in compliance with all applicable laws, and the Consolidated
Companies are subject to no tax or penalty with respect to any Plan of
such Consolidated Company or any ERISA Affiliate thereof, including
without limitation, any tax or penalty under Title I or Title IV of
ERISA or under Chapter 43 of the Tax Code, or any tax or penalty
resulting from a loss of deduction under Sections 162, 404, or 419 of
the Tax Code, where the failure to comply with such
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laws, and such taxes and penalties, together with all other liabilities
referred to in this Section 5.15. (taken as a whole), would in the
aggregate have a Materially Adverse Effect;
(c) Liabilities. The Consolidated Companies are subject to no
liabilities (including withdrawal liabilities) with respect to any
Plans of such Consolidated Companies or any of their ERISA Affiliates,
including without limitation, any liabilities arising from Titles I or
IV of ERISA, other than obligations to fund benefits under an ongoing
Plan and to pay current contributions, expenses and premiums with
respect to such Plans, where such liabilities, together with all other
liabilities referred to in this Section 5.15. (taken as a whole), would
in the aggregate have a Materially Adverse Effect;
(d) Funding. The Consolidated Companies and, with respect to
any Plan which is subject to Title IV of ERISA, each of their
respective ERISA Affiliates, have made full and timely payment of all
amounts (A) required to be contributed under the terms of each Plan and
applicable law, and (B) required to be paid as expenses (including PBGC
or other premiums) of each Plan, where the failure to pay such amounts
(when taken as a whole, including any penalties attributable to such
amounts) would have a Materially Adverse Effect. No Plan subject to
Title IV of ERISA has an "amount of unfunded benefit liabilities" (as
defined in Section 4001(a)(18) of ERISA), determined as if such Plan
terminated on any date on which this representation and warranty is
deemed made, in any amount which, together with all other liabilities
referred to in this Section 5.15. (taken as a whole), would have a
Materially Adverse Effect if such amount were then due and payable. The
Consolidated Companies are subject to no liabilities with respect to
post-retirement medical benefits in any amounts which, together with
all other liabilities referred to in this Section 5.15. (taken as a
whole), would have a Materially Adverse Effect if such amounts were
then due and payable.
SECTION 5.16. PATENTS, TRADEMARKS, LICENSES, ETC.
Except as set forth on Schedule 5.16., (i) the Consolidated Companies
have obtained and hold in full force and effect all Material governmental
authorizations, consents, approvals, patents, trademarks, service marks,
franchises, trade names, copyrights, licenses and other such rights, free from
burdensome restrictions, which are necessary for the operation of their
respective businesses as presently conducted, and (ii) to the best of Borrower's
knowledge, no product, process, method, service or other item presently sold by
or employed by any Consolidated Company in connection with such business
infringes any patents, trademark, service mark, franchise, trade name,
copyright, license or other right owned by any other Person and there is not
presently pending, or to the knowledge of Borrower, threatened, any claim or
litigation against or affecting any Consolidated Company contesting such
Person's right to sell or use any such product, process, method, substance or
other item where the result of such failure to obtain and hold such benefits or
such infringement would have a Materially Adverse Effect.
SECTION 5.17. OWNERSHIP OF PROPERTY; LIENS.
(a) Except as set forth on Schedule 5.17., (i) each
Consolidated Company has good and marketable fee simple title to or a
valid leasehold interest in all of its real property and
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good title to all of its other Property, as such Properties are
reflected in the consolidated balance sheet of the Consolidated
Companies as of May 2, 1997, except where the failure to hold such
title, leasehold interest, or possession would not have a Materially
Adverse Effect, other than Properties disposed of in the ordinary
course of business since such date or as otherwise permitted by the
terms of this Agreement, subject to no known Lien or title defect of
any kind, except Liens permitted by Section 7.2. and (ii) the
Consolidated Companies enjoy peaceful and undisturbed possession under
all of their respective leases except where the failure to enjoy
peaceful and undisturbed possession would not have a Materially Adverse
Effect.
(b) As of the date of this Agreement, the Property owned by
each Consolidated Company is not subject to any Lien securing any
Indebtedness or other obligation of such Consolidated Company in excess
of $2,500,000 individually or in the aggregate, other than as described
on Schedule 5.17. hereof.
SECTION 5.18. INDEBTEDNESS.
Other than as described on Schedule 5.18. herein, and as of the date
hereof, the Consolidated Companies, on a consolidated basis, are not obligors
(singularly or in the aggregate) in respect of any Indebtedness for Borrowed
Money in excess of $2,500,000 or any commitment to create or incur any
Indebtedness for Borrowed Money in excess of $2,500,000.
SECTION 5.19. FINANCIAL CONDITION.
On the Closing Date and after giving effect to the transactions
contemplated by this Agreement and the other Credit Documents, the Property of
each Consolidated Company at fair valuation and based on their present fair
saleable value will exceed such Consolidated Company's debts, including
contingent liabilities, (ii) the remaining capital of such Consolidated Company
will not be unreasonably small to conduct such Consolidated Company's business,
and (iii) such Consolidated Company will not have incurred debts, or have
intended to incur debts, beyond the Consolidated Company's ability to pay such
debts as they mature. For purposes of this Section 5.19., "debt" means any
liability on a claim, and "claim" means (a) the right to payment, whether or not
such right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured, or (b) the right to an equitable remedy for breach of performance if
such breach gives rise to a right to payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured,
disputed, undisputed, secured or unsecured.
SECTION 5.20. LABOR MATTERS.
Except as set forth in Schedule 5.20., the Consolidated Companies have
experienced no strikes, labor disputes, slow downs or work stoppages due to
labor disagreements which is reasonably likely to have, a Materially Adverse
Effect, and, to the best knowledge of the Executive Officers of the Borrower,
there are no such strikes, disputes, slow downs or work stoppages threatened
against any Consolidated Company except as disclosed in writing to the Agent.
The hours worked and payment made to employees of the Consolidated Companies
have
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not been in violation in any Material respect of the Fair Labor Standards Act or
any other applicable law dealing with such matters, and all payments due from
the Consolidated Companies, or for which any claim may be made against the
Consolidated Companies, on account of wages and employee health and welfare
insurance and other benefits have been paid or accrued as liabilities on the
books of the Consolidated Companies, in each case where the failure to comply
with such laws or to pay or accrue such liabilities is reasonably likely to have
a Materially Adverse Effect.
SECTION 5.21. PAYMENT OF DIVIDEND RESTRICTIONS.
Except as described on Schedule 5.21., none of the Consolidated
Companies is party to or subject to any agreement or understanding restricting
or limiting the payment of any dividends or other distributions by any such
Consolidated Company.
SECTION 5.22. DISCLOSURE.
(a) Neither this Agreement nor any financial statements
delivered to the Lenders nor in the most recent version of any other
document, certificate or written statement furnished to the Lenders by
or on behalf of any Consolidated Company in connection with the
transactions contemplated hereby contains any untrue statement of a
Material fact or omits to state a Material fact necessary in order to
make the statements contained therein or herein not misleading, it
being understood that the representation set forth in this Section
5.22.(a) shall not apply to any financial projections or other pro
forma financial information.
(b) The financial projections and other pro forma financial
information contained in the information referred to in subsection (a)
above were based on good faith estimates and assumptions believed by
the applicable Consolidated Companies to be reasonable at the time made
and at the time furnished to the Agent and/or any Lender, it being
recognized by the Lenders that such projections and other pro forma
financial information as to future events such projections and other
pro forma financial information may differ from the projected results
for such period or periods.
SECTION 5.23. NOTICE OF VIOLATIONS.
The Borrower has not received notice, and no Consolidated Company has
received notice, that it is in violation of any Requirement of Law, judgment,
court order, rule, or regulation that would be expected to have a Materially
Adverse Effect.
SECTION 5.24. FILINGS.
The Borrower has filed all reports and statements required to be filed
with the Securities and Exchange Commission. As of their respective dates, the
reports and statements referred to above complied in all Material respects with
all rules and regulations promulgated by the Securities and Exchange Commission
and did not contain any untrue statement of a Material fact
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or omit to state a Material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
ARTICLE 6. AFFIRMATIVE COVENANTS
So long as any Commitment remains in effect hereunder or any Note shall
remain unpaid, Borrower will:
SECTION 6.1. CORPORATE EXISTENCE, ETC.
Preserve and maintain, and cause each of the Consolidated Companies to
preserve and maintain, its corporate existence (except as otherwise permitted
pursuant to Section 7.3.), its Material rights, franchises, and licenses, and
its Material patents and copyrights (for the scheduled duration thereof),
trademarks, trade names, service marks, and other intellectual property rights,
necessary or desirable in the normal conduct of its business, and its
qualification to do business as a foreign corporation in all jurisdictions where
it conducts business or other activities making such qualification necessary,
where the failure to be so qualified is reasonably likely to have a Materially
Adverse Effect.
SECTION 6.2. COMPLIANCE WITH LAWS, ETC.
Comply, and cause each Consolidated Company to comply, with all
Requirements of Law (including, without limitation, the Environmental Laws) and
all Contractual Obligations applicable to or binding on any of them where the
failure to comply with such Requirements of Law and Contractual Obligations is
reasonably likely to have a Materially Adverse Effect.
SECTION 6.3. PAYMENT OF TAXES AND CLAIMS, ETC.
File and cause each Consolidated Company to file all Federal, state,
local and foreign tax returns that are required to be filed by each of them and
pay all taxes that have become due pursuant to such returns or pursuant to any
assessment in respect thereof received by any Consolidated Company; and each
Consolidated Company will pay or cause to be paid all other taxes, assessments,
fees and other governmental charges and levies which, to the knowledge of any of
the Executive Officers of any Consolidated Company, are due and payable before
the same become delinquent, except any such taxes and assessments as are being
contested in good faith by appropriate and timely proceedings and as to which
adequate reserves have been established in accordance with GAAP.
SECTION 6.4. KEEPING OF BOOKS.
Keep, and cause each Consolidated Company to keep, proper books of
record and account, containing complete and accurate entries of all their
respective financial and business transactions.
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SECTION 6.5. VISITATION, INSPECTION, ETC.
Permit, and cause each Consolidated Company to permit, any
representative of the Agent or any Lender, at the Agent's or such Lender's
expense, to visit and inspect any of its Property, to examine its books and
records and to make copies and take extracts therefrom, and to discuss its
affairs, finances and accounts with its officers, all at such reasonable times
and as often as the Agent or such Lender may reasonably request after reasonable
prior notice to Borrower; provided, however, that at any time following the
occurrence and during the continuance of a Default or an Event of Default, no
prior notice to Borrower shall be required.
SECTION 6.6. INSURANCE; MAINTENANCE OF PROPERTIES.
(a) Maintain or cause to be maintained with financially sound
and reputable insurers, such insurance with respect to its Properties
and business in such amounts as the Borrower has determined in the
exercise of its reasonable prudent business judgment is necessary to
prevent the Consolidated Companies, singularly or in the aggregate from
experiencing a loss which would cause a Materially Adverse Effect.
(b) Cause, and cause each of the Consolidated Companies to
cause, all Properties used or useful in the conduct of its business to
be maintained and kept in good condition, repair and working order and
supplied with all necessary equipment and cause to be made all
necessary repairs, renewals, replacements, settlements and improvements
thereof, all as in the reasonable judgment of Borrower may be necessary
so that the business carried on in connection therewith may be properly
and advantageously conducted at all times; provided, however, that
nothing in this Section shall prevent Borrower from discontinuing the
operation or maintenance of any such Properties if such discontinuance
is, in the reasonable judgment of Borrower, desirable in the conduct of
its business or the business of any Consolidated Company.
(c) Cause a summary, set forth in format and detail reasonably
acceptable to the Agent, of the types and amounts of insurance
(property and liability) maintained by the Consolidated Companies to be
delivered to the Agent on or before thirty (30) days after the Closing
Date.
SECTION 6.7. FINANCIAL REPORTS.
The Borrower will furnish to the Agent and each Lender:
(a) Within fifty (50) days after the end of each of the first
three quarter-annual periods of each Fiscal Year (and, in any event, in
each case as soon as prepared), the quarterly Financial Report of the
Borrower as of the end of that period, prepared on a consolidated basis
and accompanied by a certificate, dated the date of furnishing, signed
by a Financial Officer of the Borrower to the effect that such
Financial Report accurately presents in all Material respects the
consolidated financial condition of the Consolidated Companies and that
such Financial Report has been prepared in accordance with GAAP
consistently applied (subject to year end adjustments), except that
such Financial Report need not be accompanied by notes.
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(b) Within one hundred (100) days after the end of each Fiscal
Year (and, in any event, as soon as available), the annual Financial
Report of the Borrower (with accompanying notes) for that Fiscal Year
prepared on a consolidated basis (which Financial Report shall be
reported on by the Borrower's independent certified public accountants,
such report to state that such Financial Report fairly presents in all
Material respects the consolidated financial condition and results of
operation of the Consolidated Companies in accordance with GAAP and to
be without any Material qualifications or exceptions). The audit
opinion in respect of the consolidated Financial Report shall be the
unqualified opinion of one of the nationally recognized "Big Six" firms
of independent certified public accountants acceptable to Agent.
(c) Within fifty (50) days after the end of each of its first
three quarterly accounting periods and within one hundred (100) days
after the end of each Fiscal Year, a statement certified as true and
correct by a Financial Officer of the Borrower, substantially in the
form of Exhibit J hereto, with back-up material setting forth in
reasonable detail such calculations attached thereto and stating
whether any Default or Event of Default has occurred and is continuing,
and if a Default or Event of Default has occurred and is continuing,
stating the Borrower's intentions with respect thereto;
(d) Within fifty (50) days after the end of each of its
quarterly accounting periods (including the year end quarterly period),
a statement certified as true and correct by a Financial Officer of the
Borrower setting forth the Consolidated Funded Debt to Total
Capitalization Ratio and the Fixed Charge Coverage Ratio as of the last
day of such quarterly accounting period.
(e) Promptly upon the filing thereof or otherwise becoming
available, copies of all financial statements, annual, quarterly and
special reports (including, without limitation, Borrower's 8-K, 10-K,
and 10-Q reports), proxy statements and notices sent or made available
generally by Borrower to its public security holders, of all regular
and periodic reports and all registration statements and prospectuses,
if any, filed by any of them with any securities exchange or with the
Securities and Exchange Commission, and of all press releases and other
statements made available generally to the public containing Material
developments in the business or financial condition of Borrower and the
other Consolidated Companies.
(f) Promptly upon receipt thereof, copies of all financial
statements of, and all reports submitted by, independent public
accountants to Borrower in connection with each annual, interim, or
special audit of Borrower's financial statements, including without
limitation, the comment letter submitted by such accountants to
management in connection with their annual audit.
(g) As soon possible and in any event within thirty (30) days
after the Borrower or any Consolidated Company knows or has reason to
know that any "Reportable Event" (as defined in Section 4043(b) of
ERISA) with respect to any Plan has occurred (other than such a
Reportable Event for which the PBGC has waived the 30-day notice
requirement under Section 4043(a) of ERISA) and such Reportable Event
involves a matter that has
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had, or is reasonably likely to have, a Materially Adverse Effect, a
statement of a Financial Officer of the applicable Consolidated Company
setting forth details as to such Reportable Event and the action which
the applicable Consolidated Company proposes to take with respect
thereto, together with a copy of the notice of such Reportable Event
given to the PBGC if a copy of such notice is available to the
applicable Consolidated Company.
(h) With reasonable promptness, such other information
relating to the Borrower's performance of this Agreement or its
financial condition as may reasonably be requested from time to time by
the Agent.
(i) Concurrently with the furnishing of the annual
consolidated Financial Report required pursuant to Section 6.7.(b)
hereof, furnish or cause to be furnished to Agent and each Lender a
certificate of compliance in a form reasonably satisfactory to Agent
prepared by one of the nationally recognized "Big Six" accounting firms
stating that in making the examination necessary for their audit, they
have obtained no knowledge of any Default or Event of Default, or if
they have obtained such knowledge, disclosing the nature, details , and
period of existence of such event.
SECTION 6.8. NOTICES UNDER CERTAIN OTHER INDEBTEDNESS.
Immediately upon its receipt thereof, Borrower shall furnish the Agent
a copy of any notice received by it or any other Consolidated Company from the
holder(s) of Indebtedness (or from any trustee, agent, attorney, or other party
acting on behalf of such holder(s)) in an amount which, in the aggregate,
exceeds $2,500,000.00 where such notice states or claims (i) the existence or
occurrence of any default or event of default with respect to such Indebtedness
under the terms of any indenture, loan or credit agreement, debenture, note, or
other document evidencing or governing such Indebtedness, or (ii) the existence
or occurrence of any event or condition which requires or permits holder(s) of
any Indebtedness of the Consolidated Companies to exercise rights under any
Change in Control Provision.
SECTION 6.9. NOTICE OF LITIGATION.
The Borrower shall notify the Agent of any actions, suits or
proceedings instituted by any Person against the Consolidated Companies where
the uninsured portion of the money damages sought (which shall include any
deductible amount to be paid by the Borrower or any Consolidated Company) is
singularly in an amount in excess of $15,000,000.00 or where unreserved amounts
in the aggregate are in excess of $15,000,000.00 or which is reasonably likely
to have a Materially Adverse Effect. Said notice is to be given along with the
quarterly and annual reports required by Section 6.7. hereof, and is to specify
the amount of damages being claimed or other relief being sought, the nature of
the claim, the Person instituting the action, suit or proceeding, and any other
significant features of the claim.
SECTION 6.10. SUBSIDIARY GUARANTIES.
(a) Subject to subsection (c) below, the Borrower shall cause
each of the Consolidated Companies existing as of the Closing Date to
execute and deliver on or
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before the Closing Date a Subsidiary Guaranty in substantially the same
form as set forth in Exhibit K. The delivery of such documents shall be
accompanied by such other documents as the Agent may reasonably request
(e.g., certificates of incorporation, articles of incorporation and
bylaws, opinion letters and appropriate resolutions of the Board of
Directors of any such Subsidiary Guarantor).
(b) Subject to subsection (c) below, the Borrower shall cause
each Consolidated Company not existing as of the Closing Date to
execute and deliver a Subsidiary Guaranty in substantially the same
form as set forth in Exhibit K, simultaneously with the creation or
acquisition of any such Consolidated Company by the Borrower or any
other such Consolidated Company. The delivery of such documents shall
be accompanied by such other documents as the Agent may reasonably
request (e.g., certificates of incorporation, articles of incorporation
and bylaws, opinion letters and appropriate resolutions of the Board of
Directors of any such Subsidiary Guarantor).
(c) Notwithstanding the foregoing subsections (a) and (b), the
Borrower shall not be required to cause any Consolidated Company to
deliver a Subsidiary Guaranty if the delivery of such documents would
cause such Consolidated Company to violate any Requirement of Law.
SECTION 6.11. EXISTING BUSINESS.
Remain and cause each Consolidated Company to remain engaged in
business of the same general nature and type as conducted on the Closing Date.
SECTION 6.12. ERISA INFORMATION AND COMPLIANCE.
Comply and cause each Consolidated Company to comply with ERISA and all
other applicable laws governing any pension or profit sharing plan or
arrangement to which any Consolidated Company is a party. The Borrower shall
provide and shall cause each Consolidated Company to provide Agent with notice
of any "reportable event" or "prohibited transaction" or the imposition of a
"withdrawal liability" within the meaning of ERISA.
ARTICLE 7. NEGATIVE COVENANTS
So long as any Commitment remains in effect hereunder or any Note shall
remain unpaid:
SECTION 7.1. FINANCIAL REQUIREMENTS.
The Borrower shall not:
(a) Fixed Charge Coverage Ratio. Suffer or permit, as of the
last day of any fiscal quarter, the ratio of (A) Consolidated EBITR to
(B) the sum of (i) Consolidated Interest Expense, plus (ii)
Consolidated Rental Expense to be less than 2.0 to 1.0, as
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calculated for the most recently concluded quarter and the immediately
three (3) preceding fiscal quarters.
(b) Consolidated Funded Debt to Total Capitalization Ratio.
Permit, as of the last day of any fiscal quarter, the ratio of
Consolidated Funded Debt to Total Capitalization to be greater than .50
to 1.0.
SECTION 7.2. LIENS.
The Borrower will not, and will not permit any Consolidated Company to,
create, assume or suffer to exist any Lien upon any of their respective
Properties whether now owned or hereafter acquired; provided, however, that this
Section 7.2. shall not apply to the following:
(a) any Lien for taxes not yet due or taxes or assessments or
other governmental charges which are being actively contested in good
faith by appropriate proceedings and as to which adequate reserves have
been established in accordance with GAAP;
(b) any customary Liens, pledges or deposits in connection
with worker's compensation, unemployment insurance, or social security,
or deposits incidental to the conduct of the business of any
Consolidated Company or the ownership of any of their Properties which
were not incurred in connection with the borrowing of money or the
obtaining of advances or credit and which do not in the aggregate
Materially detract from the value of their Properties or Materially
impair the use thereof in the operation of their businesses;
(c) any customary Liens to secure the performance of tenders,
statutory obligations, surety and appeal bonds, and similar obligations
and as to which adequate reserves have been established in accordance
with GAAP;
(d) statutory Liens of carriers, warehousemen, mechanics,
materialmen and other Liens imposed by law created in the ordinary
course of business for amounts not yet due or which are being contested
in good faith by appropriate proceedings and as to which adequate
reserves have been established in accordance with GAAP;
(e) Liens consisting of encumbrances in the nature of zoning
restrictions, easements, rights and restrictions of record on the use
of real property on the date of the acquisition thereof and statutory
Liens of landlords and lessors which in any case do not Materially
detract from the value of such real property or impair the use thereof;
(f) any Lien in favor of the United States of America or any
department or agency thereof, or in favor of any state government or
political subdivision thereof, or in favor of a prime contractor under
a government contract of the United States, or of any state government
or any political subdivision thereof, and, in each case, resulting from
acceptance of partial, progress, advance or other payments in the
ordinary course of business
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under government contracts of the United States, or of any state
government or any political subdivision thereof, or subcontracts
thereunder;
(g) any Lien existing on the date hereof and disclosed on the
consolidated Financial Reports of Borrower;
(h) statutory Liens arising under ERISA created in the
ordinary course of business for amounts not yet due and as to which
adequate reserves have been established in accordance with GAAP; and
(i) any Lien incurred in connection with Purchase Money
Indebtedness and placed upon any Property at the time of its
acquisition (or within 60 days thereafter) by any Consolidated Company
to secure all or a portion of the purchase price therefor, provided
that the aggregate cumulative amount of Indebtedness secured by such
purchase money Liens must never exceed an amount equal to five percent
(5%) of Consolidated Net Worth (in calculating the amount of any
Purchase Money Indebtedness secured by a Lien for the purpose of this
Section 7.2.(d), there shall be excluded Purchase Money Indebtedness in
an amount up to $10,000,000 per distribution center under construction
by any Consolidated Company with the maximum exclusion, regardless of
the number of distribution centers under construction, of no more than
$20,000,000, provided that the Purchase Money Indebtedness incurred in
connection with the construction of a distribution center and the
purchase money Lien evidenced thereby is repaid and cancelled within 90
days following the issuance of a certificate of occupancy, or similar
certification, for such distribution center), and provided, that any
such Lien shall not encumber any other Properties of any Consolidated
Company.
SECTION 7.3. MERGER AND SALE OF ASSETS.
The Borrower will not, without the prior written consent of the
Required Lenders, merge or consolidate with any other corporation or sell, lease
or transfer or otherwise dispose of all or, during any twelve-month period, a
Material part of its Property to any Person, nor shall the Borrower permit any
Consolidated Company to take any of the above actions; provided that
notwithstanding any of the foregoing limitations, if no Default or Event of
Default shall then exist or immediately thereafter will exist, Consolidated
Companies may take the following actions:
(a) Any Consolidated Company may merge with (i) the Borrower
(provided that the Borrower shall be the continuing or surviving
corporation) or (ii) any one or more other Subsidiaries provided that
either the continuing or surviving corporation shall remain a
Consolidated Company;
(b) Any Consolidated Company may sell, lease, transfer or
otherwise dispose of any of its assets to (i) the Borrower, or (ii) any
other Consolidated Company; and
(c) The Borrower may sell for fair value Scottsville, Kentucky
office buildings (exclusive of its Scottsville, Kentucky distribution
center).
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SECTION 7.4. TRANSACTIONS WITH AFFILIATES.
The Borrower will not, and will not permit any Consolidated Company to,
enter into or be a party to any transaction or arrangement with any Affiliate
(including, without limitation, the purchase from, sale to or exchange of
property with, or the rendering of any service by or for, any Affiliates),
except in the ordinary course of and pursuant to the reasonable requirements of
such Consolidated Company's business and upon fair and reasonable terms no less
favorable to such Consolidated Company than such party would obtain in a
comparable arm's-length transaction with a Person other than an Affiliate.
SECTION 7.5. NATURE OF BUSINESS.
The Borrower will not, and will not permit any Consolidated Company to,
engage in any business if, as a result, the general nature of the business,
taken on a consolidated basis, which would then be engaged in by any
Consolidated Company would be fundamentally changed from the general nature of
the business engaged in by the Consolidated Companies on the date of this
Agreement.
SECTION 7.6. REGULATIONS G, T, U AND X.
The Borrower will not nor will it permit any Consolidated Company to
take any action that would result in any non-compliance of the Advances made
hereunder with Regulations G, T, U and X of the Board of Governors of the
Federal Reserve System.
SECTION 7.7. ERISA COMPLIANCE.
The Borrower will not, and will not permit any Consolidated Company to,
incur any Material "accumulated funding deficiency" within the meaning of
Section 302(a)(2) of ERISA, or any Material liability under Section 4062 of
ERISA to the Pension Benefit Guaranty Corporation ("PBGC") established
thereunder in connection with any Plan.
SECTION 7.8. INVESTMENTS, LOANS, AND ADVANCES. The Borrower will not,
and will not permit any Consolidated Company to, make or permit to remain
outstanding any loans or advances to or investments in any Person, except that,
subject to all other provisions of this Section 7.8., the foregoing restriction
shall not apply to:
(a) investments in direct obligations of the United States of
America or any agency thereof having maturities of less than one year;
(b) investments in commercial paper maturing within one year
from the date of creation thereof of the highest credit rating of a
Rating Agency;
(c) investments in bankers' acceptances and certificates of
deposit having maturities of less than one year issued by commercial
banks in the United States of America having capital and surplus in
excess of $50,000,000;
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(d) the endorsement of negotiable or similar instruments in
the ordinary course of business; and
(e) investments in stock of any Consolidated Companies;
(f) investments in stock or assets, or any combination
thereof, of any Subsidiary created or acquired after the Closing Date;
(g) investments received in settlement of debt created in the
ordinary course of business; and
(h) advances to officers and employees of Borrower made in the
ordinary course of business and not in excess of amounts customarily
and historically loaned to such officers and employees not to exceed
$2,500,000 in the aggregate.
SECTION 7.9. SALES AND LEASEBACKS. With regard to any Property owned by
the Borrower or any Consolidated Company as of the date of this Agreement, the
Borrower will not, and will not permit any Consolidated Company to, enter into
any arrangement, directly or indirectly, with any Person by which any
Consolidated Entity shall sell or transfer any such Property with a market value
in excess of $35,000,000, and by which any Consolidated Entity shall then or
thereafter rent or lease as lessee such Property or any part thereof or other
Property that such Consolidated Entity intends to use for substantially the same
purpose or purposes as the Property sold or transferred.
With regard to any Property acquired by the Borrower or any
Consolidated Company after the date of this Agreement, the Borrower will not,
and will not permit any Consolidated Company, to enter into any arrangement,
directly or indirectly, with any Person by which any Consolidated Company shall
sell or transfer any such Property and by which any Consolidated Company shall
then or thereafter rent or lease as lessee such Property or any part thereof or
other Property that the Consolidated Company intends to use for substantially
the same purpose or purposes as the Property sold or transferred unless any such
sale and leaseback transaction is completed within a six-month period from the
later of the date the Property is acquired or the date such Property is placed
into service.
SECTION 7.10. GUARANTIES. The Borrower shall not, and will not permit
any Consolidated Company to, enter into any Guaranty, except that, subject to
all other provisions of this Article, the foregoing restriction shall not apply
to:
(a) Subsidiary Guaranties;
(b) the execution by Borrower of a Guaranty for the Synthetic
Lease;
(c) Guaranties executed by one Consolidated Company in favor
of or to another Consolidated Company for the obligations of another
Consolidated Company;
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(d) endorsements of instruments for deposit or collection in
the ordinary course of business; and
(e) such other Guaranties that do not cause a breach or
violation of the Consolidated Funded Debt to Total Capitalization
Ratio.
SECTION 7.11. LIMITATION ON FUNDED DEBT. The Borrower will not permit
any Consolidated Company and the Consolidated Companies in the aggregate to
incur or suffer to exist Funded Debt other than:
(a) Funded Debt of the Consolidated Companies existing on the
date of this Agreement and any renewal, extension, refunding, or
refinancing thereof;
(b) Seasonal unsecured working capital lines of credit
incurred subsequent to the date that the Borrower has used one hundred
percent (100%) of the Total Commitments and provided that such seasonal
working capital lines of credit may remain outstanding only for so long
as one hundred percent (100%) of the Total Commitments remain
outstanding;
(c) Purchase Money Indebtedness permitted by Section 7.2(i)
herein;
(d) Indebtedness incurred in connection with stand-by letters
of credit issued in the ordinary course of business on the account of
any Consolidated Company not to exceed for all Consolidated Companies
in the aggregate, an outstanding amount in excess of $15,000,000; and
(e) Indebtedness incurred to First American National Bank in
connection with the financing of seasonal working capital needs
provided that the aggregate amount of such indebtedness does not exceed
$20,000,000.
SECTION 7.12. ACQUISITIONS. The Borrower will not, and will not permit
any Consolidated Company to make Acquisitions for a purchase price in excess of
$25,000,000 in the aggregate in any twelve (12) month period. For the purpose
hereof, the purchase price shall be determined by the sum of: (A) all cash paid,
plus (B) the principal amount of any promissory notes given, plus (C) the value
of any stock given, and (D) the value of any other Property given or transferred
in respect of such Acquisition.
ARTICLE 8. EVENTS OF DEFAULT
Upon the occurrence and during the continuance of any of the following
specified events (each an "Event of Default"):
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SECTION 8.1. PAYMENTS.
Borrower shall fail to make promptly when due (including, without
limitation, by mandatory prepayment) any principal payment with respect to the
Loans, or Borrower shall fail to make any payment of interest, fee or other
amount payable hereunder within five (5) Business Days of the due date thereof.
SECTION 8.2. COVENANTS WITHOUT NOTICE.
Borrower shall fail to observe or perform any covenant or agreement
contained in Sections 6.1., 6.2., 6.3., 6.5., 6.7., 6.8., 6.9., 6.10., 6.11.,
6.12., or in Article 7. herein.
SECTION 8.3. OTHER COVENANTS.
Borrower shall fail to observe or perform any covenant or agreement
contained in this Agreement, other than those referred to in Sections 8.1. and
8.2., and such failure shall remain unremedied for 30 days after the earlier of
(i) an Executive Officer of the Borrower obtaining knowledge thereof, or (ii)
written notice thereof shall have been given to Borrower by Agent or any Lender;
SECTION 8.4. REPRESENTATIONS.
Any representation or warranty made or deemed to be made by Borrower or
any other Consolidated Company or by any of its officers under this Agreement or
any other Credit Document (including the Schedules attached thereto), or any
certificate or other document submitted to the Agent or the Lenders by any such
Person pursuant to the terms of this Agreement or any other Credit Document,
shall be incorrect in any Material respect when made or deemed to be made or
submitted;
SECTION 8.5. NON-PAYMENTS OF OTHER INDEBTEDNESS.
Any Consolidated Company shall fail to make when due (whether at stated
maturity, by acceleration, on demand or otherwise, and after giving effect to
any applicable grace period) any payment of principal of or interest on any
Indebtedness (other than the Obligations) exceeding $2,500,000 individually or
in the aggregate;
SECTION 8.6. DEFAULTS UNDER OTHER AGREEMENTS.
Any Consolidated Company shall fail to observe or perform within any
applicable grace period any covenants or agreements contained in any agreements
or instruments relating to any of its Indebtedness (including the Synthetic
Lease and any guaranty thereof) exceeding $2,500,000 individually or in the
aggregate, or any other event shall occur if the effect of such failure or other
event is to accelerate, or to permit the holder of such Indebtedness or any
other Person to accelerate, the maturity of such Indebtedness; or any such
Indebtedness shall be required to be prepaid (other than by a regularly
scheduled required prepayment) in whole or in part prior to its stated maturity;
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SECTION 8.7. BANKRUPTCY.
Any Consolidated Company shall commence a voluntary case concerning
itself under the Bankruptcy Code or applicable foreign bankruptcy laws; or an
involuntary case for bankruptcy is commenced against any Consolidated Company
and the petition is not controverted within 10 days, or is not dismissed within
60 days, after commencement of the case, or a custodian (as defined in the
Bankruptcy Code) or similar official under applicable foreign bankruptcy laws is
appointed for, or takes charge of, all or any substantial part of the Property
of any Consolidated Company; or any Consolidated Company commences proceedings
of its own bankruptcy or to be granted a suspension of payments or any other
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction, whether now or hereafter in effect, relating to any Consolidated
Company or there is commenced against any Consolidated Company any such
proceeding which remains undismissed for a period of 60 days; or any
Consolidated Company is adjudicated insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is entered; or any
Consolidated Company suffers any appointment of any custodian or the like for it
or any substantial part of its Property to continue undischarged or unstayed for
a period of 60 days; or any Consolidated Company makes a general assignment for
the benefit of creditors; or any Consolidated Company shall fail to pay, or
shall state that it is unable to pay, or shall be unable to pay, its debts
generally as they become due; or any Consolidated Company shall call a meeting
of its creditors with a view to arranging a composition or adjustment of its
debts; or any Consolidated Company shall by any act or failure to act indicate
its consent to, approval of or acquiescence in any of the foregoing; or any
corporate action is taken by any Consolidated Company for the purpose of
effecting any of the foregoing;
SECTION 8.8. ERISA.
A Plan of a Consolidated Company or a Plan subject to Title IV of ERISA
of any of its ERISA Affiliates:
(i) shall fail to be funded in accordance with the minimum
funding standard required by applicable law, the terms of such Plan,
Section 412 of the Tax Code or Section 302 of ERISA for any plan year
or a waiver of such standard is sought or granted with respect to such
Plan under applicable law, the terms of such Plan or Section 412 of the
Tax Code or Section 303 of ERISA; or
(ii) is being, or has been, terminated or the subject of
termination proceedings under applicable law or the terms of such Plan;
or
(iii) shall require a Consolidated Company to provide security
under applicable law, the terms of such Plan, Section 401 or 412 of the
Tax Code or Section 306 or 307 of ERISA; or
(iv) results in a liability to a Consolidated Company under
applicable law, the terms of such Plan, or Title IV of ERISA;
and there shall result from any such failure, waiver, termination or other event
a liability to the PBGC or a Plan that would have a Materially Adverse Effect.
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SECTION 8.9. MONEY JUDGMENT.
A final judgments or final order for the payment of money in excess of
$2,500,000 individually or in the aggregate or otherwise having a Materially
Adverse Effect shall be rendered against Borrower or any other Consolidated
Company and such judgment or order shall continue unsatisfied (in the case of a
money judgment) and in effect for a period of 30 days during which execution
shall not be effectively stayed or deferred (whether by action of a court, by
agreement or otherwise);
SECTION 8.10. OWNERSHIP OF CREDIT PARTIES.
If Borrower ceases to own all of the Voting Stock of any Subsidiary
Guarantor.
SECTION 8.11. CHANGE IN CONTROL OF BORROWER.
Any "person" or "group" (within the meaning of Section 13(d) and
14(d)(2) of the Exchange Act) shall become the "beneficial owner(s)" (as defined
in Rule 13d-3) of more than thirty percent (30%) of the shares of the
outstanding common stock of Borrower entitled to vote for members of Borrower's
board of directors, or (b) any event or condition shall occur or exist which,
pursuant to the terms of any change of control provision, requires or permits
the holder(s) of Indebtedness of any Consolidated Company which individually or
in the aggregate is equal to or exceeds $2,500,000 to require that such
Indebtedness be redeemed, repurchased, defeased, prepaid, or repaid, in whole or
in part, or the maturity of such Indebtedness to be accelerated in any respect.
SECTION 8.12. DEFAULT UNDER OTHER CREDIT DOCUMENTS.
There shall exist or occur any "Event of Default" as provided under the
terms of any Credit Document, or any Credit Document ceases to be in full force
and effect or the validity or enforceability thereof is disaffirmed by or on
behalf of Borrower or any other Consolidated Company, or at any time it is or
becomes unlawful for Borrower or any other Consolidated Company to perform or
comply with its obligations under any Credit Document, or the obligations of
Borrower or any other Consolidated Company, any Credit Document are not or cease
to be legal, valid and binding on Borrower or any such Consolidated Company.
Then, and in any such event, and at any time thereafter if any Event of
Default shall then be continuing, the Agent may, and upon the written or telex
request of the Required Lenders, shall, by written notice to Borrower, take any
or all of the following actions, without prejudice to the rights of the Agent,
any Lender or the holder of any Note to enforce its claims against Borrower or
any Subsidiary Guarantor: (i) declare all Commitments terminated, whereupon the
Commitments of each Lender shall terminate immediately and any Facility Fee
shall forthwith become due and payable without any other notice of any kind;
(ii) declare the principal of and any accrued interest on the Loans, and all
other Obligations owing hereunder to be, whereupon the same shall become,
forthwith due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower; provided, that, if
an Event
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of Default specified in Section 8.7. shall occur, no notice shall be required
before those matters set forth herein and in subpart (i) above shall be
effective; (iii) may exercise all remedies under any Subsidiary Guaranty; and
(iv) may exercise any other rights or remedies available under the Credit
Documents, at law or in equity.
ARTICLE 9. THE AGENT
SECTION 9.1. APPOINTMENT OF AGENT.
Each Lender hereby designates SunTrust as Agent to administer all
matters concerning the Loans and to act as herein specified. Each Lender hereby
irrevocably authorizes, and each holder of any Note by the acceptance of a Note
shall be deemed irrevocably to authorize, the Agent to take such actions on its
behalf under the provisions of this Agreement, the other Credit Documents, and
all other instruments and agreements referred to herein or 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.
The provisions of this Section 9.1. are solely for the benefit of Agent and
Lenders, and the Borrower shall not have rights as a third party beneficiary of
any provisions hereof.
SECTION 9.2. NATURE OF DUTIES OF AGENT.
The Agent shall have no duties or responsibilities except those
expressly set forth in this Agreement and the other Credit Documents. Neither
the Agent nor any of its respective officers, directors, employees or agents
shall be liable for any action taken or omitted by it as such hereunder or in
connection herewith, unless caused by its or their gross negligence or willful
misconduct. The duties of the Agent shall be ministerial and administrative in
nature; the Agent shall not have by reason of this Agreement a fiduciary
relationship in respect of any Lender; and nothing in this Agreement, express or
implied is intended to or shall be so construed as to impose upon the Agent any
obligations in respect of this Agreement or the other Credit Documents except as
expressly set forth herein.
SECTION 9.3. LACK OF RELIANCE ON THE 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
condition and affairs of the Consolidated Companies in connection with
the taking or not taking of any action in connection herewith, and (ii)
its own appraisal of the creditworthiness of the Consolidated
Companies, and, except as expressly provided in this 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.
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(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 Agreement, the Notes, the Subsidiary Guaranties, or any other
documents contemplated hereby or thereby, or the financial condition of
the Consolidated Companies, or be required to make any inquiry
concurring either the performance or observance of any of the terms,
provisions or conditions of this Agreement, the Notes, the Subsidiary
Guaranties, or the other documents contemplated hereby or thereby, or
the financial condition of the Consolidated Companies, or the existence
or possible existence of any Default or Event of Default.
SECTION 9.4. CERTAIN RIGHTS OF THE AGENT.
If the Agent shall request instructions from the Required Lenders with
respect to any action or actions (including the failure to act) in connection
with this Agreement, the Agent shall be entitled to refrain from such act or
taking such act, unless and until the Agent shall have received instructions
from the Required 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's
acting or refraining from acting hereunder in accordance with the instructions
of the Required Lenders.
SECTION 9.5. 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, cable gram, radiogram, order or other
documentary, teletransmission 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 any Consolidated
Company), 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.
SECTION 9.6. INDEMNIFICATION OF AGENT.
To the extent the Agent is not reimbursed and indemnified by the
Consolidated Companies, each Lender will reimburse and indemnify the Agent,
ratably according to the respective amounts of the Loans outstanding under all
Facilities (or if no amounts are outstanding, ratably in accordance with the
Total Commitments), in either case, for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, including counsel
fees and disbursements) or disbursements of any suits, costs, expenses (in 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 Agreement or the other Credit Documents; provided that no Lender
shall be liable to the Agent 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.
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SECTION 9.7. THE AGENT IN ITS INDIVIDUAL CAPACITY.
With respect to its obligation to lend under this Agreement, the Loans
made by it and the Notes issued to it, the Agent shall have the same rights and
powers hereunder as any other Lender or holder of a Note and may exercise the
same as though it were not performing the duties specified herein; and the terms
"Lenders", "Required Lenders" "holders of 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, and
generally engage in any kind of banking, trust, financial, advisory, or other
business with the Consolidated Companies or any Affiliate of the Consolidated
Companies as if it were not performing the duties specified herein, and may
accept fees and other consideration from the Consolidated Companies for services
in connection with this Agreement and otherwise without having to account for
the same to the Lenders.
SECTION 9.8. 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.
SECTION 9.9. SUCCESSOR AGENT.
(a) The Agent may resign at any time by giving written notice
thereof to the Lenders and Borrower and may be removed at any time with
or without cause by the Required Lenders; provided, however, the Agent
may not resign or be removed until a successor Agent has been appointed
and shall have accepted such appointment. Upon any such resignation or
removal, the Required Lenders shall have the right to appoint a
successor Agent subject to Borrower's prior written approval. If no
successor Agent shall have been so appointed by the Required Lenders,
and shall have accepted such appointment, within 30 days after the
retiring Agent's giving of notice of resignation or the Required
Lenders' removal of the retiring Agent, then the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent subject to Borrower's
prior written approval, which shall be a bank which maintains an office
in the United States, or a commercial bank organized under the laws of
the United States of America or any State thereof, or any Affiliate of
such bank, having a combined capital and surplus of at least
$100,000,000. In the event that the Agent is no longer a Lender
hereunder, the Agent shall promptly resign as Agent.
(b) Upon the acceptance of any appointment as the 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 Agreement. After
any retiring Agent's resignation or removal hereunder as Agent, the
provisions of this Article 9. shall inure to
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its benefit as to any actions taken or omitted to be taken by it while
it was an Agent under this Agreement.
ARTICLE 10. MISCELLANEOUS
SECTION 10.1. NOTICES.
All notices, requests and other communications to any party hereunder
shall be in writing (including bank wire, telex, telecopy or similar
teletransmission or writing) and shall be given to such party at its address or
applicable teletransmission number set forth on the signature pages hereof, or
such other address or applicable teletransmission number as such party may
hereafter specify by notice to the Agent and Borrower. Each such notice, request
or other communication shall be effective (i) if given by telex, when such telex
is transmitted to the telex number specified in this Section and the appropriate
answerback is received, (ii) if given by mall, three (3) Business Days after
such communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid, (iii) if given by telecopy, when such telecopy is
transmitted to the telecopy number specified in this Section and the appropriate
confirmation is received, or (iv) if given by any other means (including,
without limitation, by air courier), when delivered or received at the address
specified in this Section provided that notices to the Agent shall not be
effective until received.
SECTION 10.2. AMENDMENTS, ETC.
No amendment or waiver of any provision of this Agreement or the other
Credit Documents, nor consent to any departure by any Consolidated Company
therefrom, shall in any event be effective under the same shall be in writing
and signed by the Required Lenders, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided that no amendment, waiver or consent shall, unless in writing
and signed by all the Lenders, do any of the following: (i) waive any of the
conditions specified in Section 4.1. or 4.2., (ii) increase the Commitments or
other contractual obligations to Borrower under this Agreement, (iii) reduce the
principal of, or interest on, the Notes or any fees hereunder, (iv) postpone any
date fixed for the payment in respect of principal of, or interest on, the Notes
or any fees hereunder, (v) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Notes, or the number or identity of
Lenders which shall be required for the Lenders or any of them to take any
action hereunder, (vi) modify the definition of "Required Lenders," (vii) reduce
any obligation owed under or release any Subsidiary Guaranty (except as required
under Section 6.10.(d). or (viii) modify this Section 10.2. Notwithstanding the
foregoing, no amendment, waiver or consent shall, unless in writing and signed
by the Agent in addition to the Lenders required hereinabove to take such
action, affect the rights or duties of the Agent under this Agreement or under
any other Credit Document.
SECTION 10.3. NO WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of the Agent, any Lender or any holder
of a Note in exercising any right or remedy hereunder or under any other Credit
Document, and no course of dealing between any Consolidated Company and the
Agent, any Lender or the holder of any Note
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shall operate as a waiver thereof, nor shall any single or partial exercise of
any right or remedy hereunder or under any other Credit Document preclude any
other or further exercise thereof or the exercise of any other right or remedy
hereunder or thereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which the Agent, any
Lender, or the holder of any Note would otherwise have. No notice to or demand
on any Consolidated Company not required hereunder or under any other Credit
Document in any case shall entitle any Consolidated Company to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Agent, the Lenders, or the holder of any Note to any
other or further action in any circumstances without notice or demand.
SECTION 10.4. PAYMENT OF EXPENSES, ETC.
Borrower shall:
(i) whether or not the transactions hereby contemplated are
consummated, pay all reasonable, out-of-pocket costs and expenses of
the Agent in connection with the preparation, execution and delivery
of, preservation of rights under, enforcement of, and, after a Default
or Event of Default or, upon the request of the Borrower, refinancing,
renegotiation or restructuring of, this Agreement and the other Credit
Documents and the documents and instruments referred to therein, and
any amendment, waiver or consent relating thereto (including, without
limitation, the reasonable fees actually incurred and disbursements of
counsel for the Agent), and in the case of enforcement of this
Agreement or any Credit Document after an Event of Default, all such
reasonable, out-of-pocket costs and expenses (including, without
limitation, the reasonable fees actually incurred and reasonable
disbursements and charges of counsel), for any of the Lenders;
(ii) subject, in the case of certain Taxes, to the applicable
provisions of Section 3.8.(b), pay and hold each of the Lenders
harmless from and against any and all present and future stamp,
documentary, and other similar Taxes with respect to this Agreement,
the Notes and any other Credit Documents, any collateral described
therein, or any payments due thereunder, and hold each Lender harmless
from and against any and all liabilities with respect to or resulting
from any delay or omission to pay such Taxes; and
(iii) indemnify the Agent and each Lender, and their
respective officers, directors, employees, representatives and agents
from, and hold each of them harmless against, any and all costs,
losses, liabilities, claims, damages or expenses incurred by any of
them (whether or not any of them is designated a party thereto) (an
"Indemnitee") arising out of or by reason of any investigation,
litigation or other proceeding related to any actual or proposed use of
the proceeds of any of the Loans or any Consolidated Company entering
into and performing of the Agreement, the Notes, or the other Credit
Documents, including, without limitation, the reasonable fees actually
incurred and disbursements of counsel incurred in connection with any
such investigation, litigation or other proceeding, provided, however,
Borrower shall not be obligated to indemnify, any Indemnitee for any of
the foregoing arising out of such Indemnitee's gross negligence or
willful misconduct;
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(iv) without limiting the Indemnities set forth in subsection
(iii) above, indemnify each Indemnitee for any and all expenses and
costs (including without limitation, remedial, removal, response,
abatement, cleanup, investigative, closure and monitoring costs),
losses, claims (including claims for contribution or indemnity and
including the cost of investigating or defending any claim and whether
or not such claim is ultimately defeated, and whether such claim arose
before, during or after any Consolidated Company's ownership,
operation, possession or control of its business, Property or
facilities or before, on, or after the date hereof, and including also
any amounts paid incidental to any compromise or settlement by the
Indemnitee or Indemnitees to the holders of any such claim), lawsuits,
liabilities, obligations, actions, judgments, suits, disbursements,
encumbrances, liens, damages (including without limitation damages for
contamination or destruction of natural resources), penalties and fines
of any kind or nature whatsoever (including without limitation in all
cases the reasonable fees actually incurred, other charges and
disbursements of counsel in connection therewith) incurred, suffered or
sustained by that Indemnitee based upon, arising under or relating to
Environmental Laws based on, arising out of or relating to in whole or
in part, the existence or exercise of any rights or remedies by any
Indemnitee under this Agreement, any other Credit Document or any
related documents.
If and to the extent that the obligations of Borrower under this
Section 10.4. are unenforceable for any reason, Borrower hereby agrees to make
the maximum contribution to the payment and satisfaction of such obligations
which is permissible under applicable law.
SECTION 10.5. RIGHT OF SETOFF.
In addition to and not in limitation of all rights of offset that any
Lender or other holder of a Note may have under applicable law, each Lender or
other holder of a Note shall, upon the occurrence and during the continuation of
any Event of Default and whether or not such Lender or such holder has made any
demand or any obligations under the Credit Documents have matured, have the
right to appropriate and apply to the payment of any obligations hereunder and
under the other Credit Documents, all deposits of any Consolidated Company
(general or special, time or demand, provisional or final) then or thereafter
held by and other indebtedness or Property then or thereafter owing by such
Lender or other holder to any Consolidated Company, whether or not related to
this Agreement or any transaction hereunder.
SECTION 10.6. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS.
(a) This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns
of the parties hereto, provided that Borrower may not assign or
transfer any of its interest hereunder without the prior written
consent of the Lenders.
(b) Any Lender may make, carry or transfer Loans at, to or for
the account of, any of its branch offices or the office of an Affiliate
of such Lender.
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(c) Each Lender may assign all or a portion of its interests,
rights and obligations under this Agreement (including all or a portion
of its Commitment and the Loans at the time owing to it and the Notes
held by it) to any Eligible Assignee; provided, however, that (i) the
Agent and, except during the continuance of a Default or Event of
Default, the Borrower must give their prior written consent to such
assignment (which consent shall not be unreasonably withheld or
delayed) unless such assignment is to an Affiliate of the assigning
Lender, (ii) the amount of the Commitments of the assigning Lender
subject to each assignment (determined as of the date the assignment
and acceptance with respect to such assignment is delivered to the
Agent) shall not be less than an amount equal to $5,000,000 or greater
integral multiplies thereof, and (iii) the parties to each such
assignment shall execute and deliver to the Agent an Assignment and
Acceptance, together with the Note or Notes subject to such assignment
and, unless such assignment is to an Affiliate of such Lender, a
processing and recordation fee of $3,000. Borrower shall not be
responsible for such processing and recordation fee or any costs or
expenses incurred by any Lender or the Agent in connection with such
assignment. From and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at least five
(5) Business Days after the execution thereof, the assignee there-under
shall be a party hereto and to the extent of the interest assigned by
such Assignment and Acceptance, have the rights and obligations of a
Lender under this Agreement. Within five (5) Business Days after
receipt of the notice and the Assignment and Acceptance, Borrower, at
its own expense, shall execute and deliver to the Agent,
in exchange for the surrendered Note or Notes, a new Note or Notes to
the order of such assignee in a principal amount equal to the
applicable Commitments or Loans assumed by it pursuant to such
Assignment and Acceptance and new Note or Notes to the assigning Lender
in the amount of its retained Commitment or Commitments or amount of
its retained Loans. Such new Note or Notes shall be in aggregate and a
principal amount equal to the aggregate principal amount of such
surrendered Note or Notes, shall be dated the date of the surrendered
Note or Notes which they replace, and shall otherwise be in
substantially the form attached hereto.
(d) Each Lender may, without the consent of the Borrower, sell
participations to one or more banks or other entities in all or a
portion of its rights and obligations under this Agreement (including
all or a portion of its Commitments in the Loans owing to it and the
Notes held by it), provided, however, that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, (iii) the participating bank or
other entity shall not be entitled to the benefit (except through its
selling Lender) of the cost protection provisions contained in Article
4. of this Agreement, and (iv) Borrower and the Agent and other Lenders
shall continue to deal solely and directly with each Lender in
connection with such Lender's rights and obligations under this
Agreement and the other Credit Documents, and such Lender shall retain
the sole right to enforce the obligations of Borrower relating to the
Loans and to approve any amendment, modification or waiver of any
provisions of this Agreement. Any Lender selling a participation
hereunder shall provide prompt written notice to Agent of the name of
such participant.
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(e) Any Lender or participant may, in connection with the
assignment or participation or proposed assignment or participation,
pursuant to this Section, disclose to the assignee or participant or
proposed assignee or participant any information relating to Borrower
or the other Consolidated Companies furnished to such Lender by or on
behalf of Borrower or any other Consolidated Company. With respect to
any disclosure of confidential, non-public, proprietary information,
such proposed assignee or participant shall agree to use the
information only for the purpose of making any necessary credit
judgments with respect to this credit facility and not to use the
information in any manner prohibited by any law, including without
limitation, the securities laws of the United States. The proposed
participant or assignee shall agree not to disclose any of such
information except as permitted by Section 10.15. hereof. The proposed
participant or assignee shall further agree to return all documents or
other written material and copies thereof received from any Lender, the
Agent or Borrower relating to such confidential information unless
otherwise properly disposed of by such entity.
(f) Any Lender may at any time assign all or any portion of
its rights under this Agreement and the Notes issued to it to a Federal
Reserve Bank; provided that no such assignment shall release the Lender
from any of its obligations hereunder.
(g) If (i) any Taxes referred to in Section 3.8.(b) have been
levied or imposed so as to require withholdings and reductions by the
Borrower and payment by the Borrower of additional amounts to any
Lender as a result thereof, (ii) or any Lender shall make demand for
payment of any material additional amounts as compensation for
increased costs pursuant to Section 3.11., or for its reduced rate of
return pursuant to Section 4.16., or (iii) any Lender shall decline to
consent to a modification or waiver of the terms of this Agreement or
the other Credit Documents requested by Borrower, then and in such
event, upon request from the Borrower delivered to such Lender and the
Agent, such Lender shall assign, in accordance with the provisions of
Section 10.6.(c), all of its rights and obligations under this
Agreement and the other Credit Documents to another Lender or an
Eligible Assignee selected by the Borrower and consented to by the
Agent in consideration for the payment by such assignee to the Lender
of the principal of and interest on the outstanding Loans accrued to
the date of such assignment and the assumption of such Lender's Total
Commitment, together with any and all other amounts owing to such
Lender under any provisions of this Agreement or the other Credit
Documents accrued to the date of such assignment.
SECTION 10.7. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND UNDER THE NOTES SHALL BE CONSTRUED IN ACCORDANCE
WITH AND BE GOVERNED BY THE LAW OF THE STATE OF TENNESSEE.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT, THE NOTES OR ANY OTHER COURT DOCUMENT, MAY BE BROUGHT IN ANY
FEDERAL OR STATE COURT LOCATED IN DAVIDSON
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COUNTY, TENNESSEE, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
BORROWER HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS.
(c) THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE THEIR RIGHT TO
A TRIAL BY JURY, AND BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR
BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS.
(d) Nothing herein shall affect the right of the Agent, any
Lender, any holder of a Note or any Consolidated Company to serve
process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against Borrower in any other
jurisdiction.
SECTION 10.8. INDEPENDENT NATURE OF LENDERS' RIGHTS.
The amounts payable at any time hereunder to each Lender shall be a
separate and independent debt, and each Lender shall be entitled to protect and
enforce its rights pursuant to this Agreement and its Notes, and it shall not be
necessary for any other Lender to be joined as an additional party in any
proceeding for such purpose.
SECTION 10.9. COUNTERPARTS.
This Agreement may be executed in any number of counterparts and by the
different parties hereto on 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.
SECTION 10.10. EFFECTIVENESS; SURVIVAL.
(a) This Agreement shall become effective on the date (the
"Effective 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 pursuant to Section 11.1. or, in the
case of the Lenders, shall have given to the Agent written (which may
be delivered by facsimile) or telex notice (actually received) that the
same has been signed and mailed to them.
(b) The obligations of Borrower under Sections 3.8.(b), 3.11.,
3.13., 3.14., 3.17. and 10.4. hereof shall survive the payment in full
of the Notes after the Maturity Date. All representations and
warranties made herein, in the certificates, reports, notices, and
other documents delivered pursuant to this Agreement shall survive the
execution and delivery of this Agreement, the other Credit Documents,
and such other agreements and
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documents, the making of the Loans hereunder, and the execution and
delivery of the Notes.
SECTION 10.11. SEVERABILITY.
In case any provision in or obligation under this Agreement or any
other Credit Documents shall be invalid, illegal or unenforceable, in whole or
in part, 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.
SECTION 10.12. INDEPENDENCE OF COVENANTS.
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or be otherwise within the
limitation of, another covenant, shall not avoid the occurrence of a Default or
an Event of Default if such action is taken or condition exists.
SECTION 10.13. CHANGE IN ACCOUNTING PRINCIPLES, FISCAL YEAR OR TAX
LAWS.
If (i) any preparation of the financial statements referred to in
Section 6.7. hereafter occasioned by the promulgation of rules, regulations,
pronouncements and opinions by or required by the Financial Accounting Standards
Board or the American Institute of Certified Public Accounts (or successors
thereto or agencies with similar functions) result in a Material change in the
method of calculation of financial covenants, standards or terms found in this
Agreement, (ii) there is any change in Borrower's fiscal quarter or fiscal year,
or (iii) there is a Material change in federal tax laws which Materially affects
any of the Consolidated Companies' ability to comply with the financial
covenants, standards or terms found in this Agreement, Borrower and the Required
Lenders agree to enter into negotiations in order to amend such provisions so as
to equitably reflect such changes with the desired result that the criteria for
evaluating any of the Consolidated Companies' financial condition shall be the
same after such changes as if such changes had not been made. Unless and until
such provisions have been so amended, the provisions of this Agreement shall
Govern.
SECTION 10.14. HEADINGS DESCRIPTIVE; ENTIRE AGREEMENT.
The headings of the several sections and subsections of this Agreement
are inserted for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement. This Agreement, the other
Credit Documents, and the agreements and documents required to be delivered
pursuant to the terms of this Agreement constitute the entire agreement among
the parties hereto and thereto regarding the subject matters hereof and thereof
and supersede all prior agreements, representations and understandings related
to such subject matters.
SECTION 10.15. DISCLOSURE OF CONFIDENTIAL INFORMATION.
The Agent and the Lenders agree to use their best efforts to hold in
confidence and not disclose any confidential information (other than information
(i) which was publicly known from
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a source other than the Borrower or a Subsidiary, at the time of disclosure
(except pursuant to disclosure in connection with this Agreement), (ii) which
subsequently becomes publicly known through no act or omission by them, or (iii)
which otherwise becomes known to them, other than through disclosure by the
Borrower or a Subsidiary or by any other Person whom the Agent or such Lender
has reason to believe disclosed such information in violation of or contrary to
the confidentiality requirements or policies of the Borrower or a Subsidiary)
delivered or made available by or on behalf of the Borrower or any Subsidiary to
them (including without limitation any non-public information obtained pursuant
to Section 6.5. or 7.7.) in connection with or pursuant to this Agreement which
is proprietary in nature and clearly marked or labeled as being confidential
information, provided that nothing herein shall prevent the Agent or any Lender
from delivery of copies of any financial statements and other documents
delivered to the Agent or such Lender, and disclosing any other information
disclosed to the Agent or such Lender, by or on behalf of the Borrower or any
Subsidiary in connection with or pursuant to this Agreement to (i) the Agent's
or such Lender's directors, officers, employees, agents and professional
consultants, (ii) any other Lender, (iii) any Person to which such Lender offers
to assign its Notes or Commitments or any part thereof (which person agrees to
be bound by the provisions of this Section 10.15), (iv) any Person to which such
Lender sells or offers to sell a participation in all or any part of its Notes
or Commitments (which Person agrees to be bound by the provisions of this
Section 10.15), (v) any federal or state regulatory authority having
jurisdiction over the Agent or such Lender, and (vi) any other person to which
such delivery or disclosure may be necessary (a) to effect compliance with any
law, rule, regulation or order applicable to the Agent or such Lender, (b) in
response to any subpoena or other local process, (c) in connection with any
litigation to which the Agent or such Lender is a party or (d) in order to
protect such Lender's investment in its Notes.
SECTION 10.16. USURY. The parties to this Agreement intend to conform
strictly to applicable usury laws as presently in effect. Accordingly, if the
transactions contemplated hereby would be usurious under applicable law
(including the laws of the United States of America and the State of Tennessee),
then, in that event, notwithstanding anything to the contrary in any Loan
Document or agreement executed in connection with the indebtedness described
herein, Borrower, Agent, and Lenders agree as follows: (i) the aggregate of all
consideration that constitutes interest under applicable law which is contracted
for, charged, or received under any of the Loan Documents or agreements, or
otherwise in connection with the indebtedness described herein, shall under no
circumstance exceed the maximum lawful rate of interest permitted by applicable
law, and any excess shall be credited on the indebtedness by the holder thereof
(or, if the indebtedness described herein shall have been paid in full, refunded
to the Borrower); and (ii) in the event that the maturity of the indebtedness
described herein is accelerated as a result of any Event of Default or
otherwise, or in the event of any required or permitted prepayment, then such
consideration that constitutes interest may never include more than the maximum
amount of interest permitted by applicable law, and excess interest, if any, for
which this Agreement provides, or otherwise, shall be cancelled automatically as
of the date of such acceleration or prepayment and, if previously paid, shall be
credited on the indebtedness described herein (or, if the indebtedness shall
have been paid in full, refunded to the Borrower).
SECTION 10.17. TIME IS OF THE ESSENCE. Time is of the essence is
interpreting and performing this Agreement and all other Credit Documents.
- 67 -
<PAGE> 70
SECTION 10.18. CONSTRUCTION. Should any provision of this Agreement
require judicial interpretation, the parties hereto agree that the Court
interpreting or construing the same shall not apply a presumption that the terms
hereof shall be more strictly construed against one party by reason of the rule
of construction that a document is to be more strictly construed against the
party who itself or its agents prepared the same, it being agreed that Borrower,
Agent, and Lenders and their respective agents have participated in the
preparation hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in Nashville, Tennessee by their duly authorized
officers as of the day and year first above written.
BORROWER:
DOLLAR GENERAL CORPORATION
By: /s/ Phil Richards
--------------------------------
Title: V.P. CFO
------------------------------
- 68 -
<PAGE> 71
Address for notice:
104 Woodmont Boulevard
Suite 500
Nashville, Tennessee 37205
[Signatures Continued on Next Page]
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<PAGE> 72
AGENT:
SUNTRUST BANK, NASHVILLE, N.A.,
as Agent
By: /s/ Hank Miles
----------------------------------
Title: SVP
------------------------------
Address for notice:
201 Fourth Avenue North
Nashville, Tennessee 37219
[Signatures Continued on Next Page]
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<PAGE> 73
LENDERS:
SUNTRUST BANK, NASHVILLE, N.A.
By: /s/ Hank Miles
---------------------------------------
Title: SVP
------------------------------------
Address for notice:
201 Fourth Avenue North
Nashville, Tennessee 37219
Payment Office:
201 Fourth Avenue North
Nashville, Tennessee 37219
Revolving Credit Commitment: $31,906,000.00
Applicable Commitment Percentage: 18.233%
[Signatures Continued on Next Page]
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<PAGE> 74
FIRST UNION NATIONAL BANK
By: Thelma Ferguson
-----------------------------------------
Title: V.P.
--------------------------------------
Address for notice:
2nd Floor
150 Fourth Avenue North
Nashville, Tennessee 37219
Payment Office:
--------------------------------------------
--------------------------------------------
--------------------------------------------
Revolving Credit Commitment: $22,398,000.00
Applicable Commitment Percentage: 12.799%
[Signatures Continued on Next Page]
- 72 -
<PAGE> 75
WACHOVIA BANK, N.A.
By: KENNETH WASHINGTON
-----------------------------------------
Title: V.P.
--------------------------------------
Address for notice:
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Payment Office:
--------------------------------------------
--------------------------------------------
--------------------------------------------
Revolving Credit Commitment: $22,398,000.00
Applicable Commitment Percentage: 12.799%
[Signatures Continued on Next Page]
- 73 -
<PAGE> 76
BARNETT BANK, N.A.
By: /s/ Melinda J. Lemein
-----------------------------------------
Title:
--------------------------------------
Address for notice:
50 North Laura
17th Floor
Jacksonville, Florida 32202
Payment Office:
--------------------------------------------
--------------------------------------------
--------------------------------------------
Revolving Credit Commitment: $14,342,000.00
Applicable Commitment Percentage: 8.195%
[Signatures Continued on Next Page]
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<PAGE> 77
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ Patricia Merritt
-----------------------------------------
Title: V.P.
--------------------------------------
Address for notice:
Payment Office:
--------------------------------------------
--------------------------------------------
--------------------------------------------
Revolving Credit Commitment: $14,342,000.00
Applicable Commitment Percentage: 8.195%
[Signatures Continued on Next Page]
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<PAGE> 78
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ John Runger
-----------------------------------------
Title: Managing Director
--------------------------------------
Address for notice:
One First National Plaza
Mail Suite 0086
Chicago, Illinois 60670
Payment Office:
--------------------------------------------
--------------------------------------------
--------------------------------------------
Revolving Credit Commitment: $14,342,000.00
Applicable Commitment Percentage: 8.195%
[Signatures Continued on Next Page]
- 76 -
<PAGE> 1
EXHIBIT _____
================================================================================
MASTER AGREEMENT
Dated as of September 2, 1997
among
DOLLAR GENERAL CORPORATION,
as a Lessee and Guarantor,
CERTAIN SUBSIDIARIES OF DOLLAR
GENERAL CORPORATION, as Lessees,
ATLANTIC FINANCIAL GROUP, LTD., as Lessor,
CERTAIN FINANCIAL INSTITUTIONS PARTIES HERETO,
as Lenders
and
SUNTRUST BANK, NASHVILLE, N.A., as Agent
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1
DEFINITIONS; INTERPRETATION................................................................................ 1
SECTION 2
ACQUISITION, CONSTRUCTION AND LEASE; FUNDINGS;
NATURE OF TRANSACTION...................................................................................... 2
SECTION 2.1 Agreement to Acquire, Construct, Fund and Lease......................................... 2
(a) Land................................................................................ 2
(b) Building............................................................................ 2
SECTION 2.2 Fundings of Purchase Price, Development Costs and Construction Costs.................... 2
(a) Initial Funding and Payment of Purchase Price for Land and
Development Costs on Closing Date................................................... 2
(b) Subsequent Fundings and Payments of Construction Costs during
Construction Term................................................................... 3
(c) Aggregate Limits on Funded Amounts.................................................. 3
(d) Notice, Time and Place of Fundings.................................................. 3
(e) Lessees' Deemed Representation for Each Funding..................................... 4
(f) Not Joint Obligations............................................................... 4
(g) Non-Pro Rata Fundings............................................................... 4
SECTION 2.3 Funded Amounts and Interest and Yield Thereon; Facility Fee............................. 5
SECTION 2.4 Lessee Owner for Tax Purposes........................................................... 6
SECTION 2.5 Amounts Due Under Lease................................................................. 6
SECTION 3
CONDITIONS PRECEDENT; DOCUMENTS............................................................................ 7
SECTION 3.1 Conditions to the Obligations of the Funding Parties on each Closing Date............... 7
(a) Documents........................................................................... 7
(i) Deed and Purchase Agreement................................................... 7
(ii) Lease Supplement.............................................................. 7
(iii) Mortgage and Assignment of Lease and Rents.................................... 8
(iv) Security Agreement and Assignment............................................. 8
(v) Survey........................................................................ 8
(vi) Title and Title Insurance..................................................... 8
(vii) Appraisal.........................................................../......... 9
(viii)Environmental Audit and related Reliance Letter............................... 9
(ix) Evidence of Insurance......................................................... 9
(x) Officer's Certificate.........................................................10
(xi) UCC Financing Statement; Recording Fees; Transfer Taxes.......................10
(xii) Opinions......................................................................10
</TABLE>
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<TABLE>
<S> <C>
(xiii) Officer's Certificate........................................................10
(xiv) Good Standing Certificates...................................................11
(b) Litigation..........................................................................11
(c) Legality............................................................................11
(d) No Events...........................................................................11
(e) Representations.....................................................................11
(f) Cutoff Date.........................................................................12
(g) Transaction Expenses................................................................12
SECTION 3.2 Additional Conditions for the Initial Closing Date......................................12
(i) Guaranty.....................................................................12
(ii) Loan Agreement...............................................................12
(iii) Master Agreement.............................................................12
(iv) Construction Agency Agreement................................................12
(v) Lease........................................................................12
(vi) Lessee's Resolutions and Incumbency Certificate, etc.........................12
(vii) Opinions of Counsel..........................................................13
(viii) Good Standing Certificate....................................................13
(ix) Lessor's Consents and Incumbency Certificate, etc............................13
SECTION 3.3 Conditions to the Obligations of Lessee.................................................13
(a) General Conditions..................................................................13
(b) Legality............................................................................13
(c) Purchase Agreement; Ground Lease....................................................14
SECTION 3.4 Conditions to the Obligations of the Funding Parties on each Funding Date...............14
(a) Funding Request.....................................................................14
(b) Condition Fulfilled.................................................................14
(c) Representations.....................................................................14
(d) No Bonded Stop Notice or Filed Mechanics Lien.......................................14
(e) Lease Supplement....................................................................14
SECTION 3.5 Completion Date Conditions..............................................................14
(a) Title Policy Endorsements; Architect's Certificate..................................15
(b) Construction Completion.............................................................15
(c) Construction Agent Certification....................................................15
SECTION 3.6 Addition of Lessees.....................................................................16
SECTION 4
REPRESENTATIONS............................................................................................17
SECTION 4.1 Representations of Lessee...............................................................17
(a) Organization; Corporate Powers......................................................17
(b) Authority...........................................................................17
(c) Binding Obligations.................................................................17
(d) No Conflict.........................................................................18
(e) Governmental Consents...............................................................18
(f) Governmental Regulation.............................................................18
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C>
(g) Requirements of Law.................................................................18
(h) Rights in Respect of the Leased Property............................................18
(i) Hazardous Materials - Leased Properties.............................................18
(j) Leased Property.....................................................................19
(k) True and Complete Disclosure........................................................20
(l) Financial Statements................................................................20
(m) No Material Litigation..............................................................20
(n) Margin Regulations..................................................................21
(o) Subsidiaries........................................................................21
(p) Compliance With Environmental Laws..................................................21
(q) Insurance...........................................................................22
(r) No Default..............................................................................22
(s) No Burdensome Restrictions..........................................................22
(t) Taxes...............................................................................22
(u) Subsidiaries........................................................................22
(v) ERISA...............................................................................23
(w) Patents, Trademarks, Licenses, Etc..................................................24
(x) Ownership of Property; Liens........................................................24
(y) Indebtedness........................................................................24
(z) Financial Condition.................................................................24
(aa)Labor Matters.......................................................................25
(bb)Payment or Dividend Restrictions....................................................25
(cc)Financial Projections...............................................................25
(dd)Notice of Violations................................................................25
(ee)Filings.............................................................................26
SECTION 4.2 Representations of the Lessor...........................................................26
(a) Securities Act......................................................................26
(b) Due Organization, etc...............................................................26
(c) Due Authorization; Enforceability, etc..............................................26
(d) No Conflict.........................................................................26
(e) Litigation..........................................................................27
(f) Lessor Liens........................................................................27
(g) Employee Benefit Plans..............................................................27
(h) General Partner.....................................................................27
(i) Financial Information...............................................................27
(j) No Offering.........................................................................27
SECTION 4.3 Representations of each Lender..........................................................27
(a) Securities Act......................................................................27
(b) Employee Benefit Plans..............................................................28
SECTION 5
COVENANTS OF THE LESSEES AND THE LESSOR....................................................................28
SECTION 5.1 Affirmative Covenants.........................................................................28
(a) Corporate Existence, Etc............................................................28
</TABLE>
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<PAGE> 5
<TABLE>
<S> <C>
(b) Compliance with Laws, Etc.................................................................28
(c) Payment of Taxes and Claims, Etc..........................................................28
(d) Keeping of Books..........................................................................28
(e) Visitation, Inspection, Etc...............................................................29
(f) Insurance; Maintenance of Properties......................................................29
(g) Financial Reports.........................................................................30
(h) Notices Under Certain Other Indebtedness..................................................32
(i) Notice of Litigation......................................................................32
(j) Subsidiary Guaranties.....................................................................32
(k) Existing Business.........................................................................33
(l) ERISA information and Compliance..........................................................33
(m) Financial Requirements....................................................................33
(n) Liens.....................................................................................34
(o) Merger and Sale of Assets.................................................................35
(p) Transactions with Affiliates..............................................................36
(q) Nature of Business........................................................................36
(r) Regulations G, T, U and X.................................................................36
(s) ERISA Compliance..........................................................................36
(t) Investments, Loans, and Advances..........................................................36
(u) Sales and Leasebacks......................................................................37
(v) Guaranties................................................................................38
(w) Limitation on Funded Debt.................................................................38
(x) Acquisitions..............................................................................39
SECTION 5.2 Further Assurances............................................................................39
SECTION 5.3 Additional Required Appraisals................................................................39
SECTION 5.4 Lessor's Covenants............................................................................39
SECTION 6
TRANSFERS BY LESSOR AND LENDERS............................................................................41
SECTION 6.1 Lessor Transfers..............................................................................41
SECTION 6.2 Lender Transfers..............................................................................41
SECTION 7
INDEMNIFICATION............................................................................................43
SECTION 7.1 General Indemnification.......................................................................43
SECTION 7.2 Environmental Indemnity.......................................................................45
SECTION 7.3 Proceedings in Respect of Claims..............................................................46
SECTION 7.4 General Tax Indemnity.........................................................................48
(a) Tax Indemnity.............................................................................48
(b) Exclusions from General Tax Indemnity.....................................................49
(c) Contests..................................................................................50
(d) Reimbursement for Tax Savings.............................................................52
(e) Payments..................................................................................52
(f) Reports...................................................................................53
</TABLE>
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<PAGE> 6
<TABLE>
<S> <C>
(g) Verification........................................................................53
SECTION 7.5 Increased Costs, etc....................................................................53
(a) Taxes...............................................................................53
(b) Interest Rate Not Ascertainable, etc................................................56
(c) Illegality..........................................................................56
(d) Increased Costs.....................................................................57
(e) Lending Offices.....................................................................58
(f) Funding Losses......................................................................59
(g) Assumptions Concerning Funding of LIBOR Advances....................................59
(h) Capital Adequacy....................................................................60
(i) Limitation on Certain Payment Obligations...........................................60
SECTION 7.6 End of Term Indemnity...................................................................61
SECTION 8
MISCELLANEOUS..............................................................................................62
SECTION 8.1 Survival of Agreements..................................................................62
SECTION 8.2 Notices.................................................................................62
SECTION 8.3 Counterparts............................................................................62
SECTION 8.4 Amendments..............................................................................62
SECTION 8.5 Headings, etc...........................................................................63
SECTION 8.6 Parties in Interest.....................................................................63
SECTION 8.7 GOVERNING LAW...........................................................................63
SECTION 8.8 Expenses................................................................................64
SECTION 8.9 Severability............................................................................64
SECTION 8.10 Liabilities of the Funding Parties......................................................64
SECTION 8.11 Submission to Jurisdiction; Waivers.....................................................64
SECTION 8.12 Liabilities of the Agent................................................................65
</TABLE>
APPENDIX A Definitions and Interpretation
SCHEDULES
SCHEDULE 2.2 Commitments
SCHEDULE 8.2 Notice Information
EXHIBITS
EXHIBIT A Form of Funding Request
EXHIBIT B Form of Assignment of Lease and Rents
EXHIBIT C Form of Security Agreement and Assignment
EXHIBIT D Form of Mortgage
EXHIBIT E Form of Joinder Agreement
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<PAGE> 7
EXHIBIT F Form of Environmental Audit Reliance Letter
EXHIBIT G Forms of Opinions of Counsel
EXHIBIT H Form of Certification of Construction Completion
EXHIBIT I Form of Payment Date Notice
EXHIBIT J Form of Assignment and Acceptance Agreement
EXHIBIT K Form of Compliance Request
EXHIBIT L Form of Subsidiary Guaranty
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<PAGE> 8
MASTER AGREEMENT
THIS MASTER AGREEMENT, dated as of September 2, 1997 (as it may be
amended or modified from time to time in accordance with the provisions hereof,
this "Master Agreement"), is among DOLLAR GENERAL CORPORATION, a Kentucky
corporation ("Dollar"), certain Subsidiaries of Dollar that may hereafter become
parties hereto pursuant to Section 3.6 (together with Dollar in its capacity as
a lessee, individually a "Lessee" and collectively, the "Lessees"), ATLANTIC
FINANCIAL GROUP, LTD., a Texas limited partnership (the "Lessor"), certain
financial institutions parties hereto as lenders (together with any other
financial institution that becomes a party hereto as a lender, collectively
referred to as "Lenders" and individually as a "Lender"), and SUNTRUST BANK,
NASHVILLE, N.A., a national banking association, as agent for the Lenders (in
such capacity, the "Agent").
PRELIMINARY STATEMENT
In accordance with the terms and provisions of this Master Agreement,
the Lease, the Loan Agreement and the other Operative Documents, (i) the Lessor
contemplates acquiring Land identified by Dollar from time to time, and leasing
such Land to a Lessee, (ii) Dollar, as Construction Agent for the Lessor, wishes
to construct Buildings on such Land for the Lessor and, when completed, to lease
such Buildings, or to cause such Buildings to be leased, from the Lessor as part
of the Leased Properties under a Lease, (iii) Dollar, as agent, wishes to
obtain, and the Lessor is willing to provide, funding for the acquisition of the
Land and the construction of Buildings, (iv) the Lessor wishes to obtain, and
Lenders are willing to provide, from time to time, financing of a portion of the
funding of the acquisition of the Land and the construction of the Buildings,
and (v) Dollar is willing to provide its Guaranty Agreement to the Lenders and
the Lessor.
In consideration of the mutual agreements contained in this Master
Agreement and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS; INTERPRETATION
Unless the context shall otherwise require, capitalized terms used and
not defined herein shall have the meanings assigned thereto in Appendix A hereto
for all purposes hereof; and the rules of interpretation set forth in Appendix A
hereto shall apply to this Master Agreement.
<PAGE> 9
SECTION 2
ACQUISITION, CONSTRUCTION AND LEASE; FUNDINGS;
NATURE OF TRANSACTION
SECTION 2.1 Agreement to Acquire, Construct, Fund and Lease.
(a) Land. Subject to the terms and conditions of this Master
Agreement, with respect to each parcel of Land identified by Dollar that is not
an IDB Property acquired by an Authority pursuant to the following sentence, on
the related Closing Date (i) the Lessor agrees to acquire such interest in the
related Land from the applicable Seller as is transferred, sold, assigned and
conveyed to the Lessor pursuant to the applicable Purchase Agreement or to lease
such interest in the related Land from the applicable Ground Lessor as is leased
to the Lessor pursuant to the applicable Ground Lease, (ii) the Lessor hereby
agrees to lease, or sublease, as the case may be, such Land to a Lessee pursuant
to a Lease, and (iii) the related Lessee hereby agrees to lease, or sublease, as
the case may be, such Land from the Lessor pursuant to the related Lease. With
respect to each IDB Property, (i) the applicable Authority may acquire such
interest in the related Land from the applicable Seller as is transferred, sold,
assigned and conveyed to the Authority pursuant to the applicable Purchase
Agreement, (ii) the applicable Authority will lease such Land to the Lessor
pursuant to the related IDB Lease, and (iii) the related Lessee hereby agrees to
sublease such Land from the Lessor pursuant to the related IDB Lease (it being
understood that any reference in the Operative Documents to the lease by a
Lessee of an IDB Property acquired by an Authority shall be deemed to refer to
the sublease thereof pursuant to the related Lease).
(b) Building. With respect to each parcel of Land, subject to
the terms and conditions of this Master Agreement, from and after the Closing
Date relating to such Land (i) the Construction Agent agrees, pursuant to the
terms of the Construction Agency Agreement, to construct and install the
Building on such Land for the Lessor prior to the Scheduled Construction
Termination Date, (ii) the Lenders and the Lessor agree to fund the costs of
such construction and installation (and interest and yield thereon), (iii) the
Lessor shall lease, or sublease, as the case may be, such Building as part of
such Leased Property to the related Lessee pursuant to the related Lease, and
(iv) the related Lessee shall lease, or sublease, as the case may be, such
Building from the Lessor pursuant to the related Lease.
SECTION 2.2 Fundings of Purchase Price, Development Costs and
Construction Costs.
(a) Initial Funding and Payment of Purchase Price for Land and
Development Costs on Closing Date. Subject to the terms and conditions of this
Master Agreement, on the Closing Date for any Land, each Lender shall make
available to the Lessor its initial Loan with respect to such Land in an amount
equal to the product of such Lender's Commitment Percentage times the purchase
price for the Land, if applicable, and the development, transaction and closing
costs incurred by the Lessee through such Closing Date, which funds the Lessor
shall use, together with the Lessor's own funds in an amount equal to the
product of the Lessor's
2
<PAGE> 10
Commitment Percentage times the purchase price, if applicable, for the related
Land and the development, transaction and closing costs incurred by the
Construction Agent, as agent, through such Closing Date, to purchase the Land
from the applicable Seller pursuant to the applicable Purchase Agreement or
lease the Land from the applicable Ground Lessor pursuant to the applicable
Ground Lease and to pay to the Construction Agent the amount of such
development, transaction and closing costs, and the Lessor shall lease, or
sublease, as the case may be, such Land to the related Lessee pursuant to the
Lease.
(b) Subsequent Fundings and Payments of Construction Costs
during Construction Term. Subject to the terms and conditions of this Master
Agreement, on each Funding Date following the Closing Date for each parcel of
Land until the related Construction Term Expiration Date, (i) each Lender shall
make available to the Lessor a Loan in an amount equal to the product of such
Lender's Commitment Percentage times the amount of Funding requested by the
Construction Agent for such Funding Date, which funds the Lessor hereby directs
the Lender to pay over to the Construction Agent as set forth in paragraph (d),
and (ii) the Lessor shall pay over to the Construction Agent its own funds
(which shall constitute a part of and an increase in the Lessor's Invested
Amount with respect to such Leased Property) in an amount equal to the product
of the Lessor's Commitment Percentage times the amount of Funding requested by
the Construction Agent for such Funding Date.
(c) Aggregate Limits on Funded Amounts. The aggregate amount
that the Funding Parties shall be committed to provide as Funded Amounts under
this Master Agreement and the Loan Agreement shall not exceed (x) with respect
to each Leased Property the costs of purchase and construction of such Leased
Property and the related closing and financing costs, or (y) $100,000,000 in the
aggregate for all Leased Properties; provided, however, that in the event that
any Lessee exercises a Partial Purchase Option, the amount set forth in this
clause (y) shall be reinstated to the extent of the Funded Amounts paid by such
Lessee in connection with such Partial Purchase Option. The aggregate amount
that any Funding Party shall be committed to fund under this Master Agreement
and the Loan Agreement shall not exceed the lesser of (i) such Funding Party's
Commitment and (ii) such Funding Party's Commitment Percentage of the aggregate
Fundings requested under this Master Agreement.
(d) Notice, Time and Place of Fundings. With respect to each
Funding, the Construction Agent shall give the Lessor and the Agent an
irrevocable prior written notice not later than 11:00 a.m., Nashville, Tennessee
time, three Business Days prior to the proposed Closing Date or other Funding
Date, as the case may be, pursuant, in each case, to a Funding Request in the
form of Exhibit A (a "Funding Request"), specifying the Closing Date or
subsequent Funding Date, as the case may be, the amount of Funding requested,
whether such Funding shall be a LIBOR Advance, a Base Rate Advance or a
combination thereof and the Rent Period(s) therefor. All documents and
instruments required to be delivered on such Closing Date pursuant to this
Master Agreement shall be delivered at the offices of Mayer, Brown & Platt, 190
South LaSalle Street, Chicago, Illinois 60603, or at such other location as may
be determined by the Lessor, the Construction Agent and the Agent. Each Funding
shall occur on a Business Day and shall be in an amount equal to $3,000,000 or
an integral multiple of $100,000 in excess
3
<PAGE> 11
thereof. All remittances made by any Lender and the Lessor for any Funding shall
be made in immediately available funds by wire transfer to or, as is directed
by, the Construction Agent, with receipt by the Construction Agent not later
than 12:00 noon, Nashville, Tennessee time, on the applicable Funding Date, upon
satisfaction or waiver of the conditions precedent to such Funding set forth in
Section 3; such funds shall (1) in the case of the initial Funding on a Closing
Date, be used to pay the purchase price to the applicable Seller for the related
Land and pay the Construction Agent development, transaction and closing costs
related to such Land, and (2) in the case of each subsequent Funding be paid to
the Construction Agent, for the payment or reimbursement of Construction costs.
(e) Lessees' Deemed Representation for Each Funding. Each
Funding Request by the Construction Agent shall be deemed a reaffirmation of
each Lessee's indemnity obligations in favor of the Indemnitees under the
Operative Documents and a representation by Dollar to the Lessor, the Agent, and
the Lenders that on the proposed Closing Date or Funding Date, as the case may
be, (i) the amount of Funding requested represents amounts owing in respect of
the purchase price of the related Land and development, transaction and closing
costs in respect of the Leased Property (in the case of the initial Funding on a
Closing Date) or amounts that the Construction Agent reasonably believes will be
due in the 90 days following such Funding from the Construction Agent to third
parties in respect of the Construction, or amounts paid by the Construction
Agent to third parties in respect of the Construction for which the Construction
Agent has not previously been reimbursed by a Funding (in the case of any
Funding), (ii) no Event of Default or Potential Event of Default exists, and
(iii) the representations of the Lessees set forth in Section 4.1 are true and
correct in all Material respects as though made on and as of such Funding Date,
except to the extent such representations or warranties relate solely to an
earlier date, in which case such representations and warranties shall have been
true and correct in all Material respects on and as of such earlier date.
(f) Not Joint Obligations. Notwithstanding anything to the
contrary set forth herein or in the other Operative Documents, each Lender's and
the Lessor's commitments shall be several, and not joint. In no event shall any
Funding Party be obligated to fund an amount in excess of such Funding Party's
Commitment Percentage of any Funding, or to fund amounts in the aggregate in
excess of such Funding Party's Commitment.
(g) Non-Pro Rata Fundings. Notwithstanding anything to the
contrary set forth in this Master Agreement, at the Agent's option, Fundings may
be made by drawing on the Lessor's Commitment until such Commitment is fully
funded before drawing on the Lenders' Commitments. In such event, when the
Lessor's Commitment is fully funded, the Lenders will fund, on a pro rata basis
as among themselves, 100% of the amount of the Fundings thereafter. In no event
shall any Funding Party have any obligation to fund any amount hereunder in
excess of the amount of such Funding Party's Commitment.
(h) Pre-Funded Amount. The Construction Agent may request, by
delivery of an irrevocable prior written notice to the Lessor and the Agent not
later than 11:00 a.m. Nashville, Tennessee time, three Business Days prior to
the proposed funding date, that the Funding Parties
4
<PAGE> 12
prefund amounts to the Construction Agent for anticipated acquisitions (the
"Pre-Funded Amount"), provided that at no time shall the Pre-Funded Amount
exceed $5,000,000. The Pre-Funded Amount may be comprised of LIBOR Advances,
Base Rate Advances or a combination thereof, as set forth on the related Funding
Request. The Pre-Funded Amount shall accrue interest or Yield, as the case may
be, commencing on the date such amount is funded to the Construction Agent. The
Funding Parties shall not be obligated to make such Funding if (i) any Event of
Default or Potential Event of Default has occurred and in continuing or (ii) the
representations of the Lessees set forth in Section 4.1 are not true and correct
in all Material respects as of the date of deposit, except to the extent such
representations and warranties related solely to an earlier date, in which case
such representations and warranties shall have been true in all Material
respects as of such earlier date. The Construction Agent may disburse the
Pre-Funded Amount, which date of disbursement shall be a Closing Date or a
Funding Date, as applicable, provided that all of the conditions precedent set
forth herein with respect to such Closing Date or Funding Date, as the case may
be, have been satisfied. If any portion of the Pre-Funded Amount has not been
disbursed on the date that is 120 days from the date of the funding thereof by
the Funding Parties to the Construction Agent, such funds, together with accrued
interest and Yield thereon, shall be returned to the Funding Parties.
SECTION 2.3 Funded Amounts and Interest and Yield Thereon; Facility
Fee.
(a) The Lessor's Invested Amount for any Leased Property
outstanding from time to time shall accrue yield ("Yield") at the Lessor Rate,
computed using the actual number of days elapsed and a 360 day year. If all or a
portion of the principal amount of or yield on the Lessor's Invested Amounts
shall not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue amount shall, without limiting the rights of the Lessor
under any Lease, to the maximum extent permitted by law, accrue yield at the
Overdue Rate, from the date of nonpayment until paid in full (both before and
after judgment).
(b) Each Lender's Funded Amount for any Leased Property
outstanding from time to time shall accrue interest as provided in the Loan
Agreement.
(c) During the Construction Term, in lieu of the payment of
accrued interest, on each Payment Date, each Lender's Funded Amount in respect
of a Construction Land Interest shall automatically be increased by the amount
of interest accrued and unpaid on the related Loans pursuant to the Loan
Agreement during the Rent Period ending immediately prior to such Payment Date
(except to the extent that at any time such increase would cause such Lender's
Funded Amount to exceed such Lender's Commitment, in which event the related
Lessee shall pay such excess amount to such Lender in immediately available
funds on such Payment Date). Similarly, in lieu of the payment of accrued Yield,
on each Payment Date, the Lessor's Invested Amount in respect of such
Construction Land Interest shall automatically be increased by the amount of
Yield accrued on the Lessor's Invested Amount in respect of such Land during the
Rent Period ending immediately prior to such Payment Date (except to the extent
that at any time such increase would cause the Lessor's Invested Amount to
exceed the Lessor's Commitment, in which event the related Lessee shall pay such
excess amount to the Lessor in
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immediately available funds on such Payment Date). Such increases in Funded
Amounts shall occur without any disbursement of funds by the Funding Parties.
(d) Three Business Days prior to the last day of each Rent
Period, Dollar shall deliver to the Lessor and the Agent a notice substantially
in the form of Exhibit I (each, a "Payment Date Notice"), appropriately
completed, specifying the allocation of the Funded Amounts related to such Rent
Period to LIBOR Advances and Base Rate Advances and the Rent Periods therefor,
provided that no such allocation shall be in an amount less than $1,000,000.
Each such Payment Date Notice shall be irrevocable. If no such notice is given,
the Funded Amounts shall be allocated to a LIBOR Advance with a Rent Period of
three (3) months.
(e) Dollar hereby agrees to pay to each Funding Party a
facility fee for each day from the date hereof until the Funding Termination
Date equal to (i) the applicable Facility Fee Percentage per annum times (ii)
the amount of such Funding Party's Commitment, whether used or unused, times
(iii) 1/360. Such facility fee shall be payable in arrears on each Quarterly
Payment Date.
SECTION 2.4 Lessee Owner for Tax Purposes. With respect to each Leased
Property, it is the intent of the related Lessee and the Funding Parties that
the related Lease shall constitute and be interpreted as a true leasing
transaction, except that for federal, state and local tax purposes the related
Lease shall be treated as the repayment and security provisions of a loan by the
Lessor to such Lessee, and that such lessee shall be treated as the legal and
beneficial owner entitled to any and all benefits of ownership of such Leased
Property and all payments of Basic Rent during the Lease Term shall be treated
as payments of interest and principal. Each of the related Lessee and each
Funding Party agrees to file tax returns consistent with such intent.
Nevertheless, each Lessee acknowledges and agrees that no Funding Party or any
other Person has made any representations or warranties concerning the tax,
financial, accounting or legal characteristics or treatment of the Operative
Documents and that each Lessee has obtained and relied solely upon the advice of
its own tax, accounting and legal advisors concerning the Operative Documents
and the accounting, tax, financial and legal consequences of the transactions
contemplated therein.
SECTION 2.5 Amounts Due Under Lease. With respect to each Leased
Property, anything else herein or elsewhere to the contrary notwithstanding, it
is the intention of the Lessees and the Funding Parties that: (i) the amount and
timing of Basic Rent due and payable from time to time from the Lessee under the
related Lease shall be equal to the aggregate payments due and payable with
respect to interest on, and principal of, the Loans in respect of such Leased
Property and Yield on, and principal of, the Lessor's Invested Amounts, if any,
in respect of such Leased Property on each Payment Date; (ii) if the related
Lessee elects the Purchase Option or the Partial Purchase Option with respect to
a Leased Property or becomes obligated to purchase such Leased Property under
the related Lease, the Funded Amounts in respect of such Leased Property, all
interest and Yield thereon and all other obligations of such Lessee owing to the
Funding Parties in respect of the Leased Property shall be paid in full by such
Lessee, (iii) if the related Lessee properly elects the Remarketing Option or
the Surrender
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Option, the principal amount of, and accrued interest on, the A Loans in respect
of such Leased Property, will be paid out of the Recourse Deficiency Amount, and
such Lessee shall only be required to pay to the Lenders in respect of the
principal amount of the B Loans in respect of such Leased Property and to the
Lessor in respect of the Lessor's Invested Amounts in respect of such Leased
Property, the proceeds of the sale of such Leased Property; and (iv) upon an
Event of Default resulting in an acceleration of the related Lessee's obligation
to purchase such Leased Property under the related Lease, the amounts then due
and payable by such Lessee under such Lease shall include all amounts necessary
to pay in full the Loans in respect of such Leased Property, and accrued
interest thereon, the Lessor's Invested Amounts in respect of such Leased
Property and accrued Yield thereon and all other obligations of such Lessee
owing to the Funding Parties in respect of such Leased Property.
SECTION 3
CONDITIONS PRECEDENT; DOCUMENTS
SECTION 3.1 Conditions to the Obligations of the Funding Parties on
each Closing Date. The obligations of the Lessor and each Lender to carry out
their respective obligations under Section 2 of this Master Agreement to be
performed on the Closing Date with respect to any Leased Property shall be
subject to the fulfillment to the satisfaction of, or waiver by, each such party
hereto (acting directly or through its counsel) on or prior to such Closing Date
of the following conditions precedent, provided that the obligations of any
Funding Party shall not be subject to any conditions contained in this Section
3.1 which are required to be performed by such Funding Party:
(a) Documents. The following documents shall have been
executed and delivered by the respective parties thereto:
(i) Deed and Purchase Agreement. The related original
Deed duly executed by the applicable Seller and in recordable
form, and copies of the related Purchase Agreement, duly
executed by such Seller and the Lessor, shall each have been
delivered to the Agent by Dollar, with copies thereof to each
other Funding Party or the related Ground Lease duly executed
by the Lessor and the related Ground Lessor shall have been
delivered to the Agent, with copies thereof to each other
Funding Party, as applicable (it being understood, that each
Purchase Agreement and each Ground Lease shall be satisfactory
in form and substance to the Lessor and the Lenders). If such
Leased Property is an IDB Property, the IBD Documentation
therefor shall be satisfactory in form and substance to the
Lessor and the Lenders.
(ii) Lease Supplement. The original of the related
Lease Supplement, duly executed by the related Lessee and the
Lessor and in recordable form, shall have been delivered to
the Agent by the related Lessee.
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(iii) Mortgage and Assignment of Lease and Rents.
Counterparts of the Mortgage (substantially in the form of
Exhibit D attached hereto), duly executed by the Lessor and in
recordable form, shall have been delivered to the Agent (which
Mortgage shall secure all of the debt to the Agent unless such
mortgage is subject to a tax based on the amount of
indebtedness secured thereby, in which case the amount secured
will be limited to debt in an amount equal to 125% of the
projected cost of acquisition and construction of such Leased
Property); and the Assignment of Lease and Rents
(substantially in the form of Exhibit B attached hereto) in
recordable form, duly executed by the Lessor, shall have been
delivered to the Agent by the Lessor.
(iv) Security Agreement and Assignment. If such
Leased Property is a Major Property, counterparts of the
Security Agreement and Assignment (substantially in the form
of Exhibit C attached hereto), duly executed by the
Construction Agent, with an acknowledgment and consent thereto
satisfactory to the Lessor and the Agent duly executed by the
related General Contractor and the related Architect, as
applicable, and complete copies of the related Construction
Contract and the related Architect's Agreement certified by
the Construction Agent, shall have been delivered to the
Lessor and the Agent (it being understood and agreed that if
no related Construction Contract or Architect's Agreement
exists on such Closing Date, such delivery shall not be a
condition precedent to the Funding on such Closing Date, and
in lieu thereof the Construction Agent shall deliver complete
copies of such Security Agreement and Assignment and consents
concurrently with the Construction Agent's entering into such
contracts).
(v) Survey. If such Leased Property is a Major
Property, the related Lessee shall have delivered, or shall
have caused to be delivered, to the Lessor and the Agent, at
such Lessee's expense, an accurate survey certified to the
Lessor and the Agent in a form reasonably satisfactory to the
Lessor and the Agent and showing no state of facts
unsatisfactory to the Lessor or the Agent and prepared within
ninety (90) days of the Closing Date by a Person reasonably
satisfactory to the Lessor and the Agent. Such survey shall
(1) be acceptable to the Title Insurance Company for the
purpose of providing extended coverage to the Lessor and a
lender's comprehensive endorsement to the Agent, (2) show no
encroachments on such Land by structures owned by others, and
no encroachments from any part of such Leased Property onto
any land owned by others, and (3) disclose no state of facts
reasonably objectionable to the Lessor, the Agent or the Title
Insurance Company, and be reasonably acceptable to each such
Person.
(vi) Title and Title Insurance. On such Closing Date,
the Lessor shall receive from a title insurance company
acceptable to the Lessor and the Agent an ALTA Owner's Policy
of Title Insurance issued by such title insurance company and
the Agent shall receive from such title insurance company an
ALTA
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Mortgagee's Policy of Title Insurance issued by such title
insurance company, in each case, in the amount of the
projected cost of acquisition and construction of such Leased
Property, reasonably acceptable in form and substance to the
Lessor and the Agent, respectively (collectively, the "Title
Policy"). The Title Policy shall be dated as of the Closing
Date, and, to the extent permitted under Applicable Law, shall
include such affirmative endorsements as the Lessor or the
Agent shall reasonably request.
(vii) Appraisal. If such Leased Property is a Major
Property or if requested by the Agent (provided that the Agent
shall not be entitled to so request an Appraisal with respect
to more than five Minor Properties) each Funding Party shall
have received a report of the Appraiser (an "Appraisal"), paid
for by the related Lessee, which shall meet the requirements
of the Financial Institutions Reform, Recovery and Enforcement
Act of 1989, shall be satisfactory to such Funding Party and
shall state in a manner satisfactory to such Funding Party the
estimated "as vacant" value of such Land and the Building to
be constructed thereon. Such Appraisal must show that the "as
vacant" value of the Leased Property (determined as if the
Building had already been completed in accordance with the
related Plans and Specifications and by excluding from such
value the amount of assessments on such Leased Property) is at
least 45% of the total cost of the Leased Property, including
the trade fixtures, equipment and personal property utilized
in connection with the Leased Property and to be funded by the
Funding Parties. Upon request by the related Lessee, the
Funding Parties agree to waive delivery on such Closing Date
of an Appraisal, provided that no subsequent Funding with
respect to such Leased Property shall occur until such
Appraisal has been delivered.
(viii) Environmental Audit and related Reliance
Letter. The Lessor and the Agent shall have received an
Environmental Audit for such Leased Property, which shall be
conducted in accordance with ASTM standards and shall not
include a recommendation for further investigation and is
otherwise satisfactory to the Lessor and the Agent; and the
firm that prepared the Environmental Audit for such Leased
Property shall have delivered to the Lessor and the Agent a
letter (substantially in the form of Exhibit F attached
hereto) stating that the Lessor, the Agent and the Lenders may
rely upon such firm's Environmental Audit of such Land, it
being understood that the Lessor's and the Agent's acceptance
of any such Environmental Audit shall not release or impair
any Lessee's obligations under the Operative Documents with
respect to any environmental liabilities relating to such
Leased Property.
(ix) Evidence of Insurance. If such Leased Property
is a Major Property, the Lessor and the Agent shall have
received from the related Lessee certificates of insurance
evidencing compliance with the provisions of Article VIII of
the related Lease (including the naming of the Lessor, the
Agent and the Lenders as
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additional insured or loss payee with respect to such
insurance as their interests may appear), in form and
substance reasonably satisfactory to the Lessor and the Agent.
(x) Officer's Certificate. Each of the Agent and
the Lessor shall have received an Officer's Certificate of the
related Lessee and the Guarantor stating that, to the best of
such officer's knowledge, (A) each and every representation
and warranty of such Lessee and of the Guarantor contained in
the Operative Documents is true and correct in all Material
respects on and as of such Closing Date as though made on and
as of such Closing Date, except to the extent such
representations or warranties relate solely to an earlier
date, in which case such representations and warranties were
true and correct in all Material respects on and as of such
earlier date; (B) no Event of Default, Potential Event of
Default or Construction Force Majeure Event has occurred and
is continuing; (C) each Operative Document to which such
Lessee or the Guarantor is a party is in full force and effect
with respect to it; and (D) no event that could reasonably be
expected to have a Materially Adverse Effect has occurred
since January 31, 1997.
(xi) UCC Financing Statement; Recording Fees;
Transfer Taxes. Each Funding Party shall have received
satisfactory evidence of (i) the execution and delivery to
Agent of a UCC-1 and, if required by applicable law, UCC-2
financing statement to be filed with the Secretary of State of
the applicable State (or other appropriate filing office) and
the county where the related Land is located, respectively,
and such other Uniform Commercial Code financing statements as
any Funding Party deems necessary or desirable in order to
perfect such Funding Party's interests and (ii) the payment of
all recording and filing fees and taxes with respect to any
recordings or filings made of the related Deed, the related
Lease, the related Lease Supplement, the related Mortgage and
the related Assignment of Lease and Rents.
(xii) Opinions. If such Leased Property is a Major
Property or if such Leased Property is the first Leased
Property to be located in a particular state, the opinion of
local counsel for the related Lessee qualified in the
jurisdiction in which such Leased Property is located,
substantially in the form set forth in Exhibit G-2 attached
hereto, and containing such other matters as the parties to
whom they are addressed shall reasonably request, shall have
been delivered and addressed to each of the Lessor, the Agent
and the Lenders. To the extent requested by the Agent,
opinions supplemental to those delivered under Section
3.2(vii) and reasonably satisfactory to the Agent shall have
been delivered and addressed to each of the Lessor, the Agent
and the Lenders.
(xiii) Officer's Certificate. The Agent shall have
received an Officer's Certificate of the Lessor stating that,
to the best of such officer's knowledge,
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(A) each and every representation and warranty of the Lessor
contained in the Operative Documents is true and correct in
all Material respects on and as of the Closing Date as though
made on and as of the Closing Date, except to the extent such
representations or warranties relate solely to an earlier
date, in which case such representations and warranties shall
have been true and correct in all Material respects on and as
of such earlier date; (B) no Event of Default or Potential
Event of Default has occurred and is continuing; (C) each
Operative Document to which the Lessor is a party is in full
force and effect with respect to it; and (D) no event that
could have a Materially Adverse Effect has occurred since the
date of the most recent financial statements of the Lessor
delivered or required to be delivered to the Agent.
(xiv) Good Standing Certificates. If such Leased
Property is a Major Property or if such Leased Property is the
first Leased Property to be located in a particular state by
the related Lessee, the Agent shall have received good
standing certificates for the Lessor and the related Lessee
from the appropriate offices of the state where the related
Land is located.
(b) Litigation. No action or proceeding shall have been
instituted or, to the knowledge of any Funding Party, threatened nor shall any
governmental action, suit, proceeding or investigation be instituted or
threatened before any Governmental Authority, nor shall any order, judgment or
decree have been issued or proposed to be issued by any Governmental Authority,
to set aside, restrain, enjoin or prevent the performance of this Master
Agreement or any transaction contemplated hereby or by any other Operative
Document or which is reasonably likely to Materially adversely affect the Leased
Property or any transaction contemplated by the Operative Documents or which
could reasonably be expected to result in a Materially Adverse Effect.
(c) Legality. In the opinion of such Funding Party or its
counsel, the transactions contemplated by the Operative Documents shall not
violate any Applicable Law, and no change shall have occurred or been proposed
in Applicable Law that would make it illegal for such Funding Party to
participate in any of the transactions contemplated by the Operative Documents.
(d) No Events. (i) No Event of Default, Potential Event of
Default, Event of Loss or Event of Taking relating to such Leased Property shall
have occurred and be continuing, (ii) no action shall be pending or threatened
by a Governmental Authority to initiate a Condemnation or an Event of Taking,
and (iii) there shall not have occurred any event that could reasonably be
expected to have a Materially Adverse Effect since January 31, 1997.
(e) Representations. Each representation and warranty of the
parties hereto or to any other Operative Document contained herein or in any
other Operative Document shall be true and correct in all Material respects as
though made on and as of the Closing Date, except to the extent such
representations or warranties relate solely to an earlier date, in which case
such
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representations and warranties shall have been true and correct in all Material
respects on and as of such earlier date.
(f) Cutoff Date. No Closing Date shall occur after the Funding
Termination Date.
(g) Transaction Expenses. The related Lessee shall have paid
the Transaction Costs then accrued and invoiced which such Lessee has agreed to
pay pursuant to Section 8.8.
SECTION 3.2 Additional Conditions for the Initial Closing Date. The
obligations of the Lessor and each Lender to carry out their respective
obligations under Section 2 of this Master Agreement to be performed on the
initial Closing Date shall be subject to the satisfaction of, or waiver by, each
such party hereto (acting directly or through its counsel) on or prior to the
initial Closing Date of the following conditions precedent in addition to those
set forth in Section 3.1, provided that the obligations of any Funding Party
shall not be subject to any conditions contained in this Section 3.2 which are
required to be performed by such Funding Party:
(i) Guaranty. Counterparts of the Guaranty
Agreement, duly executed by Dollar, shall have been delivered
to each Funding Party.
(ii) Loan Agreement. Counterparts of the Loan
Agreement, duly executed by the Lessor, the Agent and each
Lender shall have been delivered to each of the Lessor and the
Agent. An A Note and a B Note, duly executed by the Lessor,
shall have been delivered to each Lender.
(iii) Master Agreement. Counterparts of this Master
Agreement, duly executed by the parties hereto, shall have
been delivered to each of the parties hereto.
(iv) Construction Agency Agreement. Counterparts of
the Construction Agency Agreement, duly executed by the
parties thereto shall have been delivered to each of the
parties hereto.
(v) Lease. Counterparts of each Lease, duly
executed by each Lessee party hereto on the Initial Closing
Date, respectively, and the Lessor, shall have been delivered
to each Funding Party and the original, chattel paper copy of
each such Lease shall have been delivered to the Agent.
(vi) Lessee's Resolutions and Incumbency
Certificate, etc. Each of the Agent and the Lessor shall have
received (x) a certificate of the Secretary or an Assistant
Secretary of each Lessee party hereto on the Initial Closing
Date, attaching and certifying as to (i) the Board of
Directors' (or appropriate committee's) resolution duly
authorizing the execution, delivery and performance by it of
each Operative Document to which it is or will be a party,
(ii) the
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incumbency and signatures of persons authorized to execute and
deliver such documents on its behalf, (iii) its articles or
certificate of incorporation, certified as of a recent date by
the Secretary of State of the state of its incorporation and
(iv) its by-laws, and (y) good standing certificates for such
Lessee from the appropriate offices of the States of such
Person's incorporation and principal place of business.
(vii) Opinions of Counsel. The opinion of Larry
Wilcher, dated the initial Closing Date, substantially in the
form set forth in Exhibit G-1 attached hereto, and containing
such other matters as the parties to whom it is addressed
shall reasonably request, shall have been delivered and
addressed to each of the Lessor, the Agent and the Lenders.
The opinion of Grogan & Browner PC, dated the initial Closing
Date, substantially in the form set forth in Exhibit G-3
attached hereto, and containing such other matters as the
parties to whom it is addressed shall reasonably request,
shall have been delivered to each of the Agent and the
Lenders.
(viii) Good Standing Certificate. The Agent shall
have received a good standing certificate for the Lessor from
the appropriate offices of the State of Texas.
(ix) Lessor's Consents and Incumbency Certificate,
etc. The Agent shall have received a certificate of the
Secretary or an Assistant Secretary of the General Partner of
the Lessor attaching and certifying as to (i) the consents of
the partners of the Lessor duly authorizing the execution,
delivery and performance by it of each Operative Document to
which it is or will be a party, (ii) the incumbency and
signatures of persons authorized to execute and deliver such
documents on its behalf, and (iii) the Partnership Agreement.
SECTION 3.3 Conditions to the Obligations of Lessee. The obligations of
any Lessee to lease a Leased Property from the Lessor are subject to the
fulfillment on the related Closing Date to the satisfaction of, or waiver by,
such Lessee, of the following conditions precedent:
(a) General Conditions. The conditions set forth in Sections
3.1 and 3.2 that require fulfillment by the Lessor or the Lenders shall have
been satisfied, including the delivery of good standing certificates by the
Lessor pursuant to Sections 3.1(a)(xiv) and 3.2(b)(viii) and the delivery of an
opinion of counsel for the Lessor pursuant to Section 3.2(b)(vii).
(b) Legality. In the opinion of such Lessee or its counsel,
the transactions contemplated by the Operative Documents shall not violate any
Applicable Law, and no change shall have occurred or been proposed in Applicable
Law that would make it illegal for such Lessee to participate in any of the
transactions contemplated by the Operative Documents.
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(c) Purchase Agreement; Ground Lease. The Purchase Agreement
and, if applicable, the Ground Lease shall be reasonably satisfactory to such
Lessee.
SECTION 3.4 Conditions to the Obligations of the Funding Parties on
each Funding Date. The obligations of the Lessor and each Lender to carry out
their respective obligations under Section 2 of this Master Agreement to be
performed on each Funding Date shall be subject to the fulfillment to the
satisfaction of, or waiver by, each such party hereto (acting directly or
through their respective counsel) on or prior to each such Funding Date of the
following conditions precedent, provided that the obligations of any Funding
Party shall not be subject to any conditions contained in this Section 3.4 which
are required to be performed by such Funding Party:
(a) Funding Request. The Lessor and the Agent shall have
received from the Construction Agent the Funding Request therefor pursuant to
Section 2.2(d).
(b) Condition Fulfilled. As of such Funding Date, the
condition set forth in Section 3.1(d)(i) shall have been satisfied.
(c) Representations. As of such Funding Date, both before and
after giving effect to the Funding requested by the Construction Agent on such
date, the representations and warranties that the Lessees are deemed to make
pursuant to Section 2.2(e) shall be true and correct in all Material respects on
and as of such Funding Date as though made on and as of such Funding Date,
except to the extent such representations or warranties relate solely to an
earlier date, in which case such representations and warranties shall have been
true and correct in all Material respects on and as of such earlier date.
(d) No Bonded Stop Notice or Filed Mechanics Lien. As of each
Funding Date, and as to any Funded Amount requested for any Leased Property on
each such Funding Date, (i) neither the Lessor, the Agent nor any Lender has
received (with respect to such Leased Property) a bonded notice to withhold Loan
funds that has not been discharged by the related Lessee or the Construction
Agent, and (ii) no mechanic's liens or materialman's liens have been filed
against such Leased Property that have not been discharged by the related
Lessee, bonded over in a manner reasonably satisfactory to the Agent or insured
over by the Title Insurance Company.
(e) Lease Supplement. If the Funding relates to a Building
that will be leased under a Lease Supplement separate from the Lease Supplement
for the related Land, the original of such separate Lease Supplement, duly
executed by the related Lessee and the Lessor and in recordable form, shall have
been delivered to the Agent.
SECTION 3.5 Completion Date Conditions. The occurrence of the
Completion Date with respect to any Leased Property shall be subject to the
fulfillment to the satisfaction of, or waiver by, each party hereto (acting
directly or through its counsel) of the following conditions precedent:
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(a) Title Policy Endorsements; Architect's Certificate. If
such Leased Property is a Major Property, the Construction Agent shall have
furnished to each Funding Party (1) the following endorsements to the related
Title Policy (each of which shall be subject to no exceptions other than those
reasonably acceptable to the Agent): a date-down endorsement (redating and
confirming the coverage provided under the Title Policy and each endorsement
thereto) and a "Form 9" endorsement (if available in the applicable
jurisdiction), in each case, effective as of a date not earlier than the date of
completion of the Construction, and (2) a certificate of the Architect dated at
or about the Completion Date, in form and substance reasonably satisfactory to
the Agent, the Lessor and the Lenders, and stating that (i) the related Building
has been completed substantially in accordance with the Plans and Specifications
therefor, and such Leased Property is ready for occupancy, (ii) such Plans and
Specifications comply in all Material respects with all Material Applicable Laws
in effect at such time, and (iii) to the best of the Architect's knowledge, such
Leased Property, as so completed, complies in all Material respects with all
Material Applicable Laws in effect at such time. If such Leased Property is a
Major Property, the Construction Agent shall also deliver to the Agent true and
complete copies of: (A) an "as built" or "record" set of the Plans and
Specifications, (B) a plat of survey of such Leased Property "as built" to a
standard reasonably acceptable to the Agent showing all easements, paving,
driveways, fences and exterior improvements, and (C) copies of a certificate or
certificates of occupancy for such Leased Property or other legally equivalent
permission to occupy such Leased Property.
(b) Construction Completion. The related Construction shall
have been completed substantially in accordance with the related Plans and
Specifications, the related Deed and all Applicable Laws, and such Leased
Property shall be ready for occupancy and operation. All fixtures, equipment and
other property contemplated under the Plans and Specifications to be
incorporated into or installed in such Leased Property shall have been
substantially incorporated or installed, free and clear of all Liens except for
Permitted Liens.
(c) Construction Agent Certification. The Construction Agent
shall have furnished the Lessor, the Agent and each Lender with a certification
of the Construction Agent (substantially in the form of Exhibit H) that:
(i) all amounts owing to third parties for the
related Construction have been paid in full (other than contingent
obligations for which the Construction Agent has made adequate
reserves), and no litigation or proceedings are pending, or to the best
of the Construction Agent's knowledge, are threatened, against such
Leased Property or the Construction Agent or the related Lessee which
could reasonably be expected to have a Materially Adverse Effect;
(ii) all Material consents, licenses and permits and
other governmental authorizations or approvals required for such
Construction and operation of such Leased Property have been obtained
and are in full force and effect;
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(iii) such Leased Property has available all services
of public facilities and other utilities necessary for use and
operation of such Leased Property for its intended purposes including,
without limitation, adequate water, gas and electrical supply, storm
and sanitary sewerage facilities, telephone, other required public
utilities and means of access between the related Building and public
highways for pedestrians and motor vehicles;
(iv) all Material agreements, easements and other
rights, public or private, which are necessary to permit the lawful use
and operation of such Leased Property as the related Lessee intends to
use the Leased Property under the related Lease and which are necessary
to permit the lawful intended use and operation of all then intended
utilities, driveways, roads and other means of egress and ingress to
and from the same have been obtained and are in full force and effect
and neither the Construction Agent nor the related Lessee has any
knowledge of any pending modification or cancellation of any of the
same; and the use of such Leased Property does not depend on any
variance, special exception or other municipal approval, permit or
consent that has not been obtained and is in full force and effect for
its continuing legal use;
(v) all of the requirements and conditions set forth
in Section 3.5(b) hereof have been completed and fulfilled with respect
to such Leased Property and the related Construction; and
(vi) such Leased Property is in compliance in all
Material respects with all applicable zoning laws and regulations.
SECTION 3.6 Addition of Lessees. After the date hereof, additional
Subsidiaries of Dollar may become Lessees hereunder and under the other
Operative Documents upon satisfaction of the following conditions precedent:
(a) such Subsidiary and the Guarantor shall have executed and
delivered to the Agent and the Lessor a Joinder Agreement,
substantially in the form of Exhibit E;
(b) such Subsidiary shall have delivered to each of the Agent
and the Lessor (x) a certificate of the Secretary or an Assistant
Secretary of such Subsidiary, attaching and certifying as to (i) the
Board of Directors' resolution duly authorizing the execution, delivery
and performance by it of each Operative Document to which it is or will
be a party, (ii) the incumbency and signatures of persons authorized to
execute and deliver such documents on its behalf, (iii) its certificate
of incorporation, certified as of a recent date by the Secretary of
State of its incorporation and (iv) its by-laws, and (y) good standing
certificates from the appropriate offices of the States of such
Subsidiary's incorporation and principal place of business;
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(c) such Subsidiary shall have delivered an opinion of Larry
Wilcher, addressed to each of the Lessor, the Agent and the Lenders,
substantially in the form set forth in Exhibit G-1;
(d) such Subsidiary shall have executed and delivered a Lease
to each Funding Party and the original, chattel paper copy of such
Lease shall have been delivered to the Agent; and
(e) the Agent, the Lessor and the Lenders shall have received
such other documents, certificates and information as any of them shall
have reasonably requested.
SECTION 4
REPRESENTATIONS
SECTION 4.1 Representations of Lessee. Effective as of the date of
execution hereof (or as of the related Joinder Agreement, as applicable), as of
each Closing Date and as of each Funding Date, each Lessee represents and
warrants to each of the other parties hereto as follows:
(a) Organization; Corporate Powers. Each of such Lessee and
each of its Subsidiaries (i) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization,
(ii) is duly qualified as a foreign corporation and in good standing (A) in each
jurisdiction where a Leased Property is located, in the case of such Lessee, and
(B) under the laws of each other jurisdiction where such qualification is
required and where the failure to be duly qualified and in good standing would
have a Materially Adverse Effect, in the case of such Lessee and each of its
Subsidiaries, and (iii) has all requisite corporate power and authority to own,
operate and encumber its property and assets and to conduct its business as
presently conducted and as proposed to be conducted in connection with and
following the consummation of the transactions contemplated by the Operative
Documents.
(b) Authority. (i) Such Lessee has the requisite corporate
power and authority to execute, deliver and perform the Operative Documents
executed by it, or to be executed by it.
(ii) The execution, delivery and performance (or recording or
filing, as the case may be) of the Operative Documents, and the consummation of
the transactions contemplated thereby, have been duly approved by the Board of
Directors of such Lessee, or an appropriate committee thereof, and no other
corporate proceedings on the part of such Lessee are necessary to consummate the
transactions so contemplated.
(c) Binding Obligations. The Operative Documents executed by
such Lessee, have been duly executed and delivered (or recorded or filed, as the
case may be) by such Lessee, and constitute its legal, valid and binding
obligation, enforceable against it in accordance with their respective terms,
except as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or limiting creditors' rights generally or
by equitable principles generally.
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(d) No Conflict. The execution, delivery and performance by
such Lessee of each Operative Document to which it is a party and each of the
transactions contemplated thereby do not and will not (i) violate any Applicable
Law or Contractual Obligation of any Person the consequences of which violation,
singly or in the aggregate, would have a Materially Adverse Effect, (ii) result
in or require the creation or imposition of any Lien whatsoever on any Leased
Property or upon any of the properties or assets of such Lessee or any of its
Subsidiaries (other than Permitted Liens), or (iii) require any approval of
stockholders of such Lessee which has not been obtained.
(e) Governmental Consents. Except as have been made, obtained
or given, and are in full force and effect, and except for routine filings with
the SEC to be made in a timely fashion, no filing or registration with, consent
or approval of, notice to, with or by any Governmental Authority, is required to
authorize, or is required in connection with, the execution, delivery and
performance by such Lessee of the Operative Documents, the use of the proceeds
of the Fundings made to effect the purchase of the Land and the Construction, or
the legality, validity, binding effect or enforceability of any Operative
Document.
(f) Governmental Regulation. Neither such Lessee nor any
Subsidiary of such Lessee is an "investment company" or a company "controlled"
by an "investment company", within the meaning of the Investment Company Act of
1940, as amended. Such Lessee is not a "holding company" or a "subsidiary
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Company Act of
1935, as amended, nor subject to regulation under the Federal Power Act, or any
foreign, federal or local statute or regulation limiting its ability to incur
Indebtedness for Money Borrowed, Guaranty such indebtedness, pledge its assets
to secure such indebtedness or enter into lease arrangements.
(g) Requirements of Law. Such Lessee and each Subsidiary of
such Lessee and each Person acting on behalf of any of them is in compliance
with all Requirements of Law applicable to them and their respective businesses,
in each case where the failure to so comply would have a Materially Adverse
Effect, either individually or together with other such cases.
(h) Rights in Respect of the Leased Property. Such Lessee is
not a party to any contract or agreement to sell any interest in any Leased
Property or any part thereof, other than pursuant to the Operative Documents.
(i) Hazardous Materials - Leased Properties. (i) To the best
knowledge of such Lessee, except as described in the related
Environmental Audit, on the Closing Date for each Leased Property,
there are no Hazardous Materials present at, upon, under or within such
Leased Property or released or transported to or from such Leased
Property (except in compliance in all Material respects with all
Applicable Law).
(ii) On the related Closing Date, no Governmental
Actions have been taken or, to the best knowledge of such Lessee, are
in process or have been threatened,
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which could reasonably be expected to subject such Leased Property, any
Lender or the Lessor with respect to such Leased Property to any Claims
or Liens under any Environmental Law which would have a Materially
Adverse Effect, or would have a Materially adverse effect on the Lessor
or any Lender.
(iii) Such Lessee has, or will obtain on or before
the date required by Applicable Law, all Environmental Permits
necessary to operate such Leased Property in accordance with
Environmental Laws and is complying with and has at all times complied
with all such Environmental Permits, except to the extent the failure
to obtain such Environmental Permits or to so comply would not have a
Materially Adverse Effect.
(iv) Except as set forth in the related Environmental
Audit or in any notice subsequently furnished by such Lessee to the
Agent and approved by the Agent in writing prior to the respective
times that the representations and warranties contained herein are made
or deemed made hereunder, no notice, notification, demand, request for
information, citations, summons, complaint or order has been issued or
filed to or with respect to such Lessee, no penalty has been assessed
on such Lessee and no investigation or review is pending or, to its
best knowledge, threatened by any Governmental Authority or other
Person in each case relating to the Leased Property with respect to any
alleged Material violation or liability of such Lessee under any
Environmental Law. To the best knowledge of such Lessee, no Material
notice, notification, demand, request for information, citations,
summons, complaint or order has been issued or filed to or with respect
to any other Person, no Material penalty has been assessed on any other
Person and no investigation or review is pending or threatened by any
Governmental Authority or other Person relating to such Leased Property
with respect to any alleged Material violation or liability under any
Environmental Law by any other Person.
(v) Such Leased Property and each portion thereof are
presently in compliance in all Material respects with all Environmental
Laws, and, to the best knowledge of such Lessee, there are no present
or past facts, circumstances, activities, events, conditions or
occurrences regarding such Leased Property (including without
limitation the release or presence of Hazardous Materials) that could
reasonably be anticipated to (A) form the basis of a Material Claim
against such Leased Property, any Funding Party or such Lessee,
(B) cause such Leased Property to be subject to any Material
restrictions on ownership, occupancy, use or transferability under any
Environmental Law, (C) require the filing or recording of any notice or
restriction relating to the presence of Hazardous Materials in the real
estate records in the county or other appropriate municipality in which
such Leased Property is located, or (D) prevent or Materially interfere
with the continued operation and maintenance of such Leased Property as
contemplated by the Operative Documents.
(j) Leased Property. The present condition and use of
such Leased Property conforms in all Material respects with all conditions or
requirements of all existing Material permits and approvals issued with respect
to such Leased Property, and the present use of such
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Leased Property and such Lessee's future intended use of such Leased Property
under the related Lease does not, in any Material respect, violate any
Applicable Law. To the best knowledge of such Lessee, no Material notices,
complaints or orders of violation or non-compliance have been issued or
threatened or contemplated by any Governmental Authority with respect to such
Leased Property or any present or intended future use thereof. All Material
agreements, easements and other rights, public or private, which are necessary
to permit the lawful use and operation of such Leased Property as such Lessee
intends to use such Leased Property under the related Lease and which are
necessary to permit the lawful intended use and operation of all presently
intended utilities, driveways, roads and other means of egress and ingress to
and from the same have been, or to such Lessee's best knowledge will be,
obtained and are or will be in full force and effect, and such Lessee has no
knowledge of any pending Material modification or cancellation of any of the
same.
(k) True and Complete Disclosure. All factual information
relating to such Lessee, or any of its assets or its financial condition, or any
of the Leased Properties heretofore or contemporaneously furnished by such
Lessee or on its behalf in writing to any Funding Party (including without
limitation all information contained in the Operative Documents) for purposes of
or in connection with any transaction contemplated by this Master Agreement is,
and all other such factual information hereafter furnished by such Lessee or on
its behalf in writing to any Funding Party will be, true and accurate in all
Material respects on the date as of which such information is dated or certified
and not incomplete by omitting to state any Material fact necessary to make such
information, together with past written information supplied hereunder (taken as
a whole) not misleading at such time in light of the circumstances under which
such information was provided.
(l) Financial Statements. The consolidated statement of
financial position of Dollar as of January 31, 1997 and the related statements
of income, shareholders' equity and cash flows for the fiscal year then ended,
reported on by Coopers and Lybrand and the consolidated statements of financial
position of Dollar as of May 2, 1997 and the related statements of income,
shareholders' equity and cash flows for the three months then ended, in each
case, a copy of which has been delivered to each of the Funding Parties, present
fairly in all Material respects, in conformity with GAAP (subject, in the case
of the quarterly financial statements, to normal year-end audit adjustments and
the absence of certain notes), the consolidated financial position of Dollar and
its Subsidiaries as of such dates and the results of operations and cash flows
of Dollar and its Subsidiaries for such fiscal year or other period then ended.
The Consolidated Companies taken as a whole did not have any Material contingent
obligations, contingent liabilities or Material liabilities for known taxes,
long-term leases or unusual forward or long-term commitments required to be
reflected in the foregoing financial statements or the notes thereto that are
not so reflected.
(m) No Material Litigation. Except as set forth in Schedule
4.1(m), no litigation, investigations or proceedings of or before any court,
tribunal, arbitrator or governmental authority is pending or, to the knowledge
of any Executive Officer of such Lessee, threatened by or against any of the
Consolidated Companies, or against any of their respective Properties or
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revenues, existing or future (a) with respect to any Operative Document, or any
of the transactions contemplated hereby or thereby, or (b) which, if adversely
determined, is reasonably likely to have a Materially Adverse Effect.
(n) Margin Regulations. No part of the proceeds of any of
the Fundings will be used for any purpose which violates, or which would be
inconsistent or not in compliance with, the provisions of the applicable Margin
Regulations.
(o) Subsidiaries. The jurisdiction of incorporation or
organization, and the ownership of all issued and outstanding capital stock, for
each Subsidiary of Dollar as of the date of this Master Agreement is accurately
described on Schedule 4.1(o). Schedule 4.1(o) may be updated from time to time
by Dollar by giving written notice thereof to the Agent.
(p) Compliance With Environmental Laws.
(i) The Consolidated Companies have received no
notices of claims or potential liability under, and are in
compliance with, all applicable Environmental Laws, where such
claims and liabilities under, and failures to comply with,
such statutes, regulations, rules, ordinances, laws or
licenses, is reasonably likely to result in penalties, fines,
claims or other liabilities to the Consolidated Companies in
amounts that would have a Materially Adverse Effect, either
individually or in the aggregate (including any such
penalties, fines, claims, or liabilities relating to the
matters set forth on Schedule 4.1(p)), except as set forth on
Schedule 4.1(p)).
(ii) Except as set forth on Schedule 4.1(p), none of
the Consolidated Companies has received any notice of
violation, or notice of any action, either judicial or
administrative, from any governmental authority (whether
United States or foreign) relating to the actual or alleged
violation of any Environmental Law, including, without
limitation any notice of any actual or alleged spill, leak, or
other release of any Hazardous Substance, waste or hazardous
waste by any Consolidated Company or its employees or agents,
or as to the existence of any continuation on any Properties
owned by any Consolidated Company, where any such violation,
spill, leak, release or contamination is reasonably likely to
result in penalties, fines, claims or other liabilities to the
Consolidated Companies in amounts that would have a Materially
Adverse Effect, either individually or in the aggregate.
(iii) Except as set forth on Schedule 4.1(p), the
Consolidated Companies have obtained all necessary
governmental permits, licenses and approvals for the
operations conducted on their respective Properties, including
without limitation, all required Material permits, licenses
and approvals for (i) the emission of air pollutants or
contaminants, (ii) the treatment or pretreatment and discharge
of waste water or storm water, (iii) the treatment, storage,
disposal or generation of hazardous wastes, (iv) the
withdrawal and usage of ground water or surface water,
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and (v) the disposal of solid wastes, in any such case where
the failure to have such license, permit or approval is
reasonably likely to have a Materially Adverse Effect.
(q) Insurance. The Consolidated Companies currently maintain
such insurance with respect to their Properties and business with financially
sound and reputable insurers, and in such amounts and having such coverages
against losses and damages which the Lessee in the exercise of its reasonable
prudent business judgment has determined to be necessary to prevent the
Consolidated Companies from experiencing a loss which would cause a Materially
Adverse Effect. The Consolidated Companies have paid all Material amounts of
insurance premiums now due and owing with respect to such insurance policies and
coverages, and such policies and coverages are in full force and effect.
(r) No Default. None of the Consolidated Companies is in
default under or with respect to any Contractual Obligation in any respect which
has had or is reasonably likely to have a Materially Adverse Effect.
(s) No Burdensome Restrictions. Except as set forth on
Schedule 4.1(s), none of the Consolidated Companies is a party to or bound by
any Contractual Obligation or Requirement of Law or any provision of its
respective articles or certificates of incorporation, bylaws, or other
organizational or governing documents which has had or is reasonably likely to
have a Materially Adverse Effect.
(t) Taxes. The Consolidated Companies have filed all Federal
tax returns and, to the knowledge of any Executive Officer of the Lessee, the
Consolidated Companies have filed all other tax returns which are required to
have been filed in any jurisdiction; the Consolidated Companies have paid all
taxes shown to be due and payable on such Federal returns and other returns and
all other taxes, assessments, fees and other charges payable by them, in each
case, to the extent the same have become due and payable and before they have
become delinquent, except for the filing of any such returns or the payment of
any taxes, assessments, fees and other charges the amount, applicability or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which any Consolidated Company has set aside on
its books reserves (segregated to the extent required by GAAP) deemed by it in
good faith to be adequate. Such Lessee has not received written notice of any
proposed Material tax assessment with respect to Federal income taxes against
any of the Consolidated Companies nor does any Executive Officer of such Lessee
know of any Material Federal income tax liability on the part of the
Consolidated Companies other than any such assessment or liability which is
adequately reserved for on the books of the Consolidated Companies in accordance
with GAAP.
(u) Subsidiaries. Except as disclosed on Schedule 4.1(u),
Dollar has no Subsidiaries and neither Dollar nor any Subsidiary is a joint
venture partner or general partner in any partnership. Schedule 4.1(u) may be
updated from time to time by Dollar by giving written notice thereof to the
Agent.
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(v) ERISA. Except as disclosed on Schedule 4.1(v):
(i) Identification of Plans. None of the Consolidated
Companies nor any of their respective ERISA Affiliates
maintains or contributes to, or has during the past seven
years maintained or contributed to, any Plan that is subject
to Title IV of ERISA;
(ii) Compliance. Each Plan maintained by the
Consolidated Companies has at all times been maintained, by
their terms and in operation, in compliance with all
applicable laws, and the Consolidated Companies are subject to
no tax or penalty with respect to any Plan of such
Consolidated Company or any ERISA Affiliate thereof, including
without limitation, any tax or penalty under Title I or Title
IV of ERISA or under Chapter 43 of the Tax Code, or any tax or
penalty resulting from a loss of deduction under Sections 162,
404, or 419 of the Tax Code, where the failure to comply with
such laws, and such taxes and penalties, together with all
other liabilities referred to in this Section 4.1(v) (taken as
a whole), would in the aggregate have a Materially Adverse
Effect;
(iii) Liabilities. The Consolidated Companies are
subject to no liabilities (including withdrawal liabilities)
with respect to any Plans of such Consolidated Companies or
any of their ERISA Affiliates, including without limitation,
any liabilities arising from Titles I or IV of ERISA, other
than obligations to fund benefits under an ongoing Plan and to
pay current contributions, expenses and premiums with respect
to such Plans, where such liabilities, together with all other
liabilities referred to in this Section 4.1(v) (taken as a
whole), would in the aggregate have a Materially Adverse
Effect;
(iv) Funding. The Consolidated Companies and, with
respect to any Plan which is subject to Title IV of ERISA,
each of their respective ERISA Affiliates, have made full and
timely payment of all amounts (A) required to be contributed
under the terms of each Plan and applicable law, and (B)
required to be paid as expenses (including PBGC or other
premiums) of each Plan, where the failure to pay such amounts
(when taken as a whole, including any penalties attributable
to such amounts) would have a Materially Adverse Effect. No
Plan subject to Title IV of ERISA has an "amount of unfunded
benefit liabilities" (as defined in Section 4001(a)(18) of
ERISA), determined as if such Plan terminated on any date on
which this representation and warranty is deemed made, in any
amount which, together with all other liabilities referred to
in this Section 4.1(v). (taken as a whole), would have a
Materially Adverse Effect if such amount were then due and
payable. The Consolidated Companies are subject to no
liabilities with respect to post-retirement medical benefits
in any amounts which, together with all other liabilities
referred to in this Section 4.1(v)(taken as a whole), would
have a Materially Adverse Effect if such amounts were then due
and payable.
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(w) Patents, Trademarks, Licenses, Etc. Except as set forth on
Schedule 4.1(w), (i) the Consolidated Companies have obtained and hold in full
force and effect all Material governmental authorizations, consents, approvals,
patents, trademarks, service marks, franchises, trade names, copyrights,
licenses and other such rights, free from burdensome restrictions, which are
necessary for the operation of their respective businesses as presently con
ducted, and (ii) to the best of Lessee's knowledge, no product, process, method,
service or other item presently sold by or employed by any Consolidated Company
in connection with such business infringes any patents, trademark, service mark,
franchise, trade name, copyright, license or other right owned by any other
Person and there is not presently pending, or to the knowledge of Lessee,
threatened, any claim or litigation against or affecting any Consolidated
Company contesting such Person's right to sell or use any such product, process,
method, substance or other item where the result of such failure to obtain and
hold such benefits or such infringement would have a Materially Adverse Effect.
(x) Ownership of Property; Liens.
(i) Except as set forth on Schedule 4.1(x), (i) each
Consolidated Company has good and marketable fee simple title
to or a valid leasehold interest in all of its real property
and good title to all of its other Property, as such
Properties are reflected in the consolidated balance sheet of
the Consolidated Companies as of May 2, 1997, except where the
failure to hold such title, leasehold interest, or possession
would not have a Materially Adverse Effect, other than
Properties disposed of in the ordinary course of business
since such date or as otherwise permitted by the terms of this
Master Agreement, subject to no known Lien or title defect of
any kind, except Liens permitted hereunder and (ii) the
Consolidated Companies enjoy peaceful and undisturbed
possession under all of their respective leases except where
the failure to enjoy peaceful and undisturbed possession would
not have a Materially Adverse Effect.
(ii) As of the date of this Master Agreement, the
Property owned by each Consolidated Company is not subject to
any Lien securing any Indebtedness or other obligation of such
Consolidated Company in excess of $2,500,000 individually or
in the aggregate, other than as described on Schedule 4.1(x)
hereof.
(y) Indebtedness. Other than as described on Schedule 4.1(y),
and as of the date hereof, the Consolidated Companies, on a consolidated basis,
are not obligors (singularly or in the aggregate) in respect of any Indebtedness
for Borrowed Money in excess of $2,500,000 or any commitment to create or incur
any Indebtedness for Borrowed Money in excess of $2,500,000.
(z) Financial Condition. On the Initial Closing Date and after
giving effect to the transactions contemplated by this Master Agreement and the
other Operative Documents, the Property of each Consolidated Company at fair
valuation and based on their present fair saleable
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value will exceed such Consolidated Company's debts, including contingent
liabilities, (ii) the remaining capital of such Consolidated Company will not be
unreasonably small to conduct such Consolidated Company's business, and (iii)
such Consolidated Company will not have incurred debts, or have intended to
incur debts, beyond the Consolidated Company's ability to pay such debts as they
mature. For purposes of this Section 4.1(z), "debt" means any liability on a
claim, and "claim" means (a) the right to payment, whether or not such right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured, or (b)
the right to an equitable remedy for breach of performance if such breach gives
rise to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured.
(aa) Labor Matters. Except as set forth in Schedule 4.1(aa),
the Consolidated Companies have experienced no strikes, labor disputes, slow
downs or work stoppages due to labor disagreements which is reasonably likely to
have, a Materially Adverse Effect, and, to the best knowledge of the Executive
Officers of such Lessee, there are no such strikes, disputes, slow downs or work
stoppages threatened against any Consolidated Company except as disclosed in
writing to the Agent. The hours worked and payment made to employees of the
Consolidated Companies have not been in violation in any Material respect of the
Fair Labor Standards Act or any other applicable law dealing with such matters,
and all payments due from the Consolidated Companies, or for which any claim may
be made against the Consolidated Companies, on account of wages and employee
health and welfare insurance and other benefits have been paid or accrued as
liabilities on the books of the Consolidated Companies, in each case where the
failure to comply with such laws or to pay or accrue such liabilities is
reasonably likely to have a Materially Adverse Effect.
(bb) Payment or Dividend Restrictions. Except as described on
Schedule 4.1(bb), none of the Consolidated Companies is party to or subject to
any agreement or understanding restricting or limiting the payment of any
dividends or other distributions by any such Consolidated Company.
(cc) Financial Projections. The financial projections and
other pro forma financial information delivered to the Agent or any Lender above
were based on good faith estimates and assumptions believed by the applicable
Consolidated Companies to be reasonable at the time made and at the time
furnished to the Agent and/or any Lender, it being recognized by the Lenders
that such projections and other pro forma financial information as to future
events such projections and other pro forma financial information may differ
from the projected results for such period or periods.
(dd) Notice of Violations. Such Lessee has not received
notice, and no Consolidated Company has received notice, that it is in violation
of any Requirement of Law, judgment, court order, rule, or regulation that would
be expected to have a Materially Adverse Effect.
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(ee) Filings. Such Lessee has filed all reports and statements
required to be filed with the Securities and Exchange Commission. As of their
respective dates, the reports and statements referred to above complied in all
Material respects with all rules and regulations promulgated by the Securities
and Exchange Commission and did not contain any untrue statement of a Material
fact or omit to state a Material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
SECTION 4.2 Representations of the Lessor. Effective as of the date of
execution hereof, as of each Closing Date and as of each Funding Date, in each
case, with respect to each of the Leased Properties, the Lessor represents and
warrants to the Agent, the Lenders and the Lessees as follows:
(a) Securities Act. The interest being acquired or to be
acquired by the Lessor in such Leased Property is being acquired for its own
account, without any view to the distribution thereof or any interest therein,
provided that the Lessor shall be entitled to assign, convey or transfer its
interest in accordance with Section 6.1.
(b) Due Organization, etc. The Lessor is a limited partnership
duly organized and validly existing in good standing under the laws of Texas and
each state in which a Leased Property is located and has full power, authority
and legal right to execute, deliver and perform its obligations under the Lease,
this Master Agreement and each other Operative Document to which it is or will
be a party.
(c) Due Authorization; Enforceability, etc. This Master
Agreement and each other Operative Document to which the Lessor is or will be a
party have been or will be duly authorized, executed and delivered by or on
behalf of the Lessor and are, or upon execution and delivery will be, legal,
valid and binding obligations of the Lessor enforceable against it in accordance
with their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws affecting creditors' rights
generally and by general equitable principles.
(d) No Conflict. The execution and delivery by the Lessor of
the Leases, this Master Agreement and each other Operative Document to which the
Lessor is or will be a party, are not or will not be, and the performance by the
Lessor of its obligations under each will not be, inconsistent with its
Partnership Agreement, do not and will not contravene any Applicable Law and do
not and will not contravene any provision of, or constitute a default under, any
Contractual Obligation of Lessor, do not and will not require the consent or
approval of, the giving of notice to, the registration with or taking of any
action in respect of or by, any Governmental Authority, except such as have been
obtained, given or accomplished, and the Lessor possesses all requisite
regulatory authority to undertake and perform its obligations under the
Operative Documents.
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(e) Litigation. There are no pending or, to the knowledge of
the Lessor, threatened actions or proceedings against the Lessor before any
court, arbitrator or administrative agency with respect to any Operative
Document or that would have a Material adverse effect upon the ability of the
Lessor to perform its obligations under this Master Agreement or any other
Operative Documents to which it is or will be a party.
(f) Lessor Liens. No Lessor Liens (other than those created by
the Operative Documents) exist on any Closing Date on the Leased Property, or
any portion thereof, and the execution, delivery and performance by the Lessor
of this Master Agreement or any other Operative Document to which it is or will
be a party will not subject the Leased Property, or any portion thereof, to any
Lessor Liens (other than those created by the Operative Documents).
(g) Employee Benefit Plans. The Lessor is not and will not be
making its investment hereunder, and is not performing its obligations under the
Operative Documents, with the assets of an "employee benefit plan" (as defined
in Section 3(3) of ERISA) which is subject to Title I of ERISA, or "plan" (as
defined in Section 4975(e)(1)) of the Code.
(h) General Partner. The sole general partner of the Lessor is
Atlantic Financial Managers, Inc.
(i) Financial Information. (A) The unaudited balance sheet of
the Lessor as of December 31, 1996 and the related statements of income,
partners' capital and cash flows for the year then ended, copies of which have
been delivered to the Agent, fairly present, in conformity with sound accounting
principles, the financial condition of the Lessor as of such dates and the
results of operations and cash flows for such periods.
(B) Since December 31, 1996, there has been no event, act,
condition or occurrence having a Material adverse effect upon the financial
condition, operations, performance or properties of the Lessor, or the ability
of the Lessor to perform in any Material respect under the Operative Documents.
(j) No Offering. The Lessor has not offered the Notes to any
Person in any manner that would subject the issuance thereof to registration
under the Securities Act.
SECTION 4.3 Representations of each Lender. Effective as of the date of
execution hereof, as of each Closing Date and as of each Funding Date, each
Lender represents and warrants to the Lessor and to the Lessees as follows:
(a) Securities Act. The interest being acquired or to be
acquired by such Lender in the Funded Amounts is being acquired for its own
account, without any view to the distribution thereof or any interest therein,
provided that such Lender shall be entitled to assign, convey or transfer its
interest in accordance with Section 6.2. Such Lender is an accredited investor
as that term is defined in Rule 501(a) under the Securities Act.
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(b) Employee Benefit Plans. Such Lender is not and will not be
making its investment hereunder, and is not performing its obligations under the
Operative Documents, with the assets of an "employee benefit plan" (as defined
in Section 3(3) of ERISA) which is subject to Title I of ERISA, or "plan" (as
defined in Section 4975(e)(1)) of the Code.
SECTION 5
COVENANTS OF THE LESSEES AND THE LESSOR
SECTION 5.1 Affirmative Covenants. Each Lessee will:
(a) Corporate Existence, Etc. Preserve and maintain, and cause
each of the Consolidated Companies to preserve and maintain, its corporate
existence, its Material rights, franchises, and licenses, and its Material
patents and copyrights (for the scheduled duration thereof), trademarks, trade
names, and service marks, necessary or desirable in the normal conduct of its
business, and its qualification to do business as a foreign corporation in all
jurisdictions where it conducts business or other activities making such
qualification necessary, where the failure to be so qualified would reasonably
be expected to have a Materially Adverse Effect.
(b) Compliance with Laws, Etc. Comply, and cause each
Consolidated Company to comply, with all Requirements of Law and Contractual
Obligations applicable to or binding on any of them where the failure to comply
with such Requirements of Law and Contractual Obligations would reasonably be
expected to have a Materially Adverse Effect.
(c) Payment of Taxes and Claims, Etc. File and cause each
Consolidated Company to file all Federal, state, local and foreign tax returns
that are required to be filed by each of them and pay all taxes that have become
due pursuant to such returns or pursuant to any assessment in respect thereof
received by any Consolidated Company; and each Consolidated Company will pay or
cause to be paid all other taxes, assessments, fees and other governmental
charges and levies which, to the knowledge of any of the Executive Officers of
any Consolidated Company, are due and payable before the same become delinquent,
except any such taxes and assessments as are being contested in good faith by
appropriate and timely proceedings and as to which adequate reserves have been
established in accordance with GAAP.
(d) Keeping of Books. Keep, and cause each Consolidated
Company to keep, proper books of record and account, containing complete and
accurate entries of all their respective financial and business transactions.
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(e) Visitation, Inspection, Etc. Permit, and cause each
Consolidated Company to permit, any representative of the Lessor, the Agent or
any Lender, at the Lessor's, the Agent's or such Lender's expense, to visit and
inspect any of its Property, to examine its books and records and to make copies
and take extracts therefrom, and to discuss its affairs, finances and accounts
with its officers, all at such reasonable times and as often as the Lessor, the
Agent or such Lender may reasonably request after reasonable prior notice to
Dollar; provided, however, that at any time following the occurrence and during
the continuance of a Potential Event of Default or an Event of Default, no prior
notice to Dollar shall be required.
(f) Insurance; Maintenance of Properties.
(i) Maintain or cause to be maintained with
financially sound and reputable insurers, such insurance with
respect to its Properties and business in such amounts as
Dollar has determined in the exercise of its reasonable
prudent business judgment is necessary to prevent the
Consolidated Companies, singularly or in the aggregate from
experiencing a loss which would cause a Materially Adverse
Effect.
(ii) Cause, and cause each of the Consolidated
Companies to cause, all Properties used or useful in the
conduct of its business to be maintained and kept in good
condition, repair and working order and supplied with all
necessary equipment and cause to be made all necessary
repairs, renewals, replacements, settlements and improvements
thereof, all as in the reasonable judgment of Dollar may be
necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all
times; provided, however, that nothing in this Section shall
prevent Dollar from discontinuing the operation or maintenance
of any such Properties if such discontinuance is, in the
reasonable judgment of Dollar, desirable in the conduct of its
business or the business of any Consolidated Company.
(iii) Cause a summary, set forth in format and detail
reasonably acceptable to the Agent, of the types and amounts
of insurance (property and liability) maintained by the
Consolidated Companies to be delivered to the Agent on or
before thirty (30) days after the Initial Closing Date.
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(g) Financial Reports. Furnish to the Lessor, the
Agent and each Lender:
(i) Within fifty (50) days after the end of each of
the first three quarter-annual periods of each Fiscal Year
(and, in any event, in each case as soon as prepared), the
quarterly Financial Report of Dollar as of the end of that
period, prepared on a consolidated basis and accompanied by a
certificate, dated the date of furnishing, signed by a
Financial Officer of Dollar to the effect that such Financial
Report accurately presents in all Material respects the
consolidated financial condition of the Consolidated Companies
and that such Financial Report has been prepared in accordance
with GAAP consistently applied (subject to year end
adjustments), except that such Financial Report need not be
accompanied by notes.
(ii) Within one hundred (100) days after the end of
each Fiscal Year (and, in any event, as soon as available),
the annual Financial Report of Dollar (with accompanying
notes) for that Fiscal Year prepared on a consolidated basis
(which Financial Report shall be reported on by Dollar's
independent certified public accountants, such report to state
that such Financial Report fairly presents in all Material
respects the consolidated financial condition and results of
operation of the Consolidated Companies in accordance with
GAAP and to be without any Material qualifications or
exceptions). The audit opinion in respect of the consolidated
Financial Report shall be the unqualified opinion of one of
the nationally recognized "Big Six" firms of independent
certified public accountants acceptable to Agent.
(iii) Within fifty (50) days after the end of each of
its first three quarterly accounting periods and within one
hundred (100) days after the end of each Fiscal Year, a
statement certified as true and correct by a Financial Officer
of Dollar, substantially in the form of Exhibit K hereto, with
back-up material setting forth in reasonable detail such
calculations attached thereto and stating whether any
Potential Event of Default or Event of Default has occurred
and is continuing, and if a Default or Event of Default has
occurred and is continuing, stating Dollar's intentions with
respect thereto;
(iv) Within fifty (50) days after the end of each of
its quarterly accounting periods (including the year end
quarterly period), a statement certified as true
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and correct by a Financial Officer of Dollar setting forth the
Consolidated Funded Debt to Total Capitalization Ratio and the
Fixed Charge Coverage Ratio as of the last day of such
quarterly accounting
period.
(v) Promptly upon the filing thereof or otherwise
becoming available, copies of all financial statements,
annual, quarterly and special reports (including, without
limitation, Dollar's 8-K, 10-K, and 10-Q reports), proxy
statements and notices sent or made available generally by
Dollar to its public security holders, of all regular and
periodic reports and all registration statements and
prospectuses, if any, filed by any of them with any securities
exchange or with the Securities and Exchange Commission, and
of all press releases and other statements made available
generally to the public containing Material developments in
the business or financial condition of Dollar and the other
Consolidated Companies.
(vi) Promptly upon receipt thereof, copies of all
financial statements of, and all reports submitted by,
independent public accountants to Dollar in connection with
each annual, interim, or special audit of Dollar's financial
statements, including without limitation, the comment letter
submitted by such accountants to management in connection with
their annual audit.
(vii) As soon possible and in any event within
thirty (30) days after Dollar or any Consolidated Company
knows or has reason to know that any "Reportable Event" (as
defined in Section 4043(b) of ERISA) with respect to any Plan
has occurred (other than such a Reportable Event for which the
PBGC has waived the 30-day notice requirement under Section
4043(a) of ERISA) and such Reportable Event involves a matter
that has had, or is reasonably likely to have, a Materially
Adverse Effect, a statement of a Financial Officer of the
applicable Consolidated Company setting forth details as to
such Reportable Event and the action which the applicable
Consolidated Company proposes to take with respect thereto,
together with a copy of the notice of such Reportable Event
given to the PBGC if a copy of such notice is available to the
applicable Consolidated Company.
(viii) With reasonable promptness, such other
information relating to Dollar's performance of this Master
Agreement or its financial condition as may reasonably be
requested from time to time by the Agent.
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(ix) Concurrently with the furnishing of the annual
consolidated Financial Report required pursuant to Section
5.1(g)(ii) hereof, furnish or cause to be furnished to the
Lessor, the Agent and each Lender a certificate of compliance
in a form reasonably satisfactory to Agent prepared by one of
the nationally recognized "Big Six" accounting firms stating
that in making the examination necessary for their audit, they
have obtained no knowledge of any Potential Event of Default
or Event of Default, or if they have obtained such knowledge,
disclosing the nature, details and period of existence of such
event.
(h) Notices Under Certain Other Indebtedness. Immediately upon
its receipt thereof, furnish the Agent a copy of any notice received by it or
any other Consolidated Company from the holder(s) of Indebtedness (or from any
trustee, agent, attorney, or other party acting on behalf of such holder(s)) in
an amount which, in the aggregate, exceeds $2,500,000.00 where such notice
states or claims (i) the existence or occurrence of any default or event of
default with respect to such Indebtedness under the terms of any indenture, loan
or credit agreement, de benture, note, or other document evidencing or governing
such Indebtedness, or (ii) the existence or occurrence of any event or condition
which requires or permits holder(s) of any Indebtedness of the Consolidated
Companies to exercise rights under any Change in Control Provision.
(i) Notice of Litigation. Notify the Agent of any actions,
suits or proceedings instituted by any Person against the Consolidated Companies
where the uninsured portion of the money damages sought (which shall include any
deductible amount to be paid by Dollar or any Consolidated Company) is
singularly in an amount in excess of $15,000,000.00 or where unreserved amounts
in the aggregate are in excess of $15,000,000.00 or which is reasonably likely
to have a Materially Adverse Effect. Said notice is to be given along with the
quarterly and annual reports required by Section 5.1(g) hereof, and is to
specify the amount of damages being claimed or other relief being sought, the
nature of the claim, the Person instituting the action, suit or proceeding, and
any other significant features of the claim.
(j) Subsidiary Guaranties.
(i) Subject to subsection (iii) below, Dollar shall
cause all of the Consolidated Companies existing as of the
Initial Closing Date to execute and deliver on or before the
Initial Closing Date a Subsidiary Guaranty in substantially
the same form as set forth in Exhibit L. The delivery of
such documents shall be accompanied by such other
documents as the Agent may
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reasonably request (e.g., certificates of incorporation,
articles of incorporation and bylaws, membership operating
agreements, opinion letters and appropriate resolutions of the
Board of Directors of any such Subsidiary Guarantor).
(ii) Subject to subsection (iii) below, Dollar shall
cause each Consolidated Company not existing as of the Initial
Closing Date to execute and deliver Subsidiary Guaranties in
substantially the same form as set forth in Exhibit L
simultaneously with the creation or acquisition of any such
Consolidated Company by Dollar or any other such Consolidated
Company. The delivery of such documents shall be accompanied
by such other documents as the Agent may reasonably request
(e.g., certificates of incorporation, articles of
incorporation and bylaws, membership operating agreements,
opinion letters and appropriate resolutions of the Board of
Directors of any such Subsidiary Guarantor).
(iii) Notwithstanding the foregoing subsections (i)
and (ii), Dollar shall not be required to cause any
Consolidated Company to deliver a Subsidiary Guaranty if the
delivery of such documents would cause such Consolidated
Company to violate any Requirement of Law.
(k) Existing Business. Remain and cause each Consolidated
Company to remain engaged in business of the same general nature and type as
conducted on the Initial Closing Date.
(l) ERISA information and Compliance. Comply and cause each
Consolidated Company to comply with ERISA and all other applicable laws
governing any pension or profit sharing plan or arrangement to which any
Consolidated Company is a party. Dollar shall provide and shall cause each
Consolidated Company to provide Agent with notice of any "reportable event" or
"prohibited transaction" or the imposition of a "withdrawal liability" within
the meaning of ERISA.
(m) Financial Requirements. Not:
(i) Fixed Charge Coverage Ratio. Suffer or permit, as
of the last day of any fiscal quarter, the ratio of (A)
Consolidated EBITR to (B) the sum of (i) Consolidated Interest
Expense, plus (ii) Consolidated Rental Expense to be less than
2.0 to 1.0, as calculated for the most recently concluded
quarter and the immediately three (3) preceding fiscal
quarters.
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(ii) Consolidated Funded Debt to Total
Capitalization Ratio. Permit, as of the last day of
any fiscal quarter, the ratio of Consolidated Funded Debt to
Total Capitalization to be greater than .50 to 1.0.
(n) Liens. Not, and will not permit any Consolidated Company
to, create, assume or suffer to exist any Lien upon any of their respective
Properties whether now owned or hereafter acquired; provided, however, that this
Section 5.1(n) shall not apply to the following:
(i) any Lien for taxes not yet due or taxes or
assessments or other governmental charges which are being
actively contested in good faith by appropriate proceedings
and as to which adequate reserves have been established in
accordance with GAAP;
(ii) any customary Liens, pledges or deposits in
connection with worker's compensation, unemployment insurance,
or social security, or deposits incidental to the conduct of
the business of any Consolidated Company or the ownership of
any of their Properties which were not incurred in connection
with the borrowing of money or the obtaining of advances or
credit and which do not in the aggregate Materially detract
from the value of their Properties or Materially impair the
use thereof in the operation of their businesses;
(iii) any customary Liens to secure the performance
of tenders, statutory obligations, surety and appeal bonds,
and similar obligations and as to which adequate reserves have
been established in accordance with GAAP;
(iv) any Lien incurred in connection with Purchase
Money Indebtedness and placed upon any Property at the time of
its acquisition (or within 60 days thereafter) by any
Consolidated Company to secure all or a portion of the
purchase price therefor, provided that the aggregate
cumulative amount of Indebtedness secured by such purchase
money Liens must never exceed an amount equal to five percent
(5%) of Consolidated Net Worth (in calculating the amount of
any Purchase Money Indebtedness secured by a Lien for the
purpose of this Section 5.1(n), there shall be excluded
Purchase Money Indebtedness in an amount up to $10,000,000 per
distribution center under construction by any Consolidated
Company with the maximum exclusion, regardless of the number
of distribution centers under construction, of no more than
$20,000,000, provided
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that the Purchase Money Indebtedness incurred in connection
with the construction of a distribution center and the
purchase money Lien evidenced thereby is repaid and cancelled
within 90 days following the issuance of a certificate of
occupancy, or similar certification, for such distribution
center), and provided, that any such Lien shall not encumber
any other Properties of any Consolidated Company;
(v) statutory Liens of carriers, warehousemen,
mechanics, materialmen and other Liens imposed by law created
in the ordinary course of business for amounts not yet due or
which are being contested in good faith by appropriate
proceedings and as to which adequate reserves have been
established in accordance with GAAP;
(vi) Liens consisting of encumbrances in the nature
of zoning restrictions, easements, rights and restrictions of
record on the use of real property on the date of the
acquisition thereof and statutory Liens of landlords and
lessors which in any case do not Materially detract from the
value of such real property or impair the use thereof;
(vii) any Lien in favor of the United States of
America or any department or agency thereof, or in favor of
any state government or political subdivision thereof, or in
favor of a prime contractor under a government contract of the
United States, or of any state government or any political
subdivision thereof, and, in each case, resulting from
acceptance of partial, progress, advance or other payments in
the ordinary course of business under government contracts of
the United States, or of any state government or any political
subdivision thereof, or subcontracts thereunder;
(viii) any Lien existing on the date hereof and
disclosed on the consolidated Financial Reports of
Dollar; and
(ix) statutory Liens arising under ERISA created in
the ordinary course of business for amounts not yet due and as
to which adequate reserves have been established in accordance
with GAAP.
(o) Merger and Sale of Assets. Not, without the prior written
consent of the Required Lenders, merge or consolidate with any other corporation
or sell, lease or transfer or otherwise dispose of all or, during any
twelve-month period, a Material part of its Property to any Person, nor permit
any
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Consolidated Company to take any of the above actions; provided that
notwithstanding any of the foregoing limitations, if no Potential Event of
Default or Event of Default shall then exist or immediately thereafter will
exist, Consolidated Companies may take the following actions:
(i) Any Consolidated Company may merge with (i)
Dollar (provided that Dollar shall be the continuing or
surviving corporation) or (ii) any one or more other
Subsidiaries provided that either the continuing or surviving
corporation shall remain a Consolidated Company;
(ii) Any Consolidated Company may sell, lease,
transfer or otherwise dispose of any of its assets to (i)
Dollar, or (ii) any other Consolidated Company; and
(iii) Dollar may sell for fair value Scottsville,
Kentucky office buildings (exclusive of its Scottsville,
Kentucky distribution center).
(p) Transactions with Affiliates. Not, and will not permit any
Consolidated Company to, enter into or be a party to any transaction or
arrangement with any Affiliate (including, without limitation, the purchase
from, sale to or exchange of property with, or the rendering of any service by
or for, any Affiliates), except in the ordinary course of and pursuant to the
reasonable requirements of such Consolidated Company's business and upon fair
and reasonable terms no less favorable to such Consolidated Company than such
party would obtain in a comparable arm's-length transaction with a Person other
than an Affiliate.
(q) Nature of Business. Not, and will not permit any
Consolidated Company to, engage in any business if, as a result, the general
nature of the business, taken on a consolidated basis, which would then be
engaged in by any Consolidated Company would be fundamentally changed from the
general nature of the business engaged in by the Consolidated Companies on the
date of this Master Agreement.
(r) Regulations G, T, U and X. Not, nor permit any
Consolidated Company to take any action that would result in any non-compliance
of the Advances made hereunder with Regulations G, T, U and X of the Board of
Governors of the Federal Reserve System.
(s) ERISA Compliance. Not, and will not permit any
Consolidated Company to, incur any Material "accumulated funding deficiency"
within the meaning of Section 302(a)(2) of ERISA, or any Material liability
under Section 4062 of ERISA to the PBGC established thereunder in connection
with any Plan.
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(t) Investments, Loans, and Advances. Not, and will not permit
any Consolidated Company to, make or permit to remain outstanding any loans or
advances to or investments in any Person, except that, subject to all other
provisions of this Section 5.1(t), the foregoing restriction shall not apply to:
(i) investments in direct obligations of the
United States of America or any agency thereof having
maturities of less than one year;
(ii) investments in commercial paper maturing
within one year from the date of creation thereof of the
highest credit rating of a Rating Agency;
(iii) investments in bankers' acceptances and
certificates of deposit having maturities of less than one
year issued by commercial banks in the United States of
America having capital and surplus in excess of $50,000,000;
(iv) the endorsement of negotiable or similar
instruments in the ordinary course of business;
(v) investments in stock of any of the
Consolidated Companies;
(vi) investments in stock or assets, or any
combination thereof, of any Subsidiary created or
acquired after the Initial Closing Date;
(vii) investments received in settlement of debt
created in the ordinary course of business; and
(viii) advances to officers and employees of Dollar
made in the ordinary course of business and not in excess of
amounts customarily and historically loaned to such officers
and employees not to exceed $2,500,000 in the aggregate.
(u) Sales and Leasebacks. With regard to any Property owned by
Dollar or any Consolidated Company as of the date of this Master Agreement, Not,
and will not permit any Consolidated Company to, enter into any arrangement,
directly or indirectly, with any Person by which any Consolidated Entity shall
sell or transfer any such Property with a market value in excess of $35,000,000,
and by which any Consolidated Entity shall then or thereafter rent or lease as
lessee such Property or any part thereof or other Property that such
Consolidated Entity intends to use for substantially the same purpose or
purposes as the Property sold or transferred.
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With regard to any Property acquired by Dollar or any Consolidated
Company after the date of this Master Agreement, Dollar will not, and will not
permit any Consolidated Company, to enter into any arrangement, directly or
indirectly, with any Person by which any Consolidated Company shall sell or
transfer any such Property and by which any Consolidated Company shall then or
thereafter rent or lease as lessee such Property or any part thereof or other
Property that the Consolidated Company intends to use for substantially the same
purpose or purposes as the Property sold or transferred unless any such sale and
leaseback transaction is completed within a six-month period from the later of
the date the Property is acquired or the date such Property is placed into
service.
(v) Guaranties. Not, and will not permit any Consolidated
Company to, enter into any Guaranty, except that, subject to all other
provisions of this Section 5, the foregoing restriction shall not apply to:
(i) Subsidiary Guaranties;
(ii) the execution by Dollar of a Guaranty for the
Synthetic Lease;
(iii) Guaranties executed by one Consolidated
Company in favor of or to another Consolidated Company
for the obligations of another Consolidated Company;
(iv) endorsements of instruments for deposit or
collection in the ordinary course of business; and
(v) such other Guaranties that do not cause a breach
or violation of the Consolidated Funded Debt to Total
Capitalization Ratio.
(w) Limitation on Funded Debt. Not permit any
Consolidated Company and the Consolidated Companies in the
aggregate to incur or suffer to exist Funded Debt other than:
(i) Funded Debt of the Consolidated Companies
existing on the date of this Master Agreement and any
renewal, extension, refunding, or refinancing thereof;
(ii) Seasonal unsecured working capital lines of
credit incurred subsequent to the date that Dollar has used
one hundred percent (100%) of the Total Commitments (as
defined in the Credit Agreement) and provided that such
seasonal working capital lines of credit may remain
outstanding only for so long as one hundred percent (100%) of
the Total Commitments (as defined in the Credit Agreement)
remain outstanding;
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(iii) Purchase Money Indebtedness permitted by
Section 5.1(n);
(iv) Indebtedness incurred in connection with
stand-by letters of credit issued in the ordinary course of
business on the account of any Consolidated Company not to
exceed for all Consolidated Companies in the aggregate, an
outstanding amount in excess of $15,000,000; and
(v) Indebtedness incurred to First American National
Bank in connection with the financing of seasonal working
capital needs provided that the aggregate amount of such
indebtedness does not exceed $20,000,000.
(x) Acquisitions. Not permit any Consolidated Company to make
Acquisitions for a purchase price in excess of $25,000,000 in the aggregate in
any twelve (12) month period. For the purpose hereof, the purchase price shall
be determined by the sum of: (A) all cash paid, plus (B) the principal amount of
any promissory notes given, plus (C) the value of any stock given, and (D) the
value of any other Property given or transferred in respect of such Acquisition.
SECTION 5.2 Further Assurances. Upon the written request of the Lessor
or the Agent, each Lessee, at its own cost and expense, will cause all financing
statements (including precautionary financing statements), fixture filings and
other similar documents, to be recorded or filed at such places and times in
such manner, as may be necessary to preserve, protect and perfect the interest
of the Lessor, the Agent and the Lenders in the related Leased Property as
contemplated by the Operative Documents.
SECTION 5.3 Additional Required Appraisals. If, as a result of any
change in Applicable Law after the date hereof, an appraisal of all or any of
the Leased Property is required during the Lease Term under Applicable Law with
respect to any Funding Party's interest therein, such Funding Party's Funded
Amount with respect thereto or the Operative Documents, then the related Lessee
or Lessees shall pay the reasonable cost of such appraisal.
SECTION 5.4 Lessor's Covenants. The Lessor covenants and agrees that,
unless the Agent and the Lenders shall have otherwise consented in writing:
(a) it shall not amend its Partnership Agreement, except to
admit limited partners in connection with lease transactions similar to the
Transactions;
(b) it shall not incur any indebtedness or other monetary
obligation or liability, other than (i) non-recourse indebtedness incurred in
connection with the Transactions or
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similar transactions and (ii) operating expenses incurred in the ordinary course
of business that are not delinquent;
(c) the proceeds of the Loans received from the Lenders will
be used by the Lessor solely to acquire the Leased Property and to pay the
Construction Agent for certain closing and transaction costs associated
therewith and for the costs of Construction. No portion of the proceeds of the
Loans will be used by the Lessor (i) in connection with, whether directly or
indirectly, any tender offer for, or other acquisition of, stock of any
corporation with a view towards obtaining control of such other corporation,
(ii) directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any Margin Stock, or (iii) for any purpose
in violation of any Applicable Law;
(d) it shall not engage in any business or activity, or invest
in any Person, except for activities similar to its activities conducted on the
date hereof, the Transactions and lease transactions similar to the
Transactions;
(e) it will maintain tangible net worth in an amount no less
than the sum of (i) $100,000 plus (ii) 3% of its total assets (calculated
assuming no reduction in the value of any leased property from its original cost
to the Lessor);
(f) it will deliver to the Agent, as soon as available and in
any event within 90 days after the end of each fiscal year, a balance sheet of
the Lessor as of the end of such fiscal year and the related statements of
income, partners' capital and cash flows for such fiscal year, setting forth in
each case in comparative form the figures for the previous fiscal year, together
with copies of its tax returns, all certified by an officer of the general
partner (and if the Lessor ever prepares audited financial statements, it shall
deliver copies thereto the Agent);
(g) it will permit the Agent and its representatives to
examine, and make copies from, the Lessor's books and records, and to visit the
offices and properties of the Lessor for the purpose of examining such
materials, and to discuss the Lessor's performance hereunder with any of its, or
its general partner's, officers and employees;
(h) it shall not consent to or suffer or permit any Lien
against the Leased Property, other than as expressly contemplated pursuant to
the Operative Documents;
(i) it shall not consent to or suffer or permit the creation
of any easement or other restriction against the Leased Property other than as
permitted pursuant to Article VI of the Leases; and
(j) it shall promptly discharge each Lessor Lien and shall
indemnify the Lenders and the related Lessee for any diminution in value of any
Leased Property resulting from such Lessor Liens.
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SECTION 6
TRANSFERS BY LESSOR AND LENDERS
SECTION 6.1 Lessor Transfers. The Lessor shall not assign, convey or
otherwise transfer all or any portion of its right, title or interest in, to or
under any Leased Property or any of the Operative Documents without the prior
written consent of the Lenders and Dollar. Any proposed transferee of the Lessor
shall make the representation set forth in Section 4.2(b) to the other parties
hereto.
SECTION 6.2 Lender Transfers.
(a) Any Lender may make, carry or transfer Loans at, to or for
the account of, any of its branch offices or the office of an Affiliate
of such Lender.
(b) Each Lender may assign all or a portion of its interests,
rights and obligations under this Master Agreement and the Loan
Agreement (including all or a portion of its Commitment and the Loans
at the time owing to it and the Notes held by it) to any Eligible
Assignee; provided, however, that (i) the Agent and, except during the
continuance of a Potential Event of Default or Event of Default, Dollar
must give its prior written consent to such assignment (which consent
shall not be unreasonably withheld or delayed) unless such assignment
is to an Affiliate of the assigning Lender, (ii) the amount of the
Commitments of the assigning Lender subject to each assignment
(determined as of the date the assignment and acceptance with respect
to such assignment is delivered to the Agent) shall not be less than an
amount equal to $5,000,000 or greater integral multiplies thereof, and
(iii) the parties to each such assignment shall execute and deliver to
the Agent an Assignment and Acceptance, together with the Note or Notes
subject to such assignment and, unless such assignment is to an
Affiliate of such Lender, a processing and recordation fee of $3,000.
Any such assignment of he loans shall include both the A Loans and the
B Loans, on a pro rata basis. No Lessee shall be responsible for such
processing and recordation fee or any costs or expenses incurred by any
Lender or the Agent in connection with such assignment. From and after
the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five (5) Business Days after the
execution thereof, the assignee thereunder shall be a party hereto and
to the extent of the interest assigned by such Assignment and
Acceptance, have the rights and obligations of a Lender under this
Agreement and the Loan Agreement. Within five (5) Business Days after
receipt of the notice and the Assignment and Acceptance, Lessor, at the
expense of Lessees, shall execute and deliver to the Agent, in exchange
for the surrendered Note or Notes, a new Note or Notes to the order of
such assignee in a principal amount equal to the applicable Commitments
or Loans assumed by it pursuant to such Assignment and Acceptance and
new Note or Notes to the assigning Lender in the amount of its retained
Commitment or Commitments or amount of its retained Loans. Such new
Note or Notes shall be in aggregate and a principal amount equal to the
aggregate principal amount of such surrendered Note or Notes, shall
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be dated the date of the surrendered Note or Notes which they replace,
and shall otherwise be in substantially the form attached hereto.
(c) Each Lender may, without the consent of any Lessee, sell
participations to one or more banks or other entities in all or a
portion of its rights and obligations under this Master Agreement and
the Loan Agreement (including all or a portion of its Commitments in
the Loans owing to it and the Notes held by it), provided, however,
that (i) no Lender may sell a participation in its aggregate
Commitments or Loans (after giving effect to any permitted assignment
hereof) in an amount in excess of fifty percent (50%) of such aggregate
Commitments or Loans, provided, however, sales of participations to an
Affiliate of such Lender shall not be included in such calculation;
provided, however, no such maximum amount shall be applicable to any
such participation sold at any time there exists an Event of Default
hereunder, (ii) such Lender's obligations under this Master Agreement
and the Loan Agreement shall remain unchanged, (iii) such Lender shall
remain solely responsible to the other parties hereto for the
performance of such obligations, (iv) the participating bank or other
entity shall not be entitled to the benefit (except through its selling
Lender) of the cost protection provisions contained in Section 7.5 of
this Master Agreement, and (v) each Lessee, the Agent and the other
Lenders shall continue to deal solely and directly with each Lender in
connection with such Lender's rights and obligations under this Master
Agreement and the other Operative Documents, and such Lender shall
retain the sole right to enforce the obligations of Lessor relating to
the Loans and to approve any amendment, modification or waiver of any
provisions of this Master Agreement and the Loan Agreement. Any Lender
selling a participation hereunder shall provide prompt written notice
to the Agent of the name of such participant.
(d) Any Lender or participant may, in connection with the
assignment or par ticipation or proposed assignment or participation,
pursuant to this Section, disclose to the assignee or participant or
proposed assignee or participant any information relating to Dollar or
the other Consolidated Companies furnished to such Lender by or on
behalf of Lessee or any other Consolidated Company. With respect to any
disclosure of con fidential, non-public, proprietary information, such
proposed assignee or participant shall agree to use the information
only for the purpose of making any necessary credit judg ments with
respect to this credit facility and not to use the information in any
manner prohibited by any law, including without limitation, the
securities laws of the United States. The proposed participant or
assignee shall agree not to disclose any of such information except as
permitted by this Master Agreement. The proposed participant or
assignee shall further agree to return all documents or other written
material and copies thereof received from any Lender, the Agent or any
Lessee relating to such confidential information unless otherwise
properly disposed of by such entity.
(e) Any Lender may at any time assign all or any portion of
its rights under this Agreement and the Notes issued to it to a Federal
Reserve Bank; provided that no such assignment shall release the Lender
from any of its obligations hereunder.
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(f) If (i) any Taxes referred to in Section 7.5(a) have been
levied or imposed so as to require withholdings and reductions by the
Lessees and payment by the Lessees of additional amounts to any Lender
as a result thereof, (ii) or any Lender shall make demand for payment
of any material additional amounts as compensation for increased costs
pursuant to Section 7.5(d), or (iii) any Lender shall decline to
consent to a modification or waiver of the terms of this Master
Agreement or the other Operative Documents requested by a Lessee, then
and in such event, upon request from Dollar delivered to such Lender
and the Agent, such Lender shall assign, in accordance with the
provisions of Section 6.2(b), all of its rights and obligations under
this Master Agreement and the other Operative Documents to another
Lender or an Eligible Assignee selected by the Lessee and consented to
by the Agent in consideration for the payment by such assignee to the
Lender of the principal of and interest on the outstanding Loans
accrued to the date of such assignment and the assumption of such
Lender's Commitment, together with any and all other amounts owing to
such Lender under any provisions of this Master Agreement or the other
Operative Documents accrued to the date of such assignment.
SECTION 7
INDEMNIFICATION
SECTION 7.1 General Indemnification. Each Lessee, jointly and
severally, agrees, whether or not any of the transactions contemplated hereby
shall be consummated, to assume liability for, and to indemnify, protect,
defend, save and hold harmless each Indemnitee, on an After-Tax Basis, from and
against, any and all Claims that may be imposed on, incurred by or asserted, or
threatened to be asserted, against such Indemnitee, whether or not such
Indemnitee shall also be indemnified as to any such Claim by any other Person
and whether or not such Claim arises or accrues prior to any Closing Date or
after the Lease Termination Date, in any way relating to or arising out of:
(a) any of the Operative Documents or any of the
transactions contemplated thereby, and any amendment, modification or
waiver in respect thereof; or
(b) any Land, any Building or any part thereof or interest
therein, including any Ground Lease, and any IDB Documentation;
(c) the purchase, design, construction, preparation,
installation, inspection, delivery, non-delivery, acceptance,
rejection, ownership, management, possession, operation, rental, lease,
sublease, repossession, maintenance, repair, alteration, modification,
addition, substitution, storage, transfer of title, redelivery, use,
financing, refinancing, disposition, operation, condition, sale
(including, without limitation, any sale pursuant to the related
Lease), return or other disposition of all or any part of any interest
in any Leased Property or the imposition of any Lien, other than a
Lessor Lien (or incurring of any liability to refund or pay over any
amount as a result of any Lien, other than a Lessor Lien) thereon,
including, without limitation: (1) Claims or penalties arising
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from any violation or alleged violation of law or in tort (strict
liability or otherwise), (2) latent or other defects, whether or not
discoverable, (3) any Claim based upon a violation or alleged violation
of the terms of any restriction, easement, condition or covenant or
other matter affecting title to any Leased Property or any part
thereof, (4) the making of any Alterations in violation of any
standards imposed by any insurance policies required to be maintained
by any Lessee pursuant to the related Lease which are in effect at any
time with respect to any Leased Property or any part thereof, (5) any
Claim for patent, trademark or copyright infringement, (6) Claims
arising from any public improvements with respect to any Leased
Property resulting in any charge or special assessments being levied
against any Leased Property or any Claim for utility "tap-in" fees, and
(7) Claims for personal injury or real or personal property damage
occurring, or allegedly occurring, on any Land, Building or Leased
Property;
(d) the offer, issuance, sale or delivery of the Notes by any
Lessee;
(e) the breach or alleged breach by any Lessee of any
representation or warranty made by it or deemed made by it in any
Operative Document or any certificate required to be delivered by any
Operative Document;
(f) the retaining or employment of any broker, finder or
financial advisor by any Lessee to act on its behalf in connection with
this Master Agreement, or the incurring of any fees or commissions to
which the Lessor, the Agent or any Lender might be subjected by virtue
of their entering into the transactions contemplated by this Master
Agreement (other than fees or commissions due to any broker, finder or
financial advisor retained by the Lessor, the Agent or any Lender);
(g) the existence of any Lien on or with respect to any Leased
Property, the Construction, any Basic Rent or Supplemental Rent, title
thereto, or any interest therein, including any Liens which arise out
of the possession, use, occupancy, construction, repair or rebuilding
of any Leased Property or by reason of labor or materials furnished or
claimed to have been furnished to the Construction Agent, any Lessee,
or any of its contractors or agents or by reason of the financing of
any personalty or equipment purchased or leased by any Lessee or
Alterations constructed by any Lessee, except in all cases the Liens
listed as items (a) and (b) in the definition of Permitted Liens;
(h) the transactions contemplated hereby or by any other
Operative Document, in respect of the application of Parts 4 and 5 of
Subtitle B of Title I of ERISA and any prohibited transaction described
in Section 4975(c) of the Code; or
(i) any act or omission by any Lessee under any Purchase
Agreement or any other Operative Document, and any breach of any
requirement, condition, restriction or limitation in any Deed, Purchase
Agreement, IDB Documentation or Ground Lease;
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provided, however, the Lessees shall not be required to indemnify any Indemnitee
under this Section 7.1 for any of the following: (1) any Claim to the extent
that such Claim results from the willful misconduct, gross negligence or
misrepresentation of such Indemnitee, (2) any Claim resulting from Lessor Liens
which the Lessor Indemnitee Group is responsible for discharging under the
Operative Documents, or (3) any Claim to the extent attributable to events
occurring after the return of all of the Leased Properties to the Lessor in
accordance with the Leases. It is expressly understood and agreed that the
indemnity provided for herein shall survive the expiration or termination of,
and shall be separate and independent from any other remedy under this Master
Agreement, the Lease or any other Operative Document.
SECTION 7.2 Environmental Indemnity. In addition to and without
limitation of Section 7.1, each Lessee, jointly and severally, agrees to
indemnify, hold harmless and defend each Indemnitee from and against any and all
claims (including without limitation third party claims for personal injury or
real or personal property damage), losses (including but not limited to any loss
of value of any Leased Property), damages, liabilities, fines, penalties,
charges, suits, settlements, demands, administrative and judicial proceedings
(including informal proceedings) and orders, judgments, remedial action,
requirements, enforcement actions of any kind, and all reasonable costs and
expenses actually incurred in connection therewith (including, but not limited
to, reasonable attorneys' and/or paralegals' fees and expenses), including, but
not limited to, all costs incurred in connection with any investigation or
monitoring of site conditions or any clean-up, remedial, removal or restoration
work by any federal, state or local government agency, arising directly or
indirectly, in whole or in part, out of
(i) the presence on or under any Land of any Hazardous
Materials, or any releases or discharges of any Hazardous Materials on,
under, from or onto any Land,
(ii) any activity, including, without limitation,
construction, carried on or undertaken on or off any Land, and whether
by a Lessee or any predecessor in title or any employees, agents,
contractors or subcontractors of any Lessee or any predecessor in
title, or any other Person, in connection with the handling, treatment,
removal, storage, decontamination, clean-up, transport or disposal of
any Hazardous Materials that at any time are located or present on or
under or that at any time migrate, flow, percolate, diffuse or in any
way move onto or under any Land,
(iii) loss of or damage to any property or the environment
(including, without limitation, clean-up costs, response costs,
remediation and removal costs, cost of corrective action, costs of
financial assurance, fines and penalties and natural resource damages),
or death or injury to any Person, and all expenses associated with the
protection of wildlife, aquatic species, vegetation, flora and fauna,
and any mitigative action required by or under Environmental Laws, in
each case to the extent related to any Leased Property,
(iv) any claim concerning any Leased Property's lack of
compliance with Environmental Laws, or any act or omission causing an
environmental condition on or
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with respect to any Leased Property that requires remediation or would
allow any governmental agency to record a lien or encumbrance on the
land records, or
(v) any residual contamination on or under any Land, or
affecting any natural resources on any Land, and to any contamination
of any property or natural resources arising in connection with the
generation, use, handling, storage, transport or disposal of any such
Hazardous Materials on or from any Leased Property; in each case
irrespective of whether any of such activities were or will be
undertaken in accordance with applicable laws, regulations, codes and
ordinances;
in any case with respect to the matters described in the foregoing clauses (i)
through (v) that arise or occur
(w) prior to or during the Lease Term,
(x) at any time during which any Lessee or any Affiliate
thereof owns any interest in or otherwise occupies or possesses any
Leased Property or any portion thereof, or
(y) during any period after and during the continuance of any
Event of Default;
provided, however, the Lessees shall not be required to indemnify any Indemnitee
under this Section 7.2 for any Claim to the extent that such Claim results from
the willful misconduct or gross negligence of such Indemnitee. It is expressly
understood and agreed that the indemnity provided for herein shall survive the
expiration or termination of and shall be separate and independent from any
other remedy under this Master Agreement, any Lease or any other Operative
Document.
SECTION 7.3 Proceedings in Respect of Claims. With respect to any
amount that a Lessee is requested by an Indemnitee to pay by reason of Section
7.1 or 7.2, such Indemnitee shall, if so requested by a Lessee and prior to any
payment, submit such additional information to such Lessee as such Lessee may
reasonably request and which is in the possession of, or under the control of,
such Indemnitee to substantiate properly the requested payment. In case any
action, suit or proceeding shall be brought against any Indemnitee, such
Indemnitee promptly shall notify Dollar of the commencement thereof (provided
that the failure of such Indemnitee to promptly notify Dollar shall not affect
any Lessee's obligation to indemnify hereunder except to the extent that such
Lessee's ability to contest is Materially prejudiced by such failure), and any
Lessee shall be entitled, at its expense, to participate in, and, to the extent
that such Lessee desires to, assume and control the defense thereof with counsel
reasonably satisfactory to such Indemnitee; provided, however, that such
Indemnitee may pursue a motion to dismiss such Indemnitee from such action, suit
or proceeding with counsel of such Indemnitee's choice at the Lessees' expense;
and provided further that a Lessee may assume and control the defense of such
proceeding only if such Lessee shall have acknowledged in writing its
obligations to fully indemnify such Indemnitee in respect of such action, suit
or proceeding, such Lessee shall pay
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all reasonable costs and expenses related to such action, suit or proceeding as
and when incurred and such Lessee shall keep such Indemnitee fully apprised of
the status of such action suit or proceeding and shall provide such Indemnitee
with all information with respect to such action suit or proceeding as such
Indemnitee shall reasonably request; and, provided further, that no Lessee shall
be entitled to assume and control the defense of any such action, suit or
proceeding if and to the extent that, (A) in the reasonable opinion of such
Indemnitee, (x) such action, suit or proceeding involves any possibility of
imposition of criminal liability or any Material risk of Material civil
liability on such Indemnitee or (y) such action, suit or proceeding will involve
a Material risk of the sale, forfeiture or loss of, or the creation of any Lien
(other than a Permitted Lien) on any Leased Property or any part thereof unless
a Lessee shall have posted a bond or other security satisfactory to the relevant
Indemnitees in respect to such risk or (z) the control of such action, suit or
proceeding would involve an actual or potential conflict of interest, (B) such
proceeding involves Claims not fully indemnified by the Lessees which the
Lessees and the Indemnitee have been unable to sever from the indemnified
claim(s), or (C) an Event of Default has occurred and is continuing. The
Indemnitee may participate in a reasonable manner at its own expense and with
its own counsel in any proceeding conducted by a Lessee in accordance with the
foregoing.
If a Lessee fails to fulfill the conditions to such Lessee's assuming
the defense of any claim after receiving notice thereof on or prior to the date
that is 15 days prior to the date that an answer or response is required, the
Indemnitee may undertake such defense, at the Lessees' expense. No Lessee shall
enter into any settlement or other compromise with respect to any Claim in
excess of $1,000,000 which is entitled to be indemnified under Section 7.1 or
7.2 without the prior written consent of the related Indemnitee, which consent
shall not be unreasonably withheld. Unless an Event of Default shall have
occurred and be continuing, no Indemnitee shall enter into any settlement or
other compromise with respect to any claim which is entitled to be indemnified
under Section 7.1 or 7.2 without the prior written consent of Dollar, which
consent shall not be unreasonably withheld, unless such Indemnitee waives its
right to be indemnified under Section 7.1 or 7.2 with respect to such Claim.
Upon payment in full of any Claim by a Lessee pursuant to Section 7.1
or 7.2 to or on behalf of an Indemnitee, such Lessee, without any further
action, shall be subrogated to any and all claims that such Indemnitee may have
relating thereto (other than claims in respect of insurance policies maintained
by such Indemnitee at its own expense), and such Indemnitee shall execute such
instruments of assignment and conveyance, evidence of claims and payment and
such other documents, instruments and agreements as may be reasonably necessary
to preserve any such claims and otherwise cooperate with such Lessee and give
such further assurances as are reasonably necessary or advisable to enable such
Lessee vigorously to pursue such claims.
Any amount payable to an Indemnitee pursuant to Section 7.1 or 7.2
shall be paid to such Indemnitee promptly upon, but in no event later than 30
days after, receipt of a written demand therefor from such Indemnitee,
accompanied by a written statement describing in reasonable detail the basis for
such indemnity and the computation of the amount so payable.
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If for any reason the indemnification provided for in Section 7.1 or
7.2 is unavailable to an Indemnitee or is insufficient to hold an Indemnitee
harmless, then each Lessee, jointly and severally, agrees to contribute to the
amount paid or payable by such Indemnitee as a result of such loss, claim,
damage or liability in such proportion as is appropriate to reflect not only the
relative benefits received by such Indemnitee on the one hand and by the Lessees
on the other hand but also the relative fault of such Indemnitee as well as any
other relevant equitable considerations. It is expressly understood and agreed
that the right to contribution provided for herein shall survive the expiration
or termination of and shall be separate and independent from any other remedy
under this Master Agreement, any Lease or any other Operative Document.
SECTION 7.4 General Tax Indemnity. (a) Tax Indemnity. Except as
otherwise provided in this Section 7.4, each Lessee, jointly and severally,
shall pay on an After-Tax Basis, and on written demand shall indemnify and hold
each Tax Indemnitee harmless from and against, any and all fees (including,
without limitation, documentation, recording, license and registration fees),
taxes (including, without limitation, income, gross receipts, sales, rental,
use, turnover, value-added, property, excise and stamp taxes), levies, imposts,
duties, charges, assessments or withholdings of any nature whatsoever, together
with any penalties, fines or interest thereon or additions thereto (any of the
foregoing being referred to herein as "Taxes" and individually as a "Tax" (for
the purposes of this Section 7.4, the definition of "Taxes" includes amounts
imposed on, incurred by, or asserted against each Tax Indemnitee as the result
of any prohibited transaction, within the meaning of Section 406 or 407 of ERISA
or Section 4975(c) of the Code, arising out of the transactions contemplated
hereby or by any other Operative Document)) imposed on or with respect to any
Tax Indemnitee, any Lessee, any Leased Property or any portion thereof or any
Land, or any sublessee or user thereof, by the United States or by any state or
local government or other taxing authority in the United States in connection
with or in any way relating to (i) the acquisition, financing, mortgaging,
construction, preparation, installation, inspection, delivery, non-delivery,
acceptance, rejection, purchase, ownership, possession, rental, lease, sublease,
maintenance, repair, storage, transfer of title, redelivery, use, operation,
condition, sale, return or other application or disposition of all or any part
of any Leased Property or the imposition of any Lien (or incurrence of any
liability to refund or pay over any amount as a result of any Lien) thereon,
(ii) Basic Rent or Supplemental Rent or the receipts or earnings arising from or
received with respect to any Leased Property or any part thereof, or any
interest therein or any applications or dispositions thereof, (iii) any other
amount paid or payable pursuant to the Notes or any other Operative Documents,
(iv) any Leased Property, any Land or any part thereof or any interest therein
(including, without limitation, all assessments payable in respect thereof,
including, without limitation, all assessments noted on the related Title
Policy), (v) all or any of the Operative Documents, any other documents
contemplated thereby, any amendments and supplements thereto, and (vi) otherwise
with respect to or in connection with the transactions contemplated by the
Operative Documents.
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(b) Exclusions from General Tax Indemnity. Section 7.4(a) shall
not apply to:
(i) Taxes on, based on, or measured by or with respect to net
income of the Lessor, the Agent and the Lenders (including, without
limitation, minimum Taxes, capital gains Taxes, Taxes on or measured by
items of tax preference or alternative minimum Taxes) other than (A) any
such Taxes that are, or are in the nature of, sales, use, license, rental
or property Taxes, and (B) withholding Taxes imposed by the United States
or any state in which Leased Property is located (i) on payments with
respect to the Notes, to the extent imposed by reason of a change in
Applicable Law occurring after the date on which the holder of such Note
became the holder of such Note or (ii) on Rent, to the extent the net
payment of Rent after deduction of such withholding Taxes would be less
than amounts currently payable with respect to the Funded Amounts;
(ii) Taxes on, based on, or in the nature of or measured by
Taxes on doing business, business privilege, franchise, capital, capital
stock, net worth, or mercantile license or similar taxes other than (A)
any increase in such Taxes imposed on such Tax Indemnitee by any state in
which Leased Property is located, net of any decrease in such taxes
realized by such Tax Indemnitee, to the extent that such tax increase
would not have occurred if on each Funding Date the Lessor and the
Lenders had advanced funds to the related Lessee or the Construction
Agent in the form of loans secured by the Leased Property in an amount
equal to the Funded Amounts funded on such Funding Date, with debt
service for such loans equal to the Basic Rent payable on each Payment
Date and a principal balance at the maturity of such loans in a total
amount equal to the Funded Amounts at the end of the Lease Term, or (B)
any Taxes that are or are in the nature of sales, use, rental, license or
property Taxes relating to any Leased Property;
(iii) Taxes that are based on, or measured by, the fees or other
compensation received by a Person acting as Agent (in its individual
capacities) or any Affiliate of any thereof for acting as trustee under
the Loan Agreement;
(iv) Taxes that result from any act, event or omission, or are
attributable to any period of time, that occurs after the earliest of (A)
the expiration of the Lease Term with respect to any Leased Property and,
if such Leased Property is required to be returned to the Lessor in
accordance with the related Lease, such return and (B) the discharge in
full of the related Lessee's obligations to pay the Lease Balance, or any
amount determined by reference thereto, with respect to any Leased
Property and all other amounts due under the related Lease, unless such
Taxes relate to acts, events or matters occurring prior to the earliest
of such times or are imposed on or with respect to any payments due under
the Operative Documents after such expiration or discharge;
(v) Taxes imposed on a Tax Indemnitee that result from any
voluntary sale, assignment, transfer or other disposition or bankruptcy
by such Tax Indemnitee or any related Tax Indemnitee of any interest in
any Leased Property or any part thereof, or any interest therein or any
interest or obligation arising under the Operative Documents,
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or from any sale, assignment, transfer or other disposition of any
interest in such Tax Indemnitee or any related Tax Indemnitee, it being
understood that each of the following shall not be considered a
voluntary sale: (A) any substitution, replacement or removal of any of
the Leased Property by a Lessee, (B) any sale or transfer resulting
from the exercise by a Lessee of any termination option, any purchase
option or sale option, (C) any sale or transfer while an Event of
Default shall have occurred and be continuing under a Lease, and (D)
any sale or transfer resulting from the Lessor's exercise of remedies
under any Lease;
(vi) any Tax which is being contested in accordance with the
provisions of Section 7.4(c), during the pendency of such contest;
(vii) any Tax that is imposed on a Tax Indemnitee as a result
of such Tax Indemnitee's gross negligence or willful misconduct (other
than gross negligence or willful misconduct imputed to such Tax
Indemnitee solely by reason of its interest in any Leased Property);
(viii) any Tax that results from a Tax Indemnitee engaging,
with respect to any Leased Property, in transactions other than those
permitted by the Operative Documents;
(ix) to the extent any interest, penalties or additions to
tax result in whole or in part from the failure of a Tax Indemnitee to
file a return or pay a Tax that it is required to file or pay in a proper
and timely manner, unless such failure (A) results from the transactions
contemplated by the Operative Documents in circumstances where a Lessee
did not give timely notice to such Tax Indemnitee (and such Tax
Indemnitee otherwise had no actual knowledge) of such filing or payment
requirement that would have permitted a proper and timely filing of such
return or payment of such Tax, as the case may be, or (B) results from
the failure of a Lessee to supply information necessary for the proper
and timely filing of such return or payment of such Tax, as the case may
be, that was not in the possession of such Tax Indemnitee; and
(x) any Tax that results from the breach by the Lessor of
its representation and warranty made in Section 4.2(b) or the breach of
any Lender of its representation and warranty made in Section 4.3(b).
(c) Contests. If any claim shall be made against any Tax
Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee
(including a written notice of such proceeding) for any Taxes as to which the
Lessee may have an indemnity obligation pursuant to Section 7.4, or if any Tax
Indemnitee shall determine that any Taxes as to which the Lessees may have an
indemnity obligation pursuant to Section 7.4 may be payable, such Tax Indemnitee
shall promptly notify Dollar. A Lessee shall be entitled, at its expense, to
participate in, and, to the extent that such Lessee desires to, assume and
control the defense thereof; provided, however, that such Lessee shall have
acknowledged in writing its obligation to fully indemnify
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such Tax Indemnitee in respect of such action if requested to do so by such
Lessee, suit or proceeding if the contest is unsuccessful; and, provided
further, that no Lessee shall be entitled to assume and control the defense of
any such action, suit or proceeding (but the Tax Indemnitee shall then contest,
at the sole cost and expense of the Lessee, on behalf of the related Lessee with
representatives reasonably satisfactory to such Lessee) if and to the extent
that, (A) in the reasonable opinion of such Tax Indemnitee, such action, suit or
proceeding (x) involves any meaningful risk of imposition of criminal liability
or any Material risk of Material civil liability on such Tax Indemnitee or (y)
will involve a Material risk of the sale, forfeiture or loss of, or the creation
of any Lien (other than a Permitted Lien) on any Leased Property or any part
thereof unless the Lessees shall have posted a bond or other security
satisfactory to the relevant Tax Indemnitees in respect to such risk, (B) such
proceeding involves Claims not fully indemnified by the Lessees which the
Lessees and the Tax Indemnitee have been unable to sever from the indemnified
claim(s), (C) an Event of Default has occurred and is continuing, (D) such
action, suit or proceeding involves matters which extend beyond or are unrelated
to the Transaction and if determined adversely could be Materially detrimental
to the interests of such Tax Indemnitee notwithstanding indemnification by the
Lessees or (E) such action, suit or proceeding involves the federal or any state
income tax liability of the Tax Indemnitee. With respect to any contests
controlled by a Tax Indemnitee, (i) if such contest relates to the federal or
any state income tax liability of such Tax Indemnitee, such Tax Indemnitee shall
be required to conduct such contest only if the Lessees shall have provided to
such Tax Indemnitee an opinion of independent tax counsel selected by the Tax
Indemnitee and reasonably satisfactory to the Lessees stating that a reasonable
basis exists to contest such claim or (ii) in the case of an appeal of an
adverse determination of any contest relating to any Taxes, an opinion of such
counsel to the effect that such appeal is more likely than not to be successful,
provided, however, such Tax Indemnitee shall in no event be required to appeal
an adverse determination to the United States Supreme Court. The Tax Indemnitee
may participate in a reasonable manner at its own expense and with its own
counsel in any proceeding conducted by a Lessee in accordance with the
foregoing.
Each Tax Indemnitee shall at the Lessees' expense supply the related
Lessee with such information and documents in such Tax Indemnitee's possession
reasonably requested by such Lessee as are necessary or advisable for such
Lessee to participate in any action, suit or proceeding to the extent permitted
by this Section 7.4. Unless an Event of Default shall have occurred and be
continuing, no Tax Indemnitee shall enter into any settlement or other
compromise with respect to any Claim which is entitled to be indemnified under
this Section 7.4 without the prior written consent of Dollar, which consent
shall not be unreasonably withheld, unless such Tax Indemnitee waives its right
to be indemnified under this Section 7.4 with respect to such Claim.
Notwithstanding anything contained herein to the contrary, (a) a Tax
Indemnitee will not be required to contest (and no Lessee shall be permitted to
contest) a claim with respect to the imposition of any Tax if such Tax
Indemnitee shall waive its right to indemnification under this Section 7.4 with
respect to such claim (and any related claim with respect to other taxable years
the contest of which is precluded as a result of such waiver) and (b) no Tax
Indemnitee shall be required to contest any claim if the subject matter thereof
shall be of a continuing nature and
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shall have previously been decided adversely, unless there has been a change in
law which in the opinion of Tax Indemnitee's counsel creates substantial
authority for the success of such contest. Each Tax Indemnitee and each Lessee
shall consult in good faith with each other regarding the conduct of such
contest controlled by either.
(d) Reimbursement for Tax Savings. If (x) a Tax Indemnitee
shall obtain a credit or refund of any Taxes paid by a Lessee pursuant to this
Section 7.4 or (y) by reason of the incurrence or imposition of any Tax for
which a Tax Indemnitee is indemnified hereunder or any payment made to or for
the account of such Tax Indemnitee by a Lessee pursuant to this Section 7.4,
such Tax Indemnitee at any time realizes a reduction in any Taxes for which the
Lessees are not required to indemnify such Tax Indemnitee pursuant to this
Section 7.4, which reduction in Taxes was not taken into account in computing
such payment by a Lessee to or for the account of such Tax Indemnitee, then such
Tax Indemnitee shall promptly pay to such Lessee (xx) the amount of such credit
or refund, together with the amount of any interest received by such Tax
Indemnitee on account of such credit or refund or (yy) an amount equal to such
reduction in Taxes, as the case may be; provided that no such payment shall be
made so long as an Event of Default shall have occurred and be continuing and,
provided, further, that the amount payable to a Lessee by any Tax Indemnitee
pursuant to this Section 7.4(d) shall not at any time exceed the aggregate
amount of all indemnity payments made by such Lessee under this Section 7.4 to
such Tax Indemnitee with respect to the Taxes which gave rise to the credit or
refund or with respect to the Tax which gave rise to the reduction in Taxes less
the amount of all prior payments made to such Lessee by such Tax Indemnitee
under this Section 7.4(d). Each Tax Indemnitee agrees to act in good faith to
claim such refunds and other available Tax benefits, and take such other actions
as may be reasonable to minimize any payment due from the Lessees pursuant to
this Section 7.4. The disallowance or reduction of any credit, refund or other
tax savings with respect to which a Tax Indemnitee has made a payment to a
Lessee under this Section 7.4(d) shall be treated as a Tax for which the Lessees
are obligated to indemnify such Tax Indemnitee hereunder without regard to
Section 7.4(b) hereof.
(e) Payments. Any Tax indemnifiable under this Section 7.4
shall be paid by the Lessees directly when due to the applicable taxing
authority if direct payment is practicable and permitted. If direct payment to
the applicable taxing authority is not permitted or is otherwise not made, any
amount payable to a Tax Indemnitee pursuant to Section 7.4 shall be paid within
thirty (30) days after receipt of a written demand therefor from such Tax
Indemnitee accompanied by a written statement describing in reasonable detail
the amount so payable, but not before the date that the relevant Taxes are due.
Any payments made pursuant to Section 7.4 shall be made to the Tax Indemnitee
entitled thereto or a Lessee, as the case may be, in immediately available funds
at such bank or to such account as specified by the payee in written directions
to the payor, or, if no such direction shall have been given, by check of the
payor payable to the order of the payee by certified mail, postage prepaid at
its address as set forth in this Master Agreement. Upon the request of any Tax
Indemnitee with respect to a Tax that a Lessee is required to pay, such Lessee
shall furnish to such Tax Indemnitee the original or a certified copy of a
receipt for the Lessee's payment of such Tax or such other evidence of payment
as is reasonably acceptable to such Tax Indemnitee.
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(f) Reports. If any Lessee knows of any report, return or
statement required to be filed with respect to any Taxes that are subject to
indemnification under this Section 7.4, such Lessee shall, if such Lessee is
permitted by Applicable Law, timely file such report, return or statement (and,
to the extent permitted by law, show ownership of the applicable Leased Property
in such Lessee); provided, however, that if such Lessee is not permitted by
Applicable Law or does not have access to the information required to file any
such report, return or statement, such Lessee will promptly so notify the
appropriate Tax Indemnitee, in which case Tax Indemnitee will file such report.
In any case in which the Tax Indemnitee will file any such report, return or
statement, a Lessee shall, upon written request of such Tax Indemnitee, prepare
such report, return or statement for filing by such Tax Indemnitee or, if such
Tax Indemnitee so requests, provide such Tax Indemnitee with such information as
is reasonably available to such Lessee.
(g) Verification. At a Lessee's request, the amount of any
indemnity payment by the Lessees or any payment by a Tax Indemnitee to a Lessee
pursuant to this Section 7.4 shall be verified and certified by an independent
public accounting firm selected by Dollar and reasonably acceptable to the Tax
Indemnitee. Unless such verification shall disclose an error in the Lessees'
favor of 5% or more of the related indemnity payment, the costs of such
verification shall be borne by the Lessees. In no event shall the Lessee have
the right to review the Tax Indemnitee's tax returns or receive any other
confidential information from the Tax Indemnitee in connection with such
verification. The Tax Indemnitee agrees to cooperate with the independent public
accounting firm performing the verification and to supply such firm with all
information reasonably necessary to permit it to accomplish such verification,
provided that the information provided to such firm by such Tax Indemnitee shall
be for its confidential use. The parties agree that the sole responsibility of
the independent public accounting firm shall be to verify the amount of a
payment pursuant to this Master Agreement and that matters of interpretation of
this Master Agreement are not within the scope of the independent accounting
firm's responsibilities.
SECTION 7.5 Increased Costs, etc.
(a) Taxes.
(i) Except as otherwise specifically provided herein,
all payments under this Master Agreement and the other
Operative Documents, other than the payments specified in
clause (ii)(c) below, shall be made without defense, set-off,
or counterclaim.
(ii) (a) All such payments shall be made free and
clear of and without deduction or withholding
for any Taxes in respect of this Master
Agreement, the Notes or other Operative
Documents, or any payments of principal,
interest, fees or other amounts payable hereun
der or thereunder (but excluding, except as
provided in paragraph (iii) hereof, in the case
of each Lender, taxes imposed on or measured by
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its net income, and franchise taxes and branch
profit taxes imposed on it (A) by the
jurisdiction under the laws of which such Lender
is organized or any political subdivision
thereof, and in the case of each Lender, taxes
imposed on or measured by its net income, and
franchise taxes and branch profit taxes imposed
on it, by the jurisdiction of such Lender's
appropriate Lending Office or any political
subdivision thereof, and (B) by a jurisdiction
in which any payments are to be made by any
Lessee under the Operative Documents, other than
the United States of America, or any political
subdivision thereof, and that would not have
been imposed but for the existence of a
connection between such Lender and the
jurisdiction imposing such taxes (other than a
connection arising as a result of this Agreement
or the transactions contemplated by this
Agreement), except in the case of taxes
described in this clause (B), to the extent such
taxes are imposed as a result of a change in the
law or regulations of any jurisdiction or any
applicable treaty or regulations or in the
official interpretation of any such law, treaty
or regulations by any government authority
charged with the interpretation or
administration thereof after the date of this
Master Agreement). If any such Taxes are so
levied or imposed, the Lessees, jointly and
severally agree (A) to pay the full amount of
such Taxes, and such additional amounts as may
be necessary so that every net payment of all
amounts due hereunder and under the Notes and
other Operative Documents, after withholding or
deduction for or on account of any such Taxes
(including additional sums payable under this
Section 7.5(a)), will not be less than the full
amount provided for herein had no such deduction
or withholding been required, (B) to make such
withholding or deduction and (C) to pay the full
amount deducted to the relevant authority in
accordance with applicable law. Dollar will
furnish to the Agent and each Lender, within 30
days after the date the payment of any Taxes is
due pursuant to applicable law, certified copies
of tax receipts evidencing such payment by a
Lessee. The Lessees, jointly and severally, will
indemnify and hold harmless the Agent and each
Lender and reimburse the Agent and each Lender
upon written request for the amount of any such
Taxes so levied or imposed and paid by the Agent
or Lender and any liability (including
penalties, interest and expenses) arising
therefrom or with respect thereto, whether or
not such Taxes were correctly or illegally
asserted. A certificate as to the amount of such
payment by such Lender or the Agent, absent
manifest error, shall be final, conclusive and
binding for all purposes.
(b) Each Lender that is organized under the laws of any
jurisdiction other than the United States of America or any
State thereof (including the District of
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Columbia) agrees to furnish to Dollar and the Agent, prior to
the time it becomes a Lender hereunder, two copies of either
U.S. Internal Revenue Service Form 4224 or U.S. Internal
Revenue Service Form 1001 or any successor forms thereto
(wherein such Lender claims entitlement to complete exemption
from U.S. Federal withholding tax on Rent paid by the Lessees)
and to provide to Dollar and the Agent a new Form 4224 or Form
1001 or any successor forms thereto if any previously
delivered form is found to be incomplete or incorrect in any
Material respect or upon the obsolescence of any previously
delivered form; provided, however, that no Lender shall be
required to furnish a form under this paragraph (ii) after the
date that it becomes a Lender hereunder if it is not entitled
to claim an exemption from withholding under applicable law.
(c) The Lessees, jointly and severally, shall also reimburse
the Agent and each Lender, upon written request, for any Taxes
imposed (including, without limitation, Taxes imposed on the
overall net income of the Agent or Lender or its applicable
Lending Office pursuant to the laws of the jurisdiction in
which the principal executive office or the applicable Lending
Office of the Agent or Lender is located) as the Agent or
Lender shall determine are payable by the Agent or Lender in
respect of amounts paid by or on behalf of a Lessee to or on
behalf of the Agent or Lender pursuant to paragraph (i)
hereof.
(d) In addition to the documents to be furnished pursuant to
Section 7.5(a)(ii), each Lender shall, promptly upon the
reasonable written request of Dollar to that effect, deliver
to Dollar such other accurate and complete forms or similar
documentation as such Lender is legally able to provide and as
may be required from time to time by any applicable law,
treaty, rule or regulation or any jurisdiction in order to
establish such Lender's tax status for withholding purposes or
as may otherwise be appropriate to eliminate or minimize any
Taxes on payments under this Agreement or the Notes.
(e) No Lessee shall be required to pay any amounts pursuant to
Section 7.5(a)(iii) to any Lender for the account of any
Lending Officer of such Lender in respect of any United States
withholding taxes payable hereunder (and the Lessees, if
required by law to do so, shall be entitled to withhold such
amounts and pays such amounts to the United States Government)
if the obligation to pay such additional amounts would not
have arisen but for a failure by such Lender to comply with
its obligations under Section 7.5(a)(ii)(b), and such Lender
shall not be entitled to an exemption from deduction or
withholding of United Stated Federal income tax in respect of
the payment of such sum by the Lessees hereunder for the
account of such Lending Office for, in each case, any reason
other than a change in United States law or regulations by any
governmental authority charged with the interpretation or
administration thereof (whether or not having the force of
law) after the date such Lender became a Lender hereunder.
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(f) Within sixty (60) days of the written request of Dollar,
each Lender shall execute and deliver such certificates, forms
or other documents, which can be rea sonably furnished
consistent with the facts and which are reasonably necessary
to assist in applying for refunds of Taxes remitted hereunder.
(g) To the extent that the payment of any Lender's Taxes by
any Lessee gives rise from time to time to a Tax Benefit (as
hereinafter defined) to such Lender in any jurisdiction other
than the jurisdiction which imposed such Taxes, such Lender
shall pay to Dollar the amount of each such Tax Benefit so
recognized or received. The amount of each Tax Benefit and,
therefore, payment to Dollar will be determined from time to
time by the relevant Lender in its sole discretion, which
determination shall be binding and conclusive on all parties
hereto. Each such payment will be due and payable by such
Lender to Dollar within a reasonable time after the filing of
the income tax return in which such Tax Benefit is recognized
or, in the case of any tax refund, after the refund is
received; provided, however if at any time thereafter such
Lender is required to rescind such Tax Benefit or such Tax
Benefit is otherwise disallowed or nullified, the Lessees,
jointly and severally shall promptly, after notice thereof
from such Lender, repay to Lender the amount of such Tax
Benefit previously paid to the Borrower and rescinded,
disallowed or nullified. For purposed of this section, "Tax
Benefit" shall mean the amount by which any Lender's income
tax liability for the taxable period in question is reduced
below what would have been payable had the Borrower not been
required to pay the Lender's Taxes. In case of any dispute
with respect to the amount of any payment no Lessee shall have
any right to any offset or withholding of payments with
respect to future payments due to any Lender under the
Operative Documents.
(b) Interest Rate Not Ascertainable, etc. In the event that
the Agent shall have determined (which determination shall be made in good faith
and, absent manifest error, shall be final, conclusive and binding upon all
parties) that on any date for determining the Adjusted LIBO Rate for any Rent
Period, by reason of any changes arising after the date of this Master Agreement
affecting the London interbank market, or the Agent's position in such market,
adequate and fair means do not exist for ascertaining the applicable interest
rate on the basis provided for in the definition of Adjusted LIBO Rate, then,
and in any such event, the Agent shall forthwith give notice (by telephone
confirmed in writing) to Dollar and to the Lenders, of such determination and a
summary of the basis for such determination. Until the Agent notifies Dollar
that the circumstances giving rise to the suspension described herein no longer
exist, the obligations of the Lenders to make or permit portions of the Fundings
to remain outstanding past the last day of the then current Rent Periods as
LIBOR Advances shall be suspended, and such affected Advances shall bear the
same interest as Base Rate Advances.
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(c) Illegality.
(i) In the event that any Lender shall have
determined (which determination shall be made in good faith
and, absent manifest error, shall be final, conclusive and
binding upon all parties) at any time that the making or
continuance of any LIBOR Advance has become unlawful by
compliance by such Lender in good faith with any applicable
law, governmental rule, regulation, guideline or order
(whether or not having the force of law and whether or not
failure to comply therewith would be unlawful), then, in any
such event, the Lender shall give prompt notice (by telephone
confirmed in writing) to Dollar and to the Agent of such
determination and a summary of the basis for such
determination (which notice the Agent shall promptly transmit
to the other Lenders).
(ii) Upon the giving of the notice to Dollar referred
to in subsection (i) above, (i) each Lessee right to request
and such Lender's obligation to make LIBOR Advances shall be
immediately suspended, and such Lender shall make an Advance
as part of the requested Funding of LIBOR Advances as a Base
Rate Advance, which Base Rate Advance, as the case may be,
shall, for all other purposes, be considered part of such
Funding, and (ii) if the affected LIBOR Advance or Advances
are then outstanding, each Lessee shall immediately, or if
subject to applicable law, no later than the date permitted by
applicable law, upon at least one Business Day's written
notice to the Agent and the affected Lender, convert each such
Advance into a Base Rate Advance or Advances, provided that if
more than one Lender is affected at any time, then all
affected Lenders must be treated the same pursuant to this
Section 7.5(c)(ii).
(d) Increased Costs.
(i) If, by reason of (x) after the date hereof, the
introduction of or any change (including, without limitation,
any change by way of imposition or increase of reserve
requirements) in or in the interpretation of any law or
regulation, or (y) the compliance with any guideline or
request from any central bank or other governmental authority
or quasi-governmental authority exercising control over banks
or financial institutions generally (whether or not having the
force of law):
(a) any Lender (or its applicable Lending
Office) shall be subject to any tax, duty or other
charge with respect to its LIBOR Advances, or its
obligation to make such Advances, or the basis of
taxation of payments to any Lender of the principal
of or interest on its LIBOR Advances or its
obligation to make LIBOR Advances shall have changed
(except for changes in the tax on the overall net
income of such Lender or its applicable Lending
Office imposed by the jurisdiction in which such
Lender's principal executive office or applicable
Lending Office is located); or
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(b) any reserve (including, without limitation,
any imposed by the Board of Governors of the Federal
Reserve System), special deposit or similar
requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender's
applicable Lending Office shall be imposed or deemed
applicable or any other condition affecting its LIBOR
Advances or its obligation to make LIBOR Advances
shall be imposed on any Lender or its applicable
Lending Office or the London interbank market;
and as a result thereof there shall be any increase in the cost to such Lender
of agreeing to make or making, funding or maintaining LIBOR Advances (except to
the extent already included in the determination of the applicable Adjusted LIBO
Rate for LIBOR Advances) or its obligation to make LIBOR Advances, or there
shall be a reduction in the amount received or receivable by such Lender or its
applicable Lending Office, then the Lessees, jointly and severally, shall from
time to time, upon written notice from and demand by such Lender to Dollar (with
a copy of such notice and demand to the Agent), pay to the Agent for the account
of such Lender within ten (10) Business Days after the date of such notice and
demand, additional amounts sufficient to indemnify such Lender against such
increased cost. A certificate as to the amount of such increased cost, submitted
to Dollar and the Agent by such Lender in good faith and accompanied by a
statement prepared by such Lender describing in reasonable detail the basis for
and calculation of such increased cost, shall, except for manifest error, be
final conclusive and binding for all purposes.
(ii) If any Lender shall advise the Agent that at any time,
because of the cir cumstances described in clauses (x) or (y) in
Section 7.5(c)(i) or any other circumstances beyond such Lender's
reasonable control arising after the date of this Agreement affecting
such Lender or the London interbank market or such Lender's position in
such market, the Adjusted LIBO Rate as determined by the Agent will not
adequately and fairly reflect the cost to such Lender of funding its
LIBOR Advances then, and in any such event:
(a) the Agent shall forthwith give notice (by
telephone confirmed in writing) to Dollar and to the other
Lenders of such advice;
(b) each Lessee's right to request and such Lender's
obligation to make or permit portions of the Loans to remain
outstanding past the last day of the then current Rent Periods
as LIBOR Advances shall be immediately suspended; and
(c) such Lender shall make a Loan as part of the
requested Funding of LIBOR Advances as a Base Rate Advance,
which such Base Rate Advance shall, for all other purposes, be
considered part of such Funding.
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(e) Lending Offices.
(i) Each Lender agrees that, if requested by Dollar, it will
use reasonable efforts (subject to overall policy considerations of
such Lender) to designate an alternate Lending Office with respect to
any of its LIBOR Advances affected by the matters or circumstances
described in Section 7.5(a), (b), (c) or (d) to reduce the liability of
the Lessees or avoid the results provided thereunder, so long as such
designation is not disadvantageous to such Lender as reasonably
determined by such Lender, which determination shall be conclusive and
binding on all parties hereto. Nothing in this Section 7.5(e) shall
affect or postpone any of the obligations of any Lessee or any right of
any Lessee any Lender provided hereunder or under the other Operative
Documents.
(ii) If any Lender that is organized under the laws of any
jurisdiction other than the United States of America or any State
thereof (including the District of Columbia) is sues a public
announcement with respect to the closing of its Lending Offices in the
United States such that any withholdings or deductions and additional
payments with respect to Taxes may be required to be made by a Lessee
thereafter pursuant to Section 7.5(a)(ii), such Lender shall use
reasonable efforts to furnish Borrower notice thereof as soon as
practicable thereafter; provided, however, that no delay or failure to
furnish such notice shall in any event release or discharge any Lessee
from its obligations to such Lender pursuant to Section 7.5(a) or
otherwise result in any liability of such Lender.
(f) Funding Losses. The Lessees, jointly and severally, shall
compensate each Lender, upon its written request to Dollar (which
request shall set forth the basis for requesting such amounts in
reasonable detail and which request shall be made in good faith and,
absent manifest error, shall be final, conclusive and binding upon all
of the parties hereto), for all actual losses, expenses and liabilities
(including, without limitation, any interest paid by such Lender to
lenders of funds borrowed by it to make or carry its LIBOR Advances to
the extent not recovered by such Lender in connection with the
re-employment of such funds but excluding loss of anticipated profits),
which the Lender may sustain: (i) if for any reason (other than a
default by such Lender) a funding of, or conversion to or continuation
of, LIBOR Advances does not occur on the date specified therefor in a
Funding Request or Payment Date Notice (whether or not withdrawn), (ii)
if any repayment (including mandatory prepayments and any conversions)
of any LIBOR Advances occurs on a date which is not the last day of a
Rent Period applicable thereto, (iii), if, for any reason, any Lessee
defaults in its obligation to pay Basic Rent when required by the terms
of any Lease or (iv) if any Lender is required to make an assignment
pursuant to Section 6.2(f)..
(g) Assumptions Concerning Funding of LIBOR Advances.
Calculation of all amounts payable to a Lender under this Section 7.5 shall be
made as though that Lender had actually funded its relevant LIBOR Advances
through the purchase of deposits in the relevant market bearing interest at the
rate applicable to such LIBOR Advances in an amount equal to the amount of the
LIBOR Advances and having a maturity comparable to the relevant Rent Period and
through the transfer of such LIBOR Advances from an offshore office of that
Lender to a domestic office of that Lender in the United States of America;
provided, however that each
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Lender may fund each of its LIBOR Advances in any manner it sees fit and the
foregoing assumption shall be used only for calculation of amounts payable under
this Section 7.5.
(h) Capital Adequacy. Without limiting any other provision of
this Master Agreement, in the event that any Lender shall have determined that
any law, treaty, governmental (or quasi-governmental) rule, regulation,
guideline or order regarding capital adequacy not currently in effect or fully
applicable as of the Initial Closing Date, or any change therein or in the
interpretation or application thereof after the Initial Closing Date, or
compliance by such Lender with any request or directive regarding capital
adequacy not currently in effect or fully applicable as of the Initial Closing
Date (whether or not having the force of law and whether or not failure to
comply therewith would be unlawful) from a central bank or governmental
authority or body having jurisdiction, does or shall have the effect of reducing
the rate of return on such Lender's capital as a consequence of its obligations
hereunder to a level below that which such Lender could have achieved but for
such law, treaty, rule, regulation, guideline or order, or such change or
compliance (taking into consideration such Lender's policies with respect to
capital adequacy) by an amount deemed by such Lender to be Material, then within
ten (10) Business Days after written notice and demand by such Lender (with
copies thereof to the Agent), the Lessees, jointly and severally, shall from
time to time pay to such Lender additional amounts sufficient to compensate such
Lender for such reduction (but, in the case of outstanding Base Rate Advances,
without duplication of any amounts already recovered by such Lender by reason of
an adjustment in the applicable Base Rate). Each certificate as to the amount
payable under this Section 7.5(h) (which certificate shall set forth the basis
for requesting such amounts in reasonable detail), submitted to Dollar by any
Lender in good faith, shall, absent manifest error, be final, conclusive and
binding for all purposes.
(i) Limitation on Certain Payment Obligations.
(a) Each Lender or the Agent shall make written
demand on Dollar for indemnification or compensation pursuant
to Section 7.5(a)(ii) no later than six months after the
earlier of (i) on the date on which Lender or the Agent makes
payment of any such Taxes and (ii) the date on which the
relevant taxing authority or other governmental authority
makes written demand upon such Lender or Agent for the payment
of such Taxes.
(b) Each Lender or Agent shall make written demand on
Dollar for in demnification or compensation pursuant to
Section 7.5(e) no later than six months after the event giving
rise to the claim for indemnification or compensation occurs.
(c) Each Lender or the Agent shall make written
demand on Dollar for identification or compensation pursuant
to Section 7.5(d) or Section 7.5(g) no later than six months
after such Lender or Agent receives actual notice or obtains
actual knowledge of the promulgation of a law, rule, order,
interpretation or occurrence of another event giving rise to a
claim pursuant to such provisions.
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(d) In the event that the Lenders or Agent fail to
give Dollar notice within the time limitations set forth
above, no Lessee shall have any obligation to pay amounts with
respect to such claims accrued prior to six months preceding
any written demand therefor.
SECTION 7.6 End of Term Indemnity. In the event that at the end of the
Lease Term for a Leased Property: (i) the related Lessee elects the option set
forth in Section 14.6 of the related Lease, and (ii) after the Lessor receives
the sales proceeds from such Leased Property under Section 14.6 or 14.7 of such
Lease, together with such Lessee's payment of the Recourse Deficiency Amount,
the Lessor shall not have received the entire Lease Balance, then, within 90
days after the end of the Lease Term, the Lessor or the Agent may obtain, at the
Lessees' sole cost and expense, a report from the Appraiser (or, if the
Appraiser is not available, another appraiser reasonably satisfactory to the
Lessor or the Agent, as the case may be, and approved by Dollar, such approval
not to be unreasonably withheld) in form and substance satisfactory to the
Lessor and the Agent (the "Report") to establish the reason for any decline in
value of such Leased Property from the Lease Balance. The related Lessee or
Lessees shall promptly reimburse the Lessor for the amount equal to such decline
in value to the extent that the Report indicates that such decline was due to
(w) extraordinary use, failure to maintain, to repair, to
restore, to rebuild or to replace, failure to comply with all
Applicable Laws, failure to use, workmanship, method of installation or
removal or maintenance, repair, rebuilding or replacement, or any other
cause or condition within the power of the related Lessee to control or
effect resulting in the Building failing to be a store, office building
or warehouse, as the case may be, of the type and quality contemplated
by the Appraisal (excepting in each case ordinary wear and tear), or
(x) any Alteration made to, or any rebuilding of, the Leased
Property or any part thereof by the related Lessee, or
(y) any restoration or rebuilding carried out by the related
Lessee or any condemnation of any portion of the Leased Property
pursuant to Article X of the related Lease, or
(z) any use of such Leased Property or any part thereof by the
related Lessee other than as permitted by the related Lease, or any act
or omission constituting a breach of any requirement, condition,
restriction or limitation set forth in the related Deed or the related
Purchase Agreement.
61
<PAGE> 69
SECTION 8
MISCELLANEOUS
SECTION 8.1 Survival of Agreements. The representations, warranties,
covenants, indemnities and agreements of the parties provided for in the
Operative Documents, and the parties' obligations under any and all thereof,
shall survive the execution and delivery and the termination or expiration of
this Master Agreement and any of the Operative Documents, the transfer of any
Land to the Lessor as provided herein (and shall not be merged into any Deed),
any disposition of any interest of the Lessor in any Leased Property, the
purchase and sale of the Notes, payment therefor and any disposition thereof and
shall be and continue in effect notwithstanding any investigation made by any
party hereto or to any of the other Operative Documents and the fact that any
such party may waive compliance with any of the other terms, provisions or
conditions of any of the Operative Documents.
SECTION 8.2 Notices. Unless otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be addressed to such parties at the addresses therefor as set forth
in Schedule 8.2, or such other address as any such party shall specify to the
other parties hereto, and shall be deemed to have been given (i) the Business
Day after being sent, if sent by overnight courier service; (ii) the Business
Day received, if sent by messenger; (iii) the day sent, if sent by facsimile and
confirmed electronically or otherwise during business hours of a Business Day
(or on the next Business Day if otherwise sent by facsimile and confirmed
electronically or otherwise); or (iv) three Business Days after being sent, if
sent by registered or certified mail, postage prepaid.
SECTION 8.3 Counterparts. This Master Agreement may be executed by the
parties hereto in separate counterparts (including by facsimile), each of which
when so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
SECTION 8.4 Amendments. No Operative Document nor any of the terms
thereof may be terminated, amended, supplemented, waived or modified with
respect to the Lessees or any Funding Party, except (a) in the case of a
termination, amendment, supplement, waiver or modification to be binding on the
Lessees, with the written agreement or consent of Dollar, and (b) in the case of
a termination, amendment, supplement, waiver or modification to be binding on
the Funding Parties, with the written agreement or consent of the Required
Funding Parties; provided, however, that
(x) notwithstanding the foregoing provisions of this Section
8.4, the consent of each Funding Party affected thereby shall be required for
any amendment, modification or waiver directly:
(i) modifying any of the provisions of this Section 8.4,
changing the definition of "Required Funding Parties" or "Required
Lenders", or increasing the Commitment of such Funding Party;
62
<PAGE> 70
(ii) amending, modifying, waiving or supplementing any of the
provisions of Section 3 of the Loan Agreement or the representations of
such Funding Party in Section 4.2 or 4.3 or the covenants of such
Funding Party in Section 6 of this Master Agreement;
(iii) reducing any amount payable to such Funding Party under
the Operative Documents or extending the time for payment of any such
amount, including, without limitation, any Rent, any Funded Amount, any
fees, any indemnity, the Leased Property Balance, the Lease Balance,
any Funding Party Balance, Recourse Deficiency Amount, interest or
Yield; or
(iv) consenting to any assignment of any Lease or the
extension of the Lease Term, releasing any of the collateral assigned
to the Agent and the Lenders pursuant to any Mortgage and any
Assignment of Lease and Rents (but excluding a release of any rights
that the Lenders may have in any Leased Property, or the proceeds
thereof as contemplated in the definition of "Release Date"), releasing
any Lessee from its obligations in respect of the payments of Rent and
the Lease Balance, releasing Dollar from its obligations under the
Guaranty Agreement or the other Operative Documents or changing the
absolute and unconditional character of any such obligation; and
(y) no such termination, amendment, supplement, waiver or
modification shall, without the written agreement or consent of the Lessor, the
Agent and the Lenders, be made to any Lease or any Security Agreement and
Assignment; and
(z) subject to the foregoing clauses (x) and (y), so long as
no Event of Default has occurred and is continuing, the Lessor, the Agent and
the Lenders may not amend, supplement, waive or modify any terms of the Loan
Agreement, the Notes, the Mortgages and the Assignments of Lease and Rents
without the consent of Dollar (such consent not to be unreasonably withheld or
delayed); provided that in no event may the Loan Agreement or the Notes be
amended so as to increase the amount of Basic Rent payable by any Lessee without
the consent of such Lessee.
SECTION 8.5 Headings, etc. The Table of Contents and headings of the
various Articles and Sections of this Master Agreement are for convenience of
reference only and shall not modify, define, expand or limit any of the terms or
provisions hereof.
SECTION 8.6 Parties in Interest. Except as expressly provided herein,
none of the provisions of this Master Agreement is intended for the benefit of
any Person except the parties hereto and their respective successors and
permitted assigns.
SECTION 8.7 GOVERNING LAW. THIS MASTER AGREEMENT HAS BEEN DELIVERED IN,
AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF TENNESSEE APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN
63
<PAGE> 71
SUCH STATE, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
SECTION 8.8 Expenses. Whether or not the transactions herein
contemplated are consummated, each Lessee, jointly and severally, agrees to pay,
as Supplemental Rent, all actual, reasonable and documented out-of-pocket costs
and expenses of the Lessor, the Agent and the Lenders in connection with the
preparation, execution and delivery of the Operative Documents and the documents
and instruments referred to therein and any amendment, waiver or consent
relating thereto (including, without limitation, the reasonable fees and
disbursements of Mayer, Brown & Platt, but not including any fees and
disbursements for any other outside counsel representing any Lender) and of the
Lessor, the Agent and the Lenders in connection with the enforcement of the
Operative Documents and the documents and instruments referred to therein
(including, without limitation, the reasonable fees actually incurred and
disbursements of counsel for the Lessor, the Agent and the Lenders). All
references in the Operative Documents to "attorneys' fees" or "reasonable
attorneys fees" shall mean reasonable attorneys' fees actually incurred, without
regard to any statutory definition thereof.
SECTION 8.9 Severability. Any provision of this Master Agreement that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 8.10 Liabilities of the Funding Parties. No Funding Party shall
have any obligation to any other Funding Party or to any Lessee with respect to
the transactions contemplated by the Operative Documents except those
obligations of such Funding Party expressly set forth in the Operative Documents
or except as set forth in the instruments delivered in connection therewith, and
no Funding Party shall be liable for performance by any other party hereto of
such other party's obligations under the Operative Documents except as otherwise
so set forth. No Lender shall have any obligation or duty to any Lessee, any
other Funding Parties or any other Person with respect to the transactions
contemplated hereby except to the extent of the obligations and duties expressly
set forth in this Master Agreement or the Loan Agreement.
SECTION 8.11 Submission to Jurisdiction; Waivers. Each party hereto
hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Master Agreement or any other Operative
Document, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the Courts of the
State of Tennessee sitting in Shelby County, the courts of the United
States of America for the Western District of Tennessee, and appellate
courts from any thereof;
64
<PAGE> 72
(ii) consents that any such action or proceedings may be
brought to such courts, and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
court or that such action or proceeding was brought in an inconvenient
court and agrees not to plead or claim the same;
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such party at its address set forth in Schedule 8.2 or at
such other address of which the other parties hereto shall have been
notified pursuant to Section 8.2; and
(iv) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law.
SECTION 8.12 Liabilities of the Agent. The Agent shall have no duty,
liability or obligation to any party to this Master Agreement with respect to
the transactions contemplated hereby except those duties, liabilities or
obligations expressly set forth in this Master Agreement or the Loan Agreement,
and any such duty, liability or obligations of the Agent shall be as expressly
limited by this Master Agreement or the Loan Agreement, as the case may be. All
parties to this Master Agreement acknowledge that the Agent is not, and will not
be, performing any due diligence with respect to documents and information
received pursuant to this Master Agreement or any other Operative Agreement
including, without limitation, any Environmental Audit, Title Policy or survey.
The acceptance by the Agent of any such document or information shall not
constitute a waiver by any Funding Party of any representation or warranty of
any Lessee or Guarantor even if such document or information indicates that any
such representation or warranty is untrue.
65
<PAGE> 73
IN WITNESS WHEREOF, the parties hereto have caused this Master
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
DOLLAR GENERAL CORPORATION, as a
Lessee and as Guarantor
By:
------------------------------------
Name Printed: Philip W. Richards
Title: Vice President and Chief
Financial Officer
S-1
<PAGE> 74
ATLANTIC FINANCIAL GROUP, LTD., as
Lessor
By: Atlantic Financial Managers, Inc., its General
Partner
By:
----------------------------------------------
Name Printed: Stephen Brookshire
Title: President
S-2
<PAGE> 75
SUNTRUST BANK, NASHVILLE, N.A., as Agent
and as a Lender
By:
-----------------------------------------
Name Printed: J. H. Miles
-------------------------------
Title: Sr. V.P.
--------------------------------------
By:
-----------------------------------------
Name Printed: J. Lee Lamprecht
-------------------------------
Title: Sr. V.P.
--------------------------------------
S-3
<PAGE> 76
THE FIRST NATIONAL BANK OF CHICAGO, as
a Lender
By:
-----------------------------------------
Name Printed: John Runger
-------------------------------
Title: Managing Director
--------------------------------------
S-4
<PAGE> 77
KEYBANK NATIONAL ASSOCIATION, as a
Lender
By:
-----------------------------------------
Name Printed: Thomas J. Purcell
-------------------------------
Title:
--------------------------------------
S-5
<PAGE> 78
AMSOUTH BANK, as a Lender
By:
-----------------------------------------
Name Printed: Andrew P. Grisham
-------------------------------
Title: Vice President
--------------------------------------
S-6
<PAGE> 79
FIRST AMERICAN NATIONAL BANK, as a
Lender
By:
-----------------------------------------
Name Printed: Scott Bane
-------------------------------
Title: Senior Vice President
--------------------------------------
S-7
<PAGE> 80
UNION PLANTERS BANK OF MIDDLE
TENNESSEE, N.A., as a Lender
By:
-----------------------------------------
Name Printed: William Collier
-------------------------------
Title: Vice President
--------------------------------------
S-8
<PAGE> 81
PNC BANK, KENTUCKY, INC., as a Lender
By:
-----------------------------------------
Name Printed: Ralph A. Phillips
-------------------------------
Title: Vice President
--------------------------------------
S-9
<PAGE> 82
MERCANTILE BANK NATIONAL
ASSOCIATION, as a Lender
By:
-----------------------------------------
Name Printed: Donald A. Adam
-------------------------------
Title: Vice President
--------------------------------------
S-10
<PAGE> 83
FIRST UNION NATIONAL BANK, as a Lender
By:
-----------------------------------------
Name Printed: Thelma B. Ferguson
-------------------------------
Title: Vice President
--------------------------------------
S-11
<PAGE> 84
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as a Lender
By:
-----------------------------------------
Name Printed: Patricia Merritt
-------------------------------
Title: Vice President
--------------------------------------
S-12
<PAGE> 85
WACHOVIA BANK OF GEORGIA, N.A., as a
Lender
By:
-----------------------------------------
Name Printed: Kenneth Washington
-------------------------------
Title: V.P.
--------------------------------------
S-13
<PAGE> 86
BARNETT BANK, N.A., as a Lender
By:
-----------------------------------------
Name Printed: Melinda J. Lemein
-------------------------------
Title: V.P.
--------------------------------------
S-14
<PAGE> 87
FIFTH THIRD BANK, as a Lender
By:
-----------------------------------------
Name Printed: Kevin C.M. Jones
-------------------------------
Title: Assistant V.P.
--------------------------------------
S-15
<PAGE> 88
SCHEDULE 2.2
PAYMENT INSTRUCTIONS AND
AMOUNT OF EACH FUNDING PARTY'S COMMITMENT
Lessor Commitment Percentage: 3%
Lessor Commitment: $3,000,000
Lender Commitment Percentages:
SunTrust Bank, Nashville, N.A. %
---------------
Lender Commitments:
SunTrust Bank, Nashville, N.A. $
---------------
<PAGE> 89
SCHEDULE 8.2
ADDRESSES FOR NOTICES
Lessee:
Lessor: Atlantic Financial Group, Ltd.
1000 Ballpark Way, Suite 304
Arlington, Texas 76011
Attn: Stephen Brookshire
Lender and Agent: SunTrust Bank, Nashville, N.A.
201 Fourth Avenue
Nashville, Tennessee 37219
Attn: Hank Miles
with a copy to:
SunTrust Bank, Atlanta
303 Peachtree Street, 24th Floor
Mail Code 3943
Atlanta, Georgia 30308
Attn: R. Todd Shutley
Lender: The First National Bank of Chicago
One First National Plaza
Suite 0086
Chicago, Illinois 60670
Attn: John Lunger
Phone: 312/732-7101
Fax: 312/732-1117
KeyBank National Association
127 Public Square
Mailcode: OH-01-27-0606
Cleveland, Ohio 44114
Attn: Kathy Koenig
Phone: 216/689-4228
Fax: 216/689-4981
<PAGE> 90
AmSouth Bank
333 Union Street
Suite 200
Nashville, Tennessee 38201
Attn: Andrew P. Grisham
Phone: 615/291-5298
Fax: 615/291-5257
First American National Bank
Fourth and Union Street
3rd Floor
Nashville, Tennessee 37237
Attn: Alexis Griffin
Phone: 615/748-2823
Fax: 615/736-6206
Union Planters Bank of Middle Tennessee, N.A.
401 Union Street
Nashville, Tennessee 37219
Attn: William A. Collier
Phone: 615/726-4239
Fax: 615/726-4274
PNC Bank, Kentucky, Inc.
500 West Jefferson Street
Louisville, Kentucky 40222
Attn: Ralph A. Phillips
Phone: 502/581-4543
Fax: 502/581-2302
Mercantile Bank National Association
721 Locust Street
TRAM 12-3
St. Louis, Missouri 63101
Attn: Donald A. Adam
Phone: 314/425-3859
Fax: 314/425-2420
First Union National Bank
150 Fourth Avenue North
2nd Floor
Nashville, Tennessee 37219
Attn: Thelma B. Ferguson
Phone: 615/251-9355
<PAGE> 91
Fax: 615/251-9461
Morgan Guaranty Trust Company of New York
60 Wall Street
22nd Floor
New York, New York 10260
Attn: Patricia Merritt
Phone: 212/648-6744
Fax: 212/648-5336
Wachovia Bank of Georgia, N.A.
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn:
--------------------------------------
Phone:
--------------------------------------
Fax:
--------------------------------------
Barnett Bank, N.A.
50 North Laura
17th Floor
Jacksonville, Florida 32202
Attn:
--------------------------------------
Phone:
--------------------------------------
Fax:
--------------------------------------
Fifth Third Bank
38 Fountain Square Plaza
Mail Drop 109054
Cincinnati, Ohio 45263
Attn:
--------------------------------------
Phone:
--------------------------------------
Fax:
--------------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF DOLLAR GENERAL FOR THE NINE MONTHS ENDED OCTOBER 31,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> OCT-31-1997
<CASH> 13,168
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 737,263
<CURRENT-ASSETS> 775,901
<PP&E> 378,506
<DEPRECIATION> 140,404
<TOTAL-ASSETS> 1,019,598
<CURRENT-LIABILITIES> 495,935
<BONDS> 0
0
858
<COMMON> 66,660
<OTHER-SE> 449,374
<TOTAL-LIABILITY-AND-EQUITY> 1,019,598
<SALES> 1,766,234
<TOTAL-REVENUES> 1,766,234
<CGS> 1,280,439
<TOTAL-COSTS> 355,254
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,625
<INCOME-PRETAX> 127,916
<INCOME-TAX> 48,288
<INCOME-CONTINUING> 79,628
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 79,628
<EPS-PRIMARY> 0.58
<EPS-DILUTED> 0.58
</TABLE>
